ALLIANCE MUNICIPAL INCOME FUND II
ANNUAL REPORT
SEPTEMBER 30, 1996
LETTER TO SHAREHOLDERS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
November 1, 1996
Dear Shareholder:
We are pleased to report municipal market activity and investment results for
Alliance Municipal Income Fund II's fiscal reporting period ended September 30,
1996. Over the past six and twelve month periods, the Fund's nine
Portfolios--Arizona, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
Ohio, Pennsylvania and Virginia--produced excellent total returns.
We are especially proud that four of the nine Portfolios outperformed all
state-specific municipal income funds in their respective peer groups tracked
by Lipper for the 12 months ended September 30, 1996 and since their inception
dates. Lipper rankings are based on total returns at net asset value, without
the imposition of the maximum 4.25% sales charge, which would reduce total
return figures.
1 YEAR SINCE INCEPTION
- -----------------------------------------------------------------------
ARIZONA PORTFOLIO RANKED #5 ARIZONA PORTFOLIO RANKED #2
among 35 Arizona funds among 23 Arizona funds
(inception date: June 1, 1994)
FLORIDA PORTFOLIO RANKED #1 FLORIDA PORTFOLIO RANKED #9
among 80 Florida funds among 35 Florida funds
(inception date: June 25, 1993)
MASSACHUSETTS PORTFOLIO RANKED #1 MASSACHUSETTS PORTFOLIO RANKED #1
among 51 Massachusetts funds among 37 Massachusetts funds
(inception date: March 29, 1994)
MICHIGAN PORTFOLIO RANKED #1 MICHIGAN PORTFOLIO RANKED #1
among 46 Michigan funds among 32 Michigan funds
(inception date: February 25, 1994)
Minnesota Portfolio Ranked #2 Minnesota Portfolio Ranked #11
among 46 Minnesota funds among 24 Minnesota funds
(inception date: June 25, 1993)
NEW JERSEY PORTFOLIO RANKED #4 NEW JERSEY PORTFOLIO RANKED #4
among 53 New Jersey funds among 27 New Jersey funds
(inception date: June 25, 1993)
OHIO PORTFOLIO RANKED #2 OHIO PORTFOLIO RANKED #13
among 56 Ohio funds among 30 Ohio funds
(inception date: June 25, 1993)
PENNSYLVANIA PORTFOLIO RANKED #1 PENNSYLVANIA PORTFOLIO RANKED #1
among 65 Pennsylvania funds among 37 Pennsylvania funds
(inception date: June 25, 1993)
VIRGINIA PORTFOLIO RANKED #1 VIRGINIA PORTFOLIO RANKED #1
among 34 Virginia funds among 27 Virginia funds
(inception date: April 29, 1994)
Portfolio highlights are listed on page 3, and investment results for each
Portfolio appear on page 4. Also provided, on pages 5-8, are charts that show
how your initial investment in an Alliance Municipal Income Fund Portfolio has
increased in value over time. Each hypothetical $10,000 investment is based on
a purchase of Class A shares from the time of the Portfolio's inception date
through the end of September 1996.
MARKET OVERVIEW
The municipal bond market outperformed most other sectors of the domestic fixed
income markets in 1996, recovering from the negative impact of the "flat tax"
campaign issue earlier in the year. The tax-exempt market's successful
performance is largely due to very favorable supply and demand technical
factors brought about by the continued high pace of early redemptions of
outstanding securities by municipal issuers. This shortage of securities is not
helped by the relatively low new-issue volume of municipal bonds, which
continues to be stable at an annual rate of approximately $150 billion, down
dramatically from 1993 volume of nearly $300 billion. At Alliance, we believe
that pricing of tax-exempt securities is driven first and foremost by the
continuing supply/demand imbalance. Therefore, we attempt to take advantage of
the resulting market cycles to maximize total return to our shareholders.
Credit ratings, for the most part, improved in 1996. This improvement is a
direct reflection of the more stable economic environment for state and local
governments as a result of the recent economic expansion the nation has
enjoyed. Orange County emerged from bankruptcy in early July, having paid all
principal and interest due on its defaulted note issues. As we mentioned at the
end of fiscal year 1995, we believe that the Orange County bankruptcy has
resulted in better financial disclosure by state and local government agencies
and stricter investment guidelines for their fund managers.
INVESTMENT STRATEGY
The bond market volatility of early 1996, combined with the media attention
granted to various flat tax proposals from Republican presidential candidates,
provided the Alliance Municipal Income Fund II with ample opportunity to follow
its investment philosophy of "buy on weakness, sell on strength." The
portfolios were repositioned following the March decline in bond prices to take
advantage of any rally in the second half of the Fund's fiscal year. The bond
market has rallied in recent months, allowing the portfolios to realize the
gains provided by the March repositioning.
1
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
Consistent with our fundamental investment objective of providing high current
income and high after-tax total returns for the fund's shareholders, we
continue to be fully invested in long-term securities. We seek out bonds that
offer both high current income and excellent call protection, which generate
outstanding total returns from price appreciation. To make room in the
portfolios for attractive new issues, we sold older bonds with shorter maturity
dates and higher early redemption risk. We also sold bonds that had been
"pre-refunded" by their issuers, which causes these securities to reach maximum
price appreciation potential earlier than normal. Finally, our core strategy of
buying bonds that are undervalued, or out of favor, was quite successful in the
second half of the fiscal year as demonstrated by our excellent investment
results.
MARKET OUTLOOK
Municipal bond investors should expect a more stable market environment over
the coming year. Despite higher energy prices and signs of wage pressures in
the economy, we believe that inflation will remain in check for the foreseeable
future and that interest rates will continue to be range-bound in a less
volatile environment. The "flat tax" debate looks to be dormant through the
current election cycle, but is certain to arise again before the presidential
elections in the year 2000. Nevertheless, municipal bonds continue to offer
excellent value as they continue to trade at very cheap prices relative to
fully taxable investments. We believe that the greatest risk to investors in
the long term will be their ability to find attractively priced investments
that offer high after tax returns--returns that are currently available in the
municipal bond market.
We appreciate your investment in the Alliance Municipal Income Fund II and look
forward to reporting to you again in the coming period.
Sincerely,
John D. Carifa
Chairman and President
Susan P. Keenan
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
HOW YOUR PORTFOLIO PERFORMED
OVER THE PAST SIX MONTHS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
The Portfolios' Class A shares total returns for the periods ended September
30, 1996 are shown below. We've also shown, for comparison, returns for the
overall municipal bond market, represented by the unmanaged Lehman Brothers
Long Municipal Bond Index, which includes approximately 15,000 issues with
maturities exceeding 22 years. Current yields and returns for Class B and Class
C shares are on the next page.
CUMULATIVE TOTAL RETURNS CLASS A SHARES
PERIODS ENDED SEPTEMBER 30, 1996
SIX MONTHS TWELVE MONTHS
---------- -------------
Arizona Portfolio 5.21% 6.84%
Florida Portfolio 4.05% 7.45%
Massachusetts Portfolio 7.56% 10.25%
Michigan Portfolio 4.77% 7.54%
Minnesota Portfolio 5.13% 6.95%
New Jersey Portfolio 4.26% 6.57%
Ohio Portfolio 3.20% 6.72%
Pennsylvania Portfolio 4.39% 8.17%
Virginia Portfolio 4.63% 9.39%
Lehman Brothers Long Municipal Bond Index 4.32% 8.40%
TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES OF CLASS A SHARES AS OF
SEPTEMBER 30, 1996.
INVESTMENT OBJECTIVE AND POLICIES
_______________________________________________________________________________
The nine Portfolios of Alliance Municipal Income Fund II, by investing
principally in high-yielding, predominantly medium quality municipal
securities, seek to provide their shareholders with the highest level of income
exempt from Federal and state tax that is available without assuming undue
risk. These securities generally offer current yield above those of higher
quality municipal obligations.
3
INVESTMENT RESULTS
AS OF SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------ TAXABLE
WITHOUT SALES CHARGE WITH SALES CHARGE EQUIVALENT
-------------------- -------------------- 30 DAY YIELD IN 36%
1 SINCE 1 SINCE SEC TAX BRACKET#
-------- ---------- -------- ---------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
YEAR INCEPTION* YEAR INCEPTION* YIELD# (AT NAV)
ARIZONA PORTFOLIO
Class A Shares +6.84% +7.63% +2.26% +5.67% 5.26% 9.20%
Class B Shares +6.10% +6.88% +3.10% +6.49% 4.81% 8.08%
Class C Shares +6.00% +6.88% +5.00% +6.88% 4.81% 8.08%
FLORIDA PORTFOLIO
Class A Shares +7.45% +5.12% +2.83% +3.74% 5.37% 8.78%
Class B Shares +6.78% +4.37% +3.78% +4.37% 4.91% 7.64%
Class C Shares +6.78% +4.37% +5.78% +4.37% 4.91% 7.64%
MASSACHUSETTS PORTFOLIO
Class A Shares +10.25% +9.82% +5.52% +7.95% 5.59% 10.01%
Class B Shares +9.52% +9.02% +6.52% +8.67% 5.15% 8.86%
Class C Shares +9.52% +9.03% +8.52% +9.03% 5.15% 8.86%
MICHIGAN PORTFOLIO
Class A Shares +7.54% +6.93% +2.94% +5.18% 5.12% 8.91%
Class B Shares +6.80% +6.18% +3.80% +5.82% 4.65% 7.80%
Class C Shares +6.80% +6.18% +5.80% +6.18% 4.65% 7.80%
MINNESOTA PORTFOLIO
Class A Shares +6.95% +4.58% +2.41% +3.22% 5.42% 9.53%
Class B Shares +6.15% +3.81% +3.15% +3.81% 4.96% 8.25%
Class C Shares +6.03% +3.81% +5.03% +3.81% 4.97% 8.25%
NEW JERSEY PORTFOLIO
Class A Shares +6.57% +5.00% +2.02% +3.62% 5.14% 8.91%
Class B Shares +5.66% +4.21% +2.66% +4.21% 4.67% 7.66%
Class C Shares +5.66% +4.21% +4.66% +4.21% 4.67% 7.66%
OHIO PORTFOLIO
Class A Shares +6.72% +4.67% +2.22% +3.30% 5.41% 9.39%
Class B Shares +5.82% +3.89% +2.82% +3.89% 4.95% 8.14%
Class C Shares +5.82% +3.89% +4.82% +3.89% 4.96% 8.14%
PENNSYLVANIA PORTFOLIO
Class A Shares +8.17% +5.55% +3.55% +4.16% 5.28% 9.13%
Class B Shares +7.38% +4.80% +4.38% +4.80% 4.80% 7.94%
Class C Shares +7.37% +4.80% +6.37% +4.80% 4.81% 7.94%
VIRGINIA PORTFOLIO
Class A Shares +9.39% +8.58% +4.71% +6.67% 5.34% 8.92%
Class B Shares +8.57% +7.80% +5.57% +7.43% 4.88% 7.82%
Class C Shares +8.58% +7.80% +7.58% +7.80% 4.88% 7.82%
</TABLE>
The average annual total returns reflect reinvestment 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 purchased prior to July 1, 1996, are not subject to
front-end or contingent deferred sales charges. Class C shares purchased on or
after July 1, 1996, are subject to a contingent deferred sales charge of 1% on
redemptions made within the first year after purchase. 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; MI, 2/25/94; FL, MN, NJ, OH, PA, 6/25/93; MA,
3/29/94; VA, 4/29/94.
# Yields are for the 30 days ended September 30, 1996.
4
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
$10,000 INVESTMENT OVER LIFE OF FUND
ARIZONA PORTFOLIO
6/30/94 TO 9/30/96
$12,500
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
Arizona Portfolio
Class A $11,435
Arizona Portfolio
LB Long Municipal Bond Index
Lipper Arizona Municipal Debt Funds Average
6/30/94
9/30/96
FLORIDA PORTFOLIO
6/30/93 TO 9/30/96
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
$8,500
Florida Portfolio
Class A $11,276
Florida Portfolio
LB Long Municipal Bond Index
Lipper Florida Municipal Debt
Funds Average
6/30/93
9/30/96
MASSACHUSETTS PORTFOLIO
3/31/94 TO 9/30/96
$12,500
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
Massachusetts Portfolio
Class A $12,117
Massachusetts Portfolio
LB Long Municipal Bond Index
Lipper Massachusetts Municipal Debt Funds Average
3/31/94
9/30/96
See Page 8 for footnotes.
