<PAGE>
As filed with the Securities and Exchange
Commission on October 25, 1995
File No. 2-79807
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 31 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 29 X
ALLIANCE MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:(800) 221-5672
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
It is proposed that this filing will become effective (Check
appropriate line)
X immediately upon filing pursuant to paragraph (b)
_____
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of rule 485.
Registrant has registered an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant's Rule 24f-2 notice for its
fiscal year ended June 30, 1995 was filed on August 29, 1995.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectuses
____________ ________________________
(Caption)
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Information
Item 3. Financial Highlights Financial Highlights
Item 4. General Description of Investment Objectives
Registrant and Policies
Item 5. Management of the Fund Additional Information
Item 6. Capital Stock and Other Additional Information
Securities
Item 7. Purchase of Securities Purchase and Redemption
Being Offered of Shares; Additional
Information
Item 8. Redemption or Repurchase Purchase and Redemption of
Shares
Item 9. Pending Legal Proceedings Not Applicable
PART B Location in Statements
Of Additional Information
________________________
(Caption)
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and Management; General
History Information
Item 13. Investment Objectives and Investment Objectives
Policies and Policies; Investment
Restrictions
Item 14. Management of the Fund Management
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Statements
_____________ of Additional Information
________________________
(Caption)
PART B (continued)
Item 15. Control Persons and Principal Management
Holders of Securities
Item 16. Investment Advisory and Management
Other Services
Item 17. Brokerage Allocation General Information
Item 18. Capital Stock and Other Daily Dividends -
Securities Determination of Net Asset
Value; General Information
Item 19. Purchase, Redemption and Purchase and Redemption
Pricing of Securities of Shares; Daily
Being Offered Dividends-Determination of
Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters General Information
Item 22. Calculation of Performance General Information
Data
Item 23. Financial Statements Financial Statements;
Report of Independent
Accounts
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
YIELD MESSAGES
For current recorded yield information on Alliance Municipal Trust, call on a
touch-tone telephone toll-free (800) 251-0539 and press the following sequence
of keys:
[1][#] [1][#] [6][4][#] for the General Portfolio,
[1][#] [1][#] [4][9][#] for the New York Portfolio,
[1][#] [1][#] [3][0][#] for the California Portfolio,
[1][#] [1][#] [2][8][#] for the Connecticut Portfolio,
[1][#] [1][#] [9][2][#] for the New Jersey Portfolio,
[1][#] [1][#] [2][1][#] for the Virginia Portfolio,
[1][#] [1][#] [6][6][#] for the Florida Portfolio.
For non-touch-tone telephones, call toll-free (800) 221-9513.
- --------------------------------------------------------------------------------
The Fund, an open-end investment company with investment objectives of safety,
liquidity and tax-free income, consists of the General Portfolio which is
diversified, and the New York, California, Connecticut, New Jersey, Virginia
and Florida Portfolios, each of which is non-diversified. Shares of the New
York, California, Connecticut, New Jersey, Virginia and Florida Portfolios are
offered only to residents of New York State, California, Connecticut, New
Jersey, Virginia and Florida, respectively. This prospectus sets forth the in-
formation about each Portfolio that a prospective investor should know before
investing. Please retain it for future reference.
An investment in the Fund is (i) neither insured nor guaranteed by the U.S.
Government; (ii) not a deposit or obligation of, or guaranteed or endorsed
by, any bank; and (iii) not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. There can be no
assurance that the Fund will be able to maintain a stable net asset value of
$1.00 per share of each Portfolio.
A "Statement of Additional Information," dated November 1, 1995, which
provides a further discussion of certain areas in this prospectus and other
matters which may be of interest to some investors, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
For a free copy, call (800) 221-5672 or write Alliance Fund Services, Inc. at
the address shown on page 12.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
(R)This registered service mark used under license from the owner, Alliance
Capital Management L.P.
- --------------------------------------------------------------------------------
CONTENTS
--------
<TABLE>
<S> <C>
Expense Information....................................................... 2
Financial Highlights...................................................... 3
Investment Objectives and Policies........................................ 7
Purchase and Redemption of Shares......................................... 9
Additional Information.................................................... 10
</TABLE>
- --------------------------------------------------------------------------------
ALLIANCE
MUNICIPAL
TRUST
- --------------------------------------------------------------------------------
[LOGOOF ALLIANCE CAPITAL APPEARS HERE]
PROSPECTUS
NOVEMBER 1, 1995
ALC64PRO
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
The Fund has no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES (AS A PERCENTAGE
OF AVERAGE NET ASSETS, GEN NY CA CT NJ VA FL
AFTER EXPENSE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
REIMBURSEMENT) --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees................ .50% .50% .50% .50% .50% .50% .50%
12b-1 Fees..................... .25 .25 .25 .25 .25 .25 .25
Other Expenses................. .25 .25 .25 .25 .25 .25 .25
---- ---- ---- ---- ---- ---- ----
Total Fund Operating Expenses.. 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
</TABLE>
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return (cumulatively through the end of each time period):
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
General Portfolio... $10 $32 $55 $122
NY Portfolio........ $10 $32 $55 $122
CA Portfolio........ $10 $32 $55 $122
CT Portfolio........ $10 $32 $55 $122
NJ Portfolio........ $10 $32 $55 $122
VA Portfolio........ $10 $32 $55 $122
FL Portfolio........ $10 $32 $55 $122
</TABLE>
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
and indirectly. The expenses listed in the table for the General, NY, CA, CT,
NJ, Virginia and Florida Portfolios are net of the contractual reimbursement by
the Ad-viser described in this prospectus. The expenses of such Portfolios
(except for the FL Portfolio which has not yet completed a full fiscal year),
before expense reimbursements, would be: CT Portfolio: Management Fees--.50%,
12b-1 Fees--.25%, Other Expenses--.39% and Total Fund Operating Expenses--1.14%;
NJ Portfolio: Management Fees--.50%, 12b-1 Fees--.25%, Other Expenses--.40% and
Total Operating Expenses--1.15% and; VA Portfolio: Management Fees--.50%, 12b-1
Fees--.25%, Other Expenses--.35% and Total Operating Expenses--1.10%. For the
FL Portfolio, "Other Expenses" are based on estimated amounts for the current
fiscal year. The example should not be considered a representation of past or
future expenses; actual expenses may be greater or less than those shown.
2
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS . FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (AUDITED
WITH RESPECT TO EACH PORTFOLIO EXCEPT AMT--FLORIDA)
- --------------------------------------------------------------------------------
The following information, except with respect to AMT--Florida, has been au-
dited by McGladrey & Pullen, LLP, the Fund's independent accountant, whose un-
qualified report thereon (referring to Financial Highlights) appears in the
Statement of Additional Information. The following information should be read
in conjunction with the financial statements and related notes included in the
Statement of Additional Information. Further information about the Fund's per-
formance is contained in the Fund's annual report, which is available without
charge upon request.
<TABLE>
<CAPTION>
GENERAL PORTFOLIO
------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30, SIX MONTHS YEAR ENDED DECEMBER 31,
------------------------------------------------- ENDED ------------------------------
1995 1994 1993 1992 1991 1990 JUNE 30, 1989 1988 1987 1986 1985
------ ------ ------ ------ ------ ------ ------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .028 .018 .020 .034 .046 .055 .030 .047 .041 .044 .049
Net realized and
unrealized loss on
investments........... (.003) -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase in net
asset value from
operations............ .025 .018 .020 .034 .046 .055 .030 .047 .041 .044 .049
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
ADD: CAPITAL
CONTRIBUTIONS
Capital Contributed by
the Adviser........... .003 -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
Dividends from net
investment income..... (.028) (.018) (.020) (.034) (.046) (.055) (.030) (.047) (.041) (.044) (.049)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURNS
Total investment return
based on net asset
value(a).............. 2.83%(c) 1.81% 2.05% 3.48% 4.71% 5.65% 6.13%(b) 4.81% 4.18% 4.50% 5.04%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in millions).. $1,189 $1,134 $1,016 $914 $883 $798 $695 $633 $690 $794 $374
Ratio to average net
assets of:
Expense, net of waivers
and reimbursements.... .94% .92% .92% .92% .89% .83% .84%(b) .83% .80% .80% .85%
Expense, before waivers
and reimbursements.... .95% .94% .94% .95% .95% .93% .94%(b) .93% .90% .90% .95%
Net investment
income(d)............. 2.78% 1.80% 2.02% 3.40% 4.57% 5.50% 5.96%(b) 4.69% 4.08% 4.31% 4.87%
</TABLE>
- -------
(a) 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 during the period, and redemption
on the last day of the period.
(b) Annualized.
(c) The capital contribution by the Adviser has no effect on total return.
(d) Net of expenses reimbursed or waived by the Adviser.
3
<PAGE>
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
-------------------------------------------------------------------------------------------------------------
YEAR ENDED
YEAR ENDED JUNE 30, SIX MONTHS DECEMBER 31, OCTOBER 6, 1986(A)
-------------------------------------------------------- ENDED ---------------- TO
1995 1994 1993 1992 1991 1990 JUNE 30, 1989 1988 1987 DECEMBER 31, 1986
-------- -------- -------- -------- ------- ------- ------------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income......... .028 .018 .019 .034 .042 .051 .027 .041 .036 .008
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------
LESS
DISTRIBUTIONS
Dividends from
net investment
income......... (.028) (.018) (.019) (.034) (.042) (.051) (.027) (.041) (.036) (.008)
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======= ======= ======= ======= ======= =======
TOTAL RETURNS
Total investment
return based on
net asset
value(b)....... 2.84% 1.77% 1.94% 3.47% 4.32% 5.26% 5.61%(c) 4.14% 3.71% 3.46%(c)
RATIOS/SUPPLEMENTAL
DATA
Net assets, end
of period
(000's
omitted)....... $177,254 $162,839 $100,529 $100,476 $71,748 $62,536 $41,910 $41,335 $58,684 $78,462
Ratio to average
net assets of:
Expenses, net of
waivers and
reimbursements. .85% .84% .80% .80% .80% .80% .85%(c) 1.00% .87% .55%(c)
Expenses, before
waivers and
reimbursements. 1.03% 1.08% 1.06% 1.12% 1.15% 1.18% 1.35%(c) 1.33% .97% 1.05%(c)
Net investment
income(d)...... 2.81% 1.77% 1.91% 3.35% 4.20% 5.13% 5.45%(c) 4.03% 3.62% 3.48%(c)
</TABLE>
- -------
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(c) Annualized.
(d) Net of expenses reimbursed or waived by the Adviser.
<TABLE>
<CAPTION>
CALIFORNIA PORTFOLIO
----------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30, JUNE 2, 1988(A)
---------------------------------------------------------- SIX MONTHS ENDED THROUGH
1995 1994 1993 1992 1991 1990 JUNE 30, 1989 DECEMBER 31, 1988
-------- -------- -------- -------- -------- -------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .027 .018 .020 .032 .043 .050 .029 .030
-------- -------- -------- -------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Dividends from net
investment income..... (.027) (.018) (.020) (.032) (.043) (.050) (.029) (.030)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURNS
Total investment return
based on net asset
value(b).............. 2.78% 1.83% 2.05% 3.26% 4.43% 5.17% 6.02%(c) 5.20%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000's
omitted).............. $236,479 $219,673 $156,200 $121,317 $111,957 $104,097 $242,124 $103,390
Ratio to average net
assets of:
Expenses, net of
waivers and
reimbursements........ .93% .93% .93% .95% 1.00% .99% .92%(c) .89%(c)
Expenses, before
waivers and
reimbursements........ 1.01% 1.02% 1.02% 1.05% 1.10% 1.09% 1.02%(c) 1.10%(c)
Net investment
income(d)............. 2.75% 1.82% 2.01% 3.18% 4.32% 5.03% 5.90%(c) 5.21%(c)
</TABLE>
- -------
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(c) Annualized.
(d) Net of expenses reimbursed or waived by the Adviser.
4
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT PORTFOLIO
---------------------------------------------------------------
YEAR ENDED JUNE 30, JANUARY 5, 1990(A)
------------------------------------------- THROUGH
1995 1994 1993 1992 1991 JUNE 30, 1990
------- ------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .028 .017 .020 .033 .045 .026
------- ------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Dividends from net
investment income..... (.028) (.017) (.020) (.033) (.045) (.026)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................ $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
TOTAL RETURNS
Total investment return
based on net asset
value(b).............. 2.78% 1.71% 2.00% 3.35% 4.57% 5.53%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000's omitted). $75,991 $57,314 $56,224 $54,751 $48,482 $27,945
Ratio to net assets of:
Expenses, net of
waivers and........... 80% .77% .70% .58% .44% .19%(c)
Expenses, before
waivers and
reimbursements........ 1.21% 1.21% 1.16% 1.22% 1.16% 1.10%(c)
Net investment
income(d)............. 2.77% 1.69% 1.97% 3.28% 4.39% 5.39%(c)
</TABLE>
- -------
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(c) Annualized.
(d) Net of expenses reimbursed or waived by the Adviser.
<TABLE>
<CAPTION>
NEW JERSEY PORTFOLIO
---------------------------------
FEBRUARY 7, 1994(A)
YEAR ENDED THROUGH
JUNE 30, 1995 JUNE 30, 1994
------------- -------------------
<S> <C> <C>
Net asset value, beginning of period......... $1.00 $ 1.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................... .029 .008
------- -------
LESS: DISTRIBUTIONS
Dividends from net investment income........ (0.29) (.008)
------- -------
Net asset value, end of period.............. $1.00 $1.00
======= =======
TOTAL RETURNS
Total investment return based on net asset
value(b)................................... 2.93% 2.08%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).... $74,133 $36,909
Ratio to average net assets of:
Expenses, net of waivers and reimbursements. .74% .70%(c)
Expenses, before waivers and reimbursements. 1.29% 1.93%(c)
Net investment income(d).................... 2.98% 2.07%(c)
</TABLE>
- -------
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(c) Annualized.
(d) Net of expenses reimbursed or waived by the Adviser.
5
<PAGE>
<TABLE>
<CAPTION>
VIRGINIA PORTFOLIO FLORIDA PORTFOLIO
------------------ -------------------
OCTOBER 25 1994(A) JULY 28, 1995(A) TO
THROUGH OCTOBER 17, 1995
JUNE 30, 1995 (UNAUDITED)
------------------ -------------------
<S> <C> <C>
Net asset value, beginning of period.... $1.00 $ 1.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... .023 .008
------- -------
LESS DISTRIBUTIONS
Dividends from net investment income.... (.023) (.008)
------- -------
Net asset value, end of period.......... $1.00 $ 1.00
======= =======
TAX RETURNS
Total investment return based on net as-
set value (b).......................... 3.48%(c) 3.67%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omit-
ted)................................... $66,921 $18,065
Ratio to average net assets of:
Expenses, net of waivers and reimburse-
ments................................. .44%(c) .16%(c)
Expenses, before waivers and reimburse-
ments................................. 1.30%(c) 3.90%(c)
Net investment income(d)............... 3.48%(c) 3.73%(c)
</TABLE>
- -------
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and re-
demption on the last day of the period.
(c) Annualized.
(d) Net of expenses reimbursed or waived by the Adviser.
From time to time the Fund advertises its "yield" and "effective yield." Both
yield figures are based on historical earnings and are not intended to indicate
future performance. To calculate the "yield," the amount of dividends paid on a
share during a specified seven-day period is assumed to be paid each week over
a 52-week period and is shown as a percentage of the investment. To calculate
"effective yield," which will be higher than the "yield" because of com-
pounding, the dividends paid are assumed to be reinvested. Dividends for the
General Portfolio for the seven days ended June 30, 1995, after expense reim-
bursement, amounted to an annualized yield of 3.25%, equivalent to an effective
yield of 3.30%. Dividends for the New York Portfolio for the seven days ended
June 30, 1995, after expense reimbursement, amounted to an annualized yield of
3.36%, equivalent to an effective yield of 3.42%. Absent expense reimbursement,
the annualized yield for this period would have been 3.23%, equivalent to an
effective yield of 3.29%. Dividends for the California Portfolio for the seven
days ended June 30, 1995, after expense reimbursement, amounted to an
annualized yield of 3.18%, equivalent to an effective yield of 3.23%. Absent
expense reimbursement, the annualized yield for this period would have been
3.13%, equivalent to an effective yield of 3.18%. Dividends for the Connecticut
Portfolio for the seven days ended June 30, 1995, after expense reimbursement,
amounted to an annualized yield of 3.19%, equivalent to an effective yield of
3.24%. Absent expense reimbursement, the annualized yield for this period would
have been 2.85%, equivalent to an effective yield of 2.90%. Dividends for the
New Jersey Portfolio for the seven days ended June 30, 1995, after expense re-
imbursement, amounted to an annualized yield of 3.23%, equivalent to an effec-
tive yield of 3.28%. Absent expense reimbursement, the annualized yield for
this period would have been 2.88%, equivalent to an effective yield of 2.93%.
Dividends for the Virginia Portfolio for the seven days ended June 30, 1995,
after expense reimbursement, amounted to an annualized yield of 3.54%, equiva-
lent to an effective yield of 3.60%. Absent expense reimbursement, the
annualized yield for this period would have been 3.24%, equivalent to an effec-
tive yield of 3.30%. The Florida Portfolio had not yet commenced operations as
of June 30, 1995.
6
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Alliance Municipal Trust (the "Fund") consists of seven distinct Portfolios,
the General, New York, California, Connecticut, New Jersey, Virginia and Flor-
ida Portfolios (each a "Portfolio"), each of which issues a separate class of
shares. The investment objectives of each Portfolio are safety of principal,
liquidity and, to the extent consistent with these objectives, maximum current
income that is exempt from income taxation to the extent described below. As a
matter of fundamental policy, each Portfolio, except the Florida Portfolio,
pursues its objectives by investing in high quality municipal securities having
remaining maturities of one year (397 days with respect to the New Jersey and
Virginia Portfolios) or less, which maturities may extend to 397 days and, ex-
cept when a Portfolio assumes a temporary defensive position, at least 80% of
each such Portfolio's total assets will be invested in such securities (as op-
posed to the taxable investments described below). The Florida Portfolio pur-
sues its objectives by investing in high quality municipal securities having
remaining maturities of 397 days or less (which maturities may extend to such
greater length of time as may be permitted from time to time pursuant to Rule
2a-7 under the Investment Company Act of 1940, as amended (the "Act"), and, ex-
cept when the Portfolio assumes a temporary defensive position, as a matter of
fundamental policy, at least 80% of the Portfolio's total assets will be in-
vested in municipal securities (as opposed to the taxable investments described
above). While the fundamental policies described above and the "other fundamen-
tal investment policies" identified below may not be changed for a Portfolio
without the approval of its shareholders, the other investment policies set
forth in this prospectus may be changed upon notice but without such approval.
Normally, substantially all of each Portfolio's income will be tax-exempt as
described below (e.g., for 1994, 100% of the income of each Portfolio was ex-
empt from Federal income taxes; the Florida Portfolio had not yet been estab-
lished). The average weighted maturity of each Portfolio cannot exceed 90 days.
The Fund may in the future establish additional portfolios which may have dif-
ferent investment objectives.
The General Portfolio seeks maximum current income that is exempt from Fed-
eral income taxes by investing principally in a diversified portfolio of high
quality municipal securities. Such income may be subject to state or local in-
come taxes.
The New York Portfolio seeks maximum current income that is exempt from Fed-
eral, New York state and New York City personal income taxes by investing, as a
matter of fundamental policy, not less than 65% of its total assets in a port-
folio of high quality municipal securities issued by New York state or its po-
litical subdivisions.
The California Portfolio seeks maximum current income that is exempt from
Federal and California state personal income taxes by investing, as a matter of
fundamental policy, not less than 65% of its total assets in a portfolio of
high quality municipal securities issued by the State of California or its po-
litical subdivisions.
The Connecticut Portfolio seeks maximum current income that is exempt from
Federal and Connecticut state personal income taxes by investing, as a matter
of fundamental policy, not less than 65% of its total assets in a portfolio of
high quality municipal securities issued by the State of Connecticut or its po-
litical subdivisions.
The New Jersey Portfolio seeks maximum current income that is exempt from
Federal and New Jersey state personal income taxes by investing, as a matter of
fundamental policy, not less than 65% of its total assets in a portfolio of
high quality municipal securities issued by the State of New Jersey or its po-
litical subdivisions. The New Jersey Portfolio will invest not less than 80% of
its net assets in securities the interest on which is exempt from New Jersey
personal income taxes [i.e. New Jersey municipal securities and obligations of
the U.S. Government, its agencies and instrumentalities ("U.S. Government Secu-
rities")]. In
7
<PAGE>
addition, during periods when Alliance Capital Management L.P. (the "Adviser")
believes that New Jersey municipal securities that meet the New Jersey Portfo-
lio's standards are not available, it may invest a portion of its assets in
securities whose interest payments are only federally tax-exempt.
The Virginia Portfolio seeks maximum current income that is exempt from Fed-
eral and Virginia state personal income taxes by investing, as a matter of
fundamental policy, not less than 65% of its total assets in a portfolio of
high quality municipal securities issued by the Commonwealth of Virginia or
its political subdivisions.
The Florida Portfolio seeks maximum current income that is exempt from Fed-
eral income tax and State of Florida intangible tax by investing not less than
65% of its total assets in a portfolio of high-qual-
ity municipal securities issued by Florida or its political subdivisions.
Each Portfolio of the Fund may invest without limitation in tax-exempt mu-
nicipal securities subject to the alternative minimum tax (the "AMT").
Under current Federal income tax law, (1) interest on tax-exempt municipal
securities issued after August 7, 1986 which are "specified private activity
bonds," and the proportionate share of any exempt-interest dividends paid by a
regulated investment company which receives interest from such specified pri-
vate activity bonds, will be treated as an item of tax preference for purposes
of the AMT imposed on individuals and corporations, though for regular Federal
income tax purposes such interest will remain fully tax-exempt, and (2) inter-
est on all tax-exempt obligations will be included in "adjusted current earn-
ings" of corporations for AMT purposes. Such bonds have provided, and may con-
tinue to provide, somewhat higher yields than other comparable municipal secu-
rities. See below, "Daily Dividends, Other Distributions, Taxes."
There can be no assurance that the Portfolios will achieve their investment
objectives. Potential investors in the New York, California, Connecticut, New
Jersey, Virginia and Florida Portfolios should consider the greater risk of
the concentration of such Portfolios versus the safety that comes with less
concentrated investments and should compare yields available on portfolios of
the relevant state's issues with those of more diversified portfolios, includ-
ing other states' issues, before making an investment decision. The Adviser
believes that by maintaining each Portfolio's investments in liquid, short-
term, high quality investments, each Portfolio is largely insulated from the
credit risks that exist on long-term municipal securities of the relevant
state. See the Statement of Additional Information for a more detailed discus-
sion of the financial condition of New York, California, Connecticut, New Jer-
sey, Virginia and Florida.
MUNICIPAL SECURITIES
The municipal securities in which each Portfolio invests include municipal
notes and short-term municipal bonds. Municipal notes are generally used to
provide for short-term capital needs and generally have maturities of one year
or less. Examples include tax anticipation and revenue anticipation notes,
which are generally issued in anticipation of various seasonal revenues, bond
anticipation notes, and tax-exempt commercial paper. Short-term municipal
bonds may include general obligation bonds, which are secured by the issuer's
pledge of its faith, credit and taxing power for payment of principal and in-
terest, and revenue bonds, which are generally paid from the revenues of a
particular facility or a specific excise or other source.
A Portfolio may invest in variable rate obligations whose interest rates are
adjusted either at predesignated periodic intervals or whenever there is a
change in the market rate to which the security's interest rate is tied. Such
adjustments minimize changes in the market value of the obligation and, ac-
cordingly, enhance the ability of the Portfolio to maintain a stable net asset
value. Variable rate securities purchased may include participation interests
in industrial development bonds backed by letters of credit of Federal Deposit
Insurance Corporation member banks having total assets of more than $1 bil-
lion. The letters of credit of any single bank in respect of all variable rate
obligations will not cover more than 10% of a Portfolio's total assets.
8
<PAGE>
All of the Fund's municipal securities at the time of purchase are rated
within the two highest quality ratings of Moody's Investors Service, Inc. (Aaa
and Aa, MIG 1 and MIG 2, or VMIG 1 and VMIG 2) or Standard & Poor's Corpora-
tion (AAA and AA or SP-1 and SP-2), or judged by the Adviser to be of compara-
ble quality. Securities must also meet credit standards applied by the Advis-
er.
The Fund will comply with Rule 2a-7 under the Investment Company Act of 1940
(the "Act"), as amended from time to time, including the diversity, quality
and maturity limitations imposed by the Rule. A more detailed description of
Rule 2a-7 is set forth in the Fund's Statement of Additional Information.
A Portfolio also may invest in stand-by commitments, which may involve cer-
tain expenses and risks, but such commitments are not expected to comprise
more than 5% of any Portfolio's net assets. A Portfolio may commit up to 15%
of its net assets to the purchase of when-issued securities. The Fund's custo-
dian will maintain, in a separate account of the respective Portfolio, liquid
high-grade debt securities having value equal to, or greater than, such when-
issued securities. The price of when-issued securities, which is generally ex-
pressed in yield terms, is fixed at the time the commitment to purchase is
made, but delivery and payment for such securities takes place at a later
time. Normally the settlement date occurs from within ten
days to one month after the purchase of the issue. The value of when-issued
securities may fluctuate prior to their settlement, thereby creating an
unrealized gain or loss to a Portfolio.
TAXABLE INVESTMENTS
The taxable investments in which the Fund may invest include obligations of
the U.S. Government and its agencies, high quality certificates of deposit and
bankers' acceptances, prime commercial paper, and repurchase agreements.
OTHER FUNDAMENTAL INVESTMENT POLICIES
To reduce investment risk, the General Portfolio may not invest more than
25% of its total assets in municipal securities whose issuers are located in
the same state, and no Portfolio may invest more than 25% of its total assets
in municipal securities the interest upon which is paid from revenues of simi-
lar-type projects; a Portfolio may not invest more than 5% of its total assets
in the securities of any one issuer except the U.S. Government, although (i)
with respect to 25% of its total assets the General Portfolio may invest up to
10% per issuer, and (ii) the New York, California, Connecticut, New Jersey,
Virginia and Florida Portfolios may invest 50% of their respective total as-
sets in as few as four issuers (but no more than 25% of total assets in any
one issuer); and a Portfolio may not purchase more than 10% of any class of
the voting securities of any one issuer except those of the U.S. Government.
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
OPENING ACCOUNTS
Instruct your Account Executive to open an account in the Fund in conjunc-
tion with your brokerage account.
SUBSEQUENT INVESTMENTS
A. BY CHECK THROUGH YOUR BROKERAGE FIRM
Mail or deliver your check made payable to your brokerage firm to your Ac-
count Executive who will deposit it into your brokerage account. Please indi-
cate your account number on the check.
B. BY SWEEP
Your brokerage firm may offer an automatic "sweep" for the Fund in the oper-
ation of brokerage cash accounts for its customers. Contact your Account Exec-
utive to determine if a sweep is available and what the sweep parameters are.
REDEMPTIONS
A. BY CHECKWRITING
With this service, you may write checks made payable to any payee in any
amount of $100 or more. Checks cannot be written for more than the principal
9
<PAGE>
balance (not including any accrued dividends) in your account. You must first
fill out the Signature Card, which you can obtain from your Account Executive.
There is no additional charge for the checkwriting service. The checkwriting
service enables you to receive the daily dividends declared on the shares to be
redeemed until the day that your check is presented for payment.
B. BY SWEEP
If your brokerage firm offers an automatic sweep service, the sweep will au-
tomatically transfer from your Fund account sufficient cash to cover any debit
balance that may occur in your cash account for any reason.
OPENING AN ACCOUNT DIRECTLY WITH THE FUND; SHAREHOLDER SERVICES
If you wish to obtain an Application Form to open an account directly with
the Fund or if you have any questions about the Form, purchasing shares or
other Fund procedures, please telephone the Fund toll-free (800) 221-5672.
For more information on the purchase and redemption of Fund shares, as well
as shareholder services, see the Statement of Additional Information.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
SHARE PRICE. Shares of each Portfolio are sold and redeemed on a continuous
basis without sales or redemption charges at their net asset value which is ex-
pected to be constant at $1.00 per share, although this price is not guaran-
teed. The net asset value of each Portfolio's shares is determined each busi-
ness day at 12:00 Noon and 4:00 p.m. (New York time). The net asset value per
share of a Portfolio is calculated by taking the sum of the value of that Port-
folio's investments (amortized cost value is used for this purpose) and any
cash or other assets, subtracting liabilities, and dividing by the total number
of shares of that Portfolio outstanding. All expenses, including the fees pay-
able to the Adviser, are accrued daily.
TIMING OF INVESTMENTS AND REDEMPTIONS. The Fund has two transaction times each
business day, 12:00 Noon and 4:00 p.m. (New York time). New investments repre-
sented by Federal funds or bank wire monies received by State Street Bank at
any time during a day prior to 4:00 p.m. are entitled to the full dividend to
be paid to shareholders for that day. Shares do not earn dividends on the day a
redemption is effected regardless of whether the redemption order is received
before or after 12:00 Noon. However, if you wish to have Federal funds wired
the same day of your telephone redemption request, make sure that your request
will be received by the Fund prior to 12:00 Noon.
During periods of drastic economic or market developments, such as the market
break of October 1987, it is possible that shareholders would have difficulty
in reaching Alliance Fund Services, Inc. by telephone (although no such diffi-
culty was apparent at any time in connection with the 1987 market break). If a
shareholder were to experience such difficulty, the shareholder should issue
written instructions to Alliance Fund Services, Inc. at the address shown on
page 12 of this prospectus. The Fund reserves the right to suspend or terminate
its telephone redemption service at any time without notice. Neither the Fund
nor the Adviser, or Alliance Fund Services, Inc. will be responsible for the
authenticity of telephone requests for redemptions that the Fund reasonably be-
lieves to be genuine. The Fund will employ reasonable procedures in order to
verify that telephone requests for redemptions are genuine, including among
others, recording such telephone instructions and causing written confirmations
of the resulting transactions to be sent to shareholders. If the Fund did not
employ such procedures, it could be liable for losses arising from unauthorized
or fraudulent telephone instructions. Selected dealers or agents may charge a
commission for handling telephone requests for redemptions.
Redemption proceeds are normally wired or mailed either the same or the next
business day, but in no event later than seven days, unless redemptions have
10
<PAGE>
been suspended or postponed due to the determination of an "emergency" by the
Securities and Exchange Commission or to certain other unusual conditions.
If your Fund shares are not maintained through a financial intermediary, pro-
ceeds from any subsequent redemption by you of Fund shares that were purchased
by check or electronic funds transfer will not be forwarded to you until the
Fund is reasonably assured that your check or electronic funds transfer has
cleared, up to fifteen days following the purchase date. If the redemption re-
quest during such period is in the form of a Fund check, the check will be
marked "insufficient funds" and be returned unpaid to the presenting bank.
MINIMUMS. The Fund has minimums of $1,000 for initial investments, $100 for
subsequent investments and a $500 minimum maintenance balance for each account.
These minimums do not apply to shareholder accounts maintained through broker-
age firms or other financial institutions, as such financial intermediaries may
maintain their own minimums. The Fund imposes a service charge upon financial
intermediaries to reflect the relatively higher costs of small accounts and
small transactions; these intermediaries may in turn pass on such charges to
affected accounts. Accounts not maintained through a financial intermediary are
notified of low balances and required to increase their balance or be subject
to liquidation of their account. See the Statement of Additional Information
for further information.
DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of each Portfolio
is determined each business day at 4:00 p.m. (New York time) and is paid imme-
diately thereafter pro rata to shareholders of that Portfolio of record via au-
tomatic investment in additional full and fractional shares of that Portfolio
in each shareholder's account. As such additional shares are entitled to divi-
dends on following days, a compounding growth of income occurs.
A Portfolio's net income consists of all accrued interest income on Portfolio
assets less the Portfolio's expenses applicable to that dividend period. Real-
ized gains and losses of a Portfolio are reflected in its net asset value and
are not included in net income.
Distributions to you out of tax-exempt interest income earned by each Portfo-
lio are not subject to Fed-
eral income tax (other than the AMT), but, in the case of the General Portfo-
lio, may be subject to state or local income taxes. Any exempt-interest divi-
dends derived from interest on municipal securities subject to the AMT will be
a specific preference item for purposes of the Federal individual and corporate
AMT. Distributions to residents of New York out of income earned by the New
York Portfolio from New York municipal securities are exempt from New York
state and New York City personal income taxes. Distributions to residents of
California out of income earned by the California Portfolio from California mu-
nicipal securities are exempt from California personal income taxes. Distribu-
tions to individuals who are residents of Connecticut out of income earned by
the Connecticut Portfolio from Connecticut municipal securities are exempt from
Connecticut personal income taxes. Distributions to residents of New Jersey out
of income earned by the New Jersey Portfolio from New Jersey municipal securi-
ties or U.S. Government Securities are exempt from New Jersey state personal
income taxes. Distributions from the New Jersey Portfolio are, however, subject
to the New Jersey Corporation Business (Franchise) Tax and the New Jersey Cor-
poration Income Tax payable by corporate shareholders. Distributions to resi-
dents of Virginia out of income earned by the Virginia Portfolio from Virginia
municipal securities or obligations of the United States or any authority, com-
mission or instrumentality of the United States are exempt from Virginia indi-
vidual, estate, trust, or corporate income tax. Dividends paid by the Florida
Portfolio to individual Florida shareholders will not be subject to Florida in-
come tax, which is imposed only on corporations. However, Florida currently im-
poses an "intangible tax" at the rate of $2.00 per $1,000 taxable value of cer-
tain securities, such as shares of the Portfolio, and other intangible assets
owned by Florida residents. U.S. Government securities and Florida municipal
securities are exempt from this intangible tax. It is anticipated that the
Florida Portfolio shares will qualify for exemption from the Florida intangible
tax. In order to so qualify, the Florida Portfolio must, among other things,
have its entire portfolio invested in U.S. Government securities and Florida
municipal securities on December 31 of any year. Exempt-interest dividends paid
by the Florida Portfolio to corporate shareholders will be subject to
11
<PAGE>
Florida corporate income tax. Distributions out of taxable interest income,
other investment income, and short-term capital gains are taxable to you as or-
dinary income and distributions of long-term capital gains, if any, are taxable
as long-term capital gains irrespective of the length of time you may have held
your shares. Distributions of short and long-term capital gains, if any, are
normally made near year-end. Each year shortly after December 31, the Fund will
send you tax information stating the amount and type of all its distributions
for the year just ended.
THE ADVISER. The Fund retains Alliance Capital Management L.P., 1345 Avenue of
the Americas, New York, NY 10105 under an Advisory Agreement to provide invest-
ment advice and, in general, to supervise the Fund's management and investment
program, subject to the general control of the Trustees of the Fund. For the
fiscal year ended June 30, 1995, the General, New York, California, Connecticut
and New Jersey Portfolios each paid the Adviser an Advisory fee at an annual
rate of .50 of 1%, .42 of 1%, .50 of 1%, .19 of 1% and .05 of 1%, respectively,
of the average daily value of the net assets of each Portfolio. For the period
ended June 30, 1995, the Adviser waived the advisory fee for the Virginia Port-
folio. The Florida Portfolio pays an advisory fee at an annual rate of .50 of
1% of up to $1.25 billion of the average daily value of its net assets, .49 of
1% of the next $.25 billion of such assets, .48 of 1% of the next $.25 billion
of such assets, .47 of 1% of the next $.25 billion of such assets, .46 of 1% of
the next $1 billion of such assets and .45 of 1% of its average daily net as-
sets in excess of $3 billion. The fee is accrued daily and paid monthly.
Under a Distribution Services Agreement (the "Agreement"), the Fund pays the
Adviser at a maximum annual rate of .25 of 1% of the Fund's aggregate average
daily net assets. For the fiscal year ended June 30, 1995, the General, New
York, California, Connecticut, New Jersey and Virginia Portfolios each paid the
Adviser a distribution fee at an annual rate of .24 of 1%, .15 of 1%, .17 of
1%, .15 of 1%, .15 of 1% and .15 of 1%, respectively, of the average daily
value of the net assets of each Portfolio. Substantially all such monies (to-
gether with significant amounts from the Adviser's own resources) are paid by
the Adviser to broker-dealers and other financial intermediaries for their dis-
tribution assistance and to banks and other depository institutions for admin-
istrative and accounting services provided to the Fund, with any remaining
amounts being used to partially defray other expenses incurred by the Adviser
in distributing Fund shares. The Fund believes that the administrative services
provided by depository institutions are permissible activities under present
banking laws and regulations and will take appropriate actions (which should
not adversely affect the Fund or its shareholders) in the future to maintain
such legal conformity should any changes in, or interpretations of, such laws
or regulations occur.
The Adviser will reimburse the Fund to the extent that the combined net ex-
penses of the Fund's Portfolios (including the Adviser's fee and expenses in-
curred under the Agreement) exceed 1% of its average daily net assets for any
fiscal year.
CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank and Trust Compa-
ny, P.O. Box 1912, Boston, MA 02105, is the Fund's Custodian. Alliance Fund
Services, Inc., P.O. Box 1520, Secaucus NJ 07096-1520 and Alliance Fund Dis-
tributors, Inc., 1345 Avenue of the Americas, New York, NY 10105, are the
Fund's Transfer Agent and Distributor, respectively. The transfer agent charges
a fee for its services.
FUND ORGANIZATION. The Fund is an open-end management investment company reg-
istered under the Act. The Fund was reorganized as a Massachusetts business
trust in April 1985, having previously been a Maryland corporation since forma-
tion in January 1983. The Fund's activities are supervised by its Trustees.
Normally, shares of each Portfolio are entitled to one vote, and vote as a sin-
gle series on matters that affect the Portfolios in substantially the same man-
ner. Massachusetts law does not require annual meetings of shareholders and it
is anticipated that shareholder meetings will be held only when required by
Federal law. Shareholders have available certain procedures for the removal of
Trustees.
12
<PAGE>
ALLIANCE CAPITAL ALLIANCE MUNICIPAL TRUST
________________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1995
________________________________________________________________
TABLE OF CONTENTS
Page
Investment Objectives and Policies . . . . . . . 2
Investment Restrictions . . . . . . . . . . . . 54
Management . . . . . . . . . . . . . . . . . . . 57
Purchase and Redemption of Shares . . . . . . . 68
Additional Information . . . . . . . . . . . . . 72
Daily Dividends-Determination of Net Asset Value 75
Taxes . . . . . . . . . . . . . . . . . . . . . 76
General Information . . . . . . . . . . . . . . 79
Appendix A-Description of Municipal Securities . 84
Appendix B-Description of Securities Ratings . . 87
Financial Statements . . . . . . . . . . . . . . 89-143
Independent Auditor's Reports. . . . . . . . . . 103,
112,120,127,135,143
This Statement of Additional Information is not a prospectus
but supplements and should be read in conjunction with the Fund's
current Prospectus dated November 1, 1995. A copy of the
Prospectus may be obtained by contacting the Fund at the address
or telephone number shown above.
<PAGE>
______________________________
(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
_________________________________________________________________
INVESTMENT OBJECTIVES AND POLICIES
_________________________________________________________________
Alliance Municipal Trust (the "Fund") is an open-end
management investment company. The Fund consists of seven
distinct Portfolios, the General Portfolio, the New York
Portfolio, the California Portfolio, the Connecticut Portfolio,
the New Jersey Portfolio, the Virginia Portfolio and the Florida
Portfolio (each a "Portfolio"), each of which is, in effect, a
separate fund issuing a separate class of shares. The investment
objectives of each Portfolio are safety of principal, liquidity
and, to the extent consistent with these objectives, maximum
current income that is exempt from income taxation to the extent
described below. As a matter of fundamental policy, each
Portfolio, except the Florida Portfolio, pursues its objectives
by investing in high-quality municipal securities having
remaining maturities of one year (397 days with respect to the
New Jersey and Virginia Portfolios), or less, which maturities
may extend to 397 days and, except when a Portfolio assumes a
temporary defensive position, at least 80% of each such
Portfolio's total assets will be so invested. The Florida
Portfolio pursues its objectives by investing in high quality
municipal securities having remaining maturities of 397 days or
less (which maturities may extend to such greater length of time
as may be permitted from time to time pursuant to Rule 2a-7 under
the Investment Company Act of 1940, as amended (the "Act"), and,
except when the Portfolio assumes a temporary defensive position,
as a matter of fundamental policy, at least 80% of the
Portfolio's total assets will be invested in municipal
securities. While no Portfolio may change the "fundamental"
policies described above or the other fundamental investment
policies described in a separate section below under "Investment
Restrictions" without shareholder approval, the other investment
policies set forth in this Statement of Additional Information
may be changed by a Portfolio upon notice but without such
approval. Normally, substantially all of each Portfolio's assets
will generate tax-exempt income as described below; for example,
in 1994, 100% of the income of each Portfolio (the Florida
Portfolio had not yet been established) was exempt from Federal
income taxes. The Fund may in the future establish additional
portfolios which may have different investment objectives. There
can be no assurance, as is true with all investment companies,
that any Portfolio will achieve its investment objectives.
General Portfolio. To the extent consistent with its other
investment objectives, the General Portfolio seeks maximum
current income that is exempt from Federal income taxes by
2
<PAGE>
investing principally in a diversified portfolio of high-quality
municipal securities. Such income may be subject to state or
local income taxes.
New York Portfolio. To the extent consistent with its other
investment objectives, the New York Portfolio seeks maximum
current income that is exempt from Federal, New York State and
New York City personal income taxes by investing principally in a
non-diversified portfolio of high-quality municipal securities
issued by New York State or its political subdivisions. Except
when the New York Portfolio assumes a temporary defensive
position, at least 65% of its total assets will, as a matter of
fundamental policy, be so invested. Shares of the New York
Portfolio are offered only to New York State residents.
California Portfolio. To the extent consistent with its
other investment objectives, the California Portfolio seeks
maximum current income that is exempt from both Federal income
taxes and California personal income tax by investing principally
in a non-diversified portfolio of high-quality municipal
securities issued by the State of California or its political
subdivisions. Except when the California Portfolio assumes a
temporary defensive position, at least 65% of its total assets
will, as a matter of fundamental policy, be so invested. Shares
of the California Portfolio are available only to California
residents.
Connecticut Portfolio. To the extent consistent with its
other investment objectives, the Connecticut Portfolio seeks
maximum current income that is exempt from Federal and
Connecticut personal income taxes investing principally in a
non-diversified portfolio of high-quality municipal securities
issued by Connecticut or its political subdivisions. Except when
the Portfolio assumes a temporary defensive position, at least
65% of its total assets will, as a matter of fundamental policy,
be so invested. Shares of the Connecticut Portfolio are offered
only to Connecticut residents.
