ALLIANCE MUNICIPAL INCOME FUND II
ANNUAL REPORT
SEPTEMBER 30, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
October 29, 1997
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,
1997. Over the past six- and twelve-month periods, all of the Fund's Portfolios
produced excellent total returns and outperformed their respective benchmarks,
the state specific Lipper Municipal Debt Funds Averages.
ALLIANCE MUNICIPAL INCOME FUND II - CLASS A SHARES
Periods Ended September 30, 1997
TOTAL LIPPER MORNINGSTAR
RETURN RANKING* RATING**
PORTFOLIO 12 MONTHS 12 MONTHS OVERALL
- -------------- ----------- ----------- -------------
Arizona 10.54% #1/35 ****
Florida 10.14% #5/63 *****
Massachusetts 11.14% #1/52 *****
Michigan 11.05% #1/49 ****
Minnesota 9.93% #1/45 ***
New Jersey 10.01% #1/57 ****
Ohio 11.60% #1/53 *****
Pennsylvania 10.85% #1/62 ****
Virginia 11.32% #1/32 *****
* SINCE INCEPTION LIPPER RANKINGS ARE BASED ON THE CLOSEST MONTH END TO EACH
PORTFOLIO'S INCEPTION DATE. FUNDS IN THE LIPPER AVERAGES GENERALLY HAVE SIMILAR
INVESTMENT OBJECTIVES, ALTHOUGH SOME MAY HAVE DIFFERENT INVESTMENT POLICIES.
INCEPTION DATES AND SINCE INCEPTION LIPPER RANKINGS THROUGH SEPTEMBER 30, 1997
ARE: ARIZONA (6/1/94) IS #2 OF 22; FLORIDA (6/25/93) IS #3 OF 29;
MASSACHUSETTS (3/29/94) IS #1 OF 37; MICHIGAN (2/25/94) IS #1 OF 33; MINNESOTA
(6/25/93) IS #3 OF 22; NEW JERSEY (6/25/93) IS #2 OF 26; OHIO (6/25/93) IS #2
OF 29; PENNSYLVANIA (6/25/93) IS #1 OF 35; AND VIRGINIA (4/29/94) IS #1 OF 26.
** MORNINGSTAR PROPRIETARY RATINGS REFLECT HISTORICAL RISK-ADJUSTED
PERFORMANCE AS OF 9/30/97. THESE RATINGS MAY CHANGE MONTHLY AND ARE CALCULATED
FROM EACH PORTFOLIO'S 3-YEAR AVERAGE ANNUAL RETURNS IN EXCESS OF 90-DAY
TREASURY BILL RETURNS WITH APPROPRIATE FEE ADJUSTMENTS AND A RISK FACTOR THAT
REFLECTS PORTFOLIO PERFORMANCE BELOW 90-DAY TREASURY BILL RETURNS. TEN PERCENT
OF FUNDS IN AN INVESTMENT OBJECTIVE RECEIVE FIVE STARS, 22.5% RECEIVE FOUR
STARS, AND 35% RECEIVE THREE STARS.
BECAUSE EACH OF THE PORTFOLIOS IS LESS THAN FIVE YEARS OLD, THE OVERALL
MORNINGSTAR RANKING REFLECTS THE THREE YEAR RATING AND IS THE ONLY RATING
ISSUED FOR EACH PORTFOLIO.
THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIODS
AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES. ALL FEES AND
EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO
ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE
PURCHASED OR REDEEMED. FOR ADDITIONAL PERFORMANCE INFORMATION, SEE PAGE 4.
Additionally, eight of the Fund's nine portfolios achieved the #1 ranking of
all state specific municipal income funds in their respective peer groups
tracked by Lipper for the 12 months ended September 30, 1997. 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. Eight of
the nine portfolios also received one of Morningstar's top ratings for
risk-adjusted performance--either four or five stars. The portfolios were
ranked among 1,374 municipal funds for the three-year period ended September
30, 1997.
MARKET OVERVIEW
For the fiscal year ended September 30, 1997, municipal bonds delivered a third
consecutive year of excellent returns to investors. Following the trend
established in 1996, interest rates remained within a trading range, driven by
mild volatility in economic indicators more than by secular movement toward
significantly higher (or lower) yields. Municipal bond yield ratios, relative
to taxable investments, improved as the threat of significant tax reform
subsided. Credit ratings of municipal issuers saw a marked improvement during
the year due to higher than anticipated revenues derived from a strong domestic
economy. This stable rate and taxation environment combined with improving
municipal credit quality resulted in municipal bonds producing some of the most
attractive returns in the fixed income markets year-to-date.
During the third quarter of 1997, the pace of new issuance of municipal debt
picked up after a slow first half. The decline in interest rates during the
latter half of the year is expected to produce new issue volume exceeding 1996
levels. Demand has more than matched this supply due to reinvestment of
proceeds from maturing or called bonds, continued reallocation of stock market
profits to bonds and a surge in money from bank trust departments converting
common fund assets into mutual fund assets.
INVESTMENT STRATEGY
The Alliance Municipal Income Fund II Portfolios seek to provide shareholders
with high current tax-free income. At the same time, the Portfolios are managed
to maintain relative stability of principal without sacrificing competitive
returns.
1
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
The average credit quality of the securities in the portfolios continues to be
very high. The management team has chosen to focus on higher quality bonds due
to the yield compression between lower quality issues and higher quality issues
in the market. This compression of yields exists for two reasons. First, the
municipal bond market is income-driven. Because of the benefit of tax exempt
income, tremendous investor demand exists with little regard for risk. Second,
the ready availability and affordability of bond insurance has led to a record
number of issues marketed with credit enhancement. This has dramatically
increased the number of high grade issues in the market. At Alliance, we
believe that there is currently better value in the high quality segment of the
municipal market and we will continue to focus on this sector until conditions
change.
OUTLOOK
We believe that 1998 should be another good year for fixed income investors,
although there is the possibility that inflationary pressures may begin to
surface because of strength in the domestic U.S. economy. However, we expect
interest rates to remain in a narrow range, with levels trending lower in the
future. We would consider any backup in rates as an opportunity to lock in
attractive yields and to improve portfolio call protection. Overall, we believe
that inflation will remain in check, demand for investments will be strong and
that the environment for fixed income investors will be positive.
We appreciate your investment in Alliance Municipal Income Fund II and look
forward to reporting future investment results.
Sincerely,
John D. Carifa
Chairman and President
Susan P. Keenan
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
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.
HOW YOUR PORTFOLIO PERFORMED OVER THE PAST SIX MONTHS
_______________________________________________________________________________
The Portfolios' Class A shares total returns for the periods ended September
30, 1997 are shown below. We have also shown, for comparison, returns for the
overall municipal bond market, represented by the state specific Lipper
Municipal Debt Funds Average. Current yields and returns for Class B and Class
C shares are on the next page.
INVESTMENT RESULTS
_______________________________________________________________________________
MUNICIPAL INCOME FUND II - CLASS A SHARES COMPARED TO LIPPER MUNICIPAL DEBT
FUNDS AVERAGE
Periods Ended September 30, 1997
PORTFOLIO PORTFOLIO
TOTAL TOTAL
RETURN LIPPER RETURN LIPPER
(AT NAV)- AVERAGE- (AT NAV)- AVERAGE-
6 MONTHS 6 MONTHS 12 MONTHS 12 MONTHS
---------- --------- ----------- ---------
Arizona Portfolio 7.29% 6.11% 10.54% 8.33%
Florida Portfolio 7.32% 6.18% 10.14% 8.02%
Massachusetts Portfolio 8.22% 6.15% 11.14% 8.27%
Michigan Portfolio 8.24% 6.13% 11.05% 8.02%
Minnesota Portfolio 7.38% 5.89% 9.93% 7.79%
New Jersey Portfolio 7.25% 6.04% 10.01% 8.08%
Ohio Portfolio 7.79% 5.92% 11.60% 7.97%
Pennsylvania Portfolio 7.67% 6.25% 10.85% 8.35%
Virginia Portfolio 8.36% 6.47% 11.32% 8.37%
3
INVESTMENT RESULTS
AS OF SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS TAXABLE
---------------------------------------------- EQUIVALENT
WITHOUT SALES CHARGE WITH SALES CHARGE YIELD IN
---------------------- ---------------------- 30 DAY 36% TAX
1 SINCE 1 SINCE SEC BRACKET
YEAR INCEPTION YEAR INCEPTION YIELD* (AT NAV)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ARIZONA PORTFOLIO
Class A 10.54% 8.52% 5.82% 7.12% 4.81% 8.82%
Class B 9.80% 7.77% 6.80% 7.77% 4.33% 7.75%
Class C 9.80% 7.77% 8.80% 7.77% 4.32% 7.75%
FLORIDA PORTFOLIO
Class A 10.14% 6.27% 5.47% 5.20% 5.04% 8.44%
Class B 9.24% 5.49% 6.24% 5.49% 4.56% 7.34%
Class C 9.23% 5.49% 8.23% 5.49% 4.56% 7.34%
MASSACHUSETTS PORTFOLIO
Class A 11.14% 10.19% 6.43% 8.85% 4.88% 9.71%
Class B 10.52% 9.45% 7.52% 9.45% 4.40% 8.58%
Class C 10.52% 9.45% 9.52% 9.45% 4.39% 8.58%
MICHIGAN PORTFOLIO
Class A 11.05% 8.06% 6.32% 6.77% 4.68% 8.58%
Class B 10.30% 7.31% 7.30% 7.31% 4.19% 7.50%
Class C 10.30% 7.31% 9.30% 7.31% 4.20% 7.50%
MINNESOTA PORTFOLIO
Class A 9.93% 5.81% 5.21% 4.75% 4.71% 9.15%
Class B 9.13% 5.03% 6.13% 5.03% 4.21% 7.92%
Class C 9.13% 5.03% 8.13% 5.03% 4.22% 7.92%
NEW JERSEY PORTFOLIO
Class A 10.01% 6.15% 5.36% 5.09% 4.55% 8.55%
Class B 9.32% 5.38% 6.32% 5.38% 4.03% 7.33%
Class C 9.32% 5.38% 8.32% 5.38% 4.05% 7.33%
OHIO PORTFOLIO
Class A 11.60% 6.25% 6.83% 5.19% 4.70% 8.89%
Class B 10.80% 5.47% 7.80% 5.47% 4.19% 7.70%
Class C 10.80% 5.47% 9.80% 5.47% 4.20% 7.70%
PENNSYLVANIA PORTFOLIO
Class A 10.85% 6.76% 6.11% 5.69% 4.99% 8.70%
Class B 9.95% 5.98% 6.95% 5.98% 4.50% 7.59%
Class C 9.95% 5.98% 8.95% 5.98% 4.51% 7.59%
VIRGINIA PORTFOLIO
Class A 11.32% 9.37% 6.59% 8.01% 5.05% 8.65%
Class B 10.70% 8.64% 7.70% 8.64% 4.58% 7.59%
Class C 10.70% 8.64% 9.70% 8.64% 4.58% 7.59%
</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 front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Yields are for the 30 days ended September 30, 1997.