5
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
$10,000 INVESTMENT OVER LIFE OF FUND
MICHIGAN PORTFOLIO
2/28/94 TO 9/30/96
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
Michigan Portfolio
Class A $11,402
Michigan Portfolio
LB Long Municipal Bond Index
Lipper Michigan Municipal Debt Funds Average
2/28/94
9/30/96
MINNESOTA PORTFOLIO
6/30/93 TO 9/30/96
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
Minnesota Portfolio
Class A $11,091
Minnesota Portfolio
LB Long Municipal Bond Index
Lipper Minnesota Municipal Debt Funds Average
6/30/93
9/30/96
NEW JERSEY PORTFOLIO
6/30/93 TO 9/30/96
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
New Jersey Portfolio
Class A $11,234
New Jersey Portfolio
LB Long Municipal Bond Index
Lipper New Jersey Municipal Debt Funds Average
6/30/93
9/30/96
See Page 8 for footnotes.
6
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
$10,000 INVESTMENT OVER LIFE OF FUND
OHIO PORTFOLIO
6/30/93 TO 9/30/96
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
Ohio Portfolio Class A $11,119
Ohio Portfolio
LB Long Municipal Bond Index
Lipper Ohio Municipal Debt Funds Average
6/30/93
9/30/96
PENNSYLVANIA PORTFOLIO
6/30/93 TO 9/30/96
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
Pennsylvania Portfolio Class A $11,428
Pennsylvania Portfolio
LB Long Municipal Bond Index
Lipper Pennsylvania Municipal Debt Funds Average
6/30/93
9/30/96
See Page 8 for footnotes.
7
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
$10,000 INVESTMENT OVER LIFE OF FUND
VIRGINIA PORTFOLIO
4/30/94 TO 9/30/96
$12,500
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
Virginia Portfolio
Class A $11,699
Virginia Portfolio
LB Long Municipal Bond Index
Lipper Virginia Municipal Debt Funds Average
4/30/94
9/30/96
ABOUT YOUR PORTFOLIO'S HYPOTHETICAL INVESTMENT...
These charts illustrate the total value of assumed $10,000 investments in each
of Alliance Municipal Income Fund's Portfolios' Class A shares (since
inception). The charts assume the deduction of the maximum 4.25% sales charges
from the initial $10,000 investments and assume the reinvestment of dividends
and capital gains. Performance for Class B and Class C shares will vary from
the results shown in these illustrations due to differences in expenses charged
to those classes. Results should not be considered representative of future
gain or loss in capital value or dividend income.
The Lehman Brothers Long Municipal Bond Index includes 15,000 issues with
maturities exceeding 22 years. The bonds in this Index are a combination of
both revenue and general obligation issues, and carry a rating of BAA/Baa or
higher.
The Lipper Arizona Municipal Debt Funds Average reflects performance of 23
funds; the Lipper Florida Municipal Debt Funds Average reflects performance of
35 funds; the Lipper Massachusetts Municipal Debt Funds Average reflects
performance of 37 funds; the Lipper Michigan Municipal Debt Funds Average
reflects performance of 32 funds; the Lipper Minnesota Municipal Debt Funds
Average reflects performance of 24 funds; the Lipper New Jersey Municipal Debt
Funds Average reflects performance of 27 funds; the Lipper Ohio Municipal Debt
Funds Average reflects performance of 30 funds; the Lipper Pennsylvania
Municipal Debt Funds Average reflects performance of 37 funds; and the Lipper
Virginia Municipal Debt Funds Average reflects performance of 27 funds. The
funds tracked by Lipper Analytical Services have generally similar investment
objectives to the applicable Alliance Municipal Income Fund Portfolio, although
some of the funds may have somewhat different investment policies.
When comparing an Alliance Municipal Income Fund Portfolio to the corresponding
index and average, you should note that the Portfolios' performance reflects
the maximum sales charge of 4.25%, while no such charges are reflected in the
performance of the index or averages.
8
ARIZONA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-112.5%
ARIZONA-96.1%
AAA Glendale - IDA
(Midwestern Univ) Ser 96A
6.00%, 5/15/26 $ 480 $ 490,435
NR Goodyear Assessment District
Dist No. 1 Ser 96C
7.25%, 7/01/16 1,500 1,505,625
AAA Maricopa Cnty IDA Hlth Fac Rev
Ser 93B (Catholic Healthcare West)
7.363%, 7/01/13 (a) 1,245 1,224,595
AA+ Maricopa Cnty IDR
(Citizens Utilities) Ser 95 AMT
6.20%, 5/01/30 465 478,634
AAA Maricopa Cnty Sch Dist #80 GO
(Chandler) FGIC Ser 95
6.00%, 7/01/13 465 484,776
AAA Mohave Cnty IDA MFHR Care Rev
(Chris & Silver Ridge)
GNMA Coll Ser 96
6.375%, 11/01/31 1,000 1,034,620
AAA Mohave Cnty IDA
Baptist Hosp Sys MBIA
5.75%, 9/01/26 420 415,829
AA- Mohave Cnty IDR (Cargill) Ser 95A AMT
6.70%, 3/01/20 450 482,526
AAA Phoenix Arpt Rev MBIA Ser 94D AMT
6.30%, 7/01/10 475 499,657
AA+ Phoenix Civic Plaza Bldg Corp Senior
Lien Excise Tax Ser 94
6.00%, 7/01/12 465 478,071
AA Phoenix IDA MFHR
(Woodstone & Silver Springs)
6.25%, 4/01/23 490 496,757
AAA Tempe IDA MFHR (Quadrangles) FHA
6.25%, 6/01/26 475 481,603
AAA Yuma IDA AMT (Alexandrite Sands Apt)
MFHR FHA Ser 90 AMT
7.70%, 12/01/29 1,750 1,839,950
-----------
9,913,078
PUERTO RICO-16.4%
BB+ Puerto Rico Port Auth Rev Spec Fac
(American Airlines) Ser 96A AMT
6.25%, 6/01/26 1,675 1,694,179
TOTAL INVESTMENTS-112.5%
(cost $11,357,729) 11,607,257
Other assets less liabilities-(12.5%) (1,289,468)
NET ASSETS-100% $10,317,789
# Unaudited
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
9
FLORIDA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-103.7%
FLORIDA-98.6%
AAA Brevard Cnty IDR (NUI Corp Project)
AMBAC Ser 94
AMT 6.40%, 10/01/24 $3,000 $ 3,179,400
BBB+ Collier Cnty Hlth Fac
(The Moorings Proj) Ser 94
7.00%, 12/01/19 2,000 2,094,480
AAA Dade Cnty Arpt Rev
(Miami Int'l Arpt)
MBIA Ser 95B AMT
6.00%, 10/01/24 2,080 2,108,392
A* Dade Cnty Spec Obl
(Courthouse Ctr Proj) Ser 95
6.10%, 4/01/20 3,000 3,077,100
AAA Escambia Cnty Hsg Fin Auth
SFMR FNMA/GNMA Coll Ser 96B AMT
6.25%, 4/01/28 3,300 3,320,130
Baa1* Escambia Cnty PCR
(Champion Int'l Corp Proj) Ser 96 AMT
6.40%, 9/01/30 5,000 5,028,600
AAA Florida Hsg Fin Agy
(Brittany of Rosemont) MFHR AMBAC AMT
6.25%, 7/01/35 1,350 1,357,411
AAA Florida Hsg Fin Agy
(Landings Boot Ranch)
AMBAC Ser 95K AMT
6.10%, 11/01/35 2,050 2,025,789
AAA Florida Hsg Fin Agy
(Turtle Creek Apts Proj)
AMBAC Ser 96C AMT
6.20%, 5/01/36 3,245 3,250,095
AAA Florida Hsg Fin Agy Home
Mtg SFMR Ser 95A AMT
6.65%, 1/01/24 6,845 7,096,143
AAA Florida Hsg Fin Agy SFMR
GNMA/FNMA Coll Ser 94B AMT
6.65%, 7/01/26 1,125 1,155,668
AAA Jacksonville Wtr & Swr
(United Waterworks)
AMBAC Ser 95 AMT
6.35%, 8/01/25 1,500 1,569,180
Aa3* North Miami Hlth Fac Auth Rev
(Catholic Hlth Svcs Oblig Grp)
6.00%, 8/15/24 1,200 1,188,660
NR Northern Palm Beach Cnty Wtr Ctl
& Imp Dist - Unit Dev 9A-A,
7.30%, 8/01/27 15,600 15,695,784
A+ Palm Beach Cnty IDR
(Geriatric Care Inc Prog)
6.625%, 12/01/26 4,000 4,084,960
Aaa* Pinellas Cnty Hsg Fin Auth
SFMR Ser 94A AMT
6.55%, 8/01/27 3,145 3,229,412
Baa* Volusia Cnty Ed Fac Auth Rev
(Embry-Riddle Aero Univ)
6.125%, 10/15/26 3,200 3,225,632
AA Volusia Cnty Hlth Fac
Auth Rev (John Knox Village)
6.00%, 6/01/17 3,000 3,062,790
------------
65,749,626
WASHINGTON-4.9%
BBB+ Pilchuck Dev Pub Corp
Spec Fac Arpt Rev
(Tramco Inc. Proj)
6.00%, 8/01/23 3,400 3,294,022
UTAH-0.2%
A-1+ Morgan Cnty Solid Waste Disposal Rev
(Holnam Inc. Proj) AMT VRDN (a)
3.90%, 8/01/31 100 100,000
TOTAL INVESTMENTS-103.7%
(cost $68,003,822) 69,143,648
Other assets less liabilities- (3.7%) (2,490,839)
NET ASSETS-100% $66,652,809
# Unaudited
* Moody's Rating
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as prime
interest rate). This instrument is payable on demand and is secured by letters
of credit or other credit support agreements from major banks.
See Glossary of Terms on page 17.
See notes to financial statements.
10
MASSACHUSETTS PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-97.6%
MASSACHUSETTS-86.1%
AAA Chelsea GO AMBAC Ser 94
6.00%, 6/15/14 $ 545 $ 564,805
AAA Holyoke GO FSA Ser 93B
6.125%, 8/01/13 530 552,493
A+ Massachusetts Bay
Transportation Auth Ser 92C
6.10%, 3/01/23 540 554,515
AAA Massachusetts Ed Fin Auth
Educational Loan Rev
AMBAC Ser 94E AMT
6.00%, 1/01/12 560 562,397
AAA Massachusetts Hlth & Ed
Fac Auth Hosp Rev (Beth Israel Hosp)
AMBAC Ser G-4
8.522%, 7/01/25 (a) 2,000 2,020,500
AAA Massachusetts Hsg Fin Agy MFHR
(Harbor Pt Development)
AMBAC Ser 96A AMT
6.40%, 12/01/15 550 555,791
A+ Massachusetts Hsg Fin Auth
SFMR Ser 40 AMT
6.65%, 12/01/27 2,215 2,272,546
AAA Massachusetts Ind Fin Agy
Rev (Nantucket Elec Proj)
AMBAC Ser 96A AMT
5.875%, 7/01/17 550 550,170
AAA Massachusetts Ind Fin Auth
Rev (Heights Crossing Ltd)
FHA Ser 95 AMT
6.15%, 2/01/35 555 555,389
AAA Massachusetts Muni Wholesale Elec Pwr
Supply Sys MBIA Ser 92A
6.00%, 7/01/18 510 514,126
AA- Massachusetts Wtr Pollution Abatement
(So Essex Prog) Ser 94A
6.375%, 2/01/15 530 560,263
A1* New England Ed Loan Mktg
(Student Loan Rev) Ser 93H AMT
6.90%, 11/01/09 525 560,968
------------
9,823,963
PUERTO RICO-11.5%
BB+ Puerto Rico Port Auth Rev Spec Fac
(American Airlines) Ser 96A AMT
6.25%, 6/01/26 1,295 1,309,828
TOTAL INVESTMENTS-97.6%
(cost $10,886,836) 11,133,791
Other assets less liabilities-2.4% 274,247
NET ASSETS-100% $11,408,038
# Unaudited
* Moody's Rating.
