ALLIANCE MUNICIPAL INCOME FUND
ANNUAL REPORT
OCTOBER 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
December 3, 1997
Dear Shareholder:
We are pleased to report municipal market activity and investment results for
Alliance Municipal Income Fund's fiscal reporting period ended October 31,
1997. Over the past year, all of the Fund's Portfolios produced excellent total
returns and outperformed their respective benchmarks, the Lipper Municipal Debt
Fund Averages.
MUNICIPAL INCOME FUND - CLASS A SHARES
Periods Ended October 31, 1997
TOTAL LIPPER
RETURN RANKING*
PORTFOLIO 12 MONTHS 12 MONTHS
- --------- --------- ---------
National 9.88% #10/231
California 10.07% #9/105
New York 10.52% #1/93
Insured National 8.77% #3/49
Insured California 9.18% #1/25
* FUNDS IN THE LIPPER AVERAGES GENERALLY HAVE SIMILAR INVESTMENT OBJECTIVES,
ALTHOUGH SOME MAY HAVE DIFFERENT INVESTMENT POLICIES. LIPPER RANKINGS FOR THE
FIVE- AND TEN-YEAR PERIODS ENDED 10/31/97 WERE: #14 OF 108 AND #7 OF 68 FOR THE
NATIONAL PORTFOLIO; #2 OF 22 AND #3 OF 17 FOR THE INSURED NATIONAL PORTFOLIO;
#8 OF 50 AND #2 OF 30 FOR THE CALIFORNIA PORTFOLIO; #4 OF 8 AND #5 OF 7 FOR THE
INSURED CALIFORNIA PORTFOLIO; AND #7 OF 44 AND #4 OF 27 FOR THE NEW YORK
PORTFOLIO.
THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD
AND ARE BASED ON THE NET ASSET VALUE FOR CLASS A SHARES. TOTAL RETURNS FOR
CLASS B AND C SHARES WILL DIFFER. ALL FEES AND EXPENSES RELATED TO THE
OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR
SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED.
Additionally, the Fund's five portfolios have also received excellent rankings
among municipal income funds in their respective peer groups tracked by Lipper
for the 12 months ended October 31, 1997. Lipper rankings are for the Fund's
Class A shares and are based on total returns at net asset value, without the
imposition of the maximum 4.25% sales charge, which would reduce total return
figures.
MARKET OVERVIEW
For the fiscal year ended October 31, 1997, municipal bonds delivered a third
consecutive year of excellent returns to investors. Following the trend
established in 1996, interest rates remained within a trading range, driven by
mild volatility in economic indicators more than by secular movement toward
significantly higher (or lower) yields. Municipal bond yield ratios, relative
to taxable investments, improved as the threat of significant tax reform
subsided. Credit ratings of municipal issuers saw a marked improvement during
the year due to higher than anticipated revenues derived from a strong domestic
economy. This stable rate and taxation environment combined with improving
municipal credit quality resulted in municipal bonds producing some of the most
attractive returns in the fixed income markets year-to-date.
During the third quarter of 1997, the pace of new issuance of municipal debt
picked up after a slow first half. The decline in interest rates during the
latter half of the year is expected to produce new issue volume exceeding 1996
levels. Demand has more than matched this supply due to reinvestment of
proceeds from maturing or called bonds, continued reallocation of stock market
profits to bonds and a surge in money from bank trust departments converting
common fund assets into mutual fund assets.
INVESTMENT STRATEGY
The Alliance Municipal Income Portfolios seek to provide shareholders with high
current tax-free income. At the same time, the Portfolios are managed to
maintain relative stability of principal without sacrificing competitive
returns.
The average credit quality of the securities in the portfolios continues to be
very high. The management team has chosen to focus on higher quality bonds due
to the yield compression between lower quality issues and higher quality issues
in the market. This compression of yields exists for two reasons. First, the
municipal bond market is income-driven. Because of the benefit of tax exempt
income, tremendous investor demand exists with little regard for risk. Second,
the ready availability and affordability of bond insurance has led to a record
number of issues marketed with credit enhancement. This has dramatically
increased the number of high grade issues in the market. At Alliance, we
believe that there is currently better value in the high quality segment of the
municipal market and we will continue to focus on this sector until conditions
change.
1
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
OUTLOOK
We believe that 1998 should be another good year for fixed income investors,
although there is the possibility that inflationary pressures may begin to
surface because of strength in the domestic U.S. economy. However, we expect
interest rates to remain in a narrow range, with levels trending lower in the
future. We would consider any backup in rates as an opportunity to lock in
attractive yields and to improve portfolio call protection. Overall, we believe
that inflation will remain in check, demand for investments will be strong and
that the environment for fixed income investors will be positive.
We appreciate your investment in Alliance Municipal Income Fund and look
forward to reporting future investment results.
Sincerely,
John D. Carifa
Chairman and President
Susan P. Keenan
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
HOW YOUR PORTFOLIO PERFORMED
OVER THE PAST FISCAL YEAR ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
The Portfolios' Class A shares total returns for the periods ended October 31,
1997 are shown below. We have also shown, for comparison, returns for the
overall municipal bond market, represented by the Lipper Municipal Debt Funds
Average. Current yields and returns for Class B and Class C shares are on the
next page.
INVESTMENT RESULTS
_______________________________________________________________________________
MUNICIPAL INCOME FUND - CLASS A SHARES COMPARED TO LIPPER MUNICIPAL DEBT FUNDS
AVERAGE
PORTFOLIO LIPPER AVERAGE PORTFOLIO LIPPER AVERAGE
TOTAL TOTAL TOTAL TOTAL
RETURNS - RETURNS - RETURNS - RETURNS -
6 MONTHS 6 MONTHS 12 MONTHS 12 MONTHS
---------- -------------- ----------- --------------
National 7.53% 6.35% 9.88% 8.12%
California 7.91% 6.59% 10.07% 8.30%
New York 7.91% 6.24% 10.52% 8.04%
Insured National 7.88% 6.11% 8.77% 7.38%
Insured California 7.42% 6.30% 9.18% 7.76%
INVESTMENT OBJECTIVE AND POLICIES
_______________________________________________________________________________
The five portfolios of Alliance Municipal Income Fund, by investing principally
in high-yielding, predominantly medium quality municipal securities, seek to
provide their shareholders with the highest level of income exempt from Federal
and state tax that is available without assuming undue risk. These securities
generally offer current yields above those of higher quality municipal
obligations.
3
INVESTMENT RESULTS
AS OF OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURNS TAXABLE
--------------------------------------- EQUIVALENT
WITHOUT SALES CHARGE WITH SALES CHARGE YIELD IN
-------------------- ----------------- 30-DAY 36% TAX
SINCE SINCE SEC BRACKET*
1 YEAR INCEPTION 1 YEAR INCEPTION YIELD* (AT NAV)
-------- --------- ------ --------- ------ --------
NATIONAL PORTFOLIO
Class A 9.88% 8.30% 5.18% 7.86% 4.93% 8.27%
Class B 9.16 6.66 6.16 6.66 4.44 7.27
Class C 9.18 6.07 8.18 6.07 4.45 7.27
CALIFORNIA PORTFOLIO
Class A 10.07 8.19 5.40 7.75 5.13 9.11
Class B 9.29 6.80 6.29 6.80 4.65 7.92
Class C 9.29 6.28 8.29 6.28 4.65 7.92
NEW YORK PORTFOLIO
Class A 10.52 7.41 5.81 6.97 5.13 9.61
Class B 9.72 6.32 6.72 6.32 4.65 8.35
Class C 9.72 5.69 8.72 5.69 4.67 8.35
INSURED NATIONAL
PORTFOLIO
Class A 8.77 7.86 4.11 7.43 4.29 7.72
Class B 8.07 6.66 5.07 6.66 3.78 6.73
Class C 8.07 6.05 7.07 6.05 3.81 6.73
INSURED CALIFORNIA
PORTFOLIO
Class A 9.18 7.98 4.57 7.58 4.37 8.82
Class B 8.37 6.12 5.37 6.12 3.87 7.58
Class C 8.37 5.51 7.37 5.51 3.87 7.58
* Yields are for the 30-day period ended 10/31/97.
4
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND
GROWTH OF A $10,000 INVESTMENT
NATIONAL PORTFOLIO
10/31/87 TO 10/31/97
$24,000
$21,000
$18,000
$15,000
$12,000
$10,000
$9,000
NATIONAL PORTFOLIO CLASS A AT NAV: $24,748
NATIONAL PORTFOLIO CLASS A AT OFFERING: $23,702
LIPPER GENERAL MUNI FUNDS AVERAGE: $22,584
10/31/87
10/31/97
CALIFORNIA PORTFOLIO
10/31/87 TO 10/31/97
$24,000
$21,000
$18,000
$15,000
$12,000
$10,000
$9,000
CALIFORNIA PORTFOLIO CLASS A AT NAV: $24,234
CALIFORNIA PORTFOLIO CLASS A AT OFFERING: $23,197
LIPPER CA MUNI FUNDS AVERAGE: $22,447
10/31/87
10/31/97
NEW YORK PORTFOLIO
10/31/87 TO 10/31/97
$24,000
$21,000
$18,000
$15,000
$12,000
$10,000
$9,000
NEW YORK PORTFOLIO CLASS A AT NAV: $24,075
NEW YORK PORTFOLIO CLASS A AT OFFERING: $23,052
LIPPER NY MUNI FUNDS AVERAGE:$22,343
10/31/87
10/31/97
5
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND
GROWTH OF A $10,000 INVESTMENT
INSURED NATIONAL PORTFOLIO
10/31/87 TO 10/31/97
$24,000
$21,000
$18,000
$15,000
$12,000
$10,000
$9,000
INSURED NATIONAL PORTFOLIO CLASS A AT NAV: $23,784
INSURED NATIONAL PORTFOLIO CLASS A AT OFFERING: $22,779
LIPPER INSURED MUNI FUNDS AVERAGE:$22,185
10/31/87
10/31/97
INSURED CALIFORNIA PORTFOLIO
10/31/87 TO 10/31/97
$24,000
$21,000
$18,000
$15,000
$12,000
$10,000
$9,000
LIPPER INSURED CA MUNI FUNDS AVERAGE: $23,287
INSURED CALIFORNIA PORTFOLIO CLASS A AT NAV: $22,873
INSURED CALIFORNIA PORTFOLIO CLASS A AT OFFERING: $21,899
10/31/87
10/31/97
These charts illustrate the total value of assumed $10,000 investments in each
of Alliance Municipal Income Fund's Class A shares. The charts reflect the
deduction of the maximum 4.25% sales charges from initial $10,000 investments
and assume the reinvestment of dividends and capital gains. Performance at
NAV(net asset value) does not reflect sales charges which reduce total return
figures. Performance for Class B and C shares will vary from the results shown
in these illustrations due to differences in expenses charged to those classes.
Results should not be considered representative of future gains or losses in
capital value or dividend income.
The Lipper General Municipal Debt Funds Average reflects performance of 68
funds; the Lipper Insured Municipal Debt Funds Average reflects performance of
17 funds; the Lipper California Municipal Debt Funds Average reflects
performance of 30 funds; the Lipper Insured California Municipal Debt Funds
Average reflects performance of 7 funds; the Lipper New York Municipal Debt
Funds Average reflects performance of 27 funds. The funds tracked by Lipper
Analytical Services have generally similar investment objectives to the
applicable Alliance Municipal Income Fund Portfolio, although some of the funds
may have investment policies that are somewhat different than those of Alliance
Municipal Income Fund.
When comparing an Alliance Municipal Income Fund Portfolio at offering to the
corresponding Lipper Average, you should note that the Portfolio's performance
reflects the maximum sales charge of 4.25%, while no such sales charges are
reflected in the performance of the Lipper Averages.
