Edgar Filing: ALLIANCE NATIONAL MUNICIPAL INCOME FUND

come ........................... 14,989,072
-----------
Realized and Unrealized Gain
(Loss) on Investments
Net realized loss on investment
transactions ................................ (1,199,398)
Net change in unrealized
appreciation/depreciation
of investments .............................. 13,765,340
-----------
Net gain on investments ......................... 12,565,942
-----------
Dividends to Auction Preferred
Shareholders from
Net investment income ........................... (1,686,064)
-----------
Net Increase in Net Assets Applicable
to Common Shareholders Resulting
from Operations ................................. $25,868,950
===========

(a) Commencement of operations.

See notes to financial statements.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 17

----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS
----------------------------------

STATEMENT OF CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS

January 28,
2002(a) to
October 31,
2002
=============
Increase (Decrease) in Net Assets
Applicable to Common Shareholders
Resulting from Operations
Net investment income ......................................... $ 14,989,072
Net realized loss on investment
transactions .............................................. (1,199,398)
Net change in unrealized
appreciation/depreciation
of investments ............................................ 13,765,340
Dividends to Auction Preferred
Shareholders from
Net investment income ......................................... (1,686,064)
-------------
Net increase in net assets applicable
to Common Shareholders resulting
from operations ........................................... 25,868,950
-------------
Dividends to Common Shareholders from
Net investment income ......................................... (13,019,974)
Common Stock Transactions
Net increase .................................................. 290,308,765
-------------
Total increase ................................................ 303,157,741
Net Assets Applicable to Common Shareholders
Beginning of period ........................................... 100,005
-------------
End of period (including undistributed net investment
income of $283,034) ....................................... $ 303,257,746
=============

(a) Commencement of operations.

See notes to financial statements.

--------------------------------------------------------------------------------
18 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------

NOTES TO FINANCIAL STATEMENTS
October 31, 2001

NOTE A

Significant Accounting Policies

Alliance National Municipal Income Fund, Inc. (the "Fund"), was incorporated in
the state of Maryland on November 9, 2001 and is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. Prior to the commencement of operations on January 28, 2002, the Fund
had no operations other than the sale to Alliance Capital Management L.P. (the
"Adviser") of 6,667 shares in the amount of $100,005 on January 23, 2002. The
financial statements have been prepared in conformity with accounting principles
generally accepted in the United States, which require management to make
certain estimates and assumptions that affect the reporting 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 generally
valued at the last reported sale price or if there was no sale on such a 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 Fund's policy 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. Organization Expenses and Offering Costs

Offering costs of $614,150 ($0.03 per common share) were charged to paid-in
capital of the Fund at the completion of the initial offering of common shares.
The Adviser agreed to pay the amount by which the aggregate of all the Fund's
organization expenses and all offering costs (other than sales load) exceeded
$0.03 per common share.

Additionally, offering costs of $283,710 and sales load of $1,950,000 were
charged to paid-in capital of the Fund

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 19

-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------

at the completion of the offering of the preferred shares on March 27, 2002.

As of October 31, 2002, total offering costs of $185,828 remain payable by the
Fund.

4. Investment Income and Investment Transactions

Interest income is accrued daily. Investment transactions are accounted for on
the date the securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund amortizes premiums and
accretes original issue discounts and market discounts as adjustments to
interest income.

5. Dividends and Distributions

Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
accounting principles generally accepted in the United States. 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. For the fiscal period ended
October 31, 2002, there were no permanent differences.

NOTE B

Advisory Fee and Other Transactions with Affiliates

Under the terms of an investment advisory agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .65 of 1% of the Fund's average daily net
assets. Such fee is accrued daily and paid monthly. The Adviser has agreed to
waive a portion of its fees or reimburse the Fund for expenses in the amount of
0.25% of the Fund's average daily net assets for the first 5 full years of the
Fund's operations, 0.20% of the Fund's average daily net assets in year 6, 0.15%
in year 7, 0.10% in year 8, and 0.05% in year 9. For the period ended October
31, 2002, the amount of such fees waived was $848,126.

Under the term of a Shareholder, Inquiry Agency Agreement with Alliance Global
Investor Services, Inc. (AGIS), an affiliate of the Adviser, the Fund reimburses
AGIS for costs relating to servicing phone inquiries for the Fund. During the
period ended October 31, 2002, there was no reimbursement paid to AGIS.

NOTE C

Investment Transactions

Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $528,742,658 and $52,440,168,
respectively, for the period ended October 31, 2002. There were no purchases or
sales of U.S. government and government agency obligations for the period ended
October 31, 2002.

At October 31, 2002, the cost of investments for federal income tax purposes was
$476,438,287. Accordingly, gross unrealized appreciation of investments was
$14,675,068 and gross unrealized depreciation of investments was $909,728
resulting in net unrealized appreciation of $13,765,340.

