LETTER TO SHAREHOLDERS Alliance Municipal Income Fund II
May 1, 1995
Dear Shareholder:
For the six months ended March 31, 1995, the nine portfolios of Alliance
Municipal Income Fund II-Arizona, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, Ohio, Pennsylvania and Virginia-have provided high current tax-free
income and taxable equivalent yields. Below are some highlights of your
Portfolios as of March 31. Investment results for each Portfolio appear on page
3.
HIGHLIGHTS OF INDIVIDUAL PORTFOLIOS
Weighted
Issues Rated Average
A or Better Maturity
------------ --------
Arizona 93% 23 yrs.
Florida 73 26
Massachusettts 95 22
Michigan 95 23
Minnesota 88 23
New Jersey 81 28
Ohio 78 25
Pennsylvania 74 25
Virginia 95 23
MARKET OVERVIEW
Alliance Municipal Income Fund II's fiscal half year ending
March 31 saw a dramatic rebound from the tumultuous markets of 1994. While
municipal bond portfolios generally underperformed other sectors of the fixed
income markets during 1994, this group has had by far the most dramatic
recovery in 1995. The rebound in bond prices is primarily a result of the
economy showing signs of slowing in response to higher short-term interest
rates and confirmation that despite the continuing economic expansion, price
inflation remains subdued. Favorable technical conditions in the municipal
market have also contributed to the rally along with declining new issue supply
from state and local debt issuers and improved demand from investors.
Your Fund's fiscal year 1995 began in October amid negative trends in the
municipal market that had prevailed since early 1994 when the Federal Reserve
began to increase short-term interest rates. An imbalance between buyers and
sellers was exacerbated when municipal bond dealers, in an effort to prevent
further losses in a disappointing year for trading profits, cut back their
bidding for securities in the secondary market. This caused prices to drop
precipitously, which accelerated redemptions by frustrated mutual fund
investors. As a result, yields increased by approximately 1.00%, from 6.50% in
late September to 7.50% by late November on triple-A rated 30-year municipal
bonds. This translated into an approximate 11.30% decline in the price of a
typical long municipal issue.
The market began its turnaround in early December as bargain hunters, including
many non-traditional municipal investors such as tax-exempt pension funds and
hedge funds, began purchasing undervalued state and local government debt at
yields ranging from 90-95% of comparable maturity U.S. Treasury bonds. The
rally continued in January with the return of individual investors and mutual
funds reinvesting proceeds from bond calls, bond maturities and interest
payments. January 1, 1995, was a record-breaking date for municipal bonds
either maturing or being called for early redemption. January 1995 also saw a
decline in terms of new issuance of over 60% compared with the same period in
1994. This sharp reduction in the supply of municipal securities available in
the marketplace continued to positively impact prices throughout the remainder
of the Fund's fiscal second quarter ending in March 1995.
INVESTMENT STRATEGY
As we said to you in our last letter, we believe that the
dramatic rise in municipal bond yields during 1994 represented excellent value
for long-term tax-exempt investors and one of the best buying opportunities for
municipal investors in recent years. Therefore, our focus in managing your
Portfolios throughout the period was to take advantage of weak bond prices by
selling off older, higher coupon bonds which we expect to be called for early
redemption over the next few years. We replaced these call-vulnerable positions
with new issue current coupon bonds having a minimum of ten years' call
protection. This repositioning has allowed us to lock in higher current income
and it led to excellent performance results for the Portfolios during the first
quarter of 1995.
The Orange County, California bankruptcy protection filing early last December
has caused increased investor focus on the credit quality of state and local
government debt issuers. The highly fragmented nature of the municipal market
and the difficulty that bond rating services have tracking both new and
existing issues makes credit analysis a crucial part of municipal bond
investing. Nevertheless, we do not expect the Orange County bankruptcy filing
to start a trend among municipal issuers. On the contrary, the events in Orange
County should lead to better disclosure and mandatory updating of financial
statements by local government issuers which is a major long-term benefit for
the entire marketplace, which includes both issuers and investors.
OUTLOOK
After a tremendous rebound in the first quarter, we anticipate that
municipal bonds will continue to perform well throughout the rest of calendar
year 1995. Any weakness in prices should represent an opportunity to purchase
undervalued bonds, given the continuing favorable market technicals of low
new-issue volume and continued investor interest in the tax-exempt market.
Fundamental trends in the economy should also favor municipal bonds, with
short-term interest rates stabilizing and inflation remaining low. Price
volatility such as that experienced in late 1994 should also decline
significantly, a trend which has historically been beneficial for municipal
bond returns. Municipals also offer good relative value on an after-tax basis
relative to other fixed income sectors, which would indicate further potential
for price appreciation relative to taxable bonds.
The prospect that tax reforms could diminish the after-tax yield advantage of
municipal bonds could cause some price volatility relative to other fixed
income investments. However, the longer-term probability of such legislation
being enacted appears to be extremely low. We will seek to take advantage of
opportunities to add value to the Portfolios of Alliance Municipal Income Fund
II in the second half of the year, and to preserve the gains made year to date.
We appreciate your investment in Alliance Municipal Income Fund II and
look forward to reporting its progress to you in the coming months.
Sincerely,
John D. Carifa
Chairman and President
Susan P. Keenan
Senior Vice President
2
INVESTMENT RESULTS
As of March 31, 1995 Alliance Municipal Income Fund II
Taxable
Average Annual Total Returns Equivalent
------------------------------------ Yield
Without Sales Charge With Sales Charge in 36%
------------------- ----------------- 30 Day Tax
1 Since 1 Since SEC Bracket+
Year Inception* Year Inception* Yield+ (at NAV)
------ -------- ------ -------- ------ --------
ARIZONA PORTFOLIO
Class A Shares N/A +6.33% N/A +1.84% 5.20% 8.86%
Class B Shares N/A +5.69% N/A +2.69% 4.74% 7.78%
Class C Shares N/A +5.69% N/A +5.69% 4.75% 7.78%
FLORIDA PORTFOLIO
Class A Shares +7.74% +1.37% +3.20% -1.06% 5.63% 9.28%
Class B Shares +6.88% +.61% +3.88% -.43% 5.18% 8.08%
Class C Shares +6.88% +.61% +6.88% +.61% 5.18% 8.08%
MASSACHUSETTS PORTFOLIO
Class A Shares +9.10% +9.10% +4.50% +4.50% 5.43% 9.31%
Class B Shares +8.33% +8.33% +5.33% +3.33% 4.96% 8.22%
Class C Shares +8.33% +8.33% +8.33% +8.33% 4.96% 8.22%
MICHIGAN PORTFOLIO
Class A Shares +9.29% +3.59% +4.64% -.39% 5.09% 8.84%
Class B Shares +8.48% +2.83% +5.48% +1.06% 4.60% 7.73%
Class C Shares +8.60% +2.93% +8.60% +2.93% 4.61% 7.73%
MINNESOTA PORTFOLIO
Class A Shares +7.46% +2.21% +2.90% -0.25% 5.36% 9.22%
Class B Shares +6.74% +1.45% +3.74% +0.40% 4.88% 8.02%
Class C Shares +6.62% +1.45% +6.62% +1.45% 4.89% 8.02%
NEW JERSEY PORTFOLIO
Class A Shares +7.38% +2.09% +2.83% -.37% 5.52% 9.19%
Class B Shares +6.53% +1.33% +3.53% +.27% 5.07% 7.97%
Class C Shares +6.64% +1.39% +6.64% +1.39% 5.07% 7.97%
OHIO PORTFOLIO
Class A Shares +8.04% +2.25% +3.44% -.20% 5.49% 9.13%
Class B Shares +7.19% +1.50% +4.19% +.44% 5.02% 7.94%
Class C Shares +7.20% +1.50% +7.20% +1.50% 5.03% 7.94%
PENNSYLVANIA PORTFOLIO
Class A Shares +7.78% +2.68% +3.23% +.21% 5.61% 9.27%
Class B Shares +6.93% +1.92% +3.93% +.87% 5.15% 8.08%
Class C Shares +6.93% +1.92% +6.93% +1.92% 5.17% 8.08%
VIRGINIA PORTFOLIO
Class A Shares N/A +6.17% N/A +1.70% 5.36% 8.83%
Class B Shares N/A +5.48% N/A +2.48% 4.89% 7.75%
Class C Shares N/A +5.47% N/A +5.47% 4.89% 7.75%
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares with and without the effect of the
4.25% maximum sales charge (Class A) or 3% contingent deferred sales charge
(Class B); Class C shares are not subject to front-end or 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.
*Inception: AZ, 6/1/94; FL, MI, MN, NJ, OH, PA, 6/25/93; MA, 3/29/94; VA,
4/29/94.
+Yields are for the 30 days ended March 31, 1995.
3
ARIZONA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- ----------------------------------------------------------------------------
ARIZONA MUNICIPAL BONDS-97.9%
AAA Arizona Pwr Auth (Hoover Uprating Proj) MBIA
5.375%, 10/01/13 $135 $ 126,731
AAA Maricopa Cnty Sch Dist #28 GO
FGIC Ser 93C
Zero coupon, 7/01/11 430 167,163
AAA Maricopa Cnty
Sch Dist #80 GO (Chandler) FGIC Ser 95
6.00%, 7/01/13 200 202,000
AAA Maricopa Cnty IDA
Hlth Fac (Catholic Hlth Care) MBIA Ser 94A
5.00%, 7/01/15 230 201,538
AAA Maricopa Cnty
Sch Dist #41 (Gilbert) Ser C 6.10%, 7/01/14 195 206,944
AAA Maricopa Cnty IDA
Hlth Fac (Samaritan Hlth) MBIA Ser 90A
7.00%, 12/01/13 355 381,625
AAA Mohave Cnty IDA Util Rev (Citizen's Utilities)
Ser 93B AMT
5.80%, 11/15/28 190 177,413
NR Mohave Cnty IDR
(Cargill)
Ser 95A AMT
6.70%, 3/01/20 100 100,125
BBB Navajo Cnty PCR
(Arizona Public Service)
Ser A
5.875%, 8/15/28 225 205,875
AAA Phoenix Arpt Rev
Arpt Improvement
MBIA Ser 94D AMT
6.40%, 7/01/12 580 595,225
AA- Phoenix Civic Imp Corp
Junior Lien Wtr System
Ser 94
5.50%, 7/01/24 $230 $ 212,463
AA+ Phoenix Civic Plaza Bldg Corp
Senior Lien Excise Tax
6.00%, 7/01/12 185 187,081
AA Phoenix IDA
MFHR (Woodstone &
Silver Springs)
6.25%, 4/01/23 210 208,950
AAA Pima Cnty IDA
Hosp Rev (Tucson Med Ctr) MBIA Ser 93A
5.00%, 4/01/15 145 127,600
AAA Pima Cnty IDR
(Tucson Elec Pwr)
Ser 88A
7.25%, 7/15/10 395 432,525
AA Salt River Proj Agriculture
Imp & Pwr Dist Elec Sys 5.75%, 1/01/19 85 82,130
AAA Tempe IDA
(Quadrangles) FHA
6.25%, 6/01/26 270 266,962
AAA Tucson GO FGIC
Zero coupon, 7/01/13 365 124,100
AAA Yuma IDA AMT
(Alexandrite Sands Apt)
MFHR FHA Ser 90 470 487,037
7.70%, 12/01/29
TOTAL INVESTMENTS-97.9%
(cost $4,293,127) 4,493,487
Other assets less liabilities-2.1% 97,054
NET ASSETS-100% $4,590,541
See Glossary of terms on page 13.
See notes to financial statements.
