<PAGE>
As filed with the Securities and Exchange
Commission on October 31, 1996
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. 33 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 31 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)(1)
on (date) pursuant to paragraph (a)(1)
___75 days after filing pursuant to paragraph (a)(2)
___on (date) pursuant to paragraph (a)(2) 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, 1996 was filed on August 29, 1996.
<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 Registrant Investment Objectives
and Policies
Item 5. Management of the Fund Additional
Information
Item 6. Capital Stock and Other
Securities Additional
Information
Item 7. Purchase of Securities Being
Offered Purchase and
Redemption 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 History Management; General
Information
Item 13. Investment Objectives and
Policies Investment Objectives
and Policies;
<PAGE>
Investment
Restrictions
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal
Holders of Securities Management
PART B (continued)
Item 16. Investment Advisory and
Other Services Management
Item 17. Brokerage Allocation General Information
Item 18. Capital Stock and Other
Securities Daily Dividends -
Determination of Net
Asset Value; General
Information
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered Purchase and
Redemption of Shares;
Daily Dividends -
Determination of Net
Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters General Information
Item 22. Calculation of Performance
Data General Information
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, Connecti-
cut, New Jersey, Virginia and Flor-
ida Portfolios, each of which is
non-diversified. Shares of the New
York, California, Connecticut, New
Jersey, Virginia and Florida Port-
folios are offered only to resi-
dents of each such respective
state. This prospectus sets forth
the information about each Portfo-
lio that a prospective investor
should know before investing.
Please retain it for future refer-
ence.
An investment in the Fund is (i)
neither insured nor guaranteed by
the U.S. Government; (ii) not a de-
posit or obligation of, or guaran-
teed or endorsed by, any bank; and
(iii) not federally insured by the
Federal Deposit Insurance Corpora-
tion, 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. The Portfolios, except
for the General Portfolio, may in-
vest a significant portion of their
assets in the securities of a sin-
gle issuer. Accordingly, an invest-
ment in each such Portfolio may be
riskier than an investment in other
types of money market funds.
A "Statement of Additional Infor-
mation," dated November 1, 1996,
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 incorpo-
rated 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 AP-
PROVED OR DISAPPROVED BY THE SECU-
RITIES 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
- --------------------------------------------------------------------------------
[LOGO OF ALLIANCE CAPITAL APPEARS HERE]
PROSPECTUS
NOVEMBER 1, 1996
ALC64PRO6
<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 CT, NJ, VA and FL
Portfolios are net of the contractual reimbursement by the Adviser described in
this prospectus. The expenses of such Portfolios before such reimbursements and
fee waivers, would be: CT Portfolio: Management Fees--.50%, 12b-1 Fees--.25%,
Other Expenses--.37% and Total Operating Expenses--1.12%; NJ Portfolio: Manage-
ment Fees--.50%, 12b-1 Fees--.25%, Other Expenses--.37% and Total Operating Ex-
penses--1.12%; VA Portfolio: Management Fees--.50%; 12b-1 Fees--.25%, Other Ex-
penses--.38% and Total Operating Expenses--1.13% and; FL Portfolio: Management
Fees--.50%, 12b-1 Fees--.25%, Other Expenses--.34% and Total Operating Ex-
penses--1.09%. 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)
- --------------------------------------------------------------------------------
The following information has been audited by McGladrey & Pullen LLP, the
Fund's independent accountant, whose unqualified report thereon (referring to
Financial Highlights) appears in the Statement of Additional Information. The
following information should be read in conjunction with the financial state-
ments and related notes included in the Statement of Additional Information.
Further information about the Fund's performance is contained in the Fund's
annual report, which is available without charge upon request.
<TABLE>
<CAPTION>
GENERAL PORTFOLIO
------------------------------------------------------------------------------------------------
YEAR ENDED
YEAR ENDED JUNE 30, SIX MONTHS DECEMBER 31,
--------------------------------------------------------- ENDED ----------------------
1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------------- ------ ------ ------
<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.. .029 .028 .018 .020 .034 .046 .055 .030 .047 .041 .044
Net realized and
unrealized loss on
investments........... -0- (.003) -0- -0- -0- -0- -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase in net
asset value from
operations............ .029 .025 .018 .020 .034 .046 .055 .030 .047 .041 .044
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
ADD: CAPITAL
CONTRIBUTIONS
Capital Contributed by
the Adviser........... -0- .003 -0- -0- -0- -0- -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
Dividends from net
investment income..... (.029) (.028) (.018) (.020) (.034) (.046) (.055) (.030) (.047) (.041) (.044)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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).............. 2.93% 2.83%(c) 1.81% 2.05% 3.48% 4.71% 5.65% 6.13%(b) 4.81% 4.18% 4.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in millions).. $1,148 $1,189 $1,134 $1,016 $914 $883 $798 $695 $633 $690 $794
Ratio to average net
assets of:
Expense, net of waivers
and reimbursements.... .95% .94% .92% .92% .92% .89% .83% .84%(b) .83% .80% .80%
Expense, before waivers
and reimbursements.... .95% .95% .94% .94% .95% .95% .93% .94%(b) .93% .90% .90%
Net investment
income(d)............. 2.90% 2.78% 1.80% 2.02% 3.40% 4.57% 5.50% 5.96%(b) 4.69% 4.08% 4.31%
</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 value 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,
------------------------------------------------------------------ ENDED ----------------
1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989 1988 1987
-------- -------- -------- -------- -------- ------- ------- ------------- ------- -------
<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 .028 .018 .019 .034 .042 .051 .027 .041 .036
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income..... (.028) (.028) (.018) (.019) (.034) (.042) (.051) (.027) (.041) (.036)
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
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).............. 2.87% 2.84% 1.77% 1.94% 3.47% 4.32% 5.26% 5.61%(c) 4.14% 3.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000's
omitted).............. $330,984 $177,254 $162,839 $100,529 $100,476 $71,748 $62,536 $41,910 $41,335 $58,684
Ratio to average net
assets of:
Expenses, net of
waivers and
reimbursements........ .85% .85% .84% .80% .80% .80% .80% .85%(c) 1.00% .87%
Expenses, before
waivers and
reimbursements........ 1.03% 1.03% 1.08% 1.06% 1.12% 1.15% 1.18% 1.35%(c) 1.33% .97%
Net investment
income(d)............. 2.82% 2.81% 1.77% 1.91% 3.35% 4.20% 5.13% 5.45%(c) 4.03% 3.62%
</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, SIX MONTHS JUNE 2, 1988(A)
-------------------------------------------------------------------- ENDED THROUGH
1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989 DECEMBER 31, 1988
-------- -------- -------- -------- -------- -------- -------- ------------- -----------------
<S> <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
-------- -------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .029 .027 .018 .020 .032 .043 .050 .029 .030
-------- -------- -------- -------- -------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Dividends from net
investment income..... (.029) (.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 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURNS
Total investment return
based on net asset
value(b).............. 2.91% 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).............. $297,862 $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% .93% .95% 1.00% .99% .92%(c) .89%(c)
Expenses, before
waivers and
reimbursements........ .94% 1.01% 1.02% 1.02% 1.05% 1.10% 1.09% 1.02%(c) 1.10%(c)
Net investment
income(d)............. 2.86% 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
1996 1995 1994 1993 1992 1991 JUNE 30, 1990
------- ------- ------- ------- ------- ------- ------------------
<S> <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
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .028 .028 .017 .020 .033 .045 .026
------- ------- ------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Dividends from net
investment income..... (.028) (.028) (.017) (.020) (.033) (.045) (.026)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period................ $ 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).............. 2.88% 2.78% 1.71% 2.00% 3.35% 4.57% 5.53%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000's omitted). $95,812 $75,991 $57,314 $56,224 $54,751 $48,482 $27,945
Ratio to net assets of:
Expenses, net of
waivers and........... .80% .80% .77% .70% .58% .44% .19%(c)
Expenses, before
waivers and
reimbursements........ 1.15% 1.21% 1.21% 1.16% 1.22% 1.16% 1.10%(c)
Net investment
income(d)............. 2.84% 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
-------------------------------------
YEAR ENDED
JUNE 30, FEBRUARY 7, 1994(A)
---------------- THROUGH
1996 1995 JUNE 30, 1994
------- ------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period..... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... .028 .029 .008
------- ------- -------
LESS: DISTRIBUTIONS
Dividends from net investment income.... (.028) (.029) (.008)
------- ------- -------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
TOTAL RETURNS
Total investment return based on net as-
set value(b)........................... 2.89% 2.93% 2.08%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omit-
ted).................................... $98,098 $74,133 $36,909
Ratio to average net assets of:
Expenses, net of waivers and reimburse-
ments.................................. .82% .74% .70%(c)
Expenses, before waivers and reimburse-
ments.................................. 1.19% 1.29% 1.93%(c)
Net investment income(d)................ 2.84% 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)
YEAR ENDED THROUGH THROUGH
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996
------------- ------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of
period......................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM INVESTMENT OPERA-
TIONS
Net investment income........... .029 .023 .030
------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment
income......................... (.029) (.023) (.030)
------- ------- -------
Net asset value, end of period.. $ 1.00 $ 1.00 $ 1.00
======= ======= =======
TOTAL RETURNS
Total investment return based on
net asset value (b)............ 2.97% 3.48%(c) 3.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)....................... $89,557 $66,921 $91,179
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements................ .78% .44%(c) .58%
Expenses, before waivers and
reimbursements................ 1.15% 1.30%(c) 1.24%
Net investment income(d)....... 2.91% 3.48%(c) 3.12%
</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, 1996, after expense reim-
bursement, amounted to an annualized yield of 2.74%, equivalent to an effective
yield of 2.78%. Absent expense reimbursement, the annualized yield for this pe-
riod would have been 2.69%, equivalent to an effective yield of 2.73%. Divi-
dends for the New York Portfolio for the seven days ended June 30, 1996, after
expense reimbursement, amounted to an annualized yield of 2.68%, equivalent to
an effective yield of 2.72%. Absent expense reimbursement, the annualized yield
for this period would have been 2.16%, equivalent to an effective yield of
2.18%. Dividends for the California Portfolio for the seven days ended June 30,
1996, after expense reimbursement, amounted to an annualized yield of 2.64%,
equivalent to an effective yield of 2.68%. Absent expense reimbursement, the
annualized yield for this period would have been 2.56%, equivalent to an effec-
tive yield of 2.59%. Dividends for the Connecticut Portfolio for the seven days
ended June 30, 1996, after expense reimbursement, amounted to an annualized
yield of 2.67%, equivalent to an effective yield of 2.71%. Absent expense reim-
bursement, the annualized yield for this period would have been 2.31%, equiva-
lent to an effective yield of 2.34%. Dividends for the New Jersey Portfolio for
the seven days ended June 30, 1996, after expense reimbursement, amounted to an
annualized yield of 2.61%, equivalent to an effective yield of 2.64%. Absent
expense reimbursement, the annualized yield for this period would have been
2.24%, equivalent to an effective yield of 2.27%. Dividends for the Virginia
Portfolio for the seven days ended June 30, 1996, after expense reimbursement,
amounted to an annualized yield of 2.73%, equivalent to an effective yield of
2.77%. Absent expense reimbursement, the annualized yield for this period would
have been 2.49%, equivalent to an effective yield of 2.52%. Dividends for the
Florida Portfolio for the seven days ended June 30, 1996, after expense reim-
bursement, amounted to an annualized yield of 2.92%, equivalent to an effective
yield of 2.96%. Absent expense reimbursement, the annualized yield for this pe-
riod would have been 2.49%, equivalent to an effective yield of 2.52%.
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 1995, 100% of the income of each Portfolio was exempt
from Federal income taxes; the Florida Portfolio had not yet been established).
The average weighted maturity of each Portfolio cannot exceed 90 days. The Fund
may in the future establish additional portfolios which may have different
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.
To further enhance the quality and liquidity of the securities in which the
Portfolios invest, such securities frequently are supported by credit and li-
quidity enhancements, such as letters of credit, from third party financial
institutions. The Adviser continuously monitors the credit quality of such
third parties; however, changes in the credit quality of such a financial in-
stitution could cause a Portfolio's investments backed by that institution to
lose value and affect a Portfolio's share price.
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 diversification,
quality and maturity limitations imposed by the Rule. A more detailed descrip-
tion of Rule 2a-7 is set forth in the Fund's Statement of Additional Informa-
tion.
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.
9
<PAGE>
B. BY SWEEP
Your brokerage firm may offer an automatic "sweep" for the Fund in the opera-
tion of brokerage cash accounts for its customers. Contact your Account Execu-
tive 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
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 as 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 redemp-
10
<PAGE>
tions are genuine, including among others, recording such telephone instruc-
tions 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 instruc-
tions. Selected dealers or agents may charge a commission for handling tele-
phone 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
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 Portfolio, may be subject to state or local income taxes.
Any exempt-interest dividends derived from interest on municipal securities
subject to the AMT will be a specific preference item for purposes of the Fed-
eral 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. Distri-
butions to residents of California out of income earned by the California Port-
folio from California municipal securities are exempt from California personal
income taxes. Distributions to individuals who are residents of Connecticut out
of income earned by the Connecticut Portfolio from Connecticut municipal secu-
rities are exempt from Connecticut personal income taxes. Distributions to res-
idents of New Jersey out of income earned by the New Jersey Portfolio from New
Jersey municipal securities 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 Corporation Income Tax payable by corporate shareholders.
Distributions to residents of Virginia out of income earned by the Virginia
Portfolio from Virginia municipal securities or obligations of the United
States or any authority, commission or instrumentality of the United States are
exempt from Virginia individual, estate, trust, or corporate income tax. Divi-
dends paid by the Florida Portfolio to individual Florida shareholders
11
<PAGE>
will not be subject to Florida income tax, which is imposed only on corpora-
tions. However, Florida currently imposes 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. Gov-
ernment securities and Florida municipal securities are exempt from this in-
tangible 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 corpo-
rate shareholders will be subject to Florida corporate income tax. Distribu-
tions out of taxable interest income, other investment income, and short-term
capital gains are taxable to you as ordinary income and distributions of long-
term capital gains, if any, are taxable as long-term capital gains irrespec-
tive 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 in-
vestment advice and, in general, to supervise the Fund's management and in-
vestment program, subject to the general control of the Trustees of the Fund.
For the fiscal year ended June 30, 1996, the General, New York, California,
Connecticut, New Jersey and Virginia Portfolios each paid the Adviser an Advi-
sory fee at an annual rate of .50 of 1%, .42 of 1%, .50 of 1%, .25 of 1%, .23
of 1% and .22 of 1%, respectively, of the average daily value of the net as-
sets of each Portfolio.
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, 1996, the General, New
York, California, Connecticut, New Jersey, Virginia and Florida Portfolios
each paid the Adviser a distribution fee at an annual rate of .25 of 1%, .15
of 1%, .24 of 1%, .15 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 (together with significant amounts from the Adviser's own re-
sources) are paid by the Adviser to broker-dealers and other financial inter-
mediaries for their distribution assistance and to banks and other depository
institutions for administrative and accounting services provided to the Fund,
with any remaining amounts being used to partially defray other expenses in-
curred 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 appropri-
ate actions (which should not adversely affect the Fund or its shareholders)
in the future to maintain such legal conformity should any changes in, or in-
terpretations 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 for-
mation 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
single series on matters that affect the Portfolios in substantially the same
manner. 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>
(Logo) (R) ALLIANCE MUNICIPAL TRUST
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1996
TABLE OF CONTENTS
Page
Investment Objectives and Policies . . . . . . .
Investment Restrictions . . . . . . . . . . . .
Management . . . . . . . . . . . . . . . . . . .
Purchase and Redemption of Shares . . . . . . .
Additional Information . . . . . . . . . . . . .
Daily Dividends-Determination of Net Asset Value
Taxes . . . . . . . . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . .
Appendix A-Description of Municipal Securities .
Appendix B-Description of Securities Ratings . .
Financial Statements and Independent Auditors Report
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, 1996. A copy of the
Prospectus may be obtained by contacting the Fund at the address
or telephone number shown above.
(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 1995, 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
investing principally in a diversified portfolio of high-quality
2
<PAGE>
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 non-diversified
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, during periods when Alliance Capital Management L.P.,
3
<PAGE>
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 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 other states and political
subdivisions. The dividends designated as derived from interest
4
<PAGE>
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.)
5
<PAGE>
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 diversification, quality and
maturity limitations imposed by the Rule.
Currently, pursuant to Rule 2a-7, each Portfolio of the
Fund may invest only in U.S. dollar-denominated "eligible
securities" (as that term is defined in the Rule) that have been
determined by the Adviser to present minimal credit risks
pursuant to procedures approved by the Trustees. Generally, an
eligible security is a security that (i) has a remaining maturity
of 397 days or less and (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. 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.
6
<PAGE>
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.)
7
<PAGE>
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
8
<PAGE>
features may 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 agency reports
and other research services to which the Adviser may subscribe.
9
<PAGE>
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 respect of reverse
10
<PAGE>
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
11
<PAGE>
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 and are based on information from official
statements (described more fully below) made available in
connection with the issuance of certain securities in such
states. The summaries are not intended to provide a complete
description of such states. 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
12
<PAGE>
private business entities whose obligations support the payments
on AMT-Subject Bonds.
NEW YORK PORTFOLIO
The following is based on information obtained from an
Official Statement, dated October 1, 1995, relating to
$92,820,000 Dormitory Authority of the State of New York Revenue
Bonds, Upstate Community Colleges, Series 1995A.
New York Local Government Assistance Corporation
In 1990, as part of a New York State (the "State")
fiscal reform program, legislation was enacted creating the New
York Local Government Assistance Corporation (the "LGAC"), 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. The legislation authorized LGAC to issue its bonds
and notes in an amount not in excess of $4.7 billion (exclusive
of certain refunding bonds) plus certain other amounts. Over a
period of years, the issuance of these long-term obligations,
which are to be amortized over no more than 30 years, was
expected to eliminate the need for continued short-term seasonal
borrowing. The legislation also dedicated revenues equal to
one-quarter of the four cent State sales and use tax to pay debt
service on these bonds. 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 LGAC and bonds issued to provide
for capitalized interest, except in cases where the Governor and
the legislative leaders have certified the need for additional
borrowing and provided 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 fourth fiscal
year after the limit was first exceeded. This provision capping
the seasonal borrowing was included as a covenant with LGAC's
bondholders in the resolution authorizing such bonds.
As of June 1995, LGAC had issued bonds and notes to
provide net proceeds of $4.7 billion completing the program. The
impact of LGAC's borrowing is that the State is able to meet its
cash flow needs in the first quarter of the fiscal year without
relying on short-term seasonal borrowings. The 1995-96 State
Financial Plan includes no spring borrowing nor did the 1994-95
State Financial Plan, which was the first time in 35 years there
was no short-term seasonal borrowing. This reflects the success
of the LGAC program in permitting the State to accelerate local
aid payments from the first quarter of the current fiscal year to
the fourth quarter of the previous fiscal year.
13
<PAGE>
Recent Developments
The national economy began the current expansion in 1991
and has added over 7 million jobs since early 1992. However, the
recession lasted longer in the State and the State's economic
recovery has lagged behind the nation's. Although the State has
added approximately 195,000 jobs since November 1992, employment
growth in the State has been hindered during recent years by
significant cutbacks in the computer and instrument
manufacturing, utility, defense, and banking industries.
The State Financial Plan is based on a projection by the
State Division of the Budget (the "DOB") of national and State
economic activity. DOB forecasts that national economic growth
will weaken, but not turn negative, during the course of 1995
before beginning to rebound by the end of the year. This dynamic
is often described as a "soft landing". In the DOB forecast, the
overall rate of growth of the national economy during calendar
year 1995 will be slightly below the "consensus" of a widely
followed survey of national economic forecasters. Growth in the
real gross domestic product during 1995 is projected to be
moderate (3.0 percent), with declines in defense spending and net
exports more than offset by increases in consumption and
investment. Continuing efforts by business and government to
reduce costs are expected to exert a drag on economic growth.
Inflation, as measured by the Consumer Price Index, is projected
to remain about 3 percent due to moderate wage growth and foreign
competition. Personal income and wages are projected to increase
by about 6 percent or more.
The State's economy is expected to continue to expand
modestly during 1995, but there will be a pronounced slow-down
during the course of the year. Although industries that export
goods and services abroad are expected to benefit from the lower
dollar, growth will be slowed by government cutbacks at all
levels. On an average annual basis, employment growth will be
about the same as 1994. Both personal income and wages are
expected to record moderate gains in 1995. Bonus payments in the
securities industry are expected to increase from last year's
depressed level.
1995-96 Fiscal Year
The State's current fiscal year commenced on April 1,
1995, and ends on March 31, 1996, and is referred to herein as
the State's 1995-96 fiscal year.
The State's budget for the 1995-96 fiscal year was
enacted by the Legislature on June 7, 1995, more than two months
after the start of the fiscal year. Prior to adoption of the
budget, the Legislature enacted appropriations for disbursements
14
<PAGE>
considered to be necessary for State operations and other
purposes, including all necessary appropriations for debt
service. The State Financial Plan for the 1995-96 fiscal year
was formulated on June 20, 1995 and is based on the State's
budget as enacted by the Legislature and signed into law by the
Governor. The State Financial Plan will be updated quarterly
pursuant to law in July, October and January.
The 1995-96 budget is the first to be enacted in the
administration of the Governor, who assumed office on January 1.
It is the first budget in over half a century which proposed and,
as enacted, projects an absolute year-over-year decline in
General Fund disbursements. Spending for State operations is
projected to drop even more sharply, by 4.6 percent. Nominal
spending from all State funding sources (i.e., excluding Federal
aid) is proposed to increase by only 2.5 percent from the prior
fiscal year, in contrast to the prior decade when such spending
growth averaged more than 6.0 percent annually.
In his Executive Budget, the Governor indicated that in
the 1995-96 fiscal year, the State Financial Plan, based on then-
current law governing spending and revenues, would be out of
balance by almost $4.7 billion, as a result of the projected
structural deficit resulting from the ongoing disparity between
sluggish growth in receipts, the effect of prior-year tax
changes, and the rapid acceleration of spending growth; the
impact of unfunded 1994-95 initiatives, primarily for local aid
programs; and the use of one-time solutions, primarily surplus
funds from the prior year, to fund recurring spending in the
1994-95 budget. The Governor proposed additional tax cuts, to
spur economic growth and provide relief for low and middle-income
tax payers, which were larger than those ultimately adopted, and
which added $240 million to the then projected imbalance or
budget gap, bringing the total to approximately $5 billion.
This gap is projected to be closed in the 1995-96 State
Financial Plan based on the enacted budget, through a series of
actions, mainly spending reductions and cost containment measures
and certain reestimates that are expected to be recurring, but
also through the use of one-time solutions. The State Financial
Plan projects (i) nearly $1.6 billion in savings from cost
containment, disbursement reestimates, and other savings in
social welfare programs, including Medicaid, income maintenance
and various child and family care programs; (ii) 2.2 billion in
savings from State agency actions to reduce spending on the State
workforce, The State University of New York and The City
University of New York, mental hygiene programs, capital
projects, the prison system and fringe benefits;
(iii) $300 million in savings from local assistance reforms,
including actions affecting school aid and revenue sharing while
proposing program legislation to provide relief from certain
15
<PAGE>
mandates that increase local spending; (iv) over $400 million in
revenue measures, primarily a new Quick Draw Lottery game,
changes to tax payment schedules, and the sale of assets; and
(v) $300 million from reestimates in receipts.
The State issued the first of the three required
quarterly updates (the "Financial Plan Update") to the 1995-96
cash-basis State Financial Plan on July 28, 1995. The Financial
Plan Update projects continued balance in the State's 1995-96
Financial Plan. The Financial Plan Update incorporates few
revisions to the initial Financial Plan formulated on June 20,
1995. A number of small, offsetting changes were made to the
annual receipts estimates. The economic forecast is unchanged
following several weeks of mixed news about the pace of the
economic expansion. Negligible offsetting changes were made to
the underlying disbursement estimates.
Actual cash receipts and disbursements during the first
quarter of the 1995-96 fiscal year were impacted by the late
adoption of the budget, and fell somewhat short of original
monthly cashflow estimates. Receipt variances are at this point
mainly related to timing issues rather than changes in the
forecast. Disbursement variances are also ascribed to timing
factors. These variances do not affect the balanced position of
the State's Financial Plan.
Recent economic news remains consistent with the June
Financial Plan forecast of a "soft landing" for the national
economy in which growth is forecasted to decline to a sustainable
level. Accordingly, the economic forecast remains unchanged as
of this time. However, this forecast does contain some risks. A
sharper-than-expected reduction of excess inventory stocks could
weaken economic growth and consumer and investor confidence,
leading to a longer period of slow growth. Conversely, the drop
in long-term interest rates since the beginning of 1995 may
stimulate stronger-than-expected increases in consumer spending
and business investment, even without further monetary policy
action by the Federal Reserve Board.
The Financial Plan Update also incorporates the
restatement of three transactions within the budget so that these
transactions conform with accounting treatments utilized by the
Office of the State Comptroller. These restatements have the net
effect of reducing both General Fund receipts and disbursements
of $251 million; therefore, they have no impact on the closing
balance of the General Fund. After accounting for these
restatements and reflecting modest offsetting changes in
anticipated tax revenues, General Fund receipts are projected to
total $32.859 billion and General Fund disbursements are
projected to total $32.804 billion.
16
<PAGE>
On July 12, 1995, the State Comptroller released an
analysis of the enacted budget that included the impact on the
1996-97 fiscal year. The report identified several risks to the
1995-96 State Financial Plan and also estimated a potential
imbalance in receipts and disbursements for the 1996-97 fiscal
year of at least $2.7 billion. The Governor is required to
submit a balanced budget to the State Legislature and has
indicated he will close any potential imbalance primarily through
General Fund expenditure reductions.
1994-95 Fiscal Year
The State ended its 1994-95 fiscal year with the General
Fund in balance. The closing fund balance of $158 million
reflects $157 million in the Tax Stabilization Reserve Fund and
$1 million in the Contingency Reserve Fund ("CRF"). The CRF was
established in State Fiscal year 1993-94, funded partly with
surplus moneys, to assist the State in financing the 1994-95
fiscal year costs of extraordinary litigation known or
anticipated at that time; the opening fund balance in State
fiscal year 1994-95 was $265 million. The $241 million change in
the fund balance reflects the use of $264 million in the CRF as
planned, as well as the required deposit of $23 million to the
Tax Stabilization Reserve Fund. In addition, $278 million was on
deposit in the tax refund reserve account, $250 million of which
was deposited at the end of the State's 1994-95 fiscal year to
continue the process of restructuring the State's cash flow as
part of the LGAC program.
Compared to the State Financial Plan for 1994-95 as
formulated on June 16, 1994, reported receipts fell short of
original projections by $1.163 billion, primarily in the
categories of personal income and business taxes. Of this
amount, the personal income tax accounts for $800 million,
reflecting weak estimated tax collections and lower withholding
due to reduced wage and salary growth, more severe reductions in
brokerage industry bonuses than projected earlier, and deferral
of capital gains realizations in anticipation of potential
Federal tax changes. Business taxes fell short by $373 million,
primarily reflecting lower payments from banks as substantial
overpayments of 1993 liability depressed net collections in the
1994-95 fiscal year. These shortfalls were offset by better
performance in the remaining taxes, particularly the user taxes
and fees, which exceeded projections by $210 million. Of this
amount, $227 million was attributable to certain restatements for
accounting treatment purposes pertaining to the CRF and LGAC;
these restatements had no impact on balance in the General Fund.
