<PAGE>
As filed with the Securities and Exchange
Commission on October 30, 1997
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. 35 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 33 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.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectus
(Caption)
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Information
Item 3. Financial Highlights Financial Highlights
Item 4. General Description Investment Objectives
of Registrant and Policies
Item 5. Management of the Fund Additional Information
Item 6. Capital Stock and Additional Information
Other Securities
Item 7. Purchase of Securities Purchase and Redemption
Being Offered of Shares; Additional
Information
Item 8. Redemption or Repurchase Purchase and Redemption
of Shares
Item 9. Pending Legal Proceedings Not Applicable
PART B Location in Statement
Of Additional Information
(Caption)
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information Management; General
and History Information
Item 13. Investment Objectives Investment Objectives
and Policies and Policies; Investment
Restrictions
Item 14. Management of the Fund Management
<PAGE>
Item 15. Control Persons and Management
Principal Holders of
Securities
Item 16. Investment Advisory and Management
Other Services
Item 17. Brokerage Allocation General Information
Item 18. Capital Stock and Other Daily Dividends -
Securities Determination of Net
Asset Value; General
Information
Item 19. Purchase, Redemption and Purchase and Redemption
Pricing of Securities of Shares; Daily
Being Offered Dividends - Determination
of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters General Information
Item 22. Calculation of Performance General Information
Data
Item 23. Financial Statements Financial Statements;
Report of Independent
Auditors
<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:
<TABLE>
<S> <C>
[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] [3] [6] [6] [#] for the Florida Portfolio,
[1] [#] [1] [#] [5] [7] [#] for the Massachusetts Portfolio.
</TABLE>
For non-touch-tone telephones, call toll-free (800) 221-9513.
Alliance Municipal Trust (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, Florida and Massachusetts Portfolios, each of which
is non-diversified. Shares of the New York, California, Connecticut, New
Jersey, Virginia, Florida and Massachusetts Portfolios are offered 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, 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.
For a free copy, call (800) 221-5672 or write Alliance Fund Services, Inc. at
the address shown on page 12.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
(R)This registered service mark used under license from the owner, Alliance
Capital Management L.P.
CONTENTS
<TABLE>
<S> <C>
Expense Information....................................................... 2
Financial Highlights...................................................... 3
Investment Objectives and Policies........................................ 7
Purchase and Redemption of Shares......................................... 9
Additional Information.................................................... 10
</TABLE>
ALLIANCE
MUNICIPAL
TRUST
[LOGO OF ALLIANCE CAPITAL(R) APPEARS HERE]
PROSPECTUS
NOVEMBER 1, 1997
ALC64PRO7
<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 MA
after expense PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
reimbursement) --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees........ .50% .50% .50% .50% .50% .50% .50% .50%
12b-1 Fees............. .25 .25 .25 .25 .25 .25 .25 .25
Other Expenses......... .25 .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% 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
MA Portfolio........ $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 for the CT, NJ, VA and
FL Portfolios are net of the contractual reimbursement by the Adviser de-
scribed in this prospectus. The expenses of such Portfolios before such reim-
bursements and fee waivers, would be: CT Portfolio: Management Fees--.50%,
12b-1 Fees--.25%, Other Expenses--.31% and Total Operating Expenses--1.06%; NJ
Portfolio: Management Fees--.50%, 12b-1 Fees--.25%, Other Expenses--.31% and
Total Operating Expenses--1.06%; VA Portfolio: Management Fees--.50%, 12b-1
Fees--.25%, Other Expenses--.34% and Total Operating Expenses--1.09% and; FL
Portfolio: Management Fees--.50%, 12b-1 Fees--.25%, Other Expenses--.34% and
Total Operating Expenses--1.09%. For the MA Portfolio, "Other Expenses" are
based on estimated amounts for the current fiscal year. The example should not
be considered a representation of past or future expenses; actual expenses may
be greater or less than those shown.
2
<PAGE>
FINANCIAL HIGHLIGHTS . FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (AUDITED)
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 --------------
1997 1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989 1988 1987
------ ------ ------ ------ ------ ------ ------ ------ ------------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .028 .029 .028(d) .018(d) .020(d) .034 .046 .055 .030 .047 .041
Net realized and
unrealized loss on
investments........... -0- -0- (.003) -0- -0- -0- -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase in net
asset value from
operations............ .028 .029 .025 .018 .020 .034 .046 .055 .030 .047 .041
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
ADD: CAPITAL
CONTRIBUTIONS
Capital Contributed by
the Adviser........... -0- -0- .003 -0- -0- -0- -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS: DIVIDENDS
Dividends from net
investment income..... (.028) (.029) (.028) (.018) (.020) (.034) (.046) (.055) (.030) (.047) (.041)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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).............. 2.81% 2.93% 2.83%(c) 1.81% 2.05% 3.48% 4.71% 5.65% 6.13%(b) 4.81% 4.18%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in millions).. $980 $1,148 $1,189 $1,134 $1,016 $914 $883 $798 $695 $633 $690
Ratio to average net
assets of:
Expenses, net of
waivers and
reimbursements........ .94% .95% .94% .92% .92% .92% .89% .83% .84%(b) .83% .80%
Expenses, before
waivers and
reimbursements........ .94% .95% .95% .94% .94% .95% .95% .93% .94%(b) .93% .90%
Net investment
income(d)............. 2.76% 2.90% 2.78%(d) 1.80%(d) 2.02%(d) 3.40% 4.57% 5.50% 5.96%(b) 4.69% 4.08%
</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 had no effect on total return.
(d) Net of expenses reimbursed or waived by the Adviser.
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
---------------------------------------------------------------------------------------------------------
YEAR ENDED
YEAR ENDED JUNE 30, SIX MONTHS DECEMBER 31,
---------------------------------------------------------------------------- ENDED ------------
1997 1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989 1988
-------- -------- -------- -------- -------- -------- ------- ------- ------------- ------------
<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............. .027 .028 .028 .018 .019 .034 .042 .051 .027 .041
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net
investment income.. (.027) (.028) (.028) (.018) (.019) (.034) (.042) (.051) (.027) (.041)
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
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(a)..... 2.77% 2.87% 2.84% 1.77% 1.94% 3.47% 4.32% 5.26% 5.61%(b) 4.14%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
period (000's
omitted)........... $355,461 $330,984 $177,254 $162,839 $100,529 $100,476 $71,748 $62,536 $41,910 $41,335
Ratio to average net
assets of:
Expenses, net of
waivers and
reimbursements..... .85% .85% .85% .84% .80% .80% .80% .80% .85%(b) 1.00%
Expenses, before
waivers and
reimbursements..... 1.04% 1.03% 1.03% 1.08% 1.06% 1.12% 1.15% 1.18% 1.35%(b) 1.33%
Net investment
income(c).......... 2.73% 2.82% 2.81% 1.77% 1.91% 3.35% 4.20% 5.13% 5.45%(b) 4.03%
</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) Net of expenses reimbursed or waived by the Adviser.
3
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA PORTFOLIO
---------------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30, SIX MONTHS JUNE 2, 1988(a)
------------------------------------------------------------------------------ ENDED THROUGH
1997 1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989 DECEMBER 31, 1988
-------- -------- -------- -------- -------- -------- -------- -------- ------------- -----------------
<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......... .027 .029 .027 .018 .020 .032 .043 .050 .029 .030
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
LESS: DIVIDENDS
Dividends from
net investment
income......... (0.27) (.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 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURNS
Total investment
return based on
net asset
value(b)....... 2.76% 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)....... $357,148 $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% .93% .95% 1.00% .99% .92%(c) .89%(c)
Expenses, before
waivers and
reimbursements.. .96% .94% 1.01% 1.02% 1.02% 1.05% 1.10% 1.09% 1.02%(c) 1.10%(c)
Net investment
income(d)...... 2.73% 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.
<TABLE>
<CAPTION>
CONNECTICUT PORTFOLIO
----------------------------------------------------------------------------------
YEAR ENDED JUNE 30, JANUARY 5, 1990(a)
-------------------------------------------------------------- THROUGH
1997 1996 1995 1994 1993 1992 1991 JUNE 30, 1990
-------- ------- ------- ------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .027 .028 .028 .017 .020 .033 .045 .026
-------- ------- ------- ------- ------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net
investment income..... (0.27) (.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 $ 1.00
======== ======= ======= ======= ======= ======= ======= =======
TOTAL RETURNS
Total investment return
based on net asset
value(b).............. 2.76% 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)............... $102,612 $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% .80% .77% .70% .58% .44% .19%(c)
Expenses, before
waivers and
reimbursements........ 1.10% 1.15% 1.21% 1.21% 1.16% 1.22% 1.16% 1.10%(c)
Net investment
income(d)............. 2.72% 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.
4
<PAGE>
<TABLE>
<CAPTION>
NEW JERSEY PORTFOLIO
-----------------------------------------------
YEAR ENDED JUNE 30, FEBRUARY 7, 1994(a)
-------------------------- THROUGH
1997 1996 1995 JUNE 30, 1994
-------- ------- ------- -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- -------
INCOME FROM INVESTMENT OPERA-
TIONS
Net investment income......... .027 .028 .029 .008
-------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net investment
income....................... (.027) (.028) (.029) (.008)
-------- ------- ------- -------
Net asset value, end of peri-
od........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= =======
TOTAL RETURNS
Total investment return based
on net asset value(b)........ 2.72% 2.89% 2.93% 2.08%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............... $123,579 $98,098 $74,133 $36,909
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements............... .85% .82% .74% .70%(c)
Expenses, before waivers and
reimbursements............... 1.12% 1.19% 1.29% 1.93%(c)
Net investment income(d)...... 2.68% 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.
<TABLE>
<CAPTION>
VIRGINIA PORTFOLIO FLORIDA PORTFOLIO
------------------------------- ------------------------------
YEAR ENDED OCTOBER 25
JUNE 30, 1994(a) JULY 28, 1995(a)
---------------- THROUGH YEAR ENDED THROUGH
1997 1996 JUNE 30, 1995 JUNE 30, 1997 JUNE 30, 1996
------- ------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income... .028 .029 .023 0.30 .030
------- ------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net in-
vestment income........ (.028) (.029) (.023) (.030) (.030)
------- ------- ------- ------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
TOTAL RETURNS
Total investment return
based on net asset
value(b)............... 2.83% 2.97% 3.48%(c) 3.03% 3.32%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (000's omitted)... $78,775 $89,557 $66,921 $89,149 $91,179
Ratio to average net as-
sets of:
Expenses, net of waiv-
ers and reimburse-
ments................. .80% .78% .44%(c) .65% .58%(c)
Expenses, before waiv-
ers and reimburse-
ments................. 1.15% 1.15% 1.30%(c) 1.10% 1.24%(c)
Net investment
income(d)............. 2.78% 2.91% 3.48%(c) 2.97% 3.12%(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>
MASSACHUSETTS PORTFOLIO
-----------------------
APRIL 17, 1997(a)
THROUGH
JUNE 30, 1997
-----------------------
<S> <C>
Net asset value, beginning of period........... $ 1.00
-------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................... .007
-------
LESS: DIVIDENDS
Dividends from net investment income.......... (.007)
-------
Net asset value, end of period................ $ 1.00
=======
TOTAL RETURNS
Total investment return based on net asset
value(c)(d).................................. 3.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...... $15,046
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements(d)............................ .50%
Expenses, before waivers and
reimbursements(d)............................ 2.99%
Net investment income(b)(d)................... 3.47%
</TABLE>
- -------
(a) Commencement of operations.
(b) Net of expenses reimbursed or waived by the Adviser.
(c) 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.
(d) Annualized.
---------------
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 General Portfolio for the seven days ended June 30, 1997, after expense
reimbursement, amounted to an annualized yield of 3.20%, equivalent to an ef-
fective yield of 3.25%. Dividends for the New York Portfolio for the seven
days ended June 30, 1997, after expense reimbursement, amounted to an
annualized yield of 3.19%, equivalent to an effective yield of 3.24%. Absent
expense reimbursement, the annualized yield for this period would have been
3.00%, equivalent to an effective yield of 3.05%. Dividends for the California
Portfolio for the seven days ended June 30, 1997, after expense reimbursement,
amounted to an annualized yield of 3.08%, equivalent to an effective yield of
3.13%. Absent expense reimbursement, the annualized yield for this period
would have been 3.05%, equivalent to an effective yield of 3.10%. Dividends
for the Connecticut Portfolio for the seven days ended June 30, 1997, after
expense reimbursement, amounted to an annualized yield of 3.05%, equivalent to
an effective yield of 3.10%. Absent expense reimbursement, the annualized
yield for this period would have been 2.75%, equivalent to an effective yield
of 2.80%. Dividends for the New Jersey Portfolio for the seven days ended June
30, 1997, after expense reimbursement, amounted to an annualized yield of
3.14%, equivalent to an effective yield of 3.19%. Absent expense reimburse-
ment, the annualized yield for this period would have been 2.87%, equivalent
to an effective yield of 2.92%. Dividends for the Virginia Portfolio for the
seven days ended June 30, 1997, after expense reimbursement, amounted to an
annualized yield of 3.41%, equivalent to an effective yield of 3.47%. Absent
expense reimbursement, the annualized yield for this period would have been
3.06%, equivalent to an effective yield of 3.12%. Dividends for the Florida
Portfolio for the seven days ended June 30, 1997, after expense reimbursement,
amounted to an annualized yield of 3.41%, equivalent to an effective yield of
3.47%. Absent expense reimbursement, the annualized yield for this period
would have been 2.96%, equivalent to an effective yield of 3.02%. Dividends
for the Massachusetts Portfolio for the seven days ended June 30, 1997, after
expense reimbursement, amounted to an annualized yield of 3.71%, equivalent to
an effective yield of 3.78%. Absent expense reimbursement, the annualized
yield for this period would have been 1.22%, equivalent to an effective yield
of 1.29%.
6
<PAGE>
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INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Alliance Municipal Trust (the "Fund") consists of eight distinct Portfolios,
the General, New York, California, Connecticut, New Jersey, Virginia, Florida
and Massachusetts Portfolios (each a "Portfolio"), each of which issues a sep-
arate 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 de-
scribed below. As a matter of fundamental policy, each Portfolio, except the
Florida and Massachusetts Portfolios, 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 tem-
porary defensive position, at least 80% of each such Portfolio's total assets
will be invested in such securities (as opposed to the taxable investments de-
scribed below). The Florida and Massachusetts Portfolios pursue their objec-
tives by investing in high quality municipal securities having remaining matu-
rities 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 such a
Portfolio assumes a temporary defensive position, as a matter of fundamental
policy, at least 80% of each Portfolio's total assets will be invested in mu-
nicipal securities (as opposed to the taxable investments described above).
While the fundamental policies described above and the other fundamental in-
vestment 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. Normal-
ly, substantially all of each Portfolio's income will be tax-exempt as de-
scribed below (e.g., for 1996, 100% of the income of each Portfolio was exempt
from Federal income taxes; the Massachusetts Portfolio had not yet been estab-
lished). The average weighted maturity of each Portfolio cannot exceed 90
days. The Fund may in the future establish additional portfolios which may
have 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 securities
that meet the New Jersey Portfolio's standards are not available, it may in-
vest 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
7
<PAGE>
of Florida intangible tax by investing not less than 65% of its total assets
in a portfolio of high-quality municipal securities issued by Florida or its
political subdivisions.
The Massachusetts Portfolio seeks maximum current income that is exempt from
Federal and Massachusetts state personal income taxes by investing, at least
65% of its total assets in high quality municipal securities issued by the
Commonwealth of Massachusetts or its political subdivisions. The Massachusetts
Portfolio 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.
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, Florida and Massachusetts 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, including other states' issues, before making an investment deci-
sion. The Adviser believes that by maintaining each Portfolio's investments in
liquid, short-term, high quality investments, each Portfolio is largely insu-
lated from the credit risks that exist on long-term municipal securities of
the relevant state. See the Statement of Additional Information for a more de-
tailed discussion of the financial condition of New York, California, Connect-
icut, New Jersey, Virginia, Florida and Massachusetts.
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. Each Portfolio will comply with Rule 2a-7 with respect to its invest-
ments 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 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
8
<PAGE>
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. To the extent that the Fund's limitations are more permissive than Rule
2a-7, the Fund will comply with the more restrictive provisions of the Rule.
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 INVESTMENT POLICIES
No portfolio of the Fund will invest more than 10% of its net assets in il-
liquid securities, including illiquid restricted securities. As to these secu-
rities, a Portfolio is subject to a risk that should the Portfolio desire to
sell them when a ready buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's net assets could
be adversely affected. Illiquid securities may include securities that are not
readily marketable and securities subject to legal or contractual restrictions
on resale. With respect to the Massachusetts Portfolio, which may invest in
restricted securities, restricted securities determined by the Adviser to be
liquid will not be treated as "illiquid" for purposes of the restriction on
illiquid securities.
The following investment policies are fundamental policies with respect to
each applicable Portfolio except the Massachusetts Portfolio which has adopted
the applicable restrictions as non-fundamental 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, Florida and
Massachusetts 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 se-
curities of any one issuer except those of the U.S. Government. As a matter of
operating policy, to the extent that these limitations are more permissive
than Rule 2a-7, the Portfolio will comply with the more restrictive provisions
of Rule 2a-7.
- --------------------------------------------------------------------------------
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 oper-
ation of brokerage cash accounts for its customers. Contact your Account Exec-
utive to determine if a sweep is available and what the sweep parameters are.
REDEMPTIONS
A. BY CHECKWRITING
With this service, you may write checks made payable to any payee in any
amount. Checks cannot be written for more than the principal balance (not in-
cluding any accrued dividends) in your account. You must first fill out the
Signature Card, which you can obtain from your Account Executive. There is a
charge for check reorders. 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, see the
Statement of Additional Information. The Fund offers a variety of shareholder
services. For more information about these services, call the Fund at (800)
221-5672.
- --------------------------------------------------------------------------------
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 in
this Prospectus. The Fund reserves the right to suspend or terminate its tele-
phone redemption service at any time without notice. Neither the Fund nor the
Adviser, or Alliance Fund Services, Inc. will be responsible for the authen-
ticity 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 fee
for handling telephone requests for redemptions.
10
<PAGE>
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 ac-
count. These minimums do not apply to shareholder accounts maintained through
brokerage firms or other financial institutions, as such financial intermedi-
aries may maintain their own minimums.
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.
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 to residents of Massachusetts out of interest earned by the Massachu-
setts Portfolio from Massachusetts municipal securities are exempt from Massa-
chusetts state personal income taxes. Distributions 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 irrespective of the length of time you
may have held your shares. Distributions of short- and long-term capital
gains, if any, are normally made near year-end. Each year shortly after Decem-
ber 31, the Fund will send you tax informa -
11
<PAGE>
tion 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.
For the fiscal year ended June 30, 1997, the General, New York, California,
Connecticut, New Jersey, Virginia and Florida Portfolios each paid the Adviser
an Advisory fee at an annual rate of .50 of 1%, .41 of 1%, .50 of 1%, .30 of
1%, .33 of 1%, .25 of 1% and .15 of 1%, respectively, of the average daily
value of the net assets of each Portfolio. For the period ended June 30, 1997,
the Adviser waived the advisory fee for the Massachusetts Portfolio.
The Adviser is a leading international investment manager, supervising client
accounts with assets as of September 30, 1997 totaling more than $199 billion
(of which more than $71 billion represented the assets of investment compa-
nies). The Adviser's clients are primarily major corporate employee benefit
plans, public employee retirement plans, insurance companies, banks, founda-
tions and endowment funds. The 54 registered investment companies managed by
the Adviser comprising 116 separate investment portfolios currently have over
two million shareholders. As of September 30, 1997, the Adviser was retained
as an investment manager of employee benefit fund assets for 29 of the Fortune
100 companies.
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, one of the largest life insurance companies in the United States,
which is a wholly-owned subsidiary of The Equitable Companies Incorporated, a
holding company controlled by AXA, a French insurance holding company. Certain
information concerning the ownership and control of Equitable by AXA is set
forth in the Fund's Statement of Additional Information under "Management of
the Fund."
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, 1997, 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%, .22 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. For the period
ended June 30, 1997, the distribution payment was waived for the Massachusetts
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 institutions for administrative and accounting
services provided to the Fund, with any remaining amounts being used to par-
tially 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
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'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) ALLIANCE MUNICIPAL TRUST
________________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
November 3, 1997
________________________________________________________________
TABLE OF CONTENTS
Page
Investment Objectives and Policies 2
Investment Restrictions 51
Management 54
Purchase and Redemption of Shares 67
Additional Information 70
Daily Dividends-Determination of Net Asset Value 72
Taxes 74
General Information 76
Appendix A-Description of Municipal Securities 83-84
Appendix B-Description of Securities Ratings 85-86
Financial Statements and Independent Auditors Report 87-155
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, 1997. 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 eight
distinct Portfolios, the General Portfolio, the New York
Portfolio, the California Portfolio, the Connecticut Portfolio,
the New Jersey Portfolio, the Virginia Portfolio, the Florida
Portfolio and the Massachusetts 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 and
Massachusetts Portfolios, 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 and Massachusetts Portfolios pursue
their 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 such a Portfolio assumes a temporary defensive
position, as a matter of fundamental policy, at least 80% of each
Portfolio's total assets will be invested in municipal
securities. While no Portfolio may change any "fundamental"
policy 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 1996, 100% of the income of each Portfolio(the Massachusetts
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
municipal securities. Such income may be subject to state or
local income taxes.
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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.,
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
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securities whose interest payments are only federally tax-exempt.
Shares of the New Jersey 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 Florida Portfolio are available only to Florida
residents.
Massachusetts Portfolio. To the extent consistent with
its other investment objectives, the Massachusetts Portfolio
seeks maximum current income that is exempt from both Federal
income taxes and Commonwealth of Massachusetts tax by investing
principally in a non-diversified portfolio of high quality
municipal securities issued by the Commonwealth of Massachusetts
or its political subdivisions. The Massachusetts Portfolio may
invest in restricted securities that are determined by the
Adviser to be liquid in accordance with procedures adopted by the
Trustees, including securities eligible for resale under Rule
144A under the Securities Act of 1933 (the "Securities Act").
Restricted securities are securities subject 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. Shares of the Massachusetts Portfolio are
offered only to Massachusetts residents.
New York, California, Connecticut, New Jersey, Virginia,
Florida and Massachusetts 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, Florida and
Massachusetts Portfolios should consider the greater risks of
each Portfolio's concentration versus the safety that comes with
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a less concentrated investment portfolio and should compare
yields available on portfolios of New York, California,
Connecticut, New Jersey, Virginia, Florida and Massachusetts
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 investment company. (See below "Special Risk Factors
of Concentration in a Single State.")
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.
To the extent suitable New York, California,
Connecticut, New Jersey, Virginia, Florida and Massachusetts
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 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 New Jersey 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; (vi) non-Florida municipal securities
owned by the Florida Portfolio, will be subject to Florida income
and intangible taxes and (vii) non-Massachusetts municipal
securities owned by the Massachusetts Portfolio, will be subject
to Massachusetts 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:
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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 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.)
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. To the extent that the
Fund's limitations are more permissive than Rule 2a-7, the Fund
will comply with the more restrictive provisions of 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
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approved by the Trustees. A description of the ratings of some
NRSROs appears in Appendix B attached hereto.
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.
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. When, in the judgment of the Adviser,
financial, economic, and/or market conditions warrant, each
Portfolio may invest any amount of its total assets in taxable
7
<PAGE>
money market securities. 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.)
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
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<PAGE>
repurchase agreement is deemed to be an acquisition of the
underlying securities provided that the obligation of the seller
to repurchase the securities from the money market fund is
collateralized fully (as defined in such Rule). Accordingly, the
vendor of a fully collateralized repurchase agreement is deemed
to be the issuer of the underlying securities.
Reverse Repurchase Agreements
Each Portfolio may enter into reverse repurchase
agreements, which involve the sale of securities held by such
Portfolio with an agreement to repurchase the securities at an
agreed upon price, date and interest payment, although no
Portfolio has entered into, nor has any plans to enter into, such
agreements.
Variable Rate Obligations
The interest rate payable on certain municipal
securities in which a Portfolio may invest, called "variable
rate" obligations, is not fixed and may fluctuate based upon
changes in market rates. The interest rate payable on a variable
rate municipal security is adjusted either at pre-designated
periodic intervals or whenever there is a change in the market
rate to which the security's interest rate is tied. Other
features may 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
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<PAGE>
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. Each Portfolio
will comply with Rule 2a-7 with respect to its investments in
variable rate obligations. 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.
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
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<PAGE>
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
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.
Illiquid Securities.
No Portfolio of the Fund will invest more than 10% of
its net assets in illiquid securities, including illiquid
restricted securities. As to these securities, a Portfolio is
subject to a risk that should the Portfolio desire to sell them
when a ready buyer is not available at a price the Portfolio
deems representative of their value, the value of the Portfolio's
net assets could be adversely affected. Illiquid securities may
include securities that are not readily marketable and securities
subject to legal or contractual restrictions on resale. With
respect to the Massachusetts Portfolio, which may invest in
restricted securities, restricted securities determined by the
Adviser to be liquid will not be treated as "illiquid" for
purposes of the restriction on illiquid securities.
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MASSACHUSETTS PORTFOLIO. THE FOLLOWING POLICIES RELATE
TO THE MASSACHUSETTS PORTFOLIO.
Restricted Securities. The Massachusetts Portfolio may
purchase restricted securities determined by the Adviser to be
liquid in accordance with procedures adopted by the Trustees,
including securities eligible for resale under Rule 144A of the
Securities Act. Restricted securities are securities subject 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.
In recent years, a large institutional market has
developed for certain types of restricted securities including,
among others, private placements, repurchase agreements,
commercial paper, foreign securities and corporate bonds and
notes. These instruments are often restricted securities because
they are sold in transactions not requiring registration. For
example, commercial paper issues include, among others,
securities issued by major corporations without registration
under the Securities Act in reliance on the exemption from
registration afforded by Section 3(a)(3) of such Act and
commercial paper issued in reliance on the private placement
exemption from registration which is afforded by Section 4(2) of
the Securities Act ("Section 4(2) paper"). Section 4(2) paper is
restricted as to disposition under the Federal securities laws in
that any resale must also be made in an exempt transaction.
Section 4(2) paper is normally resold to other institutional
investors through or with the assistance of investment dealers
who make a market in Section 4(2) paper, thus providing
liquidity. Institutional investors, rather than selling these
instruments to the general public, often depend on an efficient
institutional market in which such restricted securities can be
readily resold in transactions not involving a public offering.
In many instances, therefore, the existence of contractual or
legal restrictions on resale to the general public does not, in
practice, impair the liquidity of such investments from the
perspective of institutional holders. In recognition of this
fact, the Staff of the Securities and Exchange Commission (the
"Commission") has stated that Section 4(2) paper may be
determined to be liquid by the Trustees, so long as certain
conditions, which are described below, are met.
Rule 144A under the Securities Act establishes a safe
harbor from the Securities Act's registration requirements for
resale of certain restricted securities to qualified
institutional buyers. Pursuant to Rule 144A, the institutional
restricted securities markets may provide both readily
ascertainable values for restricted securities and the ability to
liquidate an investment in order to satisfy share redemption
orders on a timely basis. An insufficient number of qualified
12
<PAGE>
institutional buyers interested in purchasing certain restricted
securities held by the Massachusetts Portfolio, however, could
affect adversely the marketability of such portfolio securities
and the Massachusetts Portfolio might be unable to dispose of
such securities promptly or at reasonable prices.
The Trustees have the ultimate responsibility for
determining whether specific securities are liquid or illiquid.
The Trustees have delegated the function of making day-to-day
determinations of liquidity to the Adviser, pursuant to
guidelines approved by the Trustees.
The Adviser takes into account a number of factors in
determining whether a restricted security being considered for
purchase is liquid, including at least the following:
(i) the frequency of trades and quotations for the
security;
(ii) the number of dealers making quotations to purchase
or sell the security;
(iii) the number of other potential purchasers of the
security;
(iv) the number of dealers undertaking to make a market
in the security;
(v) the nature of the security (including its
unregistered nature) and the nature of the
marketplace for the security (e.g., the time needed
to dispose of the security, the method of
soliciting offers and the mechanics of transfer);
and
(vi) any applicable Commission interpretation or
position with respect to such types of
securities.
To make the determination that an issue of Section 4(2)
paper is liquid, the Adviser must conclude that the following
conditions have been met:
(i) the Section 4(2) paper must not be traded flat or
in default as to principal or interest; and
(ii) the Section 4(2) paper must be rated in one of the
two highest rating categories by at least two
NRSROs, or if only one NRSRO rates the security, by
that NRSRO; if the security is unrated, the Adviser
13
<PAGE>
must determine that the security is of equivalent
quality.
The Adviser must also consider the trading market for
the specific security, taking into account all relevant
factors.
Following the purchase of a restricted security by the
Massachusetts Portfolio, the Adviser monitors continuously the
liquidity of such security and reports to the Trustees regarding
purchases of liquid restricted securities.
Asset-Backed Securities
The Massachusetts Portfolio may invest in asset-backed
securities that meet its existing diversification, quality and
maturity criteria. Asset-backed securities are securities issued
by special purpose entities whose primary assets consist of a
pool of loans or accounts receivable. The securities may be in
the form of a beneficial interest in a special purpose trust,
limited partnership interest, or commercial paper or other debt
securities issued by a special purpose corporation. Although the
securities may have some form of credit or liquidity enhancement,
payments on the securities depend predominately upon collection
of the loans and receivables held by the issuer.
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
14
<PAGE>
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
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, Florida or
Massachusetts 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.
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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, Florida and Massachusetts 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 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 March 1, 1997, relating to $214,070,000
General Obligation Bonds, the Comptroller's Report on the
Financial Condition of New York State - 1997, and the State
Comptroller's 1997-98 Budget: Fiscal Review and Analysis, dated
September 10, 1997.
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 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
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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 throughout the fiscal year without relying on
short-term seasonal borrowings. The 1996-97 State Financial Plan
included no seasonal borrowing. Recently, the State has
attempted to reduce its dependence on the LGAC. The projected
1997-98 General Fund cash flow will not depend on either short-
term spring borrowing or the issuance of LGAC bonds. The new-
money bond issuance portion of the LGAC program was completed in
1995-96, and provisions prohibiting the State from returning to a
reliance upon cash-flow manipulation to balance its budget will
remain in bond covenants until the LGAC bonds are retired.
Recent Developments
The national economy has resumed a more robust rate of
growth after a "soft landing" in 1995, with over 13 million jobs
added nationally since early 1992. The State economy has
continued to expand, but growth remains somewhat slower than in
the nation. Since 1992, New York's job growth has ranked 48th in
the nation. From April 1996 to April 1997 the State gained
97,800 jobs or 1.2 percent, while the United States gained
2,685,000 jobs or 2.3 percent. Most of the job growth has
occurred in service jobs while manufacturing and government
employment declined.
While total State personal income has increased 22
percent since 1993, compared to a 24 percent increase nationwide,
the State's per capita income continues to exceed the national
average. The State ranked fourth highest in per capita personal
income in 1995. In 1997, the State's per capita personal income
is projected to grow at a slightly higher rate than the national
average.
The State's moderate economic growth is projected to
continue through 1997 for employment, wages and personal income,
followed by a slight slowing in 1998. Personal income is
estimated to have grown by 5.2 percent in 1996, fueled in part by
an unusually large increase in financial sector bonus payments,
and is projected to grow 4.5 percent in 1997 and 4.2 percent in
1998. Overall employment growth will continue at a modest rate,
reflecting the moderate growth of the national economy, continued
spending restraint in government, and restructuring in the health
care, social service and banking sectors.
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1997-98 Fiscal Year
The surge in Wall Street revenues New York has enjoyed
since 1995 continues to be the most significant factor in the
ability of the State to balance its budget. New York is
projected to spend $67.4 billion on an all-funds basis in 1997-
98, 7 percent more than in 1996-97. The enacted budget contained
$1.2 billion more spending than was included in the Governor's
budget proposal. However, based on over $2 billion in
reestimated revenue increases, the financial plan enacted for
1997-98 is balanced with virtually no spending cuts and includes
a planned $350 million year-end surplus. The Comptroller
predicts that, because the financial plan's revenue and spending
projections are conservative, the actual year-end surplus should
be $530 million.
1996-97 Fiscal Year
The State ended its 1996-97 fiscal year on March 31,
1997 in balance on a cash basis, with a 1996-97 General Fund cash
surplus as reported by the Division of the Budget ("DOB") of
approximately $1.4 billion. The cash surplus was derived
primarily from higher-than-expected revenues and lower-than-
expected spending for social services programs. Of the cash
surplus amount, $1.05 billion was previously budgeted by the
Governor in his Executive Budget to finance the 1997-98 Financial
Plan, and the additional $373 million is available for use in
financing the 1997-98 State Financial Plan.
The General Fund closing fund balance was $433 million.
Of that amount, $317 million was in the Tax Stabilization Reserve
Fund (the "TSRF"), after a required deposit of $15 million and an
additional deposit of $65 million in 1996-97. The TSRF can be
used in the event of any future General Fund deficit, as provided
under the State Constitution and State Finance Law. In addition,
$41 million remains on deposit in the Contingency Reserve Fund
(the "CRF"). This fund assists the State in financing any
extraordinary litigation during the fiscal year. The remaining
$75 million reflects amounts on deposit in the Community Projects
Fund. This fund was created to fund certain legislative
initiatives. The General Fund closing fund balance does not
include $1.86 billion in the tax refund reserve account, of which
$521 million was made available as a result of the LGAC financing
program and was required to be on deposit as of March 31,
1997.
General Fund receipts and transfers from other funds for
the 1996-97 fiscal year totaled $33.04 billion, an increase of
less than 1 percent from 1995-96 levels (excluding deposits into
the tax refund reserve account). This was $129 million lower
than originally projected in the 1996-97 State Financial Plan as
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enacted in July 1996. As compared to the State's July
projections, personal income tax receipts were $730 million less
than projected. Tax receipts in all other categories were higher
than estimated in the July projections, including user taxes and
fees ($72 million), business tax receipts ($457 million) and
other taxes and fees ($133 million). Miscellaneous receipts and
transfers were a combined $63 million less than projected in the
original 1996-97 Financial Plan. The large variance in the
personal income tax projections reflects year-end actions that
had the effect of reducing personal income tax receipts and
miscellaneous receipts by about $1.7 billion. These actions
included early implementation of withholding table changes
accompanying scheduled 1997 personal income tax reductions,
accelerated payment of an estimated $217 million in personal
income tax refunds, and a $1.26 billion deposit of otherwise
excess receipts to the tax refund reserve account. Adjusted for
these actions, personal income taxes were almost $1 billion
higher than expected, largely due to higher-than-projected
withholding and estimated tax collections as a result of
stronger-than-expected economic growth, particularly in the
financial markets and the securities industries.
General Fund disbursements and transfers to other funds
totaled $32.90 billion for the 1996-97 fiscal year, an increase
of less than 1 percent from unadjusted 1995-96 levels.
Disbursements and transfers were $226 million lower than levels
projected in the July 1996-97 Financial Plan forecast. As
compared to the July projections, grants to local governments
were $250 million lower, State operations spending was $38
million lower, general State charges and debt service were $35
million lower than projected, and transfers to other funds for
debt service, capital projects and other purposes were $99
million higher than originally projected. Much of the decline in
local assistance spending was the result of lower-than-projected
public assistance caseload, while the increase in transfers
relates to reestimates in lottery proceeds.
Disbursements in Governmental Funds for the 1996-97
fiscal year totaled $62.95 billion, $3 billion lower than
projected at the beginning of the fiscal year. Much of this
variance was due to the uncertainty surrounding federal action on
entitlement spending at the beginning of the fiscal year. Total
unadjusted Government Funds spending decreased $278 million or
0.4 percent below the 1995-96 fiscal year.
1995-96 Fiscal Year
The State ended its 1995-96 fiscal year on March 31,
1996 with a General Fund cash surplus. DOB reported that
revenues exceeded projections by $270 million, while spending for
social service programs was lower than forecast by $120 million
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and all other spending was lower by $55 million. From the
resulting benefit of $445 million, a $65 million voluntary
deposit was made into the TSRF, and $380 million was used to
reduce 1996-97 Financial Plan liabilities by accelerating 1996-97
payments, deferring 1995-96 revenues, and making a deposit to the
tax refund reserve account.
The General Fund closing fund balance was $287 million,
an increase of $129 million from 1994-95 levels. The $120
million change in fund balance is attributable to the $65 million
voluntary deposit to the TSRF, a $15 million required deposit to
the TSRF, a $40 million deposit to the CRF, and a $9 million
deposit to the Revenue Accumulation Fund. The closing fund
balance includes $237 million on deposit in the TSRF, to be used
in the event of any future General Fund deficit as provided under
the State Constitution and State Finance Law. In addition, $41
million is on deposit in the CRF. The remaining $9 million
reflects amounts on deposit in the Revenue Accumulation Fund.
This fund was created to hold certain tax receipts temporarily
before the deposit to other accounts. In addition, $678 million
was on deposit in the tax refund reserve account, of which $521
million was necessary to complete the restructuring of the
State's cash flow under the LGAC program.
General Fund receipts totaled $32.81 billion, a decrease
of 1.1 percent from 1994-95 levels. This decrease reflects the
impact of tax reductions enacted and effective in both 1994 and
1995. General Fund disbursements totaled $32.68 billion for the
1995-96 fiscal year, a decrease of 2.2 percent from 1994-95
levels. Mid-year spending reductions, taken as part of a
management review undertaken in October at the direction of the
Governor, yielded savings from Medicaid utilization controls,
office space consolidation, overtime and contractual expense
reductions, and statewide productivity improvements achieved by
State agencies. Together with decreased social services
spending, this management review accounts for the bulk of the
decline in spending.
1994-95 Fiscal Year
The State ended its 1994-95 fiscal year with the General
Fund in balance. The $241 million decline in the fund balance
reflects the planned use of $264 million from the CRF, partially
offset by the required deposit of $23 million to the TSRF. In
addition, $278 million was on deposit in the tax refund reserve
account, $250 million of which was deposited to continue the
process of restructuring the State's cash flow as part of the
LGAC program. The closing fund balance of $158 million reflects
$157 million in the TSRF and $1 million in the CRF.
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General Fund receipts totaled $33.16 billion, an
increase of 2.9 percent from 1993-94 levels. General Fund
disbursements totaled $33.40 billion for the 1994-95 fiscal year,
an increase of 4.7 percent for the previous fiscal year. The
increase in disbursements was primarily the result of one-time
litigation costs for the State, funded by the use of the CRF,
offset by $188 million in spending reductions initiated in
January 1995 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.
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.
1996-97 Fiscal Year
The State completed its 1996-97 fiscal year with a
combined Governmental Funds operating surplus of $2.1 billion,
which included an operating surplus in the General Fund of $1.9
billion, in Capital Projects Funds of $98 million and in the
Special Revenue Funds of $65 million, offset in part by an
operating deficit of $37 million in the Debt Service Funds.
The State reported a General Funds operating surplus of
$1.93 billion for the 1996-97 fiscal year, as compared to an
operating surplus of $380 million for the prior fiscal year. The
1996-97 fiscal year GAAP operating surplus reflects several major
factors, including the cash basis operating surplus, the benefit
of bond proceeds which reduced the State's pension liability, an
increase in taxes receivable of $493 million, and a reduction in
tax refund liabilities of $196 million. This was offset by an
increased payable to local governments of $244 million.
Revenues increased $1.91 billion (nearly 6.0 percent)
over the prior fiscal year with increases in all revenue
categories. Personal income taxes grew $620 million, an increase
of nearly 3.6 percent, despite the implementation of scheduled
tax cuts. The increase in personal income taxes was caused by
moderate employment and wage growth and the strong financial
markets during 1996. Consumption and use taxes increased $179
million or 2.7 percent as a result of increased consumer
confidence. Business taxes grew $268 million, an increase of 5.6
percent, primarily as a result of the strong financial markets
during 1996. Other taxes increased primarily because revenues
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from estate and gift taxes increased. Miscellaneous revenues
increased $743 million, a 33.1 percent increase, because of an
increase in receipts from the Medical Malpractice Insurance
Association and from medical provider assessments.
Expenditures increase $830 million (2.6 percent) from
the prior fiscal year, with the largest increase occurring in
pension contributions and State aid for education spending.
Pension contribution expenditures increased $514 million (198.2
percent) primarily because the State paid off its 1984-85 and
1985-86 pension amortization liability. Education expenditures
grew $351 million (3.4 percent) due mainly to an increase in
spending for support for public schools and physically
handicapped children offset by a reduction in spending for
municipal and community colleges. Modest increases in other
State aid spending was offset by a decline in social services
expenditures of $157 million (1.7 percent). Social services
spending continues to decline because of cost containment
strategies and declining caseloads.
Net other financing sources increased $475 million (62.6
percent) due mainly to bond proceeds provided by the Dormitory
Authority of the State of New York to pay the outstanding pension
amortization, offset by elimination of prior year LGAC
proceeds.
An operating surplus of $65 million was reported for the
Special Revenue Funds for the 1996-97 year, increasing the
accumulated fund balance to $532 million over the prior fiscal
year (2.2 percent) as a result of increases in tax and lottery
revenues. Expenditures increased $384 million (1.6 percent) as a
result of increased costs for departmental operations. Net other
financing uses decreased $275 million (8.0 percent) primarily
because of declines in amounts transferred to other funds.
Debt Service Funds ended the 1996-97 fiscal year with an
operating deficit of $37 million and, as a result, the
accumulated fund balance declined to $1.90 billion. Revenues
increased $102 million (4.6 percent) because of increases in both
dedicated taxes and mental hygiene patient fees. Debt service
expenditures increased $48 million (2.0 percent). Net other
financing sources decreases $22 million (92.6 percent) due
primarily to an increase in payments on advance refunds.
An operating surplus of $98 million was reported to the
Capital Projects Funds for the State's 1996-97 fiscal year and,
as a result, the accumulated fund balance decreased to a deficit
of $614 million. Revenues increased $100 million (5.0 percent)
primarily because a larger share of the real estate transfer tax
was shifted to the Environmental Protection Fund and federal
grant revenues increased for transportation and local waste water
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treatment projects. Expenditures decreased $359 million (10.0
percent) because of declines in capital grants for education,
housing and regional development programs and capital
construction spending. Net other financing sources decreased by
$637 million as a result of a decrease in proceeds from financing
arrangements.
1995-96 Fiscal Year
The State completed its 1995-96 fiscal year with a
combined Governmental Funds operating surplus of $432 million,
which included an operating surplus in the General Fund of $380
million, in the Capital Projects Funds of $276 million and in the
Debt Service Funds of $185 million, offset in part by an
operating deficit of $409 million in the Special Revenue
Funds.
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 services sector which includes entertainment,
personal services, such as health care and auto repairs, and
business-related services, such as information processing, law
and accounting, is the State's leading economic sector. The
service sector accounts for more than three of every ten
nonagricultural jobs in New York. New York's economy is somewhat
more reliant than the rest of the nation on this sector; this
sector has added more jobs (825,000) than has the State's economy
as a whole (665,000) since 1980.
Manufacturing employment continues to decline in
importance in New York, as in most other states, and New York's
economy is less reliant on this sector than is the nation.
Manufacturing's share of total employment declined from 20.1 to
12.0 percent between 1980 and 1995. The principal manufacturing
industries in recent years produced printing and publishing
materials, instruments and related products, machinery, apparel
and finished fabric products, electronic and other electric
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equipment, food and related products, chemicals and allied
products, and fabricated metal products.
Wholesale and retail trade is the second largest sector
in terms of nonagricultural jobs in New York but is considerably
smaller when measured by income share. Trade consists of
wholesale businesses and retail businesses such as department
stores and eating and drinking establishments.
New York City is the nation's leading center of banking
and finance, and, as a result, this is a far more important
sector in the State than in the nation as a whole. Although this
sector accounts for under one-tenth of all nonagricultural jobs
in the State, it contributes one-seventh of all nonfarm labor and
proprietors' income.
Farming is an important part of the economy of large
regions of the State, although it constitutes a very minor part
of total State output. Principal agricultural products of the
State include milk and dairy products, greenhouse and nursery
products, apples and other fruits, and fresh vegetables. New
York ranks among the national's leaders in the production of
these commodities.
Federal, State and local government account for almost
18 percent of nonagricultural State employment and 16 percent of
nonfarm labor income.
The State is likely to be less affected than the nation
as a whole during an economic recession that is concentrated in
manufacturing and construction, but likely to be more affected
during a recession that is concentrated more in the service-
producing section.
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 1997, the State's
rate of economic growth was somewhat slower than that of the
nation. In the 1990-91 recession and post-recession period, 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 1987. 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.
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State per capita personal income has historically been
significantly higher than the national average, although the
ratio has varied substantially. Because New York City (the
"City") is a regional employment center for a multi-state region,
state personal income measured on a residence basis understates
the relative importance of the State to the national economy and
the size of the base to which State taxation applies.
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
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, 1996, the date of
the latest data available, there were 17 Authorities that had
outstanding debt of $100 million or more, and the aggregate
outstanding debt, including refunding bonds, of these Authorities
was $75.4 billion. At the end of fiscal year 1996-97, aggregate
Authority debt outstanding as State-supported debt was
$32.7 billion and as State-related debt was $38.4 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 1997-98 fiscal year.
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In addition to the moral obligation financing
arrangements described above, State law provides for the creation
of 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") was created in 1975 to provide financing assistance to
the City. 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.
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 and now issued by the
Dormitory Authority of the State of New York 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 1997-98 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
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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.
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 percent 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 percent 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 1997-1998
fiscal year, total State assistance to the MTA is estimated at
approximately $1.2 billion, an increase of $76 million over the
1996-97 fiscal year.
State legislation accompanying the 1996-97 adopted State
budget authorized the MTA, TBTA and TA to issue an aggregate of
$6.5 billion in bonds to finance a portion of a new $11.98
billion MTA capital plan for the 1995 through 1999 calendar years
(the "1995-99 Capital Program"), and authorized the MTA to submit
the 1995-99 Capital Program to the Capital Program Review Board
for approval. This plan will supersede the overlapping portion
of the MTA's 1992-96 Capital Program. This is the fourth capital
plan since the Legislature authorized procedures for the
adoption, approval and amendment of MTA capital programs and is
designed to upgrade the performance of the MTA's transportation
systems by investing in new following stock, maintaining
replacement schedules for existing assets and bringing the MTA
system to a state of good repair. The 1995-99 Capital Program
assumes the issuance of an estimated $5.1 billion in bonds under
this $6.5 billion aggregate bonding authority. The remainder of
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the plan is projected to be financed through assistance from the
State, the federal government, and the City of New York, and from
various other revenues generated from actions taken by the
MTA.
There can be no assurance that all the necessary
governmental actions for the 1995-99 Capital Program or future
capital programs will be taken, that funding sources currently
identified will not be decreased or eliminated, or that the
1995-99 Capital Program, or parts thereof, will not be delayed or
reduced. Should funding levels fall below current projections,
the MTA would have to revise its 1995-99 Capital Program
accordingly. If the 1995-99 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.
Certificates of Participation
The State also participates in the issuance of
certificates of participation ("COPs") in a pool of leases
entered into by the State's Office of General Services on behalf
of several State departments and agencies interested in acquiring
operational equipment, or in certain cases, real property.
Legislation enacted in 1986 established restrictions upon and
centralized State control, through the Comptroller and the
Director of the Budget, over the issuance of COPs representing
the State's contractual obligation, subject to annual
appropriation by the Legislature and availability of money, to
make installment or lease-purchase payments for the State's
acquisition of such equipment or real property.
New York City
The fiscal health of the State may also be affected by
the fiscal health of the City, which 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. A
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"Control Period" 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, 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
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.
Implementation of the Financial Plan is also dependent
upon the ability of the City and certain entities issuing debt
for the benefit of the City to market their securities
successfully. The City issues securities to finance, refinance
and rehabilitate infrastructure and other capital needs, as well
as for seasonal financing needs. In order to help the City to
avoid exceeding its State Constitutional general debt limit, the
State created the New York City Transitional Finance Authority to
finance a portion of the City's capital program. Despite this
additional financing mechanism, the City currently projects that,
if no further action is taken, it will reach its debt limit in
City fiscal year 199-2000. On June 2, 1997, an action was
commenced seeking a declaratory judgment declaring the
legislation establishing the Transitional Finance Authority to be
unconstitutional. If such legislation were voided, projected
contracts for City capital projects would exceed the City's debt
limit during fiscal year 1997-98. Future developments concerning
the City or entities issuing debt for the benefit of the City,
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
entities and may also affect the market for their outstanding
securities.
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OSDC and Control Board Reports
The staffs of the Control Board, OSDC and the City
Comptroller issue periodic reports on the City's Financial Plans
which analyze the City's forecasts of revenues and expenditures,
cash flow, and debt service requirements for, and Financial Plan
compliance by, the City and its Covered Organizations. According
to recent staff reports, the City's economy has experienced weak
employment and moderate wage and income growth throughout the
mid-1990s. Although this trend is expected to continue for the
rest of the decade, there is the risk of a slowdown in the City's
economy in the next few years, which would depress revenue growth
and put further strains on the City's budget. These reports have
also indicated that recent City budgets have been balanced in
part through the use of non-recurring resources; that the City's
Financial Plan tends to rely on actions outside its direct
control; that the City has not yet brought its expenditure growth
in line with recurring revenue growth; and that the City is
therefore likely to continue to face substantial future budget
gaps that must be closed with reduced expenditures and/or
increased revenues.
Financing Requirements
The City requires significant amounts of financing for
seasonal and capital purposes. The City issued $880 million
notes for seasonal financing purposes in fiscal year 1997. 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, roads, bridges, mass transit, schools, hospitals and
housing.
In connection with the Financial Plan, the City has
outlined a gap-closing program for the 1998 through 2000 fiscal
years to substantially reduce the remaining $1.7 billion and $3.4
billion projected budget gaps for such fiscal years. This
program, which is not specified in detail, assumes additional
agency programs to reduce expenditures or increase revenues by
$674 million, $959 million and $1.1 billion in the 1998 through
2000 fiscal years, respectively; additional reductions in
entitlement costs of $400 million, $750 million and $1.0 billion
in the 1998 through 2000 fiscal years, respectively; additional
savings of $250 million, $300 million and $500 million in the
1998 through 2000 fiscal years, respectively, resulting from
restructuring City government by consolidating operations,
privatization and mandate management and other initiatives;
additional proposed Federal and State aid of $105 million, $200
million and $300 million in the 1998 through 2000 fiscal years,
respectively; additional revenue initiatives and asset sales of
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$155 million, $350 million and $400 million in the 1998 through
2000 fiscal years, respectively; and the availability in each of
the 1998 through 2000 fiscal years of $100 million of the General
Reserve.
In 1997, record performance on Wall Street enabled the
City to recognize nearly $1.3 billion in surplus revenues. The
surplus will be used to meet half of the City's gap closing
needs. The City has also created a stabilization fund, which
includes $300 million to be used towards fiscal year 1999 and
$200 million in the General Reserve. However, the 1998 New York
City Financial Plan projects a 7.4 percent spending increase
while revenues are projected to decrease.
Other Localities
Certain localities outside the City have experienced
financial problems and have requested additional State assistance
during the last several State fiscal years. The potential impact
on the State of any future requests by localities is not included
in the projections of the State's receipts and disbursements for
the State's 1997-98 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.
Beginning in 1990, the City of Troy experienced a series
of budgetary deficits that resulted in the establishment of a
Supervisory Board for the City of Troy in 1994. The Supervisory
Board's powers were increased in 1995, when Troy MAC was created
to help Troy avoid default on certain obligations. The
legislation creating Troy MAC prohibits the City of Troy from
seeking federal bankruptcy protection while Troy MAC bonds are
outstanding.
Eighteen municipalities received extraordinary
assistance during the 1996 legislative session through $50
million in special appropriations targeted for distressed cities,
aid that was largely continued in 1997. Twenty-eight
municipalities are scheduled to share the more than $32 million
in targeted unrestricted aid allocated in the 1997-98 budget. An
additional $21 million will be dispersed among all cities, towns
and villages, a 3.97 percent increased in General Purpose State
Aid.
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Certain Municipal Indebtedness
Municipalities and school districts have engaged in
substantial short-term and long-term borrowings. In 1995, the
total indebtedness of all localities in the State other than the
City was approximately $19.0 billion. A small portion
(approximately $102.3 million) of that indebtedness represented
borrowing to finance budgetary deficits and was issued pursuant
to State enabling legislation. State law requires the
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. Seventeen
localities had outstanding indebtedness for deficit financing at
the close of their fiscal year ending in 1995.
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 legal proceedings involving
State finances, State programs and miscellaneous tort, real
property and contract claim where the monetary damages sought are
substantial. These proceedings could affect adversely the
financial condition of the State in the 1997-98 fiscal year or
thereafter.
Adverse developments in these proceedings or the
initiation of new proceedings could affect the ability of the
State to maintain a balanced 1997-98 State Financial Plan. The
State believes that the 1997-98 State Financial Plan includes
sufficient reserves for the payment of judgments that may be
required during the 1997-98 fiscal year. There can be no
assurance, however, that an adverse decision in any of these
proceedings would not exceed the amount of the 1997-98 State
Financial Plan. In its General Purpose Financial Statements, the
State reports its estimated liability in subsequent fiscal years
for awarded anticipated unfavorable judgments.
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Although other litigation is pending against the State,
no current litigation involves the State's authority, as a matter
of law, to contract indebtedness, issue its obligations, or pay
such indebtedness when it matures, or affects the State's power
or ability, as a matter of law, to impose or collect significant
amounts of taxes and revenues.
CALIFORNIA PORTFOLIO
The following is based on information obtained from an
Official Statement, dated March 1, 1997, relating to $525,000,000
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.
Not included in the Appropriations Limit are
appropriations for the debt service costs of bonds existing or
authorized by January 1, 1979, or subsequently authorized by the
voters, appropriations required to comply with mandates of courts
or the federal government, appropriations for qualified capital
outlay projects, appropriations of revenues derived from any
increase in gasoline taxes and motor vehicle weight fees above
January 1, 1990 levels, and appropriation of certain special
taxes imposed by initiative (e.g., cigarette and tobacco taxes).
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The Appropriations Limit may also be exceeded in cases of
emergency.
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 amount
has been adjusted to 34 percent to account for a subsequent
redirection of local property taxes, since such redirection
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directly affects the share of General Fund revenues to
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. The settlement required adoption of legislation
satisfactory to the parties to implement its terms, which has
occurred. The court gave final approval of the settlement in
late July, 1996.
The settlement provides, among other things, 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 by forgiveness of the amount
owed, while schools will repay $825 million. The State share of
the repayment will be reflected as an appropriation 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.
The Director of Finance has certified that a settlement has
occurred, allowing approximately $351 million in appropriations
from the 1995-96 Fiscal Year to be disbursed to schools in August
1996.
Short-Term Borrowing of California
As part of its cash management program, the State has
regularly issued short-term obligations to meet cash flow needs.
Between spring 1992 and summer 1994, the State had depended upon
external borrowing, including borrowings extending into the
subsequent fiscal year, to meet its cash needs, including
repayment of maturing Notes and Warrants. The State issued $3.0
billion of revenue anticipation notes for the 1996-97 Fiscal
Year, which matured on June 30, 1997.
The State Treasurer is working closely with the State
Controller and the Department of Finance to manage the State's
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cash flow on a regular basis, with the goal of reducing the
State's external cash flow borrowing. The three offices are also
working to develop programs to use commercial paper in whole or
in part for the State's cash flow borrowing needs, and for
construction period financing for both general obligation
bond-funded and lease-revenue bond-funded projects. As of March
1, 1997 the Finance Committees had authorized the issuance of
approximately $3,356,094,000 of commercial paper notes, but as of
that date only $367,776,534 aggregate principal amount of general
obligation commercial paper notes was actually issued and
outstanding.
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.