4
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
GROWTH OF A $10,000 INVESTMENT
ARIZONA PORTFOLIO
6/30/94 TO 9/30/97
$13,000
$12,000
$11,000
$10,000
$9,000
6/30/94 9/30/95 9/30/96 9/30/97
ARIZONA PORTFOLIO CLASS A AT NAV: $13,202
LIPPER AZ MUNI FUNDS AVERAGE: $12,700
ARIZONA PORTFOLIO CLASS A AT OFFERING: $12,640
FLORIDA PORTFOLIO
6/30/93 TO 9/30/97
$13,000
$12,000
$11,000
$10,000
$9,000
6/30/93 9/30/94 9/30/95 9/30/96 9/30/97
FLORIDA PORTFOLIO CLASS A AT NAV: $12,965
FLORIDA PORTFOLIO CLASS A AT OFFERING: $12,433
LIPPER FL MUNI FUNDS AVERAGE: $12,419
MASSACHUSETTS PORTFOLIO
3/31/94 TO 9/30/97
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
3/31/94 9/30/95 9/30/96 9/30/97
MASSACHUSETTS PORTFOLIO CLASS A AT NAV: $14,059
MASSACHUSETTS PORTFOLIO CLASS A AT OFFERING: $13,467
LIPPER MA MUNI FUNDS AVERAGE: $12,751
5
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
GROWTH OF A $10,000 INVESTMENT
MICHIGAN PORTFOLIO
2/28/94 TO 9/30/97
$13,000
$12,000
$11,000
$10,000
$9,000
2/28/94 9/30/95 9/30/96 9/30/97
MICHIGAN PORTFOLIO CLASS A AT NAV: $13,219
MICHIGAN PORTFOLIO CLASS A AT OFFERING: $12,662
LIPPER MIMUNI FUNDS AVERAGE: $12,149
MINNESOTA PORTFOLIO
6/30/93 TO 9/30/97
$13,000
$12,000
$11,000
$10,000
$9,000
6/30/93 9/30/94 9/30/95 9/30/96 9/30/97
MINNESOTA PORTFOLIO CLASS A AT NAV: $12,729
LIPPER MN MUNI FUNDS AVERAGE: $12,465
MINNESOTA PORTFOLIO CLASS A AT OFFERING: $12,193
NEW JERSEY PORTFOLIO
6/30/93 TO 9/30/97
$13,000
$12,000
$11,000
$10,000
$9,000
6/30/93 9/30/94 9/30/95 9/30/96 9/30/97
NEW JERSEY PORTFOLIO CLASS A AT NAV: $12,903
LIPPER NJ MUNI FUNDS AVERAGE: $12,444
NEW JERSEY PORTFOLIO CLASS A AT OFFERING: $12,359
6
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
GROWTH OF A $10,000 INVESTMENT
OHIO PORTFOLIO
6/30/93 TO 9/30/97
$13,000
$12,000
$11,000
$10,000
$9,000
6/30/93 9/30/94 9/30/95 9/30/96 9/30/97
OHIO PORTFOLIO CLASS A AT NAV: $12,956
LIPPER OH MUNI FUNDS AVERAGE: $12,551
OHIO PORTFOLIO CLASS A AT OFFERING: $12,410
PENNSYLVANIA PORTFOLIO
6/30/93 TO 9/30/97
$13,000
$12,000
$11,000
$10,000
$9,000
6/30/93 9/30/94 9/30/95 9/30/96 9/30/97
PENNSYLVANIA PORTFOLIO CLASS A AT NAV: $13,225
PENNSYLVANIA PORTFOLIO CLASS A AT OFFERING: $12,668
LIPPER PA MUNI FUNDS AVERAGE: $12,571
7
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
GROWTH OF A $10,000 INVESTMENT
VIRGINIA PORTFOLIO
4/30/94 TO 9/30/97
$13,000
$12,000
$11,000
$10,000
$9,000
4/30/94 9/30/95 9/30/96 9/30/97
VIRGINIA PORTFOLIO CLASS A AT NAV: $13,597
VIRGINIA PORTFOLIO CLASS A AT OFFERING: $13,024
LIPPER VA MUNI FUNDS AVERAGE: $12,743
These charts illustrate the total value of assumed $10,000 investments in each
of Alliance Municipal Income Fund II's Class A shares (since the month end
closest to each portfolio's inception). The charts reflect the deduction of the
maximum 4.25% sales charges from initial $10,000 investments and assume the
reinvestment of dividends and capital gains. Performance at NAV(net asset
value) does not reflect sales charges which reduce total return figures.
Performance for Class B and C shares will vary from the results shown in these
illustrations due to differences in expenses charged to those classes. Results
should not be considered representative of future gains or losses in capital
value or dividend income.
The Lipper Arizona Municipal Debt Funds Average reflects performance of 22
funds; the Lipper Florida Municipal Debt Funds Average reflects performance of
29 funds; the Lipper Massachusetts Municipal Debt Funds Average reflects
performance of 37 funds; the Lipper Michigan Municipal Debt Funds Average
reflects performance of 33 funds; the Lipper Minnesota Municipal Debt Funds
Average reflects performance of 22 funds; the Lipper New Jersey Municipal Debt
Funds Average reflects performance of 26 funds; the Lipper Ohio Municipal Debt
Funds Average reflects performance of 29 funds; the Lipper Pennsylvania
Municipal Debt Funds Average reflects performance of 35 funds; and the Lipper
Virginia Municipal Debt Funds Average reflects performance of 26 funds. The
funds tracked by Lipper Analytical Services have generally similar investment
objectives to the applicable Alliance Municipal Income Fund II Portfolios,
although some of the funds may have investment policies that are somewhat
different than those of Alliance Municipal Income Fund II.
When comparing an Alliance Municipal Income Fund II Portfolio to the
corresponding Lipper Average, you should note that the Portfolio's performance
reflects the maximum sales charge of 4.25%, while no such sales charges are
reflected in the performance of the Lipper Averages.
Alliance Portfolio
Lipper Average
8
ARIZONA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-102.3%
ARIZONA LONG TERM MUNICIPAL BONDS-87.5%
AAA Glendale (Midwestern Univ)
Connie Lee Ser 96A
6.00%, 5/15/26 $ 795 $ 833,104
NR Goodyear Assessment
District Dist No. 1 Ser 96C
7.25%, 7/01/16 760 792,133
NR Hassayampa Cmnty Fac
Dist Spec Assessment Lien
7.75%, 7/01/21 2,530 2,581,359
AAA Maricopa Cnty Hlth Fac Rev
(Catholic Healthcare West)
MBIA Ser 93
7.152%, 7/01/13 (a) 750 793,380
AAA Maricopa Cnty MFHR (Tempe Grove Apts)
GNMA Ser 96A AMT
6.20%, 1/20/39 755 789,889
AA+ Maricopa Cnty IDR (Citizens Utilities)
Ser 95 AMT
6.20%, 5/01/30 775 825,824
AA- Mohave Cnty IDR (Cargill/North Star Steel)
Ser 95A AMT
6.70%, 3/01/20 750 831,307
AAA Mohave Cnty IDR Hlth Care Rev
(Chris Ridge & Silver) GNMA Ser 96
6.375%, 11/01/31 1,000 1,074,490
AAA Phoenix Arpt Rev
(Sky Harbor/Goodyear/Deer Valley)
MBIA Ser 94D AMT
6.30%, 7/01/10 655 714,933
AA Phoenix MFHR (Woodstone & Silver Springs)
Asset Gty Ser 93
6.25%, 4/01/23 795 828,740
AAA Pima Cnty SFMR GNMA/FNMA/FHLMC
Ser 97A AMT
6.25%, 11/01/30 2,750 2,881,505
NR Scottsdale GO Cmnty Fac Dist
(McDowell Mt Ranch) Ser 97
6.50%, 7/15/22 700 707,000
AAA Tempe MFHR (Quadrangles) FHA Ser 93
6.25%, 6/01/26 795 831,284
AAA Yuma MFHR (Alexandrite Sands Apt)
FHA Ser 90 AMT
7.70%, 12/01/29 805 847,222
TOTAL ARIZONA LONG TERM MUNICIPAL BONDS
(cost $14,844,283) 15,332,170
SHORT TERM MUNICIPAL NOTES-14.8%
A-1 Apache Cnty PCR (Tucson Elec Pwr Co)
Ser 81B VRDN (b)
4.20%, 10/01/21 1,000 1,000,000
VMIG1* Phoenix Civic Impt Corp Excise Tax Rev
Ser 95 VRDN (b) AMT
4.20%, 6/01/20 700 700,000
A-1+ Pima Cnty IDR (Tucson Elec Pwr Co)
Ser 82 VRDN (b)
4.15%, 7/01/22 700 700,000
VMIG1* Yavapai Cnty IDR (Kachina Pointe)
Ser 88 VRDN (b)
3.80%, 1/01/09 200 200,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $2,600,000) 2,600,000
TOTAL INVESTMENTS-102.3%
(cost $17,444,283) 17,932,170
Other assets less liabilities-(2.3%) (401,443)
NET ASSETS-100% $ 17,530,727
# 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.
(b) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as 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 19.
See notes to financial statements.
9
FLORIDA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-110.2%
LONG TERM MUNICIPAL BONDS-96.6%
FLORIDA-93.6%
NR Collier Cnty Fiddlers Creek
Cmnty Dev Dist
7.50%, 5/01/18 $13,500 $ 14,099,940
BBB+ Collier Cnty Hlth Fac
(The Moorings) Ser 94
7.00%, 12/01/19 2,000 2,186,320
AAA Dade Cnty Arpt Rev (Miami Int'l)
MBIA Ser 95B AMT
6.00%, 10/01/24 3,180 3,303,448
A3* Dade Cnty Spec Oblig
(Courthouse Ctr) Ser 95
6.10%, 4/01/20 3,000 3,154,380
AAA Escambia Cnty Hsg Fin Auth
SFMR FNMA/GNMA Ser 96B AMT
6.25%, 4/01/28 2,565 2,678,783
Baa1* Escambia Cnty PCR
(Champion Int'l Corp) Ser 96 AMT
6.40%, 9/01/30 5,000 5,310,350
AAA Florida Hsg Fin Agy
MFHR (Brittany of Rosemont)
AMBAC Ser 95G AMT
6.25%, 7/01/35 1,350 1,421,860
AAA Florida Hsg Fin Agy
MFHR (Landings at Boot Ranch)
AMBAC Ser 95K AMT
6.10%, 11/01/35 2,050 2,137,515
AAA Florida Hsg Fin Agy
MFHR (Turtle Creek Apts)
AMBAC Ser 96C AMT
6.20%, 5/01/36 3,245 3,393,621
AAA Florida Hsg Fin Agy SFMR GNMA/FNMA
Ser 94B AMT
6.65%, 7/01/26 2,950 3,078,620
AAA Florida Hsg Fin Agy SFMR GNMA/FNMA
Ser 95A AMT
6.65%, 1/01/24 6,720 7,218,019
AAA Hillsborough Cnty Aviation Auth
(Tampa Int'l Arpt) FGIC Ser 96A AMT
6.00%, 10/01/23 1,500 1,584,075
Aa3* North Miami Hlth Fac
Auth (Catholic Hlth Svcs Oblig Grp) Ser 96
6.00%, 8/15/24 1,200 1,241,544
NR Northern Palm Beach Cnty
(Abacoa) Ser 96A
7.20%, 8/01/16 1,930 2,063,035
A+ Palm Beach Cnty IDR
(Geriatric Care Inc) Ser 96
6.625%, 12/01/26 2,790 3,022,267
Aaa* Pinellas Cnty Hsg Fin Auth SFMR GNMA/FNMA
Ser 94A AMT
6.55%, 8/01/27 3,130 3,323,371
Baa2* Volusia Cnty Ed Fac Auth
(Embry-Riddle Aero Univ) Ser 96A
6.125%, 10/15/26 3,190 3,310,391
AA Volusia Cnty Hlth Fac Auth
(John Knox Village) Asset Gty
6.00%, 6/01/17 1,115 1,170,438
-------------
63,697,977
CALIFORNIA-3.0%
A+ California GO Ser 95 AMT
6.40%, 2/01/20 2,000 2,054,720
TOTAL LONG TERM MUNICIPAL BONDS
(cost $63,257,978) 65,752,697
10
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
SHORT TERM MUNICIPAL NOTES-13.6%
ARIZONA-4.9%
A-1 Apache Cnty PCR (Tucson Elec Pwr Co)
Ser 81B VRDN (a)
4.20%, 10/01/21 $ 3,300 $ 3,300,000
SOUTH CAROLINA-4.9%
A-1+ Berkeley Cnty IDR (Nucor Corp)
Ser 97 VRDN (a) AMT
4.25%, 4/01/30 3,300 3,300,000
TEXAS-1.0%
A Brazos River Harbor Dist (Dow Chemical Co)
Ser 97 VRDN (a) AMT
4.05%, 5/01/27 700 700,000
WASHINGTON-2.8%
A-1 Yakima Cnty Pub Corp (Macro Plastics Inc)
VRDN (a) AMT
4.20%, 12/01/26 1,950 1,950,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $9,250,000) 9,250,000
TOTAL INVESTMENTS-110.2%
(cost $72,507,978) 75,002,697
Other assets less liabilities-(10.2%) (6,944,620)
NET ASSETS-100% $ 68,058,077
# 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 19.
See notes to financial statements.
11
MASSACHUSETTS PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-92.6%
MASSACHUSETTS-88.5%
AAA Chelsea GO AMBAC Ser 94
6.00%, 6/15/14 $1,140 $ 1,215,388
AAA Holyoke GO FSA Ser 93B
6.125%, 8/01/13 1,115 1,194,366
AAA Massachusetts Ed Fin Auth
(Educational Loan) AMBAC Ser 94E AMT
6.00%, 1/01/12 1,080 1,124,582
AAA Massachusetts Hlth & Ed Fac Auth
(Beth Israel) AMBAC Ser G-4
8.370%, 7/01/25 (a) 1,000 1,089,550
AAA Massachusetts Hsg Fin Agy
MFHR (Harbor Point) AMBAC
Ser 96A AMT
6.40%, 12/01/15 1,110 1,184,126
A+ Massachusetts Hsg Fin Agy
SFMR Ser 40 AMT
6.65%, 12/01/27 5,350 5,735,361
A3* Massachusetts Ind Fin Agy
(Brooks School)
5.95%, 7/01/23 1,200 1,231,272
AAA Massachusetts Ind Fin Agy
(Heights Crossing) FHA Ser 95 AMT
6.15%, 2/01/35 1,150 1,185,328
AAA Massachusetts Muni Wholesale
Elec Pwr Supply Sys MBIA Ser 92A
6.00%, 7/01/18 1,140 1,172,011
AAA Massachusetts Port Auth Spec Fac
(US Air) MBIA Ser 96A AMT
5.875%, 9/01/23 1,135 1,162,955
AA+ Massachusetts Wtr Pollution Abatement
(So Essex Prog) Ser 94A
6.375%, 2/01/15 1,100 1,180,410
A1* New England Ed Loan Mktg Ser 93H AMT
6.90%, 11/01/09 3,805 4,217,043
-------------
21,692,392
PUERTO RICO-4.1%
BBB- Puerto Rico Port Auth
(American Airlines) Ser 96A AMT
6.25%, 6/01/26 950 1,009,964
TOTAL INVESTMENTS-92.6%
(cost $22,064,371) 22,702,356
Other assets less liabilities-7.4 % 1,803,527
NET ASSETS-100% $ 24,505,883
# 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 19.
See notes to financial statements.
