ALLIANCE MUNICIPAL INCOME FUND
ANNUAL REPORT
OCTOBER 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
December 28, 1998
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, 1998.
INVESTMENT RESULTS
The five portfolios of your Fund seek to provide the highest level of income
exempt from federal and state personal income tax that is available without
assuming undue risk. Throughout this report, we show your Fund's performance
for each of its portfolios in various forms, including its Lipper rankings,
Morningstar ratings, and net asset value (NAV) performance compared to its
Lipper averages.
INVESTMENT RESULTS
Alliance Municipal Income Fund--Class A Shares
Period Ended October 31, 1998
<TABLE>
<CAPTION>
1 YEAR 1 YEAR 3 YEAR 5 YEAR 10 YEAR 3 YEAR
FUND PORTFOLIO LIPPER LIPPER LIPPER LIPPER MORNINGSTAR
PORTFOLIO TOTAL RETURNS* RANKINGS** RANKINGS** RANKINGS** RANKINGS** RATINGS***
- ------------- -------------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
National 6.82% 158/239 24/197 20/138 12/74 4 stars
California 8.20% 28/104 9/90 7/61 3/32 5 stars
New York 7.31% 52/98 4/86 5/57 5/30 4 stars
Insured National 7.15% 27/51 3/45 2/30 3/17 3 stars
Insured California 7.60% 14/26 7/25 4/14 5/7 2 stars
Number of Funds in
Morningstar Municipal
Bond Fund Category 1,586
</TABLE>
* THE FUND'S INVESTMENT RESULTS ARE TOTAL RETURNS FOR THE PERIOD SHOWN AND
ARE BASED ON THE NET ASSET VALUE OF CLASS A SHARES AS OF OCTOBER 31, 1998. 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. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
ADDITIONAL PERFORMANCE INFORMATION CAN BE FOUND ON PAGES 3 - 7.
** FUNDS IN THE LIPPER AVERAGES GENERALLY HAVE SIMILAR INVESTMENT OBJECTIVES
TO THE FUND, ALTHOUGH SOME MAY HAVE DIFFERENT INVESTMENT POLICIES. AN INVESTOR
CANNOT INVEST DIRECTLY IN AN AVERAGE.
*** MORNINGSTAR PROPRIETARY RATINGS REFLECT HISTORICAL RISK-ADJUSTED
PERFORMANCE AS OF OCTOBER 31, 1998. EACH PORTFOLIO'S OVERALL, 5-YEAR, AND
10-YEAR MORNINGSTAR RETURNS WERE: NATIONAL 4 STARS, 3 STARS, 4 STARS;
CALIFORNIA 4 STARS, 4 STARS, 4 STARS; NEW YORK 4 STARS, 3 STARS, 4 STARS;
INSURED NATIONAL 2 STARS, 2 STARS, 2 STARS; AND INSURED CALIFORNIA 1 STAR, 1
STAR AND 1 STAR AMONG 1,586 MUNICIPAL BOND FUNDS FOR THE OVERALL PERIOD, 972
MUNICIPAL BOND FUNDS FOR THE 5-YEAR PERIOD, AND 366 MUNICIPAL BOND FUNDS FOR
THE 10-YEAR PERIOD. THESE RATINGS MAY CHANGE MONTHLY AND ARE CALCULATED FROM
EACH PORTFOLIO'S 3-, 5-, 10-YEAR AND OVERALL AVERAGE ANNUAL RETURNS IN EXCESS
OF 90-DAY TREASURY BILL RETURNS WITH APPROPRIATE FEE ADJUSTMENTS AND A RISK
FACTOR THAT REFLECTS PORTFOLIO PERFORMANCE BELOW 90-DAY TREASURY BILL RETURNS.
IF THE PORTFOLIO SCORES IN THE TOP 10% OF ITS CLASS IT RECEIVES 5 STARS; IF IT
FALLS IN THE NEXT 22.5% IT RECEIVES 4 STARS; A PLACE IN THE MIDDLE 35% EARNS IT
3 STARS; THOSE IN THE NEXT 22.5% RECEIVE 2 STARS; AND THE BOTTOM 10% GET 1
STAR. EACH PORTFOLIO'S SEC AVERAGE ANNUAL TOTAL RETURNS CAN BE FOUND ON PAGE 5.
MARKET OVERVIEW
The municipal bond market had an excellent year both on an absolute basis and
relative to other sectors of the fixed income markets. The tax-exempt sector
benefited from the same macroeconomic and market forces that drove the U.S.
government bond market to levels not seen since the 1960s. Individual and
institutional investors alike chose to invest in municipal bonds because of
their sound credit quality, attractive taxable-equivalent yields, and an
overall perception that municipals offer a "safe haven" in turbulent global
markets. The absence of any significant tax reform legislation under
consideration by the U.S. Congress has also helped market stability, unlike
recent years when the Federal tax-exempt status of municipal bonds had been
threatened.
1
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
Despite the strong performance of municipal bonds over the course of the past
year, the yield ratio, or relationship of municipal bond yields to Treasury
yields, has increased. Factors which have contributed to this relative
underperformance versus Treasuries include the greater size, liquidity and
overall attraction of U.S. government securities as a "safe haven" and
continuing high levels of new issuance by states and municipalities. In fact,
new supply for state and local debt issuance should reach record levels this
year. Local governments are taking advantage of the opportunity to refinance
older, higher coupon debt, as well as borrowing new money to fund
infrastructure renovation and rebuilding projects.
INVESTMENT STRATEGY
Due to record low interest rates and narrow credit spreads between triple-A and
triple-B rated debt, trading activity in the portfolios has been minimal. The
performance continues to be very strong in all of the Fund's portfolios
because, over the last several years, we have aggressively worked to lock in
income and call protection. We have selectively added new non-rated positions
to our single state portfolios, which offer substantial additional income for
an acceptable incremental risk. For the most part, these investments are
project-specific financings that we believe will benefit from future economic
and demographic trends. An important part of the Fund's investment
decision-making is the criteria that non-rated projects should have a high
probability of receiving an investment-grade rating over time.
The credit fundamentals of state and local governments continue to improve.
Through September, the strong domestic economy continued to benefit
municipalities through better than projected sales tax and personal income tax
collection, typically the largest single source of tax revenue. Empirical
evidence of this continuing improvement in credit quality is that we are now in
the twelfth consecutive quarter where municipal credit rating upgrades have
exceeded downgrades, according to both Moody's and Standard & Poor's. In
addition to the strong economy, rating agencies have recognized that many
governmental entities now have financial forecasting and planning models which
should help preserve strong credit quality through a recession, unlike the
experience of the late 1980s.
MARKET OUTLOOK
We expect that over the short-term, market volatility will continue. New
municipal debt issuance, due to dramatically lower interest rates, as well as
less overall market liquidity, due to recent losses experienced by financial
institutions, will most likely lead to downward pressure on municipal bond
prices. At Alliance, we believe that any weakness caused by fundamental or
technical changes in the market should provide an excellent buying opportunity.
Looking ahead, we believe that inflation will not be a factor, municipal credit
quality will continue to improve, and we will remain in a very positive
environment for tax exempt market investors.
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
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
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 personal income tax that is available without assuming undue risk.
These securities generally offer current yields above those of higher quality
municipal obligations.
HOW YOUR PORTFOLIO PERFORMED OVER THE PAST TWELVE MONTHS
_______________________________________________________________________________
The Portfolios' Class A share total returns for the 12-month period ended
October 31, 1998 are shown below. For comparison, we have also shown returns
for the overall municipal bond market, represented by the unmanaged state
specific Lipper Municipal Debt Funds Average, for the 12-month, 5-year and
10-year periods ended October 31, 1998. Current yields and returns for Class B
and Class C shares are on the next two pages.
INVESTMENT RESULTS
_______________________________________________________________________________
MUNICIPAL INCOME FUND--CLASS A SHARES COMPARED TO LIPPER MUNICIPAL DEBT FUNDS
AVERAGE*
PERIOD ENDED OCTOBER 31, 1998
FUND PORTFOLIO
TOTAL RETURNS LIPPER LIPPER LIPPER
(AT NAV) AVERAGE AVERAGE AVERAGE
PORTFOLIO 12 MONTHS 12 MONTHS 5 YEARS 10 YEARS
- --------- -------------- --------- -------- ---------
National 6.82% 7.12% 5.53% 7.70%
California 8.20% 7.62% 5.73% 7.61%
New York 7.31% 7.34% 5.28% 7.55%
Insured National 7.15% 7.19% 5.40% 7.43%
Insured California 7.60% 7.63% 5.65% 7.93%
* Total returns for the Fund's portfolios are based on the net asset value
of Class A shares as of October 31, 1998. 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. Past
performance is no guarantee of future results. The state specific Lipper
Municipal Debt Funds Averages have generally similar investment objectives to
your Fund's portfolios, although some may have different investment policies.
3
INVESTMENT RESULTS
AS OF OCTOBER 31, 1998 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
NAV AND SEC TOTAL RETURNS
---------------------------------------------------------
TAXABLE
EQUIVALENT
WITHOUT SALES CHARGE WITH SALES CHARGEYIELD IN 36%
---------------------------- --------------------------- 30 DAY TAX BRACKET
PORTFOLIO 1 YEAR 5 YEAR 10 YEAR 1 YEAR 5 YEAR 10 YEAR SEC YIELD* (AT NAV)
- ---------- -------- ------- --------- ------- ------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NATIONAL
Class A 6.82% 6.29% 8.32% 2.23% 5.37% 7.85% 4.68% 8.16%
Class B 6.05% 5.55% 6.55%** 3.05% 5.55% 6.55%** 4.17% 7.17%
Class C 6.06% 5.56% 6.07%** 5.06% 5.56% 6.07%** 4.18% 7.19%
CALIFORNIA
Class A 8.20% 6.71% 8.39% 3.60% 5.80% 7.92% 4.50% 8.87%
Class B 7.46% 5.94% 6.91%** 4.46% 5.94% 6.91%** 3.98% 7.72%
Class C 7.36% 5.92% 6.47%** 6.36% 5.92% 6.47%** 3.99% 7.72%
NEW YORK
Class A 7.31% 6.14% 8.14% 2.73% 5.22% 7.68% 4.59% 8.91%
Class B 6.57% 5.36% 6.36%** 3.57% 5.36% 6.36%** 4.08% 7.68%
Class C 6.57% 5.36% 5.85%** 5.57% 5.36% 5.85%** 4.09% 7.68%
INSURED NATIONAL
Class A 7.15% 6.30% 8.14% 2.56% 5.38% 7.66% 4.00% 6.89%
Class B 6.48% 5.59% 6.63%** 3.48% 5.59% 6.63%** 3.47% 5.91%
Class C 6.48% 5.59% 6.13%** 5.48% 5.59% 6.13%** 3.48% 5.91%
INSURED CALIFORNIA
Class A 7.60% 6.00% 7.79% 3.01% 5.09% 7.32% 3.89% 7.72%
Class B 6.84% 5.20% 6.25%** 3.84% 5.20% 6.25%** 3.35% 6.51%
Class C 6.84% 5.20% 5.75%** 5.84% 5.20% 5.75%** 3.36% 6.51%
</TABLE>
The Fund's investment results represent total returns. The NAV and SEC returns
reflect reinvestment of dividends and/or capital gains distributions in
additional shares, without (NAV) and with (SEC) the effect of the 4.25% maximum
front-end sales charge for Class A shares or applicable contingent deferred
sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* SEC yields are based on SEC guidelines and are calculated on 30 days ended
October 31, 1998.
** For Portfolio share classes that are less than 10 years old, performance
results are as of the inception date. Inception dates for each Portfolio are:
all Class B shares 1/4/93; all Class C shares 5/3/93.
4
INVESTMENT RESULTS ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (SEPTEMBER
30, 1998)
1 YEAR 5 YEARS 10 YEARS
-------- -------- --------
NATIONAL PORTFOLIO
Class A 3.34% 5.34% 8.17%
Class B 4.21% 5.53% 6.71%*
Class C 6.13% 5.54% 6.22%*
CALIFORNIA PORTFOLIO
Class A 4.43% 5.80% 8.20%
Class B 5.34% 5.97% 7.04%*
Class C 7.34% 5.98% 6.63%*
NEW YORK PORTFOLIO
Class A 3.56% 5.21% 8.02%
Class B 4.44% 5.34% 6.47%*
Class C 6.44% 5.34% 5.97%*
INSURED NATIONAL PORTFOLIO
Class A 3.57% 5.38% 7.92%
Class B 4.55% 5.60% 6.77%*
Class C 6.55% 5.60% 6.28%*
INSURED CALIFORNIA PORTFOLIO
Class A 3.79% 5.04% 7.63%
Class B 4.66% 5.16% 6.37%*
Class C 6.66% 5.16% 5.89%*
SEC average annual total returns for the periods shown reflect reinvestment of
all distributions and deduction of the maximum 4.25% front-end sales charges
and applicable contingent deferred sales charges.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* For Portfolio share classes that are less than 10 years old, performance
results are as of the inception date. Inception dates for each Portfolio are:
all Class B shares 1/4/93; all Class C shares 5/3/93.