1997-98 Fiscal Year Proposed Budget
On January 9, 1997, the Governor released his
proposed budget for the 1997-98 Fiscal Year (the"Governor's
Budget"). The Governor's Budget projects General Fund
revenues and transfers in 1997-98 of $50.7 billion, a 4.6
percent increase from revised 1996-97 figures. The Governor
proposes expenditures of $50.3 billion, a 3.9 percent
increase from 1996-97. The Governor's Budget projects a
balance in the Special Fund for Economic Uncertainties (the
"SFEU") of $553 million on June 30, 1998. The Governor's
Budget also anticipates about $3 billion of external
borrowing for cash flow purposes during the year, with no
requirement for cross-fiscal year borrowing.
Among the major initiatives and features of the
Governor's Budget are the following:
1. A proposed 10 percent cut in the Bank and
Corporation Tax rate, to be phased in over two years.
2. Proposition 98 funding for K-14 schools will be
increased again, as a result of stronger revenues. Per-
pupil funding for K-12 schools will reach $5,010, compared
to $4,220 as recently as the 1993-94 Fiscal Year. Part of
the new funding is proposed to be dedicated to the
completion of the current program to reduce class size to 20
pupils in lower elementary grades, and to expand the program
by one grade, so that it will cover K-3rd grade.
3. Funding for higher education will be increased
consistent with a four-year "compact" established in 1995-
96. There is not projected to be any increase in student
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fees at any of the three levels of the State higher
education system.
4. The 1997-98 proposed Governor's Budget assumes
approximately $500 million in savings contingent upon
federal action. The Budget assumes that federal law will be
enacted to remove the maintenance-of-effort requirement for
Supplemental Security Income (SSI) payments, thereby
enabling the State to reduce grant levels pursuant to
previously enacted state law ($279 million). The Governor's
Budget also assumes the federal government will fund $216
million in costs of health care for illegal immigrants.
1996-97 Fiscal Year
The 1996-97 Budget Act was signed by the Governor
on July 15, 1996, along with various implementing bills.
The Governor vetoed about $82 million of appropriations
(both General Fund and Special Fund). With signing of the
Budget Act, the State implemented its regular cash flow
borrowing program with the issuance of $3.0 billion of
Revenue Anticipation Notes to mature on June 30, 1997. The
Budget Act appropriated a modest budget reserve in the SFEU
of $305 million, as of June 30, 1997. The Department of
Finance projected that, on June 30, 1997, the State's
available internal borrowable (cash) resources would be $2.9
billion, after payment of all obligations due by that date,
so that no cross-fiscal year borrowing would be needed.
Revenues The Legislature rejected the Governor's
proposed 15 percent cut in personal income taxes (to be
phased over three years), but did approve a 5 percent cut in
bank and corporation taxes, to be effective for income years
starting on January 1, 1997. As a result, revenues for the
Fiscal Year were estimated to total $47.643 billion, a 3.3
percent increase over the final estimated 1995-96 revenues.
Special Fund revenues were estimated to be $13.3
billion.
Expenditures The Budget Act contained General Fund
appropriations totaling $47.251 billion, a 4.0 percent
increase over the final estimated 1995-96 expenditures.
Special Fund expenditures were budgeted at $12.6
billion.
Subsequent Developments Following enactment of the
1996-97 Budget Act, Congress passed and, on August 22, 1996,
President Clinton signed into law The Personal
Responsibility and Work Opportunity Act of 1996, which made
significant reforms to the current welfare system. The law
provides California approximately $3.7 billion in block
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grant funds for Fiscal Year 1996-97. The law required
states to implement new plans not later than July 1, 1997
and provided a prorated block grant effective the date of
application. The California State Plan was approved
November 27, 1996 to allow grant reductions to be
implemented effective January 1, 1997 and to allow the State
to capture approximately $267 million in additional federal
block grant funds over the currently budgeted level. The
1996-97 Budget Act assumed savings of approximately $660
million in health and welfare costs as a result of
anticipated changes in federal law. None of the other
federal changes needed to achieve the balance of the $660
million cost savings were enacted. Thus, in lieu of the
$660 million savings initially assumed to be saved, it is
now projected that savings will total approximately $320
million.
With the continued strong economic recovery in the
State, the Department of Finance has estimated, in
connection with the release of the Governor's 1997-98 Budget
Proposal, that revenues for the 1996-97 Fiscal Year will
exceed initial projections by about $760 million. This
increase will be offset by higher expenditures for K-14
school aid (pursuant to Proposition 98) and for health and
welfare costs, because federal law changes and other federal
actions did not provide as much assistance to the State as
was initially planned in the Budget Act. The Department's
updated projections show a balance in the SFEU of $197
million, slightly lower than projected in July, 1996. The
Department also projects the State's cash position will be
stronger than originally estimated, with unused internal
borrowable resources at June 30, 1997 of about $4.3
billion.
1995-96 Fiscal Year
Final data for the 1995-96 Fiscal Year showed
revenues and transfers of $46.1 billion, $2 billion over the
original fiscal year estimate, which was attributed to the
strong economic recovery. Expenditures also increased, to
an estimated $45.4 billion, as a result of the requirement
to expend revenues for schools under Proposition 98, and,
among other things, failure of the federal government to
enact welfare reform during the fiscal year and to budget
new aid for illegal immigrant costs, both of which had been
counted on to allow reductions in State costs. The SFEU had
a negative balance of about $87 million at June 30, 1996,
all but eliminating the accumulated budget deficit from the
early 1990's. Available internal borrowable resources
(available cash, after payment of all obligations due) on
June 30, 1996 was about $3.8 billion, representing a
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significant improvement in the State's cash position, and
ending the need for deficit borrowing over the end of the
fiscal year. The State's improved cash position allowed it
to repay the $4.0 billion Revenue Anticipation Warrant issue
on April 25, 1996, and to issue only $2.0 billion of revenue
anticipation notes during the fiscal year, which matured on
June 28, 1996.
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.
After suffering through a severe recession,
California's economy has been on a steady recovery since the
start of 1994. More than 300,000 nonfarm jobs were added in
the State in 1996, while personal income grew by more than
$55 billion. California's economic expansion is being
fueled by strong growth in high-technology industries,
including computer software, electronics manufacturing and
motion picture production, all of which have offset the
recession-related losses which were heaviest in aerospace
and defense-related industries (which accounted for two-
thirds of the job losses), finance and insurance.
California's economy is approaching a major
milestone in 1997 as gross state domestic product is
expected to pass the $1 trillion mark. As a stand-alone
economy, California's economy would rank seventh in the
world, ahead of China's and behind the United Kingdom's.
The Department of Finance, as set forth in the
1997-98 Governor's Budget estimates that personal income
will grow by 6.6 percent in 1997. The Department also
estimates nonfarm and salary employment to increase by 2.6
percent in 1997, while housing permits are expected to rise
2.7 percent in 1997.
The State's Employment Development Department
reports that the State's unemployment rate dropped from 9.4
percent in 1993 to 8.6 percent in 1994, 7.8 percent in 1995
and 7.3 percent in 1996. This rate is still running above
the national unemployment rate, which averaged 5.4 percent
in 1996.
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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
200 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 percent 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. The county has embarked on a fiscal
recovery plan based on sharp reductions in services and
personnel, and rescheduling of outstanding short-term debt
using certain new revenues transferred to the County from
other local governments pursuant to special legislation
enacted in October 1995.
The State has no existing obligation with respect
to any outstanding obligations or securities of the County
or any of the other participating entities.
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. Following are the more
significant lawsuits pending against the State as of March
1, 1997:
In Hayes v. Commission on State Mandates, the State
is appealing an order to reimburse local school districts
for special education programs. The potential liability to
the State has been estimated at more than $1 billion.
In State v. Stringfellow, the State is seeking
recovery for cleanup costs of a toxic waste site presently
owned by the State. Present estimates of the cleanup range
from $200 million to $800 million.
The State is a defendant in a coordinated action
involving 3,000 plaintiffs seeking recovery for damages
caused by the Yuba River flood of 1986. The State's
potential liability to all plaintiffs ranges from $1.3
billion to $1.5 billion.
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In California State Employees Association v. Wilson
and Professional Engineers in California Government v.
Wilson, the petitioners have challenged transfers of funds
from the State Highway Account and the Motor Vehicle Account
to the General Fund. The loss to the State's General Fund
from both suits could be up to $608 million.
In Just Say No To Tobacco Dough Campaign v. State
of California, the petitioners challenge certain
appropriations from the Cigarette and Tobacco Products
Surtax Fund. If the State loses, the General Fund would be
used to reimburse the Surtax Fund for approximately $166
million. Similarly, in Hathaway v. Wilson, the plaintiffs
seek reimbursement to various special funds of approximately
$335 million for challenged transfers and appropriations.
In two related cases, Beno v. Sullivan and Welch v.
Anderson, concerning reductions in Aid to Families with
Dependent Children (AFDC) grant payments, the State's
potential liability for retroactive AFDC payments is
estimated at $831 million if the plaintiffs are awarded the
full amount in both cases.
On February 19, 1997, the State Court of Appeals
affirmed a judgment requiring the State to transfer
approximately $900 million to the Public Employees'
Retirement System (PERS) representing deferred payments of
the State's employer contribution to PERS. The State
intends to seek review of the decision by the State Supreme
Court.
CONNECTICUT PORTFOLIO
The following is based on information obtained from
an Official Statement, dated January 8, 1997, relating to
$260,000,000 State of Connecticut General Obligation Bonds
(1997 Series C), the Report of the State Comptroller for the
Fiscal Year Ended June 30, 1997, the Comptroller's Monthly
Letter to the Governor dated October 1, 1997 and the
Comptroller's Report: Connecticut's Economic Health -
1997.
General Fund Budgets
1995-96 Operations The Comptroller's August 30,
1996 annual report indicated a 1995-96 General Fund surplus
of $250 million. This surplus is primarily the result of
higher than anticipated revenue collections of $274.1
million above original budget projections. The most
significant contributor to this increase was the personal
income tax for which estimates were revised upward by $182.4
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million. The improved revenue results are offset somewhat
by Medicaid expenditures anticipated to be higher than
appropriations and costs associated with settlements in
lawsuits against the State. Up to $89.5 million of the
fiscal 1995-96 surplus shall be deemed to be appropriated to
the Economic Recovery Fund to meet the fiscal 1996-97 debt
service payments on the Economic Recovery Notes. No
assurances can be given that an audit will not indicate
changes in the actual 1995-96 General Fund result as
reported by the Comptroller.
1996-97 Operations The Comptroller's August 29,
1997 annual report indicated a 1996-97 General Fund surplus
of over $262 million. State spending ended the year $150.3
million over budget; however, the higher than anticipated
expenditures were more than offset by strong revenue
receipts. State income tax receipts ended the year $261.9
million over budget despite income tax reductions that
became effective during the fiscal year and total tax
refunds were $91.5 million under original budget projections
owing to large capital gains that reduced or eliminated
anticipated refunds. $166.7 million of the fiscal 1996-97
surplus shall be deemed to be appropriated to the Economic
Recovery Fund, thereby retiring the principal and interest
debt on the Economic Recovery Notes. The remaining $95.9
million of the surplus has been reserved for transfer to the
Budget Reserve Fund which, with these additional monies,
will total $336.9 million. No assurances can be given that
an audit will not indicate changes in the actual 1996-97
General Fund result as reported by the Comptroller.
1997-98 Operations For Fiscal Year 1997-98 the
adopted budget anticipates General Fund revenues of $9,342.4
million and expenditures of $9,342.25 million for a total
budget surplus of $0.15 million. Per Section 3-115 of the
Connecticut General Statutes, the State's fiscal position is
reported monthly by the Comptroller. This report compares
revenues already received and expenditures already made to
estimated revenues to be collected and estimated
expenditures to be made during the balance of the year.
The Comptroller's October 1, 1997 letter indicated
that General Fund expenditures for the current fiscal year
are estimated to be $75.1 million higher than budgeted.
However, total General Fund revenues are projected to end
the year $100.4 million higher than budgeted. Therefore,
the Comptroller has projected a Fiscal Year 1997-98 General
Fund surplus of $25.3 million. No assurances can be given
that subsequent projections will not indicate changes in the
anticipated General Fund result.
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Economic Overview
Connecticut's economy has been slow to emerge from
a recession that began in early 1989 and ended in late 1992.
During the recovery period, Connecticut has lagged behind
the nation and the New England region in economic growth,
and has yet to regain its pre-recession strength. Overall
the recession cost Connecticut 158,000 jobs. The
manufacturing sector was particularly hard hit and the
largest share of these job losses is attributable to cuts in
federal defense spending. Between 1985 and 1995,
Connecticut's defense procurement receipts dropped from $7.1
billion to $2.5 billion (in 1992 dollars) -- a 65 percent
reduction. In that same period, manufacturing employment
fell 31.2 percent.
As of October, 1997, Connecticut had recovered
almost 60 percent of its recessionary employment loss. The
fastest growing private industries are services, and
wholesale and retail trade. Small business is fueling much
of the growth in these industries. During 1996, Connecticut
added a net total of 33,000 nonfarm jobs. This is the
strongest job growth performance since the end of the
recession. The State's unemployment rate fell to 4.6
percent (adjusted for seasonal trends) in October of 1996;
however, there are still areas of very high unemployment
throughout the state, especially in the larger urban
centers. The Connecticut Labor Department projects that the
state will add a total of 181,500 jobs between the years
1994 and 2005, representing a 10.8 percent increase in total
employment.
It is estimated that the jobs being created in
Connecticut pay 30 to 50 percent less than the jobs that
were lost during the recession. Despite this, earnings have
risen at a 3.3 percent annual rate since the end of the
recession. Connecticut's per capita income is the highest
in the nation -- 33 percent above the national average for
1995.
Connecticut forecasts project continued moderate
growth for the State's economy through 1997.
State Indebtedness
There can be no assurance that general economic
difficulties or the financial circumstances of Connecticut
or its towns and cities will not adversely affect the market
value of its obligations or the ability of Connecticut
issuers or obligors of state, municipal and public authority
debt obligations to meet their obligations thereunder.
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The State has established various statewide
authorities and two regional water authorities, one of which
has since become independent, to finance revenue-producing
projects, five of which statewide authorities have the power
to incur, under certain circumstances, indebtedness for
which the State has contingent or, in limited cases, direct
liability. In addition, 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 April 15, 1996, relating to
$526,800,000 State of New Jersey General Obligation Bonds,
Refunding Bonds (Series E) and $270,000,000 State of New
Jersey General Obligation Bonds (various purpose).
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 percent and between
1990 and 1994 the growth rate accelerated to .52 percent.
While this rate of growth compared favorably with other
Middle Atlantic States, it was less than the national rate
of increase.
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The State's economic base is diversified,
consisting of a variety of manufacturing, construction and
service industries, supplemented by commercial agriculture.
In 1976, voters approved casino gambling for Atlantic City,
and that city has again become an important State tourist
attraction.
Total personal income in New Jersey stood at $237.1
billion for 1995 and $248.0 billion for 1996. Personal
income increased 4.6 percent between 1995 and 1996 but was
below the national rate of 5.3 percent. New Jersey's
personal income growth is projected to improve to 5.9
percent through 1997 and 5.6 percent in 1998. 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 1996, the State ranked
second among all states in per capita personal income
($31,053).
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 percent during the first quarter
of 1989 to a recessionary peak of 9.3 percent in 1992.
Since that time, unemployment has decreased significantly.
The jobless rate averaged 6.4 percent during 1995, 6.2
percent in 1996 and 5.4 percent during the first nine months
of 1997. The net number of new jobs created between January
1994 and October 1997 was 208,100. By September 1997, the
State had surpassed by 11,400 jobs the previous record-high
employment level of 3,706,400 set in March of 1989 just
prior to the onset of the recession.
Conditions have improved in the construction
industry, where 1997 employment has risen by more than 2,800
over the previous year and is at its highest level since
February 1991. When it began during the late spring of
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1992, this sector's hiring rebound was driven primarily by
increased homebuilding and public works projects.
Nonresidential construction activity has increased in the
last four years. Contract awards in this sector posted a
9.7 percent gain in 1993 and 9.8 percent in 1994. More
recently, nonresidential building construction contracts
increased by 9.0 percent in the first three quarters of 1995
compared with the same period in 1994. Residential
construction contracts through September 1995, despite
monthly fluctuations, stayed almost even with 1994 ($1,671
million in the first three quarters of 1995 versus $1,677
million in the same period of 1994). Despite a 7.2 percent
decline in nonbuilding or infrastructure construction,
largely due to a slowing in public construction projects,
total construction contracts rose by 1.6 percent when
comparing the first nine months of 1994 and 1995. Vehicle
registrations issued during 1993 were up 18 percent from
1992 and rose 5.5 percent from 1993 to 1994. Registrations
were down in 1995, but rose nearly 8.6 percent through 1997
and 1997.
Another indicator of economic improvement is
increased consumer spending as evidenced by rising retail
sales. While overall retail sales in New Jersey grew by
only 1.5 percent during 1993, they performed much better in
1994 and continued to increase, despite some fall off in the
winter of 1995. Sales advanced briskly with retail receipts
up 8.1 percent during 1994 compared with 1993, which was
somewhat higher than the 7.8 percent growth registered
nationwide. Consumer spending was sluggish during the
winter months of 1995 both nationally and in the State.
Statewide sales of retail stores regained momentum in May
1995 and were on a moderately upward trend through August
1995, resulting in sales growth of 3.1 percent when
comparing the first eight months of 1994 with those of 1995.
Retail sales have continued to rise: 3.9 percent in 1996 and
a projected 5.7 percent in 1997 and 4.8 percent in 1998.
The rising trend in retail sales has translated into steady
increases in retail trade jobs (both full- and part-time)
and, in September and October 1995, retail employment rose
by a total of 5,600 jobs.
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
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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, 1997, 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 $607.0 million and
$569.2 million for fiscal year 1996. Such balance was $1.4
million for the 1992 fiscal year, $760.8 million for the
1993 fiscal year, $937.4 million for the 1994 fiscal year,
and $926.0 million for the 1995 fiscal year.
There are 567 municipalities and 21 counties in New
Jersey. During 1993, 1994 and 1995 no county exceeded its
statutory debt limitations or incurred a cash deficit in
excess of 4 percent of its tax levy. The number of
municipalities which exceeded statutory debt limits was six
as of December 31, 1994. Two municipalities incurred a cash
deficit greater than 4 percent of its tax levy for 1994 and
1995. 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,
improvement, etc.) and special taxing districts (fire,
water, etc.).
As of June 30, 1994, there were 196 locally created
authorities with a total outstanding capital debt of
approximately $7.0 billion (figures do not include housing
authorities and redevelopment agencies). This amount
reflects outstanding bonds, notes, and loans payable by the
authorities as of their respective fiscal years ended
nearest to June 30, 1994.
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Litigation
There are a number of suits making monetary claims
against the State, its agencies and employees that together
if decided in favor of the complainants would significantly
increase State expenditures above those anticipated. There
are also individual suits that could have that effect.
Among them are suits challenging (a) amendments to the
pension laws enacted on June 30, 1994; (b) the method of
calculating/collecting the hospital assessment authorized by
the Health Care Reform Act of 1992; (c) the
constitutionality of annual A-901 hazard and solid waste
licensure renewals fees collected by the Department of
Environmental Protection and Energy; (d) the state's failure
to provide funding to hospitals required by state law to
treat all patients, regardless of ability to pay; and
(e) the State's compliance with the court order in Abbot v.
Burke to close the spending gap between poor urban school
districts and wealthy districts.
VIRGINIA PORTFOLIO
The following is based on information obtained from
an Official Statement, dated June 1, 1997, relating to
$152,075,000 Commonwealth of Virginia General Obligation
Bonds, Series 1997.
Economic Climate
The Commonwealth of Virginia is the twelfth most
populous state in the nation, with approximately 6,677,200
residents. In 1995, its population density was 168 persons
per square mile, compared with 72 persons per square mile
for the United States.
The Commonwealth is divided into five distinct
regions--a coastal plain cut into peninsulas by four large
tidal rivers, a piedmont plateau of rolling farms and
woodlands, the Blue Ridge Mountains, the fertile Shenandoah
Valley and the Appalachian plateau extending over the
southwest corner of the Commonwealth. Approximately one-
third of all land in Virginia is used for farming and other
agricultural services. This variety of terrain, the
location of the Commonwealth on the Atlantic Seaboard at the
southern extremity of the northeast population corridor and
its close proximity to the nation's capital have had a
significant influence on the development of the present
economic structure of the Commonwealth.
The largest metropolitan area is the Northern
Virginia portion of the Washington, D.C. This is the
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fastest growing metropolitan area in the Commonwealth and
had a 1996 population of 1,970,900. Northern Virginia has
long been characterized by the large number of people
employed in both civilian and military work with the federal
government. However, it is also one of the nation's leading
high-technology centers for computer software and
telecommunications. Per capita income for the Northern
Virginia portion of the Washington, D.C. metropolitan area
in 1994 was $28,762.
According to the U.S. Department of Commerce,
Virginians received over $166 billion in personal income in
1996, representing an increase of 83.4 percent over 1986 and
greater than the national gain of 68.9 percent for the same
period. In 1996, Virginia had per capita income of $24,925,
the highest of the Southeast region and greater than the
national average of $24,231. Virginia's per capita income
rose from 94 percent to 103 percent of the national average
from 1970 to 1996. From 1986 to 1995, Virginia's 5 percent
average rate of growth in personal per capita income was
approximately equal to the national rate of growth. Much of
Virginia's per capita income gain in the last decade has
been due to the continued strength of the manufacturing
sectors, rapid growth of high-technology industries, basic
business services, corporate headquarters and regional
offices and the attainment of parity with the nation in
labor force participation rates.
More than 3.5 million residents of the Commonwealth
are in the civilian labor force. Services, the largest
employment sector, accounts for 28.4 percent of
nonagricultural employment, and has increased 19.1 percent
from 1991-1995. Manufacturing is also a significant
employment sector, accounting for 13.1 percent of
nonagricultural employment in 1995. The industries with the
greatest manufacturing employment are transportation
equipment, textiles, food processing, printing, electric and
electronic equipment, apparel, chemicals, lumber and wood
products and machinery. Employment in the manufacturing
sector decreased 2.4 percent from 1991 to 1995.
Virginia generally has one of the lowest
unemployment rates in the nation, according to statistics
published by the U.S. Department of Labor. During 1996, an
average of 4.4 percent of Virginia's citizens were
unemployed as compared with the national average which was
5.4 percent. During the first six months of 1997,
Virginia's unemployment rate averaged 4.25 percent and in
August 1997 was down to 4.1 percent.
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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. As of June 30, 1996, $84.9 million
was on deposit in the Revenue Stabilization Fund. In
addition, $151.6 million of the General Fund balance on June
30, 1996 was reserved for deposit in the Revenue
Stabilization Fund.
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
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which there is no moral obligation pledge to consider
funding debt service or reserve fund deficiencies.
On April 7, 1996, the 1996-98 Appropriation Act
became effective. That Act appropriated $35.078 billion for
the 1996-98 biennium -- approximately $1.411 billion in
spending increases above the level necessary to continue FY
1996 workloads and costs. Of these increases, $107.2
million resulted from the deposits to the Revenue
Stabilization Fund ($66.6 million for deposit on June 30,
1997 and an estimated $40.6 million scheduled for deposit on
June 30, 1998). The remainder provided the state share of
Standards of Quality for public schools, proposed increases
in higher education, increased spending for adult and
juvenile corrections, expansion of economic development, and
mandated increases in several entitlement programs in health
and human resources, primarily for Medicaid. The Act also
included more than $200 million in settlement payments to
federal retirees (see "Litigation" below). The Act
projected over $35.258 billion in revenues, providing for an
unappropriated balance surplus on June 30, 1998.
On April 30, 1997, the Governor signed the 1997
Appropriation Act amending the 1996-98 budget. The 1997 Act
included general fund spending amendments totaling about
$226.1 million above the 1996-98 Appropriation Act. Of this
total, $187.7 million supported operating expenses and $17.7
million was required for deposit into the Revenue
Stabilization Fund. An additional $9.1 million was left
unappropriated, bringing the total general fund
unappropriated balance to $20.7 million on June 30,
1998.
Litigation
The Commonwealth, its officials and employees are
named as defendants in legal proceedings which occur in the
normal course of governmental operations, some involving
substantial amounts. It is not possible at the present time
to estimate the ultimate outcome or liability, if any, of
the Commonwealth with respect to these lawsuits. However,
the ultimate liability resulting from these suits is not
expected to have a material, adverse effect on the financial
condition of the Commonwealth.
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 without exempting
retirement benefits paid by the federal government. At that
time, Virginia exempted state and local retirement benefits
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but not federal retirement benefits. At a Special Session
held in April 1989, the General Assembly repealed the
exemption of state and local retirement benefits.
In Harper v. Department of Taxation, commenced in
1989, federal retirees sought refunds of state income taxes
during 1985-1988. In a Special Session in 1994, the General
Assembly passed emergency legislation to provide payments to
federal retirees in settlement of their claims for overpaid
taxes. Approximately 91 percent of the retirees accepted
the settlement which provided for annual payments over a
five-year period, commencing March 31, 1995.
On September 15, 1995, the Virginia Supreme Court
rendered its decision in Harper, reversed the judgment of
the trial court, entered final judgment in favor of the
plaintiff retirees who elected not to settle, and directed
that the amounts unlawfully collected be refunded with
statutory interest. The total cost of refunding all
Virginia income taxes paid on federal pensions on account of
the settlement (approximately $316.2 million) and the
judgment ($78.7 million) is approximately $394.9 million, of
which $203.2 million ($124.5 in respect of the settlement
and the entire $78.7 million in respect of the judgment) has
been paid, leaving $191.7 million payable in respect of the
settlement--approximately $63.2 million in fiscal year 1997,
$62.5 million on March 31, 1998, and (subject to
appropriation) $66 million on March 31, 1999.
FLORIDA PORTFOLIO
The following is based on information obtained from
an Official Statement, dated July 1, 1997, relating to
$200,000,000 State of Florida Full Faith and Credit
Department of Transportation Right-of-Way Acquisition and
Bridge Construction Bonds, Series 1997A.
Economic Climate
As of April 1, 1996 Florida was the fourth most
populous state in the nation with an estimated population of
14.4 million. The State's average annual population growth
since 1987 has been approximately 2.2 percent while the
nation's average annual growth rate for the same period was
approximately 1.0 percent. During this same period, Florida
maintained an average growth of approximately 224,000 new
residents per year.
From 1985 through 1995 Florida's per capita income
rose an average of 5.0 percent per year, while the national
per capita income increased an average of 4.9 percent. The
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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 1995 represented 60.6 percent
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 70.8 percent. 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 1985 through 1995, Florida's
total personal income increased by 103 percent and per
capita income expanded by approximately 62.5 percent. For
the U.S., total and per capita personal income increased by
approximately 77.8 percent and 61.0 percent, respectively.
The Southeast as a whole increased its personal income by
90.2 percent and its per capita income by approximately 68.2
percent.
Since 1987, Florida's total employment increased by
approximately 27.5 percent Since 1987 non-agricultural job
creation has increased by over 35.6 percent compared to the
national average which increased by 20.2 percent over the
same period. Contributing to Florida's rapid rate of growth
in employment and income is international trade. Structural
changes to Florida's economy have also contributed heavily
to the State's strong performance. 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.
Florida's service industries sector accounts for
nearly 87 percent of total non-farm employment in Florida.
While structurally the southeast and the nation are endowed
with a greater proportion of manufacturing jobs, which tend
to pay higher wages than some types of service jobs, service
employment, historically, tends to be less sensitive to the
business cycle. Moreover, manufacturing jobs nationwide and
in the southeast are concentrated in areas such as heavy
equipment, primary metals, chemicals, and textile mill
products. Florida's manufacturing section has a
concentration in high-tech and high value-added sectors,
such as electrical and electronic equipment, as well as
printing and publishing. These types of jobs tend to be
less cyclical than other forms of manufacturing. Since the
beginning of the nineties Florida's manufacturing sector has
kept pace with the nation at about 2.6 percent of total U.S.
manufacturing. Tourism is also one of Florida's most
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important industries. Approximately 42.9 million people
visited the State in 1995.
Florida's dependency on the highly cyclical
construction and construction-related manufacturing sectors
has declined. For example, total contract construction
employment as a share of total non-farm employment reached a
peak of over 10 percent in 1973. In 1980, the share was
roughly 7.5 percent percent, and in 1996, the share had
edged downward to nearly 5 percent. This trend is expected
to continue as Florida's economy continues to diversify.
Florida, nevertheless, has a dynamic construction industry,
with single and multi-family housing starts accounting for
approximately 8.1 percent of total U.S. housing starts in
1996, while the State's population is 5.5 percent of the
nation's population. Total housing starts were 118,400 in
1996.
Florida's unemployment rate through much of the
1980's tracked above the national average. From 1988 to
1994, however, the unemployment rate tracked above the
national average. Since 1994, the average rate of
unemployment for Florida has been 5.4 percent, while the
national average has been 5.5 percent. Florida's
unemployment rate is projected to continue slightly below
the national average through 1998.
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.
On November 8, 1994 a constitutional amendment was
ratified by the voters which limits the growth in state
revenues in a given fiscal year to no more than the average
annual growth rate in Florida personal income over the
previous five years. Revenues collected in excess of the
limitation are to be deposited into the Budget Stabilization
Fund unless 2/3 of the members of both houses of the
legislature vote to raise the limit. For the first year
which is fiscal year 1995-96, the limit is based on actual
revenues from fiscal year 1994-95. State revenues are
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defined as taxes, licenses, fees, charges for services
imposed by the Legislature on individuals, business or
agencies outside of state government and revenue from the
sale of lottery tickets.
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 1995-1996, Florida derived an
estimated 66 percent 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 69 percent of general revenue funds
available. For the fiscal year which ended June 30, 1996,
receipts from this source were $11,461 million, an increase
of 7.4 percent from fiscal year 1994-95.
In fiscal year 1996-97, the estimated General
Revenue plus Working Capital and Budget Stabilization Funds
available total $16,617.4 million, a 6.7 percent increase
from fiscal year 1995-96. The $15,568.7 million in
Estimated Revenues represents a 6.3 percent increase from
the analogous figures in 1995-96. With combined General
Revenue, Working Capital Fund and Budget Stabilization Fund
appropriations at $15,537.2 million unencumbered reserves at
the end of 1996-97 are estimated at $1,080.0 million.
For fiscal year 1997-98, the General Revenue plus
Working Capital and Budget Stabilization Funds available
total $17,553.9 million, a 5.6 percent increase over 1996-
97. The $16,321.6 million in Estimated Revenues represent a
4.8 percent increase over the analogous figure in 1996-97.
With combined General Revenue, Working Capital Fund, and
Budget Stabilization Fund appropriations at $16,716.5
million, unencumbered reserves at the end of 1997-98 are
estimated at $837.4 million.
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
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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.
MASSACHUSETTS PORTFOLIO
The following was obtained from an Official
Statement, dated August 6, 1997, relating to $271,280,000
General Obligation Refunding Bonds, 1997 Series B and the
Governor's Budget Recommendation for Fiscal Year 1998.
Economic Climate
The Commonwealth of Massachusetts is a densely
populated urban state with a well-educated population,
comparatively high income levels, low rates of unemployment
and a relatively diversified economy. According to the 1990
census, Massachusetts had a population density of 768
persons per square mile, as compared to 70.3 for the United
States as a whole. It thus had the third greatest
population density following Rhode Island and New Jersey.
Massachusetts experienced a modest increase in population
between 1980 and 1990. In 1995, the population of
Massachusetts was approximately 6,074,000.
Per capita personal income for Massachusetts
residents, unadjusted for differentials in the cost of
living, was $26,994 in 1995, as compared to the national
average of $22,788. While per capita personal income is, on
a relative scale, higher in Massachusetts than in the United
States as a whole, this is offset to some extent by the
higher cost of living in Massachusetts. During 1996,
personal income in Massachusetts grew 5.0 percent.
The Massachusetts service sector, which constituted
35.2 percent of the total non-agricultural work force in
August 1996, is the largest sector in the Massachusetts
economy. Government employment represents 12.2 percent of
the Massachusetts work force. While total employment in
construction, manufacturing, trade, government, services,
and finance, insurance and real estate declined between 1988
and 1992, total employment in all those sectors, excluding
manufacturing, has increased since 1993.
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Between 1982 and 1988, the economies of
Massachusetts and New England were among the strongest
performers in the nation. Since 1989, however, both
Massachusetts and New England have experienced growth rates
significantly below the national average. An economic
recession in 1990 and 1991 caused negative growth rates in
Massachusetts and New England. In the first three quarters
of 1996, the Gross State Product for Massachusetts grew at a
rate of 2.9 percent, approximately the same rate as the
national average. Between 1988 and 1992, total employment
in Massachusetts declined 10.7 percent. In 1993, 1994, 1995
and 1996, however, total employment increased by 1.6 percent
and 2.2 percent and 2.4 percent and 2.3 percent,
respectively. Massachusetts' unemployment rate averaged 8.6
percent in 1992, 6.9 percent in 1993, 6.0 percent in 1994,
5.4 percent in 1995 and 4.3 percent in 1996. During the
first nine months of 1997, the unemployment rate averaged
4.0 percent, nearly a full percentage point lower than the
national average.
Financial Condition
Under its constitution, the Commonwealth may borrow
money (a) for defense or in anticipation of receipts from
taxes or other sources, any such loan to be paid out of the
revenue of the year in which the loan is made, or (b) by a
two-thirds vote of the members of each house of the
Legislature present and voting thereon.
Certain independent authorities and agencies within
the Commonwealth are statutorily authorized to issue bonds
and notes for which the Commonwealth is either directly, in
whole or in part, or indirectly liable. The Commonwealth's
liabilities with respect to these bonds and notes are
classified as either (a) Commonwealth-supported debt, (b)
Commonwealth-guaranteed debt or (c) indirect
obligations.
Debt service expenditures of the Commonwealth in
Fiscal Year 1992 totaled $898.3 million, representing a 4.7
percent decrease from Fiscal Year 1991. Debt service
expenditures for Fiscal Year 1993, Fiscal Year 1994, Fiscal
Year 1995 and Fiscal Year 1996 were $1.140 billion, $1.149
billion and $1.231 billion and $1.183 billion, respectively,
and are projected to be $1.284 billion for Fiscal Year 1997.
In January 1990, legislation was enacted which imposes a 10
percent limit on the total appropriations in any fiscal year
that may be expended for payment of interest on general
obligation debt (excluding Fiscal Recovery Bonds) of
Massachusetts. In 1998, when the Commonwealth retires its
last Fiscal Recovery Bond, the long-term debt service
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obligations are projected to decrease by 2 percent, or
$26.24 million, from Fiscal Year 1997. Short-term debt
service obligations are expected to increase to
approximately $15 million in Fiscal Year 1998, as Central
Artery/Tunnel Project cash flow requirements begin to
outpace the inflow of federal revenues. The Commonwealth
will fund this interim cash shortfall with Grant
Anticipation Notes to be paid back as federal reimbursements
are received.
In Fiscal Year 1990, Massachusetts had a GAAP basis
budget deficit of nearly $1.9 billion. That deficit margin
steadily decreased and in 1995, the Commonwealth ended the
year with a GAAP basis budget surplus of $287.4 million. In
1996, the GAAP basis budget surplus was $709.2 million and
the statutory basis surplus was $1.1 billion.
In Fiscal Year 1996, the Commonwealth Stabilization
Fund was funded to its statutory limit of $543.3 million.
An additional $232 million was available for deposit into
the Fund but, because it had reached its statutory ceiling,
these funds flowed into the Tax Reduction Fund, triggering a
$150 million income tax cut for Tax Year 1996 and an $84
million tax cut for Tax Year 1997.
Preliminary results indicate that Fiscal Year 1997
tax collections totaled approximately $12.861 billion, an
increase of approximately $812 million, or 6.7 percent, over
Fiscal Year 1996 and approximately $354 million higher than
previous official estimates. Total 1997 revenues are
estimated to have been approximately $17.918 billion.
Projected total Fiscal Year 1997 expenditures are
approximately $17.735 billion, including $212.8 million in
supplemental spending requests filed by the Governor. Under
these spending and revenue estimates, approximately $241
million would be transferred to the Commonwealth
Stabilization Fund on account of Fiscal Year 1997, bringing
its balance to approximately $804.3 million, and $160.7
million would be transferred to a newly established capital
projects fund.
The Fiscal Year 1998 budget, approved on July 10,
1997, is based on a consensus revenue forecast of $12.85
billion which, according to preliminary results, is
equivalent to the amount of actual tax receipts for Fiscal
Year 1997. On July 30, 1997, the Executive Office revised
the Fiscal Year 1998 tax forecast to $13.06 billion and
filed legislation that would reduce the tax rate on certain
income. The Executive Office estimates the cost of this tax
cut at $196 million in 1998, $587 million in 1999, $985
million in 2000 and $1.229 billion in 2001, at which time
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the rate reduction would be fully implemented. The Fiscal
Year 1998 budget provides for total appropriations of
approximately $18.4 billion, a 3.3 percent increase over
Fiscal Year 1997 expenditures. Governor Weld vetoed or
reduced appropriations totaling $3.3 million.
In November 1980, voters in the Commonwealth
approved a state-wide tax limitation initiative petition,
commonly known as Proposition 2 1/2, to constrain levels of
property taxation and to limit the charges and fees imposed
on cities and towns by certain government entities,
including county governments. The law is not a
constitutional provision and accordingly is subject to
amendment or repeal by the Legislature. Proposition 2 1/2
limits the property taxes that a Massachusetts city or town
may assess in any fiscal year to the lesser of (i) 2.5
percent of the full and fair cash value of real estate and
personal property therein and (ii) 2.5 percent over the
previous fiscal year's levy limit plus any growth in the
base from certain new construction and parcel subdivisions.
In addition, Proposition 2 1/2 limits any increase in the
charges and fees assessed by certain governmental entities,
including county governments, on cities and towns to the sum
of (i) 2.5 percent of the total charges and fees imposed in
the preceding fiscal year, and (ii) any increase in charges
for services customarily provided locally or services
obtained by the city or town. the law contains certain
override provisions and, in addition, permits certain debt
servicings and expenditures for identified capital projects
to be excluded from the limits by a majority vote, in a
general or special election.
During the 1980's, Massachusetts increased payments
to its cities, towns and regional school districts ("Local
Aid") to mitigate the impact of Proposition 2 1/2 on local
programs and services. In Fiscal Year 1997, approximately
19.9 percent of Massachusetts' budget is estimated to have
been allocated to Local Aid. Direct Local Aid increased
from $2.359 billion in Fiscal Year 1992 to $2.547 billion in
Fiscal Year 1993, to $2.727 billion in Fiscal Year 1994 and
to $2.976 billion in Fiscal Year 1995. Fiscal Year 1996
expenditures for direct Local Aid were $3.246 billion, a 9.1
percent increase over 1995. It is estimated that Fiscal
Year 1997 expenditures for Local Aid will be $3.534 billion,
which is an increase of approximately 8.9 percent above the
Fiscal Year 1996 level. In addition to direct Local Aid,
Massachusetts provides substantial indirect aid to local
governments.
In November 1990 voters approved a petition which
regulates the distribution of Local Aid by requiring,
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subject to appropriation, distribution to cities and towns
of no less than 40 percent of collection from personal
income taxes, sales and use taxes, corporate excise taxes,
and Lottery Fund proceeds. The Local Aid distribution to
each city or town would equal no less than 100 percent of
the total Local Aid received for Fiscal Year 1989.
Distributions in excess of Fiscal Year 1989 levels would be
based on new formulas that would replace the current Local
Aid distribution formulas. By their terms, the new formulas
would have called for a substantial increase in direct Local
Aid in Fiscal Year 1992, and would call for such an increase
in Fiscal Year 1993 and in subsequent years. However, Local
Aid payments expressly remain subject to annual
appropriation, and appropriations for Local Aid in Fiscal
Years 1992 through 1997 did not meet the levels set forth in
the initiative law.
During Fiscal Years 1993, 1994, 1995 and 1996,
Medicaid expenditures of the Commonwealth were $3.151
billion, $3.313 billion, $3.898 billion and $3.416 billion,
respectively. The average annual growth rate from Fiscal
Year 1992 to Fiscal Year 1996 was 3.9 percent, compared to
an average annual growth rate of approximately 17 percent
between Fiscal Year 1987 and Fiscal Year 1991. The
Executive Office for administration and finance estimates
that Fiscal Year 1997 Medicaid expenditures will be
approximately $3.394 billion. Factoring out one-time
payments in Fiscal Year 1996 to settle bills from hospitals
and nursing homes dating back to the 1980's, and adjusting
for a change in the account structure of the Medicaid
program, Medicaid expenditures are projected to remain flat
from Fiscal Year 1996 to Fiscal Year 1997. The decrease in
the rate of growth is due to a number of savings and cost
control initiatives that the Division of Medical Assistance
continues to implement and refine, including managed care,
utilization review and the identification of third party
liabilities.
________________________________________________________________
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 (except the Massachusetts
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
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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 (applies to all Portfolios except the
Massachusetts Portfolio):
1. May not purchase any security which has a maturity
date more than one year* (397 days in the case of
the New Jersey and Virginia Portfolios) from the
date of such Portfolio's purchase;
2. May not invest more than 25% of its total assets in
the securities of issuers conducting their
principal business activities in any one industry,
provided that for purposes of this policy (a) there
is no limitation with respect to investments in
municipal securities (including industrial
development bonds), securities issued or guaranteed
by the U.S. Government, its agencies or
instrumentalities, certificates of deposit,
bankers' acceptances and interest-bearing savings
deposits, and (b) consumer finance companies,
industrial finance companies and gas, electric,
water and telephone utility companies are each
considered to be separate industries. For purposes
of this restriction and those set forth in
restrictions 4 and 5 below, a Portfolio 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.
____________________
* Which maturity, pursuant to Rule 2a-7, may extend to 397
days.
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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, Florida
Portfolios may invest in the securities of as few
as four issuers (provided that no more than 25% of
the respective Portfolio's total assets are
invested in the securities of any one issuer). For
purposes of such 5% and 10% limitations, the issuer
of the letter of credit or other guarantee backing
a participation interest in a variable rate
industrial development bond is deemed to be the
issuer of such participation interest;**
5. May not purchase more than 10% of any class of the
voting securities of any one issuer except
securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;
6. May not borrow money except from banks on a
temporary basis or via entering into reverse
repurchase agreements for extraordinary or
emergency purposes in an aggregate amount not to
exceed 15% of a Portfolio's total assets. Such
borrowings may be used, for example, to facilitate
the orderly maturation and sale of portfolio
securities during periods of abnormally heavy
redemption requests, if they should occur, such
borrowings may not be used to purchase investments
and such Portfolio will not purchase any investment
while any such borrowings exist;
7. May not pledge, hypothecate, mortgage or otherwise
encumber its assets except to secure borrowings,
including reverse repurchase agreements, effected
within the limitations set forth in restriction 6.
To meet the requirements of regulations in certain
states, a Portfolio, as a matter of operating
policy, will limit any such pledging, hypothecating
____________________
** 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.
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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,*** or (ii) with a particular
vendor if immediately thereafter more than 5% of
such Portfolio's assets would be committed to
repurchase agreements entered into with such
vendor; or
10. May not (a) make investments for the purpose of
exercising control; (b) purchase securities of
other investment companies, except in connection
with a merger, consolidation, acquisition or
reorganization; (c) invest in real estate (other
than securities secured by real estate or interests
therein or securities issued by companies which
invest in real estate or interests therein),
commodities or commodity contracts; (d) purchase
any restricted securities or securities on margin;
(e) make short sales of securities or maintain a
short position or write, purchase or sell puts
(except for standby commitments as described in the
Prospectus and above), calls, straddles, spreads or
combinations thereof; (f) invest in securities of
issuers (other than agencies and instrumentalities
of the United States Government) having a record,
together with predecessors, of less than three
years of continuous operation if more than 5% of a
Portfolio's assets would be invested in such
securities; (g) purchase or retain securities of
any issuer if those officers and trustees of the
Fund and officers and directors of the Adviser who
own individually more than 1/2 of 1% of the
outstanding securities of such issuer together own
____________________
*** As a matter of operating policy, each Portfolio will limit
its investment in illiquid securities to 10% of its net
assets.
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more than 5% of the securities of such issuer; or
(h) act as an underwriter of securities.
MASSACHUSETTS PORTFOLIO
THE FOLLOWING RESTRICTIONS ARE FUNDAMENTAL POLICIES OF
THE MASSACHUSETTS PORTFOLIO:
The Portfolio:
1. 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, the Fund will regard the entity
which has the primary responsibility for the payment of interest
and principal as the issuer;
2. 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 the Fund'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 the Fund will not purchase any investment while any such
borrowings exist;
3. 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 2;
4. May not make loans of money or securities except by
the purchase of debt obligations in which the Fund may invest
consistent with its investment objectives and policies and by
investment in repurchase agreements;
5. May not 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; and
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6. May not act as an underwriter of securities.
NON-FUNDAMENTAL POLICIES (MASSACHUSETTS PORTFOLIO)
The following policies are not fundamental and may be
changed by the Trustees without shareholder approval. The
Portfolio:
1. 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 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). For
purposes of this limitation, 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. 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;
3. May not invest more than 25% of its total assets in
municipal securities the interest upon which is paid from
revenues of similar-type projects;
4. May not enter into repurchase agreements not
terminable within seven days if, as a result thereof, more than
10% of the Fund's net assets would be committed to such
repurchase agreements or other illiquid investments;
5. May not purchase any securities on margin;
6. May not 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; and
7. May not invest more than 10% of its net assets in
illiquid securities.
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________________________________________________________________
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 followed by a footnote 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. WILLIAMS,**** 65, Chairman, is Chairman of the
Board of Directors of Alliance Capital Management Corporation
("ACMC")***** sole general partner of the Adviser with which he
has been associated since prior to 1992.
JOHN D. CARIFA,****** 52, is the President, Chief
Operating Officer, and a Director of ACMC with which he has been
associated since prior to 1992.
SAM Y. CROSS, 70, was, since prior to December 1992,
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, 59, is President of Middleton Place
Foundation with which he has been associated since prior to 1992.
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.
____________________
**** An "interested person" of the Fund as defined in the Act.
***** For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation,
the sole general partner of the Adviser, and to the
predecessor general partner of the Adviser of the same
name.
****** An "interested person" of the Fund as defined in the Act.
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His address is Middleton Place Foundation, Ashley River Road,
Charleston, South Carolina 29414.
WILLIAM H. FOULK, JR., 65, 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 1992. His address is 2 Greenwich Plaza, Suite
100, Greenwich, CT 06830.
DONALD J. ROBINSON, 63, was formerly a partner at
Orrick, Herrington & Sutcliffe and is currently Senior Counsel to
that firm. He was a Trustee of the Museum of the City of New
York from 1977 to 1995. His address is 666 Fifth Avenue, 19th
Floor, New York, New York 10103.
DAVID K. STORRS, 53, is President and Chief Executive
Officer of Alternative Investment Group, LLC (a venture capital
firm). He was formerly President of The Common Fund (investment
management for educational institutions) with which he had been
associated since prior to 1992. His address is 65 South Gate
Lane, Southport, Connecticut 06490.
SHELBY WHITE, 59, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York
10022.
Officers
RONALD M. WHITEHILL - President, 59, 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 1992.
KATHLEEN A. CORBET - Senior Vice President, 37, has been
a Senior Vice President of ACMC since July 1993. Prior thereto,
she was employed by Equitable Capital since prior to 1992.
DREW BIEGEL - Senior Vice President, 46, is a Vice
president of ACMC with which he has been associated since prior
to 1992.
JOHN R. BONCZEK - Senior Vice President, 37, is a Vice
President of ACMC with which he has been associated since prior
to 1992.
ROBERT I. KURZWEIL - Senior Vice President, 46, 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
1992.
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WAYNE D. LYSKI - Senior Vice President, 56, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1992.
WILLIAM E. OLIVER - Senior Vice President, 48, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1992.
PATRICIA NETTER - Senior Vice President, 46, is a Vice
President of ACMC with which she has been associated since prior
to 1992.
DORIS T. CILIBERTI - Vice President, 33, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1992.
FRANCIS M DUNN - Vice President, 27, is an
Administrative Officer of ACMC with which she has been associated
since prior to 1992.
WILLIAM J. FAGAN - Vice President, 35, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.
JOSEPH R. LASPINA - Vice President, 37, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.
LINDA D. NEIL - Vice President, 37, 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 1992.
RAYMOND J. PAPERA - Vice President, 41, is a Vice
President of ACMC with which he has been associated since prior
to 1992.
EDMUND P. BERGAN, Jr. - Secretary, 47, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
with which he has been associated since prior to 1992.
MARK D. GERSTEN - Treasurer and Chief Financial Officer,
47, is a Senior Vice President of Alliance Fund Services, Inc.
and Alliance Fund Distributors, Inc. with which he has been
associated since prior to 1992.
VINCENT S. NOTO - Controller, 32, is an Assistant Vice
President of Alliance Fund Services, Inc. with which he has been
associated since prior to 1992.
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As of October 15, 1997, 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, 1997, the
aggregate compensation paid to each of the Trustees during
calendar year 1996 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies (and separate investment portfolios within
those companies) in the Alliance Fund Complex with respect to
which each of the Trustees serves as a director or trustee, are
set forth below. Neither the Fund nor any other fund in the
Alliance Fund Complex provides compensation in the form of
pension or retirement benefits to any of its directors or
trustees.
Total Number Total Number
of Funds in of Investment
the Alliance Portfolios Within
Total Fund Complex, the Funds,
Compensation Including the Including the
from the Fund, as to Fund, as to
Alliance Fund which the which the
Name of Aggregate Complex, Trustee is a Trustee is a
Trustee Compensation Including the Director or Director or
of the Fund From the Fund Fund Trustee Trustee
___________ _____________ ______________ _____________ _______________
Dave H. Williams $-0- $-0- 6 15
John D. Carifa $-0- $-0- 52 114
Sam Y. Cross $4,516 $ 12,000 3 12
Charles H.P. Duell $4,516 $ 12,000 3 12
William H. Foulk, Jr. $6,466 $144,250 34 70
Elizabeth J. McCormack $3,769 $ 9,750 3 12
Donald J. Robinson $-0- $137,250 42 102
David K. Storrs $3,128 $ 12,000 3 12
Shelby White $3,128 $ 12,000 3 12
On August 11, 1997, Elizabeth J. McCormack resigned as a
Trustee.
On September 8, 1997, Donald J. Robinson was elected as
a Trustee.
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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 Trustees.
The Adviser is a leading international investment
manager supervising client accounts with assets as of
September 30, 1997 of more than $199 billion (of which more than
$71 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. Ss of September 30, 1997, the
Adviser was retained as an investment manager of employee benefit
fund assets for 29 of the FORTUNE 100 companies. As of that
date, the Adviser and its subsidiaries employed approximately
1,450 employees who operated out of five domestic offices and the
offices of subsidiaries in , Istanbul, London, Mumbai, Paris, Sao
Paulo, Sydney, Tokyo, Toronto, Bahrain, Luxembourg and Singapore.
The 52 registered investment companies comprising more than 110
separate investment portfolios managed by the Adviser currently
have more than two million shareholders.
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-VAP, a French insurance holding company. As of March 1,
1997, 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 March 31, 1997, approximately 34% and
9% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including an employee
of the Adviser who serves as a Trustee of the Fund.
As of March 1, 1997, AXA-VAP and its subsidiaries owned
60.7% of the issued and outstanding shares of the capital stock
of ECI. ECI is a public company with shares traded on the
Exchange. AXA-VAP, a French company, is the holding company for
an international group of insurance and related financial
services companies. AXA-VAP's insurance operations include
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<PAGE>
activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities, principally in Western Europe, North America and
the Asia/Pacific area. AXA-VAP is also engaged in asset
management, investment banking, securities trading, brokerage,
real estate and other financial services activities principally
in the United States, as well as in Western Europe and the
Asia/Pacific area.
Based on information provided by AXA-VAP, on March 1,
1997, 22.5% of the issued ordinary shares (representing 33.0% of
the voting power) of AXA-VAP were controlled directly and
indirectly by Finaxa, a French holding company. As of March 1,
1997, 61.4% of the shares (representing 72.0% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXA") (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 34.9% of the shares, representing 40.0%
of the voting power), and 23.7% of the shares of Finaxa
(representing 14.6% of the voting power) were owned by Banque
Paribas, a French bank ("Paribas"). Including the ordinary
shares owned by Finaxa, on March 1, 1997, the Mutuelles AXA
directly or indirectly controlled 26.0% of the issued ordinary
shares (representing 38.1% of the voting power) of AXA-VAP.
Acting as a group, the Mutuelles AXA control AXA-VAP and
Finaxa.
In November 1996, AXA offered (the "Exchange Offer") to
acquire 100% of the ordinary shares ("VAP Shares") of FF10 each
of Compagnie VAP, a societe anonyme organized under the laws of
France ("VAP"), in exchange for ordinary shares ("Shares") and
Certificates of Guaranteed Value ("Certificates") of AXA. Each
VAP shareholder that tendered VAP Shares in the Exchange Offer
received two Shares and two Certificates for every five VAP
Shares so tendered. On January 24, 1997, AXA acquired 91.37% of
the outstanding VAP Shares. AXA-VAP currently intends to merge
(the "Merger") with VAP at some future date in 1997. It is
anticipated that approximately 11,706,826 additional Shares will
be issued in connection with the Merger to VAP shareholders who
did not tender VAP Shares in the Exchange Offer. If the Merger
had been completed at March 1, 1997, Finaxa would have
beneficially owned (directly and indirectly) approximately 21.7%
of the Shares (representing approximately 32.0% of the voting
power), and the Mutuelles AXA would have controlled (directly or
indirectly through their interest in Finaxa) 25.1% of the issued
ordinary shares (representing 36.8% of the voting power) of AXA-
VAP. On January 17, 1997, AXA announced its intention to redeem
its outstanding 6% Bonds (the "Bonds"). Between February 14,
1997 and May 14, 1997, holders of the Bonds had the option to
convert each Bond into 5.15 Shares. On May 15, 1997, each Bond
still outstanding was redeemed into cash at FF1,285 plus FF9.29
accrued interest. Finaxa converted the Bonds it had owned into
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<PAGE>
2,153,308 Shares. After giving effect to the conversion of all
outstanding Bonds into Shares and to the Merger as if it had been
completed at March 1, 1997, Finaxa would have beneficially owned
(directly and indirectly) approximately 21.4% of the Shares
(representing 31.3% of the voting power), and the Mutuelles AXA
would have controlled (directly or indirectly through their
interest in Finaxa) 24.7% of the issued ordinary shares
(representing 36.0% of the voting power) of AXA-VAP.
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, 1995, 1996 and 1997,
the Adviser received from the General Portfolio, an advisory fee
of $5,696,283, $6,072,814 and $5,913,456, respectively.
For the fiscal years ended June 30, 1995, 1996 and 1997,
the Adviser received from the New York Portfolio an advisory fee
of $699,193, $1,172,532 and $1,449,300, respectively, net of
voluntary expense reimbursements for expenses exceeding .85 of 1%
of the average daily net assets.
For the fiscal years ended June 30, 1995, 1996 and 1997,
the Adviser received from the California Portfolio an advisory
fee of $1,128,198, $1,419,915 and $1,763,920, respectively.
For the fiscal years ended June 30, 1995, 1996 and 1997,
the Adviser received from the Connecticut Portfolio an advisory
fee of $126,013, $209,039 and $303,685, respectively, net of
voluntary expense reimbursements 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 New Jersey Portfolio an advisory fee of $30,390
net of voluntary expense reimbursements for expenses exceeding
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<PAGE>
.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
fiscal year ended June 30, 1997, the Adviser received from the
New Jersey Portfolio an advisory fee of $2,157,730 net of
voluntary expense reimbursements 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 25, 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
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 fiscal year ended
June 30, 1997 the Adviser received from the Virginia Portfolio an
advisory fee of $216,994 net of voluntary expense reimbursements
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. For the fiscal year ended
June 30, 1997, the Adviser received from the Florida Portfolio an
advisory fee of $158,755 net of voluntary expense reimbursements
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<PAGE>
for the period from July 1, 1996 to May 31, 1997 for expenses
exceeding .65 of 1% of the average daily net assets and from June
1, 1997 to June 30, 1997 for expenses exceeding .70 of 1% of the
average daily net assets.
