UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07618
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York | 10105 | |
(Address of principal executive offices) | (Zip code) |
Joseph J. Mantineo
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant’s telephone number, including area code: (800) 221-5672
Date of fiscal year end: September 30, 2008
Date of reporting period: March 31, 2008
ITEM 1. | REPORTS TO STOCKHOLDERS. |
SEMI-ANNUAL REPORT
AllianceBernstein
Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
March 31, 2008
Semi-Annual Report
Investment Products Offered
• | Are Not FDIC Insured |
• | May Lose Value |
• | Are Not Bank Guaranteed |
The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund’s prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein® at (800) 227-4618. Please read the prospectus carefully before you invest.
You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com.
This shareholder report must be preceded or accompanied by the Fund’s prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein’s web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission’s (the “Commission”) web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s web site at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the AllianceBernstein funds, and is a member of FINRA.
AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P.
May 21, 2008
Semi-Annual Report
This report provides management’s discussion of fund performance for the portfolios of AllianceBernstein Municipal Income Fund II (the “Portfolios”) for the semi-annual reporting period ended March 31, 2008.
Investment Objectives and Policies
The nine portfolios of this open-end fund, by investing principally in high-yielding, predominantly investment-grade municipal securities, seek to provide their shareholders with the highest level of current income exempt from Federal taxation, and in the case of the state Portfolios, state taxation of the respective state that is available without assuming what the Adviser considers to be undue risk. Each of the Portfolios pursues its objective by investing at least 80% of its net assets in municipal securities issued by the named state or municipal securities with interest that is otherwise exempt from the named state’s income tax. The Pennsylvania Portfolio and the Virginia Portfolio are non-diversified, meaning they can invest more of their assets in a fewer number of issuers.
Investment Results
The tables on pages 6 – 8 show performance for each Portfolio compared to its benchmark, the Lehman Brothers (LB) Municipal Index, for the six- and 12-month periods ended March 31, 2008. For the six-month period ended March 31, 2008, all of the Portfolios’ Class A shares without sales charges underperformed the benchmark, the LB Municipal Index,
which represents the municipal market and posted a return of 0.75%, except for the Massachusetts Portfolio, the Michigan Portfolio and the Minnesota Portfolio, which outperformed. For the 12-month period ended March 31, 2008, all of the Portfolios’ Class A shares without sales charges underperformed the benchmark, which returned 1.90% over the period, except for the Massachusetts Portfolio and the Michigan Portfolio, which outperformed.
Even though the Portfolios’ Municipal Bond Investment Team (the “Team”) focused new purchases on high credit quality bonds, the Portfolios’ weights in lower-credit quality bonds compared to the benchmark’s detracted from relative performance as credit spreads widened. In general, the maturities of the Portfolios’ holdings relative to the benchmark’s maturities benefited performance. A more detailed description of the contribution to each Portfolio’s relative performance due to security and sector selection versus the benchmark for the semi-annual reporting period ended March 31, 2008 follows.
Arizona Portfolio – The Arizona Portfolio’s underperformance was partially the result of security selection in the special tax sector. Security selection in the insured, housing and leasing sectors also detracted from the Portfolio’s performance. The Portfolio’s relative weight in the pre-refunded sector was beneficial to performance.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 1 |
Florida Portfolio – The Florida Portfolio’s underperformance compared to the benchmark was partially the result of the Portfolio’s security selection in the special tax, hospital and housing sectors. The Portfolio’s relative weight in the housing and general obligation sectors also detracted from performance. The Portfolio’s relative weight in the pre-refunded sector was beneficial to performance.
Massachusetts Portfolio – The Massachusetts Portfolio’s relative outperformance compared to the benchmark was partially the result of the Portfolio’s relative weight in the pre-refunded sector and security selection within the housing and pre-refunded sectors. The Portfolio’s relative weight in general obligation bonds detracted from performance.
Michigan Portfolio – The Michigan Portfolio’s relative outperformance compared to the benchmark was partially the result of the Portfolio’s relative weight in the pre-refunded sector. Security selection in the housing, special tax and hospital sectors contributed negatively to the Portfolio’s performance.
Minnesota Portfolio – The Minnesota Portfolio’s outperformance relative to the benchmark for the six-month period ended March 31, 2008 was partially a result of its relative weight in the industrial revenue bond sector and security selection in the airport sector. Security selection in the housing and education sectors, along with the Portfolio’s relative weight in the housing sector detracted from performance for the six-month period.
The Minnesota Portfolio’s underperformance relative to its benchmark for the 12-month period ended March 31, 2008 was partially a result of security selection in the housing, education and hospital sectors. The maturities of the Portfolio’s holdings, along with the Portfolio’s relative weight in the industrial revenue bond sector, helped performance for the 12-month period.
New Jersey Portfolio – The New Jersey Portfolio’s underperformance was partially the result of security selection in the education, special tax and hospital sectors. Security selection and the Portfolio’s relative weight in the pre-refunded sector were beneficial to performance.
Ohio Portfolio – The Ohio Portfolio’s underperformance was partially the result of security selection in the special tax, housing and education sectors. The Portfolio’s relative weight in the pre-refunded sector helped performance.
Pennsylvania Portfolio – The Pennsylvania Portfolio’s underperformance was partially the result of security selection in the special tax, hospital and transportation sectors. Security selection in the pre-refunded sector was beneficial to performance.
Virginia Portfolio – The Virginia Portfolio’s underperformance was partially the result of security selection in the housing, leasing and special tax sectors, along with the Portfolio’s relative weight in the housing sector. Security selection in the hospital and industrial revenue bond sectors was beneficial to performance.
2 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Market Review and Investment Strategy
A significant sign of stress in the municipal market was how inexpensive tax-exempt bonds were relative to taxable bonds on March 31, 2008. This was especially true in relation to Treasuries, but municipals were also attractive relative to other types of taxable bonds such as high-grade corporate bonds. On an after-tax basis, municipal bonds provided an extra 1.3% in yield over U.S. Treasuries for clients subject to the top federal income tax rate—the most observed in over 20 years and twice the historical average. The Team believed this was primarily due to market dislocations, which included: the downgrading of bond insurers, problems in auction rate securities (not enough interested bidders willing to purchase these long-term securities), troubles with variable rate demand notes (long-term bonds whose interest rates change with money market interest rates and are payable on demand) and issues with margin calls (investors being called on to cover their purchase of securities with borrowed funds) on leveraged municipal portfolios. Investors appear to have recognized that solving some of these factors could substantially increase the supply of traditional fixed-coupon municipal bonds available for sale. The Team observed a reduction in investor demand and a consequent reduction in the price of municipals.
The increase in credit spreads over the six- and 12-month periods ended March 31, 2008 is consistent with investors’ heightened sense of risk aversion, and has been compounded by the downgrades of bond insurers.
The percentage of municipal bonds issued with bond insurance declined from 50% of total new issuance over the last few years to only 25% in the first quarter of 2008, thereby creating a larger supply of lower-rated bonds. There may be opportunities to add income to the Portfolios, but the Team is also seeking to identify bonds which may be stable during this difficult economic period.
The Portfolios may purchase municipal securities that are insured under policies issued by certain insurance companies. Insured municipal securities typically receive a higher credit rating which means that the issuer of the securities pays a lower interest rate. In purchasing such insured securities, the Team gives consideration to both the insurer and to the credit quality of the underlying issuer. The insurance reduces the credit risk for a particular municipal security by supplementing the creditworthiness of the underlying bond and provides additional security for payment of the principal and interest of a municipal security. Certain of the insurance companies that provide insurance for municipal securities provide insurance for other types of securities, including some involving subprime mortgages. The value of subprime mortgage securities has declined recently and some may default, increasing a bond insurer’s risk of having to make payments to holders of subprime mortgage securities. Because of this risk, the ratings of some insurance companies have been, or may be, downgraded and it is possible that an insurance company may become insolvent. If an insurance company’s rating is downgraded or
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 3 |
the company becomes insolvent, the prices of municipal securities insured by the insurance company may decline.
As of March 31, 2008, the Portfolios’ percentages of total investments in insured bonds and in insured bonds that have been pre-refunded are as follows:
Portfolio | Insured Bonds | Pre-Refunded Insured Bonds | ||||
Arizona | 49 | % | 10 | % | ||
Florida | 54 | % | 1 | % | ||
Massachusetts | 51 | % | 9 | % | ||
Michigan | 45 | % | 17 | % | ||
Minnesota | 46 | % | 8 | % | ||
New Jersey | 58 | % | 10 | % | ||
Ohio | 52 | % | 19 | % | ||
Pennsylvania | 72 | % | 22 | % | ||
Virginia | 38 | % | 1 | % |
The Team believes that downgrades in insurance company ratings or insurance company insolvencies present limited risk to the Portfolios. A large proportion of the Portfolios’ insured municipal securities are insured by insurance companies rated AAA. The Portfolios are well diversified by bond insurer, minimizing the exposure to any single insurer. In addition, the generally investment grade underlying credit quality of the insured municipal securities reduces the risk of a significant reduction in the value of the insured municipal security.
4 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Portfolios will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Portfolios carefully before investing. For a free copy of the Portfolios’ prospectus, which contains this and other information, visit our website at www.alliancebernstein.com or call your financial advisor or AllianceBernstein Investments at 800.227.4618. You should read the prospectus carefully before you invest.
All fees and expenses related to the operation of the Portfolios have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Portfolios’ quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes.
Benchmark Disclosure
The unmanaged Lehman Brothers (LB) Municipal Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The 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 the performance for any specific investment, including the Portfolios.
A Word About Risk
Price fluctuations in the Portfolios’ securities 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. Please note, as interest rates rise, existing bond prices fall and can cause the value of an investment in the Portfolios to decline. Municipal income securities may realize gains; therefore, shareholders will incur a tax liability from time to time. Income may be subject to state and local taxes and/or the alternative minimum tax. A municipal security could be downgraded or its issuer could default in payment of principal or interest. If applicable, for bonds that are issued at higher interest rates, the issuer may exercise its right to recall some or all of the outstanding bonds to investors prior to their maturity. Individual state municipal portfolios are non-diversified and subject to geographic risk including greater risk of adverse economic conditions and regulatory changes based on their narrow investment objectives. Additionally, the Pennsylvania and Virginia Portfolios can invest in a relatively small number of issuers, and are more susceptible to risks associated with a single economic, political or regulatory occurrence than a more diversified portfolio might be. While the Portfolios invest principally in bonds and other fixed-income securities, in order to achieve their investment objectives, the Portfolios may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks are fully discussed in the Portfolios’ prospectus.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 5 |
Historical Performance
HISTORICAL PERFORMANCE
(continued from previous page)
THE PORTFOLIOS VS. THEIR BENCHMARKS PERIODS ENDED MARCH 31, 2008
Returns | ||||||
6 Months | 12 Months | |||||
Arizona Portfolio | ||||||
Class A | 0.56% | 1.42% | ||||
Class B | 0.21% | 0.71% | ||||
Class C | 0.21% | 0.71% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
Returns | ||||||
6 Months | 12 Months | |||||
Florida Portfolio | ||||||
Class A | -0.27% | 0.76% | ||||
Class B | -0.61% | 0.06% | ||||
Class C | -0.61% | 0.06% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
Returns | ||||||
6 Months | 12 Months | |||||
Massachusetts Portfolio | ||||||
Class A | 1.63% | 2.80% | ||||
Class B | 1.28% | 2.09% | ||||
Class C | 1.28% | 2.09% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
See Historical Performance and Benchmark disclosures on page 5.
(Historical Performance continued on next page)
6 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Historical Performance
HISTORICAL PERFORMANCE
(continued from previous page)
THE PORTFOLIOS VS. THEIR BENCHMARKS PERIODS ENDED MARCH 31, 2008
Returns | ||||||
6 Months | 12 Months | |||||
Michigan Portfolio | ||||||
Class A | 1.04% | 1.97% | ||||
Class B | 0.69% | 1.27% | ||||
Class C | 0.59% | 1.27% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
Returns | ||||||
6 Months | 12 Months | |||||
Minnesota Portfolio | ||||||
Class A | 0.99% | 1.83% | ||||
Class B | 0.64% | 1.22% | ||||
Class C | 0.64% | 1.22% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
Returns | ||||||
6 Months | 12 Months | |||||
New Jersey Portfolio | ||||||
Class A | -0.27% | 0.32% | ||||
Class B | -0.62% | -0.38% | ||||
Class C | -0.62% | -0.38% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
See Historical Performance and Benchmark disclosures on page 5.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 7 |
Historical Performance
HISTORICAL PERFORMANCE
(continued from previous page)
THE PORTFOLIOS VS. THEIR BENCHMARKS
PERIODS ENDED MARCH 31, 2008
Returns | ||||||
6 Months | 12 Months | |||||
Ohio Portfolio | ||||||
Class A | 0.29% | 1.32% | ||||
Class B | -0.06% | 0.61% | ||||
Class C | -0.06% | 0.72% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
Returns | ||||||
6 Months | 12 Months | |||||
Pennsylvania Portfolio | ||||||
Class A | 0.25% | 1.07% | ||||
Class B | -0.11% | 0.37% | ||||
Class C | -0.10% | 0.37% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
Returns | ||||||
6 Months | 12 Months | |||||
Virginia Portfolio | ||||||
Class A | 0.67% | 1.66% | ||||
Class B | 0.32% | 0.95% | ||||
Class C | 0.23% | 0.96% | ||||
LB Municipal Index | 0.75% | 1.90% | ||||
See Historical Performance and Benchmark disclosures on page 5.
(Historical Performance continued on next page)
8 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Historical Performance
ARIZONA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 3.71 | % | 5.98 | % | ||||||||
1 Year | 1.42 | % | -2.89 | % | ||||||||
5 Years | 4.47 | % | 3.56 | % | ||||||||
10 Years | 4.85 | % | 4.39 | % | ||||||||
Class B Shares | 3.18 | % | 5.12 | % | ||||||||
1 Year | 0.71 | % | -2.21 | % | ||||||||
5 Years | 3.74 | % | 3.74 | % | ||||||||
10 Years(a) | 4.42 | % | 4.42 | % | ||||||||
Class C Shares | 3.18 | % | 5.12 | % | ||||||||
1 Year | 0.71 | % | -0.27 | % | ||||||||
5 Years | 3.74 | % | 3.74 | % | ||||||||
10 Years | 4.12 | % | 4.12 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) |
| ||
SEC Returns | |||
Class A Shares | |||
1 Year | -2.89 | % | |
5 Years | 3.56 | % | |
10 Years | 4.39 | % | |
Class B Shares | |||
1 Year | -2.21 | % | |
5 Years | 3.74 | % | |
10 Years(a) | 4.42 | % | |
Class C Shares | |||
1 Year | -0.27 | % | |
5 Years | 3.74 | % | |
10 Years | 4.12 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.96%, 1.67% and 1.66% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 0.78%, 1.48% and 1.48% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 9 |
Historical Performance
FLORIDA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 4.22 | % | 6.49 | % | ||||||||
1 Year | 0.76 | % | -3.56 | % | ||||||||
5 Years | 4.01 | % | 3.12 | % | ||||||||
10 Years | 4.66 | % | 4.20 | % | ||||||||
Class B Shares | 3.70 | % | 5.69 | % | ||||||||
1 Year | 0.06 | % | -2.83 | % | ||||||||
5 Years | 3.29 | % | 3.29 | % | ||||||||
10 Years(a) | 4.23 | % | 4.23 | % | ||||||||
Class C Shares | 3.71 | % | 5.71 | % | ||||||||
1 Year | 0.06 | % | -0.90 | % | ||||||||
5 Years | 3.29 | % | 3.29 | % | ||||||||
10 Years | 3.93 | % | 3.93 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) |
| ||
SEC Returns | |||
Class A Shares | |||
1 Year | -3.56 | % | |
5 Years | 3.12 | % | |
10 Years | 4.20 | % | |
Class B Shares | |||
1 Year | -2.83 | % | |
5 Years | 3.29 | % | |
10 Years(a) | 4.23 | % | |
Class C Shares | |||
1 Year | -0.90 | % | |
5 Years | 3.29 | % | |
10 Years | 3.93 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.96%, 1.68% and 1.67% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 0.78%, 1.48% and 1.48% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
(Historical Performance continued on next page)
10 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Historical Performance
MASSACHUSETTS PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 3.16 | % | 5.13 | % | ||||||||
1 Year | 2.80 | % | -1.54 | % | ||||||||
5 Years | 4.26 | % | 3.36 | % | ||||||||
10 Years | 4.49 | % | 4.04 | % | ||||||||
Class B Shares | 2.62 | % | 4.26 | % | ||||||||
1 Year | 2.09 | % | -0.87 | % | ||||||||
5 Years | 3.54 | % | 3.54 | % | ||||||||
10 Years(a) | 4.07 | % | 4.07 | % | ||||||||
Class C Shares | 2.62 | % | 4.26 | % | ||||||||
1 Year | 2.09 | % | 1.10 | % | ||||||||
5 Years | 3.54 | % | 3.54 | % | ||||||||
10 Years | 3.78 | % | 3.78 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) |
| ||
SEC Returns | |||
Class A Shares | |||
1 Year | -1.54 | % | |
5 Years | 3.36 | % | |
10 Years | 4.04 | % | |
Class B Shares | |||
1 Year | -0.87 | % | |
5 Years | 3.54 | % | |
10 Years(a) | 4.07 | % | |
Class C Shares | |||
1 Year | 1.10 | % | |
5 Years | 3.54 | % | |
10 Years | 3.78 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.06%, 1.77% and 1.76% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 0.82%, 1.52% and 1.52% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 11 |
Historical Performance
MICHIGAN PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 3.28 | % | 5.28 | % | ||||||||
1 Year | 1.97 | % | -2.35 | % | ||||||||
5 Years | 4.08 | % | 3.18 | % | ||||||||
10 Years | 4.99 | % | 4.54 | % | ||||||||
Class B Shares | 2.73 | % | 4.39 | % | ||||||||
1 Year | 1.27 | % | -1.67 | % | ||||||||
5 Years | 3.37 | % | 3.37 | % | ||||||||
10 Years(a) | 4.55 | % | 4.55 | % | ||||||||
Class C Shares | 2.74 | % | 4.41 | % | ||||||||
1 Year | 1.27 | % | 0.29 | % | ||||||||
5 Years | 3.36 | % | 3.36 | % | ||||||||
10 Years | 4.26 | % | 4.26 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) |
| ||
SEC Returns | |||
Class A Shares | |||
1 Year | -2.35 | % | |
5 Years | 3.18 | % | |
10 Years | 4.54 | % | |
Class B Shares | |||
1 Year | -1.67 | % | |
5 Years | 3.37 | % | |
10 Years(a) | 4.55 | % | |
Class C Shares | |||
1 Year | 0.29 | % | |
5 Years | 3.36 | % | |
10 Years | 4.26 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.10%, 1.81% and 1.81% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 1.01%, 1.71% and 1.71% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
(Historical Performance continued on next page)
12 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Historical Performance
MINNESOTA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 3.41 | % | 5.69 | % | ||||||||
1 Year | 1.83 | % | -2.48 | % | ||||||||
5 Years | 3.85 | % | 2.95 | % | ||||||||
10 Years | 4.59 | % | 4.14 | % | ||||||||
Class B Shares | 2.86 | % | 4.77 | % | ||||||||
1 Year | 1.22 | % | -1.71 | % | ||||||||
5 Years | 3.14 | % | 3.14 | % | ||||||||
10 Years(a) | 4.15 | % | 4.15 | % | ||||||||
Class C Shares | 2.86 | % | 4.77 | % | ||||||||
1 Year | 1.22 | % | 0.24 | % | ||||||||
5 Years | 3.14 | % | 3.14 | % | ||||||||
10 Years | 3.87 | % | 3.87 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) | |||
SEC Returns | |||
Class A Shares | |||
1 Year | -2.48 | % | |
5 Years | 2.95 | % | |
10 Years | 4.14 | % | |
Class B Shares | |||
1 Year | -1.71 | % | |
5 Years | 3.14 | % | |
10 Years(a) | 4.15 | % | |
Class C Shares | |||
1 Year | 0.24 | % | |
5 Years | 3.14 | % | |
10 Years | 3.87 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.16%, 1.87% and 1.86% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 0.90%, 1.60% and 1.60% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 13 |
Historical Performance
NEW JERSEY PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 3.88 | % | 6.56 | % | ||||||||
1 Year | 0.32 | % | -3.94 | % | ||||||||
5 Years | 3.86 | % | 2.95 | % | ||||||||
10 Years | 4.04 | % | 3.58 | % | ||||||||
Class B Shares | 3.35 | % | 5.66 | % | ||||||||
1 Year | -0.38 | % | -3.27 | % | ||||||||
5 Years | 3.11 | % | 3.11 | % | ||||||||
10 Years(a) | 3.59 | % | 3.59 | % | ||||||||
Class C Shares | 3.35 | % | 5.66 | % | ||||||||
1 Year | -0.38 | % | -1.34 | % | ||||||||
5 Years | 3.11 | % | 3.11 | % | ||||||||
10 Years | 3.30 | % | 3.30 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) |
| ||
SEC Returns | |||
Class A Shares | |||
1 Year | -3.94 | % | |
5 Years | 2.95 | % | |
10 Years | 3.58 | % | |
Class B Shares | |||
1 Year | -3.27 | % | |
5 Years | 3.11 | % | |
10 Years(a) | 3.59 | % | |
Class C Shares | |||
1 Year | -1.34 | % | |
5 Years | 3.11 | % | |
10 Years | 3.30 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.10%, 1.81% and 1.80% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 0.94%, 1.64% and 1.64% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
(Historical Performance continued on next page)
14 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Historical Performance
OHIO PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 3.46 | % | 5.68 | % | ||||||||
1 Year | 1.32 | % | -2.98 | % | ||||||||
5 Years | 4.20 | % | 3.30 | % | ||||||||
10 Years | 4.35 | % | 3.89 | % | ||||||||
Class B Shares | 2.92 | % | 4.79 | % | ||||||||
1 Year | 0.61 | % | -2.31 | % | ||||||||
5 Years | 3.48 | % | 3.48 | % | ||||||||
10 Years(a) | 3.91 | % | 3.91 | % | ||||||||
Class C Shares | 2.92 | % | 4.79 | % | ||||||||
1 Year | 0.72 | % | -0.26 | % | ||||||||
5 Years | 3.47 | % | 3.47 | % | ||||||||
10 Years | 3.63 | % | 3.63 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) | |||
SEC Returns | |||
Class A Shares | |||
1 Year | -2.98 | % | |
5 Years | 3.30 | % | |
10 Years | 3.89 | % | |
Class B Shares | |||
1 Year | -2.31 | % | |
5 Years | 3.48 | % | |
10 Years(a) | 3.91 | % | |
Class C Shares | |||
1 Year | -0.26 | % | |
5 Years | 3.47 | % | |
10 Years | 3.63 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.01%, 1.72% and 1.71% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 0.85%, 1.55% and 1.55% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 15 |
Historical Performance
PENNSYLVANIA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 3.54 | % | 5.62 | % | ||||||||
1 Year | 1.07 | % | -3.23 | % | ||||||||
5 Years | 4.02 | % | 3.13 | % | ||||||||
10 Years | 4.60 | % | 4.15 | % | ||||||||
Class B Shares | 3.00 | % | 4.76 | % | ||||||||
1 Year | 0.37 | % | -2.54 | % | ||||||||
5 Years | 3.30 | % | 3.30 | % | ||||||||
10 Years(a) | 4.16 | % | 4.16 | % | ||||||||
Class C Shares | 3.00 | % | 4.76 | % | ||||||||
1 Year | 0.37 | % | -0.60 | % | ||||||||
5 Years | 3.30 | % | 3.30 | % | ||||||||
10 Years | 3.87 | % | 3.87 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) |
| ||
SEC Returns | |||
Class A Shares | |||
1 Year | -3.23 | % | |
5 Years | 3.13 | % | |
10 Years | 4.15 | % | |
Class B Shares | |||
1 Year | -2.54 | % | |
5 Years | 3.30 | % | |
10 Years(a) | 4.16 | % | |
Class C Shares | |||
1 Year | -0.60 | % | |
5 Years | 3.30 | % | |
10 Years | 3.87 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.03%, 1.74% and 1.74% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 0.95%, 1.65% and 1.65% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
(Historical Performance continued on next page)
16 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Historical Performance
VIRGINIA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2008 | ||||||||||||
NAV Returns | SEC Returns | SEC Yields* | Taxable Equivalent Yields** | |||||||||
Class A Shares | 3.53 | % | 5.76 | % | ||||||||
1 Year | 1.66 | % | -2.66 | % | ||||||||
5 Years | 4.32 | % | 3.42 | % | ||||||||
10 Years | 4.60 | % | 4.15 | % | ||||||||
Class B Shares | 3.00 | % | 4.90 | % | ||||||||
1 Year | 0.95 | % | -1.97 | % | ||||||||
5 Years | 3.60 | % | 3.60 | % | ||||||||
10 Years(a) | 4.18 | % | 4.18 | % | ||||||||
Class C Shares | 3.01 | % | 4.91 | % | ||||||||
1 Year | 0.96 | % | -0.02 | % | ||||||||
5 Years | 3.59 | % | 3.59 | % | ||||||||
10 Years | 3.88 | % | 3.88 | % |
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2008) | |||
SEC Returns | |||
Class A Shares | |||
1 Year | -2.66 | % | |
5 Years | 3.42 | % | |
10 Years | 4.15 | % | |
Class B Shares | |||
1 Year | -1.97 | % | |
5 Years | 3.60 | % | |
10 Years(a) | 4.18 | % | |
Class C Shares | |||
1 Year | -0.02 | % | |
5 Years | 3.59 | % | |
10 Years | 3.88 | % |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.99%, 1.69% and 1.69% for Class A, Class B and Class C, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios to 0.72%, 1.42% and 1.42% for Class A, Class B and Class C, respectively. These waivers/reimbursements extend through the Portfolio’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after six years. |
��
* | SEC Yields are calculated based on SEC guidelines for the 30-day period ended March 31, 2008. |
** | Taxable equivalent yields are based on SEC yields and a 35% marginal Federal income tax rate and maximum state taxes where applicable. |
See Historical Performance disclosures on page 5.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 17 |
Historical Performance
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Arizona Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 1,005.58 | $ | 3.91 | 0.78 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,021.10 | $ | 3.94 | 0.78 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 1,002.09 | $ | 7.41 | 1.48 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.60 | $ | 7.47 | 1.48 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 1,002.09 | $ | 7.41 | 1.48 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.60 | $ | 7.47 | 1.48 | % |
18 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Fund Expenses
FUND EXPENSES
(continued from previous page)
Florida Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 997.32 | $ | 3.89 | 0.78 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,021.10 | $ | 3.94 | 0.78 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 993.85 | $ | 7.38 | 1.48 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.60 | $ | 7.47 | 1.48 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 993.86 | $ | 7.38 | 1.48 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.60 | $ | 7.47 | 1.48 | % |
Massachusetts Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 1,016.29 | $ | 4.13 | 0.82 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,020.90 | $ | 4.14 | 0.82 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 1,012.80 | $ | 7.65 | 1.52 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.40 | $ | 7.67 | 1.52 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 1,012.79 | $ | 7.65 | 1.52 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.40 | $ | 7.67 | 1.52 | % |
Michigan Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 1,010.37 | $ | 5.08 | 1.01 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,019.95 | $ | 5.10 | 1.01 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 1,006.86 | $ | 8.58 | 1.71 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,016.45 | $ | 8.62 | 1.71 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 1,005.95 | $ | 8.58 | 1.71 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,016.45 | $ | 8.62 | 1.71 | % |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 19 |
Fund Expenses
FUND EXPENSES
(continued from previous page)
Minnesota Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 1,009.91 | $ | 4.52 | 0.90 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,020.50 | $ | 4.55 | 0.90 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 1,006.39 | $ | 8.03 | 1.60 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.00 | $ | 8.07 | 1.60 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 1,006.40 | $ | 8.03 | 1.60 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.00 | $ | 8.07 | 1.60 | % |
New Jersey Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 997.35 | $ | 4.34 | 0.87 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,020.65 | $ | 4.39 | 0.87 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 993.83 | $ | 7.83 | 1.57 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.15 | $ | 7.92 | 1.57 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 993.83 | $ | 7.83 | 1.57 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.15 | $ | 7.92 | 1.57 | % |
Ohio Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 1,002.90 | $ | 4.26 | 0.85 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,020.75 | $ | 4.29 | 0.85 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 999.40 | $ | 7.75 | 1.55 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.25 | $ | 7.82 | 1.55 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 999.43 | $ | 7.75 | 1.55 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.25 | $ | 7.82 | 1.55 | % |
20 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Fund Expenses
FUND EXPENSES
(continued from previous page)
Pennsylvania Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 1,002.47 | $ | 4.76 | 0.95 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,020.25 | $ | 4.80 | 0.95 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 998.94 | $ | 8.25 | 1.65 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,016.75 | $ | 8.32 | 1.65 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 998.97 | $ | 8.25 | 1.65 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,016.75 | $ | 8.32 | 1.65 | % |
Virginia Portfolio
Beginning Account Value October 1, 2007 | Ending Account Value March 31, 2008 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||
Class A | ||||||||||||
Actual | $ | 1,000 | $ | 1,006.73 | $ | 3.61 | 0.72 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,021.40 | $ | 3.64 | 0.72 | % | ||||
Class B | ||||||||||||
Actual | $ | 1,000 | $ | 1,003.21 | $ | 7.11 | 1.42 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.90 | $ | 7.16 | 1.42 | % | ||||
Class C | ||||||||||||
Actual | $ | 1,000 | $ | 1,002.30 | $ | 7.11 | 1.42 | % | ||||
Hypothetical** | $ | 1,000 | $ | 1,017.90 | $ | 7.16 | 1.42 | % |
* | Expenses are equal to each Class’ annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
** | Assumes 5% return before expenses. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 21 |
Fund Expenses
BOND RATING SUMMARY*
March 31, 2008 (unaudited)
* | All data are as of March 31, 2008. Each Portfolio’s quality rating distribution is expressed as a percentage of the Portfolio’s total investments rated in particular ratings categories by Standard & Poor’s Rating Services and Moody’s Investors Service. The distributions may vary over time. If ratings are not available, the Fund’s Adviser will assign ratings that are considered to be of equivalent quality to such ratings. |
22 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Bond Rating Summary
BOND RATING SUMMARY*
March 31, 2008 (unaudited)
* | All data are as of March 31, 2008. Each Portfolio’s quality rating distribution is expressed as a percentage of the Portfolio’s total investments rated in particular ratings categories by Standard & Poor’s Rating Services and Moody’s Investors Service. The distributions may vary over time. If ratings are not available, the Fund’s Adviser will assign ratings that are considered to be of equivalent quality to such ratings. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 23 |
Bond Rating Summary
BOND RATING SUMMARY*
March 31, 2008 (unaudited)
* | All data are as of March 31, 2008. Each Portfolio’s quality rating distribution is expressed as a percentage of the Portfolio’s total investments rated in particular ratings categories by Standard & Poor’s Rating Services and Moody’s Investors Service. The distributions may vary over time. If ratings are not available, the Fund’s Adviser will assign ratings that are considered to be of equivalent quality to such ratings. |
24 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Bond Rating Summary
ARIZONA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 97.8% | ||||||
Long-Term Municipal Bonds – 96.2% | ||||||
Arizona – 78.0% | ||||||
Arizona Cap Fac Fin Corp Student Hsg Rev (Arizona St Univ Proj) | $ | 2,000 | $ | 2,001,680 | ||
Arizona Game & Fish Dept | 1,000 | 961,720 | ||||
Arizona Hlth Fac Auth (Phoenix Children’s Hosp) | 1,150 | 1,104,057 | ||||
Arizona Hlth Fac Auth (Phoenix Children’s Hosp) | 5,700 | 6,372,714 | ||||
Arizona Hlth Fac Auth Rev (Blood System Inc.) | 750 | 762,810 | ||||
Arizona Sch Brd Fac Rev | 6,730 | 7,250,969 | ||||
Arizona St Transp Brd Hwy Rev | 5,000 | 5,304,600 | ||||
Series 04B | 4,300 | 4,413,262 | ||||
Arizona St Univ COP (Research Infra Proj) AMBAC | 2,000 | 2,029,080 | ||||
Arizona Student Loan Auth (Student Loan Rev) | 1,500 | 1,536,255 | ||||
Arizona Tourism & Sports Auth Tax Rev (Multipurpose Stadium Fac) MBIA | 2,400 | 2,437,416 | ||||
Arizona Wtr Infra Fin Auth Rev (Wtr Quality) | 4,000 | 4,151,320 | ||||
Estrella Mtn Ranch CFD (Desert Village) | 1,584 | 1,646,663 | ||||
Series 01A | 3,145 | 3,295,362 | ||||
Gilbert Wtr Res Muni Ppty Corp. | 2,500 | 2,505,700 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 25 |
Arizona Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Glendale IDA (John C Lincoln Hlth) | $ | 1,000 | $ | 976,950 | ||
Glendale IDA Ed Fac (Midwestern Univ) | 3,770 | 4,183,984 | ||||
Goodyear CFD (Palm Valley) | 2,297 | 2,298,769 | ||||
Goodyear IDA Wtr & Swr Rev | 3,160 | 3,162,876 | ||||
Greater Arizona Dev Auth Infra Rev MBIA | 1,600 | 1,675,808 | ||||
MBIA | 4,320 | 4,369,896 | ||||
Hassayampa CFD | 2,390 | 2,381,755 | ||||
Hassayampa CFD #2 (Forest Ridge Estates) | 680 | 705,813 | ||||
Maricopa Cnty SFMR (Mtg Rev) AMT | 20 | 20,272 | ||||
GNMA/FNMA/FHLMC | 535 | 543,967 | ||||
GNMA/FNMA/FHLMC | 50 | 50,243 | ||||
Mesa Cnty IDA Hlth Fac (Discovery Hlth Sys) MBIA | 15,000 | 15,986,100 | ||||
Nogales Muni Dev Auth AMBAC | 1,000 | 939,380 | ||||
Northern Arizona Univ COP (Northern Arizona Univ Research Proj) AMBAC | 7,140 | 7,440,044 |
26 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Arizona Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Phoenix Civic Impr Corp Excise Tax Rev (Civic Plaza Exp Proj) Sub FGIC | $ | 5,500 | $ | 5,668,025 | ||
Phoenix IDA (Capitol Mall LLC Proj) AMBAC | 5,935 | 6,041,949 | ||||
Phoenix IDA SFMR (Mtg Rev) AMT | 25 | 25,076 | ||||
Pima Cnty IDA (Horizon Comnty Learning Ctr) | 1,500 | 1,430,025 | ||||
Pima Cnty IDA MFHR (La Hacienda) GNMA | 1,290 | 1,498,851 | ||||
Pima Cnty IDA SFMR (Mtg Rev) AMT GNMA/FNMA | 70 | 70,449 | ||||
Pinal Cnty COP AMBAC | 1,000 | 1,019,990 | ||||
Series 04 | 3,780 | 3,729,310 | ||||
Pinal Cnty IDA Correctional Fac Contract (Florence West Prison Proj) ACA | 1,400 | 1,316,056 | ||||
Queen Creek Impr Dist No 1 | 600 | 551,556 | ||||
Salt Verde Fin Corp. (Prepaid Gas) | 650 | 627,744 | ||||
Salt Verde Financial Corp. | 515 | 500,606 | ||||
Show Low Assmt Dist #6 (Torreon) ACA | 955 | 961,561 | ||||
Show Low IDA Hosp Rev (Navapache Regl Med Ctr) RADIAN | 1,415 | 1,361,895 | ||||
Stoneridge CFD | 1,650 | 1,666,830 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 27 |
Arizona Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Sundance CFD No 1 | $ | 1,875 | $ | 1,926,937 | ||
Tax Exempt Muni Infra Trust | 3,310 | 3,319,069 | ||||
Tempe Excise Tax Rev | 1,035 | 1,062,759 | ||||
Tolleson IDA MFHR (Copper Cove) AMT GNMA | 5,825 | 5,575,573 | ||||
Tucson & Pima HFA SFMR (Mtg Rev) AMT GNMA/FNMA | 380 | 380,422 | ||||
Tucson & Pima IDA SFMR (Mtg Bkd Secs Prog) AMT GNMA/FNMA/FHLMC | 605 | 610,747 | ||||
Tucson Arpt Auth Rev AMT AMBAC | 6,475 | 6,282,174 | ||||
Tucson COP MBIA | 6,100 | 6,278,643 | ||||
Tucson Hgr Ed (Univ Arizona) AMBAC | 1,000 | 981,990 | ||||
Univ Med Ctr Corp. Hosp Rev | 3,500 | 3,114,230 | ||||
Univ of Arizona COP AMBAC | 3,040 | 3,268,669 | ||||
5.25%, 6/01/14 - 6/01/15 | 5,000 | 5,441,240 | ||||
West Campus Hsg LLC Student Hsg Rev | 1,500 | 1,482,030 | ||||
Yavapai Cnty Hosp Rev | 4,000 | 4,042,240 | ||||
160,746,111 | ||||||
California – 0.5% | ||||||
California Statewide Comnty Dev Auth | 1,025 | 1,025,000 | ||||
28 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Arizona Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Florida – 0.7% | ||||||
Double Branch CDD | $ | 970 | $ | 996,161 | ||
Fiddlers Creek CDD | 405 | 381,955 | ||||
1,378,116 | ||||||
North Carolina – 1.1% | ||||||
Charlotte-Mecklenburg Hosp Auth | 2,275 | 2,275,000 | ||||
Puerto Rico – 14.3% | ||||||
Puerto Rico Conv Ctr Dist Auth | 6,000 | 6,187,620 | ||||
Puerto Rico Elec Pwr Auth | 4,010 | 4,071,994 | ||||
Puerto Rico Elec Pwr Auth Rev | 2,390 | 2,403,886 | ||||
Puerto Rico GO | 2,500 | 2,714,375 | ||||
Puerto Rico GO | 575 | 576,478 | ||||
Series 01A 5.50%, 7/01/19 | 500 | 524,335 | ||||
Series 03A 5.25%, 7/01/23 | 500 | 502,005 | ||||
Puerto Rico Govt Dev Bank | 500 | 524,940 | ||||
Puerto Rico HFA (Cap Fd Program) | 4,870 | 4,973,147 | ||||
Puerto Rico Hwy & Transp Auth FSA | 3,400 | 3,507,513 | ||||
Puerto Rico IFA Hlth Fac (Ascension Hlth) | 1,500 | 1,562,610 | ||||
Univ of Puerto Rico | 1,855 | 1,893,510 | ||||
29,442,413 | ||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 29 |
Arizona Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Texas – 0.9% | ||||||
Texas Trpk Auth AMBAC | $ | 1,750 | $ | 1,775,602 | ||
Washington – 0.7% | ||||||
Washington Hlth Care Fac Auth (Catholic Hlth Initiatives) FGIC | 1,500 | 1,500,000 | ||||
Total Long-Term Municipal Bonds | 198,142,242 | |||||
Short-Term Municipal Notes – 1.6% | ||||||
Alaska – 0.5% | ||||||
Valdez Marine Term Rev (BP Pipelines, Inc. Proj) 1.25%, 7/01/37(e) | 700 | 700,000 | ||||
Series 03A | 300 | 300,000 | ||||
1,000,000 | ||||||
Colorado – 0.4% | ||||||
Colorado Ed & Cultural Fac Auth (Natl Jewish Fed Bd Prog) | 905 | 905,000 | ||||
Pennsylvania – 0.7% | ||||||
Langhorne Manor Hgr Ed & Hlth Auth (Wesley Enhanced Living) RADIAN | 1,500 | 1,500,000 | ||||
Total Short-Term Municipal Notes | 3,405,000 | |||||
Total Investments – 97.8% | ||||||
(cost $199,886,614) | 201,547,242 | |||||
Other assets less liabilities – 2.2% | 4,500,533 | |||||
Net Assets – 100.0% | $ | 206,047,775 | ||||
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | |||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | ||||||||||
Merrill Lynch | $ | 1,100 | 7/12/08 | BMA | * | 3.8154 | % | $ | 8,471 | ||||||
Merrill Lynch | 1,440 | 2/12/12 | BMA | * | 3.5480 | % | 56,469 | ||||||||
Merrill Lynch | 1,000 | 8/09/26 | 4.0632 | % | BMA | * | (59,827 | ) |
30 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Arizona Portfolio—Portfolio of Investments
(a) | Floating Rate Security. Stated interest rate was in effect at March 31, 2008. |
(b) | Variable rate coupon, rate shown as of March 31, 2008. |
(c) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security is considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2008, the market value of this security amounted to $3,319,069 or 1.6% of net assets. |
(d) | Position, or a portion thereof, has been segregated to collateralize interest rate swaps. |
(e) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
† | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of March 31, 2008 and the aggregate market value of these securities amounted to $2,525,000 or 1.3% of total investments. |
As of March 31, 2008, the Portfolio held 49% of total investments in insured bonds (of this amount 10% represents the Portfolio’s holding in pre-refunded bonds). 22% of the Portfolio’s insured bonds were insured by AMBAC. |
Glossary:
ACA – ACA Capital
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
CDD – Community Development District
CFD – Community Facilities District
COP – Certificate of Participation
FGIC – Financial Guaranty Insurance Company
FHLMC – Federal Home Loan Mortgage Corporation
FNMA – Federal National Mortgage Association
FSA – Financial Security Assurance Inc.