Disbursements were also reduced from original
projections by $848 million. After adjusting for the net impact
of restatements relating to the CRF and LGAC which raised
17
<PAGE>
disbursements by $38 million, the variance is $886 million. Well
over two-thirds of this variance is in the category of grants to
local governments, primarily reflecting the conservative nature
of the original estimates of projected costs for social services
and other programs. Lower education costs are attributable to
the availability of $110 million in additional lottery proceeds
and the use of LGAC bond proceeds.
The spending reductions also reflect $188 million in
actions initiated in January 1995 by the Governor to reduce
spending to avert a potential gap in the 1994-95 State Financial
Plan. These actions included savings from a hiring freeze,
halting the development of certain services, and the suspension
of non-essential capital projects. These actions, together with
$71 million in other measures comprised the Governor's
$259 million gap-closing plan, submitted to the Legislature in
connection with the 1995-96 Executive Budget.
1993-94 Fiscal Year
The State ended its 1993-94 fiscal year with a balance
of $1.140 billion in the tax refund reserve account, $265 million
in the CRF and $134 million in its Tax Stabilization Reserve
Fund. These fund balances were primarily the result of an
improving national economy, State employment growth, tax
collections that exceeded earlier projections and disbursements
that were below expectations. Deposits to the personal income
tax refund reserve have the effect of reducing reported personal
income tax receipts in the fiscal year when made and withdrawals
from such reserve increase receipts in the fiscal year when made.
The balance in the tax refund reserve account was used to pay
taxpayer refunds.
Of the $1.140 billion deposited in the tax refund
reserve account, $1.026 billion was available for budgetary
planning purposes in the 1994-95 fiscal year. The remaining
$114 million was redeposited in the tax refund reserve account at
the end of the State's 1994-95 fiscal year to continue the
process of restructuring the State's cash flow as part of the
LGAC program. The balance in the CRF was reserved to meet the
cost of litigation facing the State in its 1994-95 fiscal year.
Before the deposit of $1.140 billion in the tax refund
reserve account, General Fund receipts in 1993-94 exceeded those
originally projected when the State Financial Plan for that year
was formulated on April 16, 1993 by $1.002 billion.
The higher receipts resulted, in part, because the
State's economy performed better than forecasted. Employment
growth started in the first quarter of the State's 1993-94 fiscal
year, and, although this lagged behind the national economic
18
<PAGE>
recovery, the growth in the State began earlier than forecasted.
The State's economy exhibited signs of strength in the service
sector, in construction, and in trade. Long Island and the
Mid-Hudson Valley continued to lag behind the rest of the State
in economic growth. The DOB believes that approximately 100,000
jobs were added during the 1993-94 fiscal year.
Disbursements and transfers from the General Fund were
$303 million below the level projected in April 1993, an amount
that would have been $423 million had the State not accelerated
the payment of Medicaid billings, which in the April 1993 State
Financial Plan were planned to be deferred into the 1994-95
fiscal year. Compared to the estimates included in the State
Financial Plan formulated in April 1993, lower disbursements
resulted from lower spending for Medicaid, capital projects, and
debt service (due to refundings) and $114 million used to
restructure the State's cash flow as part of the LGAC program.
Disbursements were higher than expected for general support for
public schools, the State share of income maintenance, overtime
for prison guards, and highway snow and ice removal. The State
also made the first of six required payments to the State of
Delaware related to the settlement of Delaware's litigation
against the State regarding the disposition of abandoned property
receipts.
During the 1993-94 fiscal year, the State also
established and funded the CRF as a way to assist the State in
financing the cost of litigation affecting the State. The CRF
was initially funded with a transfer of $100 million attributable
to the positive margin recorded in the 1992-93 fiscal year. In
addition, the State augmented this initial deposit with
$132 million in debt service savings attributable to the
refinancing of State and public authority bonds during 1993-94.
A year-end transfer of $36 million was also made to the CRF,
which, after a disbursement for authorized fund purposes, brought
the CRF balance at the end of 1993-94 to $265 million. This
amount was $165 million higher than the amount originally
targeted for this reserve fund.
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.
On July 28, 1995, the Office of the State Comptroller
issued the General Purpose Financial Statements of the State of
New York for the 1994-95 fiscal year. The State's Combined
19
<PAGE>
Balance Sheet as of March 31, 1995 showed an accumulated deficit
in its combined governmental funds of $1.666 billion reflecting
liabilities of $14.778 billion and assets of $13.112 billion.
This accumulated governmental funds deficit includes a
$3.308 billion accumulated deficit in the General Fund, as well
as accumulated surpluses in the Special Revenue and Debt Service
fund types of $877 million and $1.753 billion, respectively, and
a $988 million accumulated deficit in the Capital Projects fund
type.
The State reported a General Fund operating deficit of
$1.426 billion for the 1994-95 fiscal year, as compared to an
operating surplus of $914 million for the prior fiscal year. The
1994-95 fiscal year deficit was caused by several factors,
including the use of $1.026 billion of the 1993-94 cash-based
surplus to fund operating expenses in 1994-95 and the adoption of
changes in accounting methodologies by the State Comptroller.
These factors were offset by net proceeds of $315 billion in
bonds issued by the LGAC.
Total revenues for 1994-95 were $31.455 billion.
Revenues decreased by $173 million over the prior fiscal year, a
decrease of less than one percent. Personal income tax revenues
grew by $103 million, an increase of 0.6 percent. Similarly,
consumption and use taxes increased by $376 million or 6.0
percent. The increase in personal income and sales taxes was due
to modest growth in the State's economy. Business taxes declined
by $751 million or 12.8 percent from the previous year. The
decline in business taxes was caused primarily by a decline in
taxable earnings in the insurance, bank and petroleum industries.
Other revenues and miscellaneous receipts showed modest
increases.
1994-95 expenditures totaled $33.079 billion, an
increase of $2.083 billion, or 6.7 percent over the prior fiscal
year. In Grants to Local Governments, social service and
education expenditures grew by $927 million (10.3 percent) and
$727 million (7.6 percent), respectively. Social services
spending increased in Medicaid and Income Maintenance, while
education spending grew as a result of increases enacted with the
1994-95 budget. General purpose local assistance declined by
$205 million (22.9 percent) as a result of prior year spending
reductions. Other local assistance spending showed modest
increases. In State Operations, personal service costs grew by
$322 million (5.4 percent) while non-personal service declined by
$70 million (3.4 percent). Pension contributions more than
doubled, increasing by $95 million, while other fringe benefit
costs increased by $151 million (10.9 percent). State Operations
growth was primarily from labor contracts that resulted in salary
increases and retroactive payments. Net other financing sources
and uses declined from $282 million (as restated) to
20
<PAGE>
$198 million, an $84 million (29.8 percent) decline from the
previous year, primarily because of a reduction in bonds issued
by LGAC.
An operating surplus of $39 million was reported for
Special Revenue Funds for the 1994-95 fiscal year which increased
the accumulated fund balance to $877 million. Revenues increased
$1.617 billion over the prior fiscal year (6.9 percent) as a
result of increases in Federal grants and Lottery revenues.
Expenditures increased $1.893 billion (9.3 percent) as a result
of increased costs for social services programs and an increase
in the distribution of Lottery proceeds to school districts.
Other financing uses declined $166 billion (5.7 percent)
primarily because of a decline in Federal reimbursements
transferred to other funds.
Debt Service Funds ended the 1994-95 fiscal year with an
operating deficit of over $38 million and, as a result, the
accumulated fund balance declined to $1.753 billion. Revenues
increased $145 million (7.1 percent) because of increases in both
dedicated taxes and mental hygiene patient fees. Debt service
expenditures increased $106 million (5.3 percent). Net other
financing uses increased fivefold to $101 million due primarily
to a decrease in operating transfers of $158 million offset, in
part, by a net decrease in payments as compared to proceeds on
advance refundings of $57 million.
An operating deficit of $366 million was reported in the
Capital Projects Fund for the State's 1994-95 fiscal year and, as
a result, the accumulated deficit fund balance in this fund type
increased to $988 million. Revenues increased $256 million (17.3
percent) primarily because a larger share of the petroleum
business tax was shifted from the General Fund to the Dedicated
Highway and Bridge Trust Fund, and by an increase in Federal
grant revenues for transportation and local waste water treatment
projects. Capital Projects Funds expenditures increased
$585 million (20.7 percent) in State fiscal year 1994-95 because
of increased expenditures for transportation and correctional
projects. Net other financing sources (uses) declined by less
than $2 million.
The State completed its 1993-94 fiscal year with a GAAP-
basis operating surplus of $914 million in the General Fund and
an accumulated deficit of $1.637 billion. The Combined Statement
of Revenues, Expenditures and Changes in Fund Balances reported
total revenue of $31.628 billion, total expenditures of
$30.996 billion.
21
<PAGE>
Economic Overview
New York is the third 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 very 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. Travel and
tourism constitute an important part of the economy. Like the
rest of the nation, the State has a declining proportion of its
workforce engaged in manufacturing, and an increasing proportion
engaged in service industries.
The State historically has 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 economic position. 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. New York City (the
"City") has also had to face greater competition as other major
cities have developed financial and business capabilities which
make them less dependent on the specialized services
traditionally available almost exclusively in the City.
During the 1982-83 recession, overall economic activity
in the State declined less than that of the nation as a whole.
However, in the calendar years 1984 through 1991, the State's
rate of economic expansion was somewhat slower than that of the
nation. In the 1990-91 recession, the economy of the State, and
that of the rest of the Northeast, was more heavily damaged than
that of the nation as a whole and has been slower to recover.
The total employment growth rate in the State has been below the
national average since 1984. The unemployment rate in the State
dipped below the national rate in the second half of 1981 and
remained lower until 1991; since then, it has been higher.
According to data published by the U.S. Bureau of Economic
Analysis, during the past ten years, total personal income in the
State rose slightly faster than the national average only from
1986 through 1988.
Although the State ranks 22nd in the nation for its
State tax burden, the State has the second highest combined state
and local tax burden in the United States. In prior years, the
State described its state and local tax burden in per capita
terms. For example, in 1991, total state and local taxes in New
York were $3,349 per capita, compared with $1,475 per capita in
22
<PAGE>
1980; and between 1980 and 1991, state and local taxes were per
capita increased 127 percent in the State, compared with 111
percent across the nation. DOB believes, however, that it is
more informative to describe the state and local tax burden in
the terms of its relationship to personal income. In 1992, total
State and local taxes in New York were $154.70 per $1,000 of
personal income, compared with $152.70 in 1980. Between 1980 and
1991, State and local taxes per $1,000 of personal income
increased at a slower rate in the State than in the nation as a
whole with such taxes in the State increasing by 1.3 percent
while such taxes increased 4 percent in the nation. 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 economic growth, the State has developed
programs, including the provision of direct financial assistance,
designed to assist businesses to expand existing operations
located within the State and to attract new businesses to the
State. In addition, the State has provided various tax
incentives to encourage business relocation and expansion. These
programs include direct tax abatements 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, the State has created 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 crate jobs and make investments in the
zones.
The 1995-96 budget reflects significant additional
actions to reduce the burden of State taxation, including
adoption of a 3-year, 20 percent reduction in the State's
personal income tax and a variety of more modest changes in other
levies. In combination with business tax reductions enacted in
1994, these actions will reduce State taxes by over $5.5 billion
by the 1997-98 State fiscal year, when compared to the estimated
yield in that year of the State tax structure as it applied in
1993-94.
State Authorities
The fiscal stability of the State is related, in part,
to the fiscal stability of its public benefit corporations (the
"Authorities"). Authorities, which have responsibility for
financing, constructing and operating revenue providing public
facilities, 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, and as otherwise
restricted by, their legislative authorizations. The State's
23
<PAGE>
access to the public credit markets could be impaired, and the
market price of its outstanding debt may be materially adversely
affected, if any of its Authorities were to default on their
respective obligations. As of September 30, 1994, the date of
the latest data available, there were 18 Authorities that had
outstanding debt of $100 million or more, and the aggregate
outstanding debt, including refunding bonds, of these 18
Authorities was $70.3 billion. As of March 31, 1995, aggregate
Authority debt outstanding as State-supported debt was
$27.9 billion and as State-related debt was $36.1 billion.
Moral obligation financing generally involves the
issuance of debt by an Authority to finance a revenue-producing
project or other activity. The debt is secured by project
revenues and includes statutory provisions requiring the State,
subject to appropriation by the Legislature, to make up any
deficiencies which may occur in the issuer's debt service reserve
fund. There has never been a default on any moral obligation
debt of any public authority. The State does not intend to
increase statutory authorizations for moral obligation bond
programs. From 1976 through 1987, the State was called upon to
appropriate and make payments totaling $162.8 million to make up
deficiencies in the debt service reserve funds of the Housing
Finance Agency pursuant to moral obligation provisions. In the
same period, the State also expended additional funds to assist
the Project Finance Agency, the New York State Urban Development
Corporation and other public authorities which had moral
obligation debt outstanding. The State has not been called upon
to make any payments pursuant to any moral obligations since the
1986-87 fiscal year and no such requirements are anticipated
during the 1995-96 fiscal year.
In addition to the moral obligation financing
arrangements described above, State law provides for State
municipal assistance corporations, which are public authorities
established to aid financially troubled localities. The
Municipal Assistance Corporation For The City of New York
("MAC"), created in 1975 to provide financing assistance to the
City, is the only municipal assistance corporation created to
date. To enable MAC to pay debt service on its obligations, MAC
receives, subject to annual appropriation by the Legislature,
receipts from the 4 percent New York State sales tax for the
benefit of the City, the State-imposed stock transfer tax and,
subject to certain prior liens, certain local assistance payments
otherwise payable to the City. The legislation creating MAC also
includes a moral obligation provision. Under its enabling
legislation, MAC's authority to issue moral obligation bonds and
notes (other than refunding bonds and notes) expired on
December 31, 1984.
24
<PAGE>
The State also provides for contingent
contractual-obligation financing for the Secured Hospital Program
pursuant to legislation enacted in 1985. Under this financing
method, the State contracts to pay debt service, subject to
annual appropriations, on bonds issued by the New York State
Medical Care Facilities Finance Agency in the event there are
shortfalls of revenues from other sources. The State has never
been required to make any payments pursuant to this financing
arrangement, nor does it anticipate being required to do so
during the 1995-96 fiscal year.
Authorities' operating expenses and debt service costs
are generally paid by revenues generated by the projects financed
or operated, such as tolls charged for the use of highways,
bridges or tunnels, rentals charged for housing units, and
charges for occupancy at medical care facilities. In addition,
State legislation authorizes several financing techniques for
Authorities. Also, there are statutory arrangements providing
for State local assistance payments, otherwise payable to
localities, to be made under certain circumstances to
Authorities. Although the State has no obligation to provide
additional assistance to localities whose local assistance
payments have been paid to Authorities under these arrangements,
if local assistance payments are so diverted, the affected
localities could seek additional State assistance. Some
Authorities also receive moneys from State appropriations to pay
for the operating costs of certain of their programs.
The Metropolitan Transportation Authority (the "MTA")
oversees the 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").
The MTA operates certain commuter rail and bus lines in the New
York metropolitan area through MTA's subsidiaries, the Long
Island Rail Road Company, the Metro-North Commuter Railroad
Company and the Metropolitan Suburban Bus Authority. 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
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. If current revenue projections
are not realized and/or operating expenses exceed current
projections, the TA or commuter railroads may be required to seek
additional state assistance, raise fares or take other actions.
25
<PAGE>
Since 1980, 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. In addition, since 1987, state law has
required that the proceeds of a one-quarter of 1% mortgage
recording tax paid on certain mortgages in the Metropolitan
Transportation Region be deposited in a special MTA fund for
operating or capital expenses. Further, in 1993, the State
dedicated a portion of the State petroleum business tax to fund
operating or capital assistance to the MTA. For the 1995-1996
fiscal year, total State assistance to the MTA is estimated at
approximately $1.1 billion.
In 1993, State legislation authorized the funding of a
five-year $9.56 billion MTA capital plan for the five-year
period, 1992 through 1996 (the "1992-96 Capital Program"). The
MTA has received approval of the 1992-96 Capital Program based on
this legislation from the 1992-96 Capital Program Review Board,
as State law requires. This is the third five-year plan since
the Legislature authorized procedures for the adoption, approval
and amendment of a five-year plan in 1981 for a capital program
designed to upgrade the performance of the MTA's transportation
systems and to supplement, replace and rehabilitate facilities
and equipment. The MTA, the TBTA and the TA are collectively
authorized to issue an aggregate of $3.1 billion of bonds (net of
certain statutory exclusions) to finance a portion of the 1992-96
Capital Program. The 1992-96 Capital Program is expected to be
financed in significant part through dedication of State
petroleum business taxes referred to above. However, in December
1994 the proposed bond resolution based on such tax receipts was
not approved by the MTA Capital Program Review Board.
There can be no assurance that all the necessary
governmental actions for the Capital Program will be taken, that
funding sources currently identified will not be decreased or
eliminated, or that the 1992-96 Capital Program, or parts
thereof, will not be delayed or reduced. Furthermore, the power
of the MTA to issue certain bonds expected to be supported by the
appropriation of State petroleum business taxes is currently the
subject of a court challenge. If the Capital 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.
26
<PAGE>
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 may also be affected by
the fiscal health of the City, which has required and continues
to require significant financial assistance from the State. The
City depends on State aid both to enable the City to balance its
budget and to meet its cash requirements. The City has achieved
balanced operating results from each of its fiscal years since
1981 as reported in accordance with the then-applicable GAAP
standards.
In response to the City's fiscal crisis in 1975, the
State took action to assist the City in returning to fiscal
stability. Among those actions, the State established the MAC to
provide financing assistance to the City; the New York State
Financial Control Board (the "Control Board") to oversee the
City's financial affairs; 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; and
a "Control Period" which existed from 1975 to 1986 during which
the City was subject to certain statutorily-prescribed fiscal
controls. Although the Control Board terminated the Control
Period in 1986 when certain statutory conditions were met, thus
suspending certain Control Board powers, the Control Board, MAC
and OSDC continue to exercise various fiscal monitoring functions
over the City, and upon the occurrence or "substantial likelihood
and imminence" of the occurrence of certain events, including,
but not limited to, a City operating budget deficit of more than
$100 million, the Control Board is required by law to reimpose a
Control Period. Currently, the City and its Covered
Organizations (i.e., those which receive or may receive moneys
from the City directly, indirectly or contingently) operate under
a four-year financial plan (the "Financial Plan") which the City
prepares annually and periodically updates. The City's Financial
Plan includes its capital, revenue and expense projections and
outlines proposed gap-closing programs for years with projected
budget gaps.
The City's projections set forth in the Financial Plan
are based on various assumptions and contingencies, some of which
are uncertain and may not materialize. Unforeseen developments
27
<PAGE>
and changes in major assumptions could significantly affect the
City's ability to balance its budget as required by State law and
to meet its annual cash flow and financing requirements.
The State could be affected by the ability of the City
and certain Covered Organizations to market their securities
successfully in the public credit markets. Future developments
concerning the City or certain of the Covered Organizations, and
public discussion of such developments, as well as prevailing
market conditions and securities credit ratings, may affect the
ability or cost to sell securities issued by the City or such
Covered Organizations and may also affect the market for their
outstanding securities.
OSDC and Control Board Reports
The staffs of OSDC, the Control Board and the City
Comptroller issue periodic reports on the City's Financial Plans,
as modified, analyzing forecasts of revenues and expenditures,
cash flow, and debt service requirements, as well as compliance
with the Financial Plan, as modified, by the City and its Covered
Organizations. OSDC staff reports issued during the mid-1980's
noted that the City's budget benefited from a rapid rise in the
City's economy, which boosted the City's collection of property,
business and income taxes. These resources were used to increase
the City's workforce and the scope of discretionary and mandated
City services. Subsequent OSDC staff reports, including its
periodic economic reports, examined the 1987 stock market crash
and the 1989-92 recession, which affected the New York City
region more severely than the nation, and these reports
attributed an erosion of City revenues and increasing strain on
City expenditures to that recession. According to a recent OSDC
economic report, the City's economy was slow to recover from the
recession and is expected to experience a weak employment
situation, and moderate wage and income growth, during the 1995-
96 period. Also, Financial Plan reports of OSDC, the Control
Board, and the City Comptroller have variously indicated that
many of the City's balanced budgets have been accomplished, in
part, through the use of non-recurring resources, tax and fee
increases, personnel reductions and additional State assistance;
that the City has not yet brought its long-term expenditures in
line with recurring revenues; that the City's proposed gap-
closing programs, if implemented, would narrow future budget
gaps; that these programs tend to rely heavily on actions outside
the direct control of the City; and that the City is therefore
likely to continue to face future projected budget gaps requiring
the City to reduce expenditures and/or increase revenues.
According to the most recent staff reports of OSDC, the Control
Board and the City Comptroller during the four-year period
covered by the current Financial Plan, the City is relying on
obtaining substantial resources from initiatives needing approval
28
<PAGE>
and cooperation of its municipal labor unions, Covered
Organizations, and the City Council, as well as the State and
Federal governments, among others, and there can be no assurance
that such approval can be obtained.
Financing Requirements
The City requires significant amounts of financing for
seasonal and capital purposes. The City issued $1.75 billion of
notes for seasonal financing purposes during its fiscal year
ending June 30, 1994. The City's capital financing program
projects long-term financing requirements of approximately
$17 billion for the City's fiscal years 1995 through 1998. The
major capital requirements include expenditures for the City's
water supply and sewage disposal systems, road, bridges, mass
transit, schools, hospitals and housing.
On February 14, 1995, the Mayor released the Preliminary
Budget for the City's 1996 fiscal year (commencing July 1), which
addresses a projected $2.7 billion budget gap. Most of the gap-
closing initiatives may be implemented only with the cooperation
of the City's municipal unions, or the State or Federal
governments. The OSDC and the Control Board continue their
respective oversight activities.
Other Localities
Certain localities in addition to the City could have
financial problems leading to requests for additional State
assistance during the State's 1995-96 fiscal years and
thereafter. The potential impact on the State of such requests
by localities is not included in the projections of the State's
receipts and disbursements for the State's 1995-96 fiscal year.
Fiscal difficulties experienced by the City of Yonkers
resulted in the re-establishment of the Financial Control Board
for the City of Yonkers by the State in 1984. That Board is
charged with oversight of the fiscal affairs of Yonkers. Future
actions taken by the State 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 1993, the
total indebtedness of all localities in the State other than the
City was approximately $17.7 billion. A small portion
(approximately $105 million) of that indebtedness represented
borrowing to finance budgetary deficits and was issued pursuant
to State enabling legislation. State law requires the
29
<PAGE>
Comptroller to review and make recommendations concerning the
budgets of those local government units other than the City
authorized by State law to issue debt to finance deficits during
the period that such deficit financing is outstanding. Fifteen
localities had outstanding indebtedness for deficit financing at
the close of their fiscal year ending in 1993.
From time to time, Federal expenditure reductions could
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,
the City or any of the public 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. Long-range potential
problems of declining urban population, increasing expenditures
and other economic trends could adversely affect 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
proceedings and other alleged violations of State and Federal
laws.
Adverse developments in these proceedings or the
initiation of new proceedings could affect the ability of the
State to maintain a balanced 1995-96 State Financial Plan. The
State believes that the 1995-96 State Financial Plan includes
sufficient reserves for the payment of judgments that may be
required during the 1995-96 fiscal year. There can be no
assurance, however, that an adverse decision in any of these
proceedings would not exceed the amount of the 1995-96 State
Financial Plan reserves for the payment of judgments and,
therefore, affect the ability of the State to maintain a balanced
1995-96 State Financial Plan. In its General Purpose Financial
Statements, the State reports its estimated liability in
subsequent fiscal years for awarded and anticipated unfavorable
judgments.
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
30
<PAGE>
or ability, as a matter of law, to impose or collect significant
amounts of taxes and revenues.
CALIFORNIA PORTFOLIO
The following is based on information obtained from
(i) an Official Statement, dated September 19, 1995, relating to
$28,245,000 State Public Works Board of the State of California
Energy Efficiency Revenue Refunding Bonds, Series 1995B and
(ii) an Official Statement, dated February 25, 1995, relating to
$400,000,000 State of California Various Purpose General
Obligation Bonds.
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 State
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. However, unless the emergency arises from
civil disturbance or natural disaster declared by the Governor,
and the appropriations are approved by two-thirds of the
Legislature, the Appropriations Limit for the next three years
must be reduced by the amount of the excess.
31
<PAGE>
The State's yearly Appropriations Limit is based on the
limit for the prior year with annual adjustments for changes in
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 (using different definitions, which
were modified by Proposition 111). Starting in the 1991-92
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 greater 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 State 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 State 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 which would be the basis
of payments 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.
Proposition 98 permits the Legislature by two-thirds
vote of both houses, with the Governor's concurrence, to suspend
32
<PAGE>
the K-14 schools' minimum funding formula for a one-year period.
In the fall of 1989, the Legislature and the Governor utilized
this provision to avoid having 40.3 percent of revenues generated
by a special supplemental sales tax enacted for earthquake relief
go to K-14 schools. Proposition 98 also contains provisions
transferring certain State tax revenues in excess of the Article
XIII B limit to K-14 schools.
During the recession, General Fund revenues for several
years were less than originally projected, so that the original
Proposition 98 appropriations turned out to be higher than the
minimum percentage provided in the law. The Legislature responded
to these developments by designating the "extra" Proposition 98
payments in one year as a "loan" from future years' entitlements.
By implementing these actions, per-pupil funding from Proposition
98 sources stayed almost constant at approximately $4,220 from
Fiscal Year 1991-92 to Fiscal Year 1993-94.
In 1992, a lawsuit was filed, called California
Teachers' Association v. Gould, which challenged the validity of
these off-budget loans. As part of the negotiations leading to
the 1995-96 Budget Act, an oral agreement was reached to settle
this case. It is expected that a formal settlement reflecting
these conditions will be entered into in the near future.
The oral agreement provides that both the State and K-14
schools share in the repayment of prior years' emergency loans to
schools. Of the total $1.76 billion in loans, the State will,
repay $935 million, while schools will repay $825 million. The
State share of the repayment will be reflected as expenditures
above the current Proposition 98 base calculation. The schools'
share of the repayment will count as appropriations that count
toward satisfying the Proposition 98 guarantee, or from "below"
the current base. Repayments are spread over the eight-year
period of 1994-95 through 2001-02 to mitigate any adverse fiscal
impact. Once a court settlement is reached, and the Director of
Finance certifies that such a settlement has occurred, $360
million in appropriations to schools will be disbursed in August
1996.
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
33
<PAGE>
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
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 or before 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 matured 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 matured on June 28,
1995.
The State has always paid the principal of and interest
on its general obligation bonds, lease-purchase debt, and
short-term obligations, including revenue anticipation notes and
revenue anticipation warrants when due.
Automatic Budget Reduction
Legislation was enacted in July 1990 providing for an
automatic mechanism to control State expenditures by implementing
certain across-the-board spending cuts under certain conditions.
The Legislature may suspend the operation of this mechanism for
any fiscal year; the mechanism was so suspended in the 1992-93
Budget Act, the 1993-94 Budget Act and the 1994-95 Budget Act.
1994-95 Fiscal Year
The 1994-95 Fiscal Year represented the fourth
consecutive year the Governor and Legislature were faced with a
very difficult budget environment to produce a balanced budget.
34
<PAGE>
Many program cuts and budgetary adjustments had 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 $1.8 billion at June 30, 1994, by June 30,
1996.