5
ALLIANCE MUNICIPAL INCOME FUND
GROWTH OF A $10,000 INVESTMENT ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
NATIONAL PORTFOLIO
10/31/88 TO 10/31/98
NATIONAL PORTFOLIO CLASS A AT NAV: $22,239
$25,000
$21,000
$17,000
$13,000
$9,000
NATIONAL PORTFOLIO CLASS A AT OFFERING: $21,295
LIPPER GENERAL MUNI FUNDS AVERAGE: $21,018
$10,000
10/31/88
10/31/98
INSURED NATIONAL PORTFOLIO
10/31/88 TO 10/31/98
INSURED NATIONAL PORTFOLIO CLASS A AT NAV: $21,864
$21,000
$18,000
$15,000
$12,000
$9,000
INSURED NATIONAL PORTFOLIO CLASS A AT OFFERING: $20,927
LIPPER INSURED MUNI FUNDS AVERAGE:
$20,495
$10,000
10/31/88
10/31/98
CALIFORNIA PORTFOLIO
10/31/88 TO 10/31/98
CALIFORNIA PORTFOLIO CLASS A AT NAV: $22,385
$24,000
$21,000
$18,000
$15,000
$12,000
$9,000
CALIFORNIA PORTFOLIO CLASS A AT OFFERING: $21,436
LIPPER CA MUNI FUNDS AVERAGE: $20,844
$10,000
10/31/88
10/31/98
6
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
INSURED CALIFORNIA PORTFOLIO
10/31/88 TO 10/31/98
INSURED CALIFORNIA PORTFOLIO CLASS A AT NAV: $21,170
$21,000
$18,000
$15,000
$12,000
$9,000
LIPPER INSURED CA MUNI FUNDS AVERAGE:$21,444
INSURED CALIFORNIA PORTFOLIO CLASS A AT OFFERING: $20,272
$10,000
10/31/88
10/31/98
NEW YORK PORTFOLIO
10/31/88 TO 10/31/98
NEW YORK PORTFOLIO CLASS A AT NAV: $21,879
$21,000
$18,000
$15,000
$12,000
$9,000
NEW YORK PORTFOLIO CLASS A AT OFFERING: $20,958
LIPPER NY MUNI FUNDS AVERAGE:$20,761
$10,000
10/31/88
10/31/98
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 74
funds; the Lipper Insured Municipal Debt Funds Average reflects performance of
17 funds; the Lipper California Municipal Debt Funds Average reflects
performance of 32 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 30 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 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.
7
NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-101.9%
LONG TERM MUNICIPAL BONDS-78.1%
ARIZONA-3.1%
NR Goodyear
Assess Dist #1 (Palm Valley)
Ser 96C
7.25%, 7/01/16 $4,125 $ 4,535,355
AA- Maricopa Cnty
Util Rev (Citizen's Util)
Ser 95 AMT
6.20%, 5/01/30 6,780 7,326,197
AA- Mohave Cnty IDR
(Cargill/No Star Steel Proj)
Ser 95A AMT
6.70%, 3/01/20 4,255 4,777,556
AA- Mohave Cnty IDR
(Citizen's Util)
Ser 93B AMT
5.80%, 11/15/28 2,000 2,082,980
NR Scottsdale GO
(McDowell Ranch) Ser 97
6.50%, 7/15/22 2,000 2,107,060
-------------
20,829,148
CALIFORNIA-14.3%
AA- California Poll Ctl Fin Auth
PCR (Pacific Gas & Elec)
Ser 93A AMT
5.875%, 6/01/23 12,145 12,733,668
Aaa Encinitas Comm
Fac Dist #1 (Encinitas Ranch)
Ser 95A
7.375%, 9/01/26 (b) 22,900 27,248,710
NR Fairfield Assess Dist
(No Cordelia Imp Dist) Ser 93
7.375%, 9/02/18 2,380 2,469,393
AA- Long Beach Harbor Rev
Ser 93 AMT
5.125%, 5/15/18 17,325 17,415,956
NR Los Angeles Cnty Comm
Fac Dist #92-1 (Castaic
Union SD/Northlake Proj) Ser 92
9.00%, 10/01/19 8,710 9,755,548
AAA No Calif Trans Agy Elec Rev
(Calif-Oregon Trans) MBIA
Ser 93A VRN
6.782%, 4/29/24 5,000 5,359,150
AAA Palm Springs COP
Ser 91B ETM
Zero coupon, 4/15/21 23,025 7,116,107
NR Riverside Cnty Assess
Dist #161 (Winchester Prop)
Ser 94C
10.00%, 9/02/14 5,355 5,597,314
Aaa San Diego Comm
Fac Dist #1
(Miramar Ranch North) Ser 95B
7.10%, 9/01/20 (b) 7,000 8,437,940
-------------
96,133,786
COLORADO-5.6%
Aaa Arapahoe Cnty
(E-470 Public Highway Auth)
7.00%, 8/31/26 (b) 11,830 14,241,072
BBB Denver City & Cnty
(Arpt Sys Rev) Ser 92C AMT
6.75%, 11/15/22 9,500 10,353,781
BB+ Denver City & Cnty Arpt Auth
(United Airlines) Ser 92A AMT
6.875%, 10/01/32 11,775 12,726,067
-------------
37,320,920
CONNECTICUT-1.6%
B+ Connecticut Dev Auth
PCR (Conn Pwr & Light Co)
Ser 93 AMT
5.95%, 9/01/28 11,000 11,062,370
FLORIDA-8.3%
NR Collier Cnty Comm
Fac Dist (Fiddler's Creek) Ser 96
7.50%, 5/01/18 3,535 3,819,462
NR Collier Cnty Comm
Fac Dist (Heritage Greens) Ser 96
8.25%, 5/01/18 5,080 5,281,066
NR Collier Cnty IDR
(Southern St Util) Ser 96 AMT
6.50%, 10/01/25 10,605 11,398,572
8
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
AAA Dade Cnty Arpt Rev
(Miami Int'l)
MBIA Ser 95B AMT
6.00%, 10/01/24 $4,710 $ 5,168,000
AAA Escambia Cnty HFA
SFMR (Multi Cnty)
GNMA Ser 95B AMT
6.25%, 4/01/28 1,135 1,199,445
AAA Jacksonville Wtr & Swr
(United Waterworks)
AMBAC Ser 95 AMT
6.35%, 8/01/25 1,500 1,698,825
NR Northern Palm Beach Cnty
Imp Dist #9A (ABACOA) Ser 96A
7.20%, 8/01/16 5,000 5,518,350
7.30%, 8/01/27 6,130 6,762,800
NR St. John's Cnty Comm Dev
(Julington Creek Plantation) Ser 97
6.70%, 5/01/07 3,090 3,321,534
7.125%, 5/01/19 8,695 9,547,458
Baa2 Volusia Cnty Ed Fac Auth
(Embry-Riddle Aero Univ)
Ser 96A
6.125%, 10/15/26 (b) 1,820 1,979,960
-------------
55,695,472
GEORGIA-5.2%
AAA Atlanta
Arpt Fac Rev MBIA AMT
Zero coupon, 1/01/10 60,535 34,548,535
INDIANA-7.9%
BB+ Indianapolis Arpt Auth
(United Airlines)
Ser 95A AMT
6.50%, 11/15/31 49,410 53,106,856
MARYLAND-0.2%
NR Maryland Ind Dev Fin Auth Eco Dev
(Med Waste Assoc) Ser 89 AMT
8.75%, 11/15/10 1,365 1,411,970
MASSACHUSETTS-3.6%
AAA Massachusetts Port Auth
(Boston Fuel Corp)
MBIA Ser 97 AMT
6.00%, 7/01/36 17,855 19,207,874
AAA Massachusetts Port Auth
(USAir Proj)
MBIA Ser 96A AMT
5.875%, 9/01/23 4,495 4,804,256
-------------
24,012,130
MICHIGAN-1.2%
AAA Kent Cnty Arpt Rev
(Kent Cnty Int'l) Ser 95 AMT
6.10%, 1/01/25 3,745 3,994,679
AA+ Michigan HDA
SFMR (Mortgage Rev)
Ser 96B AMT
6.20%, 6/01/27 1,200 1,268,220
A Michigan Strategic Fund
PCR (General Motors Corp) Ser 95
6.20%, 9/01/20 2,240 2,461,155
-------------
7,724,054
MINNESOTA-2.3%
A Bass Brook PCR
(Minnesota Pwr & Light) Ser 92
6.00%, 7/01/22 930 980,992
AAA Duluth GO
Arpt Lease Rev
Ser 95C AMT
6.25%, 8/01/14 3,735 4,021,176
AAA Minneapolis HFA
MFHR (Riverside Plaza Proj)
GNMA Ser 98 AMT
5.20%, 12/20/30 4,900 4,884,516
AA+ Minnesota HFA
SFMR (Home Mortgage)
Ser 93-C2 AMT
6.15%, 7/01/23 2,245 2,337,920
AA+ Minnesota HFA
SFMR (Home Mortgage)
Ser 96F AMT
6.30%, 1/01/28 870 923,331
AA+ Rochester Hosp Rev
(Mayo Med Ctr) Ser 92H
8.32%, 11/15/15 (d) 1,840 2,151,880
-------------
15,299,815
9
NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
NEVADA-0.2%
AAA Clark Cnty PFC
(Las Vegas/Macarran Int'l Arpt)
MBIA Ser 95A AMT
6.25%, 7/01/01 $ 1,000 $ 1,063,150
NEW HAMPSHIRE-2.3%
BB- New Hampshire Fin Auth
PCR (Pub Svc Co of NH)
Ser 93E AMT
6.00%, 5/01/21 5,000 5,100,650
B+ New Hampshire IDA
PCR (Conn Pwr & Light Co)
Ser 86 AMT
5.90%, 11/01/16 10,000 10,036,800
-------------
15,137,450
NEW JERSEY-1.3%
AAA New Jersey Eco Dev Auth
PCR (Pub Svc Elec & Gas)
MBIA Ser 94A AMT
6.40%, 5/01/32 845 940,840
A+ New Jersey Eco Dev Auth
Swr Rev (Anheuser-Busch)
Ser 95 AMT
5.85%, 12/01/30 4,690 5,013,047
AAA New Jersey Eco Dev Auth
Wtr Fac (NJ American
Wtr Co) FGIC AMT
6.875%, 11/01/34 950 1,091,094
AAA Vineland
Swr Rev (Landis Swr Auth)
Ser 93C FGIC
7.47%, 9/19/19 (d) 1,625 1,977,349
-------------
9,022,330
NEW YORK-3.4%
AAA NYS Energy Res & Dev Auth
PCR (NYS Elec & Gas)
MBIA Ser 88A AMT
5.95%, 12/01/27 6,700 7,230,372
BBB NYS Envir Fac Auth IDR
(Occidental Petroleum)
Ser 93A AMT
5.70%, 9/01/28 6,950 7,083,023
AA- Port Auth of NY & NJ
Cons Rev (95th Ser) AMT
6.125%, 7/15/29 8,110 8,726,522
-------------
23,039,917
OHIO-5.8%
AAA Cleveland Arpt Rev
(Cleveland Int'l)
FGIC Ser 94A AMT
6.25%, 1/01/20 6,990 7,631,053
AAA Columbus Arpt Rev
(Port Columbus Int'l)
MBIA Ser 94A AMT
6.25%, 1/01/24 4,000 4,364,920
AAA Cuyahoga Cnty Hosp Rev
(Meridia Hlth Sys) Ser 95
6.25%, 8/15/24 2,600 2,992,392
BBB Dayton Spec Fac
(Emery Air Freight) Ser 96D AMT
6.20%, 10/01/09 4,810 5,202,159
BBB+ Ohio Air Quality Dev Auth
PCR (Columbus So Pwr) Ser 85B
6.25%, 12/01/20 1,030 1,098,763
AA- Ohio Air Quality Dev Auth
PCR (Dayton Pwr & Light)
Ser 92B
6.40%, 8/15/27 2,000 2,165,840
AAA Ohio Air Quality Dev Auth
PCR (JMG Funding/Ohio Pwr Co)
AMBAC Ser 94B AMT
6.375%, 4/01/29 6,815 7,501,202
A Ohio Wtr Dev Auth Solid Waste
(North Star/BHP) AMT
6.45%, 9/01/20 4,330 4,737,540
Aa3 Toledo-Lucas Cnty Port
Auth (Cargill Inc Proj)
5.90%, 12/01/15 (b) 3,000 3,178,470
-------------
38,872,339
RHODE ISLAND-1.0%
AA+ Rhode Island Hsg & Mtg Fin Corp
SFMR (Home Ownership)
Ser 92-7A AMT
6.75%, 10/01/25 6,300 6,688,836
TENNESSEE-0.2%
BBB Memphis Shelby Cnty
Spec Fac (Federal Express)