GNMA – Government National Mortgage Association
GO – General Obligation
HFA – Housing Finance Authority
IDA – Industrial Development Authority/Agency
IFA – Industrial Finance Authority
MBIA – Municipal Bond Investors Assurance
MFHR – Multi-Family Housing Revenue
RADIAN – Radian Group, Inc.
SFMR – Single Family Mortgage Revenue
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 31 |
Arizona Portfolio—Portfolio of Investments
FLORIDA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 99.4% | ||||||
Long-Term Municipal Bonds – 99.3% | ||||||
Florida – 58.2% | ||||||
Beacon Tradeport CDD | $ | 855 | $ | 867,474 | ||
Bonnet Creek Resort CDD | 2,000 | 2,041,380 | ||||
Brevard Cnty Loc Opt Fuel Tax Rev FGIC Series 05 | 3,290 | 3,309,839 | ||||
Capital Trust Agy Arpt Fac (Cargo Acq Grp) AMT Series 02 | 490 | 498,369 | ||||
Series 03 | 2,000 | 1,855,940 | ||||
Concorde Estates CDD | 800 | 776,472 | ||||
Crossings at Fleming Island CDD (Eagle Harbor) Series 00C | 2,240 | 2,268,717 | ||||
Dade Cnty HFA MFHR (Golden Lakes Apts) AMT Series 97A | 250 | 250,320 | ||||
6.05%, 11/01/39 | 750 | 750,960 | ||||
Deltona Util Sys Rev MBIA | 2,440 | 2,470,842 | ||||
Florida HFA MFHR (Turtle Creek Apts) AMT AMBAC | 3,245 | 3,254,995 | ||||
Florida HFC MFHR (Logans Pointe Apts) AMT FSA | 5,055 | 5,118,996 | ||||
Florida HFC MFHR (Mystic Pointe II) AMT GNMA | 1,165 | 1,188,475 | ||||
Florida HFC MFHR (Sabal Chase Apts) AMT FSA | 3,650 | 3,697,924 | ||||
Florida HFC MFHR (Spring Harbor Apts) AMT | 2,540 | 2,540,508 |
32 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Florida Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Florida HFC MFHR (Walker Ave Club) AMT FSA | $ | 3,435 | $ | 3,461,724 | ||
Florida HFC MFHR (Waverly Apts) AMT FSA | 2,790 | 2,858,020 | ||||
Florida St Brd of Ed GO MBIA | 2,500 | 2,475,600 | ||||
Gateway CDD (Sun City Ctr) | 240 | 232,373 | ||||
Hamal CDD (Prerefunded) | 1,100 | 1,237,599 | ||||
Herons Glen Recreation Dist | 2,525 | 2,635,696 | ||||
Highlands Cnty Hlth Fac Auth (Adventist/Sunbelt Hosp) | 2,000 | 2,236,700 | ||||
Indian River Cnty Sch Brd COP MBIA | 2,480 | 2,505,321 | ||||
Indian Trace Dev Dist Spl Assmt (Wtr Mgmt Spl Benefit) MBIA | 680 | 696,932 | ||||
Jacksonville Elec Auth AMBAC | 3,925 | 3,948,511 | ||||
Lee Cnty Arpt Rev (Southwest Int’l Arpt) AMT FSA | 13,500 | 13,888,665 | ||||
Manatee Cnty HFA SFMR (Mtg Rev) AMT GNMA | 290 | 292,361 | ||||
Marshall Creek CDD | 900 | 938,457 | ||||
Miami Beach Hlth Fac Auth Rev (Mt Sinai Med Ctr) | 1,600 | 1,577,648 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 33 |
Florida Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Miami-Dade Cnty HFA MFHR (Cnty Club Villas Apts) AMT | $ | 5,145 | $ | 5,197,016 | ||
Miami-Dade Cnty HFA SFMR (Home Ownship Mtg) AMT GNMA/FNMA | 745 | 745,000 | ||||
Miromar Lakes CDD | 2,550 | 2,571,624 | ||||
North Broward Hosp Dist Rev (Prerefunded) | 1,500 | 1,645,710 | ||||
North Broward Hosp Dist Rev (Unrefunded) | 200 | 219,996 | ||||
Northern Palm Beach Assmt Dist (Unit Dev 27B) | 1,100 | 1,070,938 | ||||
Northern Palm Beach Cnty Impr Dist | 610 | 667,061 | ||||
Northern Palm Beach Cnty Impr Dist (Mirasol Unit #43) | 1,000 | 1,119,110 | ||||
Orange Cnty HFA MFHR (Loma Vista Proj) AMT | 2,000 | 1,836,920 | ||||
Orange Cnty Hosp Rev (Orlando Regl) (Prerefunded) | 1,320 | 1,477,357 | ||||
Preserve at Wilderness Lake CDD | 1,455 | 1,491,011 | ||||
South Miami Hlth Fac Hosp Rev (Baptist Hlth) | 2,000 | 2,192,280 | ||||
Tallahassee Hosp Rev (Tallahassee Memorial) | 2,750 | 2,761,357 | ||||
Tampa Hgr Ed (Tampa Univ Proj) RADIAN | 3,175 | 3,139,980 | ||||
Village Ctr CDD Util Rev MBIA | 1,000 | 1,008,510 | ||||
Volusia Cnty Ed Fac Auth (Embry Riddle Aero Univ) | 2,000 | 1,963,880 |
34 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Florida Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Waterlefe CDD | $ | 680 | $ | 719,154 | ||
West Palm Beach Comnty Redev Agy (Northwood-Pleasant Comnty Redev) | 3,640 | 3,340,070 | ||||
103,043,792 | ||||||
Arizona – 1.6% | ||||||
Arizona Hlth Fac Auth (Phoenix Children’s Hosp) | 1,250 | 1,200,062 | ||||
Queen Creek Impr Dist No 1 | 600 | 551,556 | ||||
Salt Verde Fin Corp. (Prepaid Gas) | 1,125 | 1,086,480 | ||||
2,838,098 | ||||||
Colorado – 0.4% | ||||||
Colorado Hlth Fac Auth (Evangelical Lutheran Proj) | 700 | 714,893 | ||||
District Of Columbia – 4.7% | ||||||
Dist of Columbia GO FSA | 3,205 | 3,303,906 | ||||
Washington Conv Ctr Auth AMBAC | 5,000 | 5,055,150 | ||||
8,359,056 | ||||||
Illinois – 2.4% | ||||||
Chicago Incr Alloc | 830 | 845,313 | ||||
Hampshire Spl Svc Area No 14 | 775 | 694,640 | ||||
Illinois Fin Auth (Advocate Hlthcare Network) AMBAC | 2,000 | 2,000,000 | ||||
Manhattan (No 04-1 Brookstone Springs Proj) | 703 | 646,922 | ||||
4,186,875 | ||||||
Indiana – 3.9% | ||||||
Franklin Twp Indl Sch Bldg | 6,625 | 6,896,003 | ||||
Iowa – 0.1% | ||||||
Coralville Urban Rev Tax Incr | 100 | 101,388 | ||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 35 |
Florida Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Kansas – 0.2% | ||||||
Lenexa Hlth Care Fac (Lakeview Village Inc.) | $ | 390 | $ | 353,406 | ||
Louisiana – 3.6% | ||||||
City of New Orleans RADIAN | 1,550 | 1,586,890 | ||||
Ernest N Morial-New Orleans (Exhibit Hall Auth Spl Tax) AMBAC | 1,185 | 1,311,878 | ||||
Lafayette LA Communications (Communications Sys Rev) XLCA | 2,215 | 2,382,299 | ||||
Louisiana St Agriculture Fin Auth | 1,130 | 1,124,146 | ||||
6,405,213 | ||||||
Michigan – 1.7% | ||||||
Detroit Wtr Sup Sys FSA | 2,975 | 3,041,343 | ||||
Minnesota – 1.6% | ||||||
Maple Grove Hlth Care | 1,350 | 1,328,522 | ||||
St. Paul Hsg & Redev Auth (Hltheast Proj) | 500 | 484,650 | ||||
Western Minnesota Muni Pwr Agy FSA | 900 | 983,160 | ||||
2,796,332 | ||||||
Missouri – 0.1% | ||||||
Riverside IDA (Riverside Horizons Proj) ACA | 160 | 142,962 | ||||
New Mexico – 2.4% | ||||||
Clayton Jail Proj Rev CIFG | 4,620 | 4,320,532 | ||||
New York – 0.3% | ||||||
New York Liberty Dev Corp Rev | 500 | 496,320 | ||||
North Dakota – 0.4% | ||||||
Ward Cnty Hlth Care Fac (Trinity Hlth) | 685 | 659,908 | ||||
36 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Florida Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Ohio – 1.7% | ||||||
Cleveland Cuyahoga Port Auth | $ | 3,000 | $ | 3,025,740 | ||
Pennsylvania – 0.6% | ||||||
Allegheny Cnty Hosp | 1,300 | 1,153,529 | ||||
Puerto Rico – 1.6% | ||||||
Puerto Rico Comwlth GO (Pub Impr) | 960 | 981,437 | ||||
Puerto Rico GO (Pub Impr) | 600 | 601,542 | ||||
Series 01A | 500 | 524,335 | ||||
Univ of Puerto Rico | 730 | 738,242 | ||||
2,845,556 | ||||||
South Carolina – 0.5% | ||||||
Scago Ed Fac Corp. for Calhoun Sch Dist RADIAN | 945 | 939,396 | ||||
Tennessee – 0.4% | ||||||
Sullivan Cnty Hlth Ed | 725 | 675,541 | ||||
Texas – 5.7% | ||||||
Bexar Cnty Hlth Fac Dev Corp Rev | 150 | 132,220 | ||||
Camino Real Regl Mobility Auth | 1,270 | 1,274,636 | ||||
Magnolia Tax Independent Sch Dist | 6,165 | 6,514,001 | ||||
North Texas Hlth Fac (United Regl Hlth Care Sys) FSA | 250 | 254,307 | ||||
Tyler Tex Hlth Fac Dev | 2,000 | 1,859,960 | ||||
10,035,124 | ||||||
Utah – 0.2% | ||||||
Spanish Fork City Utah Charter | 370 | 344,851 | ||||
Washington – 6.1% | ||||||
City of Spokane AMBAC | 2,390 | 2,461,867 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 37 |
Florida Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Energy Northwest Wind AMBAC | $ | 3,625 | $ | 3,761,083 | ||
King Cnty Sch Dist No 414 (Lake Washington) | 4,500 | 4,575,645 | ||||
10,798,595 | ||||||
Wisconsin – 0.9% | ||||||
Wisconsin HEFA (Wheaton Franciscan) MBIA | 1,600 | 1,525,120 | ||||
Total Long-Term Municipal Bonds | 175,699,573 | |||||
Short-Term Municipal Notes – 0.1% | ||||||
Florida – 0.1% | ||||||
Broward Cnty Ed Fac Auth | 100 | 100,000 | ||||
Total Investments – 99.4% | ||||||
(cost $176,446,350) | 175,799,573 | |||||
Other assets less liabilities – 0.6% | 1,147,717 | |||||
Net Assets – 100.0% | $ | 176,947,290 | ||||
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | ||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | |||||||||
Merrill Lynch | $ | 1,100 | 7/12/08 | BMA | * | 3.8154 | % | $ | 8,470 | |||||
Merrill Lynch | 1,540 | 2/12/12 | BMA | * | 3.5480 | % | 60,391 | |||||||
Merrill Lynch | 5,300 | 10/21/16 | BMA | * | 4.1285 | % | 424,963 |
(a) | Floating Rate Security. Stated interest rate was in effect at March 31, 2008. |
(b) | Variable rate coupon, rate shown as of March 31, 2008. |
(c) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
38 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Florida Portfolio—Portfolio of Investments
† | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of March 31, 2008 and the aggregate market value of these securities amounted to $2,000,000 or 1.1% of total investments. |
As of March 31, 2008, the Portfolio held 54% of total investments in insured bonds (of this amount 1% represents the Portfolio’s holding in pre-refunded bonds). 21% of the Portfolio’s insured bonds were insured by FSA. |
Glossary:
ACA – ACA Capital
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
CDD – Community Development District
CIFG – CIFG Assurance North America, Inc.
COP – Certificate of Participation
FGIC – Financial Guaranty Insurance Company
FNMA – Federal National Mortgage Association
FSA – Financial Security Assurance Inc.
GNMA – Government National Mortgage Association
GO – General Obligation
HEFA – Health & Education Facility Authority
HFA – Housing Finance Authority
HFC – Housing Finance Corporation
IDA – Industrial Development Authority/Agency
MBIA – Municipal Bond Investors Assurance
MFHR – Multi-Family Housing Revenue
RADIAN – Radian Group, Inc.
SFMR – Single Family Mortgage Revenue
XLCA – XL Capital Assurance Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 39 |
Florida Portfolio—Portfolio of Investments
MASSACHUSETTS PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 95.7% | ||||||
Long-Term Municipal Bonds – 86.9% | ||||||
Massachusetts – 66.9% | ||||||
City of Springfield | $ | 3,000 | $ | 3,195,840 | ||
Massachusetts Bay Transp Auth | 2,000 | 2,241,120 | ||||
Massachusetts Dev Fin Agy (Massachusetts Biomedical) | 3,000 | 3,162,060 | ||||
Massachusetts Dev Fin Agy (Worchester Redev) RADIAN | 2,350 | 2,457,888 | ||||
Massachusetts Ed Fac (Massachusetts Coll of Pharmacy) | 3,350 | 3,639,139 | ||||
Massachusetts Ed Fac (Suffolk Univ) | 1,375 | 1,446,459 | ||||
Massachusetts Ed Fin Auth (Ed Loan) AMT MBIA | 820 | 832,546 | ||||
Massachusetts HEFA | 4,000 | 4,409,766 | ||||
6.00%, 7/01/31 | 2,500 | 2,630,825 | ||||
FGIC | 1,920 | 1,766,304 | ||||
Massachusetts HEFA (Berkshire Hlth Sys) RADIAN | 4,000 | 4,031,840 | ||||
Massachusetts HEFA (Cape Cod Hlthcare) RADIAN | 2,600 | 2,465,138 | ||||
Massachusetts HEFA (Univ of Massachusetts Proj) MBIA | 6,440 | 7,090,569 | ||||
Massachusetts HEFA (Winchester Hosp) | 4,420 | 4,830,618 |
40 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Massachusetts Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Massachusetts Hlth & Educational Fac Auth FGIC | $ | 80 | $ | 86,343 | ||
Massachusetts Hsg Fin Agy (Rental Rev) AMBAC | 4,125 | 4,162,868 | ||||
Massachusetts Hsg Fin Agy MFHR (Rental Rev) AMT MBIA | 4,690 | 4,882,196 | ||||
Massachusetts Indl Fin Agy MFHR (Heights Crossing) AMT FHA | 6,000 | 6,014,640 | ||||
Massachusetts Port Auth Spec Fac (US Air Proj) AMT MBIA | 2,000 | 2,021,540 | ||||
Massachusetts St Coll Bldg AMBAC | 2,635 | 2,699,979 | ||||
Massachusetts St Dev Fin Agy (Boston Architectural Coll) ACA | 1,750 | 1,436,400 | ||||
Massachusetts St Dev Fin Agy (Pharmacy & Allied Hlth) ASSURED GTY | 3,500 | 3,544,275 | ||||
Massachusetts St GO FSA | 5,000 | 5,383,550 | ||||
Massachusetts St GO (Prerefunded) | 3,075 | 3,363,312 | ||||
Massachusetts St Hlth & Ed | 1,220 | 1,123,754 | ||||
Massachusetts St Sch Bldg Auth (Dedicated Sales Tax Rev) MBIA | 7,000 | 7,405,860 | ||||
Massachusetts St Spl Oblig Rev (Constr Lane) FSA | 1,500 | 1,551,885 | ||||
Massachusetts St Wtr Pollution Abatement | 8,000 | 8,704,341 | ||||
96,581,055 | ||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 41 |
Massachusetts Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Arizona – 1.7% | ||||||
Goodyear IDA Wtr & Swr Rev (Litchfield Pk Svc Proj) AMT | $ | 1,160 | $ | 1,178,340 | ||
Stoneridge CFD | 1,265 | 1,277,903 | ||||
2,456,243 | ||||||
California – 0.7% | ||||||
California St GO | 1,000 | 1,022,730 | ||||
Colorado – 0.3% | ||||||
Murphy Creek Metro Dist No 3 (Ref & Impt) | 500 | 406,340 | ||||
Florida – 1.2% | ||||||
Crossings at Fleming Island CDD (Eagle Harbor) | 1,750 | 1,772,435 | ||||
Georgia – 0.3% | ||||||
Atlanta Tax Alloc (Eastside Proj) | 500 | 438,475 | ||||
Illinois – 1.6% | ||||||
Bolingbrook Sales Tax Rev (Bolingbrook) | 500 | 503,955 | ||||
Illinois Fin Auth (Advocate Hlthcare Network) AMBAC | 1,500 | 1,500,000 | ||||
Plano Spl Svc Area No. 3 Spl Tax (Lakewood Springs Proj) | 395 | 367,575 | ||||
2,371,530 | ||||||
Michigan – 1.0% | ||||||
Kent Hosp Fin Auth (Spectrum Hlth Sys) FGIC | 1,400 | 1,400,000 | ||||
Nevada – 0.7% | ||||||
Clark Cnty Impr Dist No. 142 | 985 | 971,574 | ||||
42 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Massachusetts Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
North Carolina – 0.4% | ||||||
Charlotte-Mecklenburg Hosp Auth AMBAC | $ | 525 | $ | 525,000 | ||
Pennsylvania – 0.2% | ||||||
Allegheny Cnty Hosp (West Pennsylvania | 350 | 310,565 | ||||
Puerto Rico – 11.9% | ||||||
Puerto Rico Elec Pwr Auth XLCA | 3,200 | 3,541,344 | ||||
Puerto Rico GO | 500 | 504,285 | ||||
Puerto Rico GO (Pub Impr) | 500 | 524,335 | ||||
Puerto Rico Govt Dev Bank (Sr Notes) | 500 | 524,940 | ||||
Puerto Rico HFA (Cap Fndtn Program) | 1,740 | 1,715,814 | ||||
Puerto Rico Hwy & Transp Auth FGIC | 4,410 | 4,617,182 | ||||
Puerto Rico Hwy & Transp Auth Rev FGIC | 4,225 | 4,423,491 | ||||
Puerto Rico Muni Fin Agy | 275 | 276,474 | ||||
Univ of Puerto Rico | 1,025 | 1,036,572 | ||||
17,164,437 | ||||||
Total Long-Term Municipal Bonds | 125,420,384 | |||||
Short-Term Municipal Notes – 8.8% | ||||||
Alaska – 1.9% | ||||||
Valdez Marine Term Rev (BP Pipelines, Inc. Proj) | 700 | 700,000 | ||||
Series 03A | 2,000 | 2,000,000 | ||||
2,700,000 | ||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 43 |
Massachusetts Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
California – 1.5% | ||||||
Abag Fin Auth for Nonprofit Corps | $ | 400 | $ | 400,000 | ||
California Dept Wtr Res Pwr | 500 | 500,000 | ||||
California Pollution Ctl Fin Auth | 1,300 | 1,300,000 | ||||
2,200,000 | ||||||
Colorado – 0.9% | ||||||
Colorado Ed & Cultural Fac Auth | 790 | 790,000 | ||||
Colorado Ed & Cultural Fac Auth (Natl Jewish Fed Bd Prog) | 500 | 500,000 | ||||
1,290,000 | ||||||
Florida – 0.3% | ||||||
Broward Cnty Ed Fac Auth | 500 | 500,000 | ||||
Mississippi – 0.4% | ||||||
Cnty of Jackson | 500 | 500,000 | ||||
New Mexico – 0.7% | ||||||
Farmington PCR | 1,060 | 1,060,000 | ||||
North Carolina – 0.7% | ||||||
North Carolina Med Care Commission | 1,000 | 1,000,000 | ||||
Rhode Island – 0.7% | ||||||
Rhode Island Hlth & Ed Bldg Corp. | 1,000 | 1,000,000 | ||||
Tennessee – 0.3% | ||||||
Chattanooga Hlth Ed & Hsg Fac Brd | 400 | 400,000 | ||||
Texas – 1.0% | ||||||
Lower Neches Valley Frn | 1,500 | 1,500,000 | ||||
Washington – 0.4% | ||||||
Washington St Hsg Fin Commission | 500 | 500,000 | ||||
Total Short-Term Municipal Notes | 12,650,000 | |||||
44 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Massachusetts Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||
Total Investments – 95.7% | |||||
(cost $135,062,569) | $ | 138,070,384 | |||
Other assets less liabilities – 4.3% | 6,193,289 | ||||
Net Assets – 100.0% | $ | 144,263,673 | |||
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | ||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | |||||||||
Citibank | $ | 8,000 | 12/01/17 | BMA | * | 3.7920 | % | $ | 431,124 | |||||
Merrill Lynch | 700 | 7/12/08 | BMA | * | 3.8154 | % | 5,390 | |||||||
Merrill Lynch | 5,100 | 10/01/16 | BMA | * | 4.1475 | % | 417,973 |
(a) | 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 until final maturity. |
(b) Variable rate coupon, rate shown as of March 31, 2008.
(c) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
† | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of March 31, 2008 and the aggregate market value of these securities amounted to $2,900,000 or 2.1% of total investments. |
As of March 31, 2008, the Portfolio held 51% of total investments in insured bonds (of this amount 9% represents the Portfolio’s holding in pre-refunded bonds). |
Glossary:
ACA – ACA Capital
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
ASSURED GTY – Assured Guaranty
CDD – Community Development District
CFD – Community Facilities District
FGIC – Financial Guaranty Insurance Company
FHA – Federal Housing Administration
FSA – Financial Security Assurance Inc.
GO – General Obligation
HEFA – Health & Education Facility Authority
HFA – Housing Finance Authority
IDA – Industrial Development Authority/Agency
MBIA – Municipal Bond Investors Assurance
MFHR – Multi-Family Housing Revenue
PCR – Pollution Control Revenue Bond
RADIAN – Radian Group, Inc.
XLCA – XL Capital Assurance Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 45 |
Massachusetts Portfolio—Portfolio of Investments
MICHIGAN PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 95.0% | ||||||
Long-Term Municipal Bonds – 92.7% | ||||||
Michigan – 69.1% | ||||||
Allen Park Pub Sch Dist GO Q-SBLF | $ | 8,630 | $ | 9,420,163 | ||
Cedar Springs Pub Sch Dist Q-SBLF | 1,835 | 2,003,013 | ||||
Detroit GO AMBAC | 6,930 | 7,185,648 | ||||
Detroit Sch Brd (Sch Brd Loan Fund) FSA | 2,900 | 3,153,402 | ||||
Detroit Tax Incr (Diamler/Chrysler Assembly Plant) Series 98A | 1,615 | 1,393,390 | ||||
Detroit Wtr Sup Sys FSA | 1,885 | 1,927,035 | ||||
Detroit Wtr Sup Sys (Prerefunded) FGIC | 3,550 | 3,900,811 | ||||
Genesee Cnty GO (Wtr Sup Sys) AMBAC | 3,000 | 3,040,140 | ||||
Kalamazoo Hosp Fin Auth | 2,360 | 2,381,476 | ||||
Kent Hosp Fin Auth (Metro Hosp Proj) | 210 | 205,267 | ||||
Lansing Wtr & Elec Sys FSA | 2,200 | 2,240,436 | ||||
Michigan GO (Trunk Line Fund) (Prerefunded) FSA | 4,000 | 4,359,840 | ||||
Michigan HDA MFHR (Arbor Pointe) GNMA | 1,810 | 1,743,320 | ||||
Michigan HDA MFHR (Danbury Manor) AMT FNMA | 2,490 | 2,464,253 |
46 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Michigan Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Michigan HDA MFHR (Rental Rev) AMT AMBAC | $ | 1,880 | $ | 1,888,197 | ||
GNMA | 1,950 | 1,882,159 | ||||
Michigan Hgr Ed Fac (Hope Coll) | 3,465 | 3,504,189 | ||||
Michigan Hgr Ed Student Loan Auth AMT AMBAC | 3,500 | 3,552,115 | ||||
Michigan Hosp Fin Auth Rev | 415 | 372,591 | ||||
Michigan Hosp Fin Auth Rev (Crittenton Hosp) | 1,250 | 1,274,875 | ||||
Michigan Hosp Fin Auth Rev (Trinity Hlth) | 1,485 | 1,539,366 | ||||
Michigan Strategic Fund Hlth Fac | 3,000 | 3,047,490 | ||||
Michigan Strategic Fund Hlth Fac | 3,000 | 3,026,940 | ||||
Michigan Strategic Fund Hlth Fac (Holland Home) | 1,000 | 1,033,670 | ||||
North Muskegon Sch Dist Q-SBLF | 1,500 | 1,654,860 | ||||
Olivet Sch Brd Fund Q-SBLF | 1,065 | 1,163,960 | ||||
Ovid Elsie Schools Brd Fund Q-SBLF | 2,650 | 2,882,166 | ||||
Plymouth Ed Ctr Charter Sch Pub Sch | 1,050 | 1,015,423 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 47 |
Michigan Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Royal Oak Hosp Fin Auth | $ | 3,200 | $ | 3,206,080 | ||
Saginaw Hosp Fin Auth (Covenant Med Ctr) | 1,770 | 1,838,322 | ||||
Southfield Michigan Libr Bldg Auth MBIA | 3,340 | 3,369,592 | ||||
81,670,189 | ||||||
California – 1.8% | ||||||
California Hlth Fac Fin Auth (Sutter Hlth) | 1,100 | 1,143,780 | ||||
California St GO | 1,000 | 1,022,730 | ||||
2,166,510 | ||||||
Florida – 3.3% | ||||||
Crossings at Fleming Island CDD (Eagle Harbor) | 1,835 | 1,858,525 | ||||
Double Branch CDD (Oakleaf Village) | 955 | 980,756 | ||||
Gateway CDD (Sun City Ctr) | 300 | 290,466 | ||||
Northern Palm Beach Assmt Dist (Unit Dev 27B) | 765 | 744,789 | ||||
3,874,536 | ||||||
Illinois – 1.1% | ||||||
Antioch Village Spl Svc Area (Clublands Proj) | 500 | 430,485 | ||||
Antioch Village Spl Svc Area (Deercrest Proj) | 500 | 437,800 | ||||
Plano Spl Svc Area No. 3 Spl Tax | 395 | 367,575 | ||||
1,235,860 | ||||||
48 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Michigan Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Puerto Rico – 16.4% | ||||||
Puerto Rico Elec Pwr Auth | $ | 1,000 | $ | 1,034,350 | ||
XLCA | 2,500 | 2,766,675 | ||||
Puerto Rico GO | 500 | 504,285 | ||||
Puerto Rico GO (Pub Impr) | 500 | 524,335 | ||||
Puerto Rico HFA (Cap Fd Program) | 3,160 | 3,226,929 | ||||
Puerto Rico HFC SFMR (Mtg Rev) AMT GNMA | 1,975 | 1,972,986 | ||||
GNMA | 1,760 | 1,697,995 | ||||
Puerto Rico IFA Hlth Fac (Ascension Hlth) | 3,000 | 3,125,220 | ||||
Puerto Rico Muni Fin Agy | 275 | 276,474 | ||||
Puerto Rico Pub Fin Corp. MBIA | 2,875 | 3,093,500 | ||||
Univ of Puerto Rico | 1,145 | 1,157,927 | ||||
19,380,676 | ||||||
Washington – 1.0% | ||||||
Washington Hlth Care Fac Auth | 1,175 | 1,175,000 | ||||
Total Long-Term Municipal Bonds | 109,502,771 | |||||
Short-Term Municipal Notes - 2.3% | ||||||
Colorado – 1.5% | ||||||
Colorado Ed & Cultural Fac Auth FRN | 500 | 500,000 | ||||
Colorado Edl & Cultural Fac Auth FRN | 1,200 | 1,200,000 | ||||
1,700,000 | ||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 49 |
Michigan Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
North Carolina – 0.4% | ||||||
North Carolina Capl Fac Fin Agy | $ | 500 | $ | 500,000 | ||
Virginia – 0.4% | ||||||
Montgomery Cnty IDA | 500 | 500,000 | ||||
Total Short-Term Municipal Notes | 2,700,000 | |||||
Total Investments – 95.0% | ||||||
(cost $109,693,279) | 112,202,771 | |||||
Other assets less liabilities – 5.0% | 5,960,253 | |||||
Net Assets – 100.0% | $ | 118,163,024 | ||||
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | ||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | |||||||||
Merrill Lynch | $ | 700 | 7/12/08 | BMA | * | 3.8154 | % | $ | 5,390 | |||||
Merrill Lynch | 6,200 | 10/01/16 | BMA | * | 4.1475 | % | 508,124 |
(a) | Inverse Floater Security – Security with variable or floating interest rate that moves in the opposite direction of short-term interest rates. |
(b) | Variable rate coupon, rate shown as of March 31, 2008. |
(c) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
† | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of March 31, 2008 and the aggregate market value of these securities amounted to $1,175,000 or 1.1% of total investments. |
As of March 31, 2008, the Portfolio held 45% of total investments in insured bonds (of this amount 17% represents the Portfolio’s holding in pre-refunded bonds). |
50 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Michigan Portfolio—Portfolio of Investments
Glossary:
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
CDD – Community Development District
ETM – Escrow to Maturity
FGIC – Financial Guaranty Insurance Company
FNMA – Federal National Mortgage Association
FSA – Financial Security Assurance Inc.