6
NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-97.7%
LONG TERM MUNICIPAL BONDS-88.2%
ALABAMA-0.2%
AAA West Jefferson PCR
(Alabama Power) MBIA Ser 93C
6.05%, 5/01/23 $1,010 $ 1,035,402
ARIZONA-6.2%
NR Goodyear
Assess Dist #1 (Palm Valley) Ser 96C
7.25%, 7/01/16 4,940 5,159,237
AA+ Maricopa Cnty
Util Rev (Citizen's Util) Ser 95 AMT
6.20%, 5/01/30 7,705 8,223,315
AAA Maricopa Cnty
MFHR (Tempe Grove Apts)
GNMA Ser 96A AMT
6.20%, 1/20/39 5,320 5,577,967
AA- Mohave Cnty IDR
(Cargill/No Star Steel Proj)
Ser 95A AMT
6.70%, 3/01/20 8,770 9,735,489
AA+ Mohave Cnty IDR
Util Rev (Citizen's Util) Ser 93B AMT
5.80%, 11/15/28 2,000 2,055,120
AA+ Phoenix Sr Lien
(Civic Plaza Bldg Corp) Ser 94
6.00%, 7/01/12 1,015 1,081,117
NR Prescott Comm Fac Dist
(Hassayampa) Ser 96
7.75%, 7/01/21 4,785 4,881,466
NR Scottsdale GO
(McDowell Ranch) Ser 97
6.50%, 7/15/22 1,300 1,313,000
------------
38,026,711
CALIFORNIA-4.5%
AA- California Poll Ctl Fin Auth
PCR (Pacific Gas & Elec) Ser 93A AMT
5.875%, 6/01/23 12,145 12,468,664
A+ California Poll Ctl Fin Auth
PCR (So Calif Edison) Ser 92B AMT
6.40%, 12/01/24 $3,000 3,248,130
AA- Long Beach Harbor Rev
Ser 93 AMT
5.125%, 5/15/18 5,000 4,806,550
NR Sacramento Comm Fac Dist
#97-1 (No. Natomas Proj)
Series 97A
6.70%, 9/01/17 6,805 6,818,678
------------
27,342,022
COLORADO-6.1%
Aa2* Arapahoe Cnty
(E-470 Public Highway Auth)
7.00%, Prere: 8/31/05 11,830 14,011,452
BBB Denver City & Cnty
(Arpt System Rev) Ser 92C
6.75%, 11/15/22 9,500 10,332,239
BB+ Denver City & Cnty Arpt Auth
(United Airlines) Ser 92A AMT
6.875%, 10/01/32 11,775 12,855,238
------------
37,198,929
FLORIDA-13.1%
NR Collier Cnty Comm Fac Dist
(Fiddler's Creek) Ser 96
7.50%, 5/01/18 3,275 3,432,364
NR Collier Cnty IDR
(Southern St Util) Ser 96 AMT
6.50%, 10/01/25 12,605 13,363,191
AAA Dade Cnty Arpt Rev
(Miami Int'l) MBIA Ser 95B AMT
6.00%, 10/01/24 6,550 6,935,664
AAA Escambia Cnty HFA
SFMR (Multi County) GNMA Ser 95B AMT
6.25%, 4/01/28 9,690 10,137,775
7
NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
AAA Jacksonville Wtr & Swr
(United Waterworks)
AMBAC Ser 95 AMT
6.35%, 8/01/25 $1,500 $ 1,641,855
NR Northern Palm Beach Cnty
Imp Dist #9A (ABACOA) Ser 96A
7.20%, 8/01/16 3,070 3,315,201
7.30%, 8/01/27 15,600 16,839,888
AA- Orlando Util Comm
(Wtr & Elec) Ser 93B
6.809%, 10/06/17 (b) 4,550 4,742,283
A+ Palm Beach Cnty Hlth Fac
(Lourdes-McKeen Residence) Ser 96
6.625%, 12/01/26 1,210 1,313,322
NR St. John's Cnty Comm Dev
(Julington Creek Plantation) Ser 97
6.70%, 5/01/07 3,090 3,186,130
7.125%, 5/01/19 8,695 8,991,238
Baa2* Volusia Cnty Ed Fac Auth
(Embry-Riddle Aero Univ) Ser 96A
6.125%, 10/15/26 3,870 4,021,549
AA Volusia Cnty Hlth Fac Auth
(John Knox Village)
Ser 96A Asset Gty
6.00%, 6/01/17 1,885 1,975,103
------------
79,895,563
GEORGIA-5.3%
AAA Atlanta
Arpt Fac Rev MBIA AMT
Zero coupon, 1/01/10 60,535 32,587,807
INDIANA-7.0%
BB+ Indianapolis Arpt Auth
(United Airlines) Ser 95A AMT
6.50%, 11/15/31 39,670 42,474,272
MARYLAND-0.2%
NR Maryland Ind Dev Fin Auth Eco Dev
(Med Waste Assoc) Ser 89 AMT
8.75%, 11/15/10 1,405 1,464,628
MASSACHUSETTS-6.5%
AAA Massachusetts HFA
MFHR (Harbor Point Dev)
AMBAC Ser 96A AMT
6.40%, 12/01/15 1,330 1,421,624
AAA Massachusetts HFA
MFHR (Rental Hsg) AMBAC Ser 95E AMT
6.00%, 7/01/37 2,680 2,755,656
A3* Massachusetts Ind Fin Auth
Ed Fac (Brooks School) Ser 93
5.95%, 7/01/23 1,050 1,080,429
AAA Massachusetts Ind Fin Auth
MFHR (Heights Crossing)
FHA Ser 95 AMT
6.15%, 2/01/35 5,790 5,980,259
AAA Massachusetts Port Auth
(Boston Fuel Corp)
MBIA Ser 97 AMT
6.00%, 7/01/36 20,960 21,777,860
AAA Massachusetts Port Auth
(USAir Proj) MBIA Ser 96A AMT
5.875%, 9/01/23 6,285 6,459,220
------------
39,475,048
MICHIGAN-3.6%
AAA Kent Cnty GO Arpt Rev
(Kent Cnty Int'l) Ser 95 AMT
6.10%, 1/01/25 4,240 4,442,417
AAA Michigan HDA
MFHR (Rental Hsg Rev )
AMBAC Ser 97A AMT
6.10%, 10/01/33 8,400 8,714,076
AA+ Michigan HDA
SFMR (Mortgage Rev) Ser 96B AMT
6.20%, 6/01/27 5,270 5,532,288
A- Michigan Strategic Fund
PCR (General Motors Corp) Ser 95
6.20%, 9/01/20 2,765 2,962,117
------------
21,650,898
8
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MINNESOTA-3.6%
A Bass Brook PCR
(Minnesota Pwr & Light) Ser 92
6.00%, 7/01/22 $1,305 $ 1,345,964
AAA Duluth GO
Arpt Lease Rev Ser 95C AMT
6.25%, 8/01/14 4,085 4,330,999
AA+ Minnesota HFA
SFMR (Home Mortgage) Ser 93-C2 AMT
6.15%, 7/01/23 2,350 2,424,941
AA+ Minnesota HFA
SFMR (Home Mortgage) Ser 96F AMT
6.30%, 1/01/28 3,760 3,946,534
AA+ Minnesota HFA
SFMR (Home Mortgage) Ser 96G AMT
6.25%, 7/01/26 8,500 8,889,215
AA+ Rochester Hosp Rev
(Mayo Med Ctr) Ser 92H
8.022%, 11/15/15 (b) 1,000 1,126,800
------------
22,064,453
NEW JERSEY-2.5%
AAA New Jersey Eco Dev Auth
PCR (Pub Svc Elec & Gas)
MBIA Ser 94A AMT
6.40%, 5/01/32 1,450 1,549,717
A+ New Jersey Eco Dev Auth
Swr Rev (Anheuser-Busch) Ser 95 AMT
5.85%, 12/01/30 5,590 5,827,295
AAA New Jersey Eco Dev Auth
Wtr Fac (NJ American Wtr Co)
FGIC AMT
6.875%, 11/01/34 1,635 1,832,966
AAA New Jersey Hsg & Mtg Fin Agy
MFHR (Pooled Loan)
AMBAC Ser 96A AMT
6.25%, 5/01/28 1,275 1,342,129
AA- New Jersey Hwy Auth
(Garden State Pkwy)
6.25%, 1/01/14 1,250 1,329,687
AAA Vineland
Sewer Rev: Landis Sewer Auth Ser 93
7.16%, 9/19/19 3,250 3,662,100
------------
15,543,894
NEW YORK-2.9%
AAA Niagara Frontier Trans
Arpt Rev (Gtr Buffalo Int'l)
AMBAC Ser 94A AMT
6.25%, 4/01/24 1,550 1,649,820
AAA NYS Energy Res & Dev Auth
PCR (NYS Elec & Gas)
MBIA Ser 88A AMT
5.95%, 12/01/27 6,700 6,894,032
AA- Port Auth of NY & NJ
Cons Rev (95th Ser) AMT
6.125%, 7/15/29 8,835 9,395,051
------------
17,938,903
OHIO-8.4%
AAA Cleveland Arpt Rev
(Cleveland Int'l)
FGIC Ser 94A AMT
6.25%, 1/01/20 10,000 10,683,000
AAA Columbus Arpt Rev
(Port Columbus Int'l)
MBIA Ser 94A AMT
6.25%, 1/01/24 4,000 4,259,520
A Cuyahoga Cnty Hosp Rev
(Meridia Hlth Sys) Ser 95
6.25%, 8/15/24 2,885 3,098,577
BBB Dayton Spec Fac
(Emery Air Freight) Ser 96D AMT
6.20%, 10/01/09 5,680 6,074,874
BBB+ Ohio Air Quality Dev Auth
PCR (Columbus So Pwr) Ser 85B
6.25%, 12/01/20 2,695 2,819,832
AA- Ohio Air Quality Dev Auth
PCR (Dayton Power & Light) Ser 92B
6.40%, 8/15/27 2,000 2,157,960
AAA Ohio Air Quality Dev Auth
PCR (JMG Funding/Ohio Pwr Co)
AMBAC Ser 94B AMT
6.375%, 4/01/29 7,850 8,402,169
9
NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
AAA Ohio HFA
SFMR (Residental Mtg)
GNMA Ser 97 AMT
6.15%, 3/01/29 $4,835 $ 5,113,689
A Ohio Wtr Dev Auth Solid
Waste (North Star/BHP) AMT
6.45%, 9/01/20 5,245 5,639,319
Aa3 Toledo-Lucas Cnty Port Auth
(Cargill Inc Proj)
5.90%, 12/01/15 3,000 3,122,310
------------
51,371,250
PENNSYLVANIA-2.8%
BBB Pennsylvania Eco Dev Auth
Waste Wtr (Sun Co) Ser 94A AMT
7.60%, 12/01/24 935 1,067,368
AAA Pennsylvania Higher Ed
Student Loan Rev
AMBAC Ser 88D AMT
6.05%, 1/01/19 7,625 7,902,702
AAA Philadelphia Aprt Sys Rev
AMBAC Ser 95A AMT
6.10%, 6/15/25 6,500 6,832,215
AA Potter Cnty Hosp Rev
(Charles Cole Mem) Ser 96 Asset Gty
6.05%, 8/01/24 1,005 1,046,788
------------
16,849,073
RHODE ISLAND-1.1%
AA+ Rhode Island Hsg & Mtg Fin Corp
SFMR (Home Ownership)
Ser 92-7A AMT
6.75%, 10/01/25 6,030 6,399,398
SOUTH DAKOTA-1.6%
AA+ South Dakota HDA
SFMR (Home Ownership)
Ser 93-II AMT
6.15%, 5/01/26 9,600 9,842,592
TENNESSEE-0.2%
BBB Memphis Shelby Cnty
Spec Fac (Federal Express)
Ser 93 AMT
6.20%, 7/01/14 1,000 1,042,530
TEXAS-3.4%
BBB- Alliance Arpt Auth
Fac Imp (American Airlines)
Ser 90 AMT
7.50%, 12/01/29 $11,690 $12,800,667
BB- Houston Arpt Rev
(Continental Airlines) Ser 97B AMT
6.125%, 7/15/27 8,000 8,178,000
------------
20,978,667
VIRGINIA-5.8%
A Alexandria Redev & Hsg
MFHR (Buckingham Village) Ser 96A AMT
6.15%, 1/01/29 3,545 3,680,206
A+ Giles Cnty IDR
(Hoechst-Celanese Corp)
Ser 96 AMT
6.45%, 5/01/26 3,325 3,645,497
AAA Harrisonburg Redev & Hsg Auth
MFHR (Greens of Salem Run)
FSA Ser 97 AMT
6.30%, 4/01/29 3,565 3,794,693
AA Henrico Cnty IDR
(Henrico Cnty Reg Jail) Ser 94
7.125%, 8/01/21 2,000 2,304,040
A Henrico Cnty Swr Rev
(Browning-Ferris) Ser 97A AMT
5.875%, 3/01/17 2,290 2,382,356
A+ Henry Cnty Hosp Rev
(Martinsville & Henry Mem Hsp)
Ser 97
6.00%, 1/01/27 1,250 1,299,362
A- Isle of Wight Cnty
Solid Waste (Union Camp Corp)
Ser 94 AMT
6.55%, 4/01/24 3,545 3,878,088
A+ James Cnty Swr Rev
(Anheuser-Busch Proj) Ser 97 AMT
6.00%, 4/01/32 3,740 3,886,421
10
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
Aa2 Prince William Cnty
Hosp Rev (Potomac Hosp Grp)
Ser 95
6.75%, 10/01/15 $1,820 $ 2,003,875
NR Staunton Ed Fac
(Mary Baldwin College) Ser 96
6.75%, 11/01/21 1,150 1,200,773
AA Virginia Beach
Hosp Rev (Sentara Bayside)
6.30%, 11/01/21 555 587,012
AA+ Virginia HDA SFMR
(Commonwealth Mtg) Ser 96B AMT
6.375%, 1/01/26 5,000 5,319,700
AA Virginia Res Auth Swr Rev
(Hopewell Fac) Ser 95A AMT
6.00%, 10/01/25 1,375 1,423,689
-------------
35,405,712
WASHINGTON-0.8%
BBB+ Pilchuck Dev Pub Corp
Spec Fac (BF Goodrich) Ser 93 AMT
6.00%, 8/01/23 4,500 4,591,485
WISCONSIN-2.4%
AAA Wisconsin GO
MBIA Ser 96B AMT
6.20%, 11/01/26 13,930 14,755,910
TOTAL LONG TERM MUNICIPAL BONDS
(cost $511,403,739) 537,935,147
SHORT TERM MUNICIPAL NOTES-9.5%
ARIZONA-1.6%
A-1 Apache Cnty
PCR (Tuscon Elec) Ser 81B VRDN
3.75%, 10/01/21 (a) 9,500 9,500,000
SOUTH CAROLINA-2.5%
A-1+ Berkeley Cnty IDR
(Nucor Corp Proj) Ser 97 AMT VRDN
3.75%, 4/01/30 (a) 15,000 15,000,000
VIRGINIA-3.9%
P-1* Bedford Cnty IDR
(Nekoosa Pkg) Ser 95A AMT VRDN
4.00%, 12/01/25 (a) 9,350 9,350,000
A-1+ Peninsula Ports Auth IDR
(Ziegler Coal Proj)
Ser 97 AMT VRDN
4.25%, 5/01/22 (a) 14,400 14,400,000
------------
23,750,000
WASHINGTON-1.5%
A-1 Yakima Cnty IDR
(Macro Plastics Inc) AMT VRDN
3.80%, 12/01/26 (a) 9,400 9,400,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $57,650,000) 57,650,000
TOTAL INVESTMENTS-97.7%
(cost $569,053,739) 595,585,147
Other assets less liabilities-2.3% 14,277,218
NET ASSETS-100% $609,862,365
See footnote summary on page 21.