4
FLORIDA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-99.8%
FLORIDA-94.0%
Aaa* Brevard Cnty
Hsg Fin Agy
SFMR FHA/VA
Ser 94 AMT
6.70%, 9/01/27 $5,000 $ 5,056,250
AAA Brevard Cnty IDR (NUI Corp Project)
AMBAC 6.40%, 10/01/24 3,145 3,188,244
BBB+ Collier Cnty Hlth Fac (The Moorings Proj)
Ser 94 7.00%, 12/01/19 2,000 2,005,000
AAA Dade Cnty Arpt Rev (Miami Int'l Arpt)
MBIA Ser 95B AMT 6.00%, 10/01/24 3,000 2,917,500
AAA Escambia Cnty Util Auth
Util Sys FGIC Ser 92B
Zero coupon, 1/01/15 6,260 1,870,175
BBB Escambia Cnty PCR (Champion Int'l Corp) Ser 94
6.90%, 8/01/22 3,250 3,315,000
AAA Florida Hsg Fin Agy Home Mtg SFMR
Ser 95A AMT 6.65%, 1/01/24 5,900 5,973,750
AAA Hillsborough Cnty Aviation
Auth (Tampa Int'l Arpt)
FGIC Ser 93D AMT 5.40%, 10/01/13 3,250 2,998,125
BBB+ Lake Cnty Res Rec (NRG Rec Group)
Ser 93A AMT 5.95%, 10/01/13 3,650 3,257,625
BBB- Martin Cnty IDR (Indiantown Co-Generation Proj)
Ser 94A AMT 7.875%, 12/15/25 3,000 3,210,000
AA- Orlando Util Comm Wtr & Elec Sub Rev
6.678%, 10/06/17(a) $9,000 $ 7,965,000
AAA Palm Beach Cnty Hlth Fac (JFK Med Ctr) FSA
5.75%, 12/01/14 3,290 3,195,412
NR Palm Beach Cnty PCR (Okeelanta Pwr)
Ser 93A AMT 6.85%, 2/15/21 2,000 1,912,500
AAA Pinellas Cnty Hlth Fac (Morton Plant Hlth)
MBIA 5.50%, 11/15/18 3,100 2,914,000
Aaa* Pinellas Cnty Hsg Fin Auth SFMR Ser A AMT
6.55%, 8/01/27 5,000 5,031,250
A* Venice Hlth Fac (Venice Hosp) Ser
94 6.00%, 12/01/14 3,400 3,276,750
AAA Volusia Cnty (Daytona Beach Int'l) MBIA
Ser 93 AMT 5.625%, 10/01/21 2,000 1,860,000
59,946,581
WASHINGTON-5.8%
BBB Pilchuck Wtr Dev Pub Corp Spec Fac Arpt
(BF Goodrich) Ser 93 AMT 6.00%, 8/01/23 4,200 3,717,000
TOTAL INVESTMENTS-99.8%
(cost $62,702,698) 63,663,581
Other assets less liabilities-0.2% 142,329
NET ASSETS-100% $63,805,910
* Moody's Rating.
(a) Inverse floater security-the interest rate is subject to change
periodically.
See Glossary of terms on page 13. See notes to financial statements.
5
MASSACHUSETTS PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- -------------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL BONDS-95.7%
AAA Essex Cnty
So Essex Sew Dist
MBIA Ser 94B
7.00%, 6/01/24 $240 $ 258,900
AAA Holyoke GO
FSA Ser B
6.125%, 8/01/13 145 146,994
AAA Lowell GO
FSA Ser 93A
5.50%, 1/15/10 145 139,381
AAA Massachusetts Ed Fin Auth Educational Loan Rev
AMBAC Ser 94E AMT
6.00%, 1/01/12 145 139,563
AAA Massachusetts GO
MBIA Ser 95A
5.75%, 2/01/15 150 146,063
AAA Massachusetts Hlth & Ed
Fac Auth Hosp Rev
(New England Med Ctr)
MBIA Ser D
5.24%, 7/01/17 150 135,000
AAA Massachusetts Hlth & Ed
Fac Auth Hosp Rev
(Lahey Med Ctr)
MBIA Ser 93B
5.375%, 7/01/23 155 139,694
Baa1* Massachusetts Hlth & Ed
Fac Auth Hosp Rev
(Metro West Hlth) Ser C 6.50%,11/15/18 150 142,875
A- Massachusetts Hlth & Ed
Fac Auth Hosp Rev
(Jordan Hosp) Ser B
6.875%, 10/01/15 145 146,631
AAA Massachusetts Hsg Fin Auth
MFHR Residential Dev
AMBAC Ser 93A
6.15%,10/01/15 $150 $ 148,875
AAA Massachusetts Hsg Fin Auth MFHR Residential Dev
FNMA Ser 92F
6.25%, 11/15/12 185 187,775
A+ Massachusetts Hsg Fin Auth SFMR Ser 40 AMT
6.65%, 12/01/27 150 150,000
AAA Massachusetts Muni
Wholesale Elec Pwr
Supply Sys
MBIA Ser 92A
6.00%, 7/01/18 150 147,188
AAA Massachusetts Port Auth
FGIC Ser 90A AMT
7.50%, 7/01/20 320 345,200
A Massachusetts Wtr Res Auth Ser 92B
5.50%, 11/01/15 135 124,706
AA- Massachusetts Wtr Pollution
Abatement (So Essex Prog)
Ser 94A
6.375%, 2/01/15 245 250,818
A1* New England Ed Loan Mktg (Student Loan Rev)
Ser 92H AMT
6.90%, 11/01/09 130 138,775
TOTAL INVESTMENTS-95.7%
(cost $2,814,470) 2,888,438
Other assets less liabilities-4.3% 130,327
NET ASSETS-100% $3,018,765
* Moody's Rating.
See Glossary of terms on page 13.
See notes to financial statements.
6
MICHIGAN PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- -------------------------------------------------------------------------------
MICHIGAN MUNICIPAL BONDS-93.8%
BBB+ Battle Creek
Downtown Dev Auth
Ser 94
7.65%, 5/01/22 $ 330 $ 351,038
AAA Brighton Area School Dist
GO AMBAC Ser 92 II
Zero coupon, 5/01/20 780 166,725
AAA Detroit Econ Dev Corp
Res Rec Rev FSA
Ser 91A AMT
6.875%, 5/01/09 855 903,094
AAA Detroit Inflos Sew Disp
Sys Rev FGIC
Ser 93A
7.06%, 7/01/23 1,060 936,775
AAA Grand Ledge
Sch Dist GO
MBIA Ser 94
7.875%, 5/01/11 300 352,125
AAA Lowell Area School
Dist GO FGIC
Zero coupon, 5/01/19 1,365 310,538
AAA Michigan Higher Ed Auth Student Loan Rev
AMBAC Ser XII-G AMT 5.40%, 10/01/08 205 188,600
AA Michigan Muni Bond Auth
Revolving Fund Rev Ser 93
5.40%, 10/01/14 370 340,863
A* Michigan Hosp Fin Auth
Hosp Rev (Crittenton Hosp)
Ser 93A
5.25%, 3/01/14 335 283,913
A- Michigan Hosp Fin Auth
Hosp Rev (Detroit Med Ctr)
Ser 93B
5.50%, 8/15/23 $390 $ 331,500
AAA Michigan Hosp Fin Auth
Hosp Rev (St Johns Hosp)
AMBAC Ser A
6.00%, 5/15/13 350 348,250
A+ Michigan Hsg Dev Auth
MFHR Rental Hsg Ser 94B
5.80%, 4/01/19 305 289,368
AA+ Michigan Hsg Dev Auth
Mtg Rev SFMR
Ser 95B AMT
7.05%, 6/01/26 685 710,688
AAA Monroe Cnty PCR
(Detroit Edison) AMBAC
Ser 89-I AMT
7.30%, 9/01/19 525 572,250
AAA Wayne Charter Cnty Arpt
Rev (Detroit Metro Arpt)
MBIA Ser 91B AMT
6.75%, 12/01/21 300 310,124
AAA Yale Pub Sch Dist GO AMBAC
5.50%, 5/01/23 245 224,480
TOTAL INVESTMENTS-93.8%
(cost $6,155,535) 6,620,331
Other assets less liabilities-6.2% 435,512
NET ASSETS-100% $7,055,843
* Moody's Rating.
See Glossary of terms on page 13.
See notes to financial statements.
7
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- ----------------------------------------------------------------------------
MINNESOTA MUNICIPAL BONDS-98.0%
A- Bass Brook PCR
(Minn Power & Light)
6.00%, 7/01/22 $ 900 $ 865,125
AAA Buffalo Hanover Montrose
Ind Sch Dist #877 GO
MBIA Ser 94
6.15%, 2/01/22 700 707,875
AAA Burnsville Eagan Savage
Ind Sch Dist #191 GO
CGIC Ser 95A
6.20%, 2/01/17 800 821,000
Aa* Fairbault Ind
Sch Dist #656 GO
6.20%, 6/01/12 800 816,000
AAA Lakeville Ind
Sch Dist #194 GO FGIC
5.60%, 2/01/18 700 669,375
AAA Minneapolis GO SFMR
Homeownership Renov
Stage III Ser 93 AMT
5.70%, 12/01/23 900 831,375
AA+ Minnesota Hsg Fin Agy
SFMR Ser 89A AMT
7.90%, 7/01/19 1,990 2,106,913
AAA Minnesota Pub Fac Auth
Wtr Pol Ctl Rev
Ser 95A
6.25%, 3/01/16 610 628,300
AAA Northern MN Muni Pwr Agy
AMBAC Ser 92B
5.50%, 1/01/18 900 851,624
AAA Northern St Paul Maplewood
Ind Sch Dist #622 GO
MBIA Ser 94A
6.875%, 2/01/15 2,000 2,155,000
AAA Pierz Ind
Sch Dist #484 GO AMBAC
5.375%, 6/01/15 $565 $ 530,394
AAA Robbinsdale Hosp Rev
(No. Memorial Med Ctr)
AMBAC Ser 93A
5.45%, 5/15/13 600 569,250
AA+ Rochester Hosp Rev
(Mayo Med Ctr) Ser F
6.25%, 11/15/21 800 814,000
A+ Southern MN Muni Pwr Auth
Pwr Supply System Ser 92A
5.75%, 1/01/18 600 586,500
BBB- South St Paul Hsg & Redev
(Health East Proj) Ser 94
6.75%, 11/01/09 2,000 1,997,500
AAA St Francis Ind
Sch Dist #15 GO
CGIC Ser 95A
6.375%, 2/01/16 800 830,000
A Western MN Muni Pwr
Ser 87A
5.50%, 1/01/15 600 558,000
TOTAL INVESTMENTS-98.0%
(cost $15,585,733) 16,338,231
Other assets less liabilities-2.0% 325,370
NET ASSETS-100% $16,663,601
* Moody's Rating.
See Glossary of terms on page 13.
See notes to financial statements.