12
MICHIGAN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-98.0%
LONG TERM MUNICIPAL BONDS-83.8%
MICHIGAN-79.0%
AAA Detroit GO FGIC Ser 93
6.35%, 4/01/14 $ 385 $ 413,070
AAA Grand Rapids Swr Sys MBIA Ser 92
6.00%, 1/01/22 745 773,549
Aa2* Independence MFHR (Greenery Health)
FHA Ser 97
6.15%, 8/01/17 1,850 1,980,851
AAA Kent Cnty Arpt Fac
(Kent Cnty Int'l) Ser 95 AMT
6.10%, 1/01/25 760 794,861
AAA Michigan Hosp Fin Auth
Hosp Rev (St Johns) AMBAC Ser 92A
6.00%, 5/15/13 760 799,733
AA+ Michigan Hsg Dev Auth
SFMR Mortgage Rev FHA Ser 96B AMT
6.20%, 6/01/27 535 560,455
AA+ Michigan Hsg Dev Auth
SFMR Mortgage Rev Ser 95B AMT
7.05%, 6/01/26 3,245 3,425,454
AAA Michigan Strategic Fund
PCR (Detroit Edison) MBIA Ser 95AA
6.40%, 9/01/25 725 784,552
A- Michigan Strategic Fund
PCR (General Motors) Ser 95
6.20%, 9/01/20 735 785,443
A** Romulus Tax Increment
Finance Auth Ser 94
6.75%, 11/01/19 1,585 1,716,761
AA Troy MI Downtown Dev
Auth Asset Gty Ser 95A
6.375%, 11/01/18 735 788,912
-------------
12,823,641
PUERTO RICO-4.8%
BBB- Puerto Rico Port Auth
(American Airlines) Ser 96A AMT
6.25%, 6/01/26 725 770,762
TOTAL LONG TERM MUNICIPAL BONDS
(cost $13,069,055) 13,594,403
SHORT TERM MUNICIPAL NOTES-14.2%
VMIG1* Michigan Higher Ed Student
Loan Auth AMBAC
Ser XII-D AMT VRDN (a)
4.20%, 10/01/15 800 800,000
VMIG1* Michigan Hosp Rev
(Hospital Equipment Loan Program)
Ser 96A VRDN (a)
4.15%, 12/01/23 700 700,000
VMIG1* Michigan Hosp Rev
(Mt Clemens Hospital) VRDN (a)
4.20%, 8/15/15 800 800,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $2,300,000) 2,300,000
TOTAL INVESTMENTS-98.0%
(cost $15,369,055) 15,894,403
Other assets less liabilities-2.0% 330,604
NET ASSETS-100% $ 16,225,007
# Unaudited.
* Moody's Rating.
** Fitch Rating.
(a) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as 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 19.
See notes to financial statements.
13
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-98.9%
MINNESOTA LONG TERM MUNICIPAL BONDS-87.9%
BBB+ Bass Brook PCR
(Minn Power & Light) Ser 92
6.00%, 7/01/22 $ 945 $ 972,830
AAA Duluth Arpt Lease St
Secured GO Ser 95C AMT
6.25%, 8/01/14 915 968,820
Aaa* Eagan MFHR (Woodridge Apts)
GNMA Ser 97A
5.95%, 2/01/32 930 968,828
Aaa* Little Canada MFHR
(Cedar Lakeside) GNMA Ser 97A
5.95%, 2/01/32 930 968,828
A- Minneapolis Common Bond
Fund Community Dev Agy
Ser 95-2 AMT
6.625%, 12/01/15 1,245 1,330,245
A- Minneapolis Common Bond
Fund Community Dev Agy
Ser 97-2 AMT
6.20%, 6/01/17 1,205 1,255,622
AAA Minneapolis COP Special
School Dist #1 MBIA Ser 96A
5.90%, 2/01/17 930 970,278
NR Minnesota Agric & Econ Dev Brd
(Small Business Loan Prog)
Ser 96A AMT
6.75%, 8/01/16 1,450 1,558,242
NR Minnesota Agric & Econ Dev Brd
(Small Business Loan Prog)
Ser 96B AMT
7.00%, 8/01/16 750 793,523
Baa1* Minnesota Higher Ed Fac
Auth (Hamline Univ) Ser 4-I
6.00%, 10/01/16 790 823,986
AA+ Minnesota Hsg Fin Agy
SFMR FHA Ser 89A AMT
7.90%, 7/01/19 2,660 2,768,129
AA+ Rochester Hlth Care Fac
(Mayo Med Ctr) Ser 92H
7.884%, 11/15/15 (a) 2,000 2,241,860
BBB South St. Paul Hosp Rev
(Health East) Ser 94
6.75%, 11/01/09 900 976,878
AAA St Francis GO Ind
Sch Dist # 15 CGIC Ser 95A
6.375%, 2/01/16 880 982,467
TOTAL MINNESOTA LONG TERM MUNICIPAL BONDS
(cost $16,606,347) 17,580,536
SHORT TERM MUNICIPAL NOTES-11.0%
A-1+ Cloquet PCR (Potlatch Corp)
Ser 85 VRDN (b)
4.05%, 12/01/09 600 600,000
VMIG1* Minnesota Higher Ed Fac Auth
(University of St Thomas)
Ser 97O VRDN (b)
4.05%, 10/01/21 900 900,000
AAA Plymouth MFHR
(The Lakes Apts) FNMA
Coll Ser 97A AMT VRDN (b)
4.30%, 5/15/27 700 700,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $2,200,000) 2,200,000
TOTAL INVESTMENTS-98.9%
(cost $18,806,347) 19,780,536
Other assets less liabilities-1.1% 214,262
NET ASSETS-100% $ 19,994,798
# 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.
(b) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as 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 19.
See notes to financial statements.
14
NEW JERSEY PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-96.9%
NEW JERSEY LONG TERM MUNICIPAL BONDS-91.9%
AAA Essex Cnty Imp Auth Util Rev (Orange Twp)
MBIA Ser 93
6.00%, 12/01/17 $2,510 $ 2,633,442
BBB- New Jersey Eco Dev
(American Airlines) AMT
7.10%, 11/01/31 4,500 4,891,950
A+ New Jersey Eco Dev (Anheuser-Busch)
Ser 95 AMT
5.85%, 12/01/30 3,500 3,638,285
AAA New Jersey Eco Dev
(Hackensack Wtr Co) MBIA
Ser 94B AMT
5.90%, 3/01/24 3,545 3,656,100
AAA New Jersey Eco Dev (NJ American Wtr Co)
FGIC AMT
6.875%, 11/01/34 3,275 3,666,592
AAA New Jersey Eco Dev
(Pub Ser Elec & Gas) MBIA
Ser 94A AMT
6.40%, 5/01/32 3,400 3,625,964
BBB New Jersey Hlth Care Fac
(Englewood Hosp) Ser 94
6.75%, 7/01/24 4,230 4,565,354
BBB New Jersey Hlth Care Fac
(Franciscan Sisters,
St. Mary's Hosp) Ser 93
5.875%, 7/01/12 2,755 2,800,072
AAA New Jersey Hlth Care Fac
(Monmouth Med Ctr) CGIC Ser C
6.25%, 7/01/24 2,750 2,940,575
AAA New Jersey Hsg & Mtg MFHR AMBAC
Ser 96A AMT
6.25%, 5/01/28 4,000 4,191,200
A+ New Jersey Hsg & Mtg
MFHR (Sect 8) Ser 1
6.70%, 11/01/28 8,500 9,115,825
AAA New Jersey Hsg & Mtg SFMR MBIA
Ser 95O AMT
6.35%, 10/01/27 5,000 5,299,700
AAA Passaic Valley Sewer AMBAC Ser 92D
5.75%, 12/01/15 3,400 3,516,484
AAA Port Auth of NY & NJ
(JFK Int'l Arpt)
MBIA Ser 6 AMT
5.75%, 12/01/22 7,590 7,769,503
AA- Port Auth of NY & NJ 95th Ser AMT
6.125%, 7/15/29 3,205 3,327,912
AA- Salem Cnty NJ Waste Disposal Auth
(E.I. Dupont) Ser 92A AMT
6.125%, 7/15/22 3,500 3,672,550
BBB South Jersey Transportation
Auth NJ Lease Rev
(Raytheon Aircraft Service)
Ser 97A AMT
6.15%, 1/01/22 500 526,505
TOTAL NEW JERSEY LONG TERM MUNICIPAL BONDS
(cost $65,738,092 ) 69,838,013
SHORT TERM MUNICIPAL NOTES-5.0%
VMIG1* Essex Cnty Imp Auth
Ser 86 VRDN (a)
4.00%, 7/01/26 3,500 3,500,000
A-1 Newark NJ Hlth Care Fac (New Community)
FHA/GNMA Ser 95A VRDN (a)
4.15%, 6/01/30 300 300,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $3,800,000 ) 3,800,000
TOTAL INVESTMENTS-96.9%
(cost $69,538,092) 73,638,013
Other assets less liabilities-3.1% 2,383,047
NET ASSETS-100% $ 76,021,060
# 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 19.
See notes to financial statements.
15
OHIO PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-96.0%
LONG TERM MUNICIPAL BONDS-91.4%
OHIO-86.9%
BBB Akron (Akron Municipal
Baseball Stad) Ser 96
Zero Coupon, 12/01/16 $5,000 $ 4,212,050
BBB- Butler Cnty Hosp Rev
(Fort Hamilton Hughes)
7.50%, 1/01/10 1,400 1,531,796
AAA Cuyahoga Cnty MFHR
(Nat'l Terminal Apts)
FNMA Ser 96 AMT
6.40%, 7/01/16 5,180 5,527,837
BBB Dayton Spec Fac Rev (Emery Air Freight)
Ser 96D AMT
6.20%, 10/01/09 2,225 2,380,639
BBB Hamilton Cnty Hlth Sys (Franciscan
Sisters Providence) Ser 92
6.875%, 7/01/15 2,000 2,130,320
Aaa* Kent Ohio MFHR (Silver Meadows Apt)
GNMA Ser 95 AMT
7.15%, 12/20/26 2,000 2,210,680
NR Mahoning Valley Sanitary Dist Ser 94
7.75%, 5/15/14 1,500 1,673,100
Baa1* Ohio Air Quality Dev Auth
(Columbus Southern Pwr) Ser 85B
6.25%, 12/01/20 2,305 2,406,443
AAA Ohio Air Quality Dev Auth
(JMG Funding/Ohio Pwr)
AMBAC Ser 94B AMT
6.375%, 4/01/29 2,150 2,296,200
BB+ Ohio Air Quality Dev Auth
(Toledo Edison Co) Ser 97A AMT
6.10%, 8/01/27 5,000 5,096,550
Aa2* Ohio Hsg Fin Agy MFHR
(Insured Bridgeview Villa II) FHA AMT
6.45%, 12/01/33 1,965 2,056,491
AAA Ohio Hsg Fin Agy SFMR
GNMA Ser 94 B2 AMT
6.70%, 3/01/25 5,710 6,075,554
AAA Ohio Hsg Fin Agy SFMR GNMA
Ser 97 A1 AMT
6.15%, 3/01/29 735 775,638
BB+ Ohio Wtr Dev Auth (Cleveland Electric)
Ser 97A AMT
6.10%, 8/01/20 2,000 2,038,620
A Ohio Wtr Dev Auth
(North Star/BHP) AMT
6.45%, 9/01/20 2,255 2,418,645
-------------
42,830,563
PUERTO RICO-4.5%
BBB- Puerto Rico Port Auth
(American Airlines) Ser 96A AMT
6.25% 6/01/26 2,075 2,205,974
TOTAL LONG TERM MUNICIPAL BONDS
(cost $42,432,641) 45,036,537
SHORT TERM MUNICIPAL NOTE-4.6%
VMIG1* Ohio Hsg Fin Agy MFHR
(Kenwood Congregate) Ser 85 VRDN (a)
3.70%, 12/01/15
(cost $2,300,000) 2,300 2,300,000
TOTAL INVESTMENTS-96.0%
(cost $44,732,641) 47,336,537
Other assets less liabilities-4.0% 1,958,482
NET ASSETS-100% $ 49,295,019
# 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 19.
See notes to financial statements.
