N-30D 1 edg7151.txt ALLIANCE MUNI INCOME FUND II AR -------------------------------------------------------------------------------- TAX-EXEMPT INCOME -------------------------------------------------------------------------------- Alliance Municipal Income Fund II Annual Report September 30, 2001 Alliance Capital [LOGO](R) The Investment Professional's Choice Investment Products Offered --------------------------- o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed --------------------------- This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. ---------------------- LETTER TO SHAREHOLDERS ---------------------- LETTER TO SHAREHOLDERS November 5, 2001 Dear Shareholder: This report provides municipal market activity and investment results for Alliance Municipal Income Fund II for the annual reporting period ended September 30, 2001. Investment Objectives and Policies The nine portfolios of this open-end fund, by investing principally in high-yielding, predominantly medium-quality municipal securities, seek to provide their shareholders with the highest level of income exempt from Federal and state personal income tax (or for Florida, the intangible tax) that is available without assuming undue risk. These securities generally offer current yields above those of higher-quality municipal obligations. INVESTMENT RESULTS* Periods Ended September 30, 2001 ------------------------------ Total Returns ------------------------------ Overall 6 12 Morningstar Portfolio Months Months Ratings** -------------------------------------------------------------------------------- Arizona 3.62% 8.56% 5 -------------------------------------------------------------------------------- Florida 3.55% 9.71% 4 -------------------------------------------------------------------------------- Massachusetts 3.73% 9.92% 4 -------------------------------------------------------------------------------- Michigan 4.83% 10.11% 5 -------------------------------------------------------------------------------- Minnesota 3.17% 9.44% 5 -------------------------------------------------------------------------------- New Jersey 1.29% 7.33% 3 -------------------------------------------------------------------------------- Ohio 1.75% 8.04% 4 -------------------------------------------------------------------------------- Pennsylvania 4.62% 11.11% 4 -------------------------------------------------------------------------------- Virginia 2.64% 7.32% 4 -------------------------------------------------------------------------------- Number of Funds in Morningstar Municipal Bond Fund Category 1649 -------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index 3.48% 10.40% -------------------------------------------------------------------------------- * The Fund's investment results represent total returns for the periods shown and are based on the net asset value (NAV) of Class A shares as of September 30, 2001. 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. Returns for the Fund include the reinvestment of any distributions paid during the period. Returns for Class B and Class C shares will vary due to different expenses associated with these classes. The Lehman Brothers Municipal Bond Index is a total return performance benchmark for the long-term investment grade, tax-exempt bond market. An investor cannot invest directly in an index, and its results are not indicative of any specific investment, including an Alliance mutual fund. Past performance is no guarantee of future results. Additional performance information can be found on pages 2-3 and 7-15. ** Morningstar proprietary ratings reflect historical risk-adjusted performance for each Portfolio's Class A shares as of September 30, 2001. Each Portfolio's 3- and 5-year Morningstar ratings were: Arizona 4 stars and 5 stars; Florida 3 stars and 4 stars; Massachusetts 3 stars and 5 stars; Michigan 4 stars and 5 stars; Minnesota 4 stars -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 1 ---------------------- LETTER TO SHAREHOLDERS ---------------------- and 5 stars; New Jersey 3 stars and 3 stars; Ohio 3 stars and 5 stars; Pennsylvania 3 stars and 4 stars; Virginia 3 stars and 5 stars among 1649 municipal bond funds for the 3-year period and among 1442 municipal bond funds for the 5-year period. These ratings may change monthly and are calculated from each Portfolio's 3-year, 5-year and overall average annual returns in excess of 90-day Treasury bill returns with appropriate fee adjustments and a risk factor that reflects portfolio performance below 90-day Treasury bill returns. If the Portfolio scores in the top 10% of its class, it receives 5 stars; if it falls in the next 22.5%, it receives 4 stars; a place in the middle 35% earns it 3 stars; if it falls in the next 22.5%, it receives 2 stars; and if it scores at the bottom 10%, it gets 1 star. Ratings can change monthly. Each Portfolio's SEC average annual total returns can be found on page 14. ALLIANCE MUNICIPAL INCOME FUND II - CLASS A SHARES Periods Ended September 30, 2001 Since 1 Year 3 Year 5 Year Inception Lipper Lipper Lipper Lipper Portfolio Rankings* Rankings* Rankings* Rankings* -------------------------------------------------------------------------------- Arizona 29/43 3/38 1/36 1/21 -------------------------------------------------------------------------------- Florida 32/63 10/61 1/56 1/23 -------------------------------------------------------------------------------- Massachusetts 28/55 9/50 1/45 1/32 -------------------------------------------------------------------------------- Michigan 10/46 1/41 1/36 1/26 -------------------------------------------------------------------------------- Minnesota 11/50 1/46 1/45 1/19 -------------------------------------------------------------------------------- New Jersey 51/53 16/51 3/44 3/24 -------------------------------------------------------------------------------- Ohio 35/47 16/43 3/99 6/23 -------------------------------------------------------------------------------- Pennsylvania 6/62 5/60 1/55 1/34 -------------------------------------------------------------------------------- Virginia 35/37 13/36 1/33 1/27 -------------------------------------------------------------------------------- * Lipper Rankings are based on the Portfolio's return among the returns of its peer group of funds, as represented by the respective state-specific Lipper Municipal Debt Funds Average. Funds in the Lipper averages generally have similar investment objectives to the Fund, although some may have different investment policies. Fund portfolio inception dates are: Arizona (6/1/94); Florida (6/25/93); Massachusetts (3/29/94); Michigan (2/25/94); Minnesota (6/25/93); New Jersey (6/25/93); Ohio (6/25/93); Pennsylvania (6/25/93); and Virginia (4/29/94). An investor cannot invest directly in an average, and its results are not indicative of any specific investment, including Alliance Municipal Income Fund II. Past performance is no guarantee of future results. -------------------------------------------------------------------------------- 2 o ALLIANCE MUNICIPAL INCOME FUND II ---------------------- LETTER TO SHAREHOLDERS ---------------------- MUNICIPAL INCOME FUND II--CLASS A SHARES COMPARED TO LIPPER MUNICIPAL DEBT FUNDS AVERAGE* Periods Ended September 30, 2001
Fund Fund Fund Portfolio Portfolio Portfolio Total Lipper Total Lipper Total Lipper Returns Average Returns Average Returns Average Since Since Portfolio 12 Months 12 Months 5 Years 5 Years Inception Inception** ---------------------------------------------------------------------------------------- Arizona 8.56% 9.09% 6.80% 5.44% 7.07% 6.03% ---------------------------------------------------------------------------------------- Florida 9.71% 9.52% 6.42% 5.45% 5.90% 5/23% ---------------------------------------------------------------------------------------- Massachusetts 9.92% 10.08% 6.68% 5.53% 7.72% 6.03% ---------------------------------------------------------------------------------------- Michigan 10.11% 9.60% 7.25% 5.47% 7.14% 5.33% ---------------------------------------------------------------------------------------- Minnesota 9.44% 8.98% 6.52% 5.26% 5.75% 5.15% ---------------------------------------------------------------------------------------- New Jersey 7.33% 9.42% 6.08% 5.39% 5.64% 5.12% ---------------------------------------------------------------------------------------- Ohio 8.04% 8.97% 6.28% 5.35% 5.64% 5.20% ---------------------------------------------------------------------------------------- Pennsylvania 11.11% 9.53% 6.60% 5.36% 6.18% 5.20% ---------------------------------------------------------------------------------------- Virginia 7.32% 8.81% 6.53% 5.52% 7.19% 6.00% ----------------------------------------------------------------------------------------
* Total returns for the Fund's portfolios are based on the net asset value (NAV) of Class A shares as of September 30, 2001. 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. Returns for the Fund include the reinvestment of any distributions paid during the period. Returns for Class B and Class C shares will vary due to different expenses associated with these classes. Past performance is no guarantee of future results. The state specific Lipper Municipal Debt Funds Averages have generally similar investment objectives to the Fund's portfolios, although some may have different investment policies. An investor cannot invest directly in an average, and its results are not indicative of any specific investment, including Alliance Municipal Income Fund II. ** Fund portfolio since inception dates can be found on page 2. Investment Results Each of the Fund's portfolios' Class A share total returns at net asset value (NAV) for the six- and 12-month periods ended September 30, 2001 is shown on the first page along with the Fund's benchmark, the Lehman Brothers Municipal Bond Index. This is accompanied by a comparison to the portfolios' peer groups, as measured by the Lipper Municipal Debt Funds Average for each state. The Lehman Brothers Municipal Bond Index is a total return performance benchmark for the long-term, investment-grade, tax-exempt bond market. The Lipper Municipal Debt Funds Average is comprised of funds with generally similar investment objectives to the Fund's portfolios, although some may have different investment policies. Over the long-term, all of the Fund's portfolios outperformed their respective Lipper peer group average as demonstrated by the "since inception returns" in the accompanying table. Over the last 12 months, less than half of the portfolios exceeded their Lipper peer group averages. In addition, most of the portfolios underperformed the Lehman Municipal Bond Index for the same time period. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 3 ---------------------- LETTER TO SHAREHOLDERS ---------------------- When comparing a single-state municipal bond portfolio to the Lehman Municipal Bond Index, currently composed of 41,846 bond issues from across the U.S., it is important to note that the composition and performance characteristics are significantly different. Alternatively, a comparison of the portfolios to their respective Lipper peer groups may well be more meaningful. The relative performance of the portfolios over the course of the last 12 months has largely been a function of their more defensive structuring. In general, we have focused our investment activity on premium (higher) coupon structures and sector selection in an attempt to maximize a portfolio's tax-exempt income, while minimizing its price volatility. In a falling rate environment, a portfolio designed as such would be expected to lag the performance of a portfolio possessing a relative overweighting in discount (lower) coupon bonds. Despite this underperformance, we believe the portfolios are correctly structured for the longer term. In addition, as a result of the tragic events of September 11, a number of the portfolios were adversely affected due to their holdings in municipal bonds related to airport facilities backed directly by specific airlines. Market Overview Municipal bonds delivered strong relative performance over the past 12 months compared to other fixed income sectors. For the 12-month period ended September 30, 2001, the Lehman Brothers Municipal Bond Index return was 10.40% which is a taxable equivalent return of approximately 13.70%. In comparison, the Lehman Brothers Aggregate Bond Index, encompassing most taxable bond sectors, returned 12.95%. The overall fixed income market benefited from the slowing economy, aggressive rate cuts by the Federal Reserve, and an investor "flight to quality" in the wake of the terrorist attacks of September 11. Municipal bonds received an additional push from individual investors seeking stability in a volatile environment for stocks and from a dearth of new issues to satisfy the increased demand. During the past year, individual investors reallocated assets from equities and high yield corporate bonds into municipals, attracted by the significant tax benefit offered by municipals in addition to perceived credit stability. Coincident with these new money flows into the market, an estimated $255 billion of proceeds from maturing bond issues and scheduled coupon payments flowed to municipal bond investors. Investors typically reinvest a large percentage of their principal and interest payments into the municipal market, further strengthening demand. Although the available supply of newly issued municipal bonds (typically the major source of bonds available for purchase) increased compared to last year, state-by-state comparisons were uneven. For example, new issuance from New Jersey borrowers was down 24% year-over-year, leading to a shortage of bonds in that particular market. Similarly, the postponement of several large new issues expected to come to market, including $12 billion of expected supply in California alone, further exacerbated technical imbalances in the municipal market. -------------------------------------------------------------------------------- 4 o ALLIANCE MUNICIPAL INCOME FUND II ---------------------- LETTER TO SHAREHOLDERS ---------------------- The imbalance of supply and demand in the municipal market will be somewhat alleviated over the next several quarters as city and state governments see declines in tax receipts caused by the overall slowdown in the economy. In 1999 and 2000, strong personal income growth, fueled by individuals exercising stock options granted by their employers, contributed to budget surpluses in many locations. Sales tax revenues have also declined from prior levels, while property taxes have reached a plateau. This should lead to an increase in borrowing needs for state and local governments in 2002 and beyond. The extent to which this increased supply will correct current market imbalances is unknown, but record-setting levels of new issuance will be required if current demand is to be fully satisfied. Investment Strategy The Alliance Capital portfolio management team follows a bottom-up, value-oriented approach to managing your money. We select securities for the portfolios that offer good value relative to our assessment of the issuer's credit quality, and look for structural features such as call protection that enhance a security's price appreciation potential. For fiscal 2001, we identified lower-rated bonds as offering good value, as their yield advantage over higher-rated paper more than offset the incremental credit risk they present. We also anticipated that, because tax receipts typically lag the economic cycle, a downturn in the U.S. economy would not immediately impact municipal bond credit quality. In anticipation of these changes, we positioned the portfolios to be fully invested in long-term bonds with an overweight position in lower-rated securities. Mirroring this strategy for new bond purchases was our selection criteria for identifying existing investments to be sold, which for 2001 focused on high quality bonds with poor call protection. Anticipating that a lower rate environment would allow municipalities to refinance their callable bonds, we attempted to sell any position that was likely to be called in the near-term, or that had fully appreciated due to credit improvement. Another important feature of our portfolio strategy is seeking to minimize any potential tax payments generated by realizing capital gains. Because of our value-oriented approach, we will often need to offset capital gains from our fully appreciated positions with losses from underperforming securities. We utilize a technique known as tax swapping among the various portfolios to offset gains with losses, while replacing the bonds sold at a loss with higher yielding or more call-protected securities. By using this technique, we are better able to achieve our stated goal of delivering the highest level of tax-free total return possible. Outlook The outlook for the municipal bond market remains favorable, with declining credit quality offset by continuing strong investor demand for tax-exempt income. Issuance levels from specific states will cause some price volatility for single-state portfolios, but we look forward to any potential supply/demand imbalances as opportunities to buy or sell bonds, as appropriate. The pending recovery of the U.S. economy will also influence returns in 2002, but -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 5 ---------------------- LETTER TO SHAREHOLDERS ---------------------- the continuing technical imbalance in the municipal market will likely boost municipal returns compared to taxable alternatives. Overall, we anticipate for 2002 that municipal bonds will deliver strong relative and absolute results, but will require careful monitoring on a state-by-state basis in order to take full advantage of the current market environment. The Alliance Municipal Income team is proud of our excellent long-term investment record. We look forward to the opportunity to serve our shareholders over the next year. Sincerely, /s/ John D. Carifa John D. Carifa Chairman and President /s/ Susan P. Keenan Susan P. Keenan Senior Vice President [PHOTO John D. OMITTED] Carifa [PHOTO Susan P. OMITTED] Keenan Susan P. Keenan, Portfolio Manager, heads the Municipal Bond Department. She has over 20 years of investment experience. -------------------------------------------------------------------------------- 6 o ALLIANCE MUNICIPAL INCOME FUND II ------------------ PERFORMANCE UPDATE ------------------ PERFORMANCE UPDATE ALLIANCE MUNICIPAL INCOME FUND II GROWTH OF A $10,000 INVESTMENT Arizona Portfolio 6/30/94 - 9/30/01 Arizona Portfolio Class A at NAV: $16,593 Arizona Portfolio Class A at offering: $15,887 Lipper AZ Muni Funds Average: $15,296 [The following table was depicted as a mountain chart in the printed material.]
Arizona Portfolio Lipper AZ Muni Funds Average ---------------------------------------------------------------------- 6/30/94 $ 9,574 $10,000 9/30/94 $ 9,595 $10,043 9/30/95 $10,704 $11,073 9/30/96 $11,435 $11,691 9/30/97 $12,640 $12,676 9/30/98 $13,846 $13,681 9/30/99 $13,783 $13,398 9/30/00 $14,634 $14,063 9/30/01 $15,887 $15,296
Florida Portfolio 6/30/93 - 9/30/01 Florida Portfolio Class A at NAV: $16,067 Florida Portfolio Class A at offering: $15,390 Lipper FL Muni Funds Average: $15,267 [The following table was depicted as a mountain chart in the printed material.]
Florida Portfolio Lipper FL Muni Funds Average ------------------------------------------------------------------------ 6/30/93 $ 9,579 $10,000 9/30/93 $ 9,971 $10,358 9/30/94 $ 9,170 $ 9,909 9/30/95 $10,495 $10,973 9/30/96 $11,276 $11,622 9/30/97 $12,419 $12,565 9/30/98 $13,533 $13,614 9/30/99 $13,347 $13,252 9/30/00 $14,028 $13,906 9/30/01 $15,390 $15,267
Massachusetts Portfolio 3/31/94 - 9/30/01 Massachusetts Portfolio Class A at NAV: $17,476 Massachusetts Portfolio Class A at offering: $16,739 Lipper MA Muni Funds Average: $15,526 [The following table was depicted as a mountain chart in the printed material.]
Massachusetts Portfolio Lipper MA Muni Funds Average ------------------------------------------------------------------------ 3/31/94 $ 9,579 $10,000 9/30/94 $ 9,975 $10,116 9/30/95 $10,991 $11,088 9/30/96 $12,117 $11,761 9/30/97 $13,467 $12,769 9/30/98 $14,704 $13,824 9/30/99 $14,521 $13,421 9/30/00 $15,228 $14,082 9/30/01 $16,739 $15,526
Please see mountain chart footnotes on page 10. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 7 ------------------ PERFORMANCE UPDATE ------------------ PERFORMANCE UPDATE ALLIANCE MUNICIPAL INCOME FUND II GROWTH OF A $10,000 INVESTMENT Michigan Portfolio 2/28/94 - 9/30/01 Michigan Portfolio Class A at NAV: $16,895 Michigan Portfolio Class A at offering: $16,183 Lipper MI Muni Funds Average: $14,844 [The following table was depicted as a mountain chart in the printed material.]
Michigan Portfolio Lipper MI Muni Funds Average ------------------------------------------------------------------------ 2/28/94 $ 9,579 $10,000 9/30/94 $ 9,268 $ 9,680 9/30/95 $10,603 $10,642 9/30/96 $11,402 $11,259 9/30/97 $12,662 $12,199 9/30/98 $13,810 $13,201 9/30/99 $13,814 $12,850 9/30/00 $14,697 $13,507 9/30/01 $16,183 $14,844
Minnesota Portfolio 6/30/93 - 9/30/01 Minnesota Portfolio Class A at NAV: $15,876 Minnesota Portfolio Class A at offering: $15,207 Lipper MN Muni Funds Average: $15,137 [The following table was depicted as a mountain chart in the printed material.]
Minnesota Portfolio Lipper MN Muni Funds Average ------------------------------------------------------------------------ 6/30/93 $ 9,579 $10,000 9/30/93 $ 9,994 $10,350 9/30/94 $ 9,460 $10,018 9/30/95 $10,370 $10,934 9/30/96 $11,091 $11,529 9/30/97 $12,192 $12,468 9/30/98 $13,160 $13,445 9/30/99 $13,097 $13,198 9/30/00 $13,895 $13,858 9/30/01 $15,207 $15,137
New Jersey Portfolio 6/30/93 - 9/30/01 New Jersey Portfolio Class A at NAV: $15,749 New Jersey Portfolio Class A at offering: $15,103 Lipper NJ Muni Funds Average: $15,085 [The following table was depicted as a mountain chart in the printed material.]
New Jersey Portfolio Lipper NJ Muni Funds Average ------------------------------------------------------------------------ 6/30/93 $ 9,579 $10,000 9/30/93 $10,004 $10,345 9/30/94 $ 9,331 $ 9,913 9/30/95 $10,536 $10,896 9/30/96 $11,227 $11,496 9/30/97 $12,352 $12,465 9/30/98 $13,384 $13,485 9/30/99 $13,346 $13,177 9/30/00 $14,056 $13,806 9/30/01 $15,085 $15,103
Please see mountain chart footnotes on page 10. -------------------------------------------------------------------------------- 8 o ALLIANCE MUNICIPAL INCOME FUND II ------------------ PERFORMANCE UPDATE ------------------ PERFORMANCE UPDATE ALLIANCE MUNICIPAL INCOME FUND II GROWTH OF A $10,000 INVESTMENT Ohio Portfolio 6/30/93 - 9/30/01 Ohio Portfolio Class A at NAV: $15,739 Ohio Portfolio Class A at offering: $15,204 Lipper OH Muni Funds Average: $15,076 [The following table was depicted as a mountain chart in the printed material.]
Ohio Portfolio Lipper OH Muni Funds Average ------------------------------------------------------------------------ 6/30/93 $ 9,579 $10,000 9/30/93 $ 9,976 $10,346 9/30/94 $ 9,334 $ 9,949 9/30/95 $10,419 $10,937 9/30/96 $11,120 $11,584 9/30/97 $12,410 $12,560 9/30/98 $13,440 $13,574 9/30/99 $13,347 $13,282 9/30/00 $13,953 $13,922 9/30/01 $15,076 $15,204
Pennsylvania Portfolio 6/30/93 - 9/30/01 Pennsylvania Portfolio Class A at NAV: $16,422 Pennsylvania Portfolio Class A at offering: $15,730 Lipper PA Muni Funds Average: $15,200 [The following table was depicted as a mountain chart in the printed material.]
Pennsylvania Portfolio Lipper PA Muni Funds Average ------------------------------------------------------------------------ 6/30/93 $ 9,579 $10,000 9/30/93 $ 9,973 $10,361 9/30/94 $ 9,473 $ 9,982 9/30/95 $10,565 $10,956 9/30/96 $11,428 $11,615 9/30/97 $12,668 $12,597 9/30/98 $13,772 $13,597 9/30/99 $13,437 $13,238 9/30/00 $14,157 $13,855 9/30/01 $15,730 $15,200
Please see mountain chart footnotes on page 10. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 9 ------------------ PERFORMANCE UPDATE ------------------ PERFORMANCE UPDATE ALLIANCE MUNICIPAL INCOME FUND II GROWTH OF A $10,000 INVESTMENT Virginia Portfolio 4/30/94 - 9/30/01 Virginia Portfolio Class A at NAV: $16,754 Virginia Portfolio Class A at offering: $16,048 Lipper VA Muni Funds Average: $15,420 [The following table was depicted as a mountain chart in the printed material.]