--------------------------------------------------------------------------------
20 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------

NOTE D

Distributions To Common Shareholders

The tax character of distributions paid to common shareholders during the fiscal
period ended October 31, 2002 were as follows:

2002
===========
Distributions paid from:
Ordinary income .................................. $ 26,652
Tax exempt income ................................ 11,365,824
-----------
Total distributions paid ............................. $11,392,476(a)
-----------

As of October 31, 2002, the components of accumulated earnings/(deficit)
applicable to common shareholders on a tax basis were as follows:

Undistributed tax exempt income ....................... $ 2,065,905
Accumulated capital and other losses .................. (1,199,398)(b)
Unrealized appreciation/(depreciation) ................ 13,765,340
------------
Total accumulated earnings/(deficit) .................. $ 14,631,847
============

(a) Total distributions paid differ from the statement of changes in net
assets applicable to common shareholders because for tax purposes
dividends are recognized when actually paid.

(b) On October 31, 2002, the Fund had a net capital loss carryforward of
$1,199,398, all of which expires in the year 2010. To the extent future
capital gains are offset by capital loss carryforward, such gains will not
be distributed.

NOTE E

Common Stock

The Fund has 1,999,992,200 shares of $.001 par value common stock authorized.
There are 20,471,667 shares of common stock outstanding at October 31, 2002, of
which the Adviser owns 6,667 shares. In addition to the shares issued to the
Adviser, an initial public offering of the Fund's shares resulted in the
issuance of 18,900,000 shares. Also, the Fund issued an additional 1,565,000
shares in connection with the exercise by the underwriters of the over-allotment
option.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 21

-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------

NOTE F

Preferred Stock

The Fund has authorized, issued and outstanding 7,800 shares of Auction
Preferred Stock, consisting of 1,950 shares each of Series M, Series T, Series W
and Series TH. The preferred shares have a liquidation value of $25,000 per
share plus accumulated, unpaid dividends. The dividend rate on the Auction
Preferred Stock may change generally every 7 days as set by the auction agent
for Series M and T. The dividend rate on the Series M is 1.60% effective through
November 8, 2002. The dividend rate on the Series T is 1.60% effective through
November 5, 2002. The dividend rate on the Series W is 1.749% effective through
August 6, 2003. The dividend rate on the Series TH is 1.698% effective through
August 7, 2003.

At certain times, the Preferred Shares are redeemable by the Fund, in whole or
in part, at $25,000 per share plus accumulated, unpaid dividends.

Although the Fund will not ordinarily redeem the Preferred Shares, it may be
required to redeem shares if, for example, the Fund does not meet an asset
coverage ratio required by law or to correct a failure to meet a rating agency
guideline in a timely manner. The Fund voluntarily may redeem the Preferred
Shares in certain circumstances.

The Preferred Shareholders, voting as a separate class, have the right to elect
at least two Directors at all times and to elect a majority of the Directors in
the event two years' dividends on the Preferred Shares are unpaid. In each case,
the remaining Directors will be elected by the Common Shareholders and Preferred
Shareholders voting together as a single class. The Preferred Shareholders will
vote as a separate class on certain other matters as required under the Fund's
Charter, the Investment Company Act of 1940 and Maryland law.

--------------------------------------------------------------------------------
22 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

--------------------
FINANCIAL HIGHLIGHTS
--------------------

FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period

January 28,
2002(a) to
October 31,
2002
-----------

Net asset value, beginning of period ................................ $ 14.33
-----------
Income From Investment Operations
Net investment income(b)(c) ......................................... .74
Net realized and unrealized gain on investments ..................... .60
Dividends to preferred shareholders from
Net investment income (common stock equivalent basis) ........... (.08)
-----------
Net increase in net asset value from operations ..................... 1.26
-----------
Less: Dividends to common shareholders from
Net investment income ........................................... (.64)
Common stock offering costs ......................................... (.03)
Preferred stock offering costs and sales load ....................... (.11)
-----------
Net asset value, end of period .................................. $ 14.81
-----------
Market value, end of period ......................................... $ 13.48
-----------
Total Investment Return
Total investment return based on:(d)
Market value ........................................................ (5.92)%
Net asset value ..................................................... 8.14%
Ratios/Supplemental Data:
Net assets applicable to common shareholders, end of period
(000's omitted) ................................................. $ 303,258
Preferred Stock, at redemption value ($25,000 per share
liquidation preference) (000's omitted) ......................... $ 195,000
Ratios to average net assets applicable to common shareholders of:(e)
Expenses, net of fee waivers(f) ................................. .95%
Expenses, before fee waivers(f) ................................. 1.33%
Net investment income, before preferred stock dividends(c)(f) ... 6.73%
Preferred stock dividends ....................................... .76%
Net investment income, net of preferred stock dividends(c) ...... 5.97%
Portfolio turnover rate ............................................. 13%
Asset coverage ratio ................................................ 255%

See footnote summary on page 24.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 23

--------------------
FINANCIAL HIGHLIGHTS
--------------------

(a) Commencement of operations. Net asset value immediately after the closing
of the first public offering was $14.30.

(b) Based on average shares outstanding.

(d) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of the period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained
under the Fund's dividend reinvestment plan. Generally, total investment
return based on net asset value will be higher than total investment
return based on market value in periods where there is an increase in the
discount or a decrease in the premium of the market value to net asset
value from the beginning to the end of such periods. Conversely, total
investment return based on net asset value will be lower than total
investment return based on market value in periods where there is a
decrease in the discount or an increase in the premium of the market value
to the net asset value from the beginning to the end of the period. Total
investment return calculated for a period of less than one year is not
annualized.

