ALLIANCE MUNICIPAL INCOME FUND II
ANNUAL REPORT
SEPTEMBER 30, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
November 27, 1998
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,
1998.
ALLIANCE MUNICIPAL INCOME FUND II--CLASS A SHARES
Period Ended September 30, 1998
1 YEAR
FUND
PORTFOLIO 1 YEAR 3 YEAR 5 YEAR 3 YEAR
TOTAL LIPPER LIPPER LIPPER MORNINGSTAR
PORTFOLIO RETURNS* RANKINGS* *RANKINGS* *RANKINGS** RATINGS***
- ------------- --------- --------- ---------- ----------- ------------
Arizona 9.54% 1/39 2/33 1/22# 5 stars
Florida 8.97% 11/62 4/57 3/27 5 stars
Massachusetts 9.18% 5/57 1/52 1/37# 5 stars
Michigan 9.08% 6/55 1/46 1/33# 4 stars
Minnesota 7.94% 20/47 1/45 7/25 4 stars
New Jersey 8.36% 23/58 2/47 1/26 4 stars
Ohio 8.30% 16/52 1/48 3/33 5 stars
Pennsylvania 8.72% 9/63 1/59 1/40 5 stars
Virginia 9.65% 2/34 1/32 1/26# 5 stars
Number of Funds in Morningstar Municipal Bond Fund Category 1,581
* THE FUND'S INVESTMENT RESULTS ARE TOTAL RETURNS FOR THE PERIOD SHOWN AND
ARE BASED ON THE NET ASSET VALUE OF CLASS A 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. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. ADDITIONAL
PERFORMANCE INFORMATION CAN BE FOUND ON PAGES 3 - 9.
** FUNDS IN THE LIPPER AVERAGES GENERALLY HAVE SIMILAR INVESTMENT OBJECTIVES
TO THE FUND, ALTHOUGH SOME MAY HAVE DIFFERENT INVESTMENT POLICIES. FUND
PORTFOLIO INCEPTION DATES ARE: ARIZONA (6/1/94); FLORIDA (6/25/93);
MASSACHUSETTS (3/29/94); MICHIGAN (2/25/94); MINNESOTA (6/25/93); NEW JERSEY
(6/25/93); OHIO (6/25/93); PENNSYLVANIA (6/25/93); AND VIRGINIA (4/29/94).
PORTFOLIOS THAT ARE NOT YET 5 YEARS OLD SHOW SINCE INCEPTION LIPPER RANKINGS
(AS INDICATED WITH A #). SINCE INCEPTION LIPPER RANKINGS ARE BASED ON THE
CLOSEST MONTH-END TO EACH PORTFOLIO'S INCEPTION DATE. AN INVESTOR CANNOT INVEST
DIRECTLY IN AN AVERAGE.
*** MORNINGSTAR PROPRIETARY RATINGS REFLECT HISTORICAL RISK-ADJUSTED
PERFORMANCE AS OF SEPTEMBER 30, 1998. EACH PORTFOLIO'S OVERALL AND 5-YEAR
(WHERE APPLICABLE) MORNINGSTAR RETURNS WERE: ARIZONA 5 STARS; FLORIDA 4 STARS,
3 STARS; MASSACHUSETTS 5 STARS; MICHIGAN 4 STARS; MINNESOTA 3 STARS, 2 STARS;
NEW JERSEY 3 STARS, 3 STARS; OHIO 4 STARS, 3 STARS; PENNSYLVANIA 4 STARS, 3
STARS; VIRGINIA 5 STARS AMONG 943 MUNICIPAL BOND FUNDS FOR THE 5-YEAR PERIOD
AND 1,581 MUNICIPAL BOND FUNDS FOR THE OVERALL PERIOD. THESE RATINGS MAY CHANGE
MONTHLY AND ARE CALCULATED FROM EACH PORTFOLIO'S 3-, 5-YEAR (WHERE APPLICABLE)
AND OVERALL AVERAGE ANNUAL RETURNS IN EXCESS OF 90-DAY TREASURY BILL RETURNS
WITH APPROPRIATE FEE ADJUSTMENTS AND A RISK FACTOR THAT REFLECTS PORTFOLIO
PERFORMANCE BELOW 90-DAY TREASURY BILL RETURNS. IF THE PORTFOLIO SCORES IN THE
TOP 10% OF ITS CLASS IT RECEIVES 5 STARS; IF IT FALLS IN THE NEXT 22.5% IT
RECEIVES 4 STARS; A PLACE IN THE MIDDLE 35% EARNS IT 3 STARS; THOSE IN THE NEXT
22.5% RECEIVE 2 STARS; AND THE BOTTOM 10% GET 1 STAR. EACH PORTFOLIO'S SEC
AVERAGE ANNUAL TOTAL RETURNS CAN BE FOUND ON PAGE 4.
MARKET OVERVIEW
The municipal bond market had an excellent year both on an absolute basis and
relative to other sectors of the fixed income markets. The tax-exempt sector
benefited from the same macroeconomic and market forces that drove the U.S.
government bond market to levels not seen since the 1960s. Individual and
institutional investors alike chose to invest in municipal bonds because of
their sound credit quality, attractive taxable-equivalent yields, and an
overall perception that municipals offer a "safe haven" in turbulent global
markets. The absence of any significant tax reform legislation under
consideration by the U.S. Congress has also helped market stability, unlike
recent years when the Federal tax-exempt status of municipal bonds had been
threatened.
1
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
Despite the strong performance of municipal bonds over the course of the past
year, the yield ratio, or relationship of municipal bond yields to Treasury
yields, has increased. Factors which have contributed to this relative
underperformance versus Treasuries include the greater size, liquidity and
overall attraction of U.S. government securities as a "safe haven" and
continuing high levels of new issuance by states and municipalities. In fact,
new supply for state and local debt issuance should reach record levels this
year. Local governments are taking advantage of the opportunity to refinance
older, higher coupon debt, as well as borrowing new money to fund
infrastructure renovation and rebuilding projects.
INVESTMENT STRATEGY
Due to record low interest rates and narrow credit spreads between triple-A and
triple-B rated debt, trading activity in the portfolios has been minimal. The
performance continues to be very strong in all of the Fund's portfolios
because, over the last several years, we have aggressively worked to lock in
income and call protection. We have selectively added new non-rated positions
to our single state portfolios, which offer substantial additional income for
an acceptable incremental risk. For the most part, these investments are
project-specific financings that we believe will benefit from future economic
and demographic trends. An important part of the Fund's investment
decision-making is the criteria that non-rated projects should have a high
probability of receiving an investment-grade rating over time.
The credit fundamentals of state and local governments continue to improve.
Through September, the strong domestic economy continued to benefit
municipalities through better than projected sales tax and personal income tax
collection, typically the largest single source of tax revenue. Empirical
evidence of this continuing improvement in credit quality is that we are now in
the twelfth consecutive quarter where municipal credit rating upgrades have
exceeded downgrades, according to both Moody's and Standard & Poor's. In
addition to the strong economy, rating agencies have recognized that many
governmental entities now have financial forecasting and planning models which
should help preserve strong credit quality through a recession, unlike the
experience of the late 1980s.
MARKET OUTLOOK
We expect that between now and calendar year-end, market volatility will
continue. New municipal debt issuance will most likely lead to downward
pressure on municipal bond prices. This new municipal debt issuance was a
result of dramatically lower interest rates, as well as less overall market
liquidity due to recent losses experienced by financial institutions. At
Alliance, we believe that any weakness caused by fundamental or technical
changes in the market should provide an excellent buying opportunity. Looking
ahead, we believe that inflation will not be a factor, municipal credit quality
will continue to improve, and we will remain in a very positive environment for
tax exempt market investors.
We appreciate your investment in Alliance Municipal Income Fund 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 personal income tax (or for Florida, the
intangible tax) that is available without assuming undue risk. These securities
generally offer current yields above those of higher quality municipal
obligations.
HOW YOUR PORTFOLIO PERFORMED OVER THE PAST TWELVE MONTHS
The Portfolios' Class A share total returns for the 12-month period ended
September 30, 1998 are shown below. For comparison, we have also shown returns
for the overall municipal bond market, represented by the unmanaged state
specific Lipper Municipal Debt Funds Average, for the 12-month, 3-year and
5-year periods ended September 30, 1998. Current yields and returns for Class B
and Class C shares are on the next two pages.
INVESTMENT RESULTS
MUNICIPAL INCOME FUND II--CLASS A SHARES COMPARED TO LIPPER MUNICIPAL DEBT
FUNDS AVERAGE*
Period Ended September 30, 1998
FUND PORTFOLIO
TOTAL RETURNS LIPPER LIPPER LIPPER
(AT NAV) AVERAGE AVERAGE AVERAGE
PORTFOLIO 12 MONTHS 12 MONTHS 3 YEARS 5 YEARS
- ------------- -------------- --------- ------- -------
Arizona 9.54% 7.86% 7.31% 7.71%#
Florida 8.97% 8.26% 7.37% 5.47%
Massachusetts 9.18% 8.00% 7.33% 7.40%#
Michigan 9.08% 8.10% 7.25% 6.17%#
Minnesota 7.94% 7.74% 6.89% 5.38%
New Jersey 8.36% 8.09% 7.17% 5.39%
Ohio 8.30% 7.93% 7.19% 5.55%
Pennsylvania 8.72% 7.80% 7.34% .53%
Virginia 9.65% 8.31% 7.51% 7.57%#
* Total returns for the Fund's portfolios are based on the net asset value of
Class A shares as of September 30, 1998. All fees and expenses related to the
operation of the Fund have been deducted, but no adjustment has been made for
sales charges that may apply when shares are purchased or redeemed. Past
performance is no guarantee of future results. The state specific Lipper
Municipal Debt Funds Averages have generally similar investment objectives to
your Fund's portfolios, although some may have different investment policies.
*
# PORTFOLIOS THAT ARE NOT YET 5 YEARS OLD SHOW SINCE INCEPTION LIPPER
RETURNS, RATHER THAN 5 YEAR RETURNS.
3
INVESTMENT RESULTS
AS OF SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
NAV AND SEC TOTAL RETURNS
--------------------------------------------------------------
WITHOUT SALES CHARGE WITH SALES CHARGE
----------------------------- -----------------------------
1 5 SINCE 1 5 SINCE
YEAR YEAR INCEPTION YEAR YEAR INCEPTION
------- ------- --------- ------- ------- ---------
ARIZONA
Class A 9.54% n/a 8.75% 4.87% n/a 7.68%
Class B 8.84% n/a 8.02% 5.84% n/a 8.02%
Class C 8.83% n/a 8.02% 7.83% n/a 8.02%
FLORIDA
Class A 8.97% 6.30% 6.78% 4.34% 5.39% 5.91%
Class B 8.22% 5.52% 6.00% 5.22% 5.52% 6.00%
Class C 8.22% 5.52% 6.00% 7.22% 5.52% 6.00%
MASSACHUSETTS
Class A 9.18% n/a 9.97% 4.52% n/a 8.92%
Class B 8.40% n/a 9.22% 5.40% n/a 9.22%
Class C 8.40% n/a 9.22% 7.40% n/a 9.22%
MICHIGAN
Class A 9.08% n/a 8.28% 4.41% n/a 7.27%
Class B 8.26% n/a 7.51% 5.26% n/a 7.51%
Class C 8.26% n/a 7.51% 7.26% n/a 7.51%
MINNESOTA
Class A 7.94% 5.66% 6.21% 3.37% 4.74% 5.35%
Class B 7.17% 4.87% 5.43% 4.17% 4.87% 5.43%
Class C 7.18% 4.89% 5.43% 6.18% 4.89% 5.43%
NEW JERSEY
Class A 8.36% 6.01% 6.57% 3.76% 5.09% 5.70%
Class B 7.50% 5.24% 5.78% 4.50% 5.24% 5.78%
Class C 7.50% 5.24% 5.78% 6.50% 5.24% 5.78%
OHIO
Class A 8.30% 6.14% 6.64% 3.71% 5.21% 5.77%
Class B 7.56% 5.37% 5.86% 4.56% 5.37% 5.86%
Class C 7.56% 5.37% 5.86% 6.56% 5.37% 5.86%
PENNSYLVANIA
Class A 8.72% 6.67% 7.13% 4.08% 5.76% 6.26%
Class B 7.98% 5.89% 6.36% 4.98% 5.89% 6.36%
Class C 7.98% 5.91% 6.36% 6.98% 5.91% 6.36%
VIRGINIA
Class A 9.65% n/a 9.45% 5.02% n/a 8.39%
Class B 8.85% n/a 8.71% 5.85% n/a 8.71%
Class C 8.85% n/a 8.71% 7.85% n/a 8.71%
The Fund's investment results represent total returns. The NAV and SEC returns
reflect reinvestment of dividends and/or capital gains distributions in
additional shares, without (NAV) and with (SEC) the effect of the 4.25% maximum
front-end sales charge for Class A shares or applicable contingent deferred
sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
n/a: not applicable.
4
INVESTMENT RESULTS
AS OF SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
TAXABLE
EQUIVALENT
YIELD IN
30 DAY 36% TAX BRACKET
PORTFOLIO SEC YIELD* (AT NAV)
- ------------- ---------- -----------------
ARIZONA
Class A 4.25% 8.14%
Class B 3.74% 7.10%
Class C 3.74% 7.10%
FLORIDA
Class A 4.61% 8.17%
Class B 4.13% 7.11%
Class C 4.14% 7.11%
MASSACHUSETTS
Class A 4.21% 9.09%
Class B 3.70% 7.99%
Class C 3.70% 7.99%
MICHIGAN
Class A 3.94% 7.67%
Class B 3.42% 6.59%
Class C 3.42% 6.59%
MINNESOTA
Class A 4.29% 8.49%
Class B 3.77% 7.29%
Class C 3.78% 7.29%
NEW JERSEY
Class A 4.19% 8.26%
Class B 3.66% 7.11%
Class C 3.66% 7.11%
OHIO
Class A 4.12% 8.62%
Class B 3.59% 7.46%
Class C 3.60% 7.46%
PENNSYLVANIA
Class A 4.15% 8.02%
Class B 3.63% 6.94%
Class C 3.64% 6.94%
VIRGINIA
Class A 4.32% 8.55%
Class B 3.81% 7.51%
Class C 3.80% 7.51%
* SEC yields are based on SEC guidelines and are calculated on 30 days ended
September 30, 1998.