8
NEW JERSEY PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- ----------------------------------------------------------------------------
NEW JERSEY MUNICIPAL BONDS-99.1%
AAA Burlington Cnty Wtr Rev
(Evesham Muni Util Auth)MBIA
5.60%, 7/01/15 $2,500 $ 2,378,125
AAA Camden Cnty Muni Util
Sewer Rev FGIC Ser 90A
Zero coupon, 9/01/17 5,000 1,337,500
BBB+ Camden Cnty Pol Ctl Fin
Solid Waste Resource
Recovery Ser 91B AMT
7.50%, 12/01/09 2,100 2,018,625
AAA Cape May Cnty Util Auth
Sewer Rev MBIA Ser A
5.75%, 1/01/16 3,000 2,913,750
AAA Cape May Cnty Pol Ctl
Atlantic City Elec Co
PCR Ser 94A
MBIA AMT
7.20%, 11/01/29 5,000 5,393,750
AA Gloucester Cnty PCR
(Mobil Oil Refining) Ser 93
5.625%, 12/01/28 3,000 2,756,250
AAA New Jersey Eco Dev Auth
(Hackensack Wtr Co)
MBIA Ser 94B AMT
5.90%, 3/01/24 2,800 2,688,000
AAA New Jersey Eco Dev Auth
PCR (Public Service Elec & Gas)
MBIA Ser 94A AMT
6.40%, 5/01/32 2,300 2,311,500
AAA New Jersey Eco Dev Auth
Wtr Fac (NJ American Wtr
Co) FGIC AMT
6.875%, 11/01/34 5,000 5,212,500
BB+ New Jersey Eco Dev Auth
Spec Fac (American
Airlines) AMT
7.10%, 11/01/31 4,500 4,573,125
BBB- New Jersey Hlth Care Fac
Hlth Fac (Franciscan
Sisters, St. Mary's Hosp)
Ser 93
5.875%, 7/01/12 $2,500 $ 2,184,375
AAA New Jersey Hlth Care Fac
Fin Hlth Fac (Monmouth
Med Ctr) CGIC Ser 93
6.25%, 7/01/24 2,750 2,798,125
BBB New Jersey Hlth Care Fac
(Englewood Hosp & Med Ctr) Ser 94
6.75%, 7/01/24 3,230 3,169,438
AA- New Jersey Hwy Auth
Garden State Parkway
6.25%, 1/01/14 1,250 1,275,000
A+ New Jersey Hsg & Mtg Fin
Agy MFHR (Sect 8) Ser 1
6.70%, 11/01/28 5,250 5,361,562
AAA Passaic Valley Swr Comm Sewer System
AMBAC Ser 92D
5.75%, 12/01/15 2,400 2,337,000
AA- Port Auth of NY & NJ Cons
Rev 95th Ser AMT
6.125%, 7/15/29 3,250 3,197,188
AA Salem Cnty NJ Auth
Waste Disposal Rev
(E.I. Dupont)
6.125%, 7/15/22 3,500 3,447,500
A- Union Cnty Util Auth Solid
Waste Rev Ser 91A AMT
7.15%, 6/15/09 5,000 5,100,000
AAA Vineland Swr Rev
(Landis Sewerage Auth)
FGIC Ser 93C
6.92%, 9/19/19(a) 3,250 2,973,750
TOTAL INVESTMENTS-99.1%
(cost $61,843,595) 63,427,063
Other assets less liabilities-0.9% 543,841
NET ASSETS-100% $63,970,904
(a) Inverse floater security-the interest rate is subject to change
periodically.
See Glossary of terms on page 13.
See notes to financial statements.
9
OHIO PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- ----------------------------------------------------------------------------
OHIO MUNICIPAL BONDS-98.2%
BBB- Butler Cnty Hosp Rev
(Fort Hamilton Hughes)
7.50%, 1/01/10 $1,400 $ 1,426,250
A1* Cincinnati Student Loan Funding Corp
Ser 93A AMT
6.15%, 8/01/10 2,000 1,982,500
AAA Clermont Cnty Wtr Sys Rev
(Clermont Cnty Swr)
AMBAC Ser 93
5.70%, 12/01/13 2,000 1,930,000
AAA Cleveland Arpt Rev
(Cleveland Int'l Arpt)
FGIC Ser 94A AMT
6.25%, 1/01/20 2,000 2,010,000
AAA Cleveland Waterworks
Imp MBIA
5.50%, 1/01/13 2,000 1,925,000
AAA Columbus Arpt Rev
(Columbus Int'l Arpt)
MBIA Ser 94A
6.25%, 1/01/24 2,250 2,261,250
A Cuyahoga Cnty Hosp Rev
(Meridia Health Sys)
6.25%, 8/15/24 2,500 2,468,750
BBB- Hamilton Cnty Hlth Sys
(Hlth Fac & Franciscan Sisters Providence Hosp)
6.875%, 7/01/15 2,500 2,450,000
Aaa* Kent Ohio
(Silver Meadows Apt Proj)
Ser 95 MFHR AMT
7.15%, 12/20/26 2,000 2,077,500
AAA Lucas Cnty Hosp Rev
(St. Vincent Med Ctr) MBIA
5.45%, 8/15/14 2,000 1,880,000
NR Mahoning Valley Sanitary
Dist (Wtr Rev)
Ser 94
7.75%, 5/15/14 2,500 2,578,125
Baa3* Ohio Air Quality Dev Auth
(Columbus Southern Pwr)
PCR Ser 85B
6.25%, 12/01/20 $3,300 $ 3,192,750
AAA Ohio Air Quality Dev Auth
(JMG Funding/Ohio Pwr)
AMBAC Ser 94B AMT
6.375%, 4/01/29 2,000 2,012,500
AA- Ohio Air Quality Dev Auth PCR
(Dayton Pwr & Light)
Ser 92B
6.40%, 8/15/27 4,000 4,045,000
AAA Ohio Higher Ed Fac
Ohio Northern Univ Proj
5.60%, 5/01/13 2,100 2,023,875
Aa* Ohio Hsg Fin Agy Mtg
FHA (Insured Bridgeview Villa 11) MFHR AMT
6.45%, 12/01/33 1,965 1,965,000
AAA Ohio Hsg Fin Agy
Residential Mtg SFMR
Ser 94B2 AMT
6.70%, 3/01/25 3,500 3,578,750
AA- Ohio Turnpike Comm
Turnpike Rev Ser 94A
5.75%, 2/15/24 2,500 2,393,750
Aa3* Toledo-Lucas Cnty Port Auth IDR
(Cargill Inc Project)
5.90%, 12/01/15 2,200 2,172,500
TOTAL INVESTMENTS-98.2%
(cost $42,512,756) 44,373,500
Other assets less liabilities-1.8% 796,566
NET ASSETS-100% $45,170,066
* Moody's Rating.
See Glossary of terms on page 13.
See notes to financial statements.
10
PENNSYLVANIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- ----------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL BONDS-99.0%
AAA Allegheny Cnty Arpt Rev
(Pittsburgh Int'l) FSA
Ser 92B AMT
6.625%, 1/01/22 $3,500 $ 3,578,750
AAA Berks Cnty GO FGIC
Zero coupon, 5/15/15 3,400 1,011,500
Zero coupon, 5/15/16 3,460 968,800
AAA Berks Cnty Sewer Rev
(Exeter Twp) MBIA Ser 93
6.20%, 7/15/22 1,550 1,561,625
A- Bradford Cnty IDA
Solid Waste Disposal
(Int'l Paper)
Ser 95A AMT
6.60%, 3/01/19 2,500 2,503,125
A- Butler Cnty IDA Health Fac
(Sherwood Oaks Proj)
5.75%, 6/01/11 2,700 2,440,125
Baa1* Latrobe IDA (St Vincent College) Ser 94
6.75%, 5/01/24 1,380 1,407,600
AAA Lehigh Cnty Arpt Rev
(Allentown-Bethlehem) MBIA Ser 93A AMT
5.60%, 1/01/23 2,300 2,095,875
A New Morgan IDA Solid
Waste (Browning Ferris) Ser 94 AMT
6.50%, 4/01/19 2,200 2,183,500
BB Pennsylvania Convention
Ctr Auth Ref Rev Ser 94A
6.75%, 9/01/19 2,500 2,512,500
BBB- Pennsylvania Econ Dev
Fin Auth (Macmillan Bloedel Clarion Proj)
Ser 95 AMT
7.60%, 12/01/20 3,250 3,432,813
BBB+ Pennsylvania Econ Dev
Auth Wastewater Revs
(Sun Company) Ser 94A AMT
7.60%, 12/01/24 $3,000 $ 3,191,250
A Pennsylvania Fin Auth
Mun Cap Imp Prog
6.60%, 11/01/09 1,850 1,919,375
AA Pennsylvania Hsg Fin Agy SFMR (Home Mortgage)
RIBS Ser 92-35D AMT
8.059%, 4/01/25(a) 4,500 4,145,625
AA Pennsylvania Hsg Fin Agy SFMR Ser 94-41B AMT
6.65%, 4/01/25 2,250 2,252,812
AAA Pennsylvania Higher Ed Student Loan AMBAC
Ser 88D AMT
6.05%, 1/01/19 2,300 2,233,875
AAA Pennsylvania Intergov Coop Auth
(Special Tax Rev) FGIC Ser 94
7.00%, 6/15/14 4,425 4,801,125
AAA Philadelphia Muni Auth Rev
(Criminal Justice Proj) FGIC Ser A
5.625%, 11/15/18 2,000 1,875,000
A Pittsburgh Urban Redev
Mtg Rev Ser 95A AMT
7.15%, 10/01/27 3,000 3,093,750
BBB+ Warren Cnty Hosp Rev (Warren Gen Hosp Proj)
Ser 94B
7.00%, 4/01/19 2,200 2,208,250
TOTAL INVESTMENTS-99.0%
(cost $48,122,377) 49,417,275
Other assets less liabilities-1.0% 484,411
NET ASSETS-100% $49,901,686
* Moody's Rating.
(a) Inverse floater security-the interest rate is subject to change
periodically.
See Glossary of terms on page 13.
See notes to financial statements
11
VIRGINIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Standard & Principal
Poor's Amount
Ratings (000) Value
- ----------------------------------------------------------------------------
VIRGINIA MUNICIPAL BONDS-94.5%
AAA Chesapeake Bay
(Bridge &Tunnel Auth) MBIA
5.75%.7/01/25 $105 $ 99,356
A+ Fairfax Cnty Econ Dev Auth Res Rec
(Ogden Martin System) Ser 88A AMT
7.75%, 2/01/11 210 230,475
A- Hampton Museum Rev Ref
Ser 94
5.25%, 1/01/14 85 77,563
AA Henrico Cnty IDR
(Henrico Cnty Reg Jail)
7.125%, 8/01/21 200 218,500
A- Isle of Wight Cnty IDA
Solid Waste (Union Camp Corp) Ser 94 AMT
6.55%, 4/01/24 110 111,650
AAA Loudon Cnty Sani Auth
Wtr & Sewer System Rev MBIA Ser 94
5.25%, 1/01/20 90 80,663
BBB+ Peninsula Port Auth Hlth Fac
(Mary Immaculate Proj) Ser 94
7.00%, 8/01/17 90 91,462
A* Prince William Cnty
Hosp Rev IDA
(Potomac Hosp Group)
6.75%, 10/01/15 90 93,825
AAA Richmond Metro Trans Auth Rev FGIC Ser B
6.25%, 7/15/22 $190 $ 91,012
AAA Richmond Redev & Hsg Auth MFHR (Jefferson)
6.50%, 4/01/27 100 100,250
AA Virginia Beach Hlth Care
Hosp Rev (Sentara Bayside)
6.30%, 11/01/21 95 95,238
AAA Virginia Beach Dev Auth
Hosp Rev (Virginia Beach Gen Hosp) AMBAC Ser 93
5.125%, 2/15/18 30 26,663
AA Virginia College Bldg Auth
Ed Fac Rev (Washington & Lee)
5.80%, 1/01/24 75 72,937
A* Virginia Ed Loan Auth
Ser 92G AMT
6.625%, 9/01/03 200 208,250
AA+ Virginia Hsg Dev Auth Commonwealth Mtg
SFMR Ser G AMT
7.125%, 7/01/22 240 250,800
AAA Washington Metro Arpt Auth
Arpt Rev MBIA Ser 94A AMT
5.75%, 10/01/20 100 93,875
TOTAL INVESTMENTS-94.5%
(cost $1,891,729) 1,942,519
Other assets less liabilities-5.5% 113,570
NET ASSETS-100% $2,056,089
* Moody's Rating.
See Glossary of terms on page 13.
See notes to financial statements.
