ALLIANCE INCOME FUND II
SEMI-ANNUAL REPORT
MARCH 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
May 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 March 31,
1998.
ALLIANCE MUNICIPAL INCOME FUND II - CLASS A SHARES
Periods Ended March 31, 1998
<TABLE>
<CAPTION>
6 MONTHS 12 MONTHS SINCE INCEPTION MORNINGSTAR
FUND PORTFOLIO LIPPER FUND PORTFOLIO LIPPER FUND PORTFOLIO LIPPER RATING
PORTFOLIO TOTAL RETURNS* RANKINGS** TOTAL RETURNS* RANKINGS** TOTAL RETURNS* RANKINGS** OVERALL***
- ------------ ---------------------------- --------------------------- --------------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Arizona 4.11% 6/39 11.70% 3/39 8.50% 2/22 4 stars
Florida 4.33% 10/64 11.97% 3/63 6.54% 2/26 5 stars
Massachusetts 4.72% 1/57 13.33% 1/56 10.13% 1/37 5 stars
Michigan 4.70% 2/55 13.33% 2/52 8.25% 1/33 4 stars
Minnesota 4.14% 3/47 11.82% 1/45 6.09% 3/22 3 stars
New Jersey 3.88% 13/59 11.41% 4/57 6.33% 2/26 4 stars
Ohio 4.56% 2/54 12.71% 1/52 6.57% 2/29 5 stars
Pennsylvania 3.82% 29/67 11.79% 5/67 6.87% 1/35 5 stars
Virginia 5.68% 1/34 14.52% 1/34 9.69% 1/26 5 stars
</TABLE>
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIODS
AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES. ALL FEES AND
EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO
ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE
PURCHASED OR REDEEMED. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
ADDITIONAL PERFORMANCE INFORMATION CAN BE FOUND ON PAGES 3 AND 4.
** SINCE INCEPTION LIPPER RANKINGS ARE BASED ON THE CLOSEST MONTH END TO EACH
PORTFOLIO'S INCEPTION DATE. FUNDS IN THE LIPPER AVERAGES GENERALLY HAVE SIMILAR
INVESTMENT OBJECTIVES, ALTHOUGH SOME MAY HAVE DIFFERENT INVESTMENT POLICIES.
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). AN
INVESTOR CANNOT INVEST DIRECTLY IN AN AVERAGE.
*** MORNINGSTAR PROPRIETARY RATINGS REFLECT HISTORICAL RISK-ADJUSTED
PERFORMANCE AS OF MARCH 31, 1998. THESE RATINGS MAY CHANGE MONTHLY AND ARE
CALCULATED FROM EACH PORTFOLIO'S 3-YEAR AVERAGE ANNUAL RETURNS IN EXCESS OF
90-DAY TREASURY BILL RETURNS WITH APPROPRIATE FEE ADJUSTMENTS AND A RISK FACTOR
THAT REFLECTS PORTFOLIO PERFORMANCE BELOW 90-DAY TREASURY BILL RETURNS. 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 5.
BECAUSE EACH OF THE PORTFOLIOS IS LESS THAN FIVE YEARS OLD, THE OVERALL
MORNINGSTAR RANKING REFLECTS THE THREE YEAR RATING AND IS THE ONLY RATING
ISSUED FOR EACH PORTFOLIO.
MARKET OVERVIEW
After a very strong fourth quarter of 1997, municipal bonds slightly
underperformed U.S. Treasuries in the first quarter of 1998. However, the
tax-exempt market performed well on an absolute basis, with prices generally
higher across all sectors. Our view is that this relative underperformance was
due to heavy new issuance by municipalities refinancing older, higher-coupon
debt, and by the reduced supply of U.S. Treasury debt caused by the lower
Federal deficit. A "flight to quality" by international investors into U.S.
Treasuries, resulting from the Asian financial crisis, also fueled the
outperformance of that market. In addition, the Asian crisis lowered investor
expectations for growth and inflation in the domestic economy, another positive
for the U.S. bond markets. The net result for the municipal market was a
range-bound, quiet market focused on new issues. Continuing positive investment
flows into tax-exempt mutual funds, combined with stronger than usual insurance
company demand, absorbed much of the new issuance without affecting prices.
1
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
A consistent trend through the first quarter was improving credit quality for
state and local debt issuers. With local economies benefiting from the recent
protracted period of economic expansion, municipalities are experiencing record
surpluses. In many cases, surpluses have greatly exceeded budget projections.
For example, New York City recently announced a record $2 billion surplus,
compared to recent years of projected deficits. Highlighting this trend was
Standard and Poor's upgrading of nine issues for every downgrade during the
first quarter. There is a possibility that local governments will use these
surpluses to pay down older, high cost debt, reducing overall supply in the
market. However, in the past, surpluses have tended to be used for new
projects, not debt reduction.
INVESTMENT STRATEGY
Due to the recent lack of volatility in the market and record low yields for
long term municipal bonds, there has been relatively little trading activity in
the Fund's portfolios since the beginning of the year. Our style of management
is contrarian in outlook, seeking value during periods of market turmoil. Since
1994, the Alliance Municipal Income Fund II's portfolios have had a
significantly longer duration than their peer group. As a result, these funds
dramatically outperformed most of their peers in the declining interest rate
environment of the last several years. More recently, because of gains in bond
prices, we have taken a slightly more defensive posture by investing in
securities with a shorter average duration. By positioning the funds for market
moves in either direction, we stand prepared to benefit if price volatility
once again returns to the tax-exempt market.
MARKET OUTLOOK
Market volatility is likely to increase during the second half of the Fund's
fiscal year. With the continuing strength of the U.S. economy, and the
relatively modest impact of the turmoil in Asia on corporate earnings, we could
begin to see weaker bond prices and an opportunity to once again reposition the
portfolios. We firmly believe that the environment for long term municipal bond
investors should be positive. It is clear that the Federal Reserve is committed
to curbing inflationary pressures. We view any backup in interest rates as an
excellent opportunity to lock in attractive yields and to improve long term
call protection. Looking ahead, we believe that interest rates will trend lower
over the long term and that municipal credit quality will continue to improve.
Overall, we believe that the investing environment will continue to be
excellent for municipal bond 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 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 SIX MONTHS
The Portfolios' Class A shares total returns for the periods ended March 31,
1998 are shown below. We have also shown, for comparison, returns for the
overall municipal bond market, represented by the unmanaged state specific
Lipper Municipal Debt Funds Average. Current yields and returns for Class B and
Class C shares are on the next page.
INVESTMENT RESULTS
MUNICIPAL INCOME FUND II - CLASS A SHARES COMPARED TO LIPPER MUNICIPAL
DEBT FUNDS AVERAGE*
Periods Ended March 31, 1998
FUND PORTFOLIO FUND PORTFOLIO
TOTAL RETURNS TOTAL RETURN
(AT NAV) LIPPER AVERAGE (AT NAV) LIPPER AVERAGE
6 MONTHS 6 MONTHS 12 MONTHS 12 MONTHS
------------- ------------- ------------- -------------
Arizona Portfolio 4.11% 3.55% 11.70% 9.95%
Florida Portfolio 4.33% 3.79% 11.97% 10.25%
Massachusetts Portfolio 4.72% 3.60% 13.33% 9.98%
Michigan Portfolio 4.70% 3.65% 13.33% 10.04%
Minnesota Portfolio 4.14% 3.46% 11.82% 9.54%
New Jersey Portfolio 3.88% 3.54% 11.41% 9.75%
Ohio Portfolio 4.56% 3.53% 12.71% 9.59%
Pennsylvania Portfolio 3.82% 3.75% 11.79% 10.24%
Virginia Portfolio 5.68% 3.96% 14.52% 10.69%
* TOTAL RETURNS FOR THE FUND'S PORTFOLIOS ARE BASED ON THE NET ASSET VALUE
OF CLASS A SHARES AS OF MARCH 31, 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.
3
INVESTMENT RESULTS
AS OF MARCH 31, 1998 ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------ TAXABLE
WITHOUT SALES CHARGE WITH SALES CHARGE EQUIVALENT
---------------------- ------------------- 30 DAY YIELD IN 36%
1 SINCE 1 SINCE SEC TAX BRACKET
YEAR INCEPTION YEAR INCEPTION YIELD* (AT NAV)
-------- ----------- ------ ----------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
ARIZONA PORTFOLIO
Class A 11.70% 8.50% 6.93% 7.29% 4.71% 8.84%
Class B 10.98% 7.76% 7.98% 7.76% 4.22% 7.76%
Class C 10.98% 7.76% 9.98% 7.76% 4.22% 7.76%
FLORIDA PORTFOLIO
Class A 11.97% 6.54% 7.22% 5.58% 4.90% 8.31%
Class B 11.19% 5.76% 8.19% 5.76% 4.39% 7.23%
Class C 11.19% 5.76% 10.19% 5.76% 4.41% 7.23%
MASSACHUSETTS PORTFOLIO
Class A 13.33% 10.13% 8.53% 8.95% 4.97% 9.69%
Class B 12.50% 9.36% 9.50% 9.36% 4.49% 8.58%
Class C 12.50% 9.37% 11.50% 9.37% 4.49% 8.58%
MICHIGAN PORTFOLIO
Class A 13.33% 8.25% 8.55% 7.12% 4.77% 8.65%
Class B 12.58% 7.50% 9.58% 7.50% 4.28% 7.55%
Class C 12.58% 7.50% 11.58% 7.50% 4.28% 7.55%
MINNESOTA PORTFOLIO
Class A 11.82% 6.09% 7.11% 5.13% 4.66% 9.03%
Class B 11.02% 5.30% 8.02% 5.30% 4.15% 7.82%
Class C 11.02% 5.30% 10.02% 5.30% 4.16% 7.82%
NEW JERSEY PORTFOLIO
Class A 11.41% 6.33% 6.69% 5.38% 4.38% 8.41%
Class B 10.62% 5.55% 7.62% 5.55% 3.83% 7.23%
Class C 10.62% 5.55% 9.62% 5.55% 3.87% 7.23%
OHIO PORTFOLIO
Class A 12.71% 6.57% 7.92% 5.61% 4.35% 8.73%
Class B 11.80% 5.79% 8.80% 5.79% 3.83% 7.57%
Class C 11.80% 5.79% 10.80% 5.79% 3.84% 7.57%
PENNSYLVANIA PORTFOLIO
Class A 11.79% 6.87% 7.02% 5.91% 4.69% 8.62%
Class B 11.01% 6.09% 8.01% 6.09% 4.18% 7.51%
Class C 11.01% 6.09% 10.01% 6.09% 4.20% 7.51%
VIRGINIA PORTFOLIO
Class A 14.52% 9.69% 9.63% 8.49% 4.46% 8.65%
Class B 13.68% 8.93% 10.68% 8.93% 3.96% 7.59%
Class C 13.68% 8.93% 12.68% 8.93% 3.95% 7.59%
</TABLE>
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares with and without the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Yields are for the 30 days ended March 31, 1998.
4
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(MARCH 31, 1998)
1 YEAR SINCE INCEPTION
-------- ----------------
ARIZONA PORTFOLIO
Class A 6.93% 7.29%
Class B 7.98% 7.76%
Class C 9.98% 7.76%
FLORIDA PORTFOLIO
Class A 7.22% 5.58%
Class B 8.19% 5.76%
Class C 10.19% 5.76%
MASSACHUSETTS PORTFOLIO
Class A 8.53% 8.95%
Class B 9.50% 9.36%
Class C 11.50% 9.37%
MICHIGAN PORTFOLIO
Class A 8.55% 7.12%
Class B 9.58% 7.50%
Class C 11.58% 7.50%
MINNESOTA PORTFOLIO
Class A 7.11% 5.13%
Class B 8.02% 5.30%
Class C 10.02% 5.30%
NEW JERSEY PORTFOLIO
Class A 6.69% 5.38%
Class B 7.62% 5.55%
Class C 9.62% 5.55%
OHIO PORTFOLIO
Class A 7.92% 5.61%
Class B 8.80% 5.79%
Class C 10.80% 5.79%
PENNSYLVANIA PORTFOLIO
Class A 7.02% 5.91%
Class B 8.01% 6.09%
Class C 10.01% 6.09%
VIRGINIA PORTFOLIO
Class A 9.63% 8.49%
Class B 10.68% 8.93%
Class C 12.68% 8.93%
SEC average annual total returns for the period shown reflect reinvestment of
all distributions and deduction of the maximum 4.25% front-end sales charges
and applicable contingent deferred sales charges.