New Jersey Portfolio. To the extent consistent with its
other investment objectives, the Portfolio seeks maximum current
income that is exempt from Federal and New Jersey State personal
income taxes by investing principally in a portfolio of
high-quality municipal securities issued by the State of New
Jersey or its political subdivisions. Except when the Portfolio
assumes a temporary defensive position, at least 65% of its total
assets will, as a matter of fundamental policy, be so invested.
The Portfolio will invest not less than 80% of its net assets in
securities the interest on which is exempt from New Jersey
personal income taxes [i.e. New Jersey municipal securities and
obligations of the U.S. Government, its agencies and
instrumentalities ("U.S. Government Securities")]. In addition,
3
<PAGE>
during periods when Alliance Capital Management L.P., the Fund's
Adviser, (the "Adviser") believes that New Jersey municipal
securities that meet the Portfolio's standards are not available,
the Portfolio may invest a portion of its assets in securities
whose interest payments are only federally tax-exempt. Shares of
the Portfolio are offered only to New Jersey residents.
Virginia Portfolio. To the extent consistent with its other
investment objectives, the Virginia Portfolio seeks maximum
current income that is exempt from both Federal income taxes and
Virginia personal income tax by investing principally in a
non-diversified portfolio of high-quality municipal securities
issued by the State of Virginia or its political subdivisions.
Except when the Virginia Portfolio assumes a temporary defensive
position, at least 65% of its total assets will, as a matter of
fundamental policy, be so invested. Shares of the Virginia
Portfolio are available only to Virginia residents.
Florida Portfolio. To the extent consistent with its other
investment objectives, the Florida Portfolio seeks maximum
current income that is exempt from both Federal income taxes and
State of Florida intangible tax by investing principally in a
non-diversified portfolio of high-quality municipal securities
issued by the State of Florida or its political subdivisions.
Except when the Portfolio assumes Portfolio assumes a temporary
defensive position, at least 65% of its total assets will be so
invested. Shares of the Portfolio are available only to Florida
residents.
New York, California, Connecticut, New Jersey, Virginia and
Florida Portfolios. Apart from the risks associated with
investment in any money market fund seeking tax-exempt income,
such as default by municipal issuers and fluctuation in
short-term interest rates, investors in the New York, California,
Connecticut, New Jersey, Virginia and Florida Portfolios should
consider the greater risks of each Portfolio's concentration
versus the safety that comes with a less concentrated investment
portfolio and should compare yields available on portfolios of
New York, California, Connecticut, New Jersey, Virginia and
Florida issues, respectively, with those of more diversified
portfolios, including other states' issues, before making an
investment decision. Each of such Portfolios is a
non-diversified investment company and, accordingly, the
permitted concentration of investments may present greater risks
than in the case of a diversified company. (See below "Special
Risk Factors of Concentration in a Single State.")
To the extent suitable New York, California, Connecticut, New
Jersey, Virginia and Florida municipal securities, as applicable,
are not available for investment by the respective Portfolio, the
respective Portfolio may purchase municipal securities issued by
4
<PAGE>
other states and political subdivisions. The dividends
designated as derived from interest income on such municipal
securities generally will be exempt from Federal income taxes
but, with respect to: (i) non-New York municipal securities owned
by the New York Portfolio, will be subject to New York State and
New York City personal income taxes; (ii) non-California
municipal securities owned by the California Portfolio, will be
subject to California personal income taxes; (iii)
non-Connecticut municipal securities owned by the Connecticut
Portfolio, will be subject to Connecticut personal income taxes;
(iv) non-New Jersey municipal securities owned by the Portfolio,
will be subject to New Jersey personal income taxes; (v)
non-Virginia municipal securities owned by the Virginia
Portfolio, will be subject to Virginia personal income taxes and
(vi) non-Florida municipal securities owned by the Florida
Portfolio, will be subject to Florida personal income taxes.
Municipal Securities
The term "municipal securities," as used in the Prospectus
and this Statement of Additional Information, means obligations
issued by or on behalf of states, territories, and possessions of
the United States or their political subdivisions, agencies and
instrumentalities, the interest from which is exempt (subject to
the alternative minimum tax) from Federal income taxes. The
municipal securities in which the Fund invests are limited to
those obligations which at the time of purchase:
1. are backed by the full faith and credit of the United
States; or
2. are municipal notes rated MIG-1/VMIG-1 or MIG-2/VMIG-2
by Moody's Investors Service, Inc. ("Moody's") or SP-1
or SP-2 by Standard and Poor's Corporation ("S&P"), or,
if not rated, are of equivalent investment quality as
determined by Alliance Capital Management L.P., the
Fund's investment adviser (the "Adviser") and ultimately
reviewed by the Trustees; or
3. are municipal bonds rated Aa or higher by Moody's, AA or
higher by S&P or, if not rated, are of equivalent
investment quality as determined by the Adviser and
ultimately reviewed by the Trustees; or
4. are other types of municipal securities, provided that
such obligations are rated Prime-1 by Moody's, A-1 or
higher by S&P or, if not rated, are of equivalent
investment quality as determined by the Adviser and
ultimately reviewed by the Trustees. (See Appendix A
for a description of municipal securities and Appendix B
for a description of these ratings.)
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Rule 2a-7 under the Act
Each Portfolio of the Fund will comply with Rule 2a-7 under
the Investment Company Act of 1940 (the "Act"), as amended from
time to time, including the diversity, quality and maturity
limitations imposed by the Rule.
Currently, pursuant to Rule 2a-7, each Portfolio of the Fund
may invest only in "eligible securities," as that term is defined
in the Rule. Generally, an eligible security is a security that
(i) is denominated in U.S. Dollars and has a remaining maturity
of 397 days or less; (ii) is rated, or is issued by an issuer
with short-term debt outstanding that is rated, in one of the two
highest rating categories by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO
has issued a rating, by that NRSRO; and (iii) has been determined
by the Adviser to present minimal credit risks pursuant to
procedures approved by the Trustees. A security that originally
had a maturity of greater than 397 days is an eligible security
if the issuer has outstanding short-term debt that would be an
eligible security. Unrated securities may also be eligible
securities if the Adviser determines that they are of comparable
quality to a rated eligible security pursuant to guidelines
approved by the Trustees. A description of the ratings of some
NRSROs appears in Appendix B attached hereto.
No Portfolio will invest 25% or more of its total assets in
the securities of non-governmental issuers conducting their
principal business activities in any one industry.
Alternative Minimum Tax
Each Portfolio of the Fund may invest without limitation in
tax-exempt municipal securities subject to the alternative
minimum tax (the "AMT"). Under current Federal income tax law,
(1) interest on tax-exempt municipal securities issued after
August 7, 1986 which are "specified private activity bonds," and
the proportionate share of any exempt-interest dividend paid by a
regulated investment company which receives interest from such
specified private activity bonds, will be treated as an item of
tax preference for purposes of the AMT imposed on individuals and
corporations, though for regular Federal income tax purposes such
interest will remain fully tax-exempt, and (2) interest on all
tax-exempt obligations will be included in "adjusted current
earnings" of corporations for AMT purposes. Such private
activity bonds ("AMT-Subject Bonds") have provided, and may
continue to provide, somewhat higher yields than other comparable
municipal securities.
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Investors should consider that, in most instances, no state,
municipality or other governmental unit with taxing power will be
obligated with respect to AMT-Subject Bonds. AMT-Subject Bonds
are in most cases revenue bonds and do not generally have the
pledge of the credit or the taxing power, if any, of the issuer
of such bonds. AMT-Subject Bonds are generally limited
obligations of the issuer supported by payments from private
business entities and not by the full faith and credit of a state
or any governmental subdivision. Typically the obligation of the
issuer of an AMT-Subject Bond is to make payments to bond holders
only out of and to the extent of, payments made by the private
business entity for whose benefit the AMT-Subject Bonds were
issued. Payment of the principal and interest on such revenue
bonds depends solely on the ability of the user of the facilities
financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as
security for such payment. It is not possible to provide
specific detail on each of these obligations in which Fund assets
may be invested.
Taxable Securities
Although each Portfolio of the Fund is, and expects to be,
largely invested in municipal securities, each Portfolio may
elect to invest up to 20% of its total assets in taxable money
market securities when such action is deemed to be in the best
interests of shareholders. Such taxable money market securities
also are limited to remaining maturities of 397 days or less at
the time of a Portfolio's investment, and such Portfolio's
municipal and taxable securities are maintained at a
dollar-weighted average of 90 days or less. Taxable money market
securities purchased by a Portfolio are limited to those
described below:
1. marketable obligations of, or guaranteed by, the United
States Government, its agencies or instrumentalities; or
2. certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total
assets of more than $1 billion and which are members of
the Federal Deposit Insurance Corporation; or
3. commercial paper of prime quality rated A-1 or higher by
S&P or Prime-1 by Moody's or, if not rated, issued by
companies which have an outstanding debt issue rated AA
or higher by S&P, or Aa or higher by Moody's. (See
Appendix B for a description of these ratings.)
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Repurchase Agreements
Each Portfolio may also enter into repurchase agreements
pertaining to the types of securities in which it may invest. A
repurchase agreement arises when a buyer purchases a security and
simultaneously agrees to resell it to the vendor at an
agreed-upon future date, normally one day or a few days later.
The resale price is greater than the purchase price, reflecting
an agreed-upon market rate which is effective for the period of
time the buyer's money is invested in the security and which is
not related to the coupon rate on the purchased security. Each
Portfolio requires continuous maintenance of collateral in an
amount equal to, or in excess of, the market value of the
securities which are the subject of the agreement. In the event
that a vendor defaulted on its repurchase obligation, a Portfolio
might suffer a loss to the extent that the proceeds from the sale
of the collateral were less than the repurchase price. If the
vendor became bankrupt, the Portfolio might be delayed in selling
the collateral. Repurchase agreements may be entered into with
member banks of the Federal Reserve System (including the Fund's
Custodian) or "primary dealers" (as designated by the Federal
Reserve Bank of New York) in U.S. Government securities. It is
each Portfolio's current practice to enter into repurchase
agreements only with such primary dealers and its Custodian, and
the Fund has adopted procedures for monitoring the
creditworthiness of such organizations.
Pursuant to Rule 2a-7, a repurchase agreement is deemed to be an
acquisition of the underlying securities provided that the
obligation of the seller to repurchase the securities from the
money market fund is collateralized fully (as defined in such
Rule). Accordingly, the vendor of a fully collateralized
repurchase agreement is deemed to be the issuer of the underlying
securities.
Reverse Repurchase Agreements
Each Portfolio may enter into reverse repurchase agreements,
which involve the sale of securities held by such Portfolio with
an agreement to repurchase the securities at an agreed upon
price, date and interest payment, although no Portfolio has
entered into, nor has any plans to enter into, such agreements.
Variable Rate Obligations
The interest rate payable on certain municipal securities in
which a Portfolio may invest, called "variable rate"
obligations,is not fixed and may fluctuate based upon changes in
market rates. The interest rate payable on a variable rate
municipal security is adjusted either at pre-designated periodic
intervals or whenever there is a change in the market rate to
which the security's interest rate is tied. Other features may
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include the right of a Portfolio to demand prepayment of the
principal amount of the obligation prior to its stated maturity
and the right of the issuer to prepay the principal amount prior
to maturity. The main benefit of a variable rate municipal
security is that the interest rate adjustment minimizes changes
in the market value of the obligation. As a result, the purchase
of variable rate municipal securities enhances the ability of a
Portfolio to maintain a stable net asset value per share and to
sell an obligation prior to maturity at a price approximating the
full principal amount. The payment of principal and interest by
issuers of certain municipal securities purchased by a Portfolio
may be guaranteed by letters of credit or other credit facilities
offered by banks or other financial institutions. Such
guarantees will be considered in determining whether a municipal
security meets a Portfolio's investment quality requirements.
Variable rate obligations purchased by a Portfolio may
include participation interests in variable rate industrial
development bonds that are backed by irrevocable letters of
credit or guarantees of banks that meet the criteria for banks
described above in "Taxable Securities." Purchase of a
participation interest gives a Portfolio an undivided interest in
certain such bonds. A Portfolio can exercise the right, on not
more than 30 days' notice, to sell such an instrument back to the
bank from which it purchased the instrument and draw on the
letter of credit for all or any part of the principal amount of
such Portfolio's participation interest in the instrument, plus
accrued interest, but will do so only (i) as required to provide
liquidity to such Portfolio, (ii) to maintain a high quality
investment portfolio, or (iii) upon a default under the terms of
the demand instrument. Banks retain portions of the interest
paid on such variable rate industrial development bonds as their
fees for servicing such instruments and the issuance of related
letters of credit and repurchase commitments. No single bank
will issue its letters of credit with respect to variable rate
obligations or participation interests therein covering more than
10% of the total assets of a Portfolio. A Portfolio will not
purchase participation interests in variable rate industrial
development bonds unless it receives an opinion of counsel or a
ruling of the Internal Revenue Service that interest earned by
such Portfolio from the bonds in which it holds participation
interests is exempt from Federal income taxes. The Adviser will
monitor the pricing, quality and liquidity of variable rate
demand obligations and participation interests therein held by
such Portfolio on the basis of published financial
information,rating agency reports and other research services to
which the Adviser may subscribe.
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Standby Commitments
A Portfolio may purchase municipal securities together with
the right to resell them to the seller at an agreed-upon price or
yield within specified periods prior to their maturity dates.
Such a right to resell is commonly known as a "standby
commitment," and the aggregate price which such Portfolio pays
for securities with a standby commitment may be higher than the
price which otherwise would be paid. The primary purpose of this
practice is to permit a Portfolio to be as fully invested as
practicable in municipal securities while preserving the
necessary flexibility and liquidity to meet unanticipated
redemptions. In this regard, a Portfolio acquires standby
commitments solely to facilitate portfolio liquidity and does not
exercise its rights thereunder for trading purposes. Since the
value of a standby commitment is dependent on the ability of the
standby commitment writer to meet its obligation to repurchase,
each Portfolio's policy is to enter into standby commitment
transactions only with municipal securities dealers which are
determined to present minimal credit risks.
The acquisition of a standby commitment does not affect the
valuation or maturity of the underlying municipal securities
which continue to be valued in accordance with the amortized cost
method. Standby commitments acquired by a Portfolio are valued
at zero in determining net asset value. Where a Portfolio pays
directly or indirectly for a standby commitment, its cost is
reflected as unrealized depreciation for the period during which
the commitment is held. Standby commitments do not affect the
average weighted maturity of a Portfolio's portfolio of
securities.
When-Issued Securities
Municipal securities are frequently offered on a
"when-issued" basis. When so offered, the price, which is
generally expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for the
when-issued securities take place at a later date. Normally, the
settlement date occurs within one month after the purchase of
municipal bonds and notes. During the period between purchase
and settlement, no payment is made by a Portfolio to the issuer
and, thus, no interest accrues to such Portfolio from the
transaction. When-issued securities may be sold prior to the
settlement date, but a Portfolio makes when-issued commitments
only with the intention of actually acquiring the securities. To
facilitate such acquisitions, the Fund's Custodian will
maintain,in a separate account of each Portfolio, cash, U.S.
Government or other liquid high-grade debt securities, having
value equal to, or greater than, such commitments. Similarly, a
separate account will be maintained to meet obligations in
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respect of reverse repurchase agreements. On delivery dates for
such transactions, a Portfolio will meet its obligations from
maturities or sales of the securities held in the separate
account and/or from the available cash flow. If a Portfolio,
however, chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it can incur a gain or loss.
At the time a Portfolio makes the commitment to purchase a
municipal security on a when-issued basis, it records the
transaction and reflects the value of the security in determining
its net asset value. No when-issued commitments will be made if,
as a result, more than 15% of a Portfolio's net assets would be
so committed.
General
Yields on municipal securities are dependent on a variety of
factors, including the general condition of the money market and
of the municipal bond and municipal note market, the size of a
particular offering, the maturity of the obligation and the
rating of the issue. Municipal securities with longer maturities
tend to produce higher yields and are generally subject to
greater price movements than obligations with shorter maturities.
(An increase in interest rates will generally reduce the market
value of portfolio investments, and a decline in interest rates
will generally increase the value of portfolio investments.
There can be no assurance, as is true with all investment
companies, that a Portfolio's objectives will be achieved. The
achievement of a Portfolio's investment objectives is dependent
in part on the continuing ability of the issuers of municipal
securities in which a Portfolio invests to meet their obligations
for the payment of principal and interest when due. Municipal
securities historically have not been subject to registration
with the Securities and Exchange Commission, although there have
been proposals which would require registration in the future.
Each Portfolio generally will hold securities to maturity rather
than follow a practice of trading. However, a Portfolio may seek
to improve portfolio income by selling certain portfolio
securities prior to maturity in order to take advantage of yield
disparities that occur in securities markets.)
Obligations of issuers of municipal securities are subject to
the provisions of bankruptcy, insolvency, and other laws
affecting the rights and remedies of creditors, such as the
Bankruptcy Code. In addition, the obligations of such issuers
may become subject to laws enacted in the future by Congress,
state legislatures, or referenda extending the time for payment
of principal and/or interest, or imposing other constraints upon
enforcement of such obligations or upon the ability of
municipalities to levy taxes. There is also the possibility
that, as a result of litigation or other conditions, the ability
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of any issuer to pay, when due, the principal of, and interest
on, its municipal securities may be materially affected.
Except as otherwise provided above, each Portfolio's
investment objectives and policies are not designated
"fundamental policies" within the meaning of the Act and may,
therefore, be changed without a shareholder vote. However, the
Portfolio will not change its investment policies without
contemporaneous written notice to shareholders.
Effective November 1, 1991, the Fund's former name of
Alliance Tax-Exempt Reserves was changed to Alliance Municipal
Trust.
Special Risk Factors of Concentration in a Single State
The primary purpose of investing in a portfolio of a single
state's municipal securities is the special tax treatment
accorded that state's resident individual investors. However,
payment of interest and preservation of principal is dependent
upon the continuing ability of the state's issuers and/or
obligors of its state, municipal and public authority debt
obligations to meet their obligations thereunder. Investors
should consider the greater risk of the concentration of the New
York, California, Connecticut, New Jersey, Virginia or Florida
Portfolio (individually, a "State Portfolio") versus the safety
that comes with a less concentrated investment portfolio and
should compare yields available on portfolios of the relevant
state's issues with those of more diversified portfolios,
including other states' issues, before making an investment
decision. The Adviser believes that by maintaining each State
Portfolio's investment portfolio in liquid, short-term,
high-quality investments, including the participation interests
and other variable rate obligations that have credit support such
as letters of credit from major financial institutions, the State
Portfolio is largely insulated from the credit risks that exist
on long-term municipal securities of the relevant state.
The following summaries are included for the purpose of
providing a general description of credit and financial
conditions of New York, California, Connecticut, New Jersey,
Virginia and Florida are based on information from official
statements made available in September 1992 in connection with
the issuance of certain securities and does not purport to be
complete. While the Fund has not undertaken to independently
verify such information, it has no reason to believe that such
information is not correct in all material aspects. These
summaries do not provide specific information regarding all
securities in which the Fund is permitted to invest and in
particular do not provide specific information on the private
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business entities whose obligations support the payments on
AMT-Subject Bonds.
NEW YORK PORTFOLIO
Seasonal Borrowings of the State
The State's financial practices require it to issue TRANs,
with maturities of one year or less, each spring. Such notes are
issued primarily because the State makes nearly one-half of its
local assistance payments during the first quarter of its fiscal
year but receives taxes and revenues at a more even rate
throughout its fiscal year. In June 1990, June 1991, April 1992
and May 1993, the State borrowed $4.1 billion, $3.9 billion, $2.3
billion and $850 million, respectively, to meet its short-term
needs. The State issued $4.1 billion in TRANs in April 1990. As
part of the gap-closing program for the 1990-91 fiscal year, $905
million of deficit TRANs were issued to the public on February
28, 1991 and paid on December 30, 1991 and $176.5 million of
deficit TRANs were issued to the State's Short-Term Investment
Pool on March 29, 1991 and paid on January 17, 1992. As part of
the gap-closing program for the 1991-92 fiscal year $531 million
of deficit TRANs were issued to the public on March 30, 1992. The
state issued $2.3 billion in TRANs on April 28, 1992. In order
to fund its day-to-day operations and certain local assistance
payments to its municipalities and local school districts, the
State issued $850 million in TRANs on May 4, 1993. All of which
were fully retired on December 31, 1993. The Division of the
Budget expects the State to meet its cash flow needs in its 1994-
95 Fiscal Year without the issuance of TRANs.
New York Local Government Assistance Corporation
In June 1990, legislation was enacted creating the "New York
Local Government Assistance Corporation" (the "Corporation"), a
public benefit corporation empowered to issue long-term
obligations to fund certain payments to local governments
traditionally funded through the State's annual seasonal
borrowing. Over a period of the next several years, the issuance
of those long-term obligations, which will be amortized over no
more than 30 years, is expected to result in eliminating the need
for continuing short-term seasonal borrowing for those purposes,
because the timing of local assistance payments in future years
will correspond more closely with the State's available cash
flow. The legislation also imposed a cap on the annual seasonal
borrowing of the State at $4.7 billion, less net proceeds of
bonds issued by the Corporation, except in cases where the
Governor and the legislative leaders have certified both the need
for additional borrowing and a schedule for reducing it to the
cap. If borrowing above the cap is thus permitted in any fiscal
year, it is required by law to be reduced to the cap by the
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fourth fiscal year after the limit was first exceeded. As of
February 28, 1994 LGAC had issued its bonds to provide net
proceeds of $3.716 billion and has been authorized to issue its
bonds to provide net proceeds of up to an additional $140 million
during the State's 1993-94 year. The Governor has recommended up
to $315 million in additional LGAC bond issuances in the 1994-95
fiscal year.
Recent Developments
A national recession commenced in mid-1990. The downturn
continued throughout the State's 1990-91 fiscal year and was
followed by a period of weak economic growth during the 1991 and
1992 calendar years. For calendar year 1993, the economy grew
faster than in 1992, but still at a very moderate rate, as
compared to other recoveries. Moderate economic growth is
expected to continue in calendar year 1994 at a slightly faster
rate than in 1993. The recession has been more severe in the
State than in other parts of the nation, owing to a significant
retrenchment in the financial services industry, cutbacks in
defense spending, and an overbuilt real estate market. The
forecast made by the Division of the Budget for the overall rate
of growth of the national economy during calendar year 1994 is
similar to the "consensus" of a widely followed survey of
forecasters.
The 1993-94 State Financial Plan is based on an economic
projection that the State will perform more poorly than the
nation as a whole. Although real gross domestic product grew
modestly during calendar year 1992 and is expected to show
increased growth in calendar year 1993, preliminary data indicate
that the State's economy, as measured by employment, began to
grow during the first part of calendar year 1993. The recovery
is expected to continue in calendar year 1994, with employment
growing more rapidly, on average, than in the previous calendar
year. Many uncertainties exist in forecasts of both the national
and State economies, including consumer attitudes toward
spending, Federal financial and monetary policies, the
availability of credit and the condition of the world economy,
which could have an adverse effect on the State. There can be no
assurance that the State economy will not experience worse-than-
predicted results in the 1994-95 fiscal year, with corresponding
material and adverse effects on the State's projections of
receipts and disbursements.
1994-95 Fiscal Year
The Governor presented the recommended Executive Budget for
the State's 1994-95 fiscal year on January 18, 1994 and amended
it on February 17, 1994. The Recommended 1994-95 State Financial
Plan projects a balanced General Fund, with receipts and
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transfers from other funds projected at $33.422 billion,
including $339 million carried over from the surplus anticipated
for the State's 1993-94 fiscal year. Disbursements and transfers
to other funds are projected at $33.399 billion and, in addition,
the Financial Plan includes a $23 million repayment to the
State's Tax Stabilization Reserve Fund. The Division of Budget
projects that at the close of the State's 1994-95 fiscal year,
the balance in the Tax Stabilization Reserve Fund will be $157
million. The balance available in the Contingency Reserve Fund
on April 1, 1994 is projected by the division of the Budget at
$311 million.
The 1994-95 Executive Budget follows a General Fund cash-
basis surplus in the State's 1992-93 fiscal year and a projected
General Fund cash-basis surplus for the State's 1993-94 fiscal
year. The Recommended 1994-95 Financial Plan is predicated on
modest growth in the State economy. According to the Division of
the Budget it includes limited use of nonrecurring moneys, and is
balanced without the use of significant cost-cutting measures
such as layoffs of service reductions. In addition, the
Recommended 1994-95 Financial Plan does not require an intra-year
note issuance for cash flow purposes (a "spring borrowing").
Major revenue actions recommended in the 1994-95 Executive
Budget include tax and fee reductions ($210 million);
preservation of revenues currently received ($1.244 billion),
primarily through deferral of a scheduled personal income tax
rate reduction; additional revenue measures ($58 million),
resulting primarily from the collection of unredeemed deposits on
bottles and cans; increased lottery revenues due to changes
proposed in lottery games ($130 million); and enhanced revenue
collection and enforcement measures ($49 million).
Major programmatic recommendations include a $198 million
increase in school aid (on a school year basis), $185 million in
statutory Medicaid cost-containment initiatives, additional State
takeover of local government Medicaid costs amounting to $110
million, funding for new programs to fight crime and spur
economic development, increased funding for community-based
mental hygiene programs consistent with legislation passed in the
1993 Legislative session, and productivity initiatives which
constrain the cost of operating State government.
There can be no assurance that the Legislature will enact the
Executive Budget as proposed, nor can there be any assurance that
the Legislature will enact a budget for the State's 1994-95
fiscal year prior to the beginning of such fiscal year. In
recent years, the Legislature has failed to enact a budget prior
to the beginning of the State's fiscal year. A protracted delay
in legislative enactment of the State's 1994-95 fiscal year
budget may reduce the effectiveness of several of the actions
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proposed. The 1994-95 State Financial Plan, when formulated
after enactment of the budget, would have to take into account
any reduced saving arising from any late budget enactment.
There can be no assurance that the State will not face
substantial potential budget gaps in future years resulting from
a significant disparity between tax revenues projected from a
lower recurring receipts base and the spending required to
maintain State programs at current levels. To address any
potential budgetary imbalance, the State may need to take
significant actions to align recurring receipts and disbursements
in future fiscal years.
1993-94 Fiscal Year
The Governor released the recommended Executive Budget for
the 1993-94 fiscal year on January 19, 1993 and amended it on
February 18, 1993. The recommended 1993-94 State Financial Plan
projected a balanced General Fund. General Fund receipts and
transfers from other funds were projected at $31.556 billion,
including $184 million expected to be carried over from the 1993-
94 fiscal year. Disbursements and transfers to other funds were
projected at $31.489 billion, not including a $67 million
repayment to the State's Tax Stabilization Reserve Fund.
The 1993-94 State Financial Plan projects General Fund
receipts and transfers from other funds at $32.367 billion and
disbursements and transfers to other funds at $32.300 billion.
Excess receipts of $67 million will be used for a required
repayment to the State's Tax Stabilization Reserve Fund. In
comparison to the recommended 1993-94 Executive Budget, the 1993-
94 State budget, as enacted, reflects increases in both receipts
and disbursements in the General Fund of $811 million.
The $811 million increase in projected receipts reflects (i)
an increase of $487 million, from $184 million to $671 million,
in the positive year-end margin at March 31, 1993, which resulted
primarily from improving economic conditions and higher-than-
expected tax collections, as described below in this Part 9, (ii)
an increase of $269 million in projected receipts, $211 million
resulting from the improved 1992-93 results and the expectation
of an improving economy and the balance from improved auditing
and enforcement measures and other miscellaneous items, (iii)
additional payments of $200 million from the Federal government
to reimburse the State for the cost of providing indigent medical
care, and (iv) the payment of an additional $50 million of
personal income tax refunds in the 1992-93 fiscal year which
would otherwise have been paid in fiscal year 1993-94; offset by
(v) $195 million of revenue-raising recommendations in the
Executive Budget that were not enacted and thus are not included
in the 1993-94 State Financial Plan.
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The $811 million increase in projected disbursements reflects
(i) an increase of $252 million in projected school-aid payments,
after applying projected receipts from the State Lottery
allocated to school aid, (ii) an increase of $194 million in
projected payments for Medicaid assistance and other social
service programs, (iii) additional spending on the judiciary ($56
million) and criminal justice ($48 million), (iv) a net increase
in projected disbursements for all other programs and purposes,
including mental hygiene and capital projects, of $161 million,
after reflecting certain re-estimates in spending, and (v) the
transfer of $100 million to a newly-established contingency
reserve.
As a result of the United States Supreme Court decision in
the case of State of Delaware v. State of New York, on January
21, 1994 the State entered into a settlement agreement with
Delaware. The State made an immediate $35 million payment to
Delaware and agreed to make annual payments of $33 million in
each of the next five fiscal years. In return, Delaware has
agreed to withdraw its claims and its request for summary
judgment. Litigation continues with respect to the other parties
and the State may be required to make additional payments during
the State's 1993-94 fiscal year.
On November 16,1993, the Court of Appeals, the State's
highest court, affirmed the decision of the Appellate Division
(Third Department) of the State's Supreme Court in three actions
(McDermott, et al. v. Regan, et al., Puma, et al. v. Regan, et
al., and Guzdek, et al. v. Regan, et al.) declaring
unconstitutional certain legislation enacted in 1990. That
legislation mandated a change in the actuarial funding method for
determining contributions by the State and its local governments
to the State and local retirement systems from the aggregate cost
(AC) method, previously used by the Comptroller, to the projected
unit credit (PUC) method, and it required the application of the
surplus reported under the PUC method as a credit to employer
contributions. As a result, contributions to the retirement
systems have been significantly reduced since the State's 1990-91
fiscal year. The Court of Appeals held, among other things, that
the State Constitution, which prohibits the benefits of
membership in the retirement systems from being impaired or
diminished, was violated because the PUC legislation impaired
"the means designed to assure benefits to public employees by
depriving the Comptroller of his personal responsibility to
maintain 'the security and sources of benefits' of the pension
fund." As a result of this decision, the Comptroller has
developed a plan to return to the AC method and to restore prior
funding levels of the retirement systems. The Comptroller
expects to achieve this objective in a manner that, consistent
with his fiduciary responsibilities, will neither require the
State to make additional contributions in its 1993-94 fiscal year
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nor materially and adversely affect the financial condition of
the State thereafter. The Comptroller's plan calls for a return
to the AC method, using a four-year phase-in in the New York
State and Local Employees' Retirement System (ERS), with State AC
contributions to ERS capped at a percentage of payroll that
increases each year during the phase-in. Although State
contributions under the plan are expected to be lower during the
phase-in period than they would have been if the AC method were
reinstated immediately, they are expected to exceed PUC levels by
$30 million in fiscal 1994-95, $63 million in fiscal 1995-96,
$116 million in fiscal 1996-97, and $193 million in fiscal 1997-
98. The excess over PUC levels is expected to peak at $241
million in fiscal 1998-99, when State contributions under the
Comptroller's plan are first projected to exceed levels that
would have been required by an immediate return to the AC method.
The excess over PUC levels is projected to decline after fiscal
1998-99, and, beginning in fiscal 2001-02, State contributions
required under the Comptroller's plan are projected to be less
than PUC requirements would have been.
1992-93 Fiscal Year
For its 1992-93 fiscal year the State had a balanced budget
on a cash basis with a positive margin of $671 million in the
General Fund that was deposited in the refund reserve account.
After reflecting the 1992-1993 year-end deposit to the refund
reserve account, reported 1992-93 General Fund receipts were $45
million higher than originally projected in April 1992. The
1991-92 fiscal year had been the fourth consecutive year in which
the State incurred a cash-basis operating deficit in the General
Fund and issued deficit TRANs, and the favorable performance
during the 1992-93 fiscal year was primarily attributable to
personal income tax collections that were more than $700 million
higher than originally projected (before reflecting the refund
reserve transaction).
State Financial Practices: GAAP Basis
Historically, the State has accounted for, reported and
budgeted its operations on a cash basis. The State currently
formulates a financial plan which includes all funds required by
generally accepted accounting principles ("GAAP"). The State as
required by law, continues to prepare its financial plan and
financial reports on the cash basis of accounting as well. The
State Comptroller reported that, on a GAAP basis, the State's
General Fund showed an operating deficit of $1.035 billion in the
1990-91 fiscal year and operating surpluses of $1.668 billion in
the 1991-92 fiscal year and $2.065 billion in the 1992-93 fiscal
year. In the 1991-92 fiscal year the State had an audited GAAP
General Fund operating surplus of $1.668 billion, after
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reflecting the $1.6 billion benefit to General Fund operating
results arising from the 1991-92 Corporation bond sales.
The Governor's 1994-95 Executive Budget contains an update to
the GAAP-basis 1993-94 State Financial Plan, which is based on
the cash basis 1993-94 State Financial Plan. The update shows a
General Fund operating surplus of $249 million. For all
governmental funds, the update reflects an overall surplus of
$427 million, including the General Fund operating surplus of
$249 million and operating surpluses of $144 million in Special
Revenue Funds, $15 million in Capital Projects Funds and $19
million in Debt Service Funds.
The Governor's 1994-95 Executive Budget includes a projection
of the GAAP-basis 1994-95 State Financial Plan. The projection
shows a General Fund operating deficit of $13 million. For all
governmental funds, the projection reflects a deficit of $15
million, including the General Fund operating deficit of $13
million and operating deficits of $28 million in Special Revenue
Funds and $4 million in Debt Service Funds, partially offset by
an operating surplus of $30 million in the Capital Projects
Funds. The General Fund projection was revised on February 17,
1994 and now reflects a $7 million operating surplus. Projections
of the other funds were not revised.
The use of New York Local Government Assistance Corporation
bond proceeds to make payments to local governmental units,
otherwise made by the State, reduces the State's future
liabilities. Therefore, the projected 1993-94 General Fund GAAP-
basis operating surplus reflected above includes $575 million and
the 1994-95 General Fund GAAP-basis operating deficit reflected
above includes $315 million, to reflect payment by the
Corporation to local governmental units.
Economic Overview
The State is the second most populous state in the nation and
has a relatively high level of personal wealth. The State's
economy is diverse with a comparatively large share of the
nation's finance, insurance, transportation, communications and
services employment, and a comparatively small share of the
nation's farming and mining activity. The State's location and
its excellent air transport facilities and natural harbors have
made it an important link in international commerce. The State
has a declining proportion of its workforce engaged in
manufacturing, and an increasing proportion engaged in service
industries. This transition reflects a national trend.
The State has historically been one of the wealthiest states
in the nation. For decades, however, the State has grown more
slowly than the nation as a whole, gradually eroding its relative
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economic affluence. Statewide, urban centers have experienced
significant changes involving migration of the more affluent to
the suburbs and an influx of generally less affluent residents.
Regionally, the older Northeast cities have suffered because of
the relative success that the South and the West have had in
attracting people and business.
During the recession of 1982-83, the State's economy in most
respects performed better than that of the nation. However, in
the calendar years 1984 through 1991, the State's rate of
economic expansion was somewhat slower than that of the nation.
The unemployment rate in the State dipped below the national rate
in the second half of 1981 and had generally remained lower until
1991. The total employment growth rate in the State has been
below the national average since 1984. Total personal income in
the State has risen slightly faster than the national average
every year since 1983, with the exception of 1984, 1985, 1990,
1991 and 1992.
The State has for many years had a very high State and local
tax burden relative to other states. The State and its
localities have used these taxes to develop and maintain their
transportation networks, public schools and colleges, public
health systems, other social services and recreational
facilities. Despite these benefits, the burden of State and
local taxation, in combination with the many other causes of
regional economic dislocation, may have contributed to the
decisions of some businesses and individuals to relocate outside,
or not locate within, the State.
To stimulate the State's economic growth, the State has
developed programs, including the provision of direct financial
assistance by State-related sources, designed to assist
businesses to expand existing operations located within the State
and to attract new businesses to the State. Local industrial
development agencies raised an aggregate of approximately $7.5
billion in separate tax-exempt bond issues through December 31,
1991. There are currently 132 county, city, town and village
agencies. No new agencies have been established since 1987. In
addition, the New York State Urban Development Corporation
("UDC") is empowered to issue, subject to approval by the Public
Authorities Control Board, bonds and notes on behalf of private
corporations for economic development projects. The State has
also established the New York Insurance Exchange which permits
insurers and individual investors to combine to compete with
Lloyd's of London in the underwriting of large primary and
reinsurance risks. The State has also taken advantage of certain
changes in Federal bank regulations to establish a free
international banking zone in the City.
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In 1987, the State enacted a major personal income tax
reduction and reform program and also reduced the tax rate on
corporation income. In addition, the State has provided various
tax incentives to encourage business relocation and expansion.
These programs include direct tax abatement from local property
taxes for new facilities (subject to locality approval) and
investment tax credits that are applied against the State
corporation franchise tax. Furthermore, legislation passed in
1986 authorizes the creation of up to 40 "economic development
zones" in economically distressed regions of the State.
Businesses in these zones are provided a variety of tax and other
incentives to create jobs and make investments in the zones. Ten
zones were designated in 1987 and another nine were designated in
1988. The State, however, in its 1989-90, 1990-91 and 1991-92
fiscal years substantially increased taxes and fees to help close
projected budget gaps in those years, and since 1990-91, delayed
and restructured the remainder of the personal income tax
reduction program originally enacted in 1987. Under legislation
enacted with the 1993-94 budget, the rules for calculating tax
liability for the 1993 tax year will be the same as those for the
1992 tax year (deferring for a fourth year a previously scheduled
tax reduction), and the tax reduction program will be frozen at
current rates. Also, in July 1991 State legislation was enacted
to phase out the benefit of graduated income tax tables for
taxpayers with adjusted gross income above $100,000. Legislation
proposed with the 1994-95 recommended Executive Budget would
indefinitely postpone the personal income tax rate reduction.
State Authorities
The fiscal stability of the State is related to the fiscal
stability of the Authorities, which generally have responsibility
for financing, constructing and operating revenue-producing
public benefit facilities. Authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply
to the State itself and may issue bonds and notes within the
amounts of, and as otherwise restricted by, their legislative
authorization. As of September 30, 1993 there were 18
Authorities that had outstanding debt of $100 million or more.
The aggregate outstanding debt, including refunding bonds, of
these 18 Authorities was $63.5 billion as of September 30, 1993,
of which approximately $8.2 billion was moral obligation debt and
approximately $7.7 billion was moral obligation debt and
approximately $19.3 billion was financed under lease-purchase or
contractual-obligation financing arrangements.
Moral obligation financing generally involves the issuance of
debt by an Authority to finance a revenue-producing project or
other activity, and that debt is secured by project revenues and
statutory provisions of the State, subject to appropriation by
the Legislature, to make up any deficiencies which may occur in
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the issuer's debt service reserve fund. Under lease-purchase or
contractual-obligation financing arrangements, Authorities and
certain municipalities have issued obligations to finance the
construction and rehabilitation of facilities or the acquisition
and rehabilitation of equipment, and expect to cover debt service
and amortization of the obligations through the receipt of rental
or other contractual payments made by the State. The State has
also entered into a payment agreement with the New York Local
Government Assistance Corporation. State lease-purchase or
contractual-obligation financing arrangements involve a
contractual undertaking by the State to make payments to an
Authority, municipality or other entity, but the State's
obligation to make such payments is generally expressly made
subject to appropriation by the Legislature and the actual
availability of money to the State for making the payments. The
State also participates in the issuance of certificates of
participation in a pool of leases entered into by the State's
Office of General Services on behalf of several State departments
and agencies. The State has also participated in the issuance of
certificates of participation for the acquisition of real
property which represent proportionate interests in lease
payments to be paid by the State.
Authorities are generally supported by revenues generated by
the projects financed or operated, such as fares, user fees on
bridges, highway tolls and rentals for dormitory rooms and
housing. In recent years, however, the State has provided
financial assistance through appropriations, in some cases of a
recurring nature, to certain of the 18 Authorities for operating
and other expenses and, in fulfillment of its commitments on
moral obligation indebtedness or otherwise, for debt service.
This assistance is expected to continue to be required in future
years.
Several Authorities have, in the past experienced financial
difficulties. Certain Authorities continue to experience
financial difficulties, requiring financial assistance from the
State.
The Metropolitan Transportation Authority (the "MTA")
oversees New York City's subway and bus lines by its affiliates,
the New York City Transit Authority and the Manhattan and Bronx
Surface Transit Operating Authority (collectively, the "TA").
Through MTA's subsidiaries, the Long Island Rail Road Company,
the Metro-North Commuter Railroad Company and the Metropolitan
Suburban Bus Authority, the MTA operates certain commuter rail
and bus lines in the New York metropolitan area. In addition,
the Staten Island Rapid Transit Operating Authority, an MTA
subsidiary, operates a rapid transit line on Staten Island.
Through its affiliated agency, the Triborough Bridge and Tunnel
Authority (the "TBTA"), the MTA operates certain intrastate toll
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bridges and tunnels. Because fare revenues are not sufficient to
finance the mass transit portion of these operations, the MTA has
depended and will continue to depend for operating support upon a
system of State, local government and TBTA support and, to the
extent available, Federal operating assistance, including loans,
grants and operating subsidies.
The TA and the commuter railroads, which are on a December 31
fiscal year, ended 1993 with their budgets balanced on a cash
basis. The TA had an estimated closing cash balance of
approximately $39 million.
Over the past several years the State has enacted several
taxes--including a surcharge on the profits of banks, insurance
corporations and general business corporations doing business in
the 12-county Metropolitan Transportation Region served by the
MTA and a special one-quarter of 1% regional sales and use tax--
that provide revenues for mass transit purposes, including
assistance to the MTA. The surcharge, which expires in November
1995, yielded approximately $533 million in calendar year 1993,
of which the MTA was entitled to receive approximately 90
percent, or approximately $480 million. These amounts include
some receipts resulting from a change in State law to require
taxpayers to make estimated payments on their surcharge
liabilities. In addition, in March 1987, legislation was enacted
that creates an additional source of recurring revenues for the
MTA. This legislation requires that the proceeds of a one-
quarter of 1% mortgage recording tax paid on certain mortgages in
the Metropolitan Transportation Region that heretofore had been
paid to the State of New York Mortgage Agency be deposited in a
special MTA fund. These tax proceeds may be used by the MTA for
either operating or capital (including debt service) expenses.
The March 1987 legislation also requires the MTA to pay $25
million annually from its existing recurring mortgage recording
tax revenues, of which $20 million is to be paid to the State for
highway purposes in the Metropolitan Transportation Region,
except in New York City, to the extent revenues are available
therefor, and the remaining $5 million of which is to be paid to
certain counties in the Metropolitan Transportation Region.