The 1994-95 Budget Act, signed by the Governor on July
8, 1994, projected revenues and transfers of $41.9 billion, $2.1
billion more than actual revenues received in 1993-94. This
reflected the Administration's forecast of an improving economy.
Also included in this figure was the projected receipt of $356
million from the federal government to reimburse the State's cost
of incarcerating undocumented immigrants. Most of these moneys
were not received. Analysis of the federal Fiscal Year 1995
budget by the Department of Finance indicates that approximately
$98 million was appropriated for the State to offset such
incarceration costs.
The 1994-95 Budget Act projected Special Fund revenues
of $12.1 billion, a decrease of 2.4 percent from 1993-94
estimated revenues.
The 1994-95 Budget Act projected 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 projected
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. These funds ultimately were not
budgeted by the Federal government.
2. Reductions of approximately $1.1 billion in health
and welfare costs. A 2.3 percent reduction in AFDC payments
(equal to about $52 million for the entire fiscal year) has been
temporarily suspended by Court order. Certain health care
funding actions in the Budget Act also were challenged in a court
action.
3. A General Fund increase of approximately $38
million in support for the University of California and $65
million for California State University, accompanied by student
35
<PAGE>
fee increases for both the University of California and
California State University.
4. Proposition 98 funding for K-14 schools was
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 prior three years.
5. Legislation enacted with the 1994-95 Budget Act
clarified laws passed in 1992 and 1993 which required 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 contained 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 assumed that the State will use a
cash flow borrowing program in 1994-95 which combined 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 Fiscal Year. The Budget Adjustment Law enacted along
with the 1994-95 Budget Act is designed to ensure that the
warrants will be repaid in the 1995-96 Fiscal Year.
36
<PAGE>
1995-96 Fiscal Year
As described earlier, for the first time in four years,
the State entered the upcoming fiscal year with strengthening
revenues based on an improving economy. On January 10, 1995, the
Governor presented his 1995-96 Fiscal Year Budget Proposal (the
"Proposed Budget"). Two of the principal features of the
Proposed Budget were a phased, 15% cut in personal income and
corporate taxes, and a further expansion of the "realignment"
process to transfer more responsibility and funding sources for
certain health and welfare programs to local governments.
Neither of these proposals was approved by the Legislature. As a
result of the improving economy, with resulting improved revenue
and caseload estimates, the State entered the 1995-96 Budget
negotiations with the smallest nominal "budget gap" to be closed
in many years. Nonetheless, serious policy differences between
the Governor and Legislature prevented timely enactment of the
budget.
The 1995-96 Budget Act was signed by the Governor on
August 3, 1995, 34 days after the start of the fiscal year. The
Budget Act projects General Fund revenues and transfers of $44.1
billion, a 3.5 percent increase from the prior year. Expenditures
are budgeted at $43.4 billion, a 4 percent increase. The
Department of Finance projects that, after repaying the last of
the carryover budget deficit, there will be a positive balance of
$28 million in the budget reserve, the Special Fund for Economic
Uncertainties, at June 30, 1996 The Budget Act also projects
Special Fund revenues of $12.7 billion and appropriates Special
Fund expenditures of $13.4 billion.
The Department of Finance projects cash flow borrowings
in the 1995-96 Fiscal Year will be the smallest in many years,
comprising about $2 billion of notes to be issued in April, 1996,
and maturing by June 30, 1996. With full payment of $4 billion of
revenue anticipation warrants on April 25, 1996, the Department
sees no further need for borrowing over the end of the fiscal
year. The available internal borrowable cash resources of the
General Fund at June 30, 1996 are projected at almost $2 billion.
The following are the principal features of the Budget
Act:
1. Proposition 98 funding for schools and community
colleges will increase by about $1.0 billion (General Fund) and
$1.2 billion total above revised 1994-95 levels. Because of
higher than projected revenues in 1994-95, an additional $543
million ($91 per K-12 ADA) is appropriated to the 1994-95
Proposition 98 entitlement. A large part of this is a block grant
of about $54 per pupil for any one-time purpose. Per-pupil
expenditures are projected to increase by another $126 in 1995-96
37
<PAGE>
to $4,435. For the first time in several years, a full 2.7
percent cost of living allowance is funded. The budget compromise
anticipates a settlement of the CTA v. Gould litigation.
2. Cuts in health and welfare costs totaling about
$0.9 billion. Some of these cuts (totaling about $500 million)
would require federal legislative approval.
3. A 3.5 % increase in funding for the University of
California ($90 million General Fund) and the California State
University system ($24 million General Fund).
4. The Budget assumes receipt of $473 million in new
federal aid for costs of illegal immigrants, above commitments
already made by the federal government. This amount is much less
than estimates made in the summer of 1994 as part of the two-year
budget proposal, and somewhat lower than the estimates in the
January 1995 Governor's Budget.
5. General Fund support for the Department of
Corrections is increased by about 8 percent over the prior year,
reflecting estimates of increased prison population, but funding
is less than proposed in the Governor's Budget.
Economic Overview
California's economy is the largest among the 50 states
and one of the largest in the world. The State has a diverse
economy, with major employment in the agriculture, manufacturing,
high technology, services, trade, entertainment and construction
sectors. Total state gross domestic product of about $835
billion in 1994 was larger than all but six nations in the world.
The State's tax revenue experience in the past few years
clearly reflects sharp declines in employment, income and retail
sales on a scale not seen in over 50 years. The 1995-96
Governor's Budget, released January 10,1995 (the "Governor's
Budget"), indicates the State has embarked on a steady economic
recovery since late 1993, somewhat sooner than predicted in the
May, 1994 Revision of the 1994-95 Governor's Budget.
Revised employment data indicate that California's
recession ended in 1993, and following a period of stability, a
solid recovery is now underway. The State's unemployment rate
fell from 9.2 percent in 1993 to 8.6 percent in 1994. The number
of unemployed Californians fell by nearly 400,000 during 1994,
while civilian employment increased more than 300,000. However,
pre-recession employment levels are not expected to be reached
until later in the decade.
38
<PAGE>
Other indicators, including retail sales, homebuilding
activity, existing home sales and bank lending volume all confirm
the State's recovery. U.S. Department of Commerce survey data
show retail sales up over 8 percent in September and October 1994
from year-earlier data. Information from major credit card
companies and the leading check verification service suggest that
holiday-season sales growth in California outpaced the national
performance. Despite rising interest rates, existing home sales
were up 18 percent through the first 10 months of last year,
while permits to build new homes rose 16 percent over the same
period. Nonresidential construction has stabilized, and office
occupancy rates are moving up in most areas. Commercial lending
by the State's major banks is also on the rise after a three-year
decline.
Personal income was severely affected by the Northridge
Earthquake, which reduced the first quarter 1994 figure by $22
billion at an annual rate, reflecting the uninsured damage to
residences and unincorporated businesses. As a result, personal
income growth for all of 1994 was about 4.2 percent. However,
excluding the Northridge effects, growth would have been in
excess of 5 percent. Moreover, after several years of
accelerating income ahead of promised Federal tax hikes, it
appears that many individuals may have deferred the recognition
of income (including bonuses and stock options) into 1995, given
a strong possibility that the new Congress may enact tax cuts at
the Federal level. At the very least, there is virtually no risk
of further Federal tax increases this year.
Only the nonfarm wage and salary employment figures have
yet to confirm this solid recovery. Federal figures indicate
that jobs reached a low in December 1993 and have shown little
growth since then (although the November 1994 figure was up
slightly from the year-earlier level). However, State payroll
tax data, which will form the basis for the March 1995 revision
in the California Employment Development Department's ("EDD")
wage and salary job figures, paint a much brighter picture.
These tax-based data, reflecting the entire universe of
employers, indicate that employment bottomed in the spring of
1993, and after a period of stability, began a sustained recovery
later that year. Based on preliminary second quarter payroll tax
data, the Department of Finance estimates that employment grew by
more than 150,000 last year.
The gap between the data compiled by the EDD on contract
with the U.S. Bureau of Labor Statistics ("BLS"), and the State
payroll tax data is troubling but easily explained. The survey
on which these figures are based is unable to pick up new
business starts (only firms in operation prior to the first
quarter of 1992 are included) and samples only a fraction of
smaller employers. On the other hand, all very large firms,
39
<PAGE>
including most aerospace manufacturers, banks, utilities and
major retailers, are included in the EDD/BLS survey. These
larger firms are the source of most of the layoffs, down sizing
and restructuring in the economy. Thus, the official survey
reports the vast majority of layoffs, but understates growth in
small firms and misses entirely jobs created by new businesses.
Payroll tax data indicate employment growth is
concentrated in services, construction, and wholesale and retail
trade. Manufacturing continues to be affected by Federal defense
spending cuts and the weak market for commercial aircraft.
Aerospace (aircraft, missiles and space equipment and search and
navigation instruments) lost 36,000 jobs last year, and
employment is now down by more than half from the 1988 peak.
Electronics has stabilized and is showing some growth
particularly in the components industry. Excluding these high-
technology industries, manufacturing is now posting small
employment gains.
Many of the new jobs in the service-producing sector are
in high-wage industries, including motion pictures, business
services (which includes computer software and consulting), and
engineering and management consulting. Much of the growth in
wholesale trade is related to foreign trade. Dollar volumes
through California ports were up an estimated 16 percent last
year, considerably above the nationwide gain of about 9 percent.
Job gains in these high-wage service industries are helping to
cushion the ongoing losses in aerospace.
California should not be significantly affected by the
prospective slowing of U.S. economic growth. The State will
benefit from continued strength in business equipment sales,
mainly computers, instruments and other high-tech products, and
from the on-going recoveries overseas. The recent upswing in
Japan, California's largest trading partner, and faster than
expected growth in Western Europe are particularly encouraging
signs for California.
Housing, which normally suffers when interest rates
rise, may experience only a mild, temporary setback in
California. Homebuilding in the State has continued to recover
despite the 2 1/2 percentage-point rise in fixed rate mortgages
since late 1993. Job growth seems to be the key: in a reversal
of traditional roles, the rest of the State's economy is pulling
housing out of the doldrums. Lower interest rates, which should
appear on the horizon later this year, will give homebuilding an
extra boost in the second half of 1995 and throughout 1996.
Permit volume is forecast to rise from an estimated 96,000 units
last year to 109,000 units in 1995 and over 150,000 new homes in
1996.
40
<PAGE>
Following the addition of over 150,000 new jobs in 1994,
1995 should see growth in the 220,000 range, lead by services,
construction and trade. Manufacturing is expected to stabilize,
despite the loss of another 20,000 or more aerospace jobs. In
1996, job growth is projected to exceed 300,000, with gains in
all major sectors of the State's economy, again led by services
and construction.
Personal income is expected to grow 6.6 percent this
year, well above the quake-impacted 1994 estimate of 4.2 percent.
Without the quake-related losses in rental income, growth would
have been 5.1 percent in 1994, and 1995's forecast gain would be
5.7 percent. In 1996, income is expected to grow by 6 percent.
The quality of income is also improving, with wages and
salaries and proprietors' incomes accelerating, while transfer
payments, which include welfare payments, unemployment
compensation and social security, are slowing. During the
recession, transfer payments grew at a double-digit pace.
Inflation in California, which has traditionally run
slightly above the national average, is now lagging the U.S. by a
considerable margin. The California consumer price index (a
weighted average of published indexes for the five-county Los
Angeles and ten-county San Francisco Bay regions) averaged only a
1 1/2 percent rise in 1994, compared to a 2.7 percent estimate
for the nation. In 1995 and 1996, the California price measure
should average 3 percent annual increases, still below the
expected national pace of 3 1/2 percent. Subtracting inflation
from the rise in personal income, real incomes rose 2.7 percent
in 1994, and without the quake the gain would have been 3.5
percent. In both 1995 and 1996, real income growth is expected
to exceed 3 percent.
The Department of Finance Bulletin for February, 1995
reports that the State's unemployment rate rose slightly to 8.2
percent in January from 7.7 percent in December, after dropping
dramatically over the course of in 1994. Heavy rainfall and
widespread flooding throughout the State in mid-January were at
least partially responsible for the weakness in the January 1995
report. Despite this slight rise in January unemployment, the
pattern of economic recovery in California that has been evident
over the last year appears to be continuing.
Retail sales continued to gain momentum throughout 1994.
Sales in October and November were up 8.2 and 9.2 percent,
respectively pacing national sales gains in both months. Sales
in total for 1994 appear destined to show the largest gain since
the recession began in 1990. Motor vehicle registration data
indicate that new car and light truck sales were an important
component of the sales growth-up 6.7 percent in the fourth
41
<PAGE>
quarter of 1994. Annual auto sales growth of 3.7 percent
exceeded any year since 1986.
New home construction continued to improve despite
rising long-term mortgage rates. Residential building permits
for November and December combined were up 13 percent from the
prior-year level. Growth in resales of existing homes slowed
from the strong pace early in the year; however, resales in
October remained at a respectable 470,000 unit annual rate.
Nonresidential construction has also begun to show signs of
improvement. The value of nonresidential construction permits
rose three percent during 1994, the first annual increase since
1988.
Finally, the Mexican currency crisis is expected to have
some mild dampening effect on the California economy; however, it
should not endanger the recovery. The peso's devaluation will
make California exports much more expensive in Mexican markets.
Although the economic impact of this is unknown, an export
reduction of 20 percent would reduce trade by approximately $1.5
billion. This represents less than two percent of all exports
through California ports. San Diego, however, is likely to be
more severely affected due to substantial reductions in cross-
border traffic. Although the long-run impacts of the devaluation
are unclear, the fundamentals of the Mexican economy are much
stronger than during the last crisis twelve years ago.
Orange County Bankruptcy
On December 6, 1994, Orange County, California (the
"County"), together with its pooled investment funds (the
"Pools") filed for protection under Chapter 9 of the federal
Bankruptcy Code, after reports that the Pools had suffered
significant market losses in their investments, causing a
liquidity crisis for the Pools and the County. More than 180
other public entities, most of which, but not all, are located in
the County, were also depositors in the Pools. The County has
reported the Pools' loss at about $1.69 billion, or about 23% of
their initial deposits of approximately 7.5 billion. Many of the
entities which deposited moneys in the Pools, including the
County, faced interim and/or extended cash flow difficulties
because of the bankruptcy filing and may be required to reduce
programs or capital projects.
On May 2, 1995, the Bankruptcy Court approved a
settlement agreement covering claims of the other participating
entities against the County and the Pools. Most participants
have received in cash 80% (90% for school districts) of their
Pools' investment; the balance is to be paid in the future. The
County succeeded in deferring, by consent of the holders thereof,
until June 30, 1996, the repayment of $800 million of short-term
42
<PAGE>
obligations due in July and August, 1995; these notes are,
however, considered to be in default by Moody's and S&P. On
June 27, 1995, County voters turned down a proposal for a
temporary 0.5% increase in the local sales tax to replace
revenues lost after the Pools' investment losses. The County is
now in the process of developing an alternative financial plan.
The State has no existing obligation with respect to any
outstanding obligations or securities of the County or any of the
other participating entities. However, in the event the County
is unable to maintain County administered State programs because
of insufficient resources, it may be necessary for the State to
intervene, but the State cannot presently predict what, if any,
action may occur. The Legislature is considering the County's
new financial plan and a number of other proposals relating to
the County bankruptcy, including possible State oversight of
County finances. None of the proposals presently anticipate any
direct State financial support of the County.
Litigation
The State is presently involved in certain legal
proceedings that, if decided against the State, may require the
State to make significant future expenditures or may impair
future revenue sources.
CONNECTICUT PORTFOLIO
The following is based on information obtained from an
Official Statement, dated March 22, 1995, relating to
$439,150,000 State of Connecticut General Obligation Bonds (1995
Series A).
The Governor's Recommended Budget For 1995-96 and 1996-97
The Governor's Recommended Biennial Budget for fiscal
year 1995-1996 anticipates General Fund expenditures of $8,489.7
million and General Fund revenues of $8,495.3 million. After
deducting $2.6 million for the anticipated carry-forward deficit
from fiscal year 1994-95, the estimated surplus for fiscal year
1995-96 is $3 million. For fiscal year 1996-97, the Governor's
Recommended Budget anticipates General Fund expenditures of
$8,617.2 million and General Fund revenue of $8,629.9 million
resulting in a projected surplus of $12.7 million. In accordance
with Section 4.30a of the Connecticut General Statutes these
surpluses will be deposited into the Budget Reserve Fund.
Pursuant to Article 28 of the amendments to the
Constitution of the State of Connecticut and Section 2-33a of the
Connecticut General Statutes, the Governor's Recommended Budget
for the biennium remains within the limits imposed by the
43
<PAGE>
expenditure cap. For fiscal year 1995-96 and for fiscal year
1996-97, permitted growth in capped expenditures is 3.59% and
3.71%, respectively. The Recommended Budget is $126.2 million
below the expenditure cap in fiscal year 1995-96 and $246.6
million below the expenditure cap in fiscal year 1996-97.
The Governor's Recommended Budget calls for a lower
income tax rate of 3% to be applied to a filer's first portion of
taxable income with the remainder to be taxed at the current rate
of 4.5%. This change is retroactive to January 1, 1995 and for
joint filers the new 3% rate will apply to the first $12,000 of
taxable income. By January 1, 1997, when the Governor's
recommended changes are fully implemented, for joint filers the
new 3% rate will apply to the first $30,000 of taxable income.
After full implementation 43% of Connecticut's taxpayers will pay
exclusively at the new 3% rate. In addition, the Governor is
proposing to phase down the Corporation Business Tax beginning
January 1, 1997 from 10.5% to 8% by January 1, 1999. These two
changes, when combined with other miscellaneous revenue
modifications, are expected to result in a $218 million revenue
loss in fiscal year 1995-96 and a $343 million revenue loss in
fiscal year 1996-97.
In order to achieve a balanced budget, the Governor, has
recommended expenditure reductions from estimated current
services of approximately $1,020 million in fiscal year 1995-96
and an additional $632 million in fiscal year 1996-97. The
Governor's budget proposes significant changes to the welfare
system aimed at promoting economic self-sufficiency. These
include permitting recipients to earn more before eliminating
their benefits, imposing an 18 month time limit for receipt of
benefits, and reducing the Aid to Families with Dependent
Children ("AFDC") payment levels with no additional benefits for
additional children. In fiscal year 1995-96 these changes will
reduce AFDC expenditures by $36 million from fiscal year 1994-95
and General Assistance expenditures by $27 million. Included in
the Governor's budget is a restructuring of the numerous
categorical grants to municipalities. The Education Cost Sharing
grant, the state's largest, will be consolidated with other
education related grants. Overall, the Governor's budget pares
back 95% of the projected increase in education grants to towns.
The Governor's budget also proposes to cut in half, to $500
million, the amount of bonds annually authorized by the state to
rein in debt service costs.
1994-1995 Adopted Budget
The Governor's Recommended Budget also calls for the
reissuance of a portion of the fiscal year 1995-96 Economic
Recovery Fund payment and extending the payment over three
additional years. This change will decrease the fiscal year
44
<PAGE>
1995-96 payment from $328.1 million to $91.9 million and
increases the fiscal year 1996-97 payment from zero to $86.6
million. The revision will result in a projected additional
interest expense of $28.8 million over the period.
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 the biennium commencing July 1,
1993. The budget adopted by the General Assembly for fiscal year
1994-95 estimates General Fund expenditures of $8,377.3 million
and General Fund revenues of $8,374.7 million.
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
statutory spending cap limits the growth of expenditures to
either (1) the average of the annual increase in personal income
in the State or (2) the percentage increase in inflation, unless
the Governor declares an emergency or the existence of
extraordinary circumstances and at least three-fifths of the
numbers of each house of the General Assembly vote to exceed such
limits for the purposes of each emergency or extraordinary
circumstances. Expenditures for the payment of bonds, notes and
other evidences of indebtedness are excluded from the
constitutional and statutory definitions of general budget
expenditures. For fiscal 1993-94 and for fiscal 1994-95,
permitted growth-in capped expenditures was 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.
1994-95 General Fund Operations
Pursuant to 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 February 1, 1995 letter indicated a
General Fund deficit of $174.1 million. Subsequently, on
February 15, 1995, the Governor released his recommended budget
for the upcoming biennium. As part of that recommendation, the
Governor included a plan to substantially reduce this deficit
primarily through legislative action to reinstate State taxes on
hospital patient services effective February 1, 1995, estimated
to be $86.7 million from the gross earnings tax and $45 million
from the sales tax, and by legislative changes to the tax levied
in connection with underground fuel tanks estimated to produce
$13.5 million in revenues to the general fund. Based on the
45
<PAGE>
assumption such action would be taken, the Comptroller's monthly
report of March 1, 1995 reflects a deficit of $2.6 million. The
General Assembly has not yet adopted the Governor's plan and the
Governor is currently exploring alternative actions including
potential legislative changes.
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 non-agricultural employment. Non-manufacturing
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. In the past ten years, 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 75% 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.
46
<PAGE>
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, recent 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.
Connecticut has no constitutional limit on its power to
issue obligations or incur indebtedness other than that it may
only borrow for public purposes. In general, Connecticut has
borrowed money through the issuance of general obligation bonds
for the payment of which the full faith and credit of the State
are pledged. There are no express statutory provisions
establishing any priorities in favor of general obligation
bondholders over other valid claims against Connecticut.
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
The following is based on information obtained from an
Official Statement, dated November 30, 1994, relating to
$600,000,000 State of New Jersey Tax and Revenue Anticipation
Notes, Series Fiscal 1995A.
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. Between 1980 and 1990 the annual population growth
rate was .49% and between 1990 and 1993 the growth rate
accelerated to .59%. While this rate of growth compared
favorably with other Middle Atlantic States, it 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.
47
<PAGE>
Total personal income in New Jersey stood at $204.1
billion for 1992 and increased to $210.6 billion for 1993.
Personal income increased 3.2% between 1992 and 1993 but was
below the national rate of 4.4%. 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 1993, the State ranked second among all states
in per capita personal income ($26,732).
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). 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 nine months 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 the first nine months of 1994, relative to the same
period in 1993, significant job growth took place in services
(3.5%) and construction (5-7%), more moderate growth took place
in trade (1.9%), transportation and utilities (1.2%) and
finance/insurance/real estate (1.4%), while manufacturing and
government declined (by 1.5% and 0.1%, respectively). The net
result was a 1-6% increase in average employment during the first
nine months of 1994 compared to the first nine months of 1993.
Just as New Jersey was hurt by the national recession,
evidence of the State's improving economy can be found in
increased homebuilding, and other areas of construction activity,
rising consumer spending for new cars and light trucks,
substantial new job creation and the decline in the unemployment
rate.
Total construction contracts awarded in New Jersey rose
by 8.6% in 1993 compared with 1992. Nonbuilding construction
awards increased approximately 4% in the first eight months of
1994 compared with the same period in 1993. In addition, new
passenger car registrations issued during 1993 were up 12% in New
48
<PAGE>
Jersey from a year earlier. Registrations of new light trucks
and vans (up to 10,000 lbs.) advanced strongly in 1993 and jumped
nearly 30% during the first eight months of 1994 period relative
to the same period in 1993.
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. The State
Constitution additionally provides that 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, 1995, 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 $688.4 million. Such balance
was $1.4 million for the 1992 fiscal year, $760.8 million for the
1993 fiscal year and $937.4 million for the 1994 fiscal year.
There are 567 municipalities and 21 counties in New
Jersey. During 1990, 1991, 1992 and 1993 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 1993. No New Jersey municipality or county has
defaulted on the payment of interest or principal on any
outstanding debt obligation since the 1930's.
The Local Authorities Fiscal Control Law provides for
State supervision of the fiscal operations and debt issuance
practices of local financing authorities. The Local Authorities
Fiscal Control law applies to all autonomous public bodies
created by counties or municipalities empowered to issue bonds,
impose facility or service charges, or levy taxes in their
districts. This encompasses most autonomous local authorities
(sewerage, municipal utilities, parking, pollution control,
49
<PAGE>
improvement, etc.) and special taxing districts (fire, water,
etc.).
As of June 30, 1993, there were 200 locally created
authorities with a total outstanding capital debt of
approximately $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.
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; (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; (i) the adequacy of
Medicaid reimbursement for services rendered by doctors and
dentists to Medicaid eligible children; and (j) the
constitutionality of annual A-901 hazards and solid waste
licensure renewals fees collected by the Department of
Environmental Protection and Energy.
VIRGINIA PORTFOLIO
The following is based on information obtained from an
Official Statement, dated November 17, 1994, relating to
219,390,000 Commonwealth of Virginia General Obligation Bonds,
Series 1994.
50
<PAGE>
Economic Climate
The Commonwealth of Virginia is the twelfth most
populous state in the nation, with approximately 6,491,000
residents. In 1993 its population density was 163 persons per
square mile, compared with 72 persons per square mile for the
United States.
The Commonwealth is made up of many 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, and the possibility that military facilities
in Virginia will be closed or reduced, could lead to some
structural changes in two of Virginia's local economies (Northern
Virginia and Norfolk-Virginia Beach-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.
According to the U.S. Department of Commerce, Virginians
received over $140 billion in personal income in 1993,
representing an increase of 83.7% over 1984 and greater than the
national gain of 74.4% for the same period. In 1993, Virginia had
per capita income of $21,634, the highest of the Southeast region
and greater than the national average of $20,817. Virginia's per
capita income rose from 94% to 104% of the national average from
1970 to 1993. However, Virginia per capita personal income in
1990 and 1992 grew at a lower rate than the U.S. average. Much
of Virginia's per capita income gain in the last decade has been
due to the continued strength of the federal government and
manufacturing sectors.
Virginia's economy remains relatively strong and
diversified despite the current economic slowdown. Services, the
largest employment sector, accounts for 27.3% of nonagricultural
employment, and has increased 13% from 1989-1993, compared to
2.0% growth in total nonagricultural employment in Virginia
during that same period. Manufacturing is also a significant
employment sector, accounting for 13.9% of nonagricultural
employment in 1993. The industries with the greatest
manufacturing employment are transportation equipment, textiles,
food processing, printing, electric and electronic equipment,
apparel, chemicals, lumber and wood products, industrial
machinery and equipment and furniture. Employment in the
manufacturing sector decreased 5.8% from 1989-1993.
51
<PAGE>
Virginia generally has one of the lowest unemployment
rates in the nation, according to statistics published by the
U.S. Department of Labor. During 1993, an average of 5% of
Virginia's citizens were unemployed as compared with the national
average which was 6.8%.
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 Virginia
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.
Financial Condition
The Constitution of Virginia limits the ability of the
Commonwealth to create debt. The Constitution requires the
Governor to ensure that expenses do not exceed total revenues
anticipated plus fund balances during the period of two years and
six months following the end of the General Assembly session in
which the appropriations are made. An amendment to the
Constitution, effective January 1, 1993, established the Revenue
Stabilization Fund. The Revenue 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.
Tax-supported debt of Virginia 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 Virginia. Virginia may fund
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 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.
52
<PAGE>
Virginia has maintained a high level of fiscal stability
for many years due in large part to conservative financial
operations and diverse sources of revenue. In fiscal year 1994,
revenues increased 6% from 1993 while total expenditures
increased by 4.5%. Revenues exceeded expenditures by $731.2
million, an increase of 20% over fiscal year 1993. The total
general fund balance increased from $331.8 million in fiscal year
1993 to $518.7 million in fiscal year 1994.