(e) Annualized.

(f) These expense and net investment income ratios do not reflect the effect
of dividend payments to preferred shareholders.

--------------------------------------------------------------------------------
24 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

---------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
---------------------------

REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS

To the Shareholders and Board of Directors of Alliance National Municipal Income
Fund, Inc.

We have audited the accompanying statement of assets and liabilities of Alliance
National Municipal Income Fund, Inc. (the "Fund"), including the portfolio of
investments, as of October 31, 2002, and the related statement of operations,
the statement of changes in net assets applicable to common shareholders and the
financial highlights for the period from January 28, 2002 (commencement of
operations) to October 31, 2002. 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2002, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance National Municipal Income Fund, Inc. at October 31, 2002, the results
of its operations, the changes in its net assets applicable to common
shareholders and the financial highlights for the period from January 28, 2002
(commencement of operations) to October 31, 2002, in conformity with accounting
principles generally accepted in the United States.

/s/ Ernst & Young LLP

New York, New York
December 10, 2002

FEDERAL INCOME TAX INFORMATION
(unaudited)

In accordance with Federal tax law, the Fund's designation of "exempt-interest
dividends" paid during the fiscal year ended October 31, 2002 was $12,892,934.
As required by Federal tax law rules, shareholders will receive notification of
their portion of the Fund's taxable ordinary dividends (if any) and capital gain
distributions (if any) paid for the 2002 calendar year on Form 1099-DIV which
will be mailed by January 31, 2003.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 25

----------------------
ADDITIONAL INFORMATION
----------------------

ADDITIONAL INFORMATION
(unaudited)

Shareholders whose shares are registered in their own names can elect to
participate in the Dividend Reinvestment Plan (the "Plan"), pursuant to which
dividends and capital gain distributions to shareholders will be paid in or
reinvested in additional shares of the Fund (the "Dividend Shares"). Equiserve
Trust Company NA, (the "Agent") will act as agent for participants under the
Plan. Shareholders whose shares are held in the name of broker or nominee should
contact such broker or nominee to determine whether or how they may participate
in the Plan.

If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, non-participants in the
Plan will receive cash and participants in the Plan will receive the equivalent
in shares of Common Stock of the Fund valued as follows:

(i) If the shares of Common Stock are trading at net asset value or at a premium
above net asset value at the time of valuation, the Fund will issue new shares
at the greater of net asset value or 95% of the then current market price.

(ii) If the shares of Common Stock are trading at a discount from net asset
value at the time of valuation, the Plan Agent will receive the dividend or
distribution in cash and apply it to the purchase of the Fund's shares of Common
Stock in the open market on the New York Stock Exchange or elsewhere, for the
participants' accounts. Such purchases will be made on or shortly after the
payment date for such dividend or distribution and in no event more than 30 days
after such date except where temporary curtailment or suspension of purchase is
necessary to comply with Federal securities laws. If, before the Plan agent has
completed its purchases, the market price exceeds the net asset value of a share
of Common Stock, the average purchase price per share paid by the Plan agent may
exceed the net asset value of the Fund's shares of Common Stock, resulting in
the acquisition of fewer shares than if the dividend or distribution had been
paid in shares issued by the Fund.

The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of the
participant, and each shareholder's proxy will include those shares purchased or
received pursuant to the Plan.

There will be no charges with respect to shares issued directly by the Fund to
-------------
Louisiana-4.9%
Calcasieu Parish SFMR
Mtg Rev GNMA/FNMA Ser 02A
4.50%, 4/01/33(a) ................... Aaa 1,500 1,565,880

--------------------------------------------------------------------------------
10 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

------------------------
PORTFOLIO OF INVESTMENTS
------------------------

Standard Principal
& Poor's Amount
Rating + (000) Value
------------------------------------------------------------------------------

Louisiana Dev Fin Auth
Tobacco Settlement Bonds Ser 01B
5.875%, 5/15/39 ..................... A $ 10,000 $ 9,079,800
Louisiana Hsg Fin Agy SFMR
Mtg Rev GNMA Ser 02C AMT
4.00%, 6/01/33(a) ................... Aaa 4,115 4,173,968
-------------
14,819,648
-------------
Massachusetts-3.0%
Mass Hlth & Ed Fac Hosp Rev
(Berkshire Hlth Sys)
Ser 01E Asset Gty
5.70%, 10/01/25 ..................... AA 2,000 2,082,340
Massachusetts Hlth & Ed Fac Hosp Rev
(Cape Cod Healthcare)
Ser 01C Asset Gty
5.25%, 11/15/31 ..................... AA 2,100 2,090,655
Massachusetts Trpk Auth
(Metro System Hwy) AMBAC Ser 99A
5.00%, 1/01/39 ...................... AAA 5,000 4,966,550
-------------
9,139,545
-------------
Michigan-2.0%
Detroit Loc Dev Fin Auth
(Daimler/Chrysler Plant) Ser 98A
5.50%, 5/01/21 ...................... BB- 1,755 1,484,309
Saginaw Hosp Fin Auth
(Covenant Med Ctr) Ser 00F
6.50%, 7/01/30 ...................... A 4,410 4,682,009
-------------
6,166,318
-------------
Minnesota-0.4%
Dakota Cnty Comm Dev Agy MFHR
(Buffalo Ridge Apts) GNMA Ser 02
5.40%, 7/20/28(a) ................... Aaa 1,265 1,292,779
-------------
Missouri-1.4%
Missouri Hsg Dev Comm SFMR
Mtg Rev GNMA/FNMA
Ser 02A-1 AMT
4.00%, 9/01/32 ...................... AAA 4,200 4,273,416
-------------
Nevada-14.9%
Clark Cnty Arpt Rev
FGIC Ser 01B AMT
5.25%, 7/01/34 ...................... AAA 11,920 12,059,702
Nevada Dept Bus & Ind Transp Rev
(Las Vegas Monorail Proj) AMBAC
Ser 00
5.625%, 1/01/32 ..................... AAA 11,720 12,269,551
Reno Capital Improvement Rev
FGIC Ser 02
5.375%, 6/01/32 ..................... AAA 7,500 7,705,875