Virginia Portfolio Lipper VA Muni Funds Average ------------------------------------------------------------------------ 4/30/94 $ 9,579 $10,000 9/30/94 $ 9,510 $10,027 9/30/95 $10,695 $11,056 9/30/96 $11,699 $11,730 9/30/97 $13,024 $12,723 9/30/98 $14,280 $13,786 9/30/99 $14,123 $13,506 9/30/00 $14,954 $14,171 9/30/01 $16,048 $15,420
Each chart illustrates the total value of an assumed $10,000 investment in each of Alliance Municipal Income Fund II's Class A shares (since the closest month-end after each Portfolio's inception date through 9/30/01). The charts reflect the deduction of the maximum 4.25% sales charges from initial $10,000 investments in the Portfolios and assume the reinvestment of dividends and capital gains. Performance at NAV (net asset value) does not reflect sales charges, which reduce total return figures. Performance for Class B and Class C shares will vary from the results shown in these illustrations due to differences in expenses charged to these classes. Past performance is not indicative of future results, and is not representative of future gain or loss in capital value or dividend income. The Lipper Arizona Municipal Debt Funds Average reflects performance of 21 funds; the Lipper Florida Municipal Debt Funds Average reflects performance of 23 funds; the Lipper Massachusetts Municipal Debt Funds Average reflects performance of 32 funds; the Lipper Michigan Municipal Debt Funds Average reflects performance of 26 funds; the Lipper Minnesota Municipal Debt Funds Average reflects performance of 19 funds; the Lipper New Jersey Municipal Debt Funds Average reflects performance of 24 funds; the Lipper Ohio Municipal Debt Funds Average reflects performance of 23 funds; the Lipper Pennsylvania Municipal Debt Funds Average reflects performance of 34 funds; and the Lipper Virginia Municipal Debt Funds Average reflects performance of 27 funds. The funds tracked by Lipper Inc. have generally similar investment objectives to the applicable Alliance Municipal Income Fund II Portfolios, although some of the funds may have investment policies that are somewhat different than those of Alliance Municipal Income Fund II. When comparing an Alliance Municipal Income Fund II Portfolio to the corresponding Lipper Average, you should note that no charges are reflected in the performance of the Lipper Averages. An investor cannot invest directly in an average, and its results are not indicative of any specific investment, including Alliance Municipal Income Fund II. -------------------------------------------------------------------------------- 10 o ALLIANCE MUNICIPAL INCOME FUND II ----------------- PORTFOLIO SUMMARY ----------------- PORTFOLIO SUMMARY September 30, 2001 ARIZONA PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 50.48% AAA 11.56% AA 0.68% A [PIE CHART OMITTED] 14.04% BBB 23.24% NR INCEPTION DATE (Class A Shares) 6/1/94 FLORIDA PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 40.22% AAA 6.14% AA 19.63% A [PIE CHART OMITTED] 10.41% BBB 23.60% NR INCEPTION DATE (Class A Shares) 6/25/93 MASSACHUSETTS PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 41.38% AAA 18.66% AA 1.95% A [PIE CHART OMITTED] 32.75% BBB 5.26% NR INCEPTION DATE (Class A Shares) 3/29/94 All data as of September 30, 2001. Each portfolio's quality breakdown is expressed as a percentage of the portfolio's total investments and may vary over time. NR - non-rated. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 11 ----------------- PORTFOLIO SUMMARY ----------------- PORTFOLIO SUMMARY September 30, 2001 MICHIGAN PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 50.13% AAA 11.42% AA 18.73% A [PIE CHART OMITTED] 15.05% BBB 4.67% NR INCEPTION DATE (Class A Shares) 2/25/94 MINNESOTA PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 47.50% AAA 32.97% AA 3.76% A [PIE CHART OMITTED] 5.58% BBB 10.19% NR INCEPTION DATE (Class A Shares) 6/25/93 NEW JERSEY PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 51.46% AAA 8.64% AA 17.94% A [PIE CHART OMITTED] 14.21% BBB 7.75% NR INCEPTION DATE (Class A Shares) 6/25/93 All data as of September 30, 2001. Each portfolio's quality breakdown is expressed as a percentage of the portfolio's total investments and may vary over time. NR - non-rated. -------------------------------------------------------------------------------- 12 o ALLIANCE MUNICIPAL INCOME FUND II ----------------- PORTFOLIO SUMMARY ----------------- PORTFOLIO SUMMARY September 30, 2001 OHIO PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 28.04% AAA 1.51% AA 21.66% A [PIE CHART OMITTED] 32.62% BBB 16.17% NR INCEPTION DATE (Class A Shares) 6/25/93 PENNSYLVANIA PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 35.80% AAA 25.28% AA 8.96% A [PIE CHART OMITTED] 21.91% BBB 8.05% NR INCEPTION DATE (Class A Shares) 6/25/93 VIRGINIA PORTFOLIO (CLASS A SHARES) BOND QUALITY RATING 30.27% AAA 26.67% AA 15.16% A [PIE CHART OMITTED] 14.51% BBB 13.39% NR INCEPTION DATE (Class A Shares) 4/29/94 All data as of September 30, 2001. Each portfolio's quality breakdown is expressed as a percentage of the portfolio's total investments and may vary over time. NR - non-rated. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 13 ------------------ INVESTMENT RESULTS ------------------ INVESTMENT RESULTS Average Annual Total Returns as of September 30, 2001
NAV and SEC Total Returns ------------------------------------------------------------------------------------------------- Without Sales Charge With Sales Charge ------------------------------------------------------------------------------------------------- Since Since 1 Year 5 Years Inception 1 Year 5 Years Inception ------------------------------------------------------------------------------------------------- Arizona Portfolio Class A 8.56% 6.80% 7.07% 3.99% 5.87% 6.44% Class B 7.76% 6.06% 6.33% 4.76% 6.06% 6.33% Class C 7.76% 6.06% 6.33% 6.76% 6.06% 6.33% Florida Portfolio Class A 9.71% 6.42% 5.90% 5.08% 5.50% 5.35% Class B 8.92% 5.66% 5.15% 5.92% 5.66% 5.15% Class C 8.93% 5.66% 5.15% 7.93% 5.66% 5.15% Massachusetts Portfolio Class A 9.92% 6.68% 7.72% 5.25% 5.76% 7.10% Class B 9.22% 5.97% 6.98% 6.22% 5.97% 6.98% Class C 9.22% 5.97% 6.98% 8.22% 5.97% 6.98% Michigan Portfolio Class A 10.11% 7.25% 7.14% 5.44% 6.33% 6.54% Class B 9.39% 6.49% 6.38% 6.26% 6.49% 6.38% Class C 9.50% 6.52% 6.40% 8.50% 6.52% 6.40% Minnesota Portfolio Class A 9.44% 6.52% 5.75% 4.80% 5.58% 5.20% Class B 8.61% 5.74% 5.17% 5.61% 5.74% 5.17% Class C 8.82% 5.78% 5.00% 7.82% 5.78% 5.00% New Jersey Portfolio Class A 7.33% 6.08% 5.64% 2.77% 5.17% 5.10% Class B 6.56% 5.32% 5.09% 3.56% 5.32% 5.09% Class C 6.45% 5.32% 4.88% 5.45% 5.32% 4.88% Ohio Portfolio Class A 8.04% 6.28% 5.64% 3.49% 5.35% 5.09% Class B 7.33% 5.53% 5.07% 4.33% 5.53% 5.07% Class C 7.43% 5.55% 4.89% 6.43% 5.55% 4.89% Pennsylvania Portfolio Class A 11.11% 6.60% 6.18% 6.38% 5.67% 5.63% Class B 10.25% 5.81% 5.63% 7.25% 5.81% 5.63% Class C 10.25% 5.81% 5.41% 9.25% 5.81% 5.41% Virginia Portfolio Class A 7.32% 6.53% 7.19% 2.75% 5.60% 6.57% Class B 6.62% 5.83% 6.47% 3.62% 5.83% 6.47% Class C 6.62% 5.81% 6.46% 5.62% 5.81% 6.46%
The Fund's investment results represent average annual total returns. The returns reflect reinvestment of dividends and/or capital gains distributions in additional shares without and with the effect of the 4.25% maximum front-end sales charge for Class A shares or applicable contingent deferred sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0% year 4); and for Class C shares (1% year 1). Returns for Class A shares do not reflect the imposition of the 1%, year 1 contingent deferred sales charge for accounts over $1,000,000. Price fluctuation may be caused by changes in the general level of interest rates or changes in bond credit quality ratings. Changes in interest rates have a greater effect on bonds with longer maturities than on those with shorter maturities. Past performance is not indicative of 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. -------------------------------------------------------------------------------- 14 o ALLIANCE MUNICIPAL INCOME FUND II ------------------ INVESTMENT RESULTS ------------------ INVESTMENT RESULTS As of September 30, 2001 ALLIANCE MUNICIPAL INCOME FUND II
-------------------------------------------------------------------------------- Taxable Equivalent Yield in 30-Day SEC Yield* 36% Tax Bracket (at NAV)** -------------------------------------------------------------------------------- Arizona Portfolio Class A 4.50% 8.31% Class B 4.00% 7.26% Class C 4.00% 7.26% Florida Portfolio Class A 4.64% 8.09% Class B 4.15% 6.98% Class C 4.15% 6.98% Massachusetts Portfolio Class A 4.77% 8.54% Class B 4.28% 7.48% Class C 4.28% 7.48% Michigan Portfolio Class A 4.51% 8.19% Class B 4.02% 7.13% Class C 4.03% 7.13% Minnesota Portfolio Class A 4.67% 8.87% Class B 4.17% 7.77% Class C 4.15% 7.75% New Jersey Portfolio Class A 4.38% 8.69% Class B 3.86% 7.49% Class C 3.86% 7.49% Ohio Portfolio Class A 4.52% 8.94% Class B 4.00% 7.81% Class C 4.00% 7.81% Pennsylvania Portfolio Class A 4.92% 8.21% Class B 4.09% 7.14% Class C 4.08% 7.14% Virginia Portfolio Class A 4.73% 8.67% Class B 4.24% 7.59% Class C 4.25% 7.59%
* SEC yields are based on SEC guidelines and are calculated on 30 days ended September 30, 2001. ** The taxable-equivalent yield is based on NAV and a 36% marginal Federal income tax rate and maximum state, city and local taxes where applicable. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 15 ------------------------ ARIZONA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ ARIZONA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value -------------------------------------------------------------------------------- Municipal Bonds-97.3% Arizona-89.3% AAA Arizona School Board (Fac Res) Ser 01 5.00%, 7/01/19 ............................. $7,230 $7,279,381 Aaa Arizona Student Loan Acquistion Authority (Student Loan Rev) Ser 99B-1 AMT 5.90%, 5/01/24(b) .......................... 1,500 1,569,495 NR Gilbert Res Mun Prop Corp. (Water & Wastewater Sys Rev) Sub Lien-Connection Dev Fee Ser 01 6.40%, 4/01/16 ............................. 1,500 1,510,830 AAA Glendale IDR (Midwestern Univ) Connie Lee Ser 96A 6.00%, 5/15/26 ............................. 475 514,601 BBB+ Glendale IDR (Midwestern Univ) Ser 01A 5.875%, 5/15/31 ............................ 3,770 3,824,740 NR Goodyear Assessment District #1 (Palm Valley) Ser 96C 7.25%, 7/01/16 ............................. 4,935 5,320,029 NR Goodyear Cmnty Fac District (Litchfield Pk Svc Proj) Ser 01 6.375%, 7/15/26 ............................ 3,250 3,225,592 NR Goodyear Dev Auth Water & Sewer Rev (Litchfield Pk Svc Proj) Ser 99 AMT 5.95%, 10/01/23 ............................ 3,160 3,137,027 (Litchfield Pk Svc Proj) Ser 01 AMT 6.75%, 10/01/31 ............................ 6,160 6,253,817 NR Goodyear Spec. Assessment (Estrella Ranch Cmnty Proj) Ser 01A 7.875%, 7/01/25 ............................ 8,088 8,671,792 NR Hassayampa Cmnty Fac District #1 Spec. Assessment Lien Ser 96 7.75%, 7/01/21 ............................. 6,345 6,928,867 NR Hassayampa Cmnty Fac District #2 Spec. Assessment Lien Ser 00 7.50%, 7/01/24 ............................. 1,205 1,320,909 AAA Maricopa Cnty GO School Dist No. 28 (Kyrene Elem) FGIC Ser 95B 6.00%, 7/01/14 ............................. 2,000 2,172,800 AAA Maricopa Cnty Hospital Rev (Catholic Healthcare Center) MBIA 5.616%, 7/01/13(c) ......................... 2,700 2,929,338 -------------------------------------------------------------------------------- 16 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ ARIZONA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ Standard & Principal Poor's Amount Ratings(a) (000) Value -------------------------------------------------------------------------------- BBB Maricopa Cnty IDR (Citizens Utilities) Ser 95 AMT 6.20%, 5/01/30 ............................. $ 8,550 $ 8,049,654 AA Maricopa Cnty MFHR (Avalon Apts Proj) Asset Gty Ser 00A 6.35%, 4/01/30 ............................. 1,550 1,628,755 AAA Maricopa Cnty MFHR (Syl-Mar Apts Proj) GNMA Ser 01 AMT 6.10%, 4/20/36(b) .......................... 2,470 2,599,551 AAA Maricopa Cnty SFMR GNMA/FNMA/FHLMC Ser 01B-1 AMT 5.00%, 3/01/33 ............................. 2,115 2,136,235 GNMA/FNMA/FHLMC Ser 00C-1 AMT 6.25%, 12/01/30 ............................ 1,345 1,433,017 AAA Mesa Cnty Health Care Fac (Discovery Hlth Sys) MBIA Ser 99A 5.75%, 1/01/25 ............................. 15,000 15,857,550 A+ Mohave Cnty IDR (Cargill/North Star Steel) Ser 95A AMT 6.70%, 3/01/20 ............................. 11,000 11,898,480 AAA Mohave Cnty MFHR (Chris Ridge & Silver) GNMA Ser 96 6.375%, 11/01/31 ........................... 1,000 1,067,600 AA+ Phoenix Excise Tax Rev (Civic Plaza Bldg Corp) Sr Lien Ser 94 6.00%, 7/01/12 ............................. 1,015 1,111,800 AA Phoenix MFHR (Woodstone & Silver Springs) Asset Gty Ser 93 6.25%, 4/01/23 ............................. 3,000 3,099,480 AAA Phoenix SFMR FNMA/GNMA/FHLMC Ser 00B-1 AMT 7.35%, 6/01/31 ............................. 1,990 2,329,454 B+ Pima Cnty IDR (Tucson Electric Pwr) Ser 97C 6.00%, 9/01/29 ............................. 1,750 1,712,795 AAA Pima Cnty MFHR (La Hacienda) GNMA Ser 99 7.00%, 12/20/31 ............................ 1,290 1,466,253 AAA Pima Cnty SFMR GNMA/FNMA/FHLMC Ser 97A AMT 6.25%, 11/01/30 ............................ 1,630 1,706,887 Pima Cnty SFMF FNMA Ser 99B-1 AMT 6.10%, 5/01/31 ............................. 3,830 3,992,277 GNMA/FNMA/FHLMC Ser 01A-1 AMT 5.35%, 11/01/24 ............................ 1,000 1,002,180 -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 17 ------------------------ ARIZONA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ ARIZONA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value -------------------------------------------------------------------------------- AAA Pinal Cnty Prop Corp. AMBAC Ser 01 5.125%, 6/01/21 ............................ $1,000 $ 1,014,290 A Show Low Assessment District #6 (Torreon) 6.00%, 1/01/18 ............................. 1,000 1,037,870 AAA Tempe MFHR (Quadrangles) FHA Ser 93 6.25%, 6/01/26 ............................. 5,150 5,320,774 AAA Tucson Airport Auth Rev AMBAC Ser 01 AMT 5.35%, 6/01/31 ............................. 6,575 6,564,809 AAA Tucson & Pima Cnty SFMR GNMA/FNMA/FHLMC Ser 01-A1 AMT 4.65%, 1/01/34 ............................. 9,000 9,678,150 AAA Yuma Dev Auth Hosp Rev (Regional Med Ctr) FSA Ser 01 5.00%, 8/01/31 ............................. 1,500 1,486,110 ------------ 140,853,189 ------------ Florida-4.9% A Fiddler's Creek Cmnty Dev District Spec. Assessment Lien Ser 99B 5.80%, 5/01/21(e) .......................... 7,940 7,740,230 ------------ Michigan-3.1% BB- Detroit Fin Auth (Tax Increment) Ser 98A 5.50%, 5/01/21 ............................. 5,570 4,808,525 ------------ Total Investments-97.3% (cost $147,972,001) ...................... 153,401,944 Other assets less liabilities-2.7% ......... 4,289,883 ------------ Net Assets-100% ............................ $157,691,827 ============ See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- 18 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ FLORIDA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ FLORIDA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value -------------------------------------------------------------------------------- Municipal Bonds-98.8% Florida-98.8% NR Clay Cnty Cmnty Dev Dist (Crossings at Flemings Island) Spec. Assessment Ser 00C 7.10%, 5/01/30 ............................. $21,860 $ 23,295,983 A Dade Cnty Hsg Fin Auth MFHR (Golden Lakes Apts) Ser 97A AMT 6.00%, 11/01/32(e) ......................... 250 259,370 6.05%, 11/01/39(e) ......................... 750 764,820 AAA Dade Cnty Hsg Fin Auth MFHR (Marbrisa Apts) FSA Ser 002-A AMT 6.15%, 8/01/38 ............................. 1,515 1,591,871 AAA Escambia Cnty Hsg Fin Auth SFMR GNMA Ser 95B AMT 6.25%, 4/01/28 ............................. 9,500 9,797,635 Baa2 Escambia Cnty PCR (Champion Int'l Corp) Ser 96 AMT 6.40%, 9/01/30(b) .......................... 5,000 5,194,450 AAA Florida Hsg Fin Agy MFHR (Turtle Creek Apts) AMBAC Ser 96C AMT 6.20%, 5/01/36 ............................. 3,245 3,396,087 AAA Florida Hsg Fin Agy SFMR Ser 95A AMT 6.65%, 1/01/24 ............................. 6,200 6,501,196 AAA Florida Hsg Fin Corp MFHR (Cobblestone Apts) Ser 00K-1 GNMA AMT 6.10%, 6/01/42 ............................. 7,880 8,203,001 AAA Florida Hsg Fin Corp MFHR (Logans Pointe Apts) FSA Ser 99 AMT 6.00%, 6/01/39 ............................. 5,080 5,400,700 AAA Florida Hsg Fin Corp MFHR (Mystic Pointe II) GNMA Ser 00 AMT 6.30%, 12/01/41 ............................ 1,165 1,232,570 AAA Florida Hsg Fin Corp MFHR (Raintree Apts) GNMA Ser 00 AMT 6.05%, 3/01/42 ............................. 5,885 6,098,684 AAA Florida Hsg Fin Corp MFHR (Sabal Chase Apts) FSA Ser 00 AMT 6.00%, 5/01/40 ............................. 3,650 3,787,422 A Florida Hsg Fin Corp MFHR (Spring Harbor Apts) Ser 99C-1 AMT 5.90%, 8/01/39 ............................. 4,540 4,665,622 AAA Florida Hsg Fin Corp MFHR (Walker Ave Club) FSA Ser 00L-1 AMT 6.00%, 12/01/38 ............................ 3,435 3,559,519 -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 19 ------------------------ FLORIDA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ FLORIDA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value -------------------------------------------------------------------------------- AAA Florida Hsg Fin Corp MFHR (Waverly Apts) Ser 00C-1 AMT 6.50%, 7/01/40 ............................. $ 2,790 $ 2,988,648 A- Highlands Cnty Hlth Facs Auth Rev (Adventist/Sunbelt Hosp) Ser 01A 6.00%, 11/15/31 ............................ 2,000 2,039,560 AAA Hillsborough Cnty Arpt Rev (Tampa Int'l Arpt) FGIC Ser 96A AMT 6.00%, 10/01/23 ............................ 1,500 1,594,500 NR Hillsborough Cnty Cmnty Dev Dist (Waterchase) Ser 01A 6.70%, 5/01/32 ............................. 750 756,728 AA Jacksonville Eco Dev Comm Hosp Rev: (Mayo Clinic) Ser 01C 5.50%, 11/15/36 ............................ 10,000 10,048,900 AAA Lee Cnty Arpt Rev (Southwest Int'l Arpt) FSA Ser 00A AMT 6.00%, 10/01/32 ............................ 23,000 24,567,910 NR Lee Cnty Cmnty Fac Dist (Herons Glen) Spec. Ser 99 5.90%, 5/01/19 ............................. 2,680 2,671,156 NR Lee Cnty Cmnty Dev Dist (Miromar Lakes) Ser 00B 7.25%, 5/01/12 ............................. 9,345 9,823,371 Ser 00A 7.375%, 5/01/32 ............................ 14,530 15,290,936 NR Manatee Cnty Cmnty Dev (Waterlefe) Ser 01A 6.95%, 5/01/31 ............................. 750 765,128 Aaa Manatee Cnty Hsg Fin Auth SFMR GNMA Ser 96-1 AMT 5.625%, 11/01/14(b) ........................ 315 316,521 Aaa Manatee Cnty Hsg Fin Auth SFMR GNMA Ser 99 AMT 6.25%, 11/01/28(b) ......................... 2,930 3,235,716 BBB- Miami Beach Hlth Facs Auth Rev (Mt Sinai Med Ctr) Ser 01A 6.80%, 11/15/31 ............................ 4,100 4,308,608 A Miami-Dade Cnty Hsg Fin Agy MFHR (Cntry Club Villas Apts) Ser 99A AMT 6.20%, 10/01/39 ............................ 5,145 5,335,416 Aaa Miami-Dade Cnty Hsg Fin Agy SFMR (Home Ownership Mtg) Ser 00A-1 AMT 6.00%, 10/01/32(b) ......................... 3,000 3,142,260 -------------------------------------------------------------------------------- 20 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ FLORIDA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ Standard & Principal Poor's Amount Ratings(a) (000) Value -------------------------------------------------------------------------------- A- North Broward Hosp Dist Rev Ser 01 6.00%, 1/15/31 ............................. $ 4,000 $ 4,120,240 Aa3 North Miami Hlth Facs Auth Rev (Catholic Hlth Svcs Oblig Grp) Ser 96 6.00%, 8/15/24(b) .......................... 1,200 1,247,040 AA Orange Cnty Hlth Facs Auth Rev (Mayflower Retirement Proj) Asset Gty Ser 99 5.25%, 6/01/29 ............................. 1,060 1,056,852 A3 Orange Cnty Hsg Fin Auth MFHR (Loma Vista Proj) Ser 99G AMT 5.50%, 3/01/32(b) .......................... 6,500 6,542,380 AA- Orlando Util Cmnty Wtr & Elec Rev Ser 93B 5.60%, 10/06/17(c) ......................... 1,235 1,334,405 A+ Palm Beach Cnty Indl Dev Rev (Lourdes-McKeen Residence) Ser 96 6.625%, 12/01/26 ........................... 4,000 4,244,800 Aaa Pinellas Cnty Hsg Fin Auth SFMR GNMA Ser 94A AMT 6.55%, 8/01/27(b) .......................... 4,090 4,246,729 NR St. Johns Cnty (Julington Creek Plantation) Ser 97 7.125%, 5/01/19 ............................ 8,430 9,044,463 A3 Tallahassee Health Facs (Tallahassee Memorial) Ser 00 6.375%, 12/01/30(b) ........................ 15,000 15,789,900 Baa2 Volusia Cnty Edl Fac Auth (Embry Riddle Aero Univ) Ser 96A 6.125%, 10/15/26(b) ........................ 2,575 2,658,688 (Embry Riddle Aero Univ) Ser 99A 5.75%, 10/15/29(b) ......................... 2,000 2,009,740 ------------ Total Investments-98.8% (cost $212,495,236) ...................... 222,929,525 Other assets less liabilities-1.2% ......... 2,746,859 ------------ Net Assets-100% ............................ $225,676,384 ============ See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 21 ------------------------ MASSACHUSETTS PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ MASSACHUSETTS PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Municipal Bonds-96.4% Massachusetts-86.0% BBB- Massachusetts Dev Fin Agy (Boston Biomedical) Ser 99 5.75%, 2/01/29............................ $ 1,800 $ 1,696,050 BBB- Massachusetts Dev Fin Agy (Eastern Nazarine) Ser 99 5.625%, 4/01/29........................... 2,000 1,763,260 A Massachusetts Dev Fin Agy (Massachusetts Biomedical) Ser 00C 6.25%, 8/01/20............................ 3,000 3,193,470 BBB Massachusetts Dev Fin Agy (Massachusetts College of Pharmacy) Ser 99B 6.75%, 7/01/30............................ 6,600 7,024,380 BBB Massachusetts Dev Fin Agy (Ogden Haverhill Proj) Ser 98B AMT 5.50%, 12/01/19........................... 2,735 2,525,034 AA Massachusetts Dev Fin Agy (Seven Hills) Asset Gty Ser 99 5.15%, 9/01/28............................ 6,035 5,931,198 BBB Massachusetts Dev Fin Agy (Suffolk Univ) Ser 99 5.85%, 7/01/29............................ 1,375 1,379,923 AA Massachusetts Dev Fin Agy (Worcester Redev) Asset Gty Ser 99 5.25%, 6/01/19............................ 2,350 2,359,283 6.00%, 6/01/24............................ 1,300 1,404,494 BBB+ Massachusetts Dev Fin Agy (YMCA Greater Boston) Ser 98 5.45%, 11/01/28........................... 1,000 963,000 AAA Massachusetts Ed Fin Auth (Educational Loan) MBIA Ser 00G AMT 6.00%, 12/01/16........................... 2,000 2,146,920 AAA Massachusetts Hlth & Ed Fac Auth (Beth Israel) AMBAC Ser 92 9.384%, 7/01/25(c)........................ 2,000 2,132,200 BBB Massachusetts Hlth & Ed Fac Auth (Caritas Christi) Ser 99A 5.75%, 7/01/28............................ 15,440 14,671,551 Baa3 Massachusetts Hlth & Ed Fac Auth (Lasell College) Ser 99A 5.625%, 7/01/29(b)........................ 7,490 7,339,900 AA- Massachusetts Hlth & Ed Fac Auth (Partners Healthcare System) Ser 01C 5.75%, 7/01/32............................ 5,000 5,091,800 -------------------------------------------------------------------------------- 22 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ MASSACHUSETTS PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- BBB Massachusetts Hlth & Ed Fac Auth (Winchester Hosp) Ser 00E 6.75%, 7/01/30............................ $ 7,000 $ 7,387,590 AAA Massachusetts Hsg Fin Agy MFHR (Rental Hsg) MBIA Ser 00H AMT 6.65%, 7/01/41............................ 12,600 13,467,510 AAA Massachusetts Hsg Fin Agy MFHR (Harbor Point) AMBAC Ser 96A AMT 6.40%, 12/01/15........................... 4,880 5,250,734 AAA Massachusetts Hsg Fin Agy MFHR (Rental Hsg) AMBAC Ser 95E AMT 6.00%, 7/01/37............................ 2,680 2,761,150 AAA Massachusetts Hsg Fin Agy MFHR (Rental Hsg) AMBAC Ser 00A AMT 6.00%, 7/01/41............................ 4,000 4,131,320 A Massachusetts Hsg Fin Agy SFMR (Residential Mtg) Ser 40 AMT 6.65%, 12/01/27........................... 8,585 9,030,733 AAA Massachusetts Hsg Fin Agy SFMR (Residential Mtg) FSA Ser 73 AMT 5.90%, 12/01/23........................... 9,040 9,348,445 AAA Massachusetts Ind Fin Agy (Heights Crossing) FHA Ser 95 AMT 6.15%, 2/01/35............................ 7,000 7,311,920 AA- Massachusetts Port Auth Ser 99D AMT 6.00%, 7/01/29............................ 6,500 6,809,140 AAA Massachusetts Port Auth Spec Fac (Bosfuel Corp.) MBIA Ser 97 AMT 6.00%, 7/01/36............................ 7,135 7,531,635 NR Massachusetts Port Auth Spec Fac (Delta Airlines) Ser 01A AMT 5.00%, 1/01/27............................ 7,500 7,198,275 AAA Massachusetts Port Auth Spec Fac (US Air) MBIA Ser 96A AMT 5.875%, 9/01/23........................... 6,380 6,623,269 ------------- 146,474,184 ------------- Colorado-2.5% BB- Denver City & Cnty Spl Facs Arpt Rev (United Airlines Proj) Ser 92A AMT 6.875%, 10/01/32.......................... 5,000 4,273,650 ------------- Florida-5.1% NR Northern Palm Beach Cnty ABACOA Ser 96A 7.30%, 8/01/27............................ 8,000 8,630,080 ------------- -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 23 ------------------------ MASSACHUSETTS PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ MASSACHUSETTS PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Texas-2.8% BB Dallas-Fort Worth Intl Arpt Tx Fac (American Airlines, Inc.) Ser 99 AMT 6.375%, 5/01/35........................... $ 6,000 $ 4,726,200 ------------- Total Investments-96.4% (cost $155,721,977)..................... 