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
11
MICHIGAN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MUNICIPALBONDS-97.5%
MICHIGAN-92.6%
BBB Detroit GO Ser 93
6.35%, 4/01/14 $ 665 $ 665,858
AAA Grand Rapids Swr Sys Rev
MBIA Ser 92
6.00%, 1/01/22 645 655,901
AAA Kalamazoo Hosp Fin Auth
6.608%, 6/01/11(a) 1,500 1,365,555
AAA Kent Cnty Arpt Fac Rev
(Kent Cnty Int'l) Ser 95 AMT
6.10%, 1/01/25 635 648,506
AAA Michigan Hosp Fin Auth Hosp Rev
(St Johns Hosp) AMBAC Ser 92A
6.00%, 5/15/13 645 661,951
AA+ Michigan Hsg Dev Auth
SFMR Mortgage Rev Ser 95B AMT
7.05%, 6/01/26 1,860 1,940,482
AA Michigan Muni Bond Auth
Revolving Fund Ser 93
5.40%, 10/01/14 675 658,314
AAA Michigan Strategic Fund
(Detroit Edison) MBIA Ser 95AA
6.40%, 9/01/25 625 657,025
A- Michigan Strategic Fund
PCR (General Motors) Ser 95
6.20%, 9/01/20 $640 $654,208
NR Romulus Tax increment
Finance Auth Rev
6.75%, 11/01/19 1,585 1,633,929
AAA Three Rivers Cmnty Schs
GO MBIA Ser 96 School Dist
6.00%, 5/01/23 655 676,497
AA Troy MI Downtown Dev
Auth Asset Gty Ser 95A
6.375%, 11/01/18 1,675 1,744,462
AAA Yale Pub Sch Dist GO AMBAC
5.50%, 5/01/23 670 647,287
------------
12,609,975
PUERTO RICO-4.9%
BB+ Puerto Rico Port Auth Rev Spec Fac
(American Airlines) Ser 96A AMT
6.25%, 6/01/26 660 667,557
TOTAL INVESTMENTS-97.5%
(cost $12,980,092) 13,277,532
Other assets less liabilities-2.5% 338,726
NET ASSETS-100% $13,616,258
# Unaudited
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
12
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MINNESOTA MUNICIPAL BONDS-97.5%
BBB+ Bass Brook PCR
(Minn Power & Light) Ser 92
6.00%, 7/01/22 $ 900 $ 896,391
AAA Burnsville Eagan Savage GO
Ind Sch Dist #191 CGIC Ser 95A
6.20%, 2/01/17 850 890,979
AA+ Duluth Arpt Lease Rev St
Secured GO Ser 95C AMT
6.25%, 8/01/14 860 890,556
AAA Lakeville Ind Sch Dist #194
GO FGIC Ser 93
5.60%, 2/01/18 850 837,445
BBB+ Minneapolis Common Bond
Fund Community Dev Agy Ser 95-2 AMT
6.625%, 12/01/15 1,245 1,293,045
AAA Minneapolis GO SFMR Homeownership
Renovation Stage III Ser 93 AMT
5.70%, 12/01/23 720 694,894
AAA Minneapolis Cop Special School
Dist #1 MBIA Ser 96A
5.90%, 2/01/17 880 892,514
NR Minnesota Agric & Econ Dev Brd
IDR Small Business Loan Prog
Ser 96A AMT
6.75%, 8/01/16 1,450 1,479,420
NR Minnesota Agric & Econ Dev IDR Small
Business Loan Prog Ser 96B AMT
7.00%, 8/01/16 750 772,815
Baa1* Minnesota Higher Ed Fac
Auth (Hamline Univ) Ser 4-I
6.00%, 10/01/16 790 791,754
AA+ Minnesota Hsg Fin Agy
SFMR Ser 89A AMT
7.90%, 7/01/19 2,260 2,362,920
AAA Minnesota Pub Fac Auth
Wtr Pol Ctl Rev Ser 95A
6.25%, 3/01/15 220 231,735
AAA Minnesota Pub Fac Auth
Wtr Pol Ctl Rev Ser 95A
6.25%, 3/01/16 610 642,537
AA+ Rochester Hlth Care Fac Hosp Rev
Ser 92H Mayo Med Cntr
8.067%, 11/15/15 (a) 3,000 3,083,490
BBB- South St. Paul Hsg & Redev Hosp Rev
(Health East Proj) Ser 94
6.75%, 11/01/09 870 894,899
AAA St Francis GO Ind Sch Dist # 15
CGIC Ser 95A
6.375%, 2/01/16 835 894,594
TOTAL INVESTMENTS-97.5%
(cost $17,075,505) 17,549,988
Other assets less liabilities-2.5% 459,002
NET ASSETS-100% $18,008,990
# Unaudited
* Moody's Rating.
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
13
NEW JERSEY PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
NEW JERSEY MUNICIPAL BONDS-98.3%
AAA Essex Cnty Impt Auth Util
Rev (Orange Twp) MBIA Ser 93
6.00%, 12/01/17 $2,510 $ 2,562,911
AA Gloucester Cnty PCR
(Mobil Oil Refining) Ser 93
5.625%, 12/01/28 3,000 2,936,430
AAA Landis Swr Rev
7.27%, 9/19/19 (a) 3,250 3,231,670
AA- New Jersey Eco Dev Auth
(Anheuser-Busch Proj) Ser 95 AMT
5.85%, 12/01/30 8,600 8,586,498
AAA New Jersey Eco Dev Auth
(Elizabethtown Wtr Co)
MBIA Ser 95 AMT
5.60%, 12/01/25 4,000 3,822,840
AAA New Jersey Eco Dev Auth
(Hackensack Wtr Co)
MBIA Ser 94B AMT
5.90%, 3/01/24 3,850 3,858,008
AAA New Jersey Eco Dev Auth
(Pub Ser Elec & Gas)
MBIA Ser 94A AMT
6.40%, 5/01/32 3,700 3,844,633
BB+ New Jersey Eco Dev Auth
Spec Fac (American Airlines) AMT
7.10%, 11/01/31 4,500 4,705,290
AAA New Jersey Eco Dev Auth Wtr Fac
(NJ American Wtr Co) FGIC AMT
6.875%, 11/01/34 5,000 5,507,750
BBB- New Jersey Hlth Care Fac
(Franciscan Sisters,St. Mary's Hosp)
Ser 93
5.875%, 7/01/12 2,755 2,652,101
AAA New Jersey Hlth Care Fac Fin Hlth
Fac (Monmouth Med Ctr) CGIC Ser 93
6.25%, 7/01/24 2,750 2,851,173
BBB New Jersey Hlth Care Fac
(Englewood Hosp) Ser 94
6.75%, 7/01/24 4,230 4,363,372
AAA New Jersey Hsg & Mtg Fin
Agy MBIA Ser 95O AMT
6.35%, 10/01/27 5,000 5,047,200
AAA New Jersey Hsg & Mtg Fin
Agy AMBAC Ser 96A AMT
6.25%, 5/01/28 1,050 1,054,221
A+ New Jersey Hsg & Mtg Fin
Agy MFHR (Sect 8) Ser 1
6.70%, 11/01/28 8,500 8,782,625
AA- New Jersey Hwy Auth
Garden State Parkway
6.25%, 1/01/14 1,250 1,299,212
AAA Passaic Valley Sewer Comm
AMBAC Ser 92D
5.75%, 12/01/15 3,400 3,408,466
AA- Port Auth of NY & NJ Cons
Rev 95th Ser AMT
6.125%, 7/15/29 3,770 3,817,954
AA Salem Cnty NJ Waste Disposal Auth
(E. I. Dupont) Ser 92A
6.125%, 7/15/22 3,500 3,554,740
TOTAL INVESTMENTS-98.3%
(cost $73,595,291) 75,887,094
Other assets less liabilities-1.7% 1,310,805
NET ASSETS-100% $77,197,899
# Unaudited
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
14
OHIO PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
OHIO MUNICIPAL BONDS-98.8%
BBB- Butler Cnty Hosp Rev
(Fort Hamilton Hughes)
7.50%, 1/01/10 $1,400 $ 1,470,350
AAA Columbus Municipal Arpt
Rev (Columbus Int'l Arpt)
MBIA Ser 94A AMT
6.25%, 1/01/24 2,190 2,269,015
A Cuyahoga Cnty Hosp Rev
(Meridia Health Sys) Ser 93
6.25%, 8/15/24 2,360 2,408,262
AAA Cuyahoga Cnty MFHR
(Nat'l Terminal Apts Proj)
FNMA Coll AMT
6.40%, 7/01/16 5,180 5,213,307
BBB- Dayton Spec Fac Rev
(Emery Air Freight) Ser 96D
6.20%, 10/01/09 8,000 8,042,480
BBB Hamilton Cnty Hlth Sys
(Hlth Fac & Franciscan
Sisters Providence Hosp)
6.875%, 7/01/15 2,000 2,046,020
Aaa* Kent Ohio MFHR
(Silver Meadows Apt Proj)
GNMA Coll Ser 95 AMT
7.15%, 12/20/26 2,000 2,113,880
NR Mahoning Valley Sanitary
Dist Oblig Ser 94
7.75%, 5/15/14 2,500 2,586,925
Baa3* Ohio Air Quality Dev Auth
(Columbus Southern Pwr) PCR Ser 85B
6.25%, 12/01/20 2,400 2,409,696
AAA Ohio Air Quality Dev Auth
(JMG Funding/Ohio Pwr)
AMBAC Ser 94B AMT
6.375%, 4/01/29 2,150 2,247,739
AA- Ohio Air Quality Dev Auth PCR
(Dayton Pwr & Light) Ser 92B
6.40%, 8/15/27 2,100 2,187,906
AAA Ohio Capital Corp Sec 8
Assist MBIA FHA Ser 95E
6.35%, 1/01/22 1,965 1,991,547
Aa* Ohio Hsg Fin Agy Mtg FHA
(Insured Bridgeview Villas II)
MFHR AMT
6.45%, 12/01/33 1,965 1,994,691
AAA Ohio Hsg Fin Agy Residential Mtg SFMR
GNMA Coll Ser 94 B2 AMT
6.70%, 3/01/25 5,885 6,047,367
A Ohio St Wtr Dev Auth Solid
Waste Disposal
(North Star BHP - Broken Hill) AMT
6.45%, 9/01/20 1,125 1,155,049
AA- Ohio Turnpike Commission
Turnpike Rev Ser 94A
5.75%, 2/15/24 1,450 1,438,023
Aa3* Toledo-Lucas Cnty Port Auth
(Cargill Inc Proj)
5.90%, 12/01/15 2,360 2,394,905
TOTAL INVESTMENTS-98.8%
(cost $47,002,761) 48,017,162
Other assets less liabilities-1.2% 573,400
NET ASSETS-100% $48,590,562
# Unaudited
* Moody's Rating.
See Glossary of Terms on page 17.
See notes to financial statements.