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 11

------------------------
PORTFOLIO OF INVESTMENTS
------------------------

Standard Principal
& Poor's Amount
Rating + (000) Value
------------------------------------------------------------------------------

Reno Special Tax Rev
(Retrac Transp Proj) AMBAC Ser 02
5.25%, 6/01/41 ...................... AAA $ 1,000 $ 1,016,510
Truckee Meadows Wtr Auth
Wtr Rev FSA Ser 01A
5.25%, 7/01/34 ...................... AAA 12,000 12,140,640
-------------
45,192,278
-------------
New Hampshire-1.7%
New Hampshire Hlth & Ed Fac Hosp Rev
(Covenant Med Ctr) Ser 02
6.125%, 7/01/31 ..................... A- 5,000 5,123,400
-------------
North Dakota-1.2%
North Dakota HFA SFMR
Mtg Rev Ser 02A
5.65%, 1/01/34(a) ................... Aa2 3,500 3,574,935
-------------
Ohio-6.2%
Cleveland-Cuyahoga Cnty Port
Auth Rev Ser 01
7.35%, 12/01/31 ..................... NR 7,800 7,965,126
Ohio HFA SFMR
Mtg Rev GNMA Ser 00D AMT
6.05%, 3/01/31(a) ................... Aaa 10,305 10,768,828
-------------
18,733,954
-------------
Pennsylvania-4.9%
Pennsylvania Trpk Comm Transp Rev
AMBAC Ser 01
5.00%, 7/15/41 ...................... AAA 5,000 4,948,900
Philadelphia Hosp Rev
(Temple Univ Hosp) Ser 93A
6.625%, 11/15/23 .................... BBB 3,250 3,291,990
Southeastern Trans Auth
FGIC Ser 99A
4.75%, 3/01/29 ...................... AAA 4,000 3,848,560
Washington Cnty Auth Rev
Capital Funding AMBAC Ser 99
6.15%, 12/01/29 ..................... AAA 2,300 2,644,862
-------------
14,734,312
-------------
South Carolina-0.3%
South Carolina
Tobacco Settlement Bonds Ser 01B
6.375%, 5/15/30 ..................... A 1,000 982,790
-------------
South Dakota-0.2%
South Dakota
Tobacco Settlement Bonds Ser 02B
6.50%, 6/01/32 ...................... A 500 494,145
-------------

--------------------------------------------------------------------------------
12 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

------------------------
PORTFOLIO OF INVESTMENTS
------------------------

Standard Principal
& Poor's Amount
Rating + (000) Value
------------------------------------------------------------------------------

Texas-19.9%
Bexar Cnty Hsg Fin Corp MFHR
(Doral Club & Sutton House Apts)
MBIA Ser 01A
5.55%, 10/01/36(a) .................. Aaa $ 15,000 $ 15,175,350
Dallas-Fort Worth Int'l Arpt Rev
FGIC Ser 01 AMT
5.50%, 11/01/35 ..................... AAA 10,000 10,256,500
Gulf Coast Waste Disp Auth
(Anheuser-Busch Proj) Ser 02 AMT
5.90%, 4/01/36 ...................... A+ 9,000 9,287,730
Harris Cnty
Toll Road Rev FSA Ser 02
5.125%, 8/15/32 ..................... AAA 2,500 2,508,375
Houston
(Northeast Wtr Purification Proj)
FGIC Ser 02
5.125%, 3/01/32 ..................... AAA 7,000 7,027,790
San Antonio Arpt Sys Rev
FGIC Ser 02A AMT
5.25%, 7/01/27 ...................... AAA 6,250 6,273,062
Texas GO
Ser 02A AMT
5.50%, 8/01/41 ...................... AA 9,470 9,684,117
-------------
60,212,924
-------------
Utah-0.5%
Utah Hsg Corp MFHR
Mtg Rev (Bluffs Apts Proj) GNMA
Ser 02A AMT
5.60%, 7/20/30(a) ................... Aaa 1,480 1,527,375
-------------
Virginia-2.8%
Fauquier Cnty IDA Hosp Rev
Asset Gty Ser 02
5.25%, 10/01/31 ..................... AA 8,500 8,559,500
-------------
Washington-9.6%
King Cnty
Swr Rev FSA Ser 02A
5.25%, 1/01/32 ...................... AAA 4,000 4,049,000
Twenty-Fifth Ave Pptys Student
Hsg Rev (University of WA)
MBIA Ser 02
5.25%, 6/01/33 ...................... AAA 9,750 9,881,430
Washington HFA SFMR
Mtg Rev GNMA/FNMA Ser 02A AMT
4.00%, 6/01/29(a) ................... Aaa 10,000 10,266,200