5
ARIZONA PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-97.8%
ARIZONA-96.2%
AAA Glendale (Midwestern Univ)
Connie Lee Ser 96A
6.00%, 5/15/26 $ 1,415 $ 1,518,054
NR Goodyear Assessment
District Dist No. 1 Ser 96C
7.25%, 7/01/16 1,390 1,467,951
NR Hassayampa Cmnty Fac
Dist Spec Assessment Lien
Ser 96
7.75%, 7/01/21 4,975 5,181,811
AAA Maricopa Cnty GO
School Dist No. 28
(Kyrene Elem) FGIC Ser 95B
6.00%, 7/01/14 1,420 1,518,775
AAA Maricopa Cnty Hlth Fac Rev
(Catholic Healthcare West)
MBIA Ser 93
7.402%, 7/01/13 (a) 2,700 2,924,127
AA+ Maricopa Cnty IDR
(Citizens Utilities)
Ser 95 AMT
6.20%, 5/01/30 1,385 1,490,343
AA- Mohave Cnty IDR
(Cargill/North Star Steel)
Ser 95A AMT
6.70%, 3/01/20 3,825 4,282,394
AAA Mohave Cnty IDR
Hlth Care Rev
(Chris Ridge & Silver)
GNMA Ser 96
6.375%, 11/01/31 1,000 1,094,160
AAA Phoenix Arpt Rev (Sky
Harbor/Goodyear/Deer Valley)
MBIA Ser 94D AMT
6.30%, 7/01/10 1,385 1,524,317
AA+ Phoenix Excise Tax Rev
(Civic Plaza Bldg Corp)
Sr Lien Ser 94
6.00%, 7/01/12 1,015 1,096,545
AA Phoenix MFHR
(Woodstone & Silver Springs)
Asset Gty Ser 93
6.25%, 4/01/23 1,395 1,474,110
AAA Pima Cnty SFMR
GNMA/FNMA/FHLMC
Ser 97A AMT
6.25%, 11/01/30 2,750 2,921,600
AAA Tempe MFHR
(Quadrangles) FHA Ser 93
6.25%, 6/01/26 1,435 1,517,857
AAA Yuma MFHR
(Alexandrite Sands Apt)
FHA Ser 90 AMT
7.70%, 12/01/29 1,420 1,495,161
------------
29,507,205
PUERTO RICO-1.6%
BBB- Puerto Rico Port Auth
(American Airlines)
Ser 96A AMT
6.25%, 6/01/26 435 472,567
TOTAL INVESTMENTS-97.8%
(cost $29,221,174) 29,979,772
Other assets less liabilities-2.2% 689,946
NET ASSETS-100% $ 30,669,718
(a) Inverse floater security--security with variable or floating interest
rate that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
6
FLORIDA PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-98.9%
FLORIDA-85.7%
Aaa* Brevard Cnty Hsg Fin Auth
SFMR GNMA
Ser 94 AMT
6.70%, 9/01/27 $ 1,080 $ 1,157,133
NR Collier Cnty Fiddlers Creek
Cmnty Dev Dist Ser 96
7.50%, 5/01/18 14,055 14,936,951
BBB+ Collier Cnty Hlth Fac
(The Moorings) Ser 94
7.00%, 12/01/19 2,000 2,249,200
AAA Dade Cnty Arpt Rev
(Miami Int'l) MBIA
Ser 95B AMT
6.00%, 10/01/24 3,275 3,530,417
A3* Dade Cnty Spec Oblig
(Courthouse Ctr) Ser 95
6.10%, 4/01/20 3,000 3,212,010
AAA Escambia Cnty Hsg
Fin Auth
SFMR FNMA/GNMA
Ser 96B AMT
6.25%, 4/01/28 3,790 3,997,770
Baa1* Escambia Cnty PCR
(Champion Int'l Corp)
Ser 96 AMT
6.40%, 9/01/30 5,000 5,465,600
AAA Florida Hsg Fin Agy
MFHR
(Brittany of Rosemont)
AMBAC Ser 95G AMT
6.25%, 7/01/35 1,350 1,439,086
AAA Florida Hsg Fin Agy
MFHR
(Landings at Boot Ranch)
AMBAC Ser 95K AMT
6.10%, 11/01/35 2,050 2,161,930
AAA Florida Hsg Fin Agy
MFHR
(Turtle Creek Apts)
AMBAC Ser 96C AMT
6.20%, 5/01/36 3,245 3,447,131
AAA Florida Hsg Fin Agy
SFMR GNMA/FNMA
Ser 94B AMT
6.65%, 7/01/26 2,835 2,985,113
AAA Florida Hsg Fin Agy
SFMR GNMA/FNMA
Ser 95A AMT
6.65%, 1/01/24 6,720 7,266,739
AAA Hillsborough Cnty
Aviation Auth
(Tampa Int'l Arpt)
FGIC Ser 96A AMT
6.00%, 10/01/23 1,500 1,639,995
Aa3* North Miami Hlth Fac
Auth (Catholic Hlth
Svcs Oblig Grp)
Ser 96
6.00%, 8/15/24 1,200 1,265,268
NR Northern Palm Beach Cnty
(Abacoa)
Ser 96A
7.20%, 8/01/16 2,310 2,523,952
A+ Palm Beach Cnty IDR
(Geriatric Care Inc)
Ser 96
6.625%, 12/01/26 3,580 3,938,072
Aaa* Pinellas Cnty Hsg Fin Auth
SFMR GNMA/FNMA
Ser 94A AMT
6.55%, 8/01/27 3,130 3,325,437
NR St. Johns Cnty Julington
Creek Plantation Cmnty Dev
Dist Assessment
7.125%, 5/01/19 250 263,010
Baa2* Volusia Cnty Ed Fac Auth
(Embry-Riddle Aero Univ)
Ser 96A
6.125%, 10/15/26 3,770 3,999,744
AA Volusia Cnty Hlth Fac Auth
(John Knox Village)
Asset Gty Ser 96A
6.00%, 6/01/17 2,900 3,090,501
------------
71,895,059
CALIFORNIA-9.7%
A+ California GO
Ser 95 AMT
6.40%, 2/01/20 7,950 8,122,515
7
FLORIDA PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MASSACHUSETTS-1.7%
AAA Massachusetts Hsg Fin Agy
MFHR AMBAC
Ser 95E AMT
6.00%, 7/01/37 $ 1,420 $ 1,466,363
VIRGINIA-1.8%
A Alexandria MFHR
(Buckingham Village Apts)
Ser 96A AMT
6.15%, 1/01/29 1,460 1,531,817
TOTAL INVESTMENTS-98.9%
(cost $79,421,939) $ 83,015,754
Other assets less liabilities-1.1% 903,644
NET ASSETS-100% $ 83,919,398
* Moody's Rating.
See Glossary of Terms on page 17.
See notes to financial statements.
8
MASSACHUSETTS PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-97.6%
MASSACHUSETTS-82.2%
AAA Massachusetts Ed Fin Auth
(Educational Loan)
AMBAC Ser 94E AMT
6.00%, 1/01/12 $ 1,005 $ 1,058,255
AAA Massachusetts Hlth & Ed
Fac Auth (Beth Israel)
AMBAC Ser G-4
8.522%, 7/01/25 (a) 2,000 2,261,520
AAA Massachusetts Hlth & Ed
Fac Auth
(New England Med Ctr)
MBIA
6.48%, 7/01/18 (a) 5,000 5,112,500
AAA Massachusetts Hsg Fin Agy
MFHR AMBAC
Ser 95E AMT
6.00%, 7/01/37 1,260 1,301,139
AAA Massachusetts Hsg Fin Agy
MFHR FNMA Ser 92A
6.90%, 11/15/24 2,500 2,640,600
AAA Massachusetts Hsg Fin Agy
MFHR (Harbor Point)
AMBAC Ser 96A AMT
6.40%, 12/01/15 1,790 1,932,770
A+ Massachusetts Hsg Fin Agy
SFMR Ser 40 AMT
6.65%, 12/01/27 4,980 5,382,284
A3* Massachusetts Ind Fin Agy
(Brooks School)
Ser 93
5.95%, 7/01/23 1,845 1,924,077
AAA Massachusetts Ind Fin Agy
(Heights Crossing)
FHA Ser 95 AMT
6.15%, 2/01/35 1,840 1,931,117
AAA Massachusetts Muni
Wholesale Elec Pwr
Supply Sys
MBIA Ser 92A
6.00%, 7/01/18 1,850 1,927,681
AAA Massachusetts Port Auth
Spec Fac (Bosfuel Corp)
MBIA Ser 97 AMT
6.00%, 7/01/36 1,815 1,926,151
AAA Massachusetts Port Auth
Spec Fac (US Air)
MBIA Ser 96A AMT
5.875%, 9/01/23 1,835 1,928,989
A1* New England Ed Loan Mktg
Ser 93H AMT
6.90%, 11/01/09 2,450 2,751,913
------------
32,078,996
ARIZONA-3.2%
NR Hassayampa Cmnty Fac
Dist Spec Assessment Lien
Ser 96
7.75%, 7/01/21 1,205 1,255,092
CALIFORNIA-7.8%
NR Fontana Spec Tax Cmnty
Fac Dist No. 3
(Hunters Ridge)
Ser 90A
8.70%, 10/01/15 1,320 1,387,518
NR Los Angeles Cnty Cmnty Fac
Dist No. 92-1
(Castaic Union SD Northlake)
Ser 92
9.00%, 10/01/19 1,550 1,644,364
------------
3,031,882
PUERTO RICO-4.4%
BBB- Puerto Rico Port Auth
(American Airlines)
Ser 96A AMT
6.25%, 6/01/26 1,600 1,738,176
TOTAL INVESTMENTS-97.6%
(cost $37,207,777) 38,104,146
Other assets less liabilities-2.4% 924,175
NET ASSETS-100% $ 39,028,321
* Moody's Rating.
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
9
MICHIGAN PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-97.7%
MICHIGAN-83.2%
AAA Detroit Sew Disp Rev
FGIC Ser 93A
7.618%, 7/01/23 (a) $ 3,460 $ 3,713,168
AAA Grand Rapids Swr Sys
MBIA Ser 92
6.00%, 1/01/22 1,000 1,052,360
Aa2* Independence
MFHR
(Greenery Health)
FHA Ser 97A
6.15%, 8/01/17 1,850 2,017,166
AAA Kalamazoo Hosp Fin Auth
Hosp Rev
(Borgess Med Ctr)
FGIC Ser 94A
6.538%, 6/01/11 (a) 1,025 1,055,535
AAA Kent Cnty Arpt Fac
(Kent Cnty Int'l)
Ser 95 AMT
6.10%, 1/01/25 990 1,048,301
AAA Michigan Hosp Fin Auth
Hosp Rev (St Johns)
AMBAC Ser 92A
6.00%, 5/15/13 985 1,053,448
AA+ Michigan Hsg Dev Auth
SFMR Mortgage Rev
FHA Ser 96B AMT
6.20%, 6/01/27 345 359,214
AA+ Michigan Hsg Dev Auth
SFMR Mortgage Rev
Ser 95B AMT
7.05%, 6/01/26 2,760 2,880,612
AAA Michigan Strategic Fund
PCR (Detroit Edison)
MBIA Ser 95AA
6.40%, 9/01/25 955 1,055,160
A Michigan Strategic Fund
PCR (General Motors)
Ser 95
6.20%, 9/01/20 975 1,057,651
A** Romulus Tax Increment
Fin Auth Ser 94
6.75%, 11/01/19 1,585 1,743,975
AA Troy Downtown Dev Auth
Asset Gty Ser 95A
6.375%, 11/01/18 965 1,055,295
------------
18,091,885
ARIZONA-9.6%
NR Goodyear Assessment
District Dist No.1 Ser 96C
7.25%, 7/01/16 1,010 1,066,641
NR Hassayampa Cmnty
Fac Dist
Spec Assessment Lien Ser 96
7.75%, 7/01/21 970 1,010,323
------------
2,076,964
FLORIDA-4.9%
NR Collier Cnty Fiddlers Creek
Cmnty Dev Dist Ser 96
7.50%, 5/01/18 1,000 1,062,750
TOTAL INVESTMENTS-97.7%
(cost $20,622,974) 21,231,599
Other assets less liabilities-2.3% 502,879
NET ASSETS-100% $ 21,734,478
* Moody's Rating.
