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
AB 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: May 31, 2022
Date of reporting period: May 31, 2022
Explanatory Note:
Enclosed for filing you will find an amended Form N-CSR of the registrant’s original 2022 Form N-CSR filing of the referenced period. The purpose of this amended filing is to update Item 11 (b) and Item 13 (which is addressed in exhibits labeled Exhibit 12 (b)(1) and Exhibit 12 (b)(2) in the original filings). Except as set forth above, no other changes have been made to the Form N-CSR, and this amended filing does not amend, update or change any other items or disclosure found in the Form N-CSR.
| ITEM 1. | REPORTS TO STOCKHOLDERS. |
MAY 05.31.22
ANNUAL REPORT
AB MUNICIPAL INCOME FUND II
| + | AB ARIZONA PORTFOLIO |
| + | AB MASSACHUSETTS PORTFOLIO |
| + | AB MINNESOTA PORTFOLIO |
| + | AB NEW JERSEY PORTFOLIO |
| + | AB OHIO PORTFOLIO |
| + | AB PENNSYLVANIA PORTFOLIO |
| + | AB VIRGINIA PORTFOLIO |
As of January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, each Fund’s annual and semi-annual shareholder reports are no longer sent by mail, unless you specifically requested paper copies of the reports. Instead, the reports are made available on a website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
You may elect to receive all future reports in paper form free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with a Fund, you can call the Fund at (800) 221 5672. Your election to receive reports in paper form will apply to all funds held in your account with your financial intermediary or, if you invest directly, to all AB Mutual Funds you hold.
| Investment Products Offered | • Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed | |
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.abfunds.com or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.
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 AB’s website at www.abfunds.com, or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB 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 as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov. AB publishes full portfolio holdings for the Fund monthly at www.abfunds.com.
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
| FROM THE PRESIDENT |  |
Dear Shareholder,
We’re pleased to provide this report for the AB Municipal Income Fund II: AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio (each a “Portfolio,” and collectively, the “Portfolios”). Please review the discussion of Portfolio performance, the market conditions during the reporting period and the Portfolios’ investment strategies.
As always, AB strives to keep clients ahead of what’s next by:
| + | Transforming uncommon insights into uncommon knowledge with a global research scope |
| + | Navigating markets with seasoned investment experience and sophisticated solutions |
| + | Providing thoughtful investment insights and actionable ideas |
Whether you’re an individual investor or a multi-billion-dollar institution, we put knowledge and experience to work for you.
AB’s global research organization connects and collaborates across platforms and teams to deliver impactful insights and innovative products. Better insights lead to better opportunities—anywhere in the world.
For additional information about AB’s range of products and shareholder resources, please log on to www.abfunds.com.
Thank you for your investment in the AB Mutual Funds.
Sincerely,
Onur Erzan
President and Chief Executive Officer, AB Mutual Funds
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ANNUAL REPORT
July 8, 2022
This report provides management’s discussion of fund performance for the AB Municipal Income Fund II: AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio for the annual reporting period ended May 31, 2022.
The investment objective of the Portfolios is to earn the highest level of current income, exempt from both federal income tax and state taxation of the respective state, that is available without assuming what the Adviser considers to be undue risk.
NAV RETURNS AS OF MAY 31, 2022 (unaudited)
| 6 Months | 12 Months | |||||||
| AB ARIZONA PORTFOLIO | ||||||||
| Class A Shares | -6.58% | -5.63% | ||||||
| Class C Shares | -6.85% | -6.26% | ||||||
| Advisor Class Shares1 | -6.46% | -5.39% | ||||||
| Bloomberg Municipal Bond Index | -7.32% | -6.79% | ||||||
| 6 Months | 12 Months | |||||||
| AB MASSACHUSETTS PORTFOLIO | ||||||||
| Class A Shares | -7.49% | -6.63% | ||||||
| Class C Shares | -7.85% | -7.35% | ||||||
| Advisor Class Shares1 | -7.38% | -6.39% | ||||||
| Bloomberg Municipal Bond Index | -7.32% | -6.79% | ||||||
| 6 Months | 12 Months | |||||||
| AB MINNESOTA PORTFOLIO | ||||||||
| Class A Shares | -6.79% | -5.85% | ||||||
| Class C Shares | -7.22% | -6.56% | ||||||
| Bloomberg Municipal Bond Index | -7.32% | -6.79% | ||||||
| 1 | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios. |
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NAV RETURNS AS OF MAY 31, 2022 (unaudited)
| 6 Months | 12 Months | |||||||
| AB NEW JERSEY PORTFOLIO | ||||||||
| Class A Shares | -6.67% | -5.71% | ||||||
| Class C Shares | -6.92% | -6.33% | ||||||
| Bloomberg Municipal Bond Index | -7.32% | -6.79% | ||||||
| 6 Months | 12 Months | |||||||
| AB OHIO PORTFOLIO | ||||||||
| Class A Shares | -7.00% | -6.04% | ||||||
| Class C Shares | -7.35% | -6.85% | ||||||
| Bloomberg Municipal Bond Index | -7.32% | -6.79% | ||||||
| 6 Months | 12 Months | |||||||
| AB PENNSYLVANIA PORTFOLIO | ||||||||
| Class A Shares | -7.27% | -6.31% | ||||||
| Class C Shares | -7.62% | -7.11% | ||||||
| Bloomberg Municipal Bond Index | -7.32% | -6.79% | ||||||
| 6 Months | 12 Months | |||||||
| AB VIRGINIA PORTFOLIO | ||||||||
| Class A Shares | -7.39% | -6.64% | ||||||
| Class C Shares | -7.76% | -7.37% | ||||||
| Advisor Class Shares1 | -7.28% | -6.41% | ||||||
| Bloomberg Municipal Bond Index | -7.32% | -6.79% | ||||||
| 1 | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios. |
INVESTMENT RESULTS
The preceding tables show performance for each Portfolio compared to its benchmark, the Bloomberg Municipal Bond Index, for the six- and 12-month periods ended May 31, 2022.
Except for Class C of the Massachusetts, Ohio, Pennsylvania and Virginia Portfolios, all share classes of the Portfolios outperformed the benchmark for the 12-month period; except for all share classes of the Massachusetts Portfolio, Class A and Class C of the Virginia Portfolio, and Class C of the Ohio and Pennsylvania Portfolios, all share classes of the Portfolios outperformed the benchmark for the six-month period, before sales charges.