Litigation
In Davis v. Michigan (decided March 28, 1989), the
United States Supreme Court ruled unconstitutional states'
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. In a Special Session, the Virginia
General Assembly on July 9, 1994, passed emergency legislation to
provide payments to federal retirees in settlement of the
retirees' claims as a result of Davis v. Michigan. The total
amount of authorized appropriations was $340 million payable
through March 31, 1999. Although some retirees agreed to the
settlement, other retirees continued the suit. On September 13,
1995, the Virginia Supreme Court decided that the retirees are
entitled to full restitution with interest of all taxes paid for
the years 1985-1988. The estimated potential financial impact on
the Commonwealth based on its review of claims for refunds by
federal pensioners (including interest payable calculated as of
December 31, 1993) was approximately $707.5 million.
FLORIDA PORTFOLIO
The following is based on information obtained from an
Official Statement, dated April 11, 1995, relating to
$150,000,000 State of Florida Full Faith and Credit Department of
Transportation Right-of-Way Acquisition and Bridge Construction
Bonds, Series 1995.
Economic Climate
As of April 1, 1993 Florida was the fourth most populous
state in the nation 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%.
53
<PAGE>
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
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 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. In addition, according to data
available as of April 11, 1995, property income in Florida
exceeded 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 total 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 for 1994 was 6.5% as compared to
the U.S. average of 6.1% for the same year. A significant reason
for the improvement in Florida's employment rate was 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.
54
<PAGE>
Fiscal Matters
In December 1992 the State legislature 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 of $159 million during
fiscal year 1994-95 will be generated as a result of increased
economic activity due to Hurricane Andrew.
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
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 were $152.4 million.
In fiscal year 1994-95, the available general revenue
working capital and budget stabilization funds were 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) represents 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 were 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
55
<PAGE>
estimated revenues represents 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 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 year1 (397 days in the case of the New Jersey
_________________________
1Which maturity, pursuant to Rule 2a-7, may extend to 397
days.
56
<PAGE>
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 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 California
Portfolio, the Connecticut Portfolio, the New Jersey Portfolio,
the Virginia 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;2
_________________________
2
To the extent that these restrictions are more permissive
than the provisions of Rule 2a-7 as it may be amended from
time to time, the Portfolio will comply with the more
restrictive provisions of Rule 2a-7.
57
<PAGE>
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 illiquid
investments,3 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)
_________________________
3As a matter of operating policy, each Portfolio will limit
its investment in illiquid securities to 10% of its net
assets.
58
<PAGE>
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 "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. WILLIAMS4 , 64, Chairman, is Chairman of the
Board of Directors of Alliance Capital Management Corporation
("ACMC")5 , sole general partner of the Adviser with which he has
been associated since prior to 1991.
JOHN D. CARIFA*, 51, is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1991.
_________________________
4An "interested person" of the Fund as defined in the Act.
5For 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.
59
<PAGE>
SAM Y. CROSS, 69, 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, 58, is President of Middleton Place
Foundation with which he has been associated since prior to 1991.
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., 64, 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 1991. His address is 2 Hekma Road, Greenwich, CT
06831.
ELIZABETH J. McCORMACK, 74, is an Associate of
Rockefeller Family and Associates (philanthropic organization)
and has been since prior to 1991. 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 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, 52, is an independent consultant. He
was formerly President of The Common Fund (investment management
for educational institutions) with which he had been associated
since prior to 1991. His address is 65 South Gate Lane,
Southport, Connecticut 06490.
SHELBY WHITE, 58, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.
Officers
RONALD M. WHITEHILL - President, 58, is a Senior Vice
President of ACMC and President 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 1991.
JOHN R. BONCZEK - Senior Vice President, 36, is a Vice
President of ACMC with which he has been associated since prior
to 1991.
60
<PAGE>
KATHLEEN A. CORBET - Senior Vice President, 36, 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 1991.
ROBERT I. KURZWEIL - Senior Vice President, 45, 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 1991.
WAYNE D. LYSKI - Senior Vice President, 55, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1991.
PATRICIA NETTER - Senior Vice President, 45, is a Vice
President of ACMC with which she has been associated since prior
to 1991.
RONALD R. VALEGGIA - Senior Vice President, 49, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1991.
DREW BIEGEL - Vice President, 45, is a Vice President of
ACMC which he has been associated with since prior to 1991.
JOHN F. CHIODI, Jr. - Vice President, 30, is a Vice
President of ACMC with which he has been associated since prior
to 1991.
DORIS T. CILIBERTI - Vice President, 32, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1991.
WILLIAM J. FAGAN - Vice President, 34, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1991.
JOSEPH R. LASPINA - Vice President, 36, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1991.
LINDA D. NEIL - Vice President, 36, 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 1991.
RAYMOND J. PAPERA - Vice President, 40, is a Vice
President of ACMC with which he has been associated since prior
to 1991.
61
<PAGE>
PAMELA F. RICHARDSON - Vice President, 43, is a Vice
President of ACMC with which she has been associated since prior
to 1991.
EDMUND P. BERGAN, Jr. - Secretary, 46, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1991.
MARK D. GERSTEN - Treasurer and Chief Financial Officer,
46, is a Senior Vice President of Alliance Fund Services, Inc.
("AFS") and AFD with which he has been associated since prior to
1991.
JOSEPH J. MANTINEO - Controller, 37, is a Vice President
of AFS with which he has been associated since prior to 1991.
As of October 16, 1996, the Trustees and officers as a
group owned less than 1% of the shares of each Portfolio.
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, 1996, the
aggregate compensation paid to each of the Trustees during
calendar year 1995 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.
62
<PAGE>
Total Number
of Funds in
the Alliance
Total Complex,
Compensation Including the
From the Fund, as to
Aggregate Alliance Fund which the
Compensation Complex, Trustee is a
Name of Director from the Including the Director or
of the Fund Fund Fund Trustee
Dave H. Williams $ -0- $ -0- 6
John D. Carifa $ -0- $ -0- 50
Sam Y. Cross $5,035 $ 14,250 3
Charles H.P. Duell $5,035 $ 15,000 3
William H. Foulk, Jr. $6,929 $ 143,500 31
Elizabeth J. McCormack $4,405 $ 12,000 3
David K. Storrs $5,035 $ 12,000 3
Shelby White $5,035 $ 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") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision and control of the Fund's Board of Directors.
The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1996 of more than $168 billion (of which more than $55 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, 1996,
33 of the FORTUNE 100 companies. As of that date, the Adviser
and its subsidiaries employed approximately 1,450 employees who
operated out of domestic offices and the offices of subsidiaries
in Bombay, Istanbul, London, Paris, Sao Paulo, Sydney, Tokyo,
Toronto, Bahrain, Luxembourg and Singapore. The 51 registered
investment companies comprising more than 100 separate investment
portfolios managed by the Adviser currently have more than two
million shareholders.
63
<PAGE>
Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general 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, 1996,
ACMC, Inc. and Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable, together
with Equitable, owned in the aggregate approximately 57% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of June 30, 1996, approximately 33% and
10% 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 Trustees of the Fund
As of March 1, 1996, AXA and its subsidiaries owned
approximately 63.9% of the issued and outstanding shares of
capital stock of ECI. AXA is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance. The
insurance operations are diverse geographically, with activities
in France, the United States, Australia, the United Kingdom,
Canada and other countries, principally in the Asia Pacific area.
AXA is also engaged in asset management, investment banking,
securities trading, brokerage, real estate and other financial
services activities in the United States, Europe and the Asia
Pacific area. Based on information provided by AXA, as of
March 1, 1996, 42.1% of the issued ordinary shares (representing
53.4% of the voting power) of AXA were owned by Midi
Participations, a French holding company ("Midi"). The shares of
Midi were, in turn, owned 61.4% (representing 62.5% of the voting
power) by Finaxa, a French holding company, and 38.6%
(representing 37.5% of the voting power) by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation (one of
which, Belgica Insurance Holding S.A., a Belgian corporation,
owned 30.8%, representing 33.1% of the voting power). As of
March 1, 1996, 61.1% of the voting shares (representing 73.4% 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 34.7% of the voting shares
representing 40.4% of the voting power), and 25.5% of the voting
shares of Finaxa (representing 16% of the voting power) were
owned by Banque Paribas, a French bank. Including the ordinary
shares owned by Midi, as of March 1, 1996, the Mutuelles AXA
directly or indirectly owned 51% of the issued ordinary shares
64
<PAGE>
(representing 64.7% of the voting power) of AXA. Acting as a
group, the Mutuelles AXA control AXA, Midi and Finaxa.
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 $1.25 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 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, 1994 and 1995, the
Adviser received from the General Portfolio, an advisory fee of
$5,716,406 and $5,696,283, respectively. For the fiscal year
ended June 30, 1996, the Adviser received from the General
Portfolio an advisory fee of $6,072,814 net of voluntary expense
reimbursements for expenses exceeding .95 of 1% of its average
daily net assets.
For the fiscal year ended June 30, 1994, the Adviser
received from the New York Portfolio an advisory fee of $478,247
net of voluntary expense reimbursements for the period July 1,
1993 to October 31, 1993 for expenses exceeding .80 of 1% of the
average daily net assets and for the period November 1, 1993 to
June 30, 1994 for expenses exceeding .85 of 1% of the average
daily net assets. For the fiscal year ended June 30, 1995, the
Adviser received from the New York Portfolio an advisory fee of
$699,193 net of voluntary expense reimbursements for expenses
exceeding .85 of 1% of the average daily net assets. For the
fiscal year ended June 30, 1996, the Adviser received from the
New York Portfolio an advisory fee of $1,172,532 net of voluntary
expense reimbursements for expenses exceeding .85 of 1% of the
average daily net assets.
65
<PAGE>
For the fiscal years ended June 30, 1994, 1995 and 1996,
the Adviser received from the California Portfolio an advisory
fee of $888,473, $1,128,198 and $1,419,915, respectively.
For the fiscal year ended June 30, 1994, the Adviser
received from the Connecticut Portfolio an advisory fee of
$95,528 net of voluntary expense reimbursements for the period
July 1, 1993 to October 31, 1993 for expenses exceeding .70 of 1%
of its 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 net of voluntary expense reimbursements
for expenses exceeding .80 of 1% of its average daily net assets.
For the fiscal year ended June 30, 1996, the Adviser received
from the Connecticut Portfolio an advisory fee of $209,039 net of
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 net of 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 net of voluntary expense reimbursements for expenses
exceeding .70 of 1% 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 fiscal year ended June 30, 1996, the
Adviser received from the New Jersey Portfolio an advisory fee of
$206,856 net of voluntary expense reimbursements for expenses
exceeding .80 of 1% of its average daily net assets for the
period July 1, 1995 to March 3,1996 and from March 4, 1996 to
June 30, 1996 for expenses exceeding .85 of 1% of its average
daily net assets.
For the period October 25, 1994 (commencement of
operations) to June 30, 1995 the Adviser received no advisory fee
from the Virginia Portfolio net of voluntary expense
reimbursements for the period October 25, 1994 for all expenses,
for the period October 26, 1994 to May 8, 1995 for expenses
exceeding .40 of 1% of the average daily net assets, for the
period May 9, 1995 to May 31, 1995 for expenses exceeding .50 of
1% of the average daily net assets and for the period June 1,
1995 to June 30, 1995 for expenses exceeding .60 of 1% of the
average daily net assets. For the fiscal year ended June 30,
1996, the Adviser received from the Virginia Portfolio an
66
<PAGE>
advisory fee of $187,282 net of voluntary expense reimbursements
for the period July 1, 1995 to July 9, 1995 for expenses
exceeding .60 of 1% of the average daily net assets, for the
period July 10, 1995 to September 17, 1995 for expenses exceeding
.70 of 1% of the average daily net assets and for the period
September 18, 1995 to June 30, 1996 for expenses exceeding .80 of
1% of the average daily net assets.
For the period July 28, 1995 (commencement of
operations) to June 30, 1996, the Adviser received no advisory
fee from the Florida Portfolio net of voluntary expense
reimbursements for the period July 28, 1995 to September 10, 1995
for all expenses, for the period September 11, 1995 to October
22, 1995 for expenses exceeding .20 of 1% of the average daily
net assets, for the period October 23, 1995 to January 2, 1996
for expenses exceeding .40 of 1% of the average daily net assets,
for the period January 3, 1996 to March 3, 1996 for expenses
exceeding .60 of 1% of the average daily net assets and for the
period March 4, 1996 to June 30, 1996 for expenses exceeding .65
of 1% of the 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
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,
1994, 1995 and 1996, the Adviser received $104,500, $112,500 and
$109,000 respectively, from the General Portfolio; $83,800,
$93,400 and $95,000 respectively, from the New York Portfolio;
$84,500, $94,100 and $95,500 respectively, from the California
Portfolio; $82,800, $91,700 and $92,500 respectively, from the
Connecticut Portfolio; and $51,917 from the New Jersey Portfolio
67
<PAGE>
for the period February 7, 1994 (commencement of operations) to
June 30, 1994 and for the fiscal years ended June 30, 1995 and
1996, $91,500 and $92,500, respectively. For the fiscal period
October 25, 1994 (commencement of operations) to June 30, 1995,
the Adviser received $47,000 from the Virginia Portfolio. For
the fiscal year ended June 30, 1996, the Adviser received $92,500
from the Virginia Portfolio. For the period July 28, 1995
(commencement of operations) to June 30, 1996, the Adviser
received $46,000 from the Florida 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, 1994, 1995 and 1996, broker-dealers were reimbursed
$540,747, $360,255 and $462,107, respectively, by the General
Portfolio; $77,807, $33,165 and $84,873, respectively, by the New
York Portfolio; $43,047, $83,891 and $94,952, respectively, by
the California Portfolio; $26,041, $21,142 and $31,442,
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 years ended
June 30, 1995 and 1996, $4,864 and $10,091, respectively, from
the New Jersey Portfolio; for the period October 25, 1994
(commencement of operations) to June 30, 1995 $26,560 from the
Virginia Portfolio and for the fiscal year ended June 30, 1996,
$65,803 from the Virginia Portfolio; and for the period July 28,
1995 (commencement of operations) to June 30, 1996, $52,469 from
the Florida Portfolio.
The Advisory Agreement became effective on July 22,
1992. Continuance of the Advisory Agreement until June 30, 1997
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 any direct or indirect financial interest in the Agreement or
any related agreement, at a meeting called for that purpose on
June 3, 1996.
The Advisory Agreement remains in effect from year to
year provided that such continuance is specifically approved at
68
<PAGE>
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 Adviser a 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
shareholders.
During the fiscal year ended June 30, 1996, the General
Portfolio made payments to the Adviser for expenditure under the
Agreement in amounts aggregating $3,038,881 which constituted .25
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 $3,227,246. Of the $6,266,127 paid
69
<PAGE>
by the General Portfolio and the Adviser under the Agreement,
$93,000 was spent on the printing and mailing of prospectuses for
persons other than current shareholders and $6,173,127 for
compensation to dealers.
During the fiscal year ended June 30, 1996 the New York
Portfolio made payments to the Adviser for expenditures under the
Agreement in amounts aggregating $416,340 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 $971,136. Of the $1,387,476 paid by
the New York Portfolio and the Adviser under the Agreement,
$24,000 was spent on the printing and mailing of prospectuses for
persons other than current shareholders and $1,363,476 for
compensation to dealers.
During the fiscal year ended June 30, 1996 the
California Portfolio mad payments to the Adviser for expenditure
under the Agreement in amounts aggregating $681,560 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 $741,187. Of the
$1,422,747 paid by the California Portfolio and the Adviser under
the Agreement, $24,000 was spent on the printing and mailing of
prospectuses for persons other than current shareholders and
$1,398,747 for compensation to dealers.
During the fiscal year ended June 30, 1996, the
Connecticut Portfolio made payments to the Adviser for
expenditure under the Agreement in amounts aggregating $127,586
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 $305,601. Of the
$433,187 paid by the Connecticut Portfolio and the Adviser under
the Agreement, $3,000 was spent on printing and mailing of
prospectuses for persons other than current shareholders and
$430,187 for compensation of dealers.
During the fiscal year ended June 30, 1996, the New
Jersey Portfolio made payments to the Adviser for expenditure
under the Agreement in amounts aggregating $135,364 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 $366,031. Of the
$501,395 paid by the New Jersey Portfolio and the Adviser under
the Agreement, $13,000 was spent on printing and mailing of
70
<PAGE>
prospectuses for persons other than current shareholders and
$488,395 for compensation of dealers.
During the fiscal year ended June 30, 1996, the Virginia
Portfolio made payments to the Adviser for expenditure under the
Agreement in amounts aggregating $125,360 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 $281,704. Of the $407,064 paid by
the Virginia Portfolio and the Adviser under the Agreement,
$11,000 was spent on printing and mailing of prospectuses for
persons other than current shareholders and $396,064 for
compensation of dealers.
For the period July 28, 1995 (commencement of
operations) to June 30, 1996 the Florida Portfolio made payments
to the Adviser for expenditure under the Agreement in amounts
aggregating $86,511 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 $278,413. Of the $364,924 paid by the Florida
Portfolio and the Adviser under the Agreement, $45,000 was spent
on printing and mailing of prospectuses for persons other than
current shareholders and $319,924 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 other
depository 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.
71
<PAGE>
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, 1997 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 3, 1996.
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 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
72
<PAGE>
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.
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 with the Fund
Your account number as registered 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)
73
<PAGE>
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.
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 your
designated 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
74
<PAGE>
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
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 subsequent to the opening
of your Fund account, contact the Fund by telephone or mail.
There is no separate charge for the 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
75
<PAGE>
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.
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
monies become 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
76
<PAGE>
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.
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 Fund Services,
Inc., 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.
77
<PAGE>
Periodic Distribution Plans. Without affecting your
right to use any of the methods of redemption described above, by
checking 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 has the right to close out an account if it has
a zero balance on December 31 and no account activity for the
first six months of the subsequent 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 above or through instructions given to a financial
intermediary.
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 holiday
closings), 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.
78
<PAGE>
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 days
or 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
principal amount can be recovered by exercising the security's
79
<PAGE>
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
80
<PAGE>
earned by each 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.
81
<PAGE>
New York Portfolio. Shareholders of the New York Portfolio who
are individual residents of New York are not subject to the New
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 New
Jersey 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
82
<PAGE>
portfolio invested in U.S. Government Securities and Florida
municipal securities on December 31 of any year. Exempt-interest
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 one
dealer, 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,
1994, 1995 and 1996, 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.
83
<PAGE>
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
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.
At October 16, 1996, there were 2,306,841,898 shares of
beneficial interest of the Fund outstanding. Of this amount
1,202,753,511 were for the General Portfolio;358,126,577 were for
the New York Portfolio; 351,271,233 were for the California
Portfolio; 94,600,382 were for the Connecticut Portfolio;
105,694,299 were for the New Jersey Portfolio; 97,200,249 were
for the Virginia Portfolio; and 97,195,647 were for the Florida
Portfolio. To the knowledge of the Fund the following persons
owned of record and no person owned beneficially, 5% or more of
the outstanding shares of the Portfolio as of October 16, 1996:
84
<PAGE>
No. of % of
Name and Address Shares Class
General Portfolio:
Robert W. Baird & Co, as Agent, 179,664,679.4400 14.94%
Omnibus A/C for Exclusive
Benefit of Customers
First Wisconsin Building
777 East Wisconsin Avenue
Milwaukee, WI 53202-5302
Ragen Mackenzie Incorporated 78,447,213.1000 6.52%
as Agent OmniBUS A/C FOR
Exclusive Benefit of Customers
999 3rd Ave. Suite 4300
Seattle, WA 98104-4001
New York Portfolio:
Aspire Partners L.P. 26,043,007.7300 7.27%
c/o Global Directmail Corp.
Attn Richard Leeds
22 Harbor Park Drive
Port Washington, NY 11050-4650
US Clearing Corp./Omnibus Acct. 23,962,581.5000 6.69%
f/b/o Customers
26 Broadway, 12th Floor
New York, N.Y. 10004-1801
California Portfolio:
Stone & Youngberg as Agent 48,386,688.5400 13.77%
Omnibus A/C for Exclusive
Benefit of Customers
50 California St. 35th Floor
San Francisco, CA 94111-4624
US Clearing Corp./Omnibus Acct. 19,532,388.5700 5.56%
f/b/o Customers
26 Broadway, 12th Floor
New York, N.Y. 10004-1801
Connecticut Portfolio:
Eugene B. Shanks 5,108,330.4500 5.40%
30 Hope Farm Road
Greenwich CT 06830-3331
US Clearing Corp./Omnibus Acct. 13,410,006.4500 14.18%
f/b/o Customers
26 Broadway 12th Floor
New York, NY 10004-1801
85
<PAGE>
New Jersey Portfolio:
US Clearing Corp./Omnibus Acct. 8,792,384.2000 8.32%
f/b/o Customers
26 Broadway 12th, Floor
New York, N.Y. 10004-1801
Leon M. Pollack 6,949,097.1600 6.57%
Long Hill Rd.
New Vernon, NJ 07976
Virginia Portfolio:
Scott and Stringfellow 22,911,693.7800 23.57%
Inv. Corp., as Agent,
Omnibus A/C for Exclusive
Benefit of Customers
P.O. Box 1575
Richmond, VA 23218-1575
Davenport & Co. of Virginia Inc. 62,639,395.0200 64.44%
as Agent Ominbus A/C for Exclusive
Benefit of Customers
One James Center
901 E. Cary Street
Richmond, VA 23219-4057
Florida Portfolio:
US Clearing Corp./Omnibus Acct. 42,233,363.6700 43.45%
f/b/o Customers
26 Broadway, 12th Floor
New York, NY 10004-1801
Robert W. Baird & Co, as Agent, 29,326,578.7700 30.17%
Omnibus A/C for Exclusive
Benefit of Customers
First Wisconsin Building
777 East Wisconsin Avenue
Milwaukee, WI 53202-5302
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
86
<PAGE>
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.
Legal Matters. The legality of the shares offered
hereby has been passed upon by Seward & Kissel, 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, 1996 for the General,
New York, California, Connecticut, New Jersey, Virginia and
Florida Portfolios amounted to an annualized yield, after expense
reimbursement, of 2.74%, 2.68%, 2.64%, 2.67%, 2.61%, 2.73% and
2.92%, respectively, equivalent to 2.78%, 2.72%, 2.68%, 2.71%,
2.64%, 2.77% and 2.96%, respectively, when adjusted for the
Fund's daily compounding. Absent expense reimbursement, the
annualized yield for this period for the General Portfolio would
have been 2.69%, equivalent to an effective yield of 2.73%.
Absent expense reimbursement, the annualized yield for this
period for the New York Portfolio would have been 2.16%,
equivalent to an effective yield of 2.18%. Absent expense
reimbursement, the annualized yield for this period for the
California Portfolio would have been 2.56%, equivalent to an
effective yield of 2.59%. Absent expense reimbursement, the
annualized yield for this period for the Connecticut Portfolio
would have been 2.31%, equivalent to an effective yield of 2.34%.
Absent expense reimbursement, the annualized yield for this
period for the New Jersey Portfolio would have been 2.24%,
equivalent to an effective yield of 2.27%. Absent expense
reimbursement, the annualized yield for this period for the
Virginia Portfolio would have been 2.49%, equivalent to an
effective yield of 2.52%. Absent expense reimbursement, the
annualized yield for this period for the Florida Portfolio would
have been 2.49%, equivalent to an effective yield of 2.52%.
87
<PAGE>
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 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, 1996 for the
General Portfolio was 2.74%; for the New York Portfolio, 2.68%;
for the California Portfolio, 2.64%; for the Connecticut
Portfolio, 2.67%; for the New Jersey Portfolio, 2.61%; for the
Virginia Portfolio, 2.73% and for the Florida Portfolio, 2.92%.
The corresponding tax equivalent yield, however, for such period
for the General Portfolio was 4.54%; for the New York Portfolio,
4.78%, computed without taking into account the effects of New
York City income taxes, and 5.02%, computed assuming the effects
of New York City income taxes; for the California Portfolio,
4.91%; for the Connecticut Portfolio, 4.63%; for the New Jersey
Portfolio, 4.62%; for the Virginia Portfolio, 4.80%; and for the
Florida Portfolio, 4.83%. The corresponding tax equivalent
effective yield for such period for the General Portfolio was
4.64%; for the New York Portfolio, 4.90%, computed without taking
into account the effects of New York City income taxes, and
5.15%, computed assuming the effects of New York City income
taxes; for the California Portfolio, 5.03%; for the Connecticut
Portfolio, 4.74%; for the New Jersey Portfolio, 4.73%; for the
Virginia Portfolio, 4.92%; and 4.95% for the Florida Portfolio.
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 39.50%, New York State 7.125%, New
York City 4.40%, California 11.00%, Connecticut 4.50%, New Jersey
6.37%, Virginia 5.75%. The tax equivalent yield is computed by
dividing that portion of the yield of a Portfolio that is tax-
exempt by one minus the applicable marginal income tax rate
(39.60% in the case of the General and Florida Portfolios; the
88
<PAGE>
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 Virginia Portfolios) and
adding the quotient to that portion, if any, of the yield of the
Portfolio that is not tax-exempt.
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.
89
<PAGE>
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 to finance
seasonal working capital needs or as short-term financing in
anticipation of longer term financing.
90
<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 and the pledge, if any, of real and
personal property as security for such payment.
91
<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 (+)
92
<PAGE>
designation. 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.
93
00250185.AG1
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
MUNICIPAL BONDS-57.0%
ALABAMA-1.6%
BIRMINGHAM IDR
(O'Neal Steel) AMT VRDN*
$ 4,745 6/01/08 3.60% $ 4,745,000
DECATUR SOLID WASTE
(Trico Steel Co. Project) AMT VRDN*
14,000 3/01/26 3.60 14,000,000
-----------
18,745,000
ARIZONA-2.2%
PHOENIX IDA
(America West Airlines) AMT VRDN*
10,000 8/01/16 3.70 10,000,000
PHOENIX IDA MFHR
(Mariners Pointe Apts. Project)
Series '93A AMT VRDN*
8,420 10/01/23 3.60 8,420,000
TUCSON IDA MFHR
(Lincoln Garden Apts.) VRDN*
6,750 2/01/06 3.55 6,750,000
-----------
25,170,000
CALIFORNIA-3.4%
ALAMEDA COUNTY IDR
(JMS Partnership Proj.)
Series '95A AMT VRDN*
2,600 10/01/25 3.30 2,600,000
ALAMEDA COUNTY TRAN
10,000 7/05/96 4.00 10,000,519
CALIFORNIA HIGHER ED
Student Loan Revenue Series D-2 PPB*
6,300 7/01/97 3.95 6,300,000
CALIFORNIA PCFA SOLID WASTE
(CR&R Inc. Project)
Series '95A AMT VRDN*
2,000 10/01/10 3.40 2,000,000
INDIO HOUSING AUTH. MFHR
(Smoketree Apts.) Series A VRDN*
1,500 12/01/07 3.25 1,500,000
LANCASTER MFHR
(Household Bank Project)
Series '84A VRDN*
7,200 11/01/04 3.43% 7,200,000
LOS ANGELES TRAN
(Unified School District)
7,500 7/03/96 3.95 7,500,204
OCEANSIDE MFHR
(Riverview Springs Apts.)
