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This is filed pursuant to Rule 497(e).
File Nos: 002-79807 and 811-03586
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Yield Messages
For current recorded yield information on the Fund, call toll-free (800)
221-9513.
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The Massachusetts Portfolio (the "Fund") is a non-diversified series of
Alliance Municipal Trust (the "Trust"), an open-end investment company with
investment objectives of safety, liquidity and tax-free income. Shares of the
Fund are offered only to residents of Massachusetts. This prospectus sets forth
the information about the Fund that a prospective investor should know before
investing. Please retain it for future reference.
AN INVESTMENT IN THE FUND IS (I) NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT; (II) NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK; AND (III) NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO
ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE. THE FUND MAY INVEST A SIGNIFICANT PORTION OF ITS ASSETS IN THE
SECURITIES OF A SINGLE ISSUER. ACCORDINGLY, AN INVESTMENT IN THE FUND MAY BE
RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MONEY MARKET FUNDS.
A "Statement of Additional Information," dated April 17, 1997, which provides
a further discussion of certain areas in this prospectus and other matters
which may be of interest to some investors, has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. A free copy
may be obtained by contacting your Account Executive.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
(R)This registered service mark used under license from the owner, Alliance
Capital Management L.P.
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Contents
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Expense Information.......................................................... 2
Investment Objectives and Policies........................................... 3
Purchase and Redemption of Shares............................................ 5
Additional Information....................................................... 5
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Advest, inc.
Presents:
. Alliance Municipal Trust-
Massachusetts Portfolio
Advest, Inc. serving
investors since 1898
Prospectus
April 17, 1997
Corporate Headquarters
90 State House Square
Hartford, CT 06103
[LOGO OF ADVEST APPEARS HERE]
Member: New York,
American & other
principal stock exchanges.
Member: SIPC
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EXPENSE INFORMATION
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SHAREHOLDER TRANSACTION EXPENSES
The Fund has no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after expense reimbursement)
<TABLE>
<S> <C>
Management Fees.................... .50%
12b-1 Fees......................... .25%
Other Expenses..................... .25%
----
Total Fund Operating Expenses...... 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
------ -------
<S> <C>
$10 $32
</TABLE>
The purpose of the foregoing table is to assist the investor in understand-
ing the various costs and expenses that an investor in the Fund will bear di-
rectly and indirectly. The expenses listed in the table are net of the con-
tractual reimbursement by the Adviser described in this prospectus. Expenses
before such reimbursement would be: Management Fees--.50%; 12b-1 Fees--.25%;
Other Expenses--.95%; and Total Fund Operating Expenses--1.70%. "Other Ex-
penses" are based on estimated amounts for the Fund's current fiscal year. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES;
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
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
compounding, the dividends paid are assumed to be reinvested.
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INVESTMENT OBJECTIVES AND POLICIES
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INVESTMENT OBJECTIVES
The investment objectives of the Fund 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. The Fund
pursues its objectives by investing at least 65% of its total assets in high
quality municipal securities issued by the Commonwealth of Massachusetts or
its political subdivisions having remaining maturities of 397 days or less
(which maturities may extend to such greater length of time as may be permit-
ted from time to time pursuant to Rule 2a-7 under the Investment Company Act
of 1940, as amended (the "Act")), and, except when the Fund assumes a tempo-
rary defensive position, as a matter of fundamental policy, at least 80% of
the Fund's total assets will be invested in such municipal securities (as op-
posed to the taxable investments described below). Unless otherwise stated,
the Fund's investment objectives and policies are not fundamental and may be
changed by the Trustees of the Fund without shareholder approval. Normally,
substantially all of the Fund's income will be tax-exempt as described below.
The average weighted maturity of the Fund will not exceed 90 days.
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 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
securities. See below, "Daily Dividends, Other Distributions, Taxes."
There can be no assurance that the Fund will achieve its investment objec-
tives. Potential investors should consider the greater risk of the concentra-
tion of the Fund versus the safety that comes with less concentrated invest-
ments and should compare yields available on portfolios of Massachusetts
municipal issues with those of more diversified portfolios, including other
states' issues, before making an investment decision. Alliance Capital Manage-
ment L.P. (the "Adviser") believes that by maintaining the Fund's investments
in liquid, short-term, high quality investments, the Fund is largely insulated
from the credit risks that exist on long-term municipal securities of Massa-
chusetts. See the Statement of Additional Information for a more detailed dis-
cussion of the financial condition of Massachusetts.