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Arizona Portfolio: During both periods, security selection within the water and sewer, and local general obligation (“GO”) sectors contributed, relative to the benchmark, while selection in prepay energy and not-for-profit health care detracted. An overweight to municipal credit contributed for the 12-month period, but detracted for the six-month period.
Massachusetts Portfolio: During both periods, an overweight to municipal credit detracted. Security selection within the not-for-profit health-care and water and sewer sectors contributed, while selection in private higher education and local GO detracted.
Minnesota Portfolio: During both periods, security selection in the local GO and electric utility sectors contributed, while selection in public primary/secondary education and miscellaneous revenue detracted. An overweight to municipal credit detracted.
New Jersey Portfolio: During both periods, security selection within the tax-supported local lease sector contributed, while selection in water and sewer, and state GO detracted. For the 12-month period, an overweight to municipal credit contributed. Security selection in miscellaneous revenue contributed. For the six-month period, security selection in ports contributed. An overweight to municipal credit detracted.
Ohio Portfolio: During both periods, security selection in private higher education and public higher education detracted. For the 12-month period, an overweight to municipal credit contributed. Security selection within the not-for-profit health-care and multi-family housing sectors contributed. For the six-month period, an overweight to municipal credit detracted. Security selection in miscellaneous revenue and toll roads/transit contributed.
Pennsylvania Portfolio: During both periods, security selection in miscellaneous revenue contributed, while selection in primary/secondary public education and pre-refunded bonds detracted. For the 12-month period, an overweight to municipal credit contributed. Security selection within the not-for-profit health-care sector contributed. For the six-month period, an overweight to municipal credit detracted. Security selection in local GO contributed.
Virginia Portfolio: During both periods, security selection in the toll roads/transit and electric utility sectors contributed, while selection in senior living and tax-supported state lease detracted. An overweight to municipal credit detracted.
All Portfolios used derivatives in the form of interest rate swaps and Consumer Price Index (“CPI”) swaps for hedging purposes. The Arizona and Ohio Portfolios utilized credit default swaps for hedging purposes, which had no material impact on absolute returns for either period. CPI swaps
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had no material impact on returns for all Portfolios for the six-month period and added for the 12-month period. During both periods, interest rate swaps had no material impact on returns for the Massachusetts and Pennsylvania Portfolios, added for the Arizona, Minnesota and New Jersey Portfolios, and detracted for the Ohio and Virginia Portfolios.
MARKET REVIEW AND INVESTMENT STRATEGY
Yields rose toward the end of both the six- and 12-month periods ended May 31, 2022. During the 12-month period, the yield on a 10-Year AAA municipal bond rose to 2.47% from 0.99% and the yield on the 10-Year US Treasury rose to 2.85% from 1.62%. While demand for income remained strong during the first half of the 12-month reporting period, demand weakened during the first quarter of 2022 and into the second quarter, as investors pulled approximately $59 billion from the municipal market as of May 31, 2022.
In addition to broader fixed-income market volatility, these municipal market outflows contributed to municipal underperformance versus US Treasuries, with 10-Year AAA Muni/Treasury after-tax spreads widening 75 basis points (“b.p.”) during the 12-month period and 60 b.p. during the six-month period. Credit spreads widened over the 12-month period and widened modestly more during the six-month period.
The Portfolios’ Senior Investment Management Team continues to focus on real after-tax return by investing in municipal bonds that generate income exempt from federal income taxes.
The Portfolios may purchase municipal securities that are insured under policies issued by certain insurance companies. In the past, insured municipal securities typically received a higher credit rating, which meant that the issuer of the securities paid a lower interest rate. As a result of declines in the credit quality and associated downgrades of most bond insurers, insurance has less value than it did in the past. The market now values insured municipal securities primarily based on the credit quality of the issuer of the security, with little value given to the insurance feature. In purchasing such insured securities, the Adviser evaluates the risk and return of municipal securities through its own research. If an insurance company’s rating is downgraded or the company becomes insolvent, the prices of municipal securities insured by the insurance company may decline.
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| Portfolio | Insured Bonds1 | Pre-refunded/ ETM2/Insured Bonds1 | ||||||
| Arizona | 0.33% | 0.00% | ||||||
| Massachusetts | 5.86% | 0.00% | ||||||
| Minnesota | 0.58% | 0.00% | ||||||
| New Jersey | 18.78% | 3.94% | ||||||
| Ohio | 2.21% | 0.00% | ||||||
| Pennsylvania | 10.68% | 4.02% | ||||||
| Virginia | 2.56% | 0.00% | ||||||
| 1 | Breakdowns expressed as a percentage of investments in municipal bonds. |
| 2 | Escrowed to maturity. |
INVESTMENT POLICIES
Each of the Portfolios pursues its objective by investing principally in high-yielding, predominantly investment-grade municipal securities. Each of the Portfolios invests, under normal circumstances, at least 80% of its net assets in municipal securities that pay interest that is exempt from federal income tax. These securities may pay interest that is subject to the federal alternative minimum tax for certain taxpayers. 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 Portfolios may also invest in forward commitments; zero-coupon municipal securities and variable-, floating- and inverse-floating-rate municipal securities; and derivatives, such as options, futures contracts, forwards and swaps.
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DISCLOSURES AND RISKS
Benchmark Disclosure
The Bloomberg Municipal Bond Index is unmanaged and does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Bloomberg Municipal Bond Index represents the performance of the long-term tax-exempt bond market consisting of investment-grade bonds. 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
Market Risk: The value of the Portfolios’ assets will fluctuate as the bond market fluctuates. The value of the Portfolios’ investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market.
Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Investments in fixed-income securities with lower ratings tend to have a higher probability that an issuer will default or fail to meet its payment obligations.