164,104,114 Other assets less liabilities-3.6%........ 6,157,727 ------------- Net Assets-100%........................... $ 170,261,841 ============= See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- 24 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ MICHIGAN PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ MICHIGAN PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Municipal Bonds-96.9% Michigan-96.9% BB- Detroit Local Dev Fin Auth Ser 98A 5.50%, 5/01/21............................ $ 3,500 $ 3,021,515 AAA Detroit Sew Disp Rev FGIC Ser 93A 8.936%, 7/01/23(c)........................ 3,100 3,238,880 AAA Detroit Sew Disp Rev FGIC Ser 93A, Pre-refunded 8.936%, 7/01/23(c)........................ 3,890 4,461,285 AAA Detroit Water Supply System FGIC Ser 01B 5.50%, 7/01/33............................ 3,550 3,674,001 AAA Kalamazoo Hosp Fin Auth ETM (Borgess Med Ctr) FGIC Ser 94A 7.868%, 6/01/11(c)........................ 2,360 2,520,480 AA- Michigan Hosp Fin Auth Rev (Trinity Health) Ser 00A 6.00%, 12/01/27........................... 2,845 2,958,857 AAA Michigan Hsg Dev Auth MFHR AMBAC Ser 97A AMT 6.10%, 10/01/33........................... 4,300 4,486,190 Aaa Michigan Hsg Dev Auth MFHR (Arbor Pointe) GNMA Ser 99 5.40%, 6/20/40(b)......................... 1,810 1,828,933 Aaa Michigan Hsg Dev Auth MFHR (Oakbrook Villa) GNMA Ser 00A AMT 6.50%, 1/20/42(b)......................... 3,000 3,208,710 AAA Michigan Hsg Dev Auth MFHR (Westchester Towers Apts) FNMA Ser 01A AMT 5.70%, 2/01/34............................ 2,580 2,620,738 AA+ Michigan Hsg Dev Auth SFMR Ser 96B AMT 6.20%, 6/01/27............................ 3,610 3,728,733 AAA Michigan Hsg Dev Auth SFMR MBIA Ser 99B-1 AMT 6.375%, 6/01/29........................... 3,500 3,691,205 Ba1 Michigan Municipal Bond Auth Rev (Detroit Academy of Arts & Science) Ser 01A 8.00%, 10/01/31........................... 7,000 7,486,780 AAA Michigan State (Trunk Line) FSA Ser 01A 5.25%, 11/01/30........................... 3,600 3,613,824 -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 25 ------------------------ MICHIGAN PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ MICHIGAN PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- AAA Michigan Strategic Fund (Detroit Edison) MBIA Ser 95AA 6.40%, 9/01/25............................ $ 2,665 $ 2,959,483 NR Michigan Strategic Fund (Holland Home) Ser 98 5.75%, 11/15/18........................... 1,500 1,340,595 5.75%, 11/15/28........................... 3,000 2,566,200 A Michigan Strategic Fund PCR (General Motors Corp.) Ser 95 6.20%, 9/01/20............................ 1,405 1,488,345 BB+ Midland Cnty PCR (CMS Energy) Ser 00A AMT 6.875%, 7/23/09........................... 2,000 2,088,700 BBB+ Romulus Tax Increment Fin Auth Ser 94 6.75%, 11/01/19........................... 1,585 1,670,225 AAA Royal Oak Hosp Fin Auth (William Beaumont Hospital) MBIA Ser 01M 5.25%, 11/15/35........................... 2,700 2,674,431 A Saginaw Hosp Fin Auth (Convenant Medical Ctr) Ser 00F 6.50%, 7/01/30............................ 11,845 12,517,441 AA Troy Downtown Dev Auth Asset Gty Ser 95A 6.375%, 11/01/18.......................... 2,500 2,868,925 AAA Wayne Charter Cnty (Detroit Metro Arpt Hotel) MBIA Ser 01A 5.00%, 12/01/30........................... 3,130 2,995,629 ------------- Total Investments-96.9% (cost $80,419,781)...................... 83,710,105 Other assets less liabilities-3.1%........ 2,671,539 ------------- Net Assets-100%........................... $ 86,381,644 ============= See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- 26 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ MINNESOTA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ MINNESOTA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Municipal Bonds-97.0% Minnesota--97.0% AAA Brooklyn Park MFHR (Brooks Landing) FNMA Ser 99A AMT 5.50%, 7/01/19............................ $ 1,355 $ 1,391,910 Aaa Eagan MFHR (Woodridge Apts Proj) GNMA Ser 97A 5.95%, 2/01/32(b)......................... 2,405 2,504,615 Aaa Eden Prairie MFHR (College Rolling Hills Proj) GNMA Ser 01A 6.20%, 2/20/43(b)......................... 2,000 2,156,120 Aaa Little Canada MFHR (Cedars Lakeside Apts) GNMA Ser 97A 5.95%, 2/01/32(b)......................... 1,650 1,718,343 A- Minneapolis Common Bond Fund Cmnty Dev Agy Ser 95-2 AMT 6.625%, 12/01/15.......................... 1,245 1,318,704 A- Minneapolis Common Bond Fund Cmnty Dev Agy Ser 97-2 AMT 6.20%, 6/01/17............................ 795 839,862 NR Minneapolis Hlth Fac (Walker Methodist) Ser 98A 6.00%, 11/15/28........................... 8,000 7,112,720 AAA Minneapolis & St. Paul Arpt Rev FGIC Ser 00B AMT 6.00%, 1/01/21............................ 2,335 2,504,171 AAA Minnesota Agric & Eco Dev (Benedictine Health) MBIA Ser 99 5.125%, 2/15/29........................... 2,900 2,847,481 NR Minnesota Agric & Eco Dev (Small Business Loan Prog) Ser 96A AMT 6.75%, 8/01/16............................ 1,450 1,548,745 Ser 00A AMT 7.25%, 8/01/20............................ 1,000 1,076,590 Ser 00B AMT 7.25%, 8/01/20............................ 1,000 1,076,590 Ser 00C AMT 7.25%, 8/01/20............................ 1,000 1,076,590 Ser 00D AMT 7.25%, 8/01/20............................ 1,000 1,076,590 Baa2 Minnesota Higher Ed Fac Auth (College Art & Design) Ser 00-5D 6.75%, 5/01/26(b)......................... 1,000 1,091,650 -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 27 ------------------------ MINNESOTA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ MINNESOTA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Baa1 Minnesota Higher Ed Fac Auth (Hamline Univ) Ser 4-1 6.00%, 10/01/16(b)........................ $ 790 $ 818,535 (Hamline Univ) Ser 99-5B 6.00%, 10/01/29(b)........................ 1,250 1,294,075 AA+ Minnesota Hsg Fin Agy SFMR Ser 96F AMT 6.30%, 1/01/28............................ 3,670 3,815,148 Ser 96G AMT 6.25%, 7/01/26............................ 6,320 6,546,762 Ser 98H-2 AMT 6.05%, 7/01/31............................ 2,500 2,582,600 Aaa Minnetonka MFHR (Archer Heights Apts Proj) GNMA Ser 99A AMT 5.30%, 1/20/27(b)......................... 1,620 1,632,101 AA+ Rochester Hosp Rev (Mayo Med Ctr) Ser 92H 9.334%, 11/15/15(c)....................... 3,000 3,244,680 Aaa St. Cloud Hosp Rev (St Cloud Hospital) FSA Ser 00A 5.875%, 5/01/30(b)........................ 2,230 2,384,093 Aaa St. Paul MFHR (Wellington Proj) FHLMC Ser 99A 5.10%, 2/01/24(b)......................... 2,000 2,013,140 AA Waconia Hlth Care Fac Rev (Ridgeview Med Ctr) Asset Gty Ser 99A 6.125%, 1/01/29........................... 2,555 2,750,611 AAA White Bear Lake Rev MFHR (Renova Partners Proj) FNMA Ser 01 5.60%, 10/01/30........................... 1,000 1,015,870 ------------- Total Investments-97.0% (cost $54,762,737)...................... 57,438,296 Other assets less liabilities-3.0%........ 1,800,830 ------------- Net Assets-100%........................... $ 59,239,126 ============= See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- 28 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ NEW JERSEY PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ NEW JERSEY PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Municipal Bonds--101.5% New Jersey-87.7% AAA Hoboken NJ Pkg Auth Fac Rev AMBAC Ser 01 A 5.30%, 5/01/27............................ $ 3,700 $ 3,786,691 Aaa Lafayette Yard NJ Com Dev Corp (Conv Ctr Hotel Proj) MBIA Ser 00 5.80%, 4/01/35(b)......................... 2,100 2,398,011 BB New Jersey Eco Dev Auth (American Airlines) AMT 7.10%, 11/01/31........................... 4,500 4,160,520 AAA New Jersey Eco Dev Auth (American Water Co) FGIC AMT 6.875%, 11/01/34.......................... 5,000 5,560,900 A+ New Jersey Eco Dev Auth (Anheuser-Busch) Ser 95 AMT 5.85%, 12/01/30........................... 8,000 8,347,520 AAA New Jersey Eco Dev Auth (School Const) AMBAC Ser 01A 5.00%, 6/15/21............................ 9,000 9,026,820 BB- New Jersey Eco Dev Auth (Continental Airlines) Ser 99 AMT 6.40%, 9/15/23............................ 8,350 6,723,253 Ser 00 AMT 7.20%, 11/15/30........................... 20,500 17,447,550 AAA New Jersey Eco Dev Auth (Hackensack Water Co) MBIA Ser 94B AMT 5.90%, 3/01/24............................ 4,000 4,199,240 NR New Jersey Eco Dev Auth (Kapkowski Rd) Ser 98B AMT 6.50%, 4/01/31............................ 17,085 18,127,527 A+ New Jersey Eco Dev Auth (Masonic Charity Foundation Proj) Ser 01 5.50%, 6/01/31............................ 1,000 1,030,320 AAA New Jersey Eco Dev Auth (Pub Ser Elec & Gas) MBIA Ser 94A AMT 6.40%, 5/01/32............................ 5,000 5,426,300 BBB New Jersey Eco Dev PCR (NUI Corp) Ser 98A AMT 5.25%, 11/01/33........................... 16,000 15,260,800 AAA New Jersey Higher Ed (Rowan University) FGIC Ser 01C 5.00%, 7/01/31............................ 2,000 1,981,500 -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 29 ------------------------ NEW JERSEY PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ NEW JERSEY PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- AAA New Jersey Higher Ed (Student Loan) MBIA Ser 00A AMT 6.15%, 6/01/19............................ $ 1,500 $ 1,611,735 AA New Jersey Hlth Care Fac (Good Shepherd) Asset Gty Ser 01 A 5.20%, 7/01/31............................ 1,350 1,351,930 AAA New Jersey Hlth Care Fac (Jersey City Medical Center) AMBAC Ser 01 5.00%, 8/01/41............................ 14,345 14,100,561 A3 New Jersey Hlth Care Fac (Kennedy Health System) Ser 01 5.625%, 7/01/31(b)........................ 10,000 10,093,100 A New Jersey Hlth Care Fac (Palisades Med Ctr) ACA Ser 99 5.25%, 7/01/28............................ 1,000 955,680 A+ New Jersey Hlth Care Fac (Robert Wood Johnson) Ser 00 5.75%, 7/01/31............................ 6,000 6,241,800 AA New Jersey Hlth Care Fac (Southern Ocean County Hospital) Asset Gty Ser 01 5.125%, 7/01/31........................... 4,500 4,435,425 AAA New Jersey Hsg & Mtg Fin Agy MFHR AMBAC Ser 96A AMT 6.25%, 5/01/28............................ 5,000 5,255,000 AAA New Jersey Hsg & Mtg Fin Agy MFHR FSA Ser 00 A1 AMT 6.35%, 11/01/31........................... 2,000 2,124,200 AAA New Jersey Hsg & Mtg Fin Agy SFMR (Home Buyers) MBIA AMT 5.90%, 10/01/29........................... 10,540 10,864,632 6.35%, 10/01/27........................... 4,950 5,157,009 AAA New Jersey State Edl Fac Auth (New Jersey Institute of Technology) Ser 01G MBIA 4.75%, 7/01/31............................ 2,500 2,366,600 AAA New Jersey State Edl Fac Auth AMBAC (Ramapo College) Ser 01 D 5.00%, 7/01/31............................ 1,000 990,750 Aaa North Hudson Sew Auth MBIA Ser 01 A Zero Coupon, 8/01/24(b)(d)................ 12,340 3,780,482 Aaa Passaic Cnty FSA Ser 01 4.90%, 6/01/17(b)......................... 2,330 2,356,702 -------------------------------------------------------------------------------- 30 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ NEW JERSEY PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- AAA Port Auth of NY & NJ (JFK Int'l Airport Proj) MBIA Ser 97-6 AMT 5.75%, 12/01/22........................... $ 8,675 $ 8,947,569 AAA Port Auth of NY & NJ 96th FGIC Ser 94 AMT 6.60%, 10/01/23........................... 9,340 10,019,765 AA- Salem Cnty NJ Waste Disposal Auth (E.I. Dupont) Ser 92A AMT 6.125%, 7/15/22........................... 3,500 3,595,270 BBB- South Jersey Transportation Auth NJ Lease Rev (Raytheon Aircraft Service) Ser 97A AMT 6.15%, 1/01/22............................ 400 403,440 AAA Vineland NJ Sewer Auth (Landis) FGIC Ser 93C 8.52%, 9/19/19(c)......................... 3,250 3,877,770 ------------- 202,006,372 ------------- Puerto Rico-13.8% BB Puerto Rico Port Auth (American Airlines) Ser 96A AMT 6.25%, 6/01/26............................ 5,475 4,474,718 A Puerto Rico Tobacco Settlement Corp (Childrens Trust Fund) 6.00%, 7/01/26............................ 10,925 11,762,401 AAA Puerto Rico Hsg Fin Corp SFMR GNMA Ser 98 AMT 5.20%, 12/01/32........................... 6,600 6,634,386 GNMA Ser 01 C AMT 5.30%, 12/01/28........................... 4,045 4,068,704 Puerto Rico Indl Tourist Edl (Ascension Health) Ser 00A AA 6.125%, 11/15/30.......................... 4,500 4,831,290 ------------- 31,771,499 ------------- Total Investments-101.5% (cost $228,158,748)..................... 233,777,871 Other assets less liabilities-(1.5)%. (3,375,452) ------------- Net Assets-100%........................... $ 230,402,419 ============= See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 31 ------------------------ OHIO PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ OHIO PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Municipal Bonds-97.7% Ohio-89.8% A+ Akron (Canal Park) (Canal Park) COP Ser 96 Zero Coupon, 12/01/16(d).................. $ 5,000 $ 5,430,750 BB- Cleveland Arpt Rev (Continental Airlines) Ser 98 AMT 5.375%, 9/15/27........................... 19,015 12,336,742 AAA Columbus Municipal Arpt Rev (Columbus Int'l Arpt) MBIA Ser 94A AMT 6.25%, 1/01/24........................ 4,000 4,245,560 BBB Cuyahoga Cnty Hosp Rev (University Hosp) Ser 00 7.50%, 1/01/30............................ 22,250 24,513,270 Aaa Cuyahoga Cnty MFHR (Longwood Proj) GNMA Ser 01 AMT 5.60%, 1/20/43(b)......................... 3,620 3,613,882 A Franklin Cnty Ohio (OCLC Online Computer Library Ctr) Ser 98 5.20%, 10/01/20........................... 2,800 2,783,284 AAA Franklin Cnty Ohio MFHR (Wellington Village Proj) GNMA Ser 01A AMT 5.40%, 2/20/43............................ 3,945 3,898,410 A Hamilton Cnty Health Fac (Twin Towers) Ser 99A 5.80%, 10/01/23........................... 1,775 1,798,767 Aaa Lucas Cnty Health Fac (Altenheim Proj) GNMA Ser 99 Pj 5.50%, 7/20/40(b)......................... 3,200 3,240,832 BBB+ Ohio Air Quality Dev Auth PCR (Dayton Pwr & Lt) Ser 92B 6.40%, 8/15/27............................ 2,000 2,063,700 BBB+ Ohio Air Quality Dev Auth PCR (Columbus Southern Pwr) Ser 85B 6.25%, 12/01/20........................... 5,000 5,118,700 AAA Ohio Air Quality Dev Auth PCR (JMG) AMBAC Ser 94 AMT 6.375%, 4/01/29........................... 3,075 3,355,717 BBB Ohio Air Quality Dev Auth PCR (Toledo Edison Co) Ser 97A AMT 6.10%, 8/01/27............................ 5,000 5,055,250 AAA Ohio Capital Corp MFHR (Sect 8 Assist) FHA/MBIA Ser 95E 6.35%, 1/01/22............................ 1,965 2,078,400 A Ohio Environmental Fac Rev (Ford Motor Co) Ser 00 AMT 6.15%, 6/01/30............................ 4,500 4,830,075 -------------------------------------------------------------------------------- 32 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ OHIO PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Aa2 Ohio Hsg Fin Agy MFHR (Bridgeview Villa II) FHA AMT 6.45%, 12/01/33(b)........................ $ 1,965 $ 2,035,602 Aaa Ohio Hsg Fin Agy SFMR (Residential) GNMA Ser 00A-1 AMT 6.35%, 9/01/31(b)......................... 2,300 2,467,624 Aaa Ohio Hsg Fin Agy SFMR (Residential) GNMA Ser 00D AMT 6.05%, 3/01/31(b)......................... 8,545 8,881,502 AAA Ohio Hsg Fin Agy SFMR GNMA Ser 94B-2 AMT 6.70%, 3/01/25............................ 3,485 3,647,715 AAA Ohio Hsg Fin Agy SFMR GNMA Ser 95A-2 AMT 6.625%, 3/01/26........................... 2,235 2,341,587 A+ Ohio Wtr Dev Auth (Anheuser-Busch) Ser 99 AMT 6.00%, 8/01/29............................ 2,250 2,373,232 A Ohio Wtr Dev Auth (North Star/BHP) AMT 6.45%, 9/01/20............................ 3,425 3,583,578 BBB Ohio Wtr Dev Auth PCR (Cleveland Electric) Ser 97A AMT 6.10%, 8/01/20............................ 2,000 2,028,340 A3 Steubenville Ohio Hosp Rev (Trinity Hlth) Ser 00 6.50%, 10/01/30(b)........................ 6,000 6,321,180 Baa2 Toledo-Lucas Cnty Port Fac (CSX Transportation) Ser 92 6.45%, 12/15/21(b)........................ 5,270 5,773,496 ------------- 123,817,195 ------------- Florida-7.9% NR Northern Palm Beach Cnty ABACOA Ser 96A 7.30%, 8/01/27............................ 10,100 10,895,476 ------------- Total Investments-97.7% (cost $130,449,367)..................... 134,712,671 Other assets less liabilities-2.3%... 3,217,205 ------------- Net Assets-100%........................... $ 137,929,876 ============= See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 33 ------------------------ PENNSYLVANIA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ PENNSYLVANIA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Municipal Bonds-97.6% Pennsylvania-88.9% A2 Allegheny Cnty Hosp (South Hills Hlth) Ser 00B 6.75%, 5/01/25(b)......................... $ 2,555 $ 2,715,301 BBB Allegheny Cnty IDR PCR (USX Corp) Ser 96 6.10%, 1/15/18............................ 4,000 4,086,720 BBB Allegheny Cnty IDR PCR (USX Corp) Ser 98 5.50%, 12/01/29........................... 8,680 8,308,409 Aaa Allegheny Cnty MFHR (Green Meadow Apts) GNMA Ser 98-A-1 AMT 5.125%, 10/20/40(b)....................... 8,440 8,197,181 BBB Bradford Cnty IDR Solid Waste Disp Rev (Int'l Paper) Ser 95A AMT 6.60%, 3/01/19............................ 2,500 2,602,175 BBB Crawford Cnty Hosp Auth (Wesbury Methodist Cmnty) Ser 99 6.25%, 8/15/29............................ 3,100 3,004,396 BBB+ Cumberland Cnty Municipal Auth Rev (Presbyterian Homes, Inc) Ser 96 6.00%, 12/01/26........................... 2,250 2,223,878 BBB- Delaware Cnty Higher Ed (Eastern College) Ser 99C 5.625%, 10/01/28.......................... 3,300 3,144,009 N/R Harrisburg Air Fac (Susquehanna Aero Proj) Ser 99 5.50%, 1/01/24............................ 3,490 2,678,121 Aaa Lehigh Northampton Arpt MBIA Ser 00A AMT 6.00%, 5/15/30(b)......................... 4,400 4,749,448 AA Montgomery Cnty Higher Ed (Beaver College) Asset Gty Ser 99 5.70%, 4/01/27............................ 6,000 6,120,840 BB- New Morgan IDR Solid Waste Disp Rev (Browning-Ferris) Ser 94 AMT 6.50%, 4/01/19............................ 9,115 9,114,909 BBB Pennsylvania Economic Dev Auth (Amtrak) Ser 01A AMT 6.375%, 11/01/41.......................... 5,000 5,133,550 BBB Pennsylvania Economic Dev Auth Waste Water Rev (Sun Co) Ser 94A AMT 7.60%, 12/01/24........................... 5,000 5,337,950 -------------------------------------------------------------------------------- 34 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ PENNSYLVANIA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- A+ Pennsylvania Higher Ed (UPMC Health Sys) Ser 01A 6.00%, 1/15/31............................ $ 8,655 $ 8,956,194 AA Pennsylvania Hsg Fin Agy SFMR (Reg Ribs) Ser 92-35D AMT 8.64%, 4/01/2025(c)....................... 9,500 9,984,880 AA+ Pennsylvania Hsg Fin Agy SFMR Ser 94-41B AMT 6.65%, 4/01/25............................ 4,935 5,148,291 AA+ Pennsylvania Hsg Fin Agy SFMR Ser 99-67A AMT 5.90%, 10/01/30........................... 17,765 18,284,449 AA+ Pennsylvania Hsg Fin Agy SFMR Ser 00-69A AMT 6.25%, 4/01/31............................ 3,000 3,151,050 AAA Pennsylvania Tpk Commn AMBAC Ser 01 5.25%, 7/15/41............................ 10,000 10,034,100 AAA Philadelphia Arpt Sys Rev AMBAC Ser 95A AMT 6.10%, 6/15/25............................ 10,000 10,705,100 AAA Philadelphia Util Rev (Gas Works) FSA Ser 01 5.125%, 8/01/31........................... 5,000 4,913,350 AAA Pittsburgh Urban Redev Auth SFMR FHA Ser 97A AMT 6.25%, 10/01/28........................... 900 943,191 AAA Pittsburgh Urban Redev Auth SFMR Ser 00A AMT 6.40%, 10/01/31........................... 5,340 5,756,520 AA Potter Cnty Hosp Auth (Charles Cole Memorial) Asset Gty Ser 96 6.05%, 8/01/24............................ 4,340 4,718,448 AAA Southcentral Gen Auth Rev (Wellspan Health Obligated) MBIA Ser 01 5.25%, 5/15/31............................ 8,500 8,533,830 AAA Southeastern PA Trans Auth Rev FGIC Ser 99A 4.75%, 3/01/29............................ 11,000 10,144,970 BBB Warren Cnty Hosp Auth (Warren General) Ser 94A 7.00%, 4/01/19............................ 2,200 2,260,324 ------------- 170,951,584 ------------- -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 35 ------------------------ PENNSYLVANIA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ PENNSYLVANIA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Puerto Rico-2.2% BB Puerto Rico Port Auth Rev (American Airlines) Ser 96A AMT 6.25%, 6/01/26............................ $ 5,075 $ 4,147,797 ------------- Florida-6.5% NR Collier Cnty IDR (Southern States Utils) Ser 96 AMT 6.50%, 10/01/25........................... 11,000 11,133,320 NR Tallahassee (Capital Region) Cmnty Dev Dist Rev (Cap Impt) Ser 01A-2 6.85%, 5/01/31............................ 1,250 1,275,337 ------------- 12,408,657 ------------- Total Investments-97.6% (cost $177,899,195)..................... 187,508,038 Other assets less liabilities-2.4%........ 4,697,877 ------------- Net Assets-100%........................... $ 192,205,915 ============= See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- 36 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ VIRGINIA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ VIRGINIA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Municipal Bonds-96.6% Virginia-86.1% NR Albemarle Cnty IDR (The Covenant School Inc.) Ser 01A 7.50%, 7/15/23............................ $ 3,935 $ 4,041,875 7.75%, 7/15/32............................ 8,260 8,586,931 A+ Alexandria MFHR (Buckingham Village Apts) Ser 96A AMT 6.15%, 1/01/29............................ 4,000 4,088,840 AAA Arlington Cnty IDR (Ogden Martin) FSA Ser 98B AMT 5.25%, 1/01/09............................ 2,500 2,676,850 AAA Arlington Cnty MFHR (Arlington View Terrace) FNMA Ser 01 AMT 5.15%, 11/01/31........................... 1,550 1,528,935 Baa3 Bedford Cnty IDR (Nekoosa Pkg/GA Pacific) Ser 99 AMT 6.30%, 12/01/25(b)........................ 2,700 2,766,879 AAA Fairfax Cnty (Parking Auth Fac) AMBAC Ser 01 4.75%, 7/15/20............................ 1,875 1,824,881 BBB Giles Cnty IDR (Hoechst Celanese Corp) Ser 96 AMT 6.45%, 5/01/26............................ 7,500 7,648,125 A- Greater Richmond (Convention Ctr Proj) Ser 00 6.25%, 6/15/32............................ 11,000 11,933,790 AAA Harrisonburg MFHR (Battery Heights Assoc) GNMA Ser 96A 6.25%, 4/20/36............................ 5,185 5,454,361 AAA Harrisonburg MFHR (Greens of Salem Run) FSA Ser 97 AMT 6.30%, 4/01/29............................ 4,160 4,411,888 BB- Henrico Cnty IDR Solid Waste Rev (Browning-Ferris) Ser 97A AMT 5.875%, 3/01/17........................... 4,750 4,463,385 A+ Henry Cnty Hosp Rev (Memorial Hosp Martinsville & Henry) Ser 97 6.00%, 1/01/27............................ 1,250 1,296,087 BBB Isle of Wight Cnty IDR (International Paper Co) Ser 00A AMT 6.60%, 5/01/24............................ 1,700 1,802,374 BBB Isle of Wight Cnty Solid Waste Rev (Union Camp Corp) Ser 94 AMT 6.55%, 4/01/24............................ 4,000 4,128,360 -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 37 ------------------------ VIRGINIA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ VIRGINIA PORTFOLIO PORTFOLIO OF INVESTMENTS September 30, 2001 Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- A+ James City Cnty Solid Waste Rev (Anheuser Busch Proj) Ser 97 AMT 6.00%, 4/01/32............................ $ 4,200 $ 4,416,216 AAA Loudoun Cnty IDR Hosp Rev (Loudoun Hosp Ctr) FSA Ser 95 5.80%, 6/01/20............................ 2,500 2,659,625 AA- Metropolitan Washington DC Arpt Rev Ser 97B AMT 5.50%, 10/01/23........................... 9,410 9,476,435 AAA Newport News (Mennowood Cmntys) GNMA Ser 96A 6.25%, 8/01/36............................ 2,605 2,761,639 AAA Norfolk Arpt Auth Rev FGIC Ser 01B AMT 5.3%, 7/01/25............................. 6,950 6,965,151 AAA Portsmouth (Ref & Pub Util) FGIC Ser 01B 5.00%, 06/01/26........................... 1,500 1,481,055 NR Stauton Ed Fac (Mary Baldwin College) Ser 96 6.75%, 11/01/21........................... 3,145 3,321,906 AA+ Virginia Biotechnology Resh Park Auth (Consolidated Laboratories Proj) Ser 01 5.00%, 9/01/21............................ 4,000 3,984,840 AA+ Virginia Hsg Dev Auth SFMR (Commonwealth Mtg) Ser 00B 6.125%, 7/01/18........................... 5,030 5,320,533 (Commonwealth Mtg) Ser 01C-2 AMT 5.50%, 7/01/27............................ 9,040 9,113,766 AA+ Virginia Hsg Dev Auth MFHR Ser 99 AMT 5.95%, 2/01/23............................ 5,525 5,748,707 AA+ Virginia Hsg Dev Auth SFMR Ser 01D AMT 5.40%, 6/01/24............................ 3,155 3,185,509 AA Virginia Res Auth Sewer Sys Rev (Hopewell Regl Wastewater Fac) Ser 95A AMT 6.00%, 10/01/25........................... 1,375 1,417,474 ------------- 126,506,417 ------------- California-4.4% NR Orange Cmnty Facs Special Tax No 91-2 6.25%, 10/01/30........................... 6,400 6,498,368 ------------- -------------------------------------------------------------------------------- 38 o ALLIANCE MUNICIPAL INCOME FUND II ------------------------ VIRGINIA PORTFOLIO PORTFOLIO OF INVESTMENTS ------------------------ Standard & Principal Poor's Amount Ratings(a) (000) Value ------------------------------------------------------------------------------- Puerto Rico-2.5% AAA Puerto Rico Hsg Fin Corp Rev SFMR Mtg Bkd Secs GNMA Ser 98A AMT 5.20%, 12/01/32........................... $ 1,385 $ 1,392,216 AAA Puerto Rico Hsg Fin Corp Rev SFMR Mtg Bkd Secs Ser 01C AMT 5.50%, 12/01/23........................... 2,330 2,340,205 ------------- 3,732,421 ------------- Florida-2.2% NR Clay Cnty Cmnty Dev Dist (Fleming Island Plantation) Ser 00B 7.375%, 5/01/31........................... 3,000 3,253,500 ------------- Short-Term Investments-1.4% A-1 Harrisonburg IDR (Wachovia Pooled Ln Prog) Ser 00 2.25%, 8/01/23............................ 1,000 1,000,000 A-1 King George Cnty IDR (Birchwood Power Partners Proj) Ser 94B AMT 2.80%, 12/01/24(f)........................ 