<PAGE>
ALLIANCE MUNICIPAL TRUST
This is filed pursuant to Rule 497(e).
File Nos: 002-79807 and 811-03586
<PAGE>
- --------------------------------------------------------------------------------
YIELD MESSAGES
- --------------------------------------------------------------------------------
For current recorded yield information on the Fund, 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 di-
versified, and the New York, California, Connecticut, New Jersey, Virginia and
Florida Portfolios, each of which is non-diversified. Shares of the New York,
California, Connecticut, New Jersey, Virginia and Florida Portfolios are of-
fered only to residents of each such respective state. This prospectus sets
forth the information about each Portfolio that a prospective investor should
know before investing. Please retain it for future reference.
AN INVESTMENT IN THE FUND IS (I) NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT; (II) NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK; AND (III) NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO
ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE OF EACH PORTFOLIO. THE PORTFOLIOS, EXCEPT FOR THE GENERAL
PORTFOLIO, MAY INVEST A SIGNIFICANT PORTION OF THEIR ASSETS IN THE SECURITIES OF
A SINGLE ISSUER. ACCORDINGLY, AN INVESTMENT IN EACH SUCH PORTFOLIO MAY BE
RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MONEY MARKET FUNDS.
A "Statement of Additional Information," 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 incorporated herein by reference. For
a free copy, call (800) 221-5672 or write Alliance Fund Services, Inc. at the
address shown on page 12.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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>
[LOGO OF PROCASH PLUS APPEARS HERE]
Introduces....
Alliance Municipal Trust
General Portfolio
California Portfolio
Connecticut Portfolio
Florida Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Prospectus
November 1, 1996
Pershing
Division of Donaldson, Lufkin & Jenrette Securities Corporation
One Pershing Plaza, Jersey City, New Jersey 07399-0002
Member NASD, Member New York Stock Exchange,
Other Principal Exchanges Member SIPC
<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, after AMT-GEN AMT-NY AMT-CA AMT-CT AMT-NJ AMT-VA AMT-FL
expense 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>
AMT-General......... $10 $32 $55 $122
AMT-NY.............. $10 $32 $55 $122
AMT-CA.............. $10 $32 $55 $122
AMT-CT.............. $10 $32 $55 $122
AMT-NJ.............. $10 $32 $55 $122
AMT-VA.............. $10 $32 $55 $122
AMT-FL.............. $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 AMT-CT,
AMT-NJ, AMT-VA and AMT-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: AMT-CT Portfolio:
Management Fees--.50%, 12b-1 Fees--.25%, Other Expenses--.37% and Total
Operating Expenses--1.12%; AMT-NJ Portfolio: Management Fees--.50%, 12b-1
Fees--.25%, Other Expenses--.37% and Total Operating Expenses--1.12%; AMT-VA
Portfolio: Management Fees--.50%; 12b-1 Fees--.25%, Other Expenses--.38% and
Total Operating Expenses--1.13% and; AMT-FL Portfolio: Management Fees--.50%,
12b-1 Fees--.25%, Other Expenses--.34% and Total Operating Expenses--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 tables have been audited by McGladrey & Pullen LLP, the Fund's
independent auditors, whose report thereon appears in the Statement of Addi-
tional Information. The following information should be read in conjunction
with the financial statements and related notes included in the Statement of
Additional Information.
<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
reimbursements........ .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
======= ======= =======
TAX 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
compounding, the dividends paid are assumed to be reinvested. Dividends for
the AMT-General for the seven days ended June 30, 1996, after expense reim-
bursement, amounted to an annualized yield of 2.74%, equivalent to an effec-
tive yield of 2.78%. Absent expense reimbursement, the annualized yield for
this period would have been 2.69%, equivalent to an effective yield of 2.73%.
Dividends for the AMT-New York 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 AMT-California 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 ef-
fective yield of 2.59%. Dividends for the AMT-Connecticut 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 re-
imbursement, the annualized yield for this period would have been 2.31%,
equivalent to an effective yield of 2.34%. Dividends for the AMT-New Jersey
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 AMT-
Virginia 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 AMT-Florida for the seven days ended June 30, 1996, after expense re-
imbursement, amounted to an annualized yield of 2.92%, equivalent to an effec-
tive yield of 2.96%. Absent expense reimbursement, the annualized yield for
this period 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 hav-
ing 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 invested in such securities (as
opposed to the taxable investments described below). The Florida Portfolio
pursues its objectives by investing in high quality municipal securities hav-
ing 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 (as opposed to the taxable invest-
ments described above). While the fundamental policies described above and the
"other fundamental 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
portfolio of high quality municipal securities issued by New York state or its
political 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
political 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 Jer-
sey personal income taxes [i.e. New Jersey municipal securities and obliga-
tions of the U.S. Government, its agencies and instrumentalities ("U.S. Gov-
ernment Securities")]. In addition, during periods when Alliance Capital Man-
agement L.P. (the "Adviser") believes that New Jersey municipal securi-
7
<PAGE>
ties that meet the New Jersey Portfolio'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
Federal 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
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 bonds have
provided, and may continue to provide, somewhat higher yields than other
comparable municipal securities. 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.