Ser 93 AMT
6.20%, 7/01/14 1,000 1,069,440
10
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
TEXAS-6.4%
BBB- Alliance Arpt Auth
Fac Imp (American Airlines)
Ser 90 AMT
7.50%, 12/01/29 $11,690 $ 12,500,819
BB Houston Arpt Rev
(Continental Airlines)
Ser 97B AMT
6.125%, 7/15/27 8,000 8,246,400
AAA Houston Arpt Sys Rev
FGIC Ser 98B AMT
5.00%, 7/01/25 23,000 22,242,380
-------------
42,989,599
VIRGINIA-2.0%
A+ Giles Cnty IDR
(Hoechst-Celanese Corp)
Ser 96 AMT
6.45%, 5/01/26 2,320 2,572,416
AAA Harrisonburg Redev & Hsg Auth
MFHR (Greens of Salem Run)
FSA Ser 97 AMT
6.30%, 4/01/29 2,670 2,890,222
AA Henrico Cnty IDR
(Henrico Cnty Reg Jail) Ser 94
7.125%, 8/01/21 805 940,610
A- Henrico Cnty Swr Rev
(Browning-Ferris) Ser 97A AMT
5.875%, 3/01/17 1,225 1,302,138
A- Isle of Wight Cnty
Solid Waste (Union Camp Corp)
Ser 94 AMT
6.55%, 4/01/24 2,525 2,783,686
A+ James Cnty Swr Rev
(Anheuser-Busch Proj)
Ser 97 AMT
6.00%, 4/01/32 2,685 2,863,660
-------------
13,352,732
WISCONSIN-2.2%
AAA Wisconsin GO
MBIA Ser 96B AMT
6.20%, 11/01/26 13,930 15,029,634
TOTAL LONG TERM MUNICIPAL BONDS
(cost $497,539,117) 523,410,483
SHORT TERM MUNICIPAL NOTES (C)-23.8%
ARIZONA-0.7%
A-2 Tucson
MFHR (Lincoln Garden Apts)
Ser 89 VRDN
4.65%, 2/01/06 $4,425 $4,425,000
CALIFORNIA-3.7%
A-2 Contra Costa Cnty
MFHR (Park Regency Ptnrs)
Ser 92A AMT VRDN
4.05%, 8/01/32 25,000 25,000,000
CONNECTICUT-3.0%
A-2 Connecticut Dev Auth
PCR (Exeter Energy Proj)
Ser 89B AMT VRDN
4.00%, 12/01/19 12,400 12,400,000
A-2 Connecticut Dev Auth
PCR (Exeter Energy Proj)
Ser 89C AMT VRDN
4.00%, 12/01/19 7,500 7,500,000
-------------
19,900,000
DISTRICT OF COLUMBIA-0.5%
VMIG-1 District of Columbia HFA
MFHR (McLean Apts)
Series 85A VRDN
4.20%, 12/01/05 (b) 3,390 3,390,000
GEORGIA-2.4%
VMIG-1 Athens-Clarke Cnty IDR
(Nakanishi Mfg Corp)
Ser 88 AMT VRDN
4.10%, 5/01/08 (b) 8,000 8,000,000
VMIG-1 Rockdale Cnty IDR
(Liochem Inc Proj)
Ser 88 AMT VRDN
4.60%, 3/01/03 (b)(d) 8,000 8,000,000
-------------
16,000,000
HAWAII-4.4%
VMIG-1 Hawaii HFA
MFHR (Rental Hsg) Ser 90B VRDN
4.20%, 7/01/25 (b) 29,200 29,200,000
11
NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
ILLINOIS-1.0%
A-2 Illinois Dev Fin Auth
MFHR (Cobbler Square Proj)
Ser 91 VRDN
4.65%, 10/01/15 $ 2,735 $ 2,735,000
A-2 Illinois IDR
(MTI Corp Proj)
Ser 89 AMT VRDN
4.00%, 1/01/09 4,000 4,000,000
-------------
6,735,000
KANSAS-1.8%
A-2 Wichita Cnty Hlth Fac
(CSJ Health Sys) Ser 85 VRDN
4.20%, 10/01/08 5,400 5,400,000
4.20%, 10/01/11 6,800 6,800,000
-------------
12,200,000
NEVADA-1.7%
A-1+ Clark Cnty IDR
(Nevada Co-Generation Proj)
Ser 92 AMT VRDN
3.85%, 11/01/21 2,700 2,700,000
A-2 Nevada HFA
MFHR (Park Vista Apts)
Ser 91 VRDN
4.50%, 10/01/10 8,800 8,800,000
-------------
11,500,000
TENNESSEE-4.5%
P-1 Hamilton Cnty IDR
(Komatsu Amer Mftg Co)
Series 85 VRDN
4.20%, 11/01/05 (b) $5,400 $5,400,000
A-1+ Volunteer State
Student Loan Rev
Ser 87A-1 AMT VRDN
4.00%, 12/01/17 14,000 14,000,000
A-1+ Volunteer State
Student Loan Rev
Ser 87A-2 AMT VRDN
4.00%, 12/01/17 10,600 10,600,000
-------------
30,000,000
WASHINGTON-0.1%
NR Washington IDR
(Econ Revitialization Brd)
Ser 87-1 AMT VRDN
4.70%, 7/01/08 945 945,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $159,295,000) 159,295,000
TOTAL INVESTMENTS-101.9%
(cost $656,834,117) 682,705,483
Other assets less liabilities-(1.9%) (12,434,406)
NET ASSETS-100% $670,271,077
See footnote summary on page 23.
See Glossary of Terms on page 23.
See notes to financial statements.
12
INSURED NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-84.6%
LONG TERM MUNICIPAL BONDS-63.1%
ALASKA-15.6%
AAA Alaska Hsg Fin Corp
MFHR (Mtg Rev) MBIA Ser 96A
6.05%, 12/01/17 $ 1,875 $ 1,993,912
AAA Alaska Hsg Fin Corp
SFMR (Mtg Rev) MBIA Ser 97A
6.00%, 6/01/27 25,000 26,381,000
6.10%, 12/01/37 10,000 10,574,400
-------------
38,949,312
ARIZONA-3.1%
AAA Maricopa Cnty
Hosp Rev (Catholic Hlthcare West)
MBIA Ser 93
7.602%, 7/01/13 (d) 950 1,061,891
AAA Maricopa Cnty GO
Kyrene Elem Sch Imp #28
FGIC Ser 95B
6.00%, 7/01/14 205 221,472
AAA Mesa
(Lutheran Hlth Sys)
MBIA Series 98A
5.00%, 1/01/19 3,100 3,068,721
AAA Tempe
MFHR (Quadrangles) FHA Ser 93
6.25%, 6/01/26 3,245 3,446,969
-------------
7,799,053
CALIFORNIA-9.4%
AAA Glendale Hlth Fac Rev
(Glendale Mem Hosp)
CONNIE LEE Ser 95A
5.60%, 11/15/25 2,000 2,080,420
AAA Mojave Wtr Agy
Imp Dist M (Morongo
Basin Pipeline) FGIC Ser 96
5.80%, 9/01/22 5,000 5,508,950
AAA No Calif Trans Agy Elec Rev
(Calif-Oregon Trans)
MBIA Ser 93A
6.782%, 4/29/24 (d) 6,600 7,074,078
AAA Orange Cnty
(Saddleback Valley Sch Dist)
FSA Ser 95A
5.65%, 9/01/17 $2,000 $2,135,820
AAA So Tahoe Joint Pwr Fin Auth
Ser 95A CAP MAC
5.75%, 10/01/25 4,500 4,866,030
AAA Univ of California Regents
Hosp Rev (UCLA Med Ctr)
MBIA Ser 94
5.50%, 12/01/20 1,685 1,759,089
-------------
23,424,387
COLORADO-2.7%
AAA Denver City & Cnty
(Arpt Sys Rev) MBIA Ser 95A
5.70%, 11/15/25 6,375 6,829,920
ILLINOIS-2.3%
AAA Metro Pier & Expo Auth
(McCormick Place Expo)
FGIC Ser 93A
Zero coupon, 6/15/19 15,850 5,624,056
MASSACHUSETTS-4.3%
AAA Massachusetts HFA
MFHR (Residential Dev)
FNMA Coll Sec 8 Ser 92F
6.25%, 11/15/12 5,000 5,400,850
AAA Massachusetts Hlth & Ed Fac
Hosp Rev (New England Med Ctr) MBIA
6.68%, 7/01/18 (d) 2,085 2,181,806
AAA Massachusetts Muni Wholesale Elec
(Pwr Supply Sys) MBIA Ser 92A
6.00%, 7/01/18 2,895 3,060,768
-------------
10,643,424
MICHIGAN-10.8%
AAA Detroit Swr Sys Rev
FGIC Ser 93A
7.618%, 7/01/23 (d) 10,510 11,935,891
AAA Grand Rapids Swr Sys Rev
MBIA Ser 92
6.00%, 1/01/02 1,220 1,326,494
13
INSURED NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
AAA Kalamazoo Hosp Fin Auth
Hosp Rev (Borgess Med Ctr)
FGIC Ser 94A
6.668%, 6/01/11 (d) $ 7,500 $ 8,088,300
AAA Michigan Strategic Fund
PCR (Detroit Edison Co)
MBIA Ser 95AA
6.40%, 9/01/25 3,785 4,254,416
AAA Three Rivers GO
Sch Dist MBIA Ser 96
6.00%, 5/01/23 1,205 1,368,639
-------------
26,973,740
MINNESOTA-4.4%
Aaa Eagan
MFHR (Woodridge Apts) GNMA Ser 97A
5.95%, 2/01/32 (b) 1,030 1,099,927
Aaa Little Canada
MFHR (Cedars Lakeside Apt)
GNMA Ser 97A
5.95%, 2/01/32 (b) 1,365 1,457,670
AAA Minneapolis COP
(Spec Sch Dist #1)
MBIA Ser 96A
5.90%, 2/01/17 3,730 4,080,732
AAA Minnesota HFA
MFHR (Rental Hsg) MBIA Ser 95D
6.00%, 2/01/22 3,985 4,220,752
-------------
10,859,081
NEBRASKA-1.4%
AAA Nebraska Inv Fin Auth Hosp Rev
(Bishop Clarkson Mem)
MBIA Ser 91
9.284%, 12/08/16 (d) 3,000 3,572,970
NEW YORK-2.8%
Aaa Glen Cove IDR
(The Regency at Glen Cove)
Ser 92B ETM
Zero coupon, 10/15/19 (b) 20,500 6,881,030
VIRGINIA-5.4%
AAA Harrisonburg Redev & Hsg Auth
MFHR (Battery Heights
Assoc) GNMA Ser 96A
6.25%, 4/20/36 5,185 5,605,452
AAA Loudoun Cnty Hosp Rev
(Loudoun Hosp Ctr) FSA Ser 95
5.80%, 6/01/20 985 1,065,977
AAA Newport News
Hlth Fac (Mennowood) GNMA Ser 96A
6.25%, 8/01/36 1,095 1,174,617
Aaa Prince William Cnty
Hosp Rev (Potomac Hosp Grp) Ser 95
6.75%, 10/01/05 (b) 2,250 2,661,885
AAA Richmond Met Auth
(Expressway Rev) FGIC Ser 92B
6.25%, 7/15/22 1,000 1,084,810
AAA Russell Cnty
PCR (Appalachian Pwr Co)
MBIA Ser 98H
5.00%, 11/01/21 2,000 1,991,860
-------------
13,584,601
WEST VIRGINIA-0.9%
AAA West Virginia Pkwys Eco Dev
(Parkway Rev) FGIC Ser 93
7.626%, 5/16/19 (d) 2,100 2,352,357
TOTAL LONG TERM MUNICIPAL BONDS
(cost $145,964,287) 157,493,931
SHORT TERM MUNICIPAL NOTES (C)-21.5%
CALIFORNIA-4.7%
VMIG-1 Santa Clara Cnty Trans Auth
(Refunding Equip Trust)
AMBAC Ser 85A VRDN
3.75%, 6/01/15 (b) 11,800 11,800,000
FLORIDA-4.9%
A-1+ Dade Cnty Wtr & Swr Sys Rev
FGIC Ser 94 VRDN
3.05%, 10/05/22 12,100 12,100,000
14
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
IOWA-3.2%
A-1+ Iowa Fin Auth Rev
Hlth Fac (Burlington Med Ctr)
FSA Ser 97 VRDN
3.20%, 6/01/27 $ 8,100 $ 8,100,000
KENTUCKY-4.8%
A-1+ Ohio Cnty
PCR (Big River Elec Corp)
AMBAC Ser 98 VRDN
3.25%, 6/01/13 12,000 12,000,000
WISCONSIN-3.9%
A-1+ Wisconsin Hlth & Ed
Hlth Fac (Felician Services)
AMBAC Ser 97A VRDN
3.20%, 1/01/20 9,800 9,800,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $53,800,000) 53,800,000
TOTAL INVESTMENTS-84.6%
(cost $199,764,287) 211,293,931
Other assets less liabilities-15.4% 38,451,363
NET ASSETS-100% $249,745,294
See footnote summary on page 23.