For 1993, the TA originally projected a budget gap of
approximately $266 million. The MTA Board approved an increase
in TBTA tolls which took effect January 31, 1993. Since the TBTA
operating surplus helps subsidize TA operations, the January toll
increase on TBTA facilities, and other developments, reduced the
projected gap to approximately $241 million.
Legislation passed in April 1993 relating to the MTA's 1992-
1996 Capital Program reflected a plan for closing this gap
without raising fares. A major element of the plan provides that
the TA receive a significant share of the petroleum business tax
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which will be paid directly to MTA for its agencies. The plan
also relies on certain City actions that have not yet been taken.
The plan also relies on MTA and TA resources projected to be
available to help close the gap.
For 1994 the TA currently projects that it will end the year
with a $77.6 million cash surplus.
If any of the assumptions used in making these projections
prove incorrect, the TA's gap could grow, and the TA would be
required to seek additional State assistance, raise fares or take
other actions.
Two serious accidents in December 1990 and August 1991, which
caused fatalities and many injuries, have given rise to
substantial claims for damages against both the TA and the City.
Capital Program
In 1981, the Legislature authorized procedures for the
adoption, approval and amendment of a five-year plan for the
capital program designed to upgrade the performance of the MTA's
transportation systems and to supplement, replace and
rehabilitate facilities and equipment. The Legislature also
granted certain additional bonding authorization for the capital
program.
On April 5, 1993, the Legislature approved, and the Governor
subsequently signed into law, legislation authorizing a five-
year$9.56-billion capital plan for the MTA for 1992-1996. The
MTA has submitted a 1992-1996 Capital Program based on this
legislation for the approval of the MTA Capital Program Review
Board (the "CPRB"), as State law requires. Such plan was
approved by the CPRB on December 17,1993. The 1992-1996 Capital
Program succeeds two previous five-year capital programs of the
periods covering 1982-1986 and 1987-1991. The 1987-1991 Capital
Program totaled approximately $8.0 billion, including $6.2
billion for TA capital projects.
The 1992-1996 Capital Program supersedes a one-year program
adopted in 1992. State budget legislation for the 1992-93 fiscal
year had required the MTA to submit a one-year capital program
for 1992 instead of a five-year program. The one-year program,
which contained $1.635 billion of projects for transit and
commuter facilities combined, was approved by the CPRB in May
1992, but the five-year program for 1992-1996, required to be
submitted subsequently by the MTA as an amendment to the one-year
plan, was disapproved without prejudice by the CPRB in December
1992.
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There can be no assurance that all the necessary governmental
actions for a 1992-96 Capital Program will be taken, that funding
sources currently identified will not be decreased or eliminated,
or that the Program, or parts thereof, will not be delayed or
reduced. Furthermore, the MTA has been named as a respondent in
a lawsuit challenging the constitutionality of certain State
borrowing practices. If the Program is delayed or reduced,
ridership and fare revenues may decline, which could, among other
things, impair the MTA's ability to meet its operating expenses
without additional State assistance.
Certificates of Participation
The New York Portfolio may invest at times in certificates of
participation which represent proportionate interests in certain
lease or other payments made by the State with respect to
equipment or real property of the departments or agencies of the
State. Such payments are subject to annual appropriation by the
Legislature and the availability of money to the State for making
such payments.
New York City
The fiscal health of the State is closely related to the
fiscal health of its localities, particularly the City, which has
required and continues to require significant financial
assistance from the State. The City's independently audited
operating results for each of its 1981 through 1993 fiscal years,
which ended on June 30, show a General Fund surplus reported in
accordance with GAAP. The City has eliminated the cumulative
deficit in its net General Fund position. In addition, the City's
financial statements for the 1993 fiscal year received an
unqualified opinion from the City's independent auditors, the
eleventh consecutive year the City has received such an opinion.
In response to the City's fiscal crisis in 1975, the State
took a number of steps to assist the City in returning to fiscal
stability. Among these actions, the State created the Municipal
Assistance Corporation for the City of New York ("MAC") to
provide financing assistance to the City. The State also enacted
the New York State Financial Emergency Act for The City of New
York (the "Financial Emergency Act") which, among other things,
established the New York State Financial Control Board (the
"Control Board") to oversee the City's financial affairs. The
State also established the Office of the State Deputy Comptroller
for the City of New York ("OSDC") to assist the Control Board in
exercising its powers and responsibilities.
The City operates under a four-year financial plan which is
prepared annually and is periodically updated. On June 30, 1986,
the Control Board's powers of approval over the City's financial
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plan were suspended pursuant to the Financial Emergency Act.
However, the Control Board, MAC and OSDC continue to exercise
various monitoring functions relating to the City's financial
position. The City submits its financial plans as well as the
periodic updates to the Control Board for its review.
Estimates of the City's revenues and expenditures are based
on numerous assumptions and are subject to various uncertainties.
If expected Federal or State aid is not forthcoming, if
unforeseen developments in the economy significantly reduce
revenues derived from economically sensitive taxes or necessitate
increased expenditures for public assistance, if the City should
negotiate wage increases for its employees greater than the
amounts provided for in the City's financial plan or if other
uncertainties materialize that reduce expected revenues or
increase projected expenditures, then, to avoid operating
deficits, the City may be required to implement additional
actions, including increases in taxes and reductions in essential
City services. The City might also seek additional assistance
from the State.
In August 1993, the City adopted and submitted to the Control
Board for its review a four-year Financial Plan covering fiscal
years 1994 through 1997 (the "Financial Plan"). The Financial
Plan was based on the City's fiscal year 1994 expense budget
adopted June 14, 1993 as well as certain changes incorporated
subsequent to the budget adoption process. On November 23, 1993,
the City adopted and submitted to the Control Board for its
review a first-quarter modification to the Financial Plan (the
"November Modification") incorporating various re-estimates of
revenues and expenditures. For fiscal year 1994, the November
Modification includes additional resources stemming primarily
from the City Comptroller's fiscal year 1993 annual audit,
savings from a reduction in prior years' accrued expenditures,
and higher State and Federal aid resulting from claims by the
City for reimbursement of various social services costs. These
resources were used to fund new needs in the November
Modification including higher costs in the uniformed agencies, at
the Board of Education (the "BoE") and for certain social
services, the unlikelihood of the sale of the Off-Track Betting
Corporation (the "OTB"), and lower estimates of miscellaneous and
other revenues. After taking these adjustments into account, the
November Modification projects a balanced budget for fiscal year
1994, based upon revenues of $31.585 billion. For fiscal years
1995,1996 and 1997, the November Modification projects budget
gaps of $1.730 billion, $2.513 billion and $2.699 billion,
respectively. These gaps are higher by about $450 million in
fiscal year 1995 and by about $700 million in each of fiscal
years 1996 and 1997 than in the Financial Plan, primarily on
account of the nonrecurring value of the fiscal year 1994 revenue
adjustments, the loss of certain one-time resources funding BoE
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fiscal year 1994 spending needs, and the reclassification of
anticipated State aid from the baseline revenue estimates to the
gap-closing program. To offset these larger gaps, the November
Modification relies on additional City, State and other actions.
On December 1, 1993, a three-member panel appointed by the
Mayor to address City structural budget imbalance released a
report setting forth its findings and recommendations. In its
report, the panel noted that budget imbalance is likely to be
greater than the City projected in the November Modification by
$225 million in fiscal year 1995, rising to nearly $1.5 billion
in fiscal year 1997. The report provided a number of options
that the City should consider in addressing the structural
balance issue such as severe cuts in City-funded personnel
levels, increases in residential property taxes and the sales
tax, and the imposition of bridge tolls and solid waste
collection fees. The report also noted that additional State
actions will be required in many instances to allow the City to
cut its budget without grave damage to basic services.
On December 21, 1993, OSDC issued a report reviewing the
November Modification. The report noted that while the outlook
for fiscal year 1994 has improved since August, it will be
necessary for the City to manage its budget aggressively in order
to stay on course for budget balance this year. The report noted
that the November Modification's estimates of revenues and
expenditures could fall short of expectations by $234 million,
including $126 million in higher expenditures than budgeted by
the City to support the Health and Hospitals Corporation and $50
million in higher than budgeted expenditures for overtime in the
uniformed services. The report noted that the November
Modification includes a general reserve of $281 million, $181
million more than the statutory requirement, to cover unforeseen
contingencies. The report concluded that the reserve should be
sufficient to offset problems remaining for fiscal year 1994
identified in the report but cautioned that the City should take
further actions to generate additional resources so that it can
make the reserve available to help balance the fiscal year 1995
budget.
For fiscal years 1995 through 1997, the report expressed
concern that the gaps identified by the City in the November
Modification are the largest as a percentage of City-fund
revenues that the City has faced at this point in the fiscal year
since budget balance in accordance with GAAP was first achieved
in fiscal year 1981. The report concluded that the City must
first scrutinize its tax and cost structure to enhance revenues
and reduce costs, considering tax increases or service cuts to be
a final resort, and that areas to improve productivity and
economic development must be explored. The report noted that the
revised Financial Plan to be released in February, based on the
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Preliminary Budget for fiscal year 1995, will be the new City
administration's first opportunity to present a credible plan to
balance next year's budget and to move the city towards fiscal
stability.
On December 21, 1993, the staff of the Control Board issued
its report on the November Modification. The report states that
the plan is now more realistic in terms of the gaps it portrays
and the solutions it offers. However, the solutions are mostly
limited to fiscal year 1994 while the gap for fiscal year 1995
has been increased by $450 million. Beginning in fiscal year
1995, budget gaps average over $2 billion annually. Therefore,
the staff recommends that prompt action to replace many current-
year one-shots with recurring savings is critical. The staff
advocates a vigorous and effective strategy to restructure
revenues and expenditures, accompanied by a convincingly detailed
plan of implementation. The report focuses attention on the need
for the City to closely examine its capital spending priorities,
including appropriate funding for ongoing maintenance,
implementation of a stretch-out of capital commitments, and
development of a written debt policy. In addition, the report
notes that administrative other-than-personal-service
expenditures have not shared in past spending reductions and must
begin to do so and that the City must assemble a coherent labor
policy that integrates productivity initiatives with wage
increases and headcount reductions. The report concludes that
the actions taken in the next few months are critical to reverse
the expansion that has occurred since the fiscal year 1994 budget
was adopted.
On February 2, 1994, the Mayor presented to the City Council
and the Control Board a mid-year modification to the Financial
Plan (the "February Modification"). The February Modification
projects a balanced budget for fiscal year 1994, based upon
revenues of $31.735 billion, including a general reserve of $198
million. For fiscal years 1995, 1996 and 1997, the February
Modification projects budget gaps of $2.261 billion, $3.167
billion and $3.253 billion respectively, and assumes no wage and
salary increases beyond the expiration of current labor
agreements which expire in fiscal years 1995 and 1996. These
gaps have grown since November by about $530 million is fiscal
year 1995, and $650 million and $550 million in fiscal years 1996
and 1997, respectively, owing in large part to lower estimates of
real property tax revenues. To close the budget gap projected
for fiscal year 1995, the February Modification includes a gap-
closing program that consists of the following major elements:
(i) an agency program of $1.048 billion; (ii) fringe benefit and
pension savings of $400 million; (iii) an intergovernmental aid
package of $400 million; (iv) a workforce reduction program of
$144 million; and (v) the assumption of a $234 million surplus
roll from fiscal year 1994. Implementation of many of the gap-
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closing initiatives requires the cooperation of the municipal
labor unions, the City Council and the State and Federal
governments. The February Modification also includes a tax
reduction program, with most of the financial impact affecting
the later years of the Plan period.
OSDC and the staff of the Control Board are expected to issue
reports commenting on their reviews of the February Modification.
The City requires certain amounts of financing for seasonal
and capital spending purposes. The City has issued $1.75 billion
of notes for seasonal financing purposes during fiscal year 1994,
which the City currently estimates will satisfy such requirements
for the fiscal year. The City's capital financing program
projects long-term financing requirements of approximately $16.6
billion for the City's fiscal years 1994 through 1997 before
taking into account capital program reductions totalling $3.2
billion proposed by the Mayor on July 2, 1993. The major capital
requirements include expenditures for the City's water supply and
sewage disposal systems, roads, bridges, mass transit, schools,
hospitals and housing. In addition to financing for new
purposes, the City and the New York City Municipal Water Finance
Authority have issued refunding bonds totalling $1.8 billion in
fiscal year 1994.
Other Localities
Certain localities in addition to the City could have
financial problems leading to requests for additional State
assistance during the State's 1993-94 and 1994-95 fiscal years
and thereafter. The potential impact on the State of such
actions by localities is not included in the projections of the
State receipts and disbursements in the State's 1993-94 and 1994-
95 fiscal years.
Fiscal difficulties experienced by the City of Yonkers
("Yonkers") resulted in the creation of the Financial Control
Board for the City of Yonkers (the "Yonkers Board") by the State
in 1984. The Yonkers Board is charged with oversight of the
fiscal affairs of Yonkers. Future actions taken by the Governor
or the State Legislature to assist Yonkers could result in
allocation of State resources in amounts that cannot yet be
determined.
Certain Municipal Indebtedness
Municipalities and school districts have engaged in
substantial short-term and long-term borrowings. In 1992, the
total indebtedness of all localities in the State was
approximately $35.2 billion, of which $19.5 billion was debt of
the City (excluding $5.9 billion in the debt of The Municipal
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Assistance Corporation for the City of New York). A small
portion (approximately $71.6 million) of the $35.2 billion of
indebtedness represented borrowing to finance budgetary deficits
and was issued pursuant to enabling State legislation. State law
requires the Comptroller to review and make recommendations
concerning the budgets of those local government units other than
New York City authorized by State law to issue debt to finance
deficits during the period that such debt financing is
outstanding. Seventeen localities had outstanding indebtedness
for deficit financing at the close of their fiscal year ending in
1992.
In 1992, an unusually large number of local government units
requested authorization for deficit financings. According to the
Comptroller, nine local government units were authorized to issue
deficit financing in the aggregate amount of $131.1 million,
including Nassau County for $65 million in six-year deficit bonds
and Suffolk County for $36 million in six-year deficit bonds. The
current session of the Legislature may receive as many or more
requests for deficit-financing authorizations as a result of
deficits previously incurred by local governments. Although the
Comptroller has indicated that the level of deficit financing
requests in 1992 was unprecedented, in 1993 five localities were
authorized to issue only $5.5 million in deficit financing
indebtedness. Such developments are not expected to have a
material adverse effect on the financial condition of the State.
Certain proposed Federal expenditure reductions would reduce,
or in some cases eliminate, Federal funding of some local
programs and accordingly might impose substantial increased
expenditure requirements on affected localities. If the State,
New York City or any of the Authorities were to suffer serious
financial difficulties jeopardizing their respective access to
the public credit markets, the marketability of notes and bonds
issued by localities within the State could be adversely
affected. Localities also face anticipated and potential
problems resulting from certain pending litigation, judicial
decisions and long-range economic trends. The longer-range
potential problems of declining urban population, increasing
expenditures and other economic trends could adversely affect
certain localities and require increasing State assistance in the
future.
Litigation
The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine
governmental operations. Such litigation includes, but is not
limited to, claims asserted against the State arising from
alleged torts,alleged breaches of contracts, condemnation
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proceedings and other alleged violations of State and Federal
laws.
Adverse developments in those proceedings or the initiation
of new proceedings could affect adversely the financial condition
of the State in the 1993-94 and 1994-95 fiscal years or
thereafter. Although other litigation is pending against the
State, no current litigation involves the State's authority, as a
matter of law, to contract indebtedness, issue its obligations,
or pay such indebtedness when it matures, or affects the State's
power or ability, as a matter of law, to impose or collect
significant amounts of taxes and revenues.
CALIFORNIA PORTFOLIO
Constitutional Limits on Spending and Taxes
Certain California (the "State") constitutional amendments,
legislative measures, executive orders, civil actions and voter
initiatives could adversely affect the ability of issuers of the
State's municipal securities to pay interest and principal on
municipal securities.
Article XIII B. On November 6, 1979, the State's voters
approved Proposition 4, which added Article XIII B to the
California Constitution. Pursuant to Article XIII B, the State
is subject to an annual appropriations limit (the "Appropriations
Limit").
Article XIII B was modified substantially by Propositions 98
and 111 in 1988 and 1990, respectively. (See "Proposition 98"
below.) "Appropriations subject to limitation," with respect to
the State, are authorizations to spend "proceeds of taxes," which
consist of tax revenues, and certain other funds, including
proceeds from regulatory licenses, user charges or other fees to
the extent that such proceeds exceed "the cost reasonably borne
by the entity in providing the regulation, product or service,"
but "proceeds of taxes" exclude most state subsidies to local
governments, tax refunds and some benefit payments such as
unemployment insurance. No limit is imposed on appropriations of
funds which are not "proceeds of taxes," such as reasonable user
charges or fees, and certain other non-tax funds.
Debt service costs for certain bonds, and revenues derived
from new taxes such as increased cigarette and tobacco taxes are
expressly exempted from the Appropriations Limit. In addition,
the Appropriations Limit may be exceeded in certain emergency
situations.
The State's yearly Appropriations Limit is based on the limit
for the prior year with annual adjustments for changes in
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California per capita personal income and population and any
transfers of financial responsibility of providing services to or
from another unit of government.
As originally enacted in 1979, the Appropriations Limit was
based on 1978-79 fiscal year authorizations to expend proceeds of
taxes and was adjusted annually to reflect changes in cost of
living and population. Starting in the 1990-91 Fiscal Year, the
Appropriations Limit was recalculated by taking the actual
1986-87 limit and applying the annual adjustments as if
Proposition 111 had been in effect.
Proposition 98. On November 8, 1988, voters approved
Proposition 98, a combined initiative constitutional amendment
and statute called the "Classroom Instructional Improvement and
Accountability Act." Proposition 98 changed State funding of
public education below the university level, and the operation of
the State Appropriations Limit, primarily by guaranteeing local
schools and community colleges ("K-14 schools") a minimum share
of General Fund revenues. Under Proposition 98 (as modified by
"Proposition 111" which was enacted on June 5, 1990), K-14
schools are guaranteed the greatest of (a) in general, a fixed
percent of General Fund revenues (the "first test"), (b) the
amount appropriated to K-14 schools in the prior year, adjusted
for changes in the cost of living (measured as in Article XIII B
by reference to California per capita personal income) and
enrollment (the "second test"), or (c) a third test, which would
replace the second test in any year when the percentage growth in
per capita General Fund revenues from the prior year plus one
half of one percent is less than the percentage growth in
California per capita personal income. Under the third test,
schools would receive the amount appropriated in the prior year
adjusted for changes in enrollment and per capita General Fund
revenues, plus an additional small adjustment factor. If the
third test is used in any year, the difference between the third
test and the second test would become a "credit" to schools in
future years when per capita General Fund revenue growth exceeds
per capita personal income growth. Legislation adopted prior to
the end of the 1988-89 Fiscal Year, implementing Proposition 98,
determined the K-14 schools' funding guarantee under the first
test to be 40.3 percent of the General Fund Tax revenues, based
on 1986-87 appropriations. However, that percent has been
adjusted to 34 percent to account for a subsequent redirection of
local property taxes, since such redirection directly affects the
share of General Fund revenues to schools. This change is
subject to a legal challenge.
The 1991-92 Budget Act appropriated $18.4 billion for K-14
schools, applying the second test of Proposition 98. During the
course of the fiscal year, revenues proved to be substantially
below expectations. By the time the Governor's Budget was
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introduced in January, 1992, it became clear that per capita
growth in the General Fund revenues for 1991-92 would be smaller
than the growth in State per capita personal income and the
Governor's Budget therefore reflected a reduction in Proposition
98 funding in 1991-92 by applying the third test rather than the
second test.
In response to the changing revenue situation and to fully
fund the Proposition 98 guarantee in both the 1991-92 and 1992-93
Fiscal Years without exceeding it, the Legislature enacted
several bills as part of the 1992-93 budget package which
responded to the fiscal crisis in education funding. In Fiscal
Year 1991-92, Proposition 98 appropriations for K-14 schools were
reduced by $1.083 billion. In order to not adversely impact cash
received by school districts, however, a short-term loan was
appropriated from the non-Proposition 98 State General Fund. The
Legislature then appropriated $16.6 billion to K-14 schools for
1992-93 (the minimum guaranteed by Proposition 98), but
designated $1.083 billion of this amount to "repay" the prior
year loan, thereby reducing cash outlays in 1992-93 by that
amount.
In addition to reducing the 1991-92 Fiscal Year
appropriations for K-14 schools by $1.083 billion and converting
that amount to a loan (the "inter-year adjustment"), Chapter 703,
Statutes of 1992 also made an adjustment to the first test, based
on the additional $1.2 billion of local property taxes that were
shifted to schools and community colleges. The first test
percentage changed from 40 percent to 37 percent. Additionally,
Chapter 703 contained a provision that if an appellate court
should determine that the first test recalculation or the inter-
year adjustment is unconstitutional, unenforceable or invalid,
Proposition 98 would be suspended for the 1992-93 Fiscal Year,
with the result that K-14 schools would receive the amount
intended by the 1992-93 Budget Act compromise.
The State Controller stated in October, 1992 that, because of
a drafting error in Chapter 703, he could not implement the
$1.083 billion reduction of the 1991-92 school funding
appropriation, which was part of the inter-year adjustment. The
Legislature ultimately enacted corrective legislation as part of
the 1993-94 Budget package to implement the $1.083 billion inter-
year adjustment as originally intended.
In the 1992-93 Budget Act, a new loan of $732 million was
made to K-12 schools in order to maintain per-average daily
attendance ("ADA") funding at the same level as 1991-92, at
$4,187. An additional loan of $241 million was made to community
college districts. These loans are to be repaid from future
Proposition 98 entitlements. Including both State and local
funds, and adjusting for the loans and repayments, on a cash
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basis, total Proposition 98 K-12 funding in 1992-93 increased to
$21.5 billion, 2.4 percent more than the amount in 1991-92 ($21.0
billion).
On October 29, 1992, because of a special statute of
limitations contained in Chapter 703, litigation was commenced
concerning that law. The Governor filed a civil action to, in
effect, enforce the inter-year adjustment. A second civil action
was filed by a teachers' organization, the Superintendent of
Public Instruction and others to declare the inter-year
adjustment and the provision for conditional suspension of
Proposition 98 to be unlawful. A third civil action was filed by
business, local government and taxpayer organizations seeking to
enforce the budget plan for school financing as originally
intended in Chapter 703. The first action has been dismissed.
The second action, California Teachers' Association, et al. v.
Gould, et al. (the "CTA case"), was heard by the Sacramento
County Superior Court on November 12, 1993. The cause of action
addressed both Chapter 703 and the corrective legislation. The
court ruled that the $1.083 billion reduction in the 1991-92
school appropriation was proper to the extent that the base for
determining the Proposition 98 guarantee in future years did not
include the $1.083 billion. However, the court also ruled that
the State could not implement the loan provisions to recover the
excess funds or to use the excess funds as an offset against the
next fiscal year's guarantee. Additionally, the court ruled that
the $732 million loan to schools and the $241 million loan to
community colleges in Fiscal Year 1992-93 violated the
Proposition 98 guarantee in future years. A judgment consistent
with the court's oral ruling was entered on April 26, 1994. Both
the State and the plaintiffs have appealed the ruling. The
impact of this lawsuit has not been reflected in the Proposition
98 guarantee for the 1992-93 Fiscal Year or for the 1993-94 or
1994-95 Fiscal Years.
Based on revised State tax revenues and estimated decreased
reported pupil enrollment, the 1993-94 Budget Act projected that
the 1992-93 Proposition 98 Budget Act appropriations of $16.6
billion exceeded a revised minimum guarantee by $313 million. As
a result, the 1993-94 Budget Act reverted $25 million in 1992-93
appropriations to the General Fund. Limiting the reversion to
this amount ensured that per ADA funding for general purposes
would remain at the prior year level of $4,217 per pupil. The
1993-94 Budget Act also designated $98 million in 1992-93
appropriations toward satisfying prior year's guarantee levels,
an obligation that resulted primarily from updating State tax
revenues for 1991-92, and designates $190 million as a loan
repayable from 1993-94 funding. It is likely that the decision
in the CTA case will affect the $190 million loan in a manner
similar to the effect on the $1.083 billion inter-year
adjustment. The 1994-95 Budget Act appropriates an additional
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$116 million in deficiency funding for school apportionments and
special education, increasing funding per pupil in 1992-93 to
$4,244.
The 1993-94 Budget Act projects the Proposition 98 minimum
funding level at $13.5 billion based on the third test
calculation where the guarantee is determined by the change in
per capita growth in General Fund revenues, which are projected
to decrease on a year-over-year basis. This amount also takes
into account increased property taxes transferred to school
districts from other local governments.
Legislation accompanying the 1993-94 Budget Act (Chapter
66/93) provided a new loan of $609 million to K-12 schools in
order to maintain the agreed upon per ADA funding at $4,217 and a
loan of $178 million to community colleges. These loans have
been combined with the K-14 1992-93 loans into one loan totalling
$1.760 billion. Repayment of this loan would be from future
years' Proposition 98 entitlements, and would be conditioned on
maintaining current funding levels per pupil for K-12 schools.
Chapter 66/93 also reduced the first test percentage to 34
percent to reflect the property tax shift among local government
agencies.
The 1994-95 Budget Act has appropriated $14.4 billion of
Proposition 98 funds for K-14 schools based on the second test.
This exceeds the minimum Proposition 98 guarantee by $8 million
to maintain K-12 funding per pupil at $4,217. Based upon updated
State revenues, growth rates and inflation factors, the 1994-95
Budget Act appropriates an additional $286 million within
Proposition 98 for the 1993-94 Fiscal Year, to reflect a need in
appropriations for school districts and county offices of
education, as well as an anticipated deficiency in special
education funding. These appropriations increase the 1993-94
Proposition guarantee to $13.8 billion, which exceeds the minimum
guarantee in that year by $272 million and provides per pupil
funding of $4,225.
Seasonal Borrowing of California
As part of its cash management program, the state regularly
issues Revenue Anticipation Notes and Revenue Anticipation
Warrants to meet cash flow needs during the course of a fiscal
year. All such Notes have been retired prior to the end of the
fiscal year at issue. To meet cash flow needs at the start of
the 1990-91 fiscal year, the State issued $1 billion of Interim
Notes on August 1, 1990, which matured and were paid on August
21, 1990. The State issued $4.1 billion of 1990 Revenue
Anticipation Notes on August 21, 1990, which matured and were
paid on June 28, 1991. To meet cash flow needs at the start of
the 1991-92 fiscal year, the State issued $1.65 billion of
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Interim Notes on July 23, 1991, which matured and were paid on
August 15, 1991. On August 15, 1991, the State issued $4.1
billion of 1991 Revenue Anticipation Notes, which matured and
were paid on June 30, 1992. In June 1992, as a response to
revenue shortfalls, the State issued $475 million of 1992 Revenue
Anticipation Warrants, which were paid on July 24, 1992. To meet
cash flow needs at the start of the 1992-93 fiscal year, the
State issued $3.3 billion of Interim Notes on September 4, 1992,
which matured on October 8, 1992. On October 8, 1992, the State
issued $3.75 billion of Fixed Rate and $1.25 of Variable Rate
Demand 1992-93 Revenue Anticipation Notes, which matured on or
before April 26, 1993. On April 26, 1993, the State issued an
additional $3.0 billion of 1993 Revenue Anticipation Notes which
matured on June 24, 1993, to cover continuing cash flow needs. On
June 23, 1993, the State issued $2 billion of 1993 Revenue
Anticipation Warrants maturing on December 23, 1993 to cover the
State's cash needs at the end of the 1992-93 Fiscal Year and the
start of the 1993-94 Fiscal Year. To meet additional cash flow
needs in the 1993-94 Fiscal Year the State issued $2 billion of
1993-94 Revenue Anticipation Notes on July 28, 1993, which
matured on June 28, 1994. On February 23, 1994, the State issued
$3.2 billion of 1993-94 Revenue Anticipation Warrants which will
mature on or before December 21, 1994. To meet additional cash
flow needs in the 1994-95 Fiscal Year the State issued $4.0
billion of 1994-95 Revenue Anticipation Warrants on July 26, 1994
which will mature on April 25, 1996. The State issued $3.0
billion of 1994-95 Revenue Anticipation Notes on August 3, 1994
which will mature on June 28, 1995.
Automatic Budget Reduction
Legislation was enacted in July 1990 providing for an
automatic mechanism to control State expenditures. Under this
new law, by May 21st of each year, the Director of Finance must
estimate General Fund revenues for the next fiscal year. A
"workload budget" is prepared which makes adjustments in existing
programs using such factors as expected changes in enrollment,
caseload or population, statutory cost-of-living increases,
federal or court-ordered mandates, inflation, and enacted
legislation. If the revenue estimate is more than one-half
percent less than the estimated workload budget, and the
estimates are certified as generally accurate by the Commission
on State Finance, all General Fund appropriations for the ensuing
year, except those required by the State Constitution, will be
reduced on a pro-rata basis equivalent to the percentage
difference between such revenue and workload budget estimates,
but not exceeding a 4% reduction. The law applies this same
percentage reduction to various health and welfare programs which
have automatic cost-of-living increases. The Legislature may
suspend the operation of this mechanism for any fiscal year.
Among programs exempted from reduction are aid to K-14 schools
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pursuant to Proposition 98, debt service on general obligation
bonds, and contributions to retirement systems.
1994-95 Fiscal Year
The 1994-95 Fiscal Year represents the fourth consecutive
year the Governor and Legislature were faced with a very
difficult budget environment to produce a balanced budget. Many
program cuts and budgetary adjustments have already been made in
the last three years. The Governor's Budget Proposal, as updated
in May and June, 1994, recognized that the accumulated deficit
could not be repaid in one year, and proposed a two-year
solution. The budget proposal sets forth revenue and expenditure
forecasts and revenue and expenditure proposals which result in
operating surpluses for the budget for both 1994-95 and 1995-96,
and lead to the elimination of the accumulated budget deficit,
estimated at about $2.0 billion at June 30, 1994, by June 30,
1996.
The 1994-95 Budget Act, signed by the Governor on July 8,
1994, projects revenues and transfers of $41.9 billion, $2.1
billion higher than revenues in 1993-94. This reflects the
Administration's forecast of an improving economy. Also included
in this figure is a projected receipt of about $360 million from
the federal government to reimburse the State's cost of
incarcerating undocumented immigrants. The State will not know
how much the federal government will actually provide until the
federal Fiscal Year 1995 budget is completed. Completion of the
federal budget is expected by October 1994. The Legislature took
no action on a proposal in the 1994-95 Governor's Budget to
undertake an expansion of the transfer of certain programs to
counties, which would also have transferred to counties 0.5
percent of the State's current sales tax.
The 1994-95 Budget Act projects Special Fund revenues of
$12.1 billion, a decrease of 2.4 percent from 1993-94 estimated
revenues.
The 1994-95 Budget Act projects General Fund expenditures of
$40.9 billion, an increase of $1.6 billion over the 1993-94
Fiscal Year. The 1994-95 Budget Act also projects Special Fund
expenditures of $12.3 billion, a 4.7 percent decrease from the
1993-94 Fiscal Year estimated expenditures. The principal
features of the 1994-95 Budget Act were the following:
1. Receipt of additional federal aid in the 1994-95
Fiscal Year of about $400 million for costs of refugee
assistance and medical care for undocumented immigrants,
thereby offsetting a similar General Fund cost. The State
will not know how much of these funds it will receive until
the federal Fiscal Year 1995 budget is passed.
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2. Reductions of approximately $1.1 billion in health
and welfare costs. A 2.3 percent reduction in AFDC payments
may be affected by litigation.
3. A General Fund increase of approximately $38 million
in support for the University of California and $65 million
for California State University. It is anticipated that
student fees for both the University of California and
California State University will increase up to 10%.
4. Proposition 98 funding for K-14 schools is increased
by $526 million from 1993-94 Fiscal Year levels,representing
an increase for enrollment growth and inflation. Consistent
with previous budget agreements, Proposition 98 funding
provides approximately $4,217 per student for K-12 schools,
equal to the level in the past three years.
5. Legislation enacted with the 1994-95 Budget Act
clarifies laws passed in 1992 and 1993 which require counties
and other local agencies to transfer funds to local school
districts, thereby reducing State aid. Some counties had
implemented a method of making such transfers which provided
less money for schools if there were redevelopment agency
projects. The new legislation bans this method of transfer.
If all counties had implemented this method, General Fund aid
to K-12 schools would have been $300 million higher in each
of the 1994-95 and 1995-96 Fiscal Years.
6. The 1994-95 Budget Act provides funding for
anticipated growth in the State's prison inmate population,
including provisions for implementing recent legislation (the
so-called "Three Strikes" law) which requires mandatory life
prison terms for certain third-time felony offenders.
7. Additional miscellaneous cuts ($500 million) and
fund transfers ($255 million) totaling in the aggregate
approximately $755 million.
The 1994-95 Budget Act contains no tax increases. Under
legislation enacted for the 1993-94 Budget Act, the renters' tax
credit was suspended for two years (1993 and 1994). A ballot
proposition to permanently restore the renters' tax credit after
this year failed at the June, 1994 election. The Legislature
enacted a further one-year suspension of the renters' tax credit,
for 1995, saving about $390 million in the 1995-96 Fiscal Year.
The 1994-95 Budget Act assumes that the State will use a cash
flow borrowing program in 1994-95 which combines one-year notes
and two-year warrants, which have now been issued. Issuance of
the warrants allows the State to defer repayment of approximately
$1.0 billion of its accumulated budget deficit into the 1995-96
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Fiscal Year. The Budget Adjustment Law, described above, enacted
along with the 1994-95 Budget Act is designed to ensure that the
warrants will be repaid in the 1995-96 Fiscal Year.
The August 1994 Bulletin of the Department of Finance reports
that revenues in July were about 2.8%, or $54 million, above
forecast. Most of the strength comes from what appear to be one-
time factors in bank and corporation tax receipts. Overall the
basic receipts for personal income tax, sales tax and bank and
corporation tax appear to be very close to projections.
Recent Trends in State Economic Conditions
California's economy is the largest among the 50 states and
one of the largest in the world. The 1994-95 Budget is based
primarily on economic assumptions contained in the May 1994
revision to the 1994-95 Governor's Budget, released May 20, 1994
(the "May Revision"). After years of recession, California's
economy seems to be stabilizing. However, economic signals
remain mixed, and recovery is still an expectation rather than a
reality.
The May Revision forecast expects this essentially flat
pattern of economic activity to persist throughout 1993, with
employment by year end only marginally higher than in April.
Gains in service industries, mainly health care, temporary
agencies (in business services), motion picture production and
amusements are expected to continue. There should be modest
increases in wholesale and retail trade. The finance and
transportation and utilities groups will be stable to down
slightly. Assuming a modest increase in home building,
construction employment will also be about flat this year.
Against these, manufacturing and government will continue to
lose jobs. The largest losses in percentage terms will be in
aerospace manufacturing and Federal Department of Defense,
reflecting the cuts in the military budget. Budget constraints
will also affect State and local government.
The forecast predicts the State's economy will improve slowly
in 1994 and 1995, but will continue to experience deep defense
budget cuts, overbuilt commercial real estate and high business
and living costs, especially compared to neighboring Western
states. Elements of the forecast include: (1) nonfarm
employment, on an annual average basis, is forecast to decline by
about 1/2 percent this year, then increase by 1 percent in 1994
and a little over 2 percent in 1995; (2) personal income growth
is forecast at 3.7 percent in 1993, 4.7 percent in 1994 and 6
percent in 1995; (3) the California consumer price index is
expected to average around a 3 1/2 percent advance each year; and
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(4) home construction is forecast to improve to 108,000 units
this year, 145,000 in 1994 and nearly 170,000 by 1995.
The monthly Department of Finance Bulletins issued since the
May Revision of the Governor's Budget have reported a continued
sluggish economy, with no sign yet of an economic upturn. The
State continues to lose jobs, more than four years after the
recession started. By contrast, in both the 1969-70 and 1981-82
recessions, the State had recovered its job losses by two years
after the start of the recession. Job loses in recent months (as
throughout the recession) were greatest in manufacturing
(particularly defense-related industries), construction, and
retail and wholesale trade. The Department reported that job
levels in the State in September, 1993 were about 150,000 lower
than the year before. These losses include over 13,000 federal
civilian jobs, mostly in the Department of Defense. California
suffered more than 23 percent of the federal civilian job losses
nationally, although it had only 11 percent of all federal
civilian jobs.
The unemployment rate in September was 9.2 percent, almost
unchanged from the year earlier, and much higher than the
national rate. As projected, the rate has averaged over 9
percent in 1993. As total jobs have declined, the main factor in
the unemployment rate is the size of the labor force working or
actively seeking employment. The Department of Finance recently
reported that California suffered a net loss of 150,000 residents
to other states in the last fiscal year; overall population still
grew due to births and foreign immigration. Both residential and
nonresidential real estate construction remained in a sustained
slump, and were, in May, 1993 both at or close to the lowest
levels since the start of the recession. These industries
remained depressed through the summer.
Finally, the Department of Finance noted that California
would be hit hard by the latest round of federal military base
closings and force realignments, which will be implemented over
the remaining years of the decade. California was estimated to
have 22 percent of the nation's defense spending, but might
suffer 25-30 percent of the defense spending cuts over the next
five years. The Department also estimates that the recent
federal Budget Reconciliation Act will have a disproportionate
and negative impact on California. California would suffer 19.5
percent of the outlay reductions, which rely heavily on defense
budget cuts, and the State, with many high income taxpayers, will
pay nearly 14.5 percent of the tax increases, compared to 12
percent of the nation's population.
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Litigation
While at any given time, including the present, there are
numerous civil actions pending against California which could, if
determined adversely to California, affect California's
expenditures and, in some cases, its revenues, the Attorney
General of the State of California is currently of the opinion
that no pending actions are likely to have a material adverse
effect on California's ability to pay debt service on general
obligation intermediate- and long-term debt as they become due.
CONNECTICUT PORTFOLIO
1993-1994 and 1994-1995 Adopted Budgets
The adopted budget was prepared in compliance with Public Act
91-3 of the June 1991 Special Session which required a biennial
budget beginning in fiscal 1993-94. The biennial budget is a
separate budget for each of the two fiscal years. The budget
adopted by the General Assembly for fiscal year 1993-94
anticipates General Fund expenditures of $7,690.1 million and
General Fund revenues of $7,695.3 million. For fiscal 1994-95,
the adopted budget anticipates General Fund expenditures of
$8,115.6 million and General Fund revenues of $8,117.3 million.
The figures incorporate all changes passed by the Connecticut
General Assembly to Public Act 93-80 as well as Public Act 93-74.
On November 3, 1992, Connecticut voters approved a
constitutional amendment which requires a balanced budget for
each year and imposes a cap on the growth of expenditures. The
General Assembly is required by the constitutional amendment to
adopt by three-fifths vote certain spending cap definitions,
which has not yet occurred. Accordingly, the adopted budget
complies with the current statutory spending cap definitions
enacted in 1991. The statutory spending cap limits the growth of
expenditures to either (1) the average of the annual increase in
personal income in the State for each of the preceding five
years, or (2) the increase in the consumer price index for urban
consumers during the preceding twelve-month period, whichever is
greater. Expenditures for the payment of bonds, notes and other
evidences of indebtedness are excluded from the constitutional
and statutory definitions of general budget expenditures. To
preclude shifting expenditures out of the General Fund to other
funds, the spending cap applies to all appropriated funds
combined. For fiscal 1993-94 and for fiscal 1994-95, permitted
growth in capped expenditures is 5.82% and 4.49% respectively.
The adopted budget is approximately $58 million below the cap for
fiscal 1993-94 and $24 million below the cap in fiscal 1994-95.
In order to promote economic stability and provide a positive
business climate, several tax changes were adopted during the
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1993 legislative session. Among the most significant changes
were the changes to the Corporation Business Tax based on income-
- -a four year gradual rate reduction was adopted reducing the tax
to 11.25% beginning January 1, 1995; 11% beginning January 1,
1996; 10.5% beginning January 1, 1997 and 10% beginning January
1, 1998. Additionally, the Corporation Business Tax based on
capital was eliminated for regulated investment companies and
real estate investment trusts. The interest rate for late
payment of the Corporation Business Tax was reduced from 20% to
15% per annum and additional tax credits were created. To assist
manufacturers, the Gross Receipts Tax on electricity to those
businesses will be phased out over the next four years. Further,
to encourage continuing research and development in Connecticut,
a research and development tax credit was provided for research
and development expenses for income years commencing on or after
January 1, 1993. The credit amounts range from 1% for research
and development expenses of $50 million or less to 6% for
research and development expenses in excess of $200 million.
There are certain restrictions pertaining to when and how the
credits may be claimed; however, the legislation provides the
taxpayers with an unlimited carryforward of the credits.
Several Sales Tax exemptions were added which include, among
others, amusements and recreation, airport valet parking, certain
tax preparation services and car washes. The Personal Income Tax
estimated and withholding payment schedule was changed to conform
to the federal timetable. A minimum tax was established so that
Connecticut personal income taxpayers who are subject to the
federal alternative minimum tax will now pay the higher of the
State income tax or 23% of their adjusted federal tentative
minimum tax. The tax on cigarettes was increased by 2 cents per
pack effective July 1, 1993 and 3 cents per pack effective July
1, 1994 and a two dollar excise tax on automobile tires was
enacted.
1993-94 General Fund Operations
The budget adopted by the General Assembly for fiscal year
1993-94 anticipated General Fund expenditures of $7,690.1 million
and General Fund revenues of $7,695.3 million.
Per Section 3-115 of the Connecticut General Statutes, the
State's fiscal position is reported monthly by the Comptroller.
This report compares revenues already received and expenditures
already made to estimated revenues to be collected and estimated
expenditures to made during the balance of the year. The
Comptroller's monthly report as of August 1, 1994, reflects a
surplus of $141.0 million.
See Appendix C-1 for a composition of the adopted budgets for
fiscal years 1993-94 and 1994-95 and the most current estimated
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expenditures and revenues for fiscal year 1993-94. No assurance
can be given that subsequent projections will not indicate
changes in the anticipated General Fund result.
Economic Overview
Connecticut is a mature and highly developed state located in
proximity to significant centers of consumer and industrial
activity. Connecticut's economy is diverse, with manufacturing,
services and trade accounting for approximately 70% of total
nonagricultural employment. Nonmanufacturing employment has
risen significantly. The rapid relative growth in the
nonmanufacturing sector as compared to the manufacturing sector
is a trend that is in evidence nationwide and reflects the
increased importance of the service industry. From 1970 to 1993,
manufacturing employment in the State declined 33.5%, while non-
manufacturing employment rose 63.3%, particularly in the service,
trade and finance categories, resulting in an increase of 27.6%
in total growth in non-agricultural establishment sectors.