GNMA– Government National Mortgage Association
GO – General Obligation
HDA– Housing Development Authority
HFA – Housing Finance Authority
HFC – Housing Finance Corporation
IDA – Industrial Development Authority/Agency
IFA – Industrial Finance Authority
MBIA– Municipal Bond Investors Assurance
MFHR – Multi-Family Housing Revenue
Q-SBLF – Qualified School Bond Loan Fund
SFMR – Single Family Mortgage Revenue
XLCA – XL Capital Assurance Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 51 |
Michigan Portfolio—Portfolio of Investments
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 91.8% | ||||||
Long-Term Municipal Bonds – 86.0% | ||||||
Minnesota – 86.0% | ||||||
Bemidji Hlth Fac (North Country Hlth Svc) RADIAN | $ | 1,500 | $ | 1,430,310 | ||
Brooklyn Park MFHR (Brooks Landing) AMT FNMA | 1,355 | 1,367,358 | ||||
Cass Lake Sch Dist FGIC | 1,760 | 1,784,728 | ||||
Chaska Elec Rev (Generating Fac) | 1,000 | 1,026,140 | ||||
Farmington ISD No 192 FSA | 3,875 | 3,994,466 | ||||
Golden Valley Hlth Fac (Covenant Ret Comnty) | 1,000 | 919,320 | ||||
Maple Grove Hlth Care | 650 | 639,659 | ||||
Minneapolis & St. Paul Arpt Rev MBIA | 1,500 | 1,501,140 | ||||
Minneapolis & St. Paul Arpt Rev AMT FGIC | 3,455 | 3,538,715 | ||||
Minneapolis Common Bond Fund | 1,500 | 1,640,085 | ||||
Minneapolis Hlth Care Sys Rev (Fairview Hlth Svc) AMBAC | 1,000 | 973,530 | ||||
Minneapolis Hosp Rev (Allina Hlth Sys) | 1,500 | 1,680,675 | ||||
Minneapolis MFHR (Bottineau Commons Proj) AMT GNMA | 2,000 | 1,909,900 | ||||
Minneapolis MFHR (Sumner Field) AMT GNMA | 2,505 | 2,441,097 | ||||
Minneapolis Pkg Assmt GO MBIA | 2,000 | 2,060,620 |
52 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Minnesota Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Minnesota Agriculture & Econ Dev Hlth Fac (Benedictine Hlth Sys) MBIA | $ | 4,000 | $ | 4,248,080 | ||
Minnesota Agriculture & Econ Dev Hlth Fac (Evangelical Lutheran Proj) | 2,880 | 2,984,039 | ||||
Minnesota Agriculture & Econ Dev Hlth Fac (Prerefunded-Hlth Care Sys) | 1,700 | 1,878,517 | ||||
Minnesota Agriculture & Econ Dev Hlth Fac (Small Business Loan Proj) AMT | 1,000 | 1,023,520 | ||||
Series 00D | 1,000 | 1,023,520 | ||||
Minnesota Hgr Ed Fac Auth (Coll Art & Design) | 1,000 | 1,088,910 | ||||
Minnesota Hgr Ed Fac Auth (Hamline Univ) | 1,250 | 1,259,563 | ||||
Minnesota Hgr Ed Fac Auth (St Catherine Coll) | 1,000 | 984,610 | ||||
Minnesota Hgr Ed Fac Auth (Univ St Thomas) | 1,000 | 1,008,270 | ||||
5.25%, 10/01/34 | 1,000 | 995,740 | ||||
Minnesota Hsg Fin Agy SFMR AMT | 515 | 515,793 | ||||
Series 96G | 855 | 856,069 | ||||
Series 98H | 1,665 | 1,669,029 | ||||
Minnesota Muni Pwr Agy Elec Rev | 3,000 | 3,157,380 | ||||
Series 04A | 500 | 513,830 | ||||
Minnetonka MFHR (Archer Heights Apts Proj) AMT GNMA | 1,620 | 1,619,951 | ||||
North St Paul Maplewood ISD No. 622 FSA | 3,425 | 3,651,187 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 53 |
Minnesota Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Prior Lake ISD No. 719 (Sch Bldg) FSA | $ | 3,350 | $ | 3,475,223 | ||
Shakopee Hlth Care Fac (St Francis Regl Med Ctr) | 600 | 563,070 | ||||
Shoreview MFHR (Lexington Shores Proj) AMT GNMA | 1,445 | 1,402,011 | ||||
St. Cloud Hosp Rev (Saint Cloud Hosp) FSA | 3,750 | 3,896,588 | ||||
St. Paul Hsg & Redev Auth (Hltheast Proj) | 500 | 484,650 | ||||
St. Paul Pkg Auth Rev (Block 19 Ramp) FSA | 3,075 | 3,142,988 | ||||
St. Paul Port Auth Lease Rev | 1,725 | 1,762,743 | ||||
St. Paul Port Auth Lease Rev (Cedar St. Office Bldg) | 1,000 | 1,025,190 | ||||
St. Paul Recreational Fac Gross Rev (Highland National Proj) | 2,750 | 2,874,620 | ||||
Waconia Hlth Care Fac Rev (Ridgeview Med Ctr) RADIAN | 3,415 | 3,631,511 | ||||
Western Minnesota Muni Pwr Agy FSA | 700 | 764,680 | ||||
MBIA | 2,100 | 2,117,472 | ||||
Western Pwr Agy MBIA | 1,000 | 1,012,130 | ||||
White Bear Lake MFHR (Renova Partners Proj) AMT FNMA | 1,000 | 993,670 | ||||
Willmar Hosp Rev (Rice Mem Hosp Proj) FSA | 2,000 | 2,008,360 | ||||
Total Long-Term Municipal Bonds | 84,540,657 | |||||
54 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Minnesota Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Short-term Municipal Notes – 5.8% | ||||||
Minnesota – 5.8% | ||||||
Minnesota Hgr Ed Fac Auth (Carleton Coll) | $ | 500 | $ | 500,000 | ||
Univ of Minnesota | 2,000 | 2,000,000 | ||||
Series 99a | 3,195 | 3,195,000 | ||||
Total Short-Term Municipal Notes | 5,695,000 | |||||
Total Municipal Obligations | 90,235,657 | |||||
SHORT-TERM INVESTMENTS – 4.3% | ||||||
Time Deposit – 4.3% | ||||||
The Bank of New York | 4,171 | 4,171,000 | ||||
Total Investments – 96.1% | 94,406,657 | |||||
Other assets less liabilities – 3.9% | 3,874,032 | |||||
Net Assets – 100.0% | $ | 98,280,689 | ||||
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | ||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | |||||||||
Merrill Lynch | $ | 500 | 7/12/08 | BMA | * | 3.8154 | % | $ | 3,850 | |||||
Merrill Lynch | 3,500 | 8/01/16 | BMA | * | 4.0710 | % | 262,325 |
(a) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
As of March 31, 2008, the Portfolio held 46% of total investments in insured bonds (of this amount 8% represents the Portfolio’s holding in pre-refunded bonds). 22% of the Portfolio’s insured bonds were insured by FSA. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 55 |
Minnesota Portfolio—Portfolio of Investments
Glossary:
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
FGIC – Financial Guaranty Insurance Company
FNMA – Federal National Mortgage Association
FSA – Financial Security Assurance Inc.
GNMA – Government National Mortgage Association
GO – General Obligation
ISD – Independent School District
MBIA – Municipal Bond Investors Assurance
MFHR – Multi-Family Housing Revenue
RADIAN – Radian Group, Inc.
SFMR – Single Family Mortgage Revenue
See notes to financial statements.
56 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Minnesota Portfolio—Portfolio of Investments
NEW JERSEY PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 95.7% | ||||||
Long-Term Municipal Bonds – 91.9% | ||||||
New Jersey – 72.4% | ||||||
Bergen Cnty Impr Auth (Bergen Cnty Util) | $ | 3,755 | $ | 4,169,026 | ||
Bergen Cnty Impr Auth (Wyckoff Twp Brd Ed Proj) | 1,555 | 1,588,106 | ||||
Hoboken Parking Auth AMBAC | 3,700 | 4,073,552 | ||||
Lafayette Yard Com Dev Corp (Conv Ctr Hotel Proj) MBIA | 2,100 | 2,265,123 | ||||
Middlesex Cnty Impr Auth FNMA | 750 | 775,673 | ||||
Morris-Union Jointure Comnty COP RADIAN | 2,200 | 2,138,356 | ||||
New Jersey Econ Dev Auth FSA | 3,540 | 3,718,805 | ||||
New Jersey Econ Dev Auth (American Wtr Co.) AMT FGIC | 5,000 | 5,008,050 | ||||
New Jersey Econ Dev Auth (Hackensack Wtr Co.) AMT MBIA | 4,000 | 4,005,320 | ||||
New Jersey Econ Dev Auth (Kapkowski Rd) | 4,500 | 4,744,755 | ||||
New Jersey Econ Dev Auth (Liberty St Park Proj) | 1,500 | 1,536,930 | ||||
New Jersey Econ Dev Auth (Masonic Charity Fndtn Proj) | 1,000 | 1,022,880 | ||||
Series 02 | 540 | 516,710 | ||||
New Jersey Econ Dev Auth (NUI Corp.) AMT ACA | 2,200 | 1,940,598 | ||||
New Jersey Econ Dev Auth (Pub Svc Elec & Gas) AMT MBIA | 5,000 | 5,007,150 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 57 |
New Jersey Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
New Jersey Econ Dev Auth (Sch Fac Constr) | $ | 3,300 | $ | 3,398,043 | ||
New Jersey Econ Dev Auth Sch Fac | 2,510 | 2,812,229 | ||||
New Jersey Ed Fac Auth (Hgr Ed Cap Impr) (Prerefunded) AMBAC | 2,500 | 2,735,200 | ||||
New Jersey Hgr Ed (Student Loan) AMT MBIA | 705 | 713,791 | ||||
New Jersey Hlth Care Fac (Atlantic City Med Ctr) | 975 | 1,003,694 | ||||
New Jersey Hlth Care Fac (Bayshore Comnty Hosp) RADIAN | 9,250 | 8,493,535 | ||||
New Jersey Hlth Care Fac (Good Shepard) RADIAN | 1,350 | 1,260,050 | ||||
New Jersey Hlth Care Fac (Kennedy Hlth Sys) | 2,700 | 2,735,208 | ||||
New Jersey Hlth Care Fac (Newton Mem Hosp) FSA | 1,500 | 1,517,235 | ||||
New Jersey Hlth Care Fac (Palisades Med Ctr) ACA | 1,000 | 869,380 | ||||
New Jersey Hlth Care Fac (Southern Ocean Cnty Hosp) RADIAN | 4,500 | 4,112,640 | ||||
New Jersey Hlth Care Fac (Wood Johnson) | 3,350 | 3,420,953 | ||||
New Jersey Hlth Care Fac Fin Auth Rev (Atlantic City Med) (Prerefunded) | 900 | 998,280 | ||||
New Jersey Hlth Care Fac Fin Auth Rev (St Clare’s Hosp Inc.) RADIAN | 2,085 | 2,080,496 |
58 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
New Jersey Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
New Jersey Hsg & Mtg Fin Agy MFHR (Rental Hsg) AMT FSA | $ | 2,000 | $ | 2,026,560 | ||
New Jersey St Ed Fac Auth | 3,480 | 3,632,831 | ||||
New Jersey St Ed Fac Auth Rev (Ramapo Coll of New Jersey) AMBAC | 1,000 | 1,077,410 | ||||
FGIC Series 04E | 1,000 | 1,097,540 | ||||
New Jersey St Transp Auth (Transp Sys) | 3,750 | 4,209,600 | ||||
New Jersey Transp Trust Fund Auth FGIC | 3,400 | 3,586,830 | ||||
Newark Hsg Auth (Newark Marine Terminal) MBIA | 3,580 | 3,979,993 | ||||
North Hudson Swr Auth MBIA | 12,340 | 5,219,327 | ||||
Port Auth NY & NJ (126th) | 2,500 | 2,399,125 | ||||
Salem Cnty PCR (PSE&G Pwr) | 1,500 | 1,444,500 | ||||
South Jersey Port Corp (Marine Terminal) AMT | 1,000 | 1,009,540 | ||||
Union Cnty Impr Auth | 2,885 | 2,999,535 | ||||
Vineland Swr Rev (Landis Swr) FGIC | 3,250 | 3,884,205 | ||||
115,228,764 | ||||||
California – 1.1% | ||||||
California St GO | 1,000 | 1,022,730 | ||||
California Statewide Comnty Dev Auth (Catholic Healthcare Ctr) | 775 | 775,000 | ||||
1,797,730 | ||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 59 |
New Jersey Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Florida – 3.1% | ||||||
Crossings at Fleming Island CDD (Eagle Harbor) | $ | 2,500 | $ | 2,532,050 | ||
Double Branch CDD (Oakleaf Village) | 950 | 975,622 | ||||
Hammock Bay CDD (Spl Assmt) | 285 | 275,398 | ||||
Northern Palm Beach Assmt Dist (Unit Dev 27B) | 1,250 | 1,216,975 | ||||
5,000,045 | ||||||
Guam – 0.3% | ||||||
Guam Govt (Wtr & Waste Sys Rev) | 500 | 481,255 | ||||
Illinois – 1.8% | ||||||
Antioch Village Spl Svc Area (Clublands Proj) | 1,000 | 860,970 | ||||
Illinois Fin Auth (Advocate Hlthcare Network) AMBAC | 1,500 | 1,500,000 | ||||
Plano Spl Svc Area No. 3 Spl Tax (Lakewood Springs Proj) | 550 | 511,814 | ||||
2,872,784 | ||||||
Michigan – 0.9% | ||||||
Kent Hosp Fin Auth (Spectrum Hlth Sys) FGIC | 1,425 | 1,425,000 | ||||
New York - 4.9% | ||||||
Port Auth NY & NJ (JFK Int’l Arpt Proj) AMT MBIA | 7,675 | 7,842,545 | ||||
North Carolina – 0.2% | ||||||
Charlotte-Mecklenburg Hosp Auth AMBAC | 375 | 375,000 | ||||
Ohio – 0.3% | ||||||
Port Auth of Columbiana Cnty Swr (Apex Enviro LLC) AMT | 500 | 500,240 | ||||
60 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
New Jersey Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Pennsylvania – 1.2% | ||||||
Allegheny Cnty Hosp (West Pennsylvania | $ | 420 | $ | 372,679 | ||
Delaware River Joint Toll Brdg Rev (PA/NJ Bridge) | 1,625 | 1,610,586 | ||||
1,983,265 | ||||||
Puerto Rico – 4.3% | ||||||
Puerto Rico Comwlth GO (Pub Impr) | 710 | 725,854 | ||||
Puerto Rico GO | 500 | 504,285 | ||||
Puerto Rico GO (Pub Impr) | 500 | 524,335 | ||||
Puerto Rico HFA (Cap Fd Program) | 3,665 | 3,742,625 | ||||
Univ of Puerto Rico Rev | 1,260 | 1,264,939 | ||||
6,762,038 | ||||||
Texas – 0.6% | ||||||
Camino Real Regl Mobility Auth | 905 | 908,303 | ||||
Virginia – 0.8% | ||||||
Broad Street CDD (Parking Fac) | 1,200 | 1,250,976 | ||||
Total Long-Term Municipal Bonds | 146,427,945 | |||||
Short-Term Municipal Notes – 3.8% | ||||||
Alaska – 2.6% | ||||||
Valdez Marine Term Rev (BP Pipelines, Inc. Proj) 1.25%, 7/01/37(c) | 800 | 800,000 | ||||
Series 03A | 1,000 | 1,000,000 | ||||
Series 03C | 2,400 | 2,400,000 | ||||
4,200,000 | ||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 61 |
New Jersey Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Colorado – 0.3% | ||||||
Colorado Ed & Cultural Fac Auth (Natl Jewish Fed Bd Prog) | $ | 400 | $ | 400,000 | ||
Florida – 0.3% | ||||||
Broward Cnty Ed Fac Auth | 500 | 500,000 | ||||
Illinois – 0.6% | ||||||
Romoeoville Rev | 900 | 900,000 | ||||
Total Short-Term Municipal Notes | 6,000,000 | |||||
Total Investments – 95.7% | 152,427,945 | |||||
Other assets less liabilities – 4.3% | 6,840,825 | |||||
Net Assets – 100.0% | $ | 159,268,770 | ||||
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | ||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | |||||||||
Merrill Lynch | $ | 800 | 7/12/08 | BMA | * | 3.8154 | % | $ | 6,160 | |||||
Merrill Lynch | 3,000 | 10/21/16 | BMA | * | 4.1285 | % | 241,063 |
(a) | Inverse Floater Security – Security with variable or floating interest rate that moves in the opposite direction of short-term interest rates. |
(b) | Variable rate coupon, rate shown as of March 31, 2008. |
(c) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
† | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of March 31, 2008 and the aggregate market value of these securities amounted to $4,075,000 or 2.7% of total investments. |
As of March 31, 2008, the Portfolio held 58% of total investments in insured bonds (of this amount 10% represents the Portfolio’s holding in pre-refunded bonds). |
62 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
New Jersey Portfolio—Portfolio of Investments
Glossary:
ACA – ACA Capital
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
CDD – Community Development District
COP – Certificate of Participation
FGIC – Financial Guaranty Insurance Company
FNMA – Federal National Mortgage Association
FSA – Financial Security Assurance Inc.
GO – General Obligation
HFA – Housing Finance Authority
MBIA – Municipal Bond Investors Assurance
MFHR – Multi-Family Housing Revenue
PCR – Pollution Control Revenue Bond
RADIAN – Radian Group, Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 63 |
New Jersey Portfolio—Portfolio of Investments
OHIO PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 98.3% | ||||||
Long-Term Municipal Bonds – 95.9% | ||||||
Ohio – 80.7% | ||||||
Akron GO MBIA | $ | 1,000 | $ | 1,017,390 | ||
Brookville Sch Dist GO FSA | 2,000 | 2,207,860 | ||||
Canton City Sch Dist MBIA | 2,150 | 2,206,491 | ||||
Central Ohio Solid Waste Auth AMBAC | 2,035 | 2,115,444 | ||||
Cincinnati Technical Comnty Coll AMBAC | 5,000 | 4,598,700 | ||||
Cleveland Cuyahoga Port Auth | 2,000 | 2,017,160 | ||||
Cleveland Cuyahoga Port Auth (Rita Proj) RADIAN | 1,850 | 1,875,900 | ||||
Cleveland GO AMBAC | 1,200 | 1,349,532 | ||||
MBIA | 4,380 | 4,827,592 | ||||
Cleveland Pub Pwr Sys Rev FGIC | 2,165 | 2,276,238 | ||||
Cleveland Wtrwks Rev MBIA | 2,500 | 2,587,550 | ||||
Cnty of Hamilton (Prerefunded) AMBAC | 10,525 | 11,301,955 | ||||
Cnty of Hamilton (Unrefunded) AMBAC | 2,660 | 2,686,733 | ||||
Columbus Sch Dist FGIC | 4,730 | 5,169,559 | ||||
Cuyahoga Cnty Hosp Fac Rev (Univ Hosp Hlth) | 1,900 | 1,972,162 |
64 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Ohio Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Cuyahoga Cnty MFHR (Livingston Park Apts) GNMA | $ | 1,500 | $ | 1,422,345 | ||
Cuyahoga Cnty MFHR (Longwood Proj) AMT GNMA | 3,620 | 3,533,048 | ||||
Dayton Ohio Arpt Rev (James M Cox Dayton Int’l) RADIAN | 1,280 | 1,186,163 | ||||
Dayton Sch Dist (Administrative Fac Proj) | 3,040 | 3,290,519 | ||||
Delaware Sch Dist MBIA | 1,340 | 1,404,829 | ||||
Dublin Sch Dist GO FSA | 1,500 | 1,552,185 | ||||
Erie Cnty Hosp Rev (Firelands Med Ctr) | 1,500 | 1,505,040 | ||||
Fairfield Cnty Hosp Rev (Fairfield Med Ctr Proj) RADIAN | 1,000 | 978,210 | ||||
Franklin Cnty (OCLC Online Computer Library Ctr) | 2,800 | 2,843,176 | ||||
Franklin Cnty MFHR (Agler Green) AMT GNMA | 770 | 767,028 | ||||
5.80%, 5/20/44 | 1,150 | 1,138,063 | ||||
Greater Cleveland Regl Transp Auth MBIA | 1,350 | 1,375,947 | ||||
Hamilton City Sch Dist MBIA | 1,000 | 1,017,390 | ||||
Hamilton Cnty Conv Fac Auth Rev FGIC | 1,330 | 1,353,182 | ||||
Hamilton Cnty Hlth Fac (Twin Towers) | 1,775 | 1,826,936 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 65 |
Ohio Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Lucas Cnty Hlth Fac (Altenheim Proj) GNMA | $ | 3,200 | $ | 3,227,520 | ||
Madeira City Sch Dist GO MBIA | 2,665 | 2,957,350 | ||||
Oak Hills Ohio Loc Sch Dist FSA | 1,000 | 1,022,930 | ||||
Ohio HFA SFMR (Mtg Rev) AMT GNMA | 1,700 | 1,637,474 | ||||
GNMA | 150 | 145,783 | ||||
GNMA | 860 | 862,890 | ||||
Ohio St Bldg Auth (Adult Correctional Proj) MBIA | 2,975 | 3,060,263 | ||||
Ohio St Bldg Auth (St Fac-Admin Bldg Fd Proj) FSA | 1,500 | 1,538,235 | ||||
Ohio St GO | 3,000 | 3,109,740 | ||||
Ohio St Hgr Ed Fac Comnty (Denison Univ Proj) | 3,440 | 3,532,146 | ||||
Ohio St Univ MBIA | 1,950 | 2,007,115 | ||||
Ohio Swr & Solid Waste Disp Fac (Anheuser-Busch) AMT | 3,000 | 3,025,020 | ||||
Ohio Wtr Dev Auth (Anheuser-Busch) AMT | 2,250 | 2,336,220 | ||||
Pinnacle Comnty Fin Auth | 2,070 | 1,965,403 | ||||
Port Auth of Columbiana Cnty Swr (Apex Enviro LLC) AMT | 500 | 500,240 |
66 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Ohio Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Princeton Sch Dist MBIA | $ | 1,600 | $ | 1,766,288 | ||
Riversouth Auth Rev (Area Redevelopment) | 2,000 | 2,106,750 | ||||
Riversouth Auth Rev (Area Redevevelopment) | 3,590 | 3,679,283 | ||||
Steubenville Hosp Rev (Trinity Hlth) | 2,500 | 2,748,650 | ||||
Toledo Lucas Cnty Port Auth (CSX Transp) | 1,270 | 1,336,091 | ||||
Toledo Lucas Cnty Port Auth Rev (Cargill, Inc. Project) Series 04B | 2,500 | 2,512,750 | ||||
Toledo Lucas Cnty Port Auth Rev (Crocker Park Proj) | 2,000 | 1,837,140 | ||||
Toledo Sch Dist FGIC | 2,940 | 2,989,069 | ||||
Univ of Cincinnati COP (Univ Cincinnati Ctr Proj) MBIA | 4,470 | 4,534,189 | ||||
Youngstown City Sch Dist FSA | 2,155 | 2,198,876 | ||||
130,041,742 | ||||||
California – 1.1% | ||||||
California St GO | 5 | 5,072 | ||||
Series 04 | 1,000 | 1,009,220 | ||||
California Statewide Comnty Dev Auth (Catholic Healthcare Ctr) MBIA | 800 | 800,000 | ||||
1,814,292 | ||||||
Florida – 2.1% | ||||||
Collier Cnty IDR (Southern St Util) AMT | 200 | 200,378 | ||||
Crossings at Fleming Island CDD (Eagle Harbor) | 2,000 | 2,025,640 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 67 |
Ohio Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Double Branch CDD (Oakleaf Village) | $ | 920 | $ | 944,812 | ||
Hammock Bay CDD (Spl Assmt) | 300 | 289,893 | ||||
3,460,723 | ||||||
Georgia – 0.3% | ||||||
Atlanta Tax Alloc (Eastside Proj) | 500 | 438,475 | ||||
Illinois – 0.9% | ||||||
Antioch Village Spl Svc Area (Deercrest Proj) | 977 | 855,461 | ||||
Plano Spl Svc Area No. 3 Spl Tax (Lakewood Springs Proj) | 565 | 525,772 | ||||
1,381,233 | ||||||
North Carolina – 0.2% | ||||||
Charlotte-Mecklenburg Hosp Auth AMBAC | 325 | 325,000 | ||||
Pennsylvania – 0.2% | ||||||
Allegheny Cnty Hosp (West Pennsylvania Hlth Sys) | 425 | 377,115 | ||||
Puerto Rico – 10.4% | ||||||
Puerto Rico Conv Ctr Dist Auth Hotel Occupancy Rev AMBAC | 6,370 | 6,520,890 | ||||
Puerto Rico Elec Pwr Auth | 2,530 | 2,569,114 | ||||
Puerto Rico GO | 500 | 504,285 | ||||
Puerto Rico GO (Pub Impr) | 500 | 524,335 | ||||
Puerto Rico Govt Dev Bank (Sr Notes) | 500 | 524,940 | ||||
Puerto Rico Muni Fin Agy | 375 | 377,010 |
68 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Ohio Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Puerto Rico Tobacco Settlement Rev (Childrens Trust Fund) | $ | 4,000 | $ | 4,322,680 | ||
Univ of Puerto Rico Rev | 1,350 | 1,340,442 | ||||
16,683,696 | ||||||
Total Long-Term Municipal Bonds | 154,522,276 | |||||
Short-Term Municipal Notes – 2.4% | ||||||
Alaska – 0.3% | ||||||
Valdez Marine Term Rev (BP Pipelines, Inc. Proj) | 500 | 500,000 | ||||
Florida – 1.6% | ||||||
Brevard Cnty Hlth Fac Auth | 1,000 | 1,000,000 | ||||
Jacksonville Hlth Fac Auth Hosp Rev | 500 | 500,000 | ||||
Orange Cnty IDA (Catholic Charities Ctr) | 1,000 | 1,000,000 | ||||
2,500,000 | ||||||
Michigan – 0.2% | ||||||
Michigan Strategic Fund | 350 | 350,000 | ||||
Rhode Island – 0.3% | ||||||
Rhode Island Hlth & Ed Bldg Corp. | 500 | 500,000 | ||||
Total Short-Term Municipal Notes | 3,850,000 | |||||
Total Investments – 98.3% | ||||||
(cost $156,523,473) | 158,372,276 | |||||
Other assets less liabilities – 1.7% | 2,689,957 | |||||
Net Assets – 100.0% | $ | 161,062,233 | ||||
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | ||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | |||||||||
Merrill Lynch | $ | 900 | 7/12/08 | BMA | * | 3.8154 | % | $ | 6,931 | |||||
Merrill Lynch | 3,600 | 8/01/16 | BMA | * | 4.0710 | % | 269,819 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 69 |
Ohio Portfolio—Portfolio of Investments
(a) | Variable rate coupon, rate shown as of March 31, 2008. |
(b) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
† | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of March 31, 2008 and the aggregate market value of these securities amounted to $800,000 or 0.5% of total investments. |
As of March 31, 2008, the Portfolio held 52% of total investments in insured bonds (of this amount 19% represents the Portfolio’s holding in pre-refunded bonds). |
Glossary:
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
CDD – Community Development District
COP – Certificate of Participation
FGIC – Financial Guaranty Insurance Company
FSA – Financial Security Assurance Inc.
GNMA – Government National Mortgage Association
GO – General Obligation
HFA – Housing Finance Authority
IDA – Industrial Development Authority/Agency
IDR – Industrial Development Revenue
MBIA – Municipal Bond Investors Assurance
MFHR – Multi-Family Housing Revenue
RADIAN – Radian Group, Inc.
SFMR – Single Family Mortgage Revenue
See notes to financial statements.
70 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Ohio Portfolio—Portfolio of Investments
PENNSYLVANIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 98.3% | ||||||
Long-Term Municipal Bonds – 98.0% | ||||||
Pennsylvania – 75.5% | ||||||
Allegheny Cnty Hgr Ed (Thiel Coll) ACA | $ | 2,500 | $ | 2,367,200 | ||
Allegheny Cnty Hlth Fac (South Hills Hlth) | 1,555 | 1,691,591 | ||||
Allegheny Cnty Hlth Rev (Residential Res) | 1,540 | 1,734,425 | ||||
Allegheny Cnty Hosp (West Pennsylvania Hlth Sys) | 1,000 | 870,244 | ||||
Allegheny Cnty IDA (Residential Reserves Inc Proj) | 500 | 467,915 | ||||
Allegheny Cnty PCR (USX Corp.) | 2,680 | 2,552,780 | ||||
Allegheny Cnty Redev Auth Rev (Pittsburgh Mills Proj) | 1,500 | 1,403,775 | ||||
Allegheny Cnty San Auth Swr Rev MBIA | 7,490 | 7,623,022 | ||||
Butler Cnty FGIC | 1,625 | 1,798,989 | ||||
Chester Upland Sch Dist | 1,705 | 1,730,098 | ||||
Coatesville Sch Dist | 6,500 | 6,760,000 | ||||
Crawford Cnty Hlth Fac (Westbury Methodist) | 1,600 | 1,471,120 | ||||
Delaware Cnty Hgr Ed (Eastern Coll) | 2,500 | 2,373,325 | ||||
Ephrata Area Sch Dist (Prerefunded) FGIC | 1,000 | 1,099,720 | ||||
Harrisburg Arpt Auth (Susquehanna Arpt Proj) AMT | 3,490 | 3,187,312 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 71 |
Pennsylvania Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Lancaster Swr Auth Rev MBIA | $ | 1,330 | $ | 1,366,708 | ||
Lehigh Northampton Arpt Auth MBIA | 4,400 | 4,468,508 | ||||
Lycoming Cnty Hgr Ed (Coll of Technology) AMBAC | 2,250 | 2,273,738 | ||||
McKean Cnty Hosp Auth Rev (Bradford Hosp Proj) ACA | 1,205 | 1,104,816 | ||||
Meadville GO XLCA | 3,080 | 3,101,036 | ||||
Montgomery Cnty Hgr Ed (Beaver Coll) RADIAN | 6,000 | 6,226,560 | ||||
Montgomery Cnty Hosp Rev (Abington Mem Hosp) | 3,000 | 2,842,710 | ||||
Montgomery Cnty IDA (Whitemarsh Continuing Care Ret Comnty) | 415 | 402,695 | ||||
New Wilmington Muni Auth RADIAN | 1,040 | 974,449 | ||||
Pennsylvania Econ Dev Auth (30th St Station ) AMT ACA | 2,085 | 1,958,691 | ||||
Pennsylvania Econ Dev Auth (Amtrak) AMT | 3,000 | 3,012,060 | ||||
Pennsylvania Hgr Ed (Dickinson Coll) RADIAN | 1,000 | 947,790 | ||||
Pennsylvania Hgr Ed Fac Auth Rev (Univ Hlth Sys) AMBAC | 2,000 | 2,095,220 | ||||
Pennsylvania Hgr Ed Fac Auth Rev (UPMC Hlth Sys) | 2,405 | 2,501,513 | ||||
Philadelphia Auth IDR (Leadership Learning Partners) | 350 | 306,786 |
72 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Pennsylvania Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Philadelphia Gas Wks Rev ASSURED GTY | $ | 1,015 | $ | 1,069,069 | ||
Philadelphia IDA Lease Rev FSA | 8,000 | 8,748,720 | ||||
Philadelphia Sch Dist Lease Rev FSA | 5,000 | 5,523,950 | ||||
Pittsburgh GO FSA | 5,000 | 5,506,250 | ||||
Pittsburgh Pub Pkg Auth Pkg Rev FGIC | 2,435 | 2,524,194 | ||||
Pittsburgh Urban Redev Auth SFMR (Mtg Rev) AMT FHA | 790 | 794,669 | ||||
Potter Cnty Hosp Rev (Charles Cole Mem) RADIAN | 4,340 | 4,371,986 | ||||
South Ctr Gen Auth Rev (Wellspan Hlth) MBIA | 795 | 855,309 | ||||
South Ctr Gen Auth Rev (Wellspan Hlth) (Prerefunded) MBIA | 3,905 | 4,254,927 | ||||
South Ctrl Gen Auth Rev (Hanover Hosp Inc.) RADIAN | 1,570 | 1,523,308 | ||||
St Pub Sch Bldg Auth Sch Rev (Colonial Northampton Inter Unit 20) FGIC | 2,025 | 2,032,108 | ||||
Wilkes-Barre Fin Auth (Wilkes Univ Proj) | 510 | 494,562 | ||||
108,413,848 | ||||||
California – 0.5% | ||||||
California Statewide Comnty Dev Auth (Catholic Healthcare Ctr) MBIA | 725 | 725,000 | ||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 73 |
Pennsylvania Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Florida – 3.2% | ||||||
Collier Cnty IDR (Southern St Util) AMT | $ | 400 | $ | 400,756 | ||
Crossings at Fleming Island CDD (Eagle Harbor) | 2,000 | 2,025,640 | ||||
Double Branch CDD (Oakleaf Village) | 1,015 | 1,042,374 | ||||
Hammock Bay CDD (Spl Assmt) | 300 | 289,893 | ||||
Northern Palm Beach Assmt Dist (Unit Dev 27B) | 910 | 885,958 | ||||
4,644,621 | ||||||
Guam – 0.7% | ||||||
Guam Govt (Wtr & Waste Sys Rev) | 500 | 481,255 | ||||
Guam Int’l Arpt Auth MBIA | 500 | 518,075 | ||||
999,330 | ||||||
Illinois – 3.6% | ||||||
Antioch Village Spl Svc Area (Deercrest Proj) | 1,000 | 875,600 | ||||
Chicago Brd Of Ed GO AMBAC | 3,000 | 3,000,000 | ||||
Plano Spl Svc Area No. 3 Spl Tax (Lakewood Springs Proj) | 465 | 432,715 | ||||
Yorkville CFD (Raintree Village) | 800 | 810,664 | ||||
5,118,979 | ||||||
North Carolina – 1.3% | ||||||
Charlotte-Mecklenburg Hosp Auth AMBAC | 1,950 | 1,950,000 | ||||
Puerto Rico – 9.9% | ||||||
Puerto Rico Elec Pwr Auth Rev | 800 | 804,648 |
74 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Pennsylvania Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Puerto Rico GO (Pub Impr) | $ | 500 | $ | 501,285 | ||
Series 01A | 500 | 524,335 | ||||
Puerto Rico Hwy & Transp Auth FGIC | 3,335 | 3,491,678 | ||||
FSA | 4,000 | 4,203,008 | ||||
Puerto Rico Hwy & Transp Auth Rev FGIC | 3,195 | 3,345,101 | ||||
Puerto Rico Muni Fin Agy | 300 | 301,608 | ||||
Puerto Rico Pub Bldg Auth | 345 | 354,529 | ||||
Univ of Puerto Rico Rev | 655 | 650,363 | ||||
14,176,555 | ||||||
Texas – 0.6% | ||||||
Camino Real Regl Mobility Auth | 845 | 848,084 | ||||
Virgin Islands – 1.9% | ||||||
Virgin Islands Pub Fin Auth FSA | 675 | 733,177 | ||||
5.25%, 10/01/15 - 10/01/17 | 1,840 | 1,994,744 | ||||
2,727,921 | ||||||
Washington – 0.8% | ||||||
Washington Hlth Care Fac Auth (Catholic Hlth Initiatives) FGIC | 1,100 | 1,100,000 | ||||
Total Long-Term Municipal Bonds | 140,704,338 | |||||
Short-Term Municipal Notes – 0.3% | ||||||
North Carolina – 0.3% | ||||||
North Carolina Med Care Commission | 500 | 500,000 | ||||
Total Investments – 98.3% | 141,204,338 | |||||
Other assets less liabilities – 1.7% | 2,392,345 | |||||
Net Assets – 100.0% | $ | 143,596,683 | ||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 75 |
Pennsylvania Portfolio—Portfolio of Investments
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | ||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | |||||||||
Merrill Lynch | $ | 700 | 7/12/08 | BMA | * | 3.8154 | % | $ | 5,390 |
(a) | Variable rate coupon, rate shown as of March 31, 2008. |
(b) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
† | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of March 31, 2008 and the aggregate market value of these securities amounted to $4,825,000 or 3.4% of total investments. |
As of March 31, 2008, the Portfolio held 72% of total investments in insured bonds (of this amount 22% represents the Portfolio’s holding in pre-refunded bonds). 24% of the Portfolio’s insured bonds were insured by FSA. |
Glossary:
ACA – ACA Capital
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
ASSURED GTY – Assured Guaranty
CDD – Community Development District
CFD – Community Facilities District
FGIC – Financial Guaranty Insurance Company
FHA – Federal Housing Administration
FSA – Financial Security Assurance Inc.