See Glossary of Terms on page 23.
See notes to financial statements.
15
NEW YORK PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-96.6%
LONG TERM MUNICIPAL BONDS-84.0%
FLORIDA-2.8%
NR Collier Cnty Comm
Fac Dist (Fiddler's Creek)
Ser 96
7.50%, 5/01/18 $ 9,635 $ 10,410,328
NEW YORK-81.2%
BBB+ Essex Cnty IDR
(Int'l Paper) Ser 95A AMT
5.80%, 12/01/19 7,000 7,346,920
Aaa Glen Cove IDR
(The Regency at Glen Cove)
Ser 92B ETM
Zero coupon, 10/15/19 (b) 14,510 4,870,427
AAA Islip Res Rec Agy
AMBAC Ser 94B AMT
6.125%, 7/01/12 2,020 2,212,567
AAA New York City GO
MBIA Ser 93D
6.00%, 5/15/11 5,000 5,501,717
A- New York City GO
Ser 93A
6.25%, 8/01/18 4,025 4,334,643
A3 New York City GO
Ser 93A
6.25%, 8/01/18 (b) 1,975 2,171,513
A- New York City GO
Ser 93D
8.412%, 8/01/14 (d) 10,000 11,512,400
A- New York City GO
Ser 96-J
A3 6.00%, 2/15/24 (b) 2,065 2,339,686
A- 6.00%, 2/15/24 11,515 12,425,261
A- New York City GO
Ser 97A
6.25%, 8/01/17 16,750 18,546,437
BBB- New York City IDR
(American Airlines)
Ser 94 AMT
6.90%, 8/01/24 12,000 13,343,520
AAA New York City IDR
(Japan Airlines) FSA Ser 91 AMT
6.00%, 11/01/15 4,400 4,832,608
A New York City IDR
(Terminal One LP)
Ser 94 AMT
6.125%, 1/01/24 36,500 38,944,040
AAA Niagara Frontier Trans Arpt Rev
(Gtr Buffalo Int'l)
AMBAC Ser 94A AMT
6.25%, 4/01/24 16,125 17,572,702
AAA NYS Energy Res & Dev Auth
(Brooklyn Union Gas)
MBIA AMT VRN
7.792%, 7/08/26 6,000 6,376,740
AAA NYS Energy Res & Dev Auth
(Brooklyn Union Gas)
MBIA Ser 89B AMT
6.75%, 2/01/24 7,500 8,223,675
A+ NYS Energy Res & Dev Auth
(Consolidated Edison)
Ser 94A AMT
7.125%, 12/01/29 22,000 25,222,560
AAA NYS Energy Res & Dev Auth
(Rochester Gas & Elec) MBIA AMT
6.50%, 5/15/32 6,460 7,023,118
AAA NYS Energy Res & Dev Auth
PCR (NYS Elec & Gas)
MBIA Ser 87A AMT
6.15%, 7/01/26 15,000 16,495,500
AAA NYS Envir Fac Corp
Wtr Fac (Spring Valley Wtr)
AMBAC Ser 94A AMT
6.30%, 8/01/24 11,800 12,938,936
AAA NYS HFA
MFHR (Erie/Monroe Cnty Proj)
AMBAC Ser 89B AMT
7.55%, 11/01/29 5,845 6,058,343
Aa NYS HFA
MFHR (Westchester/
Onondaga/ Rockland Proj)
Ser 92F AMT
6.70%, 8/15/25 (b) 6,000 6,410,880
Aa2 NYS Mtg Agy
SFMR Ser 42 AMT
6.65%, 4/01/26 (b) 4,500 4,817,790
16
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
Aa2 NYS Mtg Agy
SFMR Ser 46 AMT
6.65%, 10/01/25 (b) $19,580 $ 21,055,940
AAA Onondaga Cnty
PCR (Bristol-Myers Squibb) AMT
5.75%, 3/01/24 4,000 4,440,200
AAA Port Auth of NY & NJ
(JFK Int'l Proj)
MBIA Ser 97-6 AMT
5.75%, 12/01/22 9,905 10,767,825
AA- Port Auth of NY & NJ
Cons Rev (95th Ser) AMT
6.125%, 7/15/29 2,160 2,324,203
AAA Port Auth of NY & NJ
Cons Rev (96th Ser) FGIC AMT
6.60%, 10/01/23 10,000 11,238,300
AAA Troy Hsg Dev Corp
MFHR (Ninth St #2) FHA Ser 90B
8.10%, 2/01/24 3,475 3,919,800
AAA Troy Hsg Dev Corp
MFHR (T.U.R. Proj) FHA Ser 90C
8.10%, 2/01/24 3,700 4,173,600
-------------
297,441,851
TOTAL LONG TERM MUNICIPAL BONDS
(cost $281,458,191) 307,852,179
SHORT TERM MUNICIPAL NOTES (C)-12.6%
NEW YORK-12.6%
A-1 Franklin Cnty IDR
(KES Chateaugay LP)
Ser 91A AMT VRDN
4.20%, 7/01/21 2,800 2,800,000
VMIG-1 Islip IDR
(Radiation Dynamics)
Ser 88A AMT VRDN
3.725%, 1/01/09 (b) 6,000 6,000,000
A-1+ Long Island Pwr Auth
Elec Sys Rev Ser 98-1 VRDN
3.00%, 5/01/33 3,800 3,800,000
A-2 New York City Cultural
Resources Trust
(The Jewish Museum) Ser 92 VRDN
3.65%, 12/01/21 5,925 5,925,000
A-1+ New York City GO
Ser F-6 VRDN
3.00%, 2/15/18 4,000 4,000,000
A-2 New York City IDR
(Nippon Cargo Air Proj)
Ser 92 AMT VRDN
4.25%, 11/01/15 16,100 16,100,000
A-1+ NYS Energy Res & Dev Auth
PCR (Niagara Mohawk) Ser 85A VRDN
3.70%, 7/01/15 3,300 3,300,000
A-1+ Syracuse
(Syracuse Univ Proj) Ser 93 VRDN
3.70%, 3/01/23 4,400 4,400,000
-------------
46,325,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $46,325,000) 46,325,000
TOTAL INVESTMENTS-96.6%
(cost $327,783,191) 354,177,179
Other assets less liabilities-3.4% 12,328,666
NET ASSETS-100% $366,505,845
See footnote summary on page 23.
See Glossary of Terms on page 23.
See notes to financial statements.
17
CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS-98.1%
LONG TERM MUNICIPAL BONDS-82.9%
NR California Comm Dev Auth
(San Diego Space & Science)
Ser 96
7.50%, 12/01/16 $ 3,500 $ 4,131,435
A+ California GO
(Veterans Hsg) Ser 95 AMT
6.40%, 2/01/20 16,300 16,562,104
AAA California HFA
MFHR (Home Mtg Rev)
MBIA Ser 91A AMT
7.20%, 2/01/26 3,450 3,655,516
AAA California HFA
MFHR (Home Mtg Rev)
MBIA Ser 91C AMT
7.00%, 8/01/23 1,475 1,565,359
A+ California HFA
MFHR (Multi-Unit Rental Hsg)
Ser 92A AMT
6.50%, 2/01/14 4,865 5,167,360
AAA California HFA
SFMR (Home Mtg Rev)
AMBAC Ser 96H AMT
6.20%, 2/01/27 8,000 8,504,000
AA- California HFA
SFMR (Home Mtg Rev)
Ser 91G AMT
7.05%, 8/01/27 4,985 5,246,264
AA- California HFA
SFMR (Home Mtg Rev) Ser 94E AMT
6.70%, 8/01/25 9,325 10,010,574
AAA California HFA
SFMR (Home Mtg Rev)
Ser 95A-2 AMT
6.45%, 8/01/25 13,400 14,263,764
A- California Poll Ctl Fin Auth
PCR (Keller Canyon/
Browning-Ferris Ind) Asset Gty
Ser 92 AMT
6.875%, 11/01/27 5,000 5,451,750
AA- California Poll Ctl Fin Auth
PCR (Pacific Gas & Elec)
Ser 93A AMT
5.875%, 6/01/23 33,200 34,809,204
AA- California Poll Ctl Fin Auth
PCR (Pacific Gas & Elec)
Ser 93B AMT
5.85%, 12/01/23 56,000 58,804,480
A+ California Poll Ctl Fin Auth
PCR (San Diego Gas & Elec)
Ser 93A-C AMT
5.85%, 6/01/21 32,335 33,949,810
A+ California Poll Ctl Fin Auth
PCR (So Calif Edison)
Ser 92B AMT
6.40%, 12/01/24 36,030 38,844,303
A+ Chula Vista
PCR (San Diego Gas & Elec)
Ser 92A AMT
6.40%, 12/01/27 28,240 30,853,330
Aaa Contra Costa Cnty
MFHR (Byron Park Proj)
GNMA Ser 93A AMT
6.40%, 1/20/31 (b) 11,860 12,848,531
NR Encinitas Comm Fac Dist #1
(Encinitas Ranch) Ser 98A
4.80%, 9/01/03 1,835 1,856,139
5.30%, 9/01/07 2,295 2,321,851
5.70%, 9/01/12 4,270 4,310,181
5.875%, 9/01/20 10,020 10,118,998
6.00%, 9/01/30 21,170 21,378,313
NR Encinitas Rec Rev
(Encinitas Ranch Golf Course)
Ser 96A
7.75%, 9/01/26 10,760 12,186,561
NR Fontana Comm
Fac Dist #2
(Village of Heritage) Ser 98C
6.375%, 9/01/17 7,000 7,000,350
NR Fontana Comm
Fac Dist #3 (Hunters Ridge)
Ser 90A
8.70%, 10/01/15 8,000 8,622,560
AAA Fresno Comm
Fac Dist #3 (Palm Bluffs)
Ser 98
4.75%, 9/01/05 8,000 8,007,280
AAA Los Angeles Cnty Arpt Rev
(Ontario Int'l Arpt)
FGIC Ser 96A AMT
6.00%, 5/15/22 12,780 14,118,705
18
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
NR Los Angeles Cnty Comm
Fac Dist #3 (Valencia/
Newhall Area) Ser 95A
7.125%, 9/01/20 $ 5,500 $ 6,045,215
NR Los Angeles Cnty Comm
Fac Dist #4 (Calabasas Area)
Ser 92A
7.65%, 9/01/17 7,500 8,022,000
BB Los Angeles Comm Redev
MFHR (Grand Ctrl Proj)
Ser 93A AMT
5.85%, 12/01/26 4,030 4,051,601
AAA Los Angeles Harbor Rev
MBIA Ser 96B AMT
6.20%, 8/01/25 10,000 11,164,000
AA Los Angeles Harbor Rev
Ser 95B AMT
6.625%, 8/01/25 24,000 26,352,000
NR Novato Comm
Fac Dist #94-1 (Hamilton Field)
Ser 95 ETM
7.375%, 9/01/25 12,400 13,825,504
AAA Orange Cnty Arpt Rev
(John Wayne Int'l)
MBIA Ser 93 AMT
5.50%, 7/01/18 4,500 4,667,040
Aaa Orange Cnty Comm
Fac Dist #87-2
(Portola Hills) Ser 91A
9.30%, 8/15/01(b) 8,850 10,332,817
Aaa Orange Cnty Comm
Fac Dist #92-1 (Las Flores/
Capistrano USD) Ser 97
7.10%, 9/01/21(b) 3,200 3,925,216
BBB- Orange Cnty Sr Lien
Foothill/Eastern Corridor
Agy Ser 95A
Zero coupon, 1/01/15 18,500 8,058,230
Zero coupon, 1/01/25 15,000 3,788,850
Zero coupon, 1/01/27 10,000 2,273,700
Zero coupon, 1/01/28 10,000 2,157,200
AAA Orange Cnty Sr Lien
San Joaquin Hills Transp Corridor
Ser 93 ETM
Zero coupon, 1/01/17 16,000 6,537,920
Zero coupon, 1/01/19 20,000 7,376,000
Zero coupon, 1/01/20 20,000 7,020,000
Zero coupon, 1/01/21 20,000 6,652,200
Zero coupon, 1/01/23 35,000 10,540,250
Zero coupon, 1/01/25 18,100 4,935,327
Pre-refunded
7.00%, 1/01/03 13,400 15,319,148
AAA Palm Springs COP
Ser 91B ETM
Zero coupon, 4/15/21 30,000 9,271,800
AAA Palm Springs Fin Auth Arpt Rev
(Palm Springs Regional Arpt)
MBIA Ser 92 AMT
6.00%, 1/01/22 6,860 7,307,889
A- Port of Oakland
(Mitsui OSK Lines) Ser 92A AMT
6.80%, 1/01/19 3,700 3,982,902
AAA Port of Oakland
MBIA Ser 92E AMT
6.40%, 11/01/22 23,370 25,673,581
6.50%, 11/01/16 8,000 8,852,080
NR Riverside Comm
Fac Dist #90-1
(Highlander Proj) Ser 91A
8.50%, 9/01/15 2,000 2,224,720
AAA Sacramento Cnty Arpt Sys Rev
FGIC Ser 92A AMT
6.00%, 7/01/20 11,750 12,515,160
AAA Sacramento Cnty Arpt Sys Rev
MBIA Ser 96A AMT
5.90%, 7/01/24 5,050 5,537,224
NR Sacramento Comm
Fac Dist #97-01
(No Natomas Proj) Ser 97A
6.70%, 9/01/17 6,805 7,184,175
6.75%, 9/01/27 9,370 9,930,607
19
CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
SP-1+ San Bernardino Cnty
MFHR (Casa Del Rio Apts)
Ser 98A AMT
4.375%, 4/01/31 $ 6,330 $ 6,334,937
AAA San Bernardino Cnty Solid Waste
(Inland Empire) FSA Ser 96B AMT
6.00%, 8/01/16 2,500 2,769,400
AAA San Francisco City &
Cnty Int'l Arpt
AMBAC Ser 94 II-6 AMT
6.60%, 5/01/24 5,000 5,633,750
AAA San Francisco City &
Cnty Int'l Arpt
FGIC Ser 94 II-5 AMT
6.50%, 5/01/24 11,000 12,340,900
AAA San Francisco City &
Cnty Int'l Arpt
FGIC Ser 96-II AMT
6.25%, 5/01/26 7,000 7,752,080
AAA San Francisco City &
Cnty Int'l Arpt
MBIA Ser 10A AMT
5.70%, 5/01/26 9,385 9,978,695
AAA San Francisco City &
Cnty Int'l Arpt
MBIA Ser 93 II-3 AMT