1,000 1,000,000 ------------- 2,000,000 ------------- Total Investments-96.6% (cost $136,094,130)..................... 141,990,706 Other assets less liabilities-3.4%........ 4,964,711 ------------- Net Assets-100%........................... $ 146,955,417 ============= See footnote summary on page 40. See Glossary of Terms on page 40. See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 39 ------------------------ PORTFOLIO OF INVESTMENTS ------------------------ (a) Unaudited (b) Moody's Rating - unaudited. (c) Inverse floater security--security with variable or floating interest rate that moves in opposite direction of short-term interest rates. (d) Indicates a security that has a zero coupon that remains in effect until a predetermined date at which time the stated coupon rate becomes effective. (e) Fitch's Rating - unaudited. (f) Variable rate coupon, rate shown as of September 30, 2001. Glossary of Terms: ACA American Capital Access AMBAC American Municipal Bond Assurance Corporation AMT Alternative Minimum Tax COP Certificate of Participation ETM Escrow to Maturity 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 Government Obligations 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 See notes to financial statements. -------------------------------------------------------------------------------- 40 o ALLIANCE MUNICIPAL INCOME FUND II --------------------------------- STATEMENT OF ASSETS & LIABILITIES --------------------------------- STATEMENT OF ASSETS & LIABILITIES September 30, 2001 Arizona Florida ============= ============= Assets Investment in securities, at value (cost: $147,972,001 and $212,495,236, respectively) ............................. $ 153,401,944 $ 222,929,525 Interest receivable .......................... 2,657,031 4,734,185 Receivable for shares of beneficial interest sold ............................. 1,243,884 3,801,073 Receivable for investment securities sold .... 1,166,866 -0- ------------- ------------- Total assets ................................. 158,469,725 231,464,783 ------------- ------------- Liabilities Due to custodian ............................. 25,440 3,635,329 Payable for shares of beneficial interest redeemed ......................... 322,039 1,523,409 Dividends payable ............................ 207,273 298,068 Distribution fee payable ..................... 77,778 128,199 Advisory fee payable ......................... 23,487 56,564 Accrued expenses and other liabilities ....... 121,881 146,830 ------------- ------------- Total liabilities ............................ 777,898 5,788,399 ------------- ------------- Net Assets ................................... $ 157,691,827 $ 225,676,384 ============= ============= Composition of Net Assets Shares of beneficial interest, at par ........ $ 146,138 $ 221,977 Additional paid-in capital ................... 155,205,895 229,876,857 Distributions in excess of net investment income .................................... (148,683) -0- Undistributed net investment income .......... -0- 25,714 Accumulated net realized loss on investment transactions ................... (2,941,466) (14,882,453) Net unrealized appreciation of investments ... 5,429,943 10,434,289 ------------- ------------- $ 157,691,827 $ 225,676,384 ============= ============= Class A Shares Net assets ................................... $ 88,260,823 $ 97,713,767 ------------- ------------- Shares of beneficial interest outstanding .... 8,174,208 9,615,074 ------------- ------------- Class B Shares Net assets ................................... $ 56,024,472 $ 87,602,905 ------------- ------------- Shares of beneficial interest outstanding .... 5,196,213 8,614,031 ------------- ------------- Class C Shares Net assets ................................... $ 13,406,532 $ 40,359,712 ------------- ------------- Shares of beneficial interest outstanding .... 1,243,386 3,968,623 ------------- ------------- Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share $10.80 $10.16 Sales charge--4.25% of public offering price . .48 .45 ------ ------ Maximum offering price ....................... $11.28 $10.61 ====== ====== Class B Shares Net asset value and offering price per share . $10.78 $10.17 ====== ====== Class C Shares Net asset value and offering price per share . $10.78 $10.17 ====== ====== See notes to financial statements -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 41 --------------------------------- STATEMENT OF ASSETS & LIABILITIES --------------------------------- Massachusetts Michigan ============= ============= Assets Investment in securities, at value (cost: $155,721,977 and $80,419,781, respectively) ............................. $ 164,104,114 $ 83,710,105 Interest receivable .......................... 2,539,872 1,430,708 Receivable for shares of beneficial interest sold ............................. 2,340,545 1,613,259 Receivable for investment securities sold .... 2,076,317 -0- ------------- ------------- Total assets ................................. 171,060,848 86,754,072 ------------- ------------- Liabilities Due to custodian ............................. 8,655 2,531 Payable for shares of beneficial interest redeemed ......................... 292,545 113,701 Dividends payable ............................ 223,472 107,999 Distribution fee payable ..................... 101,864 49,627 Advisory fee payable ......................... 36,827 33,175 Accrued expenses and other liabilities ....... 135,644 65,395 ------------- ------------- Total liabilities ............................ 799,007 372,428 ------------- ------------- Net Assets ................................... $ 170,261,841 $ 86,381,644 ============= ============= Composition of Net Assets Shares of beneficial interest, at par ........ $ 154,279 $ 81,331 Additional paid-in capital ................... 170,767,682 83,855,896 Distributions in excess of net investment income .................................... (72,358) (62,865) Accumulated net realized loss on investment transactions .............................. (8,969,899) (783,042) Net unrealized appreciation of investments ............................... 8,382,137 3,290,324 ------------- ------------- $ 170,261,841 $ 86,381,644 ============= ============= Class A Shares Net assets ................................... $ 63,383,964 $ 32,804,018 ------------- ------------- Shares of beneficial interest outstanding .... 5,737,208 3,085,966 ------------- ------------- Class B Shares Net assets ................................... $ 62,190,241 $ 29,435,523 ------------- ------------- Shares of beneficial interest outstanding .... 5,638,801 2,772,878 ------------- ------------- Class C Shares Net assets ................................... $ 44,687,636 $ 24,142,103 ------------- ------------- Shares of beneficial interest outstanding .... 4,051,891 2,274,206 ------------- ------------- Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ................................ $11.05 $10.63 Sales charge--4.25% of public offering price ............................ .49 .47 ------ ------ Maximum offering price ....................... $11.54 $11.10 ====== ====== Class B Shares Net asset value and offering price per share . $11.03 $10.62 ====== ====== Class C Shares Net asset value and offering price per share . $11.03 $10.62 ====== ====== See notes to financial statements. -------------------------------------------------------------------------------- 42 o ALLIANCE MUNICIPAL INCOME FUND II --------------------------------- STATEMENT OF ASSETS & LIABILITIES --------------------------------- Minnesota New Jersey ============= ============= Assets Investment in securities, at value (cost: $54,762,737 and $228,158,748, respectively) ............................. $ 57,438,296 $ 233,777,871 Cash ......................................... 3,079 18,357 Receivable for shares of beneficial interest sold ............................. 1,495,471 2,484,515 Interest receivable .......................... 892,910 4,569,231 Receivable for investment securities sold .... -0- 6,134,784 ------------- ------------- Total assets ................................. 59,829,756 246,984,758 ------------- ------------- Liabilities Payable for investment securities purchased .. 374,888 14,575,859 Dividends payable ............................ 78,634 302,227 Advisory fee payable ......................... 31,354 72,470 Distribution fee payable ..................... 30,074 143,377 Payable for shares of beneficial interest redeemed ......................... 13,955 1,371,829 Administration fee payable ................... -0- 24,249 Accrued expenses and other liabilities ....... 61,725 92,328 ------------- ------------- Total liabilities ............................ 590,630 16,582,339 ------------- ------------- Net Assets ................................... $ 59,239,126 $ 230,402,419 ============= ============= Composition of Net Assets Shares of beneficial interest, at par ........ $ 58,720 $ 227,893 Additional paid-in capital ................... 59,023,599 232,722,182 Distributions in excess of net investment income .................................... (26,342) (259,211) Accumulated net realized loss on investment transactions .............................. (2,492,410) (7,907,568) Net unrealized appreciation of investments ............................... 2,675,559 5,619,123 ------------- ------------- $ 59,239,126 $ 230,402,419 ============= ============= Class A Shares Net assets ................................... $ 30,501,235 $ 80,488,689 ------------- ------------- Shares of beneficial interest outstanding .... 3,023,920 7,963,158 ------------- ------------- Class B Shares Net assets ................................... $ 17,304,348 $ 103,888,864 ------------- ------------- Shares of beneficial interest outstanding .... 1,715,974 10,275,417 ------------- ------------- Class C Shares Net assets ................................... $ 11,433,543 $ 46,024,866 ------------- ------------- Shares of beneficial interest outstanding .... 1,132,097 4,550,729 ------------- ------------- Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ................................. $10.09 $10.11 Sales charge--4.25% of public offering price . .45 .45 ------ ------ Maximum offering price ....................... $10.54 $10.56 ====== ====== Class B Shares Net asset value and offering price per share . $10.08 $10.11 ====== ====== Class C Shares Net asset value and offering price per share . $10.10 $10.11 ====== ====== See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 43 --------------------------------- STATEMENT OF ASSETS & LIABILITIES --------------------------------- Ohio Pennsylvania ============= ============= Assets Investment in securities, at value (cost: $130,449,367 and $177,899,195, respectively) ............................. $ 134,712,671 $ 187,508,038 Cash ......................................... 259,416 -0- Receivable for shares of beneficial interest sold ............................. 1,803,863 1,533,832 Interest receivable .......................... 1,752,977 4,411,202 Receivable for investment securities sold .... -0- 545,797 ------------- ------------- Total assets ................................. 138,528,927 193,998,869 ------------- ------------- Liabilities Due to custodian ............................. -0- 668,011 Payable for shares of beneficial interest redeemed ......................... 184,626 562,375 Dividends payable ............................ 184,499 254,216 Distribution fee payable ..................... 85,607 101,254 Advisory fee payable ......................... 36,813 83,517 Accrued expenses and other liabilities ....... 107,506 123,581 ------------- ------------- Total liabilities ............................ 599,051 1,792,954 ------------- ------------- Net Assets ................................... $ 137,929,876 $ 192,205,915 ============= ============= Composition of Net Assets Shares of beneficial interest, at par ........ $ 137,728 $ 184,594 Additional paid-in capital ................... 140,916,170 189,439,518 Undistributed net investment income (loss) ... 168,979 (230,325) Accumulated net realized loss on investment transactions .............................. (7,556,305) (6,796,715) Net unrealized appreciation of investments ... 4,263,304 9,608,843 ------------- ------------- $ 137,929,876 $ 192,205,915 ============= ============= Class A Shares Net assets ................................... $ 46,854,845 $ 96,834,076 Shares of beneficial interest outstanding .... 4,678,545 9,297,154 Class B Shares Net assets ................................... $ 54,574,779 $ 62,037,616 ------------- ------------- Shares of beneficial interest outstanding .... 5,450,212 5,960,707 ------------- ------------- Class C Shares Net assets ................................... $ 36,500,252 $ 33,334,223 ------------- ------------- Shares of beneficial interest outstanding .... 3,644,061 3,201,546 ------------- ------------- Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ................................. $10.01 $10.42 Sales charge--4.25% of public offering price . .44 .46 ------ ------ Maximum offering price ....................... $10.45 $10.88 ====== ====== Class B Shares Net asset value and offering price per share . $10.01 $10.41 ====== ====== Class C Shares Net asset value and offering price per share . $10.02 $10.41 ====== ====== See notes to financial statements. -------------------------------------------------------------------------------- 44 o ALLIANCE MUNICIPAL INCOME FUND II --------------------------------- STATEMENT OF ASSETS & LIABILITIES --------------------------------- Virginia ============= Assets Investment in securities, at value (cost: $136,094,130) .................................... $ 141,990,706 Receivable for investment securities sold .................. 4,461,797 Interest receivable ........................................ 2,732,204 Receivable for shares of beneficial interest sold .......... 695,176 ------------- Total assets ............................................... 149,879,883 ------------- Liabilities Due to custodian ........................................... 60,308 Payable for investment securities purchased ................ 2,330,000 Dividends payable .......................................... 195,294 Payable for shares of beneficial interest redeemed ......... 136,225 Distribution fee payable ................................... 89,684 Advisory fee payable ....................................... 13,051 Accrued expenses and other liabilities ..................... 99,904 ------------- Total liabilities .......................................... 2,924,466 ------------- Net Assets ................................................. $ 146,955,417 ============= Composition of Net Assets Shares of beneficial interest, at par ...................... $ 139,520 Additional paid-in capital ................................. 147,335,515 Distributions in excess of net investment income ........... (134,203) Accumulated net realized loss on investment transactions ................................. (6,281,991) Net unrealized appreciation of investments ................. 5,896,576 ------------- $ 146,955,417 ============= Class A Shares Net assets ................................................. $ 53,305,513 ------------- Shares of beneficial interest outstanding .................. 5,055,430 ------------- Class B Shares Net assets ................................................. $ 69,533,695 ------------- Shares of beneficial interest outstanding .................. 6,604,791 ------------- Class C Shares Net assets ................................................. $ 24,116,209 ------------- Shares of beneficial interest outstanding .................. 2,291,796 ------------- Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ............. $10.54 Sales charge--4.25% of public offering price ............... .47 ------ Maximum offering price ..................................... $11.01 ====== Class B Shares Net asset value and offering price per share ............... $10.53 ====== Class C Shares Net asset value and offering price per share ............... $10.52 ====== See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 45 ----------------------- STATEMENT OF OPERATIONS ----------------------- STATEMENT OF OPERATIONS Year Ended September 30, 2001 Arizona Florida =========== ============ Investment Income Interest .................................... $ 6,734,474 $ 12,309,905 ----------- ------------ Expenses Advisory fee ................................ 716,291 1,259,335 Distribution fee - Class A .................. 183,747 264,487 Distribution fee - Class B .................. 425,489 744,240 Distribution fee - Class C .................. 108,088 389,074 Custodian ................................... 106,451 106,775 Administrative .............................. 95,250 95,250 Audit and legal ............................. 39,216 63,085 Registration ................................ 38,732 33,486 Transfer agency ............................. 38,385 81,008 Printing .................................... 15,400 22,516 Trustees' fees .............................. 3,100 3,100 Miscellaneous ............................... 4,983 14,645 ----------- ------------ Total expenses .............................. 1,775,132 3,077,001 Less: expenses waived and reimbursed by Adviser (see Note B) ..................... (507,697) (712,031) ----------- ------------ Net expenses ................................ 1,267,435 2,364,970 ----------- ------------ Net investment income ....................... 5,467,039 9,944,935 ----------- ------------ Realized and Unrealized Gain on Investments Net realized gain on investment transactions ............................. 866,030 2,148,040 Net change in unrealized appreciation/depreciation of investments ........................... 2,759,335 5,661,591 ----------- ------------ Net gain on investments ..................... 3,625,365 7,809,631 ----------- ------------ Net Increase in Net Assets from Operations .......................... $ 9,092,404 $ 17,754,566 =========== ============ See notes to financial statements. -------------------------------------------------------------------------------- 46 o ALLIANCE MUNICIPAL INCOME FUND II ----------------------- STATEMENT OF OPERATIONS ----------------------- Massachusetts Michigan ============= ============ Investment Income Interest .................................... $ 8,123,327 $ 3,349,418 ----------- ------------ Expenses Advisory fee ................................ 840,586 346,259 Distribution fee - Class A .................. 149,661 58,781 Distribution fee - Class B .................. 478,911 199,834 Distribution fee - Class C .................. 367,152 158,244 Custodian ................................... 101,688 91,387 Administrative .............................. 95,250 95,250 Audit and legal ............................. 53,210 29,463 Transfer agency ............................. 52,766 39,481 Registration ................................ 23,209 18,585 Printing .................................... 22,967 11,050 Trustees' fees .............................. 3,100 3,100 Miscellaneous ............................... 8,801 4,926 ----------- ------------ Total expenses .............................. 2,197,301 1,056,360 Less: expenses waived and reimbursed by Adviser (see Note B) ..................... (502,210) (246,151) ----------- ------------ Net expenses ................................ 1,695,091 810,209 ----------- ------------ Net investment income ....................... 6,428,236 2,539,209 ----------- ------------ Realized and Unrealized Gain on Investments Net realized gain on investment transactions ............................. 421,301 299,056 Net change in unrealized appreciation/depreciation of investments ........................... 4,705,047 2,309,483 ----------- ------------ Net gain on investments ..................... 5,126,348 2,608,539 ----------- ------------ Net Increase in Net Assets from Operations ............................... $11,554,584 $ 5,147,748 =========== ============ See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 47 ----------------------- STATEMENT OF OPERATIONS ----------------------- Minnesota New Jersey =========== ============ Investment Income Interest .................................... $ 2,873,744 $ 10,566,414 ----------- ------------ Expenses Advisory fee ................................ 293,197 1,118,634 Distribution fee - Class A .................. 71,971 190,874 Distribution fee - Class B .................. 141,306 790,647 Distribution fee - Class C .................. 87,908 362,920 Administrative .............................. 95,250 95,250 Custodian ................................... 89,856 104,525 Transfer agency ............................. 28,461 70,953 Audit and legal ............................. 24,640 27,297 Registration ................................ 12,390 33,918 Printing .................................... 6,343 27,465 Trustees' fees .............................. 3,100 3,100 Miscellaneous ............................... 6,378 11,747 ----------- ------------ Total expenses .............................. 860,800 2,837,330 Less: expenses waived and reimbursed by Adviser (see Note B) ..................... (278,146) (472,694) ----------- ------------ Net expenses ................................ 582,654 2,364,636 ----------- ------------ Net investment income ....................... 2,291,090 8,201,778 ----------- ------------ Realized and Unrealized Gain on Investments Net realized gain on investment transactions ............................. 150,934 1,817,043 Net change in unrealized appreciation/depreciation of investments ........................... 1,533,464 (366) ----------- ------------ Net gain on investments ..................... 1,684,398 1,816,677 ----------- ------------ Net Increase in Net Assets from Operations .......................... $ 3,975,488 $ 10,018,455 =========== ============ See notes to financial statements. -------------------------------------------------------------------------------- 48 o ALLIANCE MUNICIPAL INCOME FUND II ----------------------- STATEMENT OF OPERATIONS ----------------------- Ohio Pennsylvania =========== ============ Investment Income Interest .................................... $ 6,990,764 $ 9,521,987 ----------- ------------ Expenses Advisory fee ................................ 697,205 981,087 Distribution fee - Class A .................. 112,173 236,024 Distribution fee - Class B .................. 451,715 507,121 Distribution fee - Class C .................. 289,902 275,872 Custodian ................................... 97,808 103,336 Administrative .............................. 95,250 95,250 Transfer agency ............................. 55,281 89,545 Audit and legal ............................. 29,968 30,265 Printing .................................... 19,352 14,833 Trustees' fees .............................. 3,100 3,100 Registration ................................ 2,796 20,429 Miscellaneous ............................... 9,899 12,363 ----------- ------------ Total expenses .............................. 1,864,449 2,369,225 Less: expenses waived and reimbursed by Adviser (see Note B) ..................... (397,090) (329,877) ----------- ------------ Net expenses ................................ 1,467,359 2,039,348 ----------- ------------ Net investment income ....................... 5,523,405 7,482,639 ----------- ------------ Realized and Unrealized Gain on Investments Net realized gain on investment transactions ............................. 680,295 2,535,581 Net change in unrealized appreciation/depreciation of investments ........................... 1,396,175 5,675,664 ----------- ------------ Net gain on investments ..................... 2,076,470 8,211,245 ----------- ------------ Net Increase in Net Assets from Operations ............................... $ 7,599,875 $ 15,693,884 =========== ============ See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 49 ----------------------- STATEMENT OF OPERATIONS ----------------------- Virginia =========== Investment Income Interest .................................................. $ 7,293,525 ----------- Expenses Advisory fee .............................................. 771,733 Distribution fee - Class A ................................ 135,706 Distribution fee - Class B ................................ 578,411 Distribution fee - Class C ................................ 204,010 Custodian ................................................. 106,065 Administrative ............................................ 95,250 Transfer agency ........................................... 56,652 Printing .................................................. 36,416 Registration .............................................. 30,647 Audit and legal ........................................... 23,969 Trustees' fees ............................................ 3,100 Miscellaneous ............................................. 8,045 ----------- Total expenses ............................................ 2,050,004 Less: expenses waived and reimbursed by Adviser (see Note B) ................................... (613,273) ----------- Net expenses .............................................. 1,436,731 ----------- Net investment income ..................................... 5,856,794 ----------- Realized and Unrealized Gain (Loss) on Investments Net realized loss on investment transactions ........................................... (774,675) Net change in unrealized appreciation/ depreciation of investments ............................ 