12
GLOSSARY OF TERMS Alliance Municipal Income Fund II
AMBAC American Municipal Bond Assurance
Corporation
AMT Alternative Minimum Tax - Subject
to
CGIC Capital Guaranty Insurance Company
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Administration
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GO General Obligation
HFA Housing and Home Finance Agency
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
RIBS Residual Interest Bonds
SFMR Single Family Mortgage Revenue
VA Veterans Administration
13
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
Arizona Florida Massachusetts
------------ ----------- -------------
ASSETS
Investments in securities, at value
(cost: $4,293,127, $62,702,698,
$2,814,470, $6,155,535, $15,585,733,
$61,843,595, $42,512,756, $48,122,377,
$1,891,729, respectively) $4,493,487 $63,663,581 $2,888,438
Cash -0- -0- 36,324
Receivable for shares of beneficial
interest sold 119,685 249,732 59,207
Interest receivable 84,193 1,095,160 55,885
Receivable due from Adviser 29,769 -0- 34,220
Receivable for investment
securities sold -0- 2,400,594 260,816
Other assets 37,140 47,315 28,445
Total assets 4,764,274 67,456,382 3,363,335
LIABILITIES
Due to custodian 117,986 351,081 -0-
Dividends payable 19,625 299,627 14,270
Distribution fee payable 2,793 51,781 2,073
Payable for investment securities
purchased -0- 2,674,375 301,502
Payable for shares of beneficial
interest redeemed -0- 216,100 -0-
Advisory fee payable -0- 21,202 -0-
Accrued expenses and other liabilities 33,329 36,306 26,725
Total liabilities 173,733 3,650,472 344,570
NET ASSETS $4,590,541 $63,805,910 $3,018,765
Class A Shares
Net assets $1,795,945 $ 9,743,822 $ 908,873
Shares of beneficial interest
outstanding 177,401 1,057,005 88,424
Class B Shares
Net assets $2,428,583 $19,606,877 $ 862,076
Shares of beneficial interest
outstanding 239,893 2,126,350 83,874
Class C Shares
Net assets $ 366,013 $34,455,211 $1,247,816
Shares of beneficial interest
outstanding 36,154 3,736,401 121,401
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 4,534 $ 69,198 $ 2,937
Additional paid-in capital 4,502,248 72,530,290 2,965,284
Undistributed (overdistributed)
net investment income 1,099 4,050 (1,956)
Accumulated net realized loss (117,700) (9,758,511) (21,468)
Net unrealized appreciation of
investments 200,360 960,883 73,968
$4,590,541 $63,805,910 $3,018,765
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption
price per share $10.12 $9.22 $10.28
Sales charge-4.25% of public
offering price .45 .41 .46
Maximum offering price $10.57 $9.63 $10.74
Class B Shares
Net asset value and offering
price per share $10.12 $9.22 $10.28
Class C Shares
Net asset value, redemption and
offering price per share $10.12 $9.22 $10.28
See notes to financial statements
14
Alliance Municipal Income Fund II
Michigan Minnesota New Jersey Ohio Pennsylvania Virginia
- ---------- ----------- ----------- ----------- ------------ -----------
$6,620,331 $16,338,231 $63,427,063 $44,373,500 $49,417,275 $1,942,519
27,035 6,386 415,553 643,541 71,721 1,731
500 12,121 130,740 136,885 86,227 60,009
110,300 322,554 1,262,095 772,770 1,074,561 35,462
12,373 35,225 -0- -0- -0- 32,515
332,992 291,454 -0- -0- 2,298,858 -0-
22,194 44,609 44,609 46,641 60,532 23,751
7,125,725 17,050,580 65,280,060 45,973,337 53,009,174 2,095,987
-0- -0- -0- -0- -0- -0-
33,589 78,489 297,025 204,610 233,025 9,442
4,752 13,643 51,371 43,557 39,722 1,055
-0- -0- 728,828 496,529 2,513,750 -0-
3,722 253,609 167,976 15,255 249,164 -0-
-0- -0- 20,577 14,128 31,289 -0-
27,819 41,238 43,379 29,192 40,538 29,401
69,882 386,979 1,309,156 803,271 3,107,488 39,898
$7,055,843 $16,663,601 $63,970,904 $45,170,066 $49,901,686 $2,056,089
$2,856,880 $ 2,290,991 $10,513,343 $ 3,168,422 $ 8,203,588 $1,133,079
292,864 244,211 1,122,791 337,843 870,095 112,607
$1,977,965 $ 6,527,270 $31,078,650 $20,915,530 $27,640,350 $ 840,514
202,808 695,706 3,318,637 2,229,742 2,931,505 83,531
$2,220,998 $ 7,845,340 $22,378,911 $21,086,114 $14,057,748 $ 82,496
227,645 835,997 2,389,460 2,248,014 1,490,805 8,199
$ 7,233 $ 17,759 $ 68,309 $ 48,156 $ 52,924 $ 2,043
7,002,013 18,272,044 69,924,835 49,411,132 53,593,494 2,015,370
(2,683) (4,121) (7,138) 4,780 (9,128) (1,104)
(415,516) (2,374,579) (7,598,570) (6,154,746) (5,030,502) (11,010)
464,796 752,498 1,583,468 1,860,744 1,294,898 50,790
$7,055,843 $16,663,601 $63,970,904 $45,170,066 $49,901,686 $2,056,089
$19.75 $9.38 $9.36 $9.38 $9.43 $10.06
.43 .42 .42 .42 .42 .45
$10.18 $9.80 $9.78 $9.80 $9.85 $10.51
$19.75 $9.38 $9.36 $9.38 $9.43 $10.06
$19.76 $9.38 $9.37 $9.38 $9.43 $10.06
15
STATEMENTS OF OPERATIONS
For The Six Months Ended March 31, 1995 (unaudited)
Alliance Municipal Income Fund II
Arizona Florida Massachusetts
-------- ----------- -------------
INVESTMENT INCOME
Interest $121,628 $2,195,545 $ 82,293
EXPENSES
Advisory fee 11,368 197,289 7,905
Distribution fee-Class A 1,919 13,141 1,262
Distribution fee-Class B 9,620 91,228 3,658
Distribution fee-Class C 2,171 180,632 4,784
Administrative 39,500 39,500 39,500
Audit & legal 12,722 21,092 14,046
Transfer agency 6,334 26,388 4,931
Amortization of organizational expenses 4,039 7,391 2,921
Printing 3,961 3,872 2,051
Custodian 2,583 9,794 2,353
Directors' fees 1,223 914 1,141
Taxes 509 298 422
Registration 496 830 3,364
Miscellaneous 6,633 8,488 6,786
Total expenses 103,078 600,857 95,124
Less: expenses waived and assumed by
adviser (see Note B) (80,637) (186,434) (81,625)
Net expenses 22,441 414,423 13,499
Net investment income 99,187 1,781,122 68,794
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss on investments (85,633) (3,086,650) (16,449)
Net change in unrealized depreciation
of investments 244,647 4,998,217 90,080
Net gain on investments 159,014 1,911,567 73,631
NET INCREASE IN NET ASSETS FROM
OPERATIONS $258,201 $ 3,692,689 $142,425
See notes to financial statements.
16
Alliance Municipal Income Fund II
Michigan Minnesota New Jersey Ohio Pennsylvania Virginia
- ---------- ----------- ----------- ----------- ------------ ---------
$ 247,312 $ 556,832 $2,158,263 $1,545,226 $1,729,755 $ 58,186
21,267 51,472 195,693 140,701 150,695 5,618
3,739 3,431 14,178 4,082 11,047 1,811
8,949 29,974 149,230 99,024 128,544 2,622
12,614 40,946 116,619 112,491 75,744 331
39,500 39,500 39,500 39,500 39,500 39,500
15,413 22,120 24,062 20,657 20,387 5,551
9,631 15,111 43,852 24,886 36,193 15,497
2,297 6,968 6,968 7,285 9,452 2,397
5,980 4,550 4,436 4,505 3,337 1,851
3,401 10,801 15,751 7,884 12,610 2,370
1,060 1,044 914 1,019 952 1,154
352 438 330 1,137 639 368
2,845 1,211 86 -0- 399 184
7,463 7,048 9,489 8,164 7,639 6,469
134,511 234,614 621,108 471,335 497,138 85,723
(73,140) (126,197) (176,773) (154,850) (111,739) (77,633)
61,371 108,417 444,335 316,485 385,399 8,090
185,941 448,415 1,713,928 1,228,741 1,344,356 50,096
(304,084) (1,274,275) (2,319,200) (2,858,787) (1,880,538) (5,872)
616,795 1,565,248 4,087,605 4,062,718 3,014,923 92,636
312,711 290,973 1,768,405 1,203,931 1,134,385 86,764
$ 498,652 $ 739,388 $ 3,482,333 $ 2,432,672 $ 2,478,741 $136,860
17
STATEMENTS OF CHANGES IN NET ASSETS Alliance Municipal Income Fund II
<TABLE>
<CAPTION>
Arizona Florida Massachusetts
------------------------ --------------------------- -----------------------------
Six Months June 1, Six Months Year Six Months March 29,
Ended 1994* Ended Ended Ended 1994* to
March 31, Sept. 30 March 31, Sept. 30, March 31 Sept. 30
1995 1994 1995 1994 1995 1994
---------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 99,187 $ 41,493 $ 1,781,122 $ 3,638,255 $ 68,794 $ 34,380
Net realized loss on investments (85,633) (32,067) (3,086,650) (6,668,189) (16,449) (5,019)
Net change in unrealized depreciation
of investments 244,647 (44,287) 4,998,217 (4,555,788) 90,080 (16,112)
Net increase (decrease) in net assets
from operations 258,201 (34,861) 3,692,689 (7,585,722) 142,425 13,249
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (37,655) (12,405) (276,487) (408,558) (25,955) (14,562)
Class B (50,111) (21,771) (499,984) (761,434) (20,050) (14,649)
Class C (11,455) (6,184) (999,252) (2,469,612) (26,089) (3,825)
Net realized gain on investments
Class A -0- -0- -0- (6,309) -0- -0-
Class B -0- -0- -0- (12,873) -0- -0-
Class C -0- -0- -0- (45,607) -0- -0-
TRANSACTIONS IN SHARES
OF BENEFICIAL INTEREST
Net increase (decrease) 1,339,425 3,167,057 (6,790,998) 37,987,116 884,065 2,083,856
Total increase (decrease) 1,498,405 3,091,836 (4,874,032) 26,697,001 954,396 2,064,069
NET ASSETS
Beginning of period 3,092,136 300 68,679,942 41,982,941 2,064,369 300
End of period** $4,590,541 $3,092,136 $63,805,910 $68,679,942 $3,018,765 $2,064,369
</TABLE>
* Commencement of operations.
** Including undistributed net investment income of $1,099 and $4,050 for the
Arizona and Florida portfolios as of March 31, 1995, respectively and
$1,133 and $1,344 for Arizona and Massachusetts portfolios as of
September 30, 1994, respectively.
See notes to financial statements.
18
Alliance Municipal Income Fund II
<TABLE>
<CAPTION>
Michigan Minnesota New Jersey
------------------------ --------------------------- -----------------------------
Six Months Feb. 25 Six Months Year Six Months Year
Ended 1994* to Ended Ended Ended Ended
March 31, Sept. 30 March 31, Sept. 30, March 31 Sept. 30
1995 1994 1995 1994 1995 1994
---------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 185,941 $ 142,170 $ 448,415 $ 849,761 $ 1,713,928 $ 3,157,064
Net realized loss on investments (304,084) (111,432) (1,274,275) (1,100,304) (2,319,200) (5,289,187)
Net change in unrealized depreciation
of investments 616,795 (151,999) 1,565,248 (971,979) 4,087,605 (3,271,420)
Net increase (decrease) in net assets
from operations 498,652 (121,261) 739,388 (1,222,522) 3,482,333 (5,403,543)
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income
Class A (74,639) (43,193) (70,634) (96,139) (292,266) (511,479)
Class B (47,310) (37,028) (160,301) (249,268) (800,888) (1,260,934)
Class C (66,928) (61,696) (221,195) (504,760) (629,727) (1,382,836)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase (decrease) (227,165) 7,236,111 (1,387,568) 9,480,689 (3,976,987) 31,237,763
Total increase (decrease) 82,610 6,972,933 (1,100,310) 7,408,000 (2,217,535) 22,678,971
NET ASSETS
Beginning of period 6,973,233 300 17,763,911 10,355,911 66,188,439 43,509,468
End of period** $7,055,843 $6,973,233 $16,663,601 $17,763,911 $63,970,904 $66,188,439
</TABLE>
* Commencement of operations.