5
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
GROWTH OF A $10,000 INVESTMENT
ARIZONA PORTFOLIO
6/30/94 TO 9/30/98
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
ARIZONA PORTFOLIO CLASS A AT NAV: $14,462
ARIZONA PORTFOLIO CLASS A AT OFFERING: $13,846
LIPPER AZ MUNI FUNDS AVERAGE: $13,713
6/30/94 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
FLORIDA PORTFOLIO
6/30/93 TO 9/30/98
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
FLORIDA PORTFOLIO CLASS A AT NAV: $14,129
FLORIDA PORTFOLIO CLASS A AT OFFERING: $13,533
LIPPER FL MUNI FUNDS AVERAGE: $13,522
6/30/93 9/30/93 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
MASSACHUSETTS PORTFOLIO
3/31/94 TO 9/30/98
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
MASSACHUSETTS PORTFOLIO CLASS A AT NAV: $15,351
MASSACHUSETTS PORTFOLIO CLASS A AT OFFERING: $14,704
LIPPER MA MUNI FUNDS AVERAGE: $13,755
3/31/94 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
6
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
GROWTH OF A $10,000 INVESTMENT
MICHIGAN PORTFOLIO
2/28/94 TO 9/30/98
$14,000
$13,000
$12,000
$10,000
$9,000
MICHIGAN PORTFOLIO CLASS A AT NAV: $14,418
MICHIGAN PORTFOLIO CLASS A AT OFFERING: $13,810
LIPPER MI MUNI FUNDS AVERAGE: $13,144
2/28/94 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
MINNESOTA PORTFOLIO
6/30/93 TO 9/30/98
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
MINNESOTA PORTFOLIO CLASS A AT NAV: $13,739
LIPPER MN MUNI FUNDS AVERAGE:$13,448
MINNESOTA PORTFOLIO CLASS A AT OFFERING: $13,160
6/30/93 9/30/93 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
NEW JERSEY PORTFOLIO
6/30/93 TO 9/30/98
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
NEW JERSEY PORTFOLIO CLASS A AT NAV: $13,981
LIPPER NJ MUNI FUNDS AVERAGE: $13,443
NEW JERSEY PORTFOLIO CLASS A AT OFFERING: $13,392
6/30/93 9/30/93 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
7
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
GROWTH OF A $10,000 INVESTMENT
OHIO PORTFOLIO
6/30/93 TO 9/30/98
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
OHIO PORTFOLIO CLASS A AT NAV: $14,031
LIPPER OH MUNI FUNDS AVERAGE:$13,561
OHIO PORTFOLIO CLASS A AT OFFERING: $13,440
6/30/93 9/30/93 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
PENNSYLVANIA PORTFOLIO
6/30/93 TO 9/30/98
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
PENNSYLVANIA PORTFOLIO CLASS A AT NAV: $14,378
PENNSYLVANIA PORTFOLIO CLASS A AT OFFERING: $13,772
LIPPER PA MUNI FUNDS AVERAGE: $13,554
6/30/93 9/30/93 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
8
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
ALLIANCE MUNICIPAL INCOME FUND II
GROWTH OF A $10,000 INVESTMENT
VIRGINIA PORTFOLIO
4/30/94 TO 9/30/98
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
VIRGINIA PORTFOLIO CLASS A AT NAV: $14,908
VIRGINIA PORTFOLIO CLASS A AT OFFERING: $14,280
LIPPER VA MUNI FUNDS AVERAGE: $13,812
4/30/94 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
Each chart illustrates the total value of an assumed $10,000 investment 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
25 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
9
ARIZONA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
MUNICIPAL BONDS-109.9%
ARIZONA LONG TERM
MUNICIPAL BONDS-93.9%
AAA Glendale Connie Lee
(Midwestern Univ) Ser 96A
6.00%, 5/15/26 $1,500 $1,642,515
NR Goodyear Assessment District No. 1
Ser 96C
7.25%, 7/01/16 1,569 1,734,388
NR Hassayampa Cmnty Fac
Dist Spec Assessment Lien
Ser 96
7.75%, 7/01/21 6,910 7,856,394
AAA Maricopa Cnty GO
School Dist No. 28
(Kyrene Elem) FGIC
Ser 95B
6.00%, 7/01/14 1,795 1,948,598
AAA Maricopa Cnty Hlth Fac Rev
(Catholic Healthcare West)
MBIA Ser 93
7.402%, 7/01/13 (b) 1,750 1,969,030
AA- Maricopa Cnty IDR
(Citizens Utilities)
Ser 95 AMT
6.20%, 5/01/30 1,770 1,925,017
AA- Mohave Cnty IDR
(Cargill /North Star Steel)
Ser 95A AMT
6.70%, 3/01/20 6,745 7,637,296
AAA Mohave Cnty IDR
Hlth Care Rev
(Chris Ridge & Silver)
GNMA Ser 96
6.375%, 11/01/31 1,000 1,109,760
AAA Phoenix Arpt Rev
(Sky Harbor/Goodyear/
Deer Valley) MBIA
Ser 94D AMT
6.30%, 7/01/10 1,795 2,005,787
AA+ Phoenix Excise Tax Rev
(Civic Plaza Bldg Corp)
Sr Lien Ser 94
6.00%, 7/01/12 1,015 1,116,936
AA Phoenix MFHR
(Woodstone & Silver Springs)
Asset Gty Ser 93
6.25%, 4/01/23 1,820 1,939,610
AAA Pima Cnty
SFMR GNMA/FNMA/FHLMC
Ser 97A AMT
6.25%, 11/01/30 2,195 2,360,174
AAA Tempe MFHR
(Quadrangles) FHA Ser 93
6.25%, 6/01/26 1,820 1,942,231
AAA Yuma MFHR
(Alexandrite Sands Apt)
FHA Ser 90 AMT
7.70%, 12/01/29 1,890 1,976,184
TOTAL ARIZONA
LONG TERM MUNICIPAL BONDS
(cost $35,529,669) 37,163,920
SHORT TERM MUNICIPAL NOTES-16.0%
A-1+ Apache Cnty PCR
(Tucson Elec Pwr) Ser 85A
VRDN
3.55%, 12/01/20 (c) 1,400 1,400,000
A-1+ Navajo Cnty IDR
(Citizens Util)
Ser 97B AMT VRDN
3.60%, 9/01/32 (c) 1,700 1,700,000
P-1 Tempe IDR
(Schreiber Food Inc)
Ser 90 AMT VRDN
3.80%, 10/01/00 (c) (d) 1,350 1,350,000
10
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- ---------------------------------------------------------------------------
A-2 Tucson IDR MFHR
(Lincoln Garden Apts)
Ser 89 VRDN
4.75%, 2/01/06 (c) $1,900 $1,900,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $6,350,000) 6,350,000
TOTAL INVESTMENTS-109.9%
(cost $41,879,669) 43,513,920
Other assets less liabilities-(9.9%) (3,923,289)
NET ASSETS-100% $39,590,631
(a) Unaudited.
(b) Inverse floater security--security with variable or floating interest
rate that moves in opposite direction of short-term interest rates.
(c) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as prime
interest rate). This instrument is payable on demand and is secured by letters
of credit or other credit support agreements from major banks.
(d) Moody's Rating.
See Glossary of Terms on page 25.
See notes to financial statements.
11
FLORIDA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
MUNICIPAL BONDS-91.9%
LONG TERM MUNICIPAL BONDS-84.1%
FLORIDA-73.0%
Aaa Brevard Cnty Hsg Fin Auth
SFMR GNMA
Ser 94 AMT
6.70%, 9/01/27 (b) $1,080 $1,163,614
NR Collier Cnty Cmnty Dev Dist
(Fiddlers Creek) Ser 96
7.50%, 5/01/18 4,600 5,084,610
BBB+ Collier Cnty Hlth Fac
(The Moorings) Ser 94
7.00%, 12/01/19 2,000 2,267,540
AAA Dade Cnty Arpt Rev
(Miami Int'l) MBIA
Ser 95B AMT
6.00%, 10/01/24 4,750 5,185,860
A3 Dade Cnty Spec Oblig
(Courthouse Ctr) Ser 95
6.10%, 4/01/20 (b) 3,000 3,287,550
AAA Escambia Cnty Hsg Fin Auth
SFMR FNMA/GNMA
Ser 96B AMT
6.25%, 4/01/28 8,890 9,498,876
Baa1 Escambia Cnty PCR
(Champion Int'l Corp)
Ser 96 AMT
6.40%, 9/01/30 (b) 5,000 5,482,000
AAA Florida Hsg Fin Agy MFHR
(Brittany of Rosemont)
AMBAC Ser 95G AMT
6.25%, 7/01/35 1,350 1,461,618
AAA Florida Hsg Fin Agy MFHR
(Landings at Boot Ranch)
AMBAC Ser 95K AMT
6.10%, 11/01/35 2,050 2,200,429
AAA Florida Hsg Fin Agy MFHR
(Turtle Creek Apts)
AMBAC Ser 96C AMT
6.20%, 5/01/36 3,245 3,506,807
AAA Florida Hsg Fin Agy
SFMR GNMA/FNMA
Ser 94B AMT
6.65%, 7/01/26 2,875 3,068,832
AAA Florida Hsg Fin Agy
SFMR GNMA/FNMA
Ser 95A AMT
6.65%, 1/01/24 6,710 7,237,406
AAA Hillsborough Cnty
Aviation Auth
(Tampa Int'l Arpt)
FGIC Ser 96A AMT
6.00%, 10/01/23 1,500 1,659,930
Aa3 North Miami Hlth Fac Auth
(Catholic Hlth Svcs
Oblig Grp) Ser 96
6.00%, 8/15/24 (b) 1,200 1,294,380
NR Northern Palm Beach Cnty
(Abacoa)
Series 9A-A
7.30%, 8/01/27 9,470 10,504,787
AA- Orlando Util Cmnty
Wtr & Elec Rev
Ser 93B
7.205%, 10/06/17 (c) 4,550 5,035,439
A+ Palm Beach Cnty IDR
(Lourdes McKeen Residence)
Ser 96
6.625%, 12/01/26 4,000 4,344,960
Aaa Pinellas Cnty Hsg Fin Auth
SFMR GNMA/FNMA
Ser 94A AMT
6.55%, 8/01/27 (b) 4,090 4,381,903
Baa2 Volusia Cnty Ed Fac Auth
(Embry-Riddle Aero Univ)
Ser 96A
6.125%, 10/15/26 (b) 4,785 5,208,329
AA Volusia Cnty Hlth Fac Auth
(John Knox Village)
Asset Gty Ser 96A
6.00%, 6/01/17 3,000 3,320,850
------------
85,195,720
CALIFORNIA-7.1%
A+ California GO
Ser 95 AMT
6.40%, 2/01/20 8,130 8,277,560
WASHINGTON-4.0%
A- Pilchuck Dev Pub Corp
(BF Goodrich)
Ser 93 AMT
6.00%, 8/01/23 4,500 4,722,570
TOTAL LONG TERM MUNICIPAL BONDS
(cost $93,946,152) 98,195,850
12
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
SHORT TERM MUNICIPAL NOTES-7.8%
VMIG1 Jacksonville Hosp Rev
(University Med Ctr Inc)
Ser 88 VRDN
5.00%, 2/01/18 (b) (d) $7,600 $7,600,000
VMIG1 Jacksonville Hosp Rev
(University Med Ctr Inc)
Ser 89 VRDN
5.00%, 2/01/19 (b) (d) 1,500 1,500,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $9,100,000) 9,100,000
TOTAL INVESTMENTS-91.9%
(cost $103,046,152) $107,295,850
Other assets less liabilities-8.1% 9,407,210
NET ASSETS-100% $116,703,060
(a) Unaudited.
(b) Moody's Rating.
(c) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
(d) 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 25.
See notes to financial statements.
13
MASSACHUSETTS PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
MUNICIPAL BONDS-97.1%
LONG TERM MUNICIPAL BONDS-93.4%
MASSACHUSETTS-89.7%
AAA Chelsea GO
AMBAC Ser 94
6.00%, 6/15/14 $1,965 $2,210,684
AAA Holyoke GO
FSA Ser 93B
6.125%, 8/01/13 1,435 1,579,835
AAA Massachusetts Ed Fin Auth
(Educational Loan)
AMBAC Ser 94E AMT
6.00%, 1/01/12 2,525 2,670,238
AAA Massachusetts Hlth & Ed Fac Auth
(Beth Israel)
AMBAC Ser G-4
8.522%, 7/01/25 (b) 2,000 2,301,580
AAA Massachusetts Hlth & Ed Fac Auth
(New England Med Ctr) MBIA
6.68%, 7/01/18 (b) 2,765 2,972,098
AAA Massachusetts Hsg Fin Agy
AMBAC Ser 93A
6.15%, 10/01/15 3,500 3,705,940
AAA Massachusetts Hsg Fin Agy
MFHR AMBAC
Ser 95E AMT
6.00%, 7/01/37 2,680 2,817,404
AAA Massachusetts Hsg Fin Agy
MFHR FNMA Ser 92A
6.90%, 11/15/24 2,500 2,746,500
AAA Massachusetts Hsg Fin Agy
MFHR (Harbor Point)
AMBAC Ser 96A AMT
6.40%, 12/01/15 2,500 2,735,975
A+ Massachusetts Hsg Fin Agy
Mortgage Rev SFMR
Ser 40 AMT
6.65%, 12/01/27 4,980 5,416,945
A3 Massachusetts Ind Fin Agy
(Brooks School) Ser 93
5.95%, 7/01/23 (c) 2,250 2,366,865
AAA Massachusetts Ind Fin Agy
(Heights Crossing)
FHA Ser 95 AMT
6.15%, 2/01/35 7,000 7,480,410
AAA Massachusetts Muni
Wholesale Elec Pwr Supply Sys
MBIA Ser 92A
6.00%, 7/01/18 2,725 2,897,738
AAA Massachusetts Port Auth Spec Fac
(Bosfuel Corp) MBIA
Ser 97 AMT
6.00%, 7/01/36 2,735 2,976,254
AAA Massachusetts Port Auth Spec Fac
(US Air) MBIA
Ser 96A AMT
5.875%, 9/01/23 2,825 3,052,780
AA+ Massachusetts Wtr Pollution Abatement
(So Essex Prog) Ser 94A
6.375%, 2/01/15 2,605 2,880,036
A1 New England Ed Loan Mktg
Ser 93H AMT
6.90%, 11/01/09 (c) 3,805 4,323,507
------------
55,134,789
PUERTO RICO-3.7%
BBB- Puerto Rico Port Auth
(American Airlines)
Ser 96A AMT
6.25%, 6/01/26 2,035 2,240,677
TOTAL LONG TERM MUNICIPAL BONDS
(cost $55,519,016) 57,375,466
14
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
SHORT TERM
MUNICIPAL NOTES-3.7%
VMIG1 Massachusetts Hlth & Ed Fac Auth
(Brigham & Women's)
Ser 85A VRDN
3.40%, 7/01/17 (c) (d) $1,800 $1,800,000
A-1 Massachusetts Hlth & Ed Fac Auth
(Capital Asset Prog)
Ser 85B VRDN
3.70%, 7/01/05 (d) 300 300,000
A-1+ Massachusetts GO
Ser 97B VRDN
3.85%, 8/01/15 (d) 200 200,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $2,300,000) 2,300,000
TOTAL INVESTMENTS-97.1%
(cost $57,819,016) 59,675,466
Other assets less liabilities-2.9% 1,800,775
NET ASSETS-100% $61,476,241
(a) Unaudited.