Manufacturing has traditionally been of prime economic
importance to Connecticut. Manufacturing is diversified, with
transportation equipment (primarily aircraft engines, helicopters
and submarines) the dominant industry, followed by nonelectrical
machinery, fabricated metal products and electrical machinery.
Defense-related business plays an important role in the
Connecticut economy. Connecticut has ranked from sixth to
twelfth among all states in total defense contract awards,
receiving 2.5% of all such contracts in 1993. However, the
Federal government has reduced the amount of defense-related
spending and the future effect of such reductions cannot be
predicted.
The State derives approximately 70% of its revenues from
taxes imposed by the State. Miscellaneous fees, receipts and
transfers and federal grants account for most of the other State
revenues. The State finances its operations primarily through
the General Fund which receives most tax and non-tax revenues of
the State, with the exception of certain transportation-related
taxes, fees and revenues.
State Indebtedness
There can be no assurance that general economic difficulties
or the financial circumstances of Connecticut or its towns and
cities will not adversely affect the market value of its
obligations or the ability of Connecticut issuers or obligors of
state, municipal and public authority debt obligations to meet
their obligations thereunder.
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The State has established various statewide authorities and
two regional water authorities, one of which has since become
independent, to finance revenue-producing projects, five of which
statewide authorities have the power to incur, under certain
circumstances, indebtedness for which the State has contingent
or, in limited cases, direct liability. In addition, recents
State statutes have been enacted and implemented with respect to
certain bonds issued by the City of Bridgeport for which the
State has contingent liability and by the City of West Haven for
which the State has direct guarantee liability.
The General Assembly has power to authorize the issuance of
bonds of the State or to impose limited or contingent liabilities
upon the State in such manner as it may deem appropriate and as
may serve a public purpose.
Litigation
The State, its officers and employees, are defendants in
numerous lawsuits. The Attorney General's Office has reviewed
the status of pending lawsuits and reports that an adverse
decision in certain cases could materially affect the State's
financial position.
NEW JERSEY PORTFOLIO
Economic Climate
New Jersey is the ninth largest state in population and the
fifth smallest in land area. With an average of 1,062 persons
per square mile, it is the most densely populated of all the
states. New Jersey's .59% rate of annual population growth
between 1980 and 1993, while comparing favorably with other
Middle Atlantic States, was less than the national rate of
increase.
The State's economic base is diversified, consisting of a
variety of manufacturing, construction and service industries,
supplemented by commercial agriculture. In 1976, voters approved
casino gambling for Atlantic City, and that city has again become
an important State tourist attraction.
Total personal income in New Jersey stood at $197.1 billion
for 1991 and increased to $210.1 billion for 1992. Personal
income increased 6.6% between 1991 and 1992 but was below the
national rate at 6.1%. Historically, New Jersey's average per
capita income has been well above the national average. The
differential narrowed during the 1970s but widened in the 1980s.
In 1992, the State ranked second among all states in per capita
personal income ($26,969).
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After experiencing a boom during the mid-1980s, New Jersey as
well as the rest of the Northeast United States slipped into a
slowdown well before the onset of the national recession which
officially began in July 1990 (according to the National Bureau
of Economic Research). Initially, this slowdown was an expected
response to the State's tight labor market and the fewer number
of persons entering the labor force. By the beginning of the
national recession, there had already been a decline in
construction activity and the growth in the service sectors and
the long-term downtrend of factory employment had accelerated,
partly because of a leveling off of industrial demand nationally.
The onset of recession caused an acceleration of New Jersey's job
losses in construction and manufacturing as well as an employment
downturn in such previously growing sectors as wholesale trade,
retail trade, finance, utilities and trucking and warehousing.
Reflecting the downturn, the rate of unemployment in New
Jersey rose from 3.6% during the first quarter of 1989 to a
recessionary peak of 9.3% in 1992. The jobless rate averaged
7.8% during the first quarter of 1994, but this estimate is not
comparable to those prior to January because of major changes in
the federal survey from which these statistics are obtained.
In 1992, employment in services and government turned around
in the State, growing over the year by 0.7% and 0.3%,
respectively. These increases were outweighed by declines in
other sectors -- especially in manufacturing, wholesale and
retail trade, and construction, resulting in a net decline in
nonfarm employment of 1.7% in 1992.
Just as New Jersey was hurt by the national recession, the
State should benefit by national recovery a rising consumer and
business spending generate increased factory orders, building
activity and a flow of commerce without regard to State lines.
Total construction contracts awarded in New Jersey have risen
by 7.0% in 1993 compared with 1992. Nonbuilding construction
awards have been at high levels since 1991 due to substantial
outlays for roads, bridges and other infrastructure projects,
although as compared with 1992, 1993 figures show a decline in
awards. In addition, new passenger car registrations issued
during 1993 were up 15% in New Jersey from a year earlier.
Registrations of new light trucks and vans (up to 10,000 lbs.)
advanced strongly in 1992 and jumped nearly 30% during the
January-to-February 1994 period relative to the same period last
year.
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Financial Condition
The State Constitution provides, in part, that no money may
be drawn from the State Treasury except for appropriations made
by law and that no law appropriating money for any State purpose
shall be enacted if the amount of money appropriated therein,
together with all other prior appropriations made for the same
fiscal year, exceeds the total amount of revenue on hand and
anticipated to be available for such fiscal year, as certified by
the Governor.
Should it appear that revenues will be less than the amount
anticipated in the budget for a fiscal year, the Governor may
take steps to reduce State expenditures. In addition, no
supplemental appropriation may be enacted after adoption of an
appropriations act except where there are sufficient revenues on
hand or anticipated, as certified by the Governor, to meet such
appropriation.
For the fiscal year ended June 30, 1994, the undesignated
fund balances in the General Fund in which the largest part of
the financial operations of the state is accounted for, were
projected to be $937.4 million. Such balance was $1.4 million
for the 1992 fiscal year and $760.8 million for the 1993 fiscal
year.
There are 567 municipalities and 21 counties in New Jersey.
During 1990, 1991 and 1992 no county exceeded its statutory debt
limitations or incurred a cash deficit in excess of 4% of its tax
levy. The number of municipalities which exceeded statutory debt
limits was five as of December 31, 1993. No municipality
incurred a cash deficit greater than 4% of its tax levy for 1992.
No New Jersey municipality or county has defaulted on the payment
of interest or principal on any outstanding debt obligation since
the 1930's.
State supervision of school finance and of the fiscal
operations and debt issuance practices of local financing
authorities, autonomous public bodies created by counties or
municipalities empowered to issue bonds, impose facility or
service charges, or levy taxes in their districts (sewerage,
municipal utilities, parking, pollution control, improvement,
etc.) and special taxing districts (fire, water, etc.), is
similar to that of local governments. As of June 30, 1993, there
were 200 locally created authorities with a total outstanding
capital debt of $6.9 billion (figures do not include housing
authorities and redevelopment agencies). This amount reflects
outstanding bonds, notes, loans and mortgages payable by the
authorities as of their respective fiscal years ended nearest to
June 30, 1993.
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Litigation
There are a number of suits making monetary claims against
the State, its agencies and employees that together if decided in
favor of the complainants would significantly increase State
expenditures above those anticipated. There are also individual
suits that could have that effect. Among them are suits
challenging (a) the constitutionality of the method of funding
public education; (b) the method by which the State Department of
Human Services shares with county governments costs and cost
recoveries for residents in State psychiatric hospitals and
residential facilities for the developmentally disabled; (c) the
allegedly low level of Medicaid payment rates set by the State
for long-term care facilities in New Jersey; (d) the right of the
State to retain certain amounts paid to the Spill Compensation
Fund for uses that were subsequently pre-empted by federal law;
(e) the automobile insurance reform act impact on various
insurance firms; (f) the revaluation of public employee pension
funds that has resulted in smaller contributions by public
employers; (g) the deregulation of hospital rates in the State;
and (h) the hospital rate-setting system and its application for
meeting the cost of uncompensated care, for shifting Medicare
costs and for granting discounts to payors.
VIRGINIA PORTFOLIO
Economic Climate
The Commonwealth of Virginia is the twelfth most populous
state in the nation with 6,377,000 residents. In 1992 its
population density was 161 persons per square mile, compared with
72 persons per square mile for the United States.
The Commonwealth is made up of a variety of local economies
with that of Northern Virginia being the largest. In terms of
population and building activity, Northern Virginia has been the
fastest growing area in the Commonwealth. The growth has been
spurred by employment opportunities provided for both civilian
and military personnel in, and directly related to, the federal
government. The prospect of a lower defense budget and fewer
defense contracts as well as the Federal Base Closing Commission
order that a number of military facilities in Virginia be closed
or reduced, could lead to some structural changes in two of
Virginia's major local economies (Northern Virginia and
Norfolk/Newport News) where defense and military presence have
played an important role. However, the Commonwealth continues to
enjoy such economic advantages as its strategic mid-Atlantic
location, port facilities, the proximity of its largest local
economy to Washington, D.C. and a major international airport in
the northern Virginia area.
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According to the U.S. Department of Commerce, Virginians
received over $131 billion in personal income in 1992
representing an increase of 89% over 1983 and greater than the
national gain of 79% for the same period. In 1992, the
Commonwealth had per capita income of $20,629, the highest of the
Southeast region and greater than the national average of$19,841.
The Commonwealth's per capita income rose from 94% to 104% of the
national average from 1970 to 1992. However, Virginia per capita
personal income in 1990 and 1991 grew at a lower rate than the
U.S. average. Much of the Commonwealth's per capita income gain
in the last decade has been due to the continued strength of the
federal government and manufacturing sectors.
The Commonwealth's economy remains relatively strong and
diversified despite the current economic slowdown. Services, the
largest employment sector, accounts for 26% of nonagricultural
employment, and has increased 19% from 1987-1991 (1991 results
are based upon six-month figures), compared to 6.6% growth in
total nonagricultural employment in the Commonwealth.
Manufacturing is also a significant sector, accounting for 14% of
nonagricultural employment during the same period. The
industries with the greatest manufacturing employment are
textiles, transportation equipment, food processing, electric and
electronic equipment, chemicals, printing, apparel, lumber and
wood products, and furniture. Employment in the manufacturing
sector increased 3.2% from 1979-1989. This compares favorably to
manufacturing employment for the nation as a whole which declined
by 7.3% during the same period.
Virginia generally has one of the lowest unemployment rates
in the nation, according to statistics published by the U.S.
Department of Labor. During 1992, an average of 6.9% of
Virginia's citizens were unemployed as compared with the national
average which was 7.5%.
Virginia is one of twenty states with a Right-to-Work Law and
has a record of good labor management relations. Its favorable
business climate is reflected in the relatively small number of
strikes and other work stoppages it experiences.
Virginia is one of the least unionized of the more
industrialized states. Three major reasons for this situation
are the Right-to-Work Law, the importance of manufacturing
industries such as textiles, apparel, electric and electronic
equipment and lumber which are not highly organized in the state
and the importance of federal civilian and military employment.
Typically the percentage of nonagricultural employees who belong
to unions in the Commonwealth has been approximately half the
U.S. average.
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Financial Condition
The Constitution of Virginia limits the ability of the
Commonwealth to create debt. The Constitution requires a
balanced budget. However, an amendment to the
Constitution,effective January 1, 1993, established a revenue
stabilization fund (the "Stabilization Fund"). The Stabilization
Fund is used to offset, in part, anticipated shortfalls in
revenues in years when appropriations, based on previous
forecasts, exceed expected revenues in subsequent forecasts.
The Commonwealth has maintained a high level of fiscal
stability for many years due in large part to conservative
financial operations and diverse sources of revenue. As a result
of recessionary conditions, the Commonwealth has experienced for
the past several years severe revenue shortfalls, which have
necessitated cutbacks of expenditures in the budgets for the
1992-1994 biennia. In the 1993 General Assembly session, the
1992-1994 budget was amended to reflect $84 million in additional
revenues.
In Davis v. Michigan (decided March 28, 1989), the United
States Supreme Court ruled unconstitutional Michigan's stature
exempting from state income tax the retirement benefits paid by
the state or local governments and not exempting retirement
benefits paid by the federal government. In Harper v. Virginia
Department of Taxation (decided June 18, 1993), the United States
Supreme Court held, in a suit involving claims for refunds by
Federal retirees living in Virginia that Virginia state income
tax statutes violated the principles of Davis v. Michigan, but
remanded for further relief so long as the relief was consistent
with Federal due process. If the courts ultimately rule that the
Commonwealth must make full refunds of taxes imposed prior to
Davis v. Michigan, the State has estimated that the potential
financial impact on the Commonwealth based on its review of
claims for refunds by federal pensioners (including interest
payable calculated as of September 30, 1993) is approximately
$498.7 million.
Tax-supported debt of the Commonwealth includes both general
obligation debt and debt of agencies, institutions, boards and
authorities for which debt service is expected to be made in
whole or in part from appropriations of tax revenues. Certain
bonds issued by certain authorities that are designed to be
self-supporting from their individual loan programs are secured
in part by a moral obligation pledge of the Commonwealth. The
Commonwealth may consider funding deficiencies that may occur in
debt service reserves for moral obligation debt. To date, these
authorities have not requested that the Commonwealth fund reserve
deficiencies for this debt. There are also several authorities
and institutions of the Commonwealth that issue debt for which
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debt service is not paid through appropriations of state tax
revenues and for which there is no moral obligation pledge to
consider funding debt service or reserve fund deficiencies.
General obligations of cities, towns or counties in Virginia
are payable from the general revenues of the entity, including ad
valorem tax revenues on property within the jurisdiction. The
obligation to levy taxes could be enforced by mandamus, but such
a remedy may be impracticable and difficult to enforce. Under
Virginia law, a holder of any general obligation bond in default
may file an affidavit setting forth such default with the
Governor. If, after investigating, the Governor determines that
such default exists, he is directed to order the State
Comptroller to withhold State funds appropriated and payable to
the entity and apply the amount so withheld to unpaid principal
and interest. The Commonwealth, however, has no obligation to
provide any additional funds necessary to pay such principal and
interest.
No Virginia law expressly authorizes Virginia political
subdivisions to file under Chapter 9 of the United States
Bankruptcy Code, but recent case law suggests that the granting
of general powers to such subdivisions may be sufficient to
permit them to file voluntary petitions under Chapter 9. Bonds
payable exclusively by private entities may be subject to the
provisions of the United States Bankruptcy Code other than
Chapter 9.
FLORIDA PORTFOLIO
Economic Climate
As of April 1, 1993 Florida was ranked the fourth most
populous state with an estimated population of 13.6 million. The
State's average annual population growth rate for the period 1983
to 1993 was approximately 2.5% while the nation's average annual
growth rate for the same period was approximately 1.0%. During
this same period, Florida maintained an average growth of
approximately 293,000 new residents per year.
From 1984 through 1993 Florida's per capita income rose an
average of 5.4% per year, while the national per capita income
increased an average of 5.5%. The structure of Florida's income
differs from that of the nation. Because Florida has a
proportionally greater retiree population, property income
(dividends, interest and rent) and transfer payments (social
security and pension benefits) are a relatively more important
source of income. Florida's employment income in 1993
represented 62% of total personal income, while the U.S. share of
total personal income in the form of wages and salaries and other
labor benefits was 72%. One positive aspect of this greater
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diversity is that transfer payments are typically less sensitive
to the business cycle than employment income, and, therefore, act
as stabilizing forces in weak economic periods. From 1984
through 1993, Florida's total nominal personal income increased
by 115% and per capita income by approximately 68.7%. For the
U.S., total and per capita personal income increased by
approximately 87.9% and 70.3%, respectively. Property income in
Florida, however, continues to exceed the national average by
approximately 50%. Due to the effect of low interest rates on
interest earnings, property income is forecast to decline
slightly as a share of income in 1995.
From 1980 through 1993, Florida's employment increased with
each succeeding year, with a small decrease in employment
occurring in 1991 and 1992. In 1992, Florida non-agricultural
job creation began to recover, and increased by 3.9% in 1993 from
1992. The State is now less dependent on employment from
construction and construction-related manufacturing and resource
based manufacturing, which have declined as a proportion of total
state employment. Trade and services, the two largest sectors
account for more than half the total non-farm employment in
Florida. Employment in the service sector increased by 7.2% in
1993 from 1992. Tourism is also one of Florida's most important
industries. Approximately 41 million people visited the State in
1993.
During 1993, Florida's unemployment rate was 7% and
approximated the national average of 6.8%. The estimated
unemployment rate for Florida is 6.5% as compared to the U.S.
average of 6.1% in 1994. A significant reason for the
improvement in Florida's employment rate is the clean-up and
repair effort associated with Hurricane Andrew in Dade County,
Florida. The unemployment rate in Florida through the end of
1995 is forecast to drop to 6.1% for the first time since 1990.
The State legislature has enacted a law whereby the projected
revenue windfall will be transferred from the General Revenue
Fund to a Trust Fund to defray the costs of matching funds and a
wide array of expenditures related to Hurricane Andrew. The
amount of the transfer will change based on revisions made by the
State's Revenue Estimating Conference. The State's Revenue
Estimating Conference has estimated that additional non-recurring
general revenues totaling $220 million during fiscal year 1993-94
and $159 million during fiscal year 1994-95 will be generated as
a result of increased economic activity due to Hurricane Andrew.
Financial Condition
Florida prepares an annual budget which is formulated each
year and presented to the Governor and Legislature. Under
current law, the State budget as a whole, and each separate fund
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within the State budget, must be kept in balance from currently
available revenues each State fiscal Year.
In fiscal year 1993-1994, Florida derived approximately 66%
of its total direct revenues from State taxes and fees. Federal
funds and other special revenues accounted for the remaining
revenues. Florida does not currently impose an individual income
tax. The greatest single source of tax receipts in Florida is
the sales and use tax, accounting for 68% of general revenue
funds available. For the fiscal year which ended June 30, 1994,
receipts from this source were $10.013 billion, an increase of
6.9% from fiscal year 1992-93.
For fiscal year 1993-94 general revenue funds were $13.037
billion. Based on effective general revenue fund appropriations
of $12.885 billion, unencumbered reserves at the end of fiscal
year 1993-94 are $152.4 million.
In fiscal year 1994-95, the available general revenue working
capital and budget stabilization funds are estimated to be
$14.683 billion, a 6.1% increase from fiscal year 1993-94. This
amount reflects a transfer of $159 million in non-recurring
revenue due to Hurricane Andrew, which will be transferred to a
hurricane relief trust fund. The $13.702 billion in estimated
revenues (excluding the Hurricane Andrew impacts) represent a
6.6% increase from the analogous figures in 1993-94. With
combined general revenue, working capital and budget
stabilization fund appropriations at $14.310 billion,
unencumbered reserves at the end of 1994-95 are estimated at
$373.2 million.
For fiscal year 1995-96 the estimated general revenue plus
working capital funds available total $14.915 billion, a 1.6%
increase from fiscal year 1994-95. The $14.465 billion in
estimated revenues represent a 5.6% increase from the analogous
figure in 1994-95.
The Florida Constitution places limitations on the ad valorem
taxation of real estate and tangible personal property for all
county, municipal or school purposes, and for water management
districts. Counties, school districts and municipalities are
authorized by law, and special districts may be authorized by
law, to levy ad valorem taxes. The State does not levy ad
valorem taxes on real property or tangible personal property.
These limitations do not apply to taxes levied for payment of
bonds and taxes levied for periods not longer than two years when
authorized by a vote of the electors. The Florida Constitution
and the Florida Statutes, provide for the exemption of homesteads
from all taxation, except for assessments for special benefits,
up to the assessed valuation of $5,000. For every person who is
entitled to the foregoing exemption, the exemption is increased
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to a total of $25,000 of assessed valuation for taxes levied by
governing bodies.
INVESTMENT RESTRICTIONS
Unless specified to the contrary, and except with respect to
paragraph number 1 below, which does not set forth a
"fundamental" policy of the Florida Portfolio, the following
restrictions apply to each Portfolio and are fundamental policies
which may not be changed with respect to each Portfolio without
the affirmative vote of the holders of a majority of such
Portfolio's outstanding voting securities, which means with
respect to any Portfolio (1) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are present in person or by proxy or (2) more
than 50% of the outstanding shares, whichever is less. If a
percentage restriction is adhered to at the time of an
investment, a later increase or decrease in percentage resulting
from a change in values of portfolio securities or in the amount
of a Portfolio's assets will not constitute a violation of that
restriction.
A Portfolio:
1. May not purchase any security which has a maturity
date more than one year* (397 days in the case of the New
Jersey and Virginia Portfolios) from the date of such
Portfolio's purchase;
2. May not invest more than 25% of its total assets in
the securities of issuers conducting their principal business
activities in any one industry, provided that for purposes of
this policy (a) there is no limitation with respect to
investments in municipal securities (including industrial
development bonds), securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities,
certificates of deposit, bankers' acceptances and
interest-bearing savings deposits, and (b) consumer finance
companies, industrial finance companies and gas, electric,
water and telephone utility companies are each considered to
be separate industries. For purposes of this restriction and
those set forth in restrictions 4 and 5 below, a Portfolio
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will regard the entity which has the primary responsibility
for the payment of interest and principal as the issuer;
3. May not invest more than 25% of its total assets in
municipal securities (a) whose issuers are located in the
same state, or (b) the interest upon which is paid from
revenues of similar-type projects, except that subsection (a)
of this restriction 3 applies only to the General Portfolio;
4. May not invest more than 5% of its total assets in
the securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities) except that with respect to 25% of its
total assets (50% in the case of the New York Portfolio, the
____________________________
* Which maturity, pursuant to Rule 2a-7, may extend to 397
days.
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California Portfolio, the Connecticut Portfolio, the New
Jersey Portfolio, the Viriginia Portfolio and the Florida
Portfolio), (i) the General Portfolio may invest not more
than 10% of such total assets in the securities of any one
issuer and (ii) each of the New York, California,
Connecticut, New Jersey, Virginia and Florida Portfolios may
invest in the securities of as few as four issuers (provided
that no more than 25% of the respective Portfolio's total
assets are invested in the securities of any one issuer).
For purposes of such 5% and 10% limitations, the issuer of
the letter of credit or other guarantee backing a
participation interest in a variable rate industrial
development bond is deemed to be the issuer of such
participation interest;
5. May not purchase more than 10% of any class of the
voting securities of any one issuer except securities issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities;
6. May not borrow money except from banks on a
temporary basis or via entering into reverse repurchase
agreements for extraordinary or emergency purposes in an
aggregate amount not to exceed 15% of a Portfolio's total
assets. Such borrowings may be used, for example, to
facilitate the orderly maturation and sale of portfolio
securities during periods of abnormally heavy redemption
requests, if they should occur, such borrowings may not be
used to purchase investments and such Portfolio will not
purchase any investment while any such borrowings exist;
7. May not pledge, hypothecate, mortgage or otherwise
encumber its assets except to secure borrowings, including
reverse repurchase agreements, effected within the
limitations set forth in restriction 6. To meet the
requirements of regulations in certain states, a Portfolio,
as a matter of operating policy, will limit any such
pledging, hypothecating or mortgaging to 10% of its total
assets, valued at market, so long as shares of such Portfolio
are being sold in those states;
8. May not make loans of money or securities except by
the purchase of debt obligations in which a Portfolio may
invest consistent with its investment objectives and policies
and by investment in repurchase agreements;
9. May not enter into repurchase agreements (i) not
terminable within seven days if, as a result thereof, more
than 10% of a Portfolio's total assets would be committed to
such repurchase agreements (whether or not illiquid) or other
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illiquid investments,* or (ii) with a particular vendor if
immediately thereafter more than 5% of such Portfolio's
assets would be committed to repurchase agreements entered
into with such vendor; or
10. May not (a) make investments for the purpose of
exercising control; (b) purchase securities of other
investment companies, except in connection with a merger,
consolidation, acquisition or reorganization; (c) invest in
real estate (other than securities secured by real estate or
interests therein or securities issued by companies which
invest in real estate or interests therein), commodities or
commodity contracts; (d) purchase any restricted securities
or securities on margin; (e) make short sales of securities
or maintain a short position or write, purchase or sell puts
(except for standby commitments as described in the
Prospectus and above), calls, straddles, spreads or
combinations thereof; (f) invest in securities of issuers
(other than agencies and instrumentalities of the United
States Government) having a record, together with
predecessors, of less than three years of continuous
operation if more than 5% of a Portfolio's assets would be
invested in such securities; (g) purchase or retain
securities of any issuer if those officers and trustees of
the Fund and officers and directors of the Adviser who own
individually more than 1/2 of 1% of the outstanding
securities of such issuer together own more than 5% of the
securities of such issuer; or (h) act as an underwriter of
securities.
_________________________________________________________________
MANAGEMENT
_________________________________________________________________
Trustees and Officers
The Trustees and principal officers of the Fund and their
principal occupations during the past five years are set forth
below. Unless otherwise specified, the address of each such
person is 1345 Avenue of the Americas, New York, N.Y. 10105.
Those Trustees whose names are preceded by an asterisk are
________________________
* As a matter of operating policy, each Portfolio will limit its
investment in illiquid securities to 10% of its net assets.
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"interested persons" of the Trust as defined under the Act. Each
Trustee and officer is also a director, trustee or officer of
other registered investment companies sponsored by the Adviser.
Trustees
*DAVE H. WILLIAMS, 63, Chairman, is Chairman of the Board of
Directors of Alliance Capital Management Corporation ("ACMC")**,
sole general partner of the Adviser with which he has been
associated since prior to 1990.
*JOHN D. CARIFA, 50, is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1990.
SAM Y. CROSS, 68, was, since prior to December 1991,
Executive Vice President of The Federal Reserve Bank of New York
and manager for foreign operations for The Federal Reserve
System. He is also a director of Fuji Bank and Trust Co. His
address is 200 East 66th Street, New York, New York 10021.
CHARLES H. P. DUELL, 57, is President of Middleton Place
Foundation with which he has been associated since prior to 1990.
He is also a Director of GRC International, Inc., a Trustee
Emeritus of the National Trust for Historic Preservation and
serves on the Board of Architectural Review, City of Charleston.
His address is Middleton Place Foundation, Ashley River Road,
Charleston, South Carolina 29414.
WILLIAM H. FOULK, JR., 63, is an independent consultant. He
was formerly Senior Manager of Barrett Associates, Inc., a
registered investment adviser, with which he had been associated
since prior to 1990. His address is 2 Hekma Road, Greenwich, CT
06831.
ELIZABETH J. McCORMACK, 73, is an Associate of Rockefeller
Family and Associates (philanthropic organization) and has been
since prior to 1990. She is a Director of Philip Morris, Inc.,
Champion International Corporation and The American Savings Bank.
She is a Trustee of Hamilton College, and a Member of the Board
* An "interested person" of the Fund as defined in the Act.
**For purposes of this Statement of Additional Information, ACMC
refers to Alliance Capital Management Corporation, the sole
general partner of the Adviser, and to the predecessor general
partner of the Adviser of the same name.
57
<PAGE>
of Overseers Managers of Swarthmore College and the Memorial
Sloan-Kettering Cancer Center. Her address is 30 Rockefeller
Plaza, New York, New York 10112.
DAVID K. STORRS, 51, is President of The Common Fund
(investment management for educational institutions) and has been
since prior to 1990. His address is The Common Fund, 450 Post
Road East, Westport, Connecticut 06881.
SHELBY WHITE, 57, is an author and financial journalist. Her
address is One Sutton Place South, New York, New York 10022.
JOHN WINTHROP, 59, is President of John Winthrop & Co., Inc.
(investment management) and has been since prior to 1990. He is
a Director of NUI Corporation and American Farmland Trust and a
Trustee of Pioneer Funds. His address is One North Ager's Wharf,
Charleston, South Carolina, 29401.
Officers
RONALD M. WHITEHILL - President, 56, is a Senior Vice
President of ACMC and Division President and Chief Executive
Officer of Alliance Cash Management Services with which he has
been associated since 1993. Previously, he was Senior Vice
President and Managing Director of Reserve Fund since prior to
1990.
JOHN R. BONCZEK - Senior Vice President, 35, is a Vice
President of ACMC with which he has been associated since prior
to 1990.
KATHLEEN A. CORBET - Senior Vice President, 35, has been a
Senior Vice President of ACMC since July 1993. Previously, she
held various responsibilities as head of Equitable Capital
Management Corporation's Fixed Income Management Department,
Private Placement Secondary Trading and Fund Management since
prior to 1990.
ROBERT I. KURZWEIL, Senior Vice President, 44, has been a
Vice President of ACMC since May 1994. Previously, he was Vice
President of Sales and Business Development for Automatic Data
Processing with which he had been associated since prior to 1990.
WAYNE D. LYSKI - Senior Vice President, 54, is an Executive
Vice President of ACMC with which he has been associated since
prior to 1990.
58
<PAGE>
PATRICIA NETTER - Senior Vice President, 44, is a Vice
President of ACMC with which she has been associated since prior
to 1990.
RONALD R. VALEGGIA - Senior Vice President, 48, is a Senior
Vice President of ACMC with which he has been associated since
prior to 1990.
DREW BIEGEL - Vice President, 44, is a Vice President of ACMC
which he has been associated with since prior to 1990.
JOHN F. CHIODI, Jr. - Vice President, 29, is a Vice President
of ACMC with which he has been associated since prior to 1990.
DORIS T. CILIBERTI - Vice President, 31, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1990.
WILLIAM J. FAGAN - Vice President, 33, is an Assistant Vice
President of ACMC with which he has been associated since prior
to 1990.
LINDA D. NEIL - Vice President, 35, is an Assistant Vice
President of ACMC with which she has been associated since August
1993. Previously, she was an Associate Director of The Reserve
Fund since prior to 1990.
RAYMOND J. PAPERA - Vice President, 39, is a Vice President
of ACMC with which he has been associated since prior to 1990.
PAMELA F. RICHARDSON - Vice President, 42, is a Vice
President of ACMC with which she has been associated since prior
to 1990.
EDMUND P. BERGAN, Jr. - Secretary, 45, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1990.
MARK D. GERSTEN - Treasurer and Chief Financial Officer, 45,
is a Senior Vice President of Alliance Fund Services, Inc.
("AFS") and AFD with which he has been associated since prior to
1990.
JOSEPH J. MANTINEO - Controller, 36, is a Vice President of
AFS with which he has been associated since prior to 1990.
As of October 2, 1995 there were 1,262,952,525 shares of the
General Portfolio, 221,408,126 shares of the New York Portfolio,
277,302,046 shares of the California Portfolio, 75,355,763 shares
of the Connecticut Portfolio, 76,289,392 shares of the New Jersey
59
<PAGE>
Portfolio, 74,614,558 shares of the Virginia Portfolio and
11,461,329 shares of the Florida Portfolio outstanding of which,
with respect to each Portfolio, the Trustees and officers as a
group owned less than 1%.
The Fund does not pay any fees to, or reimburse expenses of,
its Trustees who are considered "interested persons" of the Fund.
The aggregate compensation paid by the Fund to each of the
Trustees during its fiscal year ended June 30, 1995, the
aggregate compensation paid to each of the Trustees during
calendar year 1994 by all of the registered investment companies
to which the Adviser provides investment advisory services
(collectively, the "Alliance Fund Complex") and the total number
of funds in the Alliance Fund Complex with respect to which each
of the Trustees serves as a director or trustee, are set forth
below. Neither the Fund nor any other fund in the Alliance Fund
Complex provides compensation in the form of pension or
retirement benefits to any of its directors or trustees.
Total Number of Funds
Total in the Alliance Fund
Compensation Complex Including the
Aggregate from the Alliance the Fund, as to which
Name of Trustee Compensation Fund Complex, the Trustee is a
of the Fund from the Fund Including the Fund Director or Trustee
________________ _____________ __________________ ______________________
Dave H. Williams $ -0- $ -0- 6
John D. Carifa $ -0- $ -0- 49
Sam Y. Cross $5,088 $ 15,000 3
Charles H.P. Duell $4,338 $ 14,250 3
William H. Foulk, Jr. $7,500 $ 141,500 30
Elizabeth J. McCormack $4,338 $ 15,000 3
David K. Storrs $5,088 $ 5,750 3
Shelby White $5,088 $ 15,750 3
John Winthrop $5,088 $ 13,500 3
The Adviser
Alliance Capital Management L.P., a New York Stock Exchange
listed company with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an
investment advisory agreement (the "Advisory Agreement") as the
Fund's Adviser (see "Management of the Fund" in the Prospectus).
ACMC, the sole general partner of, and the owner of a 1% general
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<PAGE>
partnership interest in, the Adviser, is an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies
in the United States and a wholly-owned subsidiary of The
Equitable Companies Incorporated ("ECI"), a holding company
controlled by AXA, a French insurance holding company. As of
June 30, 1995, ACMC, Inc. and Equitable Capital Management
Corporation, each a wholly-owned direct or indirect subsidiary of
Equitable, owned in the aggregate approximately 59% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser
("Units"), and approximately 33% and 8% of the Units were owned
by the public and employees of the Adviser and its subsidiaries,
respectively, including employees of the Adviser who serve as
Directors of the Fund, calculated including as outstanding Units
subject to options exercisable by employees within 60 days of
June 30, 1995.
AXA owns approximately 60% of the outstanding voting shares
of common stock of ECI. AXA is a member of a group of companies
(the "AXA Group") that is the second largest insurance group in
France (measured by gross premiums written worldwide) and one of
the largest insurance groups in Europe. Principally engaged in
property and casualty insurance and life insurance in Europe
andelsewhere in the world, the AXA Group is also involved in real
estate operations and certain other financial services, including
mutual fund management, lease financing services and brokerage
services. Based on information provided by AXA, as of January 1,
1995, 42.3% of the voting shares (representing 54.7% of the
voting power) of AXA were owned by Midi Participations, a French
corporation that is a holding company. The voting shares of Midi
Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation
("Generali") (one of which, Belgica Insurance Holding S.A., a
Belgian Corporation, owned 34.1%). As of January 1, 1995, 62.1%
of the issued shares (representing 75.7% of the voting power) of
Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,
owned 31.8% of the issued shares) (representing 44.7% of the
voting power), and 26.5% of the voting shares (representing 16.6%
of the voting power) of Finaxa were owned by Banque Paribas, a
French bank ("PARIBAS"). Including the shares owned by Midi
Participations, as of January 1, 1995, the Mutuelles AXA directly
or indirectly owned 51.3% of the voting shares (representing
65.8% of the voting power) of AXA. In addition, certain
subsidiaries of AXA own 0.4% of the shares of AXA which are not
entitled to be voted. Acting as a group, the Mutuelles AXA
control AXA, Midi Participations and Finaxa.
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<PAGE>
The Adviser is a leading international investment manager
supervising client accounts with assets as of June 30, 1995
totaling over $135 billion (of which approximately $44 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds and included, as of June 30,
1995, 29 of the FORTUNE 100 companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,350
employees who operated out of domestic offices and the overseas
offices of subsidiaries in Bombay, Istanbul, London, Sydney,
Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The 51
registered investment companies comprising 105 separate
investment portfolios managed by the Adviser currently have more
than two million shareholders.
Under the Advisory Agreement, the Adviser provides investment
advisory services and order placement facilities for each
Portfolio of the Fund and pays all compensation of Trustees of
the Fund who are affiliated persons of the Adviser. The Adviser
or its affiliates also furnish the Fund, without charge, with
management supervision and assistance and office facilities.
Under the Advisory Agreement, each of the Portfolios pays an
advisory fee at the annual rate of .50 of 1% up to $1.25billion
of the average daily value of its net assets, .49 of 1% of the
next $.25 billion of such assets, .48 of 1% of the next $.25
billion of such assets, .47 of 1% of the next $.25 billion of
such assets, .46 of 1% of the next $1 billion of such assets and
.45 of 1% of the average daily net assets of the respective
Portfolio in excess of $3 billion. The fee is accrued daily and
paid monthly. The Adviser will reimburse a Portfolio to the
extent that its net expenses (excluding taxes, brokerage,
interest and extraordinary expenses) exceed 1% of its average
daily net assets for any fiscal year. For the fiscal years ended
June 30, 1993, 1994 and 1995, the Adviser received from the
General Portfolio, an advisory fee of $4,982,140, $5,716,406 and
$5,696,283, respectively. For the fiscal year ended June 30,
1993, the Adviser received from the New York Portfolio an
advisory fee of $357,103 (net of expenses in excess of 1% and net
of expenses in excess of a voluntary limitation of .80% for the
year ended June 30, 1993). For the fiscal year ended June 30,
1994, the Adviser received from the New York Portfolio an
advisory fee of $478,247 (net of expenses in excess of 1% and net
of expenses in excess of a voluntary limitation of .80% for the
period July 1, 1993 to October 31, 1993 and net of expenses in
excess of 1% and net of expenses in excess of a voluntary
limitation of .85% for the period November 1, 1993 to June 30,
1994). For the fiscal year ended June 30, 1995, the Adviser
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<PAGE>
received from the New York Portfolio an advisory fee of $699,193
(net of expenses in excess of 1% and net of expenses in excess of
a voluntary limitation of .85% for the period ended June 30,
1995). For the fiscal years ended June 30, 1993, 1994 and 1995,
the Adviser received from the California Portfolio an advisory
fee of $748,087, $888,473 and $1,128,198, respectively. For the
fiscal year ended June 30, 1993, the Adviser received $76,585
from the Connecticut Portfolio pursuant to voluntary expense
reimbursements for expenses exceeding .70 of 1% of the average
daily net assets. For the fiscal year ended June 30, 1994, the
Adviser received $95,528 from the Connecticut Portfolio pursuant
to voluntary expense reimbursements for the period July 1, 1993
to October 31, 1993 for expenses exceeding .70 of 1% of the
average daily net assets and for the period November 1, 1993 to
June 30, 1994 for expenses exceeding .80 of 1% of its average
daily net assets. For the fiscal year ended June 30, 1995, the
Adviser received from the Connecticut Portfolio an advisory fee
of $126,013 pursuant to voluntary expense reimbursements for
expenses exceeding .80 of 1% of its average daily net assets. For
the period February 7, 1994 (commencement of operations) to June
30, 1994 the Adviser received no advisory fee from the New Jersey
Portfolio pursuant to voluntary expense reimbursements, for
expenses exceeding .70 of 1% of its average daily net assets. For
the fiscal year ended June 30, 1995, the Adviser received from
the New Jersey Portfolio an advisory fee of $30,390 pursuant to
voluntary expense reimbursements for expenses exceeding .70 of1%
of its average daily net assets for the period July 1, 1994 to
February 28, 1995 and from March 1, 1995 to June 30, 1995 for
expenses exceeding .80 of 1% of its average daily net assets. For
the period October 25, 1994 (commencement of operations) the
Adviser voluntarily agreed to reimburse the Virginia Portfolio
for all expenses, from October 26, 1994 to May 8, 1995 for
expenses exceeding .40 of 1% of its average daily net assets,
from May 9, 1995 to May 31, 1995 for expenses exceeding .50 of 1%
of its average daily net assets and from June 1, 1995 to June 30,
1995 for expenses exceeding .60 of 1% of its average daily net
assets. In accordance with the Distribution Services Agreement
described below, the Fund may pay a portion of advertising and
promotional expenses in connection with the sale of shares of the
Fund. The Fund also pays for printing of prospectuses and other
reports to shareholders and all expenses and fees related to
registration and filing with the Securities and Exchange
Commission and with state regulatory authorities. The Fund pays
all other expenses incurred in its operations, including the
Adviser's management fees; custody, transfer and dividend
disbursing expenses; legal and auditing costs; clerical,
accounting, administrative and other office costs; fees and
expenses of Trustees who are not affiliated with the Adviser;
costs of maintenance of the Fund's existence; and interest
charges, taxes, brokerage fees, and commissions. As to the
obtaining of clerical and accounting services not required to be
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<PAGE>
provided to the Fund by the Adviser under the Advisory Agreement,
the Fund may employ its own personnel. For such services, it
also may utilize personnel employed by the Adviser or its
affiliates; if so done, the services are provided to the Fund at
cost and the payments therefore must be specifically approved in
advance by the Fund's Trustees. In respect of the Adviser's
services to the Portfolios for the fiscal years ended June 30,
1993, 1994 and 1995, the Adviser received $90,992, $104,500 and
$112,500 respectively, from the General Portfolio; $70,676,
$83,800 and $93,400 respectively, from the New York Portfolio;
$71,722, $84,500 and $94,100 respectively, from the California
Portfolio; $70,041, $82,800 and $91,700 respectively, from the
Connecticut Portfolio; and $51,917 from the New Jersey Portfolio
for the period February 7, 1994 (commencement of operations) to
June 30, 1994 and for the fiscal year ended June 30, 1995
$91,500, from the New Jersey Portfolio. For the fiscal period
October 25, 1994 (commencement of operations) to June 30, 1995,
the Adviser received $47,000 from the Virginia Portfolio.
The Fund has made arrangements with certain broker-dealers
whose customers are Fund shareholders pursuant to which the
broker-dealers perform shareholder servicing functions, such as
opening new shareholder accounts, processing purchase and
redemption transactions, and responding to inquiries regarding
the Fund's current yield and the status of shareholder accounts.
The Fund pays for the electronic communications equipment
maintained at the broker-dealers' offices that permits access to
the Fund's computer files and, in addition, reimburses the
broker-dealers at cost for personnel expenses involved in
providing the services. All such reimbursements must be approved
in advance by the Fund's Trustees. For the fiscal years ended
June 30, 1993, 1994 and 1995, broker-dealers were reimbursed
$438,262, $540,747 and $360,255, respectively, by the General
Portfolio, $32,685, $77,807 and $33,165, respectively, by the New
York Portfolio, $33,726, $43,047 and $83,891, respectively, by
the California Portfolio; $20,306, $26,041 and $21,142,
respectively, by the Connecticut Portfolio, for the period
February 7, 1994 (commencement of operations) to June 30, 1994
$847 from the New Jersey Portfolio and for the fiscal year ended
June 30, 1995, $4,864 from the New Jersey Portfolio and for the
period October 25, 1994 (commencement of operations) to June 30,
1995 $26,560 from the Virginia Portfolio.
The Advisory Agreement became effective on July 22, 1992.
Continuance of the Advisory Agreement until June 30, 1996 was
approved by the vote, cast in person by all the Trustees of the
Trust who neither were interested persons of the Trust nor had
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<PAGE>
any direct or indirect financial interest in the Agreement or any
related agreement, at a meeting called for that purpose on June
12, 1995.