Series '90A AMT VRDN*
2,000 7/01/20 3.80 2,000,000
-----------
39,100,723
DELAWARE-0.4%
DELAWARE ECONOMIC DEVELOPMENT AUTHORITY
(Orient Chemical Co.) AMT VRDN*
4,620 11/01/99 3.68 4,620,000
DISTRICT OF COLUMBIA-0.9%
DISTRICT OF COLUMBIA HFA MFHR
(Tyler Housing) AMT VRDN*
10,500 8/01/25 3.80 10,500,000
FLORIDA-0.9%
FLORIDA HOUSING FINANCE AGENCY MFHR
(Lakes of Northdale Project)
Series '84D VRDN*
1,800 6/01/07 3.30 1,800,000
ORANGE COUNTY HFA SFMR
Series '96B AMT PPB*
9,000 4/01/97 3.65 9,000,000
-----------
10,800,000
GEORGIA-0.7%
CARTERSVILLE IDR
(Bliss & Laughlin Steel)
Series '88 AMT VRDN*
3,600 12/01/18 3.70 3,600,000
COLLEGE PARK IDR
(Wynefield I Project) AMT VRDN*
4,000 12/01/16 3.75 4,000,000
-----------
7,600,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
HAWAII-0.1%
HAWAII HOUSING FINANCE &
DEVELOPMENT CORP.
Series '90B VRDN*
$ 1,100 7/01/25 3.65% $ 1,100,000
ILLINOIS-10.5%
CHICAGO AIRPORT REVENUE
(Northwest Airlines Project)
Series B AMT VRDN*
16,400 2/01/24 3.75 16,400,000
CHICAGO AIRPORT REVENUE
(O'Hare International Airport)
Series '88A AMT VRDN*
30,000 1/01/18 3.55 30,000,000
ELMHURST HOSPITAL REVENUE
(Joint Comm. Health Org.)
Series '88 VRDN*
8,920 7/01/18 3.50 8,920,000
FRANKLIN PARK IDR
(Maclean-Fogg Co. Project)
Series '95 AMT VRDN*
5,000 2/01/07 3.60 5,000,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
(Bridgestone Inc.) VRDN*
3,800 7/01/00 3.75 3,800,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
(U.G.N. Inc. Project)
Series '86 AMT VRDN*
3,500 9/15/11 3.75 3,500,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
(Valspar Corp.)
Series '95 AMT VRDN*
6,000 8/01/15 3.55 6,000,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY IDR
(THK America Inc. Project)
Series '91 AMT VRDN*
3,700 7/01/11 3.75 3,700,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY PCR
(Illinois Power Project)
Series '87C AMT VRDN*
7,900 3/01/17 3.75 7,900,000
ILLINOIS HOUSING
DEVELOPMENT AUTHORITY SFMR
(Home Mortgage Program)
Series PT-7 AMT VRDN* AMBAC
29,725 8/01/19 3.75% 29,725,000
LAKE COUNTY SOLID WASTE REVENUE
(Countryside Landfill Inc.)
AMT VRDN*
5,670 4/01/21 3.30 5,670,000
-----------
120,615,000
INDIANA-1.0%
INDIANA EMP. DEVELOPMENT COMM. IDR
(O'Neal Steel) AMT VRDN*
1,000 4/01/10 3.60 1,000,000
RUSHVILLE IDR
(Fujitsu Ten America)
Series '86 AMT VRDN*
3,600 11/01/96 3.60 3,600,000
ST. JOSEPH'S COUNTY
(Edcoat Limited Partnership)
Series '95 AMT VRDN*
5,000 9/01/25 3.55 5,000,000
WESTFIELD IDR
(Porter Project)
Series '89 AMT VRDN*
2,300 12/01/09 3.65 2,300,000
-----------
11,900,000
KANSAS-0.7%
BUTLER COUNTY
(Texaco Refining & Marketing)
Series A AMT VRDN*
6,700 8/01/24 3.85 6,700,000
WICHITA HEALTH REVENUE
(CSJ Health Systems)
Series XXV '85 VRDN*
1,900 10/01/11 3.65 1,900,000
-----------
8,600,000
KENTUCKY-1.5%
BEREA IDR
(Tokico Manufacturing Corp.)
Series '87 AMT VRDN*
3,600 12/01/97 3.85 3,600,000
2
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
BOWLING GREEN IDR
(TWN Fastener Inc.)
Series '88 AMT VRDN*
$ 4,125 3/01/08 3.75% $ 4,125,000
BOWLING GREEN IDR
(Woodcraft Industries, Inc.)
Series '95 AMT VRDN*
5,400 3/01/25 3.55 5,400,000
KENTUCKY HIGHER EDUCATION
(Student Loan Rev.)
Series '91E AMT VRDN*
4,000 12/01/11 3.50 4,000,000
-----------
17,125,000
MAINE-0.6%
ORRINGTON RESOURCE RECOVERY
(Penobscot Energy Project)
Series B AMT VRDN*
6,470 5/01/03 3.55 6,470,000
MICHIGAN-0.4%
MICHIGAN HOUSING
DEVELOPMENT AUTHORITY MFHR
(Woodland Meadows Apts.)
AMT VRDN*
2,000 11/01/13 3.60 2,000,000
MICHIGAN MUNICIPAL BOND AUTHORITY
Series B
2,500 7/03/96 3.80 2,500,092
-----------
4,500,092
MISSOURI-0.8%
MEXICO IDA
(Optec D.D. USA Inc. Project)
Series '87 AMT VRDN*
7,000 10/01/97 3.83 7,000,000
MISSOURI ECONOMIC
DEVELOPMENT AUTHORITY
Export and Infrastructure
Series A AMT VRDN*
2,000 9/01/05 3.75 2,000,000
-----------
9,000,000
NEBRASKA-1.2%
NEBRASKA FINANCE AUTHORITY SFMR
Series '96C AMT PPB*
13,800 5/01/97 3.85% 13,800,000
NEVADA-0.7%
CLARK COUNTY IDB
(Nevada Power Co. Project)
Series '95B AMT VRDN*
8,000 10/01/30 3.60 8,000,000
NEW HAMPSHIRE-0.7%
NASHUA HOUSING AUTHORITY MFHR
(Clocktower Project)
AMT VRDN*
6,058 10/20/28 3.95 6,058,000
NEW HAMPSHIRE IDA
(Connecticut Light & Power Co.)
Series '86 AMT VRDN*
1,900 11/01/16 3.55 1,900,000
-----------
7,958,000
NEW JERSEY-1.3%
JERSEY CITY BAN
15,000 9/27/96 4.00 15,026,001
NEW MEXICO-0.3%
SANTA FE MORTGAGE REVENUE SMFR
(Home Mortgage Revenue)
Series '95B AMT PPB*
3,000 11/15/96 4.00 3,000,000
NORTH CAROLINA-4.2%
BLADEN COUNTY PCR
(BCH Energy Project)
Series '93 AMT VRDN*
18,000 11/01/20 3.70 18,000,000
LENOIR COUNTY IDR PCR
(Carolina Energy Project) AMT VRDN*
30,000 7/01/22 3.70 30,000,000
-----------
48,000,000
OHIO-1.5%
OHIO HOUSING FINANCE AGENCY
Residential Mortgage Revenue Bonds
Series '96 A-3 AMT PPB*
14,000 3/03/97 3.40 14,000,000
3
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
OHIO WATER DEVELOPMENT AUTHORITY
(Ohio Edison Co.) Series A AMT PPB*
$ 3,600 5/01/97 3.80% $3,600,000
-----------
17,600,000
OREGON-2.9%
OREGON HOUSING AND
COMMUNITY SERVICES SFMR
Series '96C AMT
3,700 5/15/97 3.85 3,700,000
PORT OF PORTLAND SPECIAL OBLIGATION
(Portland Bulk Terminals)
Series '96 AMT VRDN*
30,000 10/01/25 3.55 30,000,000
-----------
33,700,000
PENNSYLVANIA-0.8%
PHILADELPHIA GO TRAN
Series '96A
9,000 6/30/97 3.95 9,047,160
RHODE ISLAND-0.3%
RHODE ISLAND HOUSING AND
MORTGAGE FINANCE CORP.
(Homeownership Opportunity)
Series 19D AMT PPB*
4,000 1/30/97 3.55 4,000,000
SOUTH CAROLINA-4.0%
BERKELEY COUNTY IDB
(Nucor Corp. Project)
Series '95 AMT VRDN*
19,500 9/01/28 3.65 19,500,000
BERKELEY COUNTY IDB
(Nucor Corp. Project)
Series '96A AMT VRDN*
10,000 3/01/29 3.65 10,000,000
LAURENS COUNTY IDR
(Nicca USA Project) AMT VRDN*
8,500 4/01/09 4.10 8,500,000
SOUTH CAROLINA JOBS IDR
(Venture Packaging)
Series '95 AMT VRDN*
7,990 4/01/16 3.55 7,990,000
-----------
45,990,000
SOUTH DAKOTA-1.1%
SOUTH DAKOTA HFA SFMR
(Homeownership Mortgage) Series G
12,100 5/01/97 4.25% 12,130,929
TENNESSEE-0.5%
HAMILTON COUNTY INDUSTRIAL DEVELOPMENT
(Komatsu American Manufacturing)
Series '85 VRDN*
5,400 11/01/05 3.65 5,400,000
TEXAS-5.7%
GREATER EAST TEXAS
STUDENT LOAN REVENUE
Series '95A AMT PPB*
10,650 5/01/97 3.85 10,650,000
GREATER TEXAS STUDENT LOAN REVENUE
Series '96A AMT PPB*
18,800 3/01/97 3.35 18,800,000
GULF COAST IDA
(Gruma Corp. Project) AMT VRDN*
6,850 11/01/09 3.65 6,850,000
HARRIS COUNTY IDR
(Nippon Pigment USA Project)
Series '87 AMT VRDN*
2,500 7/01/02 3.95 2,500,000
SAN ANTONIO IDA
(Gruma Corp. Project) AMT VRDN*
6,150 11/01/09 3.65 6,150,000
TEXAS GO TRAN
Series '95A
20,000 8/30/96 3.93-4.07 20,023,566
-----------
64,973,566
UTAH-2.6%
UTAH HFA SFMR
(Home Mortgage Revenue)
Series '96-2 VRDN*
17,180 7/01/16 3.75 17,180,000
UTAH HFA SFMR
(Home Mortgage Revenue)
Series 2 AMT VRDN*
9,000 7/01/29 3.70 9,000,000
4
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
UTAH HFA SFMR
(Home Mortgage Revenue)
Series 4 AMT VRDN*
$ 3,100 7/01/28 3.60% $ 3,100,000
-----------
29,280,000
WASHINGTON-3.5%
PORT OF PORT ANGELES IDR
(Daishowa America Project)
Series '91 AMT VRDN*
5,700 6/01/06 3.75 5,700,000
PORT OF PORT ANGELES IDR
(Daishowa America Project)
Series '92B AMT VRDN*
6,200 8/01/07 3.75 6,200,000
PORT OF PORT ANGELES IDR
(Daishowa America Project)
Series '92B AMT VRDN*
2,725 12/01/07 3.75 2,725,000
WASHINGTON HFA MFHR
(Arbor Park Project)
Series '94 AMT VRDN*
6,400 10/01/24 3.60 6,400,000
WASHINGTON HFA MFHR
(Heatherstone Apts.)
Series '95 AMT VRDN*
9,800 7/01/25 3.40 9,800,000
WASHINGTON PUBLIC POWER SUPPLY
Electric Revenue Project #1
Series '93 IA2 VRDN*
100 7/01/17 3.35 100,000
WASHINGTON STUDENT
LOAN FINANCE ASSOCIATION
Third Program Series B AMT VRDN*
9,000 12/01/02 3.55 9,000,000
-----------
39,925,000
Total Municipal Bonds
(amortized cost $653,676,471) 653,676,471
COMMERCIAL PAPER-45.6%
ALABAMA-0.5%
PHENIX CITY IDB
(Mead Board Project) AMT
5,500 7/11/96 3.60 5,500,000
ARIZONA-1.6%
SALT RIVER PROJECT
Agricultural Imp. & Power District
7,039 8/26/96 3.45% 7,039,000
SALT RIVER PROJECT
Agricultural Imp. & Power District
11,000 8/16/96 3.50 11,000,000
18,039,000
CALIFORNIA-0.5%
CALIFORNIA PCFA PCR
(Pacific Gas & Electric)
Series '88D AMT
6,000 7/25/96 3.50 6,000,000
COLORADO-2.6%
DENVER AIRPORT REVENUE
Series B AMT
2,700 7/15/96 3.70 2,700,000
DENVER AIRPORT REVENUE
Series B AMT
7,000 8/08/96 3.85 7,000,000
DENVER AIRPORT REVENUE
Series B AMT
20,230 8/07/96 3.95 20,230,000
-----------
29,930,000
FLORIDA-3.9%
FLORIDA LOCAL GOVERNMENT COMM.
(Assoc. of Counties)
8,741 8/20/96 3.50 8,740,800
JACKSONVILLE POLLUTION CONTROL
(Florida Power & Light) Series '94
3,200 8/15/96 3.50 3,200,000
JACKSONVILLE POLLUTION CONTROL
(Florida Power & Light) Series '94
4,600 10/17/96 3.65 4,600,000
SARASOTA HOSPITAL REVENUE
(Sarasota Memorial Hospital) Series A
3,200 7/16/96 3.60 3,200,000
5
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
SARASOTA HOSPITAL REVENUE
(Sarasota Memorial Hospital)
Series B
$ 2,500 8/08/96 3.80% $ 2,500,000
SARASOTA HOSPITAL REVENUE
(Sarasota Memorial Hospital)
Series C
5,000 7/26/96 3.55 5,000,000
SARASOTA HOSPITAL REVENUE
(Sarasota Memorial Hospital)
Series C
1,200 8/08/96 3.80 1,200,000
ST. LUCIE PCR
(Florida Power & Light) Series '94A
16,650 8/15/96 3.45 16,650,000
-----------
45,090,800
GEORGIA-2.4%
ATHENS CLARKE IDA
(Rhone-Merieux Inc. Project)
Series '88 AMT
2,900 8/27/96 3.75 2,900,000
GEORGIA MUNICIPAL GAS AUTHORITY
(Southern Portfolio 1 Project)
Series D
7,000 7/18/96 3.55 7,000,000
GEORGIA MUNICIPAL GAS AUTHORITY
(Transco Portfolio 1) Series B
3,000 8/28/96 3.60 3,000,000
GEORGIA MUNICIPAL GAS AUTHORITY
Series '85B
14,950 8/23/96 3.70 14,950,000
-----------
27,850,000
ILLINOIS-1.9%
DECATUR WATER REVENUE
(New South Water Treatment)
Series '85
9,900 7/18/96 3.70 9,900,000
DECATUR WATER REVENUE
(New South Water Treatment)
Series '85
12,000 7/18/96 3.80 12,000,000
-----------
21,900,000
INDIANA-0.3%
SULLIVAN COOPERATIVE FINANCE CORP.
(Hoosier Energy Rural Electric)
Series '85L-6
3,000 10/01/96 3.65% 3,000,000
KANSAS-0.5%
BURLINGTON PCR
(Kansas City Power & Light)
Series '85B
6,000 9/11/96 3.70 6,000,000
MASSACHUSETTS-0.3%
MASSACHUSETTS BAY TRANS. AUTH.
Series B
4,000 7/11/96 3.50 4,000,000
MICHIGAN-1.6%
MICHIGAN BUILDING AUTHORITY AMT
9,200 8/28/96 3.70 9,200,000
MICHIGAN HOUSING DEVELOPMENT
AUTHORITY MFHR
(Housing Revenue Bonds)
Series '88A AMT
4,700 7/12/96 3.40 4,700,000
MICHIGAN HOUSING DEVELOPMENT
AUTHORITY MFHR
(Housing Revenue Bonds)
Series '88A AMT
5,000 7/29/96 3.70 5,000,000
-----------
18,900,000
NEW YORK-7.4%
NEW YORK CITY GO
Series '96
19,000 8/22/96 3.50 19,000,000
NEW YORK MUNICIPAL WATER AUTHORITY
Series '94
7,400 8/08/96 3.70 7,400,000
NEW YORK MUNICIPAL WATER AUTHORITY
Series 3
8,000 7/15/96 3.50 8,000,000
NEW YORK MUNICIPAL WATER AUTHORITY
Series 3
11,500 10/10/96 3.60 11,500,000
6
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
NEW YORK MUNICIPAL WATER AUTHORITY
Series 4
$ 6,500 8/12/96 3.80% $ 6,500,000
NIAGARA COUNTY SOLID WASTE REV. IDA
(American Ref-Fuel Co.)
Series '94B AMT
12,700 7/30/96 3.70 12,700,000
NIAGARA COUNTY SOLID WASTE REV. IDA
(American Ref-Fuel Co.)
Series '94C AMT
4,500 7/26/96 3.55 4,500,000
NIAGARA COUNTY SOLID WASTE REV. IDA
(American Ref-Fuel Co.)
Series '94C AMT
5,000 7/12/96 3.60 5,000,000
NIAGARA COUNTY SOLID WASTE REV. IDA
(American Ref-Fuel Co.)
Series '94C AMT
5,700 8/16/96 3.60 5,700,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY AMT
4,225 9/10/96 3.70 4,225,000
-----------
84,525,000
OHIO-0.3%
OHIO WATER DEVELOPMENT AUTHORITY PCR
(Dusquesne Light Co.) Series '88 AMT
3,000 8/02/96 3.60 3,000,000
PENNSYLVANIA-4.3%
ALLEGHENY COUNTY IDR
(U.S. Steel Environment Imp.)
Series '85
18,300 9/06/96 3.75 18,300,000
CARBON COUNTY
Res. Rec.:(Panther Creek Project)
Series '90A AMT
5,000 8/23/96 3.50 5,000,000
CARBON COUNTY
Res. Rec.:(Panther Creek Project)
Series '90B AMT
5,700 10/18/96 3.75 5,700,000
VENANGO INDUSTRIAL DEVELOPMENT
AUTHORITY
Res. Rec.:(Scrubgrass Project)
Series '93 AMT
6,000 8/23/96 3.50% 6,000,000
VENANGO INDUSTRIAL DEVELOPMENT
AUTHORITY
Res. Rec.:(Scrubgrass Project)
Series '93 AMT
4,200 8/26/96 3.55 4,200,000
VENANGO INDUSTRIAL DEVELOPMENT
AUTHORITY
Res. Rec.:(Scrubgrass Project)
Series '93 AMT
7,400 8/30/96 3.70 7,400,000
VENANGO INDUSTRIAL DEVELOPMENT
AUTHORITY
Res. Rec.:(Scrubgrass Project)
Series '93 AMT
2,750 10/01/96 3.70 2,750,000
-----------
49,350,000
TEXAS-9.6%
AUSTIN UTILITY SYSTEMS
(Travis & Williamson County) Series A
7,000 8/22/96 3.40 7,000,000
BRAZOS RIVER AUTHORITY PCR
(Texas Utility Electric Co.)
Series '94A AMT
2,400 7/29/96 3.40 2,400,000
BRAZOS RIVER AUTHORITY PCR
(Texas Utility Electric Co.)
Series '94A AMT
3,700 8/12/96 3.50 3,700,000
BRAZOS RIVER AUTHORITY PCR
(Texas Utility Electric Co.)
Series '94A AMT
2,000 8/12/96 3.60 2,000,000
BRAZOS RIVER HARBOR NAVIGATION
DISTRICT PCR
(Dow Chemical Project)
Series '88 AMT
5,000 7/19/96 3.65 5,000,000
7
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
BRAZOS RIVER HARBOR NAVIGATION
DISTRICT PCR
(Dow Chemical Project)
Series '88 AMT
$ 8,300 8/13/96 3.75% $ 8,300,000
BRAZOS RIVER HARBOR NAVIGATION
DISTRICT PCR
(Dow Chemical Project) Series '92 AMT
9,860 8/13/96 3.75 9,860,000
DALLAS AREA RAPID TRANSIT
Sales Tax Revenue Series A
10,000 8/26/96 3.45 10,000,000
DALLAS AREA RAPID TRANSIT
Sales Tax Revenue Series A
5,600 8/22/96 3.50 5,600,000
DALLAS AREA RAPID TRANSIT
Sales Tax Revenue Series A
5,000 8/20/96 3.55 5,000,000
DALLAS AREA RAPID TRANSIT
Sales Tax Revenue Series A
8,000 9/10/96 3.65 8,000,000
DALLAS AREA RAPID TRANSIT
Sales Tax Revenue Series A
5,000 9/10/96 3.70 5,000,000
PORT DEVELOPMENT CORP.
(Mitsui Marine Terminal Project)
Series '85A
6,000 8/14/96 3.80 6,000,000
SAN ANTONIO WATER SYSTEMS
Series '95
10,000 7/23/96 3.45 10,000,000
UNIVERSITY OF TEXAS BOARD OF REGENTS
Series A
9,000 8/16/96 3.45 9,000,000
UNIVERSITY OF TEXAS BOARD OF REGENTS
Series A
13,800 10/18/96 3.65% 13,800,000
-----------
110,660,000
UTAH-3.2%
INTERMOUNTAIN POWER AGENCY
Power Supply Revenue Series '85E
8,000 7/19/96 3.50 8,000,000
TOOELE COUNTY WASTE REVENUE
(Rollins Environmental, Inc.)
Series A AMT
16,200 8/21/96 3.75 16,200,000
TOOELE COUNTY WASTE REVENUE
(Rollins Environmental, Inc.)
Series A AMT
12,300 7/09/96 3.75 12,300,000
-----------
36,500,000
VIRGINIA-0.3%
LOUISA PCR
(Virginia Electric & Power Co.)
Series '87
4,000 7/24/96 3.70 4,000,000
WEST VIRGINIA-1.6%
WEST VIRGINIA PUBLIC ENERGY AUTHORITY
(Morgantown Energy Assoc.)
Series '89A AMT
6,500 8/06/96 3.30 6,500,000
WEST VIRGINIA PUBLIC ENERGY AUTHORITY
(Morgantown Energy Assoc.)
Series '89A AMT
10,000 8/22/96 3.50 10,000,000
WEST VIRGINIA PUBLIC ENERGY AUTHORITY
(Morgantown Energy Assoc.)
Series '89A AMT
2,000 10/18/96 3.75 2,000,000
-----------
18,500,000
8
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
WISCONSIN-0.5%
WISCONSIN HEALTH & EDUCATION
FACILITIES
(Alexian Village of Milwaukee)
Series '88A
$ 5,500 7/22/96 3.80% $ 5,500,000
WYOMING-0.6%
SWEETWATER COUNTY PCR
Series '92B
6,305 7/11/96 3.40 6,305,000
PUERTO RICO-1.7%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
10,000 8/09/96 3.65 10,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
9,200 8/21/96 3.65% 9,200,000
-----------
19,200,000
Total Commercial Paper
(amortized cost $523,749,800) 523,749,800
TOTAL INVESTMENTS-102.6%
(amortized cost $1,177,426,271) 1,177,426,271
Other assets less liabilities-(2.6%) (29,409,919)
NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 1,149,938,628
shares outstanding) $1,148,016,352
+ 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.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
GO General Obligation
HFA Housing Finance Agency/Authority
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
PCFA Pollution Control Financing Authority
PCR Pollution Control Revenue
PPB Periodic Put Bond
SFMR Single Family Mortgage Revenue
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
9
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $46,854,539
EXPENSES
Advisory fee (Note B) $ 6,077,761
Distribution assistance and administrative
service (Note C) 3,609,988
Transfer agency (Note B) 1,101,586
Custodian fees 265,308
Registration fees 201,324
Printing 173,281
Audit and legal fees 68,509
Trustees' fees 13,419
Miscellaneous 41,518
Total expenses 11,552,694
Less:expense reimbursement (4,947)
11,547,747
Net investment income 35,306,792
REALIZED AND UNREALIZED GAIN (LOSS)ON INVESTMENTS
Net realized gain on investments 21,901
Net change in unrealized appreciation of investments (17,829)
Net gain on investments 4,072
NET INCREASE IN NET ASSETS FROM OPERATIONS $35,310,864
STATEMENTS OF CHANGES IN NET ASSETS
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1996 JUNE 30,1995
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 35,306,792 $ 31,671,376
Net realized gain (loss) on investments 21,901 (1,793,640)
Net change in unrealized appreciation of
investments (17,829) (3,201,732)
Net increase in net assets from operations 35,310,864 26,676,004
OTHER CAPITAL CONTRIBUTIONS
Total increase -0- 3,218,975
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (35,306,792) (31,671,376)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease) (Note E) (41,279,072) 56,798,166
Total increase (decrease) (41,275,000) 55,021,769
NET ASSETS
Beginning of year 1,189,291,352 1,134,269,583
End of year $1,148,016,352 $1,189,291,352
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 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 seven 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, Alliance Municipal
Trust-Virginia Portfolio and Alliance Municipal Trust-Florida Portfolio. Each
series is considered to be a separate entity for financial reporting and tax
purposes. As a matter of fundamental policy, each Portfolio pursues its
objectives by maintaining a portfolio of high-quality money market securities
all of which, at the time of investment, have remaining maturities of 397 days
or less. 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, 1996, 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. The Adviser also voluntarily agreed to reimburse the Portfolio for
the year ended June 30, 1996 for expenses exceeding .95 of 1% of its average
daily assets. For the year ended June 30, 1996, the reimbursement amounted
$4,947. 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
$621,449 for the year ended June 30, 1996. The Adviser purchased tax and
revenue anticipation notes issued by Orange County, California on July 19, 1995
for $20.85 million.
11
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,
1996, the distribution fee amounted to $3,038,881. 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, 1996, such payments by the
Portfolio amounted to $571,107 of which $109,000 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1996, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1996 the
Portfolio had a capital loss carryforward of $1,912,276, of which $118,636
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,
1996, capital paid-in aggregated $1,149,928,628. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
--------------- ---------------
Shares sold 4,856,711,351 4,443,583,142
Shares issued on reinvestments of dividends 35,306,792 31,671,376
Shares redeemed (4,933,297,215) (4,418,456,352)
Net increase (decrease) (41,279,072) 56,798,166
12
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .029 .028 .018 .020 .034
Net realized and unrealized loss
on investments -0- (.003) -0- -0- -0-
Net increase in net asset value
from operations .029 .025 .018 .020 .034
ADD: CAPITAL CONTRIBUTIONS
Capital Contributed by the Adviser -0- .003 -0- -0- -0-
LESS: DISTRIBUTIONS
Dividends from net investment income (.029) (.028) (.018) (.020) (.034)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURNS
Total investment return based on
net asset value (a) 2.93% 2.83%(b) 1.81% 2.05% 3.48%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $1,148 $1,189 $1,134 $1,016 $914
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements .95% .94% .92% .92% .92%
Expenses, before waivers and
reimbursements .95% .95% .94% .94% .95%
Net investment income (c) 2.90% 2.78% 1.80% 2.02% 3.40%
</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 value during the period, and
redemption on the last day of the period.
(b) The capital contribution by the Adviser had no effect on total return.
(c) Net of expenses reimbursed or waived by the Adviser.
13
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, 1996 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, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
General Portfolio of Alliance Municipal Trust as of June 30, 1996, 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
July 26, 1996
14
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
MUNICIPAL BONDS-84.5%
CALIFORNIA-84.5%
ALAMEDA COUNTY IDB
(Ream Enterprises Project)
Series A AMT VRDN*
$ 1,300 11/01/20 3.30% $ 1,300,000
ALAMEDA COUNTY IDR
(Heat Control Project)
Series '95A AMT VRDN*
4,800 11/01/25 3.30 4,800,000
ALAMEDA COUNTY TRAN
(Board of Education)
5,000 7/05/96 4.00 5,000,260
ALAMEDA COUNTY TRAN
(Unified School District)
4,335 7/05/96 3.58-4.00 4,335,302
ALAMEDA COUNTY TRAN
Series '96
2,600 6/30/97 3.95 2,613,676
CALIFORNIA ECON. DEV.