GO – General Obligation
IDA – Industrial Development Authority/Agency
IDR – Industrial Development Revenue
MBIA – Municipal Bond Investors Assurance
PCR – Pollution Control Revenue Bond
RADIAN – Radian Group, Inc.
SFMR – Single Family Mortgage Revenue
XLCA – XL Capital Assurance Inc.
See notes to financial statements.
76 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Pennsylvania Portfolio—Portfolio of Investments
VIRGINIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2008 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||
MUNICIPAL OBLIGATIONS – 97.5% | ||||||
Long-Term Municipal Bonds – 96.0% | ||||||
Virginia – 82.2% | ||||||
Albemarle Cnty Ed Fac (The Convent Sch) | $ | 4,260 | $ | 4,485,695 | ||
Arlington Cnty IDA Rev Sew Rev (Ogden Martin) AMT FSA | 2,295 | 2,335,208 | ||||
Arlington Cnty MFHR (Arlington View Terrace) AMT FNMA | 1,550 | 1,552,232 | ||||
Arlington IDA Hosp Rev (Arlington Hlth Sys) (Prerefunded) | 5,900 | 6,447,107 | ||||
Bell Creek CDD | 200 | 190,038 | ||||
Broad Street CDD (Parking Fac) | 1,500 | 1,563,720 | ||||
Celebrate North CDD Spl Assmt Rev | 1,250 | 1,233,637 | ||||
Chesterfield Cnty (Elec & Pwr Co) | 3,800 | 3,998,094 | ||||
Dinwiddie Cnty IDA (Lease Rev) MBIA | 3,200 | 3,261,696 | ||||
Dulles Town CDA (Dulles Town Ctr Proj) | 1,990 | 1,899,236 | ||||
Fairfax Cnty Econ Dev Auth | 1,000 | 921,640 | ||||
Fairfax Wtr Auth Rev | 3,380 | 3,400,652 | ||||
Greater Richmond Hotel Tax Rev (Conv Ctr Proj) | 6,000 | 6,570,540 | ||||
Hampton Conv Ctr Rev AMBAC | 5,150 | 5,142,069 |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 77 |
Virginia Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Hampton GO MBIA | $ | 6,105 | $ | 6,468,003 | ||
Hampton Roads Sanitation Dist | 5,050 | 5,185,946 | ||||
Harrisonburg IDA AMBAC | 7,850 | 8,095,296 | ||||
Harrisonburg MFHR (Greens of Salem Run) AMT FSA | 1,110 | 1,117,326 | ||||
James City Cnty Econ Dev Auth FSA | 4,385 | 4,595,524 | ||||
James City Cnty SWR (Anheuser Busch Proj) AMT | 4,200 | 4,215,162 | ||||
Newport Comnty Dev Auth (Spl Assmt) | 1,000 | 882,720 | ||||
Newport News Hlth Care Fac (Mennowood) GNMA | 2,580 | 2,602,498 | ||||
Newport News MFHR (Walker Village Proj) AMT GNMA | 1,880 | 1,839,148 | ||||
5.65%, 3/20/44 | 1,660 | 1,630,137 | ||||
Norfolk Arpt Auth Rev (Air Cargo) AMT | 985 | 973,347 | ||||
Norfolk Arpt Auth Rev AMT FGIC | 10,000 | 10,052,300 | ||||
Northwestern Regl Jail Auth Fac Rev MBIA 5.00%, 7/01/25 | 1,500 | 1,526,325 | ||||
Pocahontas Pkwy Assoc Toll Rd Rev (Cap Appreciation) Sr (Prerefunded) | 750 | 512,235 | ||||
Portsmouth GO (Prerefunded Ref & Pub Util) FGIC | 1,405 | 1,412,390 | ||||
Portsmouth GO (Unrefunded Ref & Pub Util) FGIC | 95 | 95,038 |
78 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Virginia Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Prince William MFHR (Woodwind Gables) AMT AMBAC | $ | 2,860 | $ | 2,685,311 | ||
Reynolds Crossing CDD | 2,150 | 1,905,050 | ||||
Richmond FSA | 2,500 | 2,614,650 | ||||
Suffolk MBIA | 3,000 | 3,166,260 | ||||
Upper Occoquan Sewage Auth Rev FSA | 2,500 | 2,574,825 | ||||
Virginia Beach MFHR (Beth Sholom Terrace) GNMA | 2,900 | 2,850,265 | ||||
Virginia Beach Wtr & Swr Rev | 2,000 | 2,009,920 | ||||
Virginia Biotechnology Auth (Consolidated Laboratories Proj) | 4,170 | 4,304,274 | ||||
Virginia Coll Bldg Auth | 1,220 | 1,257,839 | ||||
Virginia Coll Bldg Auth (Pub Hgr Ed Fin Prog) | 5,615 | 6,133,658 | ||||
Series 05A | 5,890 | 6,374,217 | ||||
Virginia HDA MFHR (Rental Hsg) AMT | 5,000 | 5,007,050 | ||||
Series 99 | 5,525 | 5,577,211 | ||||
Virginia HDA SFMR (Mtg Rev) AMT | 3,155 | 3,165,727 | ||||
Virginia Port Auth Rev (Newport News) AMT | 1,000 | 976,970 | ||||
5.125%, 7/01/24 | 4,000 | 4,045,480 | ||||
Virginia Small Business Fin Auth | 710 | 672,207 | ||||
Watkins Centre Comnty | 600 | 546,750 | ||||
150,072,623 | ||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 79 |
Virginia Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
California – 0.5% | ||||||
California Statewide Comnty Dev Auth (Catholic Healthcare Ctr) MBIA | $ | 900 | $ | 900,000 | ||
Georgia – 0.2% | ||||||
Atlanta Tax Alloc (Eastside Proj) | 500 | 438,475 | ||||
Illinois – 2.7% | ||||||
Illinois Fin Auth (Advocate Hlthcare Network) AMBAC | 3,500 | 3,500,000 | ||||
Plano Spl Svc Area No. 3 Spl Tax (Lakewood Springs Proj) | 465 | 432,715 | ||||
Yorkville CFD (Raintree Village) | 1,000 | 1,013,330 | ||||
4,946,045 | ||||||
North Carolina – 0.6% | ||||||
Charlotte-Mecklenburg Hosp Auth AMBAC | 1,075 | 1,075,000 | ||||
Puerto Rico – 9.8% | ||||||
Puerto Rico Elec Pwr Auth | 800 | 812,368 | ||||
MBIA | 5,000 | 5,409,750 | ||||
Puerto Rico GO (Pub Impr) | 500 | 524,335 | ||||
Puerto Rico Govt Dev Bank (Sr Notes) | 500 | 524,940 | ||||
Puerto Rico HFA (Cap Fndtn Program) | 4,870 | 4,802,307 | ||||
Puerto Rico Hwy & Transp Auth FGIC | 1,840 | 1,926,443 | ||||
Puerto Rico Hwy & Transp Auth Rev FGIC | 1,760 | 1,842,685 | ||||
Puerto Rico Muni Fin Agy | 340 | 341,822 |
80 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Virginia Portfolio—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||
Univ of Puerto Rico Rev | $ | 1,740 | $ | 1,727,681 | ||
17,912,331 | ||||||
Total Long-Term Municipal Bonds | 175,344,474 | |||||
Short-Term Municipal Notes – 1.5% | ||||||
Virginia – 0.7% | ||||||
Montgomery Cnty IDA | 500 | 500,000 | ||||
Richmond IDA | 800 | 800,000 | ||||
1,300,000 | ||||||
Colorado – 0.8% | ||||||
Colorado Ed & Cultural Fac | 1,500 | 1,500,000 | ||||
Total Short-Term Municipal Notes | 2,800,000 | |||||
Total Investments – 97.5% | 178,144,474 | |||||
Other assets less liabilities – 2.5% | 4,520,027 | |||||
Net Assets – 100.0% | $ | 182,664,501 | ||||
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type | ||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Portfolio | Payments received by the Portfolio | Unrealized Appreciation/ (Depreciation) | |||||||||
Citibank | $ | 7,000 | 12/01/17 | BMA | * | 3.7920 | % | $ | 375,964 | |||||
Merrill Lynch | 900 | 7/12/08 | BMA | * | 3.8154 | % | 6,931 |
(a) | Variable rate coupon, rate shown as of March 31, 2008. |
(b) | Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
* | Variable interest rate based on the Securities Industry & Financial Markets Association, formerly the Bond Market Association (BMA). |
† | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of March 31, 2008 and the aggregate market value of these securities amounted to $4,400,000 or 2.5% of total investments. |
As of March 31, 2008, the Portfolio held 38% of total investments in insured bonds (of this amount 1% represents the Portfolio’s holding in pre-refunded bonds). |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 81 |
Virginia Portfolio—Portfolio of Investments
Glossary:
AMBAC – American Bond Assurance Corporation
AMT – Alternative Minimum Tax (subject to)
CDA – Community Development Administration
CDD – Community Development District
CFD – Community Facilities District
FGIC – Financial Guaranty Insurance Company
FNMA – Federal National Mortgage Association
FSA – Financial Security Assurance Inc.
GNMA – Government National Mortgage Association
GO – General Obligation
HDA – Housing Development Authority
HFA – Housing Finance Authority
IDA – Industrial Development Authority/Agency
MBIA – Municipal Bond Investors Assurance
MFHR – Multi-Family Housing Revenue
SFMR – Single Family Mortgage Revenue
SWR – Solid Waste Revenue
See notes to financial statements.
82 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Virginia Portfolio—Portfolio of Investments
STATEMENT OF ASSETS & LIABILITIES
March 31, 2008 (unaudited)
Arizona | Florida | |||||||
Assets | ||||||||
Investments in securities, at value | $ | 201,547,242 | $ | 175,799,573 | ||||
Cash | 242,719 | – 0 | – | |||||
Unrealized appreciation of interest rate swap contracts | 64,940 | 493,824 | ||||||
Receivable for shares of beneficial interest sold | 2,750,687 | 1,038,769 | ||||||
Interest receivable | 2,697,143 | 3,275,088 | ||||||
Receivable for investment securities sold | 1,633,824 | 10,000 | ||||||
Total assets | 208,936,555 | 180,617,254 | ||||||
Liabilities | ||||||||
Due to custodian | – 0 | – | 968,527 | |||||
Unrealized depreciation of interest rate swap contracts | 59,827 | – 0 | – | |||||
Payable for shares of beneficial interest redeemed | 2,376,033 | 2,278,171 | ||||||
Dividends payable | 179,352 | 169,988 | ||||||
Distribution fee payable | 83,619 | 75,418 | ||||||
Advisory fee payable | 47,948 | 38,810 | ||||||
Administrative fee payable | 20,911 | 19,144 | ||||||
Transfer Agent fee payable | 3,205 | 5,952 | ||||||
Accrued expenses and other liabilities | 117,885 | 113,954 | ||||||
Total liabilities | 2,888,780 | 3,669,964 | ||||||
Net Assets | $ | 206,047,775 | $ | 176,947,290 | ||||
Composition of Net Assets | ||||||||
Shares of beneficial interest, at par | $ | 191,428 | $ | 178,651 | ||||
Additional paid-in capital | 205,014,039 | 182,900,375 | ||||||
Distributions in excess of net investment income | (169,541 | ) | (251,056 | ) | ||||
Accumulated net realized loss on investment transactions | (653,892 | ) | (5,727,727 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 1,665,741 | (152,953 | ) | |||||
$ | 206,047,775 | $ | 176,947,290 | |||||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
Arizona Portfolio | Net Assets | Shares Outstanding | Net Asset Value | ||||||
Class A | $ | 154,963,993 | 14,391,073 | $ | 10.77 | * | |||
Class B | $ | 25,151,675 | 2,339,786 | $ | 10.75 | ||||
Class C | $ | 25,932,107 | 2,411,977 | $ | 10.75 | ||||
Florida Portfolio | |||||||||
Class A | $ | 128,009,596 | 12,925,744 | $ | 9.90 | * | |||
Class B | $ | 17,662,836 | 1,783,160 | $ | 9.91 | ||||
Class C | $ | 31,274,858 | 3,156,191 | $ | 9.91 | ||||
* | The maximum offering price per share for Class A shares of Arizona Portfolio and Florida Portfolio were $11.25 and $10.34, respectively, which reflects a sales charge of 4.25%. |
See notes to financial statements. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 83 |
Statement of Assets & Liabilities
Massachusetts | Michigan | |||||||
Assets | ||||||||
Investments in securities, at value | $ | 138,070,384 | $ | 112,202,771 | ||||
Cash | 870,853 | 138,438 | ||||||
Unrealized appreciation of interest rate swap contracts | 854,487 | 513,514 | ||||||
Receivable for investment securities sold | 2,751,244 | 3,625,200 | ||||||
Interest receivable | 1,736,164 | 2,054,604 | ||||||
Receivable for shares of beneficial interest sold | 1,586,306 | 539,152 | ||||||
Total assets | 145,869,438 | 119,073,679 | ||||||
Liabilities | ||||||||
Payable for shares of beneficial interest redeemed | 754,918 | 577,397 | ||||||
Payable for investment securities purchased | 500,977 | – 0 | – | |||||
Dividends payable | 110,348 | 94,208 | ||||||
Distribution fee payable | 67,001 | 60,835 | ||||||
Custodian fee payable | 58,705 | 53,667 | ||||||
Advisory fee payable | 25,845 | 46,980 | ||||||
Administrative fee payable | 17,235 | – 0 | – | |||||
Transfer Agent fee payable | 3,307 | 7,571 | ||||||
Accrued expenses and other liabilities | 67,429 | 69,997 | ||||||
Total liabilities | 1,605,765 | 910,655 | ||||||
Net Assets | $ | 144,263,673 | $ | 118,163,024 | ||||
Composition of Net Assets | ||||||||
Shares of beneficial interest, at par | $ | 134,170 | $ | 111,381 | ||||
Additional paid-in capital | 149,253,580 | 115,092,841 | ||||||
Distributions in excess of net investment income | (215,793 | ) | (154,782 | ) | ||||
Accumulated net realized gain (loss) on investment transactions | (8,770,586 | ) | 90,578 | |||||
Net unrealized appreciation of investments | 3,862,302 | 3,023,006 | ||||||
$ | 144,263,673 | $ | 118,163,024 | |||||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
Massachusetts Portfolio | Net Assets | Shares Outstanding | Net Asset Value | ||||||
Class A | $ | 91,668,169 | 8,519,508 | $ | 10.76 | * | |||
Class B | $ | 18,145,281 | 1,689,917 | $ | 10.74 | ||||
Class C | $ | 34,450,223 | 3,207,580 | $ | 10.74 | ||||
Michigan Portfolio | |||||||||
Class A | $ | 65,962,848 | 6,213,079 | $ | 10.62 | * | |||
Class B | $ | 15,301,522 | 1,443,970 | $ | 10.60 | ||||
Class C | $ | 36,898,654 | 3,481,017 | $ | 10.60 | ||||
* | The maximum offering price per share for Class A shares of Massachusetts Portfolio and Michigan Portfolio were $11.24 and $11.09, respectively, which reflects a sales charge of 4.25%. |
See notes to financial statements. |
84 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Assets & Liabilities
Minnesota | New Jersey | |||||||
Assets | ||||||||
Investments in securities, at value | $ | 94,406,657 | $ | 152,427,945 | ||||
Cash | 359 | 666,137 | ||||||
Unrealized appreciation of interest rate swap contracts | 266,175 | 247,223 | ||||||
Receivable for investment securities sold | 2,544,292 | 3,932,327 | ||||||
Interest receivable | 1,301,112 | 2,160,728 | ||||||
Receivable for shares of beneficial interest sold | 217,100 | 1,519,259 | ||||||
Total assets | 98,735,695 | 160,953,619 | ||||||
Liabilities | ||||||||
Payable for shares of beneficial interest redeemed | 198,844 | 984,631 | ||||||
Dividends payable | 80,532 | 138,867 | ||||||
Custodian fee payable | 49,755 | 56,453 | ||||||
Distribution fee payable | 35,578 | 70,999 | ||||||
Audit fee payable | 29,965 | 27,012 | ||||||
Advisory fee payable | 26,787 | 39,481 | ||||||
Transfer Agent fee payable | 2,483 | 6,768 | ||||||
Payable for investment securities purchased | – 0 | – | 300,000 | |||||
Administrative fee payable | – 0 | – | 16,437 | |||||
Accrued expenses and other liabilities | 31,062 | 44,201 | ||||||
Total liabilities | 455,006 | 1,684,849 | ||||||
Net Assets | $ | 98,280,689 | $ | 159,268,770 | ||||
Composition of Net Assets | ||||||||
Shares of beneficial interest, at par | $ | 98,756 | $ | 167,109 | ||||
Additional paid-in capital | 97,947,619 | 169,537,450 | ||||||
Distributions in excess of net investment income | (115,952 | ) | (180,822 | ) | ||||
Accumulated net realized loss on investment transactions | (1,554,514 | ) | (12,473,617 | ) | ||||
Net unrealized appreciation of investments | 1,904,780 | 2,218,650 | ||||||
$ | 98,280,689 | $ | 159,268,770 | |||||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
Minnesota Portfolio | Net Assets | Shares Outstanding | Net Asset Value | ||||||
Class A | $ | 79,746,645 | 8,014,126 | $ | 9.95 | * | |||
Class B | $ | 4,716,726 | 474,147 | $ | 9.95 | ||||
Class C | $ | 13,817,318 | 1,387,372 | $ | 9.96 | ||||
New Jersey Portfolio | |||||||||
Class A | $ | 107,870,208 | 11,319,376 | $ | 9.53 | * | |||
Class B | $ | 19,072,035 | 2,001,150 | $ | 9.53 | ||||
Class C | $ | 32,326,527 | 3,390,424 | $ | 9.53 | ||||
* | The maximum offering price per share for Class A shares of Minnesota Portfolio and New Jersey Portfolio were $10.39 and $9.95, respectively, which reflects a sales charge of 4.25%. |
See notes to financial statements. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 85 |
Statement of Assets & Liabilities
Ohio | Pennsylvania | |||||||
Assets | ||||||||
Investments in securities, at value | $ | 158,372,276 | $ | 141,204,338 | ||||
Cash | 201,819 | 87,761 | ||||||
Unrealized appreciation of interest rate swap contracts | 276,750 | 5,390 | ||||||
Interest receivable | 2,614,383 | 2,287,003 | ||||||
Receivable for shares of beneficial interest sold | 664,719 | 796,651 | ||||||
Receivable for investment securities sold | 60,000 | 350,000 | ||||||
Total assets | 162,189,947 | 144,731,143 | ||||||
Liabilities | ||||||||
Payable for shares of beneficial interest redeemed | 745,253 | 774,432 | ||||||
Dividends payable | 131,975 | 125,622 | ||||||
Distribution fee payable | 77,576 | 64,505 | ||||||
Custodian fee payable | 63,666 | 44,944 | ||||||
Advisory fee payable | 37,155 | 44,358 | ||||||
Administrative fee payable | 11,264 | 18,861 | ||||||
Transfer Agent fee payable | 1,805 | 7,068 | ||||||
Accrued expenses and other liabilities | 59,020 | 54,670 | ||||||
Total liabilities | 1,127,714 | 1,134,460 | ||||||
Net Assets | $ | 161,062,233 | $ | 143,596,683 | ||||
Composition of Net Assets | ||||||||
Shares of beneficial interest, at par | $ | 162,865 | $ | 139,981 | ||||
Additional paid-in capital | 164,566,383 | 142,911,587 | ||||||
Distributions in excess of net investment income | (153,055 | ) | (128,555 | ) | ||||
Accumulated net realized loss on investment transactions | (5,639,513 | ) | (1,900,837 | ) | ||||
Net unrealized appreciation of investments | 2,125,553 | 2,574,507 | ||||||
$ | 161,062,233 | $ | 143,596,683 | |||||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
Ohio Portfolio | Net Assets | Shares Outstanding | Net Asset Value | ||||||
Class A | $ | 98,957,971 | 10,003,899 | $ | 9.89 | * | |||
Class B | $ | 23,012,725 | 2,328,777 | $ | 9.88 | ||||
Class C | $ | 39,091,537 | 3,953,823 | $ | 9.89 | ||||
Pennsylvania Portfolio | |||||||||
Class A | $ | 97,269,986 | 9,482,169 | $ | 10.26 | * | |||
Class B | $ | 15,502,821 | 1,511,414 | $ | 10.26 | ||||
Class C | $ | 30,823,876 | 3,004,531 | $ | 10.26 | ||||
* | The maximum offering price per share for Class A shares of Ohio Portfolio and Pennsylvania Portfolio were $10.33 and $10.72, respectively, which reflects a sales charge of 4.25%. |
See notes to financial statements. |
86 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Assets & Liabilities
Virginia | ||||
Assets | ||||
Investments in securities, at value (cost $177,643,892) | $ | 178,144,474 | ||
Cash | 331,889 | |||
Unrealized appreciation of interest rate swap contracts | 382,895 | |||
Interest receivable | 2,240,293 | |||
Receivable for shares of beneficial interest sold | 1,684,240 | |||
Receivable for investment securities sold | 1,532,358 | |||
Total assets | 184,316,149 | |||
Liabilities | ||||
Payable for shares of beneficial interest redeemed | 1,267,745 | |||
Dividends payable | 154,321 | |||
Distribution fee payable | 78,662 | |||
Advisory fee payable | 38,391 | |||
Transfer Agent fee payable | 2,959 | |||
Accrued expenses and other liabilities | 109,570 | |||
Total liabilities | 1,651,648 | |||
Net Assets | $ | 182,664,501 | ||
Composition of Net Assets | ||||
Shares of beneficial interest, at par | $ | 173,631 | ||
Additional paid-in capital | 183,198,985 | |||
Undistributed net investment income | 95,154 | |||
Accumulated net realized loss on investment transactions | (1,686,746 | ) | ||
Net unrealized appreciation of investments | 883,477 | |||
$ | 182,664,501 | |||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
Virginia Portfolio | Net Assets | Shares Outstanding | Net Asset Value | ||||||
Class A | $ | 128,878,066 | 12,241,980 | $ | 10.53 | * | |||
Class B | $ | 16,732,379 | 1,592,313 | $ | 10.51 | ||||
Class C | $ | 37,054,056 | 3,528,778 | $ | 10.50 | ||||
* | The maximum offering price per share for Class A shares of Virginia Portfolio was $11.00 which reflects a sales charge of 4.25%. |
See notes to financial statements. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 87 |
Statement of Assets & Liabilities
STATEMENT OF OPERATIONS
Six Months Ended March 31, 2008 (unaudited)
Arizona | Florida | |||||||
Investment Income | ||||||||
Interest | $ | 5,017,634 | $ | 4,851,107 | ||||
Expenses | ||||||||
Advisory fee (see Note B) | 466,047 | 419,999 | ||||||
Distribution fee—Class A | 223,260 | 198,897 | ||||||
Distribution fee—Class B | 159,189 | 106,356 | ||||||
Distribution fee—Class C | 132,270 | 163,984 | ||||||
Transfer agency—Class A | 23,804 | 25,357 | ||||||
Transfer agency—Class B | 7,836 | 6,749 | ||||||
Transfer agency—Class C | 4,602 | 6,636 | ||||||
Custodian | 71,573 | 69,166 | ||||||
Administrative | 47,000 | 49,000 | ||||||
Audit | 20,663 | 21,372 | ||||||
Legal | 16,057 | 13,673 | ||||||
Printing | 14,111 | 9,036 | ||||||
Registration | 9,378 | 8,289 | ||||||
Trustees’ fees | 1,856 | 2,196 | ||||||
Miscellaneous | 394 | 3,381 | ||||||
Total expenses | 1,198,040 | 1,104,091 | ||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (184,419 | ) | (185,483 | ) | ||||
Less: expense offset arrangement | (1,785 | ) | (1,371 | ) | ||||
Net expenses | 1,011,836 | 917,237 | ||||||
Net investment income | 4,005,798 | 3,933,870 | ||||||
Realized and Unrealized Gain (Loss) on Investment Transactions | ||||||||
Net realized gain (loss) on: | ||||||||
Investment transactions | (4,095 | ) | 224,672 | |||||
Futures contracts | (56,521 | ) | (50,306 | ) | ||||
Swap contracts | 141,506 | 155,068 | ||||||
Net change in unrealized | (3,091,534 | ) | (5,110,709 | ) | ||||
Swap contracts | (84,622 | ) | 201,104 | |||||
Net loss on investment transactions | (3,095,266 | ) | (4,580,171 | ) | ||||
Net Increase (Decrease) in Net Assets from Operations | $ | 910,532 | $ | (646,301 | ) | |||
See notes to financial statements.
88 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Operations
Massachusetts | Michigan | |||||||
Investment Income | ||||||||
Interest | $ | 3,311,072 | $ | 2,917,259 | ||||
Expenses | ||||||||
Advisory fee (see Note B) | 305,845 | 270,037 | ||||||
Distribution fee—Class A | 120,623 | 97,348 | ||||||
Distribution fee—Class B | 107,258 | 90,184 | ||||||
Distribution fee—Class C | 170,322 | 185,407 | ||||||
Transfer agency—Class A | 17,817 | 19,307 | ||||||
Transfer agency—Class B | 6,269 | 7,382 | ||||||
Transfer agency—Class C | 8,126 | 11,971 | ||||||
Custodian | 73,489 | 67,872 | ||||||
Administrative | 49,000 | 49,000 | ||||||
Audit | 20,525 | 20,805 | ||||||
Registration | 15,594 | 9,363 | ||||||
Legal | 14,852 | 13,671 | ||||||
Printing | 5,469 | 9,501 | ||||||
Trustees’ fees | 1,609 | 2,133 | ||||||
Miscellaneous | 322 | 4,746 | ||||||
Total expenses | 917,120 | 858,727 | ||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (164,039) | (58,164 | ) | |||||
Less: expense offset arrangement | (1,457 | ) | (1,566 | ) | ||||
Net expenses | 751,624 | 798,997 | ||||||
Net investment income | 2,559,448 | 2,118,262 | ||||||
Realized and Unrealized Gain (Loss) on Investment Transactions | ||||||||
Net realized gain (loss) on: | ||||||||
Investment transactions | 1,493 | 77,533 | ||||||
Futures contracts | (34,768 | ) | (31,661 | ) | ||||
Swap contracts | 131,190 | 106,689 | ||||||
Net change in unrealized | ||||||||
Investments | (1,169,593 | ) | (1,512,778 | ) | ||||
Swap contracts | 547,218 | 222,839 | ||||||
Net loss on investment transactions | (524,460 | ) | (1,137,378 | ) | ||||
Net Increase in Net Assets from Operations | $ | 2,034,988 | $ | 980,884 | ||||
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 89 |
Statement of Operations
Minnesota | New Jersey | |||||||
Investment Income | ||||||||
Interest | $ | 2,313,777 | $ | 4,074,646 | ||||
Expenses | ||||||||
Advisory fee (see Note B) | 215,093 | 360,771 | ||||||
Distribution fee—Class A | 113,835 | 156,445 | ||||||
Distribution fee—Class B | 29,092 | 116,427 | ||||||
Distribution fee—Class C | 69,440 | 163,802 | ||||||
Transfer agency—Class A | 18,766 | 27,742 | ||||||
Transfer agency—Class B | 1,992 | 9,330 | ||||||
Transfer agency—Class C | 3,802 | 9,361 | ||||||
Custodian | 65,730 | 66,875 | ||||||
Administrative | 49,000 | 49,000 | ||||||
Audit | 20,662 | 20,782 | ||||||
Legal | 15,420 | 14,033 | ||||||
Printing | 6,763 | 10,534 | ||||||
Registration | 4,260 | 6,050 | ||||||
Trustees’ fees | 1,887 | 1,990 | ||||||
Miscellaneous | 3,047 | 5,410 | ||||||
Total expenses | 618,789 | 1,018,552 | ||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (118,575 | ) | (122,958 | ) | ||||
Less: expense offset arrangement | (1,057 | ) | (1,943 | ) | ||||
Net expenses | 499,157 | 893,651 | ||||||
Net investment income | 1,814,620 | 3,180,995 | ||||||
Realized and Unrealized Gain (Loss) on Investment Transactions | ||||||||
Net realized gain (loss) on: | ||||||||
Investment transactions | 686 | 283,347 | ||||||
Futures contracts | (24,860 | ) | (40,983 | ) | ||||
Swap contracts | 73,930 | 117,783 | ||||||
Net change in unrealized | ||||||||
Investments | (1,098,561) | (4,134,789) | ||||||
Swap contracts | 114,401 | 71,704 | ||||||
Net loss on investment transactions | (934,404 | ) | (3,702,938 | ) | ||||
Net Increase (Decrease) in Net Assets from Operations | $ | 880,216 | $ | (521,943 | ) | |||
See notes to financial statements.
90 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Operations
Ohio | Pennsylvania | |||||||
Investment Income | ||||||||
Interest | $ | 3,921,902 | $ | 3,568,840 | ||||
Expenses | ||||||||
Advisory fee (see Note B) | 365,916 | 326,269 | ||||||
Distribution fee—Class A | 144,544 | 142,332 | ||||||
Distribution fee—Class B | 131,094 | 93,992 | ||||||
Distribution fee—Class C | 200,238 | 156,610 | ||||||
Transfer agency—Class A | 22,179 | 27,885 | ||||||
Transfer agency—Class B | 7,972 | 7,874 | ||||||
Transfer agency—Class C | 10,138 | 9,811 | ||||||
Custodian | 72,970 | 62,883 | ||||||
Administrative | 49,000 | 49,000 | ||||||
Audit | 20,987 | 20,805 | ||||||
Legal | 15,571 | 13,803 | ||||||
Printing | 10,286 | 8,019 | ||||||
Registration | 5,522 | 6,570 | ||||||
Trustees’ fees | 1,990 | 2,007 | ||||||
Miscellaneous | 4,522 | 2,834 | ||||||
Total expenses | 1,062,929 | 930,694 | ||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (137,946 | ) | (64,694 | ) | ||||
Less: expense offset arrangement | (1,877 | ) | (1,788 | ) | ||||
Net expenses | 923,106 | 864,212 | ||||||
Net investment income | 2,998,796 | 2,704,628 | ||||||
Realized and Unrealized Gain (Loss) on Investment Transactions | ||||||||
Net realized gain (loss) on: | ||||||||
Investment transactions | 454,324 | 48,476 | ||||||
Futures contracts | (40,983 | ) | (37,875 | ) | ||||
Swap contracts | 126,190 | 102,431 | ||||||
Net change in unrealized | ||||||||
Investments | (3,340,796) | (2,591,115) | ||||||
Swap contracts | 88,217 | (57,984 | ) | |||||
Net loss on investment transactions | (2,713,048 | ) | (2,536,067 | ) | ||||
Net Increase in Net Assets from Operations | $ | 285,748 | $ | 168,561 | ||||
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 91 |
Statement of Operations
Virginia | ||||
Investment Income | ||||
Interest | $ | 4,399,343 | ||
Expenses | ||||
Advisory fee (see Note B) | 408,249 | |||
Distribution fee—Class A | 185,987 | |||
Distribution fee—Class B | 105,629 | |||
Distribution fee—Class C | 181,633 | |||
Transfer agency—Class A | 24,158 | |||
Transfer agency—Class B | 5,769 | |||
Transfer agency—Class C | 7,822 | |||
Custodian | 71,498 | |||
Administrative | 49,000 | |||
Audit | 21,150 | |||
Legal | 15,212 | |||
Printing | 10,207 | |||
Registration | 4,681 | |||
Trustees’ fees | 1,847 | |||
Miscellaneous | 5,168 | |||
Total expenses | 1,098,010 | |||
Less: expenses waived and reimbursed by the | (242,049 | ) | ||
Less: expense offset arrangement | (1,680 | ) | ||
Net expenses | 854,281 | |||
Net investment income | 3,545,062 | |||
Realized and Unrealized Gain (Loss) on Investment Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 1,537 | |||
Futures contracts | (47,198 | ) | ||
Swap contracts | 143,000 | |||
Net change in unrealized appreciation/depreciation of: | ||||
Investments | (3,026,843) | |||
Swap contracts | 258,094 | |||
Net loss on investment transactions | (2,671,410 | ) | ||
Net Increase in Net Assets from Operations | $ | 873,652 | ||
See notes to financial statements.
92 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Operations
STATEMENT OF CHANGES IN NET ASSETS
Arizona | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 4,005,798 | $ | 7,983,394 | ||||
Net realized gain on investment transactions | 80,890 | 252,670 | ||||||
Net change in unrealized | (3,176,156 | ) | (2,923,882 | ) | ||||
Net increase in net assets from operations | 910,532 | 5,312,182 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (3,026,726 | ) | (5,586,668 | ) | ||||
Class B | (534,812 | ) | (1,503,920 | ) | ||||
Class C | (446,106 | ) | (858,229 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net increase (decrease) | 4,652,705 | (9,266,642 | ) | |||||
Total increase (decrease) | 1,555,593 | (11,903,277 | ) | |||||
Net Assets | ||||||||
Beginning of period | 204,492,182 | 216,395,459 | ||||||
End of period (including distributions in excess of net investment income of $(169,541) and $(167,695), respectively) | $ | 206,047,775 | $ | 204,492,182 | ||||
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 93 |
Statement of Changes in Net Assets
Florida | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 3,933,870 | $ | 8,448,091 | ||||
Net realized gain on investment transactions | 329,434 | 1,815,917 | ||||||
Net change in unrealized | (4,909,605 | ) | (5,072,460 | ) | ||||
Net increase (decrease) in net assets from operations | (646,301 | ) | 5,191,548 | |||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (2,954,810 | ) | (5,927,254 | ) | ||||
Class B | (397,756 | ) | (1,162,922 | ) | ||||
Class C | (615,541 | ) | (1,347,966 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net decrease | (10,613,080 | ) | (19,972,567 | ) | ||||
Total decrease | (15,227,488 | ) | (23,219,161 | ) | ||||
Net Assets | ||||||||
Beginning of period | 192,174,778 | 215,393,939 | ||||||
End of period (including distributions in excess of net investment income of $(251,056) and $(216,819), respectively) | $ | 176,947,290 | $ | 192,174,778 | ||||
See notes to financial statements.