** Fitch's Rating.
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
10
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-99.0%
MINNESOTA LONG TERM MUNICIPAL BONDS-92.3%
A Bass Brook PCR
(Minn Power & Light)
Ser 92
6.00%, 7/01/22 $ 1,110 $ 1,156,121
AAA Duluth Arpt Lease St
Secured GO
Ser 95C AMT
6.25%, 8/01/14 1,060 1,141,037
Aaa* Eagan MFHR
(Woodridge Apts) GNMA
Ser 97A
5.95%, 2/01/32 1,095 1,156,670
Aaa* Little Canada MFHR
(Cedars Lakeside) GNMA
Ser 97A
5.95%, 2/01/32 1,095 1,156,670
Aaa* Minneapolis & St. Paul
Hsg & Redev Auth
SFMR GNMA/FNMA
Ser 96B
5.125%, 6/01/32 1,100 1,100,000
A- Minneapolis Common Bond
Fund Cmnity Dev Agy
Ser 95-2 AMT
6.625%, 12/01/15 1,245 1,346,990
A- Minneapolis Common Bond
Fund Cmnty Dev Agy
Ser 97-2 AMT
6.20%, 6/01/17 1,795 1,908,336
AAA Minneapolis COP Spec
School Dist No. 1
MBIA Ser 96A
5.90%, 2/01/17 1,115 1,179,246
NR Minnesota Agric & Econ
Dev Brd
(Small Business Loan Prog)
Ser 96A AMT
6.75%, 8/01/16 1,450 1,586,068
NR Minnesota Agric & Econ
Dev Brd
(Small Business Loan Prog)
Ser 96B AMT
7.00%, 8/01/16 750 796,935
Baa1* Minnesota Higher Ed Fac
Auth (Hamline Univ)
Ser 4-I
6.00%, 10/01/16 790 838,514
AA+ Minnesota Hsg Fin Agy
SFMR
Ser 96G AMT
6.25%, 7/01/26 175 184,916
AA+ Minnesota Hsg Fin Agy
SFMR FHA
Ser 89A AMT
7.90%, 7/01/19 2,605 2,690,757
AA+ Rochester Hlth Care Fac
(Mayo Med Ctr) Ser 92H
8.229%, 11/15/15 (a) 3,000 3,454,890
BBB South St. Paul Hosp Rev
(Health East)
Ser 94
6.75%, 11/01/09 1,060 1,160,626
AAA St. Francis GO
Ind School Dist No. 15
CGIC Ser 95A
6.375%, 2/01/16 1,000 1,120,370
TOTAL MINNESOTA LONG TERM MUNICIPAL BONDS
(cost $20,732,375) 21,978,146
SHORT TERM MUNICIPAL NOTES-6.7%
A-1 Golden Valley IDR
(Unicare Homes)
Ser 84 VRDN (b)
3.80%, 9/01/14 500 500,000
A-1 St. Paul Hsg & Redev Auth
MFHR
(Kendrick Apts)
Ser 97 AMT VRDN (b)
3.80%, 1/01/27 600 600,000
A-1 Waconia IDR
(Milltronics Mfg Co)
Ser 95 AMT VRDN (b)
3.80%, 10/01/16 485 485,000
11
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
VALUE
- -------------------------------------------------------------------------------
TOTAL SHORT TERM MUNICIPAL NOTES
(cost $1,585,000) $ 1,585,000
TOTAL INVESTMENTS-99.0%
(cost $22,317,375) $ 23,563,146
Other assets less liabilities-1.0% 248,301
NET ASSETS-100% $ 23,811,447
* Moody's Rating.
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
(b) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as prime
interest rate). This instrument is payable on demand and is secured by letters
of credit or other credit support agreements from major banks.
See Glossary of Terms on page 17.
See notes to financial statements.
12
NEW JERSEY PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-98.5%
NEW JERSEY-91.3%
AAA Essex Cnty Imp Auth Util
Rev (Orange Twp)
MBIA Ser 93
6.00%, 12/01/17 $ 2,510 $ 2,667,929
BBB- New Jersey Eco Dev
(American Airlines) AMT
7.10%, 11/01/31 4,500 4,924,710
A+ New Jersey Eco Dev
(Anheuser-Busch)
Ser 95 AMT
5.85%, 12/01/30 3,610 3,819,849
AAA New Jersey Eco Dev
(Hackensack Wtr Co) MBIA
Ser 94B AMT
5.90%, 3/01/24 3,250 3,389,425
AAA New Jersey Eco Dev
(NJ American Wtr Co)
FGIC AMT
6.875%, 11/01/34 3,000 3,382,260
AAA New Jersey Eco Dev
(Pub Ser Elec & Gas) MBIA
Ser 94A AMT
6.40%, 5/01/32 3,455 3,724,697
BBB New Jersey Hlth Care Fac
(Englewood Hosp) Ser 94
6.75%, 7/01/24 4,230 4,677,365
BBB New Jersey Hlth Care Fac
(Franciscan Sisters,
St. Mary's Hosp) Ser 93
5.875%, 7/01/12 2,755 2,835,639
AAA New Jersey Hlth Care Fac
(Monmouth Med Ctr)
CGIC Ser C
6.25%, 7/01/24 2,750 2,964,858
AAA New Jersey Hsg & Mtg
MFHR AMBAC
Ser 96A AMT
6.25%, 5/01/28 4,145 4,409,202
A+ New Jersey Hsg & Mtg
MFHR (Sect 8) Ser 1
6.70%, 11/01/28 8,500 9,138,010
AAA New Jersey Hsg & Mtg
SFMR MBIA
Ser 95O AMT
6.35%, 10/01/27 5,000 5,343,050
AAA Passaic Valley Sewer
AMBAC Ser 92D
5.75%, 12/01/15 3,400 3,550,518
AAA Port Auth of NY & NJ
(JFK Int'l Airport)
MBIA Ser 6 AMT
5.75%, 12/01/22 7,590 7,978,077
AA- Port Auth of NY & NJ
95th Ser AMT
6.125%, 7/15/29 3,625 3,885,021
AA- Salem Cnty NJ Waste
Disposal Auth (E.I. Dupont)
Ser 92A AMT
6.125%, 7/15/22 3,500 3,707,865
BBB South Jersey Transportation
Auth NJ Lease Rev
(Raytheon Aircraft Service)
Ser 97A AMT
6.15%, 1/01/22 500 536,545
AAA Vineland NJ Sewer Auth
(Landis) FGIC Ser 93C
7.37%, 9/19/19 (a) 3,250 3,694,795
------------
74,629,815
FLORIDA-7.2%
NR Collier Cnty Fiddlers Creek
Cmnty Dev Dist
Ser 96
7.50%, 5/01/18 2,125 2,258,344
NR Collier Cnty Heritage Greens
Cmnty Dev Dist
Ser 96
8.25%, 5/01/18 3,440 3,586,682
------------
5,845,026
TOTAL INVESTMENTS-98.5%
(cost $75,579,701) 80,474,841
Other assets less liabilities-1.5% 1,236,458
NET ASSETS-100% $ 81,711,299
(a) Inverse floater security--security with variable or floating interest
rate that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
13
OHIO PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-99.0%
OHIO-95.1%
BBB Akron (Akron Municipal
Baseball Stad) Ser 96
Zero Coupon, 12/01/16 $ 5,000 $ 4,441,050
BBB- Butler Cnty Hosp Rev
(Fort Hamilton Hughes)
7.50%, 1/01/10 1,400 1,536,738
AAA Cuyahoga Cnty Hosp Rev
(Meridia Health Sys)
Ser 95
6.25%, 8/15/24 2,320 2,636,819
AAA Cuyahoga Cnty MFHR
(Nat'l Terminal Apts)
FNMA Ser 96 AMT
6.40%, 7/01/16 5,180 5,595,643
BBB Dayton Spec Fac Rev
(Emery Air Freight)
Ser 96D AMT
6.20%, 10/01/09 2,320 2,520,935
BBB Hamilton Cnty Hlth Sys
(Franciscan Sisters
Providence) Ser 92
6.875%, 7/01/15 2,000 2,150,140
Aaa* Kent Ohio MFHR
(Silver Meadows Apt)
GNMA Ser 95 AMT
7.15%, 12/20/26 2,440 2,725,358
NR Mahoning Valley Sanitary
Dist Ser 94
7.75%, 5/15/14 1,500 1,690,515
BBB+ Ohio Air Quality Dev Auth
(Columbus Southern Pwr)
Ser 85B
6.25%, 12/01/20 2,620 2,779,899
AAA Ohio Air Quality Dev Auth
(JMG Funding/Ohio Pwr)
AMBAC Ser 94B AMT
6.375%, 4/01/29 2,150 2,330,922
BB+ Ohio Air Quality Dev Auth
(Toledo Edison Co)
Ser 97A AMT
6.10%, 8/01/27 5,000 5,237,050
AAA Ohio Capital Corp MFHR
(Sect 8)
FHA MBIA Ser 95E
6.35%, 1/01/22 1,775 1,895,736
Aa2* Ohio Hsg Fin Agy MFHR
(Insured Bridgeview Villa II)
FHA AMT
6.45%, 12/01/33 1,965 2,071,700
AAA Ohio Hsg Fin Agy SFMR
GNMA Ser 94 B2 AMT
6.70%, 3/01/25 5,710 6,124,203
AAA Ohio Hsg Fin Agy SFMR
GNMA Ser 97 A1 AMT
6.15%, 3/01/29 5,940 6,273,947
BB+ Ohio St Wtr Dev Auth
(Cleveland Electric)
Ser 97A AMT
6.10%, 8/01/20 2,000 2,094,820
A Ohio St Wtr Dev Auth
(North Star/BHP) AMT
6.45%, 9/01/20 2,255 2,452,854
------------
54,558,329
PUERTO RICO-3.9 %
BBB- Puerto Rico Port Auth
(American Airlines)
Ser 96A AMT
6.25% 6/01/26 2,075 2,254,197
TOTAL INVESTMENTS-99.0%
(cost $53,437,078) 56,812,526
Other assets less liabilities-1.0 % 551,911
NET ASSETS-100% $ 57,364,437
* Moody's Rating.
See Glossary of Terms on page 17.
See notes to financial statements.
14
PENNSYLVANIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-99.0%
PENNSYLVANIA-84.0%
AAA Allegheny Cnty Arpt Rev
(Pittsburgh Int'l) FSA
Ser 92B AMT
6.625%,1/01/22 $ 3,315 $ 3,597,902
BBB- Allegheny Cnty IDR
(USX) Ser 96
6.10%, 1/15/18 3,530 3,735,552
A- Bradford Cnty IDR
Solid Waste Disp Rev
(Int'l Paper) Ser 95A AMT
6.60%, 3/01/19 2,500 2,782,250
BBB+ Cumberland Cnty
Municipal Auth Rev
(Presbyterian Homes Inc)
Ser 96
6.00%, 12/01/26 3,000 3,101,970
A New Morgan IDR
Solid Waste Disp Rev
(Browning-Ferris)
Ser 94 AMT
6.50%, 4/01/19 4,000 4,356,080
BBB- Pennsylvania Econ Dev
(Macmillan Bloedel Clarion)
Ser 95 AMT
7.60%, 12/01/20 5,000 5,467,750
BBB Pennsylvania Econ Dev
(Sun Co Inc)
Ser 94A AMT
7.60%, 12/01/24 4,065 4,740,847
AAA Pennsylvania Higher Ed
Student Loan AMBAC
Ser 88D AMT
6.05%, 1/01/19 3,520 3,678,893
AA+ Pennsylvania Hsg Fin Agy
SFMR Ser 92 35D AMT
8.273%, 4/01/25(a) 9,500 10,256,390
AA+ Pennsylvania Hsg Fin Agy
SFMR Ser 94 41B AMT
6.65%, 4/01/25 5,000 5,367,750
AAA Pennsylvania Turnpike
AMBAC Ser 94A
6.00%, 12/01/19 3,000 3,210,720
AAA Philadelphia Arpt Rev
AMBAC Ser 95A AMT
6.10%, 6/15/25 3,515 3,764,881
A- Philadelphia Hosp Rev
(Temple Univ) Ser 93A
6.625%, 11/15/23 3,250 3,581,792
AAA Pittsburgh Urban Redev
SFMR
FHA/GNMA/FNMA
Ser 97A AMT
6.25%, 10/01/28 1,200 1,272,492
AAA Pittsburgh Urban Redev
SFMR
Ser 95A AMT
7.15%, 10/01/27 520 566,545
AA Potter Cnty Hosp Auth
(Charles Cole Memorial)
Asset Gty Ser 96
6.05%, 8/01/24 3,615 3,845,927
BBB+ Warren Cnty Hosp Auth
(Warren Gen) Ser 94A
7.00%, 4/01/19 2,200 2,437,644
------------
65,765,385
FLORIDA-13.1%
NR Collier Cnty Heritage Greens
Cmnty Dev Dist Ser 96
8.25%, 5/01/18 2,560 2,669,158
NR St. Johns Cnty
Julington Creek Plantation
Cmnty Dev Dist Assessment
Ser 97
7.125%, 5/01/19 7,215 7,590,469
------------
10,259,627
PUERTO RICO-1.9%
BBB- Puerto Rico Port Auth
(American Airlines)
Ser 96A AMT
6.25%, 6/01/26 1,365 1,482,881
TOTAL INVESTMENTS-99.0%
(cost $72,932,059) 77,507,893
Other assets less liabilities-1.0% 822,105
NET ASSETS-100% $ 78,329,998
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
15
VIRGINIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS (000) VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-97.6%
VIRGINIA-82.2%
A Alexandria MFHR
(Buckingham Village Apts)
Ser 96A AMT
6.15%, 1/01/29 $ 660 $ 692,465
A+ Giles Cnty IDR
(Hoechst Celanese Corp)
Ser 96 AMT
6.45%, 5/01/26 640 708,256
AAA Harrisonburg MFHR
(Battery Heights Assoc)
GNMA Ser 96A
6.25%, 4/20/36 640 685,837
AAA Harrisonburg MFHR
(Greens of Salem Run) FSA
Ser 97 AMT
6.30%, 4/01/29 615 662,023
A Henrico Cnty IDR Solid
Waste Rev (Browning-Ferris)
Ser 97A AMT
5.875%, 3/01/17 635 669,341
A- Isle of Wight Cnty Solid
Waste Rev (Union Camp Corp)
Ser 94 AMT
6.55%, 4/01/24 640 705,261
A+ James City Cnty Solid
Waste Rev (Anheuser Busch)
Ser 97 AMT
6.00%, 4/01/32 665 701,808
AAA Newport News MFHR
(Mennowood Cmntys)
GNMA Ser 96A
6.25%, 8/01/36 620 666,883
NR Staunton Ed Fac
(Mary Baldwin College)
Ser 96
6.75%, 11/01/21 2,365 2,622,051
AAA Suffolk MFHR
(Prince William Commons)
FNMA Ser 96A AMT
6.50%, 6/01/29 635 684,581
AA Virginia Beach Hlth Care
(Sentara Bayside Hosp)
6.30%, 11/01/21 610 647,735
AA+ Virginia Hsg Dev Auth
SFMR
(Commonwealth Mtg)
Ser 96B AMT
6.375%, 1/01/26 2,285 2,394,132
------------
11,840,373
CALIFORNIA-5.0%
NR Los Angeles Cnty Cmnty
Fac Dist No. 92-1
(Castaic Union SD/
Northlake Proj.)