(b) Inverse floater security--security with variable or floating interest rate
that moves in opposite of short-term interest rates.
(c) Moody's Rating.
(d) 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 25.
See notes to financial statements.
15
MICHIGAN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-99.1%
MICHIGAN LONG TERM
MUNICIPAL BONDS-89.8%
AAA Detroit GO FGIC Ser 93
6.35%, 4/01/14 $1,200 $1,327,068
AAA Detroit Sew Disp Rev
FGIC Ser 93A
7.618%, 7/01/23 (b) 1,190 1,344,510
AAA Grand Rapids Swr Sys
MBIA Ser 92
6.00%, 1/01/22 1,240 1,346,256
Aa2 Independence MFHR
(Greenery Health)
FHA Ser 97A
6.15%, 8/01/17 (c) 1,850 2,048,523
AAA Kent Cnty Arpt Fac
(Kent Cnty Int'l)
Ser 95 AMT
6.10%, 1/01/25 1,255 1,348,635
AAA Michigan Hosp Fin Auth
Hosp Rev (St Johns)
AMBAC Ser 92A
6.00%, 5/15/13 1,000 1,082,860
AAA Michigan Hsg Dev Auth
(Rental Housing) AMBAC
Ser 97A AMT
6.10%, 10/01/33 400 428,152
AA+ Michigan Hsg Dev Auth
SFMR Mortgage Rev FHA
Ser 96B AMT
6.20%, 6/01/27 5,805 6,208,971
AAA Michigan Strategic Fund
PCR (Detroit Edison)
MBIA Ser 95AA
6.40%, 9/01/25 1,150 1,290,932
A Michigan Strategic Fund
PCR (General Motors)
Ser 95
6.20%, 9/01/20 1,225 1,344,670
NR Michigan Strategic Fund
PCR (Holland Home)
5.75%, 11/15/28 2,200 2,181,168
BBB+ Romulus Tax Increment
Fin Auth Ser 94
6.75%, 11/01/19 1,585 1,774,011
AAA Three Rivers Cmnty Schl Dist GO
MBIA Ser 96
6.00%, 5/01/23 1,125 1,279,046
AA Troy Downtown Dev Auth
Asset Gty Ser 95A
6.375%, 11/01/18 1,155 1,284,626
TOTAL MICHIGAN LONG TERM
MUNICIPAL BONDS
(cost $23,191,590) 24,289,428
SHORT TERM MUNICIPAL NOTES-9.3%
VMIG1 Michigan Job Dev Auth PCR
(Mazda Mtr Mfg) VRDN
4.90%, 10/01/08 (c) (d) 1,100 1,100,000
NR Michigan Strategic Fund
(Production Engineering)
AMT VRDN
4.15%, 6/01/13 (d) 1,100 1,100,000
Aa2 Michigan Strategic Fund
(B&G Realty) VRDN
4.15%, 10/01/01 (c) (d) 300 300,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $2,500,000) 2,500,000
TOTAL INVESTMENTS-99.1%
(cost $25,691,590) 26,789,428
Other assets less liabilities-0.9% 244,840
NET ASSETS-100% $27,034,268
(a) Unaudited
(b) Inverse floater security--security with variable or floating interest rate
that moves in opposite of short-term interest rates.
(c) Moody's Ratings
(d) 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 25.
See notes to financial statements.
16
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-98.9%
MINNESOTA LONG TERM
MUNICIPAL BONDS-90.5%
A Bass Brook PCR
(Minn Power & Light)
Ser 92
6.00%, 7/01/22 $1,295 $1,372,389
AAA Duluth Arpt Lease St
Secured GO
Ser 95C AMT
6.25%, 8/01/14 1,265 1,378,205
Aaa Eagan MFHR
(Woodridge Apts) GNMA
Ser 97A
5.95%, 2/01/32 (b) 1,285 1,383,470
Aaa Little Canada MFHR
(Cedars Lakeside) GNMA
Ser 97A
5.95%, 2/01/32 (b) 1,285 1,383,469
Aaa Minneapolis & St Paul
Hsg & Redev Auth
SFMR GNMA/FNMA
Ser 96B
5.125%, 6/01/32 (b) 1,300 1,300,000
A- Minneapolis Common Bond
Fund Cmnty Dev Agy
Ser 95-2 AMT
6.625%, 12/01/15 1,245 1,367,857
A- Minneapolis Common Bond
Fund Cmnty Dev Agy
Ser 97-2 AMT
6.20%, 6/01/17 1,795 1,951,398
AAA Minneapolis COP Spec
School Dist No. 1
MBIA Ser 96A
5.90%, 2/01/17 1,270 1,385,570
NR Minnesota Agric & Econ Dev Brd
(Small Business Loan Prog)
Ser 96A AMT
6.75%, 8/01/16 1,450 1,618,171
NR Minnesota Agric & Econ Dev Brd
(Small Business Loan Prog)
Ser 96B AMT
7.00%, 8/01/16 750 800,160
Baa1 Minnesota Higher Ed Fac
Auth (Hamline Univ)
Ser 4-I
6.00%, 10/01/16 (b) 790 842,574
AA+ Minnesota Hsg Fin Agy SFMR
Ser 96G AMT
6.25%, 7/01/26 1,800 1,924,830
AA+ Minnesota Hsg Fin Agy SFMR FHA
Ser 89A AMT
7.90%, 7/01/19 2,605 2,668,875
AA+ Rochester Hlth Care Fac
(Mayo Med Ctr) Ser 92H
8.118%, 11/15/15 (c) 1,160 1,370,958
BBB South St. Paul Hosp Rev
(Health East) Ser 94
6.75%, 11/01/09 3,000 3,311,370
AAA St. Francis GO Ind
Sch Dist No. 15
CGIC Ser 95A
6.375%, 2/01/16 1,000 1,129,760
TOTAL MINNESOTA LONG TERM
MUNICIPAL BONDS
(cost $23,856,576 ) 25,189,056
SHORT TERM MUNICIPAL NOTES-8.4%
A-1+ Duluth Eco Dev Hlth Care
Fac Rev (Miller-Dwan Med Ctr) VRDN
4.10%, 6/01/19 (d) 150 150,000
A-1 Golden Valley IDR
(Unicare Homes)
Ser 84 VRDN
3.625%, 9/01/14 (d) 1,200 1,200,000
VMIG1 St. Louis Park Tax
Increment VRDN
4.35%, 2/01/06 (b)(d) 995 995,000
17
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
VALUE
- -------------------------------------------------------------------------
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $2,345,000) $ 2,345,000
TOTAL INVESTMENTS-98.9%
(cost $26,201,576) $27,534,056
Other assets less liabilities-1.1% 309,803
NET ASSETS-100% $27,843,859
(a) Unaudited.
(b) Moody's Rating.
(c) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
(d) 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 25.
See notes to financial statements.
18
NEW JERSEY PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
MUNICIPAL BONDS-97.0%
NEW JERSEY LONG TERM
MUNICIPAL BONDS-94.6%
AAA Essex Cnty Imp Auth Util
Rev (Orange Twp)
MBIA Ser 93
6.00%, 12/01/17 $2,510 $2,768,329
BBB- New Jersey Eco Dev
(American Airlines) AMT
7.10%, 11/01/31 4,500 4,915,935
A+ New Jersey Eco Dev
(Anheuser-Busch)
Ser 95 AMT
5.85%, 12/01/30 4,310 4,653,335
AAA New Jersey Eco Dev
(Hackensack Wtr Co)
MBIA Ser 94B AMT
5.90%, 3/01/24 4,000 4,253,360
NR New Jersey Eco Dev
(Kapkowski Rd/MetroMall)
Ser 98B AMT
6.50%, 4/01/31 18,985 18,999,998
AAA New Jersey Eco Dev
(NJ American Wtr Co)
FGIC AMT
6.875%, 11/01/34 4,050 4,636,399
AAA New Jersey Eco Dev
(Pub Ser Elec & Gas)
MBIA Ser 94A AMT
6.40%, 5/01/32 4,155 4,611,468
BBB New Jersey Hlth Care Fac
(Englewood Hosp) Ser 94
6.75%, 7/01/24 4,230 4,714,843
BBB New Jersey Hlth Care Fac
(Franciscan Sisters,
St. Mary's Hosp) Ser 93
5.875%, 7/01/12 2,755 2,875,228
AAA New Jersey Hlth Care Fac
(Monmouth Med Ctr)
CGIC Ser C
6.25%, 7/01/24 2,750 3,020,188
AAA New Jersey Hsg & Mtg
MFHR AMBAC
Ser 96A AMT
6.25%, 5/01/28 3,960 4,284,007
AAA New Jersey Hsg & Mtg
SFMR MBIA Ser 95O AMT
6.35%, 10/01/27 5,000 5,382,650
AA- New Jersey Hwy Auth
Garden State Pkwy Rev
6.25%, 1/01/14 1,250 1,340,313
AAA Passaic Valley Sewer
AMBAC Ser 92D
5.75%, 12/01/15 3,400 3,629,126
AAA Port Auth of NY & NJ
(JFK Int'l Airport)
MBIA Ser 6 AMT
5.75%, 12/01/22 7,590 8,234,011
AA- Port Auth of NY & NJ
95th Ser AMT
6.125%, 7/15/29 4,155 4,489,519
AA- Salem Cnty NJ Waste
Disposal Auth (E.I. Dupont)
Ser 92A AMT
6.125%, 7/15/22 3,500 3,732,995
BBB South Jersey Transportation
Auth NJ Lease Rev
(Raytheon Aircraft Service)
Ser 97A AMT
6.15%, 1/01/22 500 547,545
AAA Vineland NJ Sewer Auth
(Landis) FGIC Ser 93C
7.27%, 9/19/19 (b) 3,250 4,088,695
TOTAL NEW JERSEY LONG TERM
MUNICIPAL BONDS
(cost $85,001,691) 91,177,944
19
NEW JERSEY PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- ---------------------------------------------------------------------------
SHORT TERM MUNICIPAL NOTE- 2.4%
A-2 New Jersey Eco Dev
(Epitaxx Inc)
AMT VRDN Ser 91
4.625%, 8/01/16
(cost $2,300,000) (c) $2,300 $ 2,300,000
TOTAL INVESTMENTS-97.0%
(cost $87,301,691) 93,477,944
Other assets less liabilities-3.0% 2,900,073
NET ASSETS-100% $96,378,017
(a) Unaudited
(b) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
(c) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as 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 25.
See notes to financial statements.
20
OHIO PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-97.1%
OHIO-93.7%
BBB Akron (Akron Municipal
Baseball Stad) Ser 96
Zero Coupon, 12/01/16 $5,000 $4,670,200
BBB- Butler Cnty Hosp Rev
(Fort Hamilton Hughes)
7.50%, 1/01/10 1,400 1,528,926
AAA Cleveland Arpt Sys
FGIC Ser 94A AMT
6.25%, 1/01/20 3,010 3,283,127
AAA Cuyahoga Cnty Hosp Rev
(Meridia Health Sys)
Ser 95
6.25%, 8/15/24 2,320 2,680,899
AAA Cuyahoga Cnty MFHR
(Nat'l Terminal Apts)
FNMA Ser 96 AMT
6.40%, 7/01/16 5,180 5,679,300
BBB Dayton Spec Fac Rev
(Emery Air Freight)
Ser 96D AMT
6.20%, 10/01/09 3,010 3,277,950
BBB Hamilton Cnty Hlth Sys
(Franciscan Sisters/
Providence Hosp) Ser 92
6.875%, 7/01/15 2,000 2,178,120
Aaa Kent Ohio MFHR
(Silver Meadows Apt)
GNMA Ser 95 AMT
7.15%, 12/20/26 (b) 2,800 3,169,348
NR Mahoning Valley Sanitary
Dist Ser 94
7.75%, 5/15/14 1,500 1,689,255
Baa1 Ohio Air Quality Dev Auth
(Columbus Southern Pwr)
Ser 85B
6.25%, 12/01/20 (b) 2,470 2,652,731
AAA Ohio Air Quality Dev Auth
(JMG Funding/Ohio Pwr)
AMBAC Ser 94B AMT
6.375%, 4/01/29 3,000 3,298,440
BB+ Ohio Air Quality Dev Auth
(Toledo Edison Co)
Ser 97A AMT
6.10%, 8/01/27 5,000 5,208,650
AAA Ohio Capital Corp MFHR
(Sect 8) FHA MBIA Ser 95E
6.35%, 1/01/22 1,495 1,617,186
Aa2 Ohio Hsg Fin Agy MFHR
(Insured Bridgeview Villa II)
FHA AMT
6.45%, 12/01/33 (b) 1,965 2,091,114
AAA Ohio Hsg Fin Agy
SFMR GNMA Ser 94 B2 AMT
6.70%, 3/01/25 5,710 6,158,064
AAA Ohio Hsg Fin Agy
SFMR GNMA Ser 97 A1 AMT
6.15%, 3/01/29 8,760 9,355,242
BB+ Ohio St Wtr Dev Auth
(Cleveland Electric)
Ser 97A AMT
6.10%, 8/01/20 2,000 2,083,460
A Ohio St Wtr Dev Auth
(North Star/BHP) AMT
6.45%, 9/01/20 2,980 3,288,490
------------
63,910,502
PUERTO RICO-3.4%
BBB- Puerto Rico Port Auth
(American Airlines)
Ser 96A AMT
6.25%, 6/01/26 2,075 2,284,720
TOTAL INVESTMENTS-97.1%
(cost $62,184,170) 66,195,222
Other assets less liabilities-2.9% 1,999,275
NET ASSETS-100% $68,194,497
(a) Unaudited.