2,905,994 ----------- Net gain on investments ................................... 2,131,319 ----------- Net Increase in Net Assets from Operations ........................................ $ 7,988,113 =========== See notes to financial statements. -------------------------------------------------------------------------------- 50 o ALLIANCE MUNICIPAL INCOME FUND II ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS Arizona ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 5,467,039 $ 4,124,144 Net realized gain (loss) on investment transactions .................. 866,030 (1,443,971) Net change in unrealized appreciation/depreciation of investments ........................... 2,759,335 2,222,566 ------------- ------------ Net increase in net assets from operations ............................... 9,092,404 4,902,739 Dividends and Distributions to Shareholders from: Net investment income Class A .................................. (3,113,313) (2,210,559) Class B .................................. (1,875,221) (1,496,494) Class C .................................. (478,505) (417,091) Distributions in excess of net investment income Class A .................................. (10,736) -0- Class B .................................. (23,625) (523) Class C .................................. (6,422) (146) Transactions in Shares of Beneficial Interest Net increase ................................ 63,676,681 10,570,901 ------------- ------------ Total increase .............................. 67,261,263 11,348,827 Net Assets Beginning of period ......................... 90,430,564 79,081,737 ------------- ------------ End of period ............................... $ 157,691,827 $ 90,430,564 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 51 ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- Florida ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 9,944,935 $ 9,150,421 Net realized gain (loss) on investment transactions .................. 2,148,040 (6,318,682) Net change in unrealized appreciation/depreciation of investments ........................... 5,661,591 4,972,716 ------------- ------------ Net increase in net assets from operations .......................... 17,754,566 7,804,455 Dividends to Shareholders from: Net investment income Class A .................................. (4,629,117) (4,014,035) Class B .................................. (3,374,617) (3,097,119) Class C .................................. (1,766,975) (1,928,204) Transactions in Shares of Beneficial Interest Net increase (decrease) ..................... 38,415,245 (8,941,141) ------------- ------------ Total increase (decrease) ................... 46,399,102 (10,176,044) Net Assets Beginning of period ......................... 179,277,282 189,453,326 ------------- ------------ End of period ............................... $ 225,676,384 $179,277,282 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- 52 o ALLIANCE MUNICIPAL INCOME FUND II ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- Massachusetts ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 6,428,236 $ 5,986,974 Net realized gain (loss) on investment transactions .................. 421,301 (4,330,566) Net change in unrealized appreciation/depreciation of investments ........................... 4,705,047 3,361,018 ------------- ------------ Net increase in net assets from operations ............................... 11,554,584 5,017,426 Dividends and Distributions to Shareholders from: Net investment income Class A .................................. (2,596,579) (2,571,130) Class B .................................. (2,167,810) (1,903,093) Class C .................................. (1,663,847) (1,399,961) Distributions in excess of net investment income Class A .................................. (3,297) -0- Class B .................................. (15,132) -0- Class C .................................. (11,035) -0- Transactions in Shares of Beneficial Interest Net increase ................................ 48,575,455 694,663 ------------- ------------ Total increase (decrease) ................... 53,672,339 (162,095) Net Assets Beginning of period ......................... 116,589,502 116,751,597 ------------- ------------ End of period ............................... $ 170,261,841 $116,589,502 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 53 ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- Michigan ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 2,539,209 $ 1,839,705 Net realized gain (loss) on investment transactions .................. 299,056 (262,417) Net change in unrealized appreciation/depreciation of investments ........................... 2,309,483 655,739 ------------- ------------ Net increase in net assets from operations ............................... 5,147,748 2,233,027 Dividends and Distributions to Shareholders from: Net investment income Class A .................................. (982,605) (690,808) Class B .................................. (868,272) (606,607) Class C .................................. (688,332) (511,085) Distributions in excess of net investment income Class A .................................. (14,462) -0- Class B .................................. (19,366) -0- Class C .................................. (15,223) -0- Transactions in Shares of Beneficial Interest Net increase ................................ 42,209,071 4,836,586 ------------- ------------ Total increase .............................. 44,768,559 5,261,113 Net Assets Beginning of period ......................... 41,613,085 36,351,972 ------------- ------------ End of period ............................... $ 86,381,644 $ 41,613,085 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- 54 o ALLIANCE MUNICIPAL INCOME FUND II ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- Minnesota ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 2,291,090 $ 1,821,685 Net realized gain (loss) on investment transactions .................. 150,934 (725,502) Net change in unrealized appreciation/depreciation of investments ........................... 1,533,464 849,993 ------------- ------------ Net increase in net assets from operations ............................... 3,975,488 1,946,176 Dividends and Distributions to Shareholders from: Net investment income Class A .................................. (1,255,231) (809,194) Class B .................................. (639,279) (582,388) Class C .................................. (396,580) (373,890) Distributions in excess of net investment income Class A .................................. (14,990) -0- Class B .................................. (13,512) -0- Class C .................................. (9,452) -0- Transactions in Shares of Beneficial Interest Net increase ................................ 17,792,648 5,826,773 ------------- ------------ Total increase .............................. 19,439,092 6,007,477 Net Assets Beginning of period ......................... 39,800,034 33,792,557 ------------- ------------ End of period ............................... $ 59,239,126 $ 39,800,034 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 55 ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- New Jersey ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 8,201,778 $ 6,544,724 Net realized gain (loss) on investment transactions .................. 1,817,043 (3,336,757) Net change in unrealized appreciation/depreciation of investments ........................... (366) 3,260,518 ------------- ------------ Net increase in net assets from operations ............................... 10,018,455 6,468,485 Dividends and Distributions to Shareholders from: Net investment income Class A .................................. (3,203,753) (2,268,250) Class B .................................. (3,424,734) (2,756,064) Class C .................................. (1,573,291) (1,390,783) Distributions in excess of net investment income Class A .................................. (85,024) -0- Class B .................................. (100,866) -0- Class C .................................. (42,142) -0- Transactions in Shares of Beneficial Interest Net increase ................................ 85,882,846 12,261,589 ------------- ------------ Total increase .............................. 87,471,491 12,314,977 Net Assets Beginning of period ......................... 142,930,928 130,615,951 ------------- ------------ End of period ............................... $ 230,402,419 $142,930,928 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- 56 o ALLIANCE MUNICIPAL INCOME FUND II ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- Ohio ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 5,523,405 $ 4,794,388 Net realized gain (loss) on investment transactions .................. 680,295 (3,051,400) Net change in unrealized appreciation/depreciation of investments ........................... 1,396,175 1,749,610 ------------- ------------ Net increase in net assets from operations ............................... 7,599,875 3,492,598 Dividends to Shareholders from: Net investment income Class A .................................. (1,985,585) (1,528,439) Class B .................................. (2,097,526) (2,004,386) Class C .................................. (1,344,836) (1,058,452) Transactions in Shares of Beneficial Interest Net increase (decrease) ..................... 39,547,128 (3,100,234) ------------- ------------ Total increase (decrease) ................... 41,719,056 (4,198,913) Net Assets Beginning of period ......................... 96,210,820 100,409,733 ------------- ------------ End of period ............................... $ 137,929,876 $ 96,210,820 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 57 ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- Pennsylvania ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 7,482,639 $ 6,652,273 Net realized gain (loss) on investment transactions .................. 2,535,581 (3,216,273) Net change in unrealized appreciation/depreciation of investments ........................... 5,675,664 2,618,243 ------------- ------------ Net increase in net assets from operations ............................... 15,693,884 6,054,243 Dividends and Distributions to Shareholders from: Net investment income Class A .................................. (4,054,203) (3,276,524) Class B .................................. (2,209,993) (2,143,368) Class C .................................. (1,218,443) (1,091,618) Distributions in Excess of Net Investment Income Class A .................................. (57,507) -0- Class B .................................. (91,403) -0- Class C .................................. (34,299) -0- Transactions in Shares of Beneficial Interest Net increase (decrease) ..................... 47,871,235 (5,642,255) ------------- ------------ Total increase (decrease) ................... 55,899,271 (6,099,522) Net Assets Beginning of period ......................... 136,306,644 142,406,166 ------------- ------------ End of period ............................... $ 192,205,915 $136,306,644 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- 58 o ALLIANCE MUNICIPAL INCOME FUND II ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- Virginia ============================== Year Ended Year Ended September 30, September 30, 2001 2000 ============= ============ Increase (Decrease) in Net Assets from Operations Net investment income ....................... $ 5,856,794 $ 4,640,990 Net realized loss on investment transactions ............................. (774,675) (2,134,258) Net change in unrealized appreciation/depreciation of investments ........................... 2,905,994 2,656,230 ------------- ------------ Net increase in net assets from operations ............................... 7,988,113 5,162,962 Dividends and Distributions to Shareholders from: Net investment income Class A .................................. (2,342,705) (1,740,980) Class B .................................. (2,597,565) (2,122,937) Class C .................................. (916,524) (692,196) Distributions in Excess of Net Investment Income Class A .................................. (28,634) -0- Class B .................................. (56,753) -0- Class C .................................. (22,025) -0- Transactions in Shares of Beneficial Interest Net increase ................................ 41,082,977 20,125,507 ------------- ------------ Total increase .............................. 43,106,884 20,732,356 Net Assets Beginning of period ......................... 103,848,533 83,116,177 ------------- ------------ End of period ............................... $ 146,955,417 $103,848,533 ============= ============ See notes to financial statements. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 59 ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- NOTES TO FINANCIAL STATEMENTS September 30, 2001 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 may 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 accounting principles generally accepted in the United States, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund. 1. Security Valuation Portfolio securities traded on a national securities exchange are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, the last bid price quoted on such day. If no bid prices are quoted, then the security is valued at the mean of the bid and asked prices as obtained on that day from one or more dealers regularly making a market in that security. Securities traded on the over-the-counter market are valued at the mean of the closing bid and asked price provided by two or more dealers regularly making a market in such securities. U.S. government securities and other debt securities which mature in 60 days or less are valued at amortized cost unless this method does not represent fair value. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by, or in accordance with procedures approved by, the Board of Trustees. Fixed income securities may be valued on the basis of prices provided by a pricing service when such prices are believed to reflect the fair market value of such securities. -------------------------------------------------------------------------------- 60 o ALLIANCE MUNICIPAL INCOME FUND II ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- 2. Taxes It is the policy of each Portfolio to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to its shareholders. Therefore, no provisions for federal income or excise taxes are required. 3. Investment Income and Investment Transactions Interest income is accrued daily. Investment transactions are accounted for on the date securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Portfolios amortize premium and accrete original issue discount and market discount as adjustments to interest income. The Portfolios follow an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the Portfolios. 4. Income and Expenses All income earned and expenses incurred by the Portfolios are borne on a pro-rata basis by each settled class of shares, based on the proportionate interest in the Portfolios represented by the net assets of such class, except that the Portfolio's Class B and Class C shares bear higher distribution and transfer agent fees than Class A shares. 5. Dividends and Distributions Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with accounting principles generally accepted in the United States. 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 year ended September 30, 2001, the Adviser agreed to waive all or a portion of its advisory fees. The aggregate amounts of such fee waivers were: Arizona Portfolio, $507,697; Florida Portfolio, $712,031; Massachusetts Portfolio, $502,210; Michigan Portfolio, $150,901; Minnesota Portfolio, $182,896; New Jersey Portfolio, $472,694; Ohio Portfolio, $397,090; Pennsylvania Portfolio, $329,877; and Virginia Portfolio, $518,023. Pursuant to the advisory agreement, the Arizona, Florida, Massachusetts, New Jersey, Ohio and Pennsylvania -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 61 ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- Portfolios each paid $95,250 to the Adviser representing the cost of certain legal and accounting services provided to these Portfolios by the Adviser for the year ended September 30, 2001. Additionally, the Adviser agreed to waive all or a portion of such fees for the Michigan, Minnesota and Virginia Portfolios in the aggregate amount of $95,250 for each of these portfolios. Each Portfolio compensates Alliance Global Investor Services, Inc., (formerly Alliance Fund Services, Inc.), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for each Portfolio. Such compensation amounted to: Arizona Portfolio, $24,250; Florida Portfolio, $42,365; Massachusetts Portfolio, $34,617; Michigan Portfolio, $26,138; Minnesota Portfolio, $18,857; New Jersey Portfolio, $61,891; Ohio Portfolio, $34,409; Pennsylvania Portfolio, $55,075; and Virginia Portfolio, $32,766. For the year ended September 30, 2001, each Portfolio's expenses were reduced under an expense offset arrangement with Alliance Global Investor Services, Inc. as follows: Arizona Portfolio, by $815; Florida Portfolio, by $1,408; Massachusetts Portfolio, by $1,164; Michigan Portfolio, by $680; Minnesota Portfolio, by $583; New Jersey Portfolio, by $1,796; Ohio Portfolio, by $1,104; Pennsylvania Portfolio, by $1,595; and Virginia Portfolio, by $1,246. Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The Distributor has advised the Fund that it has received front-end sales charges from sales of Class A shares and contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares for the year ended September 30, 2001 as follows: Front End Contingent Deferred Sales Charges Sales Charges ------------------------------------ Portfolio Class A Class A Class B Class C -------------------------------------------------------------------------------- Arizona $ 42,568 $ -0- $ 62,400 $ 402 Florida 57,116 16,019 105,966 3,299 Massachusetts 29,687 -0- 67,615 4,462 Michigan 29,903 4,698 39,732 5,266 Minnesota 21,175 -0- 9,654 1,781 New Jersey 43,052 5,000 75,197 8,846 Ohio 21,502 -0- 63,263 5,582 Pennsylvania 28,390 -0- 47,163 1,242 Virginia 18,434 7 63,394 9,006 -------------------------------------------------------------------------------- 62 o ALLIANCE MUNICIPAL INCOME FUND II ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- 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 distribution and servicing fees 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 fees are accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has advised the Fund that it has incurred expenses in excess of the distribution costs reimbursed by each Portfolio as follows: Portfolio Class B Class C -------------------------------------------------------------------------------- Arizona .............................. $3,399,112 $ 630,953 Florida .............................. 4,029,284 1,958,834 Massachusetts ........................ 3,214,602 1,812,062 Michigan ............................. 2,605,910 2,015,483 Minnesota ............................ 2,467,756 1,437,059 New Jersey ........................... 5,480,665 1,888,367 Ohio ................................. 4,019,629 1,962,256 Pennsylvania ......................... 3,664,614 1,548,791 Virginia ............................. 4,060,023 1,079,317 Such costs may be recovered from each Portfolio at an annual rate of up to .30 of 1% of each Portfolio's daily net assets in future periods so long as the Agreement is in effect. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of each Portfolio's shares. NOTE D Investment Transactions Purchases and sales of investment securities (excluding short-term investments and U.S. government securities) for the year ended September 30, 2001 were as follows: Portfolio Purchases Sales -------------------------------------------------------------------------------- Arizona .......................... $196,610,655 $135,536,067 Florida .......................... 179,555,294 140,323,361 Massachusetts .................... 188,852,806 144,181,294 Michigan ......................... 104,926,165 63,816,920 Minnesota ........................ 47,115,445 28,344,557 New Jersey ....................... 288,149,685 196,653,023 Ohio ............................. 73,375,745 35,095,091 Pennsylvania ..................... 221,414,996 174,376,299 Virginia ......................... 204,453,042 163,277,829 -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 63 ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- At September 30, 2001, the cost of investments for federal income tax purposes, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation/depreciation of investments for each Portfolio were as follows:
Gross Unrealized Gross Unrealized Net Unrealized Portfolio Tax Cost Appreciation Depreciation Appreciation ----------------------------------------------------------------------------------------- Arizona $148,137,331 $ 5,291,555 $ (26,942) $ 5,264,613 Florida 212,504,008 10,439,426 (13,909) 10,425,517 Massachusetts 155,858,508 8,586,864 (341,258) 8,245,606 Michigan 80,555,537 3,184,574 (30,006) 3,154,568 Minnesota 54,899,740 2,538,556 -0- 2,538,556 New Jersey 228,260,452 10,402,685 (4,885,266) 5,517,419 Ohio 131,016,718 6,030,298 (2,334,345) 3,695,953 Pennsylvania 178,132,540 9,497,648 (122,150) 9,375,498 Virginia 136,401,509 5,645,973 (56,776) 5,589,197
For Federal income tax purposes at September 30, 2001, the Fund had capital loss carryforwards for the following Portfolios: Expiring Expiring Expiring Expiring Expiring in 2003 in 2004 in 2007 in 2008 in 2009 ------------------------------------------------------------------------------- Arizona $ -0- $ -0- $ -0- $2,361,378 $ -0- Florida 3,931,206 -0- 4,853 7,457,727 3,475,986 Massachusetts -0- -0- -0- 7,248,317 1,585,051 Michigan -0- -0- -0- 647,286 -0- Minnesota 650,584 492,981 -0- 1,051,696 160,146 New Jersey 3,051,602 349,704 -0- 3,327,295 1,077,263 Ohio 2,526,402 332,000 -0- 2,491,530 1,639,021 Pennsylvania -0- -0- -0- 6,563,370 -0- Virginia -0- -0- -0- 3,978,133 1,200,330 Capital losses incurred after October 31 ("post October" losses) within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. The Fund incurred and elected to defer the following net capital losses during the fiscal year 2001. Post October Losses ------------------- Arizona $414,758 Florida 3,909 Virginia 796,149 -------------------------------------------------------------------------------- 64 o ALLIANCE MUNICIPAL INCOME FUND II ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- To the extent that the carryover losses are used to offset future capital gains, it is probable that the gain to offset will not be distributed to shareholders. NOTE E Shares of Beneficial Interest There is an unlimited number of $.01 par value shares of beneficial interest authorized for Class A, Class B and Class C shares. Transactions in shares of beneficial interest in each Portfolio were as follows:
------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Arizona Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class A Shares sold 4,813,437 1,856,655 $ 51,297,439 $ 18,930,679 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 169,073 108,731 1,802,775 1,115,566 ---------------------------------------------------------------------------------------- Shares converted from Class B 63,843 93,637 684,789 956,418 ---------------------------------------------------------------------------------------- Shares redeemed (1,387,741) (1,244,309) (14,786,273) (12,714,107) ---------------------------------------------------------------------------------------- Net increase 3,658,612 814,714 $ 38,998,730 $ 8,288,556 ======================================================================================== Class B Shares sold 2,442,290 975,420 $ 26,083,801 $ 10,008,779 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 90,760 76,864 966,068 786,969 ---------------------------------------------------------------------------------------- Shares converted to Class A (63,938) (93,680) (684,789) (956,418) ---------------------------------------------------------------------------------------- Shares redeemed (546,808) (692,556) (5,828,643) (7,074,992) ---------------------------------------------------------------------------------------- Net increase 1,922,304 266,048 $ 20,536,437 $ 2,764,338 ======================================================================================== Class C Shares sold 935,176 273,926 $ 9,955,987 $ 2,799,629 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 25,457 21,744 271,076 222,385 ---------------------------------------------------------------------------------------- Shares redeemed (572,261) (342,651) (6,085,549) (3,504,007) ---------------------------------------------------------------------------------------- Net increase (decrease) 388,372 (46,981) $ 4,141,514 $ (481,993) ========================================================================================
-------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 65 ----------------------------- NOTES TO FINANCIAL STATEMENTS -----------------------------