94 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Changes in Net Assets
Massachusetts | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 2,559,448 | $ | 5,199,361 | ||||
Net realized gain on investment transactions | 97,915 | 706,630 | ||||||
Net change in unrealized | (622,375 | ) | (2,379,147 | ) | ||||
Net increase in net assets from operations | 2,034,988 | 3,526,844 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (1,673,242 | ) | (2,817,460 | ) | ||||
Class B | (371,612 | ) | (1,161,698 | ) | ||||
Class C | (591,882 | ) | (1,224,095 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net increase (decrease) | 10,835,977 | (6,636,425 | ) | |||||
Total increase (decrease) | 10,234,229 | (8,312,834 | ) | |||||
Net Assets | ||||||||
Beginning of period | 134,029,444 | 142,342,278 | ||||||
End of period (including distributions in excess of net investment income of $(215,793) and $(138,505), respectively) | $ | 144,263,673 | $ | 134,029,444 | ||||
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 95 |
Statement of Changes in Net Assets
Michigan | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 2,118,262 | $ | 4,518,570 | ||||
Net realized gain on investment transactions | 152,561 | 257,392 | ||||||
Net change in unrealized | (1,289,939 | ) | (1,714,414 | ) | ||||
Net increase in net assets from operations | 980,884 | 3,061,548 | ||||||
Dividends and Distributions to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (1,268,075 | ) | (2,417,113 | ) | ||||
Class B | (288,814 | ) | (857,768 | ) | ||||
Class C | (596,251 | ) | (1,252,927 | ) | ||||
Net realized gain on investments | ||||||||
Class A | (131,968 | ) | (259,975 | ) | ||||
Class B | (37,691 | ) | (121,587 | ) | ||||
Class C | (75,845 | ) | (165,841 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net decrease | (2,686,606 | ) | (12,725,856 | ) | ||||
Total decrease | (4,104,366 | ) | (14,739,519 | ) | ||||
Net Assets | ||||||||
Beginning of period | 122,267,390 | 137,006,909 | ||||||
End of period (including distributions in excess of net investment income of $(154,782) and $(119,904), respectively) | $ | 118,163,024 | $ | 122,267,390 | ||||
See notes to financial statements.
96 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Changes in Net Assets
Minnesota | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 1,814,620 | $ | 3,638,421 | ||||
Net realized gain on investment transactions | 49,756 | 109,122 | ||||||
Net change in unrealized | (984,160 | ) | (1,546,923 | ) | ||||
Net increase in net assets from operations | 880,216 | 2,200,620 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (1,509,857 | ) | (2,861,003 | ) | ||||
Class B | (95,130 | ) | (289,271 | ) | ||||
Class C | (227,544 | ) | (488,482 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net increase (decrease) | 5,443,824 | (2,156,615 | ) | |||||
Total increase (decrease) | 4,491,509 | (3,594,751 | ) | |||||
Net Assets | ||||||||
Beginning of period | 93,789,180 | 97,383,931 | ||||||
End of period (including distributions in excess of net investment income of $(115,952) and $(98,041), respectively) | $ | 98,280,689 | $ | 93,789,180 | ||||
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 97 |
Statement of Changes in Net Assets
New Jersey | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 3,180,995 | $ | 6,157,969 | ||||
Net realized gain on investment transactions | 360,147 | 786,793 | ||||||
Net change in unrealized appreciation/depreciation of investments | (4,063,085 | ) | (3,499,208 | ) | ||||
Net increase (decrease) in net assets from operations | (521,943 | ) | 3,445,554 | |||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (2,211,714 | ) | (3,710,850 | ) | ||||
Class B | (409,143 | ) | (1,267,491 | ) | ||||
Class C | (578,626 | ) | (1,167,676 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net increase | 1,546,243 | 4,248,623 | ||||||
Total increase (decrease) | (2,175,183 | ) | 1,548,160 | |||||
Net Assets | ||||||||
Beginning of period | 161,443,953 | 159,895,793 | ||||||
End of period (including distributions in excess of net investment income of $(180,822) and $(162,334), respectively) | $ | 159,268,770 | $ | 161,443,953 | ||||
See notes to financial statements.
98 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Changes in Net Assets
Ohio | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 2,998,796 | $ | 6,168,587 | ||||
Net realized gain on investment transactions | 539,531 | 405,349 | ||||||
Net change in unrealized appreciation/depreciation of investments | (3,252,579 | ) | (2,089,927 | ) | ||||
Net increase in net assets from operations | 285,748 | 4,484,009 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (1,926,468 | ) | (3,576,771 | ) | ||||
Class B | (431,535 | ) | (1,200,354 | ) | ||||
Class C | (660,314 | ) | (1,382,134 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net increase (decrease) | 470,493 | (8,727,511 | ) | |||||
Total decrease | (2,262,076 | ) | (10,402,761 | ) | ||||
Net Assets | ||||||||
Beginning of period | 163,324,309 | 173,727,070 | ||||||
End of period (including distributions in excess of net investment income of $(153,055) and $(133,534), respectively) | $ | 161,062,233 | $ | 163,324,309 | ||||
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 99 |
Statement of Changes in Net Assets
Pennsylvania | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 2,704,628 | $ | 5,348,311 | ||||
Net realized gain on investment transactions | 113,032 | 159,957 | ||||||
Net change in unrealized | (2,649,099 | ) | (2,145,660 | ) | ||||
Net increase in net assets from operations | 168,561 | 3,362,608 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (1,887,223 | ) | (3,357,673 | ) | ||||
Class B | (306,366 | ) | (912,588 | ) | ||||
Class C | (512,819 | ) | (1,055,053 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net increase (decrease) | 884,058 | (1,717,829 | ) | |||||
Total decrease | (1,653,789 | ) | (3,680,535 | ) | ||||
Net Assets | ||||||||
Beginning of period | 145,250,472 | 148,931,007 | ||||||
End of period (including distributions in excess of net investment income of $(128,555) and $(126,775), respectively) | $ | 143,596,683 | $ | 145,250,472 | ||||
See notes to financial statements.
100 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Statement of Changes in Net Assets
Virginia | ||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 3,545,062 | $ | 7,055,270 | ||||
Net realized gain on investment transactions | 97,339 | 1,088,302 | ||||||
Net change in unrealized | (2,768,749 | ) | (3,747,643 | ) | ||||
Net increase in net assets from operations | 873,652 | 4,395,929 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (2,589,050 | ) | (4,710,573 | ) | ||||
Class B | (366,273 | ) | (1,086,563 | ) | ||||
Class C | (633,096 | ) | (1,233,258 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net increase | 6,519,291 | 601,903 | ||||||
Total increase (decrease) | 3,804,524 | (2,032,562 | ) | |||||
Net Assets | ||||||||
Beginning of period | 178,859,977 | 180,892,539 | ||||||
End of period (including undistributed net investment income of $95,154 and $138,511, respectively) | $ | 182,664,501 | $ | 178,859,977 | ||||
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 101 |
Statement of Changes in Net Assets
NOTES TO FINANCIAL STATEMENTS
March 31, 2008 (unaudited)
NOTE A
Significant Accounting Policies
AllianceBernstein Municipal Income Fund II (the “Fund”), which is a Massachusetts Business Trust, is registered under the Investment Company Act of 1940, as an open-end management investment company. The Arizona Portfolio, Florida Portfolio, Massachusetts Portfolio, Michigan Portfolio, Minnesota Portfolio New Jersey Portfolio and Ohio Portfolio are each diversified Portfolios. Each of the other Portfolios is non-diversified. 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 the classes bear different distribution and transfer agency expenses. Each class has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at “fair value” as determined in accordance with procedures established by and under the general supervision of the Fund’s Board of Directors.
In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities exchange (other than securities listed on The NASDAQ Stock Market, Inc. (“NASDAQ”)) or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has
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been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price; the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market, (“OTC”) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, AllianceBernstein L.P. (the “Adviser”) may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because, most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities.
2. Taxes
It is each Portfolio’s policy 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 shareholders. Therefore, no provisions for federal income or excise taxes are required.
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Notes to Financial Statements
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. As described more fully in the prospectus for the Portfolios, each Portfolio may buy and sell securities from other affiliated funds in accordance with the requirements of Rule 17a-7 of the Investment Company Act of 1940. Each Portfolio has adopted procedures to ensure that all such transactions are done in accordance with the requirements of Rule 17a-7. 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. Class Allocations
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 for class specific expenses which are allocated to the respective class. Realized and unrealized gains and losses are allocated among the various share classes based on their respective net assets.
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 U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within 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 the investment advisory agreement, the Fund pays the Adviser an advisory fee at an annual rate of .45% of the first $2.5 billion, .40% of the next $2.5 billion and .35% in excess of $5 billion, of the average daily net assets of each Portfolio. Such fees are accrued daily and paid monthly.
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The Adviser has voluntarily agreed to waive its fees and bear certain expenses to the extent necessary to limit the total portfolio operating expenses on an annual basis as follows:
Portfolios | Class A | Class B | Class C | ||||||
Arizona | 0.78 | % | 1.48 | % | 1.48 | % | |||
Florida | 0.78 | % | 1.48 | % | 1.48 | % | |||
Massachusetts | 0.82 | % | 1.52 | % | 1.52 | % | |||
Michigan | 1.01 | % | 1.71 | % | 1.71 | % | |||
Minnesota | 0.90 | % | 1.60 | % | 1.60 | % | |||
New Jersey | 0.87 | % | 1.57 | % | 1.57 | % | |||
Ohio | 0.85 | % | 1.55 | % | 1.55 | % | |||
Pennsylvania | 0.95 | % | 1.65 | % | 1.65 | % | |||
Virginia | 0.72 | % | 1.42 | % | 1.42 | % |
For the six months ended March 31, 2008, the Adviser has voluntarily agreed to waive a portion of its advisory fees. The aggregate amounts of such fee waivers were as follows: Arizona Portfolio, $184,419; Florida Portfolio, $185,483; Massachusetts Portfolio, $164,039; Michigan Portfolio, $9,164; Minnesota Portfolio, $118,575; New Jersey Portfolio, $122,958; Ohio Portfolio, $137,946; Pennsylvania Portfolio, $64,694; and Virginia Portfolio, $193,049.
Pursuant to the advisory agreement, the Arizona, Florida, Massachusetts, New Jersey, Ohio and Pennsylvania Portfolios paid $47,000, $49,000, $49,000, $49,000, $49,000, and $49,000, respectively, to the Adviser representing the cost of certain legal and accounting services provided to these Portfolios by the Adviser for the six months ended March 31, 2008. Additionally, the Adviser voluntarily agreed to waive all such fees for these services for the Michigan, Minnesota and Virginia Portfolios in the amount of $49,000 for each of these Portfolios.
Each Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. For the six months ended March 31, 2008, such compensation retained by ABIS amounted to: Arizona Portfolio, $11,219; Florida Portfolio, $9,177; Massachusetts Portfolio, $9,958; Michigan Portfolio, $13,082; Minnesota Portfolio, $8,529; New Jersey Portfolio, $15,851; Ohio Portfolio, $13,632; Pennsylvania Portfolio, $14,391; and Virginia Portfolio, $11,910.
For the six months ended March 31, 2008, each Portfolio’s expenses were reduced under an expense offset arrangement with ABIS, as follows: Arizona Portfolio, by $1,785; Florida Portfolio, by $1,371; Massachusetts Portfolio, by $1,457; Michigan Portfolio, by $1,566; Minnesota Portfolio, by $1,057; New Jersey Portfolio, by $1,943; Ohio Portfolio, by $1,877; Pennsylvania Portfolio, by $1,788; and Virginia Portfolio, by $1,680.
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AllianceBernstein Investments, 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 retained front-end sales charges from sales of Class A shares and received contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares for each Portfolio for the six months ended March 31, 2008 as follows:
Front End Sales Charges Class A | Contingent Deferred Sales Charges | |||||||||||
Portfolio | Class A | Class B | Class C | |||||||||
Arizona | $ | 14,680 | $ | –0– | $ | 2,617 | $ | 1,685 | ||||
Florida | 6,587 | –0– | 1,076 | 1,906 | ||||||||
Massachusetts | 7,593 | 13,974 | 1,847 | 369 | ||||||||
Michigan | 3,751 | –0– | 2,176 | 2,423 | ||||||||
Minnesota | 3,423 | –0– | 2 | 614 | ||||||||
New Jersey | 5,199 | 9,633 | 2,512 | 45 | ||||||||
Ohio | 2,467 | –0– | 1,450 | 761 | ||||||||
Pennsylvania | 5,151 | –0– | 2,203 | 916 | ||||||||
Virginia | 8,974 | –0– | 2,511 | 1,124 |
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 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 incurred expenses in excess of the distribution costs reimbursed by each Portfolio as follows:
Portfolio | Class B | Class C | ||||
Arizona | $ | 3,625,776 | $ | 1,517,962 | ||
Florida | 3,949,279 | 2,927,138 | ||||
Massachusetts | 3,533,204 | 3,095,796 | ||||
Michigan | 3,274,297 | 3,857,304 | ||||
Minnesota | 2,683,731 | 2,405,050 | ||||
New Jersey | 5,433,164 | 3,136,552 | ||||
Ohio | 4,492,949 | 3,380,208 | ||||
Pennsylvania | 3,683,002 | 3,029,993 | ||||
Virginia | 3,709,262 | 2,452,920 |
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Notes to Financial Statements
While such costs may be recovered from each Portfolio in future periods so long as the Agreement is in effect, the rate of the distribution and servicing fees payable under the Agreement may not be increased without a shareholder vote. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of each Portfolio’s shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments and U.S. government securities) for the six months ended March 31, 2008 were as follows:
Portfolio | Purchases | Sales | ||||
Arizona | $ | 12,550,251 | $ | 10,999,560 | ||
Florida | 22,564,562 | 15,194,679 | ||||
Massachusetts | 8,576,543 | 6,690,150 | ||||
Michigan | 2,861,761 | 8,930,810 | ||||
Minnesota | 5,998,360 | 6,125,000 | ||||
New Jersey | 22,423,659 | 25,073,000 | ||||
Ohio | 6,574,025 | 10,823,000 | ||||
Pennsylvania | 8,498,485 | 6,749,500 | ||||
Virginia | 23,824,471 | 7,010,000 |
There were no purchases or sales of U.S. government and government agency obligations during the period.
At March 31, 2008, 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 (excluding swap contracts):
Portfolio | Tax Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||
Arizona | $ | 199,886,614 | $ | 4,614,858 | $ | 2,954,230 | $ | 1,660,628 | |||||
Florida | 176,446,350 | 3,016,997 | 3,663,774 | (646,777 | ) | ||||||||
Massachusetts | 135,062,569 | 4,636,575 | 1,628,760 | 3,007,815 | |||||||||
Michigan | 109,693,279 | 3,525,053 | 1,015,561 | 2,509,492 | |||||||||
Minnesota | 92,768,052 | 2,318,894 | 680,289 | 1,638,605 | |||||||||
New Jersey | 150,456,518 | 4,049,126 | 2,077,699 | 1,971,427 | |||||||||
Ohio | 156,523,473 | 4,296,696 | 2,447,893 | 1,848,803 | |||||||||
Pennsylvania | 138,635,221 | 4,469,689 | 1,900,572 | 2,569,117 | |||||||||
Virginia | 177,643,892 | 3,203,372 | 2,702,790 | 500,582 |
1. Swap Agreements
The Portfolios may enter into swaps to hedge its exposure to interest rates and credit risk or for investment purposes. A swap is an agreement that obligates two
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Notes to Financial Statements
parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. The payment flows are usually netted against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the net interest payment to be received by the Portfolios, and/or the termination value at the end of the contract. Therefore, the Portfolios consider the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying securities.
The Portfolios accrue for the interim payments on swap contracts on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain/loss on swaps, in addition to realized gain/loss recorded upon the termination of swap contracts on the statements of operations. Fluctuations in the value of swap contracts are recorded as a component of net change in unrealized appreciation/ depreciation of investments.
The Portfolios may enter into credit default swaps. The Portfolios may purchase credit protection on the referenced obligation of the credit default swap (“Buy Contract”) or provide credit protection on the referenced obligation of the credit default swap (“Sale Contract”). A sale/(buy) in a credit default swap provides upon the occurrence of a credit event, as defined in the swap agreement, for the Portfolio to buy/(sell) from/(to) the counterparty at the notional amount (the “Notional Amount”) and receive/(deliver) the principal amount of the referenced obligation. If a credit event occurs, the maximum payout amount for a Sale Contract is limited to the Notional Amount of the swap contract (“Maximum Payout Amount”). During the term of the swap agreement, the Portfolio receives/(pays) fixed payments from/(to) the respective counterparty, calculated at the agreed upon interest rate applied to the Notional Amount. These interim payments are recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities.
Credit default swaps may involve greater risks than if a Portfolio had invested in the referenced obligation directly. Credit default swaps are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Portfolio is a buyer and no credit event occurs, it will lose its investment. In addition, if the Portfolio is a seller and a credit event occurs, the value of the referenced obligation received by the Portfolio coupled with the periodic payments previously received, may be less than the Maximum Payout Amount it pays to the buyer, resulting in a loss to the Portfolio.
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2. Financial Futures Contracts
The Portfolios may buy or sell financial futures contracts for the purpose of hedging its portfolio against adverse affects of anticipated movements in the market. The Portfolios bear the market risk that arises from changes in the value of these financial instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of securities hedged or used to cover.
At the time the Portfolios enter into a futures contract, the Portfolios deposit and maintain as collateral an initial margin with the broker, as required by the exchange on which the transaction is affected. Pursuant to the contract, the Portfolios agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Portfolios as unrealized gains or losses. Risk may arise from the potential inability of a counterparty to meet the terms of a contract. When the contract is closed, the Portfolios record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed.
NOTE E
Shares of Beneficial Interest
Transactions in shares of beneficial interest for each Portfolio were as follows:
Shares | Amount | |||||||||||||||||
Arizona Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 1,834,510 | 2,766,270 | $ | 20,030,875 | $ | 30,384,819 | ||||||||||||
Shares issued in reinvestment | 164,256 | 280,820 | 1,792,781 | 3,089,209 | ||||||||||||||
Shares converted from Class B | 841,090 | 782,156 | 9,125,460 | 8,579,497 | ||||||||||||||
Shares redeemed | (1,432,369 | ) | (3,391,027 | ) | (15,612,293 | ) | (37,333,814 | ) | ||||||||||
Net increase | 1,407,487 | 438,219 | $ | 15,336,823 | $ | 4,719,711 | ||||||||||||
Class B | ||||||||||||||||||
Shares sold | 33,120 | 127,421 | $ | 360,343 | $ | 1,399,763 | ||||||||||||
Shares issued in reinvestment | 33,333 | 86,848 | 363,325 | 954,741 | ||||||||||||||
Shares converted to Class A | (842,515 | ) | (783,487 | ) | (9,125,460 | ) | (8,579,497 | ) | ||||||||||
Shares redeemed | (196,133 | ) | (829,571 | ) | (2,130,278 | ) | (9,127,821 | ) | ||||||||||
Net decrease | (972,195 | ) | (1,398,789 | ) | $ | (10,532,070 | ) | $ | (15,352,814 | ) | ||||||||
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Notes to Financial Statements
Shares | Amount | |||||||||||||||||
Arizona Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class C | ||||||||||||||||||
Shares sold | 305,059 | 444,707 | $ | 3,319,218 | $ | 4,885,740 | ||||||||||||
Shares issued in reinvestment | 24,784 | 39,335 | 270,145 | 432,055 | ||||||||||||||
Shares redeemed | (344,164 | ) | (359,929 | ) | (3,741,411 | ) | (3,951,334 | ) | ||||||||||
Net increase (decrease) | (14,321 | ) | 124,113 | $ | (152,048 | ) | $ | 1,366,461 | ||||||||||
Shares | Amount | |||||||||||||||||
Florida Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 733,103 | 2,154,467 | $ | 7,376,494 | $ | 22,078,165 | ||||||||||||
Shares issued in reinvestment | 162,017 | 226,727 | 1,633,799 | 2,316,613 | ||||||||||||||
Shares converted from Class B | 438,131 | 627,086 | 4,391,500 | 6,400,734 | ||||||||||||||
Shares redeemed | (1,702,998 | ) | (3,116,944 | ) | (17,093,482 | ) | (31,972,822 | ) | ||||||||||
Net decrease | (369,747 | ) | (108,664 | ) | $ | (3,691,689 | ) | $ | (1,177,310 | ) | ||||||||
Class B | ||||||||||||||||||
Shares sold | 44,431 | 93,518 | $ | 449,810 | $ | 958,350 | ||||||||||||
Shares issued in reinvestment | 23,058 | 43,978 | 232,679 | 450,211 | ||||||||||||||
Shares converted to Class A | (438,048 | ) | (626,774 | ) | (4,391,500 | ) | (6,400,734 | ) | ||||||||||
Shares redeemed | (174,546 | ) | (868,274 | ) | (1,762,164 | ) | (8,893,397 | ) | ||||||||||
Net decrease | (545,105 | ) | (1,357,552 | ) | $ | (5,471,175 | ) | $ | (13,885,570 | ) | ||||||||
Class C | ||||||||||||||||||
Shares sold | 133,903 | 261,437 | $ | 1,353,857 | $ | 2,682,018 | ||||||||||||
Shares issued in reinvestment | 33,192 | 62,298 | 334,988 | 637,392 | ||||||||||||||
Shares redeemed | (312,409 | ) | (803,729 | ) | (3,139,061 | ) | (8,229,097 | ) | ||||||||||
Net decrease | (145,314 | ) | (479,994 | ) | $ | (1,450,216 | ) | $ | (4,909,687 | ) | ||||||||
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Shares | Amount | |||||||||||||||||
Massachusetts Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 1,784,947 | 1,720,779 | $ | 19,274,713 | $ | 18,695,450 | ||||||||||||
Shares issued in reinvestment | 108,343 | 178,128 | 1,175,545 | 1,932,440 | ||||||||||||||
Shares converted from Class B | 509,723 | 705,338 | 5,507,513 | 7,632,486 | ||||||||||||||
Shares redeemed | (761,817 | ) | (1,496,587 | ) | (8,258,392 | ) | (16,244,603 | ) | ||||||||||
Net increase | 1,641,196 | 1,107,658 | $ | 17,699,379 | $ | 12,015,773 | ||||||||||||
Class B | ||||||||||||||||||
Shares sold | 48,542 | 60,339 | $ | 526,193 | $ | 655,401 | ||||||||||||
Shares issued in reinvestment | 24,447 | 73,458 | 264,716 | 796,396 | ||||||||||||||
Shares converted to Class A | (510,669 | ) | (706,644 | ) | (5,507,513 | ) | (7,632,486 | ) | ||||||||||
Shares redeemed | (209,432 | ) | (865,840 | ) | (2,270,560 | ) | (9,395,094 | ) | ||||||||||
Net decrease | (647,112 | ) | (1,438,687 | ) | $ | (6,987,164 | ) | $ | (15,575,783 | ) | ||||||||
Class C | ||||||||||||||||||
Shares sold | 283,727 | 276,302 | $ | 3,065,335 | $ | 2,999,884 | ||||||||||||
Shares issued in reinvestment | 38,443 | 75,619 | 416,374 | 819,486 | ||||||||||||||
Shares redeemed | (310,419 | ) | (636,361 | ) | (3,357,947 | ) | (6,895,785 | ) | ||||||||||
Net increase (decrease) | 11,751 | (284,440 | ) | $ | 123,762 | $ | (3,076,415 | ) | ||||||||||
Shares | Amount | |||||||||||||||||
Michigan Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 523,611 | 887,203 | $ | 5,632,476 | $ | 9,585,224 | ||||||||||||
Shares issued in reinvestment of dividends and distributions | 96,677 | 162,907 | 1,038,314 | 1,750,933 | ||||||||||||||
Shares converted from Class B | 307,592 | 466,181 | 3,291,397 | 5,013,420 | ||||||||||||||
Shares redeemed | (670,640 | ) | (1,510,021 | ) | (7,193,568 | ) | (16,331,669 | ) | ||||||||||
Net increase | 257,240 | 6,270 | $ | 2,768,619 | $ | 17,908 | ||||||||||||
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Notes to Financial Statements
Shares | Amount | |||||||||||||||||
Michigan Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class B | ||||||||||||||||||
Shares sold | 49,641 | 91,982 | $ | 529,682 | $ | 994,862 | ||||||||||||
Shares issued in reinvestment of dividends and distributions | 22,651 | 67,000 | 242,894 | 724,001 | ||||||||||||||
Shares converted to Class A | (308,169 | ) | (467,049 | ) | (3,291,397 | ) | (5,013,420 | ) | ||||||||||
Shares redeemed | (233,976 | ) | (607,176 | ) | (2,512,071 | ) | (6,543,883 | ) | ||||||||||
Net decrease | (469,853 | ) | (915,243 | ) | $ | (5,030,892 | ) | $ | (9,838,440 | ) | ||||||||
Class C | ||||||||||||||||||
Shares sold | 185,699 | 363,422 | $ | 1,981,647 | $ | 3,922,697 | ||||||||||||
Shares issued in reinvestment of dividends and distributions | 44,301 | 99,515 | 475,170 | 1,074,912 | ||||||||||||||
Shares redeemed | (268,615 | ) | (731,779 | ) | (2,881,150 | ) | (7,902,933 | ) | ||||||||||
Net decrease | (38,615 | ) | (268,842 | ) | $ | (424,333 | ) | $ | (2,905,324 | ) | ||||||||
Shares | Amount | |||||||||||||||||
Minnesota Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 967,022 | 1,193,213 | $ | 9,711,899 | $ | 12,051,009 | ||||||||||||
Shares issued in reinvestment of dividends | 81,401 | 129,201 | 818,945 | 1,306,955 | ||||||||||||||
Shares converted from Class B | 165,314 | 223,159 | 1,652,581 | 2,255,830 | ||||||||||||||
Shares redeemed | (505,012 | ) | (1,215,922 | ) | (5,073,472 | ) | (12,305,707 | ) | ||||||||||
Net increase | 708,725 | 329,651 | $ | 7,109,953 | $ | 3,308,087 | ||||||||||||
Class B | ||||||||||||||||||
Shares sold | 8,492 | 17,933 | $ | 85,401 | $ | 181,240 | ||||||||||||
Shares issued in reinvestment of dividends | 6,545 | 17,320 | 65,860 | 175,322 | ||||||||||||||
Shares converted to Class A | (155,348 | ) | (223,174 | ) | (1,652,581 | ) | (2,255,830 | ) | ||||||||||
Shares redeemed | (39,701 | ) | (194,869 | ) | (298,608 | ) | (1,972,334 | ) | ||||||||||
Net decrease | (180,012 | ) | (382,790 | ) | $ | (1,799,928 | ) | $ | (3,871,602 | ) | ||||||||
112 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Notes to Financial Statements
Shares | Amount | |||||||||||||||||
Minnesota Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class C | ||||||||||||||||||
Shares sold | 52,334 | 162,887 | $ | 526,489 | $ | 1,647,191 | ||||||||||||
Shares issued in reinvestment of dividends | 15,718 | 34,732 | 158,301 | 351,815 | ||||||||||||||
Shares redeemed | (54,761 | ) | (354,709 | ) | (550,991 | ) | (3,592,106 | ) | ||||||||||
Net increase (decrease) | 13,291 | (157,090 | ) | $ | 133,799 | $ | (1,593,100 | ) | ||||||||||
Shares | Amount | |||||||||||||||||
New Jersey Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 1,278,972 | 2,528,204 | $ | 12,334,139 | $ | 24,841,959 | ||||||||||||
Shares issued in reinvestment of dividends | 139,894 | 174,632 | 1,357,374 | 1,717,554 | ||||||||||||||
Shares converted from Class B | 683,704 | 1,114,062 | 6,613,354 | 10,956,461 | ||||||||||||||
Shares redeemed | (1,150,101 | ) | (1,820,739 | ) | (11,128,719 | ) | (17,929,193 | ) | ||||||||||
Net increase | 952,469 | 1,996,159 | $ | 9,176,148 | $ | 19,586,781 | ||||||||||||
Class B | ||||||||||||||||||
Shares sold | 83,982 | 230,788 | $ | 811,588 | $ | 2,282,546 | ||||||||||||
Shares issued in reinvestment of dividends | 31,815 | 83,423 | 309,000 | 822,563 | ||||||||||||||
Shares converted to Class A | (683,628 | ) | (1,113,786 | ) | (6,613,354 | ) | (10,956,461 | ) | ||||||||||
Shares redeemed | (225,805 | ) | (712,564 | ) | (2,195,856 | ) | (7,036,793 | ) | ||||||||||
Net decrease | (793,636 | ) | (1,512,139 | ) | $ | (7,688,622 | ) | $ | (14,888,145 | ) | ||||||||
Class C | ||||||||||||||||||
Shares sold | 212,865 | 414,891 | $ | 2,057,321 | $ | 4,088,672 | ||||||||||||
Shares issued in reinvestment of dividends | 36,564 | 75,244 | 355,010 | 741,324 | ||||||||||||||
Shares redeemed | (242,712 | ) | (533,730 | ) | (2,353,614 | ) | (5,280,009 | ) | ||||||||||
Net increase (decrease) | 6,717 | (43,595 | ) | $ | 58,717 | $ | (450,013 | ) | ||||||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 113 |
Notes to Financial Statements
Shares | Amount | |||||||||||||||||
Ohio Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 1,059,676 | 1,399,191 | $ | 10,640,243 | $ | 14,137,483 | ||||||||||||
Shares issued in reinvestment of dividends | 135,097 | 214,063 | 1,358,248 | 2,163,056 | ||||||||||||||
Shares converted from Class B | 475,080 | 620,790 | 4,756,073 | 6,257,275 | ||||||||||||||
Shares redeemed | (989,824 | ) | (1,561,050 | ) | (9,953,873 | ) | (15,764,681 | ) | ||||||||||
Net increase | 680,029 | 672,994 | $ | 6,800,691 | $ | 6,793,133 | ||||||||||||
Class B | ||||||||||||||||||
Shares sold | 86,480 | 150,177 | $ | 860,687 | $ | 1,521,552 | ||||||||||||
Shares issued in reinvestment of dividends | 30,217 | 84,421 | 303,622 | 853,153 | ||||||||||||||
Shares converted to Class A | (433,001 | ) | (621,313 | ) | (4,756,073 | ) | (6,257,274 | ) | ||||||||||
Shares redeemed | (283,538 | ) | (801,933 | ) | (2,423,859 | ) | (8,119,896 | ) | ||||||||||
Net decrease | (599,842 | ) | (1,188,648 | ) | $ | (6,015,623 | ) | $ | (12,002,465 | ) | ||||||||
Class C | ||||||||||||||||||
Shares sold | 178,977 | 347,876 | $ | 1,799,436 | $ | 3,517,661 | ||||||||||||
Shares issued in reinvestment of dividends | 40,784 | 91,537 | 409,978 | 925,052 | ||||||||||||||
Shares redeemed | (252,490 | ) | (787,261 | ) | (2,523,989 | ) | (7,960,892 | ) | ||||||||||
Net decrease | (32,729 | ) | (347,848 | ) | $ | (314,575 | ) | $ | (3,518,179 | ) | ||||||||
Shares | Amount | |||||||||||||||||
Pennsylvania Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 871,735 | 1,156,884 | $ | 9,066,106 | $ | 12,172,306 | ||||||||||||
Shares issued in reinvestment of dividends | 130,275 | 178,266 | 1,358,095 | 1,872,837 | ||||||||||||||
Shares converted from Class B | 391,443 | 787,273 | 4,061,865 | 8,251,502 | ||||||||||||||
Shares redeemed | (782,369 | ) | (921,004 | ) | (8,157,715 | ) | (9,680,328 | ) | ||||||||||
Net increase | 611,084 | 1,201,419 | $ | 6,328,351 | $ | 12,616,317 | ||||||||||||
114 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Notes to Financial Statements
Shares | Amount | |||||||||||||||||
Pennsylvania Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class B | ||||||||||||||||||
Shares sold | 64,895 | 119,545 | $ | 677,258 | $ | 1,256,533 | ||||||||||||
Shares issued in reinvestment of dividends | 21,976 | 48,295 | 229,212 | 507,960 | ||||||||||||||
Shares converted to Class A | (391,443 | ) | (787,067 | ) | (4,061,865 | ) | (8,251,502 | ) | ||||||||||
Shares redeemed | (226,853 | ) | (498,704 | ) | (2,368,491 | ) | (5,247,064 | ) | ||||||||||
Net decrease | (531,425 | ) | (1,117,931 | ) | $ | (5,523,886 | ) | $ | (11,734,073 | ) | ||||||||
Class C | ||||||||||||||||||
Shares sold | 212,193 | 193,933 | $ | 2,210,240 | $ | 2,041,982 | ||||||||||||
Shares issued in reinvestment of dividends | 27,530 | 64,650 | 287,095 | 679,552 | ||||||||||||||
Shares redeemed | (232,191 | ) | (506,022 | ) | (2,417,742 | ) | (5,321,607 | ) | ||||||||||
Net increase (decrease) | 7,532 | (247,439 | ) | $ | 79,593 | $ | (2,600,073 | ) | ||||||||||
Shares | Amount | |||||||||||||||||
Virginia Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class A | ||||||||||||||||||
Shares sold | 1,122,768 | 1,707,960 | $ | 11,986,055 | $ | 18,376,267 | ||||||||||||
Shares issued in reinvestment of dividends | 157,027 | 223,873 | 1,675,544 | 2,404,271 | ||||||||||||||
Shares converted from Class B | 504,630 | 885,555 | 5,328,444 | 9,502,541 | ||||||||||||||
Shares redeemed | (761,827 | ) | (1,683,978 | ) | (8,116,206 | ) | (18,111,444 | ) | ||||||||||
Net increase | 1,022,598 | 1,133,410 | $ | 10,873,837 | $ | 12,171,635 | ||||||||||||
Class B | ||||||||||||||||||
Shares sold | 35,326 | 112,869 | $ | 376,785 | $ | 1,206,823 | ||||||||||||
Shares issued in reinvestment of dividends | 26,512 | 63,323 | 282,597 | 679,913 | ||||||||||||||
Shares converted to Class A | (505,541 | ) | (887,073 | ) | (5,328,444 | ) | (9,502,541 | ) | ||||||||||
Shares redeemed | (166,151 | ) | (506,226 | ) | (1,768,497 | ) | (5,440,306 | ) | ||||||||||
Net decrease | (609,854 | ) | (1,217,107 | ) | $ | (6,437,559 | ) | $ | (13,056,111 | ) | ||||||||
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 115 |
Notes to Financial Statements
Shares | Amount | |||||||||||||||||
Virginia Portfolio | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, 2007 | ||||||||||||||
Class C | ||||||||||||||||||
Shares sold | 368,050 | 467,527 | $ | 3,912,274 | $ | 5,013,282 | ||||||||||||
Shares issued in reinvestment of dividends | 43,424 | 71,574 | 462,361 | 766,840 | ||||||||||||||
Shares redeemed | (215,653 | ) | (400,643 | ) | (2,291,622 | ) | (4,293,743 | ) | ||||||||||
Net increase | 195,821 | 138,458 | $ | 2,083,013 | $ | 1,486,379 | ||||||||||||
NOTE F
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $250 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 six months ended March 31, 2008.