(b) Moody's Rating.
See Glossary of Terms on page 25.
See notes to financial statements.
21
PENNSYLVANIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
MUNICIPAL BONDS-91.3%
LONG TERM MUNICIPAL BONDS-82.6%
PENNSYLVANIA-81.0 %
AAA Allegheny Cnty Arpt Rev
(Pittsburgh Int'l) FSA
Ser 92B AMT
6.625%,1/01/22 $3,315 $3,616,930
BBB- Allegheny Cnty
IDR (USX) Ser 96
6.10%, 1/15/18 4,000 4,329,840
BBB+ Bradford Cnty IDR
Solid Waste Disp Rev
(Int'l Paper)
Ser 95A AMT
6.60%, 3/01/19 2,500 2,814,900
BBB+ Cumberland Cnty
Municipal Auth Rev
(Presbyterian Homes Inc)
Ser 96
6.00%, 12/01/26 3,000 3,119,220
A- New Morgan IDR
Solid Waste Disp Rev
(Browning-Ferris)
Ser 94 AMT
6.50%, 4/01/19 4,000 4,382,280
AAA Pennsylvania Conv Ctr Auth
MBIA Ser 94A
6.75%, 9/01/19 2,500 2,866,525
BBB Pennsylvania Econ Dev
(Sun Co Inc)
Ser 94A AMT
7.60%, 12/01/24 5,000 5,877,250
AAA Pennsylvania Higher Ed
Student Loan AMBAC
Ser 88D AMT
6.05%, 1/01/19 4,755 4,984,620
AA+ Pennsylvania Hsg Fin Agy
SFMR Ser 92 35D AMT
8.293%, 4/01/25(b) 9,500 10,430,620
AA+ Pennsylvania Hsg Fin Agy
SFMR Ser 94 41B AMT
6.65%, 4/01/25 2,000 2,157,140
AA+ Pennsylvania Hsg Fin Agy
SFMR Ser 96 48 AMT
5.375%, 10/01/16 4,560 4,726,258
AAA Pennsylvania Turnpike
AMBAC Ser 94A
6.00%, 12/01/19 3,000 3,388,950
AAA Philadelphia Arpt Rev
AMBAC
Ser 95A AMT
6.10%, 6/15/25 10,000 10,887,600
A- Philadelphia Hosp Rev
(Temple Univ) Ser 93A
6.625%, 11/15/23 3,250 3,529,760
AAA Pittsburgh Urban Redev
SFMR FHA/GNMA/FNMA
Ser 97A AMT
6.25%, 10/01/28 1,200 1,288,824
AAA Pittsburgh Urban Redev SFMR
Ser 95A AMT
7.15%, 10/01/27 520 569,717
AA Potter Cnty Hosp Auth
(Charles Cole Memorial)
Asset Gty Ser 96
6.05%, 8/01/24 3,340 3,618,923
BBB Warren Cnty Hosp Auth
(Warren General Hosp)
Ser 94A
7.00%, 4/01/19 2,200 2,454,848
------------
75,044,205
PUERTO RICO-1.6%
BBB- Puerto Rico Port Auth
(American Airlines)
Ser 96A AMT
6.25%, 6/01/26 1,365 1,502,960
TOTAL LONG TERM
MUNICIPAL BONDS
(cost $71,474,237) 76,547,165
22
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
SHORT TERM
MUNICIPAL NOTES-8.7%
VMIG1 Allegheny Cnty Hosp
Dev Auth
(Presbyterian Univ Hosp)
Ser 88B-2 VRDN
4.05%, 3/01/18 (c)(d) $1,500 $1,500,000
A-1+ Geisinger Auth
Hlth Sys Rev
Ser 92B VRDN
4.15%, 7/01/22 (d) 2,000 2,000,000
A-1+ Indiana Cnty PCR
(Conemaugh)
Ser 97A AMT VRDN
3.65%, 6/01/27 (d) 4,500 4,500,000
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $8,000,000) 8,000,000
TOTAL INVESTMENTS-91.3%
(cost $79,474,237) 84,547,165
Other assets less liabilities-8.7% 8,081,513
NET ASSETS-100% $92,628,678
(a) Unaudited.
(b) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
(c) Moody's Rating.
(d) 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 25.
See notes to financial statements.
23
VIRGINIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- --------------------------------------------------------------------------
VIRGINIA MUNICIPAL BONDS-96.1%
A Alexandria MFHR
(Buckingham Village Apts)
Ser 96A AMT
6.15%, 1/01/29 $4,000 $4,227,480
A+ Giles Cnty IDR
(Hoechst Celanese Corp)
Ser 96 AMT
6.45%, 5/01/26 1,325 1,482,675
AAA Harrisonburg MFHR
(Greens of Salem Run) FSA
Ser 97 AMT
6.30%, 4/01/29 1,380 1,504,945
AA Henrico Cnty IDR Pub Fac Lease Rev
(Henrico Cnty Regl Jail)
7.125%, 8/01/21 1,195 1,411,331
A- Henrico Cnty IDR Solid Waste Rev
(Browning-Ferris)
Ser 97A AMT
5.875%, 3/01/17 1,425 1,534,197
A+ Henry Cnty IDR Hosp Rev
(Memorial Hosp
Martinsville & Henry)
6.00%, 1/01/27 1,250 1,347,038
A- Isle of Wight Cnty Solid Waste Rev
(Union Camp Corp)
Ser 94 AMT
6.55%, 4/01/24 1,355 1,505,093
A+ James City Cnty Solid Waste Rev
(Anheuser Busch)
Ser 97 AMT
6.00%, 4/01/32 1,420 1,530,661
AAA Loudoun Cnty IDR Hosp Rev
(Loudoun Hosp Ctr)
Ser 95 FSA
5.80%, 6/01/20 1,415 1,528,823
AAA Newport News MFHR
(Mennowood Cmntys) GNMA Ser 96A
6.25%, 8/01/36 1,345 1,461,800
NR Staunton Ed Fac
(Mary Baldwin College)
Ser 96
6.75%, 11/01/21 3,145 3,441,070
AAA Suffolk MFHR
(Prince William Commons)
FNMA Ser 96A AMT
6.50%, 6/01/29 1,300 1,422,707
AA Virginia Beach Hlth Care
(Sentara Bayside Hosp)
6.30%, 11/01/21 1,000 1,074,500
AA+ Virginia Hsg Dev Auth
SFMR (Commonwealth Mtg)
Ser 96B AMT
6.375%, 1/01/26 4,500 4,742,685
AA Virginia Res Auth Sewer Sys Rev
(Hopewell Regl Wastewater Fac)
Ser 95A AMT
6.00%, 10/01/25 1,375 1,476,654
TOTAL INVESTMENTS-96.1%
(cost $28,972,788) 29,691,659
Other assets less liabilities-3.9% 1,193,001
NET ASSETS-100% $30,884,660
(a) Unaudited.
See Glossary of Terms on page 25.
See notes to financial statements.
24
GLOSSARY OF TERMS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
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.
GNMA Government National Mortgage Association
GO General Obligation
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
NR Rating not applied for
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
25
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSSETTS
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Investment in securities, at value (cost: $41,879,669,
$103,046,152, $57,819,016, $25,691,590,
$26,201,576, $87,301,691, $62,184,170,
$79,474,237, and $28,972,788, respectively) $43,513,920 $107,295,850 $59,675,466
Cash 8,856 25,796 200,264
Interest receivable 604,633 1,777,422 908,348
Receivable for shares of beneficial interest sold 292,314 1,880,536 904,615
Receivable due from Adviser 6,757 -0- 16,389
Receivable for investment securities sold -0- 6,203,023 -0-
Other assets 5,928 -0- 3,491
Total assets 44,432,408 117,182,627 61,708,573
LIABILITIES
Due to custodian -0- -0- -0-
Payable for investment securities purchased 3,812,141 -0- -0-
Payable for shares of beneficial interest redeemed 908,945 139,283 50,405
Dividends payable 51,493 148,438 78,868
Distribution fee payable 19,861 66,823 35,649
Advisory fee payable -0- 23,745 -0-
Accrued expenses and other liabilities 49,337 101,278 67,410
Total liabilities 4,841,777 479,567 232,332
NET ASSETS $39,590,631 $116,703,060 $61,476,241
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $35,882 $111,316 $54,006
Additional paid-in capital 37,820,107 116,424,976 59,447,821
Distributions in excess of net investment income (53,011) (148,438) (81,357)
Accumulated net realized gain (loss) on
investment transactions 153,402 (3,934,492) 199,321
Net unrealized appreciation of investments 1,634,251 4,249,698 1,856,450
$39,590,631 $116,703,060 $61,476,241
CLASS A SHARES
Net assets $21,184,812 $44,439,754 $23,025,814
Shares of beneficial interest outstanding 1,919,801 4,238,707 2,021,889
CLASS B SHARES
Net assets $13,698,011 $40,739,595 $20,400,202
Shares of beneficial interest outstanding 1,241,654 3,886,016 1,792,646
CLASS C SHARES
Net assets $4,707,808 $31,523,711 $18,050,225
Shares of beneficial interest outstanding 426,765 3,006,834 1,586,097
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share $11.03 $10.48 $11.39
Sales charge--4.25% of public offering price .49 .47 .51
Maximum offering price $11.52 $10.95 $11.90
CLASS B SHARES
Net asset value and offering price per share $11.03 $10.48 $11.38
CLASS C SHARES
Net asset value and offering price per share $11.03 $10.48 $11.38
</TABLE>
See notes to financial statements.
26
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
------------ ------------ ------------ ------------ ------------ ------------
<C> <C> <C> <C> <C> <C>
$26,789,428 $27,534,056 $93,477,944 $66,195,222 $84,547,165 $29,691,659
-0- -0- -0- 1,121,035 -0- 66,490
430,126 396,611 1,626,402 822,017 1,652,802 564,209
85,416 105,391 751,253 478,252 535,044 694,974
15,654 45,497 -0- -0- -0- 84,143
-0- 15,000 1,105,000 -0- 6,300,000 -0-
2,272 -0- -0- -0- -0- 3,714
27,322,896 28,096,555 96,960,599 68,616,526 93,035,011 31,105,189
120,048 55,447 213,692 -0- 29,174 -0-
-0- -0- -0- -0- -0- -0-
65,690 90,294 44,696 198,982 55,669 125,195
31,702 34,384 118,572 85,252 116,770 39,555
17,040 19,079 64,810 47,063 54,033 18,464
-0- -0- 25,848 19,855 45,411 -0-
54,148 53,492 114,964 70,877 105,276 37,315
288,628 252,696 582,582 422,029 406,333 220,529
$27,034,268 $27,843,859 $96,378,017 $68,194,497 $92,628,678 $30,884,660
$25,467 $27,249 $92,131 $65,259 $86,902 $28,047
25,756,360 27,662,257 93,850,778 67,063,442 87,911,784 30,079,563
(33,354) (34,384) (118,572) (85,252) (116,770) (40,259)
187,957 (1,143,743) (3,622,573) (2,860,004) (326,166) 98,438
1,097,838 1,332,480 6,176,253 4,011,052 5,072,928 718,871
$27,034,268 $27,843,859 $96,378,017 $68,194,497 $92,628,678 $30,884,660
$8,640,155 $6,261,487 $22,332,673 $14,219,835 $35,632,110 $10,314,864
813,480 612,761 2,134,901 1,360,619 3,342,637 936,262
$9,410,795 $13,866,517 $48,027,024 $37,289,322 $39,465,160 $15,972,972
886,757 1,357,074 4,591,401 3,568,620 3,702,711 1,450,773
$8,983,318 $7,715,855 $26,018,320 $16,685,340 $17,531,408 $4,596,824
846,496 755,043 2,486,777 1,596,680 1,644,818 417,644
$10.62 $10.22 $10.46 $10.45 $10.66 $11.02
.47 .45 .46 .46 .47 .49
$11.09 $10.67 $10.92 $10.91 $11.13 $11.51
$10.61 $10.22 $10.46 $10.45 $10.66 $11.01
$10.61 $10.22 $10.46 $10.45 $10.66 $11.01
</TABLE>
27
STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSSETTS
------------ ------------ --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $1,713,853 $5,028,068 $2,220,691
EXPENSES
Advisory fee 188,200 533,325 248,200
Distribution fee - Class A 52,405 79,660 45,450
Distribution fee - Class B 98,403 308,958 125,563
Distribution fee - Class C 28,035 278,828 120,055
Custodian 79,386 90,645 86,740
Administrative 55,000 55,000 55,000
Audit & legal 20,480 58,010 32,167
Transfer agency 17,798 46,192 26,273
Amortization of organization expenses 8,921 10,680 7,132
Registration 5,754 9,255 13,608
Printing 3,614 11,634 5,618
Trustees' fees 3,335 3,335 3,335
Miscellaneous 1,688 5,771 4,171
Total expenses 563,019 1,491,293 773,312
Less: expenses waived and reimbursed by Adviser (see Note B) (239,639) (456,919) (315,454)
Net expenses 323,380 1,034,374 457,858
Net investment income 1,390,473 3,993,694 1,762,833
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 221,494 1,226,752 348,332
Net change in unrealized appreciation of investments 1,146,364 1,754,979 1,218,465
Net gain on investments 1,367,858 2,981,731 1,566,797
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,758,331 $6,975,425 $3,329,630
</TABLE>
See notes to financial statements.