15
PENNSYLVANIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-97.4%
PENNSYLVANIA-94.5%
AAA Allegheny Cnty Arpt Rev
(Pittsburgh Int'l) FSA Ser 92B AMT
6.625%, 1/01/22 $3,020 $ 3,212,374
AAA Berks Cnty GO FGIC Ser 92
Zero Coupon, 11/15/18 6,000 1,658,220
A- Bradford Cnty IDA Solid Waste Disposal
(Int'l Paper) Ser 95A AMT
6.60%, 3/01/19 2,500 2,587,300
A- Bradford Cnty IDA Solid Waste
Disposal (Int'l Paper) Ser 95B AMT
5.90%, 12/01/19 5,620 5,467,417
A- Cambria Twnship Ind Wtr
Auth Rev Ser 93A AMT
6.00%, 12/01/12 3,100 3,215,816
A New Morgan IDA Solid Waste Disp Rev
(New Morgan Landfill Co Inc PJ)
Ser 94 AMT
6.50%, 4/01/19 3,125 3,225,406
BBB- Pennsylvania Econ Dev Fin Auth
(Macmillan Bloedel Clarion Proj)
Ser 95 AMT
7.60%, 12/01/20 5,000 5,536,500
BBB+ Pennsylvania Econ Dev Auth
Wastewater Rev
(Sun Company) Ser 94A AMT
7.60%, 12/01/24 5,000 5,564,550
AA+ Pennsylvania Hsg Fin Agy SFMR
Ser 94 41B AMT
6.65%, 4/01/25 5,000 5,095,000
AA+ Pennsylvania Hsg Fin Agy SFMR
Ser 92 35D
8.414%, 4/01/25(a) 7,500 7,266,675
AAA Pennsylvania Higher Ed
Student Loan AMBAC Ser 88D AMT
6.05%, 1/01/19 3,200 3,227,712
AAA Pennsylvania Turnpike
Commission Oil Franchise
Tax Rev Ser 94A AMBAC
6.00%, 12/01/19 3,000 3,089,400
AAA Philadelphia Airport
System Rev Ser 95A AMBAC AMT
6.10%, 6/15/25 3,175 3,227,007
A- Philadelphia Hosp Rev
(Temple Univ) Ser 93A
6.625%, 11/15/23 3,100 3,158,032
AA Potter Cnty Hosp Auth Rev
(Charles Cole Memorial Hosp)
Asset Guaranty Ser 96
6.05%, 8/01/24 3,190 3,200,368
BBB+ Warren Cnty Hosp Rev
(Warren Gen Hosp Proj) Ser 94B
7.00%, 4/01/19 2,200 2,283,314
AAA Westmoreland Cnty GO FGIC Ser 93C
Zero Coupon, 8/15/17 3,160 939,152
------------
61,954,243
PUERTO RICO-2.9%
BB+ Puerto Rico Port Auth Rev Spec Fac
(American Airlines) Ser 96A AMT
6.25%, 6/01/26 1,845 1,866,125
TOTAL INVESTMENTS-97.4%
(cost $62,215,579) 63,820,368
Other assets less liabilities-2.6% 1,719,430
NET ASSETS-100% $65,539,798
# Unaudited
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
16
VIRGINIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------
VIRGINIA MUNICIPAL BONDS-97.7%
Aa3* Chesapeake Ind Dev Auth IDR
(Cargill Inc Proj) Ser 93
5.875%, 3/01/13 $ 295 $ 301,027
A+ Gile Cnty IDR (Hoechst Celanese)
Ser 96 AMT
6.45%, 5/01/26 300 308,607
AA Henrico Cnty IDR
(Henrico Cnty Reg Jail) Ser 94
7.125%, 8/01/21 265 300,849
AAA Loudon Cnty IDR Hosp Rev
(Loudon Hospital Ctr) FSA Ser 95
5.80%, 6/1/20 300 301,629
AAA Metro Airports Auth Airport MBIA Rev
Ser 94A AMT
5.75%, 10/01/20 320 313,475
AAA Newport News IDA (Mennowood Cmntys)
MFHR Ser 96A GNMA
6.25%, 8/01/36 580 585,029
A* Prince William Cnty IDA Hosp
Rev (Potomac Hosp Group) Ser 95
6.75%, 10/01/15 290 306,843
AAA Richmond Metro Auth
Expwy Rev FGIC Ser 92B
6.25%, 7/15/22 300 310,032
NR Staunton IDA Ed Fac
(Mary Baldwin College) Ser 96
6.75%, 11/01/21 1,145 1,146,786
AAA Suffolk Redev & Hsg Auth MFHR
(Prince William Commons) FNMA
Ser 95A AMT
6.50%, 6/01/29 600 609,000
AA Virginia Beach Hlth Care
Hosp Rev (Sentara Bayside)
6.30%, 11/01/21 300 307,191
AA Virginia College Bldg Auth Ed Fac Rev
(Washington & Lee)
5.80%, 1/01/24 315 312,408
AA+ Virginia Hsg Dev Auth SFMR
(Commonwealth Mtg) Ser 94G AMT
7.125%, 7/01/22 850 878,883
AA Virginia Resources Auth Swr Rev
(Hopewell Regl Waste Wtr) Ser 95A AMT
6.00%, 10/01/25 310 313,227
TOTAL INVESTMENTS-97.7%
(cost $6,232,452) 6,294,986
Other assets less liabilities-2.3% 146,795
NET ASSETS-100% $6,441,781
# Unaudited
* Moody's Rating.
Glossary Of Terms
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.
GNMA Government National Mortgage Association
GO General Obligation
IDA Industrial Development Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Note
See notes to financial statements.
17
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSETTS
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS
Investment in securities, at value (cost:
$11,357,729, $68,003,822, $10,886,836, $12,980,092,
$17,075,505, $73,595,291, $47,002,761, $62,215,579,
$6,232,452, respectively) $11,607,257 $69,143,648 $11,133,791
Cash -0- -0- 6,227
Receivable for investment securities sold -0- -0- 15,528
Interest receivable 189,438 1,178,550 169,091
Receivable due from Adviser 127,559 304 119,545
Receivable for shares of beneficial interest sold 72,461 233,628 4,850
Other assets 23,769 25,341 17,756
Total assets 12,020,484 70,581,471 11,466,788
LIABILITIES
Due to custodian 135,775 255,212 -0-
Payable for investment securities purchased 1,500,000 3,300,000 -0-
Dividends payable 14,548 92,663 16,389
Payable for shares of beneficial interest redeemed 7,433 202,177 -0-
Distribution fee payable 5,680 46,104 7,381
Advisory fee payable -0- -0- -0-
Accrued expenses and other liabilities 39,259 32,506 34,980
Total liabilities 1,702,695 3,928,662 58,750
NETASSETS $10,317,789 $66,652,809 $11,408,038
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 9,993 $ 68,455 $ 10,521
Additional paid-in capital 10,069,786 71,949,865 10,958,066
Distributions in excess of net investment income (14,548) (92,663) (16,389)
Accumulated net realized gain (loss) on investments 3,030 (6,412,674) 208,885
Net unrealized appreciation of investments 249,528 1,139,826 246,955
$10,317,789 $66,652,809 $11,408,038
CLASS A SHARES
Net assets $ 4,409,048 $14,296,967 $ 3,211,330
Shares of beneficial interest outstanding 427,051 1,469,256 295,976
CLASS B SHARES
Net assets $ 5,198,677 $22,234,840 $ 3,683,265
Shares of beneficial interest outstanding 503,513 2,283,350 339,774
CLASS C SHARES
Net assets $ 710,064 $30,121,002 $ 4,513,443
Shares of beneficial interest outstanding 68,776 3,092,885 416,382
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share $10.32 $ 9.73 $10.85
Sales charge--4.25% of public offering price .46 .43 .48
Maximum offering price $10.78 $10.16 $11.33
CLASS B SHARES
Net asset value and offering price per share $10.32 $ 9.74 $10.84
CLASS C SHARES
Net asset value and offering price per share $10.32 $ 9.74 $10.84
</TABLE>
See NOTES TO FINANCIAL STATEMENTS.
18
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$13,277,532 $17,549,988 $75,887,094 $48,017,162 $63,820,368 $6,294,986
1,627,652 -0- -0- -0- 73,177 87,802
25,416 250,362 -0- -0- 115,000 1,000,000
222,861 230,681 1,490,543 653,688 1,474,732 98,053
88,077 93,024 -0- 9,546 -0- 130,244
12,944 10,291 55,962 210,595 332,455 2,227
13,660 23,895 23,895 24,985 32,432 15,168
15,268,142 18,158,241 77,457,494 48,915,976 65,848,164 7,628,480
-0- 71,666 19,218 139,378 -0- -0-
1,585,000 -0- -0- -0- -0- 1,145,000
18,985 24,987 101,587 65,846 78,234 8,785
4,047 8,500 32,683 49,348 157,038 1,094
7,515 12,873 54,037 36,094 38,770 3,705
-0- -0- 8,179 -0- 4,904 -0-
36,337 31,225 43,891 34,748 29,420 28,115
1,651,884 149,251 259,595 325,414 308,366 1,186,699
$13,616,258 $18,008,990 $77,197,899 $48,590,562 $65,539,798 $6,441,781
$ 13,454 $ 18,799 $ 79,416 $ 50,559 $ 66,489 $ 6,091
13,195,320 19,233,242 80,557,528 51,665,618 66,764,639 6,216,982
(18,985) (24,987) (101,587) (65,846) (78,234) (8,785)
129,029 (1,692,547) (5,629,261) (4,074,170) (2,817,885) 164,959
297,440 474,483 2,291,803 1,014,401 1,604,789 62,534
$13,616,258 $18,008,990 $77,197,899 $48,590,562 $65,539,798 $6,441,781
$ 6,122,712 $ 3,165,062 $15,520,265 $ 6,054,197 $21,103,652 $2,455,452
605,047 330,400 1,597,418 630,134 2,142,109 232,136
$ 3,553,160 $ 8,291,382 $39,098,854 $25,333,901 $30,439,872 $3,344,483
351,119 865,489 4,021,823 2,635,922 3,087,401 316,301
$ 3,940,386 $ 6,552,546 $22,578,780 $17,202,464 $13,996,274 $ 641,846
389,225 683,989 2,322,310 1,789,800 1,419,394 60,706
$10.12 $ 9.58 $ 9.72 $ 9.61 $ 9.85 $10.58
.45 .43 .43 .43 .44 .47
$10.57 $10.01 $10.15 $10.04 $10.29 $11.05
$10.12 $ 9.58 $ 9.72 $ 9.61 $ 9.86 $10.57
$10.12 $ 9.58 $ 9.72 $ 9.61 $ 9.86 $10.57
</TABLE>
19
STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSETTS
---------- ------------ -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 485,267 $4,071,070 $ 568,876
EXPENSES
Advisory fee 49,708 407,810 57,179
Distribution fee - Class A 9,777 39,668 6,772
Distribution fee - Class B 41,509 220,314 26,336
Distribution fee - Class C 5,434 299,957 42,578
Custodian 78,110 90,644 76,475
Administrative 55,000 55,000 55,000
Audit & legal 37,673 42,034 32,578
Transfer agency 26,631 42,984 21,952
Amortization of organizational expenses 8,945 14,702 7,152
Printing 4,423 9,377 2,400
Registration 3,351 1,263 3,454
Trustees' fees 2,400 2,400 2,400
Taxes 706 728 454
Miscellaneous 3,496 3,836 1,631
Total expenses 327,163 1,230,717 336,361
Less: expenses waived and assumed by Adviser(see Note B) (232,267) (393,096) (231,724)
Net expenses 94,896 837,621 104,637
Net investment income 390,371 3,233,449 464,239
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 45,864 1,662,326 227,868
Net change in unrealized appreciation of investments 83,969 (590,349) 132,436
Net gain on investments 129,833 1,071,977 360,304
NET INCREASE IN NET ASSETS FROM OPERATIONS $520,204 $4,305,426 $824,543
</TABLE>
See notes to financial statements.
20
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
MICHIGAN MINNESOTA NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
- ---------- ------------ ------------ ------------ ------------ -----------
$ 739,899 $1,104,954 $4,530,076 $2,927,127 $3,509,673 $ 289,222
74,987 110,574 465,371 293,946 343,048 29,790
16,462 8,515 42,673 15,933 30,938 6,461
30,299 79,160 378,156 237,212 298,967 21,264
34,819 69,382 224,193 179,991 146,783 4,865
80,270 79,655 99,591 89,845 85,365 78,179
55,000 55,000 55,000 55,000 55,000 55,000
36,261 38,274 40,933 35,936 38,359 28,129
28,197 22,024 68,753 47,038 59,702 24,482
5,709 13,860 13,860 14,490 18,801 5,743
3,235 6,670 20,719 8,420 21,162 2,730
6,592 1,072 6,117 2,317 562 2,538
2,400 2,400 2,400 2,400 2,400 2,400
697 732 671 732 304 732
3,901 2,471 5,792 1,471 6,200 2,945
378,829 489,789 1,424,229 984,731 1,107,591 265,258
(218,064) (258,598) (388,236) (339,662) (243,699) (215,034)
160,765 231,191 1,035,993 645,069 863,892 50,224
579,134 873,763 3,494,083 2,282,058 2,645,781 238,998
310,017 566,704 926,101 1,554,258 1,880,108 180,231
(40,072) (399,102) (334,852) (1,132,174) (602,626) (28,212)
269,945 167,602 591,249 422,084 1,277,482 152,019
$ 849,079 $1,041,365 $4,085,332 $2,704,142 $3,923,263 $ 391,017
21
STATEMENTS OF CHANGES IN NET ASSETS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION
ARIZONA FLORIDA MASSACHUSETTS
---------------------------- ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1996 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 390,371 $ 230,706 $ 3,233,449 $ 3,383,708 $ 464,239 $ 171,242
Net realized gain (loss) on
investments 45,864 37,377 1,662,326 (1,403,139) 227,868 42,515
Net change in unrealized
appreciation (depreciation)
of investments 83,969 209,846 (590,349) 5,767,509 132,436 130,631
Net increase in net assets from
operations 520,204 477,929 4,305,426 7,748,078 824,543 344,388
DIVIDENDSAND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (172,713) (95,444) (732,184) (574,240) (125,448) (51,642)
Class B (192,483) (113,965) (1,058,719) (1,000,470) (129,553) (44,254)
Class C (25,175) (21,297) (1,442,546) (1,808,998) (209,238) (75,346)
Distributions in excess of net
investment income
Class A (10,334) (2,415) (14,102) (3,384) (3,990) (3,443)
Class B (11,517) (2,883) (20,392) (5,895) (4,120) (2,950)
Class C (1,507) (539) (27,785) (10,659) (6,654) (5,024)
Net realized gain on investments
Class A (18,449) -0- -0- -0- (12,500) -0-
Class B (25,982) -0- -0- -0- (13,699) -0-
Class C (3,713) -0- -0- -0- (30,280) -0-
TRANSACTIONS INSHARESOF BENEFICIAL
INTEREST
Net increase (decrease) 4,233,239 2,692,697 2,240,362 (9,621,625) 5,472,421 3,420,458
Total increase (decrease) 4,291,570 2,934,083 3,250,060 (5,277,193) 5,761,482 3,582,187
NET ASSETS
Beginning of year 6,026,219 3,092,136 63,402,749 68,679,942 5,646,556 2,064,369
End of year $10,317,789 $6,026,219 $66,652,809 $63,402,749 $11,408,038 $5,646,556
</TABLE>
See notes to financial statements.