Municipal Market Risk: This is the risk that special factors may adversely affect the value of municipal securities and have a significant effect on the yield or value of the Portfolios’ investments in municipal securities. These factors include economic conditions, political or legislative changes, public health crises, uncertainties related to the tax status of municipal securities, or the rights of investors in these securities. To the extent that the Portfolios invest more of their assets in a particular state’s municipal securities, the Portfolios may be vulnerable to events adversely affecting that state, including economic, political and regulatory occurrences, court decisions, terrorism public health crises (including the occurrence of a contagious disease or illness) and catastrophic natural disasters, such as hurricanes, fires, flooding or earthquakes. For example, the novel coronavirus (COVID-19) pandemic has significantly stressed the financial resources of many issuers of municipal securities, which could impair any such issuer’s ability to meet its financial obligations when due and adversely impact the value of its securities held by the Portfolios. As the full effects of the COVID-19 pandemic on state and local economies and on issuers of municipal securities are still uncertain, the financial difficulties of issuers of municipal securities
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DISCLOSURES AND RISKS (continued)
may continue or worsen, adversely affecting the performance of the Portfolios. The Portfolios’ investments in certain municipal securities with principal and interest payments that are made from the revenues of a specific project or facility, and not general tax revenues, may have increased risks. Factors affecting the project or facility, such as local business or economic conditions, could have a significant effect on the project’s ability to make payments of principal and interest on these securities.
Congress has previously considered making changes to the municipal securities provisions of the Internal Revenue Code that could change the US federal income tax treatment of certain types of municipal securities.
The Portfolios invest from time to time in municipal securities of issuers in Puerto Rico or other US territories and their governmental agencies and municipalities, which are exempt from federal, state, and, where applicable, local income taxes. These municipal securities may have more risks than those of other US issuers of municipal securities. Puerto Rico continues to face a very challenging economic and fiscal environment, including as a result of the COVID-19 pandemic. If the general economic situation in Puerto Rico continues to persist or worsens, the volatility and credit quality of Puerto Rican municipal securities could continue to be adversely affected, and the market for such securities may experience continued volatility.
Tax Risk: There is no guarantee that the income on the Portfolios’ municipal securities will be exempt from regular federal, and if applicable, state income taxes. From time to time, the US government and the US Congress consider changes in federal tax law that could limit or eliminate the federal tax exemption for municipal bond income, which would in effect reduce the income received by shareholders from the Portfolios by increasing taxes on that income. In such event, the Portfolios’ net asset value (“NAV”) could also decline as yields on municipal bonds, which are typically lower than those on taxable bonds, would be expected to increase to approximately the yield of comparable taxable bonds. Actions or anticipated actions affecting the tax-exempt status of municipal bonds could also result in significant shareholder redemptions of Portfolio shares as investors anticipate adverse effects on the Portfolios or seek higher yields to offset the potential loss of the tax deduction. As a result, the Portfolios would be required to maintain higher levels of cash to meet the redemptions, which would negatively affect the Portfolios’ yield.
Interest-Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest-rate risk is generally greater for fixed-income securities with
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DISCLOSURES AND RISKS (continued)
longer maturities or durations. The Portfolios may be subject to greater risk of rising interest rates than would normally be the case due to the end of a recent period of historically low rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives.
Duration Risk: Duration is a measure that relates the expected price volatility of a fixed-income security to changes in interest rates. The duration of a fixed-income security may be shorter than or equal to full maturity of a fixed-income security. Fixed-income securities with longer durations have more risk and will decrease in price as interest rates rise.
Inflation Risk: This is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Portfolios’ assets can decline as can the value of the Portfolios’ distributions. This risk is significantly greater for fixed-income securities with longer maturities.
Illiquid Investments Risk: Illiquid investments risk exists when certain investments are or become difficult to purchase or sell. Difficulty in selling such investments may result in sales at disadvantageous prices affecting the value of your investment in the Portfolios. Causes of illiquid investments risk may include low trading volumes, large positions and heavy redemptions of Portfolio shares. Illiquid investments risk may be higher in a rising interest-rate environment, when the value and liquidity of fixed-income securities generally decline. Municipal securities may have more illiquid investments risk than other fixed-income securities because they trade less frequently and the market for municipal securities is generally smaller than many other markets.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolios. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolios.
Management Risk: The Portfolios are subject to management risk because they are actively managed investment funds. The Adviser will apply its investment techniques and risk analyses in making investment decisions, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Portfolios’ prospectus. As with all investments, you may lose money by investing in the Portfolios.
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DISCLOSURES AND RISKS (continued)
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolios will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report 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.abfunds.com.
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 3.00% maximum front-end sales charge for Class A shares and 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.
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HISTORICAL PERFORMANCE
AB ARIZONA PORTFOLIO
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)
5/31/2012 TO 5/31/2022
This chart illustrates the total value of an assumed $10,000 investment in AB Arizona Portfolio Class A shares (from 5/31/2012 to 5/31/2022) as compared to the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.
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HISTORICAL PERFORMANCE (continued)
AB ARIZONA PORTFOLIO
AVERAGE ANNUAL RETURNS AS OF MAY 31, 2022 (unaudited)
| NAV Returns | SEC Returns (reflects applicable sales charges) | SEC Yields1 | Taxable Equivalent Yields2 | |||||||||||||
| CLASS A SHARES | 2.39% | 4.00% | ||||||||||||||
| 1 Year | -5.63% | -8.43% | ||||||||||||||
| 5 Years | 1.53% | 0.90% | ||||||||||||||
| 10 Years | 2.33% | 2.01% | ||||||||||||||
| CLASS C SHARES | 1.76% | 2.94% | ||||||||||||||
| 1 Year | -6.26% | -7.18% | ||||||||||||||
| 5 Years | 0.79% | 0.79% | ||||||||||||||
| 10 Years3 | 1.59% | 1.59% | ||||||||||||||
| ADVISOR CLASS SHARES4 | 2.72% | 4.55% | ||||||||||||||
| 1 Year | -5.39% | -5.39% | ||||||||||||||
| Since Inception5 | -3.23% | -3.23% | ||||||||||||||
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.02%, 1.77% and 1.00% for Class A, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.78%, 1.53% and 0.53% for Class A, Class C and Advisor Class shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2022, 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.
| 1 | SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2022. |
| 2 | Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable. |
| 3 | Assumes conversion of Class C shares into Class A shares after eight years. |
| 4 | This share class is offered at NAV to eligible investors and the SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios. |
| 5 | Inception date: 3/25/2021. |
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HISTORICAL PERFORMANCE (continued)
AB ARIZONA PORTFOLIO
SEC AVERAGE ANNUAL RETURNS
AS OF THE MOST RECENT CALENDAR QUARTER-END
JUNE 30, 2022 (unaudited)
| SEC Returns (reflects applicable sales charges) | ||||
| CLASS A SHARES | ||||
| 1 Year | -10.31% | |||
| 5 Years | 0.60% | |||
| 10 Years | 1.84% | |||
| CLASS C SHARES | ||||
| 1 Year | -9.26% | |||
| 5 Years | 0.45% | |||
| 10 Years1 | 1.40% | |||
| ADVISOR CLASS SHARES2 | ||||
| 1 Year | -7.41% | |||
| Since Inception3 | -4.37% | |||
| 1 | Assumes conversion of Class C shares into Class A shares after eight years. |
| 2 | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios. |
| 3 | Inception date: 3/25/2021. |
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HISTORICAL PERFORMANCE
AB MASSACHUSETTS PORTFOLIO
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)
5/31/2012 TO 5/31/2022
This chart illustrates the total value of an assumed $10,000 investment in AB Massachusetts Portfolio Class A shares (from 5/31/2012 to 5/31/2022) as compared to the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.