28
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
------------ ------------ ------------ ------------ ------------ ------------
<C> <C> <C> <C> <C> <C>
$1,199,307 $1,349,769 $4,796,472 $3,329,967 $4,799,372 $929,043
135,408 148,899 520,692 358,606 495,591 105,442
21,097 15,893 55,370 31,955 87,720 18,247
73,567 111,830 419,389 315,487 338,646 85,643
72,764 73,433 229,153 151,766 161,900 22,243
87,086 83,366 92,453 82,623 88,178 87,364
55,000 55,000 55,000 55,000 55,000 55,000
19,934 20,097 54,179 32,678 51,595 14,710
27,467 26,797 64,605 35,538 61,404 23,355
5,694 10,072 10,072 10,535 13,682 5,727
4,866 1,645 6,075 9,247 4,582 2,431
5,678 8,042 19,958 14,866 13,271 8,608
3,335 3,335 3,335 3,335 3,335 3,335
1,770 467 1,184 568 1,807 1,034
513,666 558,876 1,531,465 1,102,204 1,376,711 433,139
(203,247) (249,396) (389,961) (341,646) (269,644) (244,585)
310,419 309,480 1,141,504 760,558 1,107,067 188,554
888,888 1,040,289 3,654,968 2,569,409 3,692,305 740,489
285,847 274,145 529,540 227,096 1,548,033 132,862
572,490 358,291 2,076,332 1,407,156 1,104,276 498,764
858,337 632,436 2,605,872 1,634,252 2,652,309 631,626
$1,747,225 $1,672,725 $6,260,840 $4,203,661 $6,344,614 $1,372,115
</TABLE>
29
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,
1998 1997 1998 1997 1998 1997
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $1,390,473 $696,598 $3,993,694 $3,340,631 $1,762,833 $771,410
Net realized gain
on investment
transactions 221,494 377,624 1,226,752 1,247,758 348,332 489,674
Net change in
unrealized
appreciation
of investments 1,146,364 238,359 1,754,979 1,354,893 1,218,465 391,030
Net increase in
net assets from
operations 2,758,331 1,312,581 6,975,425 5,943,282 3,329,630 1,652,114
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (858,694) (367,913) (1,365,535) (847,240) (738,055) (288,776)
Class B (414,304) (263,634) (1,379,472) (1,112,789) (522,866) (229,220)
Class C (117,475) (65,051) (1,248,687) (1,346,149) (501,912) (253,414)
Distributions in
excess of net
investment income
Class A (43,709) (1,655) (35,676) -0- (61,754) (9,236)
Class B (28,034) (3,731) (43,750) -0- (60,479) (10,381)
Class C (8,101) (1,548) (37,351) -0- (57,462) (10,837)
Net realized gain
on investments
Class A (212,751) (12,807) -0- -0- (181,523) (77,311)
Class B (121,124) (11,580) -0- -0- (139,090) (71,686)
Class C (29,194) (2,601) -0- -0- (137,598) (86,735)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase
(decrease) 21,134,959 6,630,877 45,780,029 (1,231,836) 36,041,467 12,483,327
Total increase 22,059,904 7,212,938 48,644,983 1,405,268 36,970,358 13,097,845
NET ASSETS
Beginning of year 17,530,727 10,317,789 68,058,077 66,652,809 24,505,883 11,408,038
End of year $39,590,631 $17,530,727 $116,703,060 $68,058,077 $61,476,241 $24,505,883
</TABLE>
See notes to financial statements.
30
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,
1998 1997 1998 1997 1998 1997
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $888,888 $704,500 $1,040,289 $923,160 $3,654,968 $3,411,310
Net realized gain
on investment
transactions 285,847 539,839 274,145 275,164 529,540 1,486,965
Net change in
unrealized
appreciation
of investments 572,490 227,908 358,291 499,706 2,076,332 1,808,118
Net increase in
net assets from
operations 1,747,225 1,472,247 1,672,725 1,698,030 6,260,840 6,706,393
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (321,710) (307,066) (260,414) (199,592) (910,827) (748,666)
Class B (284,561) (192,911) (469,051) (384,953) (1,773,742) (1,683,216)
Class C (282,617) (204,523) (310,824) (338,557) (970,399) (979,428)
Distributions in
excess of net
investment income
Class A (28,794) (9,747) (12,557) (1,867) (16,544) (10,862)
Class B (33,663) (7,521) (27,032) (555) (40,961) (20,887)
Class C (33,194) (7,811) (16,330) -0- (20,260) (8,404)
Net realized gain
on investments
Class A (151,780) (73,030) -0- -0- -0- -0-
Class B (160,394) (46,231) -0- -0- -0- -0-
Class C (150,076) (52,615) -0- -0- -0- -0-
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase
(decrease) 10,508,825 2,037,957 7,272,544 1,213,302 17,828,850 (4,431,769)
Total increase
(decrease) 10,809,261 2,608,749 7,849,061 1,985,808 20,356,957 (1,176,839)
NET ASSETS
Beginning of year 16,225,007 13,616,258 19,994,798 18,008,990 76,021,060 77,197,899
End of year $27,034,268 $16,225,007 $27,843,859 $19,994,798 $96,378,017 $76,021,060
</TABLE>
See notes to financial statements.
31
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,
1998 1997 1998 1997 1998 1997
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $2,569,409 $2,282,278 $3,692,305 $3,351,390 $740,489 $389,032
Net realized gain
on investment
transactions 227,096 971,673 1,548,033 934,665 132,862 306,700
Net change in
unrealized
appreciation
of investments 1,407,156 1,589,495 1,104,276 2,363,863 498,764 157,573
Net increase in
net assets from
operations 4,203,661 4,843,446 6,344,614 6,649,918 1,372,115 853,305
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (537,858) (345,718) (1,490,341) (1,258,375) (294,619) (155,809)
Class B (1,369,998) (1,189,291) (1,487,630) (1,421,685) (354,381) (186,794)
Class C (661,553) (703,427) (714,334) (671,330) (91,489) (46,429)
Distributions in
excess of net
investment income
Class A (12,445) -0- (34,321) (30,406) (20,332) (12)
Class B (41,754) -0- (46,978) (39,276) (34,779) (1,795)
Class C (18,701) -0- (21,194) (16,414) (9,563) (515)
Net realized gain
on investments
Class A -0- -0- -0- -0- (109,207) (59,025)
Class B -0- -0- -0- -0- (157,407) (85,912)
Class C -0- -0- -0- -0- (39,965) (22,732)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase
(decrease) 17,338,126 (1,900,553) 19,566,732 1,759,900 20,866,666 3,021,558
Total increase 18,899,478 704,457 22,116,548 4,972,332 21,127,039 3,315,840
NET ASSETS
Beginning of year 49,295,019 48,590,562 70,512,130 65,539,798 9,757,621 6,441,781
End of year $68,194,497 $49,295,019 $92,628,678 $70,512,130 $30,884,660 $9,757,621
</TABLE>
See notes to financial statements.
32
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 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 financial statements
have been prepared in conformity with generally accepted accounting principles
which require management to make certain estimates and assumptions that affect
the reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. If no bid prices are
quoted, then the security is valued at the mean of the bid and asked prices as
obtained on that day from one or more dealers regularly making a market in that
security. Securities traded on the over-the-counter market are valued at the
mean of the closing bid and asked price provided by two or more dealers
regularly making a market in such securities. U.S. government securities and
other debt securities which mature in 60 days or less are valued at amortized
cost unless this method does not represent fair value. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by, or in accordance with procedures approved by, the
Board of Trustees. Fixed income securities may be valued on the basis of prices
provided by a pricing service when such prices are believed to reflect the fair
market value of such securities.
2. ORGANIZATION EXPENSES
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 any, 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 Portfolios amortize premium and
accrete 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.
33
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Portfolios are borne on a
pro-rata basis by each settled class of shares, based on the proportionate
interest in the Portfolios represented by the net assets of such class, except
that the Portfolio's Class B and Class C shares bear higher distribution and
transfer agent fees than Class A shares.
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, 1998, the Adviser
voluntarily agreed to waive all or a portion of its advisory fees. The
aggregate amounts of such fee waivers were: Arizona Portfolio, $184,639;
Florida Portfolio, $401,919; Massachusetts Portfolio, $248,200; Michigan
Portfolio, $135,408; Minnesota Portfolio, $148,899; New Jersey Portfolio,
$334,961; Ohio Portfolio, $286,646; Pennsylvania Portfolio, $214,644; and
Virginia Portfolio, $105,442.
Pursuant to the advisory agreement, the Adviser provides to each Portfolio
certain legal and accounting services. For the year ended September 30, 1998,
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: Massachusetts Portfolio, $67,254; Michigan
Portfolio, $67,839; Minnesota Portfolio, $100,497; and Virginia Portfolio,
$139,143. There was no such reimbursement for the Arizona Portfolio, the
Florida Portfolio, the New Jersey Portfolio, the Ohio Portfolio and the
Pennsylvania Portfolio.
Each Portfolio compensates Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) under a Transfer Agency Agreement for providing
personnel and facilities to perform transfer agency services for each
Portfolio. Such compensation amounted to: Arizona Portfolio, $16,500; Florida
Portfolio, $29,991; Massachusetts Portfolio, $18,424; Michigan Portfolio,
$16,500; Minnesota Portfolio, $18,343; New Jersey Portfolio, $42,160; Ohio
Portfolio, $27,969; Pennsylvania Portfolio, $38,555; and Virginia Portfolio,
$16,500.
Alliance Fund Distributors, Inc. (a wholly owned subsidiary of the Adviser)
serves as the distributor of the Fund's shares.
For the year ended September 30, 1998, the amount of front-end sales charges
received by the Distributor from sales of Class A shares and the amount of
contingent deferred sales charges imposed upon redemptions by shareholders of
Class A, Class B and Class C shares were as follows:
34
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
FRONT END CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES
----------- ------------------------------------
PORTFOLIO CLASS A CLASS A CLASS B CLASS C
- -------------- ----------- --------- --------- ---------
Arizona $16,215 $17,733 $11,605 $706
Florida 36,819 21,506 22,273 3,420
Massachusetts 18,390 -0- 11,227 8,754
Michigan 6,064 -0- 7,111 4,431
Minnesota 5,086 -0- 17,153 1,704
New Jersey 12,554 -0- 28,616 4,182
Ohio 5,272 567 19,687 2,362
Pennsylvania 24,654 -0- 13,516 1,570
Virginia 12,550 -0- 3,440 541
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 $1,109,791 $ 269,394
Florida 1,651,312 1,333,293
Massachusetts 1,172,556 843,833
Michigan 947,299 945,683
Minnesota 1,458,332 846,719
New Jersey 2,293,615 951,597
Ohio 2,007,545 894,056
Pennsylvania 1,681,858 823,252
Virginia 1,437,313 341,807
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, 1998 were as
follows:
PORTFOLIO PURCHASES SALES
- -------------- ------------- -------------
Arizona $33,203,051 $12,617,389
Florida 82,444,972 52,863,036
Massachusetts 59,062,789 25,829,049
Michigan 36,140,276 26,250,497
Minnesota 13,471,501 6,440,127
New Jersey 46,610,400 27,802,539
Ohio 28,438,712 9,117,739
Pennsylvania 67,182,753 53,179,607
Virginia 30,253,855 10,179,538
35
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
At September 30, 1998, 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 $ 41,879,697 $1,634,223 $ -0- $1,634,223
Florida 103,049,438 4,264,739 (18,327) 4,246,412
Massachusetts 57,819,016 1,856,450 -0- 1,856,450
Michigan 25,691,840 1,097,588 -0- 1,097,588
Minnesota 26,201,576 1,332,480 -0- 1,332,480
New Jersey 87,304,483 6,173,461 -0- 6,173,461
Ohio 62,185,771 4,009,451 -0- 4,009,451
Pennsylvania 79,484,365 5,062,800 -0- 5,062,800
Virginia 28,972,788 718,871 -0- 718,871
For Federal income tax purposes at September 30, 1998, the Fund had capital
loss carryforwards for the following Portfolios: $3,931,206 expiring in 2003,
for Florida Portfolio; $650,584 expiring in 2003, and $492,981 expiring in
2004, for Minnesota Portfolio; $3,270,077 expiring in 2003, and $349,704
expiring in 2004, for New Jersey Portfolio; $2,526,403 expiring in 2003, and
$332,000 expiring in 2004, for Ohio Portfolio; and $316,038 expiring in 2003,
for Pennsylvania 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:
36
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
ARIZONA PORTFOLIO 1998 1997 1998 1997
- ----------------- ------------ ------------ -------------- --------------
CLASS A
Shares sold 1,731,764 466,115 $18,634,736 $4,910,624
Shares issued in
reinvestment of
dividends and
distributions 45,597 9,889 491,757 104,166
Shares converted
from Class B 10,448 5,552 163,390 58,577
Shares redeemed (723,933) (52,682) (7,863,841) (550,222)
Net increase 1,063,876 428,874 $11,426,042 $4,523,145
CLASS B
Shares sold 730,287 234,439 $7,895,448 $2,473,657
Shares issued in
reinvestment of
dividends and
distributions 30,944 13,442 333,822 141,339
Shares converted
to Class A (10,458) (5,552) (163,390) (58,577)
Shares redeemed (115,125) (139,836) (1,192,886) (1,453,909)
Net increase 635,648 102,493 $6,872,994 $1,102,510
CLASS C
Shares sold 287,268 115,373 $3,107,936 $1,209,064
Shares issued in
reinvestment of
dividends and
distributions 9,267 3,226 100,059 33,997
Shares redeemed (34,469) (22,676) (372,072) (237,839)
Net increase 262,066 95,923 $2,835,923 $1,005,222
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
FLORIDA PORTFOLIO 1998 1997 1998 1997
- ----------------- ------------ ------------ -------------- --------------
CLASS A
Shares sold 3,074,851 401,472 $31,787,286 $3,966,237
Shares issued in
reinvestment of
dividends and
distributions 53,907 32,217 557,235 318,408
Shares converted
from Class B 60,032 51,926 668,487 510,238
Shares redeemed (676,944) (228,010) (7,012,672) (2,248,140)
Net increase 2,511,846 257,605 $26,000,336 $2,546,743
CLASS B
Shares sold 1,752,957 744,931 $18,139,164 $7,338,616
Shares issued in
reinvestment of
dividends and
distributions 65,852 50,066 680,172 495,099
Shares converted
to Class A (60,032) (51,926) (668,487) (510,238)
Shares redeemed (319,776) (579,406) (3,256,349) (5,720,727)
Net increase 1,439,001 163,665 $14,894,500 $1,602,750
CLASS C
Shares sold 930,521 676,267 $9,625,371 $6,658,690
Shares issued in
reinvestment of
dividends and
distributions 58,806 62,835 607,695 621,766