------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Florida Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class A Shares sold 3,589,878 2,566,311 $ 35,893,611 $ 24,438,087 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 198,966 184,140 1,990,440 1,762,270 ---------------------------------------------------------------------------------------- Shares converted from Class B 171,422 463,681 1,704,137 4,429,715 ---------------------------------------------------------------------------------------- Shares redeemed (2,072,213) (3,613,466) (20,783,492) (34,473,817) ---------------------------------------------------------------------------------------- Net increase (decrease) 1,888,053 (399,334) $ 18,804,696 $ (3,843,745) ======================================================================================== Class B Shares sold 3,059,056 1,802,032 $ 30,697,478 $ 17,249,875 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 181,564 163,330 1,818,925 1,562,651 ---------------------------------------------------------------------------------------- Shares converted to Class A (171,242) (463,533) (1,704,137) (4,429,715) ---------------------------------------------------------------------------------------- Shares redeemed (1,151,170) (1,687,659) (11,537,217) (16,081,782) ---------------------------------------------------------------------------------------- Net increase (decrease) 1,918,208 (185,830) $ 19,275,049 $ (1,698,971) ======================================================================================== Class C Shares sold 726,006 1,051,801 $ 7,279,673 $ 10,079,336 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 92,873 108,711 928,814 1,039,907 ---------------------------------------------------------------------------------------- Shares redeemed (788,495) (1,519,095) (7,872,987) (14,517,668) ---------------------------------------------------------------------------------------- Net increase (decrease) 30,384 (358,583) $ 335,500 $ (3,398,425) ========================================================================================
-------------------------------------------------------------------------------- 66 o ALLIANCE MUNICIPAL INCOME FUND II ----------------------------- NOTES TO FINANCIAL STATEMENTS -----------------------------
------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Massachusetts Portfolio 2001 2000 2001 2000 ------------------------------------------------------------------------------------------- Class A Shares sold 2,593,391 3,870,727 $ 28,601,700 $ 39,956,518 ------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 124,433 119,699 1,360,276 1,242,591 ------------------------------------------------------------------------------------------- Shares converted from Class B 86,282 53,711 960,080 557,445 ------------------------------------------------------------------------------------------- Shares redeemed (1,356,521) (3,953,939) (14,844,224) (40,717,058) ------------------------------------------------------------------------------------------- Net increase 1,447,585 90,198 $ 16,077,832 $ 1,039,496 =========================================================================================== Class B Shares sold 2,435,657 701,960 $ 26,753,154 $ 7,282,614 ------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 117,513 106,504 1,282,290 1,103,845 ------------------------------------------------------------------------------------------- Shares converted to Class A (85,391) (53,776) (960,080) (557,445) ------------------------------------------------------------------------------------------- Shares redeemed (608,606) (979,204) (6,632,922) (10,141,966) ------------------------------------------------------------------------------------------- Net increase (decrease) 1,859,173 (224,516) $ 20,442,442 $ (2,312,952) =========================================================================================== Class C Shares sold 1,522,833 1,104,460 $ 16,636,563 $ 11,373,666 ------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 111,278 100,372 1,213,365 1,040,730 ------------------------------------------------------------------------------------------- Shares redeemed (533,710) (1,011,826) (5,794,747) (10,446,277) ------------------------------------------------------------------------------------------- Net increase 1,100,401 193,006 $ 12,055,181 $ 1,968,119 =========================================================================================== ------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Michigan Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class A Shares sold 1,910,856 722,401 $ 20,024,014 $ 7,130,569 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 62,510 42,594 652,455 421,840 ---------------------------------------------------------------------------------------- Shares converted from Class B 37,882 78,253 393,516 772,080 ---------------------------------------------------------------------------------------- Shares redeemed (363,662) (573,366) (3,798,987) (5,684,298) ---------------------------------------------------------------------------------------- Net increase 1,647,586 269,882 $ 17,270,998 $ 2,640,191 ========================================================================================
-------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 67 ----------------------------- NOTES TO FINANCIAL STATEMENTS -----------------------------
------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Michigan Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class B Shares sold 1,550,077 509,186 $ 16,187,987 $ 5,037,342 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 48,534 34,447 505,596 340,544 ---------------------------------------------------------------------------------------- Shares converted to Class A (37,928) (78,329) (393,516) (772,080) ---------------------------------------------------------------------------------------- Shares redeemed (260,740) (369,536) (2,713,149) (3,623,920) ---------------------------------------------------------------------------------------- Net increase 1,299,943 95,768 $ 13,586,918 $ 981,886 ======================================================================================== Class C Shares sold 1,199,030 527,572 $ 12,534,030 $ 5,227,244 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 51,395 40,772 535,251 403,193 ---------------------------------------------------------------------------------------- Shares redeemed (165,122) (448,502) (1,718,126) (4,415,928) ---------------------------------------------------------------------------------------- Net increase 1,085,303 119,842 $ 11,351,155 $ 1,214,509 ======================================================================================== ------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Minnesota Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class A Shares sold 1,305,502 1,038,812 $ 13,064,628 $ 9,954,253 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 66,052 44,751 658,459 426,425 ---------------------------------------------------------------------------------------- Shares converted from Class B 56,635 202,898 563,714 1,922,179 ---------------------------------------------------------------------------------------- Shares redeemed (484,522) (302,710) (4,836,390) (2,863,592) ---------------------------------------------------------------------------------------- Net increase 943,667 983,751 $ 9,450,411 $ 9,439,265 ======================================================================================== Class B Shares sold 610,836 289,103 $ 6,090,509 $ 2,761,982 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 39,953 37,751 398,188 359,400 ---------------------------------------------------------------------------------------- Shares converted to Class A (56,637) (202,882) (563,714) (1,922,179) ---------------------------------------------------------------------------------------- Shares redeemed (119,730) (342,232) (1,187,513) (3,250,404) ---------------------------------------------------------------------------------------- Net increase (decrease) 474,422 (218,260) $ 4,737,470 $ (2,051,201) ========================================================================================
-------------------------------------------------------------------------------- 68 o ALLIANCE MUNICIPAL INCOME FUND II ----------------------------- NOTES TO FINANCIAL STATEMENTS -----------------------------
------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Minnesota Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class C Shares sold 459,169 121,928 $ 4,611,384 $ 1,164,949 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 28,881 28,935 288,003 275,465 ---------------------------------------------------------------------------------------- Shares redeemed (130,103) (315,968) (1,294,620) (3,001,705) ---------------------------------------------------------------------------------------- Net increase (decrease) 357,947 (165,105) $ 3,604,767 $ (1,561,291) ======================================================================================== ------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, New Jersey Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class A Shares sold 3,731,700 2,110,449 $ 38,171,495 $ 20,395,892 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 182,978 122,419 1,861,049 1,186,150 ---------------------------------------------------------------------------------------- Shares converted from Class B 313,237 741,480 3,175,314 7,152,154 ---------------------------------------------------------------------------------------- Shares redeemed (1,269,458) (1,302,929) (12,917,397) (12,525,557) ---------------------------------------------------------------------------------------- Net increase 2,958,457 1,671,419 $ 30,290,461 $ 16,208,639 ======================================================================================== Class B Shares sold 4,918,891 1,695,875 $ 50,286,151 $ 16,459,266 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 216,519 184,273 2,202,412 1,783,712 ---------------------------------------------------------------------------------------- Shares converted to Class A (313,230) (741,372) (3,175,314) (7,152,154) ---------------------------------------------------------------------------------------- Shares redeemed (808,828) (1,415,970) (8,239,249) (13,650,743) ---------------------------------------------------------------------------------------- Net increase (decrease) 4,013,352 (277,194) $ 41,074,000 $ (2,559,919) ======================================================================================== Class C Shares sold 2,158,452 815,133 $ 22,087,081 $ 7,916,397 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 108,212 96,313 1,100,784 932,437 ---------------------------------------------------------------------------------------- Shares redeemed (850,207) (1,057,324) (8,669,480) (10,235,965) ---------------------------------------------------------------------------------------- Net increase (decrease) 1,416,457 (145,878) $ 14,518,385 $ (1,387,131) ========================================================================================
-------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 69 ----------------------------- NOTES TO FINANCIAL STATEMENTS -----------------------------
------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Ohio Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class A Shares sold 1,675,440 846,158 $ 16,883,683 $ 8,165,215 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 128,136 98,790 1,283,413 947,389 ---------------------------------------------------------------------------------------- Shares converted from Class B 138,899 645,321 1,386,550 6,130,635 ---------------------------------------------------------------------------------------- Shares redeemed (590,544) (1,025,457) (5,907,771) (9,805,778) ---------------------------------------------------------------------------------------- Net increase 1,351,931 564,812 $ 13,645,875 $ 5,437,461 ======================================================================================== Class B Shares sold 1,991,235 956,292 $ 20,036,809 $ 9,174,916 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 129,450 135,146 1,296,809 1,295,052 ---------------------------------------------------------------------------------------- Shares converted to Class A (138,899) (645,213) (1,386,550) (6,184,635) ---------------------------------------------------------------------------------------- Shares redeemed (709,275) (1,244,603) (7,103,412) (11,873,682) ---------------------------------------------------------------------------------------- Net increase (decrease) 1,272,511 (798,378) $ 12,843,656 $ (7,588,349) ======================================================================================== Class C Shares sold 1,472,805 621,261 $ 14,788,323 $ 5,954,337 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 85,456 67,130 857,374 644,074 ---------------------------------------------------------------------------------------- Shares redeemed (258,483) (790,731) (2,588,100) (7,547,757) ---------------------------------------------------------------------------------------- Net increase (decrease) 1,299,778 (102,340) $ 13,057,597 $ (949,346) ======================================================================================== ------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Pennsylvania Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------------- Class A Shares sold 3,465,560 1,759,176 $ 35,409,477 $ 17,065,835 ---------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 252,549 208,257 2,571,868 2,018,532 ---------------------------------------------------------------------------------------------- Shares converted from Class B 232,910 567,875 2,384,399 5,501,230 ---------------------------------------------------------------------------------------------- Shares redeemed (1,564,884) (1,938,986) (15,832,143) (18,774,423) ---------------------------------------------------------------------------------------------- Net increase 2,386,135 596,322 $ 24,533,601 $ 5,811,174 ==============================================================================================
-------------------------------------------------------------------------------- 70 o ALLIANCE MUNICIPAL INCOME FUND II ----------------------------- NOTES TO FINANCIAL STATEMENTS -----------------------------
------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Pennsylvania Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------------- Class B Shares sold 2,179,041 1,143,644 $ 22,272,109 $ 11,092,896 ---------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 138,430 136,473 1,409,230 1,321,432 ---------------------------------------------------------------------------------------------- Shares converted to Class A (232,922) (567,932) (2,384,397) (5,501,230) ---------------------------------------------------------------------------------------------- Shares redeemed (648,283) (1,446,558) (6,580,863) (13,974,905) ---------------------------------------------------------------------------------------------- Net increase (decrease) 1,436,266 (734,373) $ 14,716,079 $ (7,061,807) ============================================================================================== Class C Shares sold 1,086,164 562,077 $ 11,094,019 $ 5,452,362 ---------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 75,889 70,224 772,636 680,054 ---------------------------------------------------------------------------------------------- Shares redeemed (318,971) (1,095,926) (3,245,100) (10,524,038) ---------------------------------------------------------------------------------------------- Net increase (decrease) 843,082 (463,625) $ 8,621,555 $ (4,391,622) ============================================================================================== ------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Virginia Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class A Shares sold 1,928,972 1,643,283 $ 20,159,676 $ 16,689,473 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 105,942 85,822 1,199,297 871,541 ---------------------------------------------------------------------------------------- Shares converted from Class B 36,017 33,791 379,415 344,049 ---------------------------------------------------------------------------------------- Shares redeemed (665,749) (838,839) (6,992,235) (8,577,211) ---------------------------------------------------------------------------------------- Net increase 1,405,182 924,057 $ 14,746,153 $ 9,327,852 ========================================================================================
-------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 71 ----------------------------- NOTES TO FINANCIAL STATEMENTS -----------------------------
------------------------------- ------------------------------- Shares Amount ------------------------------- ------------------------------- Year Ended Year Ended Year Ended Year Ended September 30, September 30, September 30, September 30, Virginia Portfolio 2001 2000 2001 2000 ---------------------------------------------------------------------------------------- Class B Shares sold 2,300,574 1,287,195 $ 24,148,737 $ 13,075,898 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 162,685 140,005 1,705,329 1,419,246 ---------------------------------------------------------------------------------------- Shares converted to Class A (32,025) (33,832) (379,415) (344,049) ---------------------------------------------------------------------------------------- Shares redeemed (587,017) (705,746) (6,103,460) (7,113,912) ---------------------------------------------------------------------------------------- Net increase 1,844,217 687,622 $ 19,371,191 $ 7,037,183 ======================================================================================== Class C Shares sold 958,758 606,560 $ 10,069,970 $ 6,121,444 ---------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 58,372 47,688 611,262 483,928 ---------------------------------------------------------------------------------------- Shares redeemed (355,655) (281,067) (3,715,599) (2,844,900) ---------------------------------------------------------------------------------------- Net increase 661,475 373,181 $ 6,965,633 $ 3,760,472 ========================================================================================
NOTE F Bank Borrowing A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $750 million revolving credit facility (the "Facility") intended to provide short-term financing if necessary, subject to certain restrictions, in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the year ended September 30, 2001. -------------------------------------------------------------------------------- 72 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- FINANCIAL HIGHLIGHTS Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Arizona Portfolio -------------------------------------------------------- Class A -------------------------------------------------------- Year Ended September 30, -------------------------------------------------------- 2001 2000 1999 1998 1997 -------------------------------------------------------- Net asset value, beginning of period .......... $ 10.47 $ 10.40 $ 11.03 $ 10.78 $ 10.32 -------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) .... .54 .55 .51 .54 .57 Net realized and unrealized gain (loss) on investment transactions ................. .34 .07 (.55) .45 .48 -------------------------------------------------------- Net increase (decrease) in net asset value from operations .............. .88 .62 (.04) .99 1.05 -------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ............ (.54) (.55) (.51) (.54) (.57) Distributions in excess of net investment income ............ (.01) -0- (.04) (.02) -0- Distributions from net realized gains ............... -0- -0- (.04) (.18) (.02) -------------------------------------------------------- Total dividends and distributions ................ (.55) (.55) (.59) (.74) (.59) -------------------------------------------------------- Net asset value, end of period ................ $ 10.80 $ 10.47 $ 10.40 $ 11.03 $ 10.78 ======================================================== Total Return Total investment return based on net asset value(c) ........ 8.56% 6.17% (.45)% 9.54% 10.54% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $88,261 $47,258 $38,472 $21,185 $ 9,225 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............. .78% .78% .78% .78% .78% Expenses, before waivers/ reimbursements ............. 1.22% 1.29% 1.39% 1.55% 2.71% Net investment income, net of waivers/ reimbursements ............. 5.08% 5.33% 4.74% 4.92% 5.42% Portfolio turnover rate ........ 119% 199% 217% 45% 193%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 73 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Arizona Portfolio -------------------------------------------------------- Class B -------------------------------------------------------- Year Ended September 30, -------------------------------------------------------- 2001 2000 1999 1998 1997 -------------------------------------------------------- Net asset value, beginning of period .......... $ 10.46 $ 10.39 $ 11.03 $ 10.78 $ 10.32 -------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) .... .47 .48 .43 .45 .50 Net realized and unrealized gain (loss) on investment transactions ................. .33 .07 (.55) .47 .48 -------------------------------------------------------- Net increase (decrease) in net asset value from operations .............. .80 .55 (.12) .92 .98 -------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ............ (.47) (.48) (.43) (.45) (.50) Distributions in excess of net investment income ............ (.01) -0- (.05) (.04) -0- Distributions from net realized gains .............. -0- -0- (.04) (.18) (.02) -------------------------------------------------------- Total dividends and distributions ................ (.48) (.48) (.52) (.67) (.52) -------------------------------------------------------- Net asset value, end of period ................ $ 10.78 $ 10.46 $ 10.39 $ 11.03 $ 10.78 ======================================================== Total Return Total investment return based on net asset value(c) ........ 7.76% 5.45% (1.19)% 8.84% 9.80% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $56,024 $34,232 $31,242 $13,698 $ 6,531 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............. 1.48% 1.48% 1.48% 1.48% 1.48% Expenses, before waivers/ reimbursements ............. 1.93% 1.99% 2.16% 2.30% 3.40% Net investment income, net of waivers/ reimbursements ............. 4.41% 4.63% 4.05% 4.21% 4.73% Portfolio turnover rate ........ 119% 199% 217% 45% 193%
See footnote summary on page 100. -------------------------------------------------------------------------------- 74 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Arizona Portfolio -------------------------------------------------------- Class C -------------------------------------------------------- Year Ended September 30, -------------------------------------------------------- 2001 2000 1999 1998 1997 -------------------------------------------------------- Net asset value, beginning of period .......... $ 10.46 $ 10.39 $ 11.03 $ 10.78 $ 10.32 -------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) .... .47 .48 .43 .45 .50 Net realized and unrealized gain (loss) on investment transactions ................. .33 .07 (.55) .47 .48 -------------------------------------------------------- Net increase (decrease) in net asset value from operations .............. .80 .55 (.12) .92 .98 -------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ............ (.47) (.48) (.43) (.45) (.50) Distributions in excess of net investment income ............ (.01) -0- (.05) (.04) -0- Distributions from net realized gains ............... -0- -0- (.04) (.18) (.02) -------------------------------------------------------- Total dividends and distributions ................ (.48) (.48) (.52) (.67) (.52) -------------------------------------------------------- Net asset value, end of period ................ $ 10.78 $ 10.46 $ 10.39 $ 11.03 $ 10.78 ======================================================== Total Return Total investment return based on net asset value(c) ........ 7.76% 5.45% (1.19)% 8.83% 9.80% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $13,407 $ 8,941 $ 9,368 $ 4,708 $ 1,775 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............. 1.48% 1.48% 1.48% 1.48% 1.48% Expenses, before waivers/ reimbursements ............. 1.93% 1.99% 2.17% 2.34% 3.39% Net investment income, net of waivers/ reimbursements ............. 4.43% 4.64% 4.05% 4.19% 4.70% Portfolio turnover rate ........ 119% 199% 217% 45% 193%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 75 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Florida Portfolio -------------------------------------------------------- Class A -------------------------------------------------------- Year Ended September 30, -------------------------------------------------------- 2001 2000 1999 1998 1997 -------------------------------------------------------- Net asset value, beginning of period .......... $ 9.76 $ 9.81 $ 10.48 $ 10.14 $ 9.73 -------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) .... .53 .53 .51 .52 .55 Net realized and unrealized gain (loss) on investment transactions ................. .40 (.05) (.65) .37 .41 -------------------------------------------------------- Net increase (decrease) in net asset value from operations .............. .93 .48 (.14) .89 .96 -------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ............ (.53) (.53) (.51) (.52) (.55) Distributions in excess of net investment income ........ -0- -0- (.02) (.03) -0- -------------------------------------------------------- Total dividends and distributions ................ (.53) (.53) (.53) (.55) (.55) -------------------------------------------------------- Net asset value, end of period ................ $ 10.16 $ 9.76 $ 9.81 $ 10.48 $ 10.14 ======================================================== Total Return Total investment return based on net asset value(c) ........ 9.71% 5.10% (1.38)% 8.97% 10.14% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $97,714 $75,422 $79,752 $44,440 $17,516 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............. .78% .73% .73% .73% .73% Expenses, before waivers/ reimbursements ............. 1.13% 1.14% 1.18% 1.27% 1.35% Net investment income, net of waivers/ reimbursements ............. 5.33% 5.52% 4.94% 5.14% 5.58% Portfolio turnover rate ........ 70% 281% 244% 65% 204%