MUNICIPAL SECURITIES
The municipal securities in which the Fund 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 antic-
ipation 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 interest, and
revenue bonds, which are generally paid from the revenues of a particular fa-
cility or a specific excise or other source.
The Fund 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,
3
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accordingly, enhance the ability of the Fund 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 Fund will comply with Rule 2a-7 with respect to its investments in
variable rate obligations supported by letters of credit.
All of the Fund's municipal securities at the time of purchase are rated
within the two highest quality ratings of the requisite nationally recognized
statistical rating organizations, such as 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
Fund invests, such securities frequently are supported by credit and liquidity
enhancements, such as letters of credit, from third party financial institu-
tions. The Adviser continuously monitors the credit quality of such third par-
ties; however, changes in the credit quality of such a financial institution
could cause the Fund's investments backed by that institution to lose value
and affect the Fund's share price.
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 INVESTMENT POLICIES
The Fund will comply with Rule 2a-7 under the Act, as amended from time to
time, including the diversification, quality and maturity limitations imposed
by the Rule. A more detailed description of Rule 2a-7 is set forth in the
Statement of Additional Information.
The Fund also may invest in stand-by commitments, which may involve certain
expenses and risks, but such commitments are not expected to comprise more
than 5% of the Fund's net assets. The Fund may commit up to 15% of its net as-
sets to the purchase of when-issued securities. The Fund's custodian will
maintain, in a separate account of the Fund, liquid high-grade debt securities
having a value equal to, or greater than, such when-issued securities. The
price of when-issued securities, which is generally expressed in yield terms,
is fixed at the time the commitment to purchase is made, but delivery and pay-
ment 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 the Fund.
The Fund may invest in restricted securities that are determined by the Ad-
viser to be liquid in accordance with procedures adopted by the Trustees, in-
cluding securities eligible for resale under Rule 144A under the Securities
Act of 1933 (the "Securities Act"). Restricted securities are securities sub-
ject to contractual or legal restrictions on resale, such as those arising
from an issuer's reliance upon certain exemptions from registration under the
Securities Act.
The Fund will not invest more than 10% of its net assets in illiquid securi-
ties, including illiquid restricted securities.
The Fund may not invest more than 5% of its total assets in the securities
of any one issuer (other than securities issued by the U.S. Government, its
agencies or instrumentalities), except that with respect to 50% of the Fund's
total assets the Fund may invest in the securities of as few as four issuers
(provided that no more than 25% of the Fund's total assets are invested in the
securities of any one issuer). To the extent that these limitations are more
permissive than Rule 2a-7, the Fund will comply with the more restrictive pro-
visions of Rule 2a-7.
4
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PURCHASE AND REDEMPTION OF SHARES
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OPENING ACCOUNTS
Instruct your Account Executive to use AMT-MA in conjunction with your bro-
kerage account.
SUBSEQUENT INVESTMENTS
A. BY CHECK THROUGH ADVEST, INC.
Mail or deliver your check or negotiable draft payable to Advest, Inc. to
your Account Executive who will deposit it into the Fund. Please indicate your
Fund account number on the check or draft. Please contact your Account Execu-
tive for applicable minimums.
B. BY SWEEP
Advest, Inc. has available an automatic "sweep" for the Funds in the opera-
tion of brokerage accounts.
C. BY CONTACTING YOUR ACCOUNT EXECUTIVE
Cash that has come into your brokerage account from any source can be moved
into your Fund account by contacting your Account Executive either specifi-
cally each time that you know there is a cash balance or by providing standing
instructions to your Account Executive to promptly move all such available
cash to the Funds.
REDEMPTIONS
A. BY CONTACTING YOUR ACCOUNT EXECUTIVE
Instruct your Advest, Inc. Account Executive to order a withdrawal from your
Fund account to purchase securities or to make payment with an Advest, Inc.
check either to you or to your designated payee.
B. BY SWEEP
Advest, Inc.'s automatic "sweep," also moves money from your account to
cover securities purchases in your Advest, Inc. brokerage account.
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ADDITIONAL INFORMATION
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SHARE PRICE. Shares of the Fund are sold and redeemed on a continuous basis
without sales or redemption charges at their net asset value which is expected
to be constant at $1.00 per share, although this price is not guaranteed. The
net asset value of Fund shares is determined each business day at 12:00 Noon
and 4:00 p.m. (New York time). The net asset value per share of the Fund is
calculated by taking the sum of the value of the Fund'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 the Fund outstand-
ing. All expenses, including the fees payable to the Adviser, are accrued dai-
ly.