For the period April 17, 1997 (commencement of
operations) to June 30, 1997, the Adviser received no advisory
fee from the Massachusetts Portfolio net of voluntary expense
reimbursements for expenses exceeding .50 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,
1995, 1996 and 1997, the Adviser received $112,500, $109,000 and
$98,000 respectively, from the General Portfolio; $93,400,
$95,000 and $94,000 respectively, from the New York Portfolio;
$94,100, $95,500 and $94,000 respectively, from the California
Portfolio; $91,700, $92,500 and $91,000 respectively, from the
Connecticut Portfolio; $91,500, $92,500 and $91,000,
respectively, from the New Jersey Portfolio. For the fiscal
period October 25, 1994 (commencement of operations) to June 30,
1995, the Adviser received $47,000 from the Virginia Portfolio.
For the fiscal years ended June 30, 1996 and 1997, the Adviser
received $92,500 and $91,000, respectively 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. For the fiscal year ended June 30, 1997
the Adviser received $92,000 from the Florida Portfolio. For the
fiscal period April 17, 1997 (commencement of operations) to June
30, 1997, the Adviser agreed to waive its fee for such services
from the Massachusetts Portfolio.
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<PAGE>
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
by the Fund's Trustees. For the fiscal years ended June 30,
1995, 1996 and 1997, broker-dealers were reimbursed $360,255,
$462,107 and $475,088, respectively, by the General Portfolio;
$33,165, $84,873 and $90,961, respectively, by the New York
Portfolio; $83,891, $94,952 and $127,710, respectively, by the
California Portfolio; $21,142, $31,442 and $41,129, respectively,
by the Connecticut Portfolio; $4,864, $10,091 and $17,464,
respectively, bythe New Jersey Portfolio; for the period October
25, 1994 (commencement of operations) to June 30, 1995 $26,560 by
the Virginia Portfolio and for the fiscal years ended June 30,
1996 and 1997, $65,803 and $77,407 by the Virginia Portfolio; and
for the period July 28, 1995 (commencement of operations) to June
30, 1996, $52,469 by the Florida Portfolio and for the fiscal
year ended June 30, 1997, $91,365 by the Florida Portfolio. For
the fiscal period April 17, 1997 (commencement of operations) to
June 30, 1997, brokers were reimbursed $8,505 by the
Massachusetts Portfolio.
The Advisory Agreement became effective on July 22,
1992. Continuance of the Advisory Agreement until June 30, 1998
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 16, 1997.
The Advisory Agreement remains in effect from year to
year provided that such continuance is specifically approved at
least annually by a vote of a majority of the outstanding shares
of the Fund or by the Fund's Trustees, including in either case
approval by a majority of the Trustees who are not parties to the
Agreement, or interested persons as defined in the Act. The
Advisory Agreement may be terminated without penalty on 60 days'
written notice at the option of either party or by a vote of the
outstanding voting securities of the Fund; it will automatically
terminate in the event of assignment. The Adviser is not liable
for any action or inaction with regard to its obligations under
the Advisory Agreement as long as it does not exhibit willful
misfeasance, bad faith, gross negligence, or reckless disregard
of its obligations.
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<PAGE>
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 and its affiliates, 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, 1997, the General
Portfolio made payments to the Adviser for expenditure under the
Agreement in amounts aggregating $2,956,728 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 $3,030,202. Of the $5,986,930 paid
by the General Portfolio and the Adviser under the Agreement,
$37,000 was spent on the printing and mailing of prospectuses for
persons other than current shareholders and $5,949,930 for
compensation to dealers.
During the fiscal year ended June 30, 1997 the New York
Portfolio made payments to the Adviser for expenditures under the
Agreement in amounts aggregating $550,183 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 $1,385,939. Of the $1,936,122 paid
by the New York Portfolio and the Adviser under the Agreement,
$20,000 was spent on the printing and mailing of prospectuses for
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persons other than current shareholders and $1,916,122 for
compensation to dealers.
During the fiscal year ended June 30, 1997 the
California Portfolio mad payments to the Adviser for expenditure
under the Agreement in amounts aggregating $777,486 which
constituted .22 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 $925,574. Of the
$1,703,060 paid by the California Portfolio and the Adviser under
the Agreement, $19,000 was spent on the printing and mailing of
prospectuses for persons other than current shareholders and
$1,684,060 for compensation to dealers.
During the fiscal year ended June 30, 1997, the
Connecticut Portfolio made payments to the Adviser for
expenditure under the Agreement in amounts aggregating $153,400
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 $387,673. Of the
$541,073 paid by the Connecticut Portfolio and the Adviser under
the Agreement, $6,000 was spent on printing and mailing of
prospectuses for persons other than current shareholders and
$535,073 for compensation of dealers.
During the fiscal year ended June 30, 1997, the New
Jersey Portfolio made payments to the Adviser for expenditure
under the Agreement in amounts aggregating $177,422 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 $468,670. Of the
$646,092 paid by the New Jersey Portfolio and the Adviser under
the Agreement, $12,000 was spent on printing and mailing of
prospectuses for persons other than current shareholders and
$634,092 for compensation of dealers.
During the fiscal year ended June 30, 1997, the Virginia
Portfolio made payments to the Adviser for expenditure under the
Agreement in amounts aggregating $129,198 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 $293,534. Of the $422,732 paid by
the Virginia Portfolio and the Adviser under the Agreement,
$12,000 was spent on printing and mailing of prospectuses for
persons other than current shareholders and $410,732 for
compensation of dealers.
For the fiscal year end June 30, 1997 the Florida
Portfolio made payments to the Adviser for expenditure under the
Agreement in amounts aggregating $160,143 which constituted .15
of 1% of such Portfolio's average daily net assets during the
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<PAGE>
period, and the Adviser made payments from its own resources as
described above aggregating $450,735. Of the $610,878 paid by
the Florida Portfolio and the Adviser under the Agreement, $9,000
was spent on printing and mailing of prospectuses for persons
other than current shareholders and $601,878 for compensation of
dealers.
For the period April 17, 1997 (commencement of
operations) to June 30, 1997, the Massachusetts Portfolio made no
payment to the Adviser and the Adviser made payments from its own
resources as described above aggregating $8,586. Of the $8,586
paid by the Adviser under the Agreement, $8,586 was spent 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. 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.
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, 1998 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 16, 1997.
The Agreement may be continued annually thereafter if approved by
a majority vote of the Trustees who neither are interested
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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
shares to the public in response to conditions in the securities
markets or for other reasons.
Accounts Not Maintained Through Financial Intermediaries
Opening Accounts New Investments
A. When Funds are Sent by Wire (the wire method
permits immediate credit)
1) Telephone the Fund toll-free at (800) 824-
1916. The Fund will ask for the name of the
account as you wish it to be registered,
address of the account, and taxpayer
identification number (social security number
for an individual). The Fund will then provide
you with an account number.
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2) Instruct your bank to wire Federal funds
(minimum $1,000) exactly as follows:
ABA 0110 00028
State Street Bank and Trust Company
Boston, MA 02101
Alliance Municipal Trust
DDA 9903-279-9
Your account name as registered 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)
Instruct your bank to wire Federal funds (minimum $100)
to State Street Bank and Trust Company ("State Street Bank") as
in A(2) above.
B. Investments by Check
Mail your check or negotiable bank draft (minimum $100),
payable to "Alliance Municipal Trust," to Alliance Fund Services,
Inc. as in A(3) above.
Include with the check or draft the "next investment"
stub from one of your previous monthly or interim account
statements. For added identification, place your Fund account
number on the check or draft.
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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
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
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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 Checkwriting
With this service, you may write checks made payable to
any payee in any amount. 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
checkwriting service subsequent to the opening of your Fund
account, contact the Fund by telephone or mail. There is no
separate charge for the checkwriting 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. There is a $7.50 charge for
check reorders.
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 to State Street Bank for
payment.
C. By Mail
You may withdraw any amount from your account at any
time by mail. Written orders for withdrawal, accompanied by
duly endorsed certificates, if issued, should be mailed to
Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey
07096- 1520. Such orders must include the account name as
registered with the Fund and the account number. All written
orders for redemption, and accompanying certificates, if any,
must be signed by all owners of the account with the signatures
guaranteed by an institution which is an "eligible guarantor" as
defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended.
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________________________________________________________________
ADDITIONAL INFORMATION
________________________________________________________________
Automatic Investment Program. A shareholder may
purchase shares of the Fund through an automatic investment
program through a bank that is a member of the National
Automated Clearing House Association. Purchases can be made on a
Fund business day each month designated by the shareholder.
Shareholders wishing to establish an automatic investment program
should write or telephone the Fund or AFS at (800) 221-5672.
Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Fund itself so that the institutions may properly
process such orders prior to their transmittal to State Street
Bank and Trust Company ("State Street Bank"). Should an investor
place a transaction order with such an institution after its
deadline, the institution may not effect the order with the Fund
until the next business day. Accordingly, an investor should
familiarize himself or herself with the deadlines set by his or
her institution. For example, the Fund's Distributor accepts
purchase orders from its customers up to 2:15 p.m. (New York
time) for issuance at the 4:00 p.m. transaction time and price.
A brokerage firm acting on behalf of a customer in connection
with transactions in Fund shares is subject to the same legal
obligations imposed on it generally in connection with
transactions in securities for a customer, including the
obligation to act promptly and accurately.
Orders for the purchase of Fund shares become effective
at the next transaction time after Federal funds or bank wire
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
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.
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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, checkwriting 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.
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
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<PAGE>
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.
________________________________________________________________
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
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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
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
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market quotations or market equivalents deviates from net asset
value based on amortized cost. If such deviation as to any
Portfolio exceeds 1/2 of 1%, the Trustees will promptly consider
what action, if any, should be initiated. In the event the
Trustees determine that such a deviation may result in material
dilution or other unfair results to new investors or existing
shareholders, they will consider corrective action which might
include (1) selling instruments held by the affected Portfolio
prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; (2) withholding dividends of
net income on shares of that Portfolio; or (3) establishing a net
asset value per share of that Portfolio by using available market
quotations or equivalents.
The net asset value of the shares of each Portfolio is
determined each business day (and on such other days as the
Trustees deem necessary) at 12:00 Noon and 4:00 p.m. New York
time. The net asset value per share of a Portfolio is calculated
by taking the sum of the value of that Portfolio's investments
and any cash or other assets, subtracting liabilities, and
dividing by the total number of shares of that Portfolio
outstanding. All expenses, including the fees payable to the
Adviser, are accrued daily.
________________________________________________________________
TAXES
________________________________________________________________
Federal Income Tax Considerations
Each of the Fund's Portfolios has qualified for each
fiscal year to date and intends to qualify in each future year to
be taxed as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code") and, as such, will
not be liable for Federal income and excise taxes on the net
income and capital gains distributed to its shareholders. Since
each Portfolio of the Fund distributes all of its net income and
capital gains, each Portfolio should thereby avoid all Federal
income and excise taxes.
For shareholders' Federal income tax purposes,
distributions to shareholders out of tax-exempt interest income
earned by each Portfolio of the Fund generally are not subject to
Federal income tax. See, however, "Investment Objectives and
Policies - 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,
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no portion of such distributions is eligible for the dividends-
received deduction available to corporations. Long-term capital
gains, if any, distributed by a Portfolio 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 a Portfolio's net asset value at $1.00 per
share.
Interest on indebtedness incurred by shareholders to
purchase or carry shares of a Portfolio of the Fund is not
deductible for Federal income tax purposes. Under rules of the
Internal Revenue Service for determining when borrowed funds are
used for purchasing or carrying particular assets, shares may be
considered to have been purchased or carried with borrowed funds
even though those funds are not directly linked to the shares.
Further, persons who are "substantial users" (or related persons)
of facilities financed by private activity bonds (within the
meaning of Section 147(a) of the Code) should consult their tax
advisers before purchasing shares of any Portfolio.
Substantially all of the dividends paid by each
Portfolio are anticipated to be exempt from Federal income taxes.
Shortly after the close of each calendar year, a notice is sent
to each shareholder advising him of the total dividends paid into
his account for the year and the portion of such total that is
exempt from Federal income taxes. This portion is determined by
the ratio of the tax-exempt income to total income for the entire
year and, thus, is an annual average rather than a day-by-day
determination for each shareholder.
State Income Tax Considerations
General Portfolio. Shareholders of the General
Portfolio may be subject to state and local taxes on
distributions from the General Portfolio, including distributions
which are exempt from Federal income taxes. Each investor should
consult his own tax adviser to determine the tax status of
distributions from the General Portfolio in his particular state
and locality.
New York Portfolio. Shareholders of the New York
Portfolio who are individual residents of New York are not
subject to the New 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.
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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. Distributions from the Connecticut
Portfolio are, however, subject to the Connecticut Corporation
Business Tax payable by corporate shareholders.
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
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.
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<PAGE>
Massachusetts Portfolio. Individual and other
noncorporate shareholders of the Portfolio will not be subject to
Massachusetts personal income tax on distributions by the
Portfolio to the extent such distributions are derived from
interest on Massachusetts obligations. Further, such
shareholders will not be subject to Massachusetts personal income
tax on long-term capital gains distributions made by the
Portfolio to the extent such distributions are derived from gains
on Massachusetts municipal obligations which were issued under
specific legislation exempting gain on such obligations from
Massachusetts personal income taxation. Distributions by the
Portfolio will not be excluded from the net income of
corporations and shares of the Portfolio will not be excluded
from the net worth of intangible property corporations in
determining the Massachusetts excise tax on corporations. Shares
of the Portfolio will not be subject to Massachusetts local
property taxes.
________________________________________________________________
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
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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,
1995, 1996 and 1997, the Fund paid no brokerage commissions.
Capitalization. All shares of the Fund, when issued,
are fully paid and non-assessable. The Trustees are authorized
to reclassify and issue any unissued shares to any number of
additional classes or series without shareholder approval.
Accordingly, the Trustees in the future, for reasons such as the
desire to establish one or more additional portfolios with
different investment objectives, policies or restrictions, may
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 15, 1997, there were 2,518,506,352 shares of
beneficial interest of the Fund outstanding. Of this amount
1,164,994,094 were for the General Portfolio; 461,114,803 were
for the New York Portfolio; 399,745,302 were for the California
Portfolio; 113,371,693 were for the Connecticut Portfolio;
144,273,375 were for the New Jersey Portfolio; 103,062,763 were
for the Virginia Portfolio;104,302,840 were for the Florida
Portfolio and 27,641,482 were for the Massachusetts Portfolio.
To the knowledge of the Fund there were no persons who owned of
record or beneficially 5% or more of the outstanding shares of
the Fund as of October 15, 1997.
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
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all loss and expense of any shareholder of the Fund held
personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the
Fund would be unable to meet its obligations. In the view of the
Adviser, such risk is not material.
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, 1997 for the General,
New York, California, Connecticut, New Jersey, Virginia, Florida
and Massachusetts Portfolios amounted to an annualized yield,
after expense reimbursement, of 3.20%, 3.19%, 3.08%, 3.05%,
3.14%, 3.41%, 3.41% and 3.71%, respectively, equivalent to 3.25%,
3.24%, 3.13%, 3.10%, 3.19%, 3.47%, 3.47% and 3.78%, respectively,
when adjusted for the Fund's daily compounding. Absent expense
reimbursement, the annualized yield for this period for the New
York Portfolio would have been 3.00%, equivalent to an effective
yield of 3.05%. Absent expense reimbursement, the annualized
yield for this period for the California Portfolio would have
been 3.05%, equivalent to an effective yield of 3.10%. Absent
expense reimbursement, the annualized yield for this period for
the Connecticut Portfolio would have been 2.75%, equivalent to an
effective yield of 2.80%. Absent expense reimbursement, the
annualized yield for this period for the New Jersey Portfolio
would have been 2.87%, equivalent to an effective yield of 2.92%.
Absent expense reimbursement, the annualized yield for this
period for the Virginia Portfolio would have been 3.06%,
equivalent to an effective yield of 3.12%. Absent expense
reimbursement, the annualized yield for this period for the
Florida Portfolio would have been 2.96%, equivalent to an
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effective yield of 3.02%. Absent expense reimbursement, the
annualized yield for this period for the Massachusetts Portfolio
would have been 1.22%, equivalent to an effective yield of
1.29%.
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, 1997 for the
General Portfolio was 3.20%; for the New York Portfolio, 3.19%;
for the California Portfolio, 3.08%; for the Connecticut
Portfolio, 3.05%; for the New Jersey Portfolio, 3.14%; for the
Virginia Portfolio, 3.41%; for the Florida Portfolio, 3.41% and
for the Massachusetts Portfolio, 3.71%. The corresponding tax
equivalent yield, however, for such period for the General
Portfolio was 5.29%; for the New York Portfolio, 5.66%, computed
without taking into account the effects of New York City income
taxes, and 5.95%, computed assuming the effects of New York City
income taxes; for the California Portfolio, 5.72%; for the
Connecticut Portfolio, 5.28%; for the New Jersey Portfolio,
5.54%; for the Virginia Portfolio, 5.98%; for the Florida
Portfolio, 5.64% and for the Massachusetts Portfolio, 6.97%. The
corresponding tax equivalent effective yield for such period for
the General Portfolio was 5.37%; for the New York Portfolio,
5.75%, computed without taking into account the effects of New
York City income taxes, and 6.04%, computed assuming the effects
of New York City income taxes; for the California Portfolio,
5.81%; for the Connecticut Portfolio, 5.37%; for the New Jersey
Portfolio, 5.63%; for the Virginia Portfolio, 6.09%; 5.74% for
the Florida Portfolio and 7.10% for the Massachusetts 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 6.85%, New
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York City 4.46%, California 11.00%, Connecticut 4.50%, New Jersey
6.58%, Virginia 5.75% and Massachusetts 12.00%. 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 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.
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ALLIANCE MUNICIPAL TRUST -GENERAL PORTFOLIO
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-85.2%
ALABAMA-2.6%
DECATUR SOLID WASTE
(Trico Steel Co. Project)
Series '96 AMT VRDN(a)
$ 23,000 3/01/26 4.30% $23,000,000
DECATUR SOLID WASTE
(Trico Steel Co. Project)
Series '97 AMT VRDN(a)
2,200 1/01/27 4.30 2,200,000
------------
25,200,000
ALASKA-1.5%
ALASKA IDA
(Fairbanks Gold Mining Inc.)
Series '97 AMT VRDN(a)
14,500 5/01/09 4.20 14,500,000
ARIZONA-5.8%
APACHE COUNTY IDA PCR
(Tuscon Electric Power Co. Project)
Series '81B
24,900 10/01/21 4.30 24,900,000
MARICOPA COUNTY TAN
(Cartwright Elementary School)
5,400 7/31/97 4.05 5,401,936
MARICOPA COUNTY TAN
(Chandler Unified School
District No. 80)
6,300 7/31/97 4.00 6,302,510
PHOENIX IDA
(America West Airlines)
AMT VRDN(a)
18,000 8/01/16 4.35 18,000,000
TUCSON IDA
(Santa Rita Hotel)
Series B AMT VRDN(a)
1,765 12/01/16 4.35 1,765,000
------------
56,369,446
ARKANSAS-1.5%
ARKANSAS DEVELOPMENT
FINANCE AUTHORITY SFMR
Series I AMT PPB(a)
5,000 11/05/97 3.80 5,000,000
CLARK COUNTY SOLID WASTE
(Reynolds Metals Co. Project)
Series '93 AMT VRDN(a)
1,900 8/01/22 4.20 1,900,000
MILLER COUNTY
(Tyson Foods, Inc. Project)
Series '96 AMT VRDN(a)
7,500 11/01/21 4.30 7,500,000
------------
14,400,000
CALIFORNIA-4.5%
CALIFORNIA COMMUNITY COLLEGE TRAN
Series A
10,000 7/02/97 3.90 10,000,193
CALIFORNIA HFA SFMR
(Home Mortgage Revenue)
Series '96J AMT PPB(a)
3,800 7/24/97 4.00 3,800,000
CALIFORNIA HIGHER ED.
Student Loan Revenue
Series B PPB(a)
7,000 7/01/98 4.00 7,000,000
CALIFORNIA HIGHER ED.
Student Loan Revenue
Series D-2 PPB(a)
6,300 7/01/97 3.95 6,300,000
CALIFORNIA SCHOOL CASH RESERVE
Series A
4,500 7/02/97 3.96 4,500,091
CONTRA COSTA COUNTY MFHR
(Park Regency Apts.)
Series '92A AMT VRDN(a)
5,000 8/01/32 4.20 5,000,000
SAN JOSE COUNTY TRAN
(Unified School District)
Series '96
7,200 8/05/97 3.96 7,203,649
------------
43,803,933
1
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
COLORADO-1.7%
COLORADO STUDENT LOAN
Series '97D AMT VRDN(a)
$ 5,100 7/01/27 4.20% $ 5,100,000
LAKEWOOD MFHR
(Marston Pointe Apts. Project)
Series '96 AMT VRDN(a)
11,200 11/01/29 4.30 11,200,000
------------
16,300,000
DELAWARE-0.3%
DELAWARE ECONOMIC
DEVELOPMENT AUTHORITY
(Orient Chemical Co.)
AMT VRDN(a)
2,620 11/01/99 4.50 2,620,000
DISTRICT OF COLUMBIA-5.0%
DISTRICT OF COLUMBIA GO TRAN
Series '97A
23,000 9/30/97 3.98 23,029,302
DISTRICT OF COLUMBIA HFA MFHR
(Tyler Housing) AMT VRDN(a)
10,500 8/01/25 4.50 10,500,000
DISTRICT OF COLUMBIA SFMR
Series B AMT PPB(a)
10,000 12/01/97 3.75 10,000,000
DISTRICT OF COLUMBIA SFMR
Series C AMT PPB(a)
5,000 12/01/97 3.90 5,000,000
------------
48,529,302
FLORIDA-0.9%
BROWARD COUNTY HFA SFMR
Series '97B AMT PPB(a)
8,500 4/01/98 4.05 8,500,000
GEORGIA-0.4%
COLLEGE PARK IDA
(Wynefield 1 Project) AMT VRDN(a)
3,900 12/01/16 4.10 3,900,000
HAWAII-1.6%
HAWAII DEPARTMENT OF BUDGET & FINANCE
(Wailuku River Hydro Project)
Series '91 AMT VRDN(a)
14,063 12/01/21 4.40 14,062,500
HAWAII HOUSING FINANCE &
DEVELOPMENT CORP.
(Rental Housing System)
Series '90B VRDN(a)
1,900 7/01/25 4.30 1,900,000
------------
15,962,500
ILLINOIS-9.9%
CHICAGO AIRPORT REVENUE
(Northwest Airlines Project)
Series B AMT VRDN(a)
16,400 2/01/24 4.35 16,400,000
CHICAGO AIRPORT REVENUE
(O'Hare International Airport)
Series '88A AMT VRDN(a)
21,300 1/01/18 4.20 21,300,000
CHICAGO AIRPORT REVENUE
(O'Hare International Airport)
Series '90 AMT VRDN(a)
1,000 5/01/18 4.30 1,000,000
CHICAGO SFMR
Series '97B AMT PPB(a)
7,000 1/15/98 3.80 7,000,000
ELMHURST HOSPITAL REVENUE
(Joint Comm. Health Org.)
Series '88 VRDN(a)
10,275 7/01/18 4.30 10,275,000
FRANKLIN PARK IDR
(Maclean-Fogg Co. Project)
Series '95 AMT VRDN(a)
5,000 2/01/07 4.35 5,000,000
ILLINOIS DEVELOPMENT FINANCE
AUTHORITY
(Tajon Warehousing Corp.)
Series A AMT VRDN(a)
3,400 1/01/10 4.40 3,400,000
2
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
ILLINOIS DEVELOPMENT FINANCE
AUTHORITY
(Valspar Corp.)
Series '95 AMT VRDN(a)
$ 6,000 8/01/15 4.30% $6 ,000,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY IDR
(THK America Inc. Project)
Series '91 AMT VRDN(a)
3,700 7/01/11 4.55 3,700,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY PCR
(Illinois Power Co. Project)
Series '93A VRDN(a)
9,770 11/01/28 4.25 9,770,000
ILLINOIS HDA
(Homeowner Mortgage)
Series '96F-2 AMT PPB(a)
10,800 12/18/97 3.70 10,800,000
LAKE COUNTY IDB
(Okamato Corp.)
Series '85 AMT VRDN(a)
2,295 10/01/15 4.35 2,295,000
------------
96,940,000
INDIANA-1.2%
ALLEN COUNTY ECONOMIC
DEVELOPMENT AUTHORITY
(Mattel Power Wheels Inc.)
AMT VRDN(a)
2,500 12/01/18 4.45 2,500,000
GARY ENVIRONMENTAL
IMPROVEMENT REVENUE
(U.S. Steel Corp.)
Series '84 VRDN(a)
4,100 7/15/02 4.10 4,100,000
ST. JOSEPH'S COUNTY
(Edcoat Limited Partnership)
Series '95 AMT VRDN(a)
5,000 9/01/25 4.35 5,000,000
------------
11,600,000
KANSAS-0.1%
WICHITA COUNTY
(CSJ Health Systems)
Series XXV '85 VRDN(a)
1,500 10/01/11 4.35 1,500,000
KENTUCKY-1.5%
BOWLING GREEN IDR
(TWN Fastener Inc.)
Series '88 AMT VRDN(a)
4,125 3/01/08 4.55 4,125,000
BOWLING GREEN IDR
(Woodcraft Industries, Inc.)
Series '95 AMT VRDN(a)
5,400 3/01/25 4.35 5,400,000
JEFFERSON COUNTY
INDUSTRIAL DEVELOPMENT
(Strawberry Lane Venture)
AMT VRDN(a)
3,280 7/01/19 4.40 3,280,000
KENTUCKY RURAL ECONOMIC
DEVELOPMENT AUTHORITY
(Heaven Hill Project) AMT VRDN(a)
2,300 10/01/16 4.40 2,300,000
------------
15,105,000
LOUISIANA-1.1%
NEW ORLEANS BOND
(International Airport)
FGIC AMT Pre-Refunded
4,500 8/01/97 3.65 4,609,252
PARISH OF IBERVILLE
(Dow Chemical Project)
AMT VRDN(a)
6,500 8/01/01 4.30 6,500,000
------------
11,109,252
MASSACHUSETTS-2.7%
MASSACHUSETTS EDUCATIONAL
FINANCING AUTHORITY
Series '97E VRDN(a)
25,600 7/01/14 4.25 25,600,000
MASSACHUSETTS INDUSTRIAL
FINANCE AGENCY
(Carand Realty Trust) AMT VRDN(a)
500 5/01/17 4.15 500,000
------------
26,100,000
MICHIGAN-0.4%
DETROIT IDA
(Millender Center Project)
Series '88 VRDN(a)
4,000 12/01/10 4.35 4,000,000
3
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MISSOURI-0.9%
MEXICO IDA
(Optec D.D. USA Inc. Project)
Series '87 AMT VRDN(a)
$ 7,000 10/01/97 4.50% $ 7,000,000
MISSOURI ECONOMIC
DEVELOPMENT AUTHORITY
(Plastic Enterprises)
Series '90A AMT VRDN(a)
1,845 9/01/05 4.45 1,845,000
------------
8,845,000
NEBRASKA-0.7%
NEBRASKA FINANCING AUTHORITY SFHR
Series '97C AMT PPB(a)
7,300 7/01/98 3.90 7,300,000
NEVADA-1.3%
CLARK COUNTY IDB
(Nevada Power Co. Project)
Series '95B AMT VRDN(a)
8,000 10/01/30 4.30 8,000,000
NEVADA IDR
(Pilot Company Project)
Series '91A AMT VRDN(a)
4,500 7/01/16 4.30 4,500,000
------------
12,500,000
NEW HAMPSHIRE-1.3%
NEW HAMPSHIRE IDA
(SCI Manufacturing, Inc.)
Series '89 AMT VRDN(a)
5,700 6/01/14 4.50 5,700,000
NEW HAMPSHIRE PCR
(Public Service Co. of NH Project)
Series '92D AMT VRDN(a)
7,000 5/01/21 4.30 7,000,000
------------
12,700,000
NEW JERSEY-2.4%
JERSEY CITY GO BAN
5,400 2/05/98 3.85 5,401,231
JERSEY CITY BAN
9,900 9/26/97 3.85 9,910,199
PLEASANTVILLE SCHOOL DISTRICT
Temporary Notes
8,500 8/28/97 4.00 8,503,232
------------
23,814,662
NEW MEXICO-0.7%
NEW MEXICO HFA SFMR
Series '97 D-2 AMT PPB(a)
7,000 6/15/98 3.95 7,000,000
NEW YORK-0.2%
NEW YORK CITY MUNICIPAL
ASSISTANCE CORPORATION
Sub Series K-2 VRDN(a)
1,700 7/01/08 4.05 1,700,000
NORTH CAROLINA-1.7%
BLADEN COUNTY PCR
(BCH Energy Project)
Series '93 AMT VRDN(a)
16,700 11/01/20 4.40 16,700,000
OHIO-4.1%
OHIO AIR QUALITY AUTHORITY
(Ohio Edison Project)
Series B AMT PPB(a)
7,000 5/01/98 4.10 7,000,000
OHIO HFA
Residential Mortgage Revenue Bonds
Series '96B-3 AMT PPB(a)
14,300 8/13/97 4.00 14,300,000
OHIO HFA
Residential Mortgage Revenue Bonds
Series '97A-2 AMT PPB(a)
16,000 3/02/98 3.65 16,000,000
WARREN COUNTY IDA
(Pioneer Industrial Components)
Series '85 VRDN(a)
2,500 12/01/05 4.30 2,500,000
------------
39,800,000
OREGON-3.3%
OREGON ECONOMIC DEVELOPMENT CORP.
(McFarland Cascade Project)
AMT VRDN(a)
1,690 11/01/16 4.45 1,690,000
OREGON HOUSING AND COMMUNITY
SERVICES SFMR
Series K AMT PPB(a)
5,800 12/11/97 3.65 5,800,000
4
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
PORT OF PORTLAND IDR
(Portland Bulk Terminals)
Series '96 AMT VRDN(a)
$ 25,000 10/01/25 4.30% $25,000,000
------------
32,490,000
SOUTH CAROLINA-4.7%
BERKELEY COUNTY IDB
(Nucor Corp. Project)
Series '95 AMT VRDN(a)
19,500 9/01/28 4.30 19,500,000
BERKELEY COUNTY IDB
(Nucor Corp. Project)
Series '96 AMT VRDN(a)
11,000 3/01/29 4.30 11,000,000
LAURENS COUNTY IDR
(Nicca USA Project)
AMT VRDN(a)
8,500 4/01/09 4.70 8,500,000
SOUTH CAROLINA JOBS IDR
(Venture Packaging)
Series '95 AMT VRDN(a)
7,320 4/01/16 4.30 7,320,000
------------
46,320,000
TENNESSEE-7.0%
MEMPHIS-SHELBY COUNTY
AIRPORT REVENUE
Series '96B AMT VRDN(a)
17,300 3/01/14 4.30 17,300,000
TENNESSEE HDA
Series '97-1 AMT PPB(a)
3,600 2/19/98 3.75 3,600,000
TENNESSEE HDA SFMR
Series '96-5 AMT PPB(a)
21,000 8/21/97 4.00 20,999,103
VOLUNTEER STATE STUDENT
LOAN REVENUE
Series '87A-3 AMT VRDN(a)
22,700 12/01/17 4.25 22,700,000
VOLUNTEER STATE STUDENT
LOAN REVENUE
Series '88A-1 AMT VRDN(a)
4,000 12/01/23 4.25 4,000,000
------------
68,599,103
TEXAS-2.6%
GREATER EAST TEXAS
STUDENT LOAN REVENUE
Series '95A AMT PPB(a)
5,400 5/01/98 4.10 5,400,000
GULF COAST IDA
(Gruma Corp. Project)
AMT VRDN(a)
6,710 11/01/09 4.35 6,710,000
PANHANDLE PLAINS
STUDENT LOAN REVENUE
Series '97X AMT VRDN(a)
7,000 6/01/27 4.25 7,000,000
SAN ANTONIO IDA
(Gruma Corp. Project) AMT VRDN(a)
6,015 11/01/09 4.35 6,015,000
------------
25,125,000
UTAH-0.7%
SALT LAKE COUNTY SOLID WASTE
(Kennecott Copper) AMT VRDN(a)
7,200 8/01/30 4.30 7,200,000
VIRGINIA-1.5%
ALEXANDRIA REDEVELOPMENT AND
HOUSING AUTHORITY MFHR
(Crystal City Apts. Project)
Series '90A AMT VRDN(a)
3,400 12/15/18 4.35 3,400,000
AMELIA COUNTY IDA
(Chambers Waste Systems, Inc.)
AMT VRDN(a)
700 7/01/07 4.35 700,000
RICHMOND REDEVELOPMENT MFHR
(Tobacco Row)
Series '89B-2 AMT VRDN(a)
4,000 10/01/24 4.20 4,000,000
RICHMOND REDEVELOPMENT MFHR
(Tobacco Row)
Series '89B-4 AMT VRDN(a)
7,000 10/01/24 4.20 7,000,000
------------
15,100,000
5
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
WASHINGTON-8.1%
PORT OF PORT ANGELES IDR
(Daishowa America Project)
Series '91 AMT VRDN(a)
$ 5,700 6/01/06 4.55% $ 5,700,000
PORT OF PORT ANGELES IDR
(Daishowa America Project)
Series '92B AMT VRDN(a)
6,500 8/01/07 4.55 6,500,000
2,725 12/01/07 4.55 2,725,000
PORT OF SEATTLE IDR
(Alaska Airlines, Inc.) VRDN(a)
6,000 12/01/09 4.15 6,000,000
PORT OF VANCOUVER IDR
(United Grain Corp. of Oregon)
Series '84A VRDN(a)
7,300 12/01/09 4.35 7,300,000
PORT OF VANCOUVER IDR
(United Grain Corp. of Oregon)
Series '84B VRDN(a)
1,300 12/01/06 4.35 1,300,000
WASHINGTON HFA MFHR
(Larkin Place Apartments)
Series '96 AMT VRDN(a)
5,565 7/01/28 4.30 5,565,000
WASHINGTON HFA SFMR
Series '971A-S AMT PPB(a)
7,000 4/01/98 4.00 7,000,000
WASHINGTON HOUSING FINANCE
COMMISSION MFHR
(Assisted Living Concepts)
AMT VRDN(a)
5,600 1/01/17 4.30 5,600,000
WASHINGTON HOUSING FINANCE
COMMISSION MFHR
(Brittany Park Project)
Series A AMT VRDN(a)
5,000 10/01/21 4.30 5,000,000
WASHINGTON HOUSING FINANCE
COMMISSION MFHR
(Heatherstone Apts.)
Series '95 AMT VRDN(a)
9,800 7/01/25 4.30 9,800,000
WASHINGTON STUDENT
LOAN FINANCE ASSOCIATION
Third Program
Series '87A AMT VRDN(a)
7,200 12/01/02 4.35 7,200,000
WASHINGTON STUDENT
LOAN FINANCE ASSOCIATION
Third Program Series B AMT VRDN(a)
9,500 12/01/02 4.35 9,500,000
------------
79,190,000
WEST VIRGINIA-0.6%
MARION COUNTY
Res. Rec.: (Grant Town Cogeneration)
AMT VRDN(a)
6,300 10/01/17 4.25 6,300,000
WYOMING-0.7%
WYOMING COMMUNITY DEVELOPMENT
AUTHORITY MFHR
(Mountainside) Series A
FSA AMT VRDN(a)
7,300 9/01/28 4.20 7,300,000
Total Municipal Bonds
(amortized cost $834,416,671) 834,423,198
COMMERCIAL PAPER-15.4%
FLORIDA-0.4%
JACKSONVILLE PCR
(Florida Power & Light Co.)
Series '92
3,800 8/20/97 3.80 3,800,000
GEORGIA-0.6%
GEORGIA MUNICIPAL GAS AUTHORITY
(Southern Portfolio 1 Project)
Series D
5,000 7/24/97 3.80 5,000,000
6
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
GEORGIA MUNICIPAL GAS AUTHORITY
(Southern Portfolio 1 Project)
Series D
$ 1,000 8/19/97 3.80% $ 1,000,000
------------
6,000,000
HAWAII-1.8%
HAWAII DEPARTMENT OF BUDGET & FINANCE
(Citizens Utility Company)
Series '88A AMT
5,500 9/08/97 3.60 5,500,000
4,000 7/30/97 3.80 4,000,000
HAWAII DEPARTMENT OF
BUDGET & FINANCE
(Citizens Utility Company)
Series '88C
7,790 9/08/97 3.60 7,790,000
------------
17,290,000
INDIANA-1.9%
INDIANA SOLID WASTE FINANCE AUTHORITY
(Pure Air Lake) Series '90A AMT
10,000 7/28/97 4.05 10,000,000
JASPER COUNTY
(Northern Indiana Public
Service Project) Series '88B
3,700 8/15/97 3.85 3,700,000
JASPER COUNTY
(Northern Indiana Public
Service Project)
Series '88C
5,100 8/01/97 3.85 5,100,000
------------
18,800,000
KANSAS-1.1%
BURLINGTON PCR
(Kansas Electric Power)
Series 85C-1
10,835 8/13/97 3.80 10,835,000
NEW YORK-0.4%
NEW YORK CITY MUNICIPAL
WATER AUTHORITY
Series 3
4,200 7/31/97 3.80 4,200,000
OHIO-0.3%
OHIO WATER DEVELOPMENT AUTHORITY
(Dusquesne Light Co. Project)
Series '88 AMT
3,000 7/28/97 4.05 3,000,000
PENNSYLVANIA-0.8%
MONTGOMERY COUNTY IDA
(Peco Energy Project)
Series '94A
1,120 8/19/97 3.80 1,120,000
VENANGO IDA
Res. Rec.: (Scrubgrass Project)
Series '90 AMT
3,100 8/22/97 3.85 3,100,000
VENANGO IDA
Res. Rec.: (Scrubgrass Project)
Series '93 AMT
3,300 8/22/97 3.85 3,300,000
------------
7,520,000
TEXAS-3.9%
BRAZOS RIVER AUTHORITY PCR
(Texas Utilities Project)
Series '94A AMT
10,470 9/19/97 3.80 10,470,000
BRAZOS RIVER AUTHORITY PCR
(Texas Utilities Project)
Series '94A AMT
2,400 8/15/97 3.90 2,400,000
BRAZOS RIVER HARBOR
NAVIGATION DISTRICT PCR
(Dow Chemical Project)
Series '92 AMT
14,000 7/24/97 4.00 14,000,000
SAN ANTONIO WATER SYSTEMS
Series '95
5,000 8/12/97 3.80 5,000,000
7
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
UNIVERSITY OF TEXAS BOARD OF REGENTS
Series A
$ 6,733 8/20/97 3.80% $ 6,733,000
------------
38,603,000
UTAH-2.5%
TOOELE COUNTY WASTE REVENUE
(Rollins Environmental, Inc.)
Series A AMT
2,000 7/24/97 3.80 2,000,000
19,400 8/14/97 3.80 19,400,000
2,800 8/25/97 3.85 2,800,000
------------
24,200,000
PUERTO RICO-1.7%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
5,000 7/14/97 3.80 5,000,000
11,625 7/14/97 3.85 11,625,000
------------
16,625,000
Total Commercial Paper
(amortized cost $150,873,000) 150,873,000
TOTAL INVESTMENTS-100.6%
(amortized cost $985,289,671) 985,296,198
Other assets less liabilities-(0.6%) (5,777,465)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
981,430,077 shares outstanding) $979,518,733
# All securities either mature or their interest rate changes in one year or
less.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as 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 General obligation
HDA Housing development authority
HFA Housing finance agency/authority
IDA Industrial development authority
IDB Industrial development board
IDR Industrial development revenue
MFHR Multi-family housing revenue
PCR Pollution control revenue
SFHR Single family housing revenue
SFMR Single family mortgage revenue
TAN Tax anticipation note
TRAN Tax & revenue anticipation note
See notes to financial statements.
8
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $985,289,671) $ 985,296,198
Cash 21,768,337
Receivable for investments sold 47,909,301
Interest receivable 7,441,894
Receivable for capital stock sold 400,282
Total assets 1,062,816,012
LIABILITIES
Payable for investments purchased 82,310,620
Investment advisory payable 407,563
Distribution fee payable 203,780
Payable for capital stock redeemed 22,194
Accrued expenses 353,122
Total liabilities 83,297,279
NET ASSETS $ 979,518,733
COMPOSITION OF NET ASSETS
Paid-in-capital $ 981,420,077
Net unrealized appreciation on investment transactions 6,527
Accumulated net realized loss on investment transactions (1,907,871)
$ 979,518,733
See notes to financial statements.
9
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $43,770,734
EXPENSES
Advisory fee (Note B) $5,913,456
Distribution assistance and administrative
service (Note C) 3,521,074
Transfer agency (Note B) 927,588
Registration fees 329,866
Custodian fees 256,854
Printing 114,404
Audit and legal fees 47,606
Trustees' fees 4,383
Miscellaneous 20,847
Total expenses 11,136,078
Net investment income 32,634,656
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 4,405
Net change in unrealized appreciation of investments 6,527
Net gain on investment transactions 10,932
NET INCREASE IN NET ASSETS FROM OPERATIONS $32,645,588
STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1997 JUNE 30,1996
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 32,634,656 $ 35,306,792
Net realized gain on investment transactions 4,405 21,901
Net change in unrealized appreciation of
investments 6,527 (17,829)
Net increase in net assets from operations 32,645,588 35,310,864
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (32,634,656) (35,306,792)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net decrease (Note E) (168,508,551) (41,279,072)
Total decrease (168,497,619) (41,275,000)
NET ASSETS
Beginning of year 1,148,016,352 1,189,291,352
End of year $ 979,518,733 $1,148,016,352
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 eight 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, Alliance Municipal Trust-Florida Portfolio and
Alliance Municipal Trust-Massachusetts Portfolio. Each series is considered to
be a separate entity for financial reporting and tax purposes. As a matter of
fundamental policy, the 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, 1997, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment transactions is recorded
on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45 of 1% in excess of $3 billion. The Adviser has agreed, pursuant to the
advisory agreement, to reimburse the Portfolio to the extent that its aggregate
expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed 1% of its average daily net assets for any
fiscal year. No reimbursement was required for the year ended June 30, 1997.
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
$474,875 for the year ended June 30, 1997.
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 the Adviser a distribution fee at the
annual rate of up to .25 of 1% of the average daily value of the Portfolio's
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, 1997, the distribution fee amounted to $2,956,728. In addition,
the Portfolio may reimburse certain broker-dealers for administrative costs
incurred in connection with providing shareholder services, and may reimburse
the Adviser for accounting and bookkeeping, and legal and compliance support.
For the year ended June 30, 1997, such payments by the Portfolio amounted to
$564,346 of which $98,000 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1997 the
Portfolio had a capital loss carryforward of $1,907,871, of which $1,208
expires in the year 2001, $134,924 expires in the year 2002, $4,619 expires in
the year 2003 and $1,767,120 expires in the year 2004.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1997, capital paid-in aggregated $981,420,077. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
--------------- ---------------
Shares sold 4,839,300,426 4,856,711,351
Shares issued on reinvestments of dividends 32,634,656 35,306,792
Shares redeemed (5,040,443,633) (4,933,297,215)
Net decrease (168,508,551) (41,279,072)
12
FINANCIAL HIGHLIGHTS ALLIANCE MUNICIPAL TRUST - GENERAL PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ------------ ----------- -----------
<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 .029 .028(a) .018(a) .020(a)
Net realized and unrealized loss
on investments -0- -0- (.003) -0- -0-
Net increase in net asset value
from operations .028 .029 .025 .018 .020
ADD: CAPITAL CONTRIBUTIONS
Capital contributed by the Adviser -0- -0- .003 -0- -0-
LESS: DIVIDENDS
Dividends from net investment income (.028) (.029) (.028) (.018) (.020)
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 (b) 2.81% 2.93% 2.83%(c) 1.81% 2.05%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $980 $1,148 $1,189 $1,134 $1,016
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .94% .95% .94% .92% .92%
Expenses, before waivers and reimbursements .94% .95% .95% .94% .94%
Net investment income 2.76% 2.90% 2.78%(a) 1.80%(a) 2.02%(a)
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(c) The capital contribution by the Adviser had no effect on total return.
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 assets and liabilities, including
the portfolio of investments, of the General Portfolio of Alliance Municipal
Trust as of June 30, 1997 and the related statement 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, 1997, by correspondence with the custodian and brokers.
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, 1997, 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 29, 1997
14
95
<PAGE>
ALLIANCE MUNICIPAL TRUST -CALIFORNIA PORTFOLIO
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS-79.3%
ALAMEDA COUNTY IDB
(Ream Enterprises Project)
Series A AMT VRDN(a)
$ 2,150 11/01/20 4.20% $ 2,150,000
ALAMEDA COUNTY IDR
(Heat Control Project) Series '95A
AMT VRDN(a)
5,200 11/01/25 4.20 5,200,000
ALAMEDA COUNTY IDR
(JMS Family Partnership Project)
Series '95A AMT VRDN(a)
2,730 10/01/25 4.20 2,730,000
ALAMEDA COUNTY TRAN
(Board of Education) Series '96
7,000 7/01/97 4.04 7,000,000
CALIFORNIA COMMUNITY COLLEGE TRAN
Series A
5,000 7/02/97 3.90 5,000,097
CALIFORNIA ECONOMIC
DEVELOPMENT AUTHORITY
(Marko Foam Products Inc.)
Series '96 AMT VRDN(a)
2,945 10/1/26 4.35 2,945,000
CALIFORNIA ECONOMIC
DEVELOPMENT AUTHORITY
(Pioneer Converting Inc.)
AMT VRDN(a)
2,090 4/01/16 4.20 2,090,000
CALIFORNIA ECONOMIC
DEVELOPMENT AUTHORITY IDR
(National R.V. Inc.)
Series '95 AMT VRDN(a)
4,000 12/01/20 4.35 4,000,000
CALIFORNIA ECONOMIC DEVELOPMENT
FINANCE AUTHORITY
(Inland Empire Venture L.L.C.)
Series '95 AMT VRDN(a)
2,500 7/01/25 4.15 2,500,000
CALIFORNIA ECONOMIC DEVELOPMENT
FINANCE AUTHORITY
(Valley Plating Works, Inc.)
Series '95 AMT VRDN(a)
6,025 10/01/20 4.35 6,025,000
CALIFORNIA HFA MFHR
Series '97B AMT VRDN(a)
2,100 8/01/39 4.20 2,100,000
CALIFORNIA HFA SFMR
(Home Mortgage Revenue) Series '96J
AMT PPB(a)
14,000 8/01/28 4.00 14,000,000
CALIFORNIA PCFA
(Colmac Energy Project)
Series B AMT VRDN(a)
2,400 12/01/16 3.95 2,400,000
CALIFORNIA PCFA
(Contra Costa Waste Services)
Series A AMT VRDN(a)
4,725 12/01/10 4.00 4,725,000
CALIFORNIA PCFA
(CR & R Inc. Project)
Series '95A AMT VRDN(a)
4,385 10/01/10 4.05 4,385,000
CALIFORNIA PCFA
(Edco Disposal Corp. Project)
Series '96A AMT VRDN(a)
3,000 10/01/16 4.05 3,000,000
CALIFORNIA PCFA
(Sanger Project)
Series '90A AMT VRDN(a)
3,300 9/01/20 3.95 3,300,000
CALIFORNIA PCFA
(Sanifill Inc. Project)
Series '94A AMT VRDN(a)
300 8/01/07 3.90 300,000
CALIFORNIA PCFA
(Santa Fe Geothermal Inc.)
Series '83 VRDN(a)
2,400 9/01/13 3.65 2,400,000
1
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
CALIFORNIA PCFA
(Taormina Inds. Inc. Project)
Series '96A AMT VRDN(a)
$ 2,500 8/01/16 4.15% $ 2,500,000
CALIFORNIA PCFA SOLID WASTE
(Athens Disposal Co. Project)
Series '95A AMT VRDN(a)
5,000 1/01/16 4.05 5,000,000
CALIFORNIA PCFA SOLID WASTE
(Burrtec Waste Project)
Series '95A AMT VRDN(a)
3,500 10/01/02 4.05 3,500,000
CALIFORNIA PCFA SOLID WASTE
(California Waste Recovery Project)
Series '96A AMT VRDN(a)
1,815 10/01/06 4.05 1,815,000
CALIFORNIA PCFA SOLID WASTE
(Calsan Inc. Project)
Series '96A AMT VRDN(a)
6,700 12/01/11 4.05 6,700,000
CALIFORNIA PCFA SOLID WASTE
(Gilton Solid Waste Management)
Series '95A AMT VRDN(a)
2,600 12/01/05 3.85 2,600,000
CALIFORNIA SCHOOL CASH RESERVE
Series A
15,000 7/02/97 4.01 15,000,288
CALIFORNIA STATEWIDE
COMMUNITY DEVELOPMENT AUTHORITY
(Lance Camper Project)
Series '94B AMT VRDN(a)
3,835 12/01/14 4.10 3,835,000
CALIFORNIA STATEWIDE
COMMUNITY DEVELOPMENT CORP.
(Pacific Bearings Company Project)
Series '96L AMT VRDN(a)
2,560 10/01/06 4.15% $2,560,000
CALIFORNIA STATEWIDE
COMMUNITY DEVELOPMENT CORP. IDR
(Howard Leight & Assoc.)
Series '95B AMT VRDN(a)
3,340 7/01/20 4.30 3,340,000
CALIFORNIA STATEWIDE
COMMUNITY DEVELOPMENT CORP. IDR
(Huntington Memorial Hospital)
Series '96 CONNIE LEE COP
1,745 7/01/97 4.00 1,745,000
CHULA VISTA IDR
(Sutherland/Palumbo Project)
AMT VRDN(a)
3,280 12/01/21 4.35 3,280,000
COMMERCE JOINT POWERS
(Precision Wire Productions)
AMT VRDN(a)
2,620 11/01/14 4.20 2,620,000
CONTRA COSTA COUNTY MFHR
(Delta Square Project)
Series '92A AMT VRDN(a)
4,500 8/01/07 4.13 4,500,000
CONTRA COSTA COUNTY MFHR
(Park Regency Apts.)
Series '92A AMT VRDN(a)
2,900 8/01/32 4.20 2,900,000
2
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
FAIRFIELD IDR
(Aitchison Family Partnership)
VRDN(a)
$ 1,700 4/01/12 4.20% $ 1,700,000
HUNTINGTON PARK COMMUNITY
REDEVELOPMENT AGENCY
(Personal Storage I) VRDN(a)
140 11/15/17 4.50 140,000
INDIO HOUSING AUTHORITY MFHR
(Smoketree Apts.)
Series A VRDN(a)
9,800 12/01/07 4.10 9,800,000
INDIO MFHR
(Olive Courts Apts.)
Series '96 AMT VRDN(a)
500 12/01/26 3.85 500,000
LONG BEACH
Res. Rec.: (Southeast Fac.
Authority Lease Rev.)
Series '95B AMT VRDN(a)
30,300 12/01/18 4.20 30,300,000
LOS ANGELES COUNTY TRAN
Series '97
8,000 6/30/98 3.90 8,046,000
LOS ANGELES HFA MFHR
(Malibu Meadows Project 91A) VRDN(a)
1,500 12/01/15 4.10 1,500,000
LOS ANGELES MFHR
(Poinsettia Apartment Project)
Series '89A AMT VRDN(a)
5,450 7/01/19 4.30 5,450,000
LOS ANGELES MFHR
(Studio Colony Project)
Series '85C VRDN(a)
1,900 5/01/07 4.20 1,900,000
MARIN COUNTY HOUSING AUTHORITY MFHR
(Crest Marin ll Apts.)
Series A AMT VRDN(a)
9,300 10/15/29 4.30 9,300,000
MONROVIA REDEVELOPMENT AGENCY
(Holiday Inn Hotel Project)
Series '84 VRDN(a)
4,400 12/01/14 3.85 4,400,000
OCEANSIDE MFHR
(Riverview Springs Apts.)
Series '90A AMT VRDN(a)
17,400 7/01/20 4.35 17,400,000
ORANGE COUNTY HFA MFHR
(Lantern Pines Project) VRDN(a)
1,600 12/01/07 4.10 1,600,000
ORANGE COUNTY MFHR
(Alicia Viejo Project)
Series '86A AMT VRDN(a)
290 12/01/16 4.35 290,000
ORANGE COUNTY MFHR
(Vintage Woods Apts.)
Series '84E VRDN(a)
1,900 11/01/08 3.85 1,900,000
PANAMA-BUENA VISTA
(Unified School District Capital
Improvement Financing Project)
VRDN(a)
5,000 6/01/24 4.25 5,000,000
PLEASANT HILL REDEVELOPMENT
AGENCY MFHR
(Chateau III Project)
Series '96A AMT VRDN(a)
2,260 8/01/26 4.10 2,260,000
RIVERSIDE COUNTY GO RAN
(School Financing Authority)
Series '96
4,000 7/17/97 4.05 4,000,967
3
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
RIVERSIDE COUNTY HOUSING AUTHORITY
MFHR
(Tyler Village Apts.)
Series '86A AMT VRDN(a)
$ 300 12/01/16 4.20% $ 300,000
RIVERSIDE COUNTY HOUSING AUTHORITY
MFHR
(Victoria Springs Apts.)
Series '89C AMT VRDN(a)
500 7/01/19 4.20 500,000
SAN BERNARDINO COUNTY HFA MFHR
(Mountain View Apts.)
Series '97A VRDN(a)
6,000 3/01/27 4.05 6,000,000
SAN BERNARDINO COUNTY MFHR
(Alta Park Apts)
Series '89A VRDN(a)
5,145 5/01/06 4.20 5,145,000
SAN DIMAS COMMUNITY
REDEVELOPMENT AGENCY
(San Dimas Commerce Center)
Series '83 VRDN(a)
110 12/01/13 3.70 110,000
SAN FRANCISCO IDR
(Hoefer Scientific Institute)
Series '92A AMT VRDN(a)
940 8/01/07 4.70 940,000
SAN JOSE MFHR
(Siena at Renaissance Apts.)
Series '96A AMT VRDN(a)
3,500 12/01/29 4.10 3,500,000
SANTA FE SPRINGS IDR
(Metal Center Inc. Project)
Series '89A AMT VRDN(a)
2,650 7/01/14 4.10 2,650,000
TRIUNFO COUNTY
Sanitation District Revenue
VRDN(a)
1,000 6/01/19 4.20 1,000,000
UNION CITY MFHR
(Skylark Apts.)