See Glossary of Terms on page 21.
See notes to financial statements.
11
INSURED NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-98.9%
LONG TERM MUNICIPAL BONDS-82.6%
ALASKA-17.0%
AAA Alaska Hsg Fin Corp
MFHR (Mtg Rev) MBIA Ser 96A
6.00%, 12/01/15 $ 1,400 $ 1,461,180
6.05%, 12/01/17 2,000 2,095,360
AAA Alaska Hsg Fin Corp
SFMR (Mtg Rev) MBIA Ser 97A
6.00%, 6/01/27 25,000 25,949,750
6.10%, 12/01/37 10,000 10,421,100
------------
39,927,390
ARIZONA-4.0%
AAA Glendale
Ed Fac (Midwestern Univ)
CONNIE LEE Ser 96A
6.00%, 5/15/26 640 672,614
AAA Maricopa Cnty
Hosp Rev (Cath Hlth West)
MBIA Ser 93
7.152%, 7/01/13 (b) 1,950 2,073,942
AAA Maricopa Cnty GO
Kyrene Elem Sch Imp #28 FGIC Ser 95B
6.00%, 7/01/14 2,000 2,099,200
AAA Tempe
MFHR (Quadrangles) FHA Ser 93
6.25%, 6/01/26 4,310 4,513,217
------------
9,358,973
CALIFORNIA-15.8%
AAA Mojave Wtr Agy
Imp Dist M (Morongo Basin Pipeline)
FGIC Ser 96
5.80%, 9/01/22 5,000 5,245,450
AAA No Calif Trans Agy Elec
Rev (Calif-Oregon Trans)
MBIA Ser 93A
6.609%, 4/29/24 (b) 11,600 11,788,036
AAA Orange Cnty
(Saddleback Valley Sch Dist)
FSA Ser 95A
5.65%, 9/01/17 2,000 2,042,140
AAA Palm Springs ETM COP
Ser 91B
Zero coupon, 4/15/21 43,025 11,705,812
AAA So Tahoe Joint Pwr Fin Auth
Ser 95A CAP MAC
5.75%, 10/01/25 4,500 4,629,780
AAA Univ of California Regents
Hosp Rev (UCLA Med Ctr)
MBIA Ser 94
5.50%, 12/01/20 1,685 1,699,120
------------
37,110,338
COLORADO-2.8%
AAA Denver City & Cnty Arpt Sys Rev
MBIA Ser 95A
5.70%, 11/15/25 6,375 6,496,699
ILLINOIS-2.1%
AAA Metro Pier & Expo Auth
(McCormick Place Expo)
FGIC Ser 93A
Zero coupon, 6/15/19 15,850 4,989,897
MASSACHUSETTS-9.5%
AAA Chelsea GO
AMBAC Ser 94
6.00%, 6/15/14 765 815,743
AAA Massachusetts HFA
MFHR (Residential Dev)
AMBAC Ser 93A
6.15%, 10/01/15 3,500 3,698,485
AAA Massachusetts HFA
MFHR (Residential Dev)
FNMA Coll Sec 8 Ser 92F
6.25%, 11/15/12 5,000 5,299,600
AAA Massachusetts HFA
SFMR (Residential Dev)
FNMA Ser 92A
6.90%, 11/15/24 1,500 1,636,875
AAA Massachusetts Hlth & Ed
Fac Hosp Rev (Beth Israel) AMBAC
8.42%, 7/01/25 (b) 1,000 1,096,390
AAA Massachusetts Hlth & Ed Fac Hosp Rev
(New England Med Ctr) MBIA
6.48%, 7/01/18 (b) 5,000 4,953,900
12
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
AAA Massachusetts Muni Wholesale Elec
(Pwr Supply Sys) MBIA Ser 92A
6.00%, 7/01/18 $4,800 $ 4,946,592
------------
22,447,585
MICHIGAN-14.4%
AAA Detroit GO
FGIC Ser 93
6.35%, 4/01/14 3,370 3,614,662
AAA Detroit Swr Sys Rev
FGIC Ser 93A
7.517%, 7/01/23 (b) 13,200 13,652,496
AAA Grand Rapids Swr Sys Rev
MBIA Ser 92
6.00%, 1/01/22 1,755 1,825,182
AAA Kalamazoo Hosp Fin Auth
Hosp Rev (Borgess Med Ctr)
FGIC Ser 94A
6.528%, 6/01/11 (b) 7,500 7,682,700
AAA Michigan Strategic Fund
PCR (Detroit Edison Co.)
MBIA Ser 95AA
6.40%, 9/01/25 4,275 4,635,041
AAA Three Rivers GO
Sch Dist MBIA Ser 96
6.00%, 5/01/23 2,400 2,554,416
------------
33,964,497
MINNESOTA-5.0%
Aaa* Eagan
MFHR (Woodridge Apts)
GNMA Ser 97A
5.95%, 2/01/32 1,475 1,540,003
Aaa* Little Canada
MFHR (Cedars Lakeside Apt)
GNMA Ser 97A
5.95%, 2/01/32 1,720 1,795,800
AAA Minneapolis
(Spec Sch Dist #1) MBIA Ser 96A
5.90%, 2/01/17 4,070 4,255,796
AAA Minnesota HFA
MFHR (Rental Hsg) MBIA Ser 95D
6.00%, 2/01/22 4,115 4,286,266
------------
11,877,865
NEBRASKA-1.5%
AAA Nebraska Inv Fin Auth Hosp Rev
(Bishop Clarkson Mem) MBIA Ser 91
9.242%, 12/08/16 (b) 3,000 3,571,170
NEW YORK-2.6%
Aaa* Glen Cove IDR
(The Regency at Glen Cove)
Ser 92B ETM
Zero coupon, 10/15/19 20,500 6,126,835
OHIO-0.9%
AAA Ohio Capital Corp
MFHR (Sect 8 Assist) FHA MBIA Ser 95E
6.35%, 1/01/22 1,965 2,080,915
PENNSYLVANIA-1.2%
AAA Pennsylvania Conv Ctr
MBIA Ser 94A
6.75%, 9/01/19 2,500 2,818,275
VIRGINIA-4.9%
AAA Harrisonburg Redev & Hsg Auth
MFHR (Battery Heights Assoc)
GNMA Ser 96A
6.25%, 4/20/36 5,185 5,486,767
AAA Loudoun Cnty Hosp Rev
(Loudoun Hosp Ctr) FSA Ser 95
5.80%, 6/01/20 2,500 2,575,750
AAA Newport News
Hlth Fac (Mennowood) GNMA Ser 96A
6.25%, 8/01/36 2,180 2,317,863
AAA Richmond Met Auth
(Expressway Rev) FGIC Ser 92B
6.25%, 7/15/22 1,000 1,056,890
------------
11,437,270
WEST VIRGINIA-0.9%
AAA West Virginia Pkwys Eco Dev
(Parkway Rev) FGIC Ser 93
7.555%, 5/16/19 (b) 2,100 2,232,426
13
INSURED NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
TOTAL LONG TERM MUNICIPAL BONDS
(cost $182,742,091) $194,440,135
SHORT TERM MUNICIPAL NOTES-16.3%
FLORIDA-4.6%
A-1+ Tampa Occup License Tax Rev
FGIC Ser 96A VRDN
3.65%, 10/01/18 (a) $10,900 10,900,000
ILLINOIS-4.6%
A-1+ Illinois Dev Fin Auth
PCR (Com Edison Co)
AMBAC Ser 96A VRDN
3.65%, 12/01/06 (a) 10,800 10,800,000
PENNSYLVANIA-4.8%
A-1+ Emmaus GO
FSA Ser 96 VRDN
3.85%, 12/01/28 (a) 11,300 11,300,000
TEXAS-2.3%
A-1+ North Central Hlth Fac
(Presbyterian Med Ctr)
MBIA Ser 85C VRDN
4.05%, 12/01/15 (a) $5,300 $ 5,300,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $38,300,000) 38,300,000
TOTAL INVESTMENTS-98.9%
(cost $221,042,091) 232,740,135
Other assets less liabilities-1.1% 2,490,855
NET ASSETS-100% $235,230,990
See footnote summary on page 21.
See Glossary of Terms on page 21.
See notes to financial statements.