** Including undistributed net investment income of $253 and $1,815 for the
Michigan and New Jersey portfolios as of September 30, 1994, respectively.
See notes to financial statements.
19
STATEMENTS OF CHANGES IN NET ASSETS (cont.) Alliance Municipal Income Fund II
<TABLE>
<CAPTION>
Ohio Pennsylvania Virginia
------------------------ --------------------------- -----------------------------
Six Months Year Six Months Year Six Months April 29,
Ended Ended Ended Ended Ended 1994* to
March 31, Sept. 30 March 31, Sept. 30, March 31 Sept. 30
1995 1994 1995 1994 1995 1994
---------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 1,228,741 $ 2,234,378 $ 1,344,356 $ 2,357,547 $ 50,096 $ 26,804
Net realized loss on investments (2,858,787) (3,280,561) (1,880,538) (3,140,943) (5,872) (5,138)
Net change in unrealized depreciation
of investments 4,062,718 (2,669,693) 3,014,923 (2,204,273) 92,636 (41,846)
Net increase (decrease) in net assets
from operations 2,432,672 (3,715,876) 2,478,741 (2,987,669) 136,860 (20,180)
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (83,712) (116,690) (231,045) (341,767) (35,997) (22,567)
Class B (532,230) (802,092) (702,003) (1,028,876) (13,616) (3,681)
Class C (609,048) (1,314,567) (417,074) (990,266) (1,716) (427)
Net realized gain on investments
Class A -0- (1,496) -0- (4,917) -0- -0-
Class B -0- (12,611) -0- (16,713) -0- -0-
Class C -0- (26,124) -0- (18,485) -0- -0-
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase (decrease) (5,408,449) 25,463,451 (2,210,068) 26,487,307 455,772 1,561,341
Total increase (decrease) (4,200,767) 19,473,995 (1,081,449) 21,098,614 541,303 1,514,486
NET ASSETS
Beginning of period 49,370,833 29,896,838 50,983,135 29,884,521 1,514,786 300
End of period** $45,170,066 $49,370,833 $49,901,686 $50,983,135 $2,056,089 $1,514,786
</TABLE>
* Commencement of operations.
** Including undistributed net investment income of $4,780 for the Ohio
portfolio as of March 31, 1995, respectively and $1,029 and $129 for the
Ohio and Virginia portfolios as of September 30, 1994, respectively.
See notes to financial statements.
20
NOTES TO FINANCIAL STATEMENTS
March 31, 1995 (unaudited) Alliance Municipal Income Fund II
NOTE A: Significant Accounting Policies
Alliance Municipal Income Fund II (the "Fund") which was organized as a
Massachusetts Business Trust on April 2, 1993 is registered under the
Investment Company Act of 1940 as a non-diversified open-end management
investment company. The Fund operates as a series company currently
comprised of nine portfolios: Arizona Portfolio, Florida Portfolio,
Massachusetts Portfolio, Michigan Portfolio, Minnesota Portfolio, New Jersey
Portfolio, Ohio Portfolio, Pennsylvania Portfolio and Virginia Portfolio (the
"Portfolios"). Prior to commencement of operations on June 25, 1993, the Fund
had no operations other than the sale to Alliance Capital Management L.P. (the
"Adviser") of 2,000 shares of Class A shares for $20,000, and 10 shares of each
of Class B and C shares for the aggregate amount of $200 on May 12, 1993 for
each of the pre-existing Portfolios: Florida, Minnesota, New Jersey, Ohio and
Pennsylvania. On February 25, March 29, April 29, and June 1, 1994, the
Michigan, Massachusetts, Virginia and Arizona Portfolios, respectively, all new
Portfolios of the series company, were added to the Fund. These portfolios
commenced operations by the sale to the Adviser of 10 shares of Class A, Class
B and Class C shares, respectively, in the aggregate amount of $300. Each
series is considered to be a separate entity for financial reporting and tax
purposes. Each portfolio offers Class A, Class B and Class C shares. Class A
shares are sold with a front-end sales charge of up to 4.25%. Class B shares
are sold with a contingent deferred sales charge which declines from 3% to zero
depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares six years after the end of the calendar
month of purchase. Class C shares are sold without an initial or contingent
deferred sales charge. All three classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions,
except that each class bears different distribution expenses and has exclusive
voting rights with respect to its distribution plan. The following is a summary
of the significant accounting policies followed by the Fund.
1. Security Valuation
The Fund values municipal securities at fair value based on prices provided by
a recognized pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values.
If market quotations are not readily available from such pricing service, a
municipal security is valued by appraisal at its fair value as determined in
good faith by the Fund's Adviser under procedures established by the Fund's
Board of Directors. Short-term securities which mature in 60 days or less are
valued at amortized cost, which approximates market value.
2. Organization Expenses
Organization expenses of approximately $68,000 for theMinnesota, $91,000 for
the New Jersey, $87,200 for the Pennsylvania, $71,000 for the Ohio, and $99,000
for theFlorida Portfolios have been deferred and are being amortized on a
straight-line basis through June, 1998. Organization expenses of approximately
$17,800 for the Arizona, $8,500 for the Michigan, $14,400 for the
Massachusetts, and $7,400 for the Virginia Portfolios have been deferred and
are being amortized on a straight-line basis through February, March, April
and June, 1999, respectively.
3. Taxes
It is the intention of each Portfolio to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if applicable,
to its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
4. Investment Income and Security Transactions
Interest income is accrued daily. Security transactions are accounted for on
the date the securities are purchased or sold. Security gains and losses are
determined on the identified cost basis. The Fund amortizes premiums and
accrues original issue discounts and market discounts as adjustments to
interest income.
The 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.
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 income tax regulations, which may differ from generally
accepted accounting principles.
6. Change in Accounting for Distributions to Shareholders
Effective September 30, 1994, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As a
result, the Portfolios changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax
regulations.
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 .625 of 1% of each Portfolio's average
daily net assets. Such fees are accrued daily and paid monthly. The Adviser has
agreed, under the terms of the investment advisory agreement, to reimburse the
Fund to the extent that the expenses of each of its Portfolios (exclusive of
interest, taxes, brokerage, distribution fees, and extraordinary expenses)
exceed the limits prescribed by any state in which that Portfolio's shares are
qualified for sale. No such reimbursement was required for the six months
ended March 31, 1995. For the same period the Adviser voluntarily agreed to
waive part of its advisory fees for certain Portfolios. The aggregate amounts
of such fee waivers were: Florida Portfolio, $147,421; New Jersey Portfolio,
$138,322; Ohio Portfolio, $115,583; and Pennsylvania Portfolio, $73,354.
Pursuant to the advisory agreement, the Adviser provides to each Portfolio
certain legal and accounting services. For the six months ended March 31, 1995,
the Adviser voluntarily agreed to waive its fees for such services. In
addition, the Adviser agreed to reimburse each Portfolio for certain operating
expenses. Such expenses amounted to $29,770 for the Arizona Portfolio, $34,221
for the Massachusetts Portfolio, $12,373 for the Michigan Portfolio, $35,225
for the Minnesota Portfolio and $32,516 for the Virginia Portfolio. No such
reimbursement was required this period for the Florida Portfolio, the New
Jersey Portfolio, the Ohio Portfolio and the Pennsylvania Portfolio.
Each Portfolio compensates Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) under a Services Agreement for providing personnel
and facilities to perform transfer agency services for each Portfolio. Such
compensation amounted to $5,093 for the Arizona Portfolio, $11,342 for the
Florida Portfolio, $3,335 for the Massachusetts Portfolio, $5,432 for the
Michigan Portfolio, $7,680 for the Minnesota Portfolio, $13,783 for the New
Jersey Portfolio, $11,363 for the Ohio Portfolio, $16,637 for the
Pennsylvania Portfolio and $3,347 for the Virginia Portfolio.
Alliance Fund Distributors, Inc. (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 each respective Portfolio's
Class A shares for the six months ended March 31, 1995 were: Arizona Portfolio,
$2,808; Florida Portfolio, $1,767; Massachusetts Portfolio, $807; Michigan
Portfolio, $583; Minnesota Portfolio, $654; New Jersey Portfolio, $2,924;
Ohio Portfolio, $1,095; Pennsylvania Portfolio, $3,125; and Virginia
Portfolio, $144. The amount of contingent deferred sales charge imposed upon
redemptions by shareholders of Class B shares for the same period were: Arizona
Portfolio, $228; Florida Portfolio, $24,122; Massachusetts Portfolio, $4,790;
Michigan Portfolio, $19,789; Minnesota Portfolio, $11,915; New Jersey
Portfolio, $52,810; Ohio Portfolio, $31,712; Pennsylvania Portfolio, $36,508;
and Virginia Portfolio, $240.
NOTE C: Distribution Services Agreement
Each Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class A,
Class B and Class C shares. Under the Agreement, each Portfolio pays a
distribution fee to the Distributor at an annual rate of up to .30 of 1% of
each Portfolios' average daily net assets attributable to the Class A shares
and 1% of each Portfolio's average daily net assets attributable to the Class B
and Class C shares, respectively. Such fee is accrued daily and paid monthly.
The Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. Since the
commencements of operations the Distributor has incurred expenses in excess of
the distribution costs reimbursed by each Portfolio as follows:
Portfolio Class B Class C
- --------- ---------- --------
Arizona $ 184,595 $ 55,694
Florida $ 657,313 $603,886
Massachusetts $ 207,559 $120,795
Michigan $ 227,837 $200,141
Minnesota $ 443,470 $372,995
New Jersey $1,132,801 $391,656
Ohio $ 798,240 $459,028
Pennsylvania $ 953,101 $345,121
Virginia $ 166,872 $ 21,514
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)
for the six months ended March 31, 1995 were as follows:
Portfolio Purchases Sales
- --------- ----------- ------------
Arizona $ 2,756,754 $ 1,474,456
Florida 56,555,350 67,223,590
Massachusetts 2,212,178 1,421,126
Michigan 6,463,476 7,089,501
Minnesota 16,182,426 17,529,213
New Jersey 39,598,923 42,551,423
Ohio 38,987,469 49,240,020
Pennsylvania 37,979,816 37,665,951
Virginia 1,340,554 963,617
NOTE E: Taxes
For Federal income tax purposes at September 30, 1994, the Series had capital
loss carryforwards expiring in 2002 for the following Portfolios: Arizona
Portfolio, $31,276; Massachusetts Portfolio, $5,019; Michigan Portfolio,
$87,108; Minnesota Portfolio, $1,032,936; New Jersey Portfolio, $7,678; and
Virginia Portfolio, $5,138. Any net capital losses incurred after October 31
("Post October losses") within the taxable year are deemed to arise on the
first business day of the Fund's next taxable year. Pursuant to Federal income
tax regulations, the Series had net capital losses of $6,333,472 for Florida
Portfolio, $5,222,467 for New Jersey Portfolio,$3,280,561 for Ohio Portfolio
and $3,137,942 for the Pennsylvania Portfolio which will be deferred to fiscal
year 1995. These capital losses will be available in fiscal 1995 to offset
capital gains and reduce amounts distributable to shareholders.