Series '89B VRDN(a)
400 11/01/07 4.20 400,000
UPLAND COMMUNITY REDEVELOPMENT
AGENCY MFHR
(Northwoods 156) Series A VRDN(a)
5,850 3/01/14 4.70 5,850,000
UPLAND COMMUNITY REDEVELOPMENT
AGENCY MFHR
(Northwoods 168) Series B VRDN(a)
3,235 3/01/14 4.70 3,235,000
VENTURA COUNTY TRAN
Series '97
10,000 7/01/98 3.90 10,057,700
Total Municipal Bonds
(amortized cost $283,320,052) 283,320,052
COMMERCIAL PAPER-20.1%
CALIFORNIA-14.3%
CALIFORNIA GO
12,000 8/18/97 3.80 12,000,000
LOS ANGELES COUNTY MTA
Sales Tax Revenue Series A
4,244 7/16/97 3.70 4,244,000
LOS ANGELES COUNTY MTA
Sales Tax Revenue Series A
4,000 9/04/97 3.80 4,000,000
LOS ANGELES WATER & POWER
15,000 10/14/97 3.90 15,000,000
ORANGE COUNTY WATER DISTRICT
2,000 8/21/97 3.75 2,000,000
UNIVERSITY OF CALIFORNIA
BOARD OF REGENTS
6,000 8/15/97 3.55 6,000,000
4
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
UNIVERSITY OF CALIFORNIA
BOARD OF REGENTS
$ 5,000 8/20/97 3.65% $ 5,000,000
UNIVERSITY OF CALIFORNIA
BOARD OF REGENTS
3,000 7/22/97 3.75 3,000,000
------------
51,244,000
PUERTO RICO-5.8%
PUERTO RICO GOVERNMENT DEVELOPMENT BANK
Series '96
13,100 8/15/97 3.75 13,100,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
4,500 7/14/97 3.80 4,500,000
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
3,000 7/14/97 3.85 3,000,000
-------------
20,600,000
Total Commercial Paper
(amortized cost $71,844,000) 71,844,000
TOTAL INVESTMENTS-99.4%
(amortized cost $355,164,052) 355,164,052
Other assets less liabilities-0.6% 1,984,150
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
357,172,202 shares outstanding) $357,148,202
# All securities either mature or their interest rate changes in one year or
less.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as 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
CONNIE LEECollege construction loan assurance assn
COP Certificate of participation
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
RAN Revenue anticipation note
SFMR Single family mortgage revenue
TRAN Tax & revenue anticipation note
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $355,164,052) $355,164,052
Cash 19,300,796
Interest receivable 2,825,996
Receivable for capital stock sold 529,790
Total assets 377,820,634
LIABILITIES
Payable for investments purchased 20,283,700
Investment advisory payable 148,558
Distribution fee payable 68,332
Accrued expenses 171,842
Total liabilities 20,672,432
NET ASSETS $357,148,202
COMPOSITION OF NET ASSETS
Paid-in-capital $357,172,202
Accumulated net realized loss on investments (24,000)
$357,148,202
See notes to financial statements.
6
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $12,908,202
EXPENSES
Advisory fee (Note B) $1,763,920
Distribution assistance and administrative
service (Note C) 1,103,670
Transfer agency (Note B) 280,278
Custodian fees 103,572
Registration fees 50,229
Printing 43,090
Audit and legal fees 29,519
Trustees' fees 1,743
Miscellaneous 9,348
Total expenses 3,385,369
Less: fee waiver (104,474)
Net expenses 3,280,895
Net investment income 9,627,307
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions 99
Net change in unrealized appreciation of investments (114)
Net loss on investment transactions (15)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,627,292
See notes to financial statements.
7
STATEMENT OF CHANGES
IN NET ASSETS
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1997 JUNE 30,1996
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 9,627,307 $ 8,134,512
Net realized gain on investment transactions 99 8,350
Net change in unrealized appreciation of
investment transactions (114) (6,990)
Net increase in net assets from operations 9,627,292 8,135,872
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (9,627,307) (8,134,512)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 59,285,776 61,381,700
Total increase 59,285,761 61,383,060
NET ASSETS
Beginning of year 297,862,441 236,479,381
End of year $357,148,202 $297,862,441
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 eight 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, Alliance Municipal Trust-Florida Portfolio and
Alliance Municipal Trust-Massachusetts Portfolio. Each series is considered to
be a separate entity for financial reporting and tax purposes. As a matter of
fundamental policy, the 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, 1997 are exempt from federal income taxes. However, certain
shareholders may be subject to the alternative minimum tax.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment 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, 1997 for expenses exceeding .93 of 1% of its average
daily net assets. No reimbursement was required for the year ended June 30,
1997. The Portfolio compensates Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) for providing personnel and facilities to perform
transfer agency services for the Portfolio. Such compensation amounted to
$146,523 for the year ended June 30, 1997.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
annual rate of up to .25 of 1% of the average daily value of the portfolio's
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, 1997, the distribution fee amounted to 881,960 of which $104,474
was waived. In addition, the Portfolio may reimburse certain broker-dealers for
administrative costs incurred in connection with providing shareholder
services, and may reimburse the Adviser for accounting and bookkeeping, and
legal and compliance support. For the year ended June 30, 1997, such payments
by the Portfolio amounted to $221,710 of which $94,000 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1997, the
Portfolio had a capital loss carryforward of $24,000, of which $11,589 expires
in 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,
1997, capital paid-in aggregated $357,172,202. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
--------------- ---------------
Shares sold 1,497,181,205 1,207,086,940
Shares issued on reinvestments of dividends 9,627,307 8,134,512
Shares redeemed (1,447,522,736) (1,153,839,752)
Net increase 59,285,776 61,381,700
10
FINANCIAL HIGHLIGHTS
ALLIANCE MUNICIPAL TRUST - CALIFORNIA PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<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 (a) .027 .029 .027 .018 .020
LESS: DISTRIBUTIONS
Dividends from net investment income (.027) (.029) (.027) (.018) (.020)
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 (b) 2.76% 2.91% 2.78% 1.83% 2.05%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $357,148 $297,862 $236,479 $219,673 $156,200
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .93% .93% .93% .93% .93%
Expenses, before waivers and reimbursements .96% .94% 1.01% 1.02% 1.02%
Net investment income (a) 2.73% 2.86% 2.75% 1.82% 2.01%
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
11
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 assets and liabilities, including
the portfolio of investments, of the California Portfolio of Alliance Municipal
Trust as of June 30, 1997 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, 1997, by correspondence with the custodian and brokers.
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, 1997, 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 29, 1997
12
96
<PAGE>
ALLIANCE MUNICIPAL TRUST -CONNECTICUT PORTFOLIO
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
STATEMENT OF NET ASSETS
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-96.7%
CONNECTICUT-77.1%
AVON GO BAN
Series '96
$ 1,800 7/15/97 3.75% $ 1,799,960
BERLIN COUNTY
FSA
500 6/15/98 3.65 509,770
CHESHIRE GO BAN
Series '96
500 8/08/97 3.50 500,352
4,000 8/08/97 3.79 4,000,079
CONNECTICUT DEVELOPMENT AUTHORITY
(Independent Living)
Series '90 VRDN(a)
7,000 7/01/15 3.90 7,000,000
CONNECTICUT DEVELOPMENT AUTHORITY
(Rand Whitney Project)
Series '93 AMT VRDN(a)
3,000 8/01/23 3.75 3,000,000
CONNECTICUT DEVELOPMENT AUTHORITY
Res. Rec.: (Exeter Energy Project)
Series '89B AMT VRDN(a)
3,700 12/01/19 4.15 3,700,000
CONNECTICUT DEVELOPMENT AUTHORITY IDR
(International Ice Cream Project)
Series '86 AMT VRDN(a)
1,200 12/01/06 3.60 1,200,000
CONNECTICUT DEVELOPMENT AUTHORITY IDR
(Shelton Inn Ltd. Partnership)
Series '86 AMT VRDN(a)
3,900 12/01/11 3.95 3,900,000
CONNECTICUT DEVELOPMENT AUTHORITY IDR
(Zotos International Project)
Series '84 VRDN(a)
2,655 12/01/04 4.05 2,655,000
CONNECTICUT DEVELOPMENT AUTHORITY PCR
(Central Vermont Public Service)
Series '85 VRDN(a)
1,000 12/01/15 3.55 1,000,000
CONNECTICUT DEVELOPMENT AUTHORITY PCR
(Connecticut Light and Power Co.)
Series '93A VRDN(a)
2,800 9/01/28 4.05 2,800,000
CONNECTICUT DEVELOPMENT AUTHORITY PCR
(Connecticut Light and Power Co.)
Series '93B AMT VRDN(a)
3,300 9/01/28 4.10 3,300,000
CONNECTICUT DEVELOPMENT AUTHORITY PCR
(Connecticut Light and Power Co.)
Series '96A AMT VRDN(a) AMBAC
4,600 5/01/31 4.10 4,600,000
CONNECTICUT DEVELOPMENT AUTHORITY PCR
(Western Mass. Electric Co.)
Series '93A VRDN(a)
4,100 9/01/28 3.95 4,100,000
CONNECTICUT GO
700 8/01/97 3.50 701,724
CONNECTICUT GO
1,000 6/15/98 3.70 1,012,080
CONNECTICUT GO
3,000 8/15/97 3.80 3,003,410
CONNECTICUT GO
(Cap. Appreciation College Svg.)
Series '91B
1,770 12/15/97 3.80 1,739,966
CONNECTICUT GO
Series B
400 3/15/98 4.00 400,811
CONNECTICUT GO
Series B
200 5/01/98 4.05 201,854
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
CONNECTICUT HEFA
(Connecticut State University System)
AMBAC
$ 1,865 11/01/97 3.50% $ 1,875,701
CONNECTICUT HEFA
(Pomfret School Issue)
Series '95A VRDN(a)
1,000 7/01/24 3.90 1,000,000
CONNECTICUT SPECIAL ASSESSMENT
UNEMPLOYMENT COMPENSATION
Series '93C FGIC PPB(a)
12,000 11/15/01 3.90 12,000,000
CONNECTICUT SPECIAL TAX OBLIGATION
(Transportation Infrastructure)
Series '90-1 VRDN(a)
3,800 12/01/10 4.10 3,800,000
CONNECTICUT SPECIAL TAX OBLIGATION
Series '87A Pre-Refunded
650 9/01/97 3.55 666,865
HARTFORD GO
FSA
1,250 12/15/97 3.45 1,264,211
MANCHESTER GO BAN
Temporary Notes Lot B
1,550 5/27/98 3.66 1,554,595
MERIDEN GO
Series '89
775 7/15/97 3.75 775,672
MONROE COUNTY
Series '97 FGIC
700 4/15/98 3.75 716,382
NEW BRITAIN COUNTY
AMBAC
985 4/15/98 3.70 1,005,223
SOUTH CENTRAL REGIONAL
WATER AUTHORITY
11th Series FGIC
250 8/01/97 3.45 250,216
STAMFORD HFA MFHR
(Morgan Street Project)
Series '94 AMT VRDN(a)
1,600 8/01/24 4.20 1,600,000
WILTON GO BAN
Series '96
1,500 8/21/97 3.70 1,500,060
------------
79,133,931
DELAWARE-2.3%
DELAWARE ECONOMIC
DEVELOPMENT AUTHORITY
(Delmarva Power & Light)
Series '93C VRDN(a)
2,400 10/01/28 4.20 2,400,000
FLORIDA-1.8%
HILLSBOROUGH COUNTY PCR
(Tampa Electric Project)
Series '93 AMT VRDN(a)
700 11/01/20 4.30 700,000
JACKSONVILLE HOSPITAL REVENUE
(University Medical Center Project)
Series '88 VRDN(a)
1,100 2/01/18 4.33 1,100,000
------------
1,800,000
MASSACHUSETTS-1.8%
MASSACHUSETTS EDUCATIONAL
FINANCE AUTHORITY
(Trinity Funding)
Series E AMT VRDN(a)
800 7/01/15 4.25 800,000
MASSACHUSETTS INDUSTRIAL
FINANCE AGENCY
(Groton School Project)
Series '89 VRDN(a)
1,000 6/01/19 4.00 1,000,000
------------
1,800,000
NEW YORK-6.3%
MUNICIPAL ASSISTANCE CORPORATION
Sub Series K-1 VRDN(a)
3,700 7/01/08 4.05 3,700,000
NEW YORK CITY IDA
(Nippon Cargo Air Project)
Series '92 AMT VRDN(a)
1,000 11/01/15 5.80 1,000,000
2
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
(Versatile Structure)
Series '96-5 VRDN(a)
$ 1,800 8/01/24 4.10% $ 1,800,000
------------
6,500,000
PENNSYLVANIA-1.2%
EMMAUS GENERAL AUTHORITY
Series '89 F-6 VRDN(a)
1,200 3/01/24 4.30 1,200,000
PUERTO RICO-6.2%
PUERTO RICO GO TRAN
Series '97A
3,100 7/30/97 3.48 3,101,231
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '85 VRDN(a)
2,400 12/01/15 3.75 2,400,000
PUERTO RICO INDUSTRIAL,
MEDICAL, HIGHER
EDUCATION & ENVIRONMENT
(Ana G. Mendez Educ.
Foundation Feagm Project)
VRDN(a)
900 12/01/15 4.20 900,000
------------
6,401,231
Total Municipal Bonds
(amortized cost $99,234,230) 99,235,162
COMMERCIAL PAPER-8.8%
CONNECTICUT-2.9%
CONNECTICUT HEFA
(Yale University) Series S
3,000 7/24/97 3.50 3,000,000
NEW YORK-3.9%
NEW YORK CITY MUNICIPAL WATER
AUTHORITY FINANCE
Series 4
4,000 10/09/97 3.80 4,000,000
PUERTO RICO-2.0%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
2,000 7/14/97 3.85 2,000,000
Total Commercial Paper
(amortized cost $9,000,000) 9,000,000
TOTAL INVESTMENTS-105.5%
(amortized cost $108,234,230) 108,235,162
Other assets less liabilities-(5.5%) (5,623,190)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
102,640,632 shares outstanding) $102,611,972
# All securities either mature or their interest rate changes in one year or
less.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
Glossary of Terms:
AMBAC American municipal bond assurance corporation
AMT Alternative minimum tax
BAN Bond anticipation note
FGIC Financial guaranty insurance company
FSA Financial security assurance
GO General obligation
HEFA Health & educational facility authority
HFA Housing finance agency/authority
IDA Industrial development authority
IDR Industrial development revenue
MFHR Multi-family housing revenue
PCR Pollution control revenue
TRAN Tax & revenue anticipation note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $3,597,848
EXPENSES
Advisory fee (Note B) $ 511,334
Distribution assistance and administrative
service (Note C) 387,796
Transfer agency (Note B) 89,959
Custodian fees 75,996
Registration expense 20,119
Audit and legal fees 17,641
Printing 13,220
Trustees' fees 2,710
Miscellaneous 9,275
Total expenses 1,128,050
Less: expense reimbursement and fee waiver (309,916)
Net expenses 818,134
Net investment income 2,779,714
UNREALIZED LOSS ON INVESTMENTS
Net change in unrealized appreciation of investments (267)
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,779,447
See notes to financial statements.
4
STATEMENT OF CHANGES
IN NET ASSETS
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1997 JUNE 30,1996
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,779,714 $ 2,415,694
Net change in unrealized appreciation of
investments (267) 1,199
Net increase in net assets from operations 2,779,447 2,416,893
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,779,714) (2,415,694)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 6,799,768 19,820,540
Total increase 6,799,501 19,821,739
NET ASSETS
Beginning of year 95,812,471 75,990,732
End of year $102,611,972 $95,812,471
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 eight 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, Alliance Municipal Trust-Florida Portfolio and Alliance Municipal
Trust-Massachusetts Portfolio. Each series is considered to be a separate
entity for financial reporting and tax purposes. As a matter of fundamental
policy, the 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, 1997 are exempt from federal income taxes. However, certain
shareholders may be subject to the alternative minimum tax.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment 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, 1997 for expenses exceeding .80 of 1% of its average
daily net assets. For the year ended June 30, 1997, the reimbursement amounted
to $207,649. 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 $52,603 for the year ended June 30, 1997.
6
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
annual rate of up to .25 of 1% of the average daily value of the Portfolio's
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, 1997, the distribution fee amounted to $255,667 of which
$102,267 was waived. In addition, the Portfolio may reimburse certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services, and may reimburse the Adviser for accounting and
bookkeeping, and legal and compliance support. For the year ended June 30,
1997, such payments by the Portfolio amounted to $132,129 of which $91,000 was
paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1997, the
Portfolio had a capital loss carryforward of $29,592 of which $10,717 expires
in 2000, $16,849 expires in 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,
1997, capital paid-in aggregated $102,640,632. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
------------- -------------
Shares sold 454,599,210 358,252,167
Shares issued on reinvestments of dividends 2,779,714 2,415,694
Shares redeemed (450,579,156) (340,847,321)
Net increase 6,799,768 19,820,540
7
FINANCIAL HIGHLIGHTS
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<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 (a) .027 .028 .028 .017 .020
LESS: DIVIDENDS
Dividends from net investment income (.027) (.028) (.028) (.017) (.020)
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 (b) 2.76% 2.88% 2.78% 1.71% 2.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $102,612 $95,812 $75,991 $57,314 $56,224
Ratio to net assets of:
Expenses, net of waivers and reimbursements .80% .80% .80% .77% .70%
Expenses, before waivers and reimbursements 1.10% 1.15% 1.21% 1.21% 1.16%
Net investment income (a) 2.72% 2.84% 2.77% 1.69% 1.97%
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
8
INDEPENDENT AUDITOR'S REPORT
ALLIANCE MUNICIPAL TRUST - CONNECTICUT PORTFOLIO
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS ALLIANCE MUNICIPAL TRUST -
CONNECTICUT PORTFOLIO
We have audited the accompanying statement of net assets of the Connecticut
Portfolio of Alliance Municipal Trust as of June 30, 1997 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, 1997, by correspondence with the custodian and brokers.
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, 1997, 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 29, 1997
9
97
<PAGE>
ALLIANCE MUNICIPAL TRUST -FLORIDA PORTFOLIO
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
STATEMENT OF NET ASSETS
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
FLORIDA MUNICIPAL BONDS-88.2%
ALACHUA CITY IDA
(Sabine Inc. Project)
Series '95 AMT VRDN(a)
$ 2,365 9/01/15 4.30% $ 2,365,000
BREVARD COUNTY HFA MFHR
(Palm Place Project) VRDN(a)
1,000 12/01/07 4.25 1,000,000
BROWARD COUNTY HFA MFHR
(Harbour Town Jacaranda Project)
Series '95B VRDN(a)
1,400 12/01/25 4.25 1,400,000
BROWARD COUNTY HFA SFMR
Series '97B AMT PPB(a)
2,500 10/01/30 4.05 2,500,000
DADE COUNTY
Capital Asset Series '90 VRDN(a)
1,450 10/01/10 4.45 1,450,000
DADE COUNTY HFA SFMR
(Home Mortgage Revenue)
Series '96 AMT PPB(a)
4,000 4/01/30 4.00 4,000,000
DADE COUNTY IDA
(DNS Manufacturing Project)
Series '89 AMT VRDN(a)
2,625 11/01/09 4.25 2,625,000
DADE COUNTY IDA
(Ivax Laboratories)
Series '88 VRDN(a)
1,600 3/01/08 4.45 1,600,000
DADE COUNTY IDB
(All Interior Supply Inc.)
AMT VRDN(a)
550 12/01/06 4.20 550,000
DADE COUNTY IDB
(Bentley's Luggage Corp.)
AMT VRDN(a)
1,000 12/01/06 4.20 1,000,000
DADE COUNTY IDB
(Pot Company Inc.) AMT VRDN(a)
550 12/01/06 4.20 550,000
DADE COUNTY PUBLIC SERVICE
TAX REVENUE
FSA
1,925 10/01/97 3.96 1,929,931
ESCAMBIA COUNTY SFHR
(Multi County Program)
Series '97 B AMT PPB(a)
4,000 4/01/30 3.75 4,000,000
FLORIDA HFA MFHR
(Ashley Lake ll)
Series J AMT VRDN(a)
3,000 12/01/11 4.20 3,000,000
FLORIDA HFA MFHR
(Banyan Bay Apts.)
Series '95L VRDN(a)
5,275 12/01/25 4.45 5,275,000
FLORIDA HFA MFHR
(Huntington Project) VRDN(a)
1,500 12/01/08 4.30 1,500,000
FLORIDA HFA MFHR
(Lakes of Northdale Project)
Series '84D VRDN(a)
1,000 6/01/07 4.30 1,000,000
FLORIDA HFA MFHR
(Monterey Lake Project) VRDN(a)
2,000 10/01/05 4.30 2,000,000
HILLSBOROUGH COUNTY HFA SFMR
Series '97 AMT PPB(a)
2,500 10/01/30 3.65 2,497,581
HILLSBOROUGH COUNTY IDA
(Seaboard System)
Series '83 VRDN(a)
100 10/15/99 4.10 100,000
HILLSBOROUGH COUNTY IDR
(Semigraphic Arts)
Series '87 AMT VRDN(a)
550 9/01/07 4.20 550,000
HILLSBOROUGH COUNTY PCR
(Tampa Electric Project)
Series '93 AMT VRDN(a)
600 11/01/20 4.30 600,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
JACKSONVILLE HOSPITAL REVENUE
(University Medical Center Project)
Series '88 VRDN(a)
$ 1,500 2/01/18 4.33% $ 1,500,000
JACKSONVILLE HOSPITAL REVENUE
(University Medical Center Project)
Series '89 VRDN(a)
5,000 2/01/19 4.33 5,000,000
JACKSONVILLE IDR
(Columbia Paving Inc.)
AMT VRDN(a)
600 9/01/07 4.15 600,000
JACKSONVILLE IDR
(St. John's Medical Investors)
Series '96 VRDN(a)
2,130 1/01/15 4.25 2,130,000
JACKSONVILLE IDR
(University of Florida
Health Science Center)
Series '89 VRDN(a)
900 7/01/19 4.38 900,000
LATANA WATER & SEWER REVENUE
FGIC
150 10/01/97 4.00 150,359
LEE COUNTY HFA SFMR
(Multi-County Program)
Series '97A AMT PPB(a)
1,400 9/01/30 3.70 1,400,000
LEE COUNTY IDA
(Christian & Missionary Project)
VRDN(a)
2,500 4/01/10 4.25 2,500,000
LEON COUNTY SALES & SEWER TAX REVENUE
(Criminal Detention Facility Project)
AMBAC
400 10/01/97 3.65 401,921
MANATEE COUNTY SCHOOL BOARD COP
Master Lease Program
Series '96 MBIA
1,000 7/01/97 4.25 1,000,000
MARION COUNTY HFA MFHR
(Paddock Place Project)
Series '85F VRDN(a)
1,100 12/01/07 4.25 1,100,000
MARION COUNTY HFA MFHR
(Summer Trace Project)
Series '85D VRDN(a)
2,300 12/01/07 4.25 2,300,000
MONROE COUNTY SALES TAX REVENUE
MBIA
100 4/01/98 4.00 101,091
ORANGE COUNTY HFA MFHR
(Sundown Assoc. II)
Series B VRDN(a)
1,000 6/01/04 4.30 1,000,000
ORANGE COUNTY HFA SFMR
Series '96B AMT PPB(a)
2,000 4/01/29 3.70 2,000,000
PALM BEACH COUNTY SFMR
Series '97B AMT PPB(a)
2,500 10/01/30 3.95 2,500,000
PALM BEACH MFHR
(Lake Crystal)
Series '88A AMT VRDN(a)
1,595 9/01/13 4.30 1,595,000
PINELLAS COUNTY
(Resource Recovery Revenue)
Series '96 MBIA AMT
2,770 10/01/97 3.96 2,773,723
PINELLAS COUNTY
(Resource Recovery Revenue)
Series A MBIA
2,625 10/01/97 3.59 2,642,456
PINELLAS COUNTY HEALTH FACILITIES
(Mease Manor, Inc.)
Series '95 VRDN(a)
4,150 11/01/15 4.30 4,150,000
2
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
POLK COUNTY IDR
(Protel Inc.) AMT VRDN(a)
$ 400 9/01/07 4.20% $ 400,000
SEMINOLE COUNTY SCHOOL DISTRICT RAN
Series '97
1,000 2/17/98 3.65 1,001,366
Total Municipal Bonds
(amortized cost $78,637,637) 78,638,428
COMMERCIAL PAPER-14.5%
FLORIDA-12.8%
CITY OF JACKSONVILLE
3,000 7/24/97 4.00 3,000,000
FLORIDA LOCAL
GOVERNMENT COMMISSION
(Assoc. of Counties)
1,960 7/23/97 3.75 1,960,000
FLORIDA LOCAL
GOVERNMENT COMMISSION
(Assoc. of Counties)
1,000 9/12/97 3.75 1,000,000
HILLSBOROUGH COUNTY
(Tampa Intl. Airport)
Series '94 AMT
2,000 7/16/97 3.90 2,000,000
INDIAN RIVER HOSPITAL DISTRICT
Series '90
3,500 7/25/97 3.70 3,500,000
------------
11,460,000
PUERTO RICO-1.7%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
1,500 7/14/97 3.85 1,500,000
Total Commercial Paper
(amortized cost $12,960,000) 12,960,000
TOTAL INVESTMENTS-102.7%
(amortized cost $91,597,637) 91,598,428
Other assets less liabilities-(2.7%) (2,449,498)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
89,150,116 shares outstanding) $89,148,930
# All securities either mature or their interest rate changes in one year or
less.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as 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
FGIC Financial guaranty insurance company
FSA Financial security assurance
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
RAN Revenue anticipation note
SFHR Single family housing revenue
SFMR Single family mortgage revenue
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $3,869,205
EXPENSES
Advisory fee (Note B) $ 533,806
Distribution assistance and administrative
service (Note C) 450,269
Custodian fees 71,284
Transfer agency (Note B) 49,505
Printing 33,386
Audit and legal fees 14,096
Registration fees 12,174
Amortization of organization expense 4,329
Trustees' fees 2,950
Miscellaneous 7,611
Total expenses 1,179,410
Less: expense reimbursement and fee waiver (481,813)
Net expenses 697,597
Net investment income 3,171,608
UNREALIZED GAIN ON INVESTMENTS
Net change in unrealized appreciation of investments 791
NET INCREASE IN NET ASSETS FROM OPERATIONS $3,172,399
See notes to financial statements.
4
STATEMENT OF CHANGES
IN NET ASSETS
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
JULY 28,
YEAR ENDED 1995(A) TO
JUNE 30,1997 JUNE 30,1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 3,171,608 $ 1,798,513
Net realized loss on investment transactions -0- (1,977)
Net change in unrealized appreciation of
investments 791 -0-
Net increase in net assets from operations 3,172,399 1,796,536
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,171,608) (1,798,513)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease) (Note E) (2,031,246) 91,181,362
Total increase (decrease) (2,030,455) 91,179,385
NET ASSETS
Beginning of period 91,179,385 -0-
End of period $89,148,930 $91,179,385
(a) Commencement of operations
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 eight 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,
Alliance Municipal Trust-Florida Portfolio (the "Portfolio") and Alliance
Municipal Trust-Massachusetts Portfolio. Each series is considered to be a
separate entity for financial reporting and tax purposes. The Florida 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
year ended June 30, 1997, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment 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, 1996 to May 31, 1997 for expenses exceeding .65 of 1% of its
average daily net assets and from June 1, 1997 to June 30, 1997 for expenses
exceeding .70 of 1% of its average daily net assets. For the year ended June
30, 1997, the reimbursement amounted to $375,051. 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 $22,601 for the year ended June 30,
1997.
6
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
annual rate of up to .25% of 1% of the average daily value of the Portfolio's
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, 1997, the distribution fee amounted to $266,904 of which
$106,762 was waived. In addition, the Portfolio may reimburse certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services, and may reimburse the Adviser for accounting and
bookkeeping, and legal and compliance support. For the year ended June 30,
1997, such payments by the Portfolio amounted to $183,365 of which $92,000 was
paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1997 the
Portfolio had a capital loss carry forward 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,
1997, capital paid-in aggregated $89,150,116. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED JULY 28,1995(A)
JUNE 30, THROUGH
1997 JUNE 30, 1996
------------- ---------------
Shares sold 509,670,004 355,151,881
Shares issued on reinvestments of dividends 3,171,608 1,798,513
Shares redeemed (514,872,858) (265,769,032)
Net increase (decrease) (2,031,246) 91,181,362
(a) Commencement of operations.
7
FINANCIAL HIGHLIGHTS
ALLIANCE MUNICIPAL TRUST - FLORIDA PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
JULY 28,1995(A)
YEAR ENDED THROUGH
JUNE 30, JUNE 30,
1997 1996
--------- --------------
Net asset value, beginning of period $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .030 .030
LESS DIVIDENDS
Dividends from net investment income (.030) (.030)
Net asset value, end of period $ 1.00 $ 1.00
Total investment return based on net asset value (c) 3.03% 3.32%(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $89,149 $91,179
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .65% .58%(d)
Expenses, before waivers and reimbursements 1.10% 1.24%(d)
Net investment income (b) 2.97% 3.12%(d)
(a) Commencement of operations.
(b) Net of expenses reimbursed or waived by the Adviser.
(c) 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.
(d) Annualized.
8
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, 1997 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 audit.
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, 1997, by correspondence with the custodian and brokers.
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
Florida Portfolio of Alliance Municipal Trust as of June 30, 1997, 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 29, 1997
9
98
<PAGE>
ALLIANCE MUNICIPAL TRUST -MASSACHUSETTS PORTFOLIO
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
STATEMENT OF NET ASSETS
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-97.2%
MASSACHUSETTS-77.9%
ACUSHNET BAN
$ 500 11/06/97 3.79% $ 500,784
BARNSTABLE BAN
495 6/15/98 3.83 504,970
BRIDGEWATER BAN
FGIC
300 6/01/98 3.90 309,627
CHATHAM GO
500 7/01/98 3.83 514,170
LEXINGTON BAN
Series '97
210 4/15/98 3.90 210,112
MASSACHUSETTS EDUCATIONAL
FINANCING AUTHORITY
Series E AMT VRDN(a)
1,100 7/01/15 4.25 1,100,000
MASSACHUSETTS GO
Series '90E VRDN(a)
120 12/01/97 4.00 120,000
MASSACHUSETTS GO
Series B VRDN(a)
400 12/01/97 4.00 400,000
MASSACHUSETTS HEALTH &
EDUCATION FACILITY
(Capital Asset Program)
VRDN(a)
1,200 1/01/01 3.80 1,200,000
MASSACHUSETTS HEALTH &
EDUCATION FACILITY
(Harvard University)
Series '85 VRDN(a)
1,000 8/01/17 4.00 1,000,000
MASSACHUSETTS HEALTH &
EDUCATION FACILITY
(Massachusetts Institute of Technology)
Series '91 VRDN(a)
300 7/01/21 3.90 300,000
MASSACHUSETTS IDA
(Carand Realty Trust)
AMT VRDN(a)
500 5/01/17 4.15 500,000
MASSACHUSETTS IDA
(Goddard House Project)
Series '95 VRDN(a)
500 11/01/25 4.15 500,000
MASSACHUSETTS IDA
(Groton School Project)
Series '89 VRDN(a)
500 6/01/19 4.00 500,000
MASSACHUSETTS IDA
(Newbury College Project)
Series '96 VRDN(a)
700 6/01/21 4.05 700,000
MASSACHUSETTS IDA
(Showa Womens Institute, Inc)
Series '94 VRDN(a)
400 3/15/04 4.00 400,000
MASSACHUSETTS IDA
Res. Rec.: (Ogden Haverhill Project)
Series '92 VRDN(a)
600 12/01/06 4.10 600,000
MASSACHUSETTS IDA PCR
(Holyoke Water & Power Co.)
Series A VRDN(a)
800 5/01/22 3.85 800,000
MASSACHUSETTS IDA PCR
(New England Power Co.)
VRDN(a)
700 10/01/22 4.00 700,000
NEWTON BAN
320 4/15/98 3.85 322,079
PEABODY BAN
Series '97
300 4/14/98 3.85 300,874
PEPPERELL BAN
MBIA
230 5/15/98 3.90 235,057
------------
11,717,673
CALIFORNIA-4.6%
CONTRA COSTA COUNTY MFHR
(Park Regency Apts.)
Series '92A AMT VRDN(a)
700 8/01/32 4.20 700,000
DISTRICT OF COLUMBIA-4.0%
DISTRICT OF COLUMBIA GO
Series '92 A-4 VRDN(a)
600 10/01/07 4.30 600,000
1
STATEMENT OF NET ASSETS
(CONTINUED)
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
NEW YORK-2.7%
NEW YORK CITY IDR
(Brooklyn Navy Yard Project)
Series '95B AMT VRDN(a)
$ 400 7/01/29 4.15% $ 400,000
PUERTO RICO-5.3%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '85 VRDN(a)
100 12/01/15 3.75 100,000
PUERTO RICO HIGHWAY &
TRANSPORTATION AUTHORITY
Series X VRDN(a)
400 7/01/99 3.75 400,000
PUERTO RICO INDUSTRIAL, MEDICAL,
HIGHER EDUCATION & ENVIRONMENT
(Ana G. Mendez Educ.
Foundation Project)
VRDN(a)
300 12/01/15 4.20 300,000
-----------
800,000
TEXAS-2.7%
BRAZOS RIVER HARBOR
NAVIGATION DISTRICT
(Dow Chemical Company Project)
Series '97 AMT VRDN(a)
400 5/01/27 5.20 400,000
Total Municipal Bonds
(amortized cost $14,617,673) $14,617,673
COMMERCIAL PAPER-5.3%
MASSACHUSETTS-2.0%
MASSACHUSETTS WATER AUTHORITY
300 7/18/97 3.85 300,000
PUERTO RICO-3.3%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
500 7/14/97 3.80 500,000
Total Commercial Paper
(amortized cost $800,000) 800,000
TOTAL INVESTMENTS-102.5%
(amortized cost $15,417,673) 15,417,673
Other assets less liabilities-(2.5%) (371,574)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
15,046,099 shares outstanding) $15,046,099
# All securities either mature or their interest rate changes in one year or
less.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as 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
IDA Industrial development authority
IDR Industrial development revenue
MBIA Municipal bond investors assurance
MFHR Multi-family housing revenue
PCR Pollution control revenue
See notes to financial statements.
2
STATEMENT OF OPERATIONS
APRIL 17, 1997* TO JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $69,477
EXPENSES
Advisory fee (Note B) $8,742
Distribution assistance and administrative service(Note C) 12,876
Printing 7,550
Audit and legal fees 6,760
Transfer agency (Note B) 4,878
Registration fees 4,635
Custodian fees 4,467
Trustees' fees 810
Amortization of organization expense 350
Miscellaneous 1,185
Total expenses 52,253
Less: expense reimbursement and fee waiver (43,511)
Net expenses 8,742
NET INCREASE IN NET ASSETS FROM OPERATIONS $60,735
* Commencement of operations.
See notes to financial statements.
3
STATEMENT OF CHANGES
IN NET ASSETS
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS PORTFOLIO
_______________________________________________________________________________
APRIL 17, 1997*
TO
JUNE 30, 1997
---------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 60,735
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (60,735)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 15,046,099
Total increase 15,046,099
NET ASSETS
Beginning of period -0-
End of period $15,046,099
* Commencement of operations.
See notes to financial statements.
4
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS 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 eight 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,
Alliance Municipal Trust-Florida Portfolio and Alliance Municipal
Trust-Massachusetts Portfolio (the "Portfolio"). Each series is considered to
be a separate entity for financial reporting and tax purposes. The
Massachusetts 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 EXPENSE
The organization expenses of the Portfolio are being amortized against income
on a straight-line basis through July, 2002.
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, 1997, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment 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 period ended June 30, 1997, the Adviser also voluntarily
agreed to reimburse the Portfolio for expenses exceeding .50 of 1% of its
average daily net assets. For the period ended June 30, 1997, the reimbursement
amounted to $39,140. 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 $3,015 for the period ended June 30, 1997.
5
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS PORTFOLIO
_______________________________________________________________________________
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
annual rate of up to .25% of 1% of the average daily value of the Portfolio's
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, 1997, the distribution fee amounted to $4,371,
all of which was waived. In addition, the Portfolio may reimburse certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services, and may reimburse the Adviser for accounting and
bookkeeping, and legal and compliance support. For the period ended June 30,
1997, such payments by the Portfolio amounted to $8,505 of which no payment was
made to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1997, capital paid-in aggregated $15,046,099. Transactions, all at $1.00 per
share, were as follows:
APRIL 17, 1997(A)
THROUGH
JUNE 30, 1997
-----------------
Shares sold 25,831,508
Shares issued on reinvestments of dividends 60,735
Shares redeemed (10,846,144)
Net increase 15,046,099
(a) Commencement of operations.
6
FINANCIAL HIGHLIGHTS
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
APRIL 17, 1997(A)
THROUGH
JUNE 30, 1997
-----------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .007
LESS: DIVIDENDS
Dividends from net investment income (.007)
Net asset value, end of period $ 1.00
TOTAL RETURNS
Total investment return based on net asset value (c)(d) 3.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,046
Ratio to average net assets of:
Expenses, net of waivers and reimbursements (d) .50%
Expenses, before waivers and reimbursements (d) 2.99%
Net investment income (b)(d) 3.47%
(a) Commencement of operations.
(b) Net of expenses reimbursed or waived by the Adviser.
(c) 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.
(d) Annualized.
7
INDEPENDENT AUDITOR'S REPORT
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS PORTFOLIO
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - MASSACHUSETTS PORTFOLIO
We have audited the accompanying statement of net assets of the Massachusetts
Portfolio of Alliance Municipal Trust as of June 30, 1997 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, 1997, by correspondence with the custodian and brokers.
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
Massachusetts Portfolio of Alliance Municipal Trust as of June 30, 1997, 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 29, 1997
8
99
<PAGE>
ALLIANCE MUNICIPAL TRUST -NEW JERSEY PORTFOLIO
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
STATEMENT OF NET ASSETS
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-92.5%
NEW JERSEY-80.3%
BERGEN COUNTY
Series '95
$ 500 7/15/97 3.50% $ 500,226
BERGEN COUNTY UTILITY AUTHORITY
FGIC Pre-Refunded
1,000 3/15/98 3.90 1,026,382
CALDWELL GO
FGIC
470 10/01/97 3.95 471,380
CAMDEN COUNTY MUNICIPAL
UTILITY AUTHORITY
Sewer Revenue FGIC
1,500 7/15/97 3.55 1,500,025
CARLSTADT COUNTY
Refunding Notes
500 3/01/98 3.70 501,451
EAST WINDOR TOWNSHIP BAN
5,000 4/17/98 3.90 5,013,345
ESSEX COUNTY IMPROVEMENT AUTHORITY
(County Asset Sale Proj.)
Series '95 AMBAC VRDN(a)
5,500 12/01/25 4.00 5,500,000
FORT LEE BAN
Series '97
2,320 5/22/98 3.90 2,325,950
GLOUCESTER COUNTY PCR
(Mobil Oil Co.) VRDN(a)
2,000 12/01/03 3.75 2,000,000
JERSEY CITY BAN
2,500 9/26/97 4.05 2,502,576
MAHWAH TOWNSHIP SCHOOL DISTRICT
Temporary Notes
3,000 7/25/97 3.95 3,000,568
MANCHESTER TOWNSHIP GO
FGIC
457 12/01/97 3.70 458,954
MERCER COUNTY IMPROVEMENT AUTHORITY
(Aces Pooled Govt Loan Prog.) VRDN(a)
3,100 11/01/98 4.00 3,100,000
MIDDLESEX BAN
1,200 6/24/98 3.90 1,203,955
MONMOUTH COUNTY GO
500 7/01/98 3.95 505,094
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(American Water Company)
Series '97B AMT VRDN(a)
3,000 5/01/32 3.90 3,000,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Crane's Mill Proj.)
Series '97C VRDN(a)
8,000 2/01/04 3.90 8,000,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Epitaxx, Inc.)
Series '91 AMT VRDN(a)
5,000 8/01/16 4.38 5,000,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Hillcrest Health Services)
Series '95 VRDN(a)
7,900 1/01/22 4.10 7,900,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Kinder-Care Learning Centers)
Series D VRDN(a)
390 10/01/00 4.35 390,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Merck & Co.) Series '82 VRDN(a)
1,300 10/01/22 4.38 1,300,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
Composite Issue
Series '92U AMT VRDN(a)
1,835 12/01/02 4.15 1,835,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY IDR
(Economic Growth)
Series B AMT VRDN(a)
$ 1,435 8/01/04 4.20% $ 1,435,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY IDR
(Fujinon Inc. Project)
Series '86 VRDN(a)
600 3/01/01 4.25 600,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY IDR
(STP Company Project)
Series '92 VRDN(a)
2,885 7/01/06 4.00 2,885,000
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY PCR
(Hoffman-LA Roche Inc.) VRDN(a)
2,800 2/01/05 4.13 2,800,000
NEW JERSEY HEALTH CARE
FACILITIES FINANCING
(Shore Memorial Hospital)
Series C MBIA Pre-Refunded
2,600 7/01/97 3.60 2,652,000
NEW JERSEY STATE TRANSPORT
TRUST FUND AUTHORITY
(Transportation System)
Series A ETM
1,000 6/15/98 3.91 1,003,578
NEW JERSEY STATE TURNPIKE AUTHORITY
(Turnpike Revenue)
Series '91D FGIC VRDN(a)
7,000 1/01/18 3.80 7,000,000
NEWARK HEALTHCARE FACILITY REVENUE
(Urban Renewal Corp. Care Fac.)
Series A VRDN(a)
2,990 6/01/30 4.40 2,990,000
PASSAIC COUNTY BAN
Series '97
5,000 4/03/98 3.85 5,023,630
PLEASANTVILLE SCHOOL DISTRICT
Temporary Notes
4,500 8/28/97 3.93 4,502,172
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
(Versatile Structure)
Series '96-5 VRDN(a)
1,300 8/01/24 4.10 1,300,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
(Versatile Structure)
Series 1 AMT VRDN(a)
1,000 8/01/28 4.15 1,000,000
PRINCETON TOWNSHIP BAN
Series '96
1,400 8/27/97 3.85 1,400,887
PRINCETON TOWNSHIP GO
Series '86
500 7/01/97 3.55 500,000
ROSELAND
General Improvement FGIC
200 3/15/98 3.85 201,708
SALEM COUNTY PCR
(Dupont Corp.) Series '82A VRDN(a)
2,400 3/01/12 3.80 2,400,000
WILDWOOD GO
FSA
460 9/15/97 4.00 461,300
WOODBRIDGE TOWNSHIP BAN
4,000 7/02/97 3.85 4,000,006
------------
99,190,187
ARIZONA-1.6%
PIMA COUNTY IDA
(Tucson Electric Power Company)
Series '90 AMT VRDN(a)
2,000 5/01/25 4.20 2,000,000
NEW HAMPSHIRE-2.0%
NEW HAMPSHIRE IDA
(Connecticut Light & Power Co.)
Series '86 AMT VRDN(a)
2,400 11/01/16 4.25 2,400,000
2
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
NEW YORK-2.4%
NEW YORK CITY IDA
(Nippon Cargo Air Project)
Series '92 AMT VRDN(a)
$ 3,000 11/01/15 5.80% $ 3,000,000
PUERTO RICO-3.3%
PUERTO RICO GO TRAN
Series '97A
4,100 7/30/97 3.55 4,101,380
VIRGINIA-2.9%
ALEXANDRIA REDEVELOPMENT
AND HOUSING AUTHORITY MFHR
(Crystal City Apts. Proj.)
Series '90A AMT VRDN(a)
3,600 12/15/18 4.35 3,600,000
Total Municipal Bonds
(amortized cost $114,291,567) 114,291,567
COMMERCIAL PAPER-8.7%
NEW JERSEY-5.5%
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
(Chambers Cogeneration )
Series '91 AMT
2,000 8/21/97 3.70 2,000,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
AMT
4,800 7/18/97 3.75 4,800,000
------------
6,800,000
NEW YORK-1.6%
NEW YORK CITY MUNICIPAL WATER
AUTHORITY FINANCE
Series 4
2,000 10/09/97 3.80 2,000,000
PUERTO RICO-1.6%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
2,000 7/14/97 3.80 2,000,000
Total Commercial Paper
(amortized cost $10,800,000) 10,800,000
TOTAL INVESTMENTS-101.2%
(amortized cost $125,091,567) 125,091,567
Other assets less liabilities-(1.2%) (1,512,313)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
123,580,537 shares outstanding) $123,579,254
# All securities either mature or their interest rate changes in one year or
less.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as 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
ETM Escrowed to maturity
FGIC Financial guaranty insurance company
FSA Financial security assurance
GO General obligation
IDA Industrial development authority
IDR Industrial development revenue
MBIA Municipal bond investors assurance
MFHR Multi-family housing revenue
PCR Pollution control revenue
TRAN Tax & revenue anticipation note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $4,175,627
EXPENSES
Advisory fee (Note B) $ 591,407
Distribution assistance and administrative
service (Note C) 404,168
Transfer agency (Note B) 181,157
Custodian fees 76,705
Printing 20,396
Audit and legal fees 16,814
Registration fees 15,949
Trustees' fees 2,803
Amortization of organization expense 2,026
Miscellaneous 9,846
Total expenses 1,321,271
Less: expense reimbursement and fee waiver (315,879)
Net expenses 1,005,392
Net investment income 3,170,235
UNREALIZED LOSS ON INVESTMENTS
Net change in unrealized appreciation of investments (3,305)
NET INCREASE IN NET ASSETS FROM OPERATIONS $3,166,930
See notes to financial statements.
4
STATEMENT OF CHANGES
IN NET ASSETS
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1997 JUNE 30,1996
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 3,170,235 $ 2,562,279
Net realized loss on investment transactions -0- (32)
Net change in unrealized appreciation of
investments (3,305) 3,305
Net increase in net assets from operations 3,166,930 2,565,552
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,170,235) (2,562,279)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 25,484,266 23,962,316
Total increase 25,480,961 23,965,589
NET ASSETS
Beginning of year 98,098,293 74,132,704
End of year $123,579,254 $98,098,293
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 eight 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, Alliance Municipal Trust-Florida Portfolio and Alliance Municipal
Trust-Massachusetts Portfolio. Each series is considered to be a separate
entity for financial reporting and tax purposes. As a matter of fundamental
policy, the 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, 1997, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment 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, 1997 for expenses exceeding .85 of 1% of its average
daily net assets. For the year ended June 30, 1997, the reimbursement amounted
to $197,597. 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 $100,339 for the year ended June 30, 1997.
6
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
annual rate of up to .25% of 1% of the average daily value of the Portfolio's
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, 1997, the distribution fee amounted to $295,704 of which
$118,282 was waived. In addition, the Portfolio may reimburse certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services and may reimburse the Adviser for accounting and
bookkeeping, and legal and compliance support. For the year ended June 30,
1997, such payments by the Portfolio amounted to $108,464 of which $91,000 was
paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1997 the
Portfolio had a capital loss carryforward of $1,283, of which $1,032 expires in
2003 $219, expires in the year 2004 and $32 expires in 2005.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1997, capital paid-in aggregated $123,580,537. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
------------- -------------
Shares sold 521,386,264 392,300,834
Shares issued on reinvestments of dividends 3,170,235 2,562,279
Shares redeemed (499,072,233) (370,900,797)
Net increase 25,484,266 23,962,316
7
FINANCIAL HIGHLIGHTS
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, FEB. 7,1994(A)
---------------------------------- THROUGH
1997 1996 1995 JUNE 30,1994
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .027 .028 .029 .008
LESS: DIVIDENDS
Dividends from net investment income (.027) (.028) (.029) (.008)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
TOTAL RETURNS
Total investment return based on net
asset value (c) 2.72% 2.89% 2.93% 2.08%(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $123,579 $98,098 $74,133 $36,909
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .85% .82% .74% .70%(d)
Expenses, before waivers and reimbursements 1.12% 1.19% 1.29% 1.93%(d)
Net investment income (b) 2.68% 2.84% 2.98% 2.07%(d)
</TABLE>
(a) Commencement of operations.
(b) Net of expenses reimbursed or waived by the Adviser.
(c) 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.
(d) Annualized.
8
INDEPENDENT AUDITOR'S REPORT
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MUNICIPAL TRUST - NEW JERSEY PORTFOLIO
We have audited the accompanying statement of net assets of the New Jersey
Portfolio of Alliance Municipal Trust as of June 30, 1997 and the related
statements of operations, changes in net assets, and financial highlights for
the periods indicated in the accompanying financial statements. These financial
statement and financial highlights are the responsibility of the Portfolio's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1997, by correspondence with the custodian and brokers.
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, 1997, 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 29, 1997
9
100
<PAGE>
ALLIANCE MUNICIPAL TRUST -NEW YORK PORTFOLIO
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
STATEMENT OF NET ASSETS
JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-92.0%
NEW YORK-91.7%
ALBANY CENTRAL SCHOOL DISTRICT
Series A FGIC
$ 1,075 5/01/98 4.00% $ 1,083,680
ALBANY IDR
(Davies Office Refurbishing Inc.)
Series '95 AMT VRDN(a)
2,500 9/01/15 4.25 2,500,000
ALBANY IDR
(Davies Office Refurbishing Inc.)
Series '97 AMT VRDN(a)
1,300 2/01/17 4.25 1,300,000
BABYLON UNION FREE SCHOOL
DISTRICT TAN
Series B
1,500 6/29/98 3.85 1,505,744
BROOME COUNTY
(Public Improvement Project)
Series '97 MBIA
3,200 4/15/98 3.90 3,236,157
BROOME COUNTY BAN
Series '97
7,973 4/15/98 3.92 7,992,923
BUFFALO RAN
Series A
1,300 7/15/97 3.60 1,300,318
CENTRAL ISLIP TAN
5,000 6/30/98 3.90 5,002,350
CLINTON COUNTY GO BAN
5,200 9/26/97 3.96 5,203,570
CLYDE-SAVANNAH CENTRAL SCHOOL
DISTRICT
FGIC
625 6/15/98 3.90 631,955
COHOES CENTRAL SCHOOL DISTRICT
FGIC
750 6/15/98 3.90 756,782
DUTCHESS COUNTY IDR
(Toys 'R' Us/NYTEX)
Series '84 VRDN(a)
1,000 11/01/19 4.25 1,000,000
ERIE COUNTY RAN
Series 97A
2,500 6/25/98 3.80 2,516,569
ERIE COUNTY RAN
Series B
5,000 11/19/97 3.60 5,012,105
FRANKLIN COUNTY IDR
(KES Chateaugay L.P.)
Series '91A AMT VRDN(a)
14,900 7/01/21 4.25 14,900,000
GENESEO BAN
Series '97
1,133 4/03/98 3.90 1,137,943
GENEVA CENTRAL SCHOOL DISTRICT
FGIC
550 6/15/98 3.96 554,074
ISLIP GO BAN
Series '96
3,720 7/25/97 3.98 3,720,634
ISLIP IDA
(Radiation Dynamics)
Series '88A AMT VRDN(a)
6,000 1/01/09 4.50 6,000,000
LANSING CENTRAL SCHOOL
DISTRICT BAN
9,500 10/08/97 4.04 9,511,621
LONG BEACH BOND
AMBAC
325 9/01/97 3.75 325,669
MUNICIPAL ASSISTANCE CORPORATION
Sub Series K-1 VRDN(a)
15,200 7/01/08 4.05 15,200,000
NAPLES CENTRAL SCHOOL DISTRICT
FSA
275 6/15/98 4.00 277,932
NEW YORK CITY GO
Series '95F-3 VRDN(a)
2,000 2/15/13 4.15 2,000,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
NEW YORK CITY GO
Series '95F-4 VRDN(a)
$ 7,200 2/15/20 4.15% $ 7,200,000
NEW YORK CITY GO
Series '95F-5 VRDN(a)
5,000 2/15/16 4.15 5,000,000
NEW YORK CITY GO
Series '95F-6 VRDN(a)
3,000 2/15/18 4.15 3,000,000
NEW YORK CITY GO
Series F-2 VRDN(a)
6,700 2/15/12 4.05 6,700,000
NEW YORK CITY HEALTH & HOSPITAL CORP.
(Health Systems) Series C VRDN(a)
17,500 2/15/26 4.05 17,500,000
NEW YORK CITY HEALTH &
HOSPITAL REVENUE
(Health Systems) Series B VRDN(a)
5,000 2/15/26 4.05 5,000,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(Columbus Gardens Project)
Series '93A VRDN(a)
1,382 2/01/07 4.10 1,382,100
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(East 96th Street Project) VRDN(a)
8,000 8/01/15 4.15 8,000,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(Montifiore Medical Center)
Series '93A VRDN(a)
1,000 5/01/30 4.05 1,000,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(Queenswood Apts. Project)
Series '89A VRDN(a)
4,960 2/01/17 4.20 4,960,000
NEW YORK CITY HOUSING
DEVELOPMENT CORP. MFHR
(West 89th Street Project)
Series '96A AMT VRDN(a)
8,100 12/01/29 4.20 8,100,000
NEW YORK CITY IDA
(Brooklyn Navy Yard Project)
Series '95A AMT VRDN(a)
11,100 7/01/29 4.20 11,100,000
NEW YORK CITY IDA
(Brooklyn Navy Yard Project)
Series '95B AMT VRDN(a)
18,200 7/01/29 4.15 18,200,000
NEW YORK CITY IDA
(Church Heavenly Rest Day School)
Series '91 VRDN(a)
4,725 7/01/21 4.20 4,725,000
NEW YORK CITY IDA
(Columbia Grammar School Project)
Series '94 VRDN(a)
1,000 6/30/14 4.00 1,000,000
NEW YORK CITY IDA
(Korean Airlines Co.)
Series A AMT VRDN(a)
5,000 11/01/24 4.10 5,000,000
NEW YORK CITY IDA
(Nippon Cargo Air Project)
Series '92 AMT VRDN(a)
12,000 11/01/15 5.80 12,000,000
NEW YORK STATE DORMITORY AUTHORITY
(St. Josephs Hospital) MBIA
795 7/01/97 3.71 795,000
2
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
NEW YORK STATE ERDA PCR
(Central Hudson Gas & Electric)
Series '87A AMT VRDN(a)
$ 16,400 6/01/27 4.10% $16,400,000
NEW YORK STATE ERDA PCR
(Long Island Lighting Co.)
Series A PPB(a)
6,000 3/01/16 3.60 6,000,000
NEW YORK STATE ERDA PCR
(New York State Gas & Electric)
Series '85 PPB(a)
5,000 3/15/15 3.65 5,000,000
NEW YORK STATE ERDA PCR
(New York State Gas & Electric)
Series '85B PPB(a)
4,000 10/15/15 3.85 4,000,000
NEW YORK STATE ERDA PCR
(Niagara Mohawk Corp.)
Series '86A AMT VRDN(a)
1,400 12/01/26 4.15 1,400,000
NEW YORK STATE ERDA PCR
(Rochester Gas & Electric)
Series '84 VRDN(a)
2,300 10/01/14 3.55 2,300,000
NEW YORK STATE HFA
(Normandie Court Housing Project)
Series '91A VRDN(a)
8,915 5/15/15 4.00 8,915,000
NEW YORK STATE JOB
DEVELOPMENT AUTHORITY
Series '86A-1 AMT VRDN(a)
1,840 3/01/00 4.10 1,840,000
NEW YORK STATE JOB
DEVELOPMENT AUTHORITY
Series '86C-1 AMT VRDN(a)
755 3/01/00 4.10 755,000
NEW YORK STATE MEDICAL
CARE FACILITIES FINANCE AGENCY
(Equipment Loan Program)
Series '85 VRDN(a)
2,000 11/01/15 4.10 2,000,000
NEW YORK STATE MEDICAL
CARE FACILITIES FINANCE AGENCY
(Equipment Loan Program)
Series '94A VRDN(a)
12,200 11/01/03 4.10 12,200,000
NEW YORK STATE MEDICAL
CARE FACILITIES FINANCE AGENCY
(St. Luke's Roosevelt)
Series '93A FHA
500 8/15/97 3.71 500,147
NEW YORK STATE MEDICAL
CARE FACILITIES FINANCE AGENCY
FHA Pre-Refunded
2,000 8/15/97 3.50 2,050,691
NEW YORK STATE THRUWAY AUTHORITY
(Highway & Bridge Trust Fund)
Series '97A
10,195 4/01/98 3.75 10,250,499
NEWBURGH IDA
(Mt. St. Mary College Civic Fac.)
Series '91 VRDN(a)
1,500 10/01/11 4.25 1,500,000
NIAGARA COUNTY IDA
(Pyron Corp. Project)
Series '89 AMT VRDN(a)
2,323 11/01/04 4.20 2,323,000
ONONDAGA COUNTY IDA
(Southern Container Project)
Series '87 AMT VRDN(a)
715 12/01/07 4.25 715,000
3
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
ONTARIO COUNTY IDA
(Ultrafab Inc.)