AUTHORITY IDR
(National R.V. Inc.)
Series '95 AMT VRDN*
4,000 12/01/20 3.45 4,000,000
CALIFORNIA ECON. DEV.
FIN. AUTHORITY
(Inland Empire Venture L.L.C.)
Series '95 AMT VRDN*
2,500 7/01/25 3.45 2,500,000
CALIFORNIA ECON. DEV.
FIN. AUTHORITY
(Valley Plating Works, Inc.)
Series '95 AMT VRDN*
6,100 10/01/20 3.45 6,100,000
CALIFORNIA HFA
(Home Mortgage)
Series '96D AMT PPB*
11,500 4/01/97 3.55 11,500,000
CALIFORNIA PCFA
(Western Waste Industries
Project) Series '94A AMT
VRDN*
9,600 10/01/06 3.10 9,600,000
CALIFORNIA PCFA SOLID WASTE
(Athens Disposal Co. Project)
Series '95 AMT VRDN*
5,000 1/01/16 3.40 5,000,000
CALIFORNIA PCFA SOLID WASTE
(Burrtec Waste Project)
Series A AMT VRDN*
4,000 10/01/02 3.45 4,000,000
CALIFORNIA PCFA SOLID WASTE
(Gilton Solid Waste
Management)
Series '95A AMT VRDN*
$ 2,900 12/01/05 3.40% $ 2,900,000
CALIFORNIA STATEWIDE
COMM. DEV. CORP. IDR
(Howard Leight & Associates)
Series '95B AMT VRDN*
3,500 7/01/20 3.40 3,500,000
CHULA VISTA IDR
(Home Depot Project)
VRDN*
2,900 12/01/10 3.20 2,900,000
CONTRA COSTA COUNTY MFHR
(Park Regency Apts.)
Series '92A AMT VRDN*
8,600 8/01/32 3.60 8,600,000
GRAND TERRACE MFHR
(Mt. Vernon Villas Project)
Series '85A VRDN*
3,535 12/01/11 3.40 3,535,000
LONG BEACH
Res. Rec.: Southeast Fac.
Authority Lease Rev.
Series '95B AMT VRDN*
22,500 12/01/18 3.60 22,500,000
LOS ANGELES COUNTY
GO TRAN
Series '95
10,000 7/01/96 3.65-3.80 10,000,000
LOS ANGELES COUNTY TRAN
(Community College Dist.)
3,000 7/31/96 3.95 3,001,304
LOS ANGELES HOUSING
AUTH. MFHR
(Sand Canyon Villas Project)
Series '89A AMT VRDN*
900 11/01/09 3.40 900,000
LOS ANGELES MFHR
(Poinsettia Apartment Project)
Series '89A AMT VRDN*
5,450 7/01/19 3.20 5,450,000
LOS ANGELES TRAN
(Unified School District)
10,500 7/03/96 3.90-3.95 10,500,306
MARIN COUNTY HOUSING
AUTHORITY MFHR
(Crest Marin ll Apt.)
Series A AMT VRDN*
9,450 10/15/29 3.40 9,450,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
MONROVIA REDEV. AGENCY
(Holiday Inn Hotel Project)
Series '84 VRDN*
$ 4,600 12/01/14 3.85% $ 4,600,000
MORGAN HILL REDEV. AGENCY
(Kent Trust) VRDN*
2,515 12/01/14 4.54 2,515,000
MORGAN HILL REDEV. AGENCY
(Nob Hill Venture
Investors) VRDN*
1,690 12/01/09 5.36 1,690,000
OCEANSIDE MFHR
(Riverview Springs Apts.)
Series '90A AMT VRDN*
15,200 7/01/20 3.80 15,200,000
ORANGE COUNTY HOUSING
AUTHORITY
(Costa Partner
Development) VRDN*
8,300 12/01/09 3.25 8,300,000
ORANGE COUNTY MFHR
(Alicia Viejo Project)
Series '86A AMT VRDN*
290 12/01/16 3.80 290,000
PANAMA BUENA VISTA
(Unified School District
Capital Improvement
Financing Project) VRDN*
5,000 6/01/24 3.25 5,000,000
RIVERSIDE COUNTY GO RAN
(School Financing
Authority) Series '96
4,000 7/17/97 4.05 4,023,040
RIVERSIDE COUNTY GO TRAN
Series '95
10,000 7/01/96 3.40 10,000,000
SACRAMENTO CITY TRAN
(Unified School District)
5,000 11/29/96 3.65 5,006,950
SACRAMENTO COUNTY
GO TRAN
11,500 10/04/96 3.50-3.77 11,529,775
SAN BERNARDINO COUNTY
GO TRAN
Series '95
5,000 7/05/96 3.95 5,000,289
SAN FRANCISCO IDR
(Hoefer Scientific Institute)
Series '92A AMT VRDN*
960 8/01/07 3.80 960,000
SAN JOSE TRAN
(Unified School District)
Series '95
$ 8,883 9/19/96 4.05% $ 8,896,045
SANTA ANA IDR
(Newport Electronics Project)
Series '88A AMT VRDN*
1,500 11/01/18 3.65 1,500,000
SANTA CLARA GO TRAN
(Unified School District)
Series '95
3,000 7/10/96 4.00 3,000,354
SANTA FE SPRINGS IDR
(Metal Center Inc. Project)
Series '89A AMT VRDN*
3,650 7/01/14 3.40 3,650,000
SOUTH COAST TRAN
Series '96A
10,000 6/30/97 4.07 10,064,900
UPLAND COMM. REDEV.
AGENCY MFHR
(Northwoods 156)
Series A VRDN*
4,925 3/01/14 3.80 4,925,000
UPLAND COMM. REDEV.
AGENCY MFHR
(Northwoods 168)
Series B VRDN*
1,460 3/01/14 3.80 1,460,000
Total Municipal Bonds
(amortized cost
$251,597,201) 251,597,201
COMMERCIAL PAPER-19.6%
CALIFORNIA-11.2%
CALIFORNIA PCFA PCR
(Pacific Gas & Electric)
Series '88A AMT
1,500 7/31/96 3.35 1,500,000
CALIFORNIA PCFA PCR
(Pacific Gas & Electric)
Series '88A AMT
1,200 8/08/96 3.40 1,199,838
CALIFORNIA PCFA PCR
(Pacific Gas & Electric)
Series '88D AMT
7,500 7/25/96 3.50 7,500,000
CALIFORNIA PCFA PCR
(Pacific Gas & Electric)
Series '88D AMT
5,395 7/25/96 3.70 5,395,000
2
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
IRVINE ASSESSMENT DISTRICT
Series '85-7
$ 5,000 7/09/96 3.35% $ 5,000,000
LONG BEACH
(Harbor & Terminal
Project) AMT
6,000 7/16/96 3.30 6,000,000
LOS ANGELES MTA
Sales Tax Revenue Series A
2,000 7/25/96 3.50 2,000,000
LOS ANGELES MTA
Sales Tax Revenue Series A
2,000 8/13/96 3.55 2,000,000
SACRAMENTO UTILITY
DISTRICT
Series I
2,637 7/30/96 3.45 2,637,000
33,231,838
PUERTO RICO-8.4%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
6,000 7/26/96 3.55 6,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
$ 6,000 8/16/96 3.60% $ 6,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
3,100 9/11/96 3.65 3,100,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
10,000 8/21/96 3.70 10,000,000
25,100,000
Total Commercial Paper
(amortized cost
$58,331,724) 58,331,838
TOTAL INVESTMENTS-104.1%
(amortized cost
$309,928,925) 309,929,039
Other assets less
liabilities-(4.1%) (12,066,598)
NET ASSETS-100%
(offering and redemption
price of$1.00 per share;
297,886,426 shares
outstanding) $297,862,441
+ 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
GO General Obligation
HFA Housing Finance Agency/Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
MTA Metropolitan Transportation Authority
PCFA Pollution Control Financing Authority
PCR Pollution Control Revenue
PPB Periodic Put Bond
RAN Revenue Anticipation Note
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $10,770,529
EXPENSES
Advisory fee (Note B) $1,419,915
Distribution assistance and
administrative service (Note C) 900,410
Transfer agency (Note B) 194,745
Custodian fees 80,352
Printing 27,473
Registration fees 17,273
Audit and legal fees 10,769
Trustees' fees 3,417
Miscellaneous 10,061
Total expenses 2,664,415
Less: fee waiver (28,398)
2,636,017
Net investment income 8,134,512
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 8,350
Net change in unrealized appreciation of investments (6,990)
Net gain on investments 1,360
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 8,135,872
See notes to financial statements.
4
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 8,134,512 $ 6,199,924
Net realized gain (loss) on investments 8,350 (12,411)
Net change in unrealized appreciation of
investments (6,990) 7,104
Net increase in net assets from operations 8,135,872 6,194,617
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (8,134,512) (6,199,924)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 61,381,700 16,811,556
Total increase 61,383,060 16,806,249
NET ASSETS
Beginning of year 236,479,381 219,673,132
End of year $297,862,441 $236,479,381
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 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 seven 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, Alliance Municipal
Trust-Virginia Portfolio and Alliance Municipal Trust-Florida Portfolio. Each
series is considered to be a separate entity for financial reporting and tax
purposes. As a matter of fundamental policy, each Portfolio pursues its
objectives by maintaining a portfolio of high-quality money market securities
all of which, at the time of investment, have remaining maturities of 397 days
or less. 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, 1996 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. The Adviser also voluntarily agreed to reimburse the Portfolio for
the year ended June 30, 1996 for expenses exceeding .93 of 1% of its average
daily net assets. No reimbursement was required for the year ended June 30,
1996. 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
$144,803 for the year ended June 30, 1996.
6
ALLIANCE MUNICIPAL TRUST - CALIFORNIA 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,
1996, the distribution fee amounted to $709,958 of which $28,398 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, 1996, such payments by the Portfolio amounted to
$190,452 of which $95,500 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1996, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1996, the
Portfolio had a capital loss carryforward of $24,099, of which $11,688 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,
1996, capital paid-in aggregated $297,886,426. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1996 1995
--------------- -------------
Shares sold 1,207,086,940 865,677,866
Shares issued on reinvestments of dividends 8,134,512 6,199,924
Shares redeemed (1,153,839,752) (855,066,234)
Net increase 61,381,700 16,811,556
7
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .029 .027 .018 .020 .032
LESS: DISTRIBUTIONS
Dividends from net investment income (.029) (.027) (.018) (.020) (.032)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURNS
Total investment return based on net
asset value (a) 2.91% 2.78% 1.83% 2.05% 3.26%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $297,862 $236,479 $219,673 $156,200 $121,317
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements .93% .93% .93% .93% .95%
Expenses, before waivers and
reimbursements .94% 1.01% 1.02% 1.02% 1.05%
Net investment income (b) 2.86% 2.75% 1.82% 2.01% 3.18%
</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 value during the period, and
redemption on the last day of the period.
(b) Net of expenses reimbursed or waived by the Adviser.
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, 1996 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, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
California Portfolio of Alliance Municipal Trust as of June 30, 1996, 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
July 26, 1996
9
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
MUNICIPAL BONDS-83.3%
CONNECTICUT-74.6%
BRANFORD GO BAN
$ 4,000 8/22/96 3.28% $4,000,219
CONNECTICUT DEVELOPMENT
AUTHORITY
(Bridgeport Hydraulic Co.
Project)
Series '95 AMT VRDN*
1,000 4/01/35 3.00 1,000,000
CONNECTICUT DEVELOPMENT
AUTHORITY
(Independent Living)
Series'90 VRDN*
8,075 7/01/15 3.35 8,075,000
CONNECTICUT DEVELOPMENT
AUTHORITY
(Rand Whitney Project)
Series '93 AMT VRDN*
1,500 8/01/23 3.10 1,500,000
CONNECTICUT DEVELOPMENT
AUTHORITY
Res. Rec.: (Exeter Energy
Project)
Series '89B
AMT VRDN*
3,700 12/01/19 3.45 3,700,000
CONNECTICUT DEVELOPMENT
AUTHORITY IDR
(International Ice Cream
Project)
Series '86 AMT VRDN*
1,300 12/01/06 3.95 1,300,000
CONNECTICUT DEVELOPMENT
AUTHORITY IDR
(Shelton Inn Ltd. Partnership)
Series '86 AMT VRDN*
3,600 12/01/11 3.80 3,600,000
CONNECTICUT DEVELOPMENT
AUTHORITY IDR
(Zotos International Project)
Series '84 VRDN*
2,985 12/01/04 3.90 2,985,000
CONNECTICUT DEVELOPMENT
AUTHORITY PCR
(Central Vermont Public
Service) Series '85 VRDN*
1,000 12/01/15 3.40 1,000,000
CONNECTICUT DEVELOPMENT
AUTHORITY PCR
(Connecticut Light and
Power Co.)
Series '93A VRDN*
$ 2,800 9/01/28 3.35% $2,800,000
CONNECTICUT DEVELOPMENT
AUTHORITY PCR
(Connecticut Light and
Power Co.)
Series '93B AMT VRDN*
800 9/01/28 3.25 800,000
CONNECTICUT DEVELOPMENT
AUTHORITY PCR
(Connecticut Light and
Power Co.)
Series '96A AMT VRDN*
600 5/01/31 3.25 600,000
CONNECTICUT DEVELOPMENT
AUTHORITY PCR
(Western Mass. Elec. Co.)
Series '93A VRDN*
3,100 9/01/28 3.10 3,100,000
CONNECTICUT GO
Economic Recovery Note
Series '95
1,000 12/15/96 3.70 1,002,433
CONNECTICUT HEFA
(Pomfret School Issue)
Series '95A VRDN*
1,000 7/01/24 3.05 1,000,000
CONNECTICUT SPECIAL
ASSESSMENT UNEMPLOYMENT
COMPENSATION
Series '93C FGIC PPB*
4,000 7/01/96 3.90 4,000,000
CONNECTICUT SPECIAL
ASSESSMENT UNEMPLOYMENT
COMPENSATION
Series '93C FGIC PPB*
5,000 7/01/97 3.90 5,000,000
CONNECTICUT SPECIAL
ASSESSMENT UNEMPLOYMENT
COMPENSATION
Series A
3,000 5/15/97 3.80-3.88 3,008,716
1
PORTFOLIO OF INVESTMENTS (CONT.)
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
CONNECTICUT SPECIAL TAX
OBLIGATION
Series '90-1 VRDN*
$ 4,000 12/01/10 3.20% $4,000,000
DANBURY BAN
2,413 7/08/96 3.48 2,413,100
DANBURY GO BAN
3,000 1/08/97 3.47 3,007,800
EAST LYME GO BAN
Series '95
900 7/30/96 3.80 900,138
EAST LYME GO BOND
Series '95 MBIA
660 8/01/96 3.65 661,142
FAIRFIELD GO BOND
Series '96
860 1/15/97 3.45 871,560
MANCHESTER GO BAN
Series '95
724 7/11/96 3.60 724,006
STAMFORD HFA MFHR
(Morgan Street Project)
Series '94 AMT VRDN*
1,600 8/01/24 3.35 1,600,000
STRATFORD BOND
Series '93 FGIC
2,000 11/01/96 3.60 1,999,330
WATERBURY GO BOND
Series '93 FGIC
300 4/15/97 3.45 301,721
WEST HARTFORD GO BAN
Series '96
3,000 7/18/96 3.30 3,000,039
WESTPORT GO BAN
3,500 10/17/96 3.35 3,500,170
71,450,374
DISTRICT OF COLUMBIA-3.2%
DISTRICT OF COLUMBIA
Series '92 A-2 VRDN*
3,100 10/01/07 3.80 3,100,000
PUERTO RICO-5.5%
PUERTO RICO HIGHWAY &
TRANSPORTATION AUTHORITY
Series X VRDN*
$ 4,100 7/01/99 3.00% $4,100,000
PUERTO RICO INDUSTRIAL,
MEDICAL, HIGHER EDUCATION &
ENVIRONMENT
(Ana G. Mendez Educ.
Foundation Feagm Proj.)
VRDN*
1,200 12/01/15 3.15 1,200,000
5,300,000
Total Municipal Bonds
(amortized cost $79,849,175) 79,850,374
COMMERCIAL PAPER-19.1%
CONNECTICUT-8.6%
CONNECTICUT HEFA
(Yale University) Series L
2,500 8/23/96 3.55 2,500,000
CONNECTICUT HEFA
(Yale University) Series P
1,350 8/13/96 3.45 1,350,000
CONNECTICUT MUNICIPAL
ELECTRIC ENERGY
Cooperative Power Supply
Systems Rev. Series '95A
2,000 7/12/96 3.30 2,000,000
CONNECTICUT MUNICIPAL
ELECTRIC ENERGY
Cooperative Power Supply
Systems Rev. Series '95A
500 8/15/96 3.45 500,000
CONNECTICUT MUNICIPAL
ELECTRIC ENERGY
Cooperative Power Supply
Systems Rev. Series '95A
400 7/30/96 3.50 400,000
CONNECTICUT MUNICIPAL
ELECTRIC ENERGY
Cooperative Power Supply
Systems Rev. Series '95A
1,500 7/25/96 3.55 1,500,000
8,250,000
2
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
PUERTO RICO-10.5%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
$ 2,000 8/13/96 3.50% $2,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
1,000 7/26/96 3.55 1,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
3,000 9/11/96 3.65 3,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
2,000 8/21/96 3.70 2,000,000
PUERTO RICO INDUSTRIAL,
MEDICAL, HIGHER EDUCATION &
ENVIRONMENT
(Inter-American Univ. of
Puerto Rico) Series '88
2,000 7/12/96 3.40 2,000,000
10,000,000
VALUE
Total Commercial Paper
(amortized cost $18,250,000) $18,250,000
TOTAL INVESTMENTS-102.4%
(amortized cost $98,099,175) 98,100,374
Other assets less
liabilities-(2.4%) (2,287,903)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
95,840,864 shares
outstanding) $95,812,471
+ 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
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 ASSETS AND LIABILITIES
JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $98,099,175) $ 98,100,374
Cash 360,834
Receivable for investments sold 4,900,000
Interest receivable 550,046
Receivable for capital stock sold 6,721
Total assets 103,917,975
LIABILITIES
Payable for investments purchased 8,007,800
Investment advisory fee payable 21,949
Payable for capital stock redeemed 14,701
Distribution fee payable 11,955
Accrued expenses 49,099
Total liabilities 8,105,504
NET ASSETS $ 95,812,471
COMPOSITION OF NET ASSETS
Capital shares $ 95,840,864
Accumulated net realized loss on investments (29,592)
Net unrealized appreciation of investments 1,199
$ 95,812,471
See notes to financial statements.
4
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $3,096,150
EXPENSES
Advisory fee (Note B) $425,285
Distribution assistance and administrative
service (Note C) 336,585
Transfer agency (Note B) 80,248
Custodian fees 65,730
Printing 21,881
Registration expense 21,191
Audit and legal fees 17,435
Trustees' fees 3,276
Miscellaneous 10,128
Total expenses 981,759
Less: expense reimbursement and fee waiver (301,303)
680,456
Net investment income 2,415,694
UNREALIZED GAIN ON INVESTMENTS
Net change in unrealized appreciation of investments 1,199
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,416,893
See notes to financial statements.
5
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,415,694 $ 1,813,183
Net realized loss on investments -0- (2,026)
Net change in unrealized appreciation
of investments 1,199 -0-
Net increase in net assets from operations 2,416,893 1,811,157
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,415,694) (1,813,183)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 19,820,540 18,678,491
Total increase 19,821,739 18,676,465
NET ASSETS
Beginning of year 75,990,732 57,314,267
End of year $95,812,471 $75,990,732
See notes to financial statements.
6
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 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 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 (the "Portfolio"),
Alliance Municipal Trust-New Jersey Portfolio, Alliance Muncipal Trust-Virginia
Portfolio and Alliance Municipal Trust-Florida Portfolio. Each series is
considered to be a separate entity for financial reporting and tax purposes. As
a matter of fundamental policy, each Portfolio pursues its objectives by
maintaining a portfolio of high-quality money market securities all of which,
at the time of investment, have remaining maturities of 397 days or less. 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, 1996 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. The Adviser also voluntarily agreed to reimburse the Portfolio for
the year ended June 30, 1996 for expenses exceeding .80 of 1% of its average
daily net assets. For the year ended June 30, 1996, the reimbursement amounted
to $216,246. 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 $45,853 for the year ended June 30, 1996.
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,
1996, the distribution fee
7
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
amounted to $212,643 of which $85,057 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, 1996, such payments by the
Portfolio amounted to $123,942 of which $92,500 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1996, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1996, 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,
1996, capital paid-in aggregated $95,840,864. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
Shares sold 358,252,167 243,757,597
Shares issued on reinvestments of dividends 2,415,694 1,813,183
Shares redeemed (340,847,321) (226,892,289)
Net increase 19,820,540 18,678,491
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .028 .028 .017 .020 .033
LESS: DISTRIBUTIONS
Dividends from net investment income (.028) (.028) (.017) (.020) (.033)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURNS
Total investment return based on net
asset value (a) 2.88% 2.78% 1.71% 2.00% 3.35%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $95,812 $75,991 $57,314 $56,224 $54,751
Ratio to net assets of:
Expenses, net of waivers and .80% .80% .77% .70% .58%
Expenses, before waivers and
reimbursements 1.15% 1.21% 1.21% 1.16% 1.22%
Net investment income (b) 2.84% 2.77% 1.69% 1.97% 3.28%
</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 value during the period, and
redemption on the last day of the period.
(b) Net of expenses reimbursed or waived by the Adviser.
8
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 assets and liabilities, including
the portfolio of investments, of the Connecticut Portfolio of Alliance
Municipal Trust as of June 30, 1996 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, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Connecticut Portfolio of Alliance Municipal Trust as of June 30, 1996, 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
July 26, 1996
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1996
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
MUNICIPAL BONDS-74.9%
FLORIDA-74.9%
ALACHUA INDUSTRIAL
DEVELOPMENT
(Sabine Inc. Project)
Series '95 AMT VRDN*
$ 2,365 9/01/15 3.50% $ 2,365,000
BROWARD COUNTY
GO BOND
(Environmentally-
Sensitive Land)
1,000 7/01/96 3.63 1,000,000
BROWARD COUNTY HFA
MFHR
(Harbour Town Jacaranda
Proj.) Series '95B VRDN*
1,400 12/01/25 3.60 1,400,000
DADE COUNTY IDA
(DNS Manufacturing
Project)
Series '89 AMT VRDN*
3,475 11/01/09 3.60 3,475,000
DADE COUNTY IDA
(Dolphins Stadium
Project)
Series A VRDN*
2,000 1/01/16 3.35 2,000,000
DADE COUNTY IDB
(All Interior Supply Inc.)
AMT VRDN*
650 12/01/06 3.85 650,000
DADE COUNTY IDB
(Arlington Sales Project)
AMT VRDN*
1,250 6/01/08 3.85 1,250,000
DADE COUNTY IDB
(Bentley's Luggage Corp.)
AMT VRDN*
1,000 12/01/06 3.85 1,000,000
DADE COUNTY IDB
(L. Luria & Sons, Inc.)
AMT VRDN*
1,000 12/01/01 3.85 1,000,000
DADE COUNTY IDB
(Pot Company Inc.)
AMT VRDN*
600 12/01/06 3.85 600,000
ESCAMBIA COUNTY SFMR
(Multi County Program)
Series B AMT PPB*
$ 3,850 4/01/97 3.65% $ 3,850,000
FLORIDA HFA MFHR
(Ashley Lake II)
Series J VRDN*
200 12/01/11 3.55 200,000
FLORIDA HFA MFHR
(Banyan Bay Apts.)
Series '95L VRDN*
5,275 12/01/25 3.55 5,275,000
FLORIDA HFA MFHR
(EEE-Carlton Arms II)
VRDN*
500 12/01/08 3.15 500,000
FLORIDA HFA MFHR
(Parrots Landing Project)
Series '85 VRDN*
3,500 6/15/25 3.30 3,500,000
FLORIDA HFA MFHR
(Sunpointe Cove Project)
VRDN*
2,500 6/15/25 3.30 2,500,000
FLORIDA HFA MFHR
(Village Place Project)
Series '85 VRDN*
900 11/01/07 3.50 900,000
FLORIDA STATE BOARD OF
EDUCATION
(Dept. of Natural
Resources Preservation)
AMBAC
1,000 7/01/96 3.72 1,000,000
HOMESTEAD INSURANCE
ASSESSMENT REVENUE
MBIA
1,175 9/01/96 3.25 1,176,858
JACKSONVILLE HOSPITAL
REVENUE
(University Medical
Center Proj.)
Series '89 VRDN*
600 2/01/19 3.50 600,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
JACKSONVILLE IDR
(Columbia Paving Inc.)
AMT VRDN*
$ 700 9/01/07 3.85% $ 700,000
JACKSONVILLE IDR
(University of Florida
Health Science Center)
Series '89 VRDN*
900 7/01/19 3.70 900,000
LADY LAKE CAPITAL
IMPROVEMENT BOND
AMBAC
425 10/01/96 3.90 425,000
LEE COUNTY COP
(Master Lease Project)
MBIA
775 10/01/96 3.60 775,000
MANATEE COUNTY SCHOOL
BOARD COP
Master Lease Program
Series '96 MBIA
1,000 7/01/97 3.95 1,002,840
MANATEE COUNTY SCHOOL
DISTRICT
Sales Tax Revenue-
AMBAC
1,500 8/01/96 3.55 1,500,000
MARION COUNTY HFA
MFHR
(Paddock Place Project)
Series '85F VRDN*
2,000 12/01/07 3.60 2,000,000
MARION COUNTY HFA
MFHR
(Summer Trace Project)
Series '85D VRDN*
2,500 12/01/07 3.60 2,500,000
MARTIN COUNTY
SOLID WASTE
(Florida Power & Light)
Series '93 AMT VRDN*
350 1/01/27 3.80 350,000
ORANGE COUNTY HFA
MFHR
(Sundown Assoc. II)
Series B VRDN*
$ 900 6/01/04 3.60% $900,000
ORANGE COUNTY
HFA SFMR
Series '96B AMT PPB*
2,500 4/01/97 3.65 2,500,000
ORANGE COUNTY SCHOOL
DISTRICT TAN
Series '95
600 10/16/96 3.80 601,182
PINELLAS COUNTY HEALTH
FACILITIES AUTHORITY
(Mease Manor, Inc.)
Series '95 VRDN*
4,300 11/01/15 3.55 4,300,000
PINELLAS COUNTY HFA
MFHR
(Foxbridge Apt. Project)
Series '95A VRDN*
2,400 6/15/25 3.30 2,400,000
PINELLAS COUNTY MFHR
(Multi County Program)
Series B AMT PPB*
4,500 3/01/97 3.40 4,500,000
PINELLAS COUNTY WATER
REVENUE
AMBAC
1,000 10/01/96 3.75 1,001,829
POLK COUNTY IDR
(Protel Inc.) AMT VRDN*
450 9/01/07 3.85 450,000
ST. LUCIE PCR
(Florida Power & Light)
Series '93 AMT VRDN*
2,600 1/01/27 3.80 2,600,000
ST. LUCIE SCHOOL DISTRICT
Series A
500 2/01/97 3.50 500,854
2
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
WAUCHULA IDR
(Hardee County Center
Project) VRDN*
$ 4,150 12/01/13 3.55% $ 4,150,000
Total Municipal Bonds
(amortized
cost $68,298,563) 68,298,563
COMMERCIAL PAPER-26.0%
FLORIDA-22.2%
ALACHUA COUNTY HEALTH
FACILITIES AUTHORITY
(Academic Research
Building Proj.)