At March 31, 1995, the cost of securities for federal income tax purposes,
gross unrealized appreciation, gross unrealized depreciation and net unrealized
appreciation of investments for each Portfolio were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Portfolio Tax Cost Appreciation (Depreciation) Appreciation
- --------- ----------- ------------ ------------ ------------
Arizona $ 4,293,918 $ 199,569 $ -0- $ 199,569
Florida 62,924,288 1,341,511 (602,218) 739,293
Massachusetts 2,814,470 74,548 (580) 73,968
Michigan 6,169,151 460,820 (9,640) 451,180
Minnesota 15,585,733 794,505 (42,007) 752,498
New Jersey 61,843,595 2,269,656 (686,188) 1,583,468
Ohio 42,512,756 1,915,312 (54,568) 1,860,744
Pennsylvania 48,122,377 1,558,346 (263,448) 1,294,898
Virginia 1,891,729 51,395 (605) 50,790
NOTE F: Shares of Beneficial Interest
There is an unlimited number of $.01 par value shares of beneficial interest
authorized for Class A, Class B and Class C shares.
Transactions in shares of beneficial interest in each Portfolio were as follows:
Shares Amount
----------------------- ------------------------
Six Months June 1, Six Months June 1,
Ended 1994* to Ended 1994* to
March 31, Sept. 30, March 31, Sept. 30,
Arizona Portfolio 1995 1994 1995 1994
- ----------------- ---------- ---------- ---------- -----------
Class A
Shares sold 90,131 130,890 $ 870,320 $1,312,170
Shares issued in
reinvestment of dividends 1,633 556 15,719 5,581
Shares redeemed (9,565) (36,254) (90,614) (364,123)
Net increase 82,199 95,192 $ 795,425 $ 953,628
Class B
Shares sold 70,940 204,005 $ 691,245 $2,041,252
Shares issued in
reinvestment of dividends 2,372 620 22,798 6,222
Shares redeemed (5,155) (32,899) (48,956) (329,620)
Net increase 68,157 171,726 $ 665,087 $1,717,854
Class C
Shares sold 44,344 84,517 $ 426,994 $ 846,679
Shares issued in
reinvestment of dividends 1,079 358 10,303 3,604
Shares redeemed (58,884) (35,270) (558,384) (354,708)
Net increase (decrease) (13,461) 49,605 $(121,087) $ 495,575
24
Alliance Municipal Income Fund II
Shares Amount
----------------------- ------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
March 31, Sept. 30, March 31, Sept. 30,
Florida Portfolio 1995 1994 1995 1994
- ----------------- ---------- ---------- ---------- -----------
Class A
Shares sold 233,866 728,668 $2,014,822 $ 7,094,881
Shares issued in
reinvestment of dividends
and distributions 12,567 19,095 109,363 147,498
Shares redeemed (114,973) (226,673) (996,072) (2,100,318)
Net increase 131,460 521,090 $1,128,113 $ 5,142,061
Class B
Shares sold 410,353 1,294,343 $3,542,666 $12,618,465
Shares issued in
reinvestment of dividends
and distributions 26,193 41,340 227,706 359,693
Shares redeemed (340,424) (241,025) (2,967,479) (2,271,231)
Net increase 96,122 1,094,658 $ 802,893 $10,706,927
Class C
Shares sold 331,936 5,942,160 $2,884,074 $60,522,877
Shares issued in
reinvestment of dividends
and distributions 57,655 252,842 501,521 1,666,591
Shares redeemed (1,423,353) (4,180,826) (12,107,599) (40,051,340)
Net increase (decrease) (1,033,762) 2,014,176 $(8,722,004) $22,138,128
Shares Amount
----------------------- ------------------------
Six Months March 29, Six Months March 29
Ended 1994* to Ended 1994* to
March 31, Sept. 30, March 31, Sept. 30,
Massachusetts Portfolio 1995 1994 1995 1994
- ----------------- ---------- ---------- ---------- -----------
Class A
Shares sold 42,874 55,665 $ 414,897 $ 563,448
Shares issued in
reinvestment of dividends 749 237 7,378 2,437
Shares redeemed (11,037) (74) (110,710) (750)
Net increase 32,586 55,828 $ 311,565 $ 565,135
Class B
Shares sold 35,341 91,592 $ 351,161 $ 928,527
Shares issued in
reinvestment of dividends 784 266 7,724 2,733
Shares redeemed (23,957) (20,162) (227,578) (203,542)
Net increase 12,168 71,696 $ 131,307 $ 727,718
Class C
Shares sold 44,661 80,734 $ 438,228 $ 834,017
Shares issued in
reinvestment of dividends 2,273 140 22,460 1,438
Shares redeemed (2,024) (4,393) (19,495) (44,452)
Net increase 44,910 76,481 $ 441,193 $ 791,003
25
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Municipal Income Fund II
Shares Amount
----------------------- ------------------------
Six Months Feb. 25, Six Months Feb. 25,
Ended 1994* to Ended 1994 to
March 31, Sept. 30, March 31, Sept. 30,
Michigan Portfolio 1995 1994 1995 1994
- ------------------ ---------- ---------- ---------- -----------
Class A
Shares sold 51,991 273,212 $ 481,145 $2,629,744
Shares issued in
reinvestment of dividends 4,113 1,548 37,815 14,906
Shares redeemed (27,702) (10,308) (243,484) (98,466)
Net increase 28,402 264,452 $ 275,476 $2,546,184
Class B
Shares sold 105,555 216,322 $ 956,784 $2,110,827
Shares issued in
reinvestment of dividends 2,764 1,705 25,378 16,370
Shares redeemed (89,635) (33,913) (812,341) (334,671)
Net increase 18,684 184,114 $ 169,821 $1,792,526
Class C
Shares sold 117,526 337,346 $1,056,302 $3,285,316
Shares issued in
reinvestment of dividends 5,768 4,444 52,954 42,627
Shares redeemed (192,653) (44,796) (1,781,718) (430,542)
Net increase (decrease) (69,359) 296,994 $(672,462) $2,897,401
Shares Amount
----------------------- ------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
March 31, Sept. 30, March 31, Sept. 30,
Minnesota Portfolio 1995 1994 1995 1994
- ------------------- ---------- ---------- ---------- -----------
Class A
Shares sold 38,145 162,212 $ 339,410 $ 1,578,544
Shares issued in
reinvestment of dividends 5,268 7,074 47,420 68,488
Shares redeemed (30,526) (34,667) (285,241) (332,104)
Net increase 12,887 134,619 $ 101,589 $ 1,314,928
Class B
Shares sold 114,739 473,120 $1,025,190 $ 4,695,988
Shares issued in
reinvestment of dividends 11,843 16,160 106,508 155,405
Shares redeemed (100,501) (78,972) (889,001) (779,794)
Net increase 26,081 410,308 $ 242,697 $ 4,071,599
Class C
Shares sold 30,638 1,013,568 $ 274,907 $10,150,228
Shares issued in
reinvestment of dividends 20,118 42,210 180,783 409,762
Shares redeemed (247,747) (674,735) (2,187,544) (6,465,828)
Net increase (decrease) (196,991) 381,043 $(1,731,854) $ 4,094,162
26
Alliance Municipal Income Fund II
Shares Amount
----------------------- ------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
March 31, Sept. 30, March 31, Sept. 30,
New Jersey Portfolio 1995 1994 1995 1994
- -------------------- ---------- ---------- ---------- -----------
Class A
Shares sold 213,963 659,128 $1,910,269 $ 6,489,472
Shares issued in
reinvestment of dividends 20,816 35,695 185,200 345,613
Shares redeemed (132,375) (323,450) (1,171,387) (2,983,190)
Net increase 102,404 371,373 $ 924,082 $ 3,851,895
Class B
Shares sold 401,883 1,982,961 $3,576,359 $19,529,992
Shares issued in
reinvestment of dividends 52,951 75,083 470,957 720,377
Shares redeemed (493,499) (221,220) (4,347,574) (2,079,652)
Net increase (decrease) (38,665) 1,836,824 $ (300,258) $18,170,717
Class C
Shares sold 171,502 2,378,869 $1,544,673 $23,979,897
Shares issued in
reinvestment of dividends 52,026 99,593 462,300 958,885
Shares redeemed (752,000) (1,621,204) (6,607,784) (15,723,631)
Net increase (decrease) (528,472) 857,258 $(4,600,811) $ 9,215,151
Shares Amount
----------------------- ------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
March 31, Sept. 30, March 31, Sept. 30,
Ohio Portfolio 1995 1994 1995 1994
- -------------- ---------- ---------- ---------- -----------
Class A
Shares sold 77,118 272,769 $ 694,713 $ 2,671,686
Shares issued in
reinvestment of dividends
and distributions 6,566 13,279 58,362 133,480
Shares redeemed (55,840) (78,425) (473,717) (773,132)
Net increase 27,844 207,623 $ 279,358 $ 2,032,034
Class B
Shares sold 227,063 1,569,467 $2,023,482 $15,405,470
Shares issued in
reinvestment of dividends
and distributions 45,810 54,953 404,701 528,310
Shares redeemed (279,062) (261,093) (2,436,831) (2,508,640)
Net increase (decrease) (6,189) 1,363,327 $ (8,648) $13,425,140
Class C
Shares sold 104,013 2,571,690 $ 910,959 $25,742,850
Shares issued in
reinvestment of dividends
and distributions 45,398 93,045 406,063 897,192
Shares redeemed (802,556) (1,702,639) (6,996,181) (16,633,765)
Net increase (decrease) (653,145) 962,096 $(5,679,159) $10,006,277
27
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Municipal Income Fund II
Shares Amount
----------------------- ------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
March 31, Sept. 30, March 31, Sept. 30,
Pennsylvania Portfolio 1995 1994 1995 1994
- ---------------------- ---------- ---------- ---------- -----------
Class A
Shares sold 194,127 451,850 $1,743,615 $ 4,391,724
Shares issued in
reinvestment of dividends
and distributions 14,777 20,521 131,760 198,538
Shares redeemed (117,515) (100,517) (1,047,494) (951,523)
Net increase 91,389 371,854 $ 827,881 $ 3,638,739
Class B
Shares sold 431,754 1,747,883 $3,871,973 $17,173,230
Shares issued in
reinvestment of dividends
and distributions 45,023 55,570 401,570 537,680
Shares redeemed (337,680) (198,944) (2,992,659) (1,919,722)
Net increase 139,097 1,604,509 $1,280,884 $15,791,188
Class C
Shares sold 88,583 1,946,256 $ 787,796 $19,563,260
Shares issued in
reinvestment of dividends
and distributions 31,318 72,010 276,148 699,308
Shares redeemed (611,425) (1,357,821) (5,382,777) (13,205,188)
Net increase (decrease) (491,524) 660,445 $(4,318,833) $ 7,057,380
Shares Amount
----------------------- ------------------------
Six Months April 29, Six Months April 29,
Ended 1994* to Ended 1994* to
March 31, Sept. 30, March 31, Sept. 30,
Virginia Portfolio 1995 1994 1995 1994
- ------------------ ---------- ---------- ---------- -----------
Class A
Shares sold 12,181 127,630 $ 116,858 $1,274,133
Shares issued in
reinvestment of dividends 3,041 1,375 28,969 13,695
Shares redeemed (31,435) (195) (309,591) (1,892)
Net increase (decrease) (16,213) 128,810 $(163,764) $1,285,936
Class B
Shares sold 65,698 22,803 $ 632,399 $ 229,130
Shares issued in
reinvestment of dividends 1,027 248 9,813 2,472
Shares redeemed (6,255) -0- (58,360) -0-
Net increase 60,470 23,051 $ 583,852 $ 231,602
Class C
Shares sold 6,945 4,367 $ 65,854 $ 43,576
Shares issued in
reinvestment of dividends 113 23 1,079 227
Shares redeemed (3,259) -0- (31,249) -0-
Net increase 3,799 4,390 $ 35,684 $ 43,803
*Commencement of operations
28
FINANCIAL HIGHLIGHTS Alliance Municipal Income Fund II
Selected Data For a Share Of Beneficial Interest Outstanding Throughout Each
Period
Arizona Portfolio
------------------------------------------------
Class A Class B
----------------------- -----------------------
Six Months June 1, Six Months June 1,
Ended 1994* to Ended 1994* to
March 31, Sept. 30, March 31, Sept. 30,
1995 1994 1995 1994
----------- ---------- ---------- -----------
Net asset value, beginning of
period $9.77 $10.00 $ 9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .28** .20** .25** .18**
Net realized and unrealized
gain (loss) on investments .36 (.23) .35 (.24)
Net increase (decrease) in net
asset value from operations .64 (.03) .60 (.06)
LESS: DISTRIBUTIONS
Dividends from net investment
income (.29) (.20) (.25) (.17)
Net asset value, end of period $10.12 $ 9.77 $10.12 $ 9.77
TOTAL RETURN
Total investment return based
on net asset value (b) 6.70% (.35)% 6.31% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $1,796 $930 $2,429 $1,677
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .78%(a) .78%(a) 1.48%(a) 1.48%(a)
Expenses, before waivers/
reimbursements 5.17%(a) 7.71%(a) 5.92%(a) 8.41%(a)
Net investment income, net of
waivers/reimbursements 5.89%(a) 5.82%(a) 5.23%(a) 5.13%(a)
Portfolio turnover rate 39% 81% 39% 81%
Class C
-------------------------
Six Months June 1,
Ended 1994* to
March 31, Sept. 30
1995 1994
------------ -----------
Net asset value, beginning of period $ 9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24** .17**
Net realized and unrealized gain (loss) on
investments .36 (.23)
Net increase (decrease) in net asset value from
operations .60 (.06)
LESS: DISTRIBUTIONS
Dividends from net investment income (.25) (.17)
Net asset value, end of period $10.12 $ 9.77
TOTAL RETURN
Total investment return based on net asset value (b) 6.31% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $366 $485
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.48%(a) 1.48%(a)
Expenses, before waivers/reimbursements 6.00%(a) 8.41%(a)
Net investment income, net of waivers/
reimbursements 5.16%(a) 4.70%(a)
Portfolio turnover rate 39% . 81%
See footnote summary on page 38.