14
NEW YORK PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
NEW YORK MUNICIPAL BONDS-100.2%
LONG TERM MUNICIPAL BONDS-95.3%
A- Essex County IDR
(Int'l Paper) Ser 95A AMT
5.80%, 12/01/19 $7,000 $ 7,165,830
Aaa* Glen Cove IDR
(The Regency at Glen Cove)
Ser 92B ETM
Zero coupon, 10/15/19 19,510 5,830,954
AAA Islip Res Rec Agy
AMBAC Ser 94B AMT
6.125%, 7/01/12 2,020 2,145,826
BBB+ New York City GO
Ser 93A
6.25%, 8/01/18 6,000 6,239,640
BBB+ New York City GO
Ser 93D
8.057%, 8/29/14 (b) 10,000 10,794,400
AAA New York City GO
Ser 93E MBIA
6.00%, 5/15/11 5,000 5,305,800
BBB+ New York City GO
Ser 96J
6.00%, 2/15/24 13,580 14,020,128
BBB+ New York City GO
Ser 97A
6.25%, 8/01/17 16,750 17,714,967
BBB- New York City IDR
(American Airlines) Ser 94 AMT
6.90%, 8/01/24 12,000 13,308,480
AAA New York City IDR
(Japan Airlines) FSA Ser 91 AMT
6.00%, 11/01/15 4,400 4,678,828
A New York City IDR
(Terminal One LP) Ser 94 AMT
6.125%, 1/01/24 36,500 38,272,805
AAA Niagara Frontier Trans Arpt Auth
(Gtr Buffalo Int'l)
AMBAC Ser 94A AMT
6.25%, 4/01/24 14,575 15,513,630
AAA NYS Energy Res & Dev Auth
(Brooklyn Union Gas) MBIA AMT
7.356%, 7/08/26 (b) 6,000 6,047,700
AAA NYS Energy Res & Dev Auth
(Brooklyn Union Gas)
MBIA Ser 89B AMT
6.75%, 2/01/24 7,500 8,249,775
AAA NYS Energy Res & Dev Auth
(Rochester Gas & Elec) MBIA AMT
6.50%, 5/15/32 6,460 6,989,785
A+ NYS Energy Res & Dev Auth
PCR (Consolidated Edison)
Ser 94A AMT
7.125%, 12/01/29 22,000 25,278,660
AAA NYS Energy Res & Dev Auth
PCR (NYS Elec & Gas)
MBIA Ser 87A AMT
6.15%, 7/01/26 15,000 15,999,300
BBB NYS Envir Fac Auth IDR
(Occidental Petroleum) Ser 93A AMT
5.70%, 9/01/28 6,950 6,929,289
AAA NYS Envir Fac Corp
Wtr Fac (Spring Valley Wtr)
AMBAC Ser 94A AMT
6.30%, 8/01/24 11,800 12,590,128
AAA NYS HFA
MFHR (Erie/Monroe Cnty Proj) AMBAC
Ser 89B AMT
7.55%, 11/01/29 9,315 9,765,287
Aa* NYS HFA
MFHR (Westchester/Onondaga
/Rockland Proj)
Ser 92F AMT
6.70%, 8/15/25 6,000 6,381,300
Aa2* NYS Mtg Agy
SFMR Ser 42 AMT
6.65%, 4/01/26 4,500 4,808,790
Aa2* NYS Mtg Agy
SFMR Ser 46 AMT
6.65%, 10/01/25 19,850 21,271,061
15
NEW YORK PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
AAA Onondaga Cnty
PCR (Bristol-Myers Squibb) AMT
5.75%, 3/01/24 $ 4,000 $ 4,259,480
AAA Port Auth of NY & NJ
(JFK Int'l Proj) MBIA
Ser 97-6 AMT
5.75%, 12/01/22 9,905 10,182,439
AA- Port Auth of NY & NJ
Cons Rev (95th Ser) AMT
6.125%, 7/15/29 4,035 4,290,779
AAA Port Auth of NY & NJ
Cons Rev (96th Ser) FGIC AMT
6.60%, 10/01/23 10,000 11,019,700
AAA Troy Hsg Dev Corp
MFHR (Ninth St #2) FHA Ser 90B
8.10%, 2/01/24 3,515 4,089,386
AAA Troy Hsg Dev Corp
MFHR (TUR Proj) FHA Ser 90C
8.10%, 2/01/24 2,390 2,780,550
TOTAL LONG TERM MUNICIPAL BONDS
(cost $280,124,351) 301,924,697
SHORT TERM MUNICIPAL NOTES-4.9%
A-1+ New York City Cultural
Res Trust
(American National Museum)
MBIA Ser 91B VRDN
3.65%, 4/01/21 (a) 3,800 3,800,000
A-1+ Niagara Cnty IDA
(American Ref-Fuel Co)
Ser 96D AMT VRDN
3.70%, 11/15/26 (a) 4,200 4,200,000
VMIG-1* NYS Job Dev Auth
Ser A-1 to A-21 AMT VRDN
4.10%, 3/01/03 (a) 2,600 2,600,000
VMIG-1* Suffolk Cnty Wtr Auth
BAN Ser 97 VRDN
3.70%, 12/21/99 (a) 5,000 5,000,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $15,600,000) 15,600,000
TOTAL INVESTMENTS-100.2%
(cost $295,724,351) 317,524,697
Other assets less liabilities-(0.2%) (770,135)
NET ASSETS-100% $316,754,562
See footnote summary on page 21.
See Glossary of Terms on page 21.
See notes to financial statements.
16
CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- --------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS-97.6%
LONG TERM MUNICIPAL BONDS-95.1%
NR California Comm Dev Auth
(San Diego Space & Science)
Ser 96
7.50%, 12/01/16 $ 3,500 $ 3,794,630
A+ California GO
(Veterans Hsg) Ser 95 AMT
6.40%, 2/01/20 29,175 29,919,546
AAA California HFA
MFHR (Home Mtg Rev)
MBIA Ser 91A AMT
7.20%, 2/01/26 3,450 3,675,147
AAA California HFA
MFHR (Home Mtg Rev)
MBIA Ser 91C AMT
7.00%, 8/01/23 1,475 1,569,946
A+ California HFA
MFHR (Multi-Unit Rental Hsg)
Ser 92A AMT
6.50%, 2/01/14 4,865 5,125,034
AAA California HFA
SFMR (Home Mtg Rev)
AMBAC Ser 96H AMT
6.20%, 2/01/27 8,000 8,356,320
AA- California HFA
SFMR (Home Mtg Rev) Ser 91G AMT
7.05%, 8/01/27 5,265 5,554,996
AAA California HFA
SFMR (Home Mtg Rev)
Ser 95A-2 AMT AMBAC
6.45%, 8/01/25 13,400 14,188,992
AA- California HFA
SFMR (Home Mtg Rev) Ser 94E AMT
6.70%, 8/01/25 9,395 10,054,435
A California Poll Ctl Fin Auth
(Keller Canyon/Browning-Ferris Ind)
Ser 92 AMT Asset Gty
6.875%, 11/01/27 5,000 5,494,550
AA- California Poll Ctl Fin Auth
PCR (Pacific Gas & Elec) Ser 93A AMT
5.875%, 6/01/23 33,200 34,084,780
AA- California Poll Ctl Fin Auth
PCR (Pacific Gas & Elec) Ser 93B AMT
5.85%, 12/01/23 56,000 57,481,200
A+ California Poll Ctl Fin Auth
PCR (San Diego Gas & Elec)
Ser 93A-C AMT
5.85%, 6/01/21 32,335 33,147,255
A+ California Poll Ctl Fin Auth
PCR (So Calif Edison) Ser 92B AMT
6.40%, 12/01/24 33,030 35,761,911
A+ Chula Vista
PCR (San Diego Gas & Elec)
Ser 92A AMT
6.40%, 12/01/27 28,240 30,076,447
Aaa* Contra Costa Cnty
MFHR (Byron Park Proj)
GNMA Ser 93A AMT
6.40%, 1/20/31 11,860 12,615,126
NR Encinitas Comm Fac Dist #1
(Encinitas Ranch) Ser 95A
7.375%, 9/01/26 23,000 24,341,820
NR Encinitas Rec Rev
(Encinitas Ranch Golf Course)
Ser 96A
7.75%, 9/01/26 10,760 11,255,606
NR Fairfield Assess Dist
(No Cordelia Imp Dist) Ser 93
7.375%, 9/02/18 2,390 2,465,357
NR Fontana Comm
Fac Dist #3 (Hunters Ridge) Ser 90A
8.70%, 10/01/15 8,000 8,421,760
AAA Garden Grove
MFHR (Tudor Grove) GNMA Ser 89 AMT
7.25%, 5/20/32 1,150 1,179,383
AA- Long Beach Harbor Rev
Ser 93 AMT
5.125%, 5/15/18 12,325 11,848,146
17
CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
AAA Los Angeles Cnty Arpt Rev
(Ontario Int'l Arpt) FGIC
Ser 96A AMT
6.00%, 5/15/22 $12,780 $13,422,706
NR Los Angeles Cnty Comm
Fac Dist #3 (Valencia/
Newhall Area) Ser 95A
7.125%, 9/01/20 5,500 5,782,645
NR Los Angeles Cnty Comm
Fac Dist #4 (Calabasas Area)
Ser 92A
7.65%, 9/01/17 7,500 7,893,750
NR Los Angeles Cnty Comm
Fac Dist #92-1
(Castaic Union SD/Northlake Proj)
Ser 92
9.00%, 10/01/19 8,710 9,233,210
BB Los Angeles Comm Redev
MFHR (Grand Ctrl Proj) Ser 93A AMT
5.85%, 12/01/26 4,030 3,914,742
AAA Los Angeles Harbor Rev
MBIA Ser 96B AMT
6.20%, 8/01/25 10,000 10,707,000
AA Los Angeles Harbor Rev
Ser 95B AMT
6.625%, 8/01/25 24,000 26,026,080
NR Novato Comm
Fac Dist #94-1 (Hamilton Field)
Ser 95
7.375%, 9/01/25 4,400 4,810,828
NR Ontario Assess Dist #107
(CA Commerce Ctr So)
7.70%, 9/02/10 6,130 6,326,466
NR Orange Cnty
Comm Fac Dist # 92-1:
Las Flores/Capistrano USD Ser 97
7.10%, 9/01/21 3,200 3,394,304
AAA Orange Cnty Arpt Rev
(John Wayne Int'l)
MBIA Ser 93 AMT
5.50%, 7/01/18 5,050 5,074,593
BBB- Orange Cnty Sr Lien
Foothill/Eastern Corridor Agy
Ser 95A
Zero coupon, 1/01/15 18,500 7,030,370
Zero coupon, 1/01/25 15,000 3,200,550
Zero coupon, 1/01/27 10,000 1,904,300
Zero coupon, 1/01/28 10,000 1,799,000
AAA* Orange Cnty Sr Lien
San Joaquin Hills Transp Corridor
Ser 93 ETM
Zero coupon, 1/01/17 16,000 5,797,920
Zero coupon, 1/01/19 20,000 6,478,400
Zero coupon, 1/01/20 20,000 6,115,800
Zero coupon, 1/01/21 20,000 5,797,200
Zero coupon, 1/01/23 35,000 9,116,100
Zero coupon, 1/01/25 18,100 4,236,124
7.00%, Prere: 1/01/03 13,400 14,989,240
AAA Palm Springs ETM
COP Ser 91B
Zero coupon, 4/15/21 10,000 2,720,700
AAA Palm Springs Fin Auth
Arpt Rev
(Palm Springs Regional Arpt)
MBIA Ser 92 AMT
6.00%, 1/01/22 6,860 7,119,720
A Port of Oakland
(Mitsui OSK Lines) Ser 92A AMT
6.80%, 1/01/19 3,700 3,924,072
AAA Port of Oakland
MBIA Ser 92E AMT
6.40%, 11/01/22 23,370 25,196,132
6.50%, 11/01/16 8,000 8,697,200
NR Riverside Cnty Assess Dist #161
(Winchester Prop) Ser 94C
10.00%, 9/02/14 6,825 7,402,054
NR Riverside Comm
Fac Dist #90-1
(Highlander Proj) Ser 91A
8.50%, 9/01/15 2,000 2,093,560
NR Sacramento
Comm Fac Dist # 97-01
(No. Natomas Proj) Ser 97A
6.75%, 9/01/27 9,370 9,388,740
18
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
AAA Sacramento Cnty Arpt Sys Rev
FGIC Ser 92A AMT
6.00%, 7/01/20 $11,750 $ 12,191,212
AAA Sacramento Cnty Arpt Sys Rev
MBIA Ser 96A AMT
5.90%, 7/01/24 5,050 5,243,819
AAA San Bernardino Cnty Solid Waste
(Inland Empire) FSA Ser 96B AMT
6.00%, 8/01/16 2,500 2,627,025
NR San Diego Comm
Fac Dist #1
(Miramar Ranch North) Ser 95B
7.10%, 9/01/20 7,000 7,505,330
AAA San Francisco City & Cnty Int'l Arpt
AMBAC Ser 94 II-6 AMT
6.60%, 5/01/24 5,000 5,490,750
AAA San Francisco City & Cnty Int'l Arpt
FGIC Ser 94 II-5 AMT
6.50%, 5/01/24 11,000 11,987,470
AAA San Francisco City & Cnty Int'l Arpt
FGIC Ser 96-II AMT
6.25%, 5/01/26 7,000 7,464,590
AAA San Francisco City & Cnty Int'l Arpt
MBIA Ser 10A AMT
5.70%, 5/01/26 9,385 9,555,432
AAA San Francisco City & Cnty Int'l Arpt
MBIA Ser 93 II-3 AMT
6.10%, 5/01/13 5,390 5,711,675
6.20%, 5/01/20 14,500 15,325,340
AAA San Jose Arpt Rev
(San Jose Arpt) FGIC Ser 93 AMT
5.70%, 3/01/18 8,825 8,971,936
AAA So Calif HFA
SFMR GNMA/FNMA Ser 91B AMT
6.90%, 10/01/24 1,635 1,734,277
AAA So Calif HFA
SFMR GNMA/FNMA Ser 92A AMT
6.75%, 9/01/22 1,425 1,511,697
A- Vacaville Redev Agy
MFHR (Vacaville Comm Hsg) Ser 94A
7.85%, 11/01/24 2,455 2,664,387
BBB+ Westminster Redev Agy
MFHR (Rose Garden Apt) Ser 93A AMT
6.75%, 8/01/24 4,300 4,498,445
AAA Yolo Cnty Hsg Auth
MFHR (Waggener Ranch Apts)
FHA Ser 91 AMT
7.00%, 10/01/33 9,000 9,763,560
TOTAL LONG TERM MUNICIPAL BONDS
(cost $634,369,283) 692,252,838
SHORT TERM MUNICIPAL NOTES-2.5%
A-1+ California Comm Dev Rev
(Tri-Valley Growers Proj)
Ser 95E AMT VRDN
3.55%, 12/01/10 (a) 3,200 3,200,000
A-1+ California Poll Ctl Fin Auth
PCR (Shell Oil) Ser 94 AMT VRDN
4.10%, 10/01/24 (a) 15,100 15,100,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $18,300,000) 18,300,000
TOTAL INVESTMENTS-97.6%
(cost $652,669,283) 710,552,838
Other assets less liabilities-2.4% 17,305,524
NET ASSETS-100% $727,858,362
See footnote summary on page 21.