16
PENNSYLVANIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-98.0%
LONG TERM MUNICIPAL BONDS-85.1%
PENNSYLVANIA-82.5%
AAA Allegheny Cnty Arpt Rev
(Pittsburgh Int'l) FSA
Ser 92B AMT
6.625%, 1/01/22 $2,715 $ 2,921,258
BBB- Allegheny Cnty IDR (USX) Ser 96
6.10%, 1/15/18 3,000 3,118,800
A- Bradford Cnty IDR
Solid Waste Disp Rev
(Int'l Paper) Ser 95A AMT
6.60%, 3/01/19 2,500 2,753,500
BBB+ Cumberland Cnty
Municipal Auth Rev
(Presbyterian Homes Inc) Ser 96
6.00%, 12/01/26 4,000 4,084,320
A New Morgan IDR Solid Waste Disp Rev
(Browning-Ferris) Ser 94 AMT
6.50%, 4/01/19 4,000 4,306,320
BBB- Pennsylvania Econ Dev
(Macmillan Bloedel Clarion)
Ser 95 AMT
7.60%, 12/01/20 5,000 5,753,800
BBB Pennsylvania Econ Dev (Sun Co Inc)
Ser 94A AMT
7.60%, 12/01/24 1,965 2,240,513
AAA Pennsylvania Higher Ed
Student Loan AMBAC Ser 88D AMT
6.05%, 1/01/19 3,175 3,285,617
AA+ Pennsylvania Hsg Fin Agy
SFMR Ser 92 35D AMT
8.009%, 4/01/25(a) 9,500 10,121,110
AA+ Pennsylvania Hsg Fin Agy
SFMR Ser 94 41B AMT
6.65%, 4/01/25 5,000 5,333,600
AAA Pennsylvania Turnpike AMBAC Ser 94A
6.00%, 12/01/19 3,000 3,146,160
A- Philadelphia Hosp Rev
(Temple Univ) Ser 93A
6.625%, 11/15/23 3,250 3,473,372
AAA Pittsburgh Urban Redev SFMR
FHA/GNMA/FNMA Ser 97A AMT
6.25%, 10/01/28 1,200 1,255,092
AAA Pittsburgh Urban Redev SFMR
Ser 95A AMT
7.15%, 10/01/27 520 563,004
AA Potter Cnty Hosp Auth
(Charles Cole Memorial)
Asset Gty Ser 96
6.05%, 8/01/24 3,335 3,463,531
BBB+ Warren Cnty Hosp Auth
(Warren Gen) Ser 94A
7.00%, 4/01/19 2,200 2,377,738
-------------
58,197,735
PUERTO RICO-2.6%
BBB- Puerto Rico Port Auth (American Airlines)
Ser 96A AMT
6.25%, 6/01/26 1,725 1,833,882
TOTAL LONG TERM MUNICIPAL BONDS
(cost $56,062,965) 60,031,617
SHORT TERM MUNICIPAL NOTES-12.9%
A-1+ Delaware Valley Regl Fin
Auth Loc Govt Rev Ser C VRDN (b)
4.15%, 12/01/20 2,100 2,100,000
17
PENNSYLVANIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
A-1+ Emmaus GO
FSA Ser 96 VRDN (b)
4.05%, 12/01/28 $3,500 $ 3,500,000
Aaa* Pennsylvania Energy Dev
Auth (B&W Ebensburg)
Ser 88 VRDN (b) AMT
4.20%, 12/01/11 3,500 3,500,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $9,100,000) 9,100,000
TOTAL INVESTMENTS-98.0%
(cost $65,162,965) 69,131,617
Other assets less liabilities-2.0% 1,380,513
NET ASSETS-100% $ 70,512,130
# 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.
(b) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as 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 19.
See notes to financial statements.
18
VIRGINIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS# (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-97.2%
VIRGINIA LONG TERM MUNICIPAL BONDS-92.6%
A Alexandria MFHR
(Buckingham Village Apts)
Ser 96A AMT
6.15%, 1/01/29 $ 455 $ 471,385
A+ Giles Cnty IDR (Hoechst Celanese Corp)
Ser 96 AMT
6.45%, 5/01/26 435 475,916
AAA Harrisonburg MFHR (Greens of Salem Run)
FSA Ser 97 AMT
6.30%, 4/01/29 595 632,027
A Henrico Cnty IDR Solid Waste Rev
(Browning-Ferris) Ser 97A AMT
5.875%, 3/01/17 460 477,199
A- Isle of Wight Cnty Solid Waste Rev
(Union Camp Corp) Ser 94 AMT
6.55%, 4/01/24 325 355,459
A+ James City Cnty Solid Waste Rev
(Anheuser-Busch) Ser 97 AMT
6.00%, 4/01/32 460 476,666
AAA Newport News MFHR (Mennowood Cmntys)
GNMA Ser 96A
6.25%, 8/01/36 445 472,105
A2* Prince William Cnty Hosp Rev
(Potomac Hosp Corp) Ser 95
6.75%, 10/01/15 430 472,901
NR Staunton Ed Fac
(Mary Baldwin College) Ser 96
6.75%, 11/01/21 1,815 1,891,049
AAA Suffolk MFHR
(Prince William Commons)
FNMA Ser 96A AMT
6.50%, 6/01/29 455 484,320
AA Virginia Beach Hlth Care
(Sentara Bayside Hosp)
6.30%, 11/01/21 445 470,476
AA+ Virginia Hsg Dev Auth SFMR
(Commonwealth Mtg) Ser 94G AMT
7.125%, 7/01/22 2,240 2,355,046
TOTAL VIRGINIA LONG TERM MUNICIPAL BONDS
(cost $8,814,442) 9,034,549
SHORT TERM MUNICIPAL NOTE-4.6%
P-1* Bedford Cnty IDR (Nekoosa Pkg Corp)
Ser 95A VRDN (a) AMT
4.45%, 12/01/25
(cost $450,000) 450 450,000
TOTAL INVESTMENTS-97.2%
(cost $9,264,442) 9,484,549
Other assets less liabilities-2.8% 273,072
NET ASSETS-100% $ 9,757,621
# 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 notes to financial statements.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax-Subject to
CGIC Capital Guaranty Insurance Company
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Administration
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
MBIA Municipal Bond Investors Assurance
GNMA Government National Mortgage Association
GO General Obligation
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
NR Rating not applied for
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
19
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSETTS
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Investment in securities, at value
(cost: $17,444,283, $72,507,978, $22,064,371,
$15,369,055, $18,806,347, $69,538,092,
$44,732,641, $65,162,965, $9,264,442,
respectively) $17,932,170 $75,002,697 $22,702,356
Cash -0- -0- 114,303
Receivable for shares of beneficial interest sold 379,151 442,015 327,664
Interest receivable 304,060 1,387,633 396,767
Receivable due from Adviser 123,739 -0- 107,044
Receivable for investment securities sold -0- -0- 1,200,000
Other assets 14,849 10,679 10,624
Total assets 18,753,969 76,843,024 24,858,758
LIABILITIES
Due to custodian 102,248 1,543 -0-
Payable for investment securities purchased 1,000,000 8,550,000 -0-
Dividends payable 24,233 91,719 34,111
Distribution fee payable 8,865 45,413 13,852
Payable for shares of beneficial interest redeemed 2,000 41,134 235,781
Advisory fee payable -0- 1,508 -0-
Accrued expenses and other liabilities 85,896 53,630 69,131
Total liabilities 1,223,242 8,784,947 352,875
NET ASSETS $17,530,727 $68,058,077 $24,505,883
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 16,266 $ 67,097 $ 21,900
Additional paid-in capital 16,707,137 70,749,224 23,436,817
Distributions in excess of net investment income (24,233) (91,719) (34,111)
Accumulated net realized gain (loss) on
investment transactions 343,670 (5,161,244) 443,292
Net unrealized appreciation of investments 487,887 2,494,719 637,985
$17,530,727 $68,058,077 $24,505,883
CLASS A SHARES
Net assets $ 9,224,832 $17,515,926 $ 9,461,448
Shares of beneficial interest outstanding 855,925 1,726,861 845,524
CLASS B SHARES
Net assets $ 6,530,863 $24,820,437 $ 7,229,832
Shares of beneficial interest outstanding 606,006 2,447,015 646,146
CLASS C SHARES
Net assets $ 1,775,032 $25,721,714 $ 7,814,603
Shares of beneficial interest outstanding 164,699 2,535,869 698,396
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share $10.78 $10.14 $11.19
Sales charge--4.25% of public offering price .48 .45 .50
Maximum offering price $11.26 $10.59 $11.69
CLASS B SHARES
Net asset value and offering price per share $10.78 $10.14 $11.19
CLASS C SHARES
Net asset value and offering price per share $10.78 $10.14 $11.19
</TABLE>
See notes to financial statements.
20
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 15,894,403 $ 19,780,536 $ 73,638,013 $ 47,336,537 $ 69,131,617 $ 9,484,549
-0- -0- 51,389 296,519 85,725 11,210
31,650 119,397 105,118 185,725 179,231 8,374
255,025 252,484 1,521,365 653,489 1,440,284 197,118
77,841 100,637 -0- 7,172 -0- 124,932
156,657 -0- 1,050,080 1,115,500 -0- -0-
7,966 10,072 10,072 10,535 13,682 9,441
16,423,542 20,263,126 76,376,037 49,605,477 70,850,539 9,835,624
86,662 141,355 -0- -0- -0- -0-
-0- -0- -0- -0- -0- -0-
21,367 26,544 95,883 63,456 96,781 12,981
9,654 13,820 52,307 35,691 43,266 5,866
8,435 14,933 136,267 143,212 114,064 2,000
-0- -0- 7,820 -0- 17,048 -0-
72,417 71,676 62,700 68,099 67,250 57,156
198,535 268,328 354,977 310,458 338,409 78,003
$ 16,225,007 $ 19,994,798 $ 76,021,060 $ 49,295,019 $ 70,512,130 $ 9,757,621
$ 15,419 $ 20,049 $ 74,857 $ 48,496 $ 68,239 $ 8,950
15,256,515 20,444,992 76,094,278 49,793,182 68,446,219 9,237,555
(21,367) (26,544) (95,883) (63,456) (96,781) (12,981)
449,092 (1,417,888) (4,152,113) (3,087,099) (1,874,199) 303,990
525,348 974,189 4,099,921 2,603,896 3,968,652 220,107
$ 16,225,007 $ 19,994,798 $ 76,021,060 $ 49,295,019 $ 70,512,130 $ 9,757,621
$ 5,836,154 $ 4,119,747 $ 16,309,352 $ 7,595,710 $ 24,948,296 $ 3,530,325
554,541 413,115 1,606,058 747,254 2,414,386 323,796
$ 5,300,345 $ 8,516,932 $ 38,307,684 $ 26,821,226 $ 30,078,121 $ 5,020,095
503,732 853,980 3,772,191 2,638,614 2,910,826 460,437
$ 5,088,508 $ 7,358,119 $ 21,404,024 $ 14,878,083 $ 15,485,713 $ 1,207,201
483,598 737,839 2,107,406 1,463,689 1,498,634 110,727
$10.52 $ 9.97 $10.15 $10.16 $10.33 $10.90
.47 .44 .45 .45 .46 .48
$10.99 $10.41 $10.60 $10.61 $10.79 $11.38
$10.52 $ 9.97 $10.16 $10.16 $10.33 $10.90
$10.52 $ 9.97 $10.16 $10.16 $10.33 $10.90
</TABLE>
21
STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSSETTS
------------ ------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 852,537 $ 4,180,751 $ 954,449
EXPENSES
Advisory fee 85,933 413,941 97,045
Distribution fee - Class A 20,379 45,848 16,048
Distribution fee - Class B 55,735 230,909 48,450
Distribution fee - Class C 13,828 278,572 53,327
Custodian 88,802 92,088 85,869
Administrative 55,000 55,000 55,000
Audit & legal 41,628 45,894 37,320
Transfer agency 28,822 45,240 25,800
Printing 9,342 11,777 2,404
Amortization of organizational expenses 8,921 14,662 7,132
Registration 5,373 1,918 7,502
Trustees' fees 2,459 2,459 2,459
Miscellaneous 4,390 7,111 3,771
Total expenses 420,612 1,245,419 442,127
Less: expenses waived and reimbursed by
Adviser (see Note B) (264,673) (405,299) (259,088)
Net expenses 155,939 840,120 183,039
Net investment income 696,598 3,340,631 771,410
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 377,624 1,247,758 489,674
Net change in unrealized appreciation of
investments 238,359 1,354,893 391,030
Net gain on investments 615,983 2,602,651 880,704
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,312,581 $ 5,943,282 $ 1,652,114
</TABLE>
See notes to financial statements.