The Advisory Agreement remains in effect from year to year
provided that such continuance is specifically approved at least
annually by a vote of a majority of the outstanding shares of the
Fund or by the Fund's Trustees, including in either case approval
by a majority of the Trustees who are not parties to the
Agreement, or interested persons as defined in the Act. The
Advisory Agreement may be terminated without penalty on 60 days'
written notice at the option of either party or by a vote of the
outstanding voting securities of the Fund; it will automatically
terminate in the event of assignment. The Adviser is not liable
for any action or inaction with regard to its obligations under
the Advisory Agreement as long as it does not exhibit willful
misfeasance, bad faith, gross negligence, or reckless disregard
of its obligations.
Distribution Services Agreement
Rule 12b-1 adopted by the Securities and Exchange Commission
under the Act permits an investment company to directly or
indirectly pay expenses associated with the distribution of its
shares in accordance with a duly adopted and approved plan. The
Fund has entered into a Distribution Services Agreement (the
"Agreement") which includes a plan adopted pursuant to Rule 12b-1
(the "Plan"). Pursuant to the Plan, the Fund pays to the
Advisera Rule 12b-1 distribution services fee, which may not
exceed an annual rate of .25 of 1% of the Fund's aggregate
average daily net assets. In addition, under the Agreement the
Adviser makes payments for distribution assistance and for
administrative and accounting services from its own resources
which may include the management fee paid by the Fund. The
Agreement became effective on May 1, 1985.
Payments under the Agreement are used in their entirety for
(i) payments to broker-dealers and other financial
intermediaries, including Donaldson, Lufkin & Jenrette Securities
Corporation, an affiliate of the Adviser, for distribution
assistance and to banks and other depository institutions for
administrative and accounting services, and (ii) otherwise
promoting the sale of shares of the Fund such as by paying for
the preparation, printing and distribution of prospectuses and
other promotional materials sent to existing and prospective
shareholders and by directly or indirectly purchasing radio,
television, newspaper and other advertising. In approving the
Agreement, the Trustees determined that there was a reasonable
likelihood that the Agreement would benefit the Fund and its
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<PAGE>
shareholders. During the fiscal year ended June 30, 1995, the
General Portfolio made payments to the Adviser for expenditure
under the Agreement in amounts aggregating $2,752,028 which
constituted .24 of 1% of such Portfolio's average daily net
assets during the year, and the Adviser made payments from its
own resources as described above aggregating $3,159,099. Of the
$5,911,127 paid by the General Portfolio and the Adviser under
the Agreement, $80,393 was spent on the printing and mailing of
prospectuses for persons other than current shareholders and
$5,830,734 for compensation to dealers. During the fiscal year
ended June 30, 1995 the New York Portfolio made payments to the
Adviser for expenditures under the Agreement in amounts
aggregating $247,853 which constituted .15 of 1% of such
Portfolio's average daily net assets during the year, and the
Adviser made payments from its own resources as described above
aggregating $596,664. Of the $844,517 paid by the New York
Portfolio and the Adviser under the Agreement, $18,389 was spent
on the printing and mailing of prospectuses for persons other
than current shareholders and $826,130 for compensation to
dealers. During the fiscal year ended June 30, 1995 the
California Portfolio made payments to the Adviser for expenditure
under the Agreement in amounts aggregating $387,516 which
constituted .17 of 1% of such Portfolio's average daily net
assets during the year, and the Adviser made payments from its
own resources as described above aggregating $607,932. Of the
$995,448 paid by the California Portfolio and the Adviser under
the Agreement, $29,273 was spent on the printing and mailing of
prospectuses for persons other than current shareholders and
$966,175 for compensation to dealers. During the fiscal
yearended June 30, 1995, the Connecticut Portfolio made payments
to the Adviser for expenditure under the Agreement in amounts
aggregating $98,165 which constituted .15 of 1% of such
Portfolio's average daily net assets during the period, and the
Adviser made payments from its own resources as described above
aggregating $222,844. Of the $321,009 paid by the Connecticut
Portfolio and the Adviser under the Agreement, $6,162 was spent
on printing and mailing of prospectuses for persons other than
current shareholders and $314,847 for compensation of dealers.
During the fiscal year ended June 30, 1995, the New Jersey
Portfolio made payments to the Adviser for expenditure under the
Agreement in amounts aggregating $87,534 which constituted .15 of
1% of such Portfolio's average daily net assets during the
period, and the Adviser made payments from its own resources as
described above aggregating $212,836. Of the $300,370 paid by
the New Jersey Portfolio and the Adviser under the Agreement,
$4,781 was spent on printing and mailing of prospectuses for
persons other than current shareholders and $295,589 for
compensation of dealers. For the period October 25, 1994
(commencement of operations) to June 30, 1995 the Virginia
Portfolio made payments to the Adviser for expenditure under the
Agreement in amounts aggregating $54,575 which constituted .15 of
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<PAGE>
1% of such Portfolio's average daily net assets during the
period, and the Adviser made payments from its own resources as
described above aggregating $142,051. Of the $196,626 paid by
the Virginia Portfolio and the Adviser under the Agreement,
$10,012 was spent on printing and mailing of prospectuses for
persons other than current shareholders and $186,614 for
compensation of dealers.
The administrative and accounting services provided by
broker-dealers, depository institutions and other financial
institutions may include, but are not limited to, establishing
and maintaining shareholder accounts, sub-accounting, processing
of purchase and redemption orders, sending confirmations of
transactions, forwarding financial reports and other
communications to shareholders and responding to shareholder
inquiries regarding the Fund. The State of Texas requires that
shares of the Fund may be sold in that state only by dealers or
other financial institutions that are registered there as broker-
dealers. As interpreted by courts and administrative agencies,
certain laws and regulations limit the ability of a bank or other
depository institution to become an underwriter or distributor of
securities. However, in the opinion of the Fund's management
based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other
services for investment companies such as the administrative and
accounting services described above. The Trustees will consider
appropriate modifications to the Fund's operations, including
discontinuance of payments under the Agreement to banks and
otherdepository institutions, in the event of any future change
in such laws or regulations which may affect the ability of such
institutions to provide the above-mentioned services.
The Treasurer of the Fund reports the amounts expended under
the Agreement and the purposes for which such expenditures were
made to the Trustees on a quarterly basis. Also, the Agreement
provides that the selection and nomination of disinterested
Trustees (as defined in the Act) are committed to the discretion
of the disinterested Trustees then in office.
The Agreement became effective on July 22, 1992. Continuance
of the Agreement until June 30, 1996 was approved by the vote,
cast in person by all the Trustees of the Fund who neither were
interested persons of the Fund nor had any direct or indirect
financial interest in the Agreement or any related agreement, at
a meeting called for that purpose on June 12, 1995. The Agreement
may be continued annually thereafter if approved by a majority
vote of the Trustees who neither are interested persons of the
Fund nor have any direct or indirect financial interest in the
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Agreement or in any related agreement, cast in person at a
meeting called for that purpose.
All material amendments to the Agreement must be approved by
a vote of the Trustees, including a majority of the disinterested
Trustees, cast in person at a meeting called for that purpose,
and the Agreement may not be amended in order to increase
materially the costs which the Fund may bear pursuant to the
Agreement without the approval of a majority of the outstanding
shares of the Fund. The Agreement may also be terminated at any
time by a majority vote of the disinterested Trustees, or by a
majority of the outstanding shares of the Fund or by the Adviser.
Any agreement with a qualifying broker-dealer or other financial
intermediary may be terminated without penalty on not more than
60 days' written notice by a vote of the majority of non-party
Trustees, by a vote of a majority of the outstanding shares of
the Fund, or by the Adviser and will terminate automatically in
the event of its assignment.
The Agreement is in compliance with rules of the National
Association of Securities Dealers, Inc. (the "NASD") which became
effective July 7, 1993 and which limit the annual asset-based
sales charges and service fees that a mutual fund may impose to
.75% and .25%, respectively, of average annual net assets.
________________________________________________________________
PURCHASE AND REDEMPTION OF SHARES
________________________________________________________________
The Fund may refuse any order for the purchase of shares.
The Fund reserves the right to suspend the sale of its shares to
the public in response to conditions in the securities markets or
for other reasons.
Accounts Not Maintained Through Financial Intermediaries
Opening Accounts New Investments
A. When Funds are Sent by Wire (the wire method permits
immediate credit)
1) Telephone the Fund toll-free at (800) 824-1916. The
Fund will ask for the name of the account as you
wish it to be registered, address of the account,
and taxpayer identification number social
security number for an individual. The Fund will
then provide you with an account number.
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2) Instruct your bank to wire Federal funds (minimum
$1,000) exactly as follows:
ABA 0110 00028
State Street Bank and Trust Company
Boston, MA 02101
Alliance Municipal Trust
DDA 9903-279-9
Your account name - - as registered
Your account number - - with the Fund
3) Mail a completed Application Form to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, New Jersey 07096-1520
B. When Funds are Sent by Check
1) Fill out an Application Form.
2) Mail the completed Application Form along with your
check or negotiable bank draft (minimum $1,000),
payable to "Alliance Municipal Trust," to Alliance
Fund Services, Inc. as in A(3) above.
Subsequent Investments
A. Investments by Wire (to obtain immediate credit)
Instruct your bank to wire Federal funds (minimum $100)
to State Street Bank and Trust Company ("State Street Bank") as
in A(2) above.
B. Investments by Check
Mail your check or negotiable bank draft (minimum $100),
payable to "Alliance Municipal Trust," to Alliance Fund Services,
Inc. as in A(3) above.
Include with the check or draft the "next investment"
stub from one of your previous monthly or interim account
statements. For added identification, place your Fund account
number on the check or draft.
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<PAGE>
Investments Made by Check
Money transmitted by a check drawn on a member of the
Federal Reserve System is converted to Federal funds in one
business day following receipt and, thus, is then invested in the
Fund. Checks drawn on banks which are not members of the Federal
Reserve System may take longer to be converted and invested. All
payments must be in United States dollars.
PROCEEDS FROM ANY SUBSEQUENT REDEMPTION BY YOU OF FUND
SHARES THAT WERE PURCHASED BY CHECK OR ELECTRONIC FUNDS TRANSFER
WILL NOT BE FORWARDED TO YOU UNTIL THE FUND IS REASONABLY ASSURED
THAT YOUR CHECK OR ELECTRONIC FUNDS TRANSFER HAS CLEARED, UP TO
FIFTEEN DAYS FOLLOWING THE PURCHASE DATE. If the redemption
request during such period is in the form of a Fund check, the
check will be marked "insufficient funds" and be returned unpaid
to the presenting bank.
Redemptions
A. By Telephone
You may withdraw any amount from your account on any
Fund business day (i.e., any weekday exclusive of days on which
the New York Stock Exchange or State Street Bank is closed)
between 9:00 a.m. and 5:00 p.m. (New York time) via orders given
to Alliance Fund Services, Inc. by telephone toll-free (800)
824-1916. Such redemption orders must include your account name
as registered with the Fund and the account number.
If your telephone redemption order is received by
Alliance Fund Services, Inc. prior to 12:00 Noon (New York time),
we will send the proceeds in Federal funds by wire to
yourdesignated bank account that day. The minimum amount for a
wire is $1,000. If your telephone redemption order is received
by Alliance Fund Services, Inc. after 12:00 Noon and before 4:00
p.m., we will wire the proceeds the next business day. You also
may request that proceeds be sent by check to your designated
bank. Redemptions are made without any charge to you.
During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
Alliance Fund Services, Inc. at the address shown on the cover of
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this statement of additional information. The Fund reserves the
right to suspend or terminate its telephone redemption service at
any time without notice. Neither the Fund nor the Adviser, or
Alliance Fund Services, Inc. will be responsible for the
authenticity of telephone requests for redemptions that the Fund
reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for redemptions are genuine, including among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for redemptions.
B. By Check-Writing
With this service, you may write checks made payable to
any payee in any amount of $100 or more. Checks cannot be
written for more than the principal balance (not including any
accrued dividends) in your account. First, you must fill out the
Signature Card which is with the Application Form. If you wish
to establish this check-writing service, except that State Street
Bank will impose its normal charges for checks which are returned
unpaid because of insufficient funds or for checks upon which you
have placed a stop order.
THE CHECK-WRITING SERVICE ENABLES YOU TO RECEIVE THE DAILY
DIVIDENDS DECLARED ON THE SHARES TO BE REDEEMED UNTIL THE DAY
THAT YOUR CHECK IS PRESENTED TO STATE STREET BANK FOR PAYMENT.
C. By Mail
You may withdraw any amount from your account at any
time by mail. Written orders for withdrawal, accompanied by
duly endorsed certificates, if issued, should be mailed to
Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey
07096-1520. Such orders must include the account name as
registered with the Fund and the account number. All written
orders for redemption, and accompanying certificates, if any,
must be signed by all owners of the account with the signatures
guaranteed by an institution which is an "eligible guarantor" as
defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended.
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________________________________________________________________
ADDITIONAL INFORMATION
________________________________________________________________
Automatic Investment Program. A shareholder may purchase
shares of the Fund through an automatic investment program
through a bank that is a member of the National Automated
Clearing House Association. Purchases can be made on a Fund
business day each month designated by the shareholder.
Shareholders wishing to establish an automatic investment program
should write or telephone the Fund or AFS at (800) 221-5672.
Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Fund itself so that the institutions may properly
process such orders prior to their transmittal to State Street
Bank and Trust Company ("State Street Bank"). Should an investor
place a transaction order with such an institution after its
deadline, the institution may not effect the order with the Fund
until the next business day. Accordingly, an investor should
familiarize himself or herself with the deadlines set by his or
her institution. For example, the Fund's Distributor accepts
purchase orders from its customers up to 2:15 p.m. (New York
time) for issuance at the 4:00 p.m. transaction time and price.
A brokerage firm acting on behalf of a customer in connection
with transactions in Fund shares is subject to the same legal
obligations imposed on it generally in connection with
transactions in securities for a customer, including the
obligation to act promptly and accurately.
Orders for the purchase of Fund shares become effective at
the next transaction time after Federal funds or bank wire
moniesbecome available to State Street Bank for a shareholder's
investment. Federal funds are a bank's deposits in a Federal
Reserve Bank. These funds can be transferred by Federal Reserve
wire from the account of one member bank to that of another
member bank on the same day and are considered to be immediately
available funds; similar immediate availability is accorded
monies received at State Street Bank by bank wire. Money
transmitted by a check drawn on a member of the Federal Reserve
System is converted to Federal funds in one business day
following receipt. Checks drawn on banks which are not members
of the Federal Reserve System may take longer. All payments
(including checks from individual investors) must be in United
States dollars.
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All shares purchased are confirmed to each shareholder and
are credited to his or her account at the net asset value. To
avoid unnecessary expense to the Fund and to facilitate the
immediate redemption of shares, share certificates, for which no
charge is made, are not issued except upon the written request of
a shareholder. Certificates are not issued for fractional
shares. Shares for which certificates have been issued are not
eligible for any of the optional methods of withdrawal; namely,
the telephone, telegraph, check-writing or periodic redemption
procedures. The Fund reserves the right to reject any purchase
order.
Arrangements for Telephone Redemptions. If you wish to use
the telephone redemption procedure, indicate this on your
Application Form and designate a bank and account number to
receive the proceeds of your withdrawals. If you decide later
that you wish to use this procedure, or to change instructions
already given, send a written notice to Alliance Capital
Reserves, P.O. Box 1520, Secaucus, New Jersey 07096-1520, with
your signature guaranteed by an institution which is an eligible
guarantor. For joint accounts, all owners must sign and have
their signatures guaranteed.
Retirement Plans. The Fund's objectives of safety of
principal, excellent liquidity and maximum current income to the
extent consistent with the first two objectives may make it a
suitable investment vehicle for part or all of the assets held in
various tax-deferred retirement plans. The Fund has available
forms of individual retirement account (IRA), simplified employee
pension plans (SEP), 403(b)(7) plans and employer-sponsored
retirement plans (Keogh or HR10 Plan). Certain services
described in this prospectus may not be available to retirement
accounts and plans. Persons desiring information concerning
these plans should write or telephone the Fund or AFS at (800)
221-5672.
The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United
States, is the custodian under these plans. The custodian
charges a nominal account establishment fee and a nominal annual
maintenance fee. A portion of such fees is remitted to AFS to
compensate that organization for services rendered to retirement
plan accounts maintained with the Fund.
Periodic Distribution Plans. Without affecting your right to
use any of the methods of redemption described above, by checking
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the appropriate boxes on the Application Form, you may elect to
participate additionally in the following plans without any
separate charge. Under the Income Distribution Plan you receive
monthly payments of all the income earned in your Fund account,
with payments forwarded by check or electronically via the
Automated Clearing House ("ACH") network shortly after the close
of the month. Under the Systematic Withdrawal Plan, you may
request payments by check or electronically via the ACH network
in any specified amount of $50 or more each month or in any
intermittent pattern of months. If desired, you can order, via a
signature-guaranteed letter to the Fund, such periodic payments
to be sent to another person. Shareholders wishing either of the
above plans electronically through the ACH network should write
or telephone the Fund or AFS at (800) 221-5672.
The Fund reserves the right to close an account if it has a
balance below $500 for each day of the first two months of a
calendar year. Therefore, unless this has occurred, a
shareholder with a zero balance, when reinvesting, should
continue to use his account number. Otherwise, the account
should be re-opened pursuant to procedures described in the
Prospectus.
A "business day," during which purchases and redemptions of
Fund shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund purposes as
any weekday exclusive of New Year's Day, Washington's Birthday
(observed), Good Friday, Memorial Day (observed), Independence
Day, Labor Day, Thanksgiving Day and Christmas Day; if one of
these holidays falls on a Saturday or Sunday, purchases and
redemptions will likewise not be processed on the preceding
Friday or the following Monday, respectively. On any such day
that is an official bank holiday in Massachusetts, neither
purchases nor wired redemptions can become effective because
Federal funds cannot be received or sent by State Street Bank.
On such days, therefore, the Fund can only accept redemption
orders for which shareholders desire remittance by check. The
right of redemption may be suspended or the date of a redemption
payment postponed for any period during which the New York Stock
Exchange is closed (other than customary weekend and
holidayclosings), when trading on the New York Stock Exchange is
restricted, or an emergency (as determined by the Securities and
Exchange Commission) exists, or the Commission has ordered such a
suspension for the protection of shareholders. The value of a
shareholder's investment at the time of redemption may be more or
less than his or her cost, depending on the market value of the
securities held by the Fund at such time and the income earned.
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________________________________________________________________
DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE
________________________________________________________________
All net income of each Portfolio is determined after the
close of each business day, currently 4:00 p.m. New York time
(and at such other times as the Trustees may determine) and is
paid immediately thereafter pro rata to shareholders of record of
that Portfolio via automatic investment in additional full and
fractional shares in each shareholder's account at the rate of
one share for each dollar distributed. As such additional shares
are entitled to dividends on following days, a compounding growth
of income occurs.
A Portfolio's net income consists of all accrued interest
income on Portfolio assets less expenses allocable to that
Portfolio (including accrued expenses and fees payable to the
Adviser) applicable to that dividend period. Realized gains and
losses are reflected in a Portfolio's net asset value and are not
included in net income. Net asset value per share of each
Portfolio is expected to remain constant at $1.00 since all net
income of each Portfolio is declared as a dividend each time net
income is determined and net realized gains and losses are
expected to be relatively small.
The valuation of the Fund's portfolio securities is based
upon their amortized cost which does not take into account
unrealized securities gains or losses as measured by market
valuations. The amortized cost method involves valuing an
instrument at its cost and thereafter applying a constant
amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value
of the instrument. During periods of declining interest rates,
the daily yield on shares of the Fund may be higher than that of
a fund with identical investments utilizing a method of valuation
based upon market prices for its portfolio instruments; the
converse would apply in a period of rising interest rates.
The Fund utilizes the amortized cost method of valuation of
portfolio securities in accordance with the provisions of Rule
2a-7 under the Act. Pursuant to such rule, each Portfolio
maintains a dollar-weighted average portfolio maturity of 90
daysor less, purchases instruments which, at the time of
investment, have remaining maturities of no more than one year
(which maturities may extend to 397 days), and invests only in
securities of high quality. Under Rule 2a-7, the Fund treats a
municipal security which has a variable or floating rate of
interest as having a maturity equal to the longer of either the
period, if any, remaining until the interest rate is next
scheduled to be readjusted or the period remaining until the
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principal amount can be recovered by exercising the security's
demand feature. The Fund maintains procedures designed to
stabilize, to the extent reasonably possible, the price per share
of each Portfolio as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the
Fund's portfolio holdings by the Trustees at such intervals as
they deem appropriate to determine whether and to what extent the
net asset value of each Portfolio calculated by using available
market quotations or market equivalents deviates from net asset
value based on amortized cost. If such deviation as to any
Portfolio exceeds 1/2 of 1%, the Trustees will promptly consider
what action, if any, should be initiated. In the event the
Trustees determine that such a deviation may result in material
dilution or other unfair results to new investors or existing
shareholders, they will consider corrective action which might
include (1) selling instruments held by the affected Portfolio
prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; (2) withholding dividends of
net income on shares of that Portfolio; or (3) establishing a net
asset value per share of that Portfolio by using available market
quotations or equivalents.
The net asset value of the shares of each Portfolio is
determined each business day (and on such other days as the
Trustees deem necessary) at 12:00 Noon and 4:00 p.m. New York
time. The net asset value per share of a Portfolio is calculated
by taking the sum of the value of that Portfolio's investments
and any cash or other assets, subtracting liabilities, and
dividing by the total number of shares of that Portfolio
outstanding. All expenses, including the fees payable to the
Adviser, are accrued daily.
________________________________________________________________
TAXES
________________________________________________________________
Federal Income Tax Considerations
Each of the Fund's Portfolios has qualified for each fiscal
year to date and intends to qualify in each future year to be
taxed as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code") and, as such, will
not be liable for Federal income and excise taxes on the net
income and capital gains distributed to its shareholders. Since
each Portfolio of the Fund distributes all of its net income and
capital gains, each Portfolio should thereby avoid all Federal
income and excise taxes.
For shareholders' Federal income tax purposes, distributions
to shareholders out of tax-exempt interest income earned by each
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Portfolio of the Fund generally are not subject to Federal income
tax. See, however, "Alternative Minimum Tax" above.
Distributions out of taxable interest income, other
investment income, and short-term capital gains are taxable to
shareholders as ordinary income. Since each Portfolio's
investment income is derived from interest rather than dividends,
no portion of such distributions is eligible for the
dividends-received deduction available to corporations.
Long-term capital gains, if any, distributed by the Fund to a
shareholder are taxable to the shareholder as long-term capital
gain, irrespective of the length of time he may have held his
shares. Distributions of short and long-term capital gains, if
any, are normally made once each year near calendar year-end,
although such distributions may be made more frequently if
necessary in order to maintain the Fund's net asset value at
$1.00 per share.
Interest on indebtedness incurred by shareholders to purchase
or carry shares of the Fund is not deductible for Federal income
tax purposes. Under rules of the Internal Revenue Service for
determining when borrowed funds are used for purchasing or
carrying particular assets, shares may be considered to have been
purchased or carried with borrowed funds even though those funds
are not directly linked to the shares. Further, persons who are
"substantial users" (or related persons) of facilities financed
by private activity bonds (within the meaning of Section 147(a)
of the Code) should consult their tax advisers before purchasing
shares of any Portfolio.
Substantially all of the dividends paid by each Portfolio are
anticipated to be exempt from Federal income taxes. Shortly
after the close of each calendar year, a notice is sent to each
shareholder advising him of the total dividends paid into his
account for the year and the portion of such total that is exempt
from Federal income taxes. This portion is determined by the
ratio of the tax-exempt income to total income for the entire
year and, thus, is an annual average rather than a day-by-day
determination for each shareholder.
State Income Tax Considerations
General Portfolio. Shareholders of the General Portfolio may be
subject to state and local taxes on distributions from the
General Portfolio, including distributions which are exempt from
Federal income taxes. Each investor should consult his own tax
adviser to determine the tax status of distributions from the
General Portfolio in his particular state and locality.
New York Portfolio. Shareholders of the New York Portfolio who
are individual residents of New York are not subject to the New
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York State or New York City personal income taxes on
distributions from the New York Portfolio which are designated as
derived from municipal securities issued by the State of New York
or its political subdivisions. Distributions from the New York
Portfolio are, however, subject to the New York Corporate
Franchise Tax payable by corporate shareholders.
California Portfolio. Shareholders of the California Portfolio
who are individual residents of California are not subject to the
California personal income tax on distributions from the
California Portfolio which are designated as derived from
municipal securities issued by the State of California or its
political subdivisions. Distributions from the California
Portfolio are, however, subject to the California Corporate
Franchise Tax payable by corporate shareholders.
Connecticut Portfolio. Shareholders of the Connecticut Portfolio
who are individual residents of Connecticut are not subject to
Connecticut personal income taxes on distributions from the
Connecticut Portfolio which are designated as derived from
municipal securities issued by the State of Connecticut or its
political subdivisions.
New Jersey Portfolio. Shareholders of the Portfolio who are
individual residents of New Jersey are not subject to the New
Jersey personal income tax on distributions from the Portfolio
which are designated as derived from municipal securities issued
by the State of New Jersey or its political subdivisions.
Distributions from the Portfolio are, however, subject to the
NewJersey Corporation Business (Franchise) Tax and the New Jersey
Corporation Income Tax payable by corporate shareholders.
Virginia Portfolio. Shareholders of the Virginia Portfolio who
are individual residents of Virginia are not subject to the
Virginia personal income tax on distributions from the Portfolio
which are designated as derived from municipal securities issued
by the Commonwealth of Virginia or its political subdivisions.
Florida Portfolio. Dividends paid by the Portfolio to individual
Florida shareholders will not be subject to Florida income tax,
which is imposed only on corporations. However, Florida
currently imposed an "intangible tax" at the rate of $2.00 per
$1,000 taxable value of certain securities, such as shares of the
Portfolio, and other intangible assets owned by Florida
residents. U.S. Government Securities and Florida municipal
securities are exempt from this intangible tax. It is
anticipated that the Portfolio's shares will qualify for
exemption from the Florida intangible tax. In order to so
qualify, the Portfolio must, among other things, have its entire
portfolio invested in U.S. Government Securities and Florida
municipal securities on December 31 of any year. Exempt-interest
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dividends paid by the Portfolio to corporate shareholders will be
subject to Florida corporate income tax.
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
Portfolio Transactions. Subject to the general supervision
of the Trustees of the Fund, the Adviser is responsible for the
investment decisions and the placing of the orders for portfolio
transactions for the Fund. Because the Fund invests in
securities with short maturities, there is a relatively high
portfolio turnover rate. However, the turnover rate does not
have an adverse effect upon the net yield and net asset value of
the Fund's shares since the Fund's portfolio transactions occur
primarily with issuers, underwriters or major dealers in money
market instruments acting as principals. Such transactions are
normally on a net basis which do not involve payment of brokerage
commissions. The cost of securities purchased from an
underwriter usually includes a commission paid by the issuer to
the underwriters; transactions with dealers normally reflect the
spread between bid and asked prices.
The Fund has no obligations to enter into transactions in
portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than
onedealer, the Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with the Fund. The supplemental information received
from a dealer is in addition to the services required to be
performed by the Adviser under the Advisory Agreement, and the
expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such information. Portfolio securities
will not be purchased from or sold to the Adviser's affiliate,
Donaldson, Lufkin & Jenrette, Inc., or any subsidiary or
affiliate of the parent. During the fiscal years ended June 30,
1993, 1994 and 1995, the Fund paid no brokerage commissions.
Capitalization. All shares of the Fund, when issued, are
fully paid and non-assessable. The Trustees are authorized to
reclassify and issue any unissued shares to any number of
additional classes or series without shareholder approval.
Accordingly, the Trustees in the future, for reasons such as the
desire to establish one or more additional portfolios with
different investment objectives, policies or restrictions, may
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create additional classes or series of shares. Any issuance of
shares of another class would be governed by the Investment
Company Act of 1940 and the law of the Commonwealth of
Massachusetts. Shares of each Portfolio are normally entitled to
one vote for all purposes. Generally, shares of all Portfolios
vote as a single series for the election of Trustees and on any
other matter affecting all Portfolios in substantially the same
manner. As to matters affecting each Portfolio differently, such
as approval of the Advisory Agreement and changes in investment
policy, shares of each Portfolio vote as separate classes.
Certain procedures for the removal by shareholders of trustees of
investment trusts, such as the Fund, are set forth in Section
16(c) of the Act.
Set forth and discussed below is certain information as to
all persons who owned of record or beneficially 5% or more of the
outstanding shares of a portfolio at October 2, 1995.
No. of % of
Name and Adress Shares Class
______________ ______ _____
New Jersey Portfolio
Thomas Brown 4,784,383 6%
Louise Brown JT TEN
4 Sassafras Court
PO Box 836
Voorhees, New Jersey 08043-0836
Shareholder Liability. Under Massachusetts law, shareholders
could, under certain circumstances, be held personally liable for
the obligations of the Fund. However, the Agreement and
Declaration of Trust disclaims shareholder liability for acts or
obligations of the Fund and requires that the Trustees use their
best efforts to ensure that notice of such disclaimer be given in
each note, bond, contract, instrument, certificate or undertaking
made or issued by the trustees or officers of the Fund. The
Agreement and Declaration of Trust provides for indemnification
out of the property of the Fund for all loss and expense of any
shareholder of the Fund held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to
meet its obligations. In the view of the Adviser, such risk is
not material.
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Legal Matters. The legality of the shares offered hereby has
been passed upon by Seward & Kissel, One Battery Park Plaza, New
York, New York, counsel for the Fund and the Adviser. Seward &
Kissel has relied upon the opinion of Sullivan & Worcester,
Boston, Massachusetts, for matters relating to Massachusetts law.
Accountants. An opinion relating to each Portfolio's
financial statements is given herein by McGladrey & Pullen, LLP,
New York, New York, independent auditors for the Fund.
Yield Quotations. Advertisements containing yield quotations
for one or more Portfolios for the Fund may from time to time be
sent to investors or placed in newspapers, magazines or other
media on behalf of the Fund. These advertisements may quote
performance rankings, ratings or data from independent
organizations or financial publications such as Lipper Analytical
Services, Inc., Morningstar, Inc., IBC's Money Fund Report, IBC's
Money Market Insight or Bank Rate Monitor or compare the Fund's
performance to bank money market deposit accounts, certificates
of deposit or various indices. Such yield quotations are
calculated in accordance with the standardized method referred to
in Rule 482 under the Securities Act of 1933. The daily
dividends for the seven days ended June 30, 1995 for the General,
New York, California, Connecticut, New Jersey and Virginia
Portfolios amounted to an annualized yield, after expense
reimbursement, of 3.25%, 3.36%, 3.18%, 3.19%, 3.23% and 3.54%,
respectively, equivalent to 3.30%, 3.42%, 3.23%, 3.24%, 3.28% and
3.60%, respectively, when adjusted for the Fund's daily
compounding. Absent expense reimbursement, the annualized yield
for this period for the New York Portfolio would have been 3.23%,
equivalent to an effective yield of 3.29%. Absent expense
reimbursement, the annualized yield for this period for
theCalifornia Portfolio would have been 3.13%, equivalent to an
effective yield of 3.18%. Absent expense reimbursement, the
annualized yield for this period for the Connecticut Portfolio
would have been 2.85%, equivalent to an effective yield of 2.90%.
Absent expense reimbursement, the annualized yield for this
period for the New Jersey Portfolio would have been 2.88%,
equivalent to an effective yield of 2.93%. Absent expense
reimbursement, the annualized yield for this period for the
Virginia Portfolio would have been 3.24%, equivalent to an
effective yield of 3.39%. The Florida Portfolio had not yet
commenced operations as of June 30, 1995.
Yield quotations for a Portfolio are thus determined by (i)
computing the net change over a seven-day period, exclusive of
the capital changes, in the value of a hypothetical pre-existing
account having a balance of one share of such Portfolio at the
beginning of such period, (ii) dividing the net change in account
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value by the value of the account at the beginning of the base
period to obtain the base period return, and (iii) multiplying
the base period return by (365/7) with the resulting yield figure
carried to the nearest hundredth of one percent. A Portfolio's
effective annual yield represents a compounding of the annualized
yield according to the formula:
effective yield = [(base period return + 1) 365/7] - 1.
Depending on an investor's tax bracket, an investor may earn
a substantially higher after-tax return from the Fund than from
comparable investments the income from which is taxable. For
example, the yield for the week ended June 30, 1995 for the
General Portfolio was 3.30%; for the New York Portfolio, 3.42%;
for the California Portfolio, 3.23%; for the Connecticut
Portfolio, 3.24%; for the New Jersey Portfolio, 3.28% and for the
Virginia Portfolio, 3.60%. The corresponding tax equivalent
yield, however, for such period for the General Portfolio was
5.38%; for the New York Portfolio, 6.02%, computed without taking
into account the effects of New York City income taxes, and
6.33%, computed assuming the effects of New York City income
taxes; for the California Portfolio, 5.92%; for the Connecticut
Portfolio 15.53%; for the New Jersey Portfolio, 5.72%; and for
the Virginia Portfolio, 6.22%. The corresponding tax equivalent
effective yield for such period for the General Portfolio was
5.46%; for the New York Portfolio, 6.13%, computed without taking
into account the effects of New York City income taxes, and
6.44%, computed assuming the effects of New York City income
taxes; for the California Portfolio, 6.01%; for the Connecticut
Portfolio, 5.62%; for the New Jersey Portfolio, 5.81%; and for
the Virginia Portfolio, 6.32%. These tax equivalent yields
assume that the taxpayer is an individual in the highest federal
and state (and, if applicable, New York City) income tax
brackets, who is not subject to federal or state alternative
minimum taxes and who is able to fully deduct state (and, if
applicable, New York City) taxes in computing federal taxable
income. The tax rates used in these calculations were: federal-
- -39.6%, New York state--7.59375%, New York City--4.46%,
California--11%, Connecticut--4.5%, New Jersey--6.58% and
Virginia--5.75%. The tax equivalent yield is computed by
dividing that portion of theyield of a Portfolio that is tax-
exempt by one minus the applicable marginal income tax rate
(39.6% in the case of the General Portfolio; the combined
effective federal and state (and, if applicable, New York City)
marginal income tax rates in the case of the New York,
California, Connecticut, New Jersey and Viriginia Portfolios) and
adding the quotient to that portion, if any, of the yield of the
Portfolio that is not tax-exempt.
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Periodic Distribution Plans. Without affecting shareholders'
right of using any of the methods of redemption described above,
by checking the appropriate boxes on the Application Form
shareholders may elect to participate additionally in the
following plans without any separate charge. Under the Income
Distribution Plan shareholders receive monthly payments of all
the income earned in his or her Fund account, with payments
forwarded shortly after the close of the month. Under the
Systematic Withdrawal Plan, shareholders may request checks in
any specified amount of $50 or more each month or in any
intermittent pattern of months. If desired, shareholders can
order, via signature-guaranteed letter to the Fund, such periodic
payments to be sent to another person.
Reports. You will receive semi-annual and annual reports of
the Fund as well as a monthly summary of your account. You can
arrange for a copy of each of your account statements to be sent
to other parties.
Additional Information. This Statement of Additional
Information does not contain all the information set forth in the
Registration Statement filed by the Fund with the Securities and
Exchange Commission under the Securities Act of 1933. Copies of
the Registration Statement may be obtained at a reasonable charge
from the Commission or may be examined, without charge, at the
Commission's offices in Washington, D.C.
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________________________________________________________________
APPENDIX A
DESCRIPTION OF MUNICIPAL SECURITIES
________________________________________________________________
Municipal Notes generally are used to provide for short-term
capital needs and usually have maturities of one year or less.
They include the following:
1. Project Notes, which carry a U.S. Government guarantee,
are issued by public bodies (called "local issuing
agencies") created under the laws of a state, territory,
or U.S. possession. They have maturities that range up
to one year from the date of issuance. Project Notes
are backed by an agreement between the local issuing
agency and the Federal Department of Housing and Urban
Development. These Notes provide financing for a wide
range of financial assistance programs for housing,
redevelopment, and related needs (such as low-income
housing programs and renewal programs).
2. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenues,
such as income, sales, use and business taxes, and are
payable from these specific future taxes.
3. Revenue Anticipation Notes are issued in expectation of
receipt of other types of revenues, such as Federal
revenues available under the Federal Revenue Sharing
Programs.
4. Bond Anticipation Notes are issued to provide interim
financing until long-term financing can be arranged. In
most cases, the long-term bonds then provide the money
for the repayment of the Notes.
5. Construction Loan Notes are sold to provide construction
financing. After successful completion and acceptance,
many projects receive permanent financing through the
Federal Housing Administration under the Federal
National Mortgage Association or the Government National
Mortgage Association.
6. Tax-Exempt Commercial Paper is a short-term obligation
with a stated maturity of 365 days or less. It is
issued by agencies of state and local governments
tofinance seasonal working capital needs or as
short-term financing in anticipation of longer term
financing.
84
<PAGE>
Municipal Bonds, which meet longer term capital needs and
generally have maturities of more than one year when issued, have
three principal classifications:
1. General Obligation Bonds are issued by such entities as
states, counties, cities, towns, and regional districts.
The proceeds of these obligations are used to fund a
wide range of public projects, including construction or
improvement of schools, highways and roads, and water
and sewer systems. The basic security behind General
Obligation Bonds is the issuer's pledge of its full
faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied
for the payment of debt service may be limited or
unlimited as to the rate or amount of special
assessments.
2. Revenue Bonds generally are secured by the net revenues
derived from a particular facility, group of facilities,
or, in some cases, the proceeds of a special excise or
other specific revenue source. Revenue Bonds are issued
to finance a wide variety of capital projects including
electric, gas, water and sewer systems; highways,
bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many of these
Bonds provide additional security in the form of a debt
service reserve fund to be used to make principal and
interest payments. Housing authorities have a wide
range of security, including partially or fully insured
mortgages, rent subsidized and/or collateralized
mortgages, and/or the net revenues from housing or other
public projects. Some authorities provide further
security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service
reserve fund.
3. Industrial Development Bonds are considered municipal
bonds if the interest paid thereon is exempt from
Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various
privately operated facilities for business and
manufacturing, housing, sports, and pollution control.
These Bonds are also used to finance public facilities
such as airports, mass transit systems, ports, and
parking. The payment of the principal and interest on
such Bonds is dependent solely on the ability of the
facility's user to meet its financial obligations andthe
pledge, if any, of real and personal property as
security for such payment.
85
<PAGE>
________________________________________________________________
APPENDIX B
DESCRIPTION OF SECURITIES RATINGS
________________________________________________________________
Municipal and Corporate
Bonds and Municipal Loans
The two highest ratings of Moody's Investors Service, Inc.
("Moody's") for municipal and corporate bonds are Aaa and Aa.
Bonds rated Aaa are judged by Moody's to be of the best quality.
Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally
known as high-grade bonds. Moody's states that Aa bonds are
rated lower than the best bonds because margins of protection or
other elements make long-term risks appear somewhat larger than
Aaa securities. The generic rating Aa may be modified by the
addition of the numerals 1, 2 or 3. The modifier 1 indicates
that the security ranks in the higher end of the Aa rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of
such rating category.
The two highest ratings of Standard & Poor's Corporation
("Standard & Poor's") for municipal and corporate bonds are AAA
and AA. Bonds rated AAA have the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest
and repay principal is extremely strong. Bonds rated AA have a
very strong capacity to pay interest and repay principal and
differ from the highest rated issues only in a small degree. The
AA rating may be modified by the addition of a plus (+) or minus
(-) sign to show relative standing within that rating category.
Short-Term Municipal Loans
Moody's highest rating for short-term municipal loans is
MIG-1/VMIG-1. Moody's states that short-term municipal
securities rated MIG-1/VMIG-1 are of the best quality, enjoying
strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG-1/VMIG-1 group.
Standard & Poor's highest rating for short-term municipal
loans is SP-1. Standard & Poor's states that short-term
municipal securities bearing the SP-1 designation have very
strong or strong capacity to pay principal and interest. Those
issues rated SP-1 which are determined to possess overwhelming
safety characteristics will be given a plus (+) designation.
86
<PAGE>
Issues rated SP-2 have satisfactory capacity to pay principal and
interest.
Other Municipal Securities and Commercial Paper
"Prime-1" is the highest rating assigned by Moody's for other
short-term municipal securities and commercial paper, and "A-1+"
and "A-1" are the two highest ratings for commercial paper
assigned by Standard & Poor's (Standard & Poor's does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2
and 3 to denote relative strength within its highest
classification of "Prime", while Standard & Poor's uses the
number 1+, 1, 2 and 3 to denote relative strength within its
highest classification of "A". Issuers rated "Prime" by Moody's
have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk, margins
of support for current indebtedness are large or stable with cash
flow and asset protection well assured, current liquidity
provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available.
While protective elements may change over the intermediate or
longer term, such changes are most unlikely to impair the
fundamentally strong position of short-term obligations.
Commercial paper issuers rated "A" by Standard & Poor's have the
following characteristics: liquidity ratios are better than
industry average, long-term debt rating is A or better, the
issuer has access to at least two additional channels of
borrowing, and basic earnings and cash flow are in an upward
trend. Typically, the issuer is a strong company in a
well-established industry and has superior management.
87
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------
MUNICIPAL BONDS-103.6%
CONNECTICUT-101.4%
CONNECTICUT DEVELOPMENT AUTH.
(Bridgeport Hydraulic Co. Project)
Series '95 AMT VRDN*
$ 2,000 5/01/35 3.85% $2,000,000
CONNECTICUT DEVELOPMENT AUTH.
Res. Rec.:(Exeter Energy Project)
Series '89B AMT VRDN*
2,700 12/01/19 4.15 2,700,000
CONNECTICUT DEVELOPMENT AUTH.
HEALTH FACILITY
(Independent Living) Series'90 VRDN*
6,700 7/01/15 3.95 6,700,000
CONNECTICUT DEVELOPMENT AUTH.
IDR
(International Ice Cream Project)
Series '86 AMT VRDN*
1,500 12/01/06 4.05 1,500,000
CONNECTICUT DEVELOPMENT AUTH.
IDR
(Zotos International Project)
Series '84 VRDN*
3,315 12/01/04 4.00 3,315,000
CONNECTICUT DEVELOPMENT AUTH.
PCR
(Central Vermont Public Service)
Series '85 VRDN*
1,000 12/01/15 3.75 1,000,000
CONNECTICUT DEVELOPMENT AUTH.
PCR
(Connecticut Light and Power Co.)
Series '93A VRDN*
3,100 9/01/28 4.10 3,100,000
CONNECTICUT DEVELOPMENT AUTH.