Shares redeemed (518,362) (1,296,118) (5,347,873) (12,661,785)
Net increase
(decrease) 470,965 (557,016) $4,885,193 $(5,381,329)
37
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MASSACHUSETTS SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
PORTFOLIO 1998 1997 1998 1997
- ---------------- ------------ ------------ -------------- --------------
CLASS A
Shares sold 1,525,593 705,271 $17,085,284 $7,737,977
Shares issued in
reinvestment of
dividends and
distributions 50,570 16,441 566,795 178,373
Shares converted
from Class B 717 36 58,037 397
Shares redeemed (400,515) (172,200) (4,495,983) (1,883,762)
Net increase 1,176,365 549,548 $13,214,133 $6,032,985
CLASS B
Shares sold 1,237,850 336,620 $13,890,559 $3,677,110
Shares issued in
reinvestment of
dividends and
distributions 36,577 14,320 409,785 155,377
Shares converted
to Class A (717) (36) (58,037) (397)
Shares redeemed (127,210) (44,532) (1,375,179) (485,344)
Net increase 1,146,500 306,372 $12,867,128 $3,346,746
CLASS C
Shares sold 1,013,035 386,133 $11,364,712 $4,233,533
Shares issued in
reinvestment of
dividends and
distributions 46,652 28,580 522,783 309,824
Shares redeemed (171,986) (132,699) (1,927,289) (1,439,761)
Net increase 887,701 282,014 $9,960,206 $3,103,596
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
MICHIGAN PORTFOLIO 1998 1997 1998 1997
- ------------------ ------------ ------------ -------------- --------------
CLASS A
Shares sold 434,869 160,589 $4,494,329 $1,659,299
Shares issued in
reinvestment of
dividends and
distributions 32,622 19,006 340,581 193,980
Shares converted
from Class B 2,043 28 71,547 286
Shares redeemed (210,595) (230,129) (2,208,136) (2,348,441)
Net increase
(decrease) 258,939 (50,506) $2,698,321 $(494,876)
CLASS B
Shares sold 447,245 185,283 $4,685,103 $1,897,940
Shares issued in
reinvestment of
dividends and
distributions 31,065 13,545 323,917 138,387
Shares converted
to Class A (2,043) (28) (71,547) (286)
Shares redeemed (93,242) (46,187) (927,923) (470,069)
Net increase 383,025 152,613 $4,009,550 $1,565,972
CLASS C
Shares sold 489,303 176,811 $5,126,475 $1,814,237
Shares issued in
reinvestment of
dividends and
distributions 39,986 22,260 417,372 227,355
Shares redeemed (166,391) (104,698) (1,742,893) (1,074,731)
Net increase 362,898 94,373 $3,800,954 $966,861
38
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
MINNESOTA PORTFOLIO 1998 1997 1998 1997
- ------------------- ------------ ------------ -------------- --------------
CLASS A
Shares sold 240,220 105,934 $2,376,324 $1,027,028
Shares issued in
reinvestment of
dividends and
distributions 15,544 12,865 157,123 125,087
Shares converted
from Class B 5,897 11,080 109,403 107,249
Shares redeemed (62,015) (47,164) (628,217) (460,217)
Net increase 199,646 82,715 $2,014,633 $799,147
CLASS B
Shares sold 641,379 167,360 $6,478,136 $1,631,577
Shares issued in
reinvestment of
dividends and
distributions 32,588 26,821 329,386 260,796
Shares converted
to Class A (5,897) (11,080) (109,403) (107,249)
Shares redeemed (164,976) (194,610) (1,616,471) (1,893,478)
Net increase (decrease) 503,094 (11,509) $5,081,648 $(108,354)
CLASS C
Shares sold 170,118 167,292 $1,720,113 $1,624,602
Shares issued in
reinvestment of
dividends and
distributions 26,170 27,887 264,223 271,274
Shares redeemed (179,084) (141,329) (1,808,073) (1,373,367)
Net increase 17,204 53,850 $176,263 $522,509
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NEW JERSEY SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
PORTFOLIO 1998 1997 1998 1997
- ----------------- ------------ ------------ -------------- --------------
CLASS A
Shares sold 751,262 469,608 $7,705,304 $4,670,579
Shares issued in
reinvestment of
dividends and
distributions 54,575 43,821 561,562 434,332
Shares converted
from Class B 21,774 25,334 268,704 250,480
Shares redeemed (298,768) (530,123) (3,073,637) (5,236,167)
Net increase 528,843 8,640 $5,461,933 $119,224
CLASS B
Shares sold 1,449,989 612,170 $14,941,581 $6,103,109
Shares issued in
reinvestment of
dividends and
distributions 113,069 106,709 1,163,362 1,057,759
Shares converted
to Class A (21,774) (25,334) (268,704) (250,480)
Shares redeemed (722,074) (943,177) (7,381,335) (9,338,864)
Net increase
(decrease) 819,210 (249,632) $8,454,904 $(2,428,476)
CLASS C
Shares sold 668,420 374,853 $6,885,939 $3,722,963
Shares issued in
reinvestment of
dividends and
distributions 65,486 67,711 673,386 671,448
Shares redeemed (354,535) (657,468) (3,647,312) (6,516,928)
Net increase
(decrease) 379,371 (214,904) $3,912,013 $(2,122,517)
39
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
OHIO PORTFOLIO 1998 1997 1998 1997
- ----------------- ------------ ------------ -------------- --------------
CLASS A
Shares sold 639,331 278,619 $6,566,039 $2,767,243
Shares issued in
reinvestment of
dividends and
distributions 33,356 20,667 344,655 203,289
Shares converted
from Class B 58,121 13,783 646,153 138,710
Shares redeemed (117,443) (195,949) (1,213,183) (1,909,329)
Net increase 613,365 117,120 $6,343,664 $1,199,913
CLASS B
Shares sold 1,207,646 491,863 $12,480,119 $4,851,011
Shares issued in
reinvestment of
dividends and
distributions 100,554 85,785 1,038,805 844,851
Shares converted
to Class A (58,121) (13,783) (646,153) (138,710)
Shares redeemed (320,073) (561,173) (3,263,624) (5,501,504)
Net increase 930,006 2,692 $9,609,147 $55,648
CLASS C
Shares sold 372,776 173,363 $3,860,583 $1,711,532
Shares issued in
reinvestment of
dividends and
distributions 46,608 51,701 480,928 509,274
Shares redeemed (286,393) (551,175) (2,956,196) (5,376,920)
Net increase
(decrease) 132,991 (326,111) $1,385,315 $(3,156,114)
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
PENNSYLVANIA SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
PORTFOLIO 1998 1997 1998 1997
- ----------------- ------------ ------------ -------------- --------------
CLASS A
Shares sold 1,354,357 467,692 $14,149,149 $4,681,081
Shares issued in
reinvestment of
dividends and
distributions 96,257 84,710 1,006,799 852,355
Shares converted
from Class B 64,196 63,903 722,138 646,415
Shares redeemed (586,559) (344,028) (6,149,684) (3,466,776)
Net increase 928,251 272,277 $9,728,402 $2,713,075
CLASS B
Shares sold 1,163,458 577,688 $12,209,270 $5,820,098
Shares issued in
reinvestment of
dividends and
distributions 85,232 80,944 891,248 814,188
Shares converted
to Class A (64,196) (63,903) (722,138) (646,415)
Shares redeemed (392,609) (771,304) (4,075,590) (7,750,943)
Net increase (decrease) 791,885 (176,575) $8,302,790 $(1,763,072)
CLASS C
Shares sold 428,757 288,667 $4,483,838 $2,906,593
Shares issued in
reinvestment of
dividends and
distributions 38,019 44,989 397,062 452,736
Shares redeemed (320,592) (254,416) (3,345,360) (2,549,432)
Net increase 146,184 79,240 $1,535,540 $809,897
40
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
VIRGINIA PORTFOLIO 1998 1997 1998 1997
- ------------------ ------------ ------------ -------------- --------------
CLASS A
Shares sold 657,077 106,838 $7,125,472 $1,119,910
Shares issued in
reinvestment of
dividends and
distributions 23,268 12,492 252,054 131,306
Shares converted
from Class B 5,107 -0- 105,746 -0-
Shares redeemed (72,986) (27,670) (800,978) (291,141)
Net increase 612,466 91,660 $6,682,294 $960,075
CLASS B
Shares sold 1,005,543 168,891 $10,994,477 $1,787,325
Shares issued in
reinvestment of
dividends and
distributions 37,823 19,801 409,683 208,051
Shares converted
to Class A (5,107) -0- (105,746) -0-
Shares redeemed (47,923) (44,556) (472,693) (465,272)
Net increase 990,336 144,136 $10,825,721 $1,530,104
CLASS C
Shares sold 311,389 54,662 $3,408,930 $578,928
Shares issued in
reinvestment of
dividends and
distributions 11,402 6,070 123,580 63,771
Shares redeemed (15,874) (10,711) (173,859) (111,320)
Net increase 306,917 50,021 $3,358,651 $531,379
41
FINANCIAL HIGHLIGHTS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
ARIZONA PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
JUNE 1,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.78 $10.32 $10.29 $9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .54(c) .57(c) .55(c) .56 .20
Net realized and unrealized gain (loss)
on investment transactions .45 .48 .14 .53 (.23)
Net increase (decrease) in net asset
value from operations .99 1.05 .69 1.09 (.03)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.54) (.57) (.55) (.56) (.20)
Distributions in excess of net
investment income (.02) -0- (.03) (.01) -0-
Distributions from net realized gains (.18) (.02) (.08) -0- -0-
Total dividends and distributions (.74) (.59) (.66) (.57) (.20)
Net asset value, end of period $11.03 $10.78 $10.32 $10.29 $9.77
TOTAL RETURN
Total investment return based on
net asset value (d) 9.54% 10.54% 6.84% 11.56% (.35)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $21,185 $9,225 $4,409 $2,379 $930
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .78% .78% .78% .78% .78%(e)
Expenses, before
waivers/reimbursements 1.55% 2.71% 3.69% 4.88% 7.71%(e)
Net investment income, net of
waivers/reimbursements 4.92% 5.42% 5.33% 5.56% 5.82%(e)
Portfolio turnover rate 45% 193% 244% 85% 81%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
JUNE 1,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.78 $10.32 $10.29 $9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .45(c) .50(c) .47(c) .49 .18
Net realized and unrealized gain (loss)
on investment transactions .47 .48 .14 .53 (.24)
Net increase (decrease) in net
asset value from operations .92 .98 .61 1.02 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.50) (.47) (.49) (.17)
Distributions in excess of net
investment income (.04) -0- (.03) (.01) -0-
Distributions from net realized gains (.18) (.02) (.08) -0- -0-
Total dividends and distributions (.67) (.52) (.58) (.50) (.17)
Net asset value, end of period $11.03 $10.78 $10.32 $10.29 $9.77
TOTAL RETURN
Total investment return based on net
asset value (d) 8.84% 9.80% 6.10% 10.78% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $13,698 $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% 1.48%(e)
Expenses, before
waivers/reimbursements 2.30% 3.40% 4.40% 5.58% 8.41%(e)
Net investment income, net of
waivers/reimbursements 4.21% 4.73% 4.62% 4.89% 5.13%(e)
Portfolio turnover rate 45% 193% 244% 85% 81%
</TABLE>
See footnote summary on page 59.
42
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
ARIZONA PORTFOLIO
-----------------------------------------------------------------
CLASS C
-----------------------------------------------------------------
JUNE 1,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.78 $10.32 $10.30 $9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .45(c) .50(c) .47(c) .49 .17
Net realized and unrealized gain (loss)
on investment transactions .47 .48 .13 .54 (.23)
Net increase (decrease) in net asset
value from operations .92 .98 .60 1.03 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.50) (.47) (.49) (.17)
Distributions in excess of net
investment income (.04) -0- (.03) (.01) -0-
Distributions from net realized gains (.18) (.02) (.08) -0- -0-
Total dividends and distributions (.67) (.52) (.58) (.50) (.17)
Net asset value, end of period $11.03 $10.78 $10.32 $10.30 $9.77
TOTAL RETURN
Total investment return based on net
asset value (d) 8.83% 9.80% 6.00% 10.89% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4,708 $1,775 $710 $481 $485
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.48% 1.48% 1.48% 1.48% 1.48%(e)
Expenses, before
waivers/reimbursements 2.34% 3.39% 4.41% 5.58% 8.41%(e)
Net investment income, net of
waivers/reimbursements 4.19% 4.70% 4.61% 4.90% 4.70%(e)
Portfolio turnover rate 45% 193% 244% 85% 81%
</TABLE>
See footnote summary on page 59.
43
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
---------------------------------------------------------------
CLASS A
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.14 $9.73 $9.58 $8.89 $10.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .52(c) .55(c) .54(c) .55 .55
Net realized and unrealized gain (loss)
on investment transactions .37 .41 .16 .69 (1.35)
Net increase (decrease) in net asset
value from operations .89 .96 .70 1.24 (.80)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.52) (.55) (.54) (.55) (.55)
Distributions in excess of net
investment income (.03) -0- (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.55) (.55) (.55) (.55) (.56)
Net asset value, end of year $10.48 $10.14 $9.73 $9.58 $8.89
TOTAL RETURN
Total investment return based on net
asset value (d) 8.97% 10.14% 7.45% 14.44% (8.03)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $44,440 $17,516 $14,297 $11,956 $8,227
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .73% .73% .73% .73% .38%
Expenses, before
waivers/reimbursements 1.27% 1.35% 1.33% 1.33% 1.27%
Net investment income, net of
waivers/reimbursements 5.14% 5.58% 5.52% 5.91% 5.70%
Portfolio turnover rate 65% 204% 237% 146% 185%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.14 $9.74 $9.58 $8.89 $10.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .48(c) .47(c) .47 .48
Net realized and unrealized gain (loss)
on investment transactions .36 .40 .17 .70 (1.35)
Net increase (decrease) in net asset
value from operations .82 .88 .64 1.17 (.87)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.48) (.47) (.47) (.48)
Distributions in excess of net
investment income (.02) -0- (.01) (.01) -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.48) (.48) (.48) (.48) (.49)
Net asset value, end of year $10.48 $10.14 $9.74 $9.58 $8.89
TOTAL RETURN
Total investment return based on net
asset value (d) 8.22% 9.24% 6.78% 13.56% (8.72)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $40,740 $24,820 $22,235 $20,660 $18,048
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.43% 1.43% 1.43% 1.42% 1.08%
Expenses, before
waivers/reimbursements 1.97% 2.05% 2.03% 2.03% 1.98%
Net investment income, net of
waivers/reimbursements 4.46% 4.87% 4.81% 5.22% 4.99%
Portfolio turnover rate 65% 204% 237% 146% 185%
</TABLE>
See footnote summary on page 59.