22
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
------------ ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 906,099 $ 1,171,979 $ 4,442,574 $ 2,914,876 $ 4,304,648 $ 476,768
91,349 117,961 464,240 290,778 421,262 49,263
17,587 10,998 43,523 19,085 69,378 8,679
42,552 81,010 378,572 252,445 300,896 39,933
44,984 71,069 219,135 149,184 141,862 9,957
85,928 88,100 89,264 89,057 97,949 77,711
55,000 55,000 55,000 55,000 55,000 55,000
40,406 40,366 55,084 46,130 51,575 34,977
26,655 27,172 64,060 44,546 61,392 25,900
4,601 6,340 15,805 15,331 21,425 1,614
5,694 13,823 13,823 14,450 18,750 5,727
4,243 1,976 1,094 1,121 3,948 1,280
2,459 2,459 2,459 2,459 2,459 2,459
4,332 6,144 7,747 5,963 5,059 4,431
425,790 522,418 1,409,806 985,549 1,250,955 316,931
(224,191) (273,599) (378,542) (352,951) (297,697) (229,195)
201,599 248,819 1,031,264 632,598 953,258 87,736
704,500 923,160 3,411,310 2,282,278 3,351,390 389,032
539,839 275,164 1,486,965 971,673 934,665 306,700
227,908 499,706 1,808,118 1,589,495 2,363,863 157,573
767,747 774,870 3,295,083 2,561,168 3,298,528 464,273
$ 1,472,247 $ 1,698,030 $ 6,706,393 $ 4,843,446 $ 6,649,918 $ 853,305
</TABLE>
23
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,
1997 1996 1997 1996 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 696,598 $ 390,371 $ 3,340,631 $ 3,233,449 $ 771,410 $ 464,239
Net realized gain on investment
transactions 377,624 45,864 1,247,758 1,662,326 489,674 227,868
Net change in unrealized
appreciation (depreciation) of
investments 238,359 83,969 1,354,893 (590,349) 391,030 132,436
Net increase in net assets from
operations 1,312,581 520,204 5,943,282 4,305,426 1,652,114 824,543
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (367,913) (172,713) (847,240) (732,184) (288,776) (125,448)
Class B (263,634) (192,483) (1,112,789) (1,058,719) (229,220) (129,553)
Class C (65,051) (25,175) (1,346,149) (1,442,546) (253,414) (209,238)
Distributions in excess of net
investment income
Class A (1,655) (10,334) -0- (14,102) (9,236) (3,990)
Class B (3,731) (11,517) -0- (20,392) (10,381) (4,120)
Class C (1,548) (1,507) -0- (27,785) (10,837) (6,654)
Net realized gain on investments
Class A (12,807) (18,449) -0- -0- (77,311) (12,500)
Class B (11,580) (25,982) -0- -0- (71,686) (13,699)
Class C (2,601) (3,713) -0- -0- (86,735) (30,280)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase (decrease) 6,630,877 4,233,239 (1,231,836) 2,240,362 12,483,327 5,472,421
Total increase 7,212,938 4,291,570 1,405,268 3,250,060 13,097,845 5,761,482
NET ASSETS
Beginning of year 10,317,789 6,026,219 66,652,809 63,402,749 11,408,038 5,646,556
End of year $17,530,727 $10,317,789 $68,058,077 $66,652,809 $24,505,883 $11,408,038
</TABLE>
See notes to financial statements.
24
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,
1997 1996 1997 1996 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 704,500 $ 579,134 $ 923,160 $ 873,763 $ 3,411,310 $ 3,494,083
Net realized gain on investment
transactions 539,839 310,017 275,164 566,704 1,486,965 926,101
Net change in unrealized
appreciation (depreciation)of
investments 227,908 (40,072) 499,706 (399,102) 1,808,118 (334,852)
Net increase in net assets from
operations 1,472,247 849,079 1,698,030 1,041,365 6,706,393 4,085,332
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (307,066) (284,490) (199,592) (157,583) (748,666) (747,181)
Class B (192,911) (137,182) (384,953) (381,606) (1,683,216) (1,724,184)
Class C (204,523) (157,462) (338,557) (334,574) (979,428) (1,022,718)
Distributions in excess of net
investment income
Class A (9,747) (16,370) (1,867) (6,547) (10,862) (53,494)
Class B (7,521) (7,894) (555) (15,854) (20,887) (123,442)
Class C (7,811) (9,061) -0- (13,899) (8,404) (73,220)
Net realized gain on investments
Class A (73,030) (83,366) -0- -0- -0- -0-
Class B (46,231) (44,698) -0- -0- -0- -0-
Class C (52,615) (49,542) -0- -0- -0- -0-
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase (decrease) 2,037,957 3,089,421 1,213,302 860,087 (4,431,769) 9,294,813
Total increase (decrease) 2,608,749 3,148,435 1,985,808 991,389 (1,176,839) 9,635,906
NET ASSETS
Beginning of year 13,616,258 10,467,823 18,008,990 17,017,601 77,197,899 67,561,993
End of year $16,225,007 $13,616,258 $19,994,798 $18,008,990 $76,021,060 $77,197,899
</TABLE>
See notes to financial statements.
25
STATEMENTS OF CHANGES IN NET ASSETS
(CONTINUED) 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,
1997 1996 1997 1996 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 2,282,278 $ 2,282,058 $ 3,351,390 $ 2,645,781 $ 389,032 $ 238,998
Net realized gain on investment
transactions 971,673 1,554,258 934,665 1,880,108 306,700 180,231
Net change in unrealized
appreciation (depreciation)
of investments 1,589,495 (1,132,174) 2,363,863 (602,626) 157,573 (28,212)
Net increase in net assets from
operations 4,843,446 2,704,142 6,649,918 3,923,263 853,305 391,017
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (345,718) (291,324) (1,258,375) (555,739) (155,809) (115,677)
Class B (1,189,291) (1,131,284) (1,421,685) (1,401,785) (186,794) (100,364)
Class C (703,427) (859,450) (671,330) (688,257) (46,429) (22,957)
Distributions in excess of net
investment income
Class A -0- (9,978) (30,406) (33,335) (12) (902)
Class B -0- (38,746) (39,276) (84,082) (1,795) (783)
Class C -0- (29,435) (16,414) (41,283) (515) (179)
Net realized gain on investments
Class A -0- -0- -0- -0- (59,025) (15,668)
Class B -0- -0- -0- -0- (85,912) (10,549)
Class C -0- -0- -0- -0- (22,732) (1,013)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase (decrease) (1,900,553) 3,381,831 1,759,900 12,089,059 3,021,558 3,148,417
Total increase 704,457 3,725,756 4,972,332 13,207,841 3,315,840 3,271,342
NET ASSETS
Beginning of year 48,590,562 44,864,806 65,539,798 52,331,957 6,441,781 3,170,439
End of year $49,295,019 $48,590,562 $70,512,130 $65,539,798 $9,757,621 $6,441,781
</TABLE>
See notes to financial statements.
26
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 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% for purchases not exceeding $1,000,000. With
respect to purchases of $1,000,000 or more, Class A shares redeemed within one
year of purchase will be subject to a contingent deferred sales charge of 1%.
Class B shares are currently sold with a contingent deferred sales charge which
declines from 3% to zero depending on the period of time the shares are held.
Class B shares will automatically convert to Class A shares six years after the
end of the calendar month of purchase. Class C shares are subject to a
contingent deferred sales charge of 1% on redemptions made within the first
year after purchase. All three classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions,
except that each class bears different distribution expenses and has exclusive
voting rights with respect to its distribution plan. The following is a summary
of the significant accounting policies followed by the Fund.
1. SECURITY VALUATION
The Fund values municipal securities at fair value based on prices provided by
a recognized pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values.
If market quotations are not readily available from such pricing service, a
municipal security is valued at its fair value as determined in good faith by
the Fund's Adviser, Alliance Capital Management, L.P. under procedures
established by the Fund's Board of 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 policy of each Portfolio to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if applicable,
to its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund amortizes premium and
accretes 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. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares.
27
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income and capital gains distribution are determined in accordance with federal
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified with the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification. During the current fiscal year, certain portfolios had
permanent differences, primarily due to distributions in excess of net
tax-exempt investment income which resulted in a net decrease in distributions
in excess of net investment income and a corresponding decrease in additional
paid-in capital for those portfolios. These reclassifications had no affect on
net assets.
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. For the year ended September 30, 1997, the Adviser
voluntarily agreed to waive all or a portion of its advisory fees. The
aggregate amounts of such fee waivers were: Arizona Portfolio, $85,933; Florida
Portfolio, $350,299; Massachusetts Portfolio, $97,045; Michigan Portfolio,
$91,349; Minnesota Portfolio, $117,961; New Jersey Portfolio, $323,542; Ohio
Portfolio, $290,778; Pennsylvania Portfolio, $242,697; and Virginia Portfolio
$49,263.
Pursuant to the advisory agreement, the Adviser provides to each Portfolio
certain legal and accounting services. For the year ended September 30, 1997,
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: Arizona Portfolio, $178,740; Massachusetts
Portfolio, $162,043; Michigan Portfolio, $132,842; Minnesota Portfolio,
$155,638; Ohio Portfolio, $62,173 and Virginia Portfolio, $179,932. There was
no such reimbursement for the Florida Portfolio, New Jersey 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: Arizona Portfolio, $18,000; Florida Portfolio,
$24,556; Massachusetts Portfolio, $18,000; Michigan Portfolio, $18,000;
Minnesota Portfolio, $18,000; New Jersey Portfolio, $38,674; Ohio Portfolio,
$24,949; Pennsylvania Portfolio, $34,716; and Virginia Portfolio, $18,000.
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, 1997 were: Arizona Portfolio
$8,550; Florida Portfolio $6,676; Massachusetts Portfolio $6,544; Michigan
Portfolio $3,231; Minnesota Portfolio, $2,259; New Jersey Portfolio, $6,728;
Pennsylvania Portfolio, $6,672; and Virginia Portfolio, $2,344. The amount of
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the same period were: Arizona Portfolio, $26,432; Florida
Portfolio, $24,195; Massachusetts Portfolio, $5,545; Michigan Portfolio,
$4,700; Minnesota Portfolio, $10,660; New Jersey Portfolio, $51,440; Ohio
Portfolio, $23,986; Pennsylvania Portfolio, $19,985; and Virginia Portfolio,
$6,835. The amount of contingent deferred sales charges imposed upon
redemptions by shareholders of Class C shares for the year ended September 30,
1997 were: Arizona Portfolio, 1,329; Florida Portfolio, $1,137; Massachusetts
Portfolio, $2,193; Michigan Portfolio, $2,053; Minnesota Portfolio, $1,172; New
Jersey Portfolio, $2,401; Ohio Portfolio, $2,176; Pennsylvania Portfolio,
$1,087; and Virginia Portfolio, $187.
28
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
NOTE C: DISTRIBUTION SERVICES AGREEMENT
Each Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, each Portfolio pays a distribution fee to the Distributor at an
annual rate of up to .30 of 1% of each Portfolio's average daily net assets
attributable to Class A shares and 1% of each Portfolio's average daily net
assets attributable to both Class B and Class C shares. 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 $ 737,147 $ 176,290
Florida 1,121,048 1,152,723
Massachusetts 654,399 605,448
Michigan 633,711 728,261
Minnesota 990,510 727,660
New Jersey 1,797,139 759,019
Ohio 1,490,274 762,570
Pennsylvania 1,276,781 680,204
Virginia 845,124 235,241
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, 1997 were as
follows:
PORTFOLIO PURCHASES SALES
- -------------- ------------ ------------
Arizona $ 32,012,466 $ 26,292,554
Florida 141,479,088 138,210,915
Massachusetts 31,281,233 20,575,225
Michigan 25,194,536 23,337,789
Minnesota 25,882,173 24,409,819
New Jersey 45,128,561 50,633,071
Ohio 48,093,498 51,547,216
Pennsylvania 58,633,704 56,627,335
Virginia 22,532,846 19,798,346
At September 30, 1997, the cost of investments 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 $ 17,445,084 $ 487,086 $ -0- $ 487,086
Florida 72,507,978 2,494,719 -0- 2,494,719
Massachusetts 22,065,936 636,420 -0- 636,420
Michigan 15,372,276 522,127 -0- 522,127
Minnesota 18,806,526 974,010 -0- 974,010
New Jersey 69,538,092 4,099,921 -0- 4,099,921
Ohio 44,732,641 2,603,896 -0- 2,603,896
Pennsylvania 65,177,919 3,953,698 -0- 3,953,698
Virginia 9,264,442 220,107 -0- 220,107
29
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
For Federal income tax purposes at September 30, 1997, the Fund had capital
loss carryforwards for the following Portfolios: $3,802,409 expiring in 2003,
and $349,704 expiring in 2004, for New Jersey Portfolio; $5,161,244 expiring in
2003, for Florida Portfolio; $2,755,099 expiring in 2003, and $332,000 expiring
in 2004, for Ohio Portfolio; $1,859,245 expiring in 2002, for Pennsylvania
Portfolio; and $924,729 expiring in 2003, and $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.