29
FINANCIAL HIGHLIGHTS (continued) Alliance Municipal Income Fund II
Selected Data For a Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
Florida Portfolio
----------------------------------------------------------------------------------------
Class A Class B
-------------------------------------------- ------------------------------------------
Six Months Ended June 25, Six Months Ended June 25,
March 31, Year Ended 1993* to March 31, Year Ended 1993* to
1995 Sept. 30 Sept. 30, 1995 Sept. 30 Sept. 30,
(unaudited) 1994 1993 (unaudited) 1994 1993
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.89 $10.25 $10.00 $ 8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .27** .55** .16** .24** .48** .14**
Net realized and unrealized gain (loss) on
investments .33 (1.35) .25 .33 (1.35) .25
Net increase (decrease) in net asset value from
operations .60 (.80) .41 .57 (.87) .39
LESS: DISTRIBUTIONS
Dividends from net investment income (.27) (.55) (.16) (.24) (.48) (.14)
Distributions from net realized gains -0- (.01) -0- -0- (.01) -0-
Total dividends and distributions (.27) (.56) (.16) (.24) (.49) (.14)
Net asset value, end of period $ 9.22 $ 8.89 $10.25 $ 9.22 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on net asset
value (b) 7.01% (8.03)% 4.10% 6.57% (8.72)% 3.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 9,744 $ 8,227 $ 4,145 $19,607 $18,048 $ 9,588
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .71%(a) .38% -0-%(a) 1.41%(a) 1.08% .61%(a)
Expenses, before waivers/reimbursements 1.30%(a) 1.27% 1.30%(a) 2.00%(a) 1.98% 2.00%(a)
Net investment income, net of
waivers/reimbursements 6.23%(a) 5.70% 5.44%(a) 5.53%(a) 4.99% 4.74%(a)
Portfolio turnover rate 87% 185% 82% 87% 185% 82%
</TABLE>
Class C
------------------------------------
Six Months Year June. 25
Ended Ended 1993* to
March 31, Sept. 30, Sept. 30
1995 1994 1993
------------ ----------- -----------
Net asset value, beginning of period $ 8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24** .48** .14**
Net realized and unrealized gain (loss)
on investments .33 (1.35) .25
Net increase (decrease) in net asset
value from operations .57 (.87) .39
LESS: DISTRIBUTIONS
Dividends from net investment income (.24) (.48) (.14)
Distributions from net realized gains -0- (.01) -0-
Total dividends and distributions (.24) (.49) (.14)
Net asset value, end of period $ 9.22 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on net
asset value (b) 6.57% (8.72)% 3.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $34,455 $42,405 $28,249
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.41%(a) 1.08% .61%(a)
Expenses, before waivers/reimbursements 2.00%(a) 1.97% 2.00%(a)
Net investment income, net of waivers/
reimbursements 5.56%(a) 4.97% 4.74%(a)
Portfolio turnover rate 87% 185% 82%
See footnote summary on page 38.
Alliance Municipal Income Fund II
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
Massachusetts Portfolio
------------------------------------------------
Class A Class B
----------------------- -----------------------
Six Months March 29 Six Months March 29,
Ended 1994* to Ended 1994* to
March 31, Sept. 30, March 31, Sept. 30,
1995 1994 1995 1994
----------- ---------- ---------- -----------
Net asset value, beginning of
period $10.12 $10.00 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .29** .31** .26** .27**
Net realized and unrealized
gain on investments .18 .11 .17 .11
Net increase in net asset value
from operations .47 .42 .43 .38
LESS: DISTRIBUTIONS
Dividends from net investment
income (.31) (.30) (.27) (.26)
Net asset value, end of period $10.28 $10.12 $10.28 $10.12
TOTAL RETURN
Total investment return based
on net asset value (b) 4.76% 4.14% 4.39% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $909 $565 $862 $725
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .60%(a) .60%(a) 1.30%(a) 1.30%(a)
Expenses, before waivers/
reimbursements 7.05%(a) 13.20%(a) 7.76%(a) 13.90%(a)
Net investment income, net of
waivers/reimbursements 5.91%(a) 5.98%(a) 5.23%(a) 5.13%(a)
Portfolio turnover rate 58% 146% 58% 146%
Class C
-------------------------
Six Months March 29,
Ended 1994* to
March 31, Sept. 30
1995 1994
------------ -----------
Net asset value, beginning of period $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .26** .25**
Net realized and unrealized gain on investments .17 .13
Net increase in net asset value from operations .43 .38
LESS: DISTRIBUTIONS
Dividends from net investment income (.27) (.26)
Net asset value, end of period $10.28 $10.12
TOTAL RETURN
Total investment return based on net asset value (b) 4.39% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,248 $774
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.30%(a) 1.30%(a)
Expenses, before waivers/reimbursements 7.75%(a) 13.90%(a)
Net investment income, net of waivers/
reimbursements 5.18%(a) 4.00%(a)
Portfolio turnover rate 58% 146%
See footnote summary on page 38.
31
FINANCIAL HIGHLIGHTS (continued) Alliance Municipal Income Fund II
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
Michigan Portfolio
------------------------------------------------
Class A Class B
----------------------- -----------------------
Six Months Feb. 25 Six Months Feb. 25
Ended 1994* to Ended 1994* to
March 31, Sept. 30, March 31, Sept. 30,
1995 1994 1995 1994
----------- ---------- ---------- -----------
Net asset value, beginning of
period $9.35 $10.00 $9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .27** .33** .23** .29**
Net realized and unrealized
gain (loss) on investments .41 (.65) .41 (.65)
Net decrease in net asset value
from operations .68 (.32) .64 (.36)
LESS: DISTRIBUTIONS
Dividends from net investment
income (.28) (.33) (.24) (.29)
Net asset value, end of period $9.75 $9.35 $9.75 $9.35
TOTAL RETURN
Total investment return based
on net asset value (b) 7.43% (3.24)% 7.03% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $2,857 $2,473 $1,978 $1,722
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.36%(a) .93%(a) 2.06%(a) 1.63%(a)
Expenses, before waivers/
reimbursements 3.51%(a) 3.97%(a) 4.20%(a) 4.67%(a)
Net investment income, net of
waivers/reimbursements 5.89%(a) 5.83%(a) 5.14%(a) 4.93%(a)
Portfolio turnover rate 95% 222% 95% 222%
Class C
-------------------------
Six Months Feb. 25
Ended 1994* to
March 31, Sept. 30
1995 1994
------------ -----------
Net asset value, beginning of period $9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24** .29**
Net realized and unrealized loss on investments .41 (.65)
Net decrease in net asset value from operations .65 (.36)
LESS: DISTRIBUTIONS
Dividends from net investment income (.24) (.29)
Net asset value, end of period $9.76 $9.35
TOTAL RETURN
Total investment return based on net asset value (b) 7.14% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,221 $2,778
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 2.06%(a) 1.63%(a)
Expenses, before waivers/reimbursements 4.22%(a) 4.67%(a)
Net investment income, net of waivers/
reimbursements 5.27%(a) 4.92%(a)
Portfolio turnover rate 95% 222%
See footnote summary on page 38.
32
Alliance Municipal Income Fund II
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
Minnesota Portfolio
----------------------------------------------------------------------------------------
Class A Class B
-------------------------------------------- ------------------------------------------
Six Months Ended June 25, Six Months Ended June 25,
March 31, Year Ended 1993* to March 31, Year Ended 1993* to
1995 Sept. 30 Sept. 30, 1995 Sept. 30 Sept. 30,
(unaudited) 1994 1993 (unaudited) 1994 1993
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.19 $10.28 $10.00 $ 9.18 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .27** .55** .15** .24** .48** .13**
Net realized and unrealized gain (loss)
on investments .20 (1.09) .28 .20 (1.10) .28
Net increase (decrease) in net asset value from
operations .47 (.54) .43 .44 (.62) .41
LESS: DISTRIBUTIONS
Dividends from net investment income (.28) (.55) (.15) (.24) (.48) (.13)
Net asset value end of period $ 9.38 $ 9.19 $10.28 $ 9.38 $ 9.18 $10.28
TOTAL RETURN
Total investment return based on net
asset value(b) 5.24% (5.35)% 4.34% 4.94% (6.15)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,291 $2,125 $ 994 $6,527 $6,150 $2,665
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .71%(a) .09% -0-%(a) 1.42%(a) .80% .43%(a)
Expenses, before waivers/reimbursements 2.24%(a) 2.12% 1.89%(a) 2.95%(a) 2.83% 2.59%(a)
Net investment income, net of
waivers/reimbursements 6.04%(a) 5.71% 5.20%(a) 5.31%(a) 5.00% 4.50%(a)
Portfolio turnover rate 95% 143% 61% 95% 143% 61%
</TABLE>
Class C
------------------------------------
Six Months Year June. 25
Ended Ended 1993* to
March 31, Sept. 30, Sept. 30
1995 1994 1993
------------ ----------- -----------
Net asset value, beginning of period $ 9.19 $10.27 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24** .48** .13**
Net realized and unrealized gain (loss)
on investments .19 (1.08) .27
Net increase (decrease) in net asset value
from operations .43 (.60) .40
LESS: DISTRIBUTIONS
Dividends from net investment income (.24) (.48) (.13)
Net asset value end of period $ 9.38 $ 9.19 $10.27
TOTAL RETURN
Total investment return based on net asset
value (b) 4.82% (5.95)% 4.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,846 $9,489 $6,697
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.41%(a) .79% .43%(a)
Expenses, before waivers/reimbursements 2.94%(a) 2.82% 2.59%(a)
Net investment income, net of waivers/
reimbursements 5.38%(a) 4.90% 4.50%(a)
Portfolio turnover rate 95% 143% 61%
See footnote summary on page 38.