PCR
(Connecticut Light and Power Co.)
Series '93B VRDN*
500 9/01/28 4.25 500,000
CONNECTICUT DEVELOPMENT AUTH.
PCR
(Western Mass. Elec. Co.)
Series '93A VRDN*
4,700 9/01/28 3.95 4,700,000
CONNECTICUT DEVELOPMENT AUTH.
REVENUE
(Rand Whitney Container Board Project)
Series '93 AMT VRDN*
3,000 8/01/23 3.90 3,000,000
CONNECTICUT GO
Economic Recovery Note
Series '91A
2,850 6/15/96 4.05% $2,888,152
CONNECTICUT GO
Economic Recovery Note
Series '91B VRDN*
2,900 6/01/96 3.95 2,900,000
CONNECTICUT GO
Series D
1,000 8/01/95 4.00 1,000,367
CONNECTICUT HEFA
(Bridgeport Hospital)
Series '95B VRDN*
4,000 7/01/25 4.00 4,000,000
CONNECTICUT HEFA
(Charlotte Hungerford Hospital)
Series '90B VRDN*
2,900 7/01/10 4.10 2,900,000
CONNECTICUT HEFA
(Kent School) Series '90 A VRDN*
2,800 7/01/23 3.80 2,800,000
CONNECTICUT HEFA
(Pomfret School Issue)
Series '95A VRDN*
1,000 7/01/24 4.05 1,000,000
CONNECTICUT HFA
(Home Mortgage Finance Project)
Series E2 AMT PPB*
4,290 11/15/95 4.50 4,290,046
CONNECTICUT SPECIAL ASSESSMENT
UNEMPLOYMENT COMPENSATION
Series '93C FGIC PPB*
5,000 7/01/95 3.85 5,000,000
CONNECTICUT SPECIAL ASSESSMENT
UNEMPLOYMENT COMPENSATION
Series '93C FGIC PPB*
4,000 7/01/96 3.90 4,000,000
CONNECTICUT SPECIAL TAX OBLIGATION
Pre-Refunded
(Transportation Infrastructure)
2,000 10/15/95 3.45 2,069,390
2
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------
CONNECTICUT SPECIAL TAX OBLIGATION
Pre-Refunded
(Transportation Infrastructure)
$ 750 10/15/95 4.10% $ 774,187
CONNECTICUT SPECIAL TAX OBLIGATION
Series '94 VRDN*
1,000 12/01/10 4.00 1,000,000
HARTFORD REDEV. AGY. MFHR
(Underwood Towers Project)
FSA Series '90 VRDN*
3,100 6/01/20 4.10 3,100,000
MADISON GO BAN
Series '95
2,525 3/27/96 4.05 2,528,584
MERIDEN GO BOND
Series '94 AMBAC
1,825 10/15/95 4.00 1,840,428
MIDDLETOWN GO BAN
Series '95
2,000 4/15/96 4.05 2,003,031
SOUTH CENTRAL WATER SYSTEMS
Series MGT 6B FGIC VRDN*
2,800 8/01/07 4.05 2,800,000
STAMFORD HFA MFHR
(Morgan Street Project)
Series '94 AMT VRDN*
1,600 8/01/24 4.00 1,600,000
77,009,185
PUERTO RICO-2.2%
PUERTO RICO HIGHWAY & TRANSPORTATION AUTHORITY
Series X VRDN*
1,700 7/01/99 3.80% $1,700,000
TOTAL MUNICIPAL BONDS
(amortized cost $78,709,185) 78,709,185
COMMERCIAL PAPER-4.6%
CONNECTICUT-4.6%
CONNECTICUT MUNICIPAL ELECTRIC ENERGY
Cooperative Power Supply
Systems Rev. Series '95A
1,000 9/08/95 4.00 1,000,000
CONNECTICUT HEFA
(Yale University) Series L
2,500 7/12/95 4.20 2,500,000
TOTAL COMMERCIAL PAPER
(amortized cost $3,500,000) 3,500,000
TOTAL INVESTMENTS-108.2%
(amortized cost $82,209,185) 82,209,185
Other assets less liabilities-(8.2%) (6,218,453)
NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 76,020,324 shares
outstanding) $75,990,732
+ All securities either mature or their interest rate changes in one year or
less.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
FGIC Financial Guaranty Insurance Company
GO General Obligation
HEFA Health & Educational Facility Authority
HFA Housing Finance Agency/Authority
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
VRDN Variable Rate Demand Note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $2,336,747
EXPENSES
Advisory fee (Note B) $327,216
Distribution assistance and administrative
service (Note C) 276,450
Transfer agency 71,772
Custodian fees 51,347
Audit and legal fees 28,632
Registration expense 20,309
Trustees' fees 4,469
Printing 3,869
Amortization of organization expenses 812
Miscellaneous 5,334
Total expenses 790,210
Less: expense reimbursement and fee waiver (266,646)
523,564
Net investment income 1,813,183
REALIZED GAIN/LOSS ON INVESTMENTS
Net realized loss on investments (2,026)
NET INCREASE IN NET ASSETS FROM OPERATIONS $1,811,157
See notes to financial statements.
4
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
- -------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JUNE 30,1995 JUNE 30,1994
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,813,183 $ 1,044,516
Net realized loss on investments (2,026) (16,849)
Net increase in net assets from operations 1,811,157 1,027,667
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (1,813,183) (1,044,516)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 18,678,491 1,106,888
Total increase 18,676,465 1,090,039
NET ASSETS
Beginning of year 57,314,267 56,224,228
End of year $75,990,732 $57,314,267
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Municipal Trust (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end investment company. The Fund
operates as a series company currently issuing six classes of shares of
beneficial interest: Alliance Municipal Trust-General Portfolio, Alliance
Municipal Trust-New York Portfolio, Alliance Municipal Trust-California
Portfolio, Alliance Municipal Trust-Connecticut Portfolio (the "Portfolio"),
Alliance Municipal Trust-New Jersey Portfolio and Alliance Muncipal
Trust-Virginia Portfolio. Each series is considered to be a separate entity for
financial reporting and tax purposes. The following is a summary of significant
accounting policies followed by the Portfolio.
1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity. Amortization of premium is charged to income.
Accretion of market discount is credited to unrealized gains.
2. ORGANIZATION EXPENSES
The organization expenses of the Portfolio are being amortized against income
on a straight-line basis through January, 1995.
3. TAXES
It is the Portfolio's policy to comply with 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 its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
4. DIVIDENDS
The Portfolio declares dividends daily from net investment income and
automatically reinvests such dividends in additional shares at net asset value.
Net realized capital gains on investments, if any, are expected to be
distributed near year end. Dividends paid from net investment income for the
year ended June 30, 1995 are exempt from federal income taxes. However, certain
shareholders may be subject to the alternative minimum tax (AMT).
5. GENERAL
Interest income is accrued daily. Security transactions are recorded on the
date securities are purchased or sold. Realized gain (loss) from security
transactions is recorded on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45 of 1% in excess of $3 billion. The Adviser has agreed, pursuant to the
advisory agreement, to reimburse the Portfolio to the extent that its annual
aggregate expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed 1% of its average daily net assets for any
fiscal year. The Adviser also voluntarily agreed to reimburse the Portfolio for
the year ended June 30, 1995 for expenses exceeding .80 of 1% of its average
daily net assets. For the year ended June 30, 1995, the reimbursement amounted
to $201,203. The Portfolio compensates Alliance Fund Services, Inc. (a
wholly-owned subsidiary of the Adviser) for providing personnel and facilities
to perform transfer agency services for the Portfolio. Such compensation
amounted to $40,562 for the year ended June 30, 1995.
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays a distribution fee to the Adviser at an
annual rate of up to .25 of 1% of the Portfolio's average daily net assets. The
Plan provides that the Adviser will use such payments in their entirety for
distribution assistance and promotional activities. For the year ended June 30,
1995, the distribution fee
6
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
- -------------------------------------------------------------------------------
amounted to $163,608 of which $65,443 was waived. In addition, the Portfolio
reimbursed certain broker-dealers for administrative costs incurred in
connection with providing shareholder services, accounting, bookkeeping, legal
and compliance support. For the year ended June 30, 1995, such payments by the
Portfolio amounted to $112,842 of which $91,700 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1995, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1995, the
Portfolio had a capital loss carryforward of $29,592 of which $10,717 expires
in the year 2000, $16,849 expires in the year 2002 and $2,026 expires in the
year 2003.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1995, capital paid-in aggregated $76,020,324. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
------------- -------------
Shares sold 243,757,597 181,209,614
Shares issued on reinvestments of dividends 1,813,183 1,046,059
Shares redeemed (226,892,289) (181,148,785)
Net increase 18,678,491 1,106,888
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------
1995 1994 1993 1992 1991
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .028 .017 .020 .033 .045
LESS: DISTRIBUTIONS
Dividends from net investment income (.028) (.017) (.020) (.033) (.045)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURNS
Total investment return based on net asset value (b) 2.78% 1.71% 2.00% 3.35% 4.57%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $75,991 $57,314 $56,224 $54,751 $48,482
Ratio to net assets of:
Expenses, net of waivers and .80% .77% .70% .58% .44%
Expenses, before waivers and reimbursements 1.21% 1.21% 1.16% 1.22% 1.16%
Net investment income 2.77% 1.69% 1.97% 3.28% 4.39%
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
7
INDEPENDENT AUDITOR'S REPORT ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
- -------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
We have audited the accompanying statement of net assets of the Connecticut
Portfolio of Alliance Municipal Trust as of June 30, 1995 and the related
statements of operations, changes in net assets, and financial highlights for
the periods indicated in the accompanying financial statements. These financial
statements and financial highlights are the responsibility of the Portfolio'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 June
30, 1995, 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 the
Connecticut Portfolio of Alliance Municipal Trust as of June 30, 1995, and the
results of its operations, changes in its net assets, and its financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles.
McGladrey &Pullen LLP
New York, New York
August 8, 1995
8
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
Principal
Amount
(000) Security+ Yield Value
- ----------------------------------------------------------------------
MUNICIPAL BONDS-82.3%
NEW YORK-80.8%
BABYLON IDA
Res. Rec.: (Babylon Project) AMT VRDN*
$ 1,100 12/01/24 4.40% $1,100,000
BATTERY PARK CITY FHA
Apt. Dev.: Marina Towers VRDN*
3,760 6/01/23 4.00 3,760,000
BATTERY PARK CITY FHA
Apt. Dev.: Marina Towers VRDN*
3,100 6/01/23 4.00 3,100,000
BROOKHAVEN IDR
(Di-Anna Realty Co.) VRDN*
341 12/01/95 5.85 341,122
DUTCHESS COUNTY IDR
(Toys 'R' Us/NYTEX) Series '84 VRDN*
1,000 11/01/19 4.13 1,000,000
ERIE COUNTY GO RAN
1,500 8/15/95 4.75 1,501,333
FRANKLIN COUNTY IDR
(McCadam Cheese Co., Inc. Project)
Series '90 VRDN*
2,500 2/01/03 4.15 2,500,000
HEMPSTEAD GO BAN
Series '94D
5,000 8/17/95 4.50 5,003,219
ISLIP IDR
(Erin Associates) Series '85 VRDN*
651 8/01/02 5.85 651,189
NEW YORK CITY CULTURAL RES.
(The Jewish Museum) Series '92 VRDN*
7,100 12/01/21 4.00 7,100,000
NEW YORK CITY HOUSING DEVELOPMENT CORP.
(Upper Fifth Avenue Project)
Series A VRDN*
3,000 1/01/16 4.05 3,000,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(Columbus Gardens Project)
Series '93A VRDN*
7,400 2/01/17 4.00% $7,400,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(Queenswood Apartments)
Series '89A VRDN*
2,200 2/01/07 4.00 2,200,000
NEW YORK GO
Series '95B-2 VRDN*
6,800 8/15/03 4.25 6,800,000
NEW YORK GO
Series '95F-3 VRDN*
3,000 2/15/13 4.25 3,000,000
NEW YORK GO
Series '95F-5 VRDN*
8,000 2/15/16 4.20 8,000,000
NEW YORK GO
Series '95F-7 VRDN*
3,300 2/15/12 4.15 3,300,000
NEW YORK IDR
(ACME Metal Co.) VRDN*
619 4/01/01 5.85 618,709
NEW YORK IDR
(Madelaine Chocolate Novelties)
Series '86 VRDN*
273 6/10/99 5.85 273,119
NEW YORK IDR
(Monadnock Construction) VRDN*
247 12/01/95 5.85 247,485
NEW YORK IDR
(Western Carpet & Linoleum) VRDN*
825 6/10/00 5.85 824,987
NEW YORK STATE
ENVIRONMENTAL FACILITIES CORP. PCR
(New York City Water Finance Auth.)
Series '94A VRDN*
8,000 6/15/12 4.25 8,000,000
2
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
Principal
Amount
(000) Security+ Yield Value
- ----------------------------------------------------------------------
NEW YORK STATE ERDA UTIL. REV.
(Long Island Lighting Co.)
Series B AMT VRDN*
$ 1,000 11/01/23 3.90% $1,000,000
NEW YORK STATE ERDA UTIL. REV.
(Rochester Gas & Electric)
Series '85 PPB*
5,000 11/15/95 4.40 5,000,000
NEW YORK STATE HFA
(Normandie Court II) Series '87A VRDN*
8,000 11/01/02 3.85 8,000,000
NEW YORK STATE HFA MFHR
(Wood Creek Meadows)
Series A AMT VRDN* AMBAC
4,650 11/01/28 3.85 4,650,000
NEW YORK STATE JOB DEV. AUTH.
Series '86A-1 AMT VRDN*
2,055 3/01/00 3.70 2,055,000
NEW YORK STATE JOB DEV. AUTH.
Series '86C-1 AMT VRDN*
895 3/01/00 3.70 895,000
NEW YORK STATE MEDICAL
CARE FACILITIES AUTH.
Eagle Trust (New York Hospital)
Series 953202 VRDN* AMBAC
13,000 8/15/24 4.25 13,000,000
NEW YORK STATE MEDICAL CARE
FACILITIES FINANCE AGENCY FHA
(St. Lukes Hosp.) Series '93 VRDN*
10,000 5/12/05 4.25 10,000,000
ROCHESTER GO BAN
Series I
5,000 3/12/96 4.45 5,026,340
ROCKLAND COUNTY IDR
(Bendix Mouldings, Inc.)
Series '85 VRDN*
1,200 12/01/01 5.40 1,200,000
SMITHTOWN CENTRAL SCHOOL DISTRTICT TAN
Series '95
3,700 6/27/96 3.70% $3,719,392
ST. LAWRENCE COUNTY IDA
(Reynolds Metal Project)
Series '95 AMT VRDN*
3,000 5/01/25 4.00 3,000,000
TRIBOROUGH BRIDGE & TUNNEL AUTHORITY
(General Purpose)
Series I Pre-Refunded
4,500 1/01/96 4.20 4,663,167
TRIBOROUGH BRIDGE & TUNNEL AUTHORITY
(Special Obligation) MBIA VRDN*
6,100 1/01/04 4.05 6,100,000
TRIBOROUGH BRIDGE & TUNNEL AUTHORITY
FGIC VRDN*
2,000 1/01/05 4.05 2,000,000
WESTCHESTER COUNTY IDR
(Hitachi America) VRDN*
3,200 7/01/98 3.90 3,200,000
143,230,062
PUERTO RICO-1.5%
PUERTO RICO HIGHWAY & TRANSPORTATION AUTHORITY
Series X VRDN*
2,700 7/01/99 3.80 2,700,000
Total Municipal Bonds
(amortized cost $145,930,062) 145,930,062
COMMERCIAL PAPER-15.5%
NEW YORK-10.9%
NEW YORK MUNICIPAL WATER AUTHORITY
Series '94
3,400 7/12/95 4.15 3,400,000
NEW YORK MUNICIPAL WATER AUTHORITY
Series 3
1,700 8/14/95 4.20 1,700,000
NEW YORK MUNICIPAL WATER AUTHORITY
Series 3
1,000 9/13/95 4.20 1,000,000
3
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
Principal
Amount
(000) Security+ Yield Value
- ----------------------------------------------------------------------
NEW YORK STATE DORMITORY AUTHORITY
(Sloan-Kettering Memorial)
$ 3,750 8/24/95 4.00% $3,750,000
NEW YORK STATE ENVIRONMENTAL FACILITY
(General Electric Co.) Series '92A
1,900 8/03/95 4.00 1,900,000
PORT AUTHORITY OF NEW YORK AND
NEW JERSEY AMT
840 8/29/95 3.90 840,000
PORT AUTHORITY OF NEW YORK AND
NEW JERSEY AMT
1,975 8/08/95 4.05 1,975,000
PORT AUTHORITY OF NEW YORK AND
NEW JERSEY AMT
4,780 8/21/95 4.05 4,780,000
19,345,000
PUERTO RICO-4.6%
PUERTO RICO GOVERNMENT DEVELOPMENT BANK
8,100 8/10/95 4.10% $8,100,000
Total Commercial Paper
(amortized cost $27,445,000) 27,445,000
TOTAL INVESTMENTS-97.8%
(amortized cost $173,375,062) 173,375,062
Other assets less liabilities-2.2% 3,878,777
NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 177,318,144
shares outstanding) $177,253,839
+ All securities either mature or their interest rate changes in one year or
less.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
ERDA Energy Research & Development Authority
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Agency/Authority
GO General Obligation
HFA Housing Finance Agency/Authority
IDR Industrial Development Revenue
IDA Industrial Development Authority
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
RAN Revenue Anticipation Note
TAN Tax Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
4
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $6,050,312
EXPENSES
Advisory fee (Note B) $ 826,178
Distribution assistance and administrative
service (Note C) 539,654
Transfer agency 168,515
Custodian fees 66,729
Audit and legal fees 33,630
Printing 24,503
Registration fees 20,784
Trustees' fees 4,140
Miscellaneous 12,590
Total expenses 1,696,723
Less: expense reimbursement and fee waiver (292,221)
1,404,502
Net investment income 4,645,810
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investments (13,089)
Net change in unrealized appreciation of investments (4,676)
Net loss on investments (17,765)
NET INCREASE IN NET ASSETS FROM OPERATIONS $4,628,045
See notes to financial statements.
5
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JUNE 30,1995 JUNE 30,1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $4,645,810 $2,384,824
Net realized loss on investments (13,089) (7,816)
Net change in unrealized appreciation
of investments (4,676) 4,676
Net increase in net assets from operations 4,628,045 2,381,684
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (4,645,810) (2,384,824)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 14,432,230 62,313,218
Total increase 14,414,465 62,310,078
NET ASSETS
Beginning of year 162,839,374 100,529,296
End of year $177,253,839 $162,839,374
See notes to financial statements.
6
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Municipal Trust (the 'Fund') is registered under the Investment
Company Act of 1940, as amended, as an open-end investment company. The Fund
operates as a series company currently issuing six classes of shares of
beneficial interest: Alliance Municipal Trust-General Portfolio, Alliance
Municipal Trust-New York Portfolio (the 'Portfolio'), Alliance Municipal Trust
California Portfolio, Alliance Municipal Trust Connecticut Portfolio, Alliance
Municipal Trust-New Jersey Portfolio and Alliance Municipal Trust-Virginia
Portfolio. Each series is considered to be a separate entity for financial
reporting and tax purposes. The following is a summary of significant
accounting policies followed by the Portfolio.
1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity. Amortization of premium is charged to income.
Accretion of market discount is credited to unrealized gains.
2. TAXES
It is the Portfolio's policy to comply with 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 its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
3. DIVIDENDS
The Portfolio declares dividends daily from net investment income and
automatically reinvests such dividends in additional shares at net asset value.
Net realized capital gains on investments, if any, are expected to be
distributed near year end. Dividends paid from net investment income for the
year ended June 30, 1995, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax (AMT).
4. GENERAL
Interest income is accrued daily. Security transactions are recorded on the
date securities are purchased or sold. Realized gain (loss) from security
transactions is recorded on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45 of 1% in excess of $3 billion. The Adviser has agreed, pursuant to the
advisory agreement, to reimburse the Portfolio to the extent that its annual
aggregate expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed 1% of its average daily net assets for any
fiscal year. For the year ended June 30, 1995, the Adviser also voluntarily
agreed to reimburse the Portfolio for expenses exceeding .85 of 1% of its
average daily net assets. For the year ended June 30, 1995, the reimbursement
amounted to $126,985. The Portfolio compensates Alliance Fund Services, Inc. (a
wholly-owned subsidiary of the Adviser) for providing personnel and facilities
to perform transfer agency services for the Portfolio. Such compensation
amounted to $97,115 for the year ended June 30, 1995.
7
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays a distribution fee to the Adviser at an
annual rate of up to .25% of 1% of the Portfolio's average daily net assets.
The Plan provides that the Adviser will use such payments in their entirety for
distribution assistance and promotional activities.
For the year ended June 30, 1995, the distribution fee amounted to $413,089 of
which $165,236 was waived. In addition, the Portfolio reimbursed certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services, accounting, bookkeeping, legal and compliance support.
For the year ended June 30, 1995, such payments by the Portfolio amounted to
$126,565 of which $93,400 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1995, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1995, the
Portfolio had a capital loss carryforward of $20,905, of which $7,816 expires
in the year 2002 and $13,089 expires in the year 2003.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1995, capital paid-in aggregated $177,318,144. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30,1995 JUNE 30,1994
------------- -------------
Shares sold 660,452,860 453,679,312
Shares issued on reinvestments of dividends 4,645,810 2,386,594
Shares redeemed (650,666,440) (393,752,688)
Net increase 14,432,230 62,313,218
8
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .028 .018 .019 .034 .042
LESS DISTRIBUTIONS
Dividends from net investment income (.028) (.018) (.019) (.034) (.042)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURNS
Total investment return based on net asset value(b) 2.84% 1.77% 1.94% 3.47% 4.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $177,254 $162,839 $100,529 $100,476 $71,748
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .85% .84% .80% .80% .80%
Expenses, before waivers and reimbursements 1.03% 1.08% 1.06% 1.12% 1.15%
Net investment income 2.81% 1.77% 1.91% 3.35% 4.20%
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
9
INDEPENDENT AUDITOR'S REPORT ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
- -------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
We have audited the accompanying statement of net assets of the New York
Portfolio of Alliance Municipal Trust as of June 30, 1995 and the related
statements of operations, changes in net assets, and financial highlights for
the periods indicated in the accompanying financial statements. These financial
statements and financial highlights are the responsibility of the Portfolio'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 June
30, 1995, 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 the
New York Portfolio of Alliance Municipal Trust as of June 30, 1995, and the
results of its operations, changes in its net assets, and its financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles.
New York, New York
August 8, 1995
10
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
MUNICIPAL BONDS-79.6%
VIRGINIA-78.1%
ARLINGTON COUNTY
(Ballston Public Parking Facility)
Series '84 VRDN*
$ 2,700 8/01/17 4.00% $2,700,000
BEDFORD COUNTY IDR
(Nekoosa Packaging Project)
Series '93 VRDN*
2,700 10/01/04 4.25 2,700,000
CAMPBELL COUNTY IDR
(Georgia Pacific Power) AMT VRDN*
3,000 12/01/19 4.25 3,000,000
CHESTERFIELD GO BOND
Pre-Refunded
1,000 1/15/96 4.33 1,019,734
FAIRFAX COUNTY
Public Improvement Series '95A
1,000 6/01/96 3.90 1,027,618
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(Nova Health Services) Series '88C VRDN*
1,000 10/01/25 4.15 1,000,000
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(Nova Health Services) Series '93A
2,000 7/26/95 3.25 2,000,000
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(Nova Health Services) Series '93A
500 9/06/95 3.85 500,000
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(Nova Health Services) Series '93A
1,600 9/06/95 4.15 1,600,000
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(Nova Health Services) Series '93B
1,000 10/10/95 4.00% $1,000,000
FAIRFAX COUNTY REDEVELOPMENT HFA
(Chase Commons Project) Series '84A VRDN*
2,900 12/01/06 4.13 2,900,000
HAMPTON REDEVELOPMENT HFA
(Chase Hampton Project) Series '84A VRDN*
2,500 12/01/06 3.63 2,500,000
HENRICO COUNTY WATER AND SEWER REVENUE
Series '86 Pre-Refunded
700 5/01/96 3.80 736,274
KING GEORGE COUNTY IDR
(Birchwood Power) Series '94A AMT VRDN*
1,300 10/01/24 4.35 1,300,000
KING GEORGE COUNTY IDR
(Birchwood Power) Series '94B AMT VRDN*
1,400 12/01/24 4.35 1,400,000
LYNCHBURG IDA
(Pooled Hospital Finance) Series '85B VRDN*
AMBAC
2,300 12/01/25 4.20 2,300,000
LYNCHBURG IDA
(Pooled Hospital Finance) Series '85C VRDN*
AMBAC
300 12/01/25 4.20 300,000
LYNCHBURG IDA
(Pooled Hospital Finance) Series'85E VRDN*
AMBAC
100 12/01/25 4.20 100,000
NORFOLK GO EAGLE TRUST
Series 944601 VRDN*
3,900 6/01/06 4.25 3,900,000
PENINSULA PORT AUTHORITY
(Dominion Terminal Project)
Series '87C VRDN*
500 7/01/16 4.25 500,000
2
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
PRINCE WILLIAM COUNTY WATER &
SEWER SYSTEM REVENUE
P-Float FGIC
$ 820 7/01/21 4.25% $820,000
RICHMOND GO BOND
Equipment Notes Series '95
960 5/15/96 3.70 965,677
RICHMOND HFA
(Tobacco Row) Series B AMT VRDN*
4,500 10/01/24 4.40 4,500,000
VIRGINIA EDUCATION LOAN AUTH.
Student Loan Revenue Series '92
2,000 9/01/95 4.10 2,001,843
VIRGINIA GO EAGLE TRUST
Series 954601 VRDN*
4,000 6/01/21 4.25 4,000,000
VIRGINIA HFA SFMR
(Commonwealth Mortgage) Series B PPB*
2,000 7/12/95 4.40 2,000,000
VIRGINIA HOUSING DEVELOPMENT AUTH.
(AHC Service Corp.- Lee Gardens)
Series '87A VRDN*
2,500 9/01/17 3.85 2,500,000
VIRGINIA HOUSING DEVELOPMENT AUTH. SFMR
Series '95I AMT PPB*
3,000 9/12/95 4.18 3,000,000
52,271,146
PUERTO RICO-1.5%
PUERTO RICO GOVERNMENT DEVELOPMENT BANK
Series '85 VRDN*
1,000 12/01/15 3.80% $1,000,000
Total Municipal Bonds
(amortized cost $53,271,146) 53,271,146
COMMERCIAL PAPER-19.8%
VIRGINIA-17.5%
CHESTERFIELD COUNTY PCR
(Electric & Power Co.) Series '85
2,000 9/11/95 4.20 2,000,000
CHESTERFIELD COUNTY PCR
(Electric & Power Co.) Series '87
1,585 10/02/95 4.10 1,585,000
CHESTERFIELD COUNTY PCR
(Electric & Power Co.) Series '87B
2,000 9/05/95 4.15 2,000,000
NORFOLK IDA
(Sentara Hospital) Series '90A
2,000 9/07/95 4.15 2,000,000
PENINSULA PORT AUTHORITY
(Chessie & Ohio Project)
2,000 8/08/95 4.05 2,000,000
PENINSULA PORT AUTHORITY
(Dominion Terminal Project) Series '87B
1,135 9/12/95 3.70 1,135,000
PENINSULA PORT AUTHORITY
(Dominion Terminal Project) Series '87B
1,000 8/24/95 4.13 1,000,000
11,720,000
3
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
PUERTO RICO-2.3%
PUERTO RICO GOVERNMENT DEVELOPMENT BANK
$ 1,500 8/10/95 4.10% $ 1,500,000
Total Commercial Paper
(amortized cost $13,220,000) 13,220,000
TOTAL INVESTMENTS-99.4%
(amortized cost $66,491,146) $66,491,146
Other assets less liabilities-0.6% 429,960
NET ASSETS-100%
(offering and redemption price of $1.00
per share; 66,929,003 shares outstanding) $66,921,106
+ All securities either mature or their interest rate changes in one year or
less.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
FGIC Financial Guaranty Insurance Company
GO General Obligation
HFA Housing Finance Agency/Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Note
See notes to financial statements.
4
STATEMENT OF OPERATIONS
OCTOBER 25, 1994* TO JUNE 30, 1995
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $1,424,859
EXPENSES
Advisory fee (Note B) $ 181,919
Distribution assistance and administrative
service (Note C) 164,519
Custodian fees 36,861
Transfer agency 31,162
Registration fees 26,088
Audit and legal fees 19,916
Printing 6,970
Trustees' fees 2,693
Prepaid organization expense 1,161
Miscellaneous 1,764
Total expenses 473,053
Less: expense reimbursement and fee waiver (313,415)
159,638
Net investment income 1,265,221
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS
Net realized loss on investments (7,897)
NET INCREASE IN NET ASSETS FROM OPERATIONS $1,257,324
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
OCTOBER 25, 1994*
TO JUNE 30, 1995
-----------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,265,221
Net realized loss on investments (7,897)
Net increase in net assets from operations 1,257,324
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (1,265,221)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 66,928,803
Total increase 66,920,906
NET ASSETS
Beginning of period 200
End of period $66,921,106
* Commencement of operations.
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Municipal Trust (the 'Fund') is registered under the Investment
Company Act of 1940, as amended, as an open-end investment company. The Fund
operates as a series company currently issuing six classes of shares of
beneficial interest: Alliance Municipal Trust-General Portfolio, Alliance
Municipal Trust-New York Portfolio, Alliance Municipal Trust-California
Portfolio, Alliance Municipal Trust-Connecticut Portfolio, Alliance Municipal
Trust-New Jersey Portfolio and Alliance Municipal Trust-Virginia Portfolio (the
'Portfolio'). Each series is considered to be a separate entity for financial
reporting and tax purposes. The following is a summary of significant
accounting policies followed by the Portfolio.
1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity. Amortization of premium is charged to income.
Accretion of market discount is credited to unrealized gains.
2. ORGANIZATION EXPENSES
The organization expenses of the Portfolio are being amortized against income
on a straight-line basis through October, 1999.
3. TAXES
It is the Portfolio's policy to comply with 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 its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
4. DIVIDENDS
The Portfolio declares dividends daily from net investment income and
automatically reinvests such dividends in additional shares at net asset value.
Net realized capital gains on investments, if any, are expected to be
distributed near year end. Dividends paid from net investment income for the
period ended June 30, 1995, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax (AMT).
5. GENERAL
Interest income is accrued daily. Security transactions are recorded on the
date securities are purchased or sold. Realized gain (loss) from security
transactions is recorded on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45 of 1% in excess of $3 billion. The Adviser has agreed, pursuant to the
advisory agreement, to reimburse the Portfolio to the extent that its annual
aggregate expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed 1% of its average daily net assets for any
fiscal year. The Adviser also voluntarily agreed to reimburse the Portfolio on
October 25, 1994 (commencement of operations) for all expenses, from October
26, 1994 to May 8, 1995 for expenses exceeding .40 of 1% of its average daily
net assets, from May 9, 1995 to May 31, 1995 for expenses exceeding .50 of 1%
of its average daily net assets and from June 1, 1995 to June 30, 1995 for
expenses exceeding .60 of 1% of its average daily net assets. For the period
ended June 30, 1995, the reimbursement amounted to $277,031. The Portfolio
compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of the
Adviser) for providing personnel and facilities to perform transfer agency
services for the Portfolio. Such compensation amounted to $20,520 for the
period ended June 30, 1995.
6
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
- -------------------------------------------------------------------------------
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays a distribution fee to the Adviser at an
annual rate of up to .25% of 1% of the Portfolio's average daily net assets.
The Plan provides that the Adviser will use such payments in their entirety for
distribution assistance and promotional activities. For the period ended June
30, 1995, the distribution amounted to $90,959 which $36,384 was waived. In
addition, the Portfolio reimbursed certain broker-dealers for administrative
costs incurred in connection with providing shareholder services, accounting,
bookkeeping, legal and compliance support. For the period ended June 30, 1995,
such payments by the Portfolio amounted to $73,560 of which $47,000 was paid to
the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1995, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1995 the
Portfolio had a capital loss carryforward of $7,897 which expires in the year
2003.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1995, capital paid-in aggregated $66,929,003. Transactions, all at $1.00 per
share, were as follows:
OCTOBER 25, 1994(A)
THROUGH
JUNE 30, 1995
-------------------
Shares sold 187,540,379
Shares issued on reinvestments of dividends 1,265,221
Shares redeemed (121,876,797)
Net increase 66,928,803
7
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
- -------------------------------------------------------------------------------
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period.
OCTOBER 25,
1994(A)
THROUGH
JUNE 30, 1995
-------------
Net asset value, beginning of period $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .023
LESS DISTRIBUTIONS
Dividends from net investment income (.023)
Net asset value, end of period $1.00
TOTAL RETURNS
Total investment return based on net asset value (b)(c) 3.48%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $66,921
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .44%(c)
Expenses, before waivers and reimbursements 1.30%(c)
Net investment income 3.48%(c)
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(c) Annualized.
8
INDEPENDENT AUDITOR'S REPORT ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
- -------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
We have audited the accompanying statement of net assets of the Virginia
Portfolio of Alliance Municipal Trust as of June 30, 1995 and the related
statements of operations, changes in net assets, and financial highlights for
the periods indicated in the accompanying financial statements. The financial
statement and financial highlights are the responsibility of the Portfolio'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 June
30, 1995, 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 audit provides 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 the
Virginia Portfolio of Alliance Municipal Trust as of June 30, 1995, and the
results of its operations, changes in its net assets, and its financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles.
McGladrey &Pullen LLP
New York, New York
August 8, 1995
9
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
MUNICIPAL BONDS-81.5%
ILLINOIS-1.8%
SOUTHWESTERN ILLINOIS DEVELOPMENT AUTHORITY
(Shell Oil-Wood River Project)
Series '91 AMT VRDN*
$ 1,300 8/01/21 4.35% $1,300,000
LOUISIANA-2.3%
ST. CHARLES PARISH PCR
(Shell Oil Company ) AMT VRDN*
1,700 11/01/21 4.35 1,700,000
NEW JERSEY-67.0%
BURLINGTON COUNTY GO BOND
700 10/15/95 4.30 700,087
ESSEX COUNTY GO
Series B MBIA
375 12/15/95 3.50 380,379
ESSEX COUNTY TAN
Series '95C
3,000 11/22/95 3.55 3,008,144
GLOUCESTER COUNTY PCR
(Mobil Oil) VRDN*
2,000 12/01/13 3.80 2,000,000
HUNTERDON COUNTY BAN
3,500 5/24/96 3.94 3,500,282
MIDDLESEX COUNTY SEWER REVENUE
BT-95 MBIA
800 2/15/03 4.05 800,000
MONMOUTH COUNTY GO BAN
2,000 8/31/95 4.75 2,002,416
MONTGOMERY TOWNSHIP BAN
School District Series '95
1,000 3/01/96 4.70 1,001,905
MORRIS COUNTY BOND
County College Series '95
1,000 7/15/96 3.62 1,018,960
MORRIS COUNTY BOND
General Improvement Series '95
1,226 7/15/96 3.62% $1,249,245
MORRIS COUNTY GO BAN
3,000 12/15/95 4.60 3,001,304
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
(Epitaxx, Inc.) Series '91 VRDN*
2,000 8/01/16 4.25 2,000,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY IDR
(Economic Growth) Series B AMT VRDN*
1,600 8/01/04 4.00 1,600,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY IDR
(Sound Design Corp.) Series '84 VRDN*
2,822 12/31/99 5.85 2,821,500
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY IDR
Stp Company 2 through 4 Project 1992 VRDN*
2,885 7/01/06 3.90 2,885,000
NEW JERSEY GO BOND
625 8/01/95 3.40 626,218
NEW JERSEY HEALTH CARE HOSPITAL REVENUE
(South Jersey Hospital)
1,625 7/01/95 4.50 1,625,000
NEW JERSEY HFA MFHR
(Statewide Mortgage) Series 1 PPB*
990 9/29/95 4.20 990,000
NEW JERSEY HFA SFMR
Eagle Trust (Home Owner Mtg.)
Series C-D MBIA VRDN*
5,900 10/01/15 4.25 5,900,000
2
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
NEW JERSEY SPORTS & EXPOSITION AUTHORITY
Series '92C MBIA VRDN*
$ 2,600 9/01/24 3.90% $ 2,600,000
NEW JERSEY STATE TURNPIKE AUTHORITY
(Turnpike Revenue) Series '91A MBIA VRDN*
900 1/01/00 4.05 900,000
NEW JERSEY STATE TURNPIKE AUTHORITY
(Turnpike Revenue) Series '91A MBIA VRDN*
1,000 1/01/01 4.05 1,000,000
NEW JERSEY STATE TURNPIKE AUTHORITY
(Turnpike Revenue) Series D FGIC VRDN*
1,000 1/01/18 3.85 1,000,000
NEW JERSEY TRANSPORTATION
TRUST FUND AUTHORITY
(Transportation Systems) Series '94A
3,000 12/15/95 3.60 3,012,085
OCEAN COUNTY UTILITIES AUTHORITY
(Wastewater Revenue) Pre-Refunded FGIC
1,000 1/01/96 4.30 1,013,087
PORT AUTHORITY OF NEW YORK AND NEW JERSEY
Series 3 Util Rev:
(KIAC Partners Project) AMT VRDN*
3,000 10/01/14 3.25 3,000,000
49,635,612
TEXAS-2.4%
DALLAS COUNTY IDR
(Crane CR/PL, Inc.) Series '85 VRDN*
700 5/01/10 4.35% 700,000
HARRIS COUNTY
(Exxon Project) Series '87 AMT VRDN*
1,100 8/15/27 4.35 1,100,000
1,800,000
VIRGINIA-4.0%
ALEXANDRIA VIRGINIA
Res. Rec.:
(Alexandria/Arlington) AMT VRDN*
3,000 12/01/16 4.45 3,000,000
PUERTO RICO-4.0%
PUERTO RICO HIGHWAY &
TRANSPORTATION AUTHORITY
Series X VRDN*
3,000 7/01/99 3.80 3,000,000
Total Municipal Bonds
(amortized cost $60,435,612) 60,435,612
COMMERCIAL PAPER-16.0%
NEW JERSEY-10.6%
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
(Chambers Cogeneration) Series '91 AMT
1,000 8/15/95 4.00 1,000,000
PORT AUTHORITY OF NEW YORK AND NEW JERSEY
Series B
3,335 9/07/95 4.05 3,335,000
3
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
PORT AUTHORITY OF NEW YORK AND
NEW JERSEY AMT
Series B
$ 3,500 7/17/95 3.35% $ 3,500,000
7,835,000
PUERTO RICO-5.4%
PUERTO RICO GOVERNMENT DEVELOPMENT BANK
1,000 7/18/95 2.80 1,000,000
PUERTO RICO GOVERNMENT DEVELOPMENT BANK
3,000 7/14/95 4.10 3,000,000
4,000,000
Total Commercial Paper
(amortized cost $11,835,000) $11,835,000
TOTAL INVESTMENTS-97.5%
(amortized cost $72,270,612) 72,270,612
Other assets less liabilities-2.5% 1,862,092
NET ASSETS-100%
(offering and redemption price of $1.00
per share; 74,133,955 shares outstanding) $74,132,704
+ All securities either mature or their interest rate changes in one year or
less.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
Glossary of Terms:
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
FGIC Financial Guaranty Insurance Company
GO General Obligation
HFA Housing Finance Agency/Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Private Placement Bond
SFMR Single Family Mortgage Revenue
TAN Tax Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
4
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $2,170,496
EXPENSES
Advisory fee (Note B) $ 291,779
Distribution assistance and administrative
service (Note C) 242,255
Transfer agency 95,229
Custodian fees 51,585
Registration fees 33,902
Audit and legal fees 20,836
Printing 9,421
Trustees' fees 2,871
Amortization of organization expense 2,720
Miscellaneous 3,160
Total expenses 753,758
Less: expense reimbursement and fee waiver (319,746)
434,012
Net investment income 1,736,484
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (1,251)
NET INCREASE IN NET ASSETS FROM OPERATIONS $1,735,233
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
FEBRUARY 7,
YEAR ENDED 1994* TO
JUNE 30,1995 JUNE 30,1994
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,736,484 $ 270,045
Net realized loss on investments (1,251) -0-
Net increase in net assets from operations 1,735,233 270,045
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (1,736,484) (270,045)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 37,225,371 36,908,584
Total increase 37,224,120 36,908,584
NET ASSETS
Beginning of period 36,908,584 -0-
End of period $74,132,704 $36,908,584
* Commencement of operations.
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Municipal Trust (the 'Fund') is registered under the Investment
Company Act of 1940, as amended, as an open-end investment company. The Fund
operates as a series company currently issuing six classes of shares of
beneficial interest: Alliance Municipal Trust-General Portfolio, Alliance
Municipal Trust-New York Portfolio, Alliance Municipal Trust-California
Portfolio, Alliance Municipal Trust-Connecticut Portfolio, Alliance Municipal
Trust-New Jersey Portfolio (the 'Portfolio') and Alliance Municipal
Trust-Virginia Portfolio. Each series is considered to be a separate entity for
financial reporting and tax purposes. The following is a summary of significant
accounting policies followed by the Portfolio.
1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity. Amortization of premium is charged to income.
Accretion of market discount is credited to unrealized gains.
2. ORGANIZATION EXPENSES
The organization expenses of the Portfolio are being amortized against income
on a straight-line basis through February 7, 1999.
3. TAXES
It is the Portfolio's policy to comply with 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 its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
4. DIVIDENDS
The Portfolio declares dividends daily from net investment income and
automatically reinvests such dividends in additional shares at net asset value.
Net realized capital gains on investments, if any, are expected to be
distributed near year end. Dividends paid from net investment income for the
year ended June 30, 1995, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax (AMT).
5. GENERAL
Interest income is accrued daily. Security transactions are recorded on the
date securities are purchased or sold. Realized gain (loss) from security
transactions is recorded on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45 of 1% in excess of $3 billion. The Adviser has agreed, pursuant to the
advisory agreement, to reimburse the Portfolio to the extent that its annual
aggregate expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed 1% of its average daily net assets for any
fiscal year. The Adviser also voluntarily agreed to reimburse the Portfolio
from July 1, 1994 to February 28, 1995 for expenses exceeding .70 of 1% of its
average daily net assets and from March 1, 1995 to June 30, 1995 for expenses
exceeding .80 of 1% of its average daily net assets. For the year ended June
30, 1995, the reimbursement amounted to $261,389. The Portfolio compensates
Alliance Fund Services, Inc. (a wholly-owned subsidiary of the Adviser) for
providing personnel and facilities to perform transfer agency services for the
Portfolio. Such compensation amounted to $54,641 for the year ended June 30,
1995.