See Glossary of Terms on page 21.
See notes to financial statements.
19
INSURED CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS-98.8%
LONG TERM MUNICIPAL BONDS-90.1%
AAA Alhambra COP
Assess Dist #91-1 (Police Fac)
AMBAC Ser 92
6.75%, 9/01/23 $ 5,000 $ 5,443,600
AAA Brea Pub Fin Auth
Tax Alloc Redev Proj B
MBIA Ser 91A
7.00%, 8/01/15 1,470 1,621,528
AAA California HFA
MFHR (Home Mtg Rev)
AMBAC Ser 95A
6.25%, 2/01/37 5,000 5,274,050
AAA Coronado Comm Dev Proj
Tax Alloc FSA Ser 96
6.00%, 9/01/26 8,700 9,254,886
AAA Fontana Pub Fin Auth
Tax Alloc (No Fontana)
MBIA Ser 93A
5.625%, 9/01/24 8,805 8,960,320
NR Fontana Redev Agy BAN
(Jurupa Hills Proj) Ser 94 ETM
8.00%, 1/01/98 5,000 5,012,600
AAA Glendale Hlth Fac Rev
(Glendale Mem Hosp)
CONNIE LEE Ser 95A
5.60%, 11/15/25 2,000 2,013,680
AAA La Mirada Redev Agy
Tax Alloc (Commercial Redev)
FSA Ser 95B
5.90%, 8/15/24 5,000 5,218,400
Aa* Lancaster Redev Agy FHA
MFHR (High Valley Apts) Ser 96A
6.00%, 6/01/27 4,170 4,317,076
AAA Los Angeles Cnty
Metro Trans Auth MBIA Ser 93A
5.625%, 7/01/18 3,000 3,066,120
AAA Los Angeles Cnty Comm Redev
Tax Alloc (Bunker Hill Proj)
FSA Ser 93H
5.60%, 12/01/28 9,000 9,104,310
AAA Los Angeles Cnty
Transportation Commission
FGIC Ser 91B
6.50%, 7/01/15 5,000 5,388,300
AAA Madera Cnty
Hosp Rev (Valley Children's Hosp)
MBIA Ser 95
6.125%, 3/15/23 4,000 4,268,120
AAA Mojave Wtr Agy
Imp Dist M
(Morongo Basin Pipeline)
FGIC Ser 96
5.80%, 9/01/22 5,000 5,245,450
AAA No Calif Trans Agy Elec Rev
(Calif-Oregon Trans) MBIA Ser 93A
6.609%, 4/29/24 (b) 7,650 7,774,007
AAA Orange Cnty
(Loma Ridge Data Ctr Proj)
AMBAC Ser 91
6.00%, 6/01/19 1,000 1,082,540
AAA Orange Cnty Recovery
MBIA Ser 96A
6.00%, 7/01/26 3,000 3,189,150
AAA Palm Springs ETM COP
Ser 91B
Zero coupon, 4/15/21 17,475 4,754,423
AAA Rancho Wtr Dist Fin Auth
AMBAC Ser 91
8.974%, Prere: 9/11/01 (b) 3,000 3,578,760
AAA Redding
Elec Sys Rev MBIA Ser 92A
8.66%, 7/01/22 (b) 2,000 2,677,500
AAA Sacramento Cnty Arpt Sys Rev
MBIA Ser 96B
5.75%, 7/01/26 3,260 3,359,234
AAA Sacramento Muni Util Dist
Elec Rev MBIA Ser 93E
5.75%, 5/15/22 5,000 5,131,800
AAA San Bernardino Cnty Redev
(Ontario Proj #1) MBIA Ser 93
5.80%, 8/01/23 10,000 10,306,700
20
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
AAA San Bernardino Redev
Agy Tax Alloc (Joint Pwr Fin)
FSA Ser 95A
5.75%, 10/01/25 $ 5,000 $ 5,163,600
AAA San Dimas Redev Agy
(Creative Growth) FSA Ser 91A
6.75%, 9/01/16 1,000 1,088,720
AAA San Francisco City & Cnty Int'l Arpt
MBIA Ser 93 II-4
6.00%, 5/01/14 5,000 5,283,500
AAA Shasta Lake COP
Elec Sys Rev FSA Ser 96-2
6.00%, 4/01/16 2,895 3,060,970
TOTAL LONG TERM MUNICIPAL BONDS
(cost $122,553,650) 130,639,344
SHORT TERM MUNICIPAL NOTES-8.7%
A-1 Oakland IDR
(Allen Temple Fam Life)
Ser 97A VRDN
3.55%, 8/01/27 (a) 4,600 4,600,000
A-1+ Orange Cnty
(Sanitation Dist No.1,2,3)
AMBAC VRDN
3.80%, 8/01/16 (a) 3,100 3,100,000
A-1+ So Calif Pub Pwr Auth
(Transmisson Proj) AMBAC VRDN
3.40%, 7/01/19 (a) 5,000 5,000,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $12,700,000) 12,700,000
TOTAL INVESTMENTS-98.8%
(cost $135,253,650) 143,339,344
Other assets less liabilities-1.2% 1,719,881
NET ASSETS-100% $145,059,225
# Unaudited.
* Moody's or Fitch Rating.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific 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.
(b) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See notes to financial statements.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax - (subject to)
BAN Bond Anticipation Note
CAP MAC Capital Markets Assurance Corporation
CONNIE LEE Connie Lee Insurance Company
COP Certificate of Participation
ETM Escrow to Maturity
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Administration
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
GO General Obligation
HDA Housing Development Authority
HFA Housing Finance Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
NR Rating not applied for
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
21
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
INSURED INSURED
NATIONAL NATIONAL NEW YORK CALIFORNIA CALIFORNIA
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost: National-
$569,053,739; Ins. National-$221,042,091; New
York-$295,724,351; California-$652,669,283;
Ins. California-$135,253,650, respectively) $595,585,147 $232,740,135 $317,524,697 $710,552,838 $143,339,344
Cash 83,990 -0- -0- -0- 21,935
Receivable for investment securities sold 11,954,247 271,360 100,000 6,244,089 -0-
Interest receivable 9,661,973 2,960,750 4,865,794 12,941,994 2,128,575
Receivable for capital stock sold 3,237,435 346,719 980,945 1,428,845 158,493
Prepaid expenses 23,338 11,067 -0- -0- -0-
Total assets 620,546,130 236,330,031 323,471,436 731,167,766 145,648,347
LIABILITIES
Due to custodian -0- 25,813 320,292 379,091 -0-
Payable for investment securities purchased 7,038,381 -0- 5,000,000 -0- -0-
Payable for capital stock redeemed 2,090,026 454,212 606,576 1,099,802 78,241
Dividends payable 899,142 331,364 478,221 1,084,337 211,003
Distribution fee payable 320,443 98,168 160,575 335,904 61,355
Advisory fee payable 102,993 99,010 40,192 183,997 67,551
Unclaimed dividends 78,007 -0- -0- 90,989 90,989
Accrued expenses 154,773 90,474 111,018 135,284 79,983
Total liabilities 10,683,765 1,099,041 6,716,874 3,309,404 589,122
NET ASSETS $609,862,365 $235,230,990 $316,754,562 $727,858,362 $145,059,225
COMPOSITION OF NET ASSETS
Capital stock, at par $ 55,771 $ 22,415 $ 31,352 $ 65,916 $ 10,446
Additional paid-in capital 587,507,625 219,401,181 298,914,571 682,656,328 137,180,364
Undistributed net investment income (loss) (496,611) (331,364) (419,120) (152,219) 116,368
Accumulated net realized gain (loss) on
investment transactions (3,735,828) 4,440,714 (3,572,587) (12,595,218) (333,647)
Net unrealized appreciation of investments 26,531,408 11,698,044 21,800,346 57,883,555 8,085,694
$609,862,365 $235,230,990 $316,754,562 $727,858,362 $145,059,225
CLASS A SHARES
Net assets $329,540,284 $170,631,382 $181,745,387 $470,444,202 $103,647,106
Shares of capital stock outstanding 30,135,988 16,259,299 17,988,797 42,604,280 7,464,162
CLASS B SHARES
Net assets $190,530,450 $ 45,542,415 $ 96,118,711 $166,672,223 $ 27,976,270
Shares of capital stock outstanding 17,423,816 4,339,709 9,513,629 15,094,150 2,014,717
CLASS C SHARES
Net assets $ 89,791,631 $ 19,057,193 $ 38,890,464 $ 90,741,937 $ 13,435,849
Shares of capital stock outstanding 8,211,346 1,815,949 3,849,294 8,217,767 967,585
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share $10.94 $10.49 $10.10 $11.04 $13.89
Sales charge--4.25% of public offering price .49 .47 .45 .49 .62
Maximum offering price $11.43 $10.96 $10.55 $11.53 $14.51
CLASS B SHARES
Net asset value and offering price per share $10.94 $10.49 $10.10 $11.04 $13.89
CLASS C SHARES
Net asset value and offering price per share $10.94 $10.49 $10.10 $11.04 $13.89
</TABLE>
See notes to financial statements.
22
STATEMENTS OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
INSURED INSURED
NATIONAL NATIONAL NEW YORK CALIFORNIA CALIFORNIA
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $37,294,957 $13,763,261 $18,916,699 $43,981,173 $ 8,775,760
EXPENSES
Advisory fee 3,829,514 1,466,189 1,937,934 4,430,718 777,943
Distribution fee - Class A 969,311 498,660 534,527 1,368,415 305,769
Distribution fee - Class B 1,995,677 482,383 946,504 1,625,675 265,870
Distribution fee - Class C 900,510 201,322 372,434 902,092 129,342
Transfer agency 537,778 154,576 276,264 441,391 78,864
Custodian 153,743 100,726 89,814 157,041 93,808
Administrative 99,000 99,000 99,000 99,000 99,000
Registration 78,202 62,020 6,384 5,299 3,649
Audit and legal 76,306 54,705 71,608 60,851 52,868
Taxes 47,835 18,642 24,225 55,635 13,641
Printing 46,315 20,537 36,533 72,460 12,755
Directors' fees 3,988 3,988 3,988 3,988 3,988
Miscellaneous 33,394 13,080 12,479 9,430 9,371
Total expenses 8,771,573 3,175,828 4,411,694 9,231,995 1,846,868
Less advisory fee waived (see note B) (2,507,326) (293,238) (1,472,830) (1,953,318) -0-
Net expenses 6,264,247 2,882,590 2,938,864 7,278,677 1,846,868
Net investment income 31,030,710 10,880,671 15,977,835 36,702,496 6,928,892
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 14,826,601 4,944,358 4,174,320 5,003,142 1,740,386
Net change in unrealized appreciation of
investments 9,340,351 3,352,744 9,967,051 24,720,704 3,440,458
Net gain on investments 24,166,952 8,297,102 14,141,371 29,723,846 5,180,844
NET INCREASE IN NET ASSETS FROM OPERATIONS $55,197,662 $19,177,773 $30,119,206 $66,426,342 $12,109,736
</TABLE>
See notes to financial statements.
23
STATEMENTS OF CHANGES IN NET ASSETS ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
NATIONAL INSURED NATIONAL
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 31,030,710 $ 34,751,054 $ 10,880,671 $ 11,513,311
Net realized gain on investment transactions 14,826,601 16,964,535 4,944,358 8,542,348
Net change in unrealized appreciation
of investments 9,340,351 (13,559,055) 3,352,744 (3,328,071)
Net increase in net assets from operations 55,197,662 38,156,534 19,177,773 16,727,588
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (17,434,356) (18,357,293) (8,055,946) (8,246,992)
Class B (9,363,672) (11,489,379) (1,989,680) (2,490,145)
Class C (4,232,682) (5,041,417) (835,045) (998,865)
Distributions in excess of net investment income
Class A (108,116) -- (357,318) --
Class B (167,843) -- (141,497) --
Class C (83,616) -- (54,455) --
Net realized gain on investments
Class A -0- -0- (2,137,301) -0-
Class B -0- -0- (675,181) -0-
Class C -0- -0- (283,681) -0-
CAPITAL STOCK TRANSACTIONS
Net decrease (50,361,494) (65,588,040) (4,760,384) (16,451,516)
Total decrease (26,554,117) (62,319,595) (112,715) (11,459,930)
NET ASSETS
Beginning of year 636,416,482 698,736,077 235,343,705 246,803,635
End of year $609,862,365 $636,416,482 $235,230,990 $235,343,705
</TABLE>
See notes to financial statements.