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HISTORICAL PERFORMANCE (continued)
AB MASSACHUSETTS PORTFOLIO
AVERAGE ANNUAL RETURNS AS OF MAY 31, 2022 (unaudited)
| NAV Returns | SEC Returns (reflects applicable sales charges) | SEC Yields1 | Taxable Equivalent Yields2 | |||||||||||||
| CLASS A SHARES | 2.58% | 4.18% | ||||||||||||||
| 1 Year | -6.63% | -9.42% | ||||||||||||||
| 5 Years | 1.43% | 0.81% | ||||||||||||||
| 10 Years | 2.04% | 1.73% | ||||||||||||||
| CLASS C SHARES | 1.93% | 3.13% | ||||||||||||||
| 1 Year | -7.35% | -8.26% | ||||||||||||||
| 5 Years | 0.67% | 0.67% | ||||||||||||||
| 10 Years3 | 1.30% | 1.30% | ||||||||||||||
| ADVISOR CLASS SHARES4 | 2.92% | 4.73% | ||||||||||||||
| 1 Year | -6.39% | -6.39% | ||||||||||||||
| 5 Years | 1.70% | 1.70% | ||||||||||||||
| Since Inception5 | 1.37% | 1.37% | ||||||||||||||
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.90%, 1.65% and 0.65% for Class A, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.77%, 1.52% and 0.52% for Class A, Class C and Advisor Class shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2022, 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.
| 1 | SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2022. |
| 2 | Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable. |
| 3 | Assumes conversion of Class C shares into Class A shares after eight years. |
| 4 | This share class is offered at NAV to eligible investors and the SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios. |
| 5 | Inception date: 7/25/2016. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 15 | |
HISTORICAL PERFORMANCE (continued)
AB MASSACHUSETTS PORTFOLIO
SEC AVERAGE ANNUAL RETURNS
AS OF THE MOST RECENT CALENDAR QUARTER-END
JUNE 30, 2022 (unaudited)
| SEC Returns (reflects applicable sales charges) | ||||
| CLASS A SHARES | ||||
| 1 Year | -11.59% | |||
| 5 Years | 0.45% | |||
| 10 Years | 1.54% | |||
| CLASS C SHARES | ||||
| 1 Year | -10.45% | |||
| 5 Years | 0.31% | |||
| 10 Years1 | 1.12% | |||
| ADVISOR CLASS SHARES2 | ||||
| 1 Year | -8.55% | |||
| 5 Years | 1.32% | |||
| Since Inception3 | 1.00% | |||
| 1 | Assumes conversion of Class C shares into Class A shares after eight years. |
| 2 | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios. |
| 3 | Inception date: 7/25/2016. |
16 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
HISTORICAL PERFORMANCE
AB MINNESOTA PORTFOLIO
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)
5/31/2012 TO 5/31/2022
This chart illustrates the total value of an assumed $10,000 investment in AB Minnesota Portfolio Class A shares (from 5/31/2012 to 5/31/2022) as compared to the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 17 | |
HISTORICAL PERFORMANCE (continued)
AB MINNESOTA PORTFOLIO
AVERAGE ANNUAL RETURNS AS OF MAY 31, 2022 (unaudited)
| NAV Returns | SEC Returns (reflects applicable sales charges) | SEC Yields1 | Taxable Equivalent Yields2 | |||||||||||||
| CLASS A SHARES | 2.22% | 3.79% | ||||||||||||||
| 1 Year | -5.85% | -8.71% | ||||||||||||||
| 5 Years | 1.37% | 0.75% | ||||||||||||||
| 10 Years | 2.05% | 1.74% | ||||||||||||||
| CLASS C SHARES | 1.54% | 2.63% | ||||||||||||||
| 1 Year | -6.56% | -7.48% | ||||||||||||||
| 5 Years | 0.60% | 0.60% | ||||||||||||||
| 10 Years3 | 1.30% | 1.30% | ||||||||||||||
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.22% and 1.97% for Class A and Class C shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.85% and 1.60% for Class A and Class C shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2022, 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.
| 1 | SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2022. |
| 2 | Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable. |
| 3 | Assumes conversion of Class C shares into Class A shares after eight years. |
18 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
HISTORICAL PERFORMANCE (continued)
AB MINNESOTA PORTFOLIO
SEC AVERAGE ANNUAL RETURNS
AS OF THE MOST RECENT CALENDAR QUARTER-END
JUNE 30, 2022 (unaudited)
| SEC Returns (reflects applicable sales charges) | ||||
| CLASS A SHARES | ||||
| 1 Year | -10.62% | |||
| 5 Years | 0.46% | |||
| 10 Years | 1.55% | |||
| CLASS C SHARES | ||||
| 1 Year | -9.42% | |||
| 5 Years | 0.32% | |||
| 10 Years1 | 1.11% | |||
| 1 | Assumes conversion of Class C shares into Class A shares after eight years. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 19 | |
HISTORICAL PERFORMANCE
AB NEW JERSEY PORTFOLIO
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)
5/31/2012 TO 5/31/2022
This chart illustrates the total value of an assumed $10,000 investment in AB New Jersey Portfolio Class A shares (from 5/31/2012 to 5/31/2022) as compared to the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.