22
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY
---------------------------- ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1996 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 579,134 $ 378,382 $ 873,763 $ 850,853 $ 3,494,083 $ 3,306,560
Net realized gain (loss) on
investments 310,017 126,954 566,704 (1,158,947) 926,101 (1,275,992)
Net change in unrealized
appreciation (depreciation) of
investments (40,072) 489,511 (399,102) 1,686,335 (334,852) 5,130,792
Net increase in net assets from
operations 849,079 994,847 1,041,365 1,378,241 4,085,332 7,161,360
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (284,490) (171,195) (157,583) (132,290) (747,181) (594,213)
Class B (137,182) (90,481) (381,606) (319,841) (1,724,184) (1,568,929)
Class C (157,462) (116,706) (334,574) (398,722) (1,022,718) (1,143,418)
Distributions in excess of net
investment income
Class A (16,370) (14,065) (6,547) (5,501) (53,494) (14,954)
Class B (7,894) (7,434) (15,854) (13,299) (123,442) (39,484)
Class C (9,061) (9,588) (13,899) (16,579) (73,220) (28,776)
Net realized gain on investments
Class A (83,366) -0- -0- -0- -0- -0-
Class B (44,698) -0- -0- -0- -0- -0-
Class C (49,542) -0- -0- -0- -0- -0-
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase (decrease) 3,089,421 2,909,212 860,087 (1,238,319) 9,294,813 (2,398,032)
Total increase (decrease) 3,148,435 3,494,590 991,389 (746,310) 9,635,906 1,373,554
NET ASSETS
Beginning of year 10,467,823 6,973,233 17,017,601 17,763,911 67,561,993 66,188,439
End of year $13,616,258 $10,467,823 $18,008,990 $17,017,601 $77,197,899 $67,561,993
</TABLE>
See notes to financial statements.
23
STATEMENTS OF CHANGES IN NET ASSETS (CONT.) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
OHIO PENNSYLVANIA VIRGINIA
---------------------------- ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1996 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 2,282,058 $ 2,328,229 $ 2,645,781 $ 2,580,960 $ 238,998 $ 112,959
Net realized gain (loss) on
investments 1,554,258 (2,332,469) 1,880,108 (1,548,029) 180,231 17,096
Net change in unrealized
appreciation (depreciation) of
investments (1,132,174) 4,348,549 (602,626) 3,927,440 (28,212) 132,592
Net increase in net assets from
operations 2,704,142 4,344,309 3,923,263 4,960,371 391,017 262,647
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (291,324) (184,425) (555,739) (465,490) (115,677) (72,700)
Class B (1,131,284) (1,041,482) (1,401,785) (1,330,120) (100,364) (36,282)
Class C (859,450) (1,102,322) (688,257) (785,350) (22,957) (3,977)
Distributions in excess of net
investment income
Class A (9,978) (3,226) (33,335) (16,051) (902) (2,164)
Class B (38,746) (18,217) (84,082) (45,868) (783) (1,080)
Class C (29,435) (19,282) (41,283) (27,082) (179) (119)
Net realized gain on investments
Class A -0- -0- -0- -0- (15,668) -0-
Class B -0- -0- -0- -0- (10,549) -0-
Class C -0- -0- -0- -0- (1,013) -0-
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase (decrease) 3,381,831 (6,481,382) 12,089,059 (941,588) 3,148,417 1,509,328
Total increase (decrease) 3,725,756 (4,506,027) 13,207,841 1,348,822 3,271,342 1,655,653
NET ASSETS
Beginning of year 44,864,806 49,370,833 52,331,957 50,983,135 3,170,439 1,514,786
End of year $48,590,562 $44,864,806 $65,539,798 $52,331,957 $6,441,781 $3,170,439
</TABLE>
See notes to financial statements.
24
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Municipal Income Fund II (the "Fund") which is a Massachusetts
Business Trust, 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"). 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
purchased on or after July 1, 1996 are subject to a contingent deferred sales
charge of 1% on redemptions made within the first year after purchase. All
three classes of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. The following is a summary of the significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
The Fund values municipal securities at fair value based on prices provided by
a recognized pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values.
If market quotations are not readily available from such pricing service, a
municipal security is valued by appraisal at its fair value as determined in
good faith by the Fund's Adviser, Alliance Capital Management, L.P., under
procedures established by the Fund's Board of Trustees. Short-term securities
which mature in 60 days or less are valued at amortized cost, which
approximates market value, unless this method does not represent fair value.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $68,000 for the Minnesota, $68,000 for
the New Jersey, $87,200 for the Pennsylvania, $71,000 for the Ohio, and $72,000
for the Florida Portfolios have been deferred and are being amortized on a
straight-line basis through June, 1998. Organization expenses of approximately
$25,550 for the Michigan, $31,450 for the Massachusetts, $27,200 for the
Virginia and $41,750 for the Arizona 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 premium and accrues
original issue discount and market discount 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 and are determined in accordance with income tax regulations.
25
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
6. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
The following represent reclassifications of components of net assets at
September 30, 1996. These reclassifications were the result of permanent
book-to-tax differences resulting from distributions in excess of net
tax-exempt income. These reclassifications had no effect on net investment
income, net realized gains or net assets.
DISTRIBUTIONS
IN EXCESS OF
NET INVESTMENT PAID-IN
INCOME CAPITAL
-------------- -----------
Arizona Portfolio $ 13,514 $ (13,514)
Florida Portfolio (9,097) 9,097
Massachusetts Portfolio 8,448 (8,448)
Michigan Portfolio 26,270 (26,270)
Minnesota Portfolio 33,864 (33,864)
New Jersey Portfolio 229,968 (229,968)
Ohio Portfolio 52,009 (52,009)
Pennsylvania Portfolio 141,453 (141,453)
Virginia Portfolio (3,687) 3,687
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P., (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 year ended September 30, 1996. For the year
ended September 30, 1996 the Adviser voluntarily agreed to waive all or a
portion of its advisory fees. The aggregate amounts of such fee waivers were:
Arizona Portfolio, $49,708; Florida Portfolio, $338,096; Massachusetts
Portfolio, $57,179; Michigan Portfolio, $74,987; Minnesota Portfolio, $110,574;
New Jersey Portfolio, $333,236; Ohio Portfolio, $284,662; Pennsylvania
Portfolio, $188,699; and Virginia Portfolio $29,790.
Pursuant to the advisory agreement, the Adviser provides to each Portfolio
certain legal and accounting services. For the year ended September 30, 1996,
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 $127,559 for the Arizona Portfolio,
$119,545 for the Massachusetts Portfolio, $88,077 for the Michigan Portfolio,
$93,024 for the Minnesota Portfolio and $130,244 for the Virginia Portfolio.
There was no such reimbursement for the Florida Portfolio, New Jersey
Portfolio, 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 $18,000 for the Arizona Portfolio, $23,097 for the
Florida Portfolio, $18,000 for the Massachusetts Portfolio, $18,000 for the
Michigan Portfolio, $18,000 for the Minnesota Portfolio, $35,824 for the New
Jersey Portfolio, $23,506 for the Ohio Portfolio, $33,765 for the Pennsylvania
Portfolio and $18,000 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 year ended September 30, 1996 were: Arizona Portfolio,
$5,723; Florida Portfolio, $3,343; Massachusetts Portfolio, $1,752; Michigan
Portfolio, $2,655; Minnesota Portfolio, $1,328; New Jersey Portfolio, $5,362;
Ohio Portfolio, $1,889; Pennsylvania Portfolio, $3,474; and Virginia Portfolio,
$1,756. The amount of contingent deferred sales charges imposed upon
redemptions by shareholders of Class B shares for the same period were: Arizona
Portfolio, $1,046; Florida Portfolio, $18,913; Massachusetts Portfolio, $646;
Michigan Portfolio, $1,731; Minnesota Portfolio, $8,339; New Jersey Portfolio,
26
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
$18,319; Ohio Portfolio, $16,155; Pennsylvania Portfolio, $17,552; and Virginia
Portfolio, $4,678. The amount of contingent deferred sales charges imposed upon
redemptions by shareholders of Class C shares for the period from July 1, 1996
to September 30, 1996 were: Arizona Portfolio $300 and Minnesota Portfolio,
$102. The remaining portfolios had no contingent deferred sales charges.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
Each Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class A,
Class B and Class C shares. Under the Agreement, each Portfolio pays a
distribution fee to the Distributor at an annual rate of up to .30 of 1% of
each Portfolio's average daily net assets attributable to the Class A shares
and 1% of each Portfolio's average daily net assets attributable to the Class B
and Class C shares, 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
commencement of operations of each Portfolio the Distributor has incurred
expenses in excess of the distribution costs reimbursed by each Portfolio as
follows:
PORTFOLIO CLASS B CLASS C
- ---------------- ----------- ---------
Arizona $ 574,137 $102,785
Florida 875,269 884,271
Massachusetts 461,771 430,278
Michigan 439,303 513,896
Minnesota 822,187 533,757
New Jersey 1,664,772 550,787
Ohio 1,216,859 641,860
Pennsylvania 1,173,017 559,425
Virginia 575,512 113,956
Such costs may be recovered from each Portfolio in future periods so long as
the Agreement is in effect. In accordance with the Agreement, there is no
provision for recovery of unreimbursed distribution costs incurred by the
Distributor beyond the current fiscal year for Class A shares. The Agreement
also provides that the Adviser may use its own resources to finance the
distribution of each Portfolio's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. Government Securities) for the year ended September 30, 1996, were as
follows:
PORTFOLIO PURCHASES SALES
- ----------------- ------------- -------------
Arizona $ 25,368,340 $ 19,766,228
Florida 162,249,770 156,789,544
Massachusetts 27,696,886 22,429,953
Michigan 31,236,603 28,803,919
Minnesota 35,581,369 34,836,811
New Jersey 106,542,353 97,805,714
Ohio 88,046,558 85,620,708
Pennsylvania 113,821,558 102,923,418
Virginia 17,237,550 14,186,400
NOTE E: TAXES
For Federal income tax purposes at September 30, 1996, the Fund had capital
loss carryforwards for the following Portfolios: $7,679 expiring in 2002,
$5,261,150 expiring in 2003, $349,704 expiring 2004, for New Jersey Portfolio;
$6,340,331 expiring in 2003, for Florida Portfolio; $3,714,202 expiring in
2003, $331,999 expiring in 2004, for Ohio Portfolio; $2,750,115 expiring in
2003, for Pennsylvania Portfolio; and $1,185,373 expiring in 2003, $492,981
expiring in 2004, for Minnesota Portfolio. 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 each Portfolio's next taxable year. None of
the portfolios had post October losses.