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 13

------------------------
PORTFOLIO OF INVESTMENTS
------------------------

Standard Principal
& Poor's Amount
Rating + (000) Value
------------------------------------------------------------------------------

Western Washington University
Student Rec Fee MBIA Ser 02
5.00%, 5/01/33 ...................... AAA $ 5,110 $ 5,054,761
-------------
29,251,391
-------------
Wisconsin-10.9%
Badger Tobacco Asset Sec Corp
Tobacco Settlement Bonds Ser 02
6.375%, 6/01/32 ..................... A 5,000 4,810,300
Wisconsin Hlth & Ed Fac Auth
Hosp Rev(Ministry Hlth Care)
MBIA Ser 02A
5.25%, 2/15/32 ...................... AAA 13,615 13,699,821
Wisconsin Hsg & Economic Dev Auth
SFMR Mtg Rev Ser 02A AMT
5.50%, 9/01/32 ...................... AA 9,200 9,263,112
Wisconsin Hsg Auth SFMR
Mtg Rev MBIA Ser 02A AMT
5.60%, 5/01/33 ...................... AAA 5,000 5,140,750
-------------
32,913,983
-------------
Total Long-Term Municipal Bonds
(cost $475,088,287) ................. 488,853,627
-------------
Short-Term Municipal Notes(b)-0.4%
Illinois-0.0%
Illinois Hlth Facs Auth Rev
(Resurrection Hlth Proj) Ser A
2.00%, 5/15/29 ...................... A-1 150 150,000
-------------
New York-0.4%
New York Hsg Dev Corp MFHR
Mtg Rev (East 17th St Properties)
Ser 93A
2.00%, 1/01/23 ...................... A-1+ 700 700,000
New York State Energy Res & Dev
Auth PCR (Niagara Mohawk Pwr)
Ser 85A
2.15%, 7/01/15 ...................... A-1+ 500 500,000
-------------
1,200,000
-------------
Total Short-Term Municipal Notes
(cost $1,350,000) ................... 1,350,000
-------------
Total Investments-161.6%
(cost $476,438,287) ................. 490,203,627
Other assets less liabilities-2.7% ...... 8,054,119
Preferred Stock, at redemption
value-(64.3%) ....................... (195,000,000)
-------------

Net Assets Applicable to Common
Shareholders-100.0%(c) .............. $ 303,257,746
=============

--------------------------------------------------------------------------------
14 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

------------------------
PORTFOLIO OF INVESTMENTS
------------------------

+ Unaudited.

(a) Moody's or Fitch Rating, unaudited.

(b) 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.

Glossary of Terms:

AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax - (subject to)
FGIC Financial Guaranty Insurance Company
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
GO General Obligation
HFA Housing Finance Authority
IDA Industrial Development Authority
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
NR Rating not applied for
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue

See notes to financial statements.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 15

---------------------------------
STATEMENT OF ASSETS & LIABILITIES
---------------------------------

STATEMENT OF ASSETS & LIABILITIES
October 31, 2002

Assets
Investments in securities, at value (cost $476,438,287) ...... $ 490,203,627
Cash ......................................................... 91,178
Interest receivable .......................................... 8,760,283
Receivable for investment securities sold .................... 3,822,258
Prepaid expenses ............................................. 183,496
-------------
Total assets ................................................. 503,060,842
-------------
Liabilities
Payable for investment securities purchased .................. 2,464,100
Dividends payable--common shares ............................. 1,627,498
Payable for offering costs ................................... 185,828
Advisory fee payable ......................................... 170,664
Dividends payable--preferred shares .......................... 155,373
Accrued expenses and other liabilities ....................... 199,633
-------------
Total liabilities ............................................ 4,803,096
-------------
Preferred Stock, at redemption value
$.001 par value per share; 7,800 shares
Auction Preferred Stock authorized, issued and
outstanding at $25,000 per share liquidation
preference ............................................... 195,000,000
-------------
Net Assets Applicable to Common Shareholders ................. $ 303,257,746
=============
Composition of Net Assets Applicable to
Common Shareholders
Common stock, $.001 par value per
share; 1,999,992,200 shares authorized,
20,471,667 shares issued and outstanding ................. $ 20,472
Additional paid-in capital ................................... 290,388,298
Undistributed net investment income .......................... 283,034
Accumulated net realized loss on investment transactions ..... (1,199,398)
Net unrealized appreciation of investments ................... 13,765,340
-------------
Net Assets Applicable to Common Shareholders ................. $ 303,257,746
=============
Net Asset Value Applicable to Common Shareholders
(based on 20,471,667 common shares outstanding) .......... $14.81
======

See notes to financial statements.