24
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
NEW YORK
----------------------------
YEAR ENDED YEAR ENDED
OCT. 31, 1997 OCT. 31, 1996
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $15,977,835 $16,689,380
Net realized gain on investment transactions 4,174,320 4,364,814
Net change in unrealized appreciation
of investments 9,967,051 (3,048,492)
Net increase in net assets from operations 30,119,206 18,005,702
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (9,716,748) (10,253,521)
Class B (4,491,417) (4,792,337)
Class C (1,769,670) (1,717,798)
Distribution in excess of net
investment income
Class A (212,191) --
Class B (93,630) --
Class C (39,023) --
CAPITAL STOCK TRANSACTIONS
Net decrease (8,015,166) (914,884)
Total increase 5,781,361 327,162
NET ASSETS
Beginning of year 310,973,201 310,646,039
End of year $316,754,562 $310,973,201
See notes to financial statements.
25
STATEMENTS OF CHANGES IN NET ASSETS (CONT.) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
CALIFORNIA INSURED CALIFORNIA
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCT. 31, 1997 OCT. 31, 1996 OCT. 31, 1997 OCT. 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 36,702,496 $ 38,549,087 $ 6,928,892 $ 7,251,129
Net realized gain (loss) on investment 5,003,142 (2,028,050) 1,740,386 1,834,892
Net change in unrealized appreciation
transations of investments 24,720,704 11,344,019 3,440,458 (1,363,432)
Net increase in net assets from operations 66,426,342 47,865,056 12,109,736 7,722,589
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (24,763,762) (26,160,727) (5,193,881) (5,222,731)
Class B (7,675,192) (8,034,602) (1,166,553) (1,268,940)
Class C (4,263,542) (4,353,711) (567,563) (605,238)
Distribution in excess of net investment income
Class A (117,642) -- (38,493) --
Class B (23,966) -- (254) --
Class C (10,658) -- -- --
CAPITAL STOCK TRANSACTIONS
Net decrease (17,969,648) (26,146,521) (1,148,149) (5,640,530)
Total increase (decrease) 11,601,932 (16,830,505) 3,994,843 (5,014,850)
NET ASSETS
Beginning of year 716,256,430 733,086,935 141,064,382 146,079,232
End of year (including undistributed
net investment income of $116,368 for
the Insured California Portfolio) $727,858,362 $716,256,430 $145,059,225 $141,064,382
</TABLE>
See notes to financial statements.
26
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Municipal Income Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified open-end management investment
company. The Fund, which is a Maryland corporation, operates as a series
company currently comprised of five portfolios: National Portfolio, Insured
National Portfolio, New York Portfolio, California Portfolio and Insured
California Portfolio (the "Portfolios"). Each series is considered to be a
separate entity for financial reporting and tax purposes. Each Portfolio offers
three classes of shares: Class A, Class B and Class C Shares. Class A shares
are sold with a front-end sales charge of up to 4.25% for purchases not
exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a contingent
deferred sales charge of 1%. Class B shares are sold with a contingent deferred
sales charge which declines from 3% to zero depending on the period of time the
shares are held. Class B shares will automatically convert to Class A shares
six years after the end of the calendar month of purchase. Class C shares are
subject to a contingent deferred sales charge of 1% on redemptions made within
the first year after purchase. All three classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that each class bears different distribution expenses and
has exclusive voting rights with respect to its distribution plan. The
following is a summary of the significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
The Fund values municipal securities at fair value based on prices provided by
a recognized pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values.
If market quotations are not readily available from such pricing service, a
municipal security is valued at its fair value as determined in good faith by
the Fund's Adviser, Alliance Capital Management, L.P. under procedures
established by the Fund's Board of Directors. Short-term securities which
mature in 60 days or less are valued at amortized cost which approximate market
value, unless this method does not represent fair value.
2. TAXES
It is the policy of each Portfolio to meet 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. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date the securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund amortizes premiums and
accretes original issue discounts and market discounts as adjustments to
interest income.
The New York, Insured California and California Portfolios follow an investment
policy of investing primarily in municipal obligations of one state. Economic
changes affecting the state and certain of its public bodies and municipalities
may affect the ability of issuers within the state to pay interest on, or repay
principal of, municipal obligations held by the Portfolios.
4. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified with the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification. During the current fiscal year, certain portfolios had
permanent differences, primarily due to distributions in excess of net
tax-exempt investment income which resulted in a net decrease in distributions
in excess of net investment income and a corresponding decrease in additional
paid-in capital for those portfolios. These reclassifications had no affect on
net assets.
27
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the National, New York and
California Portfolios pay Alliance Capital Management L.P. (the "Adviser") an
advisory fee at an annual rate of up to .625 of 1% of each Portfolio's average
daily net assets. For the Insured National Portfolio, the Agreement provides
for a fee at an annual rate of up to .625 of 1% of the first $200 million, .50
of 1% of the next $200 million and .45 of 1% in excess of $400 million of the
Portfolio's average daily net assets. For the Insured California Portfolio, the
Agreement provides for a fee at an annual rate of up to .55 of 1% of the first
$200 million, .50 of 1% of the next $200 million and .45 of 1% in excess of
$400 million of the Portfolio's average daily net assets. Such fees are accrued
daily and paid monthly.
For the year ended October 31, 1997 the Adviser voluntarily agreed to waive
part of its advisory fee for the National, Insured National, New York and
California Portfolios. The aggregate amounts of such fee waivers were: National
Portfolio, $2,507,326; Insured National Portfolio, $293,238; New York
Portfolio, $1,472,830 and California Portfolio, $1,953,318. Pursuant to the
Advisory Agreement, the Fund paid $495,000 to the Adviser representing the cost
of certain legal and accounting services provided to each Portfolio by the
Adviser.
Each Portfolio compensates Alliance Fund Services, Inc., a wholly-owned
subsidiary of the Adviser, under a Services Agreement for providing personnel
and facilities to perform transfer agency services for each Portfolio. Such
compensation amounted to: National Portfolio, $392,417; Insured National
Portfolio, $106,538; the New York Portfolio, $194,749; California Portfolio,
$291,440 and Insured California Portfolio, $46,156.
Alliance Fund Distributors, Inc., a wholly-owned subsidiary of the Adviser,
serves as the Distributor of the Fund's capital stock. The amount of front-end
sales charges received by the Distributor from sales of the respective
Portfolio's Class A shares for the year ended October 31, 1997 were: National
Portfolio, $12,822; Insured National Portfolio, $19,944; New York Portfolio,
$29,137; California Portfolio, $73,095. The amount of contingent deferred sales
charge imposed upon redemptions by shareholders of Class A shares were New York
$1,562; and California $4,926. National, Insured National and Insured
California had no contingent deferred sales charges. The amount of contingent
deferred sales charges imposed upon redemptions by shareholders of Class B
shares were: National Portfolio, $109,119; Insured National Portfolio, $29,576;
New York Portfolio, $78,379; California Portfolio, $113,659; and Insured
California Portfolio, $29,098. The amount of contingent deferred sales charges
imposed upon redemptions by shareholders of Class C shares were:National
Portfolio, $19,971; Insured National Portfolio, $9,128; New York Portfolio,
$15,274; California Portfolio, $25,188; and Insured California, $964.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
Each Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class A,
Class B and Class C shares. Under the Agreement, each Portfolio pays a
distribution fee to the Distributor at an annual rate of up to .30 of 1% of
each Portfolio's average daily net assets attributable to the Class A shares
and 1% of each Portfolio's average daily net assets attributable to the Class B
and Class C shares. The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and promotional
activities. The Distributor has incurred expenses in excess of the distribution
costs reimbursed by each Portfolio as follows:
PORTFOLIO CLASS B CLASS C
- --------- ---------- ----------
National $3,269,945 $2,600,719
Insured National 1,723,132 882,396
New York 2,984,535 1,203,405
California 4,398,447 2,267,530
Insured California 1,488,429 577,218
28
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
Such costs may be recovered from each Portfolio in future periods so long as
the Agreement is in effect. In accordance with the Agreement, there is no
provision for recovery of unreimbursed distribution costs incurred by the
Distributor beyond the current fiscal year for Class A shares. The Agreement
also provides that the Adviser may use its own resources to finance the
distribution of each Portfolio's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term securities
and U.S. government securities) for the year ended October 31, 1997 were as
follows:
PORTFOLIO PURCHASES SALES
- --------- ------------ ------------
National $431,813,674 $544,581,413
Insured National 214,156,738 253,019,567
New York 102,008,189 121,598,903
California 135,249,196 182,068,254
Insured California 45,634,615 56,619,250
There were no purchases or sales of U.S. government and government agency
obligations for the year ended October 31, 1997.
At October 31, 1997, the cost of securities for federal income tax purposes,
gross unrealized appreciation, gross unrealized depreciation and net unrealized
appreciation/depreciation of investments for each Portfolio were as follows:
GROSS UNREALIZED NET
---------------------------- UNREALIZED
TAX COST APPRECIATION (DEPRECIATION) APPRECIATION
------------ ------------ -------------- ------------
National $569,086,430 $27,824,085 $(1,325,368) $26,498,717
Insured National 221,043,160 11,698,258 (1,283) 11,696,975
New York 295,745,246 21,779,451 -0- 21,779,451
California 652,669,283 57,883,555 -0- 57,883,555
Insured California 135,253,650 8,085,694 -0- 8,085,694
NOTE E: TAXES
For Federal income tax purposes at October 31, 1997, the Fund had capital loss
carryforwards for the following Portfolios: $3,702,936 expiring in 2003 for the
National Portfolio; $3,551,488 expiring in 2003 for the New York Portfolio;
$10,543,156 expiring in 2003 and $2,052,062 expiring in 2004 for the California
Portfolio; and $333,647 expiring in 2002 for the Insured California Portfolio.
29
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
NOTE F: CAPITAL STOCK
There are 3,000,000,000 shares of $.001 par value capital stock authorized,
designated Class A, Class B and Class C shares. There are 200,000,000
authorized shares for each Class.