6.10%, 5/01/13 5,390 5,915,633
6.20%, 5/01/20 14,500 15,816,600
AAA San Jose Arpt Rev
(San Jose Arpt) FGIC Ser 93 AMT
5.70%, 3/01/18 8,825 9,331,908
AAA So Calif HFA
SFMR GNMA/FNMA Ser 91B AMT
6.90%, 10/01/24 1,530 1,617,118
AAA So Calif HFA
SFMR GNMA/FNMA Ser 92A AMT
6.75%, 9/01/22 1,265 1,339,395
BBB+ Westminster Redev Agy
MFHR (Rose Garden Apt)
Ser 93A AMT
6.75%, 8/01/24 1,000 1,061,660
NR Winchester Hills Comm
Fac Dist #98-1
(Winchester Hills) Ser 98A
6.30%, 9/01/18 4,555 4,628,244
6.375%, 9/01/28 6,700 6,848,405
AAA Yolo Cnty Hsg Auth
MFHR (Waggener Ranch Apts)
FHA Ser 91 AMT
7.00%, 10/01/33 9,000 9,776,610
TOTAL LONG TERM MUNICIPAL BONDS
(cost $657,317,919) 731,258,413
SHORT TERM MUNICIPAL NOTES (C)-15.2%
A-2 Assoc Bay Area Gov't IDR
(Reliance Tech Service Inc)
Ser 95A AMT VRDN
4.10%, 10/01/19 5,305 5,305,000
NR Auburn IDR
(Coherent Inc Proj)
Ser 88 AMT VRDN
4.20%, 10/01/08 1,800 1,800,000
A-1+ California Comm Dev Auth
MFHR (Terrace at Park Marino)
Ser 97I AMT VRDN
4.65%, 7/01/27 7,355 7,355,000
VMIG-1 California Poll Ctl Fin Auth
PCR (Taormina Inds Inc)
Ser 96A AMT VRDN
4.25%, 8/01/16 (b) 14,300 14,300,000
A-1 California Poll Ctl Fin Auth
Solid Waste Rev (Nummi Mfg)
Ser 98A AMT VRDN
4.10%, 4/01/18 9,015 9,015,000
A-2 Contra Costa Cnty
MFHR (Park Regency Ptnrs)
Ser 92A AMT VRDN
4.05%, 8/01/32 29,100 29,100,000
A-1 Long Beach Res Rec Rev
(Southeast Fac Auth Lease Rev)
Ser 95A VRDN
4.00%, 12/01/18 24,700 24,700,000
20
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
A-1 Long Beach Res Rec Rev
(Southeast Fac Auth Lease Rev)
Ser 95B AMT VRDN
4.05%, 12/01/18 $ 7,100 $ 7,100,000
VMIG-1 Los Angeles Cnty Comm Redev Agy
MFHR (Skyline at Southpark)
Ser 85 VRDN
4.50%, 12/01/05 (b) 11,000 11,000,000
VMIG-1 Los Angeles Cnty HFA
MFHR (Sand Canyon Villas Proj)
Ser 89A AMT VRDN
4.65%, 11/01/09 (b) 7,800 7,800,000
A-2 Ontario Redev Agy
MFHR (Vineyard Village Proj)
Ser 97A AMT VRDN
4.60%, 9/01/27 1,400 1,400,000
A-2 San Bernardino Cnty
MFHR (Alta Park Apts)
Series 89A VRDN
4.55%, 5/01/06 7,600 7,600,000
A-1 Santa Cruz Cnty HFA
MFHR (Paloma Del Mar Apts)
Ser 92A AMT VRDN
4.15%, 6/01/22 7,700 7,700,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $134,175,000) 134,175,000
TOTAL INVESTMENTS-98.1%
(cost $791,492,919) 865,433,413
Other assets less liabilities-1.9% 17,059,434
NET ASSETS-100% $882,492,847
See footnote summary on page 23.
See Glossary of Terms on page 23.
See notes to financial statements.
21
INSURED CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS-90.3%
LONG TERM MUNICIPAL BONDS-80.7%
AAA Alhambra COP
Assess Dist #91-1 (Police Fac)
AMBAC Ser 92
6.75%, 9/01/23 $ 5,000 $ 5,458,550
AAA Brea Pub Fin Auth
Tax Alloc Redev (Proj B)
MBIA Ser 91A
7.00%, 8/01/15 1,470 1,619,808
AAA California HFA
MFHR (Home Mtg Rev)
AMBAC Ser 95A
6.25%, 2/01/37 5,000 5,377,100
AAA Coronado Comm Dev Proj
Tax Alloc FSA Ser 96
6.00%, 9/01/26 8,700 9,730,080
AAA Fontana Pub Fin Auth
Tax Alloc (No Fontana)
MBIA Ser 93A
5.625%, 9/01/24 8,805 9,297,111
AAA La Mirada Redev Agy
Tax Alloc (Commercial Redev)
FSA Ser 95B
5.90%, 8/15/24 5,000 5,475,650
Aa Lancaster Redev Agy
MFHR (High Valley Apts)
FHA Ser 96A
6.00%, 6/01/27 (b) 4,170 4,395,305
AAA Los Angeles Cnty
Metro Trans Auth MBIA Ser 93A
5.625%, 7/01/18 3,000 3,158,610
AAA Los Angeles Cnty Comm Redev
Tax Alloc (Bunker Hill Proj)
FSA Ser 93H
5.60%, 12/01/28 9,000 9,421,740
AAA Los Angeles Cnty Trans Comm
FGIC Ser 91B
6.50%, 7/01/15 5,000 5,421,800
AAA Madera Cnty COP
Hosp Rev (Valley Children's Hosp)
MBIA Ser 95
6.125%, 3/15/23 4,000 4,571,840
AAA Mojave Wtr Agy
Imp Dist M (Morongo
Basin Pipeline) FGIC Ser 96
5.80%, 9/01/22 5,000 5,508,950
AAA No Calif Trans Agy Elec Rev
(Calif-Oregon Trans)
MBIA Ser 93A
6.782%, 4/29/24 (d) 7,650 8,199,499
AAA Orange Cnty COP
(Loma Ridge Data Ctr Proj) AMBAC
6.00%, 6/01/21 1,000 1,116,540
AAA Orange Cnty Recovery
MBIA Ser 96A
6.00%, 7/01/26 3,000 3,349,920
AAA Palm Springs COP
Ser 91B ETM
Zero coupon, 4/15/21 17,475 5,400,824
AAA Rancho Wtr Dist Fin Auth
AMBAC Ser 91
9.174%, 8/17/21 3,000 3,553,260
AAA Redding COP
Elec Sys Rev MBIA Ser 92A
8.70%, 7/01/22 (d) 2,000 2,731,600
AAA Sacramento Cnty Arpt Sys Rev
MBIA Ser 96B
5.75%, 7/01/26 3,260 3,554,345
AAA Sacramento Muni Util Dist Elec Rev
MBIA Ser 93E
5.75%, 5/15/22 5,000 5,354,400
AAA San Bernardino Cnty Redev
(Ontario Proj #1)
MBIA Ser 93 ETM
5.80%, 8/01/23 10,000 10,534,000
AAA San Bernardino Cnty Redev Agy
Tax Alloc (Joint Pwr Fin)
FSA Ser 95A
5.75%, 9/01/25 5,000 5,422,200
AAA San Dimas Redev Agy
(Creative Growth) FSA Ser 91A
6.75%, 9/01/16 1,000 1,091,990
22
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
AAA San Francisco City &
Cnty Int'l Arpt
MBIA Ser 93 II-4
6.00%, 5/01/14 $ 5,000 $ 5,488,950
AAA Shasta Lake COP
Elec Sys Rev FSA Ser 96-2
6.00%, 4/01/16 2,895 3,220,688
TOTAL LONG TERM MUNICIPAL BONDS
(cost $116,233,446) 128,454,760
SHORT TERM MUNICIPAL NOTES (C)-9.6%
A-1+ California Hlth Fac
(Catholic Hlthcare)
MBIA Ser 95B VRDN
2.75%, 7/01/05 1,392 1,392,000
A-1+ California Hlth Fac
(Catholic Hlthcare)
MBIA Ser 95D VRDN
2.75%, 7/01/18 3,000 3,000,000
A-1+ California Hlth Fac
(Catholic Hlthcare)
MBIA Ser 97B VRDN
2.75%, 7/01/12 2,300 2,300,000
A-1+ California Hlth Fac
(Sutter Hlth)
AMBAC Ser 96C VRDN
3.60%, 7/01/22 1,900 1,900,000
VMIG-1 Santa Clara Cnty Trans Auth
(Equip Trust) AMBAC Ser 85A VRDN
3.75%, 6/01/15 (b) 4,700 4,700,000
A-1+ Westminster Redev Agy
Tax Alloc (Westminster
Comm Redev Proj #1)
AMBAC Ser 97 VRDN
2.85%, 8/01/27 1,940 1,940,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $15,232,000) 15,232,000
TOTAL INVESTMENTS-90.3%
(cost $131,465,446) 143,686,760
Other assets less liabilities-9.7% 15,385,579
NET ASSETS-100% $159,072,339
(a) Unaudited.
(b) Moody's or Fitch Rating.
(c) 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). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
(d) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms below.
See notes to financial statements.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax - (subject to)
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
IDA Industrial Development Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
NR Rating not applied for
PCR Pollution Control Revenue
PFC Passenger Facility Charge
SFMR Single Family Mortgage Revenue
VRN Variable Rate Note
23
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1998 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:
$656,834,117, $199,764,287, $327,783,191,
$791,492,919 and $131,465,446, respectively) $682,705,483 $211,293,931 $354,177,179 $865,433,413 $143,686,760
Cash 523,028 -0- -0- -0- 8,965
Receivable for investment securities sold 15,137,417 39,225,416 7,278,349 -0- 13,996,756
Interest receivable 9,011,428 2,690,303 5,097,393 13,565,337 1,958,176
Receivable for capital stock sold 2,874,840 480,756 1,747,298 6,582,277 269,766
Prepaid expenses 16,319 -0- -0- -0- -0-
Total assets 710,268,515 253,690,406 368,300,219 885,581,027 159,920,423
LIABILITIES
Due to custodian -0- 129,969 135,890 302,466 -0-
Payable for investment securities purchased 37,060,183 3,083,422 300,000 -0- -0-
Payable for capital stock redeemed 1,195,753 91,281 482,617 560,078 306,753
Dividends payable 975,232 311,263 512,337 1,259,582 201,402
Distribution fee payable 349,963 105,156 186,361 415,666 67,558
Advisory fee payable 113,316 105,369 46,383 221,882 74,361
Unclaimed dividends 78,007 -0- -0- 90,989 90,989
Accrued expenses 224,984 118,652 130,786 237,517 107,021
Total liabilities 39,997,438 3,945,112 1,794,374 3,088,180 848,084
NET ASSETS $670,271,077 $249,745,294 $366,505,845 $882,492,847 $159,072,339
COMPOSITION OF NET ASSETS
Capital stock, at par $ 60,455 $ 23,736 $ 35,606 $ 77,850 $ 11,165
Additional paid-in capital 639,363,410 233,168,758 342,052,106 816,095,148 147,262,795
Distributions in excess of net
investment income (975,232) (311,263) (512,337) (1,259,582) (201,402)
Accumulated net realized gain (loss) on
investment transactions 5,951,078 5,334,419 (1,463,518) (6,361,063) (221,533)
Net unrealized appreciation of investments 25,871,366 11,529,644 26,393,988 73,940,494 12,221,314
$670,271,077 $249,745,294 $366,505,845 $882,492,847 $159,072,339
CLASS A SHARES
Net assets $364,429,067 $179,002,914 $207,031,109 $550,626,495 $113,102,277
Shares of capital stock outstanding 32,858,456 17,008,406 20,112,620 48,572,911 7,938,630
CLASS B SHARES
Net assets $197,517,045 $ 48,750,858 $114,739,197 $207,751,168 $ 29,957,373
Shares of capital stock outstanding 17,822,146 4,636,134 11,147,483 18,327,393 2,102,376
CLASS C SHARES
Net assets $108,324,965 $ 21,991,522 $ 44,735,539 $124,115,184 $ 16,012,689
Shares of capital stock outstanding 9,774,873 2,091,206 4,346,057 10,949,973 1,123,743
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share $11.09 $10.52 $10.29 $11.34 $14.25
Sales charge--4.25% of public offering price .49 .47 .46 .50 .63
Maximum offering price $11.58 $10.99 $10.75 $11.84 $14.88
CLASS B SHARES
Net asset value and offering price per share $11.08 $10.52 $10.29 $11.34 $14.25
CLASS C SHARES
Net asset value and offering price per share $11.08 $10.52 $10.29 $11.33 $14.25
</TABLE>
See notes to financial statements.