6
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
- -------------------------------------------------------------------------------
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays a distribution fee to the Adviser at an
annual rate of up to .25% of 1% of the Portfolio's average daily net assets.
The Plan provides that the Adviser will use such payments in their entirety for
distribution assistance and promotional activities.
For the year ended June 30, 1995, the distribution amounted to $145,891 of
which $58,357 was waived. In addition, the Portfolio reimbursed certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services, accounting, bookkeeping, legal and compliance support.
For the year ended June 30, 1995, such payments by the Portfolio amounted to
$96,364 of which $91,500 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1995, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1995 the
Portfolio had a capital loss carryforward of $1,251 which expires in 2003.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1995, capital paid-in aggregated $74,133,955. Transactions, all at $1.00 per
share, were as follows:
FEB. 7,1994(A)
YEAR ENDED THROUGH
JUNE 30, 1995 JUNE 30, 1994
------------- --------------
Shares sold 365,818,445 93,355,382
Shares issued on reinvestments of dividends 1,736,484 269,901
Shares redeemed (330,329,558) (56,716,699)
Net increase 37,225,371 36,908,584
7
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
- -------------------------------------------------------------------------------
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period.
FEBRUARY 7,
1994(A)
YEAR ENDED THROUGH
JUNE 30,1995 JUNE 30,1994
------------- ------------
Net asset value, beginning of period $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .029 .008
LESS DISTRIBUTIONS
Dividends from net investment income (.029) (.008)
Net asset value, end of period $ 1.00 $ 1.00
TOTAL RETURNS
Total investment return based on net asset value (b)(c) 2.93% 2.08%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $74,133 $36,909
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .74% .70%(c)
Expenses, before waivers and reimbursements 1.29% 1.93%(c)
Net investment income 2.98% 2.07%(c)
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(c) Annualized.
8
INDEPENDENT AUDITOR'S REPORT ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
- -------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
We have audited the accompanying statement of net assets of the New Jersey
Portfolio of Alliance Municipal Trust as of June 30, 1995 and the related
statements of operations, changes in net assets, and financial highlights for
the periods indicated in the accompanying financial statements. These financial
statements and financial highlights are the responsibility of the Portfolio'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 securiies owned as of June
30, 1995, 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 the
New Jersey Portfolio of Alliance Municipal Trust as of June 30, 1995, and the
results of its operations, changes in its net assets, and its financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles.
McGladrey &Pullen LLP
New York, New York
August 8, 1995
9
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
MUNICIPAL BONDS-75.1%
ALABAMA-1.2%
BIRMINGHAM IDR
(O'Neal Steel) AMT VRDN*
$ 4,745 6/01/08 4.30% $ 4,745,000
BRIDGEPORT IDR
(Beaulieu Nylon, Inc.) Series '87 VRDN*
10,000 11/01/15 4.45 10,000,000
14,745,000
ARIZONA-1.6%
COCONINO COUNTY PCR
(Public Service Co. Navajo Project)
Series '94A AMT VRDN*
1,800 10/01/29 4.40 1,800,000
PHOENIX INDUSTRIAL DEVELOPMENT
AUTHORITY MFHR
(Mariners Pointe Apts. Project)
Series '93A AMT VRDN*
8,420 10/01/23 4.35 8,420,000
PIMA COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
(Tucson Electric) Series '90A AMT VRDN*
3,900 5/01/25 4.30 3,900,000
PIMA COUNTY PCR
(Tucson Electric) Series '83A VRDN*
5,000 3/15/18 3.95 5,000,000
19,120,000
ARKANSAS-1.6%
ARKANSAS STUDENT LOAN AUTHORITY
Series '93 AMT VRDN*
12,345 6/01/10 4.40 12,345,000
SPRINGDALE IDR
(Clarke Holding Corp.) Series '88 AMT VRDN*
6,000 8/01/08 4.45 6,000,000
18,345,000
CALIFORNIA-11.9%
CALIFORNIA STATEWIDE DEPARTMENT OF
WATER RESOURCES
Pre-Refunded (Central Valley Project)
14,990 12/01/95 4.15 15,415,204
KERN COUNTY TRAN
Community College Series '94
$7,100 7/20/95 3.99% $7,102,609
LOS ANGELES CONVENTION AND EXHIBITION CENTER
Authority Lease Revenue MBIA VRDN*
17,225 8/15/18 4.25 17,225,000
LOS ANGELES TRAN
(Unified School District) Series '94
6,500 7/10/95 3.60 6,500,011
OAKLAND GO TRAN
Series '94
30,000 7/24/95 4.01 30,008,874
ORANGE COUNTY TRAN
Series A
20,850 7/19/95 3.79 17,061,555
Irrevocable standby letter of credit dated
December 8, 1994 with Chase Manhattan Bank,
of which the Portfolio is the beneficiary,
for account of the Alliance Capital Management,
L.P., securing Orange County TRAN7/19/95** 3,795,862
20,857,417
SAN BERNARDINO COUNTY
Sales Tax Revenue Series '94A VRDN*
10,600 3/01/10 3.80 10,600,000
SAN FRANCISCO GO TRAN
Series '94
20,000 7/15/95 3.65-4.75 20,002,241
VISTA COMMUNITY DEV. COMM. BAN PPB*
14,000 11/01/97 4.50 14,002,663
141,714,019
COLORADO-2.1%
COLORADO STUDENTOBLIGATION BOND AUTHORITY
Student Loan Revenue Series '89 A AMT VRDN*
6,900 3/01/24 4.30 6,900,000
LOWER COLORADO RIVER AUTHORITY
Pre-Refunded
5,000 1/01/96 4.20 5,227,028
2
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
LOWER COLORADO RIVER AUTHORITY
Pre-Refunded
$ 4,000 1/01/96 4.20% $ 4,171,849
PUEBLO COUNTY IDR
(Kaiser Aerospace & Electronics Project)
Series '87 AMT VRDN*
8,300 9/01/07 4.25 8,300,000
24,598,877
CONNECTICUT-0.7%
CONNECTICUT DEVELOPMENT AUTH.
HEALTH FACILITY
(Independent Living) Series '90 VRDN*
4,600 7/01/15 3.95 4,600,000
CONNECTICUT HFA SFMR
(Home Mortgage Finance Project)
Series E2 AMT PPB*
3,100 11/15/95 4.50 3,100,072
7,700,072
FLORIDA-6.8%
BROWARD COUNTY MFHR
(Sawgrass Pines Apts.)Series '93A AMT VRDN*
6,000 11/01/23 4.60 6,000,000
DADE COUNTY SOILD WASTE IDR
(Montenay-Dade Ltd. Project)
Series '88 AMT VRDN*
5,120 12/01/10 4.45 5,120,000
DADE COUNTY SOLID WASTE IDR
(Montenay-Dade Ltd. Project)
Series '90A AMT VRDN*
15,535 12/01/13 4.45 15,535,000
FLORIDA HFA MFHR
(Ashley Lake II) Series J VRDN*
5,000 12/01/11 4.25 5,000,000
FLORIDA HFA MFHR
(Park Colony Project) Series '95D VRDN*
5,000 4/01/13 4.20 5,000,000
FLORIDA STATE MUNICIPAL
POWER AGENCY REVENUE
VRDN* AMBAC
10,875 10/01/16 4.10 10,875,000
GULF BREEZE REVENUE
Local Government Loan Program
Series '85C FGIC VRDN*
2,700 12/01/15 3.90% $2,700,000
JACKSONVILLE ELECTRIC AUTHORITY
Pre-Refunded Series 2
5,165 10/01/95 4.13 5,281,160
ORANGE COUNTY HEALTH FACILITIES AUTHORITY
Hospital Loan Program Series '85 MBIA VRDN*
20,000 8/04/95 4.20 20,000,000
ORANGE COUNTY HFA MFHR
(Sundown Assoc. II) Series B VRDN*
5,000 6/01/04 4.25 5,000,000
80,511,160
GEORGIA-4.7%
CARROLLTON GEORGIA PAYROLL DEV. AUTH.
(Flowers Baking Villa Rica)
Series '94 AMT VRDN*
6,000 8/01/14 4.25 6,000,000
CARTERSVILLE IDR
(Bliss & Laughlin Steel)
Series '88 AMT VRDN*
3,600 12/01/18 4.45 3,600,000
COLUMBIA COUNTY ELDERLY
AUTHORITY RESIDENTIAL CARE FACILITY
Augusta Res. Center on Aging
5,000 1/01/21 4.15 5,000,000
DE KALB COUNTY HOUSING AUTHORITY MFHR
(Post Ashford Project) Series '95 VRDN*
9,895 6/01/25 4.05 9,895,000
DE KALB COUNTY HOUSING AUTHORITY MFHR
(Post Brook Project) Series '95
4,300 6/01/25 4.05 4,300,000
FULTON COUNTY MFHR
(Champion Green Apts.) VRDN*
8,940 10/01/25 4.15 8,940,000
MACON-BIBB COUNTY HOSPITAL REV.
(Charter Med/Macon) Series '86 VRDN*
4,400 3/01/05 4.40 4,400,000
3
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
SMYRNA HOUSING AUTHORITY
MFHR
(Post Valley Project) Series '95 VRDN*
$ 13,600 6/01/25 4.05% $13,600,000
55,735,000
IDAHO-0.4%
IDAHO GO TAN
Series '95
5,000 6/27/96 3.80 5,032,900
ILLINOIS-6.5%
CHICAGO AIRPORT REVENUE
(O'Hare International Airport)
Series '88A AMT VRDN*
20,150 1/01/18 4.35 20,150,000
FRANKLIN PARK IDR
(Maclean-Fogg Co. Project)
Series '95 AMT VRDN*
5,000 2/01/07 4.35 5,000,000
FULTON COUNTY SOLID WASTE DISPOSAL FACILITY
(Fulton Project) Series A PPB*
10,000 9/07/95 4.35 10,000,000
ILLINOIS DEVELOPMENT FINANCE AUTHORITY IDR
(Addison Project) Series '89 AMT VRDN*
2,900 12/01/09 4.20 2,900,000
ILLINOIS DEVELOPMENT FINANCE AUTHORITY IDR
(Crane-Tripp Partners Project)
Series '93 AMT PPB*
4,075 8/01/95 5.35 4,075,000
ILLINOIS HOUSING DEVELOPMENT AUTHORITY SFMR
(Home Mortgage Program) AMT VRDN*
32,775 8/01/19 4.35 32,775,000
ROCKFORD IDR
(Fastener Engineers Project) Series '95 AMT
2,300 2/01/15 4.35 2,300,000
77,200,000
INDIANA-1.6%
INDIANA DEVELOPMENT AUTHORITY SOLID WASTE
(Pure Air Lake) Series '90A AMT
11,050 7/27/95 4.25% $11,050,000
INDIANA EMP. DEV. COMM. IDR
(O'Neal Steel) AMT VRDN*
1,000 4/01/10 4.30 1,000,000
INDIANA HEALTH FACILITY FINANCING AUTHORITY
(St. Anthony Medical Center)Series '89 VRDN*
1,500 12/01/14 4.40 1,500,000
INDIANAPOLIS
Res. Rec.: (Ogden Martin Systems)
Series '87 AMT VRDN*
3,100 12/01/16 4.45 3,100,000
WESTFIELD IDR
(Porter Project) Series '89 AMT VRDN*
2,400 12/01/09 4.35 2,400,000
19,050,000
IOWA-0.4%
DUBUQUE IDR
(Jeld-Wen, Inc.) Series '88 AMT VRDN*
5,250 10/01/08 4.55 5,250,000
KANSAS-0.1%
JOHNSON COUNTY WATER DISTRICT
Pre-Refunded 001 Water Revenue MBIA
1,000 12/01/95 4.18 1,030,450
KENTUCKY-1.6%
BEREA IDR
(Tokico Manufacturing Corp.)
Series '87 AMT VRDN*
6,000 12/01/97 4.20 6,000,000
BOWLING GREEN IDR
(Woodcraft Industries, Inc.)
Series '95 AMT VRDN*
5,400 3/01/25 4.35 5,400,000
4
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
HENDERSON COUNTY SOLID WASTE
(Hudson Foods Inc.) Series '95 VRDN*
$ 8,000 3/01/15 4.25% $ 8,000,000
19,400,000
LOUISIANA-0.1%
CALCASIEU PARISH
(Citgo Petroleum Corp.) VRDN*
1,500 3/01/25 4.45 1,500,000
MARYLAND-0.2%
MARYLAND HEALTH AND EDUCATIONAL
FACILITIES AUTHORITY
Pooled Loan Program Series B VRDN*
2,400 4/01/35 4.30 2,400,000
MASSACHUSETTS-1.1%
MASSACHUSETTS GO
Series B VRDN*
7,200 12/01/97 4.20 7,200,000
MASSACHUSETTS INDUSTRIAL FINANCE AGENCY IDR
(Wing Realty Trust) VRDN*
327 10/01/99 5.85 326,700
MASSACHUSETTS MUNICIPAL POWER SUPPLY REVENUE
Series C VRDN*
6,000 7/01/19 3.85 6,000,000
13,526,700
MICHIGAN-1.0%
MICHIGAN HIGHER EDUCATION
Student Loan Revenue
Series XII AMT VRDN* AMBAC
7,300 10/01/15 4.30 7,300,000
MICHIGAN MUNICIPAL BOND AUTHORITY
Series B
2,500 7/03/96 3.80 2,516,850
MICHIGAN STRATEGIC FUND
WASTE DISPOSAL REVENUE
(United Waste Systems Inc.)
Series '95 VRDN*
2,500 4/01/10 4.30 2,500,000
12,316,850
MISSISSIPI-0.5%
MISSISSIPPI BUSINESS FINANCE CORP.
(Choctaw Maid Farms, Inc.)
Series '95 AMT VRDN*
5,600 3/01/10 4.25% 5,600,000
MISSOURI-0.6%
MISSOURI GO
P-Floats VRDN*
6,900 8/01/16 4.20 6,900,000
NEBRASKA-0.3%
DOUGLAS COUNTY IDR
(Chemicals Inc. Project)
Series '90 AMT VRDN*
3,500 10/01/01 4.45 3,500,000
NEVADA-1.0%
CLARK COUNTY AIRPORT REVENUE
Series A2 AMT VRDN*
4,430 7/01/25 4.15 4,430,000
CLARK COUNTY IDR
(Nevada Cogoneration Assoc. 2) AMT VRDN*
1,950 12/01/22 4.35 1,950,000
NEVADA IDR
(Cimco, Inc. Project) Series A AMT VRDN*
4,830 9/15/08 4.40 4,830,000
11,210,000
NEW HAMPSHIRE-3.3%
NEW HAMPSHIRE BUSINESS FINANCE AUTH. PCR
(Public Service Co. Project)
Series '92D AMT VRDN*
33,700 5/01/21 4.30 33,700,000
NEW HAMPSHIRE HFA MFHR
(Fairways Project) AMT VRDN*
5,000 1/01/24 4.25 5,000,000
38,700,000
NEW JERSEY-0.4%
NEW JERSEY HOUSING FINANCE AUTHORITY SFMR
EAGLE TRUST
(Home Owner Mortgage) Ser. C-D MBIA VRDN*
4,400 10/01/15 4.25 4,400,000
5
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
NEW YORK-3.4%
BATTERY PARK CITY FHA
Apt. Dev.: Marina Towers VRDN*
$ 4,800 6/01/23 4.00% $ 4,800,000
BATTERY PARK CITY FHA
Apt. Dev.: Marina Towers VRDN*
4,665 6/01/23 4.00 4,665,000
NEW YORK CITY HOUSING DEVELOPMENT
(James Tower Development) Series 4 VRDN*
7,200 7/01/05 3.85 7,200,000
NEW YORK GO
Series '95B-2 VRDN*
4,900 8/15/03 4.25 4,900,000
NEW YORK MEDICAL CARE FACILITIES AUTHORITY
Eagle Trust (New York Hospital)
Series 953202 VRDN* AMBAC
7,000 8/15/24 4.25 7,000,000
NEW YORK STATE ENVIRONMENTAL
FACILITIES CORP. PCR
(Eagle Trust) (NYC Water Finance Auth.)
Series '94A VRDN*
12,000 6/15/12 4.25 12,000,000
40,565,000
NORTH CAROLINA-2.6%
BLADEN COUNTY PCFA
(BCH Energy Project) Series '93 AMT VRDN*
16,500 11/01/20 4.30 16,500,000
NCNB POOLED MUNICIPAL TRUST
Series '90B VRDN*
9,915 11/15/20 5.63 9,915,000
ROBESON COUNTY IDR
(Core Industries) Series '91 AMT VRDN*
5,000 8/01/06 4.35 5,000,000
31,415,000
OKLAHOMA-0.7%
OKLAHOMA MUNICIPAL POWER AUTHORITY
FGIC VRDN*
7,840 1/01/28 4.25 7,840,000
OREGON-0.2%
OREGON ECONOMIC DEVELOPMENT AUTHORITY IDR
(Stagg Foods) Series 75 AMT VRDN*
2,300 3/01/04 4.35% 2,300,000
PENNSYLVANIA-0.7%
HORSHAM TOWNSHIP IDR
(Wilgoco II Associates) Series '84 VRDN*
2,650 12/01/11 5.85 2,650,000
PHILADELPHIA HOSPITAL REVENUE
(Charter Hospital) Series '86 VRDN*
6,175 1/01/01 4.40 6,175,000
8,825,000
RHODE ISLAND-0.4%
RHODE ISLAND GO TAN
5,000 6/28/96 3.65 5,040,450
SOUTH CAROLINA-1.4%
LAURENS COUNTY IDR
(Nicca USA Project) AMT VRDN*
7,500 4/01/09 4.70 7,500,000
PIEDMONT MUNICIPAL POWER AGENCY
Pre-Refunded
1,000 1/01/96 4.20 1,056,175
SOUTH CAROLINA JOBS IDR
(Venture Packaging) Series '95 AMT VRDN*
8,325 4/01/16 4.35 8,325,000
16,881,175
TENNESSEE-3.1%
ANDERSON COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
(Hollingsworth Project) VRDN*
1,820 6/01/03 4.15 1,820,000
MEMPHIS SHELBY COUNTY AIRPORT AUTHORITY
1,800 9/11/95 4.00 1,800,000
6
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
NASHVILLE COUNTY
(McKendree Village Inc. Project) VRDN*
$ 11,410 4/01/15 4.15% $11,410,000
NASHVILLE COUNTY
Metro Water & Sewer Pre-Refunded
5,000 1/01/96 4.25 5,207,434
SULLIVAN COUNTY IDR
(Modern Forge Co. Project) Series '90 VRDN*
2,000 7/01/10 4.35 2,000,000
TENNESSEE HOUSING DEVELOPMENT AGENCY
AMT VRDN*
10,315 7/01/16 4.36 10,315,000
TULLAHOMA INDUSTRIAL DEVELOPMENT AUTHORITY
(Rock Tennessee Converting Co.)
Series '95 AMT VRDN*
4,000 3/01/15 4.25 4,000,000
36,552,434
TEXAS-7.0%
ANGELINA & NECHES RIVER SOLID WASTE
(Champion International Corp.) AMT VRDN*
6,750 4/01/18 4.25 6,750,000
AUSTIN UTILITY SYSTEMS REVENUE
Series '92A MBIA
4,880 11/15/95 4.80 4,890,647
CALHOUN COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
(Formosa Plastics Corp.) Series '94 VRDN*
10,000 11/01/15 4.30 10,000,000
GALVESTON IDR
(Mitchell Project) Series '93 AMT VRDN*
4,400 6/01/09 4.20 4,400,000
GULF COAST INDUSTRIAL DEVELOPMENT AUTHORITY
(Gruma Corp.) AMT VRDN*
6,850 11/01/09 4.40 6,850,000
HARRIS COUNTY GO TAN
5,000 2/28/96 3.60% 5,021,039
PANHANDLE PLAINS STUDENT LOAN REVENUE
Series '95A AMT VRDN*
10,000 6/01/25 4.30 10,000,000
SAN ANTONIO INDUSTRIAL DEVELOPMENT AUTHORITY
(Gruma Corp.) AMT VRDN*
5,250 11/01/09 4.40 5,250,000
TARRANT COUNTY IDR
(AL- Ko Southwest Inc.) AMT VRDN*
2,500 4/01/00 4.70 2,500,000
TEXAS GO TRAN
13,000 8/31/95 4.14 13,015,485
TEXAS GO TRAN
15,000 8/31/95 4.14-4.15 15,020,994
83,698,165
VIRGINIA-3.2%
BEDFORD COUNTY IDR
(Nekoosa Packaging Project) Series '93 VRDN*
2,100 10/01/04 4.25 2,100,000
FAIRFAX COUNTY IDR
(Fairfax Hospital) Series '88B VRDN*
2,200 10/01/25 4.15 2,200,000
NORFOLK GO
(Eagle Trust) Series 944601 VRDN*
18,500 6/01/06 4.25 18,500,000
VIRGINIA GO EAGLE TRUST SERIES 954601
(Eagle Trust) Series 954601
10,900 6/01/21 4.25 10,900,000
VIRGINIA HOUSING DEVELOPMENT AUTHORITY SFMR
Series '95I AMT PPB*
4,500 9/12/95 4.18 4,500,000
38,200,000
7
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
WASHINGTON-1.2%
PILCHUCK IDR
(Canyon Park Assoc. Lot #12)
Series III '89 VRDN*
$ 1,706 8/01/04 4.30% $ 1,706,000
PILCHUCK IDR
(Hillsdale Assoc. Lot #6)
Series III '89 VRDN*
1,209 8/01/09 4.30 1,209,000
PILCHUCK IDR
(Kohkoku USA Project) AMT VRDN*
3,000 11/01/99 4.50 3,000,000
PILCHUCK IDR
(Omni Assoc. Lot 7) Series III '89 VRDN*
1,500 8/01/10 4.30 1,500,000
REDMOND PUBLIC COMM. IDR
(Hinds Project Lot #4) VRDN*
672 8/01/05 4.30 672,000
REDMOND PUBLIC COMM. IDR
(Trinity @ Canyon Park) VRDN*
580 8/01/02 4.30 580,000
REDMOND PUBLIC COMM. IDR
(Willows Project Lot #2) VRDN*
495 8/01/05 4.30 495,000
WASHINGTON HFA MFHR
(Arbor Park Project) Series '94 AMT VRDN*
5,500 10/01/24 4.35 5,500,000
14,662,000
WEST VIRGINIA-0.4%
MARION COUNTY
(Solid Waste Grant Town Cogeneration)
AMT VRDN*
5,200 10/01/17 4.30 5,200,000
WISCONSIN-0.7%
PLEASANT PRAIRIE IDR
(Nucon Corp. Project) Series '95 AMT VRDN*
3,000 2/01/22 4.15 3,000,000
WISCONSIN STATE
Operating Notes Series '95
5,000 6/17/96 3.63 5,039,800
8,039,800
WYOMING-0.4%
LINCOLN COUNTY
(Exxon Project) Series '87A AMT VRDN*
5,000 7/01/17 4.35% 5,000,000
Total Municipal Bonds
(amortized cost $893,687,223) 893,705,052
COMMERCIAL PAPER-26.2%
ALABAMA-0.4%
PHENIX CITY INDUSTRIAL DEVELOPMENT AUTHORITY
(Mead Board Project) Series '88 AMT
4,500 10/02/95 4.20 4,500,000
ARIZONA-0.2%
MESA COUNTY MUNICIPAL
DEVELOPMENT CORPORATION
(Special Tax Bonds) Series '85
3,000 10/02/95 3.90 3,000,000
CALIFORNIA-0.3%
LONG BEACH
(Harbor & Terminal Project) AMT
3,600 9/12/95 4.15 3,600,000
COLORADO-2.5%
DENVER AIRPORT REVENUE
Series '90B
14,080 9/08/95 4.30 14,080,000
DENVER AIRPORT REVENUE
Series '90B AMT
3,800 8/01/95 4.35 3,800,000
DENVER AIRPORT REVENUE
Series '90D
8,700 10/02/95 4.25 8,700,000
DENVER AIRPORT REVENUE
Series '90D
3,000 8/21/95 4.30 3,000,000
29,580,000
FLORIDA-2.7%
FLORIDA STATE MUNICIPAL POWER AGENCY REVENUE
Series A
15,000 10/16/95 4.00 15,000,000
8
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
PINELLAS COUNTY EDUCATIONAL
FACILITY
Pooled Loan Program Series '85 MBIA
$ 7,500 8/08/95 4.20% $ 7,500,000
PINELLAS COUNTY EDUCATIONAL FACILITY
Pooled Loan Revenue
3,000 7/03/95 3.45 3,000,000
SUNSHINE STATE GOVERNMENT FINANCE COMMISSION
Revenue Bonds Series '86
6,100 8/21/95 4.10 6,100,000
31,600,000
GEORGIA-0.7%
BURKE COUNTY PCR
(Oglethorpe Power/Vogtle Project)
Series '92A
8,550 8/15/95 4.10 8,550,000
ILLINOIS-1.1%
DECATUR WATER REVENUE
(New South Water Treatment) Series '85
8,500 10/06/95 4.20 8,500,000
ILLINOIS HEALTH FACILITIES AUTHORITY
(Alexanian Brothers Medical Center)
Series '85D MBIA
4,450 9/01/95 4.15 4,450,000
12,950,000
INDIANA-0.7%
JASPER COUNTY
(North Indiana Public Service Project)
Series '88A
4,000 10/13/95 4.00 4,000,000
JASPER COUNTY
(North Indiana Public Service Project)
Series '88C
4,300 8/14/95 4.10 4,300,000
8,300,000
KANSAS-0.3%
BURLINGTON PCR
(Kansas City Power & Light) Series '95
3,500 8/02/95 4.20 3,500,000
LOUISIANA-0.6%
LOUISIANA GO
Series '91A
7,500 8/21/95 4.15% 7,500,000
MARYLAND-0.7%
ANNE ARUNDEL COUNTY
(Baltimore Gas & Electric Co.)
Series '88 AMT
2,400 8/11/95 4.15 2,400,000
ANNE ARUNDEL COUNTY
(Baltimore Gas & Electric Co.)
Series '88 AMT
3,750 7/28/95 4.20 3,750,000
ANNE ARUNDEL COUNTY
(Baltimore Gas & Electric Co.)
Series '88 AMT
1,800 8/11/95 4.20 1,800,000
7,950,000
MICHIGAN-1.8%
MICHIGAN STRAGETIC FUND
WASTE DISPOSAL REVENUE
(S.D. Warren Co.) Series '87C AMT
10,000 7/18/95 4.25 10,000,000
MICHIGAN STRATEGIC FUND
WASTE DISPOSAL REVENUE
(S.D. Warren Co.) Series '87A AMT
4,000 7/25/95 4.25 4,000,000
MICHIGAN STRATEGIC FUND
WASTE DISPOSAL REVENUE
(S.D.Warren Co.) Series B AMT
5,000 8/21/95 4.15 5,000,000
MICHIGAN STRATEGIC FUND
WASTE DISPOSAL REVENUE
(S.D.Warren Co.) Series B AMT
3,000 7/24/95 4.20 3,000,000
22,000,000
MISSOURI-0.4%
MISSOURI PCR
(Union Electric Project) Series '85A
4,300 10/02/95 3.90 4,300,000
9
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
NEW YORK-1.8%
NEW YORK CITY MUNICIPAL WATER DISTRICT
$ 6,700 8/15/95 4.15% $ 6,700,000
NEW YORK CITY MUNICIPAL WATER DISTRICT
Series 4
6,100 9/11/95 4.20 6,100,000
PORT AUTHORITY OF NEW YORK & NEW JERSEY
AMT
8,160 7/07/95 4.55 8,160,000
20,960,000
NORTH CAROLINA-0.5%
WAKE COUNTY PCFA
(Carolina Power & Light) Series '90A
5,400 8/18/95 4.10 5,400,000
OHIO-1.3%
OHIO AIR QUALITY DEVELOPMENT AUTHORITY
(Dusquesne Light Co.) Series '88 AMT
5,000 7/28/95 3.80 5,000,000
OHIO AIR QUALITY DEVELOPMENT AUTHORITY
PCR
(Cincinnati Gas & Electric) Series '85A
3,000 8/02/95 4.15 3,000,000
OHIO AIR QUALITY DEVELOPMENT AUTHORITY
PCR
(Cincinnati Gas & Electric) Series '85A
3,500 9/12/95 4.15 3,500,000
OHIO AIR QUALITY DEVELOPMENT AUTHORITY
PCR
(Cincinnati Gas & Electric) Series '85B
4,500 9/12/95 4.15 4,500,000
16,000,000
PENNSYLVANIA-2.1%
CARBON COUNTY
Res. Rec.:(Panther Creek Project)
Series '90A AMT
2,100 10/02/95 4.05% 2,100,000
CARBON COUNTY
Res. Rec.:(Panther Creek Project)
Series '90A AMT
5,000 8/25/95 4.20 5,000,000
CARBON COUNTY
Res. Rec.:(Panther Creek Project)
Series '90B AMT
2,200 8/14/95 4.15 2,200,000
PHILADELPHIA GAS WORKS
Series B
5,000 10/04/95 4.00 5,000,000
VENANGO INDUSTRIAL DEVELOPMENT AUTHORITY
Res. Rec.:(Scrubgrass Project)
Series '90B AMT
2,200 9/21/95 3.75 2,200,000
VENANGO INDUSTRIAL DEVELOPMENT AUTHORITY
Res. Rec.:(Scrubgrass Project)
Series '93 AMT
8,000 8/25/95 4.20 8,000,000
24,500,000
TEXAS-3.9%
AUSTIN UTILITY SYSTEMS REVENUE
Series A
4,200 9/14/95 3.75 4,200,000
HARRIS COUNTY HEALTH FACILITY
Sisters of Charity
10,000 10/11/95 4.20 10,000,000
HOUSTON AIRPORT REVENUE
AMT
5,400 8/01/95 4.25 5,400,000
NORTH CENTRAL HEALTH FACILITY
(Methodist Hospital) Series '91A
9,000 8/24/95 4.15 9,000,000
10
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------------
TEXAS GO
$ 10,000 8/03/95 4.20% $10,000,000
TEXAS GO
8,300 9/07/95 4.20 8,300,000
46,900,000
UTAH-1.3%
TOOELE COUNTY WASTE REVENUE
(Rollins Environment, Inc.) Series A AMT
15,000 10/10/95 3.90 15,000,000
VIRGINIA-0.8%
LOUISA INDUSTRIAL DEVELOPMENT AUTHORITY
(Virginia Electric & Power Co.) Series '85
10,125 10/18/95 4.05 10,125,000
WASHINGTON-0.6%
SEATTLE MUNICIPAL POWER & LIGHT
Series '91B
7,000 8/10/95 4.20 7,000,000
WEST VIRGINIA-0.8%
WEST VIRGINIA PUBLIC ENERGY AUTHORITY
(Morgantown Energy Assoc.) Series '89 AMT
7,000 7/28/95 4.20% 7,000,000
WEST VIRGINIA PUBLIC ENERGY AUTHORITY
(Morgantown Energy Assoc.) Series '89A AMT
2,000 8/25/95 4.20 2,000,000
9,000,000
WYOMING-0.7%
LINCOLN COUNTY PCR
(Pacificorp Project) Series '91
8,900 9/11/95 4.20 8,900,000
Total Commercial Paper
(amortized cost $311,115,000) 311,115,000
TOTAL INVESTMENTS-101.3%
(amortized cost $1,204,802,223) 1,204,820,052
Other assets less liabilities-(1.3%) (15,528,700)
NET ASSETS-100%
(offering and redemption price of $1.00
per share; 1,191,217,700) shares outstanding $1,189,291,352
+ All securities either mature or their interest rate changes in one year or
less.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
** See Note B to financial statements.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Administration
GO General Obligation
HFA Housing Finance Agency/Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCFA Pollution Control Financing Authority
PCR Pollution Control Revenue
PPB Periodic Put Bond
SFMR Single Family Mortgage Revenue
TAN Tax Anticipation Note
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
11
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $42,350,143
EXPENSES
Advisory fee (Note B) $ 5,696,283
Distribution assistance and administrative
service (Note C) 3,320,897
Transfer agency 1,130,778
Registration fees 266,437
Custodian fees 188,716
Printing 87,146
Audit and legal fees 26,985
Trustees' fees 22,738
Miscellaneous 34,901
Total expenses 10,774,881
Less: expense reimbursement and fee waiver (96,114)
10,678,767
Net investment income 31,671,376
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS
Net realized loss on investments (1,793,640)
Net change in unrealized appreciation of investments (3,201,732)
Net loss on investments (4,995,372)
NET INCREASE IN NET ASSETS FROM OPERATIONS $26,676,004
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JUNE 30,1995 JUNE 30,1994
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $31,671,376 $20,532,812
Net realized loss on investments (1,793,640) (134,924)
Net change in unrealized appreciation of
investments (3,201,732) (748)
Net increase in net assets from operations 26,676,004 20,397,140
OTHER CAPITAL CONTRIBUTIONS
Total increase (Note B) 3,218,975 -0-
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (31,671,376) (20,532,812)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 56,798,166 118,724,622
Total increase 55,021,769 118,588,950
NET ASSETS
Beginning of year 1,134,269,583 1,015,680,633
End of year $1,189,291,352 $1,134,269,583
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Municipal Trust (the 'Fund') is registered under the Investment
Company Act of 1940, as amended, as an open-end investment company. The Fund
operates as a series company currently issuing six classes of shares of
beneficial interest: Alliance Municipal Trust-General Portfolio (the
'Portfolio'), Alliance Municipal Trust-New York Portfolio, Alliance Municipal
Trust-California Portfolio, Alliance Municipal Trust-Connecticut Portfolio,
Alliance Municipal Trust-New Jersey Portfolio and Alliance Municipal
Trust-Virginia Portfolio. Each series is considered to be a separate entity for
financial reporting and tax purposes. The following is a summary of significant
accounting policies followed by the Portfolio.
1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity. Amortization of premium is charged to income.
Accretion of market discount is credited to unrealized gains.
2. TAXES
It is the Portfolio's policy to comply with 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 its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
3. DIVIDENDS
The Portfolio declares dividends daily from net investment income and
automatically reinvests such dividends in additional shares at net asset value.
Net realized capital gains on investments, if any, are expected to be
distributed near year end. Dividends paid from net investment income for the
year ended June 30, 1995, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax (AMT).
4. GENERAL
Interest income is accrued daily. Security transactions are recorded on the
date securities are purchased or sold. Realized gain (loss) from security
transactions is recorded on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45 of 1% in excess of $3 billion. The Adviser has agreed, pursuant to the
advisory agreement, to reimburse the Portfolio to the extent that its aggregate
expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed 1% of its average daily net assets for any
fiscal year. No reimbursement was required for the year ended June 30, 1995.
The Portfolio compensates Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) for providing personnel and facilities to perform
transfer agency services for the Portfolio. Such compensation amounted to
$634,498 for the year ended June 30, 1995.
The Adviser established an irrevocable standby letter of credit with a
commercial bank, for the benefit of the Portfolio, in the event tax and revenue
anticipation notes issued by Orange County, California and held by the
Portfolio were not paid in full at maturity. On July 19, 1995 the Adviser
purchased all such remaining notes held by the Portfolio for $20.85 million.
13
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays a distribution fee to the Adviser at an
annual rate of up to .25 of 1% of the Portfolio's average daily net assets.
The Plan provides that the Adviser will use such payments in their entirety for
distribution assistance and promotional activities. For the year ended June 30,
1995, the distribution amounted to $2,848,142 of which $96,114 was waived. In
addition, the Portfolio reimbursed certain broker-dealers for administrative
costs incurred in connection with providing shareholder services, accounting,
bookkeeping, legal and compliance support. For the year ended June 30, 1995,
such payments by the Portfolio amounted to $472,755 of which $112,500 was paid
to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1995, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1995 the
Portfolio had a capital loss carryforward of $1,934,177, of which $5,613
expires in the year 2001, $134,924 expires in the year 2002 and $1,793,640
expires in the year 2003.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1995, capital paid-in aggregated $1,191,207,700. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
--------------- ---------------
Shares sold 4,443,583,142 3,818,700,772
Shares issued on reinvestments of dividends 31,671,376 20,558,991
Shares redeemed (4,418,456,352) (3,720,535,141)
Net increase 56,798,166 118,724,622
14
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------
1995 1994 1993 1992 1991
---------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .028 .018 .020 .034 .046
Net realized and unrealized loss on investments (.003) -0- -0- -0- -0-
Net increase in net asset value from operations .025 .018 .020 .034 .046
ADD: CAPITAL CONTRIBUTIONS (SEE NOTE B)
Capital Contributed by the Adviser .003 -0- -0- -0- -0-
LESS: DISTRIBUTIONS
Dividends from net investment income (.028) (.018) (.020) (.034) (.046)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURNS
Total investment return based on net asset value (b) 2.83%(c) 1.81% 2.05% 3.48% 4.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1,189 $1,134 $1,016 $914 $883
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .94% .92% .92% .92% .89%
Expenses, before waivers and reimbursements .95% .94% .94% .95% .95%
Net investment income 2.78% 1.80% 2.02% 3.40% 4.57%
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(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 during the period, and redemption on
the last day of the period.
(c) The capital contribution by the Adviser described in Note B had no effect
on total return.
15
INDEPENDENT AUDITOR'S REPORT ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
- -------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
We have audited the accompanying statement of net assets of the General
Portfolio of Alliance Municipal Trust as of June 30, 1995 and the related
statements of operations, changes in net assets, and financial highlights for
the periods indicated in the accompanying financial statements. These financial
statements and financial highlights are the responsibility of the Portfolio'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 June
30, 1995, 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 the
General Portfolio of Alliance Municipal Trust as of June 30, 1995, and the
results of its operations, changes in its net assets, and its financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles.
New York, New York
August 8, 1995
16
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
MUNICIPAL BONDS-85.6%
CALIFORNIA-85.6%
CALIFORNIA GO
Tender Option Bonds Series 153 FGIC VRDN*
$ 1,000 11/01/24 4.25% $ 1,000,000
CALIFORNIA HFA SFMR
(Home Mortgage) Series '95E AMT PPB*
3,500 2/01/96 4.60 3,500,000
CALIFORNIA PCFA
(Burney Forest) Series A VRDN*
5,500 9/01/20 4.35 5,500,000
CALIFORNIA PCFA
(Western Waste Industries Project)
Series '94A VRDN*
600 10/01/06 4.25 600,000
CALIFORNIA PCFA PCR
(Taormina Industries) Series '94A AMT VRDN*
3,400 8/01/14 4.20 3,400,000
CALIFORNIA PCFA PCR
(Wadham Energy Project) Series B AMT VRDN*
1,700 11/01/17 4.35 1,700,000
CALIFORNIA STATEWIDE COMM. DEV. CORP.
(Chino Basin Municipal Water)
Series '90 AMT VRDN*
2,395 8/01/10 4.40 2,395,000
CALIFORNIA STATEWIDE COMM. DEV. CORP. IDR
(Charles/Loralie) Series '89 AMT VRDN*
1,690 7/01/09 4.40 1,690,000
CALIFORNIA STATEWIDE COMM. DEV. CORP. IDR
(K.U.M. Ltd.) AMT VRDN*
2,000 6/01/22 4.70 2,000,000
CHULA VISTA IDR
(Home Depot Project) VRDN*
3,400 12/01/10 4.15 3,400,000
CHULA VISTA IDR
(San Diego Gas & Electric Co.)
Series '92B AMT VRDN*
4,900 12/01/27 4.20 4,900,000
GRAND TERRACE MFHR
(Mt. Vernon Villas) Series '85A VRDN*
1,435 12/01/11 3.85 1,435,000
LOCAL AGENCY COP
Composite Issue 1986 Series I VRDN*
1,200 8/01/16 4.20 1,200,000
LOMA LINDA HOSPITAL REVENUE
(Loma Linda University Medical Center)
Series C VRDN*
15,000 12/01/15 4.00 15,000,000
LOS ANGELES COUNTY
(Convention and Exhibition Center)
MBIA VRDN*
11,000 8/15/18 4.25 11,000,000
LOS ANGELES COUNTY COP
(Los Angeles County Public Properties)
Pre-Refunded
2,750 10/01/95 10.50 2,832,725
LOS ANGELES COUNTY RAN
Metropolitan Transportation Authority
Series A
3,000 4/25/96 4.23 3,018,088
LOS ANGELES COUNTY TRAN
Series '95
5,000 7/01/96 3.80 5,033,450
LOS ANGELES HFA MFHR
(Malibu Meadows Project A) VRDN*
3,400 12/01/15 3.85 3,400,000
LOS ANGELES MFHR
(Poinsettia Apartment Project)
Series '89A AMT VRDN*
1,300 7/01/19 3.85 1,300,000
LOS ANGELES TRAN
(Unified School District) Series '94
15,000 7/10/95 3.60-8.08 15,003,211
MONROVIA REDEV. AGY.
(Holiday Inn) Series '84 VRDN*
4,700 12/01/14 4.00 4,700,000
MONTEREY PENINSULA COP
(Wastewater Reclamation Project)
Series '92 VRDN*
10,300 7/01/22 4.35 10,300,000
MORGAN HILL REDEV. AGY.
(Kent Trust) VRDN*
2,640 12/01/14 5.85 2,640,000
MORGAN HILL REDEV. AGY.
(Nob Hill Venture Investors) VRDN*
1,970 12/01/09 5.85 1,970,000
2
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
OCEANSIDE MFHR
(Riverview Springs) Series '90A AMT VRDN*
$ 3,520 7/01/20 4.55% $ 3,520,000
ONTARIO GO TRAN
Series '94
5,400 11/03/95 3.60-4.30 5,414,451
ORANGE COUNTY MFHR
(Alicia Viejo Project)
Series '86A AMT VRDN*
4,120 12/01/16 4.65 4,120,000
PALM SPRINGS IDR
(BP Holdings Project) Series '89A VRDN*
2,000 8/05/19 4.20 2,000,000
REDONDO BEACH REDEV. AGY.