Series '95 AMT VRDN(a)
$ 2,200 12/01/15 4.20% $ 2,200,000
PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
Series 96-5 VRDN(a)
2,600 8/01/24 4.10 2,600,000
RENSSELAER COUNTY IDA
(Rensselaer Polytechnic
Institute Project)
Series '97A VRDN(a)
4,400 2/01/22 4.25 4,400,000
SHENENDEHOWA CENTRAL
SCHOOL DISTRICT BAN
Series '97
3,000 5/06/98 4.04 3,011,454
SOUTHEAST NEW YORK IDA
(The Rawplug Project)
Series '96 AMT VRDN(a)
2,300 5/01/21 4.25 2,300,000
SUFFOLK COUNTY
(Public Improvement Project)
Series A AMBAC
2,355 6/15/98 3.90 2,379,046
SUFFOLK COUNTY IDA
(Nissequogue Cogen Partners)
Series '93 AMT VRDN(a)
2,200 12/15/23 4.15 2,200,000
SYOSSET CENTRAL SCHOOL DISTRICT BAN
Series '96
4,500 7/18/97 3.92 4,500,664
TRIBOROUGH BRIDGE & TUNNEL AUTHORITY
Series '94 FGIC VRDN(a)
8,400 1/01/24 4.15 8,400,000
WESTCHESTER COUNTY IDR
(Elba Enterprises Project)
Series '86 AMT VRDN(a)
700 12/01/01 4.05 700,000
WESTCHESTER COUNTY IDR
(Hitachi America) VRDN(a)
1,500 7/01/98 4.20 1,500,000
WYANDANCH UNION FREE SCHOOL DISTRICT
FSA
315 4/01/98 3.85 318,792
------------
325,991,419
PUERTO RICO-0.3%
PUERTO RICO GO TRAN
Series '97A
1,000 7/30/97 3.76 1,000,149
Total Municipal Bonds
(amortized cost $326,991,568) 326,991,568
NEW YORK
COMMERCIAL PAPER-9.5%
NEW YORK CITY MUNICIPAL WATER
FINANCE AUTHORITY
10,000 7/31/97 3.70 10,000,000
NEW YORK CITY MUNICIPAL WATER
FINANCE AUTHORITY
Series 3
2,000 7/31/97 3.80 2,000,000
NEW YORK CITY MUNICIPAL WATER
FINANCE AUTHORITY
Series 4
4,000 7/31/97 3.75 4,000,000
NEW YORK CITY MUNICIPAL WATER
FINANCE AUTHORITY
Series 4
1,000 10/09/97 3.80 1,000,000
NEW YORK STATE DORMITORY AUTHORITY
(Memorial Sloan-Kettering
Cancer Center)
Series '89C
5,035 8/21/97 3.75 5,035,000
NEW YORK STATE DORMITORY AUTHORITY
(Memorial Sloan-Kettering
Cancer Center)
Series '96
5,000 7/18/97 3.80 5,000,000
4
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
NEW YORK STATE ENVIRONMENTAL FACILITY
Series '97A
$ 6,900 7/16/97 4.00% $ 6,900,000
Total Commercial Paper
(amortized cost $33,935,000) 33,935,000
TOTAL INVESTMENTS-101.5%
(amortized cost $360,926,568) $360,926,568
Other assets less liabilities-(1.5%) (5,466,042)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
355,524,472 shares outstanding) $355,460,526
# All securities either mature or their interest rate changes in one year or
less.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
Glossary of Terms:
AMBAC American municipal bond assurance corporation
AMT Alternative minimum tax
BAN Bond anticipation note
ERDA Energy research & development authority
FGIC Financial guaranty insurance company
FHA Federal housing authority
FSA Financial security assurance
GO General obligation
HFA Housing finance agency/authority
IDA Industrial development authority
IDR Industrial development revenue
MBIA Municipal bond investors assurance
MFHR Multi-family housing revenue
PCR Pollution control revenue
RAN Revenue anticipation note
TAN Tax anticipation note
TRAN Tax & revenue anticipation note
See notes to financial statements.
5
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $13,126,009
EXPENSES
Advisory fee (Note B) $1,833,945
Distribution assistance and administrative
service (Note C) 1,101,933
Transfer agency (Note B) 573,353
Custodian fees 123,145
Printing 74,230
Registration fees 66,420
Audit and legal fees 26,078
Trustees' fees 3,317
Miscellaneous 16,719
Total expenses 3,819,140
Less: expense reimbursement and fee waiver (701,434)
Net expenses 3,117,706
Net investment income 10,008,303
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions 51
Net change in unrealized appreciation of investments (2,331)
Net loss on investment transactions (2,280)
NET INCREASE IN NET ASSETS FROM OPERATIONS $10,006,023
STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1997 JUNE 30,1996
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 10,008,303 $ 7,827,518
Net realized gain on investment transactions 51 308
Net change in unrealized appreciation of
investments (2,331) 2,331
Net increase in net assets from operations 10,006,023 7,830,157
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (10,008,303) (7,827,518)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 24,478,975 153,727,353
Total increase 24,476,695 153,729,992
NET ASSETS
Beginning of year 330,983,831 177,253,839
End of year $355,460,526 $330,983,831
See notes to financial statements.
6
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 eight 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, Alliance Municipal Trust-Florida Portfolio and
Alliance Municipal Trust-Massachusetts Portfolio. Each series is considered to
be a separate entity for financial reporting and tax purposes. As a matter of
fundamental policy, the 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, 1997, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment 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, 1997, 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, 1997, the reimbursement
amounted to $334,645. 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 $338,925 for the year ended June 30, 1997.
7
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
annual rate of up to .25% of 1% of the average daily value of the Portfolio's
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, 1997, the distribution fee amounted to $916,972 of
which $366,789 was waived. In addition, the Portfolio may reimburse certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services, and may reimburse the Adviser for accounting and
bookkeeping, and legal and compliance support. For the year ended June 30,
1997, such payments by the Portfolio amounted to $184,961 of which $94,000 was
paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1997, the
Portfolio had a capital loss carryforward of $20,548, of which $7,459 expires
in 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,
1997, capital paid-in aggregated $355,481,074. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
--------------- ---------------
Shares sold 1,393,269,626 1,218,028,397
Shares issued on reinvestments of dividends 10,008,303 7,827,518
Shares redeemed (1,378,798,954) (1,072,128,562)
Net increase 24,478,975 153,727,353
8
FINANCIAL HIGHLIGHTS
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<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 (a) .027 .028 .028 .018 .019
LESS: DIVIDENDS
Dividends from net investment income (.027) (.028) (.028) (.018) (.019)
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 (b) 2.77% 2.87% 2.84% 1.77% 1.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $355,461 $330,984 $177,254 $162,839 $100,529
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .85% .85% .85% .84% .80%
Expenses, before waivers and reimbursements 1.04% 1.03% 1.03% 1.08% 1.06%
Net investment income (a) 2.73% 2.82% 2.81% 1.77% 1.91%
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
9
INDEPENDENT AUDITOR'S REPORT
ALLIANCE MUNICIPAL TRUST - NEW YORK PORTFOLIO
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS ALLIANCE MUNICIPAL TRUST - NEW YORK
PORTFOLIO
We have audited the accompanying statement of net assets of the New York
Portfolio of Alliance Municipal Trust as of June 30, 1997 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, 1997, by correspondence with the custodian and brokers.
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, 1997, 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 29, 1997
10
101
<PAGE>
ALLIANCE MUNICIPAL TRUST -VIRGINIA PORTFOLIO
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
STATEMENT OF NET ASSETS
JUNE 30, 1997 ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-94.4%
VIRGINIA-90.9%
ALEXANDRIA REDEVELOPMENT &
HOUSING AUTHORITY MFHR
(Crystal City Apts. Project)
Series '90A AMT VRDN(a)
$ 4,700 12/15/18 4.35% $4,700,000
AMELIA COUNTY IDA
(Chambers Waste Systems, Inc)
AMT VRDN(a)
4,290 7/01/07 4.35 4,290,000
AMHERST IDA SOLID WASTE
(Nekoosa Packaging) AMT VRDN(a)
2,750 7/01/11 4.45 2,750,000
ARLINGTON COUNTY
(Ballston Public Parking Facility)
Series '84 VRDN(a)
1,900 8/01/17 4.15 1,900,000
BEDFORD IDA SOLID WASTE
(Nekoosa Packaging) AMT VRDN(a)
1,000 12/01/25 4.20 1,000,000
BOTETOURT COUNTY IDA
(Emkay Holdings L.L.C. Project)
Series '95 AMT VRDN(a)
2,000 10/01/05 4.20 2,000,000
BOTETOURT COUNTY IDA
(Virginia Forge Co. Project)
Series '96 AMT VRDN(a)
1,000 7/01/11 4.35 1,000,000
CAMPBELL COUNTY PCR
(Georgia Pacific Power) AMT VRDN(a)
3,000 12/01/19 4.45 3,000,000
CHARLES CITY IDA
(Chambers Dev. of VA, Inc.)
Series '89 AMT VRDN(a)
1,100 10/01/04 4.35 1,100,000
CHARLES CITY IDA
(Chambers Dev. of VA, Inc.)
Series '96 AMT VRDN(a)
1,500 4/01/16 4.35 1,500,000
CHESAPEAKE IDA
(LTD Associates) VRDN(a)
1,770 3/01/11 4.20 1,770,000
CHESTERFIELD COUNTY IDA
(Phillip Morris Co.) VRDN(a)
3,500 4/01/09 4.40 3,500,000
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(Fairfax Hospital Systems)
Series '88C VRDN(a)
1,050 10/01/25 4.15 1,050,000
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(Fairfax Hospital Systems)
Series '88D VRDN(a)
400 10/01/25 4.15 400,000
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(INOVA Services) Series '85A VRDN(a)
1,100 10/01/16 4.25 1,100,000
FAIRFAX COUNTY IDA HOSPITAL REVENUE
(INOVA Services) Series '89A VRDN(a)
500 1/15/22 4.15 500,000
FLUVANNA COUNTY IDA
(Edgecomb Metals Co.) VRDN(a)
2,100 12/01/09 4.13 2,100,000
FREDERICKSBURG IDA
(MWH Medicorp) Series '91A FGIC
100 8/15/97 3.65 100,262
HAMPTON COUNTY REDEVELOPMENT &
HOUSING AUTHORITY MFHR
(Avalon Pointe Project)
Series '96 AMT VRDN(a)
2,000 6/15/26 4.20 2,000,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
HAMPTON ROADS JAIL AUTHORITY
Regional Jail Fac.
Series '96B VRDN(a)
$ 2,300 7/01/16 4.15% $ 2,300,000
KING GEORGE COUNTY IDR
(Birchwood Power Project)
Series '94A AMT VRDN(a)
2,600 10/01/24 4.30 2,600,000
KING GEORGE COUNTY IDR
(Birchwood Power Project)
Series '97 AMT VRDN(a)
500 3/01/27 4.30 500,000
KING GEORGE COUNTY IDR
(Garnet of VA, Inc.)
Series '96 AMT VRDN(a)
800 9/01/21 4.20 800,000
LOUDOWN COUNTY IDA
(Kinder-Care Learning Centers)
Series A VRDN(a)
394 6/01/02 4.35 394,000
LOUISA COUNTY IDA
Pooled Financing Series '95 VRDN(a)
2,500 1/01/20 4.20 2,500,000
METRO DC AIRPORTS AUTHORITY
Series A AMT MBIA
1,290 10/01/97 3.80 1,292,305
NORFOLK GO BOND
Pre-Refunded
200 8/01/97 3.50 204,595
RICHMOND GO
(Public Utility Revenue)
Series A VRDN(a)
3,500 6/30/01 4.25 3,500,000
RICHMOND HFA
(Old Manchester Project)
Series A VRDN(a)
1,000 12/01/25 4.30 1,000,000
RICHMOND REDEVELOPMENT MFHR
(Tobacco Row)
Series '89B-8 AMT VRDN(a)
3,555 10/01/24 4.20 3,555,000
SMYTHE COUNTY IDA
(Summit Products Project)
AMT VRDN(a)
800 3/01/06 4.30 800,000
SPOTSYLVANIA COUNTY GO
(School Bonds) Series '97 FGIC
620 1/15/98 3.75 622,152
UNIVERSITY OF VIRGINIA
HOSPITAL REVENUE
Series D Pre-Refunded
1,000 6/01/98 3.96 1,047,707
VIRGINIA BEACH DEVELOPMENT AUTHORITY
(Kinder-Care Learning Centers)
Series D VRDN(a)
866 10/01/00 4.35 866,000
VIRGINIA BEACH MFHR
(Dam Neck Square Apts.)
Series '97 VRDN(a)
1,000 2/01/17 4.20 1,000,000
VIRGINIA HDA
(AHC Service Corp.- Lee Gardens)
Series '87A VRDN(a)
5,500 9/01/17 4.30 5,500,000
VIRGINIA PUBLIC BUILDING
AUTHORITY BOND
Series '94A
2,295 8/01/97 3.60 2,298,853
VIRGINIA PUBLIC SCHOOL AUTHORITY
Series '92A
2,500 1/01/98 3.65 2,528,829
VIRGINIA TRANSPORTATION REVENUE
(Rte. 28 Project) Pre-Refunded
1,000 3/01/98 4.00 1,043,426
VIRGINIA TRANSPORTATION REVENUE
(Rte. 28 Project) Pre-Refunded
1,415 3/01/98 4.00 1,477,366
------------
71,590,495
2
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
PUERTO RICO-3.5%
PUERTO RICO GO TRAN
Series '97A
$ 2,800 7/30/97 3.56% $ 2,800,950
Total Municipal Bonds
(amortized cost $74,391,445) 74,391,445
COMMERCIAL PAPER-6.1%
VIRGINIA-3.2%
HAMPTON HOSPITAL REVENUE
(Sentara Health System) Series '97B
2,500 7/24/97 4.00 2,500,000
PUERTO RICO-2.9%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
2,300 7/14/97 3.85 2,300,000
Total Commercial Paper
(amortized cost $4,800,000) 4,800,000
TOTAL INVESTMENTS-100.5%
(amortized cost $79,191,445) 79,191,445
Other assets less liabilities-(0.5%) (416,351)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
78,783,119 shares outstanding) $78,775,094
# All securities either mature or their interest rate changes in one year or
less.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as 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
FGIC Financial guaranty insurance company
GO General obligation
HDA Housing development authority
HFA Housing finance agency/authority
IDA Industrial development authority
IDR Industrial development revenue
MBIA Municipal bond investors assurance
MFHR Multi-family housing revenue
PCR Pollution control revenue
TRAN Tax & revenue anticipation note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997 ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $3,084,776
EXPENSES
Advisory fee (Note B) $ 430,661
Distribution assistance and administrative
service (Note C) 383,737
Custodian fees 72,958
Transfer agency (Note B) 37,947
Audit and legal fees 21,903
Printing 18,223
Registration fees 10,782
Trustees' fees 2,908
Amortization of organization expense 1,701
Miscellaneous 8,036
Total expenses 988,856
Less: expense reimbursement and fee waiver (299,799)
Net expenses 689,057
Net investment income 2,395,719
UNREALIZED LOSS ON INVESTMENTS
Net change in unrealized appreciation of investments (745)
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,394,974
See notes to financial statements.
4
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1997 JUNE 30,1996
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,395,719 $ 2,432,185
Net realized loss on investment transactions -0- (128)
Net change in unrealized appreciation of
investments (745) 745
Net increase in net assets from operations 2,394,974 2,432,802
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,395,719) (2,432,185)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease) (Note E) (10,781,003) 22,635,119
Total increase (decrease) (10,781,748) 22,635,736
NET ASSETS
Beginning of year 89,556,842 66,921,106
End of year $ 78,775,094 $89,556,842
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 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 eight 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"), Alliance Municipal Trust-Florida Portfolio and Alliance Municipal
Trust-Massachusetts Portfolio. Each series is considered to be a separate
entity for financial reporting and tax purposes. As a matter of fundamental
policy, the 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, 1997, are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment 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 for the year ended June 30, 1997 for expenses exceeding .80 of 1%
of its average daily net assets. For the year ended June 30, 1997, the
reimbursement amounted to $213,667. 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 $17,735 for the year ended June 30, 1997.
6
ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
annual rate of up to .25% of 1% of the average daily value of the Portfolio's
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, 1997, the distribution fee amounted to $215,330 of which $86,132
was waived. In addition, the Portfolio may reimburse certain broker-dealers for
administrative costs incurred in connection with providing shareholder
services, and may reimburse the Adviser for accounting and bookkeeping, and
legal and compliance support. For the year ended June 30, 1997, such payments
by the Portfolio amounted to $168,407 of which $91,000 was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1997 the
Portfolio had a capital loss carryforward of $8,025, of which $7,897 expires in
2004 and $128 expires in the year 2005.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.01 par value) are authorized. At June 30,
1997, capital paid-in aggregated $78,783,119. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
------------- -------------
Shares sold 159,430,948 251,119,609
Shares issued on reinvestments of dividends 2,395,719 2,432,185
Shares redeemed (172,607,670) (230,916,675)
Net increase (decrease) (10,781,003) 22,635,119
7
FINANCIAL HIGHLIGHTS ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
OCTOBER 25,
YEAR ENDED JUNE 30, 1994(A)
-------------------- THROUGH
1997 1996 JUNE 30,1995
--------- --------- ------------
Net asset value, beginning of period $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .028 .029 .023
LESS: DIVIDENDS
Dividends from net investment income (.028) (.029) (.023)
Net asset value, end of period $1.00 $1.00 $1.00
TOTAL RETURNS
Total investment return based on
net asset value (c) 2.83% 2.97% 3.48%(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $78,775 $89,557 $66,921
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .80% .78% .44%(d)
Expenses, before waivers and reimbursements 1.15% 1.15% 1.30%(d)
Net investment income (b) 2.78% 2.91% 3.48%(d)
(a) Commencement of operations.
(b) Net of expenses reimbursed or waived by the Adviser.
(c) 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.
(d) Annualized.
8
INDEPENDENT AUDITOR'S REPORT ALLIANCE MUNICIPAL TRUST - VIRGINIA PORTFOLIO
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS ALLIANCE MUNICIPAL TRUST - VIRGINIA
PORTFOLIO
We have audited the accompanying statement of net assets of the Virginia
Portfolio of Alliance Municipal Trust as of June 30, 1997 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, 1997, 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, 1997, 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 29, 1997
9
102
<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.
A-1
<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.
A-2
<PAGE>
________________________________________________________________
APPENDIX B
DESCRIPTION OF SECURITIES RATINGS
________________________________________________________________
Municipal and Corporate
Bonds and Municipal Loans
The two highest ratings of Moody's Investors Service,
Inc. ("Moody's") for municipal and corporate bonds are Aaa and
Aa. Bonds rated Aaa are judged by Moody's to be of the best
quality. Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Moody's states that Aa
bonds are rated lower than the best bonds because margins of
protection or other elements make long-term risks appear somewhat
larger than Aaa securities. The generic rating Aa may be
modified by the addition of the numerals 1, 2 or 3. The modifier
1 indicates that the security ranks in the higher end of the Aa
rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the issue ranks in the lower
end of such rating category.
The two highest ratings of Standard & Poor's Corporation
("Standard & Poor's") for municipal and corporate bonds are AAA
and AA. Bonds rated AAA have the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest
and repay principal is extremely strong. Bonds rated AA have a
very strong capacity to pay interest and repay principal and
differ from the highest rated issues only in a small degree. The
AA rating may be modified by the addition of a plus (+) or minus
(-) sign to show relative standing within that rating category.
Short-Term Municipal Loans
Moody's highest rating for short-term municipal loans is
MIG- 1/VMIG-1. Moody's states that short-term municipal
securities rated MIG-1/VMIG-1 are of the best quality, enjoying
strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG-1/VMIG-1 group.
Standard & Poor's highest rating for short-term
municipal loans is SP-1. Standard & Poor's states that short-
term municipal securities bearing the SP-1 designation have very
strong or strong capacity to pay principal and interest. Those
issues rated SP-1 which are determined to possess overwhelming
safety characteristics will be given a plus (+) designation.
B-1
<PAGE>
Issues rated SP-2 have satisfactory capacity to pay principal and
interest.
Other Municipal Securities and Commercial Paper
"Prime-1" is the highest rating assigned by Moody's for
other short-term municipal securities and commercial paper, and
"A-1+" and "A-1" are the two highest ratings for commercial paper
assigned by Standard & Poor's (Standard & Poor's does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2
and 3 to denote relative strength within its highest
classification of "Prime", while Standard & Poor's uses the
number 1+, 1, 2 and 3 to denote relative strength within its
highest classification of "A". Issuers rated "Prime" by Moody's
have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk, margins
of support for current indebtedness are large or stable with cash
flow and asset protection well assured, current liquidity
provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available.
While protective elements may change over the intermediate or
longer term, such changes are most unlikely to impair the
fundamentally strong position of short-term obligations.
Commercial paper issuers rated "A" by Standard & Poor's have the
following characteristics: liquidity ratios are better than
industry average, long-term debt rating is A or better, the
issuer has access to at least two additional channels of
borrowing, and basic earnings and cash flow are in an upward
trend. Typically, the issuer is a strong company in a well-
established industry and has superior management.
B-2
00250185.AH9
<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, 1997
Statement of Operations, June 30, 1997 and April 17,
1997 (commencement of operations) to June 30, 1997 for
the Massachusetts Portfolio
Statement of Changes in Net Assets for the years ended
June 30, 1996 and June 30, 1997 for the General
Portfolio, New York Portfolio, California Portfolio,
Connecticut Portfolio, New Jersey Portfolio and
Virginia Portfolio; and for the period July 28, 1995
(commencement of operations) to June 30, 1996 and for
the year ended June 30, 1997 for the Florida Portfolio
and for the period April 17, 1997 (commencement of
operations) to June 30, 1997 for the Massachusetts
Portfolio
Notes to Financial Statements, June 30, 1997
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) Agreement and Declaration of Trust - Filed
herewith
(1)(b) Certificate of Amendment - Filed herewith.
(2) By-Laws - Filed herewith.
(3) Not applicable.
(4)(a) 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,
C-1
<PAGE>
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.
(4)(d) Specimen Form of Certificate for Shares of
Beneficial Interest of the Massachusetts Portfolio - Filed
herewith.
(5) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - Filed herewith.
(6) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. - Filed herewith.
(7) Not applicable.
(8)(a) Custodian Contract between the Registrant and
Street Bank and Trust Company - Filed herewith.
(8)(b) Amendment to the Custodian Contract between
Registrant and State Street Bank and Trust Company - Filed
herewith.
(9) Transfer Agency Agreement between the Registrant and
Alliance Fund Services, Inc. - Filed herewith.
(10) Not applicable.
(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.
C-2
<PAGE>
(16) Schedule of Computation of Performance Quotation
Provided in Response to Item 22 - Filed herewith.
(27) Not applicable.
Other Exhibits:
Powers of Attorney of: John D. Carifa, Charles H. P.
Duell, William H. Foulk, Jr., Elizabeth J. McCormack, David K.
Storrs, Dave H. Williams, John Winthrop - Incorporated by
reference to Other Exhibits to Post-Effective Amendment No. 14 of
the Registrant's Statement on Form N-1A, filed on February 15,
1989.
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 -
Incorporated by reference to Other Exhibits to Post-Effective
Amendment No. 33 of the Registrant's Statement on Form N-1A,
filed October 29, 1996.
ITEM 25. Persons Controlled by or Under Common Control
with Registrant.
None.
ITEM 26. Number of Holders of Securities.
Registrant had, as of October 15, 1997 the following
record holders of shares of Beneficial Interest:
General Portfolio 22,686
New York Portfolio 17,156
California Portfolio 7,621
Connecticut Portfolio 2,376
New Jersey Portfolio 5,440
Virginia Portfolio 491
Florida 1,337
Massachusetts 294
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
C-3
<PAGE>
Section 7 of the Distribution Agreement filed as
Exhibit 6 in response to Item 24, all as set forth
below. The liability of the Registrant's trustees and
officers is also dealt with in Article V of Registrant's
Agreement and Declaration of Trust. The Adviser's
liability for loss suffered by the Registrant or its
shareholders is set forth in Section 4 of the Advisory
Agreement filed as Exhibit 5 in response to Item 24, as
set forth below.
Article V of Registrant's Agreement and Declaration of
Trust reads as follows:
Section 5.1 - No Personal Liability of Shareholders,
Trustees, etc.
No Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with
Trust Property, including the property of any series of
the Trust, or the acts, obligations or affairs of the
Trust or any series thereof. No Trustee, officer,
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.
C-4
<PAGE>
Section 5.2 - Non-Liability of Trustees, etc. No
Trustee, officer, employee or agent of the Trust shall
be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including
without limitation the failure to compel in any way any
former or acting Trustee to redress any breach of trust)
except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties.
Section 5.3 - Indemnification.
(a) The Trustees shall provide for indemnification by
the Trust (or by the appropriate series thereof) of
every person who is, or has been, a Trustee or
officer of the Trust against all liability and
against all expenses reasonably incurred or paid by
him in 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
C-5
<PAGE>
by the executors thereof only in their capacity as
Trustees under the Declaration or in their capacity as
officers, employees or agents of the Trust. Every
written obligation, contract, instrument, certificate,
Share, other security of the Trust or undertaking made
or issued by the Trustees shall recite that the same is
executed or made by them not individually, but as
Trustees under the Declaration, and that the obligations
of any such instrument are not binding upon any of the
Trustees or Shareholders, individually, but bind only
the Trust Property or the property of the appropriate
series of the Trust, and may contain any further recital
which they or he may deem appropriate, but the omission
of such recital shall not operate to bind the Trustees
or Shareholders individually. The Trustees shall at all
times maintain insurance for the protection of the Trust
Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees
shall deem adequate to cover possible tort liability,
and such other insurance as the Trustees in their sole
judgment shall deem advisable.
Section 5.6 - Reliance on Experts, etc. Each Trustee
and officer or employee of the Trust shall, in the
performance of his duties, be fully and completely
justified and protected with regard to any act or any
failure to act resulting from reliance in good faith
upon the books of account or other records of the Trust,
upon an opinion of counsel or upon reports made to the
Trust by any of its officers or employees or by the
Investment Adviser, the Distributor, Transfer Agent,
selected dealers, accountants, appraisers or other
experts or consultants selected with reasonable care by
the Trustees, officers or employees of the Trust,
regardless of whether such counsel or expert may also be
a Trustee.
The Advisory Agreement between Registrant and Alliance
Capital Management L.P. provides that Alliance Capital
Management L.P. will not be liable under such agreement
for any mistake of judgment or in any event whatsoever
except for lack of good faith and that nothing therein
shall be deemed to protect, or purport to protect,
Alliance Capital Management L.P. against any liability
to Registrant or its security holders to which it would
otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its
duties thereunder, or by reason of reckless disregard of
its obligations and duties thereunder.
C-6
<PAGE>
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 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.
C-7
<PAGE>
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 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.
C-8
<PAGE>
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 Greater China '97 Fund, Inc.
Alliance Income Builder Fund, Inc.
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, Inc.
Alliance Municipal Income Fund II
Alliance New Europe Fund, Inc.
C-9
<PAGE>
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.
Positions and Positions and
Offices With Offices With
Name Underwriter Registrant
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
Secretary &
General Counsel
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart Senior Vice President
Richard A. Davies Senior Vice President,
Managing Director
Byron M. Davis Senior Vice President
Anne S. Drennan Senior Vice President
& Treasurer
Mark J. Dunbar Senior Vice President
Bradley F. Hanson Senior Vice President
C-10
<PAGE>
Geoffrey L. Hyde Senior Vice President
Robert H. Joseph, Jr. Senior Vice President &
Chief Financial Officer
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Ryne A. Nishimi Senior Vice President
Antonios G. Poleonadkis Senior Vice President
Robert E. Powers Senior Vice President
Richard K. Saccullo 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
Kenneth F. Barkoff Vice President
Casimir F. Bolanowski Vice President
Timothy W. Call Vice President
Kevin T. Cannon Vice President
John R. Carl Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
C-11
<PAGE>
Sohaila S. Farsheed Vice President
William C. Fisher Vice President
Gerard J. Friscia Vice President &
Controller
Andrew L. Gangolf Vice President & Assistant
Assistant General Secretary
Counsel
Mark D. Gersten Vice President Treasurer
& Chief
Financial
Officer
Joseph W. Gibson Vice President
Charles M. Greenberg Vice President
Alan Halfenger Vice President
William B. Hanigan Vice President
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Scott Hutton Vice President
Thomas K. Intoccia Vice President
Larry P. Johns Vice President
Richard D. Keppler Vice President
Gwenn M. Kessler Vice President
Donna M. Lamback Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Shawn P. McClain Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
C-12
<PAGE>
Lori E. Master Vice President
Shawn P. McClain Vice President
Maura A. McGrath Vice President
Thomas F. Monnerat Vice President
Joanna D. Murray Vice President
Jeanette M. Nardella Vice President
Nicole Nolan-Koester Vice President
John C. O'Connell Vice President
John J. O'Connor Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Domenick Pugliese Vice President Assistant
& Assistant Secretary
General Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Karen C. Satterberg Vice President
Robert C. Schultz Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
William C. White Vice President
C-13
<PAGE>
Emilie D. Wrapp Vice President Assistant
& Special Counsel Secretary
Charles M. Barrett Assistant Vice President
Robert F. Brendli Assistant Vice President
Maria L. Carreras Assistant Vice President
John W. Cronin Assistant Vice President
John P. Chase Assistant Vice President
Russell R. Corby Assistant Vice President
Ralph A. DiMeglio Assistant Vice President
Faith Dunn Assistant Vice President
John C. Endahl Assistant Vice President
John E. English Assistant Vice President
Duff C. Ferguson Assistant Vice President
John Grambone Assistant Vice President
Brian S. Hanigan Assistant Vice President
James J. Hill Assistant Vice President
Edward W. Kelly Assistant Vice President
Michael Laino Assistant Vice President
Nicholas J. Lapi Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Richard F. Meier Assistant Vice President
Catherine N. Peterson Assistant Vice President
Carol H. Rappa Assistant Vice President
Clara Sierra Assistant Vice President
Vincent T. Strangio Assistant Vice President
Wesley S. Williams Assistant Vice President
C-14
<PAGE>
Christopher J. Zingaro 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.
ITEM 32. Undertakings.
The Registrant undertakes to furnish each person to whom
a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon request
and without charge.
The Registrant undertakes to provide assistance to
shareholders in communications concerning the removal of
any Trustee of the Fund in accordance with Section 16 of
the Investment Company Act of 1940.
C-15
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to its
Registration pursuant to Rule 485(b) under the 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 30th day of October 1997.
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 30, 1997
________________________
Ronald M. Whitehill
2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and October 30, 1997
________________________ Chief Financial
Mark D. Gersten Officer
3) All of the Trustees
John D. Carifa Donald J. Robinson
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 30, 1997
_________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-16
<PAGE>
Index to Exhibits
Page
(1)(a) Agreement and Declaration of Trust
(1)(b) Certificate of Amendment
(2) By-Laws
(5) Advisory Agreement
(6) Distribution Services Agreement
(8)(a) Custodian Contract
(8)(b) Amendment to the Custodian Contract
(9) Transfer Agency Agreement
(11) Consent of Independent Auditors
(16) Schedule of Computation of Performance
Quotation in Response to Item 22
Other Exhibits
Power of Attorney for:
John D. Carifa
Sam Y. Cross
Charles H.P. Duell
William H. Foulk, Jr.
Donald J. Robinson
David K. Storrs
Shelby White
Dave H. Williams
C-17
00250185.AH9
<PAGE>
ALLIANCE TAX-EXEMPT RESERVES
----------------------------------
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
Dated: April 16, 1985
<PAGE>
ALLIANCE TAX-EXEMPT RESERVES
AGREEMENT AND DECLARATION OF TRUST
Index
Page
RECITALS
ARTICLE I. THE TRUST 2
Section 1.1 Name 2
Section 1.2 Location 2
Section 1.3 Nature of Trust 3
Section 1.4 Definitions 3
Section 1.5 Real Property to be Converted into
Personal Property 7
ARTICLE II. PURPOSE OF THE TRUST 8
ARTICLE III. POWERS OF THE TRUSTEES 8
Section 3.1 Powers in General 8
(a) Investments 10
(b) Disposition of Assets 10
(c) Ownership Powers 10
(d) Form of Holding 10
(e) Reorganization, etc. 11
(f) Voting Trusts, etc. 11
(g) Contracts, etc. 11
(h) Guarantees, etc. 11
(i) Partnerships, etc. 11
(j) Insurance. 12
(k) Pensions, etc. 12
(l) Power of Collection and Litigation 12
(m) Issuance and Repurchase of Shares 13
(n) Offices 13
(o) Expenses 13
(p) Agents, etc. 13
(q) Accounts 13
(r) Valuation 13
(s) Indemnification 14
(t) General 14
<PAGE>
Section 3.2 Borrowings; Financings; Issuance of
Securities 14
Section 3.3 Deposits 15
Section 3.4 Allocations 15
Section 3.5 Further Powers; Limitations 15
ARTICLE IV. TRUSTEES AND OFFICERS 16
Section 4.1 Number, Designation, Election, Term, etc. 16
(a) Initial Trustee 16
(b) Number 16
(c) Election and Term 16
(d) Resignation and Retirement 17
(e) Removal 17
(f) Vacancies 17
(g) Acceptance of Trusts 18
(h) Effect of Death, Resignation, etc. 18
(i) Conveyance 18
(j) No Accounting 19
(k) Filings 19
Section 4.2 Trustees' Meetings; Participation by
Telephone, etc 19
Section 4.3 Committees; Delegation 20
Section 4.4 Officers 20
Section 4.5 Compensation of Trustees and Officers 20
Section 4.6 Ownership of Shares and Securities of
the Trust 21
Section 4.7 Right of Trustees and Officers to Own
Property or to Engage in Business;
Authority of Trustees to Permit Others
to Do Likewise 21
Section 4.8 Reliance on Experts 22
Section 4.9 Surety Bonds 22
Section 4.10 Apparent Authority of Trustees and Officers 22
Section 4.11 Other Relationships Not Prohibited 22
Section 4.12 Payment of Trust Expenses 23
<PAGE>
Section 4.13 Ownership of the Trust Property 24
ARTICLE V. DELEGATION OF MANAGERIAL RESPONSIBILITIES 24
Section 5.1 Appointment; Action by Less than all Trustees 24
Section 5.2 Certain Contracts 25
(a) Advisory 25
(b) Administration 26
(c) Distribution 26
(d) Custodian 26
(e) Transfer and Dividend Disbursing Agency 27
(f) Shareholder Servicing 27
(g) Accounting 27
ARTICLE VI. FUNDS AND SHARES 28
Section 6.1 Description of Funds and Shares 28
(a) Shares; Funds; Series of Shares 28
(b) Establishment, etc. of Funds;
Authorization of Shares 28
(c) Character of Separate Funds and
Shares Thereof 29
(d) Consideration for Shares 29
Section 6.2 Establishment and Designation of the
Tax-Exempt Reserves Fund; General
Provisions for All Funds 30
(a) Assets Belonging to Funds 30
(b) Liabilities of Funds 31
(c) Dividends 31
(d) Liquidation 32
(e) Voting 32
(f) Redemption by Shareholder 32
(g) Redemption at the Option of the Trust 33
(h) Net Asset Value 33
(i) Transfer 34
(j) Equality 34
(k) Rights of Fractional Shares 34
(l) Conversion Rights 35
Section 6.3 Ownership of Shares 35
Section 6.4 Investments in the Trust 35
Section 6.5 No Pre-emptive Rights 35
Section 6.6 Status of Shares 36
<PAGE>
ARTICLE VII. SHAREHOLDERS' VOTING POWERS AND MEETINGS 36
Section 7.1 Voting Powers 36
Section 7.2 Number of Votes and Manner of Voting;
Proxies 37
Section 7.3 Meetings 37
Section 7.4 Record Dates 38
Section 7.5 Quorum and Required Vote 38
Section 7.6 Action by Written Consent 38
Section 7.7 Inspection of Records 39
Section 7.8 Additional Provisions 39
ARTICLE VIII. LIMITATION OF LIABILITY; INDEMNIFICATION 39
Section 8.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice 39
Section 8.2 Trustees' Good Faith Action Expert Advice;
No Bond or Surety 40
Section 8.3 Indemnification of Shareholders 41
Section 8.4 Indemnification of Trustees, Officers, etc. 41
Section 8.5 Compromise Payment 42
Section 8.6 Indemnification Not Exclusive, etc. 43
Section 8.7 Liability of Third Persons Dealing with
Trustees 43
ARTICLE IX DURATION; REORGANIZATION; AMENDMENTS 43
Section 9.1 Duration and Termination of Trust 43
Section 9.2 Reorganization 44
Section 9.3 Amendments; etc. 44
Section 9.4 Filing of Copies of Declaration and
Amendments 45
<PAGE>
ARTICLE X MISCELLANEOUS 46
Section 10.1 Governing Law 46
Section 10.2 Counterparts 46
Section 10.3 Reliance by Third Parties 46
Section 10.4 References; Headings 46
Section 10.5 Use of the Name "Alliance" 46
Signatures 47
Acknowledgments 48
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
ALLIANCE TAX-EXEMPT RESERVES
This AGREEMENT AND DECLARATION OF TRUST, made at
Boston, Massachusetts this 16th day of April, 1985, by and
between the Settlor and the Trustee whose signature is set
forth below (the "Initial Trustee"),
W I T N E S S E T H T H A T:
WHEREAS, John Hand, an individual residing in
Manchester, Massachusetts (the "Settlor"), proposes to
deliver to the Initial Trustee the sum of one hundred
dollars ($100.00) lawful money of the United States of
America in trust hereunder and to authorize the Initial
Trustee and all other Persons acting as Trustees hereunder
to employ such funds, and any other funds coming into their
hands or the hands of their successor or successors as such
Trustees, to carry on the business of an investment company,
and as such of buying, selling, investing in or otherwise
dealing in and with stocks, bonds, debentures, warrants,
options, future contracts and other securities and interests
therein, or calls or puts with respect to any of the same,
or such other and further investment media and other
property as the Trustees may deem advisable, which are not
prohibited by law or the terms of this Declaration; and
WHEREAS, the Initial Trustee is willing to accept
such sum, together with any and all additions thereto and
the income or increments thereof, upon the terms, conditions
and trusts hereinafter set forth; and
WHEREAS, it is proposed that the assets held by the
Trustees be divided into separate funds, each with its own
separate investment portfolio, investment objectives,
policies and purposes, and that the beneficial interest in
each such fund shall be divided into transferable Shares of
Beneficial Interest, a separate Series of Shares for each
fund, all in accordance with the provisions hereinafter set
forth; and
WHEREAS, it is desired that the trust established
hereby (the "Trust") be managed and operated as a trust with
transferable shares under the laws of Massachusetts, of the
type commonly known as and referred to as a Massachusetts
business trust, in accordance with the provisions
hereinafter set forth,
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NOW, THEREFORE, the Initial Trustee, for himself
and his successors as Trustees, hereby declares, and agrees
with the Settlor, for himself and for all Persons who shall
hereafter become holders of Shares of Beneficial Interest of
the Trust, of any Series, that the Trustees will hold the
sum delivered to them upon the execution hereof, and all
other and further cash, securities and other property of
every type and description which they may in any way acquire
in their capacity as such Trustees, together with the income
therefrom and the proceeds thereof, IN TRUST NEVERTHELESS,
to manage and dispose of the same for the benefit of the
holders from time to time of the Shares of Beneficial
Interest of the several Series being issued and to be issued
hereunder and in the manner and subject to the provisions
hereof, to wit:
ARTICLE I
THE TRUST
SECTION 1.1. Name. The name of the Trust shall be
"ALLIANCE TAX-EXEMPT RESERVES",
and so far as may be practicable the Trustees shall conduct
the Trust's activities, execute all documents and sue or be
sued under that name, which name (and the word "Trust"
wherever used in this Agreement and Declaration of Trust,
except where the context otherwise requires) shall refer to
the Trustees in their capacity as Trustees, and not
individually or personally, and shall not refer to the
officers, agents or employees of the Trust or of such
Trustees, or to the holders of the Shares of Beneficial
Interest of the Trust, of any Series. If the Trustees
determine that the use of such name is not practicable,
legal or convenient at any time or in any jurisdiction, or
if the Trust is required to discontinue the use of such name
pursuant to Section 10.5 hereof, then subject to that
Section, the Trustees may use such other designation, or
they may adopt such other name for the Trust as they deem
proper, and the Trust may hold property and conduct its
activities under such designation or name.
SECTION 1.2. Location. The Trust shall have an
office in Boston, Massachusetts, unless changed by the
Trustees to another location in Massachusetts or elsewhere,
but such office need not be the sole or principal office of
the Trust. The Trust may have such other offices or places
of business as the Trustees may from time to time determine
to be necessary or expedient.
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SECTION 1.3. Nature of Trust. The Trust shall be
a trust with transferable shares under the laws of The
Commonwealth of Massachusetts, of the type referred to in
Section 1 of Chapter 182 of the Massachusetts General Laws
and commonly termed a Massachusetts business trust. The
Trust is not intended to be, shall not be deemed to be, and
shall not be treated as, a general partnership, limited
partnership, joint venture, corporation or joint stock
company. The Shareholders shall be beneficiaries and their
relationship to the Trustees shall be solely in that
capacity in accordance with the rights conferred upon them
hereunder.
SECTION 1.4. Definitions. As used in this
Agreement and Declaration of Trust, the following terms
shall have the meanings set forth below unless the context
thereof otherwise requires:
"Accounting Agent" shall have the meaning
designated in Section 5.2(g) hereof.
"Administrator" shall have the meaning designated
in Section 5.2(b) hereof.
"Affiliated Person" shall have the meaning assigned
to it in the 1940 Act.
"By-Laws" shall mean the By-Laws of the Trust, as
amended from time to time.
"Certificate of Designation" shall have the meaning
designated in Section 6.1 hereof.
"Certificate of Termination" shall have the meaning
designated in Section 6.1 hereof.
"Commission" shall have the same meaning as in the
1940 Act.
"Contracting Party" shall have the meaning
designated in the preamble to Section 5.2 hereof.
"Covered Person" shall have the meaning designated
in Section 8.4 hereof.
"Custodian" shall have the meaning designated in
Section 5.2(d) hereof.
"Declaration" and "Declaration of Trust" shall mean
this Agreement and Declaration of Trust and all amendments
or modifications thereof as from time to time in effect.
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References in this Agreement and Declaration of Trust to
"hereof", "herein" and "hereunder" shall be deemed to refer
to the Declaration of Trust generally, end shall not be
limited to the particular text, Article or Section in which
such words appear.
"Disabling Conduct" shall have the meaning
designated in Section 8.4 hereof.
"Distributor" shall have the meaning designated in
Section 5.2(c) hereof.
"Dividend Disbursing Agent" shall have the meaning
designated in Section 5.2(e) hereof.
"Fund" or "Funds" shall mean one or more of the
separate components of the assets of the Trust which are now
or hereafter established and designated under or in
accordance with the provisions of Article VI hereof.
"Fund Assets" shall have the meaning defined in
Section 6.2(a) hereof.
"General Items" shall have the meaning defined in
Section 6.2(a) hereof.
"Initial Trustee" shall have the meaning defined in
the preamble hereto.
"Investment Advisor" shall have the meaning stated
in Section 5.2(a) hereof.
"Majority of the Trustees" shall mean a majority of
the Trustees in office at the time in question. At any time
at which there shall be only one (1) Trustee in office, such
term shall mean such Trustee.
"Majority Shareholder Vote," as used with respect
to the election of any Trustee at a meeting of Shareholders,
shall mean the vote for the election of such Trustee of a
plurality of all outstanding Shares of the Trust, without
regard to Series, represented in person or by proxy and
entitled to vote thereon, provided that a quorum (as
determined in accordance with the By-Laws) is present, and
as used with respect to any other action required or
permitted to be taken by Shareholders, shall mean the vote
for such action of the holders of that majority of all
outstanding Shares (or, where a separate vote of Shares of
any particular Series is to be taken, the affirmative vote
of that majority of the outstanding Shares of that Series)
of the Trust which consists of: (i) a majority of all Shares
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(or of Shares of the particular Series) represented in
person or by proxy and entitled to vote on such action at
the meeting of Shareholders at which such action is to be
taken, provided that a quorum (as determined in accordance
with the By-Laws) is present; or (ii) if such action is to
be taken by written consent of Shareholders, a majority of
all Shares (or of Shares of the particular Series) issued
and outstanding and entitled to vote on such action;
provided, that (iii) as used with respect to any action
requiring the affirmative vote of "a majority of the
outstanding voting securities", as the quoted phrase is
defined in the 1940 Act, of the Trust or of any Fund,
"Majority Shareholder Vote" means the vote for such action
at a meeting of Shareholders of the smallest majority of all
outstanding Shares of the Trust (or of Shares of the
particular Fund) entitled to vote on such action which
satisfies such 1940 Act voting requirement.
"1940 Act" shall mean the provisions of the
Investment Company Act of 1940 and the rules and regulations
thereunder, both as amended from time to time, and any order
or orders thereunder which may from time to time be
applicable to the Trust.
"Person" shall mean and include individuals, as
well as corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures,
associations, banks, trust companies, land trusts, business
trusts or other organizations established under the laws of
any jurisdiction, whether or not considered to be legal
entities, and governments and agencies and political
subdivisions thereof.
"Principal Underwriter" shall have the meaning
designated in Section 5.2(c) hereof.
"Prospectus," as used with respect to any Fund or
Series of Shares, shall mean the prospectus relating to such
Fund or Series which constitutes part of the currently
effective Registration Statement of the Trust under the
Securities Act of 1933, as such prospectus may be amended or
supplemented from time to time.
"Securities" shall mean any and all bills, notes,
bonds, debentures or other obligations or evidences of
indebtedness, certificates of deposit, bankers' acceptances,
commercial paper, repurchase agreements or other money
market instruments; stocks, shares or other equity ownership
interests; and warrants, options or other instruments
representing rights to subscribe for, purchase, receive or
otherwise acquire or to sell, transfer, assign or otherwise
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dispose of, and scrip, certificates, receipts or other
instruments evidencing any ownership rights or interests in,
any of the foregoing and "when issued" and "delayed
delivery" contracts for securities, issued, guaranteed or
sponsored by any governments, political subdivisions or
governmental authorities, agencies or instrumentalities, by
any individuals, firms, companies, corporations, syndicates,
associations or trusts, or by any other organizations or
entities whatsoever, irrespective of their forms or the
names by which they may be described, whether or not they be
organized and operated for profit, and whether they be
domestic or foreign with respect to The Commonwealth of
Massachusetts or the United States of America.
"Securities of the Trust" shall mean any Securities
issued by the Trust.
"Series" shall mean one or more of the series of
Shares authorized by the Trustees to represent the
beneficial interest in one or more of the Funds.
"Settlor" shall have the meaning stated in the
first "Whereas" clause set forth above.
"Shareholder" shall mean as of any particular time
any Person shown of record at such time on the books of the
Trust as a holder of outstanding Shares of any Series, and
shall include a pledgee into whose name any such Shares are
transferred in pledge.
"Shareholder Servicing Agent" shall have the
meaning designated in Section 5.2(f) hereof.
"Shares" shall mean the transferable units into
which the beneficial interest in the Trust and each Fund of
the Trust (as the context may require) shall be divided from
time to time, and includes fractions of Shares as well as
whole Shares. All references herein to "Shares" which are
not accompanied by a reference to any particular Series or
Fund shall be deemed to apply to outstanding Shares without
regard to Series.
"Single Class Voting," as used with respect to any
matter to be acted upon at a meeting or by written consent
of Shareholders, shall mean a style of voting in which each
holder of one or more Shares shall be entitled to one vote
on the matter in question for each Share standing in name on
the records of the Trust, irrespective of Series, and all
outstanding Shares of all Series vote as a single class.
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"Statement of Additional Information," as used with
respect to any Fund or Series of Shares shall mean the
statement of additional information relating to such Fund or
Series, which constitutes part of the currently effective
Registration Statement of the Trust under the Securities Act
of 1933, as such statement of additional information may be
amended or supplemented from time to time.
"Transfer Agent" shall have the meaning defined in
Section 5.2(e) hereof.
"Trust" shall have the meaning stated in the fourth
"whereas" clause set forth above.
"Trust Property" shall mean, as of any particular
time, any and all property which shall have been
transferred, conveyed or paid to the Trust or the Trustees,
and all interest, dividends, income, earnings, profits and
gains therefrom, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may
be, and which at such time is owned or held by, or for the
account of, the Trust or the Trustees, without regard to the
Fund to which such property is allocated.
"Trustees" shall mean, collectively, the Initial
Trustee, so long as he shall continue in office, and all
other individuals who at the time in question have been duly
elected or appointed as Trustees of the Trust in accordance
with the provisions hereof and who have qualified and are
then in office. At any time at which there shall be only one
(1) Trustee in office, such term shall mean such single
Trustee.
SECTION 1.5. Real Property to be Converted into
Personal Property. Notwithstanding any other provision
hereof, any real property at any time forming part of the
Trust Property shall be held in trust for sale and
conversion into personal property at such time or times and
in such manner and upon such terms as the Trustees shall
approve, but the Trustees shall have power until the
termination of this Trust to postpone such conversion as
long as they in their uncontrolled discretion shall think
fit, and for the purpose of determining the nature of the
interest of the Shareholders therein, all such real property
shall at all times be considered as personal property.
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ARTICLE II
PURPOSE OF THE TRUST
The purpose of the Trust shall be to engage in the
business of being an investment company, and as such of
subscribing for, purchasing or otherwise acquiring, holding
for investment or trading in, borrowing, lending and selling
short, selling, assigning, negotiating or exchanging and
otherwise disposing of, and turning to account, realizing
upon and generally dealing in and with, in any manner,
(a) Securities of all kinds, (b) precious metals and other
minerals, contracts to purchase and sell, and other
interests of every nature and kind in, such metals or
minerals, and (c) rare coins and other numismatic items, and
all as the Trustees in their discretion shall determine to
be necessary, desirable or appropriate, and to exercise and
perform any and every act, thing or power necessary,
suitable or desirable for the accomplishment of such
purpose, the attainment of any of the objects or the
furtherance of any of the powers given hereby which are
lawful purposes, objects or powers of a trust with
transferable shares of the type commonly termed a
Massachusetts business trust; and to do every other act or
acts or thing or things incidental or appurtenant to or
growing out of or in connection with the aforesaid objects,
purposes or powers, or any of them, which a trust of the
type commonly termed a Massachusetts business trust is not
now or hereafter prohibited from doing, exercising or
performing.
ARTICLE III
POWERS OF THE TRUSTEES
SECTION 3.1. Powers in General. The Trustees
shall have, without other or further authorization, full,
entire, exclusive and absolute power, control and authority
over, and management of, the business of the Trust and over
the Trust Property, to the same extent as if the Trustees
were the sole owners of the business and property of the
Trust in their own right, and with such powers of delegation
as may be permitted by this Declaration, subject only to
such limitations as may be expressly imposed by this
Declaration of Trust or by applicable law. The enumeration
of any specific power or authority herein shall not be
construed as limiting the aforesaid power or authority or
any specific power or authority. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent
with this Declaration of Trust providing for the conduct of
the business and affairs of the Trust and may amend and
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repeal them to the extent that such By-Laws do not reserve
that right to the Shareholders; they may select, and from
time to time change, the fiscal year of the Trust; they may
adopt and use a seal for the Trust, provided, that unless
otherwise required by the Trustees, it shall not be
necessary to place the seal upon, and its absence shall not
impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust;
they may from time to time in accordance with the provisions
of Section 6.1 hereof establish one or more Funds to which
they may allocate such of the Trust Property, subject to
such liabilities, as they shall deem appropriate, each such
Fund to be operated by the Trustees as a separate and
distinct investment medium and with separately defined
investment objectives and policies and distinct investment
purposes, all as established by the Trustees, or from time
to time changed by them; they may as they consider
appropriate elect and remove officers and appoint and
terminate agents and consultants and hire and terminate
employees, any one or more of the foregoing of whom may be a
Trustee; they may appoint from their own number, and
terminate, any one or more committees consisting of one or
more Trustees, including without implied limitation an
Executive Committee, which may, when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may
determine; in accordance with Section 5.2 they may employ
one or more Investment Advisors, Administrators and
Custodians and may authorize any Custodian to employ
subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the central handling
of Securities, retain Transfer, Dividend Disbursing,
Accounting or Shareholder Servicing Agents or any of the
foregoing, provide for the distribution of Shares by the
Trust through one or more Distributors, Principal
Underwriters or otherwise, set record dates or times for the
determination of Shareholders entitled to participate in,
benefit from or act with respect to various matters; and in
general they may delegate to any officer of the Trust, to
any Committee of the Trustees and to any employee,
Investment Advisor, Administrator, Distributor, Custodian,
Transfer Agent, Dividend Disbursing Agent, or any other
agent or consultant of the Trust, such authority, powers,
functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of
the Trust, including without implied limitation the power
and authority to act in the name of the Trust and of the
Trustees, to sign documents and to act as attorney-in-fact
for the Trustees. Without limiting the foregoing and to the
extent not inconsistent with the 1940 Act or other
applicable law, the Trustees shall have power and authority:
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(a) Investments. To invest and reinvest cash
and other property; to buy, for cash or on margin,
and otherwise acquire and hold, Securities created
or issued by any Persons, including Securities
maturing after the possible termination of the
Trust; to make payment therefor in any lawful
manner in exchange for any of the Trust Property;
and to hold cash or other property uninvested
without in any event being bound or limited by any
present or future law or custom in regard to
investments by trustees;
(b) Disposition of Assets. Upon such terms
and conditions as they deem best, to lend, sell,
exchange, mortgage, pledge, hypothecate, grant
security interests in, encumber, negotiate, convey,
transfer or otherwise dispose of, and to trade in,
any and all of the Trust Property, free and clear
of all trusts, for cash or on terms, with or
without advertisement, and on such terms as to
payment, security or otherwise, all as they shall
deem necessary or expedient;
(c) Ownership Powers. To vote or give
assent, or exercise any and all other rights,
powers and privileges of ownership with respect to,
and to perform any and all duties and obligations
as owners of, any Securities or other property
forming part of the Trust Property, the same as any
individual might do; to exercise powers and rights
of subscription or otherwise which in any manner
arise out of ownership of Securities, and to
receive powers of attorney from, and to execute and
deliver proxies or powers of attorney to, such
Person or Persons as the Trustees shall deem
proper, receiving from or granting to such Person
or Persons such power and discretion with relation
to Securities or other property of the Trust, all
as the Trustees shall deem proper;
(d) Form of Holding. To hold any Security or
other property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable
form, or in the name of the Trustees or of the
Trust, or of the Fund to which such Securities or
property belong, or in the name of a Custodian,
subcustodian or other depository or a nominee or
nominees, or otherwise, upon such terms, in such
manner or with such powers, as the Trustees may
determine, and with or without indicating any trust
or the interest of the Trustees therein;
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(e) Reorganization, etc. To consent to or
participate in any plan for the reorganization,
consolidation or merger of any corporation or
issuer, any Security of which is or was held in the
Trust or any Fund; to consent to any contract,
lease, mortgage, purchase or sale of property by
such corporation or issuer, and to pay calls or
subscriptions with respect to any Security forming
part of the Trust Property;
(f) Voting Trusts, etc. To join with other
holders of any Securities in acting through a
committee, depository, voting trustee or otherwise,
and in that connection to deposit any Security
with, or transfer any Security to, any such
committee, depository or trustee, and to delegate
to them such power and authority with relation to
any Security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and
to agree to pay, and to pay, such portion of the
expenses and compensation of such committee,
depository or trustee as the Trustees shall deem
proper;
(g) Contracts, etc. To enter into, make and
perform all such obligations, contracts, agreements
and undertakings of every kind and description,
with any Person or Persons, as the Trustees shall
in their discretion deem expedient in the conduct
of the business of the Trust, for such terms as
they shall see fit, whether or not extending beyond
the term of office of the Trustees, or beyond the
possible expiration of the Trust; to amend, extend,
release or cancel any such obligations, contracts,
agreements or understandings; and to execute,
acknowledge, deliver and record all written
instruments which they may deem necessary or
expedient in the exercise of their powers;
(h) Guarantees, etc. To endorse or guarantee
the payment of any notes or other obligations of
any Person; to make contracts of guaranty or
suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge the
Trust Property or any part thereof to secure any or
all such obligations;
(i) Partnerships, etc. To enter into joint
ventures, general or limited partnerships and any
other combinations or associations;
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(j) Insurance. To purchase and pay for
entirely out of Trust Property such insurance as
they may deem necessary or appropriate for the
conduct of the business, including, without
limitation, insurance policies insuring the assets
of the Trust and payment of distributions and
principal on its portfolio investments, and
insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants,
Investment Advisors, managers, Administrators,
Distributors, Principal Underwriters, or other
independent contractors, or any thereof (or any
Person connected therewith), of the Trust,
individually, against all claims and liabilities of
every nature arising by reason of holding, being or
having held any such office or position, or by
reason of any action alleged to have been taken or
omitted by any such Person in any such capacity,
including any action taken or omitted that may be
determined to constitute negligence, whether or not
the Trust would have the power to indemnify such
Person against such liability;
(k) Pensions, etc. To pay pensions for
faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement,
incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and
annuity contracts as a means of providing such
retirement and other benefits, for any or all of
the Trustees, officers, employees and agents of the
Trust;
(l) Power of Collection and Litigation. To
collect, sue for and receive all sums of money
coming due to the Trust, to employ counsel, and to
commence, engage in, prosecute, intervene in, join,
defend, compound, compromise, adjust or abandon, in
the name of the Trust, any and all actions, suits,
proceedings, disputes, claims, controversies,
demands or other litigation or legal proceedings
relating to the Trust, the business of the Trust,
the Trust Property, or the Trustees, officers,
employees, agents and other independent contractors
of the Trust, in their capacity as such, at law or
in equity, or before any other bodies or tribunals,
and to compromise, arbitrate or otherwise adjust
any dispute to which the Trust may be a party,
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whether or not any suit is commenced or any claim
shall have been made or asserted;
(m) Issuance and Repurchase of Shares. To
issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of,
transfer, and otherwise deal in Shares of any
Series, and, subject to Article VI hereof, to apply
to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares of any
Series, any of the Fund Assets belonging to the
Fund to which such Series relates, whether
constituting capital or surplus or otherwise, to
the full extent now or hereafter permitted by
applicable law; provided, that any Shares belonging
to the Trust shall not be voted, directly or
indirectly;
(n) Offices. To have one or more offices,
and to carry on all or any of the operations and
business of the Trust, in any of the States,
Districts or Territories of the United States, and
in any and all foreign countries, subject to the
laws of such State, District, Territory or country;
(o) Expenses. To incur and pay any and all
such expenses and charges as they may deem
advisable (including without limitation appropriate
fees to themselves as Trustees), and to pay all
such sums of money for which they may be held
liable by way of damages, penalty, fine or
otherwise;
(p) Agents, etc. To retain and employ any
and all such servants, agents, employees,
attorneys, brokers, investment advisers,
accountants, architects, engineers, builders,
escrow agents, depositories, consultants, ancillary
trustees, custodians, agents for collection,
insurers, banks and officers, as they think best
for the business of the Trust or any Fund, to
supervise and direct the acts of any of the same,
and to fix and pay their compensation and define
their duties;
(q) Accounts. To determine, and from time to
time change, the method or form in which the
accounts of the Trust shall be kept;
(r) Valuation. Subject to the requirements
of the 1940 Act, to determine from time to time the
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value of all or any part of the Trust Property and
of any services, Securities, property or other
consideration to be furnished to or acquired by the
Trust, and from time to time to revalue all or any
part of the Trust Property in accordance with such
appraisals or other information as is, in the
Trustees' sole judgment, necessary and
satisfactory;
(s) Indemnification. In addition to the
mandatory indemnification provided for in Article
VIII hereof and to the extent permitted by law, to
indemnify or enter into agreements with respect to
indemnification with any Person with whom this
Trust has dealings, including, without limitation,
any independent contractor, to such extent as the
Trustees shall determine; and
(t) General. To do all such other acts and
things and to conduct, operate, carry on and engage
in such other lawful businesses or business
activities as they shall in their sole and absolute
discretion consider to be incidental to the
business of the Trust or any Fund as an investment
company, and to exercise all powers which they
shall in their discretion consider necessary,
useful or appropriate to carry on the business of
the Trust or any Fund, to promote any of the
purposes for which the Trust is formed, whether or
not such things are specifically mentioned herein,
in order to protect or promote the interests of the
Trust or any Fund, or otherwise to carry out the
provisions of this Declaration.