24
STATEMENTS OF OPERATIONS
YEAR ENDED OCTOBER 31, 1998 ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
INSURED INSURED
NATIONAL NATIONAL NEW YORK CALIFORNIA CALIFORNIA
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $35,851,598 $12,566,395 $19,057,754 $45,102,922 $8,548,646
EXPENSES
Advisory fee 3,969,624 1,508,814 2,106,298 4,932,710 843,236
Distribution fee - Class A 1,051,097 527,472 583,416 1,500,586 328,458
Distribution fee - Class B 1,890,577 459,261 1,042,356 1,844,807 296,948
Distribution fee - Class C 957,165 196,603 383,001 1,045,574 141,348
Transfer agency 530,217 163,614 240,730 438,393 71,174
Custodian 171,166 95,875 100,728 171,729 86,031
Administrative 93,750 93,750 93,750 93,750 93,750
Printing 74,708 18,698 35,877 84,366 12,850
Registration 59,168 48,520 10,305 27,970 5,103
Audit and legal 55,013 29,914 37,875 65,437 23,357
Taxes 41,701 17,268 20,250 52,245 10,351
Directors' fees 6,503 6,503 6,503 6,503 6,503
Miscellaneous 9,056 7,286 7,959 17,744 4,002
Total expenses 8,909,745 3,173,578 4,669,048 10,281,814 1,923,111
Less: advisory fee waived (see note B) (2,699,344) (301,762) (1,600,787) (2,565,009) -0-
Net expenses 6,210,401 2,871,816 3,068,261 7,716,805 1,923,111
Net investment income 29,641,197 9,694,579 15,989,493 37,386,117 6,625,535
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investment transactions 11,054,812 6,650,920 2,109,069 6,234,155 112,114
Net change in unrealized appreciation of
investments (660,042) (168,400) 4,593,642 16,056,939 4,135,620
Net gain on investments 10,394,770 6,482,520 6,702,711 22,291,094 4,247,734
NET INCREASE IN NET ASSETS FROM OPERATIONS $40,035,967 $16,177,099 $22,692,204 $59,677,211 $10,873,269
</TABLE>
See notes to financial statements.
25
STATEMENTS OF CHANGES IN NET ASSETS ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
NATIONAL INSURED NATIONAL
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCT. 31, 1998 OCT. 31, 1997 OCT. 31, 1998 OCT. 31, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 29,641,197 $ 31,030,710 $ 9,694,579 $ 10,880,671
Net realized gain on investment
transactions 11,054,812 14,826,601 6,650,920 4,944,358
Net change in unrealized
appreciation of investments (660,042) 9,340,351 (168,400) 3,352,744
Net increase in net assets from
operations 40,035,967 55,197,662 16,177,099 19,177,773
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (17,277,432) (17,434,356) (7,331,490) (8,055,946)
Class B (8,200,493) (9,363,672) (1,655,195) (1,989,680)
Class C (4,163,272) (4,232,682) (707,894) (835,045)
Distributions in excess of net
investment income
Class A (1,076,316) (108,116) (882,481) (357,318)
Class B (510,858) (167,843) (199,233) (141,497)
Class C (259,356) (83,616) (85,208) (54,455)
Net realized gain on investments
Class A -0- -0- (3,321,194) (2,137,301)
Class B -0- -0- (878,080) (675,181)
Class C -0- -0- (370,918) (283,681)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 51,860,472 (50,361,494) 13,768,898 (4,760,384)
Total increase (decrease) 60,408,712 (26,554,117) 14,514,304 (112,715)
NET ASSETS
Beginning of year 609,862,365 636,416,482 235,230,990 235,343,705
End of year $670,271,077 $609,862,365 $249,745,294 $235,230,990
</TABLE>
See notes to financial statements.
26
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
NEW YORK
----------------------------
YEAR ENDED YEAR ENDED
OCT. 31, 1998 OCT. 31, 1997
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 15,989,493 $ 15,977,835
Net realized gain on investment transactions 2,109,069 4,174,320
Net change in unrealizedappreciation of
investments 4,593,642 9,967,051
Net increase in net assets from operations 22,692,204 30,119,206
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (9,784,034) (9,716,748)
Class B (4,539,871) (4,491,417)
Class C (1,665,588) (1,769,670)
Distributions in excess of net
investment income
Class A (329,150) (212,191)
Class B (152,729) (93,630)
Class C (56,033) (39,023)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 43,586,484 (8,015,166)
Total increase 49,751,283 5,781,361
NET ASSETS
Beginning of year 316,754,562 310,973,201
End of year $366,505,845 $316,754,562
See notes to financial statements.
27
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, 1998 OCT. 31, 1997 OCT. 31, 1998 OCT. 31, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $ 37,386,117 $ 36,702,496 $ 6,625,535 $ 6,928,892
Net realized gain on investment
transactions 6,234,155 5,003,142 112,114 1,740,386
Net change in unrealized
appreciation of investments 16,056,939 24,720,704 4,135,620 3,440,458
Net increase in net assets from
operations 59,677,211 66,426,342 10,873,269 12,109,736
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (24,897,286) (24,763,762) (4,943,558) (5,193,881)
Class B (7,973,937) (7,675,192) (1,139,926) (1,166,553)
Class C (4,514,894) (4,263,542) (542,051) (567,563)
Distributions in excess of net
investment income
Class A (1,151,725) (117,642) (287,347) (38,493)
Class B (368,867) (23,966) (66,259) (254)
Class C (208,855) (10,658) (31,507) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 134,072,838 (17,969,648) 10,150,493 (1,148,149)
Total increase 154,634,485 11,601,932 14,013,114 3,994,843
NET ASSETS
Beginning of year 727,858,362 716,256,430 145,059,225 141,064,382
End of year $882,492,847 $727,858,362 $159,072,339 $145,059,225
</TABLE>
See notes to financial statements.
28
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 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 currently 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, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The financial statements have
been prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. If no bid prices are
quoted, then the security is valued at the mean of the bid and asked prices as
obtained on that day from one or more dealers regularly making a market in that
security. Securities traded on the over-the-counter market are valued at the
mean of the closing bid and asked prices provided by two or more dealers
regularly making a market in such securities. U.S. government securities and
other debt securities which mature in 60 days or less are valued at amortized
cost unless this method does not represent fair value. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by, or in accordance with procedures approved by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities.
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 any, to
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 trade date securities are purchased or sold. The Fund amortizes premiums,
accretes original issue discounts and market discounts as adjustments to
interest income. Investment gains and losses are determined on the identified
cost basis.
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 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.
29
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends 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 within 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. This reclassification had
no effect on net assets.
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 its
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 its average daily net assets. Such fees are accrued daily and paid
monthly.
For the year ended October 31, 1998, 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:
$2,699,344, $301,762, $1,600,787 and $2,565,009 respectively. Pursuant to the
advisory agreement, the Fund paid $463,427 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 Transfer Agency Agreement for providing
personnel and facilities to perform transfer agency services for each
Portfolio. Such compensation amounted to: National Portfolio, $391,532; Insured
National Portfolio, $102,684; New York Portfolio, $180,521; California
Portfolio, $323,839 and Insured California Portfolio, $53,060 for the year
ended October 31, 1998.
Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of the Adviser, serves as the Distributor of the Fund's shares. 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, 1998 were:
National Portfolio, $67,020; Insured National Portfolio, $5,051; New York
Portfolio, $9,677; and, California Portfolio, $31,667. The amount of contingent
deferred sales charge imposed upon redemptions by shareholders of Class A
shares were: National Portfolio, $23,761; New York, $21,302; California
Portfolio, $26,952; and Insured California, $22,605. Insured National Portfolio
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, $109,957; Insured National Portfolio, $30,044; New York
Portfolio, $95,159; California Portfolio, $100,769; and Insured California
Portfolio, $17,320. The amount of contingent deferred sales charges imposed
upon redemptions by shareholders of Class C shares were:National Portfolio,
$24,916; Insured National Portfolio, $2,888; New York Portfolio, $22,830;
California Portfolio, $27,881; and Insured California, $2,687.
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. 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 both Class B and Class C shares. The fees are accrued
daily and paid monthly.
30
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
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 $3,389,508 3,086,618
Insured National 1,969,302 1,028,413
New York 3,508,627 1,552,297
California 5,195,159 2,883,110
Insured California 1,693,728 696,256
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 investments
and U.S. government securities) for the year ended October 31, 1998 were as
follows:
PORTFOLIO PURCHASES SALES
- --------- ------------- -------------
National $290,511,652 $317,964,773
Insured National 45,186,769 89,564,394
New York 55,168,744 55,884,899
California 165,882,973 152,140,944
Insured California -0- 7,007,380
There were no purchases or sales of U.S. government and government agency
obligations for the year ended October 31, 1998.
At October 31, 1998, the cost of investments 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 $656,834,117 $27,248,094 $(1,376,728) $25,871,366
Insured National 199,764,287 11,537,846 (8,202) 11,529,644
New York 327,801,783 26,547,128 (171,732) 26,375,396
California 791,492,919 73,943,265 (2,771) 73,940,494
Insured California 131,465,446 12,221,314 -0- 12,221,314
NOTE E: TAXES
For Federal income tax purposes at October 31, 1998, the Fund had capital loss
carryforwards for the following Portfolios: $1,444,926 expiring in 2003 for the
New York Portfolio; $4,309,001 expiring in 2003 and $2,052,062 expiring in 2004
for the California Portfolio; and $221,533 expiring in 2002 for the Insured
California Portfolio.
31
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,
divided into three classes, designated Class A, Class B and Class C shares.