27
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
At September 30, 1996, 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 $11,364,695 $ 249,528 $ (6,966) $ 242,562
Florida 68,072,493 1,202,395 (131,240) 1,071,155
Massachusetts 10,899,871 253,991 (20,071) 233,920
Michigan 12,982,500 297,997 (2,965) 295,032
Minnesota 17,090,203 483,036 (23,251) 459,785
New Jersey 73,615,836 2,461,095 (189,837) 2,271,258
Ohio 47,015,331 1,038,715 (36,884) 1,001,831
Pennsylvania 62,274,328 1,654,574 (108,534) 1,546,040
Virginia 62,232,452 68,872 (6,338) 62,534
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
--------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
ARIZONA PORTFOLIO SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1996
- ------------------- ------------ ------------ -------------- -------------
CLASS A
Shares sold 245,077 179,031 $2,497,924 $1,777,357
Shares issued in
reinvestment of
dividends and
distributions 7,348 4,255 75,448 42,481
Shares converted
from Class B 8,585 -0- 85,589 -0-
Shares redeemed (65,056) (47,391) (660,264) (477,515)
Net increase 195,954 135,895 $1,998,697 $1,342,323
CLASS B
Shares sold 222,576 161,670 $2,277,718 $1,621,211
Shares issued in
reinvestment of
dividends and
distributions 9,322 5,382 95,597 53,513
Shares converted
to Class A (8,585) -0- (85,589) -0-
Shares redeemed (27,452) (31,136) (280,976) (312,965)
Net increase 195,861 135,916 $2,006,750 $1,361,759
CLASS C
Shares sold 44,293 70,824 $ 451,216 $ 699,946
Shares issued in
reinvestment of
dividends and
distributions 2,349 2,011 24,160 19,819
Shares redeemed (24,564) (75,752) (247,584) (731,150)
Net increase(decrease) 22,078 (2,917) $ 227,792 $ (11,385)
28
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
FLORIDA PORTFOLIO SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1995
- ------------------- ------------ ------------ -------------- -------------
Shares sold 519,985 509,383 $ 5,045,697 $ 4,618,993
Shares issued in
reinvestment of
dividends 29,497 28,075 286,857 254,915
Shares converted
from Class B 22,916 -0- 219,737 -0-
Shares redeemed (351,639) (214,506) (3,406,503) (1,942,117)
Net increase 220,759 322,952 $ 2,145,788 $ 2,931,791
CLASS B
Shares sold 649,530 692,583 $ 6,337,001 $ 6,210,101
Shares issued in
reinvestment of
dividends 44,597 52,413 434,054 473,711
Shares converted
to Class A (22,916) -0- (219,737) -0-
Shares redeemed (544,509) (618,576) (5,277,524) (5,601,581)
Net increase 126,702 126,420 $ 1,273,794 $ 1,082,231
CLASS C
Shares sold 594,748 602,179 $ 5,803,084 $ 5,420,341
Shares issued in
reinvestment of
dividends 85,081 89,459 834,227 826,873
Shares redeemed (800,351) (2,248,394) (7,816,531) (19,882,861)
Net decrease (120,522) (1,556,756) $(1,179,220) $(13,635,647)
SHARES AMOUNT
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MASSACHUSETTS PORTFOLIO SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1995
- ----------------------- ------------ ------------ ------------ ------------
Shares sold 172,711 84,385 $ 1,833,733 $ 846,860
Shares issued in
reinvestment of
dividends and
distributions 4,244 1,677 45,329 16,995
Shares redeemed (8,362) (14,517) (89,000) (147,082)
Net increase 168,593 71,545 $ 1,790,062 $ 716,773
CLASS B
Shares sold 191,547 134,315 $ 2,024,593 $1,379,176
Shares issued in
reinvestment of
dividends and
distributions 5,666 1,760 60,463 17,847
Shares redeemed (24,584) (40,636) (264,300) (402,150)
Net increase 172,629 95,439 $ 1,820,756 $ 994,873
CLASS C
Shares sold 371,867 212,201 $ 3,967,597 $2,178,365
Shares issued in
reinvestment of
dividends and
distributions 18,527 7,004 197,520 71,499
Shares redeemed (217,586) (52,122) (2,303,514) (541,052)
Net increase 172,808 167,083 $ 1,861,603 $1,708,812
29
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
-------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MICHIGAN PORTFOLIO SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1995
- ------------------- ------------ ------------ ------------- -------------
Shares sold 101,489 276,931 $ 1,014,340 $ 2,738,565
Shares issued in
reinvestment of
dividends and
distributions 25,151 11,339 255,525 109,493
Shares converted
from Class B 8,229 -0- 81,522 -0-
Shares redeemed (40,577) (41,977) (412,901) (385,329)
Net increase 94,292 246,293 $ 938,486 $ 2,462,729
CLASS B
Shares sold 159,283 156,377 $ 1,598,649 $ 1,459,362
Shares issued in
reinvestment of
dividends and
distributions 9,868 5,917 100,283 56,625
Shares converted
to Class A (8,229) -0- (81,522) -0-
Shares redeemed (49,958) (106,263) (499,250) (978,875)
Net increase 110,964 56,031 $ 1,118,160 $ 537,112
CLASS C
Shares sold 250,006 248,250 $ 2,504,024 $ 2,360,494
Shares issued in
reinvestment of
dividends and
distributions 16,967 10,635 171,824 101,189
Shares redeemed (163,569) (270,068) (1,643,073) (2,552,312)
Net increase(decrease) 103,404 (11,183) $ 1,032,775 $ (90,629)
SHARES AMOUNT
-------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MINNESOTA PORTFOLIO SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1995
- ------------------- ------------ ------------ ------------- -------------
Shares sold 92,916 59,025 $ 881,265 $ 535,578
Shares issued in
reinvestment of
dividends 12,846 11,459 122,393 105,730
Shares converted
from Class B 387 -0- 3,685 -0-
Shares redeemed (30,018) (47,539) (284,383) (447,134)
Net increase 76,131 22,945 $ 722,960 $ 194,174
CLASS B
Shares sold 222,829 216,010 $ 2,141,082 $ 1,983,579
Shares issued in
reinvestment of
dividends 28,415 26,096 270,706 240,734
Shares converted
to Class A (387) -0- (3,685) -0-
Shares redeemed (154,177) (142,922) (1,473,158) (1,290,257)
Net increase 96,680 99,184 $ 934,945 $ 934,056
CLASS C
Shares sold 123,688 72,048 $ 1,186,392 $ 667,481
Shares issued in
reinvestment of
dividends 30,164 37,923 287,651 348,475
Shares redeemed (238,952) (373,870) (2,271,861) (3,382,505)
Net decrease (85,100) (263,899) $ (797,818) $(2,366,549)
30
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
-------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NEW JERSEY PORTFOLIO SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1995
- -------------------- ------------ ------------ ------------- -------------
CLASS A
Shares sold 625,486 426,481 $ 6,081,158 $ 3,927,489
Shares issued in
reinvestment of
dividends 52,967 44,652 512,440 411,328
Shares converted
from Class B 10,942 -0- 110,519 -0-
Shares redeemed (295,089) (288,408) (2,850,599) (2,664,713)
Net increase 394,306 182,725 $ 3,853,518 $ 1,674,104
CLASS B
Shares sold 1,079,052 921,717 $10,515,892 $ 8,533,273
Shares issued in
reinvestment of
dividends 109,643 109,495 1,062,642 1,007,537
Shares converted
to Class A (10,942) -0- (110,519) -0-
Shares redeemed (749,409) (795,035) (7,256,786) (7,215,765)
Net increase 428,344 236,177 $ 4,211,229 $ 2,325,045
CLASS C
Shares sold 633,743 260,713 $ 6,162,975 $.2,395,820
Shares issued in
reinvestment of
dividends 78,732 96,647 763,028 885,664
Shares redeemed (591,207) (1,074,250) (5,695,937) (9,678,665)
Net increase(decrease) 121,268 (716,890) $ 1,230,066 $(6,397,181)
SHARES AMOUNT
-------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OHIO PORTFOLIO SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1995
- ------------------- ------------ ------------ ------------- -------------
CLASS A
Shares sold 254,120 187,714 $ 2,463,924 $ 1,745,161
Shares issued in
reinvestment of
dividends 20,355 14,798 195,466 136,073
Shares converted
from Class B 6,776 -0- 64,703 -0-
Shares redeemed (88,508) (75,120) (851,889) (655,825)
Net increase 192,743 127,392 $ 1,872,204 $ 1,225,409
CLASS B
Shares sold 708,116 418,493 $ 6,793,206 $ 3,836,071
Shares issued in
reinvestment of
dividends 84,542 88,923 813,053 811,788
Shares converted
to Class A (6,776) -0- (64,703) -0-
Shares redeemed (437,800) (455,507) (4,210,177) (4,110,296)
Net increase 348,082 51,909 $ 3,331,379 $ 537,563
CLASS C
Shares sold 306,053 184,387 $ 2,943,537 $ 1,674,321
Shares issued in
reinvestment of
dividends 58,817 83,246 566,008 763,381
Shares redeemed (553,963) (1,189,899) (5,331,297) (10,682,056)
Net decrease (189,093) (922,266) $(1,821,752) $(8,244,354)
31
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
PENNSYLVANIA PORTFOLIO SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1995
- ---------------------- ------------ ------------ ------------ ------------
CLASS A
Shares sold 1,374,963 300,278 $13,527,078 $ 2,762,892
Shares issued in
reinvestment of
dividends 22,540 29,254 220,725 269,638
Shares converted
from Class B 48,579 -0- 472,346 -0-
Shares redeemed (208,292) (203,919) (2,034,747) (1,876,487)
Net increase 1,237,790 125,613 $12,185,402 $ 1,156,043
CLASS B
Shares sold 533,742 680,168 $ 5,244,693 $ 6,247,762
Shares issued in
reinvestment of
dividends 81,750 91,028 800,878 839,841
Shares converted
to Class A (48,579) -0- (472,346) -0-
Shares redeemed (440,056) (603,060) (4,312,987) (5,537,065)
Net increase 126,857 168,136 $ 1,260,238 $ 1,550,538
CLASS C
Shares sold 325,151 395,768 $ 3,213,975 $ 3,738,239
Shares issued in
reinvestment of
dividends 45,719 56,156 448,507 512,839
Shares redeemed (511,735) (873,994) (5,019,063) (7,899,247)
Net decrease (140,865) (422,070) $(1,356,581) $(3,648,169)
SHARES AMOUNT
-------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
Virginia Portfolio SEP. 30,1996 SEP. 30,1995 SEP. 30,1996 SEP. 30,1995
- ------------------- ------------ ------------ ------------- -------------
CLASS A
Shares sold 71,182 78,719 $ 740,685 $ 791,882
Shares issued in
reinvestment of
dividends and
distributions 8,689 6,335 90,991 62,455
Shares converted
from Class B 103 -0- 1,094 -0-
Shares redeemed (28,103) (33,609) (294,511) (331,886)
Net increase 51,871 51,445 $ 538,259 $ 522,451
CLASS B
Shares sold 226,100 96,151 $ 2,369,231 $ 942,868
Shares issued in
reinvestment of
dividends and
distributions 7,632 2,972 79,869 29,586
Shares converted
to Class A (103) -0- (1,094) -0-
Shares redeemed (33,245) (6,267) (345,773) (58,483)
Net increase 200,384 92,856 $ 2,102,233 $ 913,971
CLASS C
Shares sold 59,047 10,903 $ 615,683 $ 105,949
Shares issued in
reinvestment of
dividends and
distributions 2,054 306 21,491 3,042
Shares redeemed (12,272) (3,732) (129,249) (36,085)
Net increase 48,829 7,477 $ 507,925 $ 72,906
32
FINANCIAL HIGHLIGHTS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
ARIZONA PORTFOLIO
-----------------------------------------------------------------
CLASS A CLASS B
-------------------------------- -------------------------------
JUNE 1, JUNE 1,
1994(C) 1994(C)
YEAR ENDED SEP. 30, TO YEAR ENDED SEP. 30, TO
------------------- SEP. 30, ------------------- SEP. 30,
1996 1995 1994 1996 1995 1994
--------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.29 $9.77 $10.00 $10.29 $9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .55(b) .56 .20 .47(b) .49 .18
Net realized and unrealized gain (loss)
on investments .14 .53 (.23) .14 .53 (.24)
Net increase (decrease) in net asset
value from operations .69 1.09 (.03) .61 1.02 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.55) (.56) (.20) (.47) (.49) (.17)
Distributions in excess of net
investment income (.03) (.01) -0- (.03) (.01) -0-
Distributions from net realized gains (.08) -0- -0- (.08) -0- -0-
Total dividends and distributions (.66) (.57) (.20) (.58) (.50) (.17)
Net asset value, end of period $10.32 $10.29 $9.77 $10.32 $10.29 $9.77
TOTAL RETURN
Total investment return based on
net asset value (d) 6.84% 11.56% (.35)% 6.10% 10.78% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $4,409 $2,379 $930 $5,199 $3,166 $1,677
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .78% .78% .78%(e) 1.48% 1.48% 1.48%(e)
Expenses, before waivers/reimbursements 3.69% 4.88% 7.71%(e) 4.40% 5.58% 8.41%(e)
Net investment income, net of waivers/
reimbursements 5.33% 5.56% 5.82%(e) 4.62% 4.89% 5.13%(e)
Portfolio turnover rate 244% 85% 81% 244% 85% 81%
</TABLE>
CLASS C
--------------------------------------
JUNE 1,1994(C)
YEAR ENDED SEPTEMBER 30, TO
----------------------- SEPTEMBER 30,
1996 1995 1994
----------- --------- ------------
Net asset value, beginning of period $10.30 $ 9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .47(b) .49 .17
Net realized and unrealized gain (loss)
on investments .13 .54 (.23)
Net increase (decrease) in net asset
value from operations .60 1.03 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.49) (.17)
Distributions in excess of net
investment income (.03) (.01) -0-
Distributions from net realized gains (.08) -0- -0-
Total dividends and distributions (.58) (.50) (.17)
Net asset value, end of period $10.32 $10.30 $ 9.77
TOTAL RETURN
Total investment return based on
net asset value (d) 6.00% 10.89% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $710 $481 $485
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.48% 1.48% 1.48%(e)
Expenses, before waivers/reimbursements 4.41% 5.58% 8.41%(e)
Net investment income, net of waivers/
reimbursements 4.61% 4.90% 4.70%(e)
Portfolio turnover rate 244% 85% 81%
See footnote summary on page 47.