20 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
HISTORICAL PERFORMANCE (continued)
AB NEW JERSEY PORTFOLIO
AVERAGE ANNUAL RETURNS AS OF MAY 31, 2022 (unaudited)
| NAV Returns | SEC Returns (reflects applicable sales charges) | SEC Yields1 | Taxable Equivalent Yields2 | |||||||||||||
| CLASS A SHARES | 2.75% | 4.74% | ||||||||||||||
| 1 Year | -5.71% | -8.51% | ||||||||||||||
| 5 Years | 2.02% | 1.41% | ||||||||||||||
| 10 Years | 2.39% | 2.08% | ||||||||||||||
| CLASS C SHARES | 2.10% | 3.62% | ||||||||||||||
| 1 Year | -6.33% | -7.24% | ||||||||||||||
| 5 Years | 1.26% | 1.26% | ||||||||||||||
| 10 Years3 | 1.63% | 1.63% | ||||||||||||||
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.14% and 1.89% for Class A and Class C shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.82% and 1.57% for Class A and Class C shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2022, 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.
| 1 | SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2022. |
| 2 | Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable. |
| 3 | Assumes conversion of Class C shares into Class A shares after eight years. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 21 | |
HISTORICAL PERFORMANCE (continued)
AB NEW JERSEY PORTFOLIO
SEC AVERAGE ANNUAL RETURNS
AS OF THE MOST RECENT CALENDAR QUARTER-END
JUNE 30, 2022 (unaudited)
| SEC Returns (reflects applicable sales charges) | ||||
| CLASS A SHARES | ||||
| 1 Year | -10.40% | |||
| 5 Years | 1.12% | |||
| 10 Years | 1.93% | |||
| CLASS C SHARES | ||||
| 1 Year | -9.26% | |||
| 5 Years | 0.97% | |||
| 10 Years1 | 1.48% | |||
| 1 | Assumes conversion of Class C shares into Class A shares after eight years. |
22 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
HISTORICAL PERFORMANCE
AB OHIO PORTFOLIO
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)
5/31/2012 TO 5/31/2022
This chart illustrates the total value of an assumed $10,000 investment in AB Ohio Portfolio Class A shares (from 5/31/2012 to 5/31/2022) as compared to the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 23 | |
HISTORICAL PERFORMANCE (continued)
AB OHIO PORTFOLIO
AVERAGE ANNUAL RETURNS AS OF MAY 31, 2022 (unaudited)
| NAV Returns | SEC Returns (reflects applicable sales charges) | SEC Yields1 | Taxable Equivalent Yields2 | |||||||||||||
| CLASS A SHARES | 2.18% | 3.52% | ||||||||||||||
| 1 Year | -6.04% | -8.86% | ||||||||||||||
| 5 Years | 1.54% | 0.93% | ||||||||||||||
| 10 Years | 2.00% | 1.69% | ||||||||||||||
| CLASS C SHARES | 1.50% | 2.42% | ||||||||||||||
| 1 Year | -6.85% | -7.77% | ||||||||||||||
| 5 Years | 0.78% | 0.78% | ||||||||||||||
| 10 Years3 | 1.25% | 1.25% | ||||||||||||||
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.16% and 1.91% for Class A and Class C shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.80% and 1.55% for Class A and Class C shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2022, 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.
| 1 | SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2022. |
| 2 | Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable. |
| 3 | Assumes conversion of Class C shares into Class A shares after eight years. |
24 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
HISTORICAL PERFORMANCE (continued)
AB OHIO PORTFOLIO
SEC AVERAGE ANNUAL RETURNS
AS OF THE MOST RECENT CALENDAR QUARTER-END
JUNE 30, 2022 (unaudited)
| SEC Returns (reflects applicable sales charges) | ||||
| CLASS A SHARES | ||||
| 1 Year | -11.31% | |||
| 5 Years | 0.51% | |||
| 10 Years | 1.44% | |||
| CLASS C SHARES | ||||
| 1 Year | -10.16% | |||
| 5 Years | 0.36% | |||
| 10 Years1 | 1.00% | |||
| 1 | Assumes conversion of Class C shares into Class A shares after eight years. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 25 | |
HISTORICAL PERFORMANCE
AB PENNSYLVANIA PORTFOLIO
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)
5/31/2012 TO 5/31/2022
This chart illustrates the total value of an assumed $10,000 investment in AB Pennsylvania Portfolio Class A shares (from 5/31/2012 to 5/31/2022) as compared to the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.
26 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
HISTORICAL PERFORMANCE (continued)
AB PENNSYLVANIA PORTFOLIO
AVERAGE ANNUAL RETURNS AS OF MAY 31, 2022 (unaudited)
| NAV Returns | SEC Returns (reflects applicable sales charges) | SEC Yields1 | Taxable Equivalent Yields2 | |||||||||||||
| CLASS A SHARES | 2.31% | 3.67% | ||||||||||||||
| 1 Year | -6.31% | -9.14% | ||||||||||||||
| 5 Years | 1.69% | 1.07% | ||||||||||||||
| 10 Years | 2.29% | 1.98% | ||||||||||||||
| CLASS C SHARES | 1.67% | 2.65% | ||||||||||||||
| 1 Year | -7.11% | -8.02% | ||||||||||||||
| 5 Years | 0.91% | 0.91% | ||||||||||||||
| 10 Years3 | 1.54% | 1.54% | ||||||||||||||
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.19% and 1.94% for Class A and Class C shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.85% and 1.60% for Class A and Class C shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2022, 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.
| 1 | SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2022. |
| 2 | Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable. |
| 3 | Assumes conversion of Class C shares into Class A shares after eight years. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 27 | |
HISTORICAL PERFORMANCE (continued)
AB PENNSYLVANIA PORTFOLIO
SEC AVERAGE ANNUAL RETURNS
AS OF THE MOST RECENT CALENDAR QUARTER-END
JUNE 30, 2022 (unaudited)
| SEC Returns (reflects applicable sales charges) | ||||
| CLASS A SHARES | ||||
| 1 Year | -11.21% | |||
| 5 Years | 0.75% | |||
| 10 Years | 1.79% | |||
| CLASS C SHARES | ||||
| 1 Year | -10.04% | |||
| 5 Years | 0.57% | |||
| 10 Years1 | 1.35% | |||
| 1 | Assumes conversion of Class C shares into Class A shares after eight years. |
28 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
HISTORICAL PERFORMANCE
AB VIRGINIA PORTFOLIO
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)
5/31/2012 TO 5/31/2022
This chart illustrates the total value of an assumed $10,000 investment in AB Virginia Portfolio Class A shares (from 5/31/2012 to 5/31/2022) as compared to the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 29 | |
HISTORICAL PERFORMANCE (continued)
AB VIRGINIA PORTFOLIO
AVERAGE ANNUAL RETURNS AS OF MAY 31, 2022 (unaudited)
| NAV Returns | SEC Returns (reflects applicable sales charges) | SEC Yields1 | Taxable Equivalent Yields2 | |||||||||||||
| CLASS A SHARES | 2.43% | 3.97% | ||||||||||||||
| 1 Year | -6.64% | -9.45% | ||||||||||||||
| 5 Years | 1.50% | 0.88% | ||||||||||||||
| 10 Years | 2.19% | 1.88% | ||||||||||||||
| CLASS C SHARES | 1.77% | 2.89% | ||||||||||||||
| 1 Year | -7.37% | -8.28% | ||||||||||||||
| 5 Years | 0.75% | 0.75% | ||||||||||||||
| 10 Years3 | 1.45% | 1.45% | ||||||||||||||
| ADVISOR CLASS SHARES4 | 2.76% | 4.51% | ||||||||||||||
| 1 Year | -6.41% | -6.41% | ||||||||||||||
| 5 Years | 1.76% | 1.76% | ||||||||||||||
| Since Inception5 | 1.52% | 1.52% | ||||||||||||||
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.89%, 1.64% and 0.64% for Class A, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.80%, 1.55% and 0.55% for Class A, Class C and Advisor Class shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2022, 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.