--------------------------------------------------------------------------------
16 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

-----------------------
STATEMENT OF OPERATIONS
-----------------------

STATEMENT OF OPERATIONS
January 29, 2002(a) to October 31, 2002

Investment Income
Interest ........................................ $17,098,560
Expenses
Advisory fee .................................... $ 2,205,129
Auction Preferred Stock-auction
agent's fees ................................ 289,189
Custodian ....................................... 126,113
Audit and legal ................................. 99,590
Printing ........................................ 74,776
Registration fees ............................... 33,678
Transfer agency ................................. 31,910
Directors' fees and expenses .................... 24,000
Miscellaneous ................................... 73,229
-----------
Total expenses .................................. 2,957,614
Less: expenses waived by the Adviser
(see Note B) ................................ (848,126)
-----------
Net expenses .................................... 2,109,488
-----------
Net investment income ........................... 14,989,072
-----------
Realized and Unrealized Gain
(Loss) on Investments
Net realized loss on investment
transactions ................................ (1,199,398)
Net change in unrealized
appreciation/depreciation
of investments .............................. 13,765,340
-----------
Net gain on investments ......................... 12,565,942
-----------
Dividends to Auction Preferred
Shareholders from
Net investment income ........................... (1,686,064)
-----------
Net Increase in Net Assets Applicable
to Common Shareholders Resulting
from Operations ................................. $25,868,950
===========

(a) Commencement of operations.

See notes to financial statements.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 17

----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS
----------------------------------

STATEMENT OF CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS

(a) Commencement of operations.

See notes to financial statements.

--------------------------------------------------------------------------------
18 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------

NOTES TO FINANCIAL STATEMENTS
October 31, 2001

NOTE A

Significant Accounting Policies

1. Security Valuation

2. Taxes

3. Organization Expenses and Offering Costs

Additionally, offering costs of $283,710 and sales load of $1,950,000 were
charged to paid-in capital of the Fund

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 19

-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------

at the completion of the offering of the preferred shares on March 27, 2002.

As of October 31, 2002, total offering costs of $185,828 remain payable by the
Fund.

4. Investment Income and Investment Transactions

5. Dividends and Distributions

NOTE B

Advisory Fee and Other Transactions with Affiliates

NOTE C

Investment Transactions

--------------------------------------------------------------------------------
20 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------

NOTE D

Distributions To Common Shareholders

The tax character of distributions paid to common shareholders during the fiscal
period ended October 31, 2002 were as follows:

As of October 31, 2002, the components of accumulated earnings/(deficit)
applicable to common shareholders on a tax basis were as follows:

(a) Total distributions paid differ from the statement of changes in net
assets applicable to common shareholders because for tax purposes
dividends are recognized when actually paid.

NOTE E

Common Stock

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 21

-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------

NOTE F

Preferred Stock

At certain times, the Preferred Shares are redeemable by the Fund, in whole or
in part, at $25,000 per share plus accumulated, unpaid dividends.

--------------------------------------------------------------------------------
22 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

--------------------
FINANCIAL HIGHLIGHTS
--------------------

FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period

January 28,
2002(a) to
October 31,
2002
-----------

See footnote summary on page 24.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 23

--------------------
FINANCIAL HIGHLIGHTS
--------------------

(a) Commencement of operations. Net asset value immediately after the closing
of the first public offering was $14.30.

(b) Based on average shares outstanding.

(e) Annualized.

(f) These expense and net investment income ratios do not reflect the effect
of dividend payments to preferred shareholders.

--------------------------------------------------------------------------------
24 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

---------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
---------------------------

REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS

To the Shareholders and Board of Directors of Alliance National Municipal Income
Fund, Inc.

/s/ Ernst & Young LLP

New York, New York
December 10, 2002

FEDERAL INCOME TAX INFORMATION
(unaudited)

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 25

----------------------
ADDITIONAL INFORMATION
----------------------

ADDITIONAL INFORMATION
(unaudited)

There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares.

--------------------------------------------------------------------------------
26 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

----------------------
ADDITIONAL INFORMATION
----------------------

The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.

Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent to
written notice of the change sent to participants in the Plan at least 90 days
before the record date for such dividend or distribution. The Plan may also be
amended or terminated by the Agent on at least 90 days' written notice to
participants in the Plan. All correspondence concerning the Plan should be
directed to the Agent at Equiserve Trust Company N.A. c/o Alliance National
Municipal Income fund, P.O. Box 43011, Providence, RI 02940-3011

Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change of
control of the Fund, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv) no change to the persons
primarily responsible for the day-to-day management of the Fund's portfolio, who
are David Dowden, and Terrance Hults, each of whom is a Vice President of the
Fund.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 27

----------------------------
GLOSSARY OF INVESTMENT TERMS
----------------------------

GLOSSARY OF INVESTMENT TERMS

basis point

One basis point equals 0.01%.

benchmark

A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.

bond

Bonds are issued by governments or corporations when they need to raise cash.
Bonds are sold, or issued, to investors and have a maturity date, which is the
date the issuer is obligated to repay the investor for the principal, or face
amount, of the bond. Bonds also pay interest until maturity. Bonds are also
called fixed-income securities.

credit rating

Credit ratings are issued by independent organizations, such as the Standard &
Poor's Ratings group or Moody's Investors Service. These groups attempt to
assess the likelihood that the issuer of the bond will be able to make timely
payments of principal and interest on the bond, based on such factors as the
issuer's financial condition and any collateral securing these obligations.
Ratings typically range from AAA, which is the highest rating, to D, which is
the lowest.

index

A compilation of securities of similar types of companies that is used to
measure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.

net asset value (NAV)

The value of a mutual fund's total assets, minus its liabilities, divided by the
number of shares outstanding.

portfolio

The collection of securities that make up a fund's or an investor's investments.

yield

The rate of return on an asset, usually referring to dividend or interest
payments, expressed as a percentage of current market price.