Ser 92
9.00%, 10/01/19 670 710,790
MICHIGAN-10.4%
AAA Detroit Sewage Disp Rev
FGIC Ser 93A
7.618%, 7/01/23 (a) 1,400 1,502,438
TOTAL INVESTMENTS-97.6%
(cost $13,635,325) 14,053,601
Other assets less liabilities-2.4% 352,285
NET ASSETS-100% $ 14,405,886
(a) Inverse floater security--security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See Glossary of Terms on page 17.
See notes to financial statements.
16
GLOSSARY OF TERMS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax--Subject to
CGIC Capital Guaranty Insurance Company
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
17
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998 (UNAUDITED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSETTS MICHIGAN
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost: $29,221,174, $79,421,939,
$37,207,777, $20,622,974, $22,317,375,
$75,579,701, $53,437,078, $72,932,059,
$13,635,325 respectively) $ 29,979,772 $ 83,015,754 $ 38,104,146 $ 21,231,599
Cash -0- -0- 2,127 10,961
Interest receivable 492,548 1,634,580 700,175 313,078
Receivable for shares of beneficial
interest sold 332,636 659,338 664,922 444,030
Receivable due from Adviser 1,667 -0- 10,393 6,427
Other assets 10,400 3,368 7,068 5,127
Total assets 30,817,023 85,313,040 39,488,831 22,011,222
LIABILITIES
Due to custodian 9,273 11,145 -0- -0-
Dividends payable 45,502 118,845 61,778 30,373
Distribution fee payable 14,565 55,331 22,581 13,954
Payable for shares of beneficial
interest redeemed 100 72,992 104,267 -0-
Advisory fee payable -0- 10,123 -0- -0-
Payable for investment securities purchased -0- 1,048,322 200,787 163,263
Accrued expenses and other liabilities 77,865 76,884 71,097 69,154
Total liabilities 147,305 1,393,642 460,510 276,744
NET ASSETS $ 30,669,718 $ 83,919,398 $ 39,028,321 $ 21,734,478
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 28,542 $ 81,455 $ 34,834 $ 20,819
Additional paid-in capital 29,889,495 85,511,380 37,919,695 20,897,703
Distributions in excess of net
investment income (59,298) (132,456) (80,752) (61,348)
Accumulated net realized gain (loss) on
investment transactions 52,381 (5,134,796) 258,175 268,679
Net unrealized appreciation of investments 758,598 3,593,815 896,369 608,625
$ 30,669,718 $ 83,919,398 $ 39,028,321 $ 21,734,478
CLASS A SHARES
Net assets $ 18,515,627 $ 25,189,395 $ 14,933,022 $ 6,847,190
Shares of beneficial interest outstanding 1,723,115 2,444,893 1,332,509 655,646
CLASS B SHARES
Net assets $ 9,835,068 $ 30,320,007 $ 12,225,628 $ 7,406,055
Shares of beneficial interest outstanding 915,239 2,943,048 1,091,321 709,532
CLASS C SHARES
Net assets $ 2,319,023 $ 28,409,996 $ 11,869,671 $ 7,481,233
Shares of beneficial interest outstanding 215,804 2,757,567 1,059,553 716,762
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share $10.75 $10.30 $11.21 $10.44
Sales charge--4.25% of public offering price .48 .46 .50 .46
Maximum offering price $11.23 $10.76 $11.71 $10.90
CLASS B SHARES
Net asset value and offering price per share $10.75 $10.30 $11.20 $10.44
CLASS C SHARES
Net asset value and offering price per share $10.75 $10.30 $11.20 $10.44
</TABLE>
18
See notes to financial statements.
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
------------- ------------ ------------ ------------ ------------
<C> <C> <C> <C> <C>
$ 23,563,146 $ 80,474,841 $ 56,812,526 $ 77,507,893 $ 14,053,601
68,124 63,690 -0- -0- 44,436
299,603 1,622,739 706,653 1,832,264 285,702
23,074 176,935 549,607 114,748 61,825
24,512 -0- -0- -0- 41,937
3,180 3,180 3,330 4,333 6,586
23,981,639 82,341,385 58,072,116 79,459,238 14,494,087
-0- -0- 95,324 64,915 -0-
33,336 109,160 76,962 113,668 20,636
16,847 58,655 41,646 49,509 8,755
45,776 169,820 3,862 170,812 -0-
-0- 14,652 4,644 28,461 -0-
-0- 195,713 400,571 611,085 -0-
74,233 82,086 84,670 90,790 58,810
170,192 630,086 707,679 1,129,240 88,201
$ 23,811,447 $ 81,711,299 $ 57,364,437 $ 78,329,998 $ 14,405,886
$ 23,557 $ 79,487 $ 55,432 $ 75,000 $ 13,224
23,981,619 80,854,540 56,937,555 75,532,886 13,872,156
(51,478) (116,726) (95,116) (154,099) (31,069)
(1,388,022) (4,001,142) (2,908,882) (1,699,623) 133,299
1,245,771 4,895,140 3,375,448 4,575,834 418,276
$ 23,811,447 $ 81,711,299 $ 57,364,437 $ 78,329,998 $ 14,405,886
$ 5,430,751 $ 17,788,490 $ 10,845,058 $ 28,363,923 $ 5,327,622
537,298 1,730,459 1,047,946 2,715,690 488,956
$ 11,270,645 $ 41,460,265 $ 31,479,828 $ 33,976,446 $ 7,200,169
1,115,038 4,033,416 3,041,994 3,253,330 661,002
$ 7,110,051 $ 22,462,544 $ 15,039,551 $ 15,989,629 $ 1,878,095
703,404 2,184,811 1,453,303 1,531,013 172,442
$10.11 $10.28 $10.35 $10.44 $10.90
.45 .46 .46 .46 .48
$10.56 $10.74 $10.81 $10.90 $11.38
$10.11 $10.28 $10.35 $10.44 $10.89
$10.11 $10.28 $10.35 $10.44 $10.89
</TABLE>
19
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSSETTS MICHIGAN
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 731,846 $ 2,235,709 $ 874,450 $ 546,648
EXPENSES
Advisory fee 77,908 233,518 92,257 58,322
Distribution fee- Class A 22,489 31,714 17,170 9,205
Distribution fee- Class B 39,882 134,047 44,878 31,298
Distribution fee- Class C 9,805 133,866 45,469 31,330
Custodian 40,628 42,294 44,842 41,940
Administrative 27,500 27,500 27,500 27,500
Transfer agency 10,200 21,650 12,047 12,316
Amortization of organization expenses 4,448 7,311 3,556 2,839
Audit & legal 2,092 31,210 8,680 4,512
Registration 1,698 192 931 2,106
Trustees' fees 1,092 1,092 1,092 1,092
Printing 172 9,098 98 1,140
Miscellaneous 1,170 1,822 1,141 738
Total expenses 239,084 675,314 299,661 224,338
Less: expenses waived and reimbursed
by Adviser (see Note B) (107,075) (215,026) (130,150) (90,917)
Net expenses 132,009 460,288 169,511 133,421
Net investment income 599,837 1,775,421 704,939 413,227
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investment
transactions 71,780 26,448 273,094 281,837
Net change in unrealized appreciation
of investments 270,711 1,099,096 258,384 83,277
Net gain on investments 342,491 1,125,544 531,478 365,114
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 942,328 $ 2,900,965 $ 1,236,417 $ 778,341
</TABLE>
See notes to financial statements.
20
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
------------- ------------- ------------- ------------- -------------
<C> <C> <C> <C> <C>
$ 629,984 $ 2,303,888 $ 1,548,317 $ 2,289,270 $ 329,550
67,385 246,492 165,089 231,022 36,370
7,044 25,405 13,612 39,533 6,385
48,948 200,214 144,694 158,209 29,447
35,390 109,492 74,074 79,651 7,463
41,480 45,316 45,864 46,530 41,720
27,500 27,500 27,500 27,500 27,500
13,996 30,072 21,154 26,252 12,523
6,892 6,892 7,205 9,349 2,856
7,392 26,358 17,458 32,714 2,940
336 938 49 728 497
1,092 1,092 1,092 1,092 1,092
1,296 12,220 8,456 7,858 546
1,036 1,570 980 1,974 1,295
259,787 733,561 527,227 662,412 170,634
(119,399) (191,367) (174,537) (143,174) (105,808)
140,388 542,194 352,690 519,238 64,826
489,596 1,761,694 1,195,627 1,770,032 264,724
29,866 150,971 178,217 174,576 135,888
271,582 795,219 771,552 607,182 198,169
301,448 946,190 949,769 781,758 334,057
$ 791,044 $ 2,707,884 $ 2,145,396 $ 2,551,790 $ 598,781
</TABLE>
21
STATEMENTS OF CHANGES IN NET ASSETS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
ARIZONA FLORIDA MASSACHUSETTS
---------------------------- ---------------------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $ 599,837 $ 696,598 $ 1,775,421 $ 3,340,631 $ 704,939 $ 771,410
Net realized gain on
investment transactions 71,780 377,624 26,448 1,247,758 273,094 489,674
Net change in unrealized
appreciation of investments 270,711 238,359 1,099,096 1,354,893 258,384 391,030
Net increase in net assets
from operations 942,328 1,312,581 2,900,965 5,943,282 1,236,417 1,652,114
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (401,745) (367,913) (566,226) (847,240) (313,264) (288,776)
Class B (186,993) (263,634) (625,558) (1,112,789) (217,420) (229,220)
Class C (46,164) (65,051) (624,374) (1,346,149) (220,896) (253,414)
Distributions in excess of net
investment income
Class A -0- (1,655) -0- -0- -0- (9,236)
Class B -0- (3,731) -0- -0- -0- (10,381)
Class C -0- (1,548) -0- -0- -0- (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) 13,194,634 6,630,877 14,776,514 (1,231,836) 14,495,812 12,483,327
Total increase 13,138,991 7,212,938 15,861,321 1,405,268 14,522,438 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 period $ 30,669,718 $ 17,530,727 $ 83,919,398 $ 68,058,077 $ 39,028,321 $ 24,505,883
</TABLE>
See notes to financial statements.
22
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY
---------------------------- ---------------------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $ 413,227 $ 704,500 $ 489,596 $ 923,160 $ 1,761,694 $ 3,411,310
Net realized gain on
investment transactions 281,837 539,839 29,866 275,164 150,971 1,486,965
Net change in unrealized
appreciation of investments 83,277 227,908 271,582 499,706 795,219 1,808,118
Net increase in net assets
from operations 778,341 1,472,247 791,044 1,698,030 2,707,884 6,706,393
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (162,450) (307,066) (125,232) (199,592) (429,557) (748,666)
Class B (144,895) (192,911) (225,734) (384,953) (874,612) (1,683,216)
Class C (145,863) (204,523) (163,564) (338,557) (478,368) (979,428)
Distributions in excess of net
investment income
Class A -0- (9,747) -0- (1,867) -0- (10,862)
Class B -0- (7,521) -0- (555) -0- (20,887)
Class C -0- (7,811) -0- -0- -0- (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) 5,646,588 2,037,957 3,540,135 1,213,302 4,764,892 (4,431,769)
Total increase (decrease) 5,509,471 2,608,749 3,816,649 1,985,808 5,690,239 (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 period $ 21,734,478 $ 16,225,007 $ 23,811,447 $ 19,994,798 $ 81,711,299 $ 76,021,060
</TABLE>
See notes to financial statements.
23
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
<TABLE>
<CAPTION>
OHIO PENNSYLVANIA VIRGINIA
---------------------------- ---------------------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $ 1,195,627 $ 2,282,278 $ 1,770,032 $ 3,351,390 $ 264,724 $ 389,032
Net realized gain on
investment transactions 178,217 971,673 174,576 934,665 135,888 306,700
Net change in unrealized
appreciation of investments 771,552 1,589,495 607,182 2,363,863 198,169 157,573
Net increase in net assets
from operations 2,145,396 4,843,446 2,551,790 6,649,918 598,781 853,305
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (237,419) (345,718) (710,121) (1,258,375) (112,054) (155,809)
Class B (654,493) (1,189,291) (742,856) (1,421,685) (136,200) (186,794)
Class C (335,375) (703,427) (374,373) (671,330) (34,558) (46,429)
Distributions in excess of net
investment income
Class A -0- -0- -0- (30,406) -0- (12)
Class B -0- -0- -0- (39,276) -0- (1,795)
Class C -0- -0- -0- (16,414) -0- (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) 7,151,309 (1,900,553) 7,093,428 1,759,900 4,638,875 3,021,558
Total increase 8,069,418 704,457 7,817,868 4,972,332 4,648,265 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 period $ 57,364,437 $ 49,295,019 $ 78,329,998 $ 70,512,130 $ 14,405,886 $ 9,757,621
</TABLE>
See notes to financial statements.