| 1 | SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2022. |
| 2 | Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable. |
| 3 | Assumes conversion of Class C shares into Class A shares after eight years. |
| 4 | This share class is offered at NAV to eligible investors and the SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios. |
| 5 | Inception date: 7/25/2016. |
30 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
HISTORICAL PERFORMANCE (continued)
AB VIRGINIA PORTFOLIO
SEC AVERAGE ANNUAL RETURNS
AS OF THE MOST RECENT CALENDAR QUARTER-END
JUNE 30, 2022 (unaudited)
| SEC Returns (reflects applicable sales charges) | ||||
| CLASS A SHARES | ||||
| 1 Year | -11.62% | |||
| 5 Years | 0.51% | |||
| 10 Years | 1.69% | |||
| CLASS C SHARES | ||||
| 1 Year | -10.39% | |||
| 5 Years | 0.39% | |||
| 10 Years1 | 1.26% | |||
| ADVISOR CLASS SHARES2 | ||||
| 1 Year | -8.64% | |||
| 5 Years | 1.37% | |||
| Since Inception3 | 1.17% | |||
| 1 | Assumes conversion of Class C shares into Class A shares after eight years. |
| 2 | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios. |
| 3 | Inception date: 7/25/2016. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 31 | |
EXPENSE EXAMPLE
(unaudited)
As a shareholder of a Portfolio, 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 Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio 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 a Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’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 Portfolio 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.
32 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
EXPENSE EXAMPLE (continued)
(unaudited)
AB Arizona Portfolio
| Beginning Account Value December 1, 2021 | Ending Account Value May 31, 2022 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||||||
| Class A | ||||||||||||||||
Actual | $ | 1,000 | $ | 934.20 | $ | 3.76 | 0.78 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.04 | $ | 3.93 | 0.78 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000 | $ | 931.50 | $ | 7.37 | 1.53 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,017.30 | $ | 7.70 | 1.53 | % | ||||||||
Advisor Class | ||||||||||||||||
Actual | $ | 1,000 | $ | 935.40 | $ | 2.56 | 0.53 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,022.29 | $ | 2.67 | 0.53 | % | ||||||||
AB Massachusetts Portfolio
| Beginning Account Value December 1, 2021 | Ending Account Value May 31, 2022 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000 | $ | 925.10 | $ | 3.70 | 0.77 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.09 | $ | 3.88 | 0.77 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000 | $ | 921.50 | $ | 7.28 | 1.52 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,017.35 | $ | 7.64 | 1.52 | % | ||||||||
Advisor Class | ||||||||||||||||
Actual | $ | 1,000 | $ | 926.20 | $ | 2.50 | 0.52 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,022.34 | $ | 2.62 | 0.52 | % | ||||||||
AB Minnesota Portfolio
| Beginning Account Value December 1, 2021 | Ending Account Value May 31, 2022 | Expenses Paid During Period* | Annualized Expense Ratio* | Total Expenses Paid During Period+ | Total Annualized Expense Ratio+ | |||||||||||||||||||
Class A | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 932.10 | $ | 4.05 | 0.84 | % | $ | 4.09 | 0.85 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.74 | $ | 4.23 | 0.84 | % | $ | 4.28 | 0.85 | % | ||||||||||||
Class C | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 927.80 | $ | 7.64 | 1.59 | % | $ | 7.69 | 1.60 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,017.00 | $ | 8.00 | 1.59 | % | $ | 8.05 | 1.60 | % | ||||||||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 33 | |
EXPENSE EXAMPLE (continued)
(unaudited)
AB New Jersey Portfolio
| Beginning Account Value December 1, 2021 | Ending Account Value May 31, 2022 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000 | $ | 933.30 | $ | 3.95 | 0.82 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.84 | $ | 4.13 | 0.82 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000 | $ | 930.80 | $ | 7.56 | 1.57 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,017.10 | $ | 7.90 | 1.57 | % | ||||||||
AB Ohio Portfolio
| Beginning Account Value December 1, 2021 | Ending Account Value May 31, 2022 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000 | $ | 930.00 | $ | 3.85 | 0.80 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.94 | $ | 4.03 | 0.80 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000 | $ | 926.50 | $ | 7.44 | 1.55 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,017.20 | $ | 7.80 | 1.55 | % | ||||||||
AB Pennsylvania Portfolio
| Beginning Account Value December 1, 2021 | Ending Account Value May 31, 2022 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000 | $ | 927.30 | $ | 4.08 | 0.85 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.69 | $ | 4.28 | 0.85 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000 | $ | 923.80 | $ | 7.67 | 1.60 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.95 | $ | 8.05 | 1.60 | % | ||||||||
34 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
EXPENSE EXAMPLE (continued)
(unaudited)
AB Virginia Portfolio
| Beginning Account Value December 1, 2021 | Ending Account Value May 31, 2022 | Expenses Paid During Period* | Annualized Expense Ratio* | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000 | $ | 926.10 | $ | 3.84 | 0.80 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.94 | $ | 4.03 | 0.80 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000 | $ | 922.40 | $ | 7.43 | 1.55 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,017.20 | $ | 7.80 | 1.55 | % | ||||||||
Advisor Class | ||||||||||||||||
Actual | $ | 1,000 | $ | 927.20 | $ | 2.64 | 0.55 | % | ||||||||
Hypothetical** | $ | 1,000 | $ | 1,022.19 | $ | 2.77 | 0.55 | % | ||||||||