--------------------------------------------------------------------------------
28 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

----------------
ALLIANCE CAPITAL
----------------

ALLIANCE CAPITAL
The Investment Professional's Choice

Alliance Capital is a leading global investment management firm with
approximately $369 billion in assets under management. In recognition of our
far-reaching investment capabilities, Alliance Capital has been selected by
employee benefit plans for 43 of the FORTUNE 100 companies and public retirement
funds in 44 states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.

At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 600
investment professionals in 36 cities and 19 countries. Our commitment to this
process means that our mutual fund shareholders have their portfolios managed by
the same experienced analysts and portfolio managers who manage the pension
funds of some of America's largest institutional investors.

All information on Alliance Capital is as of 9/30/02.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 29

------------------
BOARD OF DIRECTORS
------------------

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
Guy Davidson, Senior Vice President
Wayne D. Lyski, Senior Vice President
David M. Dowden, Vice President
Terrance T. Hults, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Thomas R. Manley, Controller

Custodian

State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110

Legal Counsel

Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004

Independent Auditors

Ernst & Young LLP
5 Times Square
New York, NY 10036

Transfer Agent, Dividend Paying Agent and Registrar

Equiserve Trust Company N.A.
P.O. Box 43011
Providence, RI 02940-3011

(1) Member of the Audit Committee.

--------------------------------------------------------------------------------
30 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

----------------------
MANAGEMENT OF THE FUND
----------------------

MANAGEMENT OF THE FUND

Board of Directors Information

The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.

PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
-------------------------------------------------------------------------------------------------------------------------

INTERESTED DIRECTOR**
John D. Carifa, **, 57 President, Chief Operating Officer and a 114 None
1345 Avenue of the Director of Alliance Capital Management
Americas Corporation ("ACMC"), with which he has
New York, NY 10105 been associated with since prior to 1997.
(1)

DISINTERESTED DIRECTORS
Ruth Block, #+, 72 Formerly an Executive Vice President 93 None
P.O. Box 4623 and Chief Insurance Officer of The
Stamford, CT 06903 Equitable Life Assurance Society of the
(1) United States; Chairman and Chief
Executive Officer of Evlico. Formerly a
Director of Avon, BP Amoco Corporation,
Ecolab, Inc., Tandem Financial Group and
Donaldson, Lufkin & Jenrette Securities
Corporation.

David H. Dievler, #+, 73 Independent Consultant. Until December 98 None
P.O. Box 167 1994, Senior Vice President of ACMC
Spring Lake, NJ 07762 responsible for mutual fund administration.
(1) Prior to joining ACMC in 1984, Chief
Financial Officer of Eberstadt Asset
Management since 1968. Prior to that, Senior
Manager at Price Waterhouse & Co. Member of
the American Institute of Certified Public
Accountants since 1953.

John H. Dobkin, #+, 60 Consultant. Formerly a Senior Advisor 94 None
P.O. Box 12 from June 1999-June 2000 and President
Annandale, NY 12504 (December 1989-May 1999) of Historic
(1) Hudson Valley (historic preservation).
Previously, Director of the National Academy
of Design and during 1988-92, Director and
Chairman of the Audit Committee of ACMC.

William H. Foulk, Jr., #+, 70 Investment Adviser and Independent 110 None
2 Soundview Drive Consultant. Formerly Senior Manager
Suite 100 of Barrett Associates, Inc., a registered
Greenwich, CT 06830 investment adviser, with which he had
(1) been associated since prior to 1997.
Formerly Deputy Comptroller of the State of
New York and, prior thereto, Chief Investment
Officer of the New York Bank for Savings.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 31

----------------------
MANAGEMENT OF THE FUND
----------------------

DISINTERESTED DIRECTORS
(continued)
Dr. James M. Hester, #+, 78 President of The Harry Frank 11 None
25 Cleveland Lane Guggenheim Foundation, with which
Princeton, NJ 08540 he has been associated since prior to
(1) 1997. Formerly President of New York
University and the New York Botanical
Garden, Rector of the United Nations
University and Vice Chairman of the Board of
the Federal Reserve Bank of New York.

Clifford L. Michel, #+ 63 Senior Counsel of the law firm of Cahill 93 Placer Dome Inc.
15 St. Bernard's Road Gordon & Reindel, since February 2001
Gladstone, NJ 07934 and a partner of that firm for more than
(1) 25 years prior thereto. President and Chief
Executive Officer of Wenonah Development
Company (Investments) and a Director of Placer
Dome Inc. (mining).

Donald J. Robinson, #+, 68 Senior Counsel at the law firm of Orrick, 92 None
98 Hell's Peak Road Herrington & Sutcliffe LLP since prior
Weston, VT 05161 to 1997. Formerly a senior partner and a
(1) member of the Executive Committee of that
firm. He was also a member and Chairman of the
Municipal Securities Rulemaking Board and a
Trustee of the Museum of the City of New York.