NATIONAL PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 3,200,221 5,575,925 $ 34,152,888 $ 58,487,725
Shares issued in
reinvestment of
dividends 965,819 1,019,710 10,298,158 10,606,458
Shares converted
from Class B 966,203 1,147,625 10,317,831 11,942,215
Shares redeemed (5,936,090) (9,175,311) (63,228,325) (95,864,424)
Net decrease (803,847) (1,432,051) $ (8,459,448) $(14,828,026)
CLASS B
Shares sold 2,028,317 2,083,622 $ 21,665,451 $ 21,678,779
Shares issued in
reinvestment of
dividends 595,412 691,706 6,345,911 7,193,169
Shares converted
to Class A (966,312) (1,147,625) (10,317,831) (11,942,215)
Shares redeemed (4,683,031) (5,326,953) (49,816,107) (55,286,254)
Net decrease (3,025,614) (3,699,250) $(32,122,576) $(38,356,521)
CLASS C
Shares sold 1,388,588 2,326,094 $ 14,824,288 $ 24,279,598
Shares issued in
reinvestment of
dividends 388,719 335,126 4,147,274 3,484,071
Shares redeemed (2,709,926) (3,859,000) (28,751,032) (40,167,162)
Net decrease (932,619) (1,197,780) $ (9,779,470) $(12,403,493)
INSURED NATIONAL PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 1,963,755 1,382,575 $ 20,121,552 $ 13,902,664
Shares issued in
reinvestment of
dividends and
distributions 606,956 414,861 6,193,387 4,198,610
Shares converted
from Class B 72,137 24,166 741,691 243,256
Shares redeemed (1,983,414) (2,661,772) (20,244,010) (26,886,521)
Net increase(decrease) 659,434 (840,170) $ 6,812,620 $ (8,541,991)
30
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
INSURED NATIONAL PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS B
Shares sold 445,318 725,416 $ 4,550,886 $ 7,364,166
Shares issued in
reinvestment of
dividends and
distributions 189,204 149,506 1,928,668 1,512,818
Shares converted
to Class A (72,158) (24,166) (741,691) (243,256)
Shares redeemed (1,295,176) (1,637,886) (13,217,186) (16,598,949)
Net decrease (732,812) (787,130) $ (7,479,323) $ (7,965,221)
CLASS C
Shares sold 607,973 713,617 $ 6,236,279 $ 7,183,108
Shares issued in
reinvestment of
dividends and
distributions 100,042 66,139 1,023,363 669,187
Shares redeemed (1,106,023) (777,517) (11,353,323) (7,796,599)
Net increase
(decrease) (398,008) 2,239 $ (4,093,681) $ 55,696
NEW YORK PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 1,656,405 1,703,514 $ 16,287,832 $ 16,329,024
Shares issued in
reinvestment of
dividends 622,430 661,612 6,108,602 6,340,256
Shares converted
from Class B 68,401 25,442 672,992 280,942
Shares redeemed (2,933,918) (2,945,222) (28,752,201) (28,238,945)
Net decrease (586,682) (554,654) $ (5,682,775) $ (5,288,723)
CLASS B
Shares sold 1,571,739 1,812,208 $ 15,455,527 $ 17,384,846
Shares issued in
reinvestment of
dividends 335,027 323,928 3,289,276 3,102,964
Shares converted
to Class A (68,401) (25,442) (672,992) (280,942)
Shares redeemed (2,361,128) (1,885,403) (23,120,896) (18,010,268)
Net increase
(decrease) (522,763) 225,291 $ (5,049,085) $ 2,196,600
31
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
NEW YORK PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS C
Shares sold 1,428,234 1,388,105 $ 14,035,181 $ 13,398,638
Shares issued in
reinvestment of
dividends 199,225 132,115 1,958,524 1,265,387
Shares redeemed (1,355,750) (1,295,305) (13,277,011) (12,486,786)
Net increase 271,709 224,915 $ 2,716,694 $ 2,177,239
CALIFORNIA PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 3,738,289 4,406,385 $ 40,219,966 $ 46,067,687
Shares issued in
reinvestment of
dividends 1,166,476 1,158,430 12,506,829 12,118,531
Shares converted
from Class B 142,469 108,411 1,524,654 1,125,538
Shares redeemed (5,919,965) (8,003,914) (63,313,282) (83,570,318)
Net decrease (872,731) (2,330,688) $(9,061,833) $(24,258,562)
CLASS B
Shares sold 2,222,122 2,529,481 $ 23,864,126 $ 26,499,615
Shares issued in
reinvestment of
dividends 443,701 404,752 4,759,751 4,234,295
Shares converted
to Class A (142,456) (108,411) (1,524,654) (1,125,538)
Shares redeemed (2,999,262) (3,207,605) (32,131,158) (33,548,529)
Net decrease (475,895) (381,783) $ (5,031,935) $ (3,940,157)
CLASS C
Shares sold 1,575,361 2,465,162 $ 16,866,778 $ 25,830,785
Shares issued in
reinvestment of
dividends 377,469 250,607 4,052,166 2,619,923
Shares redeemed (2,319,763) (2,530,143) (24,794,824) (26,398,510)
Net increase
(decrease) (366,933) 185,626 $ (3,875,880) $ 2,052,198
32
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
INSURED CALIFORNIA PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 579,093 827,900 $ 7,766,679 $ 10,898,263
Shares issued in
reinvestment of
dividends 194,618 189,983 2,638,958 2,517,761
Shares converted
from Class B 12,441 1,804 170,252 23,470
Shares redeemed (903,548) (1,244,117) (12,186,021) (16,388,925)
Net decrease (117,396) (224,430) $ (1,610,132) $ (2,949,431)
CLASS B
Shares sold 362,181 558,000 $ 4,900,540 $ 7,459,223
Shares issued in
reinvestment of
dividends 62,833 51,658 852,376 684,457
Shares converted
to Class A (12,440) (1,804) (170,252) (23,470)
Shares redeemed (391,053) (703,582) (5,261,290) (9,300,020)
Net increase (decrease) 21,521 (95,728) $ 321,374 $ (1,179,810)
CLASS C
Shares sold 145,518 198,597 $ 1,971,410 $ 2,664,787
Shares issued in
reinvestment of
dividends 35,557 32,458 482,604 429,912
Shares redeemed (171,093) (349,078) (2,313,405) (4,605,988)
Net increase
(decrease) 9,982 (118,023) $ 140,609 $ (1,511,289)
33
FINANCIAL HIGHLIGHTS ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
NATIONAL PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.51 $10.45 $ 9.41 $11.05 $10.19
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .57(b) .58 .58 .57 .61
Net realized and unrealized gain (loss)
on investment transactions .44 .06 1.04 (1.37) .88
Net increase (decrease) in net asset
value from operations 1.01 .64 1.62 (.80) 1.49
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.58) (.58) (.58) (.57) (.62)
Distributions in excess of net
investment income -0- -0- -0- (.03) -0-
Distributions from net realized gains -0- -0- -0- (.24) (.01)
Total dividends and distributions (.58) (.58) (.58) (.84) (.63)
Net asset value, end of year $10.94 $10.51 $10.45 $ 9.41 $11.05
TOTAL RETURN
Total investment return based on
net asset value (c) 9.88% 6.32% 17.73% (7.65)% 14.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $329,540 $325,288 $338,311 $338,814 $386,484
Ratio to average net assets of:
Expenses, net of fee waivers .69% .69% .71% .62% .65%
Expenses, before fee waivers 1.11% 1.10% 1.09% 1.09% 1.08%
Net investment income, net of
fee waivers 5.40% 5.55% 5.84% 5.61% 5.69%
Portfolio turnover rate 72% 137% 118% 110% 233%
</TABLE>
See footnote summary on page 48.
34
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
NATIONAL PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
JANUARY 4,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.51 $10.45 $ 9.41 $11.05 $10.43
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .50(b) .51 .51 .50 .44
Net realized and unrealized gain (loss)
on investment transactions .44 .06 1.04 (1.38) .63
Net increase (decrease) in net asset
value from operations .94 .57 1.55 (.88) 1.07
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) (.51) (.51) (.50) (.45)
Distributions in excess of net
investment income (.01) -0- -0- (.02) -0-
Distributions from net realized gains -0- -0- -0- (.24) -0-
Total dividends and distributions (.51) (.51) (.51) (.76) (.45)
Net asset value, end of period $10.94 $10.51 $10.45 $ 9.41 $11.05
TOTAL RETURN
Total investment return based on
net asset value (c) 9.16% 5.61% 16.91% (8.34)% 10.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $190,530 $214,994 $252,357 $250,391 $216,489
Ratio to average net assets of:
Expenses, net of fee waivers 1.40% 1.40% 1.42% 1.32% 1.36%(e)
Expenses, before fee waivers 1.79% 1.81% 1.80% 1.80% 1.78%(e)
Net investment income, net of
fee waivers 4.69% 4.85% 5.13% 4.91% 4.59%(e)
Portfolio turnover rate 72% 137% 118% 110% 233%
</TABLE>
See footnote summary on page 48.
35
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
NATIONAL PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
MAY 3,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.51 $10.45 $ 9.41 $11.05 $10.70
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .50(b) .51 .51 .50 .26
Net realized and unrealized gain (loss)
on investment transactions .44 .06 1.04 (1.38) .36
Net increase (decrease) in net asset
value from operations .94 .57 1.55 (.88) .62
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) (.51) (.51) (.50) (.27)
Distributions in excess of net
investment income (.01) -0- -0- (.02) -0-
Distributions from net realized gains -0- -0- -0- (.24) -0-
Total dividends and distributions (.51) (.51) (.51) (.76) (.27)
Net asset value, end of period $10.94 $10.51 $10.45 $ 9.41 $11.05
TOTAL RETURN
Total investment return based on
net asset value (c) 9.18% 5.62% 16.93% (8.33)% 5.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $89,792 $96,134 $108,068 $133,249 $150,953
Ratio to average net assets of:
Expenses, net of fee waivers 1.39% 1.39% 1.41% 1.31% 1.36%(e)
Expenses, before fee waivers 1.81% 1.80% 1.78% 1.79% 1.78%(e)
Net investment income, net of
fee waivers 4.70% 4.85% 5.16% 4.89% 4.17%(e)
Portfolio turnover rate 72% 137% 118% 110% 233%
</TABLE>
See footnote summary on page 48.
36
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
INSURED NATIONAL PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.28 $10.07 $ 8.96 $10.76 $ 9.87
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .50(b) .51 .51 .53 .56
Net realized and unrealized gain (loss)
on investment transactions .37 .22 1.13 (1.40) .96
Net increase (decrease) in net asset
value from operations .87 .73 1.64 (.87) 1.52
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) (.52) (.51) (.53) (.57)
Distributions in excess of net
investment income (.02) -0- (.02) (.01) -0-
Distributions from net realized gains (.14) -0- -0- (.39) (.06)
Total dividends and distributions (.66) (.52) (.53) (.93) (.63)
Net asset value, end of year $10.49 $10.28 $10.07 $ 8.96 $10.76
TOTAL RETURN
Total investment return based on
net asset value (c) 8.77% 7.43% 18.72% (8.69)% 15.82%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $170,631 $160,425 $165,548 $153,656 $185,876
Ratio to average net assets of:
Expenses, net of fee waivers 1.02% 1.02% 1.01% .66% .73%
Expenses, before fee waivers 1.15% 1.12% 1.12% 1.11% 1.11%
Net investment income, net of
fee waivers 4.85% 5.04% 5.37% 5.40% 5.40%
Portfolio turnover rate 98% 157% 171% 149% 165%
</TABLE>
See footnote summary on page 48.
37
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
INSURED NATIONAL PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
JANUARY 4,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.28 $10.07 $ 8.96 $10.76 $10.10
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .42(b) .44 .45 .46 .40
Net realized and unrealized gain (loss)
on investment transactions .38 .22 1.12 (1.40) .66
Net increase (decrease) in net asset
value from operations .80 .66 1.57 (.94) 1.06
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.42) (.45) (.45) (.46) (.40)
Distributions in excess of net
investment income (.03) -0- (.01) (.01) -0-
Distributions from net realized gains (.14) -0- -0- (.39) -0-
Total dividends and distributions (.59) (.45) (.46) (.86) (.40)
Net asset value, end of period $10.49 $10.28 $10.07 $ 8.96 $10.76
TOTAL RETURN
Total invesment return based on
net asset value (c) 8.07% 6.74% 17.91% (9.38)% 10.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $45,542 $52,156 $58,990 $51,439 $42,954
Ratio to average net assets of:
Expenses, net of fee waivers 1.75% 1.73% 1.72% 1.37% 1.45%(e)
Expenses, before fee waivers 1.86% 1.83% 1.83% 1.82% 1.83%(e)
Net investment income, net of
fee waivers 4.12% 4.32% 4.65% 4.71% 4.31%(e)
Portfolio turnover rate 98% 157% 171% 149% 165%
</TABLE>
See footnote summary on page 48.
38
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
INSURED NATIONAL PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
MAY 3,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.28 $10.07 $ 8.96 $10.76 $10.41
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .42(b) .44 .45 .46 .24
Net realized and unrealized gain (loss)
on investment transactions .38 .22 1.12 (1.40) .35
Net increase (decrease) in net asset
value from operations .80 .66 1.57 (.94) .59
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.42) (.45) (.45) (.46) (.24)
Distributions in excess of net
investment income (.03) -0- (.01) (.01) -0-
Distributions from net realized gains (.14) -0- -0- (.39) -0-
Total dividends and distributions (.59) (.45) (.46) (.86) (.24)
Net asset value, end of period $10.49 $10.28 $10.07 $ 8.96 $10.76
TOTAL RETURN
Total invesment return based on
net asset value (c) 8.07% 6.74% 17.91% (9.38)% 5.75%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $19,057 $22,763 $22,265 $24,112 $28,862
Ratio to average net assets of:
Expenses, net of fee waivers 1.72% 1.72% 1.71% 1.36% 1.45%(e)
Expenses, before fee waivers 1.84% 1.82% 1.82% 1.81% 1.83%(e)
Net investment income, net of fee waivers 4.15% 4.34% 4.69% 4.68% 3.98%(e)
Portfolio turnover rate 98% 157% 171% 149% 165%
</TABLE>
See footnote summary on page 48.