24
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998 (UNAUDITED) 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 generally
valued at the last reported sale price 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 prices provided by two or more dealers regularly making a
market in such securities. U.S. government securities and other debt securities
which mature in 60 days or less are valued at amortized cost unless this method
does not represent fair value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by, or
in accordance with procedures approved by, the Board of Directors. Fixed income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair value of such securities.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $68,000 for the Minnesota, $68,000 for
the New Jersey, $87,200 for the Pennsylvania, $71,000 for the Ohio, and $72,000
for the Florida Portfolios have been deferred and are being amortized on a
straight-line basis through June, 1998. Organization expenses of approximately
$25,550 for the Michigan, $31,450 for the Massachusetts, $27,200 for the
Virginia and $41,750 for the Arizona Portfolios have been deferred and are
being amortized on a straight-line basis through February, March, April and
June, 1999, respectively.
3. TAXES
It is the policy of each Portfolio to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if applicable,
to its shareholders. Therefore, no provisions for federal income or excise
taxes are required.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund amortizes premium and
accretes original issue discount and market discount as adjustments to interest
income.
The Portfolios follow an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers
25
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
within the state to pay interest on, or repay principal of, municipal
obligations held by the Portfolios.
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares.
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.
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 six months ended March 31, 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, $77,908; Florida
Portfolio, $187,526; Massachusetts Portfolio, $92,257; Michigan Portfolio,
$58,322; Minnesota Portfolio, $67,385; New Jersey Portfolio, $163,867; Ohio
Portfolio, $147,037; Pennsylvania Portfolio, $115,674; and Virginia Portfolio
$36,370.
Pursuant to the advisory agreement, the Adviser provides to each Portfolio
certain legal and accounting services. For the six months ended March 31, 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: Arizona Portfolio, $29,167; Massachusetts
Portfolio, $37,893; Michigan Portfolio, $32,595; Minnesota Portfolio, $52,014;
and Virginia Portfolio, $69,438. There was no such reimbursement for the
Florida Portfolio, the New Jersey Portfolio, the Ohio Portfolio and the
Pennsylvania Portfolio.
Each Portfolio compensates Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) under a Services Agreement for providing personnel
and facilities to perform transfer agency services for each Portfolio. Such
compensation amounted to: Arizona Portfolio, $9,000; Florida Portfolio,
$13,147; Massachusetts Portfolio, $9,000; Michigan Portfolio, $9,000; Minnesota
Portfolio, $9,000; New Jersey Portfolio, $19,294; Ohio Portfolio, $12,470;
Pennsylvania Portfolio, $17,374; and Virginia Portfolio, $9,000.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The amount of front-end sales
charges received by the Distributor from sales of each respective Portfolio's
Class A shares for the six months ended March 31, 1998 were: Arizona Portfolio
$7,857; Florida Portfolio $5,462; Massachusetts Portfolio $10,513; Michigan
Portfolio $2,568; Minnesota Portfolio, $3,195; New Jersey Portfolio, $6,785;
Pennsylvania Portfolio, $9,091; and Virginia Portfolio, $3,272. The amount of
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the same period were: Arizona Portfolio, $6,581; Florida
Portfolio, $5,838; Massachusetts Portfolio, $5,515; Michigan Portfolio, $5,197;
Minnesota Portfolio, $13,523; New Jersey Portfolio, $21,798; Ohio Portfolio,
$7,022; Pennsylvania Portfolio, $5,381; and Virginia Portfolio, $2,395. The
amount of contingent deferred sales charges imposed upon redemptions by
shareholders of Class C shares for the six months ended March 31, 1998 were:
Florida Portfolio, $1,688; Massachusetts Portfolio, $6,402; Michigan Portfolio,
$2,060; Minnesota Portfolio, $1,106; New Jersey Portfolio, $1,899; Ohio
Portfolio, $1,720; Pennsylvania Portfolio, $804.
26
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
NOTE C: DISTRIBUTION SERVICES AGREEMENT
Each Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, each Portfolio pays a distribution fee to the Distributor at an
annual rate of up to .30 of 1% of each Portfolio's average daily net assets
attributable to Class A shares and 1% of each Portfolio's average daily net
assets attributable to both Class B and Class C shares. Such fee is accrued
daily and paid monthly. The Agreement provides that the Distributor will use
such payments in their entirety for distribution assistance and promotional
activities. Since the commencement of operations of each Portfolio the
Distributor has incurred expenses in excess of the distribution costs
reimbursed by each Portfolio as follows:
PORTFOLIO CLASS B CLASS C
- -------------- ----------- -----------
Arizona $ 893,937 $ 198,713
Florida 1,306,695 1,245,718
Massachusetts 865,161 713,832
Michigan 788,006 831,740
Minnesota 1,216,496 781,690
New Jersey 2,027,329 839,830
Ohio 1,719,440 819,525
Pennsylvania 1,469,157 754,705
Virginia 1,033,873 272,775
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 six months ended March 31, 1998 were as
follows:
PORTFOLIO PURCHASES SALES
- -------------- ------------ ------------
Arizona $ 21,619,833 $ 7,272,944
Florida 24,322,936 8,135,848
Massachusetts 28,703,838 13,795,210
Michigan 21,773,099 14,480,920
Minnesota 8,266,930 4,147,413
New Jersey 15,852,037 6,135,440
Ohio 17,496,532 6,782,737
Pennsylvania 26,500,083 9,756,835
Virginia 11,712,206 7,013,852
At March 31, 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 UNREALIZED GROSS UNREALIZED NET UNREALIZED
PORTFOLIO TAX COST APPRECIATION (DEPRECIATION) APPRECIATION
- -------------------------------------------------------------------------------
Arizona $ 29,221,174 $ 759,204 $ (606) $ 758,598
Florida 79,431,716 3,585,923 (1,885) 3,584,038
Massachusetts 37,208,470 901,725 (6,049) 895,676
Michigan 20,623,898 617,951 (10,250) 607,701
Minnesota 22,317,553 1,245,749 (156) 1,245,593
New Jersey 75,579,701 4,966,723 (71,583) 4,895,140
Ohio 53,439,782 3,373,467 (723) 3,372,744
Pennsylvania 72,947,013 4,565,037 (4,157) 4,560,880
Virginia 13,635,325 418,276 -0- 418,276
27
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
For Federal income tax purposes at September 30, 1997, the Fund had capital
loss carryforwards for the following Portfolios: $3,802,409 expiring in 2003,
and $349,704 expiring in 2004, for New Jersey Portfolio; $5,161,244 expiring in
2003, for Florida Portfolio; $2,755,099 expiring in 2003, and $332,000 expiring
in 2004, for Ohio Portfolio; $1,859,245 expiring in 2002, for Pennsylvania
Portfolio; and $924,729 expiring in 2003, and $492,981 expiring in 2004, for
Minnesota Portfolio. Any net capital losses incurred after October 31 ("Post
October losses") within the taxable year are deemed to arise on the first
business day of each Portfolio's next taxable year. None of the portfolios had
post October losses.
NOTE E: SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $.01 par value shares of beneficial interest
authorized for Class A, Class B and Class C shares.
Transactions in shares of beneficial interest in each Portfolio were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
ARIZONA PORTFOLIO
CLASS A
Shares sold 981,127 466,115 $ 10,487,275 $ 4,910,624
Shares issued in
reinvestment of
dividends and
distributions 24,867 9,889 266,581 104,166
Shares converted
from Class B 1,603 5,552 67,268 58,577
Shares redeemed (140,407) (52,682) (1,509,756) (550,222)
Net increase 867,190 428,874 $ 9,311,368 $ 4,523,145
CLASS B
Shares sold 332,385 234,439 $ 3,583,403 $ 2,473,657
Shares issued in
reinvestment of
dividends and
distributions 16,223 13,442 173,985 141,339
Shares converted
to Class A (1,603) (5,552) (67,268) (58,577)
Shares redeemed (37,772) (139,836) (357,707) (1,453,909)
Net increase 309,233 102,493 $ 3,332,413 $ 1,102,510
CLASS C
Shares sold 67,781 115,373 $ 731,214 $ 1,209,064
Shares issued in
reinvestment of
dividends and
distributions 4,386 3,226 47,014 33,997
Shares redeemed (21,062) (22,676) (227,375) (237,839)
Net increase 51,105 95,923 $ 550,853 $ 1,005,222
28
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
FLORIDA PORTFOLIO
CLASS A
Shares sold 912,074 401,472 $ 9,327,652 $ 3,966,237
Shares issued in
reinvestment of
dividends and
distributions 20,976 32,217 215,636 318,408
Shares converted
from Class B 37,846 51,926 437,461 510,238
Shares redeemed (252,864) (228,010) (2,605,288) (2,248,140)
Net increase 718,032 257,605 $ 7,375,461 $ 2,546,743
CLASS B
Shares sold 604,481 744,931 $ 6,223,907 $ 7,338,616
Shares issued in
reinvestment of
dividends and
distributions 27,932 50,066 286,965 495,099
Shares converted
to Class A (37,846) (51,926) (437,461) (510,238)
Shares redeemed (98,534) (579,406) (960,080) (5,720,727)
Net increase 496,033 163,665 $ 5,113,331 $ 1,602,750
CLASS C
Shares sold 423,767 676,267 $ 4,365,398 $ 6,658,690
Shares issued in
reinvestment of
dividends and
distributions 26,391 62,835 271,646 621,766
Shares redeemed (228,460) (1,296,118) (2,349,322) (12,661,785)
Net increase
(decrease) 221,698 (557,016) $ 2,287,722 $ (5,381,329)
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
MASSACHUSETTS PORTFOLIO
CLASS A
Shares sold 588,296 705,271 $ 6,552,079 $ 7,737,977
Shares issued in
reinvestment of
dividends and
distributions 25,456 16,441 282,024 178,373
Shares converted
from Class B 717 36 58,037 397
Shares redeemed (127,484) (172,200) (1,431,849) (1,883,762)
Net increase 486,985 549,548 $ 5,460,291 $ 6,032,985
CLASS B
Shares sold 479,716 336,620 $ 5,376,535 $ 3,677,110
Shares issued in
reinvestment of
dividends and
distributions 18,291 14,320 203,225 155,377
Shares converted
to Class A (717) (36) (58,037) (397)
Shares redeemed (52,115) (44,532) (533,333) (485,344)
Net increase 445,175 306,372 $ 4,988,390 $ 3,346,746
CLASS C
Shares sold 422,674 386,133 $ 4,737,673 $ 4,233,533
Shares issued in
reinvestment of
dividends and
distributions 23,486 28,580 260,436 309,824
Shares redeemed (85,003) (132,699) (950,978) (1,439,761)
Net increase 361,157 282,014 $ 4,047,131 $ 3,103,596
29
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
MICHIGAN PORTFOLIO
CLASS A
Shares sold 161,335 160,589 $ 1,634,383 $ 1,659,299
Shares issued in
reinvestment of
dividends and
distributions 19,989 19,006 207,842 193,980
Shares converted
from Class B 150 28 51,531 286
Shares redeemed (80,369) (230,129) (843,897) (2,348,441)
Net increase
(decrease) 101,105 (50,506) $ 1,049,859 $ (494,876)
CLASS B
Shares sold 216,163 185,283 $ 2,264,647 $ 1,897,940
Shares issued in
reinvestment of
dividends and
distributions 20,351 13,545 211,434 138,387
Shares converted
to Class A (150) (28) (51,531) (286)
Shares redeemed (30,564) (46,187) (270,358) (470,069)
Net increase 205,800 152,613 $ 2,154,192 $ 1,565,972
CLASS C
Shares sold 273,998 176,811 $ 2,872,633 $ 1,814,237
Shares issued in
reinvestment of
dividends and
distributions 24,030 22,260 249,856 227,355
Shares redeemed (64,864) (104,698) (679,952) (1,074,731)
Net increase 233,164 94,373 $ 2,442,537 $ 966,861
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
MINNESOTA PORTFOLIO
CLASS A
Shares sold 135,476 105,934 $ 1,316,642 $ 1,027,028
Shares issued in
reinvestment of
dividends and
distributions 7,018 12,865 70,772 125,087
Shares converted
from Class B 1,613 11,080 66,099 107,249
Shares redeemed (19,924) (47,164) (201,273) (460,217)
Net increase 124,183 82,715 $ 1,252,240 $ 799,147