* There is no stated term of office for the Fund's Directors.

** Mr. Carifa is an "interested director", as defined in the 1940 Act, due to
his position as President and Chief Operating Officer of ACMC, the Fund's
investment adviser.

# Member of the Audit Committee.

+ Member of the Nominating Committee.

--------------------------------------------------------------------------------
32 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

----------------------
MANAGEMENT OF THE FUND
----------------------

OFFICER INFORMATION

Certain information concerning the Fund's Officers is listed below.

POSITION(S) PRINCIPAL OCCUPATION
NAME, ADDRESS* AND AGE HELD WITH FUND DURING PAST 5 YEARS
---------------------------------------------------------------------------------------------------------------------------

Kathleen A. Corbet, 42 Senior Vice President Executive Vice President of Alliance Capital
Management Corporation ("ACMC"),** with which she
has been associated since prior to 1997.

Guy Davidson, 41 Senior Vice President Senior Vice President of ACMC,** with which he has
been associated since prior to 1997.

Wayne D. Lyski, 61 Senior Vice President Executive Vice President of ACMC,** with which he
has been associated since prior to 1997.

David M. Dowden, 37 Vice President Senior Vice President of ACMC,** with which he has
been associated since prior to 1997.

Terrance T. Hults, 36 Vice President Vice President of ACMC,** with which he has been
associated since prior to 1997.

William E. Oliver, 53 Vice President Senior Vice President of ACMC.** with which he has
been associated since prior to 1997.

Edmund P. Bergan, Jr., 52 Secretary Senior Vice President and General Counsel of
Alliance Fund Distributors, Inc. ("AFD")** and
Alliance Global Investor Services Inc. ("AGIS"),**
with which he has been associated since prior to
1997.

Mark D. Gersten, 52 Treasurer and Chief Senior Vice President of AGIS,** with
Financial Officer which he has been associated since prior to 1997.

Thomas R. Manley, 51 Controller Vice President of ACMC,** with which he has been
associated since prior to 1997.

* The address for each of the Fund's Officers is 1345 Avenue of the
Americas, New York, NY 10105.

** ACMC, AFD and AGIS are affiliates of the Fund.

The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and Officers and is available without
charge upon request. Contact your financial representative or Alliance Capital
at 800-227-4618 for a free prospectus or SAI.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 33

--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
--------------------------------

ALLIANCE CAPITAL FAMILY OF FUNDS

U.S. Stock Funds

Growth & Income Fund
Growth Fund
Health Care Fund
Mid-Cap Growth Fund*
Premier Growth Fund
Quasar Fund
Technology Fund

AllianceBernstein Value Funds

Disciplined Value Fund
Global Value Fund
International Value Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund

AllianceBernstein Blended Style Series

U.S. Large Cap Portfolio

Global & International Stock Funds

All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
The Korean Investment Fund
New Europe Fund
Worldwide Privatization Fund

Select Investor Series

Biotechnology Portfolio
Premier Portfolio
Small Cap Growth Portfolio
Technology Portfolio

Taxable Bond Funds

Americas Government Income Trust**
Corporate Bond Portfolio
Emerging Market Debt Fund***
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
U.S. Government Portfolio

Tax-Exempt Bond Funds

National
Intermediate Diversified
Insured National
Arizona
California
Intermediate California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Intermediate New York
Ohio
Pennsylvania
Virginia

Asset Allocation Funds

Balanced Shares
Conservative Investors Fund
Growth Investors Fund

Closed-End Funds

All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Southern Africa Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II

Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.

To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.

* The Alliance Fund changed its name to Alliance Mid-Cap Growth Fund on
February 1, 2002.

** Alliance North American Government Income Trust changed its name to
Alliance Americas Government Income Trust on March 1, 2002.

*** Alliance Global Dollar Government Fund changed its name to Alliance
Emerging Market Debt Fund on March 1, 2002.

--------------------------------------------------------------------------------
34 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

------------------------------
SUMMARY OF GENERAL INFORMATION
------------------------------

SUMMARY OF GENERAL
INFORMATION

Shareholder Information

Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction Section of newspapers each day, under the
designation "ACMMSI." The Fund's NYSE trading symbol is "AFB". Weekly
comparative net asset value (NAV) and market price information about the Fund is
published each Monday in The Wall Street Journal, each Sunday in The New York
Times and each Saturday in Barron's and other newspapers in a table called
"Closed-End Bond Funds."

Dividend Reinvestment Plan

A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains in additional Fund shares.

For questions concerning shareholder account information, or if you would like a
brochure describing the Dividend Reinvestment Plan, please call Equiserve Trust
Company at (800) 219-4218.

--------------------------------------------------------------------------------
ALLIANCE NATIONAL MUNICIPAL INCOME FUND o 35

NOTES

--------------------------------------------------------------------------------
36 o ALLIANCE NATIONAL MUNICIPAL INCOME FUND

Alliance National Municipal Income Fund
1345 Avenue of the Americas
New York, NY 10105

Alliance Capital [LOGO](R)
The Investment Professional's Choice

(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.

NMIAR1002