See footnote summary on page 100. -------------------------------------------------------------------------------- 76 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Florida Portfolio -------------------------------------------------------- Class B -------------------------------------------------------- Year Ended September 30, -------------------------------------------------------- 2001 2000 1999 1998 1997 -------------------------------------------------------- Net asset value, beginning of period .......... $ 9.77 $ 9.81 $ 10.48 $ 10.14 $ 9.74 -------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) .... .46 .46 .43 .46 .48 Net realized and unrealized gain (loss) on investment transactions ................. .39 (.05) (.64) .36 .40 -------------------------------------------------------- Net increase (decrease) in net asset value from operations .............. .85 .41 (.21) .82 .88 -------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ............ (.45) (.45) (.43) (.46) (.48) Distributions in excess of net investment income ............ -0- -0- (.03) (.02) -0- -------------------------------------------------------- Total dividends and distributions ................ (.45) (.45) (.46) (.48) (.48) -------------------------------------------------------- Net asset value, end of period ................ $ 10.17 $ 9.77 $ 9.81 $ 10.48 $ 10.14 ======================================================== Total Return Total investment return based on net asset value(c) ........ 8.92% 4.43% (2.06)% 8.22% 9.24% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $87,603 $65,391 $67,532 $40,740 $24,820 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............. 1.48% 1.43% 1.43% 1.43% 1.43% Expenses, before waivers/ reimbursements ............. 1.84% 1.85% 1.91% 1.97% 2.05% Net investment income, net of waivers/ reimbursements ............... 4.62% 4.82% 4.25% 4.46% 4.87% Portfolio turnover rate ........ 70% 281% 244% 65% 204%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 77 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Florida Portfolio ------------------------------------------------------- Class C ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.77 $ 9.81 $ 10.48 $ 10.14 $ 9.74 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .46 .46 .43 .46 .49 Net realized and unrealized gain (loss) on investment transactions ................ .39 (.05) (.64) .36 .39 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .85 .41 (.21) .82 .88 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.45) (.45) (.43) (.46) (.48) Distributions in excess of net investment income ........... -0- -0- (.03) (.02) -0- ------------------------------------------------------- Total dividends and distributions ............... (.45) (.45) (.46) (.48) (.48) ------------------------------------------------------- Net asset value, end of period ............... $ 10.17 $ 9.77 $ 9.81 $ 10.48 $ 10.14 ======================================================= Total Return Total investment return based on net asset value(c) ....... 8.93% 4.43% (2.06)% 8.22% 9.23% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $40,360 $38,464 $42,169 $31,524 $25,722 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.48% 1.43% 1.43% 1.43% 1.43% Expenses, before waivers/ reimbursements ............ 1.83% 1.85% 1.91% 1.99% 2.03% Net investment income, net of waivers/ reimbursements ............ 4.64% 4.83% 4.24% 4.48% 4.89% Portfolio turnover rate ....... 70% 281% 244% 65% 204%
See footnote summary on page 100. -------------------------------------------------------------------------------- 78 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Massachusetts Portfolio ------------------------------------------------------- Class A ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.59 $ 10.66 $ 11.39 $ 11.19 $ 10.85 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .56 .58 .53 .54 .58 Net realized and unrealized gain (loss) on investment transactions ................ .47 (.09) (.66) .45 .57 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. 1.03 .49 (.13) .99 1.15 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.56) (.56) (.53) (.54) (.58) Distributions in excess of net investment income ........... (.01) -0- (.04) (.06) (.03) Distributions from net realized gains .............. -0- -0- (.03) (.19) (.20) ------------------------------------------------------- Total dividends and distributions ............... (.57) (.56) (.60) (.79) (.81) ------------------------------------------------------- Net asset value, end of period ............... $ 11.05 $ 10.59 $ 10.66 $ 11.39 $ 11.19 ======================================================= Total Return Total investment return based on net asset value(c) .............. 9.92% 4.86% (1.24)% 9.18% 11.14% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $63,384 $45,418 $44,758 $23,026 $ 9,461 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ .82% .77% .72% .72% .72% Expenses, before waivers/ reimbursements ............ 1.19% 1.63% 1.24% 1.51% 2.40% Net investment income, net of waivers/ reimbursements ............ 5.20% 5.53% 4.74% 4.87% 5.40% Portfolio turnover rate ....... 108% 389% 303% 69% 134%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 79 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Massachusetts Portfolio ------------------------------------------------------- Class B ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.57 $ 10.65 $ 11.38 $ 11.19 $ 10.84 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .49 .50 .45 .46 .51 Net realized and unrealized gain (loss) on investment transactions ................ .47 (.09) (.65) .45 .58 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .96 .41 (.20) .91 1.09 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.49) (.49) (.45) (.46) (.51) Distributions in excess of net investment income ........... (.01) -0- (.05) (.07) (.03) Distributions from net realized gains .............. -0- -0- (.03) (.19) (.20) ------------------------------------------------------- Total dividends and distributions ............... (.50) (.49) (.53) (.72) (.74) ------------------------------------------------------- Net asset value, end of period ............... $ 11.03 $ 10.57 $ 10.65 $ 11.38 $ 11.19 ======================================================= Total Return Total investment return based on net asset value(c) ....... 9.22% 4.06% (1.87)% 8.40% 10.52% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $62,190 $39,964 $42,628 $20,400 $ 7,230 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.52% 1.47% 1.42% 1.42% 1.42% Expenses, before waivers/ reimbursements ............ 1.90% 1.94% 1.97% 2.22% 3.07% Net investment income, net of waivers/ reimbursements ............ 4.53% 4.83% 4.06% 4.16% 4.73% Portfolio turnover rate ....... 108% 389% 303% 69% 134%
See footnote summary on page 100. -------------------------------------------------------------------------------- 80 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Massachusetts Portfolio ------------------------------------------------------- Class C ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.57 $ 10.65 $ 11.38 $ 11.19 $ 10.84 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .49 .50 .45 .47 .51 Net realized and unrealized gain (loss) on investment transactions ................ .47 (.09) (.65) .44 .58 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .96 .41 (.20) .91 1.09 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.49) (.49) (.45) (.47) (.51) Distributions in excess of net investment income ........... (.01) -0- (.05) (.06) (.03) Distributions from net realized gains .............. -0- -0- (.03) (.19) (.20) ------------------------------------------------------- Total dividends and distributions ........... (.50) (.49) (.53) (.72) (.74) ------------------------------------------------------- Net asset value, end of period ............... $ 11.03 $ 10.57 $ 10.65 $ 11.38 $ 11.19 ======================================================= Total Return Total investment return based on net asset value(c) ....... 9.22% 4.06% (1.87)% 8.40% 10.52% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $44,688 $31,207 $29,365 $18,050 $ 7,815 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.52% 1.47% 1.42% 1.42% 1.42% Expenses, before waivers/ reimbursements ............ 1.90% 1.93% 1.96% 2.21% 3.09% Net investment income, net of waivers/ reimbursements ............ 4.53% 4.83% 4.05% 4.18% 4.75% Portfolio turnover rate ....... 108% 389% 303% 69% 134%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 81 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Michigan Portfolio ------------------------------------------------------- Class A ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.16 $ 10.06 $ 10.62 $ 10.52 $ 10.12 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .52 .53 .46 .48 .53 Net realized and unrealized gain (loss) on investment transactions ................ .48 .09 (.45) .44 .55 ------------------------------------------------------- Net increase in net asset value from operations ....... 1.00 .62 .01 .92 1.08 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.52) (.52) (.46) (.48) (.53) Distributions in excess of net investment income ........... (.01) -0- (.04) (.05) (.02) Distributions from net realized gains .............. -0- -0- (.07) (.29) (.13) ------------------------------------------------------- Total dividends and distributions ............... (.53) (.52) (.57) (.82) (.68) ------------------------------------------------------- Net asset value, end of period ............... $ 10.63 $ 10.16 $ 10.06 $ 10.62 $ 10.52 ======================================================= Total Return Total investment return based on net asset value(c) ....... 10.11% 6.39% .03% 9.08% 11.05% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $32,804 $14,609 $11,760 $ 8,640 $ 5,836 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.01% .99% .96% .96% .96% Expenses, before waivers/ reimbursements ............ 1.44% 1.63% 1.62% 1.89% 2.46% Net investment income, net of waivers/ reimbursements .............. 5.01% 5.30% 4.48% 4.57% 5.24% Portfolio turnover rate ....... 115% 287% 213% 134% 161%
See footnote summary on page 100. -------------------------------------------------------------------------------- 82 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Michigan Portfolio ------------------------------------------------------- Class B ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.15 $ 10.05 $ 10.61 $ 10.52 $ 10.12 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .45 .45 .39 .40 .46 Net realized and unrealized gain (loss) on investment transactions ................ .48 .10 (.45) .44 .55 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .93 .55 (.06) .84 1.01 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.45) (.45) (.39) (.40) (.46) Distributions in excess of net investment income ........... (.01) -0- (.04) (.06) (.02) Distributions from net realized gains .............. -0- -0- (.07) (.29) (.13) ------------------------------------------------------- Total dividends and distributions ............... (.46) (.45) (.50) (.75) (.61) ------------------------------------------------------- Net asset value, end of period ............... $ 10.62 $ 10.15 $ 10.05 $ 10.61 $ 10.52 ======================================================= Total Return Total investment return based on net asset value(c) ....... 9.39% 5.55% (.64)% 8.26% 10.30% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $29,436 $14,943 $13,844 $ 9,411 $ 5,300 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.71% 1.69% 1.66% 1.66% 1.66% Expenses, before waivers/ reimbursements ............ 2.16% 2.34% 2.44% 2.61% 3.23% Net investment income, net of waivers/ reimbursements ............ 4.34% 4.59% 3.79% 3.87% 4.53% Portfolio turnover rate ....... 115% 287% 213% 134% 161%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 83 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Michigan Portfolio ------------------------------------------------------- Class C ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.14 $ 10.05 $ 10.61 $ 10.52 $ 10.12 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .45 .46 .40 .41 .46 Net realized and unrealized gain (loss) on investment transactions ................ .49 .08 (.46) .43 .55 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .94 .54 (.06) .84 1.01 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.45) (.45) (.40) (.41) (.46) Distributions in excess of net investment income ....... (.01) -0- (.03) (.05) (.02) Distributions from net realized gains .............. -0- -0- (.07) (.29) (.13) ------------------------------------------------------- Total dividends and distributions ............... (.46) (.45) (.50) (.75) (.61) ------------------------------------------------------- Net asset value, end of period ............... $ 10.62 $ 10.14 $ 10.05 $ 10.61 $ 10.52 ======================================================= Total Return Total investment return based on net asset value(c) ....... 9.50% 5.55% (.64)% 8.26% 10.30% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $24,142 $12,061 $10,747 $ 8,983 $ 5,089 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.71% 1.69% 1.66% 1.66% 1.66% Expenses, before waivers/ reimbursements ............ 2.16% 2.34% 2.43% 2.59% 3.20% Net investment income, net of waivers/ reimbursements ............ 4.35% 4.60% 3.78% 3.88% 4.55% Portfolio turnover rate ....... 115% 287% 213% 134% 161%
See footnote summary on page 100. -------------------------------------------------------------------------------- 84 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Minnesota Portfolio ------------------------------------------------------- Class A ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.72 $ 9.67 $ 10.22 $ 9.97 $ 9.58 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .52 .53 .49 .50 .53 Net realized and unrealized gain (loss) on investment transactions ................ .38 .03 (.53) .27 .39 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .90 .56 (.04) .77 .92 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.52) (.51) (.49) (.50) (.53) Distributions in excess of net investment income ........... (.01) -0- (.02) (.02) -0- ------------------------------------------------------- Total dividends and distributions ............... (.53) (.51) (.51) (.52) (.53) ------------------------------------------------------- Net asset value, end of period ............... $ 10.09 $ 9.72 $ 9.67 $ 10.22 $ 9.97 ======================================================= Total Return Total investment return based on net asset value(c) ....... 9.44% 6.09% (.48)% 7.94% 9.93% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $30,501 $20,212 $10,601 $ 6,261 $ 4,120 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ .90% .81% .75% .75% .75% Expenses, before waivers/ reimbursements ............ 1.49% 1.66% 1.63% 1.80% 2.22% Net investment income, net of waivers/ reimbursements ............ 5.23% 5.57% 4.90% 4.92% 5.44% Portfolio turnover rate ....... 61% 307% 259% 30% 131%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 85 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Minnesota Portfolio ------------------------------------------------------- Class B ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.72 $ 9.67 $ 10.22 $ 9.97 $ 9.58 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .45 .46 .42 .42 .46 Net realized and unrealized gain (loss) on investment transactions ................ .37 .03 (.53) .28 .39 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .82 .49 (.11) .70 .85 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.45) (.44) (.42) (.42) (.46) Distributions in excess of net investment income ........... (.01) -0- (.02) (.03) -0- ------------------------------------------------------- Total dividends and distributions ............... (.46) (.44) (.44) (.45) (.46) ------------------------------------------------------- Net asset value, end of period ............... $ 10.08 $ 9.72 $ 9.67 $ 10.22 $ 9.97 ======================================================= Total Return Total investment return based on net asset value(c) ....... 8.61% 5.32% (1.19)% 7.17% 9.13% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $17,304 $12,064 $14,111 $13,867 $ 8,517 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.60% 1.51% 1.46% 1.46% 1.46% Expenses, before waivers/ reimbursements ............ 2.19% 2.37% 2.43% 2.52% 2.91% Net investment income, net of waivers/ reimbursements ............ 4.52% 4.81% 4.16% 4.19% 4.75% Portfolio turnover rate ....... 61% 307% 259% 30% 131%
See footnote summary on page 100. -------------------------------------------------------------------------------- 86 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Minnesota Portfolio ------------------------------------------------------- Class C ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.72 $ 9.67 $ 10.22 $ 9.97 $ 9.58 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .45 .46 .42 .43 .46 Net realized and unrealized gain (loss) on investment transactions ................ .39 .03 (.53) .27 .39 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .84 .49 (.11) .70 .85 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.45) (.44) (.42) (.43) (.46) Distributions in excess of net investment income ........... (.01) -0- (.02) (.02) -0- ------------------------------------------------------- Total dividends and distributions ............... (.46) (.44) (.44) (.45) (.46) ------------------------------------------------------- Net asset value, end of period ............... $ 10.10 $ 9.72 $ 9.67 $ 10.22 $ 9.97 ======================================================= Total Return Total investment return based on net asset value(c) ....... 8.82% 5.32% (1.19)% 7.18% 9.13% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $11,434 $ 7,524 $ 9,081 $ 7,716 $ 7,358 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.60% 1.50% 1.45% 1.45% 1.45% Expenses, before waivers/ reimbursements ............ 2.19% 2.36% 2.44% 2.48% 2.89% Net investment income, net of waivers/ reimbursements ............ 4.51% 4.84% 4.17% 4.23% 4.76% Portfolio turnover rate ....... 61% 307% 259% 30% 131%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 87 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
New Jersey Portfolio ------------------------------------------------------- Class A ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.92 $ 9.93 $ 10.46 $ 10.15 $ 9.72 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .52 .52 .49 .51 .51 Net realized and unrealized gain (loss) on investment transactions ................ .20 (.02) (.51) .32 .44 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .72 .50 (.02) .83 .95 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.52) (.51) (.49) (.51) (.51) Distributions in excess of net investment income ........... (.01) -0- (.02) (.01) (.01) ------------------------------------------------------- Total dividends and distributions ........... (.53) (.51) (.51) (.52) (.52) ------------------------------------------------------- Net asset value, end of period ............... $ 10.11 $ 9.92 $ 9.93 $ 10.46 $ 10.15 ======================================================= Total Return Total investment return based on net asset value(c) ....... 7.33% 5.31% (.29)% 8.36% 10.01% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $80,489 $49,667 $33,109 $22,333 $16,309 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ .87% .85% .82% .82% .82% Expenses, before waivers/ reimbursements ............ 1.13% 1.23% 1.25% 1.29% 1.34% Net investment income, net of waivers/ reimbursements ............ 5.04% 5.36% 4.82% 4.93% 5.16% Portfolio turnover rate ....... 111% 224% 131% 35% 61%
See footnote summary on page 100. -------------------------------------------------------------------------------- 88 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
New Jersey Portfolio ------------------------------------------------------- Class B ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.92 $ 9.93 $ 10.46 $ 10.16 $ 9.72 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .44 .45 .42 .43 .44 Net realized and unrealized gain (loss) on investment transactions ................ .20 (.02) (.51) .32 .45 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .64 .43 (.09) .75 .89 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.44) (.44) (.42) (.43) (.44) Distributions in excess of net investment income ........... (.01) -0- (.02) (.02) (.01) ------------------------------------------------------- Total dividends and distributions ............... (.45) (.44) (.44) (.45) (.45) ------------------------------------------------------- Net asset value, end of period ............... $ 10.11 $ 9.92 $ 9.93 $ 10.46 $ 10.16 ======================================================= Total Return Total investment return based on net asset value(c) ....... 6.56% 4.53% (.99)% 7.50% 9.32% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $103,889 $62,149 $64,929 $48,027 $38,308 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.57% 1.55% 1.53% 1.53% 1.53% Expenses, before waivers/ reimbursements ............ 1.84% 1.94% 1.99% 2.00% 2.04% Net investment income, net of waivers/ reimbursements ............ 4.33% 4.63% 4.10% 4.23% 4.45% Portfolio turnover rate ....... 111% 224% 131% 35% 61%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 89 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
New Jersey Portfolio ------------------------------------------------------- Class C ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.93 $ 9.93 $ 10.46 $ 10.16 $ 9.72 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .44 .45 .43 .43 .44 Net realized and unrealized gain (loss) on investment transactions ................ .19 (.01) (.52) .32 .45 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .63 .44 (.09) .75 .89 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.44) (.44) (.43) (.43) (.44) Distributions in excess of net investment income ........... (.01) -0- (.01) (.02) (.01) ------------------------------------------------------- Total dividends and distributions ........... (.45) (.44) (.44) (.45) (.45) ------------------------------------------------------- Net asset value, end of period ............... $ 10.11 $ 9.93 $ 9.93 $ 10.46 $ 10.16 ======================================================= Total Return Total investment return based on net asset value(c) ....... 6.45% 4.63% (.99)% 7.50% 9.32% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $46,025 $31,115 $32,578 $26,018 $21,404 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.57% 1.54% 1.52% 1.52% 1.52% Expenses, before waivers/ reimbursements ............ 1.83% 1.93% 1.98% 1.99% 2.03% Net investment income, net of waivers/ reimbursements ............ 4.34% 4.64% 4.12% 4.23% 4.47% Portfolio turnover rate ....... 111% 224% 131% 35% 61%
See footnote summary on page 100. -------------------------------------------------------------------------------- 90 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Ohio Portfolio ------------------------------------------------------- Class A ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.77 $ 9.86 $ 10.45 $ 10.16 $ 9.61 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .54 .54 .49 .52 .54 Net realized and unrealized gain (loss) on investment transactions ................ .23 (.12) (.55) .30 .54 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .77 .42 (.06) .82 1.08 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.53) (.51) (.49) (.52) (.53) Distributions in excess of net investment income ........... -0- -0- (.04) (.01) -0- ------------------------------------------------------- Total dividends and distributions ........... (.53) (.51) (.53) (.53) (.53) ------------------------------------------------------- Net asset value, end of period ............... $ 10.01 $ 9.77 $ 9.86 $ 10.45 $ 10.16 ======================================================= Total Return Total investment return based on net asset value(c) ....... 8.04% 4.54% (.70)% 8.30% 11.60% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $46,855 $32,490 $27,229 $14,220 $ 7,596 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ .85% .76% .75% .75% .75% Expenses, before waivers/ reimbursements ............ 1.20% 1.29% 1.30% 1.35% 1.52% Net investment income, net of waivers/ reimbursements ............ 5.42% 5.57% 4.88% 5.05% 5.49% Portfolio turnover rate ....... 32% 307% 208% 16% 104%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 91 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Ohio Portfolio ------------------------------------------------------- Class B ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.77 $ 9.86 $ 10.45 $ 10.16 $ 9.61 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .47 .46 .43 .45 .48 Net realized and unrealized gain (loss) on investment transactions ................ .24 (.11) (.57) .30 .53 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .71 .35 (.14) .75 1.01 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.47) (.44) (.43) (.45) (.46) ------------------------------------------------------- Distributions in excess of net investment income ........... -0- -0- (.02) (.01) -0- ------------------------------------------------------- Total dividends and distributions ........... (.47) (.44) (.45) (.46) (.46) ------------------------------------------------------- Net asset value, end of period ............... $ 10.01 $ 9.77 $ 9.86 $ 10.45 $ 10.16 ======================================================= Total Return Total investment return based on net asset value(c) ....... 7.33% 3.78% (1.38)% 7.56% 10.80% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $54,575 $40,812 $49,055 $37,289 $26,821 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.55% 1.47% 1.46% 1.46% 1.46% Expenses, before waivers/ reimbursements ............ 1.91% 2.00% 2.01% 2.05% 2.22% Net investment income, net of waivers/ reimbursements ............ 4.72% 4.84% 4.17% 4.34% 4.81% Portfolio turnover rate ....... 32% 307% 208% 16% 104%