116 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Notes to Financial Statements
NOTE G
Distributions to Shareholders
The tax character of distributions to be paid for the year ending September 30, 2008 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended September 30, 2007 and September 30, 2006 were as follows:
2007 | 2006 | |||||
Arizona Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 7,948,817 | $ | 7,890,473 | ||
Ordinary income | — | 7,507 | ||||
Total distributions paid | $ | 7,948,817 | $ | 7,897,980 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed Tax-Exempt Income | $ | 41,139 | ||
Accumulated capital and other losses | (720,546 | )(a) | ||
Unrealized appreciation/(depreciation) | 4,832,357 | (b) | ||
Total accumulated earnings/(deficit) | $ | 4,152,950 | (c) | |
(a) | On September 30, 2007, the Portfolio had a net capital loss carryforward for federal income tax purposes of $720,546 of which $249,413 expires in the year 2008, $383,250 expires in the year 2010 and $87,883 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year ended September 30, 2007, the Portfolio utilized capital loss carryforwards of $136,000. |
(b) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between the book and tax treatment of swap income. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 117 |
Notes to Financial Statements
2007 | 2006 | |||||
Florida Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 8,438,142 | $ | 9,306,646 | ||
Ordinary income | — | 23,265 | ||||
Total distributions paid | $ | 8,438,142 | $ | 9,329,911 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed Tax-Exempt Income | $ | 3,032 | ||
Accumulated capital and other losses | (5,996,024 | )(a) | ||
Unrealized appreciation/(depreciation) | 4,696,065 | (b) | ||
Total accumulated earnings/(deficit) | $ | (1,296,927 | )(c) | |
(a) | On September 30, 2007, the Portfolio had a net capital loss carryforward for federal income tax purposes of $5,996,024 of which $2,516,119 expires in the year 2008, $3,475,986 expires in the year 2009 and $3,919 expires in the year 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year ended September 30, 2007, the Portfolio utilized capital loss carryforwards of $1,736,945. |
(b) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between the book and tax treatment of swap income. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable. |
118 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Notes to Financial Statements
2007 | 2006 | |||||
Massachusetts Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 5,197,763 | $ | 5,201,319 | ||
Ordinary income | 5,490 | 6,193 | ||||
Total distributions paid | $ | 5,203,253 | $ | 5,207,512 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed Tax-Exempt Income | $ | 319 | ||
Accumulated capital and other losses | (8,794,249 | )(a) | ||
Unrealized appreciation/(depreciation) | 4,408,287 | (b) | ||
Total accumulated earnings/(deficit) | $ | (4,385,643 | )(c) | |
(a) | On September 30, 2007, the Portfolio had a net capital loss carryforward for federal income tax purposes of $8,794,249 of which $5,015,921 expires in the year 2008, $1,585,051 expires in the year 2009 and $2,193,277 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year ended September 30, 2007, the Portfolio utilized capital loss carryforwards of $675,039. |
(b) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between the book and tax treatment of swap income. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 119 |
Notes to Financial Statements
2007 | 2006 | |||||
Michigan Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 4,495,268 | $ | 4,978,179 | ||
Ordinary income | 21,710 | 13,541 | ||||
Long term capital gains | 558,233 | 152,691 | ||||
Total distributions paid | $ | 5,075,211 | $ | 5,144,411 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Ordinary Income | $ | 89,273 | ||
Long term capital gains | 120,415 | |||
Unrealized appreciation/(depreciation) | 4,283,461 | (a) | ||
Total accumulated earnings/(deficit) | $ | 4,493,149 | (b) | |
(a) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between the book and tax treatment of swap income. |
(b) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable. |
120 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Notes to Financial Statements
2007 | 2006 | |||||
Minnesota Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 3,624,953 | $ | 3,831,101 | ||
Ordinary income | 13,803 | 23,440 | ||||
Total distributions paid | $ | 3,638,756 | $ | 3,854,541 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Accumulated capital and other losses | $ | (1,577,792 | )(a) | |
Unrealized appreciation/(depreciation) | 2,862,455 | (b) | ||
Total accumulated earnings/(deficit) | $ | 1,284,663 | (c) | |
(a) | On September 30, 2007, the Portfolio had a net capital loss carryforward for federal income tax purposes of $1,577,792 of which $771,675 expires in the year 2008, $160,146 expires in the year 2009, $46,432 expires in the year 2010, $179,795 expires in the year 2011, $142,635 expires in the year 2012 and $277,109 expires in the year 2013. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year ended September 30, 2007, the Portfolio utilized capital loss carryforwards of $107,592. |
(b) | The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales, and the difference between the book and tax treatment of swap income. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 121 |
Notes to Financial Statements
2007 | 2006 | |||||
New Jersey Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 6,146,017 | $ | 6,402,977 | ||
Ordinary income | — | 29,578 | ||||
Total distributions paid | $ | 6,146,017 | $ | 6,432,555 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed Tax-Exempt Income | $ | 7,889 | ||
Accumulated capital and other losses | (12,732,061) | (a) | ||
Unrealized appreciation/(depreciation) | 6,180,783 | (b) | ||
Total accumulated earnings/(deficit) | $ | (6,543,389 | )(c) | |
(a) | On September 30, 2007, the Portfolio had a net capital loss carryforward for federal income tax purposes of $12,732,061 of which $984,036 expires in the year 2008, $1,077,263 expires in the year 2009, $4,688,584 expires in the year 2010, $5,617,272 expires in the year 2011 and $364,906 expires in the year 2012. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year ended September 30, 2007, the Portfolio utilized capital loss carryforwards of $689,124. |
(b) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between book and tax treatment of swap income. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable |
122 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Notes to Financial Statements
2007 | 2006 | |||||
Ohio Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 6,150,596 | $ | 6,727,534 | ||
Ordinary income | 8,663 | 53,531 | ||||
Total distributions paid | $ | 6,159,259 | $ | 6,781,065 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed tax exempt income | $ | 29,782 | ||
Accumulated capital and other losses | (6,179,044 | )(a) | ||
Unrealized appreciation/(depreciation) | 5,379,534 | (b) | ||
Total accumulated earnings/(deficit) | $ | (769,728 | )(c) | |
(a) | On September 30, 2007, the Portfolio had a net capital loss carryforward for federal income tax purposes of $6,179,044 of which $882,226 expires in the year 2008, $1,639,021 expires in the year 2009, $3,620,192 expires in the year 2011 and $37,605 expires in the year 2012. To the extent future capital gains are offset by capital loss carry-forwards, such gains will not be distributed. During the fiscal year ended September 30, 2007 the Portfolio utilized capital loss carryforwards of $417,072. |
(b) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the difference between book and tax treatment of swap income. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 123 |
Notes to Financial Statements
2007 | 2006 | |||||
Pennsylvania Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 5,317,153 | $ | 5,491,025 | ||
Ordinary income | 8,161 | 53,980 | ||||
Total distributions paid | $ | 5,325,314 | $ | 5,545,005 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed Tax Exempt Income | $ | 16,119 | ||
Accumulated capital and other losses | (2,012,781) | (a) | ||
Unrealized appreciation/(depreciation) | 5,225,297 | (b) | ||
Total accumulated earnings/(deficit) | $ | 3,228,635 | (c) | |
(a) | On September 30, 2007, the Portfolio had a net capital loss carryforward for federal income tax purposes of $2,012,781 of which $1,292,249 expires in the year 2008, $274,791 expires in the year 2010 and $445,741 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year ended September 30, 2007, the Portfolio utilized capital loss carry-forwards of $183,149. |
(b) | The difference between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between book and tax treatment of swap income. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable. |
124 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Notes to Financial Statements
2007 | 2006 | |||||
Virginia Portfolio | ||||||
Distributions paid from: | ||||||
Tax-exempt income | $ | 7,022,505 | $ | 6,880,113 | ||
Ordinary income | 7,889 | 48,992 | ||||
Total distributions paid | $ | 7,030,394 | $ | 6,929,105 | ||
As of September 30, 2007, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed tax-exempt income | $ | 326,337 | ||
Accumulated capital and other losses | (1,539,541 | )(a) | ||
Unrealized appreciation/(depreciation) | 3,411,022 | (b) | ||
Total accumulated earnings/(deficit) | $ | 2,197,818 | (c) | |
(a) | On September 30, 2007, the Portfolio had a net capital loss carryforward for federal income tax purposes of $1,539,541 of which, $714,217 expires in the year 2009, $793,446 expires in the year 2010 and $31,878 expires in the year 2014. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year ended September 30, 2007, the portfolio utilized capital loss carry-forwards of $1,085,836. |
(b) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between book and tax treatment of swap income. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/ (deficit) is attributable to dividends payable. |
NOTE H
Risks Involved in Investing in the Fund
Credit Risk — The Portfolios of the AllianceBernstein Municipal Income Fund II are State Portfolios that may invest a large portion of their assets in a particular state’s municipal securities and their various political subdivisions, and the performance of each of these Portfolios may be closely tied to economic conditions within the applicable state and the financial condition of that state and its agencies and municipalities.
Indemnification Risk — In the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss thereunder to be remote.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 125 |
Notes to Financial Statements
NOTE I
Legal Proceedings
On October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. (“Hindo Complaint”) was filed against the Adviser, Alliance Capital Management Holding L.P. (“Alliance Holding”), Alliance Capital Management Corporation, AXA Financial, Inc., the AllianceBernstein Funds, certain officers of the Adviser (“AllianceBernstein defendants”), and certain other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the AllianceBernstein defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in “late trading” and “market timing” of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts.
Following October 2, 2003, 43 additional lawsuits making factual allegations generally similar to those in the Hindo Complaint were filed in various federal and state courts against the Adviser and certain other defendants. On September 29, 2004, plaintiffs filed consolidated amended complaints with respect to four claim types: mutual fund shareholder claims; mutual fund derivative claims; derivative claims brought on behalf of Alliance Holding; and claims brought under ERISA by participants in the Profit Sharing Plan for Employees of the Adviser. All four complaints include substantially identical factual allegations, which appear to be based in large part on the Order of the SEC dated December 18, 2003 as amended and restated January 15, 2004 (“SEC Order”) and the New York State Attorney General Assurance of Discontinuance dated September 1, 2004 (“NYAG Order”)
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims entered into a confidential memorandum of understanding containing their agreement to settle these claims. The agreement will be documented by a stipulation of settlement and will be submitted for court approval at a later date. The settlement amount ($30 million), which the Adviser previously accrued and disclosed, has been disbursed. The derivative claims brought on behalf of Alliance Holding, in which plaintiffs seek an unspecified amount of damages, remain pending.
It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the AllianceBernstein Mutual Funds’ shares or other adverse consequences to the AllianceBernstein Mutual
126 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Notes to Financial Statements
Funds. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to the AllianceBernstein Mutual Funds.
NOTE J
Recent Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board (“FASB”) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing a fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded in the current period. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. On March 31, 2008, the Fund implemented FIN 48 which supplements FASB 109, “Accounting for Income Taxes”. Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (tax years ended September 30, 2004-2006) for purposes of implementing FIN 48, and has concluded that no provision for income tax is required in the Fund’s financial statements.
On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined.
On March 19, 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements has not yet been determined.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 127 |
Notes to Financial Statements
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Arizona Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning of period | $ 10.93 | $ 11.07 | $ 11.06 | $ 10.95 | $ 10.76 | $ 11.02 | ||||||||||||
Income From | ||||||||||||||||||
Net investment income(b)(c) | .22 | .44 | .45 | .47 | .51 | .51 | ||||||||||||
Net realized and | (.16 | ) | (.14 | ) | .01 | .11 | .19 | (.26 | ) | |||||||||
Net increase in net asset value from operations | .06 | .30 | .46 | .58 | .70 | .25 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net investment income | (.22 | ) | (.44 | ) | (.45 | ) | (.47 | ) | (.51 | ) | (.51 | ) | ||||||
Net asset value, end of period | $ 10.77 | $ 10.93 | $ 11.07 | $ 11.06 | $ 10.95 | $ 10.76 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return based on net asset value(d) | .56 | % | 2.78 | % | 4.28 | % | 5.36 | % | 6.64 | % | 2.35 | % | ||||||
Ratios/Supplemental Data | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $154,964 | $141,882 | $138,880 | $111,704 | $88,701 | $101,040 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of | .78 | %(e) | .78 | % | .78 | %(f) | .78 | % | .78 | % | .78 | % | ||||||
Expenses, before waivers/ reimbursements | .96 | %(e) | .96 | % | .95 | %(f) | .97 | % | 1.13 | % | 1.11 | % | ||||||
Net investment income, net of waivers/reimbursements | 4.07 | %(e) | 4.03 | % | 4.11 | %(f) | 4.22 | % | 4.69 | % | 4.72 | % | ||||||
Portfolio turnover rate | 6 | % | 8 | % | 20 | % | 25 | % | 28 | % | 28 | % |
See footnote summary on page 155.
128 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Arizona Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning of period | $ 10.91 | $ 11.05 | $ 11.04 | $ 10.94 | $ 10.74 | $ 11.00 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .18 | .37 | .38 | .39 | .43 | .43 | ||||||||||||
Net realized and unrealized gain (loss) on investment | (.16 | ) | (.15 | ) | – 0 | – | .10 | .20 | (.26 | ) | ||||||||
Net increase in net asset | .02 | .22 | .38 | .49 | .63 | .17 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.18 | ) | (.36 | ) | (.37 | ) | (.39 | ) | (.43 | ) | (.43 | ) | ||||||
Net asset value, end of | $ 10.75 | $ 10.91 | $ 11.05 | $ 11.04 | $ 10.94 | $ 10.74 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .21 | % | 2.07 | % | 3.56 | % | 4.56 | % | 5.98 | % | 1.62 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $25,152 | $36,136 | $52,070 | $63,255 | $76,951 | $89,938 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of | 1.48 | %(e) | 1.48 | % | 1.48 | %(f) | 1.48 | % | 1.48 | % | 1.48 | % | ||||||
Expenses, before | 1.67 | %(e) | 1.67 | % | 1.66 | %(f) | 1.68 | % | 1.84 | % | 1.82 | % | ||||||
Net investment income, | 3.36 | %(e) | 3.33 | % | 3.42 | %(f) | 3.54 | % | 4.00 | % | 4.03 | % | ||||||
Portfolio turnover rate | 6 | % | 8 | % | 20 | % | 25 | % | 28 | % | 28 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 129 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Arizona Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning of period | $ 10.91 | $ 11.05 | $ 11.04 | $ 10.94 | $ 10.74 | $ 11.00 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .18 | .37 | .37 | .39 | .43 | .43 | ||||||||||||
Net realized and | (.16 | ) | (.14 | ) | .01 | .10 | .20 | (.26 | ) | |||||||||
Net increase in net asset | .02 | .23 | .38 | .49 | .63 | .17 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.18 | ) | (.37 | ) | (.37 | ) | (.39 | ) | (.43 | ) | (.43 | ) | ||||||
Net asset value, end of | $ 10.75 | $ 10.91 | $ 11.05 | $ 11.04 | $ 10.94 | $ 10.74 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .21 | % | 2.07 | % | 3.56 | % | 4.56 | % | 5.98 | % | 1.62 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $25,932 | $26,474 | $25,445 | $24,926 | $20,305 | $25,110 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of | 1.48 | %(e) | 1.48 | % | 1.48 | %(f) | 1.48 | % | 1.48 | % | 1.48 | % | ||||||
Expenses, before | 1.66 | %(e) | 1.66 | % | 1.65 | %(f) | 1.67 | % | 1.84 | % | 1.82 | % | ||||||
Net investment income, | 3.37 | %(e) | 3.34 | % | 3.42 | %(f) | 3.53 | % | 4.00 | % | 4.03 | % | ||||||
Portfolio turnover rate | 6 | % | 8 | % | 20 | % | 25 | % | 28 | % | 28 | % |
See footnote summary on page 155.
130 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Florida Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning of period | $ 10.15 | $ 10.32 | $ 10.28 | $ 10.25 | $ 10.17 | $ 10.34 | ||||||||||||
Income From | ||||||||||||||||||
Net investment income(b)(c) | .22 | .45 | .46 | .47 | .49 | .49 | ||||||||||||
Net realized and | (.25 | ) | (.17 | ) | .04 | .03 | .08 | (.13 | ) | |||||||||
Net increase (decrease) in net asset value from operations | (.03 | ) | .28 | .50 | .50 | .57 | .36 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net investment income | (.22 | ) | (.45 | ) | (.46 | ) | (.47 | ) | (.49 | ) | (.53 | ) | ||||||
Net asset value, end of period | $ 9.90 | $ 10.15 | $ 10.32 | $ 10.28 | $ 10.25 | $ 10.17 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return based on net asset value(d) | (.27 | )% | 2.80 | % | 5.00 | % | 5.01 | % | 5.78 | % | 3.54 | % | ||||||
Ratios/Supplemental Data | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $128,009 | $134,989 | $138,307 | $127,541 | $101,529 | $109,543 | ||||||||||||
Ratio to average net assets of: | ||||||||||||||||||
Expenses, net of waivers/ reimbursements excluding interest expense | .78 | %(e) | .78 | % | .78 | %(f) | .78 | % | .78 | % | .78 | % | ||||||
Expenses, before waivers/ reimbursements | .98 | %(e) | .96 | % | .98 | %(f) | 1.08 | % | 1.12 | % | 1.11 | % | ||||||
Expenses, before waivers/ reimbursements excluding interest expense | .98 | %(e) | .96 | % | .94 | %(f) | .98 | % | 1.11 | % | 1.11 | % | ||||||
Net investment income, net of waivers/ reimbursements | 4.42 | %(e) | 4.43 | % | 4.51 | %(f) | 4.60 | % | 4.83 | % | 4.80 | % | ||||||
Portfolio turnover rate | 9 | % | 23 | % | 27 | % | 23 | % | 22 | % | 30 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 131 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Florida Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.16 | $ 10.32 | $ 10.29 | $ 10.26 | $ 10.18 | $ 10.35 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .19 | .38 | .39 | .40 | .42 | .42 | ||||||||||||
Net realized and | (.25 | ) | (.16 | ) | .03 | .03 | .08 | (.14 | ) | |||||||||
Net increase (decrease) in | (.06 | ) | .22 | .42 | .43 | .50 | .28 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.19 | ) | (.38 | ) | (.39 | ) | (.40 | ) | (.42 | ) | (.45 | ) | ||||||
Net asset value, end | $ 9.91 | $ 10.16 | $ 10.32 | $ 10.29 | $ 10.26 | $ 10.18 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.61 | )% | 2.18 | % | 4.17 | % | 4.29 | % | 4.96 | % | 2.82 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $17,663 | $23,646 | $38,045 | $53,996 | $79,266 | $104,874 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.48 | %(e) | 1.48 | % | 1.48 | %(f) | 1.48 | % | 1.48 | % | 1.48 | % | ||||||
Expenses, before | 1.70 | %(e) | 1.68 | % | 1.69 | %(f) | 1.78 | % | 1.83 | % | 1.81 | % | ||||||
Expenses, before | 1.70 | %(e) | 1.68 | % | 1.65 | %(f) | 1.68 | % | 1.82 | % | 1.81 | % | ||||||
Net investment income, | 3.70 | %(e) | 3.73 | % | 3.80 | %(f) | 3.91 | % | 4.12 | % | 4.09 | % | ||||||
Portfolio turnover rate | 9 | % | 23 | % | 27 | % | 23 | % | 22 | % | 30 | % |
See footnote summary on page 155.
132 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Florida Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning of period | $ 10.16 | $ 10.32 | $ 10.29 | $ 10.25 | $ 10.18 | $ 10.35 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .19 | .38 | .39 | .40 | .42 | .42 | ||||||||||||
Net realized and | (.25 | ) | (.16 | ) | .03 | .04 | .07 | (.14 | ) | |||||||||
Net increase (decrease) in | (.06 | ) | .22 | .42 | .44 | .49 | .28 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.19 | ) | (.38 | ) | (.39 | ) | (.40 | ) | (.42 | ) | (.45 | ) | ||||||
Net asset value, end of | $ 9.91 | $ 10.16 | $ 10.32 | $ 10.29 | $ 10.25 | $ 10.18 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.61 | )% | 2.18 | % | 4.17 | % | 4.38 | % | 4.96 | % | 2.82 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $31,275 | $33,540 | $39,042 | $39,950 | $39,170 | $46,929 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.48 | %(e) | 1.48 | % | 1.48 | %(f) | 1.48 | % | 1.48 | % | 1.48 | % | ||||||
Expenses, before | 1.68 | %(e) | 1.67 | % | 1.68 | %(f) | 1.78 | % | 1.83 | % | 1.81 | % | ||||||
Expenses, before | 1.68 | %(e) | 1.67 | % | 1.64 | %(f) | 1.68 | % | 1.82 | % | 1.81 | % | ||||||
Net investment income, | 3.72 | %(e) | 3.73 | % | 3.80 | %(f) | 3.90 | % | 4.13 | % | 4.09 | % | ||||||
Portfolio turnover rate | 9 | % | 23 | % | 27 | % | 23 | % | 22 | % | 30 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 133 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Massachusetts Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning of period | $ 10.81 | $ 10.94 | $ 10.96 | $ 10.92 | $ 10.79 | $ 11.06 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .23 | .44 | .45 | .47 | .51 | .51 | ||||||||||||
Net realized and | (.05 | ) | (.13 | ) | (.02 | ) | .05 | .13 | (.26 | ) | ||||||||
Net increase in net asset | .18 | .31 | .43 | .52 | .64 | .25 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.23 | ) | (.44 | ) | (.45 | ) | (.48 | ) | (.51 | ) | (.52 | ) | ||||||
Net asset value, end of | $ 10.76 | $ 10.81 | $ 10.94 | $ 10.96 | $ 10.92 | $ 10.79 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | 1.63 | % | 2.92 | % | 4.06 | % | 4.80 | % | 6.13 | % | 2.39 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $91,668 | $74,341 | $63,120 | $53,035 | $39,749 | $46,342 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | .82 | %(e) | .82 | % | .82 | %(f) | .82 | % | .82 | % | .82 | % | ||||||
Expenses, before | 1.06 | %(e) | 1.06 | % | 1.09 | %(f) | 1.17 | % | 1.25 | % | 1.17 | % | ||||||
Expenses, before | 1.06 | %(e) | 1.06 | % | 1.03 | %(f) | 1.03 | % | 1.20 | % | 1.17 | % | ||||||
Net investment income, | 4.05 | %(e) | 4.08 | % | 4.18 | %(f) | 4.29 | % | 4.73 | % | 4.71 | % | ||||||
Portfolio turnover rate | 5 | % | 11 | % | 25 | % | 25 | % | 26 | % | 28 | % |
See footnote summary on page 155.
134 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Massachusetts Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.79 | $ 10.92 | $ 10.94 | $ 10.91 | $ 10.77 | $ 11.03 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .19 | .37 | .38 | .40 | .44 | .44 | ||||||||||||
Net realized and | (.05 | ) | (.13 | ) | (.02 | ) | .03 | .14 | (.25 | ) | ||||||||
Net increase in net asset | .14 | .24 | .36 | .43 | .58 | .19 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.19 | ) | (.37 | ) | (.38 | ) | (.40 | ) | (.44 | ) | (.45 | ) | ||||||
Net asset value, end of | $ 10.74 | $ 10.79 | $ 10.92 | $ 10.94 | $ 10.91 | $ 10.77 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | 1.28 | % | 2.21 | % | 3.35 | % | 4.00 | % | 5.38 | % | 1.76 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $18,146 | $25,209 | $41,221 | $50,203 | $63,430 | $73,979 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.52 | %(e) | 1.52 | % | 1.52 | %(f) | 1.52 | % | 1.52 | % | 1.52 | % | ||||||
Expenses, before | 1.77 | %(e) | 1.77 | % | 1.81 | %(f) | 1.88 | % | 1.96 | % | 1.89 | % | ||||||
Expenses, before | 1.77 | %(e) | 1.77 | % | 1.75 | %(f) | 1.74 | % | 1.91 | % | 1.89 | % | ||||||
Net investment income, | 3.35 | %(e) | 3.38 | % | 3.49 | %(f) | 3.61 | % | 4.04 | % | 4.02 | % | ||||||
Portfolio turnover rate | 5 | % | 11 | % | 25 | % | 25 | % | 26 | % | 28 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 135 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Massachusetts Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.79 | $ 10.92 | $ 10.94 | $ 10.91 | $ 10.77 | $ 11.03 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .19 | .37 | .38 | .40 | .44 | .44 | ||||||||||||
Net realized and | (.05 | ) | (.13 | ) | (.02 | ) | .03 | .14 | (.25 | ) | ||||||||
Net increase in net asset | .14 | .24 | .36 | .43 | .58 | .19 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.19 | ) | (.37 | ) | (.38 | ) | (.40 | ) | (.44 | ) | (.45 | ) | ||||||
Net asset value, end of | $ 10.74 | $ 10.79 | $ 10.92 | $ 10.94 | $ 10.91 | $ 10.77 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | 1.28 | % | 2.22 | % | 3.35 | % | 3.99 | % | 5.38 | % | 1.76 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $34,450 | $34,479 | $38,001 | $34,789 | $35,598 | $46,542 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.52 | %(e) | 1.52 | % | 1.52 | %(f) | 1.52 | % | 1.52 | % | 1.52 | % | ||||||
Expenses, before | 1.76 | %(e) | 1.76 | % | 1.80 | %(f) | 1.88 | % | 1.95 | % | 1.88 | % | ||||||
Expenses, before | 1.76 | %(e) | 1.76 | % | 1.74 | %(f) | 1.74 | % | 1.90 | % | 1.88 | % | ||||||
Net investment income, | 3.36 | %(e) | 3.39 | % | 3.49 | %(f) | 3.61 | % | 4.04 | % | 4.02 | % | ||||||
Portfolio turnover rate | 5 | % | 11 | % | 25 | % | 25 | % | 26 | % | 28 | % |
See footnote summary on page 155.
136 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Michigan Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.74 | $ 10.91 | $ 10.88 | $ 10.79 | $ 10.69 | $ 10.91 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .21 | .42 | .43 | .46 | .48 | .47 | ||||||||||||
Net realized and | (.10 | ) | (.12 | ) | .03 | .09 | .11 | (.17 | ) | |||||||||
Net increase in net asset | .11 | .30 | .46 | .55 | .59 | .30 | ||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||
Dividends from net investment income | (.21 | ) | (.42 | ) | (.42 | ) | (.46 | ) | (.49 | ) | (.52 | ) | ||||||
Distributions from net | (.02 | ) | (.05 | ) | (.01 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||
Total dividends and distributions | (.23 | ) | (.47 | ) | (.43 | ) | (.46 | ) | (.49 | ) | (.52 | ) | ||||||
Net asset value, end of | $ 10.62 | $ 10.74 | $ 10.91 | $ 10.88 | $ 10.79 | $ 10.69 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | 1.04 | % | 2.75 | % | 4.38 | % | 5.16 | % | 5.65 | % | 2.66 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $65,963 | $63,989 | $64,920 | $54,635 | $45,362 | $53,022 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of | 1.01 | %(e) | 1.01 | % | .98 | %(f) | .99 | % | 1.01 | % | 1.01 | % | ||||||
Expenses, before | 1.10 | %(e) | 1.10 | % | 1.04 | %(f) | 1.05 | % | 1.20 | % | 1.20 | % | ||||||
Net investment income, | 3.85 | %(e) | 3.87 | % | 3.92 | %(f) | 4.19 | % | 4.51 | % | 4.38 | % | ||||||
Portfolio turnover rate | 3 | % | 2 | % | 17 | % | 18 | % | 18 | % | 46 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 137 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Michigan Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.72 | $ 10.89 | $ 10.86 | $ 10.77 | $ 10.67 | $ 10.89 |
| |||||||||||
Income From | ||||||||||||||||||
Net investment | .17 | .34 | .35 | .38 | .41 | .40 | ||||||||||||
Net realized and unrealized gain (loss) on investment | (.10 | ) | (.12 | ) | .04 | .10 | .10 | (.18 | ) | |||||||||
Net increase in net asset | .07 | .22 | .39 | .48 | .51 | .22 | ||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||
Dividends from net | (.17 | ) | (.34 | ) | (.35 | ) | (.39 | ) | (.41 | ) | (.44 | ) | ||||||
Distributions from net | (.02 | ) | (.05 | ) | (.01 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||
Total dividends and | (.19 | ) | (.39 | ) | (.36 | ) | (.39 | ) | (.41 | ) | (.44 | ) | ||||||
Net asset value, end of | $ 10.60 | $ 10.72 | $ 10.89 | $ 10.86 | $ 10.77 | $ 10.67 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .69 | % | 2.04 | % | 3.66 | % | 4.47 | % | 4.91 | % | 1.95 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $15,301 | $20,524 | $30,813 | $41,516 | $47,605 | $58,034 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of | 1.71 | %(e) | 1.71 | % | 1.69 | %(f) | 1.70 | % | 1.71 | % | 1.71 | % | ||||||
Expenses, before | 1.83 | %(e) | 1.81 | % | 1.75 | %(f) | 1.76 | % | 1.91 | % | 1.92 | % | ||||||
Net investment income, | 3.15 | %(e) | 3.17 | % | 3.23 | %(f) | 3.50 | % | 3.81 | % | 3.69 | % | ||||||
Portfolio turnover rate | 3 | % | 2 | % | 17 | % | 18 | % | 18 | % | 46 | % |
See footnote summary on page 155.
138 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Michigan Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.73 | $ 10.89 | $ 10.87 | $ 10.77 | $ 10.67 | $ 10.89 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .17 | .34 | .35 | .38 | .41 | .40 | ||||||||||||
Net realized and | (.11 | ) | (.11 | ) | .03 | .10 | .10 | (.18 | ) | |||||||||
Net increase in net asset | .06 | .23 | .38 | .48 | .51 | .22 | ||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||
Dividends from net | (.17 | ) | (.34 | ) | (.35 | ) | (.38 | ) | (.41 | ) | (.44 | ) | ||||||
Distributions from net | (.02 | ) | (.05 | ) | (.01 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||
Total dividends and | (.19 | ) | (.39 | ) | (.36 | ) | (.38 | ) | (.41 | ) | (.44 | ) | ||||||
Net asset value, end of | $ 10.60 | $ 10.73 | $ 10.89 | $ 10.87 | $ 10.77 | $ 10.67 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .59 | % | 2.13 | % | 3.56 | % | 4.54 | % | 4.91 | % | 1.95 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $36,899 | $37,755 | $41,274 | $43,225 | $43,382 | $54,996 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of | 1.71 | %(e) | 1.71 | % | 1.68 | %(f) | 1.70 | % | 1.71 | % | 1.71 | % | ||||||
Expenses, before | 1.81 | %(e) | 1.81 | % | 1.74 | %(f) | 1.75 | % | 1.90 | % | 1.90 | % | ||||||
Net investment income, | 3.16 | %(e) | 3.17 | % | 3.23 | %(f) | 3.50 | % | 3.82 | % | 3.69 | % | ||||||
Portfolio turnover rate | 3 | % | 2 | % | 17 | % | 18 | % | 18 | % | 46 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 139 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Minnesota Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.05 | $ 10.20 | $ 10.19 | $ 10.14 | $ 10.15 | $ 10.31 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .20 | .41 | .42 | .42 | .44 | .45 | ||||||||||||
Net realized and | (.10 | ) | (.15 | ) | .01 | .05 | (.01 | ) | (.15 | ) | ||||||||
Net increase in net asset | .10 | .26 | .43 | .47 | .43 | .30 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.20 | ) | (.41 | ) | (.42 | ) | (.42 | ) | (.44 | ) | (.46 | ) | ||||||
Net asset value, end of | $ 9.95 | $ 10.05 | $ 10.20 | $ 10.19 | $ 10.14 | $ 10.15 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .99 | % | 2.58 | % | 4.29 | % | 4.72 | % | 4.41 | % | 3.05 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $79,747 | $73,400 | $71,172 | $69,174 | $64,847 | $67,521 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | .90 | %(e) | .90 | % | .90 | %(f) | .90 | % | .90 | % | .90 | % | ||||||
Expenses, before | 1.15 | %(e) | 1.16 | % | 1.17 | %(f) | 1.26 | % | 1.32 | % | 1.22 | % | ||||||
Expenses, before | 1.15 | %(e) | 1.16 | % | 1.10 | %(f) | 1.13 | % | 1.28 | % | 1.20 | % | ||||||
Net investment income, | 3.94 | %(e) | 4.03 | % | 4.10 | %(f) | 4.12 | % | 4.36 | % | 4.42 | % | ||||||
Portfolio turnover rate | 7 | % | 1 | % | 13 | % | 14 | % | 19 | % | 32 | % |
See footnote summary on page 155.
140 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Minnesota Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.05 | $ 10.20 | $ 10.19 | $ 10.14 | $ 10.15 | $ 10.31 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .16 | .34 | .34 | .35 | .37 | .38 | ||||||||||||
Net realized and unrealized gain (loss) | (.10 | ) | (.15 | ) | .01 | .05 | (.01 | ) | (.15 | ) | ||||||||
Net increase in net asset value from operations | .06 | .19 | .35 | .40 | .36 | .23 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.16 | ) | (.34 | ) | (.34 | ) | (.35 | ) | (.37 | ) | (.39 | ) | ||||||
Net asset value, end of | $ 9.95 | $ 10.05 | $ 10.20 | $ 10.19 | $ 10.14 | $ 10.15 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .64 | % | 1.86 | % | 3.56 | % | 3.99 | % | 3.68 | % | 2.34 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $4,717 | $6,571 | $10,577 | $14,424 | $16,976 | $24,366 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.60 | %(e) | 1.60 | % | 1.60 | %(f) | 1.60 | % | 1.60 | % | 1.60 | % | ||||||
Expenses, before | 1.87 | %(e) | 1.87 | % | 1.88 | %(f) | 1.97 | % | 2.04 | % | 1.93 | % | ||||||
Expenses, before | 1.87 | %(e) | 1.87 | % | 1.81 | %(f) | 1.84 | % | 2.00 | % | 1.91 | % | ||||||
Net investment income, | 3.23 | %(e) | 3.33 | % | 3.41 | %(f) | 3.43 | % | 3.65 | % | 3.72 | % | ||||||
Portfolio turnover rate | 7 | % | 1 | % | 13 | % | 14 | % | 19 | % | 32 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 141 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Minnesota Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.06 | $ 10.21 | $ 10.20 | $ 10.15 | $ 10.16 | $ 10.32 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .16 | .34 | .34 | .35 | .37 | .38 | ||||||||||||
Net realized and unrealized gain (loss) | (.10 | ) | (.15 | ) | .01 | .05 | (.01 | ) | (.15 | ) | ||||||||
Net increase in net asset value from operations | .06 | .19 | .35 | .40 | .36 | .23 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.16 | ) | (.34 | ) | (.34 | ) | (.35 | ) | (.37 | ) | (.39 | ) | ||||||
Net asset value, end of | $ 9.96 | $ 10.06 | $ 10.21 | $ 10.20 | $ 10.15 | $ 10.16 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .64 | % | 1.86 | % | 3.55 | % | 3.98 | % | 3.68 | % | 2.34 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $13,817 | $13,818 | $15,635 | $17,153 | $16,402 | $19,248 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.60 | %(e) | 1.60 | % | 1.60 | %(f) | 1.60 | % | 1.60 | % | 1.60 | % | ||||||
Expenses, before | 1.85 | %(e) | 1.86 | % | 1.87 | %(f) | 1.96 | % | 2.03 | % | 1.92 | % | ||||||
Expenses, before | 1.85 | %(e) | 1.86 | % | 1.80 | %(f) | 1.83 | % | 1.99 | % | 1.90 | % | ||||||
Net investment income, | 3.24 | %(e) | 3.33 | % | 3.40 | %(f) | 3.42 | % | 3.65 | % | 3.70 | % | ||||||
Portfolio turnover rate | 7 | % | 1 | % | 13 | % | 14 | % | 19 | % | 32 | % |
See footnote summary on page 155.