33
FINANCIAL HIGHLIGHTS (continued) Alliance Municipal Income Fund II
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
New Jersey Portfolio
----------------------------------------------------------------------------------------
Class A Class B
-------------------------------------------- ------------------------------------------
Six Months Ended June 25, Six Months Ended June 25,
March 31, Year Ended 1993* to March 31, Year Ended 1993* to
1995 Sept. 30 Sept. 30, 1995 Sept. 30 Sept. 30,
(unaudited) 1994 1993 (unaudited) 1994 1993
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.07 $10.29 $10.00 $ 9.07 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .23** .55** .15** .27** .48** .13**
Net realized and unrealized gain (loss)
on investments .30 (1.22) .29 .30 (1.21) .28
Net increase (decrease) in net asset value from
operations .53 (.67) .44 .57 (.73) .41
LESS: DISTRIBUTIONS
Dividends from net investment income (.24) (.55) (.15) (.28) (.48) (.13)
Net asset value, end of period $ 9.36 $ 9.07 $10.29 $ 9.36 $ 9.07 $10.28
TOTAL RETURN
Total investment return based on net
asset value (b) 6.42% (6.67)% 4.44% 5.99% (7.28)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $10,513 $9,257 $6,679 $31,079 $30,459 $15,637
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .82%(a) .20% -0-%(a) 1.53%(a) .91% .63%(a)
Expenses, before waivers/reimbursements 1.39%(a) 1.33% 1.29%(a) 2.09%(a) 2.03% 1.99%(a)
Net investment income, net of
waivers/reimbursements 6.07%(a) 5.65% 5.37%(a) 5.35%(a) 4.96% 4.67%(a)
Portfolio turnover rate 62% 171% 47% 62% 171% 47%
</TABLE>
Class C
------------------------------------
Six Months Year June. 25
Ended Ended 1993* to
March 31, Sept. 30, Sept. 30
1995 1994 1993
------------ ----------- -----------
Net asset value, beginning of period $ 9.07 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24** .48** .13**
Net realized and unrealized gain (loss)
on investments .30 (1.21) .28
Net increase (decrease) in net asset value
from operations .54 (.73) .41
LESS: DISTRIBUTIONS
Dividends from net investment income (.24) (.48) (.13)
Net asset value, end of period $ 9.37 $ 9.07 $10.28
TOTAL RETURN
Total investment return based on net
asset value (b) 6.10% (7.28)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $22,379 $26,472 $21,193
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.52%(a) .90% .63%(a)
Expenses, before waivers/reimbursements 2.09%(a) 2.02% 1.99%(a)
Net investment income, net of waivers/
reimbursements 5.39%(a) 4.93% 4.67%(a)
Portfolio turnover rate 62% 171% 47%
See footnote summary on page 38.
34
Alliance Municipal Income Fund II
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
Ohio Portfolio
Class A Class B
-------------------------------------------- ------------------------------------------
Six Months Ended June 25, Six Months Ended June 25,
March 31, Year Ended 1993* to March 31, Year Ended 1993* to
1995 Sept. 30 Sept. 30, 1995 Sept. 30 Sept. 30,
(unaudited) 1994 1993 (unaudited) 1994 1993
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.06 $10.26 $10.00 $9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .27** .55** .15** .24** .48** .13**
Net realized and unrealized gain (loss)
on investments .32 (1.19) .26 .32 (1.19) .26
Net increase (decrease) in net asset value from
operations .59 (.64) .41 .56 (.71) .39
LESS: DISTRIBUTIONS
Dividends from net investment income (.27) (.55) (.15) (.24) (.48) (.13)
Distributions from net realized gains -0- (.01) -0- -0- (.01) -0-
Total dividends and distributions (.27) (.56) (.15) (.24) (.49) (.13)
Net asset value, end of period $9.38 $9.06 $10.26 $9.38 $9.06 $10.26
TOTAL RETURN
Total investment return based on net
asset value (b) 6.75% (6.44)% 4.15% 6.33% (7.13)% 3.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 3,168 $ 2,810 $ 1,050 $20,916 $20,267 $ 8,952
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .75%(a) .04% -0-%(a) 1.46%(a) .74% .17%(a)
Expenses, before waivers/reimbursements 1.42%(a) 1.42% 1.32%(a) 2.14%(a) 2.13% 2.02%(a)
Net investment income, net of waivers/
reimbursements 6.06%(a) 5.67% 5.30%(a) 5.39%(a) 4.95% 4.60%(a)
Portfolio turnover rate 82% 161% 55% 82% 161% 55%
</TABLE>
Class C
------------------------------------
Six Months Year June. 25
Ended Ended 1993* to
March 31, Sept. 30, Sept. 30
1995 1994 1993
------------ ----------- -----------
Net asset value, beginning of period $9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24** .48** .13**
Net realized and unrealized gain (loss)
on investments .32 (1.19) .26
Net increase (decrease) in net asset value
from operations .56 (.71) .39
LESS: DISTRIBUTIONS
Dividends from net investment income (.24) (.48) (.13)
Distributions from net realized gains -0- (.01) -0-
Total dividends and distributions (.24) (.49) (.13)
Net asset value, end of period $9.38 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on net
asset value (b) 6.33% (7.13)% 3.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $21,086 $26,294 $19,894
Ratio to average net assets of:
Expenses, net of waivers/reimbursements1 .44%(a) .74% .17%(a)
Expenses, before waivers/reimbursements 2.14%(a) 2.12% 2.02%(a)
Net investment income, net of waivers/
reimbursements 5.44%(a) 4.89% 4.60%(a)
Portfolio turnover rate 82% 161% 55%
See footnote summary on page 38.
35
FINANCIAL HIGHLIGHTS (continued) Alliance Municipal Income Fund II
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
Pennsylvania Portfolio
Class A Class B
-------------------------------------------- ------------------------------------------
Six Months Ended June 25, Six Months Ended June 25,
March 31, Year Ended 1993* to March 31, Year Ended 1993* to
1995 Sept. 30 Sept. 30, 1995 Sept. 30 Sept. 30,
(unaudited) 1994 1993 (unaudited) 1994 1993
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.18 $10.25 $10.00 $ 9.18 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .28** .56** .16** .24** .49** .14**
Net realized and unrealized gain (loss)
on investments .25 (1.06) .25 .25 (1.06) .25
Net increase (decrease) in net asset value from
operations .53 (.50) .41 .49 (.57) .39
LESS: DISTRIBUTIONS
Dividends from net investment income (.28) (.56) (.16) (.24) (.49) (.14)
Distributions from net realized gains -0- (.01) -0- -0- (.01) -0-
Total dividends and distributions (.28) (.57) (.16) (.24) (.50) (.14)
Net asset value, end of period $ 9.43 $ 9.18 $10.25 $ 9.43 $ 9.18 $10.25
TOTAL RETURN
Total investment return based on net
asset value (b) 5.97% (5.02)% 4.12% 5.55% (5.72)% 3.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $8,204 $7,149 $4,170 $27,640 $25,637 $12,173
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.00%(a) .45% -0-%(a) 1.71%(a) 1.16% .40%(a)
Expenses, before waivers/reimbursements 1.47%(a) 1.46% 1.31%(a) 2.17%(a) 2.16% 2.01%(a)
Net investment income, net of
waivers/reimbursements 6.17%(a) 5.73% 5.67%(a) 5.45%(a) 5.01% 4.97%(a)
Portfolio turnover rate 76% 156% 75% 76% 156% 75%
</TABLE>
Class C
------------------------------------
Six Months Year June. 25
Ended Ended 1993* to
March 31, Sept. 30, Sept. 30
1995 1994 1993
------------ ----------- -----------
Net asset value, beginning of period $ 9.18 $10.24 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24** .49** .14**
Net realized and unrealized gain (loss)
on investments .25 (1.05) .24
Net increase (decrease) in net asset value
from operations .49 (.56) .38
LESS: DISTRIBUTIONS
Dividends from net investment income (.24) (.49) (.14)
Distributions from net realized gains -0- (.01) -0-
Total dividends and distributions (.24) (.50) (.14)
Net asset value, end of period $ 9.43 $9.18 $10.24
TOTAL RETURN
Total investment return based on net
asset value (b) 5.55% (5.63)% 3.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $14,058 $18,198 $13,541
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.70%(a) 1.15% .40%(a)
Expenses, before waivers/reimbursements 2.17%(a) 2.15% 2.01%(a)
Net investment income, net of waivers/
reimbursements 5.49%(a) 4.99% 4.97%(a)
Portfolio turnover rate 76% 156% 75%
See footnote summary on page 38.
36
Alliance Municipal Income Fund II
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
Virginia Portfolio
------------------------------------------------
Class A Class B
----------------------- -----------------------
Six Months April 29, Six Months April 29,
Ended 1994* to Ended 1994* to
March 31, Sept. 30, March 31, Sept. 30,
1995 1994 1995 1994
----------- ---------- ---------- -----------
Net asset value, beginning of
period $ 9.69 $10.00 $ 9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .28** .24** .24** .22**
Net realized and unrealized gain
(loss) on investments .37 (.31) .38 (.32)
Net increase (decrease) in net
asset value from operations .65 (.07) .62 (.10)
LESS: DISTRIBUTIONS
Dividends from net investment
income (.28) (.24) (.25) (.21)
Net asset value, end of period $10.06 $ 9.69 $10.06 $ 9.69
TOTAL RETURN
Total investment return based
on net asset value (b) 6.94% (.71)% 6.55% (1.01)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $1,133 $1,249 $841 $ 224
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .67%(a) .57%(a) 1.37%(a) 1.27%(a)
Expenses, before waivers/
reimbursements 9.34%(a) 12.29%(a) 9.95%(a) 12.99%(a)
Net investment income, net of
waivers/reimbursements 5.82%(a) 5.62%(a) 5.07%(a) 4.97%(a)
Portfolio turnover rate 53% 65% 53% 65%
Class C
-------------------------
Six Months April 29
Ended 1994* to
March 31, Sept. 30
1995 1994
------------ -----------
Net asset value, beginning of period $ 9.70 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24** .21**
Net realized and unrealized gain (loss) on investments .37 (.30)
Net increase (decrease) in net asset value from operations .61 (.09)
LESS: DISTRIBUTIONS
Dividends from net investment income (.25) (.21)
Net asset value, end of period $10.06 $ 9.70
TOTAL RETURN
Total investment return based on net asset value (b) 6.44% (.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 82 $ 9.43
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.37%(a) 1.27%(a)
Expenses, before waivers/reimbursements 9.93%(a) 12.99%(a)
Net investment income, net of waivers/
reimbursements 5.02%(a) 4.67%(a)
Portfolio turnover rate 53% 65%
See footnote summary on page 38.
37
FINANCIAL HIGHLIGHTS (continued) Alliance Municipal Income Fund II
FOOTNOTE SUMMARY
* Commencement of operations.
** Net of fee waived and expenses reimbursed by the Adviser.
(a) Annualized.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period less than one year is
not annualized.
38
Alliance Municipal Income Fund II
DIRECTORS
John D. Carifa, Chairman and President
David H. Dievier(1)
Ruth Block(1)
James R. Green(1)
Dr. James M. Hester(1)
Clifford L. Michel(1)
Eugene F. O'Neil(1)
Robert C. White(1)
OFFICERS
Susan P. Keenan, Senior Vice President
David Dowden, Vice President
William E. Oliver, Vice President
Emund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Patrick J. Farrell, Controller
CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286
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