44
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
---------------------------------------------------------------
CLASS C
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.14 $9.74 $9.58 $8.89 $10.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .49(c) .47(c) .47 .48
Net realized and unrealized gain (loss)
on investment transactions .36 .39 .17 .70 (1.35)
Net increase (decrease) in net asset
value from operations .82 .88 .64 1.17 (.87)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.48) (.47) (.47) (.48)
Distributions in excess of net
investment income (.02) -0- (.01) (.01) -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.48) (.48) (.48) (.48) (.49)
Net asset value, end of year $10.48 $10.14 $9.74 $9.58 $8.89
TOTAL RETURN
Total investment return based on net
asset value (d) 8.22% 9.23% 6.78% 13.56% (8.72)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $31,524 $25,722 $30,121 $30,787 $42,405
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.43% 1.43% 1.43% 1.42% 1.08%
Expenses, before waivers/reimbursements 1.99% 2.03% 2.02% 2.03% 1.97%
Net investment income, net of
waivers/reimbursements 4.48% 4.89% 4.81% 5.27% 4.97%
Portfolio turnover rate 65% 204% 237% 146% 185%
</TABLE>
See footnote summary on page 59.
45
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
MASSACHUSETTS PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
MARCH 29,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.19 $10.85 $10.50 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .54(c) .58(c) .60(c) .58 .31
Net realized and unrealized gain on
investment transactions .45 .57 .44 .41 .11
Net increase in net asset value
from operations .99 1.15 1.04 .99 .42
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.54) (.58) (.59) (.58) (.30)
Distributions in excess of net
investment income (.06) (.03) (.02) (.03) -0-
Distributions from net realized gains (.19) (.20) (.08) -0- -0-
Total dividends and distributions (.79) (.81) (.69) (.61) (.30)
Net asset value, end of period $11.39 $11.19 $10.85 $10.50 $10.12
TOTAL RETURN
Total investment return based on net
asset value (d) 9.18% 11.14% 10.25% 10.19% 4.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $23,026 $9,461 $3,211 $1,337 $565
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .72% .72% .62% .60% .60%(e)
Expenses, before
waivers/reimbursements 1.51% 2.40% 3.15% 6.44% 13.20%(e)
Net investment income, net of
waivers/reimbursements 4.87% 5.40% 5.62% 5.67% 5.98%(e)
Portfolio turnover rate 69% 134% 246% 155% 146%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
MARCH 29,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.19 $10.84 $10.49 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .51(c) .52(c) .52 .27
Net realized and unrealized gain on
investment transactions .45 .58 .45 .39 .11
Net increase in net asset
value from operations .91 1.09 .97 .91 .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.51) (.52) (.52) (.26)
Distributions in excess of net
investment income (.07) (.03) (.02) (.02) -0-
Distributions from net realized gains (.19) (.20) (.08) -0- -0-
Total dividends and distributions (.72) (.74) (.62) (.54) (.26)
Net asset value, end of period $11.38 $11.19 $10.84 $10.49 $10.12
TOTAL RETURN
Total investment return based on
net asset value (d) 8.40% 10.52% 9.52% 9.32% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $20,400 $7,230 $3,683 $1,754 $725
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.42% 1.42% 1.32% 1.30% 1.30%(e)
Expenses, before
waivers/reimbursements 2.22% 3.07% 3.85% 7.14% 13.90%(e)
Net investment income, net of
waivers/reimbursements 4.16% 4.73% 4.93% 4.90% 5.13%(e)
Portfolio turnover rate 69% 134% 246% 155% 146%
</TABLE>
See footnote summary on page 59.
46
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
MASSACHUSETTS PORTFOLIO
-----------------------------------------------------------------
CLASS C
-----------------------------------------------------------------
MARCH 29,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.19 $10.84 $10.49 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .47(c) .51(c) .52(c) .52 .25
Net realized and unrealized gain on
investment transactions .44 .58 .45 .39 .13
Net increase in net asset value
from operations .91 1.09 .97 .91 .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.51) (.52) (.52) (.26)
Distributions in excess of net
investment income (.06) (.03) (.02) (.02) -0-
Distributions from net realized gains (.19) (.20) (.08) -0- -0-
Total dividends and distributions (.72) (.74) (.62) (.54) (.26)
Net asset value, end of period $11.38 $11.19 $10.84 $10.49 $10.12
TOTAL RETURN
Total investment return based on
net asset value (d) 8.40% 10.52% 9.52% 9.32% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $18,050 $7,815 $4,514 $2,556 $774
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.42% 1.42% 1.31% 1.30% 1.30%(e)
Expenses, before
waivers/reimbursements 2.21% 3.09% 3.84% 7.14% 13.90%(e)
Net investment income, net of
waivers/reimbursements 4.18% 4.75% 4.88% 4.85% 4.00%(e)
Portfolio turnover rate 69% 134% 246% 155% 146%
</TABLE>
See footnote summary on page 59.
47
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
MICHIGAN PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
FEBRUARY 25,
YEAR ENDED SEPTEMBER 30, 1994(A) TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.52 $10.12 $10.10 $9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .48(c) .53(c) .52(c) .52 .33
Net realized and unrealized gain (loss)
on investment transactions .44 .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations .92 1.08 .74 1.30 (.32)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.48) (.53) (.52) (.52) (.33)
Distributions in excess of net
investment income (.05) (.02) (.03) (.03) -0-
Distributions from net realized gains (.29) (.13) (.17) -0- -0-
Total dividends and distributions (.82) (.68) (.72) (.55) (.33)
Net asset value, end of period $10.62 $10.52 $10.12 $10.10 $9.35
TOTAL RETURN
Total investment return based on net
asset value (d) 9.08% 11.05% 7.54% 14.40% (3.24)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $8,640 $5,836 $6,123 $5,158 $2,473
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .96% .96% .96% 1.36% .93%(e)
Expenses, before
waivers/reimbursements 1.89% 2.46% 2.77% 3.43% 3.97%(e)
Net investment income, net of
waivers/reimbursements 4.57% 5.24% 5.21% 5.27% 5.83%(e)
Portfolio turnover rate 134% 161% 242% 151% 222%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
FEBRUARY 25,
YEAR ENDED SEPTEMBER 30, 1994(A) TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.52 $10.12 $10.10 $9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .40(c) .46(c) .45(c) .45 .29
Net realized and unrealized gain (loss)
on investment transactions .44 .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations .84 1.01 .67 1.23 (.36)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.40) (.46) (.45) (.45) (.29)
Distributions in excess of net
investment income (.06) (.02) (.03) (.03) -0-
Distributions from net realized gains (.29) (.13) (.17) -0- -0-
Total dividends and distributions (.75) (.61) (.65) (.48) (.29)
Net asset value, end of period $10.61 $10.52 $10.12 $10.10 $9.35
TOTAL RETURN
Total investment return based on net
asset value (d) 8.26% 10.30% 6.80% 13.58% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $9,411 $5,300 $3,553 $2,424 $1,722
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.66% 1.66% 1.66% 2.06% 1.63%(e)
Expenses, before
waivers/reimbursements 2.61% 3.23% 3.48% 4.12% 4.67%(e)
Net investment income, net of
waivers/reimbursements 3.87% 4.53% 4.51% 4.57% 4.93%(e)
Portfolio turnover rate 134% 161% 242% 151% 222%
</TABLE>
See footnote summary on page 59.
48
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
MICHIGAN PORTFOLIO
-----------------------------------------------------------------
CLASS C
-----------------------------------------------------------------
FEBRUARY 25,
YEAR ENDED SEPTEMBER 30, 1994(A) TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.52 $10.12 $10.10 $9.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .41(c) .46(c) .45(c) .45 .29
Net realized and unrealized gain (loss)
on investment transactions .43 .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations .84 1.01 .67 1.23 (.36)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.41) (.46) (.45) (.45) (.29)
Distributions in excess of net
investment income (.05) (.02) (.03) (.03) -0-
Distributions from net realized gains (.29) (.13) (.17) -0- -0-
Total dividends and distributions (.75) (.61) (.65) (.48) (.29)
Net asset value, end of period $10.61 $10.52 $10.12 $10.10 $9.35
TOTAL RETURN
Total investment return based on net
asset value (d) 8.26% 10.30% 6.80% 13.58% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $8,983 $5,089 $3,940 $2,886 $2,778
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.66% 1.66% 1.66% 2.06% 1.63%(e)
Expenses, before
waivers/reimbursements 2.59% 3.20% 3.48% 4.13% 4.67%(e)
Net investment income, net of
waivers/reimbursements 3.88% 4.55% 4.50% 4.69% 4.92%(e)
Portfolio turnover rate 134% 161% 242% 151% 222%
</TABLE>
See footnote summary on page 59.
49
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
MINNESOTA PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $9.97 $9.58 $9.49 $9.19 $10.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .50(c) .53(c) .53(c) .53 .55
Net realized and unrealized gain (loss)
on investment transactions .27 .39 .11 .32 (1.09)
Net increase (decrease) in net asset
value from operations .77 .92 .64 .85 (.54)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) (.53) (.53) (.53) (.55)
Distributions in excess of net
investment income (.02) -0- (.02) (.02) -0-
Total dividends and distributions (.52) (.53) (.55) (.55) (.55)
Net asset value, end of year $10.22 $9.97 $9.58 $9.49 $9.19
TOTAL RETURN
Total investment return based on net
asset value (d) 7.94% 9.93% 6.95% 9.63% (5.35)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $6,261 $4,120 $3,165 $2,414 $2,125
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .75% .75% .72% .71% .09%
Expenses, before
waivers/reimbursements 1.80% 2.22% 2.19% 2.30% 2.12%
Net investment income, net of
waivers/reimbursements 4.92% 5.44% 5.54% 5.71% 5.71%
Portfolio turnover rate 30% 131% 195% 117% 143%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $9.97 $9.58 $9.49 $9.18 $10.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .42(c) .46(c) .46(c) .46 .48
Net realized and unrealized gain (loss)
on investment transactions .28 .39 .11 .33 (1.10)
Net increase (decrease) in net asset
value from operations .70 .85 .57 .79 (.62)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.42) (.46) (.46) (.46) (.48)
Distributions in excess of net
investment income (.03) -0- (.02) (.02) -0-
Total dividends and distributions (.45) (.46) (.48) (.48) (.48)
Net asset value, end of year $10.22 $9.97 $9.58 $9.49 $9.18
TOTAL RETURN
Total investment return based on net
asset value (d) 7.17% 9.13% 6.15% 8.90% (6.15)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $13,867 $8,517 $8,291 $7,299 $6,150
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.46% 1.46% 1.42% 1.42% .80%
Expenses, before
waivers/reimbursements 2.52% 2.91% 2.89% 3.02% 2.83%
Net investment income, net of
waivers/reimbursements 4.19% 4.75% 4.82% 4.97% 5.00%
Portfolio turnover rate 30% 131% 195% 117% 143%
</TABLE>
See footnote summary on page 59.
50
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
MINNESOTA PORTFOLIO
---------------------------------------------------------------
CLASS C
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $9.97 $9.58 $9.50 $9.19 $10.27
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .43(c) .46(c) .46(c) .46 .48
Net realized and unrealized gain (loss)
on investment transactions .27 .39 .10 .33 (1.08)
Net increase (decrease) in net asset
value from operations .70 .85 .56 .79 (.60)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.43) (.46) (.46) (.46) (.48)
Distributions in excess of net
investment income (.02) -0- (.02) (.02) -0-
Total dividends and distributions (.45) (.46) (.48) (.48) (.48)
Net asset value, end of year $10.22 $9.97 $9.58 $9.50 $9.19
TOTAL RETURN
Total investment return based on net
asset value (d) 7.18% 9.13% 6.03% 8.89% (5.95)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $7,716 $7,358 $6,553 $7,305 $9,489
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.45% 1.45% 1.41% 1.41% .79%
Expenses, before
waivers/reimbursements 2.48% 2.89% 2.88% 3.00% 2.82%
Net investment income, net of
waivers/reimbursements 4.23% 4.76% 4.82% 5.05% 4.90%
Portfolio turnover rate 30% 131% 195% 117% 143%
</TABLE>
See footnote summary on page 59.