1,050 8/19/96 3.75 1,050,000
FLORIDA LOCAL
GOVERNMENT COMM.
(Assoc. of Counties)
1,000 8/20/96 3.50 1,000,000
FLORIDA MUNICIPAL
POWER AGENCY
Series A
3,605 8/22/96 3.40 3,605,000
HILLSBOROUGH COUNTY
(Tampa Intl. Airport)
Series '94 AMT
2,600 8/16/96 3.70 2,600,000
HILLSBOROUGH COUNTY
(Tampa Intl. Airport)
Series '94 AMT
2,200 8/23/96 3.70 2,200,000
JACKSONVILLE POLLUTION
CONTROL
(Florida Power & Light)
Series '92
440 7/08/96 3.55 440,000
JACKSONVILLE POLLUTION
CONTROL
(Florida Power & Light)
Series '94
500 7/08/96 3.55 500,000
SARASOTA HOSPITAL
REVENUE
(Sarasota Memorial
Hospital) Series A
$ 2,000 8/08/96 3.80% $ 2,000,000
SARASOTA HOSPITAL
REVENUE
(Sarasota Memorial
Hospital) Series C
550 7/26/96 3.55 550,000
SARASOTA HOSPITAL
REVENUE
(Sarasota Memorial
Hospital) Series C
800 7/22/96 3.80 800,000
SUNSHINE STATE
GOVERNMENT
FINANCE AGENCY
Series '86
1,000 7/12/96 3.50 1,000,000
SUNSHINE STATE
GOVERNMENT
FINANCE AGENCY
Series '86
700 7/12/96 3.55 700,000
WEST ORANGE MEMORIAL
HOSPITAL
Tax Revenue Bonds
Series 1991A-1
1,000 7/26/96 3.65 1,000,000
WEST ORANGE MEMORIAL
HOSPITAL
Tax Revenue Bonds
Series 1991A-2
600 7/11/96 3.60 600,000
WEST ORANGE MEMORIAL
HOSPITAL
Tax Revenue Bonds
Series 1991A-2
1,150 7/26/96 3.65 1,150,000
3
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
WEST ORANGE MEMORIAL
HOSPITAL
Tax Revenue Bonds
Series 1991A-2
$ 1,050 8/14/96 3.65% $ 1,050,000
20,245,000
PUERTO RICO-3.8%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
3,500 8/21/96 3.70 3,500,000
Total Commercial Paper
(amortized
cost $23,745,000) 23,745,000
TOTAL INVESTMENTS-100.9%
(amortized
cost $92,043,563) $92,043,563
Other assets less
liabilities-(0.9%) (864,178)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
91,181,362 shares
outstanding) $91,179,385
+ 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
COP Certificate of Participation
GO General Obligation
HFA Housing Finance Agency/Authority
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
SFMR Single Family Mortgage Revenue
TAN Tax Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
4
STATEMENT OF OPERATIONS
JULY 28, 1995* TO JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $2,130,586
EXPENSES
Advisory fee (Note B) $ 288,369
Distribution assistance and administrative
service (Note C) 242,654
Custodian fees 62,397
Registration fees 34,142
Transfer agency (Note B) 31,058
Audit and legal fees 22,791
Printing 19,044
Amortization of organizational expense 4,021
Trustees fees 3,430
Miscellaneous 4,388
Total expenses 712,294
Less: expense reimbursement and fee waiver (380,221)
332,073
Net investment income 1,798,513
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (1,977)
NET INCREASE IN NET ASSETS FROM OPERATIONS $1,796,536
* Commencement of operations
See notes to financial statements.
5
STATEMENT OF CHANGES IN NET ASSETS
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
JULY 28, 1995*
TO
JUNE 30, 1996
--------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,798,513
Net realized loss on investments (1,977)
Net increase in net assets from operations 1,796,536
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (1,798,513)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 91,181,362
Total increase 91,179,385
NET ASSETS
Beginning of period -0-
End of period $91,179,385
* Commencement of operations
See notes to financial statements.
6
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 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. As
a matter of fundamental policy, each Portfolio pursues its objectives by
maintaining a portfolio of high-quality money market securities all of which,
at the time of investment, have remaining maturities of 397 days or less. 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 for the
period ended June 30, 1996, 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
all expenses from July 28, 1995 (commencement of operations) to September 10,
1995, from September 11, 1995 to October 22, 1995 for expenses exceeding .20 of
1% of its average daily net assets, from October 23, 1995 to January 2, 1996
for expenses exceeding .40 of 1% of its average daily net assets, from January
3, 1996 to March 3, 1996 for expenses exceeding .60 of 1% of its average daily
net assets and from March 4, 1996 to June 30, 1996 for expenses exceeding .65
of 1% of its average daily net assets. For the period ended June 30, 1996, the
reimbursement amounted to $322,547. 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 $18,539 for the period ended June 30, 1996.
7
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE MUNICIPAL TRUST - FLORIDA 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, 1996, the distribution fee amounted to $144,185
of which $57,674 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, 1996, such payments by the Portfolio amounted to
$98,469 of which $46,000 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1996, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1996 the
Portfolio had a capital loss carryforward of $1,977 which expires in the year
2004.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1996, capital paid-in aggregated $91,181,362. Transactions, all at $1.00 per
share, were as follows:
JULY 28, 1995(A)
THROUGH
JUNE 30, 1996
----------------
Shares sold 355,151,881
Shares issued on reinvestments of dividends 1,798,513
Shares redeemed (265,769,032)
Net increase 91,181,362
(a) Commencement of operations.
8
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout the period.
JULY 28,
1995(A)
THROUGH
JUNE 30,
1996
---------
Net asset value, beginning of period $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .030
LESS DISTRIBUTIONS
Dividends from net investment income (.030)
Net asset value, end of period $1.00
Total investment return based on net asset value (b)(c) 3.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $91,179
Ratio to average net assets of:
Expenses, net of waivers and reimbursements (c) .58%
Expenses, before waivers and reimbursements (c) 1.24%
Net investment income (c)(d) 3.12%
(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.
9
INDEPENDENT AUDITOR'S REPORT ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
We have audited the accompanying statement of net assets of the Florida
Portfolio of Alliance Municipal Trust as of June 30, 1996 and the related
statements of operations, changes in net assets, and financial highlights for
the period 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 audit.
We conducted our audit 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, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our 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
Florida Portfolio of Alliance Municipal Trust as of June 30, 1996, and the
results of its operations, changes in its net assets, and its financial
highlights for the period indicated, in conformity with generally accepted
accounting principles.
McGladrey & Pullen, LLP
New York, New York
July 26, 1996
10
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
MUNICIPAL BONDS-76.1%
NEW JERSEY-71.6%
CAMDEN COUNTY MUNICIPAL
UTILITY AUTHORITY
Sewer Revenue FGIC
$ 1,000 7/15/96 3.66% $ 1,000,113
ESSEX COUNTY
IMPROVEMENT AUTHORITY
(County Asset Sale Proj.)
Series '95 VRDN*
3,500 12/01/25 3.20 3,500,000
FORT LEE
Refunding Notes
2,670 5/23/97 3.70 2,682,758
FORT LEE
Refunding Notes
620 5/23/97 3.75 622,399
FREEHOLD TOWNSHIP
GO BOND
FGIC
550 9/01/96 3.85 550,723
GLOUCESTER COUNTY
BOND
1,500 9/01/96 3.90 1,499,488
GLOUCESTER COUNTY
BOND
Series '95 MBIA
190 11/01/96 3.82 190,699
GLOUCESTER COUNTY PCR
(Mobil Oil Co.) VRDN*
2,000 12/01/03 3.00 2,000,000
HACKENSACK BAN
2,958 12/19/96 3.50 2,961,331
HUDSON COUNTY UTILITY
SYSTEMS AUTHORITY
Pre-Refunded
1,960 7/01/96 3.25 1,960,000
JERSEY CITY
School Promissory Note
2,000 3/07/97 3.55 2,002,595
JERSEY CITY BAN
1,500 9/27/96 3.90 1,502,948
JERSEY CITY BAN
1,500 9/27/96 3.90 1,500,345
MIDDLESEX COUNTY
BOND
Pre-Refunded
2,250 7/15/96 3.80 2,297,287
MORRIS COUNTY BOND
County College
Series '95
$ 1,000 7/15/96 3.62% $ 1,000,699
MORRIS COUNTY BOND
General Improvement
Series '95
1,226 7/15/96 3.62 1,226,856
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Epitaxx, Inc.)
Series '91 AMT VRDN*
4,500 8/01/16 3.55 4,500,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Hillcrest Health Services)
Series '95 VRDN*
4,000 1/01/22 3.15 4,000,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Kinder-Care Learning
Centers) Series D VRDN*
390 10/01/00 3.70 390,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
Composite Issue '92 Series
U AMT VRDN*
2,140 12/01/02 3.35 2,140,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
IDR
(Economic Growth)
Series B AMT VRDN*
1,600 8/01/04 3.25 1,600,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
IDR
(STP Company Project)
Series '92 VRDN*
2,885 7/01/06 3.20 2,884,999
NEW JERSEY EDUCATIONAL
FACILITIES AUTHORITY
Higher Education
Equipment Leasing
Fund A MBIA
750 9/01/96 5.00 751,675
NEW JERSEY HFA SFMR
Eagle Trust (Home Owner
Mtg.) Series C-D MBIA
VRDN*
4,100 10/01/15 3.44 4,100,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
NEWARK HEALTHCARE
FACILITY REVENUE
(Urban Renewal Corp.
Care Fac.) Series A VRDN*
$ 3,015 6/01/30 3.65% $ 3,015,000
NORTH BERGEN TOWNSHIP
BOARD OF EDUCATION
Promissory Note
4,000 3/14/97 3.30 4,005,429
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
(Versatile Structure)
Series 1 AMT VRDN*
5,400 8/01/28 3.70 5,400,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
(Versatile Structure)
Series 3 VRDN*
4,000 6/01/20 3.55 4,000,000
SALEM COUNTY PCR
(Dupont Corp.)
Series '82A VRDN*
2,100 3/01/12 3.65 2,100,000
SOMERS POINT BOARD OF
EDUCATION
FSA
450 3/01/97 3.35 453,939
UNION CITY GO FSA
225 7/15/96 3.65 225,090
VOORHEES TOWNSHIP
WATER & SEWER BOND
MBIA
300 10/15/96 4.85 300,833
WEST DEPTFORD
TOWNSHIP GO
Series '96
900 3/01/97 3.50 900,000
WOODBRIDGE TOWNSHIP
BAN
1,000 7/03/96 3.75 999,993
WOODBRIDGE TOWNSHIP
BAN
2,000 7/03/96 3.77 1,999,979
70,265,178
PUERTO RICO-4.5%
PUERTO RICO HIGHWAY &
TRANSPORTATION AUTHORITY
Series X VRDN*
2,500 7/01/99 3.00 2,500,000
PUERTO RICO INDUSTRIAL,
MEDICAL &
ENVIRONMENTAL PCR
(Key Pharmaceuticals)
PPB*
$ 1,900 12/01/96 3.80% $ 1,900,757
4,400,757
Total Municipal Bonds
(amortized cost
$74,662,630) 74,665,935
COMMERCIAL PAPER-20.5%
NEW JERSEY-16.4%
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Chambers Cogeneration )
Series '91 AMT
1,000 7/12/96 3.40 1,000,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Chambers Cogeneration )
Series '91 AMT
1,000 9/10/96 3.40 1,000,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Chambers Cogeneration )
Series '91 AMT
1,500 10/23/96 3.55 1,500,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Logan-1992 Project)
AMT
1,500 7/19/96 3.30 1,500,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Logan-1992 Project)
AMT
500 7/26/96 3.30 500,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Logan-1992 Project)
AMT
2,000 7/12/96 3.35 2,000,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Logan-1992 Project)
AMT
2,000 9/10/96 3.40 2,000,000
2
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Logan-1992 Project)
AMT
$ 2,000 10/24/96 3.60% $ 2,000,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
AMT
4,550 7/10/96 3.20 4,550,000
16,050,000
PUERTO RICO-4.1%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
1,000 7/26/96 3.55 1,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
2,000 8/16/96 3.60 2,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
$ 1,000 8/21/96 3.70% $ 1,000,000
4,000,000
Total Commercial Paper
(amortized cost
$20,050,000) 20,050,000
TOTAL INVESTMENTS-96.6%
(amortized cost $94,712,630) 94,715,935
Other assets
less liabilities-3.4% 3,382,358
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
98,096,271 shares
outstanding) $98,098,293
+ 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
FSA Financial Security Assurance
GO New Jersey Obligation
HFA Housing Finance Agency/Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
PCR Pollution Control Revenue
PPB Periodic Put Bond
SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $3,300,284
EXPENSES
Advisory fee (Note B) $ 451,214
Distribution assistance and administrative
service (Note C) 328,198
Transfer agency (Note B) 148,119
Custodian fees 66,870
Printing 27,282
Registration fees 18,161
Audit and legal fees 16,660
Trustees' fees 2,846
Amortization of organization expense 2,031
Miscellaneous 11,225
Total expenses 1,072,606
Less: expense reimbursement and fee waiver (334,601)
738,005
Net investment income 2,562,279
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (32)
Net change in unrealized appreciation
of investments 3,305
Net gain on investments 3,273
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,565,552
See notes to financial statements.
4
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30,1995
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,562,279 $ 1,736,484
Net realized loss on investments (32) (1,251)
Net change in unrealized appreciation
of investments 3,305 -0-
Net increase in net assets from operations 2,565,552 1,735,233
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,562,279) (1,736,484)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 23,962,316 37,225,371
Total increase 23,965,589 37,224,120
NET ASSETS
Beginning of year 74,132,704 36,908,584
End of year $98,098,293 $74,132,704
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 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 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 (the "Portfolio"), Alliance Municipal Trust-Virginia
Portfolio and Alliance Municipal Trust-Florida Portfolio. Each series is
considered to be a separate entity for financial reporting and tax purposes. As
a matter of fundamental policy, each Portfolio pursues its objectives by
maintaining a portfolio of high-quality money market securities all of which,
at the time of investment, have remaining maturities of 397 days or less. 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, 1996, 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, 1995 to March 3, 1996 for expenses exceeding .80 of 1% of its
average daily net assets and from March 4, 1996 to June 30, 1996 for expenses
exceeding .85 of 1% of its average daily net assets. For the year ended June
30, 1996, the reimbursement amounted to $244,358. 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 $90,636 for the year ended June 30,
1996.
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, 1996, the distribution fee amounted to $225,607 of
which $90,243 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, 1996, such payments by the Portfolio amounted to
$102,591 of which $92,500 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1996, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1996 the
Portfolio had a capital loss carryforward of $1,283, of which $1,251 expires in
2003 and $32 expires in 2004.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1996, capital paid-in aggregated $98,096,271. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1996 1995
----------- ----------
Shares sold 392,300,834 365,818,445
Shares issued on reinvestments of dividends 2,562,279 1,736,484
Shares redeemed (370,900,797) (330,329,558)
Net increase 23,962,316 37,225,371
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.
FEB. 7,
1994(A)
YEAR ENDED JUNE 30, THROUGH
-------------------- JUNE 30,
1996 1995 1994
------ ------ --------
Net asset value, beginning of period $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .028 .029 .008
LESS DISTRIBUTIONS
Dividends from net investment income (.028) (.029) (.008)
Net asset value, end of period $1.00 $1.00 $1.00
TOTAL RETURNS
Total investment return based on net
asset value (b) 2.89% 2.93% 2.08%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $98,098 $74,133 $36,909
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements .82% .74% .70%(c)
Expenses, before waivers and
reimbursements 1.19% 1.29% 1.93%(c)
Net investment income (d) 2.84% 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.
(d) Net of expenses reimbursed or waived by the Adviser.
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, 1996 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, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
New Jersey Portfolio of Alliance Municipal Trust as of June 30, 1996, 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
July 26, 1996
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
MUNICIPAL BONDS-67.9%
NEW YORK-67.9%
BROOME COUNTY GO
Series '96
$ 3,090 4/18/97 3.69% $ 3,100,322
DUTCHESS COUNTY IDR
(Toys 'R' Us/NYTEX) Series '84 VRDN*
1,000 11/01/19 3.43 1,000,000
ERIE COUNTY RAN
Series '95
7,500 9/20/96 3.85 7,510,386
FRANKLIN COUNTY IDR
(KES Chateaugay L.P.)
Series '91A AMT VRDN*
14,900 7/01/21 3.40 14,900,000
HEMPSTEAD BAN
Series '96A
5,100 2/28/97 3.50 5,099,824
ISLIP IDA
(Radiation Dynamics)
Series '88A AMT VRDN*
6,000 1/01/09 3.83 6,000,000
NEW YORK CITY GO
Series '95F-3 VRDN*
11,400 2/15/13 3.45 11,400,000
NEW YORK CITY GO
Series '95F-5 VRDN*
4,500 2/15/16 3.40 4,500,000
NEW YORK CITY GO
Series '95F-6 VRDN*
7,300 2/15/18 3.45 7,300,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(400 West 59th Street Dev.)
Series A-1 AMT VRDN*
16,000 11/01/30 3.35 16,000,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(East 96th Street Project) VRDN*
4,300 8/01/15 3.30 4,300,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(Queenswood Apts. Project)
Series '89A VRDN*
3,700 2/01/17 3.40 3,700,000
NEW YORK CITY IDA
(Brooklyn Navy Yard Project)
Series '95A AMT VRDN*
15,900 7/01/29 3.50% 15,900,000
NEW YORK CITY IDA
(Japan Airlines Co.)
Series '91 AMT VRDN*
5,500 11/01/15 3.65 5,500,000
NEW YORK CITY IDA
(Nippon Cargo Air Project)
Series '92 AMT VRDN*
18,000 11/01/15 4.30 18,000,000
NEW YORK CITY IDA
(Stroheim & Romann Inc.)
Series '85 VRDN*
1,500 12/01/15 3.20 1,500,000
NEW YORK STATE ERDA PCR
(Long Island Lighting Co.)
Series A PPB*
4,800 3/01/97 3.25 4,798,616
NEW YORK STATE ERDA PCR
(Long Island Lighting Co.)
Series B PPB*
10,000 3/01/97 3.25 10,000,000
NEW YORK STATE ERDA PCR
(New York State Electric & Gas)
Series '85 PPB*
10,000 3/15/97 3.30 10,000,000
NEW YORK STATE ERDA PCR
(Rochester Gas & Electric)
Series '84 VRDN*
2,000 10/01/14 3.45 2,000,000
NEW YORK STATE ERDA UTIL. REV.
(Rochester Gas & Electric)
Series '85 PPB*
5,000 11/15/96 3.75 5,000,000
NEW YORK STATE HFA
Pre-Refunded
3,015 11/01/96 3.60 3,057,501
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
NEW YORK STATE HFA MFHR
(Normandie Court II)
Series '87A AMT VRDN*
$ 10,800 11/01/02 3.30% $10,800,000
NEW YORK STATE JOB DEV. AUTHORITY
Series '86A-1 AMT VRDN*
1,995 3/01/00 3.86 1,995,000
NEW YORK STATE JOB DEV. AUTHORITY
Series '86C-1 AMT VRDN*
835 3/01/00 3.86 835,000
NEW YORK STATE LOCAL
GOVERNMENT ASSIST. CORP.
Series '95C VRDN*
1,100 4/01/25 3.05 1,100,000
NEW YORK STATE LOCAL
GOVERNMENT ASSIST. CORP.
Series '95E VRDN*
10,000 4/01/25 3.10 10,000,000
NEW YORK STATE MEDICAL
CARE FACILITIES AUTHORITY
Eagle Trust Series 953202
(New York Hospital) VRDN* AMBAC
14,000 8/15/24 3.44 14,000,000
NEW YORK STATE MORTGAGE AGENCY
16th Series AMT PPB*
3,000 7/01/96 3.25 3,000,000
NEWBURGH IDA
(Mt. St. Mary College Civic Fac.)
Series '91 VRDN*
1,600 10/01/11 3.25 1,600,000
NIAGARA COUNTY IDA
(Pyron Corp. Project)
Series '89 AMT VRDN*
2,631 11/01/04 3.45 2,631,000
ONTARIO COUNTY IDA
(Ultrafab Inc.) Series '95
AMT VRDN*
2,200 12/01/15 3.30 2,200,000
PORT AUTHORITY OF NEW YORK
AND NEW JERSEY
(Versatile Structure Series)
AMT VRDN*
6,500 8/01/28 3.35 6,500,000
ROCHESTER GO BAN
Series I
2,400 10/31/96 3.80% 2,405,406
SUFFOLK COUNTY IDA
(Nissequogue Cogen Partners)
Series '93 AMT VRDN*
1,200 12/15/23 3.35 1,200,000
UNITED NATIONS DEVELOPMENT CORP.
Pre-Refunded
2,000 7/01/96 4.00 2,040,000
WESTCHESTER COUNTY IDR
(Hitachi America) VRDN*
1,500 7/01/98 4.00 1,500,000
YONKERS IDA
(Consumer Union Facility)
Series '91 VRDN*
1,700 7/01/21 3.55 1,700,000
YONKERS IDA
(Consumers Union Facility)
Series '91 VRDN*
600 7/01/19 3.55 600,000
Total Municipal Bonds
(amortized cost $224,672,308) 224,673,055
COMMERCIAL PAPER-29.8%
NEW YORK-27.6%
NEW YORK CITY GO
Series '96
8,000 8/22/96 3.50 8,000,000
NEW YORK CITY MUNICIPAL WATER
AUTHORITY
Series '94
5,000 8/08/96 3.65 5,000,000
NEW YORK CITY MUNICIPAL WATER
AUTHORITY
Series 3
2,500 9/12/96 3.35 2,500,000
NEW YORK CITY MUNICIPAL WATER
AUTHORITY
Series 3
2,500 8/09/96 3.50 2,500,000
NEW YORK CITY MUNICIPAL
WATER AUTHORITY
Series 3
4,000 7/23/96 3.60 4,000,000
NEW YORK CITY MUNICIPAL
WATER AUTHORITY
Series 4
3,000 8/01/96 3.20 2,999,454
2
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
NEW YORK CITY MUNICIPAL
WATER AUTHORITY
Series 4
$ 4,000 8/28/96 3.20% $ 4,000,000
NEW YORK CITY MUNICIPAL
WATER AUTHORITY
Series 4
2,000 7/22/96 3.45 2,000,000
NEW YORK STATE DORMITORY AUTHORITY
(Sloan-Kettering Memorial)
Series '89A
2,400 7/24/96 3.55 2,400,000
NEW YORK STATE DORMITORY AUTHORITY
(Sloan-Kettering Memorial)
Series '89A
4,000 8/23/96 3.55 4,000,000
NEW YORK STATE DORMITORY AUTHORITY
(Sloan-Kettering Memorial)
Series '89A
4,000 7/25/96 3.60 4,000,000
NEW YORK STATE DORMITORY AUTHORITY
(Sloan-Kettering Memorial)
Series '89A
1,700 8/13/96 3.65 1,700,000
NEW YORK STATE DORMITORY AUTHORITY
(Sloan-Kettering Memorial)
Series '89B
1,500 7/12/96 3.40 1,500,000
NEW YORK STATE DORMITORY AUTHORITY
(Sloan-Kettering Memorial)
Series '89B
1,600 8/06/96 3.70 1,600,000
NEW YORK STATE ENVIRONMENTAL FACILITY
(General Electric Co.) Series '87A
1,500 8/07/96 3.40 1,500,000
NEW YORK STATE ENVIRONMENTAL FACILITY
(General Electric Co.)
Series '92A AMT
1,200 7/31/96 3.25 1,200,000
NEW YORK STATE ENVIRONMENTAL FACILITY
(General Electric Co.)
Series '92A AMT
5,000 8/28/96 3.30% 5,000,000
NEW YORK STATE ENVIRONMENTAL FACILITY
(General Electric Co.)
Series '92A AMT
5,600 8/06/96 3.70 5,600,000
NIAGARA COUNTY IDA
(American Ref-Fuel Co.)
Series '94B AMT
4,000 7/30/96 3.70 4,000,000
NIAGARA COUNTY IDA
(American Ref-Fuel Co.)
Series '94B AMT
5,100 7/17/96 3.70 5,100,000
NIAGARA COUNTY IDA
(American Ref-Fuel Co.)
Series '94B AMT
4,000 8/05/96 3.75 4,000,000
NIAGARA COUNTY IDA
(American Ref-Fuel Co.)
Series '94B AMT
3,400 7/23/96 3.80 3,400,000
NIAGARA COUNTY IDA
(American Ref-Fuel Co.)
Series '94C AMT
1,500 7/31/96 3.75 1,500,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY AMT
3,010 8/22/96 3.30 3,010,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY AMT
6,000 8/23/96 3.35 6,000,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY AMT
4,980 7/31/96 3.60 4,980,000
-----------
91,489,454
3
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
PUERTO RICO-2.2%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
$ 2,200 8/13/96 3.50% $ 2,200,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
1,000 7/26/96 3.55 1,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
4,000 8/21/96 3.70 4,000,000
-----------
7,200,000
Total Commercial Paper
(amortized cost $98,687,870) $98,689,454
TOTAL INVESTMENTS-97.7%
(amortized cost $323,360,178) 323,362,509
Other assets less liabilities-2.3% 7,621,322
NET ASSETS-100%
(offering and redemption price
of $1.00 per share; 331,045,497
shares outstanding) $330,983,831
+ 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
GO General Obligation
HFA Housing Finance Agency/Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
RAN Revenue Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
4
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $10,186,781
EXPENSES
Advisory fee (Note B) $1,387,802
Distribution assistance and administrative
service (Note C) 873,774
Transfer agency (Note B) 382,867
Custodian fees 87,288
Printing 55,631
Registration fees 35,348
Audit and legal fees 17,583
Trustees' fees 3,605
Miscellaneous 8,196
Total expenses 2,852,094
Less: expense reimbursement and fee waiver (492,831)
2,359,263
Net investment income 7,827,518
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 308
Net change in unrealized appreciation of investments 2,331
Net gain on investments 2,639
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,830,157
See notes to financial statements.
5
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1996 JUNE 30,1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 7,827,518 $ 4,645,810
Net realized gain (loss) on investments 308 (13,089)
Net change in unrealized appreciation of
investments 2,331 (4,676)
Net increase in net assets from operations 7,830,157 4,628,045
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (7,827,518) (4,645,810)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 153,727,353 14,432,230
Total increase 153,729,992 14,414,465
NET ASSETS
Beginning of year 177,253,839 162,839,374
End of year $330,983,831 $177,253,839
See notes to financial statements.
6
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 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 seven 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, Alliance Municipal
Trust-Virginia Portfolio and Alliance Municipal Trust-Florida Portfolio. Each
series is considered to be a separate entity for financial reporting and tax
purposes. As a matter of fundamental policy, each Portfolio pursues its
objectives by maintaining a portfolio of high-quality money market securities
all of which, at the time of investment, have remaining maturities of 397 days
or less. 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, 1996, 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, 1996, 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, 1996, the reimbursement
amounted to $215,270. 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 $236,865 for the year ended June 30, 1996.
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.