142 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New Jersey Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 9.76 | $ 9.93 | $ 9.90 | $ 9.84 | $ 9.80 | $ 10.03 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .21 | .42 | .42 | .42 | .45 | .45 | ||||||||||||
Net realized and unrealized gain (loss) | (.23 | ) | (.17 | ) | .03 | .07 | .04 | (.22 | ) | |||||||||
Net increase (decrease) in | (.02 | ) | .25 | .45 | .49 | .49 | .23 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.21 | ) | (.42 | ) | (.42 | ) | (.43 | ) | (.45 | ) | (.46 | ) | ||||||
Net asset value, end of period | $ 9.53 | $ 9.76 | $ 9.93 | $ 9.90 | $ 9.84 | $ 9.80 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.27 | ) % | 2.52 | % | 4.65 | % | 5.03 | % | 5.05 | % | 2.39 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $107,870 | $101,138 | $83,088 | $77,570 | $76,164 | $81,632 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | .87 | %(e) | .87 | % | .87 | %(f) | .87 | % | .87 | % | .87 | % | ||||||
Expenses, before | 1.02 | %(e) | 1.10 | % | 1.15 | %(f) | 1.16 | % | 1.23 | % | 1.16 | % | ||||||
Expenses, before | 1.02 | %(e) | 1.03 | % | 1.01 | %(f) | 1.02 | % | 1.17 | % | 1.14 | % | ||||||
Net investment income, | 4.22 | %(e) | 4.23 | % | 4.25 | %(f) | 4.26 | % | 4.60 | % | 4.53 | % | ||||||
Portfolio turnover rate | 15 | % | 6 | % | 6 | % | 38 | % | 15 | % | 45 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 143 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New Jersey Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 9.76 | $ 9.93 | $ 9.90 | $ 9.84 | $ 9.80 | $ 10.04 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .17 | .35 | .35 | .35 | .38 | .38 | ||||||||||||
Net realized and | (.23 | ) | (.17 | ) | .03 | .07 | .04 | (.23 | ) | |||||||||
Net increase (decrease) in | (.06 | ) | .18 | .38 | .42 | .42 | .15 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.17 | ) | (.35 | ) | (.35 | ) | (.36 | ) | (.38 | ) | (.39 | ) | ||||||
Net asset value, end of | $ 9.53 | $ 9.76 | $ 9.93 | $ 9.90 | $ 9.84 | $ 9.80 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.62 | )% | 1.80 | % | 3.91 | % | 4.30 | % | 4.41 | % | 1.56 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $19,072 | $27,275 | $42,766 | $58,706 | $83,835 | $110,294 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.57 | %(e) | 1.57 | % | 1.57 | %(f) | 1.57 | % | 1.57 | % | 1.57 | % | ||||||
Expenses, before | 1.75 | %(e) | 1.81 | % | 1.86 | %(f) | 1.87 | % | 1.94 | % | 1.87 | % | ||||||
Expenses, before | 1.75 | %(e) | 1.74 | % | 1.72 | %(f) | 1.73 | % | 1.88 | % | 1.85 | % | ||||||
Net investment income, | 3.49 | %(e) | 3.52 | % | 3.55 | %(f) | 3.56 | % | 3.89 | % | 3.83 | % | ||||||
Portfolio turnover rate | 15 | % | 6 | % | 6 | % | 38 | % | 15 | % | 45 | % |
See footnote summary on page 155.
144 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New Jersey Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 9.76 | $ 9.93 | $ 9.90 | $ 9.84 | $ 9.81 | $ 10.04 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .17 | .35 | .35 | .35 | .38 | .38 | ||||||||||||
Net realized and | (.23 | ) | (.17 | ) | .03 | .07 | .03 | (.22 | ) | |||||||||
Net increase (decrease) in | (.06 | ) | .18 | .38 | .42 | .41 | .16 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.17 | ) | (.35 | ) | (.35 | ) | (.36 | ) | (.38 | ) | (.39 | ) | ||||||
Net asset value, end of | $ 9.53 | $ 9.76 | $ 9.93 | $ 9.90 | $ 9.84 | $ 9.81 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.62 | )% | 1.80 | % | 3.92 | % | 4.31 | % | 4.30 | % | 1.66 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $32,327 | $33,031 | $34,042 | $35,279 | $37,926 | $45,633 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.57 | %(e) | 1.57 | % | 1.57 | %(f) | 1.57 | % | 1.57 | % | 1.57 | % | ||||||
Expenses, before | 1.72 | %(e) | 1.80 | % | 1.85 | %(f) | 1.86 | % | 1.93 | % | 1.86 | % | ||||||
Expenses, before | 1.72 | %(e) | 1.74 | % | 1.71 | %(f) | 1.72 | % | 1.87 | % | 1.84 | % | ||||||
Net investment income, | 3.51 | %(e) | 3.52 | % | 3.55 | %(f) | 3.56 | % | 3.89 | % | 3.83 | % | ||||||
Portfolio turnover rate | 15 | % | 6 | % | 6 | % | 38 | % | 15 | % | 45 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 145 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Ohio Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning of period | $ 10.06 | $ 10.16 | $ 10.14 | $ 10.10 | $ 10.05 | $ 10.02 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .20 | .40 | .41 | .43 | .44 | .46 | ||||||||||||
Net realized and | (.17 | ) | (.10 | ) | .02 | .03 | .05 | .05 | ||||||||||
Net increase in net asset | .03 | .30 | .43 | .46 | .49 | .51 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.20 | ) | (.40 | ) | (.41 | ) | (.42 | ) | (.44 | ) | (.48 | ) | ||||||
Net asset value, end of | $ 9.89 | $ 10.06 | $ 10.16 | $ 10.14 | $ 10.10 | $ 10.05 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .29 | % | 3.05 | % | 4.40 | % | 4.67 | % | 5.02 | % | 5.20 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $98,958 | $93,801 | $87,902 | $85,749 | $78,184 | $75,102 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of | .85 | %(e) | .85 | % | .85 | %(f) | .85 | % | .85 | % | .85 | % | ||||||
Expenses, before | 1.02 | %(e) | 1.01 | % | .98 | %(f) | .99 | % | 1.14 | % | 1.15 | % | ||||||
Net investment income, | 3.97 | %(e) | 4.00 | % | 4.12 | %(f) | 4.19 | % | 4.38 | % | 4.59 | % | ||||||
Portfolio turnover rate | 4 | % | 4 | % | 11 | % | 23 | % | 33 | % | 23 | % |
See footnote summary on page 155.
146 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Ohio Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.05 | $ 10.15 | $ 10.13 | $ 10.09 | $ 10.04 | $ 10.02 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .17 | .33 | .34 | .36 | .37 | .39 | ||||||||||||
Net realized and | (.17 | ) | (.10 | ) | .02 | .03 | .05 | .04 | ||||||||||
Net increase in net asset value from operations | .00 | .23 | .36 | .39 | .42 | .43 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net investment income | (.17 | ) | (.33 | ) | (.34 | ) | (.35 | ) | (.37 | ) | (.41 | ) | ||||||
Net asset value, end of period | $ 9.88 | $ 10.05 | $ 10.15 | $ 10.13 | $ 10.09 | $ 10.04 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.06 | )% | 2.34 | % | 3.67 | % | 3.95 | % | 4.30 | % | 4.37 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $23,013 | $29,436 | $41,802 | $55,111 | $70,121 | $83,422 | ||||||||||||
Ratio to average net assets of: | ||||||||||||||||||
Expenses, net of | 1.55 | %(e) | 1.55 | % | 1.55 | %(f) | 1.55 | % | 1.55 | % | 1.55 | % | ||||||
Expenses, before | 1.73 | %(e) | 1.72 | % | 1.69 | %(f) | 1.69 | % | 1.85 | % | 1.86 | % | ||||||
Net investment income, net of waivers/reimbursements | 3.27 | %(e) | 3.30 | % | 3.42 | %(f) | 3.50 | % | 3.69 | % | 3.88 | % | ||||||
Portfolio turnover rate | 4 | % | 4 | % | 11 | % | 23 | % | 33 | % | 23 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 147 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Ohio Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.06 | $ 10.16 | $ 10.13 | $ 10.09 | $ 10.05 | $ 10.02 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .17 | .33 | .34 | .36 | .37 | .39 | ||||||||||||
Net realized and | (.17 | ) | (.10 | ) | .03 | .03 | .04 | .05 | ||||||||||
Net increase in net asset | .00 | .23 | .37 | .39 | .41 | .44 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.17 | ) | (.33 | ) | (.34 | ) | (.35 | ) | (.37 | ) | (.41 | ) | ||||||
Net asset value, end of | $ 9.89 | $ 10.06 | $ 10.16 | $ 10.13 | $ 10.09 | $ 10.05 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.06 | )% | 2.33 | % | 3.78 | % | 3.94 | % | 4.19 | % | 4.47 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $39,091 | $40,087 | $44,023 | $47,610 | $48,233 | $54,062 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of | 1.55 | %(e) | 1.55 | % | 1.55 | %(f) | 1.55 | % | 1.55 | % | 1.55 | % | ||||||
Expenses, before | 1.72 | %(e) | 1.71 | % | 1.68 | %(f) | 1.69 | % | 1.85 | % | 1.85 | % | ||||||
Net investment income, | 3.27 | %(e) | 3.31 | % | 3.42 | %(f) | 3.49 | % | 3.69 | % | 3.89 | % | ||||||
Portfolio turnover rate | 4 | % | 4 | % | 11 | % | 23 | % | 33 | % | 23 | % |
See footnote summary on page 155.
148 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Pennsylvania Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.44 | $ 10.58 | $ 10.53 | $ 10.48 | $ 10.44 | $ 10.58 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .21 | .41 | .42 | .44 | .48 | .50 | ||||||||||||
Net realized and | (.18 | ) | (.14 | ) | .05 | .05 | .04 | (.14 | ) | |||||||||
Net increase in net asset | .03 | .27 | .47 | .49 | .52 | .36 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.21 | ) | (.41 | ) | (.42 | ) | (.44 | ) | (.48 | ) | (.50 | ) | ||||||
Net asset value, end of | $ 10.26 | $ 10.44 | $ 10.58 | $ 10.53 | $ 10.48 | $ 10.44 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .25 | % | 2.60 | % | 4.57 | % | 4.75 | % | 5.06 | % | 3.57 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period | $97,270 | $92,626 | $81,151 | $78,472 | $74,132 | $84,053 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | .95 | %(e) | .95 | % | .95 | %(f) | .95 | % | .95 | % | .95 | % | ||||||
Expenses, before | 1.04 | %(e) | 1.03 | % | 1.11 | %(f) | 1.20 | % | 1.24 | % | 1.16 | % | ||||||
Expenses, before | 1.04 | %(e) | 1.03 | % | 1.01 | %(f) | 1.04 | % | 1.18 | % | 1.16 | % | ||||||
Net investment income, | 3.98 | %(e) | 3.92 | % | 4.00 | %(f) | 4.19 | % | 4.55 | % | 4.91 | % | ||||||
Portfolio turnover rate | 5 | % | 8 | % | 23 | % | 36 | % | 19 | % | 17 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 149 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Pennsylvania Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.44 | $ 10.58 | $ 10.53 | $ 10.48 | $ 10.44 | $ 10.58 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .17 | .34 | .35 | .37 | .40 | .44 | ||||||||||||
Net realized and | (.18 | ) | (.14 | ) | .05 | .05 | .04 | (.15 | ) | |||||||||
Net increase (decrease) in | (.01 | ) | .20 | .40 | .42 | .44 | .29 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.17 | ) | (.34 | ) | (.35 | ) | (.37 | ) | (.40 | ) | (.43 | ) | ||||||
Net asset value, end of | $ 10.26 | $ 10.44 | $ 10.58 | $ 10.53 | $ 10.48 | $ 10.44 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.11 | ) % | 1.89 | % | 3.84 | % | 4.01 | % | 4.32 | % | 2.84 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $15,503 | $21,329 | $33,448 | $41,760 | $55,552 | $68,409 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ reimbursements | 1.65 | %(e) | 1.65 | % | 1.65 | %(f) | 1.65 | % | 1.65 | % | 1.65 | % | ||||||
Expenses, before | 1.76 | %(e) | 1.74 | % | 1.82 | %(f) | 1.90 | % | 1.95 | % | 1.87 | % | ||||||
Expenses, before | 1.76 | %(e) | 1.74 | % | 1.72 | %(f) | 1.74 | % | 1.89 | % | 1.87 | % | ||||||
Net investment income, | 3.26 | %(e) | 3.21 | % | 3.31 | %(f) | 3.49 | % | 3.85 | % | 4.21 | % | ||||||
Portfolio turnover rate | 5 | % | 8 | % | 23 | % | 36 | % | 19 | % | 17 | % |
See footnote summary on page 155.
150 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Pennsylvania Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.44 | $ 10.58 | $ 10.53 | $ 10.48 | $ 10.44 | $ 10.58 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .17 | .34 | .35 | .37 | .40 | .44 | ||||||||||||
Net realized and | (.18 | ) | (.14 | ) | .05 | .05 | .04 | (.15 | ) | |||||||||
Net increase (decrease) in | (.01 | ) | .20 | .40 | .42 | .44 | .29 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.17 | ) | (.34 | ) | (.35 | ) | (.37 | ) | (.40 | ) | (.43 | ) | ||||||
Net asset value, end of | $ 10.26 | $ 10.44 | $ 10.58 | $ 10.53 | $ 10.48 | $ 10.44 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | (.10 | )% | 1.89 | % | 3.84 | % | 4.02 | % | 4.32 | % | 2.84 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $30,824 | $31,295 | $34,332 | $34,705 | $36,168 | $42,917 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ reimbursements | 1.65 | %(e) | 1.65 | % | 1.65 | %(f) | 1.65 | % | 1.65 | % | 1.65 | % | ||||||
Expenses, before | 1.74 | %(e) | 1.74 | % | 1.82 | %(f) | 1.90 | % | 1.94 | % | 1.87 | % | ||||||
Expenses, before | 1.74 | %(e) | 1.74 | % | 1.72 | %(f) | 1.74 | % | 1.88 | % | 1.87 | % | ||||||
Net investment income, | 3.27 | %(e) | 3.22 | % | 3.30 | %(f) | 3.49 | % | 3.85 | % | 4.20 | % | ||||||
Portfolio turnover rate | 5 | % | 8 | % | 23 | % | 36 | % | 19 | % | 17 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 151 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Virginia Portfolio | ||||||||||||||||||
Class A | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.68 | $ 10.84 | $ 10.82 | $ 10.77 | $ 10.75 | $ 10.77 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .22 | .45 | .47 | .49 | .52 | .52 | ||||||||||||
Net realized and | (.15 | ) | (.16 | ) | .02 | .05 | .01 | (.03 | ) | |||||||||
Net increase in net asset | .07 | .29 | .49 | .54 | .53 | .49 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.22 | ) | (.45 | ) | (.47 | ) | (.49 | ) | (.51 | ) | (.51 | ) | ||||||
Net asset value, end of period | $ 10.53 | $ 10.68 | $ 10.84 | $ 10.82 | $ 10.77 | $ 10.75 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .67 | % | 2.72 | % | 4.61 | % | 5.11 | % | 5.04 | % | 4.66 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $128,878 | $119,858 | $109,343 | $88,605 | $64,089 | $71,572 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | .72 | %(e) | .72 | % | .72 | %(f) | .72 | % | .72 | % | .72 | % | ||||||
Expenses, before | .98 | %(e) | .99 | % | 1.01 | %(f) | 1.09 | % | 1.18 | % | 1.15 | % | ||||||
Expenses, before | .98 | %(e) | .99 | % | 1.00 | %(f) | 1.00 | % | 1.18 | % | 1.15 | % | ||||||
Net investment income, | 4.13 | %(e) | 4.19 | % | 4.33 | %(f) | 4.48 | % | 4.82 | % | 4.87 | % | ||||||
Portfolio turnover rate | 4 | % | 15 | % | 31 | % | 23 | % | 10 | % | 25 | % |
See footnote summary on page 155.
152 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Virginia Portfolio | ||||||||||||||||||
Class B | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.66 | $ 10.82 | $ 10.80 | $ 10.75 | $ 10.73 | $ 10.75 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .19 | .38 | .39 | .41 | .44 | .45 | ||||||||||||
Net realized and | (.15 | ) | (.17 | ) | .02 | .05 | .01 | (.04 | ) | |||||||||
Net increase in net asset | .04 | .21 | .41 | .46 | .45 | .41 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.19 | ) | (.37 | ) | (.39 | ) | (.41 | ) | (.43 | ) | (.43 | ) | ||||||
Net asset value, end of | $ 10.51 | $ 10.66 | $ 10.82 | $ 10.80 | $ 10.75 | $ 10.73 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .32 | % | 2.01 | % | 3.89 | % | 4.36 | % | 4.32 | % | 3.94 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $16,733 | $23,486 | $37,006 | $46,489 | $65,978 | $82,541 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.42 | %(e) | 1.42 | % | 1.42 | %(f) | 1.42 | % | 1.42 | % | 1.42 | % | ||||||
Expenses, before | 1.70 | %(e) | 1.69 | % | 1.72 | %(f) | 1.80 | % | 1.89 | % | 1.85 | % | ||||||
Expenses, before | 1.70 | %(e) | 1.69 | % | 1.71 | %(f) | 1.71 | % | 1.89 | % | 1.85 | % | ||||||
Net investment income, | 3.42 | %(e) | 3.49 | % | 3.64 | %(f) | 3.81 | % | 4.13 | % | 4.18 | % | ||||||
Portfolio turnover rate | 4 | % | 15 | % | 31 | % | 23 | % | 10 | % | 25 | % |
See footnote summary on page 155.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 153 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Virginia Portfolio | ||||||||||||||||||
Class C | ||||||||||||||||||
Six Months Ended March 31, 2008 (unaudited) | Year Ended September 30, | |||||||||||||||||
2007 | 2006 | 2005 | 2004(a) | 2003 | ||||||||||||||
Net asset value, beginning | $ 10.66 | $ 10.81 | $ 10.79 | $ 10.74 | $ 10.73 | $ 10.75 | ||||||||||||
Income From | ||||||||||||||||||
Net investment | .19 | .38 | .39 | .41 | .44 | .45 | ||||||||||||
Net realized and | (.16 | ) | (.16 | ) | .02 | .06 | – 0 | – | (.04 | ) | ||||||||
Net increase in net asset | .03 | .22 | .41 | .47 | .44 | .41 | ||||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net | (.19 | ) | (.37 | ) | (.39 | ) | (.42 | ) | (.43 | ) | (.43 | ) | ||||||
Net asset value, end of | $ 10.50 | $ 10.66 | $ 10.81 | $ 10.79 | $ 10.74 | $ 10.73 | ||||||||||||
Total Return | ||||||||||||||||||
Total investment return | .23 | % | 2.11 | % | 3.90 | % | 4.41 | % | 4.23 | % | 3.94 | % | ||||||
Ratios/Supplemental | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $37,054 | $35,516 | $34,544 | $29,412 | $28,654 | $33,486 | ||||||||||||
Ratio to average net | ||||||||||||||||||
Expenses, net of waivers/ | 1.42 | %(e) | 1.42 | % | 1.42 | %(f) | 1.42 | % | 1.42 | % | 1.42 | % | ||||||
Expenses, before | 1.69 | %(e) | 1.69 | % | 1.71 | %(f) | 1.79 | % | 1.88 | % | 1.85 | % | ||||||
Expenses, before | 1.69 | %(e) | 1.69 | % | 1.70 | %(f) | 1.70 | % | 1.88 | % | 1.85 | % | ||||||
Net investment income, | 3.44 | %(e) | 3.50 | % | 3.64 | %(f) | 3.80 | % | 4.13 | % | 4.17 | % | ||||||
Portfolio turnover rate | 4 | % | 15 | % | 31 | % | 23 | % | 10 | % | 25 | % |
See footnote summary on page 155.
154 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Financial Highlights
(a) | As of October 1, 2003, the Portfolios have adopted the method of accounting for interim payments on swap contracts in accordance with Financial Accounting Standards Board Statement No. 133. These interim payments are reflected within net realized and unrealized gain (loss) on swap contracts, however prior to October 1, 2003, these interim payments were reflected within interest income/expense on the statement of operations. For the year ended September 30, 2004, the effect of this change to the net investment income and the net realized and unrealized gain (loss) on investment transactions was less than $0.01 per share. The effect on the ratio of net investment income to average net assets was as follows: |
Class A | Class B | Class C | |||||||
Arizona | .01 | % | .00 | % | .00 | % | |||
Florida | (.02 | )% | (.02 | )% | (.02 | )% | |||
Massachusetts | (.01 | )% | .00 | % | (.01 | )% | |||
Michigan | .01 | % | .01 | % | .02 | % | |||
Minnesota | .00 | % | .00 | % | .00 | % | |||
New Jersey | .01 | % | .01 | % | .01 | % | |||
Ohio | (.04 | )% | (.03 | )% | (.04 | )% | |||
Pennsylvania | .00 | % | .01 | % | .00 | % | |||
Virginia | (.02 | )% | (.01 | )% | (.02 | )% |
(b) | Net of fees waived and expenses reimbursed by the Adviser. |
(c) | Based on average shares outstanding. |
(d) | Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charge or contingent deferred sales charge is not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. |
(e) | Annualized. |
(f) | The ratio includes expenses attributable to costs of proxy solicitation. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 155 |
Financial Highlights
BOARD OF TRUSTEES
William H. Foulk, Jr.,(1) Chairman
Marc O. Mayer, President and Chief Executive Officer
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Garry L. Moody(1)
Marshall C. Turner, Jr.(1)
Earl D. Weiner(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
(Guy) Robert B. Davidson III(2), Senior Vice President
Douglas J. Peebles, Senior Vice President
Jeffrey S. Phlegar, Senior Vice President
Michael G. Brooks(2), Vice President
Fred S. Cohen(2), Vice President
Terrance T. Hults(2), Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer and Chief Financial Officer
Thomas R. Manley, Controller
Custodian and Accounting Agent The Bank of New York
Principal Underwriter AllianceBernstein Investments, Inc.
Legal Counsel Seward & Kissel LLP | Independent Registered Public Accounting Firm Ernst & Young LLP
Transfer Agent AllianceBernstein Investor |
(1) | Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. Mr. Foulk is the sole member of the Fair Value Pricing Committee. |
(2) | The day-to-day management of and investment decisions for the Portfolios’ portfolios are made by the Municipal Bond Investment Team. Michael G. Brooks, Fred S. Cohen, (Guy) Robert B. Davidson III and Terrance T. Hults are the investment professionals with the most significant responsibility for the day-to-day management of the Portfolios’ portfolios. |
156 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Board of Trustees
Information Regarding the Review and Approval of the Fund’s Advisory Agreement
The disinterested trustees (the “trustees”) of AllianceBernstein Municipal Income Fund II (the “Fund”) approved the continuance of the Fund’s Advisory Agreement with the Adviser in respect of each of the Arizona Portfolio, Florida Portfolio, Massachusetts Portfolio, Michigan Portfolio, Minnesota Portfolio, New Jersey Portfolio, Ohio Portfolio, Pennsylvania Portfolio and Virginia Portfolio (each, a “Portfolio,” and collectively, the “Portfolios”) at a meeting held on October 30-November 1, 2007.
Prior to approval of the continuance of the Advisory Agreement, the trustees had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser who advised on the relevant legal standards. The trustees also reviewed an independent evaluation prepared by the Fund’s Senior Officer (who is also the Fund’s Independent Compliance Officer) of the reasonableness of the advisory fee in the Advisory Agreement in respect of each Portfolio wherein the Senior Officer concluded that the contractual fee for each Portfolio was reasonable. The trustees also discussed the proposed continuances in private sessions with counsel and the Fund’s Senior Officer.
The trustees considered their knowledge of the nature and quality of the services provided by the Adviser to the Portfolios gained from their experience as trustees or directors of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the trustees and its responsiveness, frankness and attention to concerns raised by the trustees in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. The trustees noted that they have four regular meetings each year, at each of which they receive presentations from the Adviser on the investment results of the Portfolios and review extensive materials and information presented by the Adviser.
The trustees also considered all other factors they believed relevant, including the specific matters discussed below. In their deliberations, the trustees did not identify any particular information that was all-important or controlling, and different trustees may have attributed different weights to the various factors. The trustees determined that the selection of the Adviser to manage each Portfolio and the overall arrangements between each Portfolio and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the trustees considered relevant in the exercise of their business
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 157 |
judgment. The material factors and conclusions that formed the basis for the trustees’ determinations included the following:
Nature, Extent and Quality of Services Provided
The trustees considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The trustees also considered that the Advisory Agreement in respect of each Portfolio provides that the Portfolio will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services provided at the Portfolio’s request by employees of the Adviser or its affiliates. Requests for these reimbursements are approved by the trustees on a quarterly basis and (to the extent requested and paid) result in a higher rate of total compensation from the Portfolios to the Adviser than the fee rate stated in the Portfolio’s Advisory Agreement. The trustees noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant retained by the Fund’s Senior Officer. The trustees further noted that the Adviser had waived reimbursements in each Portfolio’s last fiscal year from the Michigan Portfolio, Minnesota Portfolio and Virginia Portfolio. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Portfolios’ other service providers, also were considered. The trustees concluded that, overall, they were satisfied with the nature, extent and quality of services provided to each of the Portfolios under the Advisory Agreement.
Costs of Services Provided and Profitability
The trustees reviewed a schedule of the revenues, expenses and related notes indicating the profitability of each Portfolio to the Adviser for calendar years 2005 and 2006 that had been prepared with an updated expense allocation methodology arrived at in consultation with an independent consultant retained by the Fund’s Senior Officer. The trustees reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and noted that there are a number of potentially acceptable allocation methodologies for information of this type. The trustees noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Portfolios, including those relating to its subsidiaries which provide transfer agency and distribution services to the Portfolios. The trustees recognized that it is difficult to make comparisons of profitability from fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors. The trustees focused on the profitability of the Adviser’s relationships with the Portfolios before taxes and distribution expenses. The trustees concluded that they were satisfied that the Adviser’s level of profitability from its relationship with each Portfolio was not unreasonable.
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Fall-Out Benefits
The trustees considered the benefits to the Adviser and its affiliates from their relationships with the Portfolios other than the fees and expense reimbursements payable under the Advisory Agreement, including but not limited to benefits relating to soft dollar arrangements (whereby the Adviser receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis), 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of certain classes of the Portfolios’ shares and transfer agency fees paid by the Portfolios to a wholly owned subsidiary of the Adviser. The trustees recognized that the Adviser’s profitability would be somewhat lower without these benefits. The trustees noted that since the Portfolios do not engage in brokerage transactions, the Adviser does not receive soft dollar benefits in respect of portfolio transactions of the Portfolios. The trustees understood that the Adviser also might derive reputational and other benefits from its association with the Portfolios.
Investment Results
In addition to the information reviewed by the trustees in connection with the meeting, the trustees receive detailed performance information for each Portfolio at each regular Board meeting during the year. At the meeting, the trustees reviewed information prepared by Lipper showing the performance for Class A shares of each Portfolio as compared to a group of funds selected by Lipper (the “Performance Group”) and as compared to a broader array of funds selected by Lipper (the “Performance Universe”), and information prepared by the Adviser showing performance of the Class A Shares of each Portfolio as compared to the Lehman Brothers Municipal Bond Index (the “Index”), in each case for periods ended July 31, 2007 over the 1-, 3-, 5- and 10-year periods and (in the case of the Index) the since inception period.
Arizona Portfolio
The trustees noted that the Portfolio (June 1994 inception) was in the 1st quintile of the Performance Group and Performance Universe in all periods reviewed except in the 5-year period of the Performance Universe when it was in the 2nd quintile, and that the Portfolio outperformed the Index in all periods reviewed. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
Florida Portfolio
The trustees noted that the Portfolio (June 1993 inception) was in the 2nd quintile of the Performance Group and Performance Universe in all periods reviewed except in the 10-year period when it was in the 1st quintile of the Performance Group and Performance Universe, and that it outperformed the Index in the 3- and 5-year periods and underperformed the Index in all other periods reviewed. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
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Massachusetts Portfolio
The trustees noted that the Portfolio (March 1994 inception) was in the 1st quintile of the Performance Group and Performance Universe in the 1- and 3-year periods and 2nd quintile of the Performance Group and Performance Universe in the 5- and 10-year periods, and that the Portfolio outperformed the Index in the 3-year and since inception periods and underperformed the Index in all other periods reviewed. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
Michigan Portfolio
The trustees noted that the Portfolio (February 1994 inception) was 1 out of 4 of the Performance Group and in the 1st quintile of the Performance Universe in all periods reviewed except in the 1-year period of the Performance Universe when it was in the 2nd quintile, and that the Portfolio outperformed the Index in the 3- and 10-year and since inception periods and underperformed the Index in the 1- and 5-year periods. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
Minnesota Portfolio
The trustees noted that the Portfolio (June 1993 inception) was in the 3rd quintile of the Performance Group and 2nd quintile of the Performance Universe in the 1-, 3- and 5-year periods and 2nd quintile of the Performance Group and 1st quintile of the Performance Universe in the 10-year period, and that the Portfolio underperformed the Index in all periods reviewed except in the 3-year period when it outperformed the Index. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
New Jersey Portfolio
The trustees noted that the Portfolio (June 1993 inception) was in the 3rd quintile of the Performance Group and Performance Universe in the 1-, 5- and 10-year periods and 2nd quintile of the Performance Group and Performance Universe in the 3-year period, and that the Portfolio outperformed the Index in the 3-year period and underperformed the Index in all other periods reviewed. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
Ohio Portfolio
The trustees noted that the Portfolio (June 1993 inception) was in the 1st quintile of the Performance Group and Performance Universe in the 1-year period, 2nd quintile of the Performance Group and 1st quintile of the Performance Universe in the 3- and 5-year periods and 2nd quintile of the Performance Group and Performance Universe in the 10-year period, and that the Portfolio outperformed the Index in the 1- and 3-year periods and underperformed the Index in the other periods reviewed. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
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Pennsylvania Portfolio
The trustees noted that the Portfolio (June 1993 inception) was in the 2nd quintile of the Performance Group and Performance Universe in the 1-year period, 2nd quintile of the Performance Group and 3rd quintile of the Performance Universe in the 3-year period, 1st quintile of the Performance Group and 2nd quintile of the Performance Universe in the 5-year period, and 1st quintile of the Performance Group and Performance Universe in the 10-year period, and that the Portfolio underperformed the Index in all periods reviewed except in the 3-year period when it matched the Index. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
Virginia Portfolio
The trustees noted that the Portfolio (April 1994 inception) was in the 2nd quintile of the Performance Group and Performance Universe in the 1-year period, 2nd quintile of the Performance Group and 1st quintile of the Performance Universe in the 3-year period and 1st quintile of the Performance Group and Performance Universe in the 5- and 10-year periods, and that the Fund outperformed the Index in all periods reviewed except in the 1-year period when it underperformed the Index. Based on their review, the trustees concluded that the Portfolio’s relative performance over time had been satisfactory.
Advisory Fees and Other Expenses
The trustees considered the advisory fee rate paid by each Portfolio to the Adviser and information prepared by Lipper concerning fee rates paid by other funds in the same Lipper category as the Portfolio at a common asset level. The trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds.
The Adviser informed the trustees that there are no institutional products managed by it which have a substantially similar investment style as the Portfolios. The trustees reviewed information in the Adviser’s Form ADV and noted that it charged institutional clients lower fees for advising comparably sized accounts using strategies that differ from those of the Portfolios but which involve investments in securities of the same type that the Portfolios invest in (i.e., fixed income municipal securities).
The Adviser reviewed with the trustees the significantly greater scope of the services it provides to the Portfolios relative to institutional clients. The Adviser also noted that since mutual funds are constantly issuing and redeeming shares, they are more difficult to manage than an institutional account, where the assets are relatively stable. In light of these facts, the trustees did not place significant weight on these fee comparisons.
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The trustees also considered the total expense ratio of the Class A shares of each Portfolio in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of funds comparable to a Portfolio and an Expense Universe as a broader group, consisting of all funds in the Portfolio’s investment classification/objective with a similar load type as the Portfolio. The trustees noted that because of the small number of funds in the Portfolio’s Lipper category, at the request of the Adviser and the Fund’s Senior Officer, Lipper had expanded the Expense Group of each Portfolio except the Massachusetts Portfolio, New Jersey Portfolio and Pennsylvania Portfolio to include peers that had a similar (but not the same) Lipper investment objective/classification. The Expense Universe for those Portfolios was also expanded by Lipper pursuant to Lipper’s standard guidelines and not at the request of the Adviser or the Fund’s Senior Officer. The Class A expense ratio of each Portfolio was based on the Portfolio’s latest fiscal year expense ratio. The expense ratio of the Arizona Portfolio, Florida Portfolio, Massachusetts Portfolio, Minnesota Portfolio, New Jersey Portfolio, Ohio Portfolio, Pennsylvania Portfolio and Virginia Portfolio reflected fee waivers and/or expense reimbursements as a result of an applicable expense limitation undertaking by the Adviser. The trustees recognized that the expense ratio information for each Portfolio potentially reflected on the Adviser’s provision of services, as the Adviser is responsible for coordinating services provided to each Portfolio by others. The trustees noted that it was likely that the expense ratios of some funds in each Portfolio’s Lipper category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases were voluntary and perhaps temporary.
Arizona Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points, plus the 4 basis point impact of the latest fiscal year administrative expense reimbursement by the Portfolio pursuant to the Advisory Agreement, was lower than the Expense Group median. The trustees noted that the Portfolio’s total expense ratio, which had been capped by the Adviser, was lower than the Expense Group median and higher than the Expense Universe median. The trustees concluded that the Portfolio’s expense ratio was satisfactory.
Florida Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points, plus the 3.7 basis point impact of the latest fiscal year administrative expense reimbursement by the Portfolio pursuant to the Advisory Agreement, was lower than the Expense Group median. The trustees noted that the Portfolio’s total expense ratio, which had been capped by the Adviser, was lower than the Expense Group and Expense Universe medians. The trustees concluded that the Portfolio’s expense ratio was satisfactory.