SECTION 3.2. Borrowings; Financings: Issuance of
Securities. The Trustees have power to borrow or in any
other manner raise such sum or sums of money, and to incur
such other indebtedness for goods or services, or for or in
connection with the purchase or other acquisition of
property, as they shall deem advisable for the purposes of
the Trust, in any manner and on any terms, and to evidence
the same by negotiable or non-negotiable Securities which
may mature at any time or times, even beyond the possible
date of termination of the Trust; to issue Securities of any
type for such cash, property, services or other
considerations, and at such time or times and upon such
terms, as they may deem advisable; and to reacquire any such
Securities. Any such Securities of the Trust may, at the
discretion of the Trustees, be made convertible into Shares
of any Series, or may evidence the right to purchase,
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subscribe for or otherwise acquire Shares of any Series, at
such times and on such terms as the Trustees may prescribe.
SECTION 3.3. Deposits. Subject to the
requirements of the 1940 Act, the Trustees shall have power
to deposit any moneys or Securities included in the Trust
Property with any one or more banks, trust companies or
other banking institutions, whether or not such deposits
will draw interest. Such deposits are to be subject to
withdrawal in such manner as the Trustees may determine, and
the Trustees shall have no responsibility for any loss which
may occur by reason of the failure of the bank, trust
company or other banking institution with which any such
moneys or Securities have been deposited, other than
liability based on their gross negligence or willful fault.
SECTION 3.4. Allocations. The Trustees shall have
power to determine whether moneys or other assets received
by the Trust shall be charged or credited to income or
capital, or allocated between income and capital, including
the power to amortize or fail to amortize any part or all of
any premium or discount, to treat any part or all of the
profit resulting from the maturity or sale of any asset,
whether purchased at a premium or at a discount, as income
or capital, or to apportion the same between income and
capital, to apportion the sale price of any asset between
income and capital, and to determine in what manner any
expenses or disbursements are to be borne as between income
and capital, whether or not in the absence of the power and
authority conferred by this Section 3.4 such assets would be
regarded as income or as capital or such expense or
disbursement would be charged to income or to capital; to
treat any dividend or other distribution on any investment
as income or capital, or to apportion the same between
income and capital; to provide or fail to provide reserves,
including reserves for depreciation, amortization or
obsolescence in respect of any Trust Property in such
amounts and by such methods as they shall determine; to
allocate less than all of the consideration paid for Shares
of any Series to the shares of beneficial interest account
of the Fund to which such Shares relate and to allocate the
balance thereof to paid-in capital of that Fund, and to
reallocate such amounts from time to time; all as the
Trustees may reasonably deem proper.
SECTION 3.5. Further Powers; Limitations. The
Trustees shall have power to do all such other matters and
things, and to execute all such instruments, as they deem
necessary, proper or desirable in order to carry out,
promote or advance the interests of the Trust, although such
matters or things are not herein specifically mentioned.
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Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this
Declaration of Trust, the presumption shall be in favor of a
grant of power to the Trustees. The Trustees shall not be
required to obtain any court order to deal with the Trust
Property. The Trustees may limit their right to exercise any
of their powers through express restrictive provisions in
the instruments evidencing or providing the terms for any
Securities of the Trust or in other contractual instruments
adopted on behalf of the Trust.
ARTICLE IV
TRUSTEES AND OFFICERS
SECTION 4.1. Number, Designation, Election, Term,
etc.
(a) Initial Trustee. Upon his execution of
this Declaration of Trust or a counterpart hereof
or some other writing in which he accepts such
Trusteeship and agrees to the provisions hereof,
the individual whose signature is affixed hereto as
Initial Trustee shall become the Initial Trustee
hereof.
(b) Number. The Trustees serving as such,
whether named above or hereafter becoming Trustees,
may increase (to not more than twenty (20)) or
decrease the number of Trustees to a number other
than the number theretofore determined by a written
instrument signed by a Majority of the Trustees. No
decrease in the number of Trustees shall have the
effect of removing any Trustee from office prior to
the expiration of his term, but the number of
Trustees may be decreased in conjunction with the
removal of a Trustee pursuant to subsection (e) of
this Section 4.1.
(c) Election and Term. The Trustees shall be
elected by the Shareholders of the Trust at the
first meeting of Shareholders immediately prior to
the initial public offering of Shares of the Trust,
and the term of office of any Trustees in office
before such election shall terminate at the time of
such election. Subject to Section 16(a) of the
1940 Act and to the preceding sentence of this
subsection (c), the Trustees shall have the power
to set and alter the terms of office of the
Trustees, and at any time to lengthen or shorten
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their own terms or make their terms of unlimited
duration, to elect their own successors and,
pursuant to subsection (f) of this Section 4.1, to
appoint Trustees to fill vacancies; provided, that
Trustees shall be elected by a Majority Shareholder
Vote at any such time or times as the Trustees
shall determine that such action is required under
Section 16(a) of the 1940 Act or, if not so
required, that such action is advisable; and
further provided, that, after the initial election
of Trustees by the Shareholders, the term of office
of any incumbent Trustee shall continue until the
termination of this Trust or his earlier death,
resignation, retirement, bankruptcy, adjudicated
incompetency or other incapacity or removal, or if
not so terminated, until the election of such
Trustee's successor in office has become effective
in accordance with this subsection (c).
(d) Resignation and Retirement. Any Trustee
may resign his trust or retire as a Trustee, by a
written instrument signed by him and delivered to
the other Trustees or to any officer of the Trust,
and such resignation or retirement shall take
effect upon such delivery or upon such later date
as is specified in such instrument.
(e) Removal. Any Trustee may be removed with
or without cause at any time: (i) by written
instrument, signed by at least two-thirds (2/3) of
the number of Trustees prior to such removal,
specifying the date upon which such removal shall
become effective; or (ii) by vote of Shareholders
holding not less than two-thirds (2/3) of the
Shares of each Series then outstanding, cast in
person or by proxy at any meeting called for the
purpose; or (iii) by a written declaration signed
by Shareholders holding not less than two-thirds
(2/3) of the Shares of each Series then outstanding
and filed with the Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated
vacancy resulting from any reason, including an
increase in the number of Trustees, may (but need
not unless required by the 1940 Act) be filled by a
Majority of the Trustees, subject to the provisions
of Section 16(a) of the 1940 Act, through the
appointment in writing of such other individual as
such remaining Trustees in their discretion shall
determine; provided, that if there shall be no
Trustees in office, such vacancy or vacancies shall
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be filled by vote of the Shareholders. Any such
appointment or election shall be effective upon
such individual's written acceptance of his
appointment as a Trustee and his agreement to be
bound by the provisions of this Declaration of
Trust, except that any such appointment in
anticipation of a vacancy to occur by reason of
retirement, resignation or increase in the number
of Trustees to be effective at a later date shall
become effective only at or after the effective
date of said retirement, resignation or increase in
the number of Trustees.
(g) Acceptance of Trusts. Any individual
appointed as a Trustee under subsection (f), and
any individual elected as a Trustee under
subsection (c), of this Section 4.1 who was not,
immediately prior to such election, acting as a
Trustee, shall accept such appointment or election
in writing and agree in such writing to be bound by
the provisions hereof, and whenever such individual
shall have executed such writing and any conditions
to such appointment or election shall have been
satisfied, such individual shall become a Trustee
and the Trust Property shall vest in the new
Trustee, together with the continuing Trustees,
without any further act or conveyance.
(h) Effect or Death, Resignation, etc. No
vacancy, whether resulting from the death,
resignation, retirement, removal or incapacity of
any Trustee, an increase in the number of Trustees
or otherwise, shall operate to annul or terminate
the Trust hereunder or to revoke or terminate any
existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
Until such vacancy is filled as provided in this
Section 4.1, the Trustees in office (if any),
regardless of their number, shall have all the
powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this
Declaration. A written instrument certifying the
existence of such vacancy signed by a Majority of
the Trustees shall be conclusive evidence of the
existence of such vacancy.
(i) Conveyance. In the event of the
resignation or removal of a Trustee or his
otherwise ceasing to be a Trustee, such former
Trustee or his legal representative shall, upon
request of the continuing Trustees, execute and
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deliver such documents as may be required for the
purpose of consummating or evidencing the
conveyance to the Trust or the remaining Trustees
of any Trust Property held in such former Trustee's
name, but the execution and delivery of such
documents shall not be requisite to the vesting of
title to the Trust Property in the remaining
Trustees, as provided in subsection (g) of this
Section 4.1 and in Section 4.13 hereof.
(j) No Accounting. Except to the extent
required by the 1940 Act or under circumstances
which would justify his removal for cause, no
Person ceasing to be a Trustee (nor the estate of
any such Person) shall be required to make an
accounting to the Shareholders or remaining
Trustees upon such cessation.
(k) Filings. Whenever there shall be a
change in the composition of the Trustees, the
Trust shall cause to be filed in the office of the
Secretary of The Commonwealth of Massachusetts and
in each other place where the Trust is required to
file amendments to this Declaration a copy of
(i) the instrument by which (in the case of the
appointment of a new Trustee, or the election of an
individual who was not theretofore a Trustee) the
new Trustee accepted his appointment or election
and agreed to be bound by the terms of this
Declaration, or (in the case of a resignation) by
which the former Trustee resigned as such, together
in either case with a certificate of one of the
other Trustees as to the circumstances of such
election, appointment or resignation, or (ii) in
the case of the removal or death of a Trustee, a
certificate of one of the Trustees as to the
circumstances of such removal or resignation.
SECTION 4.2. Trustees' Meetings: Participation by
Telephone, etc. An annual meeting of Trustees shall be held
not later than the last day of the fourth month after the
end of each fiscal year of the Trust and special meetings
may be held from time to time, in each case, upon the call
of such officers as may be thereunto authorized by the
By-Laws or vote of the Trustees, or by any two (2) Trustees,
or pursuant to a vole of the Trustees adopted at a duly
constituted meeting of the Trustees, and upon such notice as
shall be provided in the By-Laws. The Trustees may act with
or without a meeting, and a written consent to any matter,
signed by a Majority of the Trustees, shall be equivalent to
action duly taken at a meeting of the Trustees, duly called
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and held. Except as otherwise provided by the 1940 Act or
other applicable law, or by this Declaration of Trust or the
By-Laws, any action to be taken by the Trustees may be taken
by a majority of the Trustees present at a meeting of
Trustees (a quorum, consisting of at least a Majority of the
Trustees, being present), within or without Massachusetts.
If authorized by the By-Laws, all or any one or more
Trustees may participate in a meeting of the Trustees or any
Committee thereof by means of conference telephone or
similar means of communication by means of which all Persons
participating in the meeting can hear each other, and
participation in a meeting pursuant to such means of
communication shall constitute presence in person at such
meeting. The minutes of any meeting thus held shall be
prepared in the same manner as a meeting at which all
participants were present in person.
SECTION 4.3. Committees; Delegation. The Trustees
shall have power, consistent with their ultimate
responsibility to supervise the affairs of the Trust, to
delegate from time to time to an Executive Committee, and to
one or more other Committees, or to any single Trustee, the
doing of such things and the execution of such deeds or
other instruments, either in the name of the Trust or the
names of the Trustees or as their attorney or attorneys in
fact, or otherwise as the Trustees may from time to time
deem expedient, and any agreement, deed, mortgage, lease or
other instrument or writing executed by the Trustee or
Trustees or other Person to whom such delegation was made
shall be valid and binding upon the Trustees and upon the
Trust.
SECTION 4.4 Officers. The Trustees shall annually
elect such officers or agents, who shall have such powers,
duties and responsibilities as the Trustees may deem to be
advisable, and as they shall specify by resolution or in the
By-Laws. Except as may be provided in the By-Laws, any
officer elected by the Trustees may be removed at any time
with or without cause. Any two (2) or more offices may be
held by the same individual.
SECTION 4.5. Compensation of Trustees and
Officers. The Trustees shall fix the compensation of all
officers and Trustees. Without limiting the generality of
any of the provisions hereof, the Trustees shall be entitled
to receive reasonable compensation for their general
services as such, and to fix the amount of such
compensation, and to pay themselves or any one or more of
themselves such compensation for special services, including
legal, accounting, or other professional services, as they
in good faith may deem reasonable. No Trustee or officer
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resigning and (except where a right to receive compensation
for a definite future period shall be expressly provided in
a written agreement with the Trust, duly approved by the
Trustees) no Trustee or officer removed shall have any right
to any compensation as such Trustee or officer for any
period following his resignation or removal, or any right to
damages on account of his removal, whether his compensation
be by the month, by the year or otherwise.
SECTION 4.6. Ownership of Shares and Securities of
the Trust. Any Trustee, and any officer, employee or agent
of the Trust, and any organization in which any such Person
is interested, may acquire, own, hold and dispose of Shares
of any Series and other Securities of the Trust for his or
its individual account, and may exercise all rights of a
holder of such Shares or Securities to the same extent and
in the same manner as if such Person were not such a
Trustee, officer, employee or agent of the Trust; subject,
in the case of Trustees and officers, to the same
limitations as directors or officers (as the case may be) of
a Massachusetts business corporation; and the Trust may
issue and sell or cause to be issued and sold and may
purchase any such Shares or other Securities from any such
Person or any such organization, subject only to the general
limitations, restrictions or other provisions applicable to
the sale or purchase of Shares of such Series or other
Securities of the Trust generally.
SECTION 4.7. Right of Trustees and Officers to Own
Property or to Engage in Business; Authority of Trustees to
Permit Others to Do Likewise. The Trustees, in their
capacity as Trustees, and (unless otherwise specifically
directed by vote of the Trustees) the officers of the Trust
in their capacity as such, shall not be required to devote
their entire time to the business and affairs of the Trust.
Except as otherwise specifically provided by vote of the
Trustees, or by agreement in any particular case, any
Trustee or officer of the Trust may acquire, own, hold and
dispose of, for his own individual account, any property,
and acquire, own, hold, carry on and dispose of, for his own
individual account, any business entity or business
activity, whether similar or dissimilar to any property or
business entity or business activity invested in or carried
on by the Trust, and without first offering the same as an
investment opportunity to the Trust, and may exercise all
rights in respect thereof as if he were not a Trustee or
officer of the Trust. The Trustees shall also have power,
generally or in specific cases, to permit employees or
agents of the Trust to have the same rights (or lesser
rights) to acquire, hold, own and dispose of property and
businesses, to carry on businesses, and to accept investment
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opportunities without offering them to the Trust, as the
Trustees have by virtue of this Section 4.7.
SECTION 4.8. Reliance on Experts. The Trustees
and officers may consult with counsel, engineers, brokers,
appraisers, auctioneers, accountants, investment bankers,
securities analysts or other Persons (any of which may be a
firm in which one or more of the Trustees or officers is or
are members or otherwise interested) whose profession gives
authority to a statement made by them on the subject in
question, and who are reasonably deemed by the Trustees or
officers in question to be competent, and the advice or
opinion of such Persons shall be full and complete personal
protection to all of the Trustees and officers in respect of
any action taken or suffered by them in good faith and in
reliance on or in accordance with such advice or opinion.
In discharging their duties, Trustees and officers, when
acting in good faith, may rely upon financial statements of
the Trust represented to them to be correct by any officer
of the Trust having charge of its books of account, or
stated in a written report by an independent certified
public accountant fairly to present the financial position
of the Trust. The Trustees and officers may rely, and shall
be personally protected in acting, upon any instrument or
other document believed by them to be genuine.
SECTION 4.9. Surety Bonds. No Trustee, officer,
employee or agent of the Trust shall, as such, be obligated
to give any bond or surety or other security for the
performance of any of his duties, unless required by
applicable law or regulation, or unless the Trustees shall
otherwise determine in any particular case.
SECTION 4.10. Apparent Authority of Trustees and
Officers. No purchaser, lender, transfer agent or other
Person dealing with the Trustees or any officer 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 such officer, or to make inquiry concerning or be liable
for the application of money or property paid, loaned or
delivered to or on the order of the Trustees or of such
officer.
SECTION 4.11. Other Relationships Not Prohibited.
The fact that:
(i) any of the Shareholders, Trustees or
officers of the Trust is a shareholder, director,
officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or
agent of or for any Contracting Party (as defined
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in Section 5.2 hereof), or of or for any parent or
affiliate of any Contracting Party, or that the
Contracting Party or any parent or affiliate
thereof is a Shareholder or has an interest in the
Trust or any Fund, or that
(ii) any Contracting Party may have a
contract providing for the rendering of any similar
services to one or more other corporations, trusts,
associations, partnerships, limited partnerships or
other organizations, or have other business or
interests,
shall not affect the validity of any contract for the
performance and assumption of services, duties and
responsibilities to, for or of the Trust and/or the Trustees
or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same or create any
liability or accountability to the Trust or to the holders
of Shares of any Series; provided, that, in the case of any
relationship or interest referred to in the preceding clause
(i) on the part of any Trustee or officer of the Trust,
either (x) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees
not having any such relationship or interest and the
contract involved is approved in good faith by a majority of
such Trustees not having any such relationship or interest
(even though such unrelated or disinterested Trustees are
less than a quorum of all of the Trustees), (y) the material
facts as to such relationship or interest and as to the
contract have been disclosed to or are known by the
Shareholders entitled to vote thereon and the contract
involved is specifically approved in good faith by vote of
the Shareholders, or (z) the specific contract involved is
fair to the Trust as of the time it is authorized, approved
or ratified by the Trustees or by the Shareholders.
SECTION 4.12. Payment of Trust Expenses. The
Trustees are authorized to pay or to cause to be paid out of
the principal or income of the Trust, or partly out of
principal and partly out of income, and according to any
allocation to particular Funds made by them pursuant to
Section 6.2(b) hereof, all expenses, fees, charges, taxes
and liabilities incurred or arising in connection with the
business and affairs of the Trust or in connection with the
management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, Investment
Advisor, Administrator, Distributor, Principal Underwriter,
auditor, counsel, Custodian, Transfer Agent, Dividend
Disbursing Agent, Accounting Agent, Shareholder Servicing
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Agent, and such other agents, consultants, and independent
contractors and such other expenses and charges as the
Trustees may deem necessary or proper to incur.
SECTION 4.13. Ownership of the Trust Property.
Legal title to all the Trust Property shall be vested in the
Trustees as joint tenants, except that the Trustees shall
have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in
the name of the Trust, or of any particular Fund, or in the
name of any other Person as nominee, on such terms as the
Trustees may determine; provided, that the interest of the
Trust and of the respective Fund therein is appropriately
protected. The right, title and interest of the Trustees in
the Trust Property shall vest automatically in each Person
who may hereafter become a Trustee. Upon the termination of
the term of office of a Trustee as provided in Section
4.1(c), (d) or (e) hereof, such Trustee shall automatically
cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such
Trustee in the Trust Property shall vest automatically in
the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents
have been executed and delivered pursuant to Section 4.1(i)
hereof.
ARTICLE V
DELEGATION OF MANAGERIAL RESPONSIBILITIES
SECTION 5.1. Appointment; Action by Less than all
Trustees. The Trustees shall be responsible for the general
operating policy of the Trust and for the general
supervision of the business of the Trust conducted by
officers, agents, employees or advisers of the Trust or by
independent contractors, but the Trustees shall not be
required personally to conduct all the business of the Trust
and, consistent with their ultimate responsibility as stated
herein, the Trustees may appoint, employ or contract with
one or more officers, employees and agents to conduct,
manage and/or supervise the operations of the Trust, and may
grant or delegate such authority to such officers, employees
and/or agents as the Trustees may, in their sole discretion,
deem to be necessary or desirable, without regard to whether
such authority is normally granted or delegated by trustees.
With respect to those matters of the operation and business
of the Trust which they shall elect to conduct themselves,
except as otherwise provided by this Declaration or the
By-Laws, if any, the Trustees may authorize any single
Trustee or defined group of Trustees, or any committee
consisting of a number of Trustees less than the whole
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number of Trustees then in office without specification of
the particular Trustees required to be included therein, to
act for and to bind the Trust, to the same extent as the
whole number of Trustees could do, either with respect to
one or more particular matters or classes of matters, or
generally.
SECTION 5.2. Certain Contracts. Subject to
compliance with the provisions of the l940 Act, but
notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees
generally, the Trustees may, at any time and from time to
time in their discretion and without limiting the generality
of their powers and authority otherwise set forth herein,
enter into one or more contracts with any one or more
corporations, trusts, associations, partnerships, limited
partnerships or other types of organizations, or individuals
("Contracting Party"), to provide for the performance and
assumption of some or all of the following services, duties
and responsibilities to, for or on behalf of the Trust
and/or any Fund, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties
and responsibilities in addition to those set forth below,
as the Trustees may deem appropriate:
(a) Advisory. An investment advisory or
management agreement whereby the Investment Advisor
shall undertake to furnish the Trust such
management, investment advisory or supervisory,
administrative, accounting, legal, statistical and
research facilities and services, and such other
facilities and services, if any, as the Trustees
shall from time to time consider desirable, all
upon such terms and conditions as the Trustees may
in their discretion determine to be not
inconsistent with this Declaration, the applicable
provisions of the 1940 Act or any applicable
provisions of the By-Laws. Any such advisory or
management agreement and any amendment thereto
shall be subject to approval by a Majority
Shareholder Vote at a meeting of the Shareholders
of the Trust. Notwithstanding any provisions of
this Declaration, the Trustees may authorize the
Investment Advisor (subject to such general or
specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans or
exchanges of portfolio securities of the Trust on
behalf of the Trustees or may authorize any officer
or employee of the Trust or any Trustee to effect
such purchases, sales, loans or exchanges pursuant
to recommendations of the Investment Advisor (and
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all without further action by the Trustees). Any
such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the
Trustees. The Trustees may, in their sole
discretion, call a meeting of Shareholders in order
to submit to a vote of Shareholders at such meeting
the approval of continuance of any such investment
advisory or management agreement. If the
Shareholders of any Fund should fail to approve any
such investment advisory or management agreement,
the Investment Advisor may nonetheless serve as
Investment Advisor with respect to any other Fund
whose Shareholders shall have approved such
contract.
(b) Administration. An agreement whereby the
agent, subject to the general supervision of the
Trustees and in conformity with any policies of the
Trustees with respect to the operations of the
Trust and each Fund, will supervise all or any part
of the operations of the Trust and each Fund, and
will provide all or any part of the administrative
and clerical personnel, office space and office
equipment and services appropriate for the
efficient administration and operations of the
Trust and each Fund (any such agent being herein
referred to as an "Administrator").
(c) Distribution. An agreement providing for
the sale of Shares of any one or more Series to net
the Trust not less than the net asset value per
Share (as described in Section 6.2(h) hereof) and
pursuant to which the Trust may appoint the other
party to such agreement as its principal
underwriter or sales agent for the distribution of
such Shares. The agreement shall contain such
terms and conditions as the Trustees may in their
discretion determine to be not inconsistent with
this Declaration, the applicable provisions of the
1940 Act and any applicable provisions of the
By-Laws (any such agent being herein referred to as
a "Distributor" or a "Principal Underwriter", as
the case may be).
(d) Custodian. The appointment of a bank or
trust company having an aggregate capital, surplus
and undivided profits (as shown in its last
published report) of at least two million dollars
($2,000,000) as custodian of the Securities and
cash of the Trust and of each Fund and of the
accounting records in connection therewith (any
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such agent being herein referred to as a
"Custodian").
(e) Transfer and Dividend Disbursing Agency.
An agreement with an agent to maintain records of
the ownership of outstanding Shares, the issuance
and redemption and the transfer thereof (any such
agent being herein referred to as a "Transfer
Agent"), and to disburse any dividends declared by
the Trustees and in accordance with the policies of
the Trustees and/or the instructions of any
particular Shareholder to reinvest any such
dividends (any such agent being herein referred to
as a "Dividend Disbursing Agent").
(f) Shareholder Servicing. An agreement with
an agent to provide service with respect to the
relationship of the Trust and its Shareholders,
records with respect to Shareholders and their
Shares, and similar matters (any such agent being
herein referred to as a "Shareholder Servicing
Agent").
(g) Accounting. An agreement with an agent
to handle all or any part of the accounting
responsibilities, whether with respect to the
Trust's properties, Shareholders or otherwise (any
such agent being herein referred to as an
"Accounting Agent").
The same Person may be the Contracting Party for some or all
of the services, duties and responsibilities to, for and of
the Trust and/or the Trustees, and the contracts with
respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are
not inconsistent with the 1940 Act relating to the standard
of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine.
Nothing herein shall preclude, prevent or limit the Trust or
a Contracting Party from entering into sub-contractual
arrangements relative to any of the matters referred to in
subsections (a) through (g) of this Section 5.2.
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ARTICLE VI
FUNDS AND SHARES
SECTION 6.1. Description of Funds and Shares.
(a) Shares; Funds; Series of Shares. The
beneficial interest in the Trust shall be divided
into Shares having a nominal or par value of one
cent ($.01) per Share, and all of one class, of
which an unlimited number may be issued. The
Trustees shall have the authority from time to time
to establish and designate one or more separate,
distinct and independent Funds into which the
assets of the Trust shall be divided, and to
authorize a separate Series of Shares for each such
Fund (each of which Series, including without
limitation each Series authorized in Section 6.2
hereof, shall represent interests only in the Fund
with respect to which such Series was authorized),
as they deem necessary or desirable. Except as
otherwise provided as to a particular Fund herein,
or in the Certificate of Designation therefor, the
Trustees shall have all the rights and powers, and
be subject to all the duties and obligations, with
respect to each such Fund and the assets and
affairs thereof as they have under this Declaration
with respect to the Trust and the Trust Property in
general.
(b) Establishment, etc. of Funds;
Authorization of Shares. The establishment and
designation of any Fund in addition to the Funds
established and designated in Section 6.2 hereof
and the authorization of the Shares thereof shall
be effective upon the execution by a Majority of
the Trustees of an instrument setting forth such
establishment and designation and the relative
rights and preferences of the Shares of such Fund
and the manner in which the same may be amended (a
"Certificate of Designation"), and may provide that
the number of Shares of such Series which may be
issued is unlimited, or may limit the number
issuable. At any time that there are no Shares
outstanding of any particular Fund previously
established and designated, including any Fund
established and designated in Section 6.2 hereof,
the Trustees may by an instrument executed by a
Majority of the Trustees terminate such Fund and
the establishment and designation thereof and the
authorization of its Shares (a "Certificate of
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Termination"). Each Certificate of Designation,
Certificate of Termination and any instrument
amending a Certificate of Designation shall have
the status of an amendment to this Declaration of
Trust, and shall be filed and become effective as
provided in Section 9.4 hereof.
(c) Character of Separate Funds and Shares
Thereof. Each Fund established hereunder shall be
a separate component of the assets of the Trust,
and the holders of Shares of the Series
representing the beneficial interest in the assets
of that Fund shall be considered Shareholders of
such Fund, but such Shareholders shall also be
considered Shareholders of the Trust for purposes
of receiving reports and notices and, except as
otherwise provided herein or in the Certificate of
Designation of a particular Fund as to such Fund,
or as required by the 1940 Act or other applicable
law, the right to vote, all without distinction by
Series. The Trustees shall have exclusive power
without the requirement of Shareholder approval to
establish and designate such separate and distinct
Funds, and to fix and determine the relative rights
and preferences as between the shares of the
respective Funds as to rights of redemption and the
price, terms and manner of redemption, special and
relative rights as to dividends and other
distributions and on liquidation, sinking or
purchase fund provisions, conversion rights, and
conditions under which the Shareholders of the
several Funds shall have separate voting rights or
no voting rights.
(d) Consideration for Shares. The Trustees
may issue Shares of any Series for such
consideration (which may include property subject
to, or acquired in connection with the assumption
of, liabilities) and on such terms as they may
determine (or for no consideration if pursuant to a
Share dividend or split-up), all without action or
approval of the Shareholders. All Shares when so
issued on the terms determined by the Trustees
shall be fully paid and non-assessable (but may be
subject to mandatory contribution back to the Trust
as provided in Section 6.2(h) hereof). The
Trustees may classify or reclassify any unissued
Shares, or any Shares of any Series previously
issued and reacquired by the Trust, into Shares of
one or more other Funds that may be established and
designated from time to time.
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SECTION 6.2. Establishment and Designation of the
Tax-Exempt Reserves Fund; General Provisions for All Funds.
Without limiting the authority of the Trustees set forth in
Section 6.1(a) hereof to establish and designate further
Funds, there is hereby established and designated the
Tax-Exempt Reserves Fund. The Shares of such Fund, and the
Shares of any further Funds that may from time to time be
established and designated by the Trustees shall (unless the
Trustees otherwise determine which respect to some further
Fund at the time of establishing and designating the same)
have the following relative rights and preferences:
(a) Assets Belonging to Funds. Any portion
of the Trust Property allocated to a particular
Fund, and all consideration received by the Trust
for the issue or sale of Shares of such Fund,
together with all assets in which such
consideration is invested or reinvested, all
interest, dividends, income, earnings, profits and
gains therefrom, and proceeds thereof, including
any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or
payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall be
held by the Trustees in trust for the benefit of
the holders of Shares of that Fund and shall
irrevocably belong to that Fund for all purposes,
and shall be so recorded upon the books of account
of the Trust, and the Shareholders of such Fund
shall not have, and shall be conclusively deemed to
have waived, any claims to the assets of any Fund
of which they are not Shareholders. Such
consideration, assets, interest, dividends, income,
earnings, profits, gains and proceeds, together
with any General Items allocated to that Fund as
provided in the following sentence, are herein
referred to collectively as "Fund Assets" of such
Fund, and as assets "belonging to" that Fund. In
the event that there are any assets, income,
earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as
belonging to any particular Fund (collectively
"General Items"), the Trustees shall allocate such
General Items to and among any one or more of the
Funds established and designated from time to time
in such manner and on such basis as they, in their
sole discretion, deem fair and equitable; and any
General Items so allocated to a particular Fund
shall belong to and be part of the Fund Assets of
that Fund. Each such allocation by the Trustees
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shall be conclusive and binding upon the
Shareholders of all Funds for all purposes.
(b) Liabilities of Funds. The assets
belonging to each particular Fund shall be charged
with the liabilities in respect of that Fund and
all expenses, costs, charges and reserves
attributable to that Fund, and any general
liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as
pertaining to any particular Fund shall be
allocated and charged by the Trustees to and among
any one or more of the Funds established and
designated from time to time in such manner and on
such basis as the Trustees in their sole discretion
deem fair and equitable. The indebtedness,
expenses, costs, charges and reserves allocated and
so charged to a particular Fund are herein referred
to as "liabilities of" that Fund. Each allocation
of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and
binding upon the Shareholders of all Funds for all
purposes. Any creditor of any Fund may look only
to the assets of that Fund to satisfy such
creditor's debt.
(c) Dividends. Dividends and distributions
on Shares of a particular Fund may be paid with
such frequency as the Trustees may determine, which
may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with
such frequency as the Trustees may determine, to
the Shareholders of that Fund, from such of the
income, accrued or realized, and capital gains,
realized or unrealized, and out of the assets
belonging to that Fund, as the Trustees may
determine, after providing for actual and accrued
liabilities of that Fund. All dividends and
distributions on Shares of a particular Fund shall
be distributed pro rata to the Shareholders of that
Fund in proportion to the number of such Shares
held by such holders at the date and time of record
established for the payment of such dividends or
distributions, except that in connection with any
dividend or distribution program or procedure the
Trustees may determine that no dividend or
distribution shall be payable on Shares as to which
the Shareholder's purchase order and/or payment
have not been received by the time or times
established by the Trustees under such program or
procedure, or that dividends or distributions shall
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be payable on Shares which have been tendered by
the holder thereof for redemption or repurchase,
but the redemption or repurchase proceeds of which
have not yet been paid to such Shareholder. Such
dividends and distributions may be made in cash or
Shares of that Fund or a combination thereof as
determined by the Trustees, or pursuant to any
program that the Trustees may have in effect at the
time for the election by each Shareholder of the
mode of the making of such dividend or distribution
to that Shareholder. Any such dividend or
distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance
with subsection (h) of this Section 6.2.
(d) Liquidation. In the event of the
liquidation or dissolution of the Trust, the
Shareholders of each Fund of which Shares are
outstanding shall be entitled to receive, when and
as declared by the Trustees, the excess of the Fund
Assets over the liabilities of such Fund. The
assets so distributable to the Shareholders of any
particular Fund shall be distributed among such
Shareholders in proportion to the number of Shares
of that Fund held by them and recorded on the books
of the Trust. The liquidation of any particular
Fund may be authorized by vote of a Majority of the
Trustees, subject to the affirmative vote of "a
majority of the outstanding voting securities" of
that Fund, as the quoted phrase is defined in the
1940 Act, determined in accordance with clause
(iii) of the definition of "Majority Shareholder
Vote" in Section 1.4 hereof.
(e) Voting. The Shareholders shall have the
voting rights set forth in or determined under
Article VII hereof.
(f) Redemption by Shareholder. Each holder
of Shares of a particular Fund shall have the right
at such times as may be permitted by the Trust, but
no less frequently than once each week, to require
the Trust to redeem all or any part of his Shares
of that Fund at a redemption price equal to the net
asset value per Share of that Fund next determined
in accordance with subsection (h) of this Section
6.2 after the Shares are properly tendered for
redemption; provided, that the Trustees may from
time to time, in their discretion, determine and
impose a fee for such redemption. Payment of the
redemption price shall be in cash; provided,
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however, that if the Trustees determine, which
determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or
undesirable, the Trust may make payment wholly or
partly in Securities or other assets belonging to
such Fund at the value of such Securities or assets
used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may
postpone payment of the redemption price and may
suspend the right of the holders of Shares of any
Fund to require the Trust to redeem Shares of that
Fund during any period or at any time when and to
the extent permissible under the 1940 Act.
(g) Redemption at the Option of the Trust.
Each Share of any Fund shall be subject to
redemption at the option of the Trust at the
redemption price which would be applicable if such
Share were then being redeemed by the Shareholder
pursuant to subsection (f) of this Section 6.2:
(i) at any time, if the Trustees determine in their
sole discretion that failure to so redeem may have
materially adverse consequences to the holders of
the Shares of the Trust or of any Fund, or
(ii) upon such other conditions with respect to
maintenance of Shareholder accounts of a minimum
amount as may from time to time be determined by
the Trustees and set forth in the then current
Prospectus of such Fund. Upon such redemption the
holders of the Shares so redeemed shall have no
further right with respect thereto other than to
receive payment of such redemption price.
(h) Net Asset Value. The net asset value per
Share of any Fund at any time shall be the quotient
obtained by dividing the value of the net assets of
such Fund at such time (being the current value of
the assets belonging to such Fund, less its then
existing liabilities) by the total number of Shares
of that Fund then outstanding, all determined in
accordance with the methods and procedures,
including without limitation those with respect to
rounding, established by the Trustees from time to
time. The Trustees may determine to maintain the
net asset value per Share of any Fund at a
designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent
with the 1940 Act for the continuing declaration of
income attributable to that Fund as dividends
payable in additional Shares of that Fund at the
designated constant dollar amount and for the
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handling of any losses attributable to that Fund.
Such procedures may provide that in the event of
any loss each Shareholder shall be deemed to have
contributed to the shares of beneficial interest
account of that Fund his pro rata portion of the
total number of Shares required to be cancelled in
order to permit the net asset value per Share of
that Fund to be maintained, after reflecting such
loss, at the designated constant dollar amount.
Each Shareholder of the Trust shall be deemed to
have expressly agreed, by his investment in any
Fund with respect to which the Trustees shall have
adopted any such procedure, to make the
contribution referred to in the preceding sentence
in the event of any such loss.
(i) Transfer. All Shares of each particular
Fund shall be transferable, but transfers of Shares
of a particular Fund will be recorded on the Share
transfer records of the Trust applicable to that
Fund only at such times as Shareholders shall have
the right to require the Trust to redeem Shares of
that Fund and at such other times as may be
permitted by the Trustees.
(j) Equality. All Shares of each particular
Fund shall represent an equal proportionate
interest in the assets belonging to that Fund
(subject to the liabilities of that Fund), and each
Share of any particular Fund shall be equal to each
other Share thereof; but the provisions of this
sentence shall not restrict any distinctions
permissible under subsection (c) of this Section
6.2 that may exist with respect to dividends and
distributions on Shares of the same Fund. The
Trustees may from time to time divide or combine
the Shares of any particular Fund into a greater or
lesser number of Shares of that Fund without
thereby changing the proportionate beneficial
interest in the assets belonging to that Fund or in
any way affecting the rights of the holders of
Shares of any other Fund.
(k) Rights of Fractional Shares. Any
fractional Share of any Series shall carry
proportionately all the rights and obligations of a
whole Share of that Series, including rights and
obligations with respect to voting, receipt of
dividends and distributions, redemption of Shares,
and liquidation of the Trust or of the Fund to
which they pertain.
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(l) Conversion Rights. Subject to compliance
with the requirements of the 1940 Act, the Trustees
shall have the authority to provide that holders of
Shares of any Fund shall have the right so convert
said Shares into Shares of one or more other Funds
in accordance with such requirements and procedures
as the Trustees may establish.
SECTION 6.3. Ownership of Shares. The ownership
of Shares shall be recorded on the books of the Trust or of
a Transfer Agent or similar agent for the Trust, which books
shall be maintained separately for the Shares of each Series
that has been authorized. Certificates evidencing the
ownership of Shares need not be issued except as the
Trustees may otherwise determine from time to time, and the
Trustees shall have power to call outstanding Share
certificates and to replace them with book entries. The
Trustees may make such rules as they consider appropriate
for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The
record books of the Trust as kept by the Trust or any
Transfer Agent or similar agent, as the case may be, shall
be conclusive as to who are the Shareholders and as to the
number of Shares of each Fund held from time to time by each
such Shareholder.
The holders of Shares of each Fund shall upon
demand disclose to the Trustees in writing such information
with respect to their direct and indirect ownership of
Shares of such Fund as the Trustees deem necessary to comply
with the provisions of the Internal Revenue Code, or to
comply with the requirements of any other authority.
SECTION 6.4. Investments in the Trust. The
Trustees may accept investments in any Fund of the Trust
from such Persons and on such terms and for such
consideration, not inconsistent with the provisions of the
1940 Act, as they from time to time authorize. The Trustees
may authorize any Distributor, Principal Underwriter,
Custodian, Transfer Agent or other Person to accept orders
for the purchase of Shares that conform to such authorized
terms and to reject any purchase orders for Shares, whether
or not conforming to such authorized terms.
SECTION 6.5. No Pre-emptive Rights. No
Shareholder, by virtue of holding Shares of any Fund, shall
have any pre-emptive or other right to subscribe to any
additional Shares of that Fund, or to any shares of any
other Fund, or any other Securities issued by the Trust.
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SECTION 6.6. Status of Shares. Every Shareholder,
by virtue of having become a Shareholder, shall be held to
have expressly assented and agreed to the terms hereof and
to have become a party hereto. Shares shall be deemed to be
personal property, giving only the rights provided herein.
Ownership of Shares shall not entitle the Shareholder to any
title in or to the whole or any part of the Trust Property
or right to call for a partition or division of the same or
for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. The death of a
Shareholder during the continuance of the Trust shall not
operate to terminate the Trust or any Fund, nor entitle the
representative of any deceased Shareholder to an accounting
or to take any action in court or elsewhere against the
Trust or the Trustees, but only to the rights of said
decedent under this Declaration of Trust.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.1. Voting Powers. The Shareholders
shall have power to vote only (i) for the election or
removal of Trustees as provided in Sections 4.l(c) and (e)
hereof, (ii) with respect to the approval or termination in
accordance with the 1940 Act of any contract with a
Contracting Party as provided in Section 5.2 hereof as to
which Shareholder approval is as required by the 1940 Act,
(iii) with respect to any termination or reorganization of
the Trust or any Fund to the extent and as provided in
Sections 9.1 and 9.9 hereof, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as
provided in Section 9.3 hereof, (v) to the same extent as
the stockholders of a Massachusetts business corporation as
to whether or not a court action, proceeding or claim should
or should not be brought or maintained derivatively or as a
class action on behalf of the Trust or any Fund, or the
Shareholders of any of them (provided, however, that a
Shareholder of a particular Fund shall not in any event be
entitled to maintain a derivative or class action on behalf
of any other Fund or the Shareholders thereof), and
(vi) with respect to such additional matters relating to the
Trust as may be required by the 1940 Act, this Declaration
of Trust, the By-Laws or any registration of the Trust with
the Commission (or any successor agency) or any State, or as
the Trustees may consider necessary or desirable. If and to
the extent that the Trustees shall determine that such
action is required by law, they shall cause each matter
required or permitted to be voted upon at a meeting or by
written consent of Shareholders to be submitted to a
separate vote of the outstanding Shares of each Fund
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entitled to vote thereon; provided, that (i) when expressly
required by this Declaration or by the 1940 Act, actions of
Shareholders shall be taken by Single Class Voting of all
outstanding Shares of each Series whose holders are entitled
to vote thereon; and (ii) when the Trustees determine that
any matter to be submitted to a vote of Shareholders affects
only the rights or interests of Shareholders of one or more
but not all Funds, then only the Shareholders of the Funds
so affected shall be entitled to vote thereon.
SECTION 7.2. Number of Votes and Manner of Voting;
Proxies. On each matter submitted to a vote of the
Shareholders, each holder of Shares of any Series shall be
entitled to a number of votes equal to the number of Shares
of such Series standing in his name on the books of the
Trust. There shall be no cumulative voting in the election
of Trustees. Shares may be voted in person or by proxy. A
proxy with respect to Shares held in the name of two (2) or
more Persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust
receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Until
Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by
Shareholders.
SECTION 7.3. Meetings. Meetings of Shareholders
may be called by the Trustees from time to time for the
purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided, or upon
any other matter deemed by the Trustees to be necessary or
desirable. Written notice of any meeting of Shareholders
shall be given or caused to be given by the Trustees by
mailing such notice at least seven (7) days before such
meeting, postage prepaid, stating the time, place and
purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of
a meeting of Shareholders for the purpose of voting upon
removal of any Trustee of the Trust when requested to do so
in writing by Shareholders holding not less than ten percent
(10%) of the Shares then outstanding. If the Trustees shall
fail to call or give notice of any meeting of Shareholders
for a period of thirty (30) days after written application
by Shareholders holding at least ten percent (10%) of the
Shares then outstanding requesting that a meeting be called
for any other purpose requiring action by the Shareholders
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as provided herein or in the By-Laws, then Shareholders
holding at least ten percent (10%) of the Shares then
outstanding may call and give notice of such meeting, and
thereupon the meeting shall be held in the manner provided
for herein in case of call thereof by the Trustees.
SECTION 7.4. Record Dates. For the purpose of
determining the Shareholders who are entitled to vote or act
at any meeting or any adjournment thereof, or who are
entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from
time to time close the transfer books for such period, not
exceeding thirty (30) days (except at or in connection with
the termination of the Trust), as the Trustees may
determine; or without closing the transfer books the
Trustees may fix a date and time not more than sixty (60)
days prior to the date of any meeting of Shareholders or
other action as the date and time of record for the
determination of Shareholders entitled to vote at such
meeting or any adjournment thereof or to be treated as
Shareholders of record for purposes of such other action,
and any Shareholder who was a Shareholder at the date and
time so fixed shall be entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of
record for purposes of such other action, even though he has
since that date and time disposed of his Shares, and no
Shareholder becoming such after that date and time shall be
so entitled to vote at such meeting or any adjournment
thereof or to be treated as a Shareholder of record for
purposes of such other action.
SECTION 7.5. Quorum and Required Vote. A majority
of the Shares entitled to vote shall be a quorum for the
transaction of business at a Shareholders' meeting, but any
lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held within a
reasonable time after the date set for the original meeting
without the necessity of further notice. A Majority
Shareholder Vote at a meeting of which a quorum is present
shall decide any question, except when a different vote is
required or permitted by any provision of the 1940 Act or
otter applicable law or by this Declaration of Trust or the
By-Laws, or when the Trustees shall in their discretion
require a larger vote or the vote of a majority or larger
fraction of the Shares of one or more particular Series.
SECTION 7.6. Action by Written Consent. Subject
to the provisions of the 1940 Act and other applicable law,
any action taken by Shareholders may be taken without a
meeting if a majority of Shareholders entitled to vote on
the matter (or such larger proportion thereof or of the
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Shares of any particular Series as shall be required by the
1940 Act or by any express provision of this Declaration of
Trust or the By-Laws or as shall be permitted by the
Trustees) consent to the action in writing and if the
writings in which such consent is given are filed with the
records of the meetings of Shareholders, to the same extent
and for the same period as proxies given in connection with
a Shareholders' meeting. Such consent shall be treated for
all purposes as a vote taken at a meeting of Shareholders.
SECTION 7.7. Inspection of Records. The records
of the Trust shall be open to inspection by Shareholders to
the same extent as is permitted stockholders of a
Massachusetts business corporation under the Massachusetts
Business Corporation Law.
SECTION 7.8. Additional Provisions. The By-Laws
may include further provisions for Shareholders' votes and
meetings and related matters not inconsistent with the
provisions hereof.
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.1. Trustees, Shareholders, etc. Not
Personally Liable; Notice. The Trustees and officers of the
Trust, in incurring any debts, liabilities or obligations,
or in limiting or omitting any other actions for or in
connection with the Trust, are or shall be deemed to be
acting as Trustees or officers of the Trust and not in their
own capacities. No Shareholder shall be subject to any
personal liability whatsoever in tort, contract or otherwise
to any other Person or Persons in connection with the assets
or the affairs of the Trust or of any Fund, and subject to
Section 8.4 hereof, no Trustee, officer, employee or agent
of the Trust shall be subject to any personal liability
whatsoever in tort, contract, or otherwise, to any other
Person or Persons in connection with the assets or affairs
of the Trust or of any Fund, save only that arising from his
own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
his office or the discharge of his functions. The Trust (or
if the matter relates only to a particular Fund, that Fund)
shall be solely liable for any and all debts, claims,
demands, judgments, decrees, liabilities or obligations of
any and every kind, against or with respect to the Trust or
such Fund in tort, contract or otherwise in connection with
the assets or the affairs of the Trust or such Fund, and all
Persons dealing with the Trust or any Fund shall be deemed
to have agreed that resort shall be had solely to the Trust
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Property of the Trust or the Fund Assets of such Fund, as
the case may be, for the payment or performance thereof.
The Trustees shall use their best efforts to ensure
that every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any
officers or officer shall give notice that this Declaration
of Trust is on file with the Secretary of The Commonwealth
of Massachusetts and shall recite to the effect that the
same was executed or made by or on behalf of the Trust or by
them as Trustees or Trustee or as officers or officer, and
not individually, and that the obligations of such
instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the
assets and property of the Trust, or the particular Fund in
question, as the case may be, but the omission thereof shall
not operate to bind any Trustees or Trustee or officers or
officer or Shareholders or Shareholder individually, or to
subject the Fund Assets of any Fund to the obligations of
any other Fund.
SECTION 8.2. Trustees' Good Faith Action; Expert
Advice; No Bond or Surety. The exercise by the Trustees of
their powers and discretions hereunder shall be binding upon
everyone interested. Subject to Section 8.4 hereof, a
Trustee shall be liable for his own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for
nothing else, and shall not be liable for errors of judgment
or mistakes of fact or law. Subject to the foregoing,
(i) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent,
employee, consultant, Investment Advisor, Administrator,
Distributor or Principal Underwriter, Custodian or Transfer
Agent, Dividend Disbursing Agent, Shareholder Servicing
Agent or Accounting Agent of the Trust, nor shall any
Trustee be responsible for the act or omission of any other
Trustee; (ii) the Trustees may take advice of counsel or
other experts with respect to the meaning and operation of
this Declaration of Trust and their duties as Trustees, and
shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such
advice; and (iii) in discharging their duties, the Trustees,
when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports
made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the
subject matter of the contract involved) any officer,
partner or responsible employee of a Contracting Party
appointed by the Trustees pursuant to Section 5.2 hereof.
The Trustees as such shall not be required to give any bond
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or surety or any other security for the performance of their
duties.
SECTION 8.3. Indemnification of Shareholders. If
any Shareholder (or former Shareholder) of the Trust shall
be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of
being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason,
the Trust (upon proper and timely request by the
Shareholder) shall assume the defense against such charge
and satisfy any judgment thereon, and the Shareholder or
former Shareholder (or the heirs, executors, administrators
or other legal representatives thereof, or in the case of a
corporation or other entity, its corporate or other general
successor) shall be entitled (but solely out of the assets
of the Fund of which such Shareholder or former Shareholder
is or was the holder of Shares) to be held harmless from and
indemnified against all loss and expense arising from such
liability.
SECTION 8.4. Indemnification of Trustees,
Officers, etc. Subject to the limitations set forth
hereinafter in this Section 8.4, the Trust shall indemnify
(from the assets of the Fund or Funds to which the conduct
in question relates) each of its Trustees and officers
(including Persons who serve at the Trust's request as
directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor
or otherwise [hereinafter, together with such Person's
heirs, executors, administrators or personal representative,
referred to as a "Covered Person"]) against all liabilities,
including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel
fees, incurred by any Covered Person in connection with the
defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or
otherwise or with which such Covered Person may be or may
have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer,
director or trustee, except with respect to any matter as to
which it has been determined that such Covered Person
(i) did not act in good faith in the reasonable belief that
such Covered Person's action was in or not opposed to the
best interests of the Trust or (ii) had acted with willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
Covered Person's office (either and both of the conduct
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described in (i) and (ii) being referred to hereafter as
"Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before
whom the proceeding was brought that the Covered Person to
be indemnified was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for
insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of Disabling
Conduct by (a) a vote of a majority of a quorum of Trustees
who are neither "interested persons" of the Trust as defined
in Section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees
so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or
as fines or penalties), may be paid from time to time by the
Fund or Funds to which the conduct in question related in
advance of the final disposition of any such action, suit or
proceeding; provided, that the Covered Person shall have
undertaken to repay the amounts so paid to such Fund or
Funds if it is ultimately determined that indemnification of
such expenses is not authorized under this Article VIII and
(i) the Covered Person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested Trustees, or an
independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason
to believe that the Covered Person ultimately will be found
entitled to indemnification.
SECTION 8.5. Compromise Payment. As to any matter
disposed of by a compromise payment by any such Covered
Person referred to in Section 8.4 hereof, pursuant to a
consent decree or otherwise, no such indemnification either
for said payment or for any other expenses shall be provided
unless such indemnification shall be approved (i) by a
majority of a quorum of the disinterested Trustees or
(ii) by an independent legal counsel in a written opinion.
Approval by the Trustees pursuant to clause (i) or by
independent legal counsel pursuant to clause (ii) shall not
prevent the recovery from any Covered Person of any amount
paid to such Covered Person in accordance with either of
such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the
reasonable belief that such Covered Person's action was in
42
<PAGE>
or not opposed to the best interests of the Trust or to have
been liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
Covered Person's office.
SECTION 8.6. Indemnification Not Exclusive, etc.
The right of indemnification provided by this Article VIII
shall not be exclusive of or affect any other rights to
which any such Covered Person may be entitled. As used in
this Article VIII, a "disinterested" Person is one against
whom none of the actions, suits or other proceedings in
question, and no other action, suit or other proceeding on
the same or similar grounds is then or has been pending or
threatened. Nothing contained in this Article VIII shall
affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other
Persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such Person.