7
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
For the year ended June 30, 1996, the distribution fee amounted to $693,901 of
which $277,561 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, 1996, such payments by the Portfolio amounted to
$179,873 of which $95,000 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1996, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1996, the
Portfolio had a capital loss carryforward of $20,597, of which $7,508 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,
1996, capital paid-in aggregated $331,002,099. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
--------------- --------------
Shares sold 1,218,028,397 660,452,860
Shares issued on reinvestments of dividends 7,827,518 4,645,810
Shares redeemed (1,072,128,562) (650,666,440)
Net increase 153,727,353 14,432,230
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .028 .028 .018 .019 .034
LESS DISTRIBUTIONS
Dividends from net investment income (.028) (.028) (.018) (.019) (.034)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURNS
Total investment return based on
net asset value (a) 2.87% 2.84% 1.77% 1.94% 3.47%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year(000's omitted) $330,984 $177,254 $162,839 $100,529 $100,476
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements .85% .85% .84% .80% .80%
Expenses, before waivers and
reimbursements 1.03% 1.03% 1.08% 1.06% 1.12%
Net investment income (b) 2.82% 2.81% 1.77% 1.91% 3.35%
</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 value during the period, and
redemption on the last day of the period.
(b) Net of expenses reimbursed or waived by the Adviser.
8
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, 1996 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, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
New York Portfolio of Alliance Municipal Trust as of June 30, 1996, 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
July 26, 1996
9
<PAGE>
STATEMENT OF NET ASSETS
JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
MUNICIPAL BONDS-81.2%
VIRGINIA-78.1%
ALEXANDRIA REDEV. &
HOUSING MFHR
(Crystal City Apts. Proj.)
Series '90A AMT VRDN*
$ 3,500 12/15/18 3.65% $ 3,500,000
AMELIA COUNTY IDA
(Chambers Waste Systems,
Inc.) AMT VRDN*
4,000 7/01/07 3.75 4,000,000
AMHERST IDA SOLID
WASTE
(Nekoosa Packaging)
AMT VRDN*
2,750 7/01/11 3.65 2,750,000
ARLINGTON COUNTY
(Ballston Public Parking
Facility)
Series '84 VRDN*
1,500 8/01/17 3.35 1,500,000
BOTETOURT COUNTY IDA
(Emkay Holdings L.L.C.)
Series '95 AMT VRDN*
3,500 10/01/05 3.40 3,500,000
CAMPBELL COUNTY PCR
(Georgia Pacific Power)
AMT VRDN*
3,000 12/01/19 3.65 3,000,000
CHARLES CITY IDA
(Chambers Dev. of VA,
Inc.)
Series '96 AMT VRDN*
1,500 4/01/16 3.75 1,500,000
FAIRFAX COUNTY IDA
HOSPITAL REVENUE
(Fairfax Hospital)
Series '88B VRDN*
1,200 10/01/25 3.60 1,200,000
FAIRFAX COUNTY IDA
HOSPITAL REVENUE
(INova Health Services)
Series '88C VRDN*
1,400 10/01/25 3.60 1,400,000
FAIRFAX COUNTY REDEV.
HOUSING AUTHORITY
(Chase Commons Project)
Series '84A VRDN*
3,000 12/01/06 3.43 3,000,000
FLUVANNA COUNTY IDA
(Edgecomb Metals Co.)
VRDN*
$ 3,800 12/01/09 3.30% $ 3,800,000
HAMPTON COUNTY REDEV.
HOUSING AUTHORITY
(Chase Hampton Project)
Series '84A VRDN*
2,500 12/01/06 4.08 2,500,000
HAMPTON ROADS JAIL
AUTHORITY
Series '96B VRDN*
4,000 7/01/16 3.50 4,000,000
JAMES CITY COUNTY BOND
FGIC
960 12/15/96 3.70 971,495
LOUDOWN COUNTY IDA
(Kinder-Care Learning
Centers)
Series A VRDN*
394 6/01/02 3.70 394,000
METRO DC AIRPORTS
AUTHORITY
Series A MBIA AMT
200 10/01/96 3.90 200,644
NORFOLK BOND
Pre-Refunded
1,900 6/01/97 3.62 1,981,375
NORFOLK GO EAGLE TRUST
Series 944601 VRDN*
3,900 6/01/06 3.44 3,900,000
NORFOLK WATER REVENUE
BOND
MBIA
480 11/01/96 3.45 482,427
PRINCE WILLIAM COUNTY
COP
MBIA
2,540 12/01/96 3.45 2,545,634
RICHMOND
REDEVELOPMENT
MFHR AMT
(Tobacco Row)
Series '89B-8 VRDN*
3,555 10/01/24 3.70 3,555,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
VIRGINIA BEACH
DEVELOPMENT
AUTHORITY
(Kinder-Care Learning
Centers)
Series D VRDN*
$ 866 10/01/00 3.70% $ 866,000
VIRGINIA GO BOND
Series A
1,400 12/01/96 3.50 1,409,950
VIRGINIA GO EAGLE TRUST
Series 954601 VRDN*
3,000 6/01/21 3.44 3,000,000
VIRGINIA HOUSING
AUTHORITY SFMR
Series D PPB*
6,000 7/16/96 3.35 6,000,000
VIRGINIA HOUSING
DEVELOPMENT AUTHORITY
(AHC Service Corp.-
Lee Gardens)
Series '87A VRDN*
3,500 9/01/17 3.50 3,500,000
VIRGINIA HOUSING
DEVELOPMENT AUTHORITY
Series I AMT
1,075 5/01/97 3.90 1,075,423
VIRGINIA HOUSING
DEVELOPMENT
AUTHORITY MFHR
Series L AMT
445 11/01/96 4.25 444,632
VIRGINIA PUBLIC
SCHOOL AUTHORITY
Pre-Refunded
2,325 1/01/97 3.25 2,415,696
VIRGINIA PUBLIC
SCHOOL AUTHORITY
Series A Pre-Refunded
1,500 1/01/97 3.65 1,552,908
69,945,184
PUERTO RICO-3.1%
PUERTO RICO HIGHWAY &
TRANSPORTATION AUTHORITY
Series X VRDN*
400 7/01/99 3.00 400,000
PUERTO RICO INDUSTRIAL,
MEDICAL &
ENVIRONMENTAL PCR
(Key Pharmaceuticals)
PPB*
$ 2,400 12/01/96 3.60% $ 2,401,946
2,801,946
Total Municipal Bonds
(amortized
cost $72,746,385) 72,747,130
COMMERCIAL PAPER-17.4%
VIRGINIA-10.7%
CHESAPEAKE IDA
(Virginia Electric &
Power Co.)
Series '85
2,000 8/20/96 3.70 2,000,000
CHESTERFIELD COUNTY
PCR
(Virginia Electric &
Power Co.)
Series '87
1,585 8/08/96 3.65 1,585,000
CHESTERFIELD COUNTY
PCR
(Virginia Electric &
Power Co.)
Series '87B
1,000 8/15/96 3.65 1,000,000
FAIRFAX COUNTY IDA
HOSPITAL REVENUE
(INova Health Services)
Series '93B
1,000 7/29/96 3.65 1,000,000
LOUISA PCR
(Virginia Electric &
Power Co.)
Series '87
500 8/12/96 3.70 500,000
PENINSULA PORT AUTHORITY
(Chessie & Ohio Project)
Series '92
2,000 7/12/96 3.50 2,000,001
PENINSULA PORT AUTHORITY
(Chessie & Ohio Project)
Series '92
1,500 8/15/96 3.65 1,500,000
9,585,001
2
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
_______________________________________________________________________________
PUERTO RICO-6.7%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
$ 3,000 7/16/96 3.50% $ 3,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
1,000 7/26/96 3.55 1,000,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
2,000 8/21/96 3.70 2,000,000
6,000,000
Total Commercial Paper
(amortized cost $15,585,001) 15,585,001
VALUE
TOTAL INVESTMENTS-98.6%
(amortized cost $88,331,386) $88,332,131
Other assets less liabilities-1.4% 1,224,711
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
89,564,122 shares
outstanding) $89,556,842
+ 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
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
GO Virginia Obligation
IDA Industrial Development Authority
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $3,082,007
EXPENSES
Advisory fee (Note B) $ 417,867
Distribution assistance and administrative
service (Note C) 367,236
Custodian fees 64,227
Transfer agency (Note B) 44,100
Printing 25,454
Registration fees 20,000
Audit and legal fees 10,316
Trustees' fees 3,364
Amortization of organization expense 1,705
Miscellaneous 9,711
Total expenses 963,980
Less: expense reimbursement and fee waiver (314,158)
649,822
Net investment income 2,432,185
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (128)
Net change in unrealized appreciation of investments 745
Net gain on investments 617
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,432,802
See notes to financial statements.
4
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
OCT. 25,
1994(A)
YEAR ENDED THROUGH
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $2,432,185 $1,265,221
Net realized loss on investments (128) (7,897)
Net change in unrealized appreciation of
investments 745 -0-
Net increase in net assets from operations 2,432,802 1,257,324
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,432,185) (1,265,221)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 22,635,119 66,928,803
Total increase 22,635,736 66,920,906
NET ASSETS
Beginning of period 66,921,106 200
End of period $89,556,842 $66,921,106
(a) Commencement of operations.
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 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 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 (the
"Portfolio") and Alliance Municipal Trust-Florida Portfolio. Each series is
considered to be a separate entity for financial reporting and tax purposes. As
a matter of fundamental policy, each Portfolio pursues its objectives by
maintaining a portfolio of high-quality money market securities all of which,
at the time of investment, have remaining maturities of 397 days or less. 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
year ended June 30, 1996, 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
all expenses from July 1, 1995 to July 9, 1995 for expenses exceeding .60 of 1%
of its average daily net assets, from July 10, 1995 to September 17, 1995 for
expenses exceeding .70 of 1% of its average daily net assets and from September
18, 1995 to June 30, 1996 for expenses exceeding .80 of 1% of its average daily
net assets. For the year ended June 30, 1996, the reimbursement amounted to
$230,585. 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 $27,198 for the year ended June 30, 1996.
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 year ended June 30,
1996, the distribution fee amounted to $208,933 of which $83,573 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, 1996,
such payments by the Portfolio amounted to $158,303 of which $92,500 was paid
to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1996, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1996 the
Portfolio had a capital loss carryforward of $8,025, of which $7,897 expires in
the year 2003 and $128 expires in the year 2004.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1996, capital paid-in aggregated $89,564,122. Transactions, all at $1.00 per
share, were as follows:
OCT. 25,
YEAR ENDED 1994(A)
JUNE 30, THROUGH
1996 JUNE 30, 1995
----------- -------------
Shares sold 251,119,609 187,540,379
Shares issued on reinvestments of dividends 2,432,185 1,265,221
Shares redeemed (230,916,675) (121,876,797)
Net increase 22,635,119 66,928,803
(a) Commencement of operations.
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,
YEAR ENDED 1994(A)
JUNE 30, THROUGH
1996 JUNE 30, 1995
---------- -------------
Net asset value, beginning of period $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .029 .023
LESS DISTRIBUTIONS
Dividends from net investment income (.029) (.023)
Net asset value, end of period $1.00 $1.00
TOTAL RETURNS
Total investment return based on net
asset value (b) 2.97% 3.48%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $89,557 $66,921
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements .78% .44%(c)
Expenses, before waivers and
reimbursements 1.15% 1.30%(c)
Net investment income (d) 2.91% 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.
(d) Net of expenses reimbursed or waived by the Adviser.
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, 1996 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, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Virginia Portfolio of Alliance Municipal Trust as of June 30, 1996, 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
July 26, 1996
9
<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, 1996
Statement of Operations, June 30, 1996 and July 28,
1995 (commencement of operations) to June 30,
1996 for the Florida Portfolio
Statement of Changes in Net Assets for the years
ended June 30, 1995 and June 30, 1996 and for
the period October 25, 1994 (commencement of
operations) to June 30, 1995 and for the year
ended June 30, 1996 for the Virginia Portfolio
and for the period July 28, 1995 (commencement
of operations) to June 30, 1996 for the Florida
Portfolio
Notes to Financial Statements June 30, 1996
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.
C-2
<PAGE>
(7) Not applicable.
(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) Consent of Independent Auditors - Filed
herewith.
(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
C-3
<PAGE>
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.
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.
Powers of Attorney of: John D. Carifa, Sam Y.
Cross, Charles H. P. Duell, William H. Foulk,
Jr., Elizabeth J. McCormack, David K. Storrs,
Shelby White, Dave H. Williams - Filed
herewith.
ITEM 25. Persons Controlled by or Under Common Control with
Registrant.
None.
ITEM 26. Number of Holders of Securities.
Registrant had, as of October 16, 1996 the
following record holders of shares of Beneficial
Interest:
General Portfolio 22,815
New York Portfolio 15,833
California Portfolio 6,901
Connecticut Portfolio 2,214
New Jersey Portfolio 338
Virginia Portfolio 326
Florida 805
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.
C-4
<PAGE>
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, 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
C-5
<PAGE>
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 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
C-6
<PAGE>
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 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
C-7
<PAGE>
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 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 against public
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
C-8
<PAGE>
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 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
C-9
<PAGE>
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, 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 Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
C-10
<PAGE>
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Income Fund, Inc.
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust,
Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance/Regent Sector Opportunity 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
(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.
Name Positions and Positions and
Offices With Offices With
Underwriter Registrant
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel
and Secretary
Daniel J. Dart Senior Vice President
Richard A. Davies Senior Vice President,
Managing Director
Byron M. Davis Senior Vice President
Kimberly A. Gardner Senior Vice President
C-11
<PAGE>
Geoffrey L. Hyde Senior Vice President
Richard E. Khaleel Senior Vice President
Barbara J. Krumsiek Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleondakis Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Jamie A. Atkinson Vice President
Benji A. Baer Vice President
Warren W. Babcock III Vice President
Kenneth F. Barkoff Vice President
William P. Beanblossom Vice President
Jack C. Bixler Vice President
Casimir F. Bolanowski Vice President
Kevin T. Cannon Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
Mark J. Dunbar Vice President
Sohaila S. Farsheed Vice President
C-12
<PAGE>
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 and Assistant Secretary
Assistant General
Counsel
Mark D. Gersten Vice President Treasurer and 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
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Thomas K. Intoccia Vice President
Robert H. Joseph, Jr. Vice President
and Treasurer
Richard D. Keppler Vice President
Sheila F. Lamb Vice President
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Shawn P. McClain Vice President
C-13
<PAGE>
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Nicole Nolan-Koester Vice President
Daniel J. Phillips Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President and Assistant Secretary
Associate General
Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
J. William Strott, Jr. Vice President
Richard E. Tambourine Vice President
Joseph T. Tocyloski Vice President
Neil S. Wood Vice President
Emilie D. Wrapp Vice President and Assistant Secretary
Special Counsel
Maria L. Carreras Assistant Vice President
John W. Cronin Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
C-14
<PAGE>
John C. Hershock Assistant Vice President
James J. Hill Assistant Vice President
Kalen H. Holliday Assistant Vice President
Edward W. Kelly Assistant Vice President
Nicholas J. Lapi Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Thomas F. Monnerat Assistant Vice President
Jeanette M. Nardella Assistant Vice President
Carol H. Rappa Assistant Vice President
Lisa Robinson-Cronin Assistant Vice President
Robert M. Smith Assistant Vice President
Wesley S. Williams Assistant Vice President
Mark R. Manley Assistant Secretary
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 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.
C-15
<PAGE>
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.
00250185.AG1
<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 Securities 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 29th day of October 1996.
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 29, 1996
Ronald M. Whitehill
2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and October 29, 1996
Mark D. Gersten Chief Financial
Officer
3) All of the Trustees
John D. Carifa Elizabeth J. McCormack
Sam Y. Cross David K. Storrs
Charles H.P. Duell Shelby White
William H. Foulk, Jr. Dave H. Williams
by/s/ Edmund P. Bergan, Jr. October 29, 1996
(Attorney-in-fact)
Edmund P. Bergan, Jr.
<PAGE>
Index to Exhibits
Page
(11) Consent of Independent Auditors
(27) Financial Data Schedule
Other Exhibits
Power of Attorney for
John D. Carifa
Sam Y. Cross
Charles H.P. Duell
William J. Foulk, Jr.
Elizabeth J. McCormack
David K. Storrs
Shelby White
Dave H. Williams
00250185.AG1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our reports dated
July 26, 1996 on the financial statements of the General
Portfolio, New York Portfolio, California Portfolio, Connecticut
Portfolio, New Jersey Portfolio, Virginia Portfolio, and Florida
Portfolio, series of Alliance Municipal Trust, referred to
therein in Post-Effective Amendment No. 33 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 28, 1996
00250185.AG3
<PAGE>
OTHER EXHIBIT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Municipal
Trust and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Dave H. Williams
Dave H. Williams
Dated: September 30, 1996
00250185.AF0
<PAGE>
OTHER EXHIBIT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Municipal
Trust and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ John D. Carifa
John D. Carifa
Dated: September 30, 1996
00250185.AF0
<PAGE>
OTHER EXHIBIT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Municipal
Trust and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Sam Y. Cross
Sam Y. Cross
Dated: September 30, 1996
00250185.AF0
<PAGE>
OTHER EXHIBIT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Municipal
Trust and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Charles H.P. Duell
Charles H.P. Duell
Dated: September 30, 1996
00250185.AF0
<PAGE>
OTHER EXHIBIT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Municipal
Trust and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ William H. Foulk
William H. Foulk
Dated: September 30, 1996
00250185.AF0
<PAGE>
OTHER EXHIBIT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Municipal
Trust and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Elizabeth J. McCormack
Elizabeth J. McCormack
Dated: September 30, 1996
00250185.AF0
<PAGE>
OTHER EXHIBIT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Municipal
Trust and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ David K. Storrs
David K. Storrs
Dated: September 30, 1996
00250185.AF0
<PAGE>
OTHER EXHIBIT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Municipal
Trust and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/Shelby White
Shelby White
Dated: September 30, 1996
00250185.AF0
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000707857
<NAME> THE ALLIANCE MUNICIPAL TRUST
<SERIES>
<NUMBER> 01
<NAME> GENERAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 1,177,426,271
<INVESTMENTS-AT-VALUE> 1,17,7426,271
<RECEIVABLES> 12,483,271
<ASSETS-OTHER> 12,781
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,189,922,323
<PAYABLE-FOR-SECURITIES> 27,697,570
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,208,401
<TOTAL-LIABILITIES> 41,905,971
<SENIOR-EQUITY> 11,499,386
<PAID-IN-CAPITAL-COMMON> 1,138,429,242
<SHARES-COMMON-STOCK> 1,149,938,628
<SHARES-COMMON-PRIOR> 1,191,217,700
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,912,276)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,148,016,352
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 46,854,539
<OTHER-INCOME> 0
<EXPENSES-NET> (11,547,747)
<NET-INVESTMENT-INCOME> 35,306,792
<REALIZED-GAINS-CURRENT> 21,901
<APPREC-INCREASE-CURRENT> (17,829)
<NET-CHANGE-FROM-OPS> 35,310,864
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (35,306,792)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,856,711,351
<NUMBER-OF-SHARES-REDEEMED> (4,933,297,215)
<SHARES-REINVESTED> 35,306,792
<NET-CHANGE-IN-ASSETS> (41,275,000)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,934,177)
<OVERDISTRIB-NII-PRIOR> 0
<PAGE>
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,078,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,553,000
<AVERAGE-NET-ASSETS> 1,215,552,289
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.029
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.029)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000707857
<NAME> THE ALLIANCE MUNICIPAL TRUST
<SERIES>
<NUMBER> 03
<NAME> CALIFORNIA PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 309,928,925
<INVESTMENTS-AT-VALUE> 309,929,039
<RECEIVABLES> 4,367,435
<ASSETS-OTHER> 662,664
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 314,959,138
<PAYABLE-FOR-SECURITIES> 16,701,616
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 395,081
<TOTAL-LIABILITIES> 17,096,697
<SENIOR-EQUITY> 2,978,864
<PAID-IN-CAPITAL-COMMON> 294,907,562
<SHARES-COMMON-STOCK> 297,886,426
<SHARES-COMMON-PRIOR> 236,504,726
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (24,099)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 114
<NET-ASSETS> 297,862,441
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,770,529
<OTHER-INCOME> 0
<EXPENSES-NET> (2,636,017)
<NET-INVESTMENT-INCOME> 8,134,512
<REALIZED-GAINS-CURRENT> 8,350
<APPREC-INCREASE-CURRENT> (6,990)
<NET-CHANGE-FROM-OPS> 8,135,872
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,134,512)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,207,086,940
<NUMBER-OF-SHARES-REDEEMED> (1,153,839,752)
<SHARES-REINVESTED> 8,134,512
<NET-CHANGE-IN-ASSETS> 61,383,060
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (32,449)
<OVERDISTRIB-NII-PRIOR> 0
<PAGE>
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,420,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,664,000
<AVERAGE-NET-ASSETS> 283,983,026
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.029
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.029)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000707857
<NAME> THE ALLIANCE MUNICIPAL TRUST
<SERIES>
<NUMBER> 04
<NAME> CONNECTICUT PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 98,099,175
<INVESTMENTS-AT-VALUE> 98,100,374
<RECEIVABLES> 5,456,767
<ASSETS-OTHER> 360,834
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103,917,975
<PAYABLE-FOR-SECURITIES> 8,007,800
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 97,704
<TOTAL-LIABILITIES> 8,105,504
<SENIOR-EQUITY> 958,409
<PAID-IN-CAPITAL-COMMON> 94,882,455
<SHARES-COMMON-STOCK> 95,840,864
<SHARES-COMMON-PRIOR> 76,020,324
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (29,592)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,199
<NET-ASSETS> 95,812,471
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,096,150
<OTHER-INCOME> 0
<EXPENSES-NET> (680,456)
<NET-INVESTMENT-INCOME> 2,415,694
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 1,199
<NET-CHANGE-FROM-OPS> 2,416,893
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,415,694)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 358,252,167
<NUMBER-OF-SHARES-REDEEMED> (340,847,321)
<SHARES-REINVESTED> 2,415,694
<NET-CHANGE-IN-ASSETS> 19,821,739
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (29,592)
<OVERDISTRIB-NII-PRIOR> 0
<PAGE>
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 425,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 982,000
<AVERAGE-NET-ASSETS> 85,057,009
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.028
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.028)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000707857
<NAME> THE ALLIANCE MUNICIPAL TRUST
<SERIES>
<NUMBER> 07
<NAME> FLORIDA PORTFOLIO
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-28-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 92,043,563
<INVESTMENTS-AT-VALUE> 92,043,563
<RECEIVABLES> 610,454
<ASSETS-OTHER> 20,209
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 92,674,226
<PAYABLE-FOR-SECURITIES> 1,007,326
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 487,515
<TOTAL-LIABILITIES> 1,494,841
<SENIOR-EQUITY> 911,814
<PAID-IN-CAPITAL-COMMON> 90,269,548
<SHARES-COMMON-STOCK> 91,181,362
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,977)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 91,179,385
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,130,586
<OTHER-INCOME> 0
<EXPENSES-NET> (332,073)
<NET-INVESTMENT-INCOME> 1,798,513
<REALIZED-GAINS-CURRENT> (1,977)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,796,536
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,798,513)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 355,151,881
<NUMBER-OF-SHARES-REDEEMED> (265,769,032)
<SHARES-REINVESTED> 1,798,513
<NET-CHANGE-IN-ASSETS> 91,179,385
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<PAGE>
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 288,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 712,000
<AVERAGE-NET-ASSETS> 62,267,343
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000707857
<NAME> THE ALLIANCE MUNICIPAL TRUST
<SERIES>
<NUMBER> 05
<NAME> NEW JERSEY PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 94,712,630
<INVESTMENTS-AT-VALUE> 94,715,935
<RECEIVABLES> 3,749,555
<ASSETS-OTHER> 6,099
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 98,471,589
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 373,296
<TOTAL-LIABILITIES> 373,296
<SENIOR-EQUITY> 980,963
<PAID-IN-CAPITAL-COMMON> 97,115,308
<SHARES-COMMON-STOCK> 98,096,271
<SHARES-COMMON-PRIOR> 74,133,955
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,283)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,305
<NET-ASSETS> 98,098,293
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,300,284
<OTHER-INCOME> 0
<EXPENSES-NET> (738,005)
<NET-INVESTMENT-INCOME> 2,562,279
<REALIZED-GAINS-CURRENT> (32)
<APPREC-INCREASE-CURRENT> 3,305
<NET-CHANGE-FROM-OPS> 2,565,552
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,562,279)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 392,300,834
<NUMBER-OF-SHARES-REDEEMED> (370,900,797)
<SHARES-REINVESTED> 2,562,279
<NET-CHANGE-IN-ASSETS> 23,965,589
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,251)
<OVERDISTRIB-NII-PRIOR> 0
<PAGE>
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 451,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,073,000
<AVERAGE-NET-ASSETS> 90,242,711
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .028
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.028)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000707857
<NAME> the ALLIANCE MUNICIPAL TRUST
<SERIES>
<NUMBER> 02
<NAME> NEW YORK PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 323,360,178
<INVESTMENTS-AT-VALUE> 323,362,509
<RECEIVABLES> 9,347,578
<ASSETS-OTHER> 873,794
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 333,583,881
<PAYABLE-FOR-SECURITIES> 2,000,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 600,050
<TOTAL-LIABILITIES> 2,600,050
<SENIOR-EQUITY> 3,310,453
<PAID-IN-CAPITAL-COMMON> 327,735,042
<SHARES-COMMON-STOCK> 331,045,497
<SHARES-COMMON-PRIOR> 177,318,144
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (63,997)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,639
<NET-ASSETS> 330,983,831
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,186,781
<OTHER-INCOME> 0
<EXPENSES-NET> (2,359,263)
<NET-INVESTMENT-INCOME> 7,827,518
<REALIZED-GAINS-CURRENT> 308
<APPREC-INCREASE-CURRENT> 2,331
<NET-CHANGE-FROM-OPS> 7,830,157
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,827,518)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,218,028,397
<NUMBER-OF-SHARES-REDEEMED> (1,072,128,562)
<SHARES-REINVESTED> 7,827,518
<NET-CHANGE-IN-ASSETS> 153,729,992
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (64,305)
<OVERDISTRIB-NII-PRIOR> 0
<PAGE>
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,388,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,852,000
<AVERAGE-NET-ASSETS> 277,560,363
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.028
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.028)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000707857
<NAME> THE ALLIANCE MUNICIPAL TRUST
<SERIES>
<NUMBER> 06
<NAME> VIRGINIA PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 88,331,386
<INVESTMENTS-AT-VALUE> 88,332,131
<RECEIVABLES> 1,335,488
<ASSETS-OTHER> 34,159
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 89,701,778
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 144,936
<TOTAL-LIABILITIES> 144,936
<SENIOR-EQUITY> 895,641
<PAID-IN-CAPITAL-COMMON> 88,668,481
<SHARES-COMMON-STOCK> 89,564,122
<SHARES-COMMON-PRIOR> 66,929,003
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,025)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 745
<NET-ASSETS> 89,556,842
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,082,007
<OTHER-INCOME> 0
<EXPENSES-NET> (649,822)
<NET-INVESTMENT-INCOME> 2,432,185
<REALIZED-GAINS-CURRENT> (128)
<APPREC-INCREASE-CURRENT> 745
<NET-CHANGE-FROM-OPS> 2,432,802
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,432,185)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 251,119,609
<NUMBER-OF-SHARES-REDEEMED> (230,916,675)
<SHARES-REINVESTED> 2,432,185
<NET-CHANGE-IN-ASSETS> 22,635,736
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,897)
<OVERDISTRIB-NII-PRIOR> 0
<PAGE>
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 418,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 964,000
<AVERAGE-NET-ASSETS> 83,573,376
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.029
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.029)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