CLASS B
Shares sold 335,149 167,360 $ 3,379,470 $ 1,631,577
Shares issued in
reinvestment of
dividends and
distributions 15,038 26,821 151,652 260,796
Shares converted
to Class A (1,613) (11,080) (66,099) (107,249)
Shares redeemed (87,516) (194,610) (832,709) (1,893,478)
Net increase
(decrease) 261,058 (11,509) $ 2,632,314 $ (108,354)
CLASS C
Shares sold 86,988 167,292 $ 880,299 $ 1,624,602
Shares issued in
reinvestment of
dividends and
distributions 13,406 27,887 134,964 271,274
Shares redeemed (134,829) (141,329) (1,359,682) (1,373,367)
Net increase
(decrease) (34,435) 53,850 $ (344,419) $ 522,509
30
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
NEW JERSEY PORTFOLIO
CLASS A
Shares sold 268,247 469,608 $ 2,716,689 $ 4,670,579
Shares issued in
reinvestment of
dividends and
distributions 25,250 43,821 259,164 434,332
Shares converted
from Class B 6,785 25,334 113,698 250,480
Shares redeemed (175,881) (530,123) (1,808,440) (5,236,167)
Net increase 124,401 8,640 $ 1,281,111 $ 119,224
CLASS B
Shares sold 630,688 612,170 $ 6,480,549 $ 6,103,109
Shares issued in
reinvestment of
dividends and
distributions 56,596 106,709 580,871 1,057,759
Shares converted
to Class A (6,785) (25,331) (113,698) (250,480)
Shares redeemed (419,274) (943,180) (4,260,284) (9,338,864)
Net increase
(decrease) 261,225 (249,632) $ 2,687,438 $ (2,428,476)
CLASS C
Shares sold 240,683 374,853 $ 2,471,183 $ 3,722,963
Shares issued in
reinvestment of
dividends and
distributions 34,317 67,711 351,834 671,448
Shares redeemed (197,595) (657,468) (2,026,674) (6,516,928)
Net increase
(decrease) 77,405 (214,904) $ 796,343 $ (2,122,517)
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
OHIO PORTFOLIO
CLASS A
Shares sold 318,402 278,619 $ 3,241,125 $ 2,767,243
Shares issued in
reinvestment of
dividends and
distributions 13,752 20,667 141,515 203,289
Shares converted
from Class B 26,683 13,783 318,651 138,710
Shares redeemed (58,145) (195,949) (599,225) (1,909,329)
Net increase 300,692 117,120 $ 3,102,066 $ 1,199,913
CLASS B
Shares sold 537,385 491,863 $ 5,534,607 $ 4,851,011
Shares issued in
reinvestment of
dividends and
distributions 45,205 85,785 465,423 844,851
Shares converted
to Class A (26,683) (13,783) (318,651) (138,710)
Shares redeemed (152,527) (561,173) (1,528,206) (5,501,504)
Net increase 403,380 2,692 $ 4,153,173 $ 55,648
CLASS C
Shares sold 146,073 173,363 $ 1,509,731 $ 1,711,532
Shares issued in
reinvestment of
dividends and
distributions 25,636 51,701 263,515 509,274
Shares redeemed (182,095) (551,175) (1,877,176) (5,376,920)
Net decrease (10,386) (326,111) $ (103,930) $ (3,156,114)
31
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
PENNSYLVANIA PORTFOLIO
CLASS A
Shares sold 504,142 467,692 $ 5,243,403 $ 4,681,081
Shares issued in
reinvestment of
dividends and
distributions 45,957 84,710 479,702 852,355
Shares converted
from Class B 37,509 63,903 441,246 646,415
Shares redeemed (286,304) (344,028) (2,998,519) (3,466,776)
Net increase 301,304 272,277 $ 3,165,832 $ 2,713,075
CLASS B
Shares sold 513,737 577,688 $ 5,373,166 $ 5,820,098
Shares issued in
reinvestment of
dividends and
distributions 40,833 80,944 425,979 814,188
Shares converted
to Class A (37,509) (63,903) (441,246) (646,415)
Shares redeemed (174,557) (771,304) (1,771,936) (7,750,943)
Net increase
(decrease) 342,504 (176,575) $ 3,585,963 $ (1,763,072)
CLASS C
Shares sold 185,250 288,667 $ 1,935,132 $ 2,906,593
Shares issued in
reinvestment of
dividends and
distributions 19,801 44,989 206,153 452,736
Shares redeemed (172,672) (254,416) (1,799,652) (2,549,432)
Net increase 32,379 79,240 $ 341,633 $ 809,897
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPT. 30, MARCH 31, 1998 SEPT. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
VIRGINIA PORTFOLIO
CLASS A
Shares sold 161,742 106,838 $ 1,702,909 $ 1,119,910
Shares issued in
reinvestment of
dividends and
distributions 13,318 12,492 143,030 131,306
Shares converted
from Class B 3,978 -0- 93,390 -0-
Shares redeemed (13,878) (27,670) (151,121) (291,141)
Net increase 165,160 91,660 $ 1,788,208 $ 960,075
CLASS B
Shares sold 199,343 168,891 $ 2,168,649 $ 1,787,325
Shares issued in
reinvestment of
dividends and
distributions 21,481 19,801 230,715 208,051
Shares converted
to Class A (3,978) -0- (93,390) -0-
Shares redeemed (16,281) (44,556) (126,874) (465,272)
Net increase 200,565 144,136 $ 2,179,100 $ 1,530,104
CLASS C
Shares sold 55,666 54,662 $ 606,609 $ 578,928
Shares issued in
reinvestment of
dividends and
distributions 6,307 6,070 67,779 63,771
Shares redeemed (258) (10,711) (2,821) (111,320)
Net increase 61,715 50,021 $ 671,567 $ 531,379
32
FINANCIAL HIGHLIGHTS ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ARIZONA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
SIX MONTHS JUNE 1, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .28(c) .57(c) .55(c) .56 .20
Net realized and unrealized gain (loss)
on investment transactions .16 .48 .14 .53 (.23)
Net increase (decrease) in net asset
value from operations .44 1.05 .69 1.09 (.03)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.29) (.57) (.55) (.56) (.20)
Distributions in excess of net
investment income -0- -0- (.03) (.01) -0-
Distributions from net realized gains (.18) (.02) (.08) -0- -0-
Total dividends and distributions (.47) (.59) (.66) (.57) (.20)
Net asset value, end of period $10.75 $10.78 $10.32 $10.29 $ 9.77
TOTAL RETURN
Total investment return based on
net asset value (d) 4.11% 10.54% 6.84% 11.56% (.35)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $18,516 $9,225 $4,409 $2,379 $930
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .78%(e) .78% .78% .78% .78%(e)
Expenses, before waivers/reimbursements 1.63%(e) 2.71% 3.69% 4.88% 7.71%(e)
Net investment income, net of
waivers/reimbursements 5.08%(e) 5.42% 5.33% 5.56% 5.82%(e)
Portfolio turnover rate 31% 193% 244% 85% 81%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
SIX MONTHS JUNE 1, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .24(c) .50(c) .47(c) .49 .18
Net realized and unrealized gain (loss)
on investment transactions .16 .48 .14 .53 (.24)
Net increase (decrease) in net asset
value from operations .40 .98 .61 1.02 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.25) (.50) (.47) (.49) (.17)
Distributions in excess of net
investment income -0- -0- (.03) (.01) -0-
Distributions from net realized gains (.18) (.02) (.08) -0- -0-
Total dividends and distributions (.43) (.52) (.58) (.50) (.17)
Net asset value, end of period $10.75 $10.78 $10.32 $10.29 $ 9.77
TOTAL RETURN
Total investment return based on
net asset value (d) 3.77% 9.80% 6.10% 10.78% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $9,835 $6,531 $5,199 $3,166 $1,677
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.48%(e) 1.48% 1.48% 1.48% 1.48%(e)
Expenses, before waivers/reimbursements 2.35%(e) 3.40% 4.40% 5.58% 8.41%(e)
Net investment income, net of
waivers/reimbursements 4.41%(e) 4.73% 4.62% 4.89% 5.13%(e)
Portfolio turnover rate 31% 193% 244% 85% 81%
</TABLE>
See footnote summary on page 55.
33
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ARIZONA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS JUNE 1, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .24(c) .50(c) .47(c) .49 .17
Net realized and unrealized gain (loss)
on investment transactions .16 .48 .13 .54 (.23)
Net increase (decrease) in net asset
value from operations .40 .98 .60 1.03 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.25) (.50) (.47) (.49) (.17)
Distributions in excess of net
investment income -0- -0- (.03) (.01) -0-
Distributions from net realized gains (.18) (.02) (.08) -0- -0-
Total dividends and distributions (.43) (.52) (.58) (.50) (.17)
Net asset value, end of period $10.75 $10.78 $10.32 $10.30 $ 9.77
TOTAL RETURN
Total investment return based on
net asset value (d) 3.77% 9.80% 6.00% 10.89% (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,319 $1,775 $710 $481 $485
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.48%(e) 1.48% 1.48% 1.48% 1.48%(e)
Expenses, before waivers/reimbursements 2.36%(e) 3.39% 4.41% 5.58% 8.41%(e)
Net investment income, net of
waivers/reimbursements 4.43%(e) 4.70% 4.61% 4.90% 4.70%(e)
Portfolio turnover rate 31% 193% 244% 85% 81%
</TABLE>
See footnote summary on page 55.
34
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
FLORIDA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.14 $ 9.73 $ 9.58 $ 8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .27(c) .55(c) .54(c) .55 .55 .16
Net realized and unrealized gain (loss)
on investment transactions .16 .41 .16 .69 (1.35) .25
Net increase (decrease) in net asset
value from operations .43 .96 .70 1.24 (.80) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27) (.55) (.54) (.55) (.55) (.16)
Distributions in excess of net
investment income -0- -0- (.01) -0- -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.27) (.55) (.55) (.55) (.56) (.16)
Net asset value, end of period $10.30 $10.14 $ 9.73 $ 9.58 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 4.33% 10.14% 7.45% 14.44% (8.03)% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $25,189 $17,516 $14,297 $11,956 $8,227 $4,145
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .73%(e) .73% .73% .73% .38% -0-%(e)
Expenses, before waivers/reimbursements 1.31%(e) 1.35% 1.33% 1.33% 1.27% 1.30%(e)
Net investment income, net of
waivers/reimbursements 5.25%(e) 5.58% 5.52% 5.91% 5.70% 5.44%(e)
Portfolio turnover rate 11% 204% 237% 146% 185% 82%
</TABLE>
See footnote summary on page 55.
35
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
FLORIDA PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.14 $ 9.74 $ 9.58 $ 8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .23(c) .48(c) .47(c) .47 .48 .14
Net realized and unrealized gain (loss)
on investment transactions .17 .40 .17 .70 (1.35) .25
Net increase (decrease) in net asset
value from operations .40 .88 .64 1.17 (.87) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.48) (.47) (.47) (.48) (.14)
Distributions in excess of net
investment income -0- -0- (.01) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.24) (.48) (.48) (.48) (.49) (.14)
Net asset value, end of period $10.30 $10.14 $ 9.74 $ 9.58 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 3.97% 9.24% 6.78% 13.56% (8.72)% 3.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $30,320 $24,820 $22,235 $20,660 $18,048 $9,588
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.43%(e) 1.43% 1.43% 1.42% 1.08% .61%(e)
Expenses, before waivers/reimbursements 2.01%(e) 2.05% 2.03% 2.03% 1.98% 2.00%(e)
Net investment income, net of
waivers/reimbursements 4.55%(e) 4.87% 4.81% 5.22% 4.99% 4.74%(e)
Portfolio turnover rate 11% 204% 237% 146% 185% 82%
</TABLE>
See footnote summary on page 55.
36
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
FLORIDA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.14 $ 9.74 $ 9.58 $ 8.89 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .23(c) .49(c) .47(c) .47 .48 .14
Net realized and unrealized gain (loss)
on investment transactions .17 .39 .17 .70 (1.35) .25
Net increase (decrease) in net asset
value from operations .40 .88 .64 1.17 (.87) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.48) (.47) (.47) (.48) (.14)
Distributions in excess of net
investment income -0- -0- (.01) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.24) (.48) (.48) (.48) (.49) (.14)
Net asset value, end of period $10.30 $10.14 $ 9.74 $ 9.58 $ 8.89 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 3.97% 9.23% 6.78% 13.56% (8.72)% 3.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $28,410 $25,722 $30,121 $30,787 $42,405 $28,249
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.43%(e) 1.43% 1.43% 1.42% 1.08% .61%(e)
Expenses, before waivers/reimbursements 2.00%(e) 2.03% 2.02% 2.03% 1.97% 2.00%(e)
Net investment income, net of
waivers/reimbursements 4.56%(e) 4.89% 4.81% 5.27% 4.97% 4.74%(e)
Portfolio turnover rate 11% 204% 237% 146% 185% 82%
</TABLE>
See footnote summary on page 55.