SECTION 8.7. Liability of Third Persons Dealing
with Trustees. No person dealing with the Trustees shall be
bound to make any inquiry concerning the validity of any
transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred
to the Trust or upon its order.
ARTICLE IX
DURATION; REORGANIZATION; AMENDMENTS
SECTION 9.1. Duration and Termination of Trust.
Unless terminated as provided herein, the Trust shall
continue without limitation of time and, without limiting
the generality of the foregoing, no change, alteration or
modification with respect to any Fund or Series of Shares
shall operate to terminate the Trust. The Trust may be
terminated at any time by a Majority of the Trustees,
subject to the favorable vote of the holders of not less
than a majority of the Shares outstanding and entitled to
vote of each Fund of the Trust, or by an instrument or
instruments in writing without a meeting, consented to by
the holders of not less than a majority of such Shares, or
by such greater or different vote of Shareholders of any
Series as may be established by the Certificate of
Designation by which such Series was authorized. Upon
termination, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or
accrued or anticipated as may be determined by the Trustees,
the Trust shall in accordance with such procedures as the
43
<PAGE>
Trustees consider appropriate reduce the remaining assets to
distributable form in cash, Securities or other property, or
any combination thereof, and distribute the proceeds to the
Shareholders, in conformity with the provisions of Section
6.2(d) hereof.
SECTION 9.2. Reorganization. The Trustees may
sell, convey and transfer all or substantially all of the
assets of the Trust, or the assets belonging to any one or
more Funds, to another trust, partnership, association or
corporation organized under the laws of any state of the
United States, or may transfer such assets to another Fund
of the Trust, in exchange for cash, Shares or other
Securities (including, in the case of a transfer to another
Fund of the Trust, Shares of such other Fund), or to the
extent permitted by law then in effect may merge or
consolidate the Trust or any Fund with any other Trust or
any corporation, partnership, or association organized under
the laws of any state of the United States, all upon such
terms and conditions and for such consideration when and as
authorized by vote or written consent of a Majority of the
Trustees and approved by the affirmative vote of the holders
of not less than a majority of the Shares outstanding and
entitled to vote of each Fund whose assets are affected by
such transaction, or by an instrument or instruments in
writing without a meeting, consented to by the holders of
not less than a majority of such Shares, and/or by such
other vote of any Series as may be established by the
Certificate of Designation with respect to such Series.
Following such transfer, the Trustees shall distribute the
cash, Shares or other Securities or other consideration
received in such transaction (giving due effect to the
assets belonging to and indebtedness of, and any other
differences among, the various Funds of which the assets
have so been transferred) among the Shareholders of the Fund
of which the assets have been so transferred; and if all of
the assets of the Trust have been so transferred, the Trust
shall be terminated. Nothing in this Section 9.2 shall be
construed as requiring approval of Shareholders for the
Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other
organizations, and to sell, convey or transfer less than
substantially all of the Trust Property or the assets
belonging to any Fund to such organizations or entities.
SECTION 9.3. Amendments; etc. All rights granted
to the Shareholders under this Declaration of Trust are
granted subject to the reservation of the right to amend
this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability
of any Shareholder or Trustee or the prohibition of
44
<PAGE>
assessment upon the Shareholders (otherwise than as
permitted under Section 6.2(h)) without the express consent
of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust
(whether or not related to the rights of Shareholders) may
be amended al any time, so long as such amendment does not
adversely affect the rights of any Shareholder with respect
to which such amendment is or purports to be applicable and
so long as such amendment is not in contravention of
applicable law, including the 1940 Act, by an instrument in
writing signed by a Majority of the Trustees (or by an
officer of the Trust pursuant to the vote of a Majority of
the Trustees). Any amendment to this Declaration of Trust
that adversely affects the rights of all Shareholders may be
adopted at any time by an instrument in writing signed by a
Majority of the Trustees (or by an officer of the Trust
pursuant to a vote of a Majority of the Trustees) when
authorized to do so by the vote in accordance with Section
7.1 hereof of Shareholders holding a majority of all the
Shares outstanding and entitled to vote, without regard to
Series, or if said amendment adversely affects the rights of
the Shareholders of less than all of the Funds, by the vote
of the holders of a majority of all the Shares entitled to
vote of each Fund so affected. Subject to the foregoing,
any such amendment shall be effective when the instrument
containing the terms thereof and a certificate (which may be
a part of such instrument) to the effect that such amendment
has been duly adopted, and setting forth the circumstances
thereof, shall have been executed and acknowledged by a
Trustee or officer of the Trust and filed as provided in
Section 9.4 hereof.
SECTION 9.4. Filing of Copies of Declaration and
Amendments. The original or a copy of this Declaration and
of each amendment hereto (including each Certificate of
Designation and Certificate of Termination), as well as the
certificates called for by Section 4.1(k) hereof as to
changes in the Trustees, shall be kept at the office of the
Trust where it may be inspected by any Shareholder, and one
copy of each such instrument shall be filed with the
Secretary of The Commonwealth of Massachusetts, as well as
with any other governmental office where such filing may
from time to time be required by the laws of Massachusetts.
A restated Declaration, integrating into a single instrument
all of the provisions of this Declaration which are then in
effect and operative, may be executed from time to time by a
Majority of the Trustees and shall, upon filing with the
Secretary of The Commonwealth of Massachusetts, be
conclusive evidence of all amendments contained therein and
may thereafter be referred to in lieu of the original
Declaration and the various amendments thereto.
45
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Governing Law. This Declaration of
Trust is executed and delivered in The Commonwealth of
Massachusetts and with reference to the laws thereof, and
the rights of all parties and the construction and effect of
every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
SECTION 10.2. Counterparts. This Declaration of
Trust and any amendment thereto may be simultaneously
executed in several counterparts, each of which so executed
shall be deemed to be an original, and such counterparts,
together, shall constitute but one and the same instrument,
which shall be sufficiently evidenced by any such original
counterpart.
SECTION 10.3. Reliance by Third Parties. Any
certificate executed by an individual who, according to the
records in the office of the Secretary of The Commonwealth
of Massachusetts appears to be a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of
any instrument or writing, (c) the form of any vote passed
as a meeting of Trustees or Shareholders, (d) the fact that
the number of Trustees or Shareholders present at any
meeting or executing any written instrument satisfies the
requirements of this Declaration of Trust, (e) the form of
any By-Law adopted, or the identity of any officers elected,
by the Trustees, or (f) the existence or non-existence of
any fact or facts which in any manner relate to the affairs
of the Trust, shall be conclusive evidence as to the matters
so certified in favor of any Person dealing with the
Trustees, or any of them, and the successors of such Person.
SECTION 10.4. References; Headings. The masculine
gender shall include the feminine and neuter genders.
Headings are placed herein for convenience of reference only
and shall not be taken as a part of this Declaration or
control or affect the meaning, construction or effect
hereof.
SECTION 10.5. Use of the Name "Alliance".
Alliance Capital Management Corporation ("Alliance") has
consented to the use by the Trust of the identifying name
"Alliance", which is a property right of Alliance. The
Trust will only use the name "Alliance" as a component of
its name and for no other purpose, and will not purport to
grant to any third party the right to use the name
46
<PAGE>
"Alliance" for any purpose. Alliance or any corporate
affiliate of Alliance may use or grant to others the right
to use the name "Alliance", as all or a portion of a
corporate or business name or for any commercial purpose,
including a grant of such right to any other investment
company. At the request of Alliance, the Trust will take
such action as may be required to provide its consent to the
use of such name by Alliance, or any corporate affiliate of
Alliance, or by any Person to whom Alliance or an affiliate
of Alliance shall have granted the right to the use of the
name "Alliance". Upon the termination of any investment
advisory or management agreement into which Alliance and the
Trust may enter, the Trust shall, upon request by Alliance,
cease to use the name "Alliance" as a component of its name,
and shall not use such name or initials as a part of its
name or for any other commercial purpose, and shall cause
its officers and Trustees to take any and all actions which
Alliance may request to effect the foregoing and to reconvey
to Alliance or such corporate affiliate any and all rights
to such name.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal, for himself and his assigns, and has
thereby accepted the Trusteeship as the Initial Trustee of
Alliance Tax-Exempt Reserves hereby granted and agreed to
the provisions hereof, all as of the day and year first
above written.
/s/ Thomas E. Weesner
--------------------------
Thomas E. Weesner
The undersigned Settlor of Alliance Tax-Exempt
Reserves, hereby accepts, approves and authorizes the
foregoing Agreement and Declaration of Trust of Alliance
Tax-Exempt Reserves.
Dated: April 16, 1985
/S/ John Hand
--------------------------
John Hand
47
<PAGE>
ACKNOWLEDGMENTS
M A S S A C H U S E T T S
Suffolk, ss.: April 16, 1985
Then personally appeared the above named John Hand
and acknowledged the foregoing instrument to be his free act
and deed.
Before me,
/s/
--------------------------
Notary Public
M A S S A C H U S E T T S
Suffolk, ss.: April 16, 1985
Then personally appeared the above named Thomas E.
Weesner and acknowledged the foregoing instrument to be his
free act and deed.
Before me,
/s/
--------------------------
Notary Public
48
00250185.AH8
<PAGE>
ALLIANCE TAX-EXEMPT RESERVES
CERTIFICATE OF AMENDMENT
The undersigned, being the Secretary of Alliance Tax-Exempt
Reserves, Inc. (hereinafter referred to as the "Trust"), a trust
with transferable shares of the type commonly called a
Massachusetts business trust, DOES HEREBY CERTIFY that, pursuant
to the authority conferred upon the Trustees of the Trust by
Section 9.3 of the Agreement and Declaration of Trust, dated
April 16, 1985, as so amended by the Certificates of Designation
dated July 28, 1986, December 11, 1989 and May 19, 1988
(hereinafter referred to as the "Declaration of Trust"), and by
the affirmative vote of a Majority of the Trustees at a meeting
duly called and held on September 9, 1991, the Trustees adopted
the following resolutions amending the Declaration of Trust:
RESOLVED, that of Section 1.1 of the
Declaration of Trust be and it hereby is
amended to provide that the name of the Trust
shall be "Alliance Municipal Trust."
RESOLVED, that Section 6.2 of the
Declaration of Trust, establishing the
Alliance Tax-Exempt Reserves Fund, be and it
hereby is amended to provide that such fund is
hereby redesignated as the "Alliance Municipal
Trust General Portfolio."
RESOLVED, that the Certificate of
Designation, dated May 19, 1988 and filed with
the Secretary of State of The Commonwealth of
Massachusetts on July 7, 1988, establishing
the Alliance Tax-Exempt Reserves California
Portfolio, be and it hereby is amended to
provide that such portfolio is hereby
redesignated as the "Alliance Municipal Trust
California Portfolio."
RESOLVED, that the Certificate of
Designation, dated December 11, 1989 and filed
with the Secretary of State of The
Commonwealth of Massachusetts on December 12,
1989, establishing the Alliance Tax-Exempt
Reserves Connecticut Portfolio, be and it
hereby is amended to provide that such
portfolio is hereby redesignated as the
"Alliance Municipal Trust Connecticut
Portfolio."
<PAGE>
RESOLVED, that the Certificate of
Designation, dated July 28, 1986 and filed
with the Secretary of State of The
Commonwealth of Massachusetts on August 11,
1986, establishing the Alliance Tax-Exempt
Reserves New York Portfolio, be and it hereby
is amended to provide that such portfolio is
hereby redesignated as the "Alliance Municipal
Trust New York Portfolio."
RESOLVED, that the proper officers of the
Trust be, and they hereby are and each of them
singly hereby is, authorized from time to
time, in the name and on behalf of the Trust
and under its seal, if desired, attested by an
appropriate officer, if desired, to execute,
make oath to, acknowledge, deliver and file or
cause to be filed with the Secretary of State
of The Commonwealth of Massachusetts and at
any other place within or without said
Commonwealth required by law or by the
Declaration of Trust, any and all such
designations, amendments, certificates and
other instruments and papers, and to do or
cause to be done any and all execution or
performance thereof to be in his or their
judgment necessary or desirable in connection
with the transactions authorized in the
foregoing votes.
IN WITNESS WHEREOF, the undersigned has set his
hand and seal this 31st day of October, 1991.
/s/ Edmund P. Bergan, Jr.
__________________________
Edmund P. Bergan, Jr.
Secretary
2
<PAGE>
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK ) October 31, 1991
Then personally appeared the above named Edmund P.
Bergan, Jr. and acknowledged the foregoing instrument to be his
free act and deed.
Before me,
/s/ John F. Rigney
__________________________
Notary Public
3
00250185.AA3
<PAGE>
____________________________
ALLIANCE TAX-EXEMPT RESERVES
By-Laws
____________________________
<PAGE>
ALLIANCE TAX-EXEMPT RESERVES
By-Laws
Index
Page No.
RECITALS 1
ARTICLE I - SHAREHOLDERS AND SHAREHOLDERS' MEETINGS 1
Section 1.1 Meetings 1
Section 1.2 Presiding Officer; Secretary 1
Section 1.3 Authority of Chairman of Meeting to
Interpret Declaration and By-Laws 1
Section 1.4 Voting; Quorum 2
Section 1.5 Inspectors 2
Section 1.6 Shareholders' Action in Writing 2
ARTICLE II - TRUSTEES AND TRUSTEES' MEETINGS 3
Section 2.1 Number of Trustees 3
Section 2.2 Regular Meetings of Trustees 3
Section 2.3 Special Meetings of Trustees 3
Section 2.4 Notice of Meetings 3
Section 2.5 Quorum 3
Section 2.6 Participation by Telephone 4
Section 2.7 Location of Meetings 4
Section 2.8 Votes 4
Section 2.9 Rulings of Chairman 4
Section 2.10 Trustees' Action in Writing 4
Section 2.11 Resignations 4
<PAGE>
ARTICLE III - OFFICERS 4
Section 3.1 Officers of the Trust 4
Section 3.2 Time and Terms of Election 5
Section 3.3 Resignation and Removal 5
Section 3.4 Fidelity Bond 5
Section 3.5 Chairman of the Trustees 5
Section 3.6 Vice Chairmen 5
Section 3.7 President 6
Section 3.8 Vice Presidents 6
Section 3.9 Treasurer and Assistant Treasurers 6
Section 3.10 Controller and Assistant Controllers 7
Section 3.11 Secretary and Assistant Secretaries 7
Section 3.12 Substitutions 7
Section 3.13 Execution of Deeds, etc. 7
Section 3.14 Power to Vote Securities 8
ARTICLE IV - COMMITTEES 8
Section 4.1 Power of Trustees to Designate
Committees 8
Section 4.2 Rules for Conduct of Committee
Affairs 8
Section 4.3 Trustees may Alter, Abolish, etc.,
Committees 8
Section 4.4 Minutes; Review by Trustees 9
ARTICLE V - SEAL 9
<PAGE>
ARTICLE VI - SHARES 9
Section 6.1 Issuance of Shares 9
Section 6.2 Uncertificated Shares 9
Section 6.3 Share Certificates 9
Section 6.4 Lost, Stolen, etc., Certificates 10
Section 6.5 Record Transfer of Pledged Shares 10
ARTICLE VII - CUSTODIAN 10
ARTICLE VIII - AMENDMENTS 11
Section 8.1 By-Laws Subject to Amendment 11
Section 8.2 Notice of Proposal to Amend By-Laws
Required 11
<PAGE>
ALLIANCE TAX-EXEMPT RESERVES
BY-LAWS
These Articles are the By-Laws of ALLIANCE TAX-EXEMPT
RESERVES, a trust with transferable shares established under the
laws of The Commonwealth of Massachusetts (the "Trust"), pursuant
to an Agreement and Declaration of Trust of the Trust (the
"Declaration") made the 30th day of April 1985, and filed in the
office of the Secretary of the Commonwealth. These By-Laws have
been adopted by the Trustees pursuant to the authority granted by
Section 3.1 of the Declaration.
All words and terms capitalized in these By-Laws, unless
otherwise defined herein, shall have the same meanings as they
have in the Declaration.
ARTICLE I
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
SECTION 1.1. Meetings. A meeting of the Shareholders
of the Trust shall be held whenever called by the Trustees and
whenever election of a Trustee or Trustees by Shareholders is
required by the provisions of the 1940 Act. Meetings of
Shareholders shall also be called by the Trustees when requested
in writing by Shareholders holding at least ten percent (10%) of
the Shares then outstanding for the purpose of voting upon
removal of any Trustee, or if the Trustees shall fail to call or
give notice of any such meeting of Shareholders for a period of
thirty (30) days after such application; then Shareholders
holding at least ten percent (10%) of the Shares then outstanding
may call and give notice of such meeting. Notice of
Shareholders' meetings shall be given as provided in the
Declaration.
SECTION 1.2. Presiding Officer; Secretary. The
Chairman of the Trustees, or in his absence the Vice Chairman or
Chairmen, if any, in the order of their seniority or as the
Trustees shall otherwise determine, and in the absence of the
Chairman and all Vice Chairmen, if any, the President, shall
preside at each Shareholders' meeting as chairman of the meeting,
or in the absence of the Chairman, all Vice Chairmen and the
President, the Trustees present at the meeting shall elect one of
their number as chairman of the meeting. Unless otherwise
provided for by the Trustees, the Secretary of the Trust shall be
the secretary of all meetings of Shareholders and shall record
the minutes thereof.
SECTION 1.3. Authority of Chairman of Meeting to
Interpret Declaration and By-Laws. At any Shareholders' meeting
<PAGE>
the chairman of the meeting shall be empowered to determine the
construction or interpretation of the Declaration or these
By-Laws, or any part thereof or hereof, and his ruling shall be
final.
SECTION 1.4. Voting; Quorum. At each meeting of
Shareholders, except as otherwise provided by the Declaration,
every holder of record of Shares entitled to vote shall be
entitled to a number of votes equal to the number of Shares
standing in his name on the Share register of the Trust.
Shareholders may vote by proxy and the form of any such proxy may
be prescribed from time to time by the Trustees. A quorum shall
exist if the holders of a majority of the outstanding Shares of
the Trust entitled to vote without regard to Series, are present
in person or by proxy, but any lesser number shall be sufficient
for adjournments. At all meetings of the Shareholders, votes
shall be taken by ballot for all matters which may be binding
upon the Trustees pursuant to Section 7.1 of the Declaration. On
other matters, votes of Shareholders need not be taken by ballot
unless otherwise provided for by the Declaration or by vote of
the Trustees, or as required by the Act or the Regulations, but
the chairman of the meeting may in his discretion authorize any
matter to be voted upon by ballot.
SECTION 1.5. Inspectors. At any meeting of
Shareholders, the chairman of the meeting may appoint one or more
Inspectors of Election or Balloting to supervise the voting at
such meeting or any adjournment thereof. If Inspectors are not
so appointed, the chairman of the meeting may, and on the request
of any Shareholder present or represented and entitled to vote
shall, appoint one or more Inspectors for such purpose. Each
Inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of
Inspector of Election or Balloting, as the case may be, at such
meeting with strict impartiality and according to the best of his
ability. If appointed, Inspectors shall take charge of the polls
and, when the vote is completed, shall make a certificate of the
result of the vote taken and of such other facts as may be
required by law.
SECTION 1.6. Shareholders' Action in Writing. Nothing
in this Article I shall limit the power of the Shareholders to
take any action by means of written instruments without a
meeting, as permitted by Section 7.6 of the Declaration.
2
<PAGE>
ARTICLE II
TRUSTEES And TRUSTEES' MEETINGS
SECTION 2.1. Number of Trustees. There shall initially
be one (1) Trustee, and the number of Trustees shall thereafter
be such number, authorized by the Declaration, as from time to
time shall be fixed by a vote adopted by a Majority of the
Trustees.
SECTION 2.2. Regular Meetings of Trustees. Regular
meetings of the Trustees may be held without call or notice at
such places and at such times as the Trustees may from time to
time determine; provided, that notice of such determination, and
of the time, place and purposes of the first regular meeting
thereafter, shall be given to each absent Trustee in accordance
with Section 2.4 hereof.
SECTION 2.3. Special Meetings of Trustees. Special
meetings of the Trustees may be held at any time and at any place
when called by the Chairman of the Trustees, any Vice Chairman,
the President or the Treasurer or by two (2) or more Trustees, or
if there shall be less than three (3) Trustees, by any Trustee;
provided, that notice of the time, place and purposes thereof is
given to each Trustee in accordance with Section 2.4 hereof by
the Secretary or an Assistant Secretary or by the officer or the
Trustees calling the meeting.
SECTION 2.4. Notice of Meetings. Notice of any regular
or special meeting of the Trustees shall be sufficient if given
in writing to each Trustee, and if sent by mail at least five (5)
days, or by telegram at least twenty-four (24) hours, before the
meeting, addressed to his usual or last known business or
residence address, or if delivered to him in person at least
twenty-four (24) hours before the meeting. Notice of a special
meeting need not be given to any Trustee who was present at an
earlier meeting, not more than thirty-one (31) days prior to the
subsequent meeting, at which the subsequent meeting was called.
Notice of a meeting may be waived by any Trustee by written
waiver of notice, executed by him before or after the meeting,
and such waiver shall be filed with the records of the meeting.
Attendance by a Trustee at a meeting shall constitute a waiver of
notice, except where a Trustee attends a meeting for the purpose
of protesting prior thereto or at its commencement the lack of
notice.
SECTION 2.5. Quorum; Presiding Officer. At any meeting
of the Trustees, a Majority of the Trustees shall constitute a
quorum. Any meeting may be adjourned from time to time by a
majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned
3
<PAGE>
without further notice. Unless the Trustees shall otherwise
elect, generally or in a particular case, the Chairman of the
Trustees, or in his absence the Vice Chairman or Vice Chairmen,
if any, in the order of their seniority or as the Trustees shall
otherwise determine, or in the absence of the Chairman and all
Vice Chairmen, if any, and if he shall be a Trustee, the
President, shall preside at each meeting of the Trustees as
chairman of the meeting.
SECTION 2.6. Participation by Telephone. One or more
of the Trustees may participate in a meeting thereof or of any
Committee of the Trustees by means of a conference telephone or
similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person
at a meeting.
SECTION 2.7. Location of Meetings. Trustees' meetings
may be held at any place, within or without Massachusetts.
SECTION 2.8. Votes. Voting at Trustees' meetings may
be conducted orally, by show of hands, or, if requested by any
Trustee, by written ballot. The results of all voting shall be
recorded by the Secretary in the minute book.
SECTION 2.9. Rulings of Chairman. All other rules of
conduct adopted and used at any Trustees' meeting shall be
determined by the chairman of such meeting, whose ruling on all
procedural matters shall be final.
SECTION 2.10. Trustees' Action in Writing. Nothing in
this Article II shall limit the power of the Trustees to take
action by means of a written instrument without a meeting, as
provided in Section 4.2 of the Declaration.
SECTION 2.11. Resignations. Any Trustee may resign at
any time by written instrument signed by him and delivered to the
Chairman, the President or the Secretary or to a meeting of the
Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time.
ARTICLE III
OFFICERS
SECTION 3.1. Officers of the Trust. The officers of
the Trust shall consist of a Chairman of the Trustees, a
President, a Treasurer and a Secretary, and may include one or
more Vice Chairmen, Vice Presidents, Assistant Treasurers and
Assistant Secretaries, and such other officers as the Trustees
may designate. Any person may hold more than one office. Except
4
<PAGE>
for the Chairman and any Vice Chairmen, no officer need be a
Trustee.
SECTION 3.2. Time and Terms of Election. The Chairman,
the President, the Treasurer and the Secretary shall be elected
by the Trustees at their first meeting and thereafter at the
annual meeting of the Trustees, as provided in Section 4.2 of the
Declaration. Such officers shall hold office until the next
annual meeting of the Trustees and until their successors shall
have been duly elected and qualified, and may be removed at any
meeting by the affirmative vote of a Majority of the Trustees.
All other officers of the Trust may be elected or appointed at
any meeting of the Trustees. Such officers shall hold office for
any term, or indefinitely, as determined by the Trustees, and
shall be subject to removal, with or without cause, at any time
by the Trustees.
SECTION 3.3. Resignation and Removal. Any officer may
resign at any time by giving written notice to the Trustees.
Such resignation shall take effect at the time specified therein,
and, unless otherwise specified therein, the acceptance of such
resignation shell not be necessary to make it effective. If the
office of any officer or agent becomes vacant by reason of death,
resignation, retirement, disqualification, removal from office or
otherwise, the Trustees may choose a successor, who shall hold
office for the unexpired term in respect of which such vacancy
occurred. Except to the extent expressly provided in a written
agreement with the Trust, no officer resigning or removed shall
have any right to any compensation for any period following such
resignation or removal, or any right to damage on account of such
removal.
SECTION 3.4. Fidelity Bond. The Trustees may, in their
discretion, direct any officer appointed by them to furnish at
the expense of the Trust a fidelity bond approved by the
Trustees, in such amount as the Trustees may prescribe.
SECTION 3.5. Chairman of the Trustees. Unless the
Trustees otherwise provide, the Chairman of the Trustees shall
preside at all meetings of the Shareholders and of the Trustees.
The Chairman shall be the chief executive officer of the Trust
and, subject to the supervision of the Trustees, shall have
general charge and supervision of the business, property and
affairs of the Trust and such other powers and duties as the
Trustees may prescribe, and unless otherwise provided by law, the
Declaration, these By-Laws or specific vote of the Trustees,
shall have and may exercise all of the powers given to the
Trustees by the Declaration and by these By-Laws.
SECTION 3.6. Vice Chairmen. If the Trustees shall
elect one or more Vice Chairmen, the Vice Chairman or if there
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shall be more than one, such Vice Chairmen in the order of their
seniority or as otherwise designated by the Trustees, shall
preside at meetings of the Shareholders and of the Trustees, and
shall exercise such other powers and duties of the Chairman as
the Trustees shall determine.
SECTION 3.7. President. The President shall be the
chief administrative officer of the Trust and, subject to the
supervision of the Chairman, shall have general charge of the
operations of the Trust and general supervision of the personnel
of the Trust, and such other powers and duties as the Trustees or
the Chairman shall prescribe. In the absence or disability of
the Chairman, the President shall exercise the powers and duties
of the Chairman, except to the extent that the Trustees shall
have delegated such powers and duties to the Vice Chairman or
Chairmen, and except that he shall not preside at meetings of the
Trustees if he is not himself a Trustee.
SECTION 3.8. Vice Presidents. In the absence or
disability of the President, the Vice President or, if there
shall be more than one, the Vice Presidents in the order of their
seniority or as otherwise designated by the Trustees, shall
exercise all of the powers and duties of the President. The Vice
Presidents shall have the power to execute bonds, notes,
mortgages and other contracts, agreements and instruments in the
name of the Trust, and shall do and perform such other duties as
the Trustees, the Chairman or the President shall direct.
SECTION 3.9. Treasurer and Assistant Treasurers. The
Treasurer shall be the chief financial officer of the Trust, and
shall have the custody of the Trust's funds and Securities, and
shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Trust and shall deposit
all moneys, and other valuable effects in the name and to the
credit of the Trust, in such depositories as may be designated by
the Trustees, taking proper vouchers for such disbursements,
shall have such other duties and powers as may be prescribed from
time to time by the Trustees or the Chairman, and shall render to
the Trustees, whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the
Trust. If no Controller is elected, the Treasurer shall also
have the duties and powers of the Controller, as provided in
these By-Laws. Any Assistant Treasurer shall have such duties
and powers as shall be prescribed from time to time by the
Trustees or the Treasurer, and shall be responsible to and shall
report to the Treasurer. In the absence or disability of the
Treasurer, the Assistant Treasurer or, if there shall be more
than one, the Assistant Treasurers in the order of their
seniority or as otherwise designated by the Trustees or the
Chairman, shall have the powers and duties of the Treasurer.
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SECTION 3.10. Controller and Assistant Controllers. If
a Controller is elected, he shall be the chief accounting officer
of the Trust and shall be in charge of its books of account and
accounting records and of its accounting procedures, and shall
have such duties and powers as are commonly incident to the
office of a controller, and such other duties and powers as may
be prescribed from time to time by the Trustees. The Controller
shall be responsible to and shall report to the Trustees, but in
the ordinary conduct of the Trust's business, shall be under the
supervision of the Treasurer. Any Assistant Controller shall
have such duties and powers as shall be prescribed from time to
time by the Trustees or the Controller, and shall be responsible
to and shall report to the Controller. In the absence or
disability of the Controller, the Assistant Controller or, if
there shall be more than one, the Assistant Controllers in the
order of their seniority or as otherwise designated by the
Trustees or the Chairman, shall have the powers and duties of the
Controller.
SECTION 3.11. Secretary and Assistant Secretaries. The
Secretary shall, if and to the extent requested by the Trustees,
attend all meetings of the Trustees, any Committee of the
Trustees and/or the Shareholders and record all votes and the
minutes of proceedings in a book to be kept for that purpose,
shall give or cause to be given notice of all meetings of the
Trustees, any Committee of the Trustees, and of the Shareholders
and shall perform such other duties as may be prescribed by the
Trustees. The Secretary, or in his absence any Assistant
Secretary, shall affix the Trust's seal to any instrument
requiring it, and when so affixed, it shall be attested by the
signature of the Secretary or an Assistant Secretary. The
Secretary shall be the custodian of the Share records and all
other books, records and papers of the Trust (other than
financial) and shall see that all books, reports, statements,
certificates and other documents and records required by law are
properly kept and filed. In the absence or disability of the
Secretary, the Assistant Secretary or, if there shall be more
than one, the Assistant Secretaries in the order of their
seniority or as otherwise designated by the Trustees or the
Chairman, shall have the powers and duties of the Secretary.
SECTION 3.12. Substitutions. In case of the absence or
disability of any officer of the Trust, or for any other reason
that the Trustees may deem sufficient, the Trustees may delegate,
for the time being, the powers or duties, or any of them, of such
officer to any other officer, or to any Trustee.
SECTION 3.13. Execution of Deeds, etc. Except as the
Trustees may generally or in particular cases otherwise authorize
or direct, all deeds, leases, transfers, contracts, proposals,
bonds, notes, checks, drafts and other obligations made, accepted
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or endorsed by the Trust shall be signed or endorsed on behalf of
the Trust by the Chairman, the President, one of the Vice
Presidents or the Treasurer.
SECTION 3.14. Power to Vote Securities. Unless
otherwise ordered by the Trustees, the Treasurer shall have full
power and authority on behalf of the Trust to give proxies for,
and/or to attend and to act and to vote at, any meeting of
stockholders of any corporation in which the Trust may hold
stock, and at any such meeting the Treasurer or his proxy shall
possess and may exercise any and all rights and powers incident
to the ownership of such stock which, as the owner thereof, the
Trust might have possessed and exercised if present. The
Trustees, by resolution from time to time, or, in the absence
thereof, the Treasurer, may confer like powers upon any other
person or persons as attorneys and proxies of the Trust.
ARTICLE IV
COMMITTEES
SECTION 4.1. Power of Trustees to Designate Committees.
The Trustees, by vote of a Majority of the Trustees, may elect
from their number an Executive Committee and any other Committees
and may delegate thereto some or all of their powers except those
which by law, by the Declaration or by these By-Laws may not be
delegated; provided, that the Executive Committee shall not be
empowered to elect the Chairman of the Trustees, the President,
the Treasurer or the Secretary, to amend the By-Laws, to exercise
the powers of the Trustees under this Section 4.1 or under
Section 4.3 hereof, or to perform any act for which the action of
a Majority of the Trustees is required by law, by the Declaration
or by these By-Laws. The members of any such Committee shall
serve at the pleasure of the Trustees.
SECTION 4.2. Rules for Conduct of Committee Affairs.
Except as otherwise provided by the Trustees, each Committee
elected or appointed pursuant to this Article IV may adopt such
standing rules and regulations for the conduct of its affairs as
it may deem desirable, subject to review and approval of such
rules and regulations by the Trustees at the next succeeding
meeting of the Trustees, but in the absence of any such action or
any contrary provisions by the Trustees, the business of each
Committee shall be conducted, so far as practicable, in the same
manner as provided herein and in the Declaration for the
Trustees.
SECTION 4.3. Trustees May Alter, Abolish, etc.,
Committees. The Trustees may at any time alter or abolish any
Committee, change the membership of any Committee, or revoke,
rescind or modify any action of any Committee or the authority of
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any Committee with respect to any matter or class of matters;
provided, that no such action shall impair the rights of any
third parties.
SECTION 4.4. Minutes; Review by Trustees. Any
Committee to which the Trustees delegate any of their powers or
duties shall keep records of its meetings and shall report its
actions to the Trustees.
ARTICLE V
SEAL
The seal of the Trust shall consist of a flat-faced
circular die with the word "Massachusetts", together with the
name of the Trust, the words "Trust Seal", and the year of its
organization cut or engraved thereon, but, unless otherwise
required by the Trustees, the seal shall not be necessary to be
placed on, and its absence shall not impair the validity of, any
document, instrument or other paper executed and delivered by or
on behalf of the Trust.
ARTICLE VI
SHARES
SECTION 6.1. Issuance of Shares. The Trustees may
issue Shares of any or all Series either in certificated or
uncertificated form, they may issue certificates to the holders
of Shares of a Series which was originally issued in
uncertificated form, and if they have issued Shares of any Series
in certificated form, they may at any time discontinue the
issuance of Share certificates for such Series and may, by
written notice to such Shareholders of such Series require the
surrender of their Share certificates to the Trust for
cancellation, which surrender and cancellation shall not affect
the ownership of Shares for such Series.
SECTION 6.2. Uncertificated Shares. For any Series of
Shares for which the Trustees issue Shares without certificates,
the Trust or the Transfer Agent may either issue receipts
therefor or may keep accounts upon the books of the Trust for the
record holders of such Shares, who shall in either case be
deemed, for all purposes hereunder, to be the holders of such
Shares as if they had received certificates therefor and shall be
held to have expressly assented and agreed to the terms hereof
and of the Declaration.
SECTION 6.3. Share Certificates. For any Series of
Shares for which the Trustees shall issue Share certificates,
each Shareholder of such Series shall be entitled to a
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<PAGE>
certificate stating the number of Shares owned by him in such
form as shall be prescribed from time to time by the Trustees.
Such certificate shall be signed by the Chairman or a Vice
Chairman, or the President or a Vice-President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Trust. Such signatures may be
facsimiles if the certificate is countersigned by a Transfer
Agent, or by a Registrar, other than a Trustee, officer or
employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate
shall cease to be such officer before such certificate is issued,
it may be issued by the Trust with the same effect as if he were
such officer at the time of its issue.
SECTION 6.4. Lost, Stolen, etc., Certificates. If any
certificate for certificated Shares shall be lost, stolen,
destroyed or mutilated, the Trustees may authorize the issuance
of a new certificate of the same tenor and for the same number of
Shares in lieu thereof. The Trustees shall require the surrender
of any mutilated certificate in respect of which a new
certificate is issued, and may, in their discretion, before the
issuance of a new certificate, require the owner of a lost,
stolen or destroyed certificate, or the owner's legal
representative, to make an affidavit or affirmation setting forth
such facts as to the loss, theft or destruction as they deem
necessary, and to give the Trust a bond in such reasonable sum as
the Trustees direct, in order to indemnify the Trust.
SECTION 6.5. Record Transfer of Pledged Shares. A
pledgee of Shares pledged as collateral security shall be
entitled to a new certificate in his name as pledgee, in the case
of certificated Shares, or to be registered as the holder in
pledge of such Shares in the case of uncertificated Shares;
provided, that the instrument of pledge substantially describes
the debt or duty that is intended to be secured thereby. Any
such new certificate shall express on its face that it is held as
collateral security, and the name of the pledgor shall be stated
thereon, and any such registration of uncertificated Shares shall
be in a form which indicates that the registered holder holds
such Shares in pledge. After such issue or registration, and
unless and until such pledge is released, such pledgee and his
successors and assigns shall alone be entitled to the rights of a
Shareholder, and entitled to vote such Shares.
ARTICLE VII
CUSTODIAN
The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at
least Two Million Dollars ($2,000,000) as Custodian of the
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capital assets of the Trust. The Custodian shall be compensated
for its services by the Trust upon such basis as shall be agreed
upon from time to time between the Trust and the Custodian.
ARTICLE VIII
AMENDMENTS
SECTION 8.1. By-Laws Subject to Amendment. These
By-Laws may be altered, amended or repealed, in whole or in part,
at any time by vote of the holders of a majority of the Shares
(or whenever there shall be more than one Series of Shares, of
the holders of a majority of the Shares of each Series) issued,
outstanding and entitled to vote. The Trustees, by vote of a
Majority of the Trustees, may alter, amend or repeal these
By-Laws, in whole or in part, including By-Laws adopted by the
Shareholders, except with respect to any provision hereof which
by law, the Declaration or these By-Laws requires action by the
Shareholders; provided, that no later than the time of giving
notice of the meeting of Shareholders next following the
alteration, amendment or repeal of these By-Laws, in whole or in
part, notice thereof, stating the substance of such action shall
be given to all Shareholders entitled to vote. By-Laws adopted
by the Trustees may be altered, amended or repealed by the
Shareholders.
SECTION 8.2. Notice of Proposal to Amend By-Laws
Required. No proposal to amend or repeal these By-Laws or to
adopt new By-Laws shall be acted upon at a meeting unless either
(i) such proposal is stated in the notice or in the waiver of
notice, as the case may be, of the meeting of the Trustees or
Shareholders at which such action is taken, or (ii) all of the
Trustees or Shareholders, as the case may be, are present at such
meeting and all agree to consider such proposal without
protesting the lack of notice.
11
00250185.AB0
<PAGE>
ADVISORY AGREEMENT
ALLIANCE MUNICIPAL TRUST
1345 Avenue of the Americas
New York, New York 10105
July 22, 1992
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
We herewith confirm our agreement with you as follows:
1. We are an open-end, diversified management
investment company registered under the Investment Company Act of
1940 (the "Act"). We are currently authorized to issue one class
of shares and our Trustees are authorized to reclassify and issue
any unissued shares to any number of additional classes or series
(Portfolios) each having its own investment objective, policies
and restrictions, all as more fully described in the Prospectus
and Statement of Additional Information constituting a part of
the Registration Statement filed on our behalf under the
Securities Act of 1933 and the Act. We are engaged in the
business of investing and reinvesting our assets in securities of
the type and in accordance with the limitations specified in our
Declaration of Trust, By-Laws, Registration Statements filed with
the Securities and Exchange Commission under the Securities Act
of 1933 and the Act, and any representations made in our
Prospectus and Statement of Additional Information, all in such
manner and to such extent as may from time to time be authorized
by our Trustees. We enclose copies of the documents listed above
and will from time to time furnish you with any amendments
thereof.
2. (a) We hereby employ you to manage the investment
and reinvestment of the assets in each of our Portfolios as above
specified, and, without limiting the generality of the foregoing,
to provide management and other services specified below.
(b) You will make decisions with respect to all
purchases and sales of securities in each of our Portfolios. To
carry out such decisions, you are hereby authorized, as our agent
and attorney in fact, for our account and at our risk and in our
name, to place orders for the investment and reinvestment of our
assets. In all purchases, sales and other transactions in
securities in each of our Portfolios you are authorized to
<PAGE>
exercise full discretion and act for us in the same manner and
with the same force and effect as we might or could do with
respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to
the furtherance or conduct of such purchases, sales or other
transactions.
(c) You will report to our Trustees at each
meeting thereof all changes in each Portfolio since the prior
report, and will also keep us in touch with important
developments affecting any Portfolio and on your own initiative
will furnish us from time to time with such information as you
may believe appropriate for this purpose, whether concerning the
individual banks or other companies whose securities are included
in our Portfolios, the banking or other industries in which they
engage, or the conditions prevailing in the money market or the
economy generally. You will also furnish us with such
statistical and analytical information with respect to securities
in each of our Portfolios as you may believe appropriate or as we
reasonably may request. In making such purchases and sales of
securities in each of our Portfolios, you will bear in mind the
policies set from time to time by our Trustees as well as the
limitations imposed by our Declaration of Trust and in our
Registration Statements under the Act and the Securities Act of
1933, the limitations in the Act and of the Internal Revenue Code
in respect of regulated investment companies and the investment
objective, policies and restrictions for each of our Portfolios.
(d) It is understood that you will from time to
time employ or associate with yourselves such persons as you
believe to be particularly fitted to assist you in the execution
of your duties hereunder, the cost of performance of such duties
to be borne and paid by you. No obligation may be incurred on
our behalf in any such respect. During the continuance of this
agreement at our request you will provide to us persons
satisfactory to our Trustees to serve as our officers. You or
your affiliates will also provide persons, who may be our
officers, to render such clerical, accounting, administrative and
other services to us as we may from time to time request of you.
Such personnel may be employees of you or your affiliates. We
will pay to you or your affiliates the cost of such personnel for
rendering such services to us at such rates as shall from time to
time be agreed upon between us, provided that all time devoted to
the investment or reinvestment of securities in each of our
Portfolios or to the promotion of the sale of our shares shall be
for your account. Nothing contained herein shall be construed to
restrict our right to hire our own employees or to contract for
services to be performed by third parties. Furthermore, you or
your affiliates (other than us) shall furnish us without charge
with such administrative and management supervision and
assistance and such office facilities as you may believe
2
<PAGE>
appropriate or as we may reasonably request subject to the
requirements of any regulatory authority to which you may be
subject. You or your affiliates (other than us) shall also be
responsible for the payment of any expenses incurred in promoting
the sale of our shares (other than the portion of the promotional
expenses to be borne by us in accordance with an effective plan
pursuant to Rule 12b-1 under the Act and the costs of printing
our prospectuses and other reports to shareholders and fees
related to registration with the Securities and Exchange
Commission and with state regulatory authorities).
3. It is further agreed that you shall be responsible
for the portion of the net expenses of all our Portfolios (except
taxes, brokerage, interest, and extraordinary expenses) incurred
by us during each of our fiscal years or portion thereof that
this agreement is in effect between us which portion shall be the
excess of the aggregate of such expenses over one per cent (1%)
of our net assets computed on a daily average basis for such
fiscal year (reduced pro rata for any portion of less than a
year). We hereby confirm that, subject to the foregoing, we
shall be responsible and hereby assume the obligation for payment
of all our other expenses, including: (a) payment of the fee
payable to you under paragraph 5 hereof; (b) custody, transfer,
and dividend disbursing expenses; (c) fees of trustees who are
not your affiliated persons; (d) legal and auditing expenses;
(e) clerical, accounting, administrative, and other office costs;
(f) the cost of personnel providing services to us, as provided
in subparagraph (d) of paragraph 2 above; (g) costs of printing
our prospectuses and shareholder reports; (h) expenses and fees
related to registration and filing with the Securities and
Exchange Commission and with state regulatory authorities; and
(i) such promotional expenses as may be contemplated by an
effective plan pursuant to Rule 12b-1 under the Act; provided,
however, that our payment of such promotional expenses shall be
in the amounts, and in accordance with the procedures, set forth
in such plan.
4. We shall expect of you, and you will give us the
benefit of, your best judgment and efforts in rendering these
services to us, and we agree as an inducement to your undertaking
these services that you shall not be liable hereunder for any
mistake of judgment or in any event whatsoever, except for lack
of good faith, provided that nothing herein shall be deemed to
protect, or purport to protect, you against any liability to us
or to our security holders to which you would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
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5. In consideration of the foregoing we will pay you a
fee for each Portfolio at the annual rate of: .50 of 1% of the
first $1.25 billion of that Portfolio's average daily 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 such average daily net assets in excess
of $3 billion. Such fee shall be accrued by us daily and shall
be payable in arrears on the last day of each calendar month for
services performed hereunder during such month. Your
reimbursement, if any, of our expenses, as provided in paragraph
3 hereof, shall be estimated and paid to us monthly in arrears,
at the same time as our payment to you for such month.
6. This agreement shall become effective on the date
hereof and shall remain in effect until June 30, 1993 and
thereafter for successive twelve-month periods (computed from
each July 1), with respect to each Portfolio provided that such
continuance is specifically approved at least annually by our
Trustees or by majority vote of the holders of the outstanding
voting securities (as defined in the Act) of such Portfolio, and,
in either case, by a majority of our trustees who are not parties
to this agreement or interested persons, as defined in the Act,
of any such party (other than as trustees of our Trust) provided
further, however, that if the continuation of this agreement is
not approved as to a Portfolio, you may continue to render to
such Portfolio the services described herein in the manner and to
the extent permitted by the Act and the rules and regulations
thereunder. Upon the effectiveness of this agreement, it shall
supersede all previous agreements between us covering the subject
matter hereof. This agreement may be terminated with respect to
any Portfolio at any time, without the payment of any penalty, by
vote of a majority of the outstanding voting securities (as so
defined) of such Portfolio, or by a vote of a majority of our
Trustees on sixty days' written notice to you, or by you with
respect to any Portfolio on sixty days' written notice to us.
7. This agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged by you and this
agreement shall terminate automatically in the event of any such
transfer, assignment, sale, hypothecation or pledge by you. The
terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing
law and any interpretation thereof contained in rules or
regulations promulgated by the Securities and Exchange Commission
thereunder.
8. (a) Except to the extent necessary to perform your
obligations hereunder, nothing herein shall be deemed to limit or
restrict your right, or the right of any of your employees,
officers, or any of the Directors of Alliance Capital Management
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Corporation, general partner, or employees who may also be a
trustee, officer or employee of ours, or persons otherwise
affiliated with us (within the meaning of the Act) to engage in
any other business or devote time and attention to the management
or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other
trust, corporation, firm, individual or association.
(b) You will notify us of any change in general
partners or your partnership within a reasonable time after such
change.
9. Notice is hereby given that this agreement is
entered into on our behalf by an officer of our Trust in his
capacity as an officer and not individually and that the
obligations of or arising out of this agreement are not binding
upon any of our Trustees, officers, shareholders, employees or
agents individually but are binding only upon the assets and
property of our Trust.
If the foregoing is in accordance with your
understanding, you will kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
ALLIANCE MUNICIPAL TRUST
By /s/James P. Syrett
_______________________
James P. Syrett
President
Accepted: As of July 22, 1992
ALLIANCE CAPITAL MANAGEMENT L.P.
By ALLIANCE CAPITAL MANAGEMENT CORPORATION,
general partner
By /s/ John D. Carifa
_________________________________
John D. Carifa
Executive Vice President
& Chief Financial Officer
5
00250185.AI1
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
ALLIANCE MUNICIPAL TRUST
1345 Avenue of the Americas
New York, New York 10105
July 22, 1992, as
amended as of June 16, 1997
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
This is to confirm that, on the terms and conditions set
forth herein, we have agreed that you shall be, for the period of
this Distribution Services Agreement (the "Agreement"), a
distributor, as our agent, for the unsold portion of such number
of shares of beneficial interest of our Trust, par value $.01 per
share (the "Trust Shares") as may from time to time be
effectively registered under the Securities Act of 1933, as
amended (the "Act").
1. We hereby agree to offer through you as our agent,
and to solicit, through you as our agent, offers to subscribe to,
the unsold balance of the Trust Shares as shall then be
effectively registered under the Act, and you are appointed our
agent for such purpose. All subscriptions for Trust Shares
obtained by you shall be directed to us for acceptance and shall
not be binding on us until accepted by us. You shall have no
authority to make binding subscriptions on our behalf. We
reserve the right to sell Trust Shares through other distributors
or directly to investors through subscriptions received by us at
our principal office in New York, New York. The right given to
you under this agreement shall not apply to Trust Shares issued
in connection with (a) the merger or consolidation of any other
investment company with us, (b) our acquisition by purchase or
otherwise of all or substantially all of the assets or stock of
any other investment company or (c) the reinvestment in Trust
Shares by our shareholders of dividends or other distributions or
any other offering of shares to our shareholders.
2. You will use your best efforts to obtain
subscriptions to Trust Shares upon the terms and conditions
contained herein and in the then current Prospectus and Statement
of Additional Information, including the offering price. You
will send to us promptly all subscriptions placed with you. We
<PAGE>
shall advise you of the approximate net asset value per share or
net asset value per share (as used in the Prospectus and
Statement of Additional Information) on any date requested by you
and at such other times as it shall have been determined by us.
We shall furnish you from time to time, for use in connection
with the offering of Trust Shares, such other information with
respect to us and the Trust Shares as you may reasonably request.
We shall supply you with such copies of our current Prospectus
and Statement of Additional Information in effect from time to
time as you may request. You are not authorized to give any
information or to make any representations, other than those
contained in the Registration Statement, Prospectus and Statement
of Additional Information, as then in effect, filed under the Act
covering Trust Shares or which we may authorize in writing. You
may use employees and agents at your cost and expense to assist
you in carrying out your obligations hereunder but no such
employee or agent shall be deemed to be our agent or have any
rights under this agreement.
3. We reserve the right to suspend the offering of
Trust Shares at any time, in the absolute discretion of our Board
of Trustees, and upon notice of such suspension you shall cease
to offer Trust Shares hereunder.
4. Both of us will cooperate with each other in taking
such action as may be necessary to qualify Trust Shares for sale
under the securities laws of such states as we may designate.
Pursuant to our Advisory Agreement dated July 22, 1992 with
Alliance Capital Management L.P. (the "Adviser"), we will pay all
fees and expenses of registering Trust Shares under the Act and
of qualification of Trust Shares and our qualification under
applicable state securities laws. You shall pay all expenses
relating to your broker-dealer qualification.
5. It is understood that paragraphs 5, 10 and 13
hereof constitutes a plan of distribution (the "Plan") within the
meaning of Rule 12b-1 adopted by the Securities and Exchange
Commission under the Investment Company Act of 1940 (the "1940
Act") and is a part of this Agreement. The material aspects of
the Plan are as follows:
(a) The Trust will pay to the Adviser each month a
distribution services fee with respect to each Portfolio of the
Trust ("Portfolio") which will not exceed, on an annualized
basis, .25 of 1% of the Trust's average daily net assets. The
Adviser will use the entire amount so received from the Trust
(i) to make payments to you to compensate broker-dealers or other
persons for providing distribution assistance, (ii) to make
payments to compensate banks and other institutions for providing
administrative and accounting services with respect to Trust
shareholders and (iii) to otherwise promote the sale of shares of
2
<PAGE>
the Trust, including paying for the preparation, printing and
distribution of prospectuses and sales literature or other
promotional activities.
(b) The Adviser will as long as the Plan is in effect
make similar payments to you for distribution services performed
by you and for distribution assistance provided by broker-dealers
or other persons as described above and to banks or other
institutions for administrative and accounting services. These
payments will be made by the Adviser from its own resources,
which may include the management fee it receives from the Trust.
The Adviser may in its sole discretion increase or decrease the
amount of distribution assistance payments.
(c) Payments for distribution assistance or
administrative and accounting services are subject to the terms
and conditions of the written agreements between each
broker-dealer or other person and you. Such agreements will be
in a form satisfactory to the Trustees of the Trust.
(d) The Treasurer of the Trust will prepare and furnish
to the Trustees of the Trust at least quarterly a written report
complying with the requirements to Rule 12b-1 setting forth all
amounts expended under the Plan and the purposes for which such
expenditures were made.
(e) The Trust is not obligated to pay any distribution
expense in excess of the distribution services fee described in
subparagraph (a) hereof and any expenses of distribution of the
Trust's shares accrued by the Adviser or you in one fiscal year
of the Trust may not be paid from distribution services fees
received from the Trust in subsequent fiscal years of the Trust.
Distribution services fees received from the Trust also will not
be used to pay any interest expense, carrying charges or other
financing costs, or allocation of overhead.
(f) All agreements with any persons relating to the
implementation of the Plan will be subject to termination,
without penalty, upon not more than sixty days' written notice,
pursuant to the provisions of paragraph 10 hereof.
(g) Neither the Adviser nor you are obligated by the
Plan to execute agreements with qualifying banks, broker-dealers
or other persons and any termination of an agreement with a
particular financial intermediary under the Plan will have no
effect on similar agreements between the Adviser or you and other
participating banks, broker-dealers or other persons pursuant to
the Plan.
6. We represent to you that our Registration
Statement, Prospectus and Statement of Additional Information (as
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<PAGE>
in effect from time to time) under the Act have been or will be,
as the case may be, carefully prepared in conformity with the
requirements of the Act and the rules and regulations of the
Securities and Exchange Commission thereunder. We represent and
warrant to you that our Registration Statement, Prospectus and
Statement of Additional Information contain or will contain all
statements required to be stated therein in accordance with the
Act and the rules and regulations of said Commission, and that
all statements of fact contained or to be contained therein are
or will be true and correct at the time indicated or the
effective date as the case may be; that none of our Registration
Statement, our Prospectus or our Statement of Additional
Information, when it shall become effective or be authorized for
use, will include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a
purchaser of Trust Shares. We will from time to time file such
amendment or amendments to our Registration Statement, Prospectus
and Statement of Additional Information as, in the light of
future developments, shall, in the opinion of our counsel, be
necessary in order to have our Registration Statement, Prospectus
and Statement of Additional Information at all times contain all
material facts required to be stated therein or necessary to make
any statements therein not misleading to a purchaser of Trust
Shares, but, if we shall not file such amendment or amendments
within fifteen days after receipt by us of a written request from
you to do so, you may, at your option, terminate this Agreement
immediately. We shall not file any amendment to our Registration
Statement, Prospectus or Statement of Additional Information
without giving you reasonable notice thereof in advance;
provided, however, that nothing in this agreement contained shall
in any way limit our right to file at any such time such
amendments to our Registration Statement, Prospectus or Statement
of Additional Information, of whatever character, as we may deem
advisable, such right being in all respects absolute and
unconditional. We represent and warrant to you that any
amendment to our Registration Statement, Prospectus or Statement
of Additional Information hereafter filed by us will, when it
becomes effective, contain all statements required to be stated
therein in accordance with the Act and the rules and regulations
of said Commission, that all statements of fact contained therein
will, when the same shall become effective, be true and correct
and that no such amendment, when it becomes effective, will
include an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading to a purchaser of
Trust Shares.
7. We agree to indemnify, defend and hold you, and any
person who controls you within the meaning of Section 15 of the
Act, free and harmless from and against any and all claims,
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<PAGE>
demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities
and any reasonable counsel fees incurred in connection therewith)
which you or any such controlling person may incur, under the
Act, or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in
our Registration Statement, Prospectus or Statement of Additional
Information in effect from time to time under the Act or arising
out of or based upon any alleged omission to state a material
fact required to be stated in either thereof or necessary to make
the statements in either thereof not misleading; provided,
however, that in no event shall anything herein contained be so
construed as to protect you against any liability to us or our
security holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence, in
the performance of your duties, or by reason of your reckless
disregard of your obligations and duties under this agreement.
Our agreement to indemnify you and any such controlling person as
aforesaid is expressly conditioned upon our being notified of any
action brought against you or any such controlling person, such
notification to be given by letter or by telegram addressed to us
at our principal office in New York, New York, and sent to us by
the person against whom such action is brought within ten days
after the summons or other first legal process shall have been
served. The failure to so notify us of any such action shall not
relieve us from any liability which we may have to the person
against whom such action is brought by reason of any such alleged
untrue statement or omission otherwise than on account of our
indemnity agreement contained in this paragraph 7. We will be
entitled to assume the defense of any suit brought to enforce any
such claim, and to retain counsel of good standing chosen by us
and approved by you. In the event we do elect to assume the
defense of any suit and retain counsel of good standing approved
by you, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of
them; but in case we do not elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by us,
we will reimburse you or the controlling person or persons named
as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by you or them. Our
indemnification agreement contained in this paragraph 7 and our
representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any
investigation made by or on behalf of you or any controlling
person and shall survive the sale of any of Trust Shares made
pursuant to subscriptions obtained by you. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your successors and assigns, and to the benefit of any
controlling persons and their successors and assigns. We agree
promptly to notify you of the commencement of any litigation or
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<PAGE>
processing against us in connection with the issue and sale of
any Trust Shares.