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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 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
Fund's Statement of Additional Information.
A Portfolio also may invest in stand-by commitments, which may involve cer-
tain expenses and risks, but such commitments are not expected to comprise
more than 5% of any Portfolio's net assets. A Portfolio may commit up to 15%
of its net assets to the purchase of when-issued securities. The Fund's custo-
dian will maintain, in a separate account of the respective Portfolio, liquid
high-grade debt securities having value equal to, or greater than, such when-
issued securities. The price of when-issued securities, which is generally ex-
pressed in yield terms, is fixed at the time the commitment to purchase is
made, but delivery and payment for such securities takes place at a later
time. Normally the settlement date occurs from within ten days to one month
after the purchase of the issue. The value of when-issued securities may fluc-
tuate 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
similar-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 assets 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
Account holders of the ProCASH PLUS Account offered by The Pershing Division
of Donaldson, Lufkin & Jenrette Securities Corporation ("Pershing") are eligi-
ble to invest in shares of the Fund. The Fund is intended to provide a means
for the investment of free credit cash balances arising in ProCASH PLUS
Accounts.
Your brokerage account will be coded to sweep cash balances into shares of
the Fund you have selected. There is a $500 minimum initial investment for all
Funds. Free credit balances arising in your brokerage account from check de-
posits, dividend payments, interest payments and other credits will be in-
vested in the selected Fund on the business day after posting. Free
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credit balances arising from the sale of securities will be invested into the
selected Fund on the business day following settlement. We will, however, hold
back and not invest in the Fund sufficient monies to pay for security pur-
chases which have not yet settled.
REDEMPTIONS
Pershing has instituted an automatic redemption for participants invested in
the Fund. Pershing will redeem a sufficient number of shares on settlement
date to pay for all securities transactions. If you intend to send funds to
settle securities transactions, Pershing must receive these funds on the busi-
ness day before the settlement date to prevent an automatic redemption. Shares
may also be redeemed to meet any debits in the ProCASH PLUS Account arising
from MasterCard and checking transactions and will be paid from your account
on the day transactions are posted.
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
expected 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
Portfolio'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 payable 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
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 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 termi-
nate 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 reasona-
bly believes to be genuine. The Fund will employ reasonable procedures in or-
der to verify that telephone requests for redemptions are genuine, including
among others, recording such telephone instructions and causing written con-
firmations 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 redemp-
tions.
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.
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
automatic investment in additional full and fractional shares of that Portfo-
lio in each shareholder's account. As such additional shares are entitled to
dividends on following days, a compounding growth of income occurs.
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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 Federal 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. Dis-
tributions to residents of California out of income earned by the California
Portfolio from California municipal securities are exempt from California per-
sonal income taxes. Distributions to individuals who are residents of Connect-
icut out of income earned by the Connecticut Portfolio from Connecticut munic-
ipal securities are exempt from Connecticut personal income taxes. Distribu-
tions to residents of New Jersey out of income earned by the New Jersey Port-
folio 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. Dividends paid by the Florida Portfolio to individual Florida
shareholders will not be subject to Florida income tax, which is imposed only
on corporations. 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.
Government securities and Florida municipal securities are exempt from this
intangible tax. It is anticipated that the Florida Portfolio shares will qual-
ify 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 period 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 av-
erage daily value of the net assets of each Portfolio. 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 institu-
tions for administrative and accounting services
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provided to the Fund, with any remaining amounts being used to partially de-
fray other expenses incurred by the Adviser in distributing Fund shares. The
Fund believes that the administrative services provided by depository institu-
tions are permissible activities under present banking laws and regulations
and will take appropriate actions (which should not adversely affect the Fund
or its shareholders) in the future to maintain such legal conformity should
any changes in, or interpretations of, such laws or regulations occur.
The Adviser will reimburse the Fund to the extent that the combined net ex-
penses of the Fund's Portfolios (including the Adviser's fee and expenses in-
curred under the Agreement) exceed 1% of its average daily net assets for any
fiscal year.
CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank and Trust Compa-
ny, P.O. Box 1912, Boston, MA 02105, is the Fund's Custodian. Alliance Fund
Services, Inc., P.O. Box 1520, Secaucus NJ 07096-1520 and Alliance Fund Dis-
tributors, Inc., 1345 Avenue of the Americas, New York, NY 10105, are the
Fund's Transfer Agent and Distributor, respectively. The transfer agent
charges a fee for its services.
FUND ORGANIZATION. The Fund is an open-end management investment company reg-
istered under the Act. The Fund was reorganized as a Massachusetts business
trust in April 1985, having previously been a Maryland corporation since 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.
REPORTS. You receive semi-annual and annual reports for 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.
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