37
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MASSACHUSETTS PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
SIX MONTHS MARCH 29, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .29(c) .58(c) .60(c) .58 .31
Net realized and unrealized gain
on investment transactions .23 .57 .44 .41 .11
Net increase in net asset value
from operations .52 1.15 1.04 .99 .42
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.31) (.58) (.59) (.58) (.30)
Distributions in excess of net
investment income -0- (.03) (.02) (.03) -0-
Distributions from net realized gains (.19) (.20) (.08) -0- -0-
Total dividends and distributions (.50) (.81) (.69) (.61) (.30)
Net asset value, end of period $11.21 $11.19 $10.85 $10.50 $10.12
TOTAL RETURN
Total investment return based on
net asset value (d) 4.72% 11.14% 10.25% 10.19% 4.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $14,933 $9,461 $3,211 $1,337 $565
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .72%(e) .72% .62% .60% .60%(e)
Expenses, before waivers/reimbursements 1.60%(e) 2.40% 3.15% 6.44% 13.20%(e)
Net investment income, net of
waivers/reimbursements 5.20%(e) 5.40% 5.62% 5.67% 5.98%(e)
Portfolio turnover rate 48% 134% 246% 155% 146%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
SIX MONTHS MARCH 29, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .25(c) .51(c) .52(c) .52 .27
Net realized and unrealized gain
on investment transactions .22 .58 .45 .39 .11
Net increase in net asset value
from operations .47 1.09 .97 .91 .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27) (.51) (.52) (.52) (.26)
Distributions in excess of net
investment income -0- (.03) (.02) (.02) -0-
Distributions from net realized gains (.19) (.20) (.08) -0- -0-
Total dividends and distributions (.46) (.74) (.62) (.54) (.26)
Net asset value, end of period $11.20 $11.19 $10.84 $10.49 $10.12
TOTAL RETURN
Total investment return based on
net asset value (d) 4.29% 10.52% 9.52% 9.32% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $12,226 $7,230 $3,683 $1,754 $725
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.42%(e) 1.42% 1.32% 1.30% 1.30%(e)
Expenses, before waivers/reimbursements 2.30%(e) 3.07% 3.85% 7.14% 13.90%(e)
Net investment income, net of
waivers/reimbursements 4.50%(e) 4.73% 4.93% 4.90% 5.13%(e)
Portfolio turnover rate 48% 134% 246% 155% 146%
</TABLE>
See footnote summary on page 55.
38
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MASSACHUSETTS PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS MARCH 29, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .25(c) .51(c) .52(c) .52 .25
Net realized and unrealized gain
on investment transactions .22 .58 .45 .39 .13
Net increase in net asset value
from operations .47 1.09 .97 .91 .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27) (.51) (.52) (.52) (.26)
Distributions in excess of net
investment income -0- (.03) (.02) (.02) -0-
Distributions from net realized gains (.19) (.20) (.08) -0- -0-
Total dividends and distributions (.46) (.74) (.62) (.54) (.26)
Net asset value, end of period $11.20 $11.19 $10.84 $10.49 $10.12
TOTAL RETURN
Total investment return based on
net asset value (d) 4.29% 10.52% 9.52% 9.32% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $11,870 $7,815 $4,514 $2,556 $774
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.42%(e) 1.42% 1.31% 1.30% 1.30%(e)
Expenses, before waivers/reimbursements 2.30%(e) 3.09% 3.84% 7.14% 13.90%(e)
Net investment income, net of
waivers/reimbursements 4.51%(e) 4.75% 4.88% 4.85% 4.00%(e)
Portfolio turnover rate 48% 134% 246% 155% 146%
</TABLE>
See footnote summary on page 55.
39
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MICHIGAN PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
SIX MONTHS FEBRUARY 25,
ENDED YEAR ENDED SEPTEMBER 30, 1994(A) TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .26(c) .53(c) .52(c) .52 .33
Net realized and unrealized gain (loss)
on investment transactions .23 .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations .49 1.08 .74 1.30 (.32)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.28) (.53) (.52) (.52) (.33)
Distributions in excess of net
investment income -0- (.02) (.03) (.03) -0-
Distributions from net realized gains (.29) (.13) (.17) -0- -0-
Total dividends and distributions (.57) (.68) (.72) (.55) (.33)
Net asset value, end of period $10.44 $10.52 $10.12 $10.10 $ 9.35
TOTAL RETURN
Total investment return based on
net asset value (d) 4.70% 11.05% 7.54% 14.40% (3.24)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,847 $5,836 $6,123 $5,158 $2,473
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .96%(e) .96% .96% 1.36% .93%(e)
Expenses, before waivers/reimbursements 1.93%(e) 2.46% 2.77% 3.43% 3.97%(e)
Net investment income, net of
waivers/reimbursements 4.90%(e) 5.24% 5.21% 5.27% 5.83%(e)
Portfolio turnover rate 82% 161% 242% 151% 222%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
SIX MONTHS FEBRUARY 25,
ENDED YEAR ENDED SEPTEMBER 30, 1994(A) TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .22(c) .46(c) .45(c) .45 .29
Net realized and unrealized gain (loss)
on investment transactions .23 .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations .45 1.01 .67 1.23 (.36)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.46) (.45) (.45) (.29)
Distributions in excess of net
investment income -0- (.02) (.03) (.03) -0-
Distributions from net realized gains (.29) (.13) (.17) -0- -0-
Total dividends and distributions (.53) (.61) (.65) (.48) (.29)
Net asset value, end of period $10.44 $10.52 $10.12 $10.10 $ 9.35
TOTAL RETURN
Total investment return based on
net asset value (d) 4.37% 10.30% 6.80% 13.58% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,406 $5,300 $3,553 $2,424 $1,722
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.66%(e) 1.66% 1.66% 2.06% 1.63%(e)
Expenses, before waivers/reimbursements 2.64%(e) 3.23% 3.48% 4.12% 4.67%(e)
Net investment income, net of
waivers/reimbursements 4.19%(e) 4.53% 4.51% 4.57% 4.93%(e)
Portfolio turnover rate 82% 161% 242% 151% 222%
</TABLE>
See footnote summary on page 55.
40
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MICHIGAN PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS FEBRUARY 25,
ENDED YEAR ENDED SEPTEMBER 30, 1994(A) TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .22(c) .46(c) .45(c) .45 .29
Net realized and unrealized gain (loss)
on investment transactions .23 .55 .22 .78 (.65)
Net increase (decrease) in net asset
value from operations .45 1.01 .67 1.23 (.36)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.46) (.45) (.45) (.29)
Distributions in excess of net
investment income -0- (.02) (.03) (.03) -0-
Distributions from net realized gains (.29) (.13) (.17) -0- -0-
Total dividends and distributions (.53) (.61) (.65) (.48) (.29)
Net asset value, end of period $10.44 $10.52 $10.12 $10.10 $ 9.35
TOTAL RETURN
Total investment return based on net
asset value (d) 4.35% 10.30% 6.80% 13.58% (3.65)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,481 $5,089 $3,940 $2,886 $2,778
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.66%(e) 1.66% 1.66% 2.06% 1.63%(e)
Expenses, before waivers/reimbursements 2.64%(e) 3.20% 3.48% 4.13% 4.67%(e)
Net investment income, net of
waivers/reimbursements 4.21%(e) 4.55% 4.50% 4.69% 4.92%(e)
Portfolio turnover rate 82% 161% 242% 151% 222%
</TABLE>
See footnote summary on page 55.
41
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MINNESOTA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.97 $ 9.58 $ 9.49 $ 9.19 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .25(c) .53(c) .53(c) .53 .55 .15
Net realized and unrealized gain (loss)
on investment transactions .16 .39 .11 .32 (1.09) .28
Net increase (decrease) in net asset
value from operations .41 .92 .64 .85 (.54) .43
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27) (.53) (.53) (.53) (.55) (.15)
Distributions in excess of net
investment income -0- -0- (.02) (.02) -0- -0-
Total dividends and distributions (.27) (.53) (.55) (.55) (.55) (.15)
Net asset value, end of period $10.11 $ 9.97 $ 9.58 $ 9.49 $ 9.19 $10.28
TOTAL RETURN
Total investment return based on
net asset value (d) 4.14% 9.93% 6.95% 9.63% (5.35)% 4.34%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,431 $4,120 $3,165 $2,414 $2,125 $994
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .75%(e) .75% .72% .71% .09% -0-%(e)
Expenses, before waivers/reimbursements 1.86%(e) 2.22% 2.19% 2.30% 2.12% 1.89%(e)
Net investment income, net of
waivers/reimbursements 5.09%(e) 5.44% 5.54% 5.71% 5.71% 5.20%(e)
Portfolio turnover rate 20% 131% 195% 117% 143% 61%
</TABLE>
See footnote summary on page 55.
42
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MINNESOTA PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.97 $ 9.58 $ 9.49 $ 9.18 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .22(c) .46(c) .46(c) .46 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .15 .39 .11 .33 (1.10) .28
Net increase (decrease) in net asset
value from operations .37 .85 .57 .79 (.62) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.23) (.46) (.46) (.46) (.48) (.13)
Distributions in excess of net
investment income -0- -0- (.02) (.02) -0- -0-
Total dividends and distributions (.23) (.46) (.48) (.48) (.48) (.13)
Net asset value, end of period $10.11 $ 9.97 $ 9.58 $ 9.49 $ 9.18 $10.28
TOTAL RETURN
Total investment return based on
net asset value (d) 3.77% 9.13% 6.15% 8.90% (6.15)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $11,271 $8,517 $8,291 $7,299 $6,150 $2,665
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.46%(e) 1.46% 1.42% 1.42% .80% .43%(e)
Expenses, before waivers/reimbursements 2.57%(e) 2.91% 2.89% 3.02% 2.83% 2.59%(e)
Net investment income, net of
waivers/reimbursements 4.38%(e) 4.75% 4.82% 4.97% 5.00% 4.50%(e)
Portfolio turnover rate 20% 131% 195% 117% 143% 61%
</TABLE>
See footnote summary on page 55.
43
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
MINNESOTA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.97 $ 9.58 $ 9.50 $ 9.19 $10.27 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .22(c) .46(c) .46(c) .46 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .15 .39 .10 .33 (1.08) .27
Net increase (decrease) in net asset
value from operations .37 .85 .56 .79 (.60) .40
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.23) (.46) (.46) (.46) (.48) (.13)
Distributions in excess of net
investment income -0- -0- (.02) (.02) -0- -0-
Total dividends and distributions (.23) (.46) (.48) (.48) (.48) (.13)
Net asset value, end of period $10.11 $ 9.97 $ 9.58 $ 9.50 $ 9.19 $10.27
TOTAL RETURN
Total investment return based on
net asset value (d) 3.77% 9.13% 6.03% 8.89% (5.95)% 4.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,110 $7,358 $6,553 $7,305 $9,489 $6,697
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.45%(e) 1.45% 1.41% 1.41% .79% .43%(e)
Expenses, before waivers/reimbursements 2.55%(e) 2.89% 2.88% 3.00% 2.82% 2.59%(e)
Net investment income, net of
waivers/reimbursements 4.40%(e) 4.76% 4.82% 5.05% 4.90% 4.50%(e)
Portfolio turnover rate 20% 131% 195% 117% 143% 61%
</TABLE>
See footnote summary on page 55.
44
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
NEW JERSEY PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.15 $ 9.72 $ 9.65 $ 9.07 $10.29 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .26(c) .51(c) .51(c) .54 .55 .15
Net realized and unrealized gain (loss)
on investment transactions .13 .44 .11 .59 (1.22) .29
Net increase (decrease) in net asset
value from operations .39 .95 .62 1.13 (.67) .44
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.26) (.51) (.51) (.54) (.55) (.15)
Distributions in excess of net
investment income -0- (.01) (.04) (.01) -0- -0-
Total dividends and distributions (.26) (.52) (.55) (.55) (.55) (.15)
Net asset value, end of period $10.28 $10.15 $ 9.72 $ 9.65 $ 9.07 $10.29
TOTAL RETURN
Total investment return based on
net asset value (d) 3.88% 10.01% 6.57% 12.91% (6.67)% 4.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $17,788 $16,309 $15,520 $11,612 $9,257 $6,679
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .82%(e) .82% .82% .82% .20% -0-%(e)
Expenses, before waivers/reimbursements 1.31%(e) 1.34% 1.35% 1.35% 1.33% 1.29%(e)
Net investment income, net of
waivers/reimbursements 5.02%(e) 5.16% 5.26% 5.73% 5.65% 5.37%(e)
Portfolio turnover rate 8% 61% 132% 86% 171% 47%
</TABLE>
See footnote summary on page 55.
45
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
NEW JERSEY PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.16 $ 9.72 $ 9.66 $ 9.07 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .22(c) .44(c) .44(c) .47 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .12 .45 .10 .60 (1.21) .28
Net increase (decrease) in net asset
value from operations .34 .89 .54 1.07 (.73) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.22) (.44) (.45) (.47) (.48) (.13)
Distributions in excess of net
investment income -0- (.01) (.03) (.01) -0- -0-
Total dividends and distributions (.22) (.45) (.48) (.48) (.48) (.13)
Net asset value, end of period $10.28 $10.16 $ 9.72 $ 9.66 $ 9.07 $10.28
TOTAL RETURN
Total investment return based on
net asset value (d) 3.41% 9.32% 5.66% 12.15% (7.28)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $41,460 $38,308 $39,099 $34,695 $30,459 $15,637
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.53%(e) 1.53% 1.53% 1.53% .91% .63%(e)
Expenses, before waivers/reimbursements 2.01%(e) 2.04% 2.05% 2.06% 2.03% 1.99%(e)
Net investment income, net of
waivers/reimbursements 4.31%(e) 4.45% 4.56% 5.03% 4.96% 4.67%(e)
Portfolio turnover rate 8% 61% 132% 86% 171% 47%
</TABLE>
See footnote summary on page 55.