51
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
NEW JERSEY PORTFOLIO
---------------------------------------------------------------
CLASS A
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.15 $9.72 $9.65 $9.07 $10.29
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .51(c) .51(c) .51(c) .54 .55
Net realized and unrealized gain (loss)
on investment transactions .32 .44 .11 .59 (1.22)
Net increase (decrease) in net asset
value from operations .83 .95 .62 1.13 (.67)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.51) (.51) (.54) (.55)
Distributions in excess of net
investment income (.01) (.01) (.04) (.01) -0-
Total dividends and distributions (.52) (.52) (.55) (.55) (.55)
Net asset value, end of year $10.46 $10.15 $9.72 $9.65 $9.07
TOTAL RETURN
Total investment return based on net
asset value (d) 8.36% 10.01% 6.57% 12.91% (6.67)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $22,333 $16,309 $15,520 $11,612 $9,257
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .82% .82% .82% .82% .20%
Expenses, before
waivers/reimbursements 1.29% 1.34% 1.35% 1.35% 1.33%
Net investment income, net of
waivers/reimbursements 4.93% 5.16% 5.26% 5.73% 5.65%
Portfolio turnover rate 35% 61% 132% 86% 171%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.16 $9.72 $9.66 $9.07 $10.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .43(c) .44(c) .44(c) .47 .48
Net realized and unrealized gain (loss)
on investment transactions .32 .45 .10 .60 (1.21)
Net increase (decrease) in net asset
value from operations .75 .89 .54 1.07 (.73)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.43) (.44) (.45) (.47) (.48)
Distributions in excess of net
investment income (.02) (.01) (.03) (.01) -0-
Total dividends and distributions (.45) (.45) (.48) (.48) (.48)
Net asset value, end of year $10.46 $10.16 $9.72 $9.66 $9.07
TOTAL RETURN
Total investment return based on net
asset value (d) 7.50% 9.32% 5.66% 12.15% (7.28)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $48,027 $38,308 $39,099 $34,695 $30,459
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.53% 1.53% 1.53% 1.53% .91%
Expenses, before
waivers/reimbursements 2.00% 2.04% 2.05% 2.06% 2.03%
Net investment income, net of
waivers/reimbursements 4.23% 4.45% 4.56% 5.03% 4.96%
Portfolio turnover rate 35% 61% 132% 86% 171%
</TABLE>
See footnote summary on page 59.
52
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
NEW JERSEY PORTFOLIO
---------------------------------------------------------------
CLASS C
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.16 $9.72 $9.66 $9.07 $10.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .43(c) .44(c) .44(c) .47 .48
Net realized and unrealized gain (loss)
on investment transactions .32 .45 .10 .60 (1.21)
Net increase (decrease) in net asset
value from operations .75 .89 .54 1.07 (.73)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.43) (.44) (.45) (.47) (.48)
Distributions in excess of net
investment income (.02) (.01) (.03) (.01) -0-
Total dividends and distributions (.45) (.45) (.48) (.48) (.48)
Net asset value, end of year $10.46 $10.16 $9.72 $9.66 $9.07
TOTAL RETURN
Total investment return based on net
asset value (d) 7.50% 9.32% 5.66% 12.14% (7.28)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $26,018 $21,404 $22,579 $21,255 $26,472
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.52% 1.52% 1.52% 1.52% .90%
Expenses, before
waivers/reimbursements 1.99% 2.03% 2.04% 2.06% 2.02%
Net investment income, net of
waivers/reimbursements 4.23% 4.47% 4.56% 5.09% 4.93%
Portfolio turnover rate 35% 61% 132% 86% 171%
</TABLE>
See footnote summary on page 59.
53
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
OHIO PORTFOLIO
---------------------------------------------------------------
CLASS A
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.16 $9.61 $9.53 $9.06 $10.26
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .52(c) .54(c) .52(c) .54 .55
Net realized and unrealized gain (loss)
on investment transactions .30 .54 .11 .48 (1.19)
Net increase (decrease) in net asset
value from operations .82 1.08 .63 1.02 (.64)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.52) (.53) (.53) (.54) (.55)
Distributions in excess of net
investment income (.01) -0- (.02) (.01) -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.53) (.53) (.55) (.55) (.56)
Net asset value, end of year $10.45 $10.16 $9.61 $9.53 $9.06
TOTAL RETURN
Total investment return based on net
asset value (d) 8.30% 11.60% 6.72% 11.63% (6.44)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $14,220 $7,596 $6,054 $4,170 $2,810
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .75% .75% .75% .75% .04%
Expenses, before
waivers/reimbursements 1.35% 1.52% 1.48% 1.51% 1.42%
Net investment income, net of
waivers/reimbursements 5.05% 5.49% 5.47% 5.74% 5.67%
Portfolio turnover rate 16% 104% 182% 108% 161%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.16 $9.61 $9.54 $9.06 $10.26
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .45(c) .48(c) .46(c) .47 .48
Net realized and unrealized gain (loss)
on investment transactions .30 .53 .09 .49 (1.19)
Net increase (decrease) in net asset
value from operations .75 1.01 .55 .96 (.71)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.46) (.46) (.47) (.48)
Distributions in excess of net
investment income (.01) -0- (.02) (.01) -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.46) (.46) (.48) (.48) (.49)
Net asset value, end of year $10.45 $10.16 $9.61 $9.54 $9.06
TOTAL RETURN
Total investment return based on net
asset value (d) 7.56% 10.80% 5.82% 10.88% (7.13)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $37,289 $26,821 $25,334 $21,821 $20,267
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.46% 1.46% 1.46% 1.46% .74%
Expenses, before
waivers/reimbursements 2.05% 2.22% 2.18% 2.21% 2.13%
Net investment income, net of
waivers/reimbursements 4.34% 4.81% 4.77% 5.08% 4.95%
Portfolio turnover rate 16% 104% 182% 108% 161%
</TABLE>
See footnote summary on page 59.
54
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
OHIO PORTFOLIO
---------------------------------------------------------------
CLASS C
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.16 $9.61 $9.54 $9.06 $10.26
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .45(c) .47(c) .46(c) .47 .48
Net realized and unrealized gain (loss)
on investment transactions .30 .54 .09 .49 (1.19)
Net increase (decrease) in net asset
value from operations .75 1.01 .55 .96 (.71)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.46) (.46) (.47) (.48)
Distributions in excess of net
investment income (.01) -0- (.02) (.01) -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.46) (.46) (.48) (.48) (.49)
Net asset value, end of year $10.45 $10.16 $9.61 $9.54 $9.06
TOTAL RETURN
Total investment return based on net
asset value (d) 7.56% 10.80% 5.82% 10.88% (7.13)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $16,685 $14,878 $17,203 $18,874 $26,294
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.45% 1.45% 1.45% 1.45% .74%
Expenses, before
waivers/reimbursements 2.04% 2.20% 2.16% 2.20% 2.12%
Net investment income, net of
waivers/reimbursements 4.36% 4.81% 4.78% 5.14% 4.89%
Portfolio turnover rate 16% 104% 182% 108% 161%
</TABLE>
See footnote summary on page 59.
55
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
---------------------------------------------------------------
CLASS A
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.33 $9.85 $9.64 $9.18 $10.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .53(c) .55(c) .49(c) .54 .56
Net realized and unrealized gain (loss)
on investment transactions .35 .49 .28 .48 (1.06)
Net increase (decrease) in net asset
value from operations .88 1.04 .77 1.02 (.50)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.53) (.55) (.53) (.54) (.56)
Distributions in excess of net
investment income (.02) (.01) (.03) (.02) -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.55) (.56) (.56) (.56) (.57)
Net asset value, end of year $10.66 $10.33 $9.85 $9.64 $9.18
TOTAL RETURN
Total investment return based on net
asset value (d) 8.72% 10.85% 8.17% 11.53% (5.02)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $35,632 $24,948 $21,104 $8,721 $7,149
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .95% .95% 1.00% 1.00% .45%
Expenses, before
waivers/reimbursements 1.29% 1.40% 1.45% 1.47% 1.46%
Net investment income, net of
waivers/reimbursements 5.10% 5.44% 5.40% 5.78% 5.73%
Portfolio turnover rate 70% 85% 185% 114% 156%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.33 $9.86 $9.65 $9.18 $10.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .47(c) .46(c) .47 .49
Net realized and unrealized gain (loss)
on investment transactions .34 .49 .24 .49 (1.06)
Net increase (decrease) in net asset
value from operations .80 .96 .70 .96 (.57)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.47) (.46) (.47) (.49)
Distributions in excess of net
investment income (.01) (.02) (.03) (.02) -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.47) (.49) (.49) (.49) (.50)
Net asset value, end of year $10.66 $10.33 $9.86 $9.65 $9.18
TOTAL RETURN
Total investment return based on net
asset value (d) 7.98% 9.95% 7.38% 10.78% (5.72)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $39,465 $30,078 $30,440 $28,559 $25,637
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.66% 1.66% 1.71% 1.71% 1.16%
Expenses, before
waivers/reimbursements 2.00% 2.09% 2.15% 2.17% 2.16%
Net investment income, net of
waivers/reimbursements 4.39% 4.72% 4.69% 5.09% 5.01%
Portfolio turnover rate 70% 85% 185% 114% 156%
</TABLE>
See footnote summary on page 59.
56
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
---------------------------------------------------------------
CLASS C
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.33 $9.86 $9.65 $9.18 $10.24
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .46(c) .47(c) .46(c) .47 .49
Net realized and unrealized gain (loss)
on investment transactions .34 .49 .24 .49 (1.05)
Net increase (decrease) in net asset
value from operations .80 .96 .70 .96 (.56)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.47) (.46) (.47) (.49)
Distributions in excess of net
investment income (.01) (.02) (.03) (.02) -0-
Distributions from net realized gains -0- -0- -0- -0- (.01)
Total dividends and distributions (.47) (.49) (.49) (.49) (.50)
Net asset value, end of year $10.66 $10.33 $9.86 $9.65 $9.18
TOTAL RETURN
Total investment return based on net
asset value (d) 7.98% 9.95% 7.37% 10.78% (5.63)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $17,531 $15,486 $13,996 $15,052 $18,198
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.65% 1.65% 1.70% 1.70% 1.15%
Expenses, before
waivers/reimbursements 1.99% 2.10% 2.14% 2.17% 2.15%
Net investment income, net of
waivers/reimbursements 4.41% 4.73% 4.69% 5.09% 4.99%
Portfolio turnover rate 70% 85% 185% 114% 156%
</TABLE>
See footnote summary on page 59.
57
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
VIRGINIA PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
APRIL 29,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.90 $10.58 $10.29 $9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .52(c) .57(c) .57(c) .56 .24
Net realized and unrealized gain (loss)
on investment transactions .49 .57 .37 .61 (.31)
Net increase (decrease) in net asset
value from operations 1.01 1.14 .94 1.17 (.07)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.52) (.57) (.57) (.56) (.24)
Distributions in excess of net
investment income (.05) -0- -0- (.01) -0-
Distributions from net realized gains (.32) (.25) (.08) -0- -0-
Total dividends and distributions (.89) (.82) (.65) (.57) (.24)
Net asset value, end of period $11.02 $10.90 $10.58 $10.29 $9.69
TOTAL RETURN
Total investment return based on net
asset value (d) 9.65% 11.32% 9.39% 12.46% (.71)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $10,315 $3,530 $2,455 $1,855 $1,249
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements .67% .67% .67% .67% .57%(e)
Expenses, before
waivers/reimbursements 2.09% 3.57% 5.18% 8.96% 12.29%(e)
Net investment income, net of
waivers/reimbursements 4.84% 5.39% 5.39% 5.59% 5.62%(e)
Portfolio turnover rate 62% 258% 298% 128% 65%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
APRIL 29,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.90 $10.57 $10.29 $9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .44(c) .50(c) .50(c) .49 .22
Net realized and unrealized gain (loss)
on investment transactions .49 .58 .36 .61 (.32)
Net increase (decrease) in net asset
value from operations .93 1.08 .86 1.10 (.10)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.50) (.50) (.49) (.21)
Distributions in excess of net
investment income (.06) -0- -0- (.01) -0-
Distributions from net realized gains (.32) (.25) (.08) -0- -0-
Total dividends and distributions (.82) (.75) (.58) (.50) (.21)
Net asset value, end of period $11.01 $10.90 $10.57 $10.29 $9.69
TOTAL RETURN
Total investment return based on net
asset value (d) 8.85% 10.70% 8.57% 11.67% (1.01)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,973 $5,020 $3,345 $1,193 $224
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.37% 1.37% 1.37% 1.37% 1.27%(e)
Expenses, before
waivers/reimbursements 2.84% 4.29% 5.88% 9.66% 12.99%(e)
Net investment income, net of
waivers/reimbursements 4.14% 4.68% 4.70% 4.80% 4.97%(e)
Portfolio turnover rate 62% 258% 298% 128% 65%
</TABLE>
See footnote summary on page 59.
58
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
VIRGINIA PORTFOLIO
-----------------------------------------------------------------
CLASS C
-----------------------------------------------------------------
APRIL 29,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.90 $10.57 $10.29 $9.70 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .44(c) .50(c) .50(c) .49 .21
Net realized and unrealized gain (loss)
on investment transactions .49 .58 .36 .60 (.30)
Net increase (decrease) in net asset
value from operations .93 1.08 .86 1.09 (.09)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.50) (.50) (.49) (.21)
Distributions in excess of net
investment income (.06) -0- -0- (.01) -0-
Distributions from net realized gains (.32) (.25) (.08) -0- -0-
Total dividends and distributions (.82) (.75) (.58) (.50) (.21)
Net asset value, end of period $11.01 $10.90 $10.57 $10.29 $9.70
TOTAL RETURN
Total investment return based on net
asset value (d) 8.85% 10.70% 8.58% 11.56% (.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4,597 $1,207 $642 $122 $43
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.37% 1.37% 1.37% 1.37% 1.27%(e)
Expenses, before
waivers/reimbursements 2.85% 4.25% 5.88% 9.66% 12.99%(e)
Net investment income, net of
waivers/reimbursements 4.11% 4.66% 4.73% 4.81% 4.67%(e)
Portfolio turnover rate 62% 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.
59
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, 1998, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Alliance Municipal Income Fund II
at September 30, 1998, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the indicated periods, in
conformity with generally accepted accounting principles.
New York, New York
October 29, 1998
FEDERAL TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In accordance with Federal tax law, the following table represents each
portfolio's designation of "exempt-interest dividends" and long-term capital
gain distributions paid during the fiscal year ended September 30, 1998.
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 1998 calendar year on Form
1099-DIV which will be mailed by January 31, 1999.
EXEMPT-INTEREST LONG-TERM CAPITAL
PORTFOLIO DIVIDENDS GAIN DISTRIBUTIONS
- --------- --------------- ------------------
Arizona 1,421,624 82,516
Florida 4,110,471 -0-
Massachusetts 1,808,434 156,756
Michigan 899,807 86,989
Minnesota 1,048,159 -0-
New Jersey 3,679,194 -0-
Ohio 2,632,907 -0-
Pennsylvania 3,695,405 -0-
Virginia 773,328 28,714
60
ALLIANCE MUNICIPAL INCOME FUND II
BOARD OF TRUSTEES
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
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
One 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.
61
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 Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
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 Strategic Balanced Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
62
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