| * | Expenses are equal to the classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
| ** | Assumes 5% annual return before expenses. |
| + | In connection with the Portfolio’s investments in affiliated/unaffiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated/unaffiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses of the affiliated underlying portfolios. The Portfolio’s total expenses are equal to the classes’ annualized expense ratio plus the Portfolio’s pro rata share of the weighted average expense ratio of the affiliated/unaffiliated underlying portfolios in which it invests, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 35 | |
BOND RATING SUMMARY1
May 31, 2022 (unaudited)
| 1 | All data are as of May 31, 2022. The Portfolio’s quality rating breakdown is expressed as a percentage of the Portfolio’s total investments in municipal securities and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Portfolio considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the Pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments, such as equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment. |
36 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
BOND RATING SUMMARY1 (continued)
May 31, 2022 (unaudited)
| 1 | All data are as of May 31, 2022. The Portfolio’s quality rating breakdown is expressed as a percentage of the Portfolio’s total investments in municipal securities and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Portfolio considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the Pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments, such as equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 37 | |
BOND RATING SUMMARY1 (continued)
May 31, 2022 (unaudited)
| 1 | All data are as of May 31, 2022. The Portfolio’s quality rating breakdown is expressed as a percentage of the Portfolio’s total investments in municipal securities and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Portfolio considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the Pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments, such as equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment. |
38 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
BOND RATING SUMMARY1 (continued)
May 31, 2022 (unaudited)
| 1 | All data are as of May 31, 2022. The Portfolio’s quality rating breakdown is expressed as a percentage of the Portfolio’s total investments in municipal securities and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Portfolio considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the Pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments, such as equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 39 | |
PORTFOLIO OF INVESTMENTS
AB ARIZONA PORTFOLIO
May 31, 2022
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
MUNICIPAL OBLIGATIONS – 103.8% |
| |||||||
Long-Term Municipal Bonds – 103.8% |
| |||||||
Arizona – 87.5% |
| |||||||
Arizona Department of Transportation State Highway Fund Revenue | $ | 3,000 | $ | 3,009,350 | ||||
Arizona Game & Fish Department & Commission (Arizona Game & Fish Department & Commission State Lease) | 1,000 | 1,002,960 | ||||||
Arizona Health Facilities Authority (HonorHealth) | 3,000 | 3,102,244 | ||||||
Arizona Industrial Development Authority | 1,031 | 1,037,905 | ||||||
Arizona Industrial Development Authority | 3,000 | 2,900,817 | ||||||
Arizona Industrial Development Authority | 1,000 | 884,711 | ||||||
Arizona Industrial Development Authority | 2,300 | 2,514,452 | ||||||
Arizona Industrial Development Authority | 1,500 | 1,633,425 | ||||||
Series 2021 | 1,500 | 1,539,556 | ||||||
Arizona Industrial Development Authority | 600 | 518,596 | ||||||
Arizona Industrial Development Authority | 2,100 | 1,817,329 | ||||||
40 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Arizona Sports & Tourism Authority BAM | $ | 2,000 | $ | 2,290,389 | ||||
Arizona State University | 2,050 | 2,146,773 | ||||||
City of Buckeye AZ | 3,450 | 3,695,085 | ||||||
City of Glendale AZ | 2,000 | 1,732,762 | ||||||
City of Glendale AZ Water & Sewer Revenue | 2,000 | 2,006,217 | ||||||
City of Mesa AZ Excise Tax Revenue | 3,000 | 3,009,201 | ||||||
City of Mesa AZ Utility System Revenue | 1,000 | 1,049,442 | ||||||
City of Phoenix Civic Improvement Corp. | 1,500 | 1,741,441 | ||||||
City of Phoenix Civic Improvement Corp. | 750 | 808,316 | ||||||
Series 2019 | 2,500 | 2,748,403 | ||||||
City of Tempe AZ | 1,250 | 1,046,525 | ||||||
City of Tempe AZ Excise Tax Revenue | 520 | 573,681 | ||||||
City of Tucson AZ Water System Revenue | 500 | 501,575 | ||||||
County of Pinal AZ | 2,840 | 2,983,243 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 41 | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Gilbert Water Resource Municipal Property Corp. (Town of Gilbert AZ Waterworks & Sewer System Revenue) | $ | 5,000 | $ | 5,263,603 | ||||
Glendale Industrial Development Authority | 1,000 | 989,835 | ||||||
Glendale Industrial Development Authority | 1,000 | 1,014,283 | ||||||
Glendale Municipal Property Corp. | 2,500 | 2,544,790 | ||||||
Industrial Development Authority of the City of Phoenix (The) (Downtown Phoenix Student Housing LLC) | 2,250 | 2,335,462 | ||||||
Industrial Development Authority of the City of Phoenix (The) (JMF-Higley 2012 LLC) | 2,500 | 2,531,028 | ||||||
La Paz County Industrial Development Authority | 1,130 | 1,021,524 | ||||||
Maricopa County Industrial Development Authority (Arizona Autism Charter Schools Obligated Group) | 990 | 756,098 | ||||||
Maricopa County Industrial Development Authority (Banner Health Obligated Group) | 3,400 | 3,618,524 | ||||||
Maricopa County Industrial Development Authority | 830 | 908,941 | ||||||
42 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Maricopa County Industrial Development Authority | $ | 500 | $ | 458,137 | ||||