46
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
NEW JERSEY PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.16 $ 9.72 $ 9.66 $ 9.07 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .22(c) .44(c) .44(c) .47 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .12 .45 .10 .60 (1.21) .28
Net increase (decrease) in net asset
value from operations .34 .89 .54 1.07 (.73) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.22) (.44) (.45) (.47) (.48) (.13)
Distributions in excess of net
investment income -0- (.01) (.03) (.01) -0- -0-
Total dividends and distributions (.22) (.45) (.48) (.48) (.48) (.13)
Net asset value, end of period $10.28 $10.16 $ 9.72 $ 9.66 $ 9.07 $10.28
TOTAL RETURN
Total investment return based on
net asset value (d) 3.41% 9.32% 5.66% 12.14% (7.28)% 4.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $22,463 $21,404 $22,579 $21,255 $26,472 $21,193
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.52%(e) 1.52% 1.52% 1.52% .90% .63%(e)
Expenses, before waivers/reimbursements 2.01%(e) 2.03% 2.04% 2.06% 2.02% 1.99%(e)
Net investment income, net of
waivers/reimbursements 4.33%(e) 4.47% 4.56% 5.09% 4.93% 4.67%(e)
Portfolio turnover rate 8% 61% 132% 86% 171% 47%
</TABLE>
See footnote summary on page 55.
47
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
OHIO PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.16 $ 9.61 $ 9.53 $ 9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .26(c) .54(c) .52(c) .54 .55 .15
Net realized and unrealized gain (loss)
on investment transactions .20 .54 .11 .48 (1.19) .26
Net increase (decrease) in net asset
value from operations .46 1.08 .63 1.02 (.64) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27) (.53) (.53) (.54) (.55) (.15)
Distributions in excess of net
investment income -0- -0- (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.27) (.53) (.55) (.55) (.56) (.15)
Net asset value, end of period $10.35 $10.16 $ 9.61 $ 9.53 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on
net asset value (d) 4.56% 11.60% 6.72% 11.63% (6.44)% 4.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $10,845 $7,596 $6,054 $4,170 $2,810 $1,050
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .75%(e) .75% .75% .75% .04% -0-%(e)
Expenses, before waivers/reimbursements 1.42%(e) 1.52% 1.48% 1.51% 1.42% 1.32%(e)
Net investment income, net of
waivers/reimbursements 5.11%(e) 5.49% 5.47% 5.74% 5.67% 5.30%(e)
Portfolio turnover rate 13% 104% 182% 108% 161% 55%
</TABLE>
See footnote summary on page 55.
48
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
OHIO PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.16 $ 9.61 $ 9.54 $ 9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .23(c) .48(c) .46(c) .47 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .19 .53 .09 .49 (1.19) .26
Net increase (decrease) in net asset
value from operations .42 1.01 .55 .96 (.71) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.23) (.46) (.46) (.47) (.48) (.13)
Distributions in excess of net
investment income -0- -0- (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.23) (.46) (.48) (.48) (.49) (.13)
Net asset value, end of period $10.35 $10.16 $ 9.61 $ 9.54 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on
net asset value (d) 4.20% 10.80% 5.82% 10.88% (7.13)% 3.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $31,480 $26,821 $25,334 $21,821 $20,267 $8,952
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.46%(e) 1.46% 1.46% 1.46% .74% .17%(e)
Expenses, before waivers/reimbursements 2.12%(e) 2.22% 2.18% 2.21% 2.13% 2.02%(e)
Net investment income, net of
waivers/reimbursements 4.40%(e) 4.81% 4.77% 5.08% 4.95% 4.60%(e)
Portfolio turnover rate 13% 104% 182% 108% 161% 55%
</TABLE>
See footnote summary on page 55.
49
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
OHIO PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.16 $ 9.61 $ 9.54 $ 9.06 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .23(c) .47(c) .46(c) .47 .48 .13
Net realized and unrealized gain (loss)
on investment transactions .19 .54 .09 .49 (1.19) .26
Net increase (decrease) in net asset
value from operations .42 1.01 .55 .96 (.71) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.23) (.46) (.46) (.47) (.48) (.13)
Distributions in excess of net
investment income -0- -0- (.02) (.01) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.23) (.46) (.48) (.48) (.49) (.13)
Net asset value, end of period $10.35 $10.16 $ 9.61 $ 9.54 $ 9.06 $10.26
TOTAL RETURN
Total investment return based on
net asset value (d) 4.20% 10.80% 5.82% 10.88% (7.13)% 3.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,040 $14,878 $17,203 $18,874 $26,294 $19,894
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.45%(e) 1.45% 1.45% 1.45% .74% .17%(e)
Expenses, before waivers/reimbursements 2.11%(e) 2.20% 2.16% 2.20% 2.12% 2.02%(e)
Net investment income, net of
waivers/reimbursements 4.41%(e) 4.81% 4.78% 5.14% 4.89% 4.60%(e)
Portfolio turnover rate 13% 104% 182% 108% 161% 55%
</TABLE>
See footnote summary on page 55.
50
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.33 $ 9.85 $ 9.64 $ 9.18 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .27(c) .55(c) .49(c) .54 .56 .16
Net realized and unrealized gain (loss)
on investment transactions .12 .49 .28 .48 (1.06) .25
Net increase (decrease) in net asset
value from operations .39 1.04 .77 1.02 (.50) .41
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.28) (.55) (.53) (.54) (.56) (.16)
Distributions in excess of net
investment income -0- (.01) (.03) (.02) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.28) (.56) (.56) (.56) (.57) (.16)
Net asset value, end of period $10.44 $10.33 $ 9.85 $ 9.64 $ 9.18 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 3.82% 10.85% 8.17% 11.53% (5.02)% 4.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $28,364 $24,948 $21,104 $8,721 $7,149 $4,170
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .95%(e) .95% 1.00% 1.00% .45% -0-%(e)
Expenses, before waivers/reimbursements 1.34%(e) 1.40% 1.45% 1.47% 1.46% 1.31%(e)
Net investment income, net of
waivers/reimbursements 5.24%(e) 5.44% 5.40% 5.78% 5.73% 5.67%(e)
Portfolio turnover rate 14% 85% 185% 114% 156% 75%
</TABLE>
See footnote summary on page 55.
51
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.33 $ 9.86 $ 9.65 $ 9.18 $10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .24(c) .47(c) .46(c) .47 .49 .14
Net realized and unrealized gain (loss)
on investment transactions .11 .49 .24 .49 (1.06) .25
Net increase (decrease) in net asset
value from operations .35 .96 .70 .96 (.57) .39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.47) (.46) (.47) (.49) (.14)
Distributions in excess of net
investment income -0- (.02) (.03) (.02) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.24) (.49) (.49) (.49) (.50) (.14)
Net asset value, end of period $10.44 $10.33 $ 9.86 $ 9.65 $ 9.18 $10.25
TOTAL RETURN
Total investment return based on
net asset value (d) 3.46% 9.95% 7.38% 10.78% (5.72)% 3.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $33,976 $30,078 $30,440 $28,559 $25,637 $12,173
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.66%(e) 1.66% 1.71% 1.71% 1.16% .40%(e)
Expenses, before waivers/reimbursements 2.04%(e) 2.09% 2.15% 2.17% 2.16% 2.01%(e)
Net investment income, net of
waivers/reimbursements 4.53%(e) 4.72% 4.69% 5.09% 5.01% 4.97%(e)
Portfolio turnover rate 14% 85% 185% 114% 156% 75%
</TABLE>
See footnote summary on page 55.
52
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS JUNE 25, 1993(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.33 $ 9.86 $ 9.65 $ 9.18 $10.24 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .24(c) .47(c) .46(c) .47 .49 .14
Net realized and unrealized gain (loss)
on investment transactions .11 .49 .24 .49 (1.05) .24
Net increase (decrease) in net asset
value from operations .35 .96 .70 .96 (.56) .38
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.47) (.46) (.47) (.49) (.14)
Distributions in excess of net
investment income -0- (.02) (.03) (.02) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.24) (.49) (.49) (.49) (.50) (.14)
Net asset value, end of period $10.44 $10.33 $ 9.86 $ 9.65 $ 9.18 $10.24
TOTAL RETURN
Total investment return based on
net asset value (d) 3.46% 9.95% 7.37% 10.78% (5.63)% 3.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,990 $15,486 $13,996 $15,052 $18,198 $13,541
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.65%(e) 1.65% 1.70% 1.70% 1.15% .40%(e)
Expenses, before waivers/reimbursements 2.04%(e) 2.10% 2.14% 2.17% 2.15% 2.01%(e)
Net investment income, net of
waivers/reimbursements 4.55%(e) 4.73% 4.69% 5.09% 4.99% 4.97%(e)
Portfolio turnover rate 14% 85% 185% 114% 156% 75%
</TABLE>
See footnote summary on page 55.
53
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
VIRGINIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
SIX MONTHS APRIL 29, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .27(c) .57(c) .57(c) .56 .24
Net realized and unrealized gain (loss)
on investment transactions .34 .57 .37 .61 (.31)
Net increase (decrease) in net asset
value from operations .61 1.14 .94 1.17 (.07)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.29) (.57) (.57) (.56) (.24)
Distributions in excess of net
investment income -0- -0- -0- (.01) -0-
Distributions from net realized gains (.32) (.25) (.08) -0- -0-
Total dividends and distributions (.61) (.82) (.65) (.57) (.24)
Net asset value, end of period $10.90 $10.90 $10.58 $10.29 $ 9.69
TOTAL RETURN
Total investment return based on
net asset value (d) 5.68% 11.32% 9.39% 12.46% (.71)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,328 $3,530 $2,455 $1,855 $1,249
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .67%(e) .67% .67% .67% .57%(e)
Expenses, before waivers/reimbursements 2.49%(e) 3.57% 5.18% 8.96% 12.29%(e)
Net investment income, net of
waivers/reimbursements 4.99%(e) 5.39% 5.39% 5.59% 5.62%(e)
Portfolio turnover rate 63% 258% 298% 128% 65%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
SIX MONTHS APRIL 29, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .23(c) .50(c) .50(c) .49 .22
Net realized and unrealized gain (loss)
on investment transactions .33 .58 .36 .61 (.32)
Net increase (decrease) in net asset
value from operations .56 1.08 .86 1.10 (.10)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.25) (.50) (.50) (.49) (.21)
Distributions in excess of net
investment income -0- -0- -0- (.01) -0-
Distributions from net realized gains (.32) (.25) (.08) -0- -0-
Total dividends and distributions (.57) (.75) (.58) (.50) (.21)
Net asset value, end of period $10.89 $10.90 $10.57 $10.29 $ 9.69
TOTAL RETURN
Total investment return based on
net asset value (d) 5.25% 10.70% 8.57% 11.67% (1.01)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,200 $5,020 $3,345 $1,193 $224
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.37%(e) 1.37% 1.37% 1.37% 1.27%(e)
Expenses, before waivers/reimbursements 3.19%(e) 4.29% 5.88% 9.66% 12.99%(e)
Net investment income, net of
waivers/reimbursements 4.30%(e) 4.68% 4.70% 4.80% 4.97%(e)
Portfolio turnover rate 63% 258% 298% 128% 65%
</TABLE>
See footnote summary on page 55.
54
ALLIANCE MUNICIPAL INCOME FUND II
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
VIRGINIA PORTFOLIO
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS APRIL 29, 1994(A)
ENDED YEAR ENDED SEPTEMBER 30, TO
MARCH 31, 1998 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 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) .23(c) .50(c) .50(c) .49 .21
Net realized and unrealized gain (loss)
on investment transactions .33 .58 .36 .60 (.30)
Net increase (decrease) in net asset
value from operations .56 1.08 .86 1.09 (.09)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.25) (.50) (.50) (.49) (.21)
Distributions in excess of net
investment income -0- -0- -0- (.01) -0-
Distributions from net realized gains (.32) (.25) (.08) -0- -0-
Total dividends and distributions (.57) (.75) (.58) (.50) (.21)
Net asset value, end of period $10.89 $10.90 $10.57 $10.29 $ 9.70
TOTAL RETURN
Total investment return based on
net asset value (d) 5.25% 10.70% 8.58% 11.56% (.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,878 $1,207 $642 $122 $43
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.37%(e) 1.37% 1.37% 1.37% 1.27%(e)
Expenses, before waivers/reimbursements 3.19%(e) 4.25% 5.88% 9.66% 12.99%(e)
Net investment income, net of
waivers/reimbursements 4.28%(e) 4.66% 4.73% 4.81% 4.67%(e)
Portfolio turnover rate 63% 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.
55
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
48 Wall Street
New York, NY 10286
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
(1) Member of the Audit Committee.
56
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 Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance 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 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
57
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.
MUNIIISR`