See footnote summary on page 100. -------------------------------------------------------------------------------- 92 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Ohio Portfolio ------------------------------------------------------- Class C ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.77 $ 9.86 $ 10.45 $ 10.16 $ 9.61 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .47 .47 .43 .45 .47 Net realized and unrealized gain (loss) on investment transactions ................ .25 (.12) (.57) .30 .54 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .72 .35 (.14) .75 1.01 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.47) (.44) (.43) (.45) (.46) Distributions in excess of net investment income ........... -0- -0- (.02) (.01) -0- ------------------------------------------------------- Total dividends and distributions ........... (.47) (.44) (.45) (.46) (.46) ------------------------------------------------------- Net asset value, end of period ............... $ 10.02 $ 9.77 $ 9.86 $ 10.45 $ 10.16 ======================================================= Total Return Total investment return based on net asset value(c) ....... 7.43% 3.78% (1.38)% 7.56% 10.80% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $36,500 $22,909 $24,126 $16,685 $14,878 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.55% 1.46% 1.45% 1.45% 1.45% Expenses, before waivers/ reimbursements ............ 1.90% 1.99% 2.01% 2.04% 2.20% Net investment income, net of waivers/ reimbursements ............ 4.71% 4.85% 4.18% 4.36% 4.81% Portfolio turnover rate ....... 32% 307% 208% 16% 104%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 93 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Pennsylvania Portfolio ------------------------------------------------------- Class A ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.88 $ 9.89 $ 10.66 $ 10.33 $ 9.85 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .52 .52 .49 .53 .55 Net realized and unrealized gain (loss) on investment transactions ................ .55 (.01) (.73) .35 .49 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. 1.07 .51 (.24) .88 1.04 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.52) (.52) (.49) (.53) (.55) Distributions in excess of net investment income ........... (.01) -0- (.04) (.02) (.01) ------------------------------------------------------- Total dividends and distributions ........... (.53) (.52) (.53) (.55) (.56) ------------------------------------------------------- Net asset value, end of period ............... $ 10.42 $ 9.88 $ 9.89 $ 10.66 $ 10.33 ======================================================= Total Return Total investment return based on net asset value(c) ....... 11.11% 5.35% (2.43)% 8.72% 10.85% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $96,834 $68,288 $62,479 $35,632 $24,948 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ .95% .95% .95% .95% .95% Expenses, before waivers/ reimbursements ............ 1.16% 1.23% 1.24% 1.29% 1.40% Net investment income, net of waivers/ reimbursements ............ 5.15% 5.40% 4.68% 5.10% 5.44% Portfolio turnover rate ....... 112% 356% 249% 70% 85%
See footnote summary on page 100. -------------------------------------------------------------------------------- 94 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Pennsylvania Portfolio ------------------------------------------------------- Class B ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.88 $ 9.89 $ 10.66 $ 10.33 $ 9.86 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .45 .45 .41 .46 .47 Net realized and unrealized gain (loss) on investment transactions ................ .54 (.02) (.73) .34 .49 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .99 .43 (.32) .80 .96 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.45) (.44) (.41) (.46) (.47) Distributions in excess of net investment income ........... (.01) -0- (.04) (.01) (.02) ------------------------------------------------------- Total dividends and distributions ........... (.46) (.44) (.45) (.47) (.49) ------------------------------------------------------- Net asset value, end of period ............... $ 10.41 $ 9.88 $ 9.89 $ 10.66 $ 10.33 ======================================================= Total Return Total investment return based on net asset value(c) ....... 10.25% 4.58% (3.10)% 7.98% 9.95% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $62,038 $44,713 $52,012 $39,465 $30,078 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.65% 1.66% 1.66% 1.66% 1.66% Expenses, before waivers/ reimbursements ............ 1.86% 1.94% 1.98% 2.00% 2.09% Net investment income, net of waivers/ reimbursements ............ 4.36% 4.69% 3.96% 4.39% 4.72% Portfolio turnover rate ....... 112% 356% 249% 70% 85%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 95 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Pennsylvania Portfolio ------------------------------------------------------- Class C ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 9.88 $ 9.89 $ 10.66 $ 10.33 $ 9.86 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .45 .46 .41 .46 .47 Net realized and unrealized gain (loss) on investment transactions ................ .54 (.03) (.73) .34 .49 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .99 .43 (.32) .80 .96 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.45) (.44) (.41) (.46) (.47) Distributions in excess of net investment income ........... (.01) -0- (.04) (.01) (.02) ------------------------------------------------------- Total dividends and distributions ........... (.46) (.44) (.45) (.47) (.49) ------------------------------------------------------- Net asset value, end of period ............... $ 10.41 $ 9.88 $ 9.89 $ 10.66 $ 10.33 ======================================================= Total Return Total investment return based on net asset value(c) ....... 10.25% 4.58% (3.10)% 7.98% 9.95% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $33,334 $23,306 $27,916 $17,531 $15,486 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.65% 1.65% 1.65% 1.65% 1.65% Expenses, before waivers/ reimbursements ............ 1.86% 1.93% 1.98% 1.99% 2.10% Net investment income, net of waivers/ reimbursements ............ 4.42% 4.71% 3.98% 4.41% 4.73% Portfolio turnover rate ....... 112% 356% 249% 70% 85%
See footnote summary on page 100. -------------------------------------------------------------------------------- 96 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Virginia Portfolio ------------------------------------------------------- Class A ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.35 $ 10.32 $ 11.02 $ 10.90 $ 10.58 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .54 .56 .49 .52 .57 Net realized and unrealized gain (loss) on investment transactions ................ .20 .02 (.60) .49 .57 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .74 .58 (.11) 1.01 1.14 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.54) (.55) (.49) (.52) (.57) Distributions in excess of net investment income ........... (.01) -0- (.07) (.05) -0- Distributions from net realized gains .............. -0- -0- (.03) (.32) (.25) ------------------------------------------------------- Total dividends and distributions ........... (.55) (.55) (.59) (.89) (.82) ------------------------------------------------------- Net asset value, end of period ............... $ 10.54 $ 10.35 $ 10.32 $ 11.02 $ 10.90 ======================================================= Total Return Total investment return based on net asset value(c) ....... 7.32% 5.88% (1.10)% 9.65% 11.32% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $53,306 $37,784 $28,148 $10,315 $ 3,530 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ .72% .67% .67% .67% .67% Expenses, before waivers/ reimbursements ............ 1.21% 1.26% 1.43% 2.09% 3.57% Net investment income, net of waivers/ reimbursements ............ 5.18% 5.52% 4.67% 4.84% 5.39% Portfolio turnover rate ....... 134% 289% 311% 62% 258%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 97 -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Virginia Portfolio ------------------------------------------------------- Class B ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.34 $ 10.31 $ 11.01 $ 10.90 $ 10.57 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .47 .49 .42 .44 .50 Net realized and unrealized gain (loss) on investment transactions ................ .20 .02 (.60) .49 .58 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .67 .51 (.18) .93 1.08 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.47) (.48) (.42) (.44) (.50) Distributions in excess of net investment income ........... (.01) -0- (.07) (.06) -0- Distributions from net realized gains .............. -0- -0- (.03) (.32) (.25) ------------------------------------------------------- Total dividends and distributions ........... (.48) (.48) (.52) (.82) (.75) ------------------------------------------------------- Net asset value, end of period ............... $ 10.53 $ 10.34 $ 10.31 $ 11.01 $ 10.90 ======================================================= Total Return Total investment return based on net asset value(c) ....... 6.62% 5.16% (1.73)% 8.85% 10.70% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $69,534 $49,216 $42,007 $15,973 $ 5,020 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.42% 1.37% 1.37% 1.37% 1.37% Expenses, before waivers/ reimbursements ............ 1.92% 1.97% 2.20% 2.84% 4.29% Net investment income, net of waivers/ reimbursements ............ 4.49% 4.83% 3.97% 4.14% 4.68% Portfolio turnover rate ....... 134% 289% 311% 62% 258%
See footnote summary on page 100. -------------------------------------------------------------------------------- 98 o ALLIANCE MUNICIPAL INCOME FUND II -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Virginia Portfolio ------------------------------------------------------- Class C ------------------------------------------------------- Year Ended September 30, ------------------------------------------------------- 2001 2000 1999 1998 1997 ------------------------------------------------------- Net asset value, beginning of period ......... $ 10.33 $ 10.31 $ 11.01 $ 10.90 $ 10.57 ------------------------------------------------------- Income From Investment Operations Net investment income(a)(b) ... .47 .49 .42 .44 .50 Net realized and unrealized gain (loss) on investment transactions ................ .20 .01 (.60) .49 .58 ------------------------------------------------------- Net increase (decrease) in net asset value from operations ............. .67 .50 (.18) .93 1.08 ------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.47) (.48) (.42) (.44) (.50) Distributions in excess of net investment income ........... (.01) -0- (.07) (.06) -0- Distributions from net realized gains .............. -0- -0- (.03) (.32) (.25) ------------------------------------------------------- Total dividends and distributions ........... (.48) (.48) (.52) (.82) (.75) ------------------------------------------------------- Net asset value, end of period ............... $ 10.52 $ 10.33 $ 10.31 $ 11.01 $ 10.90 ======================================================= Total Return Total investment return based on net asset value(c) ....... 6.62% 5.06% (1.73)% 8.85% 10.70% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $24,116 $16,848 $12,962 $ 4,597 $ 1,207 Ratio to average net assets of: Expenses, net of waivers/ reimbursements ............ 1.42% 1.37% 1.37% 1.37% 1.37% Expenses, before waivers/ reimbursements ............ 1.92% 1.96% 2.19% 2.85% 4.25% Net investment income, net of waivers/ reimbursements ............ 4.48% 4.83% 3.97% 4.11% 4.66% Portfolio turnover rate ....... 134% 289% 311% 62% 258%
See footnote summary on page 100. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 99 -------------------- FINANCIAL HIGHLIGHTS -------------------- (a) Net of fee waived and expenses reimbursed by the Adviser. (b) Based on average shares outstanding. (c) 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 of less than one year is not annualized. -------------------------------------------------------------------------------- 100 o ALLIANCE MUNICIPAL INCOME FUND II --------------------------- REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS --------------------------- REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS To the Shareholders and Board of Trustees Alliance Municipal Income Fund II We have audited the accompanying statement of assets and liabilities, including the portfolios of investments, of Alliance Municipal Income Fund II ("the Fund") (comprising, respectively, the Arizona, Florida, Massachusetts, Michigan, Minnesota, New Jersey, Ohio, Pennsylvania, and Virginia Portfolios) as of September 30, 2001, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2001, by correspondence with the custodian and others. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective portfolios constituting the Alliance Municipal Income Fund II at September 30, 2001, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP New York, New York November 9, 2001 -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 101 ----------------------- FEDERAL TAX INFORMATION ----------------------- FEDERAL TAX INFORMATION (unaudited) In accordance with Federal tax law, the following table represents each portfolio's designation of "exempt-interest dividends" and paid during the fiscal year ended September 30, 2001. As required by Federal tax law rules, shareholders will receive notification of their portion of each portfolio's taxable ordinary dividends (if any) and capital gain distributions (if any) paid for the 2001 calendar year on Form 1099-DIV which will be mailed by January 31, 2002. Exempt-Interest Portfolio Dividends -------------------------------------------------------------------------------- Arizona................................................ $5,477,721 Florida................................................ 9,757,531 Massachusetts.......................................... 6,373,525 Michigan............................................... 2,572,357 Minnesota.............................................. 2,304,152 New Jersey............................................. 8,375,701 Ohio .................................................. 5,368,596 Pennsylvania........................................... 7,573,444 Virginia............................................... 5,929,531 -------------------------------------------------------------------------------- 102 o ALLIANCE MUNICIPAL INCOME FUND II ---------------------------- GLOSSARY OF INVESTMENT TERMS ---------------------------- GLOSSARY OF INVESTMENT TERMS benchmark A standard by which a fund's performance can be measured. A benchmark is usually an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman Brothers Aggregate Bond Index. bond Bonds are issued by governments or corporations when they need to raise cash. Bonds are sold, or issued, to investors and have a maturity date, which is the date the issuer is obligated to repay the investor for the principal, or face amount, of the bond. Bonds also pay interest until maturity. Bonds are also called fixed-income securities. credit rating Credit ratings are issued by independent organizations, such as Standard & Poor's Ratings group or Moody's Investors Services. These groups attempt to assess the likelihood that the issuer of the bond will be able to make timely payments of principal and interest on the bond, based on such factors as the issuer's financial condition and any collateral securing these obligations. Ratings typically range from AAA which is the highest rating, to D, which is the lowest rating. index A compilation of securities of similar types of companies that is used to measure the investment performance of securities within that specific market. An index is often used as a benchmark for a mutual fund. An investor cannot invest directly in an index. net asset value (NAV) The value of a mutual fund's total assets, minus its liabilities, divided by the number of shares outstanding. portfolio The collection of securities that make up a Fund's or an investor's investments. Treasuries Negotiable U.S. Government debt obligations, backed by the full faith and credit of the U.S. Government. Treasuries are issued either as bills, notes or bonds, depending on the maturity. Treasuries are exempt from state and local taxes. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 103 ---------------- ALLIANCE CAPITAL ---------------- ALLIANCE CAPITAL The Investment Professional's Choice Alliance Capital is a leading global investment management firm with approximately $421 billion in assets under management. In recognition of our far-reaching investment capabilities, Alliance Capital has been selected by employee benefit plans for 37 of the FORTUNE 100 companies and public retirement funds in 44 states as well as by hundreds of foundations, endowments and foreign institutions. By sharing this institutional money management experience with millions of mutual fund investors as well, Alliance stands out as a "manager of choice" for thousands of investment professionals around the world. At Alliance Capital, we place a premium on investment research. We carefully select securities based on our proprietary research, conducted by 646 investment professionals in 36 cities and 19 countries. Our commitment to this process means that our mutual fund shareholders have their portfolios managed by the same experienced analysts and portfolio managers who manage the pension funds of some of America's largest institutional investors. All information on Alliance Capital is as of 9/30/01. -------------------------------------------------------------------------------- 104 o ALLIANCE MUNICIPAL INCOME FUND II -------------------------------- ALLIANCE CAPITAL AT YOUR SERVICE -------------------------------- ALLIANCE CAPITAL AT YOUR SERVICE At Alliance Capital, shareholder satisfaction is among our top priorities. That is why we provide our shareholders with a wide variety of products and time-saving services. o Automatic Reinvestment You may choose to reinvest fund dividend and capital-gains distributions automatically at no charge. o Automatic Investment Program Build your investment account by having money automatically transferred from your bank account on a regular basis. o Dividend Direction Plans You may cross-invest dividends from one fund into the same class of shares in any other fund without incurring a sales charge--a good way to diversify your assets. o Auto Exchange You may choose to automatically exchange money from one Alliance Capital fund to another on a regular basis. This can be a good way to dollar cost average*, helping you to invest with discipline. o Systematic Withdrawals Regular checks for specified amounts can be sent to you or to your brokerage or bank account. o E-Statements and Electronic Delivery Sign up to view your quarterly mutual fund, retirement or CollegeBoundfund(SM) account statements online, rather than wait to receive paper copies in the mail. You may also sign up for electronic delivery of your legal documents so you can receive your semi-annual and annual shareholder reports, prospectuses and prospectus supplements online. It's easy, convenient and saves you time and storage space. Sign up today at www.alliancecapital.com. Simply go to Individual Investor, U.S., Account Access. o A Choice of Purchase Plans Most funds are available in A, B, and C Class shares. Many funds are also available in Advisor Class shares. o Telephone Transaction Purchases, transfers and redemptions can be made by calling (800) 221-5672. Our knowledgeable representatives are available to assist you Monday through Friday from 8:30 a.m. to 8:00 p.m. Eastern Standard Time. o Alliance Answer: 24-Hour Information For your convenience, our computerized audio response system is available to you 24-hours a day by calling (800) 251-0539. Using any touch tone phone, you can hear share prices, get account balances, review details of your last transaction, obtain dividend information, order statements/checkbooks, review fund objectives, and Watchlist information, order additional copies of statements and request additional year-end tax forms (available from February 1 to May 31). o The Alliance Advance A quarterly newsletter discussing investment strategies, economic news and other mutual fund matters. o Our Website at www.alliancecapital.com gives you a broad perspective of Alliance Capital. You can reach Alliance mutual fund and account information more directly from www.investor.alliancecapital.com. Either way, you'll have access to extensive Alliance fund data, answers to frequently asked questions, and financial planning tools and calculators. * Dollar cost averaging does not assure a profit nor protect against loss in a declining market. Since this strategy involves continuous investments in securities, regardless of fluctuating prices, investors should consider their financial ability to invest during periods of low price levels. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 105 ----------------- BOARD OF TRUSTEES ----------------- 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) 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 Thomas R. Manley, Controller Custodian The Bank of New York One Wall Street New York, NY 10286 Principal Underwriter Alliance Fund Distributors, Inc. 1345 Avenue of the Americas New York, NY 10105 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 Independent Auditors Ernst & Young LLP 787 Seventh Avenue New York, NY 10019 Transfer Agent Alliance Global Investor Services, Inc. P.O. Box 1520 Secaucus, NJ 07096-1520 Toll-free (800) 221-5672 (1) Member of the Audit Committee. -------------------------------------------------------------------------------- 106 o ALLIANCE MUNICIPAL INCOME FUND II -------------------------------- ALLIANCE CAPITAL FAMILY OF FUNDS -------------------------------- ALLIANCE CAPITAL FAMILY OF FUNDS Domestic Equity Funds Growth & Income Fund Growth Fund Health Care Fund Premier Growth Fund Quasar Fund Technology Fund The Alliance Fund Global & International Equity Funds All-Asia Investment Fund Global Small Cap Fund Greater China '97 Fund International Fund International Premier Growth Fund New Europe Fund Worldwide Privatization Fund AllianceBernstein Value Funds Disciplined Value Fund Global Value Fund International Value Fund Real Estate Investment Fund Small Cap Value Fund Utility Income Fund Value Fund Select Investor Series Biotechnology Portfolio Premier Portfolio Small Cap Growth Portfolio Technology Portfolio Asset Allocation Funds Balanced Shares Conservative Investors Fund Growth Investors Fund Fixed Income Funds Corporate Bond Portfolio Global Dollar Government Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust North American Government Income Trust Quality Bond Portfolio U.S. Government Portfolio Municipal Income Funds National Insured National Arizona California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Ohio Pennsylvania Virginia Closed-End Funds All-Market Advantage Fund The Austria Fund ACM Income Fund ACM Government Opportunity Fund The Korean Investment Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund The Southern Africa Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II Alliance also offers AFD Exchange Reserves, which serves as the money market fund exchange vehicle for the Alliance mutual funds. To obtain a prospectus for any Alliance Capital fund, call your investment professional, or call Alliance at (800) 227-4618. -------------------------------------------------------------------------------- ALLIANCE MUNICIPAL INCOME FUND II o 107 NOTES -------------------------------------------------------------------------------- 108 o ALLIANCE MUNICIPAL INCOME FUND II Alliance Municipal Income Fund II 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 Alliance Capital [LOGO](R) The Investment Professional's Choice (R) These registered service marks used under license from the owner, Alliance Capital Management L.P. MUNIIIAR901