Each class consists of 200,000,000 authorized shares. Transactions in capital
stock were as follows:
NATIONAL PORTFOLIO
-----------------------------------------------------------
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997 1998 1997
------------- ------------ -------------- --------------
CLASS A
Shares sold 7,594,850 3,200,221 $ 83,693,512 $ 34,152,888
Shares issued in
reinvestment of
dividends and
distributions 958,894 965,819 10,582,438 10,298,158
Shares converted
from Class B 899,961 966,203 9,934,458 10,317,831
Shares redeemed (6,731,237) (5,936,090) (74,127,641) (63,228,325)
Net increase
(decrease) 2,722,468 (803,847) $ 30,082,767 $ (8,459,448)
CLASS B
Shares sold 4,004,496 2,028,317 $ 44,261,765 $ 21,665,451
Shares issued in
reinvestment of
dividends and
distributions 532,635 595,412 5,876,000 6,345,911
Shares converted
to Class A (899,961) (966,312) (9,934,458) (10,317,831)
Shares redeemed (3,238,840) (4,683,031) (35,717,016) (49,816,107)
Net increase (decrease) 398,330 (3,025,614) $ 4,486,291 $(32,122,576)
CLASS C
Shares sold 2,677,765 1,388,588 $ 29,579,521 $ 14,824,288
Shares issued in
reinvestment of
dividends and
distributions 392,655 388,719 4,329,223 4,147,274
Shares redeemed (1,506,893) (2,709,926) (16,617,330) (28,751,032)
Net increase
(decrease) 1,563,527 (932,619) $ 17,291,414 $ (9,779,470)
INSURED NATIONAL PORTFOLIO
-----------------------------------------------------------
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997 1998 1997
------------- ------------ -------------- --------------
CLASS A
Shares sold 1,642,188 1,963,755 $ 17,152,883 $ 20,121,552
Shares issued in
reinvestment of
dividends and
distributions 702,615 606,956 7,318,564 6,193,387
Shares converted
from Class B 111,070 72,137 1,163,290 741,691
Shares redeemed (1,706,766) (1,983,414) (17,848,065) (20,244,010)
Net increase 749,107 659,434 $ 7,786,672 $ 6,812,620
32
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,
1998 1997 1998 1997
------------- ------------ -------------- --------------
CLASS B
Shares sold 1,034,758 445,318 $ 10,829,842 $ 4,550,886
Shares issued in
reinvestment of
dividends and
distributions 190,011 189,204 1,977,801 1,928,668
Shares converted
to Class A (111,070) (72,158) (1,163,290) (741,691)
Shares redeemed (817,274) (1,295,176) (8,543,696) (13,217,186)
Net increase
(decrease) 296,425 (732,812) $ 3,100,657 $ (7,479,323)
CLASS C
Shares sold 402,996 607,973 $ 4,220,683 $ 6,236,279
Shares issued in
reinvestment of
dividends and
distributions 115,304 100,042 1,200,682 1,023,363
Shares redeemed (243,043) (1,106,023) (2,539,796) (11,353,323)
Net increase
(decrease) 275,257 (398,008) $ 2,881,569 $ (4,093,681)
NEW YORK PORTFOLIO
-----------------------------------------------------------
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997 1998 1997
------------- ------------ -------------- --------------
CLASS A
Shares sold 4,204,543 1,656,405 $ 43,008,797 $ 16,287,832
Shares issued in
reinvestment of
dividends and
distributions 610,190 622,430 6,244,173 6,108,602
Shares converted
from Class B 70,171 68,401 719,730 672,992
Shares redeemed (2,761,081) (2,933,918) (28,246,100) (28,752,201)
Net increase
(decrease) 2,123,823 (586,682) $ 21,726,600 $ (5,682,775)
CLASS B
Shares sold 2,973,222 1,571,739 $ 30,435,248 $ 15,455,527
Shares issued in
reinvestment of
dividends and
distributions 336,709 335,027 3,444,476 3,289,276
Shares converted
to Class A (70,171) (68,401) (719,730) (672,992)
Shares redeemed (1,605,906) (2,361,128) (16,421,860) (23,120,896)
Net increase
(decrease) 1,633,854 (522,763) $ 16,738,134 $ (5,049,085)
33
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,
1998 1997 1998 1997
------------- ------------ -------------- --------------
CLASS C
Shares sold 1,797,741 1,428,234 $ 18,408,602 $ 14,035,181
Shares issued in
reinvestment of
dividends and
distributions 185,639 199,225 1,897,746 1,958,524
Shares redeemed (1,486,617) (1,355,750) (15,184,598) (13,277,011)
Net increase 496,763 271,709 $ 5,121,750 $ 2,716,694
CALIFORNIA PORTFOLIO
-----------------------------------------------------------
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997 1998 1997
------------- ------------ -------------- --------------
CLASS A
Shares sold 10,042,110 3,738,289 $112,726,624 $ 40,219,966
Shares issued in
reinvestment of
dividends and
distributions 1,185,228 1,166,476 13,289,149 12,506,829
Shares converted
from Class B 114,030 142,469 1,283,090 1,524,654
Shares redeemed (5,372,737) (5,919,965) (60,189,528) (63,313,282)
Net increase
(decrease) 5,968,631 (872,731) $ 67,109,335 $ (9,061,833)
CLASS B
Shares sold 5,018,694 2,222,122 $ 56,293,953 $ 23,864,126
Shares issued in
reinvestment of
dividends and
distributions 488,172 443,701 5,472,448 4,759,751
Shares converted
to Class A (114,030) (142,456) (1,283,090) (1,524,654)
Shares redeemed (2,159,593) (2,999,262) (24,224,615) (32,131,158)
Net increase
(decrease) 3,233,243 (475,895) $ 36,258,696 $ (5,031,935)
CLASS C
Shares sold 3,787,068 1,575,361 $ 42,523,071 $ 16,866,778
Shares issued in
reinvestment of
dividends and
distributions 411,862 377,469 4,614,537 4,052,166
Shares redeemed (1,466,724) (2,319,763) (16,432,801) (24,794,824)
Net increase
(decrease) 2,732,206 (366,933) $ 30,704,807 $ (3,875,880)
34
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,
1998 1997 1998 1997
------------- ------------ -------------- --------------
CLASS A
Shares sold 1,208,098 579,093 $ 17,010,840 $ 7,766,679
Shares issued in
reinvestment of
dividends and
distributions 183,708 194,618 2,585,734 2,638,958
Shares converted
from Class B 13,557 12,441 192,508 170,252
Shares redeemed (930,895) (903,548) (13,086,251) (12,186,021)
Net increase
(decrease) 474,468 (117,396) $ 6,702,831 $ (1,610,132)
CLASS B
Shares sold 439,858 362,181 $ 6,185,442 $ 4,900,540
Shares issued in
reinvestment of
dividends and
distributions 53,385 62,833 751,134 852,376
Shares converted
to Class A (13,557) (12,440) (192,508) (170,252)
Shares redeemed (392,027) (391,053) (5,515,049) (5,261,290)
Net increase 87,659 21,521 $ 1,229,019 $ 321,374
CLASS C
Shares sold 251,196 145,518 $ 3,555,671 $ 1,971,410
Shares issued in
reinvestment of
dividends 38,215 35,557 537,625 482,604
Shares redeemed (133,253) (171,093) (1,874,653) (2,313,405)
Net increase 156,158 9,982 $ 2,218,643 $ 140,609
NOTE G: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility") to
provide short-term financing if necessary, subject to certain restrictions, in
connection with abnormal redemption activity. Commitment fees related to the
Facility are paid by the participating funds and are included in the
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended October 31, 1998.
35
FINANCIAL HIGHLIGHTS ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
NATIONAL PORTFOLIO
--------------------------------------------------------------
CLASS A
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.94 $10.51 $10.45 $9.41 $11.05
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .55(b) .57(b) .58 .58 .57
Net realized and unrealized gain (loss)
on investment transactions .18 .44 .06 1.04 (1.37)
Net increase (decrease) in net asset
value from operations .73 1.01 .64 1.62 (.80)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.55) (.58) (.58) (.58) (.57)
Distributions in excess of net
investment income (.03) -0- -0- -0- (.03)
Distributions from net realized gains -0- -0- -0- -0- (.24)
Total dividends and distributions (.58) (.58) (.58) (.58) (.84)
Net asset value, end of year $11.09 $10.94 $10.51 $10.45 $9.41
TOTAL RETURN
Total investment return based on
net asset value (c) 6.82% 9.88% 6.32% 17.73% (7.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $364,429 $329,540 $325,288 $338,311 $338,814
Ratios to average net assets of:
Expenses, net of fee waivers .66% .69% .69% .71% .62%
Expenses, before fee waivers 1.08% 1.11% 1.10% 1.09% 1.09%
Net investment income, net of
fee waivers 4.98% 5.40% 5.55% 5.84% 5.61%
Portfolio turnover rate 56% 72% 137% 118% 110%
</TABLE>
See footnote summary on page 50.
36
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
NATIONAL PORTFOLIO
--------------------------------------------------------------
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.94 $10.51 $10.45 $9.41 $11.05
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .50(b) .51 .51 .50
Net realized and unrealized gain (loss)
on investment transactions .19 .44 .06 1.04 (1.38)
Net increase (decrease) in net asset
value from operations .65 .94 .57 1.55 (.88)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.50) (.51) (.51) (.50)
Distributions in excess of net
investment income (.05) (.01) -0- -0- (.02)
Distributions from net realized gains -0- -0- -0- -0- (.24)
Total dividends and distributions (.51) (.51) (.51) (.51) (.76)
Net asset value, end of year $11.08 $10.94 $10.51 $10.45 $9.41
TOTAL RETURN
Total investment return based on net
asset value (c) 6.05% 9.16% 5.61% 16.91% (8.34)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $197,517 $190,530 $214,994 $252,357 $250,391
Ratios to average net assets of:
Expenses, net of fee waivers 1.37% 1.40% 1.40% 1.42% 1.32%
Expenses, before fee waivers 1.79% 1.79% 1.81% 1.80% 1.80%
Net investment income, net of
fee waivers 4.28% 4.69% 4.85% 5.13% 4.91%
Portfolio turnover rate 56% 72% 137% 118% 110%
</TABLE>
See footnote summary on page 50.
37
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
NATIONAL PORTFOLIO
--------------------------------------------------------------
CLASS C
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.94 $10.51 $10.45 $9.41 $11.05
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .47(b) .50(b) .51 .51 .50
Net realized and unrealized gain (loss)
on investment transactions .18 .44 .06 1.04 (1.38)
Net increase (decrease) in net asset
value from operations .65 .94 .57 1.55 (.88)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.50) (.51) (.51) (.50)
Distributions in excess of net
investment income (.04) (.01) -0- -0- (.02)
Distributions from net realized gains -0- -0- -0- -0- (.24)
Total dividends and distributions (.51) (.51) (.51) (.51) (.76)
Net asset value, end of year $11.08 $10.94 $10.51 $10.45 $9.41
TOTAL RETURN
Total investment return based on net
asset value (c) 6.06% 9.18% 5.62% 16.93% (8.33)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $108,325 $89,792 $96,134 $108,068 $133,249
Ratios to average net assets of:
Expenses, net of fee waivers 1.36% 1.39% 1.39% 1.41% 1.31%
Expenses, before fee waivers 1.82% 1.81% 1.80% 1.78% 1.79%
Net investment income, net of
fee waivers 4.28% 4.70% 4.85% 5.16% 4.89%
Portfolio turnover rate 56% 72% 137% 118% 110%
</TABLE>
See footnote summary on page 50.
38
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
INSURED NATIONAL PORTFOLIO
--------------------------------------------------------------
CLASS A
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.49 $10.28 $10.07 $8.96 $10.76
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .44(b) .50(b) .51 .51 .53
Net realized and unrealized gain (loss)
on investment transactions .28 .37 .22 1.13 (1.40)
Net increase (decrease) in net asset
value from operations .72 .87 .73 1.64 (.87)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.50) (.52) (.51) (.53)
Distributions in excess of net
investment income (.05) (.02) -0- (.02) (.01)
Distributions from net realized gains (.20) (.14) -0- -0- (.39)
Total dividends and distributions (.69) (.66) (.52) (.53) (.93)
Net asset value, end of year $10.52 $10.49 $10.28 $10.07 $8.96
TOTAL RETURN
Total investment return based on net
asset value (c) 7.15% 8.77% 7.43% 18.72% (8.69)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $179,003 $170,631 $160,425 $165,548 $153,656
Ratios to average net assets of:
Expenses, net of fee waivers 1.00% 1.02% 1.02% 1.01% .66%
Expenses, before fee waivers 1.12% 1.15% 1.12% 1.12% 1.11%
Net investment income, net of
fee waivers 4.21% 4.85% 5.04% 5.37% 5.40%
Portfolio turnover rate 27% 98% 157% 171% 149%
</TABLE>
See footnote summary on page 50.
39
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
INSURED NATIONAL PORTFOLIO
--------------------------------------------------------------
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.49 $10.28 $10.07 $8.96 $10.76
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .37(b) .42(b) .44 .45 .46
Net realized and unrealized gain (loss)
on investment transactions .28 .38 .22 1.12 (1.40)
Net increase (decrease) in net asset
value from operations .65 .80 .66 1.57 (.94)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.37) (.42) (.45) (.45) (.46)
Distributions in excess of net
investment income (.05) (.03) -0- (.01) (.01)
Distributions from net realized gains (.20) (.14) -0- -0- (.39)
Total dividends and distributions (.62) (.59) (.45) (.46) (.86)
Net asset value, end of year $10.52 $10.49 $10.28 $10.07 $8.96
TOTAL RETURN
Total investment return based on
net asset value (c) 6.48% 8.07% 6.74% 17.91% (9.38)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $48,751 $45,542 $52,156 $58,990 $51,439
Ratios to average net assets of:
Expenses, net of fee waivers 1.71% 1.75% 1.73% 1.72% 1.37%
Expenses, before fee waivers 1.87% 1.86% 1.83% 1.83% 1.82%
Net investment income, net of
fee waivers 3.49% 4.12% 4.32% 4.65% 4.71%
Portfolio turnover rate 27% 98% 157% 171% 149%
</TABLE>
See footnote summary on page 50.
40
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
INSURED NATIONAL PORTFOLIO
--------------------------------------------------------------
CLASS C
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.49 $10.28 $10.07 $8.96 $10.76
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .37(b) .42(b) .44 .45 .46
Net realized and unrealized gain (loss)
on investment transactions .28 .38 .22 1.12 (1.40)
Net increase (decrease) in net asset
value from operations .65 .80 .66 1.57 (.94)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.37) (.42) (.45) (.45) (.46)
Distributions in excess of net
investment income (.05) (.03) -0- (.01) (.01)
Distributions from net realized gains (.20) (.14) -0- -0- (.39)
Total dividends and distributions (.62) (.59) (.45) (.46) (.86)
Net asset value, end of year $10.52 $10.49 $10.28 $10.07 $8.96
TOTAL RETURN
Total investment return based on net
asset value (c) 6.48% 8.07% 6.74% 17.91% (9.38)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $21,992 $19,057 $22,763 $22,265 $24,112
Ratios to average net assets of:
Expenses, net of fee waivers 1.70% 1.72% 1.72% 1.71% 1.36%
Expenses, before fee waivers 1.83% 1.84% 1.82% 1.82% 1.81%
Net investment income, net of
fee waivers 3.51% 4.15% 4.34% 4.69% 4.68%
Portfolio turnover rate 27% 98% 157% 171% 149%
</TABLE>
See footnote summary on page 50.