39
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 9.66 $ 9.62 $ 8.72 $10.17 $ 9.53
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .53(b) .55 .55 .55 .57
Net realized and unrealized gain (loss)
on investment transactions .46 .04 .90 (1.40) .79
Net increase (decrease) in net asset
value from operations .99 .59 1.45 (.85) 1.36
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.54) (.55) (.55) (.55) (.58)
Distributions in excess of net
investment income (.01) -0- -0- (.01) -0-
Distributions from net realized gains -0- -0- -0- (.04) (.14)
Total dividends and distributions (.55) (.55) (.55) (.60) (.72)
Net asset value, end of year $10.10 $ 9.66 $ 9.62 $ 8.72 $10.17
TOTAL RETURN
Total investment return based on net
asset value (c) 10.52% 6.30% 17.10% (8.76)% 14.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $181,745 $179,452 $183,987 $182,170 $214,259
Ratio to average net assets of:
Expenses, net of fee waivers .65% .64% .75% .66% .68%
Expenses, before fee waivers 1.12% 1.11% 1.12% 1.11% 1.13%
Net investment income, net of
fee waivers 5.45% 5.66% 5.93% 5.75% 5.76%
Portfolio turnover rate 34% 64% 69% 69% 63%
</TABLE>
See footnote summary on page 48.
40
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
JANUARY 4,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.66 $ 9.62 $ 8.72 $10.17 $ 9.61
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .48 .48 .48 .41
Net realized and unrealized gain (loss)
on investment transactions .46 .04 .90 (1.41) .56
Net increase (decrease) in net asset
value from operations .92 .52 1.38 (.93) .97
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.48) (.48) (.47) (.41)
Distributions in excess of net
investment income (.01) -0- -0- (.01) -0-
Distributions from net realized gains -0- -0- -0- (.04) -0-
Total dividends and distributions (.48) (.48) (.48) (.52) (.41)
Net asset value, end of period $10.10 $ 9.66 $ 9.62 $ 8.72 $10.17
TOTAL RETURN
Total investment return based on net
asset value (c) 9.72% 5.52% 16.19% (9.44)% 10.29%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $96,119 $96,959 $94,400 $81,941 $58,504
Ratio to average net assets of:
Expenses, net of fee waivers 1.35% 1.35% 1.45% 1.36% 1.39%(e)
Expenses, before fee waivers 1.84% 1.82% 1.83% 1.82% 1.84%(e)
Net investment income, net of fee waivers 4.75% 4.95% 5.21% 5.05% 4.70%(e)
Portfolio turnover rate 34% 64% 69% 69% 63%
</TABLE>
See footnote summary on page 48.
41
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
MAY 3,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.66 $ 9.62 $ 8.72 $10.17 $ 9.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .48 .48 .48 .24
Net realized and unrealized gain (loss)
on investment transactions .46 .04 .90 (1.41) .29
Net increase (decrease) in net asset
value from operations .92 .52 1.38 (.93) .53
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.48) (.48) (.47) (.25)
Distributions in excess of net
investment income (.01) -0- -0- (.01) -0-
Distributions from net realized gains -0- -0- -0- (.04) -0-
Total dividends and distributions (.48) (.48) (.48) (.52) (.25)
Net asset value, end of period $10.10 $ 9.66 $ 9.62 $ 8.72 $10.17
TOTAL RETURN
Total investment return based on net
asset value (c) 9.72% 5.52% 16.19% (9.44)% 5.37%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $38,890 $34,562 $32,259 $34,646 $38,245
Ratio to average net assets of:
Expenses, net of fee waivers 1.35% 1.34% 1.44% 1.36% 1.38%(e)
Expenses, before fee waivers 1.82% 1.81% 1.82% 1.81% 1.84%(e)
Net investment income, net of fee waivers 4.75% 4.95% 5.24% 5.03% 4.42%(e)
Portfolio turnover rate 34% 64% 69% 69% 63%
</TABLE>
See footnote summary on page 48.
42
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.59 $10.45 $ 9.43 $10.90 $10.06
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .58(b) .58 .59 .59 .61
Net realized and unrealized gain (loss)
on investment transactions .45 .14 1.02 (1.41) .85
Net increase (decrease) in net asset
value from operations 1.03 .72 1.61 (.82) 1.46
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.58) (.58) (.59) (.59) (.61)
Distributions from net realized gains -0- -0- -0- (.06) (.01)
Total dividends and distributions (.58) (.58) (.59) (.65) (.62)
Net asset value, end of year $11.04 $10.59 $10.45 $ 9.43 $10.90
TOTAL RETURN
Total investment return based on net
asset value (c) 10.07% 7.15% 17.55% (7.73)% 14.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $470,444 $460,444 $478,535 $470,308 $531,293
Ratio to average net assets of:
Expenses, net of fee waivers .78% .77% .74% .64% .74%
Expenses, before fee waivers 1.05% 1.05% 1.04% 1.05% 1.06%
Net investment income, net of
fee waivers 5.43% 5.57% 5.90% 5.78% 5.74%
Portfolio turnover rate 20% 49% 39% 45% 83%
</TABLE>
See footnote summary on page 48.
43
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
JANUARY 4,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.59 $10.45 $ 9.43 $10.90 $10.27
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .51(b) .51 .51 .52 .44
Net realized and unrealized gain (loss)
on investment transactions .45 .14 1.02 (1.41) .63
Net increase (decrease) in net asset
value from operations .96 .65 1.53 (.89) 1.07
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.51) (.51) (.52) (.44)
Distributions from net realized gains -0- -0- -0- (.06) -0-
Total dividends and distributions (.51) (.51) (.51) (.58) (.44)
Net asset value, end of period $11.04 $10.59 $10.45 $ 9.43 $10.90
TOTAL RETURN
Total investment return based on net
asset value (c) 9.29% 6.37% 16.64% (8.43)% 10.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $166,672 $164,895 $166,759 $160,879 $126,688
Ratio to average net assets of:
Expenses, net of fee waivers 1.48% 1.47% 1.45% 1.35% 1.44%(e)
Expenses, before fee waivers 1.76% 1.75% 1.75% 1.75% 1.78%(e)
Net investment income, net of
fee waivers 4.72% 4.87% 5.19% 5.07% 4.66%(e)
Portfolio turnover rate 20% 49% 39% 45% 83%
</TABLE>
See footnote summary on page 48.
44
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
MAY 3,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.59 $10.45 $ 9.43 $10.90 $10.54
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .51(b) .51 .51 .52 .26
Net realized and unrealized gain (loss)
on investment transactions .45 .14 1.02 (1.41) .36
Net increase (decrease) in net asset
value from operations .96 .65 1.53 (.89) .62
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.51) (.51) (.52) (.26)
Distributions from net realized gains -0- -0- -0- (.06) -0-
Total dividends and distributions (.51) (.51) (.51) (.58) (.26)
Net asset value, end of period $11.04 $10.59 $10.45 $ 9.43 $10.90
TOTAL RETURN
Total investment return based on net
asset value (c) 9.29% 6.38% 16.64% (8.43)% 5.98%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $90,742 $90,917 $87,793 $103,622 $117,379
Ratio to average net assets of:
Expenses, net of fee waivers 1.48% 1.47% 1.44% 1.34% 1.44%(e)
Expenses, before fee waivers 1.74% 1.75% 1.74% 1.75% 1.78%(e)
Net investment income, net of
fee waivers 4.73% 4.87% 5.22% 5.06% 4.42%(e)
Portfolio turnover rate 20% 49% 39% 45% 83%
</TABLE>
See footnote summary on page 48.
45
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
INSURED CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.39 $13.32 $11.79 $14.25 $12.99
INCOME FROM INVESTMENT OPERATIONS
Net investment income .69(b) .69 .68(a) .69(a) .70(a)
Net realized and unrealized gain (loss)
on investment transactions .50 .06 1.54 (1.99) 1.30
Net increase (decrease) in net asset
value from operations 1.19 .75 2.22 (1.30) 2.00
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.68) (.68) (.68) (.69) (.71)
Dividends in excess of net
investment income (.01) -0- (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- (.47) (.03)
Total dividends and distributions (.69) (.68) (.69) (1.16) (.74)
Net asset value, end of year $13.89 $13.39 $13.32 $11.79 $14.25
TOTAL RETURN
Total investment return based on net
asset value (c) 9.18% 5.79% 19.29% (9.73)% 15.64%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $103,647 $101,542 $103,940 $94,857 $120,734
Ratio to average net assets of:
Expenses, net of fee waivers 1.11% 1.08% 1.04% .82% .94%
Expenses, before fee waivers 1.11% 1.08% 1.09% 1.08% 1.08%
Net investment income, net of
fee waivers 5.09% 5.19% 5.34% 5.29% 5.06%
Portfolio turnover rate 35% 118% 103% 100% 186%
</TABLE>
See footnote summary on page 48.
46
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
INSURED CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
JANUARY 4,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.39 $13.32 $11.79 $14.25 $13.37
INCOME FROM INVESTMENT OPERATIONS
Net investment income .59(b) .60 .58(a) .60(a) .49(a)
Net realized and unrealized gain (loss)
on investment transactions .50 .05 1.54 (2.00) .89
Net increase (decrease) in net asset
value from operations 1.09 .65 2.12 (1.40) 1.38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.59) (.58) (.58) (.59) (.50)
Distributions in excess of net
investment income -0- -0- (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- (.47) -0-
Total dividends and distributions (.59) (.58) (.59) (1.06) (.50)
Net asset value, end of period $13.89 $13.39 $13.32 $11.79 $14.25
TOTAL RETURN
Total investment return based on net
asset value (c) 8.37% 4.99% 18.35% (10.43)% 10.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $27,976 $26,696 $27,816 $24,591 $21,234
Ratio to average net assets of:
Expenses, net of fee waivers 1.81% 1.79% 1.74% 1.53% 1.65%(e)
Expenses, before fee waivers 1.81% 1.79% 1.80% 1.78% 1.79%(e)
Net investment income, net of
fee waivers 4.39% 4.49% 4.61% 4.60% 3.85%(e)
Portfolio turnover rate 35% 118% 103% 100% 186%
</TABLE>
See footnote summary on page 48.
47
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
INSURED CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
MAY 3,
1993(D)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.39 $13.32 $11.79 $14.25 $13.78
INCOME FROM INVESTMENT OPERATIONS
Net investment income .59(b) .60 .58(a) .60(a) .29(a)
Net realized and unrealized gain (loss)
on investment transactions .50 .05 1.54 (2.00) .48
Net increase (decrease) in net asset
value from operations 1.09 .65 2.12 (1.40) .77
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.59) (.58) (.58) (.59) (.30)
Distributions in excess of net
investment income -0- -0- (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- (.47) -0-
Total dividends and distributions (.59) (.58) (.59) (1.06) (.30)
Net asset value, end of period $13.89 $13.39 $13.32 $11.79 $14.25
TOTAL RETURN
Total investment return based on net
asset value (c) 8.37% 4.99% 18.35% (10.43)% 5.63%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $13,436 $12,826 $14,323 $12,472 $15,971
Ratio to average net assets of:
Expenses, net of fee waivers 1.81% 1.78% 1.74% 1.52% 1.65%(e)
Expenses, before fee waivers 1.81% 1.78% 1.79% 1.77% 1.79%(e)
Net investment income, net of
fee waivers 4.39% 4.49% 4.64% 4.59% 3.74%(e)
Portfolio turnover rate 35% 118% 103% 100% 186%
</TABLE>
(a) Net of fees voluntarily waived by the Adviser.
(b) Based on average shares outstanding.
(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. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period less than one year is
not annualized.
(d) Commencement of distribution.
(e) Annualized
48
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS ALLIANCE MUNICIPAL INCOME FUND, INC.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Alliance Municipal Income Fund,
Inc. (comprising, respectively, the National, Insured National, New York,
California, and Insured California Portfolios) as of October 31, 1997, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund'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
October 31, 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 each
of the respective portfolios constituting the Alliance Municipal Income Fund,
Inc. at October 31, 1997, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the indicated periods, in
conformity with generally accepted accounting principles.
New York, New York
December 4, 1997
FEDERAL TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In accordance with Federal tax law, the following table represents each
portfolio's designation of "exempt-interest dividends" and long-term capital
gain distributions paid during the fiscal year ended October 31, 1997. As
required by Federal tax law, shareholders will receive notification of their
portion of each portfolio's taxable ordinary dividends (if any) and capital
gain distributions (if any) paid for the 1997 calendar year on Form 1099-DIV
which will be mailed by January 31, 1998.
EXEMPT-INTEREST LONG-TERM CAPITAL
PORTFOLIO DIVIDENDS GAIN DISTRIBUTIONS
- ------------------- --------------- ------------------
National $30,101,325 $ -0-
Insured National 10,121,194 2,731,909
New York 16,183,619 -0-
California 36,375,062 -0-
Insured California 6,153,340 -0-
49
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JAMES R. GREENE (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
SUSAN P. KEENAN, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
DAVID M. DOWDEN, VICE PRESIDENT
TERRANCE HULTS, VICE PRESIDENT
WILLIAM E. OLIVER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JUAN J. RODRIGUEZ, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
(1) Member of the Audit Committee.
50
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
51
ALLIANCE MUNICIPAL INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
MUNIAR