8. You agree to indemnify, defend and hold us, our
several officers and trustees, and any person who controls us
within the meaning of Section 15 of the Act, free and harmless
from and against any and all claims, demands, liabilities, and
expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which we, our officers or
trustees, or any such controlling person may incur under the Act
or under common law or otherwise, but only to the extent that
such liability, or expense incurred by us, our officers or
trustees or such controlling person resulting from such claims or
demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished
in writing by you to us for use in our Registration Statement or
Prospectus in effect from time to time under the Act, or shall
arise out of or be based upon any alleged omission to state a
material fact in connection with such information required to be
stated in the Registration Statement or Prospectus or necessary
to make such information not misleading. Your agreement to
indemnify us, our officers and trustees, and any such controlling
person as aforesaid is expressly conditioned upon you being
notified of any action brought against us, our officers or
trustees or any such controlling person, such notification to be
given by letter or telegram addressed to you at your principal
office in New York, New York, and sent to you by the person
against whom such action is brought, within ten days after the
summons or other first legal process shall have been served. You
shall have a right to control the defense of such action, with
counsel of your own choosing, satisfactory to us, if such action
is based solely upon such alleged misstatement or omission on
your part, and in any other event you and we, our officers or
trustees or such controlling person shall each have the right to
participate in the defense or preparation of the defense of any
such action. The failure to so notify you of any such action
shall not relieve you from any liability which you may have to
us, to our officers or trustees, or to such controlling person by
reason of any such untrue statement or omission on your part
otherwise than on account of your indemnity agreement contained
in this paragraph 8.
9. We agree to advise you immediately:
(a) of any request by the Securities and Exchange
Commission for amendments to our Registration Statement or
Prospectus or for additional information,
(b) In the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the
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<PAGE>
effectiveness of our Registration Statement or Prospectus or the
initiation of any proceedings for that purpose,
(c) of the happening of any material event which makes
untrue any statement made in our Registration Statement or
Prospectus or which requires the making of a change in either
thereof in order to make the statements therein not misleading,
and (d) of all action of the Securities and Exchange Commission
with respect to any amendments to our Registration Statement or
Prospectus which may from time to time be filed with the
Securities and Exchange Commission under the Act.
10. (a) This agreement shall become effective in
respect of each Portfolio of the Trust on the date hereof, shall
remain in effect until June 30, 1998, and shall continue in
effect thereafter for successive twelve-month periods (computed
from each July 1); provided, however, that such continuance is
specifically approved at least annually by the Trustees of the
Trust or by majority vote of the holders of the outstanding
voting securities (as defined in the 1940 Act) of the relevant
Portfolio of the Trust, and, in either case, by a majority of the
Trustees of the Trust who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party
(other than as Trustees of the Trust) and who have no direct or
indirect financial interest in the operation of the Plan or any
agreement related thereto. Upon the effectiveness of this
Agreement, it shall supersede all previous agreements between the
parties hereto covering the subject matter hereof. This
Agreement may be terminated in respect of a Portfolio of the
Trust (i) by the Trust at any time, without the payment of any
penalty, by the vote of a majority of the outstanding voting
securities (as so defined) of such Portfolio, or by a vote of a
majority of the Trustees of the Trust who are not interested
persons (as defined in the 1940 Act) of the Trust and have no
direct or indirect financial interest in the operation of the
Plan or any agreement related thereto, in either event on sixty
days written notice to you; provided, however, that no such
notice shall be required if such termination is stated by the
Trust to relate only to paragraphs 5 and 13 hereof (in which
event paragraphs 5 and 13 shall be deemed to have been severed
herefrom and all other provisions of this Agreement shall
continue in full force and effect), or (ii) by you on sixty days
written notice to the Trust.
(b) This Agreement may be amended at any time with the
approval of the Trustees of the Trust; provided, however, that
(i) any material amendments of the terms hereof will become
effective with respect to a Portfolio only upon approval as
provided in the first proviso of paragraph 10(a) hereof, and
(ii) any amendment to increase materially the amount to be
expended by a Portfolio for distribution assistance,
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<PAGE>
administrative and accounting services and other activities
designed to promote the sale of shares of such Portfolio
hereunder will be effective with respect to a Portfolio only upon
the additional approval by a vote of a majority of the
outstanding voting securities of such Portfolio as defined in the
1940 Act.
11. This Agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged by you and this
Agreement shall terminate automatically in the event of any such
transfer, assignment, sale, hypothecation or pledge. The terms
"transfer", "assignment", and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations
promulgated by the Securities and Exchange Commission thereunder.
12. Except to the extent necessary to perform your
obligation hereunder, nothing herein shall be deemed to limit or
restrict your right, or the right of any of your officers,
directors or employees who may also be a trustee, officer or
employee of ours, to engage in any other business or to devote
time and attention to the management or other aspects of any
other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm,
individual or association.
13. While the Plan is in effect, the selection and
nomination of the trustees who are not "interested persons" of
the Trust (as defined in the 1940 Act) will be committed to the
discretion of such disinterested trustees.
14. Notice is hereby given that this Agreement is
entered into on our behalf by an officer of our Trust in his
capacity as an officer and not individually and that the
obligations of or arising out of this Agreement are not binding
upon any of our Trustees, officers, shareholders, employees or
agents individually but are binding only upon the assets and
property of our Trust.
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<PAGE>
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
Alliance Municipal Trust
By/s/ Ronald M. Whitehill
_______________________
Ronald M. Whitehill
President
Accepted: July 22, 1992, as amended
as of June 16, 1997
Alliance Fund Distributors, Inc.
By /s/ Edmund P. Bergan, Jr.
__________________________
Edmund P. Bergan, Jr.
Senior Vice President
Alliance Capital Management L.P.
By Alliance Capital Management Corporation,
general partner
By /s/ John D. Carifa
__________________________
John D. Carifa
President & Chief Operating Officer
9
00250185.AI2
<PAGE>
CUSTODIAN CONTRACT
Between
ALLIANCE TAX-EXEMPT RESERVES
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held
By It 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 7
2.4 Bank Accounts 7
2.5 Payments for Shares 8
2.6 Investment and Availability of Federal Funds 9
2.7 Collection of Income 9
2.8 Payment of Fund Moneys 10
2.9 Liability for Payment in Advance of Receipt
of Securities Purchased 12
2.10 Payments for Repurchases or Redemptions of
Shares of the Fund 13
2.11 Appointment of Agents 14
2.12 Deposit of Fund Assets in Securities System 14
2.13 Segregated Account 17
2.14 Ownership Certificates for Tax Purposes 18
2.15 Proxies 19
2.16 Communications Relating to Fund Portfolio
Securities 19
2.17 Proper Instructions 20
2.18 Actions Permitted Without Express Authority 21
2.19 Evidence of Authority 21
3. Duties of Custodian With Respect to the Books of
Account and Calculation of Net Asset Value and
Net Income 22
4. Records 23
5. Opinion of Fund's Independent Accountants 23
6. Reports to Fund by Independent Public Accountants 24
7. Compensation of Custodian 24
8. Responsibility of Custodian 24
9. Effective Period, Termination and Amendment 26
10. Successor Custodian 27
<PAGE>
11. Interpretive and Additional Provisions 29
12. Massachusetts Law to Apply 29
13. Prior Contracts 29
<PAGE>
CUSTODIAN CONTRACT
This Contract between Alliance Tax-Exempt Reserves, a
business trust organized and existing under the laws of
Massachusetts, having its principal place of business at 140
Broadway, New York, New York 10005 hereinafter called the "Fund",
and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin
Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH: That in consideration of the mutual
covenants and agreements hereinafter contained, the parties
hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian
of its assets pursuant to the provisions of the Declaration of
Trust. The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income,
payments of principal or capital distributions received by it
with respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new or
treasury shares of beneficial interest ("Shares") of the Fund as
may be issued or sold from time to time. The Custodian shall not
be responsible for any property of the Fund held or received by
the Fund and not delivered to the Custodian.
<PAGE>
Upon receipt of "Proper Instructions" (within the
meaning of Section 2.17), the Custodian shall from time to time
employ one or more sub-custodians, but only in accordance with an
applicable vote by the Trustees of the Fund, and provided that
the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of
any sub-custodian so employed than any such sub-custodian has to
the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Fund all non-
cash property, including all securities owned by the Fund,
other than securities which are maintained pursuant to
Section 2.12 in a clearing agency which acts as a
securities depository or in a book-entry system authorized
by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System".
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by the Fund held by the Custodian
or in a Securities System account of the Custodian only
upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the
parties, and only in the following cases:
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1) Upon sale of such securities for the account of the
Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Fund;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of
Section 2.12 hereof;
4) To the depository agent in connection with tender
or other similar offers for portfolio securities of
the Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in any
such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Fund or into the name of any
nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or
nominee name of any sub-custodian appointed
pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face
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<PAGE>
amount or number of units; provided that, in any
such case, the new securities are to be delivered
to the Custodian;
7) To the broker selling the same for examination in
accordance with the "street delivery" custom;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities
and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise
of such warrants, rights or similar securities or
the surrender of interim receipts or temporary
securities for definitive securities; provided
that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against
receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund, which
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<PAGE>
may be in the form of cash or obligations issued by
the United States government, its agencies or
instrumentalities, except that in connection with
any loans for which collateral is to be credited to
the Custodian's account in book-entry system
authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or
responsible for the delivery of securities owned by
the Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets
by the Fund, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of
any agreement among the Fund, the Custodian and a
broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and
of any registered national securities exchange, or
of any similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions by the Fund;
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<PAGE>
13) For delivery in accordance with the provisions of
any agreement among the Fund, the Custodian, and a
Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with
the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any
similar organization or organizations, regarding
account deposits in connection with transactions by
the Fund;
14) Upon receipt of instructions from the transfer
agent ("Transfer Agent") for the Fund, for delivery
to such Transfer Agent or to the holders of shares
in connection with distributions in kind, as may be
described from time to time in the Fund's currently
effective prospectus and statement of additional
information ("prospectus"), in satisfaction of
requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but only
upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of
the Trustees or of the Executive Committee signed
by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, specifying the
securities to be delivered, setting forth the
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<PAGE>
purpose for which such delivery is to be made,
declaring such purposes to be proper corporate
purposes, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be
registered in the name of the Fund or in the name of any
nominee of the Fund or of any nominee of the Custodian
which nominee shall be assigned exclusively to the Fund,
unless the Fund has authorized in writing the appointment
of a nominee to be used in common with other registered
investment companies having the same investment adviser as
the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.11 or in the name or
nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on
behalf of the Fund under the terms of this Contract shall
be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of the Fund,
subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in
such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank
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<PAGE>
account established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940. Funds held by
the Custodian for the Fund may be deposited by it to its
credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it
may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or
trust company and the funds to be deposited with each such
bank or trust company shall be approved by vote of a
majority of the Trustees of the Fund. Such funds shall be
deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that
capacity.
2.5 Payments for Shares. The Custodian shall receive from the
distributor for the Fund's Shares or from the Transfer
Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares of the Fund issued or
sold from time to time by the Fund. The Custodian will
provide timely notification to the Fund and the Transfer
Agent of any receipt by it of payments for Shares of the
Fund.
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<PAGE>
2.6 Investment and Availability of Federal Funds. Upon mutual
agreement between the Fund and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions,
1) invest in such instruments as may be set forth in
such instructions on the same day as received all
federal funds received after a time agreed upon
between the Custodian and the Fund; and
2) make federal funds available to the Fund as of
specified times agreed upon from time to time by
the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which
are deposited into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a
timely basis all income and other payments with respect to
registered securities held hereunder to which the Fund
shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such
securities are held by the Custodian or agent thereof and
shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall collect
9
<PAGE>
interest when due on securities held hereunder. Income due
the Fund on securities loaned pursuant to the provisions of
Section 2.2(10) shall be the responsibility of the Fund.
The Custodian will have no duty or responsibility in
connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist the
Fund in arranging for the timely delivery to the Custodian
of the income to which the Fund is properly entitled.
2.8 Payment of Fund Moneys. Upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay
out moneys of the Fund in the following cases only:
1) Upon the purchase of securities, futures contracts
or options on futures contracts for the account of
the Fund but only (a) against the delivery of such
securities, or evidence of title to futures
contracts or options on futures contracts, to the
Custodian (or any bank, banking firm or trust
company doing business in the United States or
abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian
as its agent for this purpose) registered in the
name of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
10
<PAGE>
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.12 hereof or (c) in the case of repurchase
agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer
which is a member of NASD, (i) against delivery of
the securities either in certificate form or
through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities or
(ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the
Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund;
2) In connection with conversion, exchange or
surrender of securities owned by the Fund as set
forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued
by the Fund as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not limited to
the following payments for the account of the Fund:
interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the
11
<PAGE>
Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant
to the governing documents of the Fund;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of the Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary
or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which
such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for
purchase of securities for the account of the Fund is made
by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions
from the Fund to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the
12
<PAGE>
Custodian, except that in the case of repurchase agreements
entered into by the Fund with a bank which is a member of
the Federal Reserve System, the Custodian may transfer
funds to the account of such bank prior to the receipt of
written evidence that the securities subject to such
repurchase agreement have been transferred by book-entry
into a segregated non-proprietary account of the Custodian
maintained with the Federal Reserve Bank of Boston or of
the safe-keeping receipt, provided that such securities
have in fact been so transferred by book-entry.
2.10 Payments for Repurchases or Redemptions of Shares of the
Fund. From such funds as may be available for the purpose
but subject to the limitations of the Declaration of Trust
and any applicable votes of the Trustees of the Fund
pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available
for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of
their Shares. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer
Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection
with the redemption or repurchase of Shares of the Fund,
the Custodian shall honor checks drawn on the Custodian by
13
<PAGE>
a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the
Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the
Fund and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or
times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 2 as the Custodian
may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.
2.12 Deposit of Trust Assets in Securities Systems. The
Custodian may deposit and/or maintain securities owned by
the Fund in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the
U.S., Department of the Treasury and certain federal
agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and
14
<PAGE>
regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the
Custodian in the Securities System which shall not
include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
for customers;
2) The records of the Custodian with respect to
securities of the Fund which are maintained in a
Securities System shall identify by book-entry
those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased
for the account of the Fund upon (i) receipt of
advice from the Securities System that such
securities have been transferred to the Account,
and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer
for the account of the Fund. The Custodian shall
transfer securities sold for the account of the
Fund upon (i) receipt of advice from the Securities
System that payment for such securities has been
transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect
15
<PAGE>
such transfer and payment for the account of the
Fund. Copies of all advices from the Securities
System of transfers of securities for the account
of the Fund shall identify the Fund, be maintained
for the Fund by the Custodian and be provided to
the Fund at its request. Upon request, the
Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund in
the form or a written advice or notice and shall
furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the
Securities System for the account of the Fund.
4) The Custodian shall provide the Fund with any
report obtained by the Custodian on the Securities
System's accounting system, internal accounting
control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received the initial or
annual certificate, as the case may be, required by
Article 9 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to
the Fund for any loss or damage to the Fund
resulting from use of the Securities System by
reason of any negligence, misfeasance or misconduct
16
<PAGE>
of the Custodian or any of its agents or of any of
its or their employees or from failure of the
Custodian or any such agent to enforce effectively
such rights as it may have against the Securities
System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the
Custodian with respect to any claim against the
Securities System or any other person which the
Custodian may have as a consequence of any such
loss or damage if and to the extent that the Fund
has not been made whole for any such loss or
damage.
2.13 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or
securities, including securities maintained in an account
by the Custodian pursuant to Section 2.12 hereof, (i) in
accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under
the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading
17
<PAGE>
Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or
options thereon purchased or sold by the Fund, (iii) for
the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee signed by an officer
of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper
corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
18
<PAGE>
respect to securities of the Fund held by it and in
connection with transfers of securities.
2.15 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities
are registered otherwise than in the name of the Fund or a
nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall
promptly deliver to the Fund such proxies, all proxy
soliciting materials and all notices relating to such
securities.
2.16 Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of
calls and maturities of securities and expirations of
rights in connection therewith and notices of exercise of
call and put options written by the Fund and the maturity
of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities
being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to
the Fund all written information received by the Custodian
from issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the tender
or exchange offer. If the Fund desires to take action with
19
<PAGE>
respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at
least three business days prior to the date on which the
Custodian is to take such action.
2.17 Proper Instructions. Proper Instructions as used
throughout this Article 2 means a writing signed or
initialled by one or more person or persons as the Trustees
shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of
transaction involved, including a specific statement of the
purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the
custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to
the transaction involved. The Fund shall cause all oral
instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as
to the authorization by the Trustees of the Fund
accompanied by a detailed description of procedures
approved by the Trustees, Proper Instructions may include
communications effected directly between electro-mechanical
or electronic devices provided that the Trustees and the
Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets.
20
<PAGE>
2.18 Actions Permitted without Express Authority. The Custodian
may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor
expenses of handling securities or other similar
items relating to its duties under this Contract,
provided that all such payments shall be accounted
for to the Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments;
and
4) in general, attend to all non-discretionary details
in connection with the sale, exchange,
substitution, purchase, transfer and other dealings
with the securities and property of the Fund except
as otherwise directed by the Trustees of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected in
acting upon any instructions, notice, request, consent,
certificate or other instrument or paper believed by it to
be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a
certified copy of a vote of the Trustees of the Fund as
conclusive evidence (a) of the authority of any person to
21
<PAGE>
act in accordance with such vote or (b) of any
determination or of any action by the Trustees pursuant to
the Declaration of Trust as described in such vote, and
such vote may be considered as in full force and effect
until receipt by the Custodian of written notice to the
contrary.
3. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trustees
of the Fund to keep the books of account of the Fund and/or
compute the net asset value per share of the outstanding shares
of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net
asset value per share. If so directed, the Custodian shall also
calculate daily the net income of the Fund as described in the
Fund's currently effective prospectus and shall advise the Fund
and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to
do so, shall advise the Transfer Agent periodically of the
division of such net income among its various components. The
calculations of the net asset value per share and the daily
income of the Fund shall be made at the time or times described
from time to time in the Fund's currently effective prospectus.
22
<PAGE>
4. Records
The Custodian shall create and maintain all records
relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the
Fund. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers,
employees or agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities
owned by the Fund and held by the custodian and shall, when
requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the
Fund may from time to time request, to obtain from year to year
favorable opinions from the Fund's independent accountants with
respect to its activities hereunder in connection with the
preparation of the Fund's Form N-1A, and Form N-SAR or other
23
<PAGE>
annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as
the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities System, relating to
the services provided by the Custodian under this Contract; such
reports, which shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund, to provide
reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such
inadequacies, shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as
agreed upon from time to time between the Fund and the Custodian.
8. Responsibility of Custodian
So long as and to the extent that it is in the exercise
of reasonable care, the Custodian shall not be responsible for
the title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
Contract and shall be held harmless in acting upon any notice,
24
<PAGE>
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability
to the Fund for any action taken or omitted by it in good faith
without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian with respect to
redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the
Fund.
If the Fund requires the Custodian to take any action
with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Fund being
liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges,
25
<PAGE>
expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the
account of the Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of Fund assets
to the extent necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its
execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by
mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take
effect not sooner than thirty (30) days after the date of such
delivery or mailing; provided, however that the Custodian shall
not act under Section 2.12 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary
that the Trustees of the Fund have approved the initial use of a
particular Securities System and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the
Trustees have reviewed the use by the Fund of such Securities
System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, as amended; provided further,
26
<PAGE>
however, that the Fund shall not amend or terminate this Contract
in contravention of any applicable federal or state regulations,
or any provision of the Declaration of Trust, and further
provided, that the Fund may at any time by action of its Trustees
(i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or
(ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event
at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to
the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for
its costs, expenses and disbursements.
10. Successor Custodian
If a successor custodian shall be appointed by the
Trustees of the Fund, the Custodian shall, upon termination,
deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities
held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
27
<PAGE>
of a vote of the Trustees of the Fund, deliver at the office of
the Custodian and transfer such securities, funds and other
properties in accordance with such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the Trustees
shall have been delivered to the Custodian on or before the date
when such termination shall become effective, then the Custodian
shall have the right to deliver to a bank or trust company, which
is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000,
all securities, funds and other properties held by the Custodian
and all instruments held by the Custodian relative thereto and
all other property held by it under this Contract and to transfer
to an account of such successor custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of vote referred to or of the Trustees to appoint
a successor custodian, the Custodian shall be entitled to fair
compensation for its services during such period as the Custodian
28
<PAGE>
retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and
effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Declaration of Trust of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
12. Massachusetts Law to Apply
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
13. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund and the Custodian
relating to the custody of the Fund's assets.
29
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the 1st day of June, 1985.
ATTEST ALLIANCE TAX-EXEMPT RESERVES
/s/ William A. Bennet /s/ James P. Syrett
___________________________ By____________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ K. M. Kubit /s/ Charles Cassidy
___________________________ ______________________________
Assistant Secretary Vice President
30
00250185.AB4
<PAGE>
AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made this 23rd day of May, 1989 by and between
STATE STREET BANK AND TRUST COMPANY ("Custodian") and ALLIANCE
TAX-EXEMPT RESERVES (the "Fund").
WITNESSETH THAT:
WHEREAS, the Custodian and the Fund are parties to a
Custodian Contract dated June 1, 1985, (as amended to date, the
"Contract") which governs the terms and conditions under which
the Custodian maintains custody of the securities and other
assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend
the terms of the Custodian Contract and mutually agree to the
following:
Replace subsection 7 of Section 2.2 Delivery of Securities
with the following new subsection 7:
7) Upon the sale of such securities for the account
of the Fund, to the broker or its clearing agent,
against a receipt, for examination in accordance
with "street delivery" custom; the Custodian shall
have no responsibility or liability for any loss
arising from the delivery of such securities prior
to receiving payment for such securities except as
may arise from the Custodian's own negligence or
willful misconduct;
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Amendment to be executed in its name and on its behalf by a duly
authorized officer as of the day and year first above written.
ATTEST ALLIANCE TAX-EXEMPT RESERVES
/s/ Edmund P. Bergan /s/ James P. Syrett
___________________________ ______________________________
Secretary President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ P. McClure /s/ E. D. Hawkes, Jr.
___________________________ ______________________________
Assistant Secretary Vice President
2
00250185.AD0
<PAGE>
ALLIANCE FUND SERVICES, INC.
TRANSFER AGENCY AGREEMENT
AGREEMENT, dated as of September 13, 1988, between
ALLIANCE TAX EXEMPT RESERVES, a Massachusetts business trust
and an open-end investment company registered with the
Securities and Exchange Commission (the "SEC") under the
Investment Company Act of 1940 (the "Investment Company
Act"), having its principal place of business at 1345 Avenue
of Americas, New York, New York 10105 (the "Fund"), and
ALLIANCE FUND SERVICES, INC., a Delaware corporation
registered with the SEC as a transfer agent under the
Securities Exchange Act of 1934, having its principal place
of business at 500 Plaza Drive, Secaucus, New Jersey 07094
("Fund Services"), provides as follows:
WHEREAS, Fund Services has agreed to act as
transfer agent to the Fund for the purpose of recording the
transfer, issuance and redemption of shares of each series
of the common stock or shares of beneficial interest, as
applicable, of the Fund ("Shares" or "Shares of a Series"),
transferring the Shares, disbursing dividends and other
distributions to shareholders of the Fund, and performing
such other services as may be agreed to pursuant hereto;
NOW THEREFORE, for and in consideration of the
mutual covenants and agreements contained herein, the
parties do hereby agree as follows:
<PAGE>
SECTION 1. The Fund hereby appoints Fund Services
as its transfer agent, dividend disbursing agent and
shareholder servicing agent for the Shares, and Fund
Services agrees to act in such capacities upon the terms set
forth in this Agreement. Capitalized terms used in this
Agreement and not otherwise defined shall have the meanings
assigned to them in SECTION 30.
SECTION 2.
(a) The Fund shall provide Fund Services with
copies of the following documents:
(1) Specimens of all forms of certificates
for Shares;
(2) Specimens of all account application
forms and other documents relating to Shareholders'
accounts;
(3) Copies of each Prospectus;
(4) Specimens of all documents relating to
withdrawal plans instituted by the Fund, as described in
SECTION 16; and
(5) Specimens of all amendments to any of the
foregoing documents.
(b) The Fund shall furnish to Fund Services a
supply of blank Share Certificates for the Shares and, from
time to time, will renew such supply upon Fund Services'
request. Blank Share Certificates shall be signed manually
2
<PAGE>
or by facsimile signatures of officers of the Fund
authorized to sign by law or pursuant to the by-laws of the
Fund and, if required by Fund Services, shall bear the
Fund's seal or a facsimile thereof.
SECTION 3. Fund Services shall make original
issues of Shares in accordance with SECTIONS 13 and 14 and
the Prospectus upon receipt of (i) Written Instructions
requesting the issuance, (ii) a certified copy of a
resolution of the Fund's Board of Directors or Trustees
authorizing the issuance, (iii) necessary funds for the
payment of any original issue tax applicable to such Shares,
and (iv) an opinion of the Fund's counsel as to the legality
and validity of the issuance, which opinion may provide that
it is contingent upon the filing by the Fund of an
appropriate notice with the SEC, as required by Rule 24f-2
of the Investment Company Act, as amended from time to time.
SECTION 4. Transfers of Shares shall be registered
and, subject to the provisions of SECTION 10 in the case of
Shares evidenced by Share Certificates, new Share
Certificates shall be issued by Fund Services upon surrender
of outstanding Share Certificates in the form deemed by Fund
Services to be properly endorsed for transfer, which form
shall include (i) all necessary endorsers' signatures
guaranteed by a member firm of a national securities
exchange or a domestic commercial bank or through other
3
<PAGE>
procedures mutually agreed to between the Fund and Fund
Services, (ii) such assurances as Fund Services may deem
necessary to evidence the genuineness and effectiveness of
each endorsement and (iii) satisfactory evidence of
compliance with all applicable laws relating to the payment
or collection of taxes.
SECTION 5. Fund Services shall forward Share
Certificates in "non-negotiable" form by first-class or
registered mail, or by whatever means Fund Services deems
equally reliable and expeditious. While in transit to the
addressee, all deliveries of Share Certificates shall be
insured by Fund Services as it deems appropriate. Fund
Services shall not mail Share Certificates in "negotiable"
form, unless requested in writing by the Fund and fully
indemnified by the Fund to Fund Services' satisfaction.
SECTION 6. In registering transfers of Shares,
Fund Services may rely upon the Uniform Commercial Code as
in effect from time to time in the State in which the Fund
is incorporated or organized or, if appropriate, in the
State of New Jersey; provided, that Fund Services may rely
in addition or alternatively on any other statutes in effect
in the State of New Jersey or in the state under the laws of
which the Fund is incorporated or organized that, in the
opinion of Fund Services' counsel, protect Fund Services and
the Fund from liability arising from (i) not requiring
4
<PAGE>
complete documentation in connection with an issuance or
transfer, (ii) registering a transfer without an adverse
claim inquiry, (iii) delaying registration for purposes of
an adverse claim inquiry or (iv) refusing registration in
connection with an adverse claim.
SECTION 7. Fund Services may issue new Share
Certificates in place of those lost, destroyed or stolen,
upon receiving indemnity satisfactory to Fund Services; and
may issue new Share Certificates in exchange for, and upon
surrender of, mutilated Share Certificates as Fund Services
deems appropriate.
SECTION 8. Unless otherwise directed by the Fund,
Fund Services may issue or register Share Certificates
reflecting the signature, or facsimile thereof, of an
officer who has died, resigned or been removed by the Fund.
The Fund shall file promptly with Fund Services' approval,
adoption or ratification of such action as may be required
by law or by Fund Services.
SECTION 9. Fund Services shall maintain customary
stock registry records for Shares of each Series noting the
issuance, transfer or redemption of Shares and the issuance
and transfer of Share Certificates. Fund Services may also
maintain for Shares of each Series an account entitled
"Unissued Certificate Account," in which Fund Services will
record the Shares, and fractions thereof, issued and
5
<PAGE>
outstanding from time to time for which issuance of Share
Certificates has not been requested. Fund Services is
authorized to keep records for Shares of each Series
containing the names and addresses of record of
Shareholders, and the number of Shares, and fractions
thereof, from time to time owned by them for which no Share
Certificates are outstanding. Each Shareholder will be
assigned a single account number for Shares of each Series,
even though Shares for which Certificates have been issued
will be accounted for separately.
SECTION 10. Fund Services shall issue Share
Certificates for Shares only upon receipt of a written
request from a Shareholder and as authorized by the Fund.
If Shares are purchased or transferred without a request for
the issuance of a Share Certificate, Fund Services shall
merely note on its stock registry records the issuance or
transfer of the Shares and fractions thereof and credit or
debit, as appropriate, the Unissued Certificate Account and
the respective Shareholders' accounts with the Shares.
Whenever Shares, and fractions thereof, owned by
Shareholders are surrendered for redemption, Fund Services
may process the transactions by making appropriate entries
in the stock transfer records, and debiting the Unissued
Certificate Account and the record of issued Shares
6
<PAGE>
outstanding; it shall be unnecessary for Fund Services to
reissue Share Certificates in the name of the Fund.
SECTION 11. Fund Services shall also perform the
usual duties and function required of a stock transfer agent
for a corporation, including but not limited to (i) issuing
Share Certificates as treasury Shares, as directed by
Written Instructions, and (ii) transferring Share
Certificates from one Shareholder to another in the usual
manner. Fund Services may rely conclusively and act without
further investigation upon any list, instruction,
certification, authorization, Share Certificate or other
instrument or paper reasonably believed by it in good faith
to be genuine and unaltered, and to have been signed,
countersigned or executed or authorized by a duly-authorized
person or persons, or by the Fund, or upon the advice of
counsel for the Fund or for Fund Services. Fund Services
may record any transfer of Share Certificates which it
reasonably believes in good faith to have been duly
authorized, or may refuse to record any transfer of Share
Certificates if, in good faith, it reasonably deems such
refusal necessary in order to avoid any liability on the
part of either the Fund or Fund Services.
SECTION 12. Fund Services shall notify the Fund of
any request or demand for the inspection of the Fund's share
records. Fund Services shall abide by the Fund's
7
<PAGE>
instructions for granting or denying the inspection;
provided, however, Fund Services may grant the inspection
without such instructions if it is advised by its counsel
that failure to do so will result in liability to Fund
Services.
SECTION 13. Fund Services shall observe the
following procedures in handling funds received:
(a) Upon receipt at the office designated by the
Fund of any check or other order drawn or endorsed to the
Fund or otherwise identified as being for the account of the
Fund, and, in the case of a new account, accompanied by a
new account application or sufficient information to
establish an account as provided in the Prospectus, Fund
Services shall stamp the transmittal document accompanying
such check or other order with the name of the Fund and the
time and date of receipt and shall forthwith deposit the
proceeds thereof in the custodial account of the Fund.
(b) In the event that any check or other order for
the purchase of Shares is returned unpaid for any reason,
Fund Services shall, in the absence of other instructions
from the Fund, advise the Fund of the returned check and
prepare such documents and information as may be necessary
to cancel promptly any Shares purchased on the basis of such
returned check and any accumulated income dividends and
capital gains distributions paid on such Shares.
8
<PAGE>
(c) As soon as possible after 4:00 p.m., Eastern
time or at such other times as the Fund may specify in
Written or Oral Instructions for any Series (the "Valuation
Time") on each Business Day Fund Services shall obtain from
the Fund's Adviser a quotation (on which it may conclusively
rely) of the net asset value, determined as of the Valuation
Time on that day. On each Business Day Fund Services shall
use the net asset value(s) determined by the Fund's Adviser
to compute the number of Shares and fractional Shares to be
purchased and the aggregate purchase proceeds to be
deposited with the Custodian. As necessary but no more
frequently than daily (unless a more frequent basis is
agreed to by Fund Services), Fund Services shall place a
purchase order with the Custodian for the proper number of
Shares and fractional Shares to be purchased and promptly
thereafter shall send written confirmation of such purchase
to the Custodian and the Fund.
SECTION 14. Having made the calculations required
by SECTION 13, Fund Services shall thereupon pay the
Custodian the aggregate net asset value of the Shares
purchased. The aggregate number of Shares and fractional
Shares purchased shall then be issued daily and credited by
Fund Services to the Unissued Certificate Account. Fund
Services shall also credit each Shareholder's separate
account with the number of Shares purchased by such
9
<PAGE>
Shareholder. Fund Services shall mail written confirmation
of the purchase to each Shareholder or the Shareholder's
representative and to the Fund if requested. Each
confirmation shall indicate the prior Share balance, the new
Share balance, the Shares for which Stock Certificates are
outstanding (if any), the amount invested and the price paid
for the newly-purchased Shares.
SECTION 15. Prior to the Valuation Time on each
Business Day, as specified in accordance with SECTION 13,
Fund Services shall process all requests to redeem Shares
and, with respect to each Series, shall advise the Custodian
of (i) the total number of Shares available for redemption
and (ii) the number of Shares and fractional Shares
requested to be redeemed. Upon confirmation of the net
asset value by the Fund's Adviser, Fund Services shall
notify the Fund and the Custodian of the redemption, apply
the redemption proceeds in accordance with SECTION 16 and
the Prospectus, record the redemption in the stock registry
books, and debit the redeemed Shares from the Unissued
Certificates Account and the individual account of the
Shareholder.
In lieu of carrying out the redemption procedures
described in the preceding paragraph, Fund Services may, at
the request of the Fund, sell Shares to the Fund as
repurchases from Shareholders, provided that the sale price
10
<PAGE>
is not less than the applicable redemption price. The
redemption procedures shall then be appropriately modified.
SECTION 16. Fund Services will carry out the
following procedures with respect to Share redemptions:
(a) As to each request received by the Fund from
or on behalf of a Shareholder for the redemption of Shares,
and unless the right of redemption has been suspended as
contemplated by the Prospectus, Fund Services shall, within
seven days after receipt of such redemption request, either
(i) mail a check in the amount of the proceeds of such
redemption to the person designated by the Shareholder or
other person to receive such proceeds or, (ii) in the event
redemption proceeds are to be wired through the Federal
Reserve Wire System or by bank wire pursuant to procedures
described in the Prospectus, cause such proceeds to be wired
in Federal funds to the bank or trust company account
designated by the Shareholder to receive such proceeds.
Funds Services shall also prepare and send a confirmation of
such redemption to the Shareholder. Redemptions in kind
shall be made only in accordance with such Written
Instructions as Fund Services may receive from the Fund.
The requirements as to instruments of transfer and other
documentation, the determination of the appropriate
redemption price and the time of payment shall be as
provided in the Prospectus, subject to such additional
11
<PAGE>
requirements consistent therewith as may be established by
mutual agreement between the Fund and Fund Services. In the
case of a request for redemption that does not comply in all
respects with the requirements for redemption, Fund Services
shall promptly so notify the Shareholder and shall effect
such redemption at the price in effect at the time of
receipt of documents complying with such requirements. Fund
Services shall notify the Fund's Custodian and the Fund on
each Business Day of the amount of cash required to meet
payments made pursuant to the provisions of this paragraph
and thereupon the Fund shall instruct the Custodian to make
available to Fund Services in timely fashion sufficient
funds therefor.
(b) Procedures and standards for effecting and
accepting redemption orders from Shareholders by telephone
or by such check writing service as the Fund may institute
may be established by mutual agreement between Fund Services
and the Fund consistent with the Prospectus.
(c) For purposes of redemption of Shares that have
been purchased by check within fifteen (15) days prior to
receipt of the redemption request, the Fund shall provide
Fund Services with Written Instructions concerning the time
within which such requests may be honored.
(d) Fund Services shall process withdrawal orders
duly executed by Shareholders in accordance with the terms
12
<PAGE>
of any withdrawal plan instituted by the Fund and described
in the Prospectus. Payments upon such withdrawal orders and
redemptions of Shares held in withdrawal plan accounts in
connection with such payments shall be made at such times as
the Fund may determine in accordance with the Prospectus.
(e) The authority of Fund Services to perform its
responsibilities under SECTIONS 15 and 16 with respect to
the Shares of any Series shall be suspended if Fund Services
receives notice of the suspension of the determination of
the net asset value of the Series.
SECTION 17. Upon the declaration of each dividend
and each capital gains distribution by the Fund's Board of
Directors or Trustees, the Fund shall notify Fund Services
of the date of such declaration, the amount payable per
Share, the record date for determining the Shareholders
entitled to payment, the payment and the reinvestment date
price.
SECTION 18. Upon being advised by the Fund of the
declaration of any income dividend or capital gains
distribution on account of its Shares, Fund Services shall
compute and prepare for the Fund records crediting such
distributions to Shareholders. Fund Services shall, on or
before the payment date of any dividend or distribution,
notify the Fund and the Custodian of the estimated amount
required to pay any portion of a dividend or distribution
13
<PAGE>
which is payable in cash, and thereupon the Fund shall, on
or before the payment date of such dividend or distribution,
instruct the Custodian to make available to Fund Services
sufficient funds for the payment of such cash amount. Fund
Services will, on the designated payment date, reinvest all
dividends in additional shares and promptly mail to each
Shareholder at his address of record a statement showing the
number of full and fractional Shares (rounded to three
decimal places) then owned by the Shareholder and the net
asset value of such Shares; provided, however, that if a
Shareholder elects to receive dividends in cash, Fund
Services shall prepare a check in the appropriate amount and
mail it to the Shareholder at his address of record within
five (5) business days after the designated payment date, or
transmit the appropriate amount in Federal funds in
accordance with the Shareholder's agreement with the Fund.
SECTION 19. Fund Services shall prepare and
maintain for the Fund records showing for each Shareholder's
account the following:
A. The name, address and tax identification
number of the Shareholder;
B. The number of Shares of each Series held by
the Shareholder;
C. Historical information including dividends
paid and date and price for all transactions;
14
<PAGE>
D. Any stop or restraining order placed against
such account;
E. Information with respect to the withholding of
any portion of income dividends or capital gains
distributions as are required to be withheld under
applicable law;
F. Any dividend or distribution reinvestment
election, withdrawal plan application, and correspondence
relating to the current maintenance of the account;
G. The certificate numbers and denominations of
any Share Certificates issued to the Shareholder; and
H. Any additional information required by Fund
Services to perform the services contemplated by this
Agreement.
Fund Services agrees to make available upon request
by the Fund or the Fund's Adviser and to preserve for the
periods prescribed in Rule 31a-2 of the Investment Company
Act any records related to services provided under this
Agreement and required to be maintained by Rule 31a-1 of
that Act, including:
(i) Copies of the daily transaction register for each
Business Day of the Fund;
(ii) Copies of all dividend, distribution and
reinvestment blotters;
15
<PAGE>
(iii) Schedules of the quantities of Shares of each
Series distributed in each state for purposes of
any state's laws or regulations as specified in
Oral or Written Instructions given to Fund
Services from time to time by the Fund or its
agents; and
(iv) Such other information, including Shareholder
lists, and statistical information as may be
agreed upon from time to time by the Fund and Fund
Services.
SECTION 20. Fund Services shall maintain those
records necessary to enable the Fund to file, in a timely
manner, form N-SAR (Semi-Annual Report) or any successor
report required by the Investment Company Act or rules and
regulations thereunder.
SECTION 21. Fund Services shall cooperate with the
Fund's independent public accountants and shall take
reasonable action to make all necessary information
available to such accountants for the performance of their
duties.
SECTION 22. In addition to the services described
above, Fund Services will perform other services for the
Fund as may be mutually agreed upon in writing from time to
time, which may include preparing and filing Federal tax
forms with the Internal Revenue Service, and, subject to
16
<PAGE>
supervisory oversight by the Fund's Adviser, mailing Federal
tax information to Shareholders, mailing semi-annual
Shareholder reports, preparing the annual list of
Shareholders, mailing notices of Shareholders' meetings,
proxies and proxy statements and tabulating proxies. Fund
Services shall answer the inquiries of certain Shareholders
related to their share accounts and other correspondence
requiring an answer from the Fund. Fund Services shall
maintain dated copies of written communications from
Shareholders, and replies thereto.
SECTION 23. Nothing contained in this Agreement is
intended to or shall require Fund Services, in any capacity
hereunder, to perform any functions or duties on any day
other than a Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Business
Day shall be performed on, and as of, the next Business Day,
unless otherwise required by law.
SECTION 24. For the services rendered by Fund
Services as described above, the Fund shall pay to Fund
Services an annualized fee at a rate to be mutually agreed
upon from time to time. Such fee shall be prorated for the
months in which this Agreement becomes effective or is
terminated. In addition, the Fund shall pay, or Fund
Services shall be reimbursed for, all out-of-pocket expenses
incurred in the performance of this Agreement, including but
17
<PAGE>
not limited to the cost of stationery, forms, supplies,
blank checks, stock certificates, proxies and proxy
solicitation and tabulation costs, all forms and statements
used by Fund Services in communicating with Shareholders of
the Fund or especially prepared for use in connection with
its services hereunder, specific software enhancements as
requested by the Fund, costs associated with maintaining
withholding accounts (including non-resident alien, Federal
government and state), postage, telephone, telegraph (or
similar electronic media) used in communicating with
Shareholders or their representatives, outside mailing
services, microfiche/microfilm, freight charges and off-site
record storage. It is agreed in this regard that Fund
Services, prior to ordering any form in such supply as it
estimates will be adequate for more than two years' use,
shall obtain the written consent of the Fund. All forms for
which Fund Services has received reimbursement from the Fund
shall be the property of the Fund.
SECTION 25. Fund Services shall not be liable for
any taxes, assessments or governmental charges that may be
levied or assessed on any basis whatsoever in connection
with the Fund or any Shareholder, excluding taxes assessed
against Fund Services for compensation received by it
hereunder.
18
<PAGE>
SECTION 26.
(a) Fund Services shall at all times act in good
faith and with reasonable care in performing the services to
be provided by it under this Agreement, but shall not be
liable for any loss or damage unless such loss or damage is
caused by the negligence, bad faith or willful misconduct of
Fund Services or its employees or agents.
(b) The Fund shall indemnify and hold Fund
Services harmless from all loss, cost, damage and expense,
including reasonable expenses for counsel, incurred by it
resulting from any claim, demand, action or suit in
connection with the performance of its duties hereunder, or
as a result of acting upon any instruction reasonably
believed by it to have been properly given by a duly
authorized officer of the Fund, or upon any information,
data, records or documents provided to Fund Services or its
agents by computer tape, telex, CRT data entry or other
similar means authorized by the Fund; provided that this
indemnification shall not apply to actions or omissions of
Fund Services in cases of its own bad faith, willful
misconduct or negligence, and provided further that if in
any case the Fund may be asked to indemnify or hold Fund
Services harmless pursuant to this Section, the Fund shall
have been fully and promptly advised by Fund Services of all
material facts concerning the situation in question. The
19
<PAGE>
Fund shall have the option to defend Fund Services against
any claim which may be the subject of this indemnification,
and in the event that the Fund so elects it will so notify
Fund Services, and thereupon the Fund shall retain competent
counsel to undertake defense of the claim, and Fund Services
shall in such situations incur no further legal or other
expenses for which it may seek indemnification under this
paragraph. Fund Services shall in no case confess any claim
or make any compromise in any case in which the Fund may be
asked to indemnify Fund Services except with the Fund's
prior written consent.
Without limiting the foregoing:
(i) Fund Services may rely upon the advice of the
Fund or counsel to the Fund or Fund Services, and upon
statements of accountants, brokers and other persons
believed by Fund Services in good faith to be expert in the
matters upon which they are consulted. Fund Services shall
not be liable for any action taken in good faith reliance
upon such advice or statements;
(ii) Fund Services shall not be liable for any
action reasonably taken in good faith reliance upon any
Written Instructions or certified copy of any resolution of
the Fund's Board of Directors or Trustees, including a
Written Instruction authorizing Fund Services to make
payment upon redemption of Shares without a signature
20
<PAGE>
guarantee; provided, however, that upon receipt of a Written
Instruction countermanding a prior Instruction that has not
been fully executed by Fund Services, Fund Services shall
verify the content of the second Instruction and honor it,
to the extent possible. Fund Services may rely upon the
genuineness of any such document, or copy thereof,
reasonably believed by Fund Services in good faith to have
been validly executed;
(iii) Fund Services may rely, and shall be protected
by the Fund in acting, upon any signature, instruction,
request, letter of transmittal, certificate, opinion of
counsel, statement, instrument, report, notice, consent,
order, or other paper or document reasonably believed by it
in good faith to be genuine and to have been signed or
presented by the purchaser, the Fund or other proper party
or parties; and
(d) Fund Services may, with the consent of the
Fund, subcontract the performance of any portion of any
service to be provided hereunder, including with respect to
any Shareholder or group of Shareholders, to any agent of
Fund Services and may reimburse the agent for the services
it performs at such rates as Fund Services may determine;
provided that no such reimbursement will increase the amount
payable by the Fund pursuant to this Agreement; and provided
21
<PAGE>
further, that Fund Services shall remain ultimately
responsible as transfer agent to the Fund.
SECTION 27. The Fund shall deliver or cause to be
delivered over to Fund Services (i) an accurate list of
Shareholders, showing each Shareholder's address of record,
number of Shares of each Series owned and whether such
Shares are represented by outstanding Share Certificates or
by non-certificated Share accounts and (ii) all Shareholder
records, files, and other materials necessary or appropriate
for proper performance of the functions assumed by the under
this Agreement (collectively referred to as the
"Materials"). The Fund shall indemnify Fund Services and
hold it harmless from any and all expenses, damages, claims,
suits, liabilities, actions, demands and losses arising out
of or in connection with any error, omission, inaccuracy or
other deficiency of such Materials, or out of the failure of
the Fund to provide any portion of the Materials or to
provide any information in the Fund's possession needed by
Fund Services to knowledgeably perform its functions;
provided the Fund shall have no obligation to indemnify Fund
Services or hold it harmless with respect to any expenses,
damages, claims, suits, liabilities, actions, demands or
losses caused directly or indirectly by acts or omissions of
Fund Services or the Fund's Adviser.
22
<PAGE>
SECTION 28. This Agreement may be amended from
time to time by a written supplemental agreement executed by
the Fund and Fund Services and without notice to or approval
of the Shareholders; provided this Agreement may not be
amended in any manner which would substantially increase the
Fund's obligations hereunder unless the amendment is first
approved by the Fund's Board of Directors or Trustees,
including a majority of the Directors or Trustees who are
not a party to this Agreement or interested persons of any
such party, at a meeting called for such purpose, and
thereafter is approved by the Fund's Shareholders if such
approval is required under the Investment Company Act or the
rules and regulations thereunder. The parties hereto may
adopt procedures as may be appropriate or practical under
the circumstances, and Fund Services may conclusively rely
on the determination of the Fund that any procedure that has
been approved by the Fund does not conflict with or violate
any requirement of its Articles of Incorporation or
Declaration of Trust, By-Laws or Prospectus, or any rule,
regulation or requirement of any regulatory body.
SECTION 29. The Fund shall file with Fund Services
a certified copy of each operative resolution of its Board
of Directors or Trustees authorizing the execution of
Written Instructions or the transmittal of Oral Instructions
and setting forth authentic signatures of all signatories
23
<PAGE>
authorized to sign on behalf of the Fund and specifying the
person or persons authorized to give Oral Instructions on
behalf of the Fund. Such resolution shall constitute
conclusive evidence of the authority of the person or
persons designated therein to act and shall be considered in
full force and effect, with Fund Services fully protected in
acting in reliance therein, until Fund Services receives a
certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Written or
Oral Instructions. If the officer certifying the resolution
is authorized to give Oral Instructions, the certification
shall also be signed by a second officer of the Fund.
SECTION 30. The terms, as defined in this Section,
whenever used in this Agreement or in any amendment or
supplement hereto, shall have the meanings specified below,
insofar as the context will allow.
(a) Business Day: Any day on which the Fund is
open for business as described in the Prospectus.
(b) Custodian: The term Custodian shall mean the
Fund's current custodian or any successor custodian acting
as such for the Fund.
(c) Fund's Adviser: The term Fund's Adviser shall
mean Alliance Capital Management L.P. or any successor
thereto who acts as the investment adviser or manager of the
Fund.
24
<PAGE>
(d) Oral Instructions: The term Oral Instructions
shall mean an authorization, instruction, approval, item or
set of data, or information of any kind transmitted to Fund
Services in person or by telephone, vocal telegram or other
electronic means, by a person or persons reasonably believed
in good faith by Fund Services to be a person or persons
authorized by a resolution of the Board of Directors or
Trustees of the Fund to give Oral Instructions on behalf of
the Fund. Each Oral Instruction shall specify whether it is
applicable to the entire Fund or a specific Series of the
Fund.
(e) Prospectus: The term Prospectus shall mean a
prospectus and related statement of additional information
forming part of a currently effective registration statement
under the Investment Company Act and, as used with the
respect to Shares or Shares of a Series, shall mean the
prospectuses and related statements of additional
information covering the Shares or Shares of the Series.
(f) Securities: The term Securities shall mean
bonds, debentures, notes, stocks, shares, evidences of
indebtedness, and other securities and investments from time
to time owned by the Fund.
(g) Series: The term Series shall mean any series
of Shares of the common stock of the Fund that the Fund may
establish from time to time.
25
<PAGE>
(h) Share Certificates: The term Share
Certificates shall mean the stock certificates or
certificates representing shares of beneficial interest for
the Shares.
(i) Shareholders: The term Shareholders shall
mean the registered owners from time to time of the Shares,
as reflected on the stock registry records of the Fund.
(j) Written Instructions: The term Written
Instructions shall mean an authorization, instruction,
approval, item or set of data, or information of any kind
transmitted to Fund Services in original writing containing
original signatures, or a copy of such document transmitted
by telecopy, including transmission of such signature, or
other mechanical or documentary means, at the request of a
person or persons reasonably believed in good faith by Fund
Services to be a person or persons authorized by a
resolution of the Board of Directors or Trustees of the Fund
to give Written Instruction shall specify whether it is
applicable to the entire Fund or a specific Series of the
Fund.
SECTION 31. Fund Services shall not be liable for
the loss of all or part of any record maintained or
preserved by it pursuant to this Agreement or for any delays
or errors occurring by reason of circumstances beyond its
control, including but not limited to acts of civil or
26
<PAGE>
military authorities, national emergencies, fire, flood or
catastrophe, acts of God, insurrection, war, riot, or
failure of transportation, communication or power supply,
except to the extent that Fund Services shall have failed to
use its best efforts to minimize the likelihood of
occurrence of such circumstances or to mitigate any loss or
damage to the Fund caused by such circumstances.
SECTION 32. The Fund may give Fund Services sixty
(60) days and Fund Services may give the Fund (90) days
written notice of the termination of this Agreement, such
termination to take effect at the time specified in the
notice. Upon notice of termination, the Fund shall use its
best efforts to obtain a successor transfer agent. If a
successor transfer agent is not appointed within ninety (90)
days after the date of the notice of termination, the Board
of Directors or Trustees of the Fund shall, by resolution,
designate the Fund as its own transfer agent. Upon receipt
of written notice from the Fund of the appointment of the
successor transfer agent and upon receipt of Oral or Written
Instructions Fund Services shall, upon request of the Fund
and the successor transfer agent and upon payment of Fund
Services reasonable charges and disbursements, promptly
transfer to the successor transfer agent the original or
copies of all books and records maintained by Fund Services
hereunder and cooperate with, and provide reasonable
27
<PAGE>
assistance to, the successor transfer agent in the
establishment of the books and records necessary to carry
out its responsibilities hereunder.
SECTION 33. Any notice or other communication
required by or permitted to be given in connection with this
Agreement shall be in writing, and shall be delivered in
person or sent by first-class mail, postage prepaid, to the
respective parties.
Notice to the Fund shall be given as follows until
further notice:
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
Notice to Fund Services shall be given as follows
until further notice:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
SECTION 34. The Fund represents and warrants to
Fund Services that the execution and delivery of this
Agreement by the undersigned officer of the Fund has been
duly and validly authorized by resolution of the Fund's
Board of Directors or Trustees. Fund Services represents
and warrants to the Fund that the execution and delivery of
this Agreement by the undersigned officer of Fund Services
has also been duly and validly authorized.
28
<PAGE>
SECTION 35. This Agreement may be executed in more
than one counterpart, each of which shall be deemed to be an
original, and shall become effective on the last date of
signature below unless otherwise agreed by the parties.
Unless sooner terminated pursuant to SECTION 32, this
Agreement will continue until and will continue
in effect thereafter for successive 12 month periods only if
such continuance is specifically approved at least annually
by the Board of Directors or Trustees or by a vote of the
stockholders of the Fund and in either case by a majority of
the Directors or Trustees who are not parties to this
Agreement or interested persons of any such party, at a
meeting called for the purpose of voting on this Agreement.
SECTION 36. This Agreement shall extend to and
shall bind the parties hereto and their respective
successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the
written consent of Fund Services or by Fund Services without
the written consent of the Fund, authorized or approved by a
resolution of the Fund's Board of Directors or Trustees.
Notwithstanding the foregoing, either party may assign this
Agreement without the consent of the other party so long as
the assignee is an affiliate, parent or subsidiary of the
assigning party and is qualified to act under the Investment
Company Act, as amended from time to time.
29
<PAGE>
SECTION 38. This Agreement shall be governed by
the laws of the State of New Jersey.
WITNESS the following signatures:
ALLIANCE TAX EXEMPT RESERVES
BY: /s/ James P. Syrett
__________________________
TITLE: President
_______________________
ALLIANCE FUND SERVICES, INC.
BY: /s/ Edmund P. Bergan, Jr.
__________________________
TITLE: Vice President,
Secretary and General
Counsel
_______________________
30
00250185.AA4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our reports dated
July 29, 1997 on the financial statements of the General
Portfolio, New York Portfolio, California Portfolio, Connecticut
Portfolio, New Jersey Portfolio, Virginia Portfolio, Florida
Portfolio, and Massachusetts Portfolio, series of Alliance
Municipal Trust, referred to therein in Post-Effective Amendment
No. 35 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, 1997
00250185.AI6
Exhibit 16
__________
Alliance Municipal Trust -
General, New York, California, Connecticut
New Jersey, Virginia, Florida and Massachusetts Portfolios
Hypothetical Yield Computation
1. Add last seven days of dividends.
Hypothetical
Date Daily Dividend
XX/YY/97 a
XX/YY/97 b
XX/YY/97 c
XX/YY/97 d
XX/YY/97 e
XX/YY/97 f
XX/YY/97 g
Total: h
2. Divide total of last 7 days of dividend by 7
to get average daily dividend.
h divided by 7 = i
3. Take average daily dividend and multiply by
365 to get 7-day yield.
i multiplied by 365 = A.AA%
4. Take 7-day yield and compound over a 365-day
period to obtain effective yield.
((A.AA% divided by 365)+1) compounded by
365 = B.BB%
<PAGE>
Alliance Municipal Trust -
General, New York, California, Connecticut
New Jersey, Virginia, Florida and Massachusetts Portfolios
Hypothetical Yield Computation
1. Divide that portion of the yield (determined
as set forth above) of the Portfolio that is
tax-exempt by one minus the applicable income
tax rate and add that quotient to that
portion, if any, of the yield that is not tax-
exempt:
((RR.RR% x A.AA%) divided by (1 - TT.TT%)) +
(A.AA% - (RR.RR% x A.AA%))
2. Tax-equivalent effective yield is determined
using the same formula above, except that the
effective yield (determined as set forth
above) is inserted:
((RR.RR% x B.BB%) divided by (1 - TT.TT%)) +
(B.BB% - (RR.RR% x B.BB%))
00250185.AI5
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 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: October 29, 1997
<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: October 29, 1997
00250185.AI7
<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: October 29, 1997
00250185.AI7
<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, Jr.
__________________________
William H. Foulk, Jr.
Dated: October 29, 1997
00250185.AI7
<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/ Donald J. Robinson
_______________________
Donald J. Robinson
Dated: October 29, 1997
00250185.AI7
<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: October 29, 1997
00250185.AI7
<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: October 29, 1997
00250185.AI7
<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: October 29, 1997
00250185.AI7