NOTE E: 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
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
ARIZONA PORTFOLIO 1997 1996 1997 1996
- ----------------- ------------- ----------- -------------- -------------
CLASS A
Shares sold 466,115 245,077 $ 4,910,624 $ 2,497,924
Shares issued in
reinvestment of
dividends and
distributions 9,889 7,348 104,166 75,448
Shares converted
from Class B 5,552 8,585 58,577 85,589
Shares redeemed (52,682) (65,056) (550,222) (660,264)
Net increase 428,874 195,954 $ 4,523,145 $ 1,998,697
CLASS B
Shares sold 234,439 222,576 $ 2,473,657 $ 2,277,718
Shares issued in
reinvestment of
dividends and
distributions 13,442 9,322 141,339 95,597
Shares converted
to Class A (5,552) (8,585) (58,577) (85,589)
Shares redeemed (139,836) (27,452) (1,453,909) (280,976)
Net increase 102,493 195,861 $ 1,102,510 $ 2,006,750
CLASS C
Shares sold 115,373 44,293 $ 1,209,064 $ 451,216
Shares issued in
reinvestment of
dividends and
distributions 3,226 2,349 33,997 24,160
Shares redeemed (22,676) (24,564) (237,839) (247,584)
Net increase 95,923 22,078 $ 1,005,222 $ 227,792
30
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
FLORIDA PORTFOLIO 1997 1996 1997 1996
- ----------------- ------------- ----------- -------------- -------------
CLASS A
Shares sold 401,472 519,985 $ 3,966,237 $ 5,045,697
Shares issued in
reinvestment of
dividends and
distributions 32,217 29,497 318,408 286,857
Shares converted
from Class B 51,926 22,916 510,238 219,737
Shares redeemed (228,010) (351,639) (2,248,140) (3,406,503)
Net increase 257,605 220,759 $ 2,546,743 $ 2,145,788
CLASS B
Shares sold 744,931 649,530 $ 7,338,616 $ 6,337,001
Shares issued in
reinvestment of
dividends and
distributions 50,066 44,597 495,099 434,054
Shares converted
to Class A (51,926) (22,916) (510,238) (219,737)
Shares redeemed (579,406) (544,509) (5,720,727) (5,277,524)
Net increase 163,665 126,702 $ 1,602,750 $ 1,273,794
CLASS C
Shares sold 676,267 594,748 $ 6,658,690 $ 5,803,084
Shares issued in
reinvestment of
dividends and
distributions 62,835 85,081 621,766 834,227
Shares redeemed (1,296,118) (800,351) (12,661,785) (7,816,531)
Net decrease (557,016) (120,522) $(5,381,329) $(1,179,220)
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MASSACHUSETTS SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
PORTFOLI 1997 1996 1997 1996
- --------------- ------------- ----------- -------------- -------------
CLASS A
Shares sold 705,271 172,711 $ 7,737,977 $ 1,833,733
Shares issued in
reinvestment of
dividends and
distributions 16,441 4,244 178,373 45,329
Shares converted
from Class B 36 -0- 397 -0-
Shares redeemed (172,200) (8,362) (1,883,762) (89,000)
Net increase 549,548 168,593 $ 6,032,985 $ 1,790,062
CLASS B
Shares sold 336,620 191,547 $ 3,677,110 $ 2,024,593
Shares issued in
reinvestment of
dividends and
distributions 14,320 5,666 155,377 60,463
Shares converted
to Class A (36) -0- (397) -0-
Shares redeemed (44,532) (24,584) (485,344) (264,300)
Net increase 306,372 172,629 $ 3,346,746 $ 1,820,756
CLASS C
Shares sold 386,133 371,867 $ 4,233,533 $ 3,967,597
Shares issued in
reinvestment of
dividends and
distributions 28,580 18,527 309,824 197,520
Shares redeemed (132,699) (217,586) (1,439,761) (2,303,514)
Net increase 282,014 172,808 $ 3,103,596 $ 1,861,603
31
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
MICHIGAN PORTFOLIO 1997 1996 1997 1996
- ------------------ ----------- ----------- -------------- -------------
CLASS A
Shares sold 160,589 101,489 $ 1,659,299 $ 1,014,340
Shares issued in
reinvestment of
dividends and
distributions 19,006 25,151 193,980 255,525
Shares converted
from Class B 28 8,229 286 81,522
Shares redeemed (230,129) (40,577) (2,348,441) (412,901)
Net increase(decrease) (50,506) 94,292 $ (494,876) $ 938,486
CLASS B
Shares sold 185,283 159,283 $ 1,897,940 $ 1,598,649
Shares issued in
reinvestment of
dividends and
distributions 13,545 9,868 138,387 100,283
Shares converted
to Class A (28) (8,229) (286) (81,522)
Shares redeemed (46,187) (49,958) (470,069) (499,250)
Net increase 152,613 110,964 $ 1,565,972 $ 1,118,160
CLASS C
Shares sold 176,811 250,006 $ 1,814,237 $ 2,504,024
Shares issued in
reinvestment of
dividends and
distributions 22,260 16,967 227,355 171,824
Shares redeemed (104,698) (163,569) (1,074,731) (1,643,073)
Net increase 94,373 103,404 $ 966,861 $ 1,032,775
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
MINNESOTA PORTFOLIO 1997 1996 1997 1996
- ------------------- ----------- ----------- -------------- -------------
CLASS A
Shares sold 105,934 92,916 $ 1,027,028 $ 881,265
Shares issued in
reinvestment of
dividends and
distributions 12,865 12,846 125,087 122,393
Shares converted
from Class B 11,080 387 107,249 3,685
Shares redeemed (47,164) (30,018) (460,217) (284,383)
Net increase 82,715 76,131 $ 799,147 $ 722,960
CLASS B
Shares sold 167,360 222,829 $ 1,631,577 $ 2,141,082
Shares issued in
reinvestment of
dividends and
distributions 26,821 28,415 260,796 270,706
Shares converted
to Class A (11,080) (387) (107,249) (3,685)
Shares redeemed (194,610) (154,177) (1,893,478) (1,473,158)
Net increase (decrease) (11,509) 96,680 $ (108,354) $ 934,945
CLASS C
Shares sold 167,292 123,688 $ 1,624,602 $ 1,186,392
Shares issued in
reinvestment of
dividends and
distributions 27,887 30,164 271,274 287,651
Shares redeemed (141,329) (238,952) (1,373,367) (2,271,861)
Net increase (decrease) 53,850 (85,100) $ 522,509 $ (797,818)
32
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
NEW JERSEY PORTFOLIO 1997 1996 1997 1996
- -------------------- ------------ ----------- -------------- -------------
CLASS A
Shares sold 469,608 625,486 $ 4,670,579 $ 6,081,158
Shares issued in
reinvestment of
dividends and
distributions 43,821 52,967 434,332 512,440
Shares converted
from Class B 25,334 10,942 250,480 110,519
Shares redeemed (530,123) (295,089) (5,236,167) (2,850,599)
Net increase 8,640 394,306 $ 119,224 $ 3,853,518
CLASS B
Shares sold 612,170 1,079,052 $ 6,103,109 $10,515,892
Shares issued in
reinvestment of
dividends and
distributions 106,709 109,643 1,057,759 1,062,642
Shares converted
to Class A (25,331) (10,942) (250,480) (110,519)
Shares redeemed (943,180) (749,409) (9,338,864) (7,256,786)
Net increase(decrease) (249,632) 428,344 $(2,428,476) $ 4,211,229
CLASS C
Shares sold 374,853 633,743 $ 3,722,963 $ 6,162,975
Shares issued in
reinvestment of
dividends and
distributions 67,711 78,732 671,448 763,028
Shares redeemed (657,468) (591,207) (6,516,928) (5,695,937)
Net increase(decrease) (214,904) 121,268 $(2,122,517) $ 1,230,066
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
OHIO PORTFOLIO 1997 1996 1997 1996
- -------------- ------------ ----------- -------------- -------------
CLASS A
Shares sold 278,619 254,120 $ 2,767,243 $ 2,463,924
Shares issued in
reinvestment of
dividends and
distributions 20,667 20,355 203,289 195,466
Shares converted
from Class B 13,783 6,776 138,710 64,703
Shares redeemed (195,949) (88,508) (1,909,329) (851,889)
Net increase 117,120 192,743 $ 1,199,913 $ 1,872,204
CLASS B
Shares sold 491,863 708,116 $ 4,851,011 $ 6,793,206
Shares issued in
reinvestment of
dividends and
distributions (85,785) 84,542 844,851 813,053
Shares converted
to Class A (13,783) (6,776) (138,710) (64,703)
Shares redeemed (561,173) (437,800) (5,501,504) (4,210,177)
Net increase 2,692 348,082 $ 55,648 $ 3,331,379
CLASS C
Shares sold 173,363 306,053 $ 1,711,532 $ 2,943,537
Shares issued in
reinvestment of
dividends and
distributions 51,701 58,817 509,274 566,008
Shares redeemed (551,175) (553,963) (5,376,920) (5,331,297)
Net decrease (326,111) (189,093) $(3,156,114) $(1,821,752)
33
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
PENNSYLVANIA SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
PORTFOLIO 1997 1996 1997 1996
- -------------- ------------- ----------- -------------- -------------
CLASS A
Shares sold 467,692 1,374,963 $ 4,681,081 $13,527,078
Shares issued in
reinvestment of
dividends and
distributions 84,710 22,540 852,355 220,725
Shares converted
from Class B 63,903 48,579 646,415 472,346
Shares redeemed (344,028) (208,292) (3,466,776) (2,034,747)
Net increase 272,277 1,237,790 $ 2,713,075 $12,185,402
CLASS B
Shares sold 577,688 533,742 $ 5,820,098 $ 5,244,693
Shares issued in
reinvestment of
dividends and
distributions 80,944 81,750 814,188 800,878
Shares converted
to Class A (63,903) (48,579) (646,415) (472,346)
Shares redeemed (771,304) (440,056) (7,750,943) (4,312,987)
Net increase(decrease) (176,575) 126,857 $(1,763,072) $ 1,260,238
CLASS C
Shares sold 288,667 325,151 $ 2,906,593 $ 3,213,975
Shares issued in
reinvestment of
dividends and
distributions 44,989 45,719 452,736 448,507
Shares redeemed (254,416) (511,735) (2,549,432) (5,019,063)
Net increase(decrease) 79,240 (140,865) $ 809,897 $(1,356,581)
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
VIRGINIA PORTFOLIO 1997 1996 1997 1996
- ------------------ ------------ ----------- -------------- -------------
CLASS A
Shares sold 106,838 71,182 $ 1,119,910 $ 740,685
Shares issued in
reinvestment of
dividends and
distributions 12,492 8,689 131,306 90,991
Shares converted
from Class B -0- 103 -0- 1,094
Shares redeemed (27,670) (28,103) (291,141) (294,511)
Net increase 91,660 51,871 $ 960,075 $ 538,259
CLASS B
Shares sold 168,891 226,100 $ 1,787,325 $ 2,369,231
Shares issued in
reinvestment of
dividends and
distributions 19,801 7,632 208,051 79,869
Shares converted
to Class A -0- (103) -0- (1,094)
Shares redeemed (44,556) (33,245) (465,272) (345,773)
Net increase 144,136 200,384 $ 1,530,104 $ 2,102,233
CLASS C
Shares sold 54,662 59,047 $ 578,928 $ 615,683
Shares issued in
reinvestment of
dividends and
distributions 6,070 2,054 63,771 21,491
Shares redeemed (10,711) (12,272) (111,320) (129,249)
Net increase 50,021 48,829 $ 531,379 $ 507,925
34
FINANCIAL HIGHLIGHTS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ARIZONA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
JUNE 1,1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.32 $10.29 $ 9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .57(c) .55(c) .56 .20
Net realized and unrealized gain (loss)
on investment transactions .48 .14 .53 (.23)
Net increase (decrease) in net asset
value from operations 1.05 .69 1.09 (.03)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.57) (.55) (.56) (.20)
Distributions in excess of net
investment income -0- (.03) (.01) -0-
Distributions from net realized gains (.02) (.08) -0- -0-
TOTAL DIVIDENDS AND DISTRIBUTIONS (.59) (.66) (.57) (.20)
Net asset value, end of period $10.78 $10.32 $10.29 $ 9.77
TOTAL RETURN
Total investment return based on
net asset value (d) 10.54% 6.84% 11.56% (.35)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $9,225 $4,409 $2,379 $930
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .78% .78% .78% .78%(e)
Expenses, before waivers/reimbursements 2.71% 3.69% 4.88% 7.71%(e)
Net investment income, net of waivers
/reimbursements 5.42% 5.33% 5.56% 5.82%(e)
Portfolio turnover rate 193% 244% 85% 81%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
JUNE 1,1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.32 $10.29 $ 9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .50(c) .47(c) .49 .18
Net realized and unrealized gain (loss)
on investment transactions .48 .14 .53 (.24)
Net increase (decrease) in net asset
value from operations .98 .61 1.02 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS FROM NET INVESTMENT INCOME (.50) (.47) (.49) (.17)
Distributions in excess of net
investment income -0- (.03) (.01) -0-
Distributions from net realized gains (.02) (.08) -0- -0-
Total dividends and distributions (.52) (.58) (.50) (.17)
Net asset value, end of period $10.78 $10.32 $10.29 $ 9.77
TOTAL RETURN
Total investment return based on net
asset value (d) 9.80% 6.10% 10.78% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,531 $5,199 $3,166 $1,677
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.48% 1.48% 1.48% 1.48%(e)
Expenses, before waivers/reimbursements 3.40% 4.40% 5.58% 8.41%(e)
Net investment income, net of waivers
/reimbursements 4.73% 4.62% 4.89% 5.13%(e)
Portfolio turnover rate 193% 244% 85% 81%
</TABLE>
See footnote summary on page 52.
35
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ARIZONA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
JUNE 1,1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.32 $10.30 $ 9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .50(c) .47(c) .49 .17
Net realized and unrealized gain (loss)
on investment transactions .48 .13 .54 (.23)
Net increase (decrease) in net asset
value from operations .98 .60 1.03 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) (.47) (.49) (.17)
Distributions in excess of net
investment income -0- (.03) (.01) -0-
Distributions from net realized gains (.02) (.08) -0- -0-
Total dividends and distributions (.52) (.58) (.50) (.17)
Net asset value, end of period $10.78 $10.32 $10.30 $ 9.77
TOTAL RETURN
Total investment return based on net
asset value (d) 9.80% 6.00% 10.89% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,775 $710 $481 $485
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.48% 1.48% 1.48% 1.48%(e)
Expenses, before waivers/reimbursements 3.39% 4.41% 5.58% 8.41%(e)
Net investment income, net of waivers
/reimbursements 4.70% 4.61% 4.90% 4.70%(e)
Portfolio turnover rate 193% 244% 85% 81%
</TABLE>
See footnote summary on page 52.