33
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
----------------------------------------------------
JUNE 25,1993(C)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.58 $8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .54(b) .55 .55 .16
Net realized and unrealized gain (loss)
on investments .16 .69 (1.35) .25
Net increase (decrease) in net asset
value from operations .70 1.24 (.80) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.54) (.55) (.55) (.16)
Distributions in excess of net
investment income (.01) -0- -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.55) (.55) (.56) (.16)
Net asset value, end of period $9.73 $9.58 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 7.45% 14.44% (8.03)% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $14,297 $11,956 $8,227 $4,145
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .73% .73% .38% -0-%(e)
Expenses, before waivers/reimbursements 1.33% 1.33% 1.27% 1.30%(e)
Net investment income, net of waivers/
reimbursements 5.52% 5.91% 5.70% 5.44%(e)
Portfolio turnover rate 237% 146% 185% 82%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
JUNE 25,1993(C)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.58 $8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .47(b) .47 .48 .14
Net realized and unrealized gain (loss)
on investments .17 .70 (1.35) .25
Net increase (decrease) in net asset
value from operations .64 1.17 (.87) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.47) (.48) (.14)
Distributions in excess of net
investment income (.01) (.01) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.48) (.48) (.49) (.14)
Net asset value, end of period $9.74 $9.58 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 6.78% 13.56% (8.72)% 3.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $22,235 $20,660 $18,048 $9,588
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.43% 1.42% 1.08% .61%(e)
Expenses, before waivers/reimbursements 2.03% 2.03% 1.98% 2.00%(e)
Net investment income, net of waivers/
reimbursements 4.81% 5.22% 4.99% 4.74%(e)
Portfolio turnover rate 237% 146% 185% 82%
</TABLE>
See footnote summary on page 47.
34
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
---------------------------------------------
CLASS C
----------------------------------------------------
JUNE 25,1993(C)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.58 $8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .47(b) .47 .48 .14
Net realized and unrealized gain (loss)
on investments .17 .70 (1.35) .25
Net increase (decrease) in net asset
value from operations .64 1.17 (.87) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.47) (.48) (.14)
Distributions in excess of net
investment income (.01) (.01) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.48) (.48) (.49) (.14)
Net asset value, end of period $9.74 $9.58 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 6.78% 13.56% (8.72)% 3.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $30,121 $30,787 $42,405 $28,249
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.43% 1.42% 1.08% .61%(e)
Expenses, before waivers/reimbursements 2.02% 2.03% 1.97% 2.00%(e)
Net investment income, net of waivers/
reimbursements 4.81% 5.27% 4.97% 4.74%(e)
Portfolio turnover rate 237% 146% 185% 82%
</TABLE>
See footnote summary on page 47.
35
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
MASSACHUSETTS PORTFOLIO
--------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- ---------------------------------
MARCH 29, MARCH 29,
1994(C) 1994(C)
YEAR ENDED SEP. 30, TO YEAR ENDED SEP. 30, TO
-------------------- SEP. 30, -------------------- SEP. 30,
1996 1995 1994 1996 1995 1994
---------- -------- ----------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.50 $10.12 $10.00 $10.49 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .60(b) .58 .31 .52(b) .52 .27
Net realized and unrealized gain on
investments .44 .41 .11 .45 .39 .11
Net increase in net asset value from
operations 1.04 .99 .42 .97 .91 .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.59) (.58) (.30) (.52) (.52) (.26)
Distributions in excess of net investment
income (.02) (.03) -0- (.02) (.02) -0-
Distributions from net realized gains (.08) -0- -0- (.08) -0- -0-
Total dividends and distributions (.69) (.61) (.30) (.62) (.54) (.26)
Net asset value, end of period $10.85 $10.50 $10.12 $10.84 $10.49 $10.12
TOTAL RETURN
Total investment return based on net
asset value (d) 10.25% 10.19% 4.14% 9.52% 9.32% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $3,211 $1,337 $565 $3,683 $1,754 $725
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .62% .60% .60%(e) 1.32% 1.30% 1.30%(e)
Expenses, before waivers/reimbursements 3.15% 6.44% 13.20%(e) 3.85% 7.14% 13.90%(e)
Net investment income, net of waivers/
reimbursements 5.62% 5.67% 5.98%(e) 4.93% 4.90% 5.13%(e)
Portfolio turnover rate 246% 155% 146% 246% 155% 146%
</TABLE>
CLASS C
------------------------------------
MARCH 29,
YEAR ENDED SEP. 30, 1994(C) TO
--------------------- SEPTEMBER 30,
1996 1995 1994
----------- -------- -------------
Net asset value, beginning of period $10.49 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .52(b) .52 .25
Net realized and unrealized gainon
investments .45 .39 .13
Net increase in net asset value from
operations .97 .91 .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.52) (.52) (.26)
Distributions in excess of net
investment income (.02) (.02) -0-
Distributions from net realized gains (.08) -0- -0-
Total dividends and distributions (.62) (.54) (.26)
Net asset value, end of period $10.84 $10.49 $10.12
TOTAL RETURN
Total investment return based on net
asset value (d) 9.52% 9.32% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4,514 $2,556 $774
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.31% 1.30% 1.30%(e)
Expenses, before waivers/reimbursements 3.84% 7.14% 13.90%(e)
Net investment income, net of waivers/
reimbursements 4.88% 4.85% 4.00%(e)
Portfolio turnover rate 246% 155% 146%
See footnote summary on page 47.
36
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
MICHIGAN PORTFOLIO
--------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- ---------------------------------
FEB. 25, FEB. 25,
YEAR ENDED SEP. 30, 1994(C) TO YEAR ENDED SEP. 30, 1994(C) TO
-------------------- SEP. 30, -------------------- SEP. 30,
1996 1995 1994 1996 1995 1994
---------- -------- ----------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.10 $ 9.35 $10.00 $10.10 $ 9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .52(b) .52 .33 .45(b) .45 .29
Net realized and unrealized gain (loss)
on investments .22 .78 (.65) .22 .78 (.65)
Net increase (decrease) in net asset
value from
operations .74 1.30 (.32) .67 1.23 (.36)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.52) (.52) (.33) (.45) (.45) (.29)
Distributions in excess of net
investment income (.03) (.03) -0- (.03) (.03) -0-
Distributions from net realized gains (.17) -0- -0- (.17) -0- -0-
Total dividends and distributions (.72) (.55) (.33) (.65) (.48) (.29)
Net asset value, end of period $10.12 $10.10 $ 9.35 $10.12 $10.10 $ 9.35
TOTAL RETURN
Total investment return based on net
asset value (d) 7.54% 14.40% (3.24)% 6.80% 13.58% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,123 $5,158 $2,473 $3,553 $2,424 $1,722
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .96% 1.36% .93%(e) 1.66% 2.06% 1.63%(e)
Expenses, before waivers/reimbursements 2.77% 3.43% 3.97%(e) 3.48% 4.12% 4.67%(e)
Net investment income, net of waivers/
reimbursements 5.21% 5.27% 5.83%(e) 4.51% 4.57% 4.93%(e)
Portfolio turnover rate 242% 151% 222% 242% 151% 222%
</TABLE>
CLASS C
-----------------------------------
FEBRUARY 25,
YEAR ENDED SEP. 30, 1994(C) TO
-------------------- SEPTEMBER 30,
1996 1995 1994
---------- -------- -------------
Net asset value, beginning of period $10.10 $ 9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .45(b) .45 .29
Net realized and unrealized gain (loss)
on investments .22 .78 (.65)
Net increase (decrease) in net asset
value from operations .67 1.23 (.36)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.45) (.29)
Distributions in excess of net
investment income (.03) (.03) -0-
Distributions from net realized gains (.17) -0- -0-
Total dividends and distributions (.65) (.48) (.29)
Net asset value, end of period $10.12 $10.10 $ 9.35
TOTAL RETURN
Total investment return based on
net asset value (d) 6.80% 13.58% (3.65)%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000'S OMITTED) $3,940 $2,886 $2,778
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.66% 2.06% 1.63%(e)
Expenses, before waivers/reimbursements 3.48% 4.13% 4.67%(e)
Net investment income, net of waivers/
reimbursements 4.50% 4.69% 4.92%(e)
Portfolio turnover rate 242% 151% 222%
See footnote summary on page 47.
37
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
MINNESOTA PORTFOLIO
-----------------------------------------------
CLASS A
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.49 $9.19 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .53(b) .53 .55 .15
Net realized and unrealized gain (loss)
on investments .11 .32 (1.09) .28
Net increase (decrease) in net asset
value from operations .64 .85 (.54) .43
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.53) (.53) (.55) (.15)
Distributions in excess of net
investment income (.02) (.02) -0- -0-
Total dividends and distributions (.55) (.55) (.55) (.15)
Net asset value, end of period $9.58 $9.49 $ 9.19 $10.28
TOTAL RETURN
Total investment return based on net
asset value (d) 6.95% 9.63% (5.35)% 4.34%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $3,165 $2,414 $2,125 $994
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .72% .71% .09% -0-%(e)
Expenses, before waivers/reimbursements 2.19% 2.30% 2.12% 1.89%(e)
Net investment income, net of waivers/
reimbursements 5.54% 5.71% 5.71% 5.20%(e)
Portfolio turnover rate 195% 117% 143% 61%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.49 $9.18 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .46 .48 .13
Net realized and unrealized gain (loss)
on investments .11 .33 (1.10) .28
Net increase (decrease) in net asset
value from operations .57 .79 (.62) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.46) (.48) (.13)
Distributions in excess of net
investment income (.02) (.02) -0- -0-
Total dividends and distributions (.48) (.48) (.48) (.13)
Net asset value, end of period $9.58 $9.49 $ 9.18 $10.28
TOTAL RETURN
Total investment return based on net
asset value (d) 6.15% 8.90% (6.15)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $8,291 $7,299 $6,150 $2,665
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.42% 1.42% .80% .43%(e)
Expenses, before waivers/reimbursements 2.89% 3.02% 2.83% 2.59%(e)
Net investment income, net of waivers/
reimbursements 4.82% 4.97% 5.00% 4.50%(e)
Portfolio turnover rate 195% 117% 143% 61%
</TABLE>
See footnote summary on page 47.
38
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
MINNESOTA PORTFOLIO
----------------------------------------------
CLASS C
-----------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.50 $9.19 $10.27 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .46 .48 .13
Net realized and unrealized gain (loss)
on investments .10 .33 (1.08) .27
Net increase (decrease) in net asset
value from operations .56 .79 (.60) .40
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.46) (.48) (.13)
Distributions in excess of net
investment income (.02) (.02) -0- -0-
Total dividends and distributions (.48) (.48) (.48) (.13)
Net asset value, end of period $9.58 $9.50 $ 9.19 $10.27
TOTAL RETURN
Total investment return based on net
asset value (d) 6.03% 8.89% (5.95)% 4.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,553 $7,305 $9,489 $6,697
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.41% 1.41% .79% .43%(e)
Expenses, before waivers/reimbursements 2.88% 3.00% 2.82% 2.59%(e)
Net investment income, net of waivers/
reimbursements 4.82% 5.05% 4.90% 4.50%(e)
Portfolio turnover rate 195% 117% 143% 61%
</TABLE>
See footnote summary on page 47.