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Massachusetts Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points pursuant to the Advisory Agreement, was lower than the Expense Group median. The trustees noted that the latest fiscal year administrative expense reimbursement by the Portfolio pursuant to the Advisory Agreement was 5.8 basis points, and that as a result the rate of total compensation received by the Adviser from the Portfolio pursuant to the Advisory Agreement was higher than the Expense Group median. The trustees also noted that the Portfolio’s total expense ratio, which had been capped by the Adviser, was lower than the Expense Group and Expense Universe medians. The trustees concluded that the Portfolio’s expense ratio was satisfactory.
Michigan Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points was lower than the Expense Group median. The trustees noted that in the Portfolio’s latest fiscal year, the administrative expense reimbursement of 5.7 basis points had been waived by the Adviser. The trustees noted that the Portfolio’s total expense ratio, which had been capped by the Adviser (although the expense ratio was currently lower than the cap) was higher than the Expense Group and Expense Universe medians. The trustees also noted that the Adviser had reviewed with them steps being taken that are intended to reduce the expenses of the AllianceBernstein Funds. The trustees concluded that the Portfolio’s expense ratio was acceptable.
Minnesota Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points was lower than the Expense Group median. The trustees noted that in the Portfolio’s latest fiscal year, the administrative expense reimbursement of 8.2 basis points had been waived by the Adviser. The trustees noted that the Portfolio’s total expense ratio, which had been capped by the Adviser, was higher than the Expense Group and Expense Universe medians. The trustees also noted that the Adviser had reviewed with them steps being taken that are intended to reduce the expenses of the AllianceBernstein Funds. The trustees concluded that the Portfolio’s expense ratio was acceptable.
New Jersey Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points, plus the 4.9 basis point impact of the latest fiscal year administrative expense reimbursement by the Portfolio pursuant to the Advisory Agreement, was lower than the Expense Group median. The trustees noted that the Portfolio’s total expense ratio, which had been capped by the Adviser, was higher than the
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 163 |
Expense Group and Expense Universe medians. The trustees also noted that the Adviser had reviewed with them steps being taken that are intended to reduce the expenses of the AllianceBernstein Funds. The trustees concluded that the Portfolio’s expense ratio was acceptable.
Ohio Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points, plus the 4.5 basis point impact of the latest fiscal year administrative expense reimbursement by the Portfolio pursuant to the Advisory Agreement, was lower than the Expense Group median. The trustees noted that the Portfolio’s total expense ratio, which had been capped by the Adviser, was lower than the Expense Group median and the same as the Expense Universe median. The trustees concluded that the Portfolio’s expense ratio was satisfactory.
Pennsylvania Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points, plus the 5.3 basis point impact of the latest fiscal year administrative expense reimbursement by the Portfolio pursuant to the Advisory Agreement, was lower than the Expense Group median. The trustees noted that the Portfolio’s total expense ratio, which had been capped by the Adviser, was higher than the Expense Group and Expense Universe medians. The trustees also noted that the Adviser had reviewed with them steps being taken that are intended to reduce the expenses of the AllianceBernstein Funds. The trustees concluded that the Portfolio’s expense ratio was acceptable.
Virginia Portfolio
The information reviewed by the trustees showed that the Portfolio’s at approximate current size contractual effective advisory fee rate of 45 basis points was lower than the Expense Group median. The trustees noted that in the Portfolio’s latest fiscal year, the administrative expense reimbursement of 4.7 basis points had been waived by the Adviser. The trustees noted that the Portfolio’s total expense ratio, which had been capped by the Adviser, was lower than the Expense Group and Expense Universe medians. The trustees concluded that the Portfolio’s expense ratio was satisfactory.
Economies of Scale
The trustees noted that the advisory fee schedule for each Portfolio contains breakpoints that reduce the fee rates on assets above specified levels. The trustees also considered presentations by an independent consultant discussing economies of scale in the mutual fund industry and for the AllianceBernstein Funds as
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well as a presentation by the Adviser concerning certain of its views on economies of scale. The trustees believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The trustees noted that there is no established methodology for establishing breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The trustees observed that in the mutual fund industry as a whole, as well as among funds similar to the Portfolios, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The trustees also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the trustees concluded that each Portfolio’s breakpoint arrangements would result in a sharing of economies of scale in the event the Portfolio’s net assets exceed a breakpoint in the future.
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THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS.
SUMMARY OF SENIOR OFFICER’S EVALUATION OF INVESTMENT ADVISORY AGREEMENT1
The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the “Adviser”) and AllianceBernstein Municipal Income Fund II (the “Trust”) in respect of the following Portfolios: 2
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
The evaluation of the Investment Advisory Agreement was prepared by Philip L. Kirstein, the Senior Officer of the Trust, for the Trustees of the Trust, as required by an August 2004 agreement between the Adviser and the New York State Attorney General (“the NYAG”). The Senior Officer’s evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Trustees of the Trust to perform its duties pursuant to Section 15 of the Investment Company Act of 1940 (the “40 Act”) and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees proposed to be paid by the Portfolios, which was provided to the Trustees in connection with their review of the proposed approval of the continuance of the Investment Advisory Agreement. The Senior Officer’s evaluation considered the following factors:
1. | Advisory fees charged to institutional and other clients of the Adviser for like services; |
2. | Advisory fees charged by other mutual fund companies for like services; |
3. | Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreements, excluding any intra-corporate profit; |
4. | Profit margins of the Adviser and its affiliates from supplying such services; |
1 | It should be noted that Senior Officer’s fee evaluation was completed on October 18, 2007. |
2 | Future references to the Portfolios do not include “AllianceBernstein.” References in the fee summary pertaining to performance and expense ratios refer to the Class A shares of the Portfolios. |
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5. | Possible economies of scale as the Portfolios grow larger; and |
6. | Nature and quality of the Adviser’s services including the performance of the Portfolios. |
PORTFOLIO ADVISORY FEES, EXPENSE REIMBURSEMENTS, CAPS & RATIOS
The Adviser proposed that the Portfolios pay the advisory fee set forth in the table below for receiving the services to be provided pursuant to the Investment Advisory Agreement. The fee schedule below, implemented in January 2004 in consideration of the Adviser’s settlement with the NYAG in December 2003, is based on a master schedule that contemplates eight categories of funds with almost all funds in each category having the same advisory fee schedule.3
Category | Advisory Fee4 | Trust | ||
Low Risk Income | 45 bp on 1st $2.5 billion 40 bp on next $2.5 billion 35 bp on the balance | Municipal Income Fund II |
The Portfolios’ net assets on September 30, 2007 are set forth below:
Portfolio | Net Assets ($MM) | |
Arizona Portfolio | $ 204.3 | |
Florida Portfolio | $ 192.3 | |
Massachusetts Portfolio | $ 134.3 | |
Michigan Portfolio | $ 122.3 | |
Minnesota Portfolio | $ 93.7 | |
New Jersey Portfolio | $ 161.7 | |
Ohio Portfolio | $ 163.4 | |
Pennsylvania Portfolio | $ 145.3 | |
Virginia Portfolio | $ 178.8 |
The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative, and other services. Indicated below are the reimbursement amounts, which the Adviser received from the
3 | Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser’s settlement with the NYAG. |
4 | The management fees for each Portfolio are based on the percentage of each Portfolio’s average daily net assets, not a combination of any of the Portfolios. |
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Portfolios during their most recently completed fiscal year; expressed in dollars and as a percentage of average daily net assets:
Portfolio | Amount | As a % of Average Daily Net Assets | ||||
Arizona Portfolio | $ | 80,500 | 0.039 | % | ||
Florida Portfolio | $ | 80,500 | 0.017 | % | ||
Massachusetts Portfolio | $ | 80,500 | 0.058 | % | ||
Michigan Portfolio5 | $ | 80,500 | 0.057 | % | ||
Minnesota Portfolio5 | $ | 80,500 | 0.082 | % | ||
New Jersey Portfolio | $ | 80,500 | 0.049 | % | ||
Ohio Portfolio | $ | 80,500 | 0.045 | % | ||
Pennsylvania Portfolio | $ | 80,500 | 0.053 | % | ||
Virginia Portfolio5 | $ | 80,500 | 0.047 | % |
The Adviser has agreed to waive that portion of its advisory fees and/or reimburse certain of the Portfolios for that portion of the Portfolios’ total operating expenses to the degree necessary to limit each Portfolio’s expense ratios to the amounts set forth below for each Portfolio’s current fiscal year. The waiver agreement is terminable by the Adviser at the end of the Portfolios’ fiscal year upon at least 60 days written notice. In addition, set forth below are the gross expense ratios of the Portfolios, annualized for the most recent semi-annual period:
Portfolio | Expense Cap Pursuant to Expense Limitation Undertaking | Gross Expense Ratio | Fiscal Year End | |||||||
Arizona Portfolio | Class A Class B Class C | 0.78 1.48 1.48 | % % % | 0.94 1.65 1.64 | % % % | September 30 | ||||
Florida Portfolio | Class A Class B Class C | 0.78 1.48 1.48 | % % % | 0.95 1.66 1.65 | % % % | September 30 | ||||
Massachusetts Portfolio | Class A Class B Class C | 0.82 1.52 1.52 | % % % | 1.04 1.75 1.74 | % % % | September 30 | ||||
Michigan Portfolio | Class A Class B Class C | 1.01 1.71 1.71 | % % % | 1.08 1.79 1.78 | % % % | September 30 | ||||
Minnesota Portfolio | Class A Class B Class C | 0.90 1.60 1.60 | % % % | 1.15 1.87 1.86 | % % % | September 30 | ||||
New Jersey Portfolio | Class A Class B Class C | 0.87 1.57 1.57 | % % % | 1.09 1.80 1.79 | % % % | September 30 |
5 | The Adviser waived the amount in its entirety. |
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Portfolio | Expense Cap Pursuant to Expense Limitation Undertaking | Gross Expense Ratio | Fiscal Year End | |||||||
Ohio Portfolio | Class A Class B Class C | 0.85 1.55 1.55 | % % % | 1.00 1.71 1.70 | % % % | September 30 | ||||
Pennsylvania Portfolio | Class A Class B Class C | 0.95 1.65 1.65 | % % % | 1.02 1.73 1.72 | % % % | September 30 | ||||
Virginia Portfolio | Class A Class B Class C | 0.72 1.42 1.42 | % % % | 0.97 1.68 1.67 | % % % | September 30 |
I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The advisory fees charged to investment companies which the Adviser manages and sponsors are normally higher than those charged to similar sized institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Portfolios that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers, who among other responsibilities make the certifications required under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the Portfolios’ third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative, legal and compliance requirements for the Portfolios are more costly than those for institutional client assets due to the greater complexities and time required for investment companies, although as previously noted, a portion of these expenses are reimbursed by the Portfolios to the Adviser. Also, retail mutual funds managed by the Adviser are widely held. Servicing the Portfolios’ investors is more time consuming and labor intensive compared to institutional clients since the Adviser needs to communicate with a more extensive network of financial intermediaries and shareholders. In addition, managing the cash flow of an investment company may be more difficult than that of a stable pool of assets, such as an institutional client account with little cash movement in either direction, particularly, if a fund is in net redemption and the Adviser is frequently forced to sell securities to raise cash for redemptions. However, managing a fund with positive cash flow may be easier at times than managing a stable pool of assets. Finally, in recent years, investment advisers have been sued by institutional clients and have suffered reputational damage both by the attendant publicity and outcomes other than complete victories. Accordingly, the legal and reputational risks associated with institutional accounts are greater than previously thought, although still not equal to those related to the mutual fund industry.
Notwithstanding the Adviser’s view that managing an investment company is not comparable to managing other institutional accounts because the services
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 169 |
provided are different, it is worth considering information regarding the advisory fees charged to institutional accounts with substantially similar investment styles as the Portfolios. However, with respect to the Portfolios, the Adviser represented that there is no institutional product in the Adviser’s Form ADV that has a substantially similar investment style as the Portfolios. It should be noted that the Adviser has represented that it does manage separately managed accounts that invest principally in municipal securities but those mandates have a substantially lower risk profile (credit and interest rate risk) than the Portfolios.
The Adviser represented that it does not sub-advise any registered investment companies of other fund families with a substantially similar investment style as any of the Portfolios.
II. | MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUNDS COMPANIES FOR LIKE SERVICES. |
Lipper, Inc. (“Lipper”), an analytical service that is not affiliated with the Adviser, compared the fees charged to the Portfolio with fees charged to other investment companies for similar services by other investment advisers. Lipper’s analysis included the Portfolios’ rankings with respect to the contractual management fee relative to the median of the Portfolios’ Lipper Expense Group (“EG”) at the approximate current asset level of the Portfolios.6
Lipper describes an EG as a representative sample of comparable funds. Lipper’s standard methodology for screening funds to be included in an EG entails the consideration of several fund criteria, including fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes.7 An EG will typically consist of seven to twenty funds. Certain of the Portfolios had original EGs that had an insufficient number of peers, in the view of the Senior Officer and the Adviser. Consequently, at the request of the Senior Officer and the Adviser,
6 | The contractual management fee is calculated by Lipper using the Portfolio’s contractual management fee rate at a hypothetical asset level. The hypothetical asset level is based on the combined net assets of all classes of the Portfolio, rounded up to the next $25 million. Lipper’s total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of “1” means that the Portfolio has the lowest effective fee rate in the Lipper peer group. |
7 | Lipper does not consider average account size when constructing EGs. Funds with relatively small average account sizes tend to have higher transfer agent expense ratios than comparable sized funds that have relatively large average account sizes. Note that there are limitations on Lipper expense category data because different funds categorize expenses differently. |
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Lipper expanded those Portfolios’ EGs to include peers that had a similar but not the same Lipper investment classification/objective.
Portfolio | Contractual Management Fee8 | Lipper Expense Median | Rank | |||
Arizona Portfolio9,10 | 0.450 | 0.543 | 3/13 | |||
Florida Portfolio9,10 | 0.450 | 0.550 | 2/15 | |||
Massachusetts Portfolio10 | 0.450 | 0.500 | 2/11 | |||
Michigan Portfolio9,10 | 0.450 | 0.550 | 1/13 | |||
Minnesota Portfolio9 | 0.450 | 0.550 | 1/13 | |||
New Jersey Portfolio10 | 0.450 | 0.510 | 1/8 | |||
Ohio Portfolio9,10 | 0.450 | 0.550 | 1/14 | |||
Pennsylvania Portfolio10 | 0.450 | 0.546 | 1/9 | |||
Virginia Portfolio9,10 | 0.450 | 0.547 | 3/12 |
Because Lipper had expanded certain of the Portfolios’ EGs, under Lipper’s standard guidelines, those Portfolios’ Lipper Expense Universes (“EU”) were also expanded to include the universes of the peers that had a similar but not the same Lipper investment objective/classification as the subject Portfolio.11 A “normal” EU will include funds that have the same investment objective/classification as the subject Portfolio. 12 Set forth below is the comparison of the
8 | The contractual management fees for the Portfolios do not reflect any expense reimbursements made by the Portfolios to the Adviser for certain clerical, legal, accounting, administrative, and other services. In addition, the contractual management fees do not reflect any management waivers for expense caps that effectively reduce the contractual management fee. |
9 | The Portfolio’s EG was expanded by Lipper at the request of the Senior Officer and the adviser. |
10 | Note that one of the Portfolio’s peers is excluded in the contractual management fee rankings because Lipper is unable to calculate the fund’s contractual management fee due to the fund’s breakpoint gross income component. |
11 | The expansion of the Portfolio’s EU was not requested by the Adviser or the Senior Officer. They requested only that the EGs be expanded. |
12 | Except for asset size comparability, Lipper uses the same criteria for selecting an EG peer when selecting an EU peer. Unlike the EG, the EU allows for the same adviser to be represented by more than just one fund. |
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Portfolios’ total expense ratios and the medians of the Portfolios’ EGs and EUs. The Portfolios’ total expense ratios rankings are also shown:
Portfolio | Expense Ratio | Lipper Group | Lipper Group Rank | Lipper Universe Median | Lipper Rank | |||||
Arizona Portfolio14 | 0.778 | 0.791 | 7/14 | 0.770 | 10/18 | |||||
Florida Portfolio14 | 0.778 | 0.881 | 3/16 | 0.876 | 5/20 | |||||
Massachusetts Portfolio | 0.817 | 0.860 | 5/12 | 0.870 | 7/17 | |||||
Michigan Portfolio14 | 0.980 | 0.914 | 11/14 | 0.890 | 17/21 | |||||
Minnesota Portfolio14 | 0.899 | 0.890 | 8/13 | 0.860 | 15/22 | |||||
New Jersey Portfolio | 0.867 | 0.857 | 6/9 | 0.851 | 9/14 | |||||
Ohio Portfolio14 | 0.847 | 0.890 | 4/15 | 0.850 | 9/21 | |||||
Pennsylvania Portfolio | 0.948 | 0.861 | 9/10 | 0.861 | 14/18 | |||||
Virginia Portfolio14 | 0.719 | 0.845 | 2/13 | 0.851 | 3/17 |
Based on this analysis, except for Virginia Portfolio which has a more favorable ranking on a total expense ratio basis than on a management fee basis, the Portfolios have a more favorable ranking on a management fee basis than they do on a total expense ratio basis.
III. | COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. |
The Adviser utilizes two profitability reporting systems, which operate independently but are aligned with each other, to estimate the Adviser’s profitability in connection with investment advisory services provided to the Portfolios. The Senior Officer has retained a consultant to provide independent advice regarding the alignment of the two profitability systems as well as the methodologies and allocations utilized by both profitability systems. See Section IV for additional discussion.
IV. | PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. |
The Adviser’s profitability information for the Portfolios prepared by the Adviser for the Trustees of the Trust was reviewed by the Senior Officer and the consultant. Except for Michigan Portfolio and Virginia Portfolio, the Adviser’s profitability from providing investment advisory services to the Portfolios increased during the calendar year 2006, relative to 2005.
13 | Most recently completed fiscal year Class A share total expense ratio. |
14 | The Portfolios’ EU was expanded by Lipper under standard Lipper guidelines. |
172 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
In addition to the Adviser’s direct profits from managing the Portfolios, certain of the Adviser’s affiliates have business relationships with the Portfolios and may earn a profit from providing other services to the Portfolios. The courts have referred to this type of business opportunity as “fall-out benefits” to the Adviser and indicated that they should be factored into the evaluation of the total relationship between the Portfolios and the Adviser. Neither case law nor common business practice precludes the Adviser’s affiliates from earning a reasonable profit on this type of relationship. These affiliates provide transfer agent and distribution services to the Portfolios and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads and contingent deferred sales charges (“CDSC”).
AllianceBernstein Investments, Inc. (“ABI”), an affiliate of the Adviser, is the Portfolios’ principal underwriter. ABI and the Adviser have disclosed in the Portfolios’ prospectus that they may make revenue sharing payments from their own resources, in addition to revenues derived from sales loads and Rule 12b-1 fees, to firms that sell shares of the Portfolios. In 2006, ABI paid approximately 0.044% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $20.4 million for distribution services and educational support (revenue sharing payments). For 2007, it is anticipated, ABI will pay approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $20 million.15
ABI retained the following amounts for Class A front-end load sales charges from sales of the Portfolios’ Class A shares during the Portfolios’ most recently completed fiscal year:
Portfolio | Amount Received | ||
Arizona Portfolio | $ | 47,909 | |
Florida Portfolio | $ | 20,683 | |
Massachusetts Portfolio | $ | 12,980 | |
Michigan Portfolio | $ | 13,670 | |
Minnesota Portfolio | $ | 8,111 | |
New Jersey Portfolio | $ | 10,044 | |
Ohio Portfolio | $ | 12,123 | |
Pennsylvania Portfolio | $ | 10,735 | |
Virginia Portfolio | $ | 24,168 |
15 | ABI currently inserts the “Advance” in quarterly account statements and pays the incremental costs associated with the mailing. The incremental cost is less than what an “independent mailing” would cost. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 173 |
ABI received the following Rule 12b-1 fees and CDSC for the Portfolios during the Portfolios’ most recently completed fiscal year:
Portfolio | 12b-1 Fee Received | CDSC Received | ||||
Arizona Portfolio | $ | 1,204,307 | $ | 31,161 | ||
Florida Portfolio | $ | 1,253,323 | $ | 36,741 | ||
Massachusetts Portfolio | $ | 994,952 | $ | 29,159 | ||
Michigan Portfolio | $ | 982,555 | $ | 54,057 | ||
Minnesota Portfolio | $ | 495,020 | $ | 10,388 | ||
New Jersey Portfolio | $ | 1,094,043 | $ | 19,155 | ||
Ohio Portfolio | $ | 1,196,616 | $ | 29,410 | ||
Pennsylvania Portfolio | $ | 955,604 | $ | 9,665 | ||
Virginia Portfolio | $ | 1,026,494 | $ | 22,764 |
Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. (“ABIS”), the affiliated transfer agent for the Portfolios, are charged on a per account basis, based on the level of service provided and the class of share held by the account. ABIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. ABIS’ after-tax profitability decreased in 2006 in comparison to 2005. Set forth below are the net fees which ABIS retained from the Portfolios during the Portfolios’ most recently completed fiscal year:16
Portfolio | ABIS Fee | Expense Offset | ||||
Arizona Portfolio | $ | 37,864 | $ | 1,787 | ||
Florida Portfolio | $ | 33,893 | $ | 1,448 | ||
Massachusetts Portfolio | $ | 35,074 | $ | 1,825 | ||
Michigan Portfolio | $ | 47,048 | $ | 2,237 | ||
Minnesota Portfolio | $ | 28,398 | $ | 1,367 | ||
New Jersey Portfolio | $ | 54,295 | $ | 2,554 | ||
Ohio Portfolio | $ | 48,076 | $ | 2,328 | ||
Pennsylvania Portfolio | $ | 49,558 | $ | 2,276 | ||
Virginia Portfolio | $ | 36,574 | $ | 1,594 |
V. | POSSIBLE ECONOMIES OF SCALE |
The Adviser has indicated that economies of scale are being shared with shareholders through fee structures,17 subsidies and enhancement to services. Based on some of the professional literature that has considered economies of scale in the mutual fund industry, it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment
16 | The fees disclosed are net of any expense offsets with ABIS. An expense offset is created by the interest earned on the positive cash balance that occur within the transfer agent account as there is a one day lag with regards to money movement from the shareholder’s account to the transfer agent’s account and then from the transfer agent’s account to the Portfolio’s account. |
17 | Fee structures include fee reductions, pricing at scale and breakpoints in advisory fee schedules. |
174 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
research or technology for trading or compliance systems, can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such investments in their business to provide services, there may be a sharing of economies of scale without a reduction in advisory fees.
An independent consultant, retained by the Senior Officer, provided the Board of Trustees an update of the Deli18 study on advisory fees and various fund characteristics. The preliminary results of the updated study, based on more recent data and using Lipper classifications, were found to be consistent with the results of the original study. The independent consultant observed patterns of lower advisory fees for funds with larger asset sizes and funds from larger family sizes compared to funds with smaller asset sizes and funds from smaller family sizes, which according to the independent consultant is indicative of a sharing of economies of scale and scope. However, in less liquid and active markets, such is not the case, as the empirical analysis showed potential for diseconomies of scale in those markets. The empirical analysis also showed diminishing economies of scale and scope as funds surpassed a certain high level of assets.
VI. | NATURE AND QUALITY OF THE ADVISER’S SERVICES INCLUDING THE PERFORMANCE OF THE PORTFOLIOS. |
With assets under management of $813 billion as of September 30, 2007, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Portfolios.
The information below, prepared by Lipper, shows the 1, 3, 5 and 10 year performance returns and rankings of the Portfolios19 relative to their Lipper
18 | The Deli study was originally published in 2002 based on 1997 data. |
19 | The performance returns and rankings are for the Class A shares of the Portfolios. It should be noted that the performance returns of the Portfolios that were shown were provided by the Adviser. Lipper maintains its own database that includes the Portfolios’ performance returns. However, differences in the distribution price (ex-date versus payable date) and rounding differences may cause the Adviser’s own performance returns of the Portfolios to be one or two basis points different from Lipper. To maintain consistency, the performance returns of the Portfolios, as reported by the Adviser, are provided instead of Lipper. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 175 |
Performance Group (“PG”) and Lipper Performance Universe (“PU”)20 for the periods ended July 31, 2007.21
Arizona Portfolio | Portfolio Return (%) | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 4.37 | 3.81 | 3.83 | 1/5 | 2/10 | |||||
3 year | 4.80 | 3.87 | 3.89 | 1/5 | 2/10 | |||||
5 year | 4.70 | 3.87 | 4.02 | 1/5 | 3/10 | |||||
10 year | 5.24 | 4.39 | 4.56 | 1/5 | 1/9 | |||||
Florida Portfolio | Portfolio Return (%) | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 4.11 | 3.85 | 3.85 | 2/5 | 2/9 | |||||
3 year | 4.83 | 4.00 | 4.40 | 2/5 | 2/9 | |||||
5 year | 4.89 | 3.94 | 4.33 | 2/5 | 2/9 | |||||
10 year | 5.16 | 4.35 | 4.78 | 1/5 | 1/9 | |||||
Massachusetts Portfolio | Portfolio Return (%) | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 4.06 | 3.72 | 3.72 | 2/12 | 3/18 | |||||
3 year | 4.43 | 4.02 | 4.00 | 2/12 | 2/17 | |||||
5 year | 4.28 | 4.17 | 4.10 | 4/12 | 5/17 | |||||
10 year | 4.82 | 4.63 | 4.60 | 4/12 | 5/16 | |||||
Michigan Portfolio | Portfolio Return | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 3.98 | 3.70 | 3.79 | 1/4 | 3/12 | |||||
3 year | 4.68 | 3.83 | 3.78 | 1/4 | 1/11 | |||||
5 year | 4.49 | 3.78 | 3.89 | 1/4 | 1/11 | |||||
10 year | 5.31 | 4.42 | 4.42 | 1/4 | 1/11 | |||||
Minnesota Portfolio | Portfolio Return | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 3.90 | 3.76 | 3.58 | 3/7 | 5/16 | |||||
3 year | 4.42 | 4.08 | 3.92 | 3/7 | 5/16 | |||||
5 year | 4.28 | 4.20 | 4.10 | 3/7 | 5/16 | |||||
10 year | 4.90 | 4.65 | 4.65 | 2/7 | 2/15 | |||||
20 | The Portfolios PG/PU may not be necessarily identical to the Portfolios EG/EU as the criteria for including or excluding a fund in/from a PG/PU are somewhat different than that of an EU/EG. |
21 | Note that the current Lipper investment classification/objective dictates the PG and PU throughout the life of each Portfolio even if a Portfolio may have had a different investment classification/objective at different points in time. |
176 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
New Jersey Portfolio | Portfolio Return | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 4.19 | 3.67 | 3.80 | 4/9 | 6/14 | |||||
3 year | 4.75 | 4.13 | 4.22 | 2/9 | 4/14 | |||||
5 year | 3.98 | 3.82 | 3.96 | 4/9 | 7/14 | |||||
10 year | 4.42 | 4.35 | 4.45 | 4/9 | 8/14 | |||||
Ohio Portfolio | Portfolio Return | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 4.60 | 3.50 | 3.66 | 1/7 | 2/15 | |||||
3 year | 4.60 | 3.68 | 3.61 | 2/7 | 2/14 | |||||
5 year | 4.46 | 3.73 | 3.77 | 2/7 | 2/14 | |||||
10 year | 4.82 | 4.33 | 4.33 | 2/7 | 3/13 | |||||
Pennsylvania Portfolio | Portfolio Return | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 4.06 | 3.76 | 3.82 | 3/10 | 6/18 | |||||
3 year | 4.38 | 4.19 | 4.20 | 3/10 | 8/18 | |||||
5 year | 4.44 | 4.16 | 4.28 | 2/10 | 4/18 | |||||
10 year | 4.99 | 4.60 | 4.60 | 1/10 | 3/18 | |||||
Virginia Portfolio | Portfolio Return | PG Median (%) | PU Median (%) | PG Rank | PU Rank | |||||
1 year | 3.87 | 3.69 | 3.63 | 2/6 | 4/11 | |||||
3 year | 4.66 | 4.13 | 3.69 | 2/6 | 2/10 | |||||
5 year | 4.77 | 4.35 | 3.88 | 1/6 | 1/10 | |||||
10 year | 5.26 | 4.61 | 4.51 | 1/6 | 1/10 |
Set forth below are the 1, 3, 5, 10 year and since inception performance returns of the Portfolios (in bold)22 versus its benchmarks.23 Portfolio and benchmark volatility and reward-to-variability ratio (“Sharpe Ratio”) information is also
22 | The performance returns and risk measures shown in the table are for the Class A shares of the Portfolios. |
23 | The benchmark’s since inception performance return for each Portfolio is from the nearest month-end after inception date. In contrast to the benchmark, each Portfolio’s since inception performance return is from the Portfolio’s actual inception date. |
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 177 |
shown.24 Note that each Portfolio’s benchmark is the Lehman Brothers Municipal Bond Index.25
Periods Ending July 31, 2007 Annualized Performance | ||||||||||||||||
1 Year | 3 Year | 5 Year | 10 Year | Since Inception (%) | Annualized | Risk Period (Year) | ||||||||||
Volatility (%) | Sharpe (%) | |||||||||||||||
Arizona Portfolio | 4.37 | 4.80 | 4.70 | 5.24 | 6.06 | 3.29 | 0.44 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 6.02 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: June 1, 1994 | ||||||||||||||||
Florida Portfolio | 4.11 | 4.83 | 4.89 | 5.16 | 5.48 | 3.29 | 0.41 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 5.60 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: June 25, 1993 | ||||||||||||||||
Massachusetts Portfolio | 4.06 | 4.43 | 4.28 | 4.82 | 6.18 | 3.83 | 0.28 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 5.99 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: March 29, 1994 | ||||||||||||||||
Michigan Portfolio | 3.98 | 4.68 | 4.49 | 5.31 | 6.09 | 3.73 | 0.41 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 5.63 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: February 25, 1994 | ||||||||||||||||
Minnesota Portfolio | 3.90 | 4.42 | 4.28 | 4.90 | 5.19 | 3.59 | 0.31 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 5.60 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: June 25, 1993 |
24 | Portfolio and benchmark volatility and Sharpe Ratio information was obtained through Lipper LANA, a database maintained by Lipper. Volatility is a statistical measure of the tendency of a market price or yield to vary over time. A Sharpe Ratio is a risk adjusted measure of return that divides a fund’s return in excess of the riskless return by the fund’s standard deviation. A fund with a greater volatility would be seen as more risky than a fund with equivalent performance but lower volatility; for that reason, a greater return would be demanded for the more risky fund. A fund with a higher Sharpe Ratio would be viewed as better performing than a fund with a lower Sharpe Ratio. |
25 | The Lehman Brother’s Municipal Index is a rules-based, market-value-weighted index engineered for the long-term tax-exempt bond market. To be included, bonds must be investment grade and be at least one year from maturity. The index has four main sectors: general obligation bonds, revenue bonds, insured bonds, and pre-funded bonds. The index represents a national municipal bond index as opposed to a specific state index. |
178 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
Periods Ending July 31, 2007 Annualized Performance | ||||||||||||||||
1 Year | 3 Year | 5 Year | 10 Year | Since Inception (%) | Annualized | Risk Period (Year) | ||||||||||
Volatility (%) | Sharpe (%) | |||||||||||||||
New Jersey Portfolio | 4.19 | 4.75 | 3.98 | 4.42 | 4.98 | 4.08 | 0.17 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 5.60 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: June 25, 1993 | ||||||||||||||||
Ohio Portfolio | 4.60 | 4.60 | 4.46 | 4.82 | 5.23 | 3.47 | 0.30 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 5.60 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: June 25, 1993 | ||||||||||||||||
Pennsylvania Portfolio | 4.06 | 4.38 | 4.44 | 4.99 | 5.52 | 3.61 | 0.33 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 5.60 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: June 25, 1993 | ||||||||||||||||
Virginia Portfolio | 3.87 | 4.66 | 4.77 | 5.26 | 6.21 | 3.37 | 0.43 | 10 | ||||||||
Lehman Brothers Municipal Bond Index | 4.27 | 4.38 | 4.50 | 5.23 | 5.97 | 3.65 | 0.39 | 10 | ||||||||
Inception Date: April 29, 1994 |
CONCLUSION:
Based on the factors discussed above the Senior Officer’s conclusion is that the proposed fees for the Portfolios are reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of the Portfolios is based on an evaluation of all of these factors and no single factor was dispositive.
Dated: November 26, 2007
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II • | 179 |
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
Wealth Strategies Funds
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
Blended Style Funds
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
Growth Funds
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Global & International
Global Health Care Fund
Global Research Growth Fund
Global Technology Fund
Greater China ‘97 Fund
International Growth Fund
International Research Growth Fund
Value Funds
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
Small/Mid Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Real Estate Investment Fund
Global Value Fund
International Value Fund
Taxable Bond Funds
Diversified Yield Fund*
Global Bond Fund*
High Income Fund*
Intermediate Bond Portfolio
Short Duration Portfolio
Municipal Bond Funds
National | Michigan |
Intermediate Municipal Bond Funds
Intermediate California
Intermediate Diversified
Intermediate New York
Closed-End Funds
AllianceBernstein Global High Income Fund
AllianceBernstein Income Fund
AllianceBernstein National Municipal Income Fund*
ACM Managed Dollar Income Fund
California Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
Retirement Strategies Funds
2000 Retirement Strategy | 2020 Retirement Strategy | 2040 Retirement Strategy | ||
2005 Retirement Strategy | 2025 Retirement Strategy | 2045 Retirement Strategy | ||
2010 Retirement Strategy | 2030 Retirement Strategy | 2050 Retirement Strategy | ||
2015 Retirement Strategy | 2035 Retirement Strategy | 2055 Retirement Strategy |
We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds.
You should consider the investment objectives, risks, charges and expenses of any AllianceBernstein fund/portfolio carefully before investing. For free copies of our prospectuses, which contain this and other information, visit us online at www.alliancebernstein.com or contact your financial advisor. Please read the prospectus carefully before investing.
* | Prior to May 18, 2007, AllianceBernstein National Municipal Income Fund was named National Municipal Income Fund. Prior to November 5, 2007, Diversified Yield Fund was named Global Strategic Income Trust and Global Bond Fund was named Global Government Income Trust. Prior to January 28, 2008, High Income Fund was named Emerging Market Debt Fund. |
** | An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. |
180 | • ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II |
AllianceBernstein Family of Funds
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
1345 Avenue of the Americas
New York, NY 10105
800.221.5672
MIFII-0152-0308 |
ITEM 2. | CODE OF ETHICS. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable to the registrant.
ITEM 6. | SCHEDULE OF INVESTMENTS. |
Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR.
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the registrant.
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the registrant.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable to the registrant.
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Directors since the Fund last provided disclosure in response to this item.
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no changes in the registrant’s internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 12. | EXHIBITS. |
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. | DESCRIPTION OF EXHIBIT | |
12(b)(1) | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
12(b)(2) | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
12(c) | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Municipal Income Fund II
By: | /s/ Marc O. Mayer | |
Marc O. Mayer President | ||
Date: | May 30, 2008 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Marc O. Mayer | |
Marc O. Mayer President | ||
Date: | May 30, 2008 | |
By: | /s/ Joseph J. Mantineo | |
Joseph J. Mantineo Treasurer and Chief Financial Officer | ||
Date: | May 30, 2008 |