36
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
FLORIDA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.73 $ 9.58 $ 8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .55(c) .54(c) .55 .55 .16
Net realized and unrealized gain (loss)
on investment transactions .41 .16 .69 (1.35) .25
Net increase (decrease) in net asset
value from operations .96 .70 1.24 (.80) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.55) (.54) (.55) (.55) (.16)
Distributions in excess of net
investment income -0- (.01) -0- -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.55) (.55) (.55) (.56) (.16)
Net asset value, end of period $10.14 $ 9.73 $ 9.58 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 10.14% 7.45% 14.44% (8.03)% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $17,516 $14,297 $11,956 $8,227 $4,145
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .73% .73% .73% .38% -0-%(e)
Expenses, before waivers/reimbursements 1.35% 1.33% 1.33% 1.27% 1.30%(e)
Net investment income, net of waivers
/reimbursements 5.58% 5.52% 5.91% 5.70% 5.44%(e)
Portfolio turnover rate 204% 237% 146% 185% 82%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.74 $ 9.58 $ 8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .48(c) .47(c) .47 .48 .14
Net realized and unrealized gain (loss)
on investment transactions .40 .17 .70 (1.35) .25
Net increase (decrease) in net asset
value from operations .88 .64 1.17 (.87) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.48) (.47) (.47) (.48) (.14)
Distributions in excess of net
investment income -0- (.01) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.48) (.48) (.48) (.49) (.14)
Net asset value, end of period $10.14 $ 9.74 $ 9.58 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on net
asset value (d) 9.24% 6.78% 13.56% (8.72)% 3.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $24,820 $22,235 $20,660 $18,048 $9,588
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.43% 1.43% 1.42% 1.08% .61%(e)
Expenses, before waivers/reimbursements 2.05% 2.03% 2.03% 1.98% 2.00%(e)
Net investment income, net of waivers
/reimbursements 4.87% 4.81% 5.22% 4.99% 4.74%(e)
Portfolio turnover rate 204% 237% 146% 185% 82%
</TABLE>
See footnote summary on page 52.
37
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
FLORIDA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.74 $9.58 $8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .49(c) .47(c) .47 .48 .14
Net realized and unrealized gain (loss)
on investment transactions .39 .17 .70 (1.35) .25
Net increase (decrease) in net asset
value from operations .88 .64 1.17 (.87) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.48) (.47) (.47) (.48) (.14)
Distributions in excess of net
investment income -0- (.01) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.48) (.48) (.48) (.49) (.14)
Net asset value, end of period $10.14 $9.74 $9.58 $8.89 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 9.23% 6.78% 13.56% (8.72)% 3.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $25,722 $30,121 $30,787 $42,405 $28,249
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.43% 1.43% 1.42% 1.08% .61%(e)
Expenses, before waivers/reimbursements 2.03% 2.02% 2.03% 1.97% 2.00%(e)
Net investment income, net of waivers
/reimbursements 4.89% 4.81% 5.27% 4.97% 4.74%(e)
Portfolio turnover rate 204% 237% 146% 185% 82%
</TABLE>
See footnote summary on page 52.
38
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MASSACHUSETTS PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
MAR. 29,1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.85 $10.50 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .58(c) .60(c) .58 .31
Net realized and unrealized gain on
investment transactions .57 .44 .41 .11
Net increase in net asset value
from operations 1.15 1.04 .99 .42
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.58) (.59) (.58) (.30)
Distributions in excess of net
investment income (.03) (.02) (.03) -0-
Distributions from net realized gains (.20) (.08) -0- -0-
Total dividends and distributions (.81) (.69) (.61) (.30)
Net asset value, end of period $11.19 $10.85 $10.50 $10.12
TOTAL RETURN
Total investment return based on net
asset value (d) 11.14% 10.25% 10.19% 4.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $9,461 $3,211 $1,337 $565
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .72% .62% .60% .60%(e)
Expenses, before waivers/reimbursements 2.40% 3.15% 6.44% 13.20%(e)
Net investment income, net of waivers
/reimbursements 5.40% 5.62% 5.67% 5.98%(e)
Portfolio turnover rate 134% 246% 155% 146%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
MAR. 29,1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.84 $10.49 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .51(c) .52(c) .52 .27
Net realized and unrealized gain on
investment transactions .58 .45 .39 .11
Net increase in net asset value from
operations 1.09 .97 .91 .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.52) (.52) (.26)
Distributions in excess of net
investment income (.03) (.02) (.02) -0-
Distributions from net realized gains (.20) (.08) -0- -0-
Total dividends and distributions (.74) (.62) (.54) (.26)
Net asset value, end of period $11.19 $10.84 $10.49 $10.12
TOTAL RETURN
Total investment return based on net
asset value (d) 10.52% 9.52% 9.32% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,230 $3,683 $1,754 $725
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.42% 1.32% 1.30% 1.30%(e)
Expenses, before waivers/reimbursements 3.07% 3.85% 7.14% 13.90%(e)
Net investment income, net of waivers
/reimbursements 4.73% 4.93% 4.90% 5.13%(e)
Portfolio turnover rate 134% 246% 155% 146%
</TABLE>
See footnote summary on page 52.
39
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MASSACHUSETTS PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
MAR. 29,1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.84 $10.49 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .51(c) .52(c) .52 .25
Net realized and unrealized gain on
investment transactions .58 .45 .39 .13
Net increase in net asset value from
operations 1.09 .97 .91 .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.52) (.52) (.26)
Distributions in excess of net
investment income (.03) (.02) (.02) -0-
Distributions from net realized gains (.20) (.08) -0- -0-
Total dividends and distributions (.74) (.62) (.54) (.26)
Net asset value, end of period $11.19 $10.84 $10.49 $10.12
TOTAL RETURN
Total investment return based on net
asset value (d) 10.52% 9.52% 9.32% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,815 $4,514 $2,556 $774
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.42% 1.31% 1.30% 1.30%(e)
Expenses, before waivers/reimbursements 3.09% 3.84% 7.14% 13.90%(e)
Net investment income, net of waivers
/reimbursements 4.75% 4.88% 4.85% 4.00%(e)
Portfolio turnover rate 134% 246% 155% 146%
</TABLE>
See footnote summary on page 52.
40
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MICHIGAN PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
FEBRUARY 25,
YEAR ENDED SEPTEMBER 30, 1994(a) TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.12 $10.10 $ 9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .53(c) .52(c) .52 .33
Net realized and unrealized gain (loss)
on investment transactions .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations 1.08 .74 1.30 (.32)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.53) (.52) (.52) (.33)
Distributions in excess of net
investment income (.02) (.03) (.03) -0-
Distributions from net realized gains (.13) (.17) -0- -0-
Total dividends and distributions (.68) (.72) (.55) (.33)
Net asset value, end of period $10.52 $10.12 $10.10 $ 9.35
TOTAL RETURN
Total investment return based on net
asset value (d) 11.05% 7.54% 14.40% (3.24)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,836 $6,123 $5,158 $2,473
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .96% .96% 1.36% .93%(e)
Expenses, before waivers/reimbursements 2.46% 2.77% 3.43% 3.97%(e)
Net investment income, net of waivers
/reimbursements 5.24% 5.21% 5.27% 5.83%(e)
Portfolio turnover rate 161% 242% 151% 222%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
FEBRUARY 25,
YEAR ENDED SEPTEMBER 30, 1994(a) TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.12 $10.10 $ 9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .45(c) .45 .29
Net realized and unrealized gain (loss)
on investment transactions .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations 1.01 .67 1.23 (.36)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.45) (.45) (.29)
Distributions in excess of net
investment income (.02) (.03) (.03) -0-
Distributions from net realized gains (.13) (.17) -0- -0-
Total dividends and distributions (.61) (.65) (.48) (.29)
Net asset value, end of period $10.52 $10.12 $10.10 $ 9.35
TOTAL RETURN
Total investment return based on net
asset value (d) 10.30% 6.80% 13.58% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,300 $3,553 $2,424 $1,722
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.66% 1.66% 2.06% 1.63%(e)
Expenses, before waivers/reimbursements 3.23% 3.48% 4.12% 4.67%(e)
Net investment income, net of waivers
/reimbursements 4.53% 4.51% 4.57% 4.93%(e)
Portfolio turnover rate 161% 242% 151% 222%
</TABLE>
See footnote summary on page 52.
41
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MICHIGAN PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
FEBRUARY 25,
YEAR ENDED SEPTEMBER 30, 1994(a) TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.12 $10.10 $ 9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .45(c) .45 .29
Net realized and unrealized gain (loss)
on investment transactions .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations 1.01 .67 1.23 (.36)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.45) (.45) (.29)
Distributions in excess of net
investment income (.02) (.03) (.03) -0-
Distributions from net realized gains (.13) (.17) -0- -0-
Total dividends and distributions (.61) (.65) (.48) (.29)
Net asset value, end of period $10.52 $10.12 $10.10 $ 9.35
TOTAL RETURN
Total investment return based on net
asset value (d) 10.30% 6.80% 13.58% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,089 $3,940 $2,886 $2,778
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.66% 1.66% 2.06% 1.63%(e)
Expenses, before waivers/reimbursements 3.20% 3.48% 4.13% 4.67%(e)
Net investment income, net of waivers
/reimbursements 4.55% 4.50% 4.69% 4.92%(e)
Portfolio turnover rate 161% 242% 151% 222%
</TABLE>
See footnote summary on page 52.
42
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MINNESOTA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.58 $9.49 $9.19 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .53(c) .53(c) .53 .55 .15
Net realized and unrealized gain (loss)
on investment transactions .39 .11 .32 (1.09) .28
Net increase (decrease) in net asset
value from operations .92 .64 .85 (.54) .43
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.53) (.53) (.53) (.55) (.15)
Distributions in excess of net
investment income -0- (.02) (.02) -0- -0-
Total dividends and distributions (.53) (.55) (.55) (.55) (.15)
Net asset value, end of period $9.97 $9.58 $9.49 $ 9.19 $10.28
TOTAL RETURN
Total investment return based on
net asset value (d) 9.93% 6.95% 9.63% (5.35)% 4.34%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4,120 $3,165 $2,414 $2,125 $994
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .75% .72% .71% .09% -0-%(e)
Expenses, before waivers/reimbursements 2.22% 2.19% 2.30% 2.12% 1.89%(E)
Net investment income, net of waivers
/reimbursements 5.44% 5.54% 5.71% 5.71% 5.20%(e)
Portfolio turnover rate 131% 195% 117% 143% 61%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.58 $9.49 $9.18 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .46(c) .46 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .39 .11 .33 (1.10) .28
Net increase (decrease) in net asset
value from operations .85 .57 .79 (.62) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.46) (.46) (.48) (.13)
Distributions in excess of net
investment income -0- (.02) (.02) -0- -0-
Total dividends and distributions (.46) (.48) (.48) (.48) (.13)
Net asset value, end of period $9.97 $9.58 $9.49 $ 9.18 $10.28
TOTAL RETURN
Total investment return based on net
asset value (d) 9.13% 6.15% 8.90% (6.15)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $8,517 $8,291 $7,299 $6,150 $2,665
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.46% 1.42% 1.42% .80% .43%(e)
Expenses, before waivers/reimbursements 2.91% 2.89% 3.02% 2.83% 2.59%(E)
Net investment income, net of waivers
/reimbursements 4.75% 4.82% 4.97% 5.00% 4.50%(e)
Portfolio turnover rate 131% 195% 117% 143% 61%
</TABLE>
See footnote summary on page 52.
43
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MINNESOTA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.58 $9.50 $9.19 $10.27 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .46(c) .46 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .39 .10 .33 (1.08) .27
Net increase (decrease) in net asset
value from operations .85 .56 .79 (.60) .40
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.46) (.46) (.48) (.13)
Distributions in excess of net
investment income -0- (.02) (.02) -0- -0-
Total dividends and distributions (.46) (.48) (.48) (.48) (.13)
Net asset value, end of period $9.97 $9.58 $9.50 $ 9.19 $10.27
TOTAL RETURN
Total investment return based on
net asset value (d) 9.13% 6.03% 8.89% (5.95)% 4.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,358 $6,553 $7,305 $9,489 $6,697
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.45% 1.41% 1.41% .79% .43%(e)
Expenses, before waivers/reimbursements 2.89% 2.88% 3.00% 2.82% 2.59%(e)
Net investment income, net of waivers
/reimbursements 4.76% 4.82% 5.05% 4.90% 4.50%(e)
Portfolio turnover rate 131% 195% 117% 143% 61%
</TABLE>
See footnote summary on page 52.