(McCandless Housing Project)
Series '95A VRDN*
9,140 12/01/25 4.00 9,140,000
RIVERSIDE COUNTY COP
Series '85C VRDN*
2,800 12/01/15 4.10 2,800,000
RIVERSIDE COUNTY SCHOOL
FINANCING AUTHORITY RAN
12,000 7/07/95 3.65 12,001,616
RIVERSIDE HOUSING AUTHORITY
(Amanda Park Apartments)
Series '89B AMT VRDN*
5,400 5/01/19 4.70 5,400,000
SACRAMENTO COUNTY COP
(Administration Center & Courthouse Project)
Series '90 VRDN*
6,200 6/01/20 3.65 6,200,000
SAN BERNARDINO COUNTY GO TRAN
10,000 7/31/95 3.94-4.83 10,002,093
SAN BERNARDINO COUNTY GO TRAN
Series '95
5,000 7/05/96 3.95 5,026,300
SAN DIEGO MFHR
(La Serena Apartments) Series '92A VRDN*
8,000 2/01/09 3.60 8,000,000
SAN FRANCISCO CITY & COUNTY IDR
(Hoefer Scientific Project)
Series '92A AMT VRDN*
980 8/01/07 4.55 980,000
SANTA ANA IDR
(Newport Electronics Project)
Series '88A AMT VRDN*
1,700 11/01/18 5.30 1,700,000
SANTA FE SPRINGS IDR
(Metal Center Project)
Series '89A AMT VRDN*
3,750 7/01/14 4.25 3,750,000
STOCKTON MFHR
(Mariners Pointe Association)
Series A VRDN*
4,000 9/01/18 3.95 4,000,000
UPLAND COMM. REDEV. AGY. MFHR
(Northwoods 168) Series B VRDN*
925 3/01/14 4.40 925,000
VISTA COMMUNITY DEV. COMM. BAN PPB*
8,500 11/01/95 4.50 8,501,617
Total Municipal Bonds
(amortized cost $202,391,447) 202,398,551
COMMERCIAL PAPER-16.0%
CALIFORNIA-14.3%
CALIFORNIA PCFA PCR
(Pacific Gas & Electric) Series '88
7,500 7/18/95 4.05 7,500,000
CALIFORNIA PCFA PCR
(Pacific Gas & Electric) Series '88
4,000 8/15/95 4.05 4,000,000
CALIFORNIA PCFA PCR
(Pacific Gas & Electric) Series '88C
2,000 8/18/95 4.05 2,000,000
CALIFORNIA PCFA PCR
(Pacific Gas & Electric) Series '88F
5,000 8/01/95 4.05 5,000,000
3
STATEMENT OF NET ASSETS ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
LONG BEACH
(Harbor & Terminal Project) AMT
$ 2,000 9/14/95 4.10% $ 2,000,000
LONG BEACH
(Harbor & Terminal Project) AMT
4,000 9/12/95 4.15 4,000,000
LOS ANGELES METROPOLITAN
TRANSPORTATION AUTH.
3,000 9/01/95 4.10 3,000,000
LOS ANGELES METROPOLITAN
TRANSPORTATION AUTH.
Series A
3,300 8/08/95 3.95 3,300,000
LOS ANGELES METROPOLITAN
TRANSPORTATION AUTH.
Series A
3,000 7/11/95 4.10 3,000,000
33,800,000
PUERTO RICO-1.7%
PUERTO RICO GOVERNMENT DEVELOPMENT BANK
4,000 8/11/95 4.10 4,000,000
Total Commercial Paper
(amortized cost $37,800,000) 37,800,000
TOTAL INVESTMENTS-101.6%
(amortized cost $240,191,447) 240,198,551
Other assets less liabilities-(1.6%) (3,719,170)
NET ASSETS-100%
(offering and redemption price of $1.00
per share; 236,504,726 shares outstanding) $236,479,381
+ All securities either mature or their interest rate changes in one year or
less.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
Glossary of Terms:
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
GO General Obligation
HFA Housing Finance Agency/Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCFA Pollution Control Financing Authority
PCR Pollution Control Revenue
PPB Periodic Put Bond
RAN Revenue Anticipation Note
SFMR Single Family Mortgage Revenue
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
4
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $8,298,373
EXPENSES
Advisory fee (Note B) $1,128,198
Distribution assistance and administrative
service (Note C) 742,090
Transfer agency 202,472
Custodian fees 70,512
Printing 43,285
Registration fees 37,541
Audit and legal fees 36,109
Trustees' fees 3,295
Miscellaneous 11,530
Total expenses 2,275,032
Less: fee waiver (176,583)
2,098,449
Net investment income 6,199,924
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS
Net realized loss on investments (12,411)
Net change in unrealized appreciation of investments 7,104
Net loss on investments (5,307)
NET INCREASE IN NET ASSETS FROM OPERATIONS $6,194,617
See notes to financial statements.
5
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
- -------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JUNE 30,1995 JUNE 30,1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 6,199,924 $ 3,228,452
Net realized loss on investments (12,411) (13,804)
Net change in unrealized appreciation
of investments 7,104 -0-
Net increase in net assets from operations 6,194,617 3,214,648
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (6,199,924) (3,228,452)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 16,811,556 63,486,936
Total increase 16,806,249 63,473,132
NET ASSETS
Beginning of year 219,673,132 156,200,000
End of year $236,479,381 $219,673,132
See notes to financial statements.
6
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Municipal Trust (the 'Fund') is registered under the Investment
Company Act of 1940, as amended, as an open-end investment company. The Fund
operates as a series company currently issuing six classes of shares of
beneficial interest: Alliance Municipal Trust-General Portfolio, Alliance
Municipal Trust-New York Portfolio, Alliance Municipal Trust-California
Portfolio (the 'Portfolio'), Alliance Municipal Trust-Connecticut Portfolio,
Alliance Municipal Trust-New Jersey Portfolio and Alliance Municipal
Trust-Virginia Portfolio. Each series is considered to be a separate entity for
financial reporting and tax purposes. The following is a summary of significant
accounting policies followed by the Portfolio.
1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity. Amortization of premium is charged to income.
Accretion of market discount is credited to unrealized gains.
2. TAXES
It is the Portfolio's policy to comply with 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 its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
3. DIVIDENDS
The Portfolio declares dividends daily from net investment income and
automatically reinvests such dividends in additional shares at net asset value.
Net realized capital gains on investments, if any, are expected to be
distributed near year end. Dividends paid from net investment income for the
year ended June 30, 1995 are exempt from federal income taxes. However, certain
shareholders may be subject to the alternative minimum tax (AMT).
4. GENERAL
Interest income is accrued daily. Security transactions are recorded on the
date securities are purchased or sold. Realized gain (loss) from security
transactions is recorded on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45 of 1% in excess of $3 billion. The Adviser has agreed, pursuant to the
advisory agreement, to reimburse the Portfolio to the extent that its annual
aggregate expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed 1% of its average daily net assets for any
fiscal year. No reimbursement was required for the year ended June 30, 1995.
The Portfolio compensates Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) for providing personnel and facilities to perform
transfer agency services for the Portfolio. Such compensation amounted to
$114,130 for the year ended June 30, 1995.
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays a distribution fee to the Adviser at an
annual rate of up to .25 of 1% of the Portfolio's average daily net assets.
The Plan provides that the Adviser will use such payments in their entirety for
distribution assistance and promotional activities. For the year ended June
30, 1995, the distribution amounted to $564,099 of which $176,583 was waived.
In addition, the Portfolio reimbursed certain broker-dealers for administrative
costs incurred in connection with providing shareholder services, accounting,
bookkeeping, legal and compliance support.
For the year ended June 30, 1995, such payments by the Portfolio amounted to
$177,991 of which $94,100 was paid to the Adviser.
7
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
- -------------------------------------------------------------------------------
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1995, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1995 the
Portfolio had a capital loss carryforward of $32,449, of which $6,234 expires
in the year 2000, $13,804 expires in the year 2002 and $12,411 expires in the
year 2003.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1995, capital paid-in aggregated $236,504,726. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
------------- -------------
Shares sold 865,677,866 704,558,192
Shares issued on reinvestments of dividends 6,199,924 3,238,981
Shares redeemed (855,066,234) (644,310,237)
Net increase 16,811,556 63,486,936
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .027 .018 .020 .032 .043
LESS: DISTRIBUTIONS
Dividends from net investment income (.027) (.018) (.020) (.032) (.043)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURNS
Total investment return based on net asset value (b) 2.78% 1.83% 2.05% 3.26% 4.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $236,479 $219,673 $156,200 $121,317 $111,957
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .93% .93% .93% .95% 1.00%
Expenses, before waivers and reimbursements 1.01% 1.02% 1.02% 1.05% 1.10%
Net investment income 2.75% 1.82% 2.01% 3.18% 4.32%
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
8
INDEPENDENT AUDITOR'S REPORT ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
- -------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
We have audited the accompanying statement of net assets of the California
Portfolio of Alliance Municipal Trust as of June 30, 1995 and the related
statements of operations, changes in net assets, and financial highlights for
the periods indicated in the accompanying financial statements. These financial
statements and financial highlights are the responsibility of the Portfolio'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 June
30, 1995, 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 the
California Portfolio of Alliance Municipal Trust as of June 30, 1995, and the
results of its operations, changes in its net assets, and its financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles.
New York, New York
August 8, 1995
<PAGE>
Alliance Municipal Trust - Florida Portfolio
Interim Report
October 17, 1995
<PAGE>
STATEMENT OF NET ASSETS
October 17, 1995 (unaudited)
Alliance Municipal Trust-Florida Portfolio
Principal
Amount
(000) Security+ Yield Value
________________________________________________________________
MUNICIPAL BONDS-77.0%
FLORIDA-73.1%
Alachua City IDR
(Sabine Inc. Project)
Series 95 AMT VRDN*
$1,465 09/01/15 3.80% $ 1,465,000
Broward County HFA MFHR
(Sawgrass Pines Apts.)
Series 93A AMT VRDN*
600 11/01/23 4.05 600,000
Broward County Housing Revenue
MFHR (Harbour Town Jacaranda Project)
Series 95B VRDN*
400 12/01/25 3.70 400,000
Dade County Aviation Facilities
Series 84A VRDN*
1,400 10/01/09 3.75 1,400,000
Dade County Solid Waste IDR
(Montenay-Dade Ltd. Project)
Series 90A AMT VRDN*
300 12/01/13 3.85 300,000
Dade County IDA
(Dolphins Stadium Project)
Series A VRDN*
1,000 01/01/16 3.90 1,000,000
Dade County IDB
(Oates-Schneider & Reiff
Pharmaceuticals)
AMT VRDN*
800 12/01/06 4.00 800,000
Dade County IDA
(DNS Manufacturing Project)
Series 89 AMT VRDN*
500 11/01/09 3.85 500,000
Eustis HFA Hospital Revenue
(Waterman Medical Center)
VRDN*
300 12/01/15 3.55 300,000
Florida State HFA MFHR
(Park Colony Project)
Series 95D VRDN*
100 4/01/13 3.70 100,000
2
<PAGE>
Florida State HFA
(Oak at Mill Creek Project)
Series 85 VRDN*
100 11/01/07 3.65 100,000
Florida State HFA
(Ashley Lake II)
Series J VRDN*
200 12/01/11 3.75 200,000
Florida State Municipal
Power Agency Revenue
VRDN* AMBAC
$400 10/01/16 3.70% 400,000
Hillsborough County PCR
(Tampa Electric)
Series 93 AMT VRDN*
600 11/01/20 3.80 600,000
Indian Trace Community Village
(Basin 1 Water Management)
Series A VRDN* MBIA
170 11/01/99 3.55 170,000
Jacksonville Health Facility
(Baptist Medical Center Project)
VRDN*
400 7/01/14 3.58 400,000
Lady Lake Capital Improvement
AMBAC
425 10/01/96 3.90 425,000
Marion County HFA MFHR
(Summer Trace Project)
Series 85D VRDN*
500 12/01/07 3.70 500,000
Martin County Solid Waste
(Florida Power & Light)
Series 93 AMT VRDN*
400 01/01/27 3.80 400,000
Orange County Health Facilities
(Adventist Health System/Sunbelt)
VRDN*
400 11/15/14 3.63 400,000
Orange County School District
TAN Series 95
600 10/16/96 4.50 604,022
Orange County HFA MFHR
(Sundown Assoc. II)
Series B VRDN*
400 06/01/04 3.80 400,000
Orlando Utility Commission
(Water & Electric Revenue)
Series 91 VRDN*
150 12/10/96 3.55 150,000
Pinellas County Hospital
3
<PAGE>
Revenue MFHR
(Foxbridge Apt. Project)
Series 95A VRDN*
900 6/15/25 3.65 900,000
University of Florida
Athletic Assoc. VRDN*
200 02/01/20 3.65 200,000
University of No. Florida
Capital Improvement VRDN*
500 11/01/24 3.70 500,000
_______
13,214,022
__________
PUERTO RICO-3.9%
Puerto Rico Government
Development Bank
Series 85 VRDN*
$400 12/01/15 3.15% 400,000
Puerto Rico Highway
& Transportation Authority
Series X VRDN*
300 7/01/99 3.15 300,000
_______
700,000
_______
Total Municipal Bonds
(amortized cost $13,914,022) 13,914,022
__________
COMMERCIAL PAPER-26.5%
FLORIDA-26.5%
Alachua County Health Facility
(Academic Research
Building Project)
700 12/08/95 3.90 700,000
Florida Municipal Loan Council
(Florida League of Cities
Municipal Loan)
Series 85-2
700 11/06/95 3.85 700,000
Florida Municipal Power Agency
Series A
1,000 02/09/96 3.90 1,000,000
Jacksonville PCR
(Florida Power & Light)
Series 94
500 11/28/95 3.85 500,000
Orange County Health Facility
Pooled Hospital Loan Program
Series 85 MBIA
4
<PAGE>
$200 11/27/95 3.65% 200,000
Pinellas County Education Facility
Pooled Loan Project
Series 85 MBIA
400 11/09/95 3.60 400,000
Sarasota Public Hospital District
Hospital Revenue
(Sarasota Memorial Hospital)
Series A
495 11/08/95 3.65 495,000
Sunshine State GFA
Series 86
200 11/01/95 3.80 200,000
Sunshine State GFA
Series 86
200 12/05/95 3.80 200,000
West Orange Memorial Hospital
Tax District Revenue Bonds
Subseries 91A-1
400 11/28/95 3.60 400,000
_______
Total Commercial Paper
(amortized cost $4,795,000) 4,795,000
_________
TOTAL INVESTMENTS-103.5%
(amortized cost $18,709,022) 18,709,022
Other assets less
liabilities-(3.5%) (643,540)
__________
NET ASSETS-100%
(Offering and redemption price
of $1.00 per share; 18,065,482
shares outstanding) $18,065,482
===========
____________________________________________________________
+All securities either mature or their interest rate changes in
one year or less.
*Variable Rate Demand Notes (VRDN) are instruments whose interest
rates change on a specified date (such as a coupon date or
interest payment date) or whose interest rates vary with changes
in a designated base rate (such as the prime interest rate).
These instruments are payable on demand and are secured by
letters of credit or other credit support agreements from major
banks. Periodic Put Bonds (PPB) are payable on demand quarterly,
semi-annually or annually and their interest rates change less
frequently than rates on Variable Rate Demand Notes.
5
<PAGE>
GLOSSARY OF TERMS:
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax
GFA Government Finance Agency
HFA Housing Finance Agency/Authority
IDA Industrial Development Authority
IDB Industrial Development Bond
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
TAN Tax Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS
July 28, 1995* to October 17, 1995 (Unaudited)
Alliance Municipal Trust - Florida Portfolio
________________________________________________________________
INVESTMENT INCOME
Interest $ 72,920
EXPENSES
Advisory fee (Note B) $9,377
Distribution assistance and
administrative service 34,036
Custodian fees 11,330
Transfer agency 9,596
Audit and legal fees 4,841
Printing 1,411
Trustees' fees 919
Prepaid organization expense 721
Registration fees 249
Miscellaneous 591
Total expenses 73,071
Less: fee waiver (70,138) 2,933
________ _____
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 69,987
=======
STATEMENTS OF CHANGES IN NET ASSETS
________________________________________________________________
July 28, 1995* to
October 17, 1995
(unaudited)
_________________
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income 69,987
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (69,987)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 18,065,482
Total increase $18,065,482
NET ASSETS
Beginning of period -0-
_____________
7
<PAGE>
End of period $ 18,065,482
============
_________________
* Commencement of operations.
See notes to financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 17, 1995 (unaudited)
Alliance Municipal Trust - Florida Portfolio
NOTE A: Significant Accounting Policies
Alliance Municipal Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as an open-end
investment company. The Fund operates as a series company
currently issuing seven classes of shares of beneficial interest:
Alliance Municipal Trust-General Portfolio, Alliance Municipal
Trust-New York Portfolio, Alliance Municipal Trust-California
Portfolio, Alliance Municipal Trust-Connecticut Portfolio,
Alliance Municipal Trust-New Jersey Portfolio, Alliance Municipal
Trust-Virginia Portfolio and Alliance Municipal Trust-Florida
Portfolio. (the "Portfolio"). Each series is considered to be a
separate entity for financial reporting and tax purposes. The
following is a summary of significant accounting policies
followed by the Portfolio.
1. Valuation of Securities
Securities in which the Portfolio invests are traded primarily in
the over-the-counter market and are valued at amortized cost,
under which method a portfolio instrument is valued at cost and
any premium or discount is amortized on a constant basis to
maturity. Amortization of premium is charged to income. Accretion
of market discount is credited to unrealized gains.
2. Organization Expenses
The organization expenses of the portfolio are being amortized
against income on a straight-line basis through July 2000.
3. Taxes
It is the Portfolio's policy to comply with 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 its
shareholders. Therefore, no provisions for federal income or
excise taxes are required.
4. Dividends
The Portfolio declares dividends daily from net investment income
and automatically reinvests such dividends in additional shares
at net asset value. Net realized capital gains on investments, if
any, are expected to be distributed near year end. Dividends paid
from net investment income from July 28, 1995 (commencement of
operations) through October 17, 1995, are exempt from federal
income taxes. However, certain shareholders may be subject to the
alternative minimum tax (AMT).
9
<PAGE>
5. General
Interest income is accrued daily. Security transactions are
recorded on the date securities are purchased or sold. Realized
gain (loss) from security transactions is recorded on the
identified cost basis.
________________________________________________________________
NOTE B: Advisory Fee and Transactions with an Affiliate of the
Adviser
The Portfolio pays its Adviser, Alliance Capital Management L.P.,
an advisory fee at the annual rate of .50 of 1% on the first
$1.25 billion of average daily net assets; .49 of 1% on the next
$.25 billion; .48 of 1% on the next $.25 billion; .47 of 1% on
the next $.25 billion; .46 of 1% on the next $1 billion; and .45
of 1% in excess of $3 billion. The Adviser has agreed, pursuant
to the advisory agreement, to reimburse the Portfolio to the
extent that its aggregate expenses (excluding taxes,
brokerage, interest and, where permitted, extraordinary expenses)
exceed 1% of its average daily net assets for any fiscal year.
The Advisor also voluntarily agreed to reimburse the portfolio
from July 28, 1995 (commencement of operations) through September
10, 1995 for all expenses and from September 11, 1995 to October
17, 1995 for expenses exceeding .20 of 1% of its average daily
net assets. From July 28, 1995 (commencement of operations)
through October 17, 1995, the reimbursement amounted to $68,263.
The Portfolio compensates Alliance Fund Services, Inc. (a wholly-
owned subsidiary of the Adviser) for providing personnel and
facilities to perform transfer agency services for the Portfolio.
Such compensation amounted to $146 from July 28, 1995
(commencement of operations) to October 17, 1995.
_______________________________________________________________
NOTE C: Distribution Assistance and Administrative Services Plan
Under this Plan, the Portfolio pays a distribution fee to the
Adviser at an annual rate of up to .25 of 1% of the Portfolio's
average daily net assets.
The Plan provides that the Adviser will use such payments in
their entirety for distribution assistance and promotional
activities.
From July 28, 1995 (commencement of operations) to October 17,
1995, the distribution amounted to $4,688 of which $1,875 was
waived. In addition, the Portfolio reimbursed certain broker-
dealers for administrative costs incurred in connection with
providing shareholder services, accounting, bookkeeping, legal
and compliance support. From July 28, 1995 (commencement of
operations) to October 17, 1995, such payments by the Portfolio
amounted to $29,348 of which $0 was paid to the Adviser.
10
<PAGE>
________________________________________________________________
NOTE D: Investment Transactions
At October 17, 1995, the cost of securities for federal income
tax purposes was the same as the cost for financial reporting
purposes.
________________________________________________________________
NOTE E: Transactions in Shares of Beneficial Interest
An unlimited number of shares ($.01 par value) are authorized.
At October 17, 1995, capital paid-in aggregated $18,065,482.
Transactions, all at $1.00 per share, were as follows:
July 28, 1995* to
October 17, 1995
(unaudited)
_________________
Shares sold 27,329,519
Shares issued on reinvestments of dividends 68,831
Shares redeemed (9,332,868)
Net increase (decrease) 18,065,482
________________________________________________________________
NOTE F: Financial Highlights
Per share operating performance for a share outstanding
throughout each period.
July 28, 1995(a) to
October 17, 1995
(unaudited)
____________________
Net asset value, beginning of period $1.00
Income From Investment Operations
Net investment income .008
Less: Distributions
Dividends from net investment income (.008)
Net asset value, end of period $1.00
Total Returns
Total investment return based on net
asset value (b) 3.67%(c)
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $18,065
Ratio of average net assets of:
11
<PAGE>
Expenses, net of waivers and reimbursements .16%(c)
Expenses, before waivers and reimbursements 3.90%(c)
Net investment income (d) 3.73%(c)
__________________________
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial
investment made at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions at net
asset during the period, and redemption on the last day of the
period.
(c) Annualized
(d) Net of expenses reimbursed or waived by the Adviser.
12
<PAGE>
TRUSTEES
Dave H. Williams, Chairman
John D. Carifa
Sam Y. Cross
Charles H.P. Duell
William H. Foulk, Jr.
Elizabeth J. McCormack
David K. Storrs
Shelby White
John Winthrop
OFFICERS
Ronald M. Whitehill, President
John R. Bonczek, Senior Vice President
Kathleen A. Corbet, Senior Vice President
Robert I. Kurzweil, Senior Vice President
Wayne D. Lyski, Senior Vice President
Patricia Netter, Senior Vice President
Ronald R. Valeggia, Senior Vice President
Drew Biegel, Vice President
Doris T. Ciliberti, Vice President
William E. Oliver, Vice President
Raymond J. Papera, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Joseph J. Mantineo, Controller
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1912
Boston, MA 02105
LEGAL COUNSEL
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
AUDITORS
McGladrey & Pullen
555 Fifth Avenue
New York, NY 10017
TRANSFER AGENT
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
DISTRIBUTOR
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, NY 10105
13
<PAGE>
Alliance Municipal Trust-General Portfolio
1345 Avenue of the Americas, New York, NY 10105
Toll-free 1(800) 221-5672
Yields. For current recorded yield information on Alliance
Municipal Trust, call on a touch-tone telephone toll-free
(800) 251-0539 and press the following sequence of keys: 1 # 1
# 64 #
For non-touch-tone telephones, call toll-free (800) 221-9513
_________________________________________________________________
[LOGO]
Distribution of this report other than to shareholders must be
preceded or accompanied by the Fund's current prospectus, which
contains further information about the Fund.
(R) These registered service marks used under license from the
owner, Alliance Capital Management L.P.
ALC 501298
AMTSR
14
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits for Each Portfolio
of the Fund
(a) Financial Highlights
Included in the Prospectuses:
Financial Information
Included in the Statements of Additional Information
Statement of Net Assets, June 30, 1995
Statement of Operations, June 30, 1995 and October 25,
1994 (commencement of operations) to June 30, 1995 for
the Virginia Portfolio
Statement of Changes in Net Assets for the years ended
June 30, 1994 and June 30, 1995 and for the period
February 7, 1994 (commencement of operations) to June
30, 1994 and for the year ended June 30, 1995 for the
New Jersey Portfolio and for the period October 25,
1994 (commencement of operations) to June 30, 1995 for
the Virginia Portfolio
Notes to Financial Statements June 30, 1995
Report of Independent Auditors
Included in Part C of the Registration Statement
All other schedules are omitted as the required
information is inapplicable
(b) Exhibits
( 1)(a) Declaration of Trust - Incorporated by
reference to Exhibit No. 1 to Post-Effective
Amendment No. 4 of Registration Statement on
Form N-1A (File No. 2-79807) (the
"Registrant's Form N-1A"), filed April 29,
1985.
( 1)(b) Certificate of Amendment - Incorporated by
reference to Exhibit No. 1(b) to Post-
Effective Amendment No. 28 of Registration
Statement on Form N-1A, filed September 28,
1994.
C-1
<PAGE>
(2) By-Laws - Incorporated by reference to
Exhibit No. 2 to Post-Effective Amendment
No. 4 of the Registrant's Form N-1A, filed
April 29, 1985.
(3) Not applicable.
(4) Specimen Forms of Certificate for Shares of
Beneficial Interest of the General and New
York Portfolio - Incorporated by reference
to Exhibit No. 4 to Post-Effective Amendment
No. 7 of the Registrant's Form N-1A, filed
July 10, 1986; for the California Portfolio
- Incorporated by reference to Exhibit No. 4
to Post-Effective Amendment No. 10 of the
Registrant's Form N-1A,filed March 9, 1988;
for the Connecticut Portfolio - Incorporated
by reference to Exhibit No. 4 to Post-
Effective Amendment No. 17 of the
Registrant's Form N-1A, filed October 24,
1989.
(4)(b) Specimen Form of Certificate for Shares of
Beneficial Interest of the New Jersey
Portfolio - Incorporated by reference to
Exhibit No 4(b) to Post- Effective Amendment
No. 25 of the Registrant's Form N-1A, filed
November 30, 1993.
(4)(c) Specimen Form of Certificate for Shares of
Beneficial Interest of the Virginia
Portfolio - Incorporated by reference to
Exhibit No. 4(c) to Post-Effective Amendment
No. 26 of the Registrant's Form N-1A, filed
July 18, 1994.
(5) Copy of Advisory Agreement between the
Registrant and Alliance Capital Management
L.P. - Incorporated by reference to Exhibit
5 to Post-Effective Amendment No. 22 of the
Registrant's Form N-1A, filed October 13,
1992.
(6) Copy of Distribution Services Agreement
between the Registrant and Alliance Fund
Distributors, Inc. - Incorporated by
reference to Exhibit 6 to Post-Effective
Amendment No. 22 of the Registrant's Form N-
1A, filed October 13, 1992.
(7) Not applicable.
C-2
<PAGE>
(8) Copy of Custodian Contract between the
Registrant and State Street Bank and Trust
Company incorporated by reference to Exhibit
No. 8 to Post-Effective Amendment No. 4 of
the Registrant's Form N-1A, filed April 29,
1985.
(9) Copy of Transfer Agency Agreement between
the Registrant and Alliance Fund Services,
Inc. - Incorporated by reference to Exhibit
No. 9 to Post- Effective Amendment No. 14
filed February 15, 1989.
(10)(a) Opinion of Seward & Kissel - Incorporated by
reference to Exhibit No. 10 to Pre-Effective
Amendment No. 1 to Registrant's Registration
Statement on Form N-1 (Pre-Effective
Amendment No. 1).
(b) Opinion of Venable, Baetjer and Howard -
Incorporated by reference to Exhibit No.
10(b) to Pre-Effective Amendment No. 1.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Rule 12b-1 Plan - See Exhibit 6 hereto.
(16) Schedule of Computation of Performance
Quotation Provided in Response to Item 22 -
Incorporated by reference to Exhibit No. 16
to Post-Effective Amendment No. 22 of the
Registrant's Statement on Form N-1A, filed
October 13, 1992.
(27) Financial Data Schedule - Filed herewith.
Other Exhibits:
Powers of Attorney of: John D. Carifa, Charles H. P.
Duell, William H. Foulk, Jr., Elizabeth J. McCormack,
David K. Storrs, Dave H. Williams, John Winthrop -
Incorporated by reference to Other Exhibits to
Post-Effective Amendment No. 14 of the Registrant's
Statement on Form N- 1A, filed on February 15, 1989.
C-3
<PAGE>
Powers of Attorney of: Sam Y. Cross and Shelby White
- Incorporated by reference to Other Exhibits to Post-
Effective Amendment No. 22 of the Registrant's
Statement on Form N-1A, filed October 13, 1992.
ITEM 25. Persons Controlled by or Under Common Control with
Registrant.
None.
ITEM 26. Number of Holders of Securities.
Registrant had, as of October 2, 1995 the following
record holders of shares of Beneficial Interest:
General Portfolio 26,104
New York Portfolio 5,279
California Portfolio 5,545
Connecticut Portfolio 1,822
New Jersey Portfolio 3,049
Virginia Portfolio 1,431
Florida 90
ITEM 27. Indemnification
It is the Registrant's policy to indemnify its
trustees and officers, employees and other agents as
set forth in Article V of Registrant's Agreement and
Declaration of Trust, filed as Exhibit 1 in response
to Item 24 and Section 7 of the Distribution Agreement
filed as Exhibit 6 in response to Item 24, all as set
forth below. The liability of the Registrant's
trustees and officers is also dealt with in Article V
of Registrant's Agreement and Declaration of Trust.
The Adviser's liability for loss suffered by the
Registrant or its shareholders is set forth in Section
4 of the Advisory Agreement filed as Exhibit 5 in
response to Item 24, as set forth below.
Article V of Registrant's Agreement and Declaration of
Trust reads as follows:
Section 5.1 - No Personal Liability of Shareholders,
Trustees, etc.
No Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with
Trust Property, including the property of any series
of the Trust, or the acts, obligations or affairs of
the Trust or any series thereof. No Trustee, officer,
C-4
<PAGE>
employee or agent of the Trust shall be subject to any
personal liability whatsoever to any Person, other
than the Trust or applicable series thereof or its
Shareholders, in connection with Trust Property or the
property of any series thereof or the affairs of the
Trust or any series thereof, save only that arising
from bad faith, willful misfeasance, gross negligence
or reckless disregard for his duty to such Person; and
all such Persons shall look solely to the Trust
Property or the property of the appropriate series of
the Trust for satisfaction of claims of any nature
arising in connection with the affairs of the Trust or
any series thereof. If any Shareholder, Trustee,
officer, employee or agent, as such, of the Trust is
made a party to any suit or proceeding to enforce any
such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall
indemnify and hold each Shareholder harmless from and
against all claims by reason of his being or having
been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses
reasonably incurred by him in connection with any such
claim or liability, provided that any such expenses
shall be paid solely out of the funds and property of
the series of the Trust with respect to which such
Shareholder's Shares are issued. The rights accruing
to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may
be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify
or reimburse a Shareholder in any appropriate
situation even though not specifically provided
herein.
Section 5.2 - Non-Liability of Trustees, etc. No
Trustee, officer, employee or agent of the Trust shall
be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including
without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of
trust) except for his own bad faith, willful
misfeasance, gross negligence or reckless disregard of
his duties.
Section 5.3 - Indemnification.
(a) The Trustees shall provide for indemnification by
the Trust (or by the appropriate series thereof) of
every person who is, or has been, a Trustee or officer
of the Trust against all liability and against all
expenses reasonably incurred or paid by him in
C-5
<PAGE>
connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in
the settlement thereof, in such manner as the Trustees
may provide from time to time in the By-Laws.
(b) The words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other
liabilities.
Section 5.4 - No Bond Required of Trustees. No
Trustee shall be obligated to give any bond or other
security for performance of any of his duties
hereunder.
Section 5.5 - No Duty of Investigation; Notice in
Trust Instruments, Insurance. No purchaser, lender,
transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the
Trust shall be bound to make any inquiry concerning
the validity of any transaction purporting to be made
by the Trustees or by said officer, employee or agent
or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the
Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share,
other security of the Trust or undertaking, and every
other act or thing whatsoever executed in connection
with the Trust shall be conclusively presumed to have
been executed or done by the executors thereof only in
their capacity as Trustees under the Declaration or in
their capacity as officers, employees or agents of the
Trust. Every written obligation, contract,
instrument, certificate, Share, other security of the
Trust or undertaking made or issued by the Trustees
shall recite that the same is executed or made by them
not individually, but as Trustees under the
Declaration, and that the obligations of any such
instrument are not binding upon any of the Trustees or
Shareholders, individually, but bind only the Trust
Property or the property of the appropriate series of
the Trust, and may contain any further recital which
they or he may deem appropriate, but the omission of
such recital shall not operate to bind the Trustees or
Shareholders individually. The Trustees shall at all
C-6
<PAGE>
times maintain insurance for the protection of the
Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees
shall deem adequate to cover possible tort liability,
and such other insurance as the Trustees in their sole
judgment shall deem advisable.
Section 5.6 - Reliance on Experts, etc. Each Trustee
and officer or employee of the Trust shall, in the
performance of his duties, be fully and completely
justified and protected with regard to any act or any
failure to act resulting from reliance in good faith
upon the books of account or other records of the
Trust, upon an opinion of counsel or upon reports made
to the Trust by any of its officers or employees or by
the Investment Adviser, the Distributor, Transfer
Agent, selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the
Trust, regardless of whether such counsel or expert
may also be a Trustee.
The Advisory Agreement between Registrant and Alliance
Capital Management L.P. provides that Alliance Capital
Management L.P. will not be liable under such
agreement for any mistake of judgment or in any event
whatsoever except for lack of good faith and that
nothing therein shall be deemed to protect, or purport
to protect, Alliance Capital Management L.P. against
any liability to Registrant or its security holders to
which it would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in
the performance of its duties thereunder, or by reason
of reckless disregard of its obligations and duties
thereunder.
The Distribution Agreement between the Registrant and
Alliance Fund Distributors, Inc. provides that the
Registrant will indemnify, defend and hold Alliance
Fund Distributors, Inc., and any person who controls
it within the meaning of Section 15 of the Investment
Company Act of 1940, free and harmless from and
against any and all claims, demands, liabilities and
expenses which Alliance Fund Distributors, Inc. or any
controlling person may incur arising out of or based
upon any alleged untrue statement of a material fact
contained in Registrant's Registration Statement or
Prospectus or Statement of Additional Information or
arising out of, or based upon any alleged omission to
state a material fact required to be stated in or
necessary to make the statements in either thereof not
C-7
<PAGE>
misleading; provided, however that nothing therein
shall be so construed as to protect Alliance Fund
Distributors, Inc. against any liability to Registrant
or its security holders to which it would otherwise be
subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties
thereunder, or by reason of reckless disregard of its
obligations and duties thereunder.
The foregoing summaries are qualified by the entire
text of Registrant's Agreement and Declaration of
Trust, the Advisory Agreement between Registrant and
Alliance Capital Management L.P. and the Distribution
Agreement between Registrant and Alliance Fund
Distributors, Inc.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to trustees,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that, in the opinion
of the Securities and Exchange Commission, such
indemnification is againstpublic policy as expressed
in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against
such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding)
is asserted by such trustee, officer or controlling
person in connection with the securities being
registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as
expressed in the Securities Act and will be governed
by the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2,
1980) the Registrant will indemnify its directors,
officers, investment manager and principal
underwriters only if (1) a final decision on the
merits was issued by the court or other body before
whom the proceeding was brought that the person to be
indemnified (the "indemnitee") was not liable by
reason or willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling
C-8
<PAGE>
conduct") or (2) a reasonable determination is made,
based upon a review of the facts, that the indemnitee
was not liable of disabling conduct, by (a) the vote
of a majority of a quorum of the directors who are
neither "interested persons" of the Registrant as
defined in section 2(a)(19) of the Investment Company
Act of 1940 nor parties to the proceeding
("disinterested, non-party directors"), or (b) an
independent legal counsel in a written opinion. The
Registrant will advance attorneys fees or other
expenses incurred by its directors, officers,
investment adviser or principal underwriters in
defending a proceeding, upon the undertaking by or on
behalf of the indemnitee to repay the advance unless
it is ultimately determined that he is entitled to
indemnification and, as a condition to the advance,
(1) the indemnitee shall provide a security for his
undertaking, (2) the Registrant shall be insured
against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of
disinterested, non-party directors of the Registrant,
or an independent legal counsel in a written opinion,
shall determine, based on a review of readily
available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the
indemnitee ultimately will be found entitled to
indemnification.
The Registrant participates in a joint directors and
officers liability insurance policy issued by the ICI
Mutual Insurance Company. Coverage under this policy
has been extended to directors, trustees and officers
of the investment companies managed by Alliance
Capital Management L.P. Under this policy, outside
trustees and directors would be covered up to the
limits specified for any claim against them for acts
committed in their capacities as trustee or director.
A pro rata share of the premium for this coverage is
charged to each investment company.
ITEM 28. Business and Other Connections of Investment Adviser.
The descriptions of Alliance Capital Management L.P.
under the caption "The Adviser" in the Prospectus and
"Management of the Fund" in the Prospectus and in the
Statement of Additional Information constituting Parts
A and B, respectively, of this Registration Statement
are incorporated by reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation,
C-9
<PAGE>
the general partner of Alliance Capital Management
L.P., set forth in Alliance Capital Management L.P.'s
Form ADV filed with the Securities and Exchange
Commission on April 21, 1988 (File No. 801-32361) and
amended through the date hereof, is incorporated by
reference.
ITEM 29. Principal Underwriters
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale
of shares of the Registrant, also acts as
Principal Underwriter or Distributor for the
following investment companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II.
Alliance New Europe Fund, Inc.
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
The Hudson River Trust
C-10
<PAGE>
(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc. the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105.
Positions and Positions and
Offices With Offices With
Name Underwriter Registrant
____ _____________ _____________
Michael J. Laughlin Chairman
Robert L. Errico President
Kimberly A. Baumgardner Senior Vice President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel &
Secretary
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Geoffrey L. Hyde Senior Vice President
Barbara J. Krumseik Senior Vice President
Stephen R. Laut Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleonadkis Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
James P. Syrett Senior Vice President
Peter J. Szabo Senior Vice President
Richard A. Winge Senior Vice President
Benji A. Baer Vice President
Warren W. Babcock III Vice President
Kenneth F. Barkoff Vice President
C-11
<PAGE>
William P. Beanblossom Vice President
Jack C. Bixler Vice President
Casimir F. Bolanowski Vice President
Kevin T. Cannon Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
Mark J. Dunbar Vice President
Linda A. Finnerty Vice President
William C. Fisher Vice President
Robert M. Frank Vice President
Gerard J. Friscia Vice President
& Controller
Andrew L. Gangolf Vice President
Mark D. Gersten Vice President Treasurer & Chief
Financial Officer
Joseph W. Gibson Vice President
Troy L. Glawe Vice President
Herbert H. Goldman Vice President
James E. Gunter Vice President
Alan Halfenger Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Robert H. Joseph, Jr. Vice President
& Treasurer
Richard D. Keppler Vice President
Sheila F. Lamb Vice President
Thomas Leavitt, III Vice President
Donna M. Lamback Vice President
C-12
<PAGE>
James M. Liptrot Vice President
Christopher J. MacDonald Vice President
Daniel D. McGinley Vice President
Maura A. McGrath Vice President
Mark R. Manley Vice President,
Counsel & Assistant
Secretary
Matthew P. Mintzer Vice President
Nicole Nolan-Koester Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Raymond S. Sclafani Vice President
J. William Strott, Jr. Vice President
Richard E. Tambourine Vice President
Nicholas K. Willett Vice President
Neil S. Wood Vice President
Emilie D. Wrapp Vice President
Maria L. Carreras Assistant Vice President
Sarah A. Chodera Assistant Vice President
John W. Cronin Assistant Vice President
Sohaila S. Farsheed Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
C-13
<PAGE>
Vicky M. Hayes Assistant Vice President
Daniel M. Hazard Assistant Vice President
John C. Hershock Assistant Vice President
James J. Hill Assistant Vice President
Kalen H. Holliday Assistant Vice President
Thomas K. Intoccia Assistant Vice President
Edward W. Kelly Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Michael F. Mahoney Assistant Vice President
Shawn P. McClain Assistant Vice President
Thomas F. Monnerat Assistant Vice President
Joanna D. Murray Assistant Vice President
Jeanette M. Nardella Assistant Vice President
Camilo R. Pedraza Assistant Vice President
Carol H. Rappa Assistant Vice President
Karen C. Satterberg Assistant Vice President
Robert M. Smith Assistant Vice President
Joseph T. Tocyloski Assistant Vice President
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other
documents required to be maintained by Section 31(a)
of the Investment Company Act of 1940 and the Rules
thereunder are maintained as follows: journals,
ledgers, securities records and other original records
are maintained principally at the offices of Alliance
Fund Services, Inc. 500 Plaza Drive, Secaucus, New
Jersey 07094 and at the offices of State Street Bank
and Trust Company, the Registrant's Custodian, 225
C-14
<PAGE>
Franklin Street, Boston, Massachusetts 02110. All
other records so required to be maintained are
maintained at the offices of Alliance Capital
Management L.P., 1345 Avenue of the Americas, New
York, New York 10105.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon
request and without charge.
The Registrant undertakes to provide assistance to
shareholders in communications concerning the removal
of any Trustee of the Fund in accordance with Section
16 of the Investment Company Act of 1940.
C-15
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirements
for effectiveness of this Amendment to its Registration pursuant
to Rule 485(b) under the Securites Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of New York and State of New York on the 24th day of
October 1995.
ALLIANCE MUNICIPAL TRUST
by/s/ Ronald M. Whitehill
____________________________
Ronald M. Whitehill
President
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated:
Signature Title Date
________ _____ _____
1) Principal
Executive Officer
/s/ Ronald M. Whitehill President October 24, 1995
_______________________
Ronald M. Whitehill
2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and October 24, 1995
____________________ Chief Financial
Mark D. Gersten Officer
C-16
<PAGE>
3) All of the Trustees
___________________
John D. Carifa David K. Storrs
Sam Y. Cross Shelby White
Charles H.P. Duell Dave H. Williams
William H. Foulk, Jr. John Winthrop
Elizabeth McCormack
by/s/ Edmund P. Bergan, Jr. October 24, 1995
___________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-17
<PAGE>
Index to Exhibits
Page
(11) Consent of Independent Auditors
(27) Financial Data Schedule
00250204.AB0
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our reports dated
August 8, 1995 on the financial statements of the General
Portfolio, New York Portfolio, California Portfolio, Connecticut
Portfolio, New Jersey Portfolio, and Virginia Portfolio, series
of Alliance Municipal Trust, referred to therein in Post-
Effective Amendment No. 31 to the Registration Statement on Form
N-1A, File No. 2-79807, as filed with the Securities and Exchange
Commission.
We also consent to the reference to our firm in the
Prospectus under the caption "Financial Highlights" and in the
Statement of Additional Information under the caption
"Accountants."
New York, New York
October 24, 1995
00250122.AC1
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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[TYPE] EX-27
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[TYPE] EX-27
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12
00250185.AB6
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