41
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
--------------------------------------------------------------
CLASS A
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.10 $9.66 $9.62 $8.72 $10.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .51(b) .53(b) .55 .55 .55
Net realized and unrealized gain (loss)
on investment transactions .21 .46 .04 .90 (1.40)
Net increase (decrease) in net asset
value from operations .72 .99 .59 1.45 (.85)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.54) (.55) (.55) (.55)
Distributions in excess of net
investment income (.02) (.01) -0- -0- (.01)
Distributions from net realized gains -0- -0- -0- -0- (.04)
Total dividends and distributions (.53) (.55) (.55) (.55) (.60)
Net asset value, end of year $10.29 $10.10 $9.66 $9.62 $8.72
TOTAL RETURN
Total investment return based on net
asset value (c) 7.31% 10.52% 6.30% 17.10% (8.76)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $207,031 $181,745 $179,452 $183,987 $182,170
Ratios to average net assets of:
Expenses, net of fee waivers .61% .65% .64% .75% .66%
Expenses, before fee waivers 1.08% 1.12% 1.11% 1.12% 1.11%
Net investment income, net of
fee waivers 5.04% 5.45% 5.66% 5.93% 5.75%
Portfolio turnover rate 18% 34% 64% 69% 69%
</TABLE>
See footnote summary on page 50.
42
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
--------------------------------------------------------------
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.10 $9.66 $9.62 $8.72 $10.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .44(b) .46(b) .48 .48 .48
Net realized and unrealized gain (loss)
on investment transactions .21 .46 .04 .90 (1.41)
Net increase (decrease) in net asset
value from operations .65 .92 .52 1.38 (.93)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.47) (.48) (.48) (.47)
Distributions in excess of net
investment income (.02) (.01) -0- -0- (.01)
Distributions from net realized gains -0- -0- -0- -0- (.04)
Total dividends and distributions (.46) (.48) (.48) (.48) (.52)
Net asset value, end of year $10.29 $10.10 $9.66 $9.62 $8.72
TOTAL RETURN
Total investment return based on net
asset value (c) 6.57% 9.72% 5.52% 16.19% (9.44)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $114,739 $96,119 $96,959 $94,400 $81,941
Ratios to average net assets of:
Expenses, net of fee waivers 1.32% 1.35% 1.35% 1.45% 1.36%
Expenses, before fee waivers 1.80% 1.84% 1.82% 1.83% 1.82%
Net investment income, net of
fee waivers 4.34% 4.75% 4.95% 5.21% 5.05%
Portfolio turnover rate 18% 34% 64% 69% 69%
</TABLE>
See footnote summary on page 50.
43
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
--------------------------------------------------------------
CLASS C
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.10 $9.66 $9.62 $8.72 $10.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .44(b) .46(b) .48 .48 .48
Net realized and unrealized gain (loss)
on investment transactions .21 .46 .04 .90 (1.41)
Net increase (decrease) in net asset
value from operations .65 .92 .52 1.38 (.93)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.47) (.48) (.48) (.47)
Distributions in excess of net
investment income (.02) (.01) -0- -0- (.01)
Distributions from net realized gains -0- -0- -0- -0- (.04)
Total dividends and distributions (.46) (.48) (.48) (.48) (.52)
Net asset value, end of year $10.29 $10.10 $9.66 $9.62 $8.72
TOTAL RETURN
Total investment return based on net
asset value (c) 6.57% 9.72% 5.52% 16.19% (9.44)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $44,736 $38,890 $34,562 $32,259 $34,646
Ratios to average net assets of:
Expenses, net of fee waivers 1.31% 1.35% 1.34% 1.44% 1.36%
Expenses, before fee waivers 1.82% 1.82% 1.81% 1.82% 1.81%
Net investment income, net of
fee waivers 4.33% 4.75% 4.95% 5.24% 5.03%
Portfolio turnover rate 18% 34% 64% 69% 69%
</TABLE>
See footnote summary on page 50.
44
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CALIFORNIA PORTFOLIO
--------------------------------------------------------------
CLASS A
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.04 $10.59 $10.45 $9.43 $10.90
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .56(b) .58(b) .58 .59 .59
Net realized and unrealized gain (loss)
on investment transactions .32 .45 .14 1.02 (1.41)
Net increase (decrease) in net asset
value from operations .88 1.03 .72 1.61 (.82)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.56) (.58) (.58) (.59) (.59)
Distributions in excess of net
investment income (.02) -0- -0- -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.06)
Total dividends and distributions (.58) (.58) (.58) (.59) (.65)
Net asset value, end of year $11.34 $11.04 $10.59 $10.45 $9.43
TOTAL RETURN
Total investment return based on net
asset value (c) 8.20% 10.07% 7.15% 17.55% (7.73)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $550,626 $470,444 $460,444 $478,535 $470,308
Ratios to average net assets of:
Expenses, net of fee waivers .72% .78% .77% .74% .64%
Expenses, before fee waivers 1.04% 1.05% 1.05% 1.04% 1.05%
Net investment income, net of
fee waivers 4.99% 5.43% 5.57% 5.90% 5.78%
Portfolio turnover rate 22% 20% 49% 39% 45%
</TABLE>
See footnote summary on page 50.
45
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CALIFORNIA PORTFOLIO
--------------------------------------------------------------
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.04 $10.59 $10.45 $9.43 $10.90
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .48(b) .51(b) .51 .51 .52
Net realized and unrealized gain (loss)
on investment transactions .33 .45 .14 1.02 (1.41)
Net increase (decrease) in net asset
value from operations .81 .96 .65 1.53 (.89)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.48) (.51) (.51) (.51) (.52)
Distributions in excess of net
investment income (.03) -0- -0- -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.06)
Total dividends and distributions (.51) (.51) (.51) (.51) (.58)
Net asset value, end of year $11.34 $11.04 $10.59 $10.45 $9.43
TOTAL RETURN
Total investment return based on net
asset value (c) 7.46% 9.29% 6.37% 16.64% (8.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $207,751 $166,672 $164,895 $166,759 $160,879
Ratios to average net assets of:
Expenses, net of fee waivers 1.43% 1.48% 1.47% 1.45% 1.35%
Expenses, before fee waivers 1.75% 1.76% 1.75% 1.75% 1.75%
Net investment income, net of
fee waivers 4.30% 4.72% 4.87% 5.19% 5.07%
Portfolio turnover rate 22% 20% 49% 39% 45%
</TABLE>
See footnote summary on page 50.
46
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CALIFORNIA PORTFOLIO
--------------------------------------------------------------
CLASS C
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.04 $10.59 $10.45 $9.43 $10.90
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .48(b) .51(b) .51 .51 .52
Net realized and unrealized gain (loss)
on investment transactions .32 .45 .14 1.02 (1.41)
Net increase (decrease) in net asset
value from operations .80 .96 .65 1.53 (.89)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.48) (.51) (.51) (.51) (.52)
Distributions in excess of net
investment income (.03) -0- -0- -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.06)
Total dividends and distributions (.51) (.51) (.51) (.51) (.58)
Net asset value, end of year $11.33 $11.04 $10.59 $10.45 $9.43
TOTAL RETURN
Total investment return based on net
asset value (c) 7.36% 9.29% 6.38% 16.64% (8.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $124,115 $90,742 $90,917 $87,793 $103,622
Ratios to average net assets of:
Expenses, net of fee waivers 1.42% 1.48% 1.47% 1.44% 1.34%
Expenses, before fee waivers 1.76% 1.74% 1.75% 1.74% 1.75%
Net investment income, net of
fee waivers 4.29% 4.73% 4.87% 5.22% 5.06%
Portfolio turnover rate 22% 20% 49% 39% 45%
</TABLE>
See footnote summary on page 50.
47
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
INSURED CALIFORNIA PORTFOLIO
---------------------------------------------------------------
CLASS A
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.89 $13.39 $13.32 $11.79 $14.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income .64(b) .69(b) .69 .68(a) .69(a)
Net realized and unrealized gain (loss)
on investment transactions .39 .50 .06 1.54 (1.99)
Net increase (decrease) in net asset
value from operations 1.03 1.19 .75 2.22 (1.30)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.64) (.68) (.68) (.68) (.69)
Distributions in excess of net
investment income (.03) (.01) -0- (.01) -0-
Distributions from net realized gains -0- -0- -0- -0- (.47)
Total dividends and distributions (.67) (.69) (.68) (.69) (1.16)
Net asset value, end of year $14.25 $13.89 $13.39 $13.32 $11.79
TOTAL RETURN
Total investment return based on net
asset value (c) 7.60% 9.18% 5.79% 19.29% (9.73)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $113,102 $103,647 $101,542 $103,940 $94,857
Ratios to average net assets of:
Expenses, net of fee waivers 1.05% 1.11% 1.08% 1.04% .82%
Expenses, before fee waivers 1.05% 1.11% 1.08% 1.09% 1.08%
Net investment income, net of
fee waivers 4.52% 5.09% 5.19% 5.34% 5.29%
Portfolio turnover rate 0% 35% 118% 103% 100%
</TABLE>
See footnote summary on page 50.
48
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
INSURED CALIFORNIA PORTFOLIO
---------------------------------------------------------------
CLASS B
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.89 $13.39 $13.32 $11.79 $14.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income .54(b) .59(b) .60 .58(a) .60(a)
Net realized and unrealized gain (loss)
on investment transactions .39 .50 .05 1.54 (2.00)
Net increase (decrease) in net asset
value from operations .93 1.09 .65 2.12 (1.40)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.54) (.59) (.58) (.58) (.59)
Distributions in excess of net
investment income (.03) -0- -0- (.01) -0-
Distributions from net realized gains -0- -0- -0- -0- (.47)
Total dividends and distributions (.57) (.59) (.58) (.59) (1.06)
Net asset value, end of year $14.25 $13.89 $13.39 $13.32 $11.79
TOTAL RETURN
Total investment return based on
net asset value (c) 6.84% 8.37% 4.99% 18.35% (10.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $29,957 $27,976 $26,696 $27,816 $24,591
Ratios to average net assets of:
Expenses, net of fee waivers 1.76% 1.81% 1.79% 1.74% 1.53%
Expenses, before fee waivers 1.76% 1.81% 1.79% 1.80% 1.78%
Net investment income, net of fee waivers 3.82% 4.39% 4.49% 4.61% 4.60%
Portfolio turnover rate 0% 35% 118% 103% 100%
</TABLE>
See footnote summary on page 50.
49
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
INSURED CALIFORNIA PORTFOLIO
---------------------------------------------------------------
CLASS C
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.89 $13.39 $13.32 $11.79 $14.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income .54(b) .59(b) .60 .58(a) .60(a)
Net realized and unrealized gain (loss)
on investment transactions .39 .50 .05 1.54 (2.00)
Net increase (decrease) in net asset
value from operations .93 1.09 .65 2.12 (1.40)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.54) (.59) (.58) (.58) (.59)
Distributions in excess of net
investment income (.03) -0- -0- (.01) -0-
Distributions from net realized gains -0- -0- -0- -0- (.47)
Total dividends and distributions (.57) (.59) (.58) (.59) (1.06)
Net asset value, end of year $14.25 $13.89 $13.39 $13.32 $11.79
TOTAL RETURN
Total investment return based on
net asset value (c) 6.84% 8.37% 4.99% 18.35% (10.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $16,013 $13,436 $12,826 $14,323 $12,472
Ratios to average net assets of:
Expenses, net of fee waivers 1.75% 1.81% 1.78% 1.74% 1.52%
Expenses, before fee waivers 1.75% 1.81% 1.78% 1.79% 1.77%
Net investment income, net of
fee waivers 3.82% 4.39% 4.49% 4.64% 4.59%
Portfolio turnover rate 0% 35% 118% 103% 100%
</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 charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return.
50
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, 1998, 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, 1998, 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, 1998, 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 14, 1998
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, 1998. 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 1998 calendar year on Form 1099-DIV
which will be mailed by January 31, 1999.
EXEMPT-INTEREST LONG-TERM CAPITAL
PORTFOLIO DIVIDENDS GAIN DISTRIBUTIONS
- ------------------ --------------- ------------------
National $28,938,322 $ -0-
Insured National 9,003,630 3,016,313
New York 15,986,263 -0-
California 37,935,062 -0-
Insured California 6,480,942 -0-
51
ALLIANCE MUNICIPAL INCOME FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (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.
52
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 U.S. Government Fund
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 Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
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
53
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