44
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
NEW JERSEY PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.72 $9.65 $9.07 $10.29 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .51(c) .51(c) .54 .55 .15
Net realized and unrealized gain (loss)
on investment transactions .44 .11 .59 (1.22) .29
Net increase (decrease) in net asset
value from operations .95 .62 1.13 (.67) .44
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.51) (.54) (.55) (.15)
Distributions in excess of net
investment income (.01) (.04) (.01) -0- -0-
Total dividends and distributions (.52) (.55) (.55) (.55) (.15)
Net asset value, end of period $10.15 $9.72 $9.65 $ 9.07 $10.29
TOTAL RETURN
Total investment return based on
net asset value (d) 10.01% 6.57% 12.91% (6.67)% 4.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $16,309 $15,520 $11,612 $9,257 $6,679
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .82% .82% .82% .20% -0-%(e)
Expenses, before waivers/reimbursements 1.34% 1.35% 1.35% 1.33% 1.29%(e)
Net investment income, net of waivers
/reimbursements 5.16% 5.26% 5.73% 5.65% 5.37%(e)
Portfolio turnover rate 61% 132% 86% 171% 47%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.72 $9.66 $9.07 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .44(c) .44(c) .47 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .45 .10 .60 (1.21) .28
Net increase (decrease) in net asset
value from operations .89 .54 1.07 (.73) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.45) (.47) (.48) (.13)
Distributions in excess of net
investment income (.01) (.03) (.01) -0- -0-
Total dividends and distributions (.45) (.48) (.48) (.48) (.13)
Net asset value, end of period $10.16 $9.72 $9.66 $ 9.07 $10.28
TOTAL RETURN
Total investment return based on net
asset value (d) 9.32% 5.66% 12.15% (7.28)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $38,308 $39,099 $34,695 $30,459 $15,637
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.53% 1.53% 1.53% .91% .63%(e)
Expenses, before waivers/reimbursements 2.04% 2.05% 2.06% 2.03% 1.99%(E)
Net investment income, net of waivers
/reimbursements 4.45% 4.56% 5.03% 4.96% 4.67%(e)
Portfolio turnover rate 61% 132% 86% 171% 47%
</TABLE>
See footnote summary on page 52.
45
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
NEW JERSEY PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.72 $9.66 $9.07 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .44(c) .44(c) .47 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .45 .10 .60 (1.21) .28
Net increase (decrease) in net asset
value from operations .89 .54 1.07 (.73) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.45) (.47) (.48) (.13)
Distributions in excess of net
investment income (.01) (.03) (.01) -0- -0-
Total dividends and distributions (.45) (.48) (.48) (.48) (.13)
Net asset value, end of period $10.16 $9.72 $9.66 $ 9.07 $10.28
TOTAL RETURN
Total investment return based on net
asset value (d) 9.32% 5.66% 12.14% (7.28)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $21,404 $22,579 $21,255 $26,472 $21,193
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.52% 1.52% 1.52% .90% .63%(e)
Expenses, before waivers/reimbursements 2.03% 2.04% 2.06% 2.02% 1.99%(e)
Net investment income, net of waivers
/reimbursements 4.47% 4.56% 5.09% 4.93% 4.67%(e)
Portfolio turnover rate 61% 132% 86% 171% 47%
</TABLE>
See footnote summary on page 52.
46
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
OHIO PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.61 $9.53 $9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .54(c) .52(c) .54 .55 .15
Net realized and unrealized gain (loss)
on investment transactions .54 .11 .48 (1.19) .26
Net increase (decrease) in net asset
value from operations 1.08 .63 1.02 (.64) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.53) (.53) (.54) (.55) (.15)
Distributions in excess of net
investment income -0- (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.53) (.55) (.55) (.56) (.15)
Net asset value, end of period $10.16 $9.61 $9.53 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on
net asset value (d) 11.60% 6.72% 11.63% (6.44)% 4.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,596 $6,054 $4,170 $2,810 $1,050
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .75% .75% .75% .04% -0-%(e)
Expenses, before waivers/reimbursements 1.52% 1.48% 1.51% 1.42% 1.32%(e)
Net investment income, net of waivers
/reimbursements 5.49% 5.47% 5.74% 5.67% 5.30%(e)
Portfolio turnover rate 104% 182% 108% 161% 55%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.61 $9.54 $9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .48(c) .46(c) .47 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .53 .09 .49 (1.19) .26
Net increase (decrease) in net asset
value from operations 1.01 .55 .96 (.71) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.46) (.47) (.48) (.13)
Distributions in excess of net
investment income -0- (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.46) (.48) (.48) (.49) (.13)
Net asset value, end of period $10.16 $9.61 $9.54 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on
net asset value (d) 10.80% 5.82% 10.88% (7.13)% 3.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $26,821 $25,334 $21,821 $20,267 $8,952
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.46% 1.46% 1.46% .74% .17%(e)
Expenses, before waivers/reimpursements 2.22% 2.18% 2.21% 2.13% 2.02%(E)
Net investment income, net of waivers
/reimbursements 4.81% 4.77% 5.08% 4.95% 4.60%(e)
Portfolio turnover rate 104% 182% 108% 161% 55%
</TABLE>
See footnote summary on page 52.
47
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
OHIO PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.61 $9.54 $9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .47(c) .46(c) .47 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .54 .09 .49 (1.19) .26
Net increase (decrease) in net asset
value from operations 1.01 .55 .96 (.71) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.46) (.47) (.48) (.13)
Distributions in excess of net
investment income -0- (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.46) (.48) (.48) (.49) (.13)
Net asset value, end of period $10.16 $9.61 $9.54 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on
net asset value (d) 10.80% 5.82% 10.88% (7.13)% 3.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $14,878 $17,203 $18,874 $26,294 $19,894
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.45% 1.45% 1.45% .74% .17%(e)
Expenses, before waivers/reimbursements 2.20% 2.16% 2.20% 2.12% 2.02%(e)
Net investment income, net of waivers
/reimbursements 4.81% 4.78% 5.14% 4.89% 4.60%(e)
Portfolio turnover rate 104% 182% 108% 161% 55%
</TABLE>
See footnote summary on page 52.
48
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.85 $9.64 $9.18 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .55(c) .49(c) .54 .56 .16
Net realized and unrealized gain (loss)
on investment transactions .49 .28 .48 (1.06) .25
Net increase (decrease) in net asset
value from operations 1.04 .77 1.02 (.50) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.55) (.53) (.54) (.56) (.16)
Distributions in excess of net
investment income (.01) (.03) (.02) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.56) (.56) (.56) (.57) (.16)
Net asset value, end of period $10.33 $9.85 $9.64 $ 9.18 $10.25
TOTAL RETURN
Total investment return based on net
asset value (d) 10.85% 8.17% 11.53% (5.02)% 4.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $24,948 $21,104 $8,721 $7,149 $4,170
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .95% 1.00% 1.00% .45% -0-%(e)
Expenses, before waivers/reimbursements 1.40% 1.45% 1.47% 1.46% 1.31%(e)
Net investment income, net of waivers
/reimbursements 5.44% 5.40% 5.78% 5.73% 5.67%(e)
Portfolio turnover rate 85% 185% 114% 156% 75%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.86 $9.65 $9.18 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .47(c) .46(c) .47 .49 .14
Net realized and unrealized gain (loss)
on investment transactions .49 .24 .49 (1.06) .25
Net increase (decrease) in net asset
value from operations .96 .70 .96 (.57) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.46) (.47) (.49) (.14)
Distributions in excess of net
investment income (.02) (.03) (.02) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.49) (.49) (.49) (.50) (.14)
Net asset value, end of period $10.33 $9.86 $9.65 $ 9.18 $10.25
TOTAL RETURN
Total investment return based on net
asset value (d) 9.95% 7.38% 10.78% (5.72)% 3.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $30,078 $30,440 $28,559 $25,637 $12,173
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.66% 1.71% 1.71% 1.16% .40%(e)
Expenses, before waivers/reimbursements 2.09% 2.15% 2.17% 2.16% 2.01%(e)
Net investment income, net of waivers
/reimbursements 4.72% 4.69% 5.09% 5.01% 4.97%(e)
Portfolio turnover rate 85% 185% 114% 156% 75%
</TABLE>
See footnote summary on page 52.
49
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
JUNE 25,1993(a)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.86 $9.65 $9.18 $10.24 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .47(c) .46(c) .47 .49 .14
Net realized and unrealized gain (loss)
on investment transactions .49 .24 .49 (1.05) .24
Net increase (decrease) in net asset
value from operations .96 .70 .96 (.56) .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.46) (.47) (.49) (.14)
Distributions in excess of net
investment income (.02) (.03) (.02) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.49) (.49) (.49) (.50) (.14)
Net asset value, end of period $10.33 $9.86 $9.65 $ 9.18 $10.24
TOTAL RETURN
Total investment return based on net
asset value (d) 9.95% 7.37% 10.78% (5.63)% 3.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,486 $13,996 $15,052 $18,198 $13,541
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.65% 1.70% 1.70% 1.15% .40%(e)
Expenses, before waivers/reimbursements 2.10% 2.14% 2.17% 2.15% 2.01%(e)
Net investment income, net of waivers
/reimbursements 4.73% 4.69% 5.09% 4.99% 4.97%(e)
Portfolio turnover rate 85% 185% 114% 156% 75%
</TABLE>
See footnote summary on page 52.
50
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
VIRGINIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
APR. 29, 1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.58 $10.29 $ 9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .57(c) .57(c) .56 .24
Net realized and unrealized gain (loss)
on investment transactions .57 .37 .61 (.31)
Net increase (decrease) in net asset
value from operations 1.14 .94 1.17 (.07)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.57) (.57) (.56) (.24)
Distributions in excess of net
investment income -0- -0- (.01) -0-
Distributions from net realized gains (.25) (.08) -0- -0-
Total dividends and distributions (.82) (.65) (.57) (.24)
Net asset value, end of period $10.90 $10.58 $10.29 $ 9.69
TOTAL RETURN
Total investment return based on net
asset value (d) 11.32% 9.39% 12.46% (.71)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $3,530 $2,455 $1,855 $1,249
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .67% .67% .67% .57%(e)
Expenses, before waivers/reimbursements 3.57% 5.18% 8.96% 12.29%(e)
Net investment income, net of waivers
/reimbursements 5.39% 5.39% 5.59% 5.62%(e)
Portfolio turnover rate 258% 298% 128% 65%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
APR. 29, 1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.57 $10.29 $ 9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .50(c) .50(c) .49 .22
Net realized and unrealized gain (loss)
on investment transactions .58 .36 .61 (.32)
Net increase (decrease) in net asset
value from operations 1.08 .86 1.10 (.10)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) (.50) (.49) (.21)
Distributions in excess of net
investment income -0- -0- (.01) -0-
Distributions from net realized gains (.25) (.08) -0- -0-
Total dividends and distributions (.75) (.58) (.50) (.21)
Net asset value, end of period $10.90 $10.57 $10.29 $ 9.69
TOTAL RETURN
Total investment return based on
net asset value (d) 10.70% 8.57% 11.67% (1.01)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,020 $3,345 $1,193 $224
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.37% 1.37% 1.37% 1.27%(e)
Expenses, before waivers/reimbursements 4.29% 5.88% 9.66% 12.99%(e)
Net investment income, net of waivers
/reimbursements 4.68% 4.70% 4.80% 4.97%(e)
Portfolio turnover rate 258% 298% 128% 65%
</TABLE>
See footnote summary on page 52.
51
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
VIRGINIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
APR. 29, 1994(a)
YEAR ENDED SEPTEMBER 30, TO
------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.57 $10.29 $ 9.70 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .50(c) .50(c) .49 .21
Net realized and unrealized gain (loss)
on investment transactions .58 .36 .60 (.30)
Net increase (decrease) in net asset
value from operations 1.08 .86 1.09 (.09)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) (.50) (.49) (.21)
Distributions in excess of net
investment income -0- -0- (.01) -0-
Distributions from net realized gains (.25) (.08) -0- -0-
Total dividends and distributions (.75) (.58) (.50) (.21)
Net asset value, end of period $10.90 $10.57 $10.29 $ 9.70
TOTAL RETURN
Total investment return based on net
asset value (d) 10.70% 8.58% 11.56% (.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,207 $642 $122 $43
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.37% 1.37% 1.37% 1.27%(e)
Expenses, before waivers/reimbursements 4.25% 5.88% 9.66% 12.99%(e)
Net investment income, net of waivers
/reimbursements 4.66% 4.73% 4.81% 4.67%(e)
Portfolio turnover rate 258% 298% 128% 65%
</TABLE>
(a) Commencement of operations.
(b) Net of fee waived and expenses reimbursed by the Adviser.
(c) Based on average shares.
(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.
52
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, 1997, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1997, by correspondence
with the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Alliance Municipal Income Fund II
at September 30, 1997, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the indicated periods, in
conformity with generally accepted accounting principles.
New York, New York
November 4, 1997
FEDERAL TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In accordance with Federal tax law, the following table represents each
portfolio's designation of "exempt-interest dividends" and long-term capital
gain distributions paid during the fiscal year ended September 30, 1997.
As required by Federal tax law rules, shareholders will receive notification of
their portion of each portfolio's taxable ordinary dividends (if any) and
capital gain distributions (if any) paid for the 1997 calendar year on Form
1099-DIV which will be mailed by January 31, 1998.
EXEMPT-INTEREST LONG-TERM CAPITAL
PORTFOLIO DIVIDENDS GAIN DISTRIBUTIONS
- --------- --------------- ------------------
Arizona 703,532 26,988
Florida 3,303,035 --
Massachusetts 798,463 55,295
Michigan 754,791 103,126
Minnesota 923,515 --
New Jersey 3,446,602 --
Ohio 2,238,436 --
Pennsylvania 3,418,684 --
Virginia 391,354 46,947
53
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)
DONALD J. ROBINSON (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.
54
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance 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
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
55
ALLIANCE MUNICIPAL INCOME FUND II
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
MUNIIIAR