39
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
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.65 $9.07 $10.29 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .51(b) .54 .55 .15
Net realized and unrealized gain (loss)
on investments .11 .59 (1.22) .29
Net increase (decrease) in net asset
value from operations .62 1.13 (.67) .44
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.54) (.55) (.15)
Distributions in excess of net
investment income (.04) (.01) -0- -0-
Total dividends and distributions (.55) (.55) (.55) (.15)
Net asset value, end of period $9.72 $9.65 $ 9.07 $10.29
TOTAL RETURN
Total investment return based on net
asset value (d) 6.57% 12.91% (6.67)% 4.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,520 $11,612 $9,257 $6,679
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .82% .82% .20% -0-%(e)
Expenses, before waivers/reimbursements 1.35% 1.35% 1.33% 1.29%(e)
Net investment income, net of waivers/
reimbursements 5.26% 5.73% 5.65% 5.37%(e)
Portfolio turnover rate 132% 86% 171% 47%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.66 $9.07 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .44(b) .47 .48 .13
Net realized and unrealized gain (loss)
on investments .10 .60 (1.21) .28
Net increase (decrease) in net asset
value from operations .54 1.07 (.73) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.47) (.48) (.13)
Distributions in excess of net
investment income (.03) (.01) -0- -0-
Total dividends and distributions (.48) (.48) (.48) (.13)
Net asset value, end of period $9.72 $9.66 $ 9.07 $10.28
TOTAL RETURN
Total investment return based on net
asset value (d) 5.66% 12.15% (7.28)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $39,099 $34,695 $30,459 $15,637
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.53% 1.53% .91% .63%(e)
Expenses, before waivers/reimbursements 2.05% 2.06% 2.03% 1.99%(e)
Net investment income, net of waivers/
reimbursements 4.56% 5.03% 4.96% 4.67%(e)
Portfolio turnover rate 132% 86% 171% 47%
</TABLE>
See footnote summary on page 47.
40
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
NEW JERSEY PORTFOLIO
------------------------------------------------------
CLASS C
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.66 $9.07 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .44(b) .47 .48 .13
Net realized and unrealized gain (loss)
on investments .10 .60 (1.21) .28
Net increase (decrease) in net asset
value from operations .54 1.07 (.73) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.47) (.48) (.13)
Distributions in excess of net
investment income (.03) (.01) -0- -0-
Total dividends and distributions (.48) (.48) (.48) (.13)
Net asset value, end of period $9.72 $9.66 $ 9.07 $10.28
TOTAL RETURN
Total investment return based on net
asset value (d) 5.66% 12.14% (7.28)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $22,579 $21,255 $26,472 $21,193
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.52% 1.52% .90% .63%(e)
Expenses, before waivers/reimbursements 2.04% 2.06% 2.02% 1.99%(e)
Net investment income, net of waivers/
reimbursements 4.56% 5.09% 4.93% 4.67%(e)
Portfolio turnover rate 132% 86% 171% 47%
</TABLE>
See footnote summary on page 47.
41
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
OHIO PORTFOLIO
------------------------------------------------------
CLASS A
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.53 $9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .52(b) .54 .55 .15
Net realized and unrealized gain (loss)
on investments .11 .48 (1.19) .26
Net increase (decrease) in net asset
value from operations .63 1.02 (.64) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.53) (.54) (.55) (.15)
Distributions in excess of net
investment income (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.55) (.55) (.56) (.15)
Net asset value, end of period $9.61 $9.53 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on net
asset value (d) 6.72% 11.63% (6.44)% 4.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,054 $4,170 $2,810 $1,050
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .75% .75% .04% -0-%(e)
Expenses, before waivers/reimbursements 1.48% 1.51% 1.42% 1.32%(e)
Net investment income, net of waivers/
reimbursements 5.47% 5.74% 5.67% 5.30%(e)
Portfolio turnover rate 182% 108% 161% 55%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.54 $9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .47 .48 .13
Net realized and unrealized gain (loss)
on investments .09 .49 (1.19) .26
Net increase (decrease) in net asset
value from operations .55 .96 (.71) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.47) (.48) (.13)
Distributions in excess of net
investment income (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.48) (.48) (.49) (.13)
Net asset value, end of period $9.61 $9.54 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on net
asset value (d) 5.82% 10.88% (7.13)% 3.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $25,334 $21,821 $20,267 $8,952
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.46% 1.46% .74% .17%(e)
Expenses, before waivers/reimbursements 2.18% 2.21% 2.13% 2.02%(e)
Net investment income, net of waivers/
reimbursements 4.77% 5.08% 4.95% 4.60%(e)
Portfolio turnover rate 182% 108% 161% 55%
</TABLE>
See footnote summary on page 47.
42
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
OHIO PORTFOLIO
------------------------------------------------------
CLASS C
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.54 $9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .47 .48 .13
Net realized and unrealized gain (loss)
on investments .09 .49 (1.19) .26
Net increase (decrease) in net asset
value from operations .55 .96 (.71) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.47) (.48) (.13)
Distributions in excess of net
investment income (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.48) (.48) (.49) (.13)
Net asset value, end of period $9.61 $9.54 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on net
asset value (d) 5.82% 10.88% (7.13)% 3.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $17,203 $18,874 $26,294 $19,894
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.45% 1.45% .74% .17%(e)
Expenses, before waivers/reimbursements 2.16% 2.20% 2.12% 2.02%(e)
Net investment income, net of waivers/
reimbursements 4.78% 5.14% 4.89% 4.60%(e)
Portfolio turnover rate 182% 108% 161% 55%
</TABLE>
See footnote summary on page 47.
43
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
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.64 $9.18 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .49(b) .54 .56 .16
Net realized and unrealized gain (loss)
on investments .28 .48 (1.06) .25
Net increase (decrease) in net asset
value from operations .77 1.02 (.50) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.53) (.54) (.56) (.16)
Distributions in excess of net
investment income (.03)- (.02) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.56) (.56) (.57) (.16)
Net asset value, end of period $9.85 $9.64 $ 9.18 $10.25
TOTAL RETURN
Total investment return based on net
asset value (d) 8.17% 11.53% (5.02)% 4.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $21,104 $8,721 $7,149 $4,170
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.00% 1.00% .45% -0-%(e)
Expenses, before waivers/reimbursements 1.45% 1.47% 1.46% 1.31%(e)
Net investment income, net of waivers/
reimbursements 5.40% 5.78% 5.73% 5.67%(e)
Portfolio turnover rate 185% 114% 156% 75%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.65 $9.18 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .47 .49 .14
Net realized and unrealized gain (loss)
on investments .24 .49 (1.06) .25
Net increase (decrease) in net asset
value from operations .70 .96 (.57) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.47) (.49) (.14)
Distributions in excess of net
investment income (.03) (.02) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.49) (.49) (.50) (.14)
Net asset value, end of period $9.86 $9.65 $ 9.18 $10.25
TOTAL RETURN
Total investment return based on net
asset value (d) 7.38% 10.78% (5.72)% 3.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $30,440 $28,559 $25,637 12,173
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.71% 1.71% 1.16% .40%(e)
Expenses, before waivers/reimbursements 2.15% 2.17% 2.16% 2.01%(e)
Net investment income, net of waivers/
reimbursements 4.69% 5.09% 5.01% 4.97%(e)
Portfolio turnover rate 185% 114% 156% 75%
</TABLE>
See footnote summary on page 47.
44
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
------------------------------------------------------
CLASS C
------------------------------------------------------
JUNE 25,
YEAR ENDED SEPTEMBER 30, 1993(C) TO
--------------------------------------- SEPTEMBER 30,
1996 1995 1994 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.65 $9.18 $10.24 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .46(b) .47 .49 .14
Net realized and unrealized gain (loss)
on investments .24 .49 (1.05) .24
Net increase (decrease) in net asset
value from operations .70 .96 (.56) .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.47) (.49) (.14)
Distributions in excess of net
investment income (.03) (.02) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.49) (.49) (.50) (.14)
Net asset value, end of period $9.86 $9.65 $ 9.18 $10.24
TOTAL RETURN
Total investment return based on net
asset value (d) 7.37% 10.78% (5.63)% 3.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $13,996 $15,052 $18,198 $13,541
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.70% 1.70% 1.15% .40%(e)
Expenses, before waivers/reimbursements 2.14% 2.17% 2.15% 2.01%(e)
Net investment income, net of waivers/
reimbursements 4.69% 5.09% 4.99% 4.97%(e)
Portfolio turnover rate 185% 114% 156% 75%
</TABLE>
See footnote summary on page 47.
45
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
VIRGINIA PORTFOLIO
--------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- ---------------------------------
APRIL 29, APRIL 29,
YEAR ENDED SEP. 30, 1994(C) TO YEAR ENDED SEP. 30, 1994(C) TO
-------------------- SEP. 30, -------------------- SEP. 30,
1996 1995 1994 1996 1995 1994
---------- -------- ----------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.29 $ 9.69 $10.00 $10.29 $ 9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .57(b) .56 .24 .50(b) .49 .22
Net realized and unrealized gain (loss)
on investments .37 .61 (.31) .36 .61 (.32)
Net increase (decrease) in net asset
value from operations .94 1.17 (.07) .86 1.10 (.10)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.57) (.56) (.24) (.50) (.49) (.21)
Distributions in excess of net
investment income -0- (.01) -0- -0- (.01) -0-
Distributions from net realized gains (.08) -0- -0- (.08) -0- -0-
Total dividends and distributions (.65) (.57) (.24) (.58) (.50) (.21)
Net asset value, end of period $10.58 $10.29 $ 9.69 $10.57 $10.29 $ 9.69
TOTAL RETURN
Total investment return based on net
asset value (d) 9.39% 12.46% (.71)% 8.57% 11.67% (1.01)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,455 $1,855 $1,249 $3,345 $1,193 $224
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .67% .67% .57%(e) 1.37% 1.37% 1.27%(e)
Expenses, before waivers/reimbursements 5.18% 8.96% 12.29%(e) 5.88% 9.66% 12.99%(e)
Net investment income, net of waivers/
reimbursements 5.39% 5.59% 5.62%(e) 4.70% 4.80% 4.97%(e)
Portfolio turnover rate 298% 128% 65% 298% 128% 65%
</TABLE>
CLASS C
------------------------------------
APRIL 29,
YEAR ENDED SEP. 30, 1994(C) TO
--------------------- SEPTEMBER 30,
1996 1995 1994
----------- -------- -------------
Net asset value, beginning of period $10.29 $ 9.70 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .50(b) .49 .21
Net realized and unrealized gain (loss)
on investments .36 .60 (.30)
Net increase (decrease) in net asset
value from operations .86 1.09 (.09)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) (.49) (.21)
Distributions in excess of net
investment income -0- (.01) -0-
Distributions from net realized gains (.08) -0- -0-
Total dividends and distributions (.58) (.50) (.21)
Net asset value, end of period $10.57 $10.29 $ 9.70
TOTAL RETURN
Total investment return based on net
asset value (d) 8.58% 11.56% (.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $642 $122 $43
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.37% 1.37% 1.27%(e)
Expenses, before waivers/reimbursements 5.88% 9.66% 12.99%(e)
Net investment income, net of waivers/
reimbursements 4.73% 4.81% 4.67%(e)
Portfolio turnover rate 298% 128% 65%
See footnote summary on page 47.
46
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
FOOTNOTE SUMMARY
(a) Net of fee waived and expenses reimbursed by the Adviser.
(b) Based on average shares.
(c) Commencement of operations.
(d) 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.
(e) Annualized.
47
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES ALLIANCE MUNICIPAL INCOME FUND II
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Alliance Municipal Income Fund II
(comprising, respectively, the Arizona, Florida, Massachusetts, Michigan,
Minnesota, New Jersey, Ohio, Pennsylvania and Virginia Portfolios), as of
September 30, 1996, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Alliance Municipal Income Fund II
at September 30, 1996, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the indicated periods, in
conformity with generally accepted accounting principles.
New York, New York
November 1, 1996
FEDERAL TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In accordance with the Federal Requirements, the Fund designates substantially
all the dividends paid from investment income--net during the fiscal year ended
September 30, 1996 as "exempt-interest dividends." For the Arizona portfolio
the Fund paid on Class A, Class B, and Class C shares long term capital gains
of $.08. As required by Federal regulations, shareholders will receive
notification of their portion of the taxable ordinary dividends and capital
gains distributions paid (if any) for any other portfolio for the 1996 calendar
year early in 1997.
48
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
BOARD OF TRUSTEES
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JAMES R. GREEN (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
EUGENE F. O'NEIL (1)
DONALD J. ROBINSON (1)
ROBERT C. WHITE (1)
OFFICERS
SUSAN P. KEENAN, SENIOR VICE PRESIDENT
DAVID DOWDEN, VICE PRESIDENT
TERRANCE HULTS, VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
WILLIAM E. OLIVER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JUAN J. RODRIGUEZ, 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
(1) Member of the Audit Committee.
49
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
50
ALLIANCE MUNICIPAL INCOME FUND II
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
INVESTING WITHOUT THE MYSTERY
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
MUNIIIAR