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
represented 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 re-
ceived 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 drastic economic or market developments, it is possible that share-
holders might have difficulty in reaching Alliance Fund Services, Inc. by tel-
ephone, in which event the shareholder should issue written instructions to
Alliance Fund Services, Inc. at the address shown in this prospectus. The
5
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Fund reserves the right to suspend or terminate its telephone redemption serv-
ice at any time without notice. Neither the Fund nor the Adviser, or Alliance
Fund Services, Inc. will be responsible for the authenticity of telephone re-
quests to purchase or redeem Fund shares. Alliance Fund Services, Inc. will
employ reasonable procedures in order to verify that telephone requests are
genuine and could be liable for losses arising from unauthorized transactions
if it did not employ such procedures.
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.
SMALL ACCOUNT CHARGE. The Fund imposes service charges upon financial inter-
mediaries to reflect the relatively higher costs of small accounts and small
transactions; these intermediaries may in turn pass on such charges to af-
fected accounts.
DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of the Fund is
determined each business day at 4:00 p.m. (New York time) and is paid immedi-
ately thereafter pro rata to Fund shareholders of record via automatic invest-
ment in additional full and fractional shares of the Fund in each sharehold-
er's account. As such additional shares are entitled to dividends on following
days, a compounding growth of income occurs.
The Fund's net income consists of all accrued interest income on its assets
less the Fund's expenses applicable to that dividend period. Realized gains
and losses of the Fund are reflected in its net asset value and are not in-
cluded in net income.
Distributions to you out of tax-exempt interest income earned by the Fund
are not subject to Federal income tax (other than the AMT). Any exempt-inter-
est dividends derived from interest on municipal securities subject to the AMT
will be a specific preference item for purposes of the Federal individual and
corporate AMT. Distributions to residents of Massachusetts out of interest
earned by the Fund from Massachusetts municipal securities are exempt from
Massachusetts state personal income taxes. Distributions out of taxable inter-
est 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 irrespective of the length of time
you may have held your shares. Distributions of long-term capital gains de-
rived from certain specified Massachusetts municipal securities are exempt
from Massachusetts personal income tax. Distributions of short and long-term
capital gains, if any, are normally made near year-end. Each year shortly af-
ter 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
investment 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.
The Fund pays an advisory fee at an annual rate of .50 of 1% up to $1.25 bil-
lion 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 bil-
lion of such assets and .45 of 1% of the average daily net assets in excess of
$3 billion. The fee is accrued daily and paid monthly.
Under a Distribution Services Agreement (the "Agreement"), the Fund pays the
Adviser at a maximum annual rate of .25 of 1% of the Fund's aggregate average
daily net assets. Substantially all such monies (together with significant
amounts from the Adviser's own resources) are paid by the Adviser to broker-
dealers and other financial intermediaries for their distribution assistance
and to banks and other depository institutions for administrative and account-
ing services provided to the Fund, with any remaining amounts being used to
partially defray other expenses incurred by the Adviser in distributing Fund
shares. The Fund believes that the administrative services provided by deposi-
tory institutions are permissible activities under present banking laws and
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regulations and will take appropriate actions (which should not adversely af-
fect the Fund or its shareholders) in the future to maintain such legal con-
formity should any changes in, or interpretations of, such laws or regulations
occur.
The Adviser will reimburse the Fund to the extent that the combined net ex-
penses of the Fund (including the Adviser's fee and expenses incurred 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 Com-
pany, 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 a series of the Trust, which currently con-
sists of seven other series not offered by this prospectus. The Trust may in
the future establish additional portfolios which may have investment objec-
tives different from those of the Fund. The Trust is an open-end management
investment company registered under the Act. The Trust was reorganized as a
Massachusetts business trust in April 1985, having previously been a Maryland
corporation since its formation in January 1983. The Trust's activities are
supervised by its Trustees. Normally, shares of each series of the Trust are
entitled to one vote, and vote as a single series on matters that affect the
series in substantially the same manner. Massachusetts law does not require
annual meetings of shareholders and it is anticipated that shareholder meet-
ings will be held only when required by Federal law. Shareholders have avail-
able certain procedures for the removal of Trustees.
7