Maricopa County Industrial Development Authority | 750 | 803,087 | ||||||
Maricopa County Industrial Development Authority | 1,700 | 1,754,048 | ||||||
Maricopa County Industrial Development Authority | 750 | 781,971 | ||||||
Maricopa County Special Health Care District | 4,700 | 5,255,823 | ||||||
McAllister Academic Village LLC | 2,500 | 2,703,354 | ||||||
Northern Arizona University BAM | 1,000 | 1,063,698 | ||||||
Salt River Project Agricultural Improvement & Power District | 2,750 | 3,200,089 | ||||||
Salt Verde Financial Corp. (Citigroup, Inc.) | 2,500 | 2,821,384 | ||||||
5.25%, 12/01/2022-12/01/2023 | 1,165 | 1,199,253 | ||||||
Student & Academic Services LLC | 1,200 | 1,250,274 | ||||||
Tempe Industrial Development Authority | 815 | 766,499 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 43 | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Tempe Industrial Development Authority | $ | 400 | $ | 398,175 | ||||
University of Arizona (The) | 3,765 | 3,942,731 | ||||||
Western Maricopa Education Center District No. 402 | 3,940 | 4,107,387 | ||||||
|
| |||||||
| 97,784,396 | ||||||||
|
| |||||||
American Samoa – 0.2% |
| |||||||
American Samoa Economic Development Authority | 225 | 267,300 | ||||||
|
| |||||||
California – 0.4% |
| |||||||
Golden State Tobacco Securitization Corp. | 465 | 465,000 | ||||||
|
| |||||||
Delaware – 0.5% |
| |||||||
Delaware State Economic Development Authority | 520 | 542,092 | ||||||
|
| |||||||
Florida – 1.0% |
| |||||||
Halifax Hospital Medical Center | 1,000 | 1,081,978 | ||||||
|
| |||||||
Georgia – 0.2% |
| |||||||
Municipal Electric Authority of Georgia | 200 | 213,287 | ||||||
|
| |||||||
Guam – 2.2% |
| |||||||
Antonio B Won Pat International Airport Authority | 100 | 89,054 | ||||||
44 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Guam Department of Education | $ | 310 | $ | 316,297 | ||||
Guam Government Waterworks Authority | 775 | 825,175 | ||||||
Guam Power Authority | 875 | 922,001 | ||||||
Series 2022-A | 200 | 213,753 | ||||||
Territory of Guam | 90 | 93,311 | ||||||
|
| |||||||
| 2,459,591 | ||||||||
|
| |||||||
Illinois – 2.4% |
| |||||||
Chicago Board of Education | 335 | 354,009 | ||||||
Cook County Forest Preserve District | 2,360 | 2,366,733 | ||||||
|
| |||||||
| 2,720,742 | ||||||||
|
| |||||||
Indiana – 0.2% |
| |||||||
Indiana Finance Authority | 145 | 120,999 | ||||||
Indiana Finance Authority | 100 | 92,555 | ||||||
|
| |||||||
| 213,554 | ||||||||
|
| |||||||
Kentucky – 0.9% |
| |||||||
Kentucky Economic Development Finance Authority | 1,000 | 1,053,741 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 45 | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Louisiana – 0.6% |
| |||||||
Louisiana Local Government Environmental Facilities & Community Development Auth | $ | 500 | $ | 507,398 | ||||
Parish of St. James LA | 100 | 114,404 | ||||||
|
| |||||||
| 621,802 | ||||||||
|
| |||||||
Michigan – 0.1% |
| |||||||
City of Detroit MI | 50 | 52,826 | ||||||
|
| |||||||
New York – 1.9% |
| |||||||
Metropolitan Transportation Authority | 1,000 | 1,099,486 | ||||||
New York State Dormitory Authority | 755 | 971,716 | ||||||
|
| |||||||
| 2,071,202 | ||||||||
|
| |||||||
North Carolina – 0.7% |
| |||||||
North Carolina Medical Care Commission | 300 | 300,671 | ||||||
North Carolina Medical Care Commission | 500 | 504,891 | ||||||
|
| |||||||
| 805,562 | ||||||||
|
| |||||||
Ohio – 0.3% |
| |||||||
Ohio Water Development Authority Water Pollution Control Loan Fund (Energy Harbor Nuclear Generation LLC) | 320 | 320,000 | ||||||
|
| |||||||
46 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Puerto Rico – 1.8% |
| |||||||
Commonwealth of Puerto Rico | $ | 145 | $ | 86,450 | ||||
4.00%, 07/01/2033-07/01/2046 | 214 | 204,276 | ||||||
5.25%, 07/01/2023 | 63 | 64,067 | ||||||
5.375%, 07/01/2025 | 3 | 3,399 | ||||||
5.625%, 07/01/2027-07/01/2029 | 206 | 225,110 | ||||||
5.75%, 07/01/2031 | 3 | 3,458 | ||||||
Series 2022-C | 20 | 10,431 | ||||||
Puerto Rico Electric Power Authority | 100 | 104,804 | ||||||
Puerto Rico Highway & Transportation Authority | 260 | 275,612 | ||||||
Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth | 345 | 357,554 | ||||||
Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue | 130 | 98,940 | ||||||
Series 2019-A | 105 | 104,869 | ||||||
5.00%, 07/01/2058 | 480 | 488,024 | ||||||
|
| |||||||
| 2,026,994 | ||||||||
|
| |||||||
Tennessee – 0.2% |
| |||||||
Bristol Industrial Development Board | 165 | 165,482 | ||||||
|
| |||||||
Texas – 2.4% |
| |||||||
Mission Economic Development Corp. | 290 | 300,630 | ||||||
North Texas Tollway Authority | 1,000 | 1,052,116 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 47 | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Series 2015-B 5.00%, 01/01/2034 | $ | 1,300 | $ | 1,371,070 | ||||
|
| |||||||
| 2,723,816 | ||||||||
|
| |||||||
Washington – 0.3% |
| |||||||
Kalispel Tribe of Indians | 225 | 244,995 | ||||||
Washington State Housing Finance Commission | 100 | 92,314 | ||||||
|
| |||||||
| 337,309 | ||||||||
|
| |||||||
Total Municipal Obligations | 115,926,674 | |||||||
|
| |||||||
| Shares | ||||||||
SHORT-TERM INVESTMENTS – 0.3% |
| |||||||
Investment Companies – 0.3% |
| |||||||
AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB, | 383,928 | 383,928 | ||||||
|
| |||||||
Total Investments – 104.1% | 116,310,602 | |||||||
Other assets less liabilities – (4.1)% | (4,580,625 | ) | ||||||
|
| |||||||
Net Assets – 100.0% | $ | 111,729,977 | ||||||
|
| |||||||
48 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)
Rate Type | ||||||||||||||||||||||||||
Notional | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 740 | 01/15/2025 | 2.565% | CPI# | Maturity | $ | 77,681 | $ | – 0 | – | $ | 77,681 | ||||||||||||||
| USD | 370 | 01/15/2025 | 2.585% | CPI# | Maturity | 38,542 | – 0 | – | 38,542 | |||||||||||||||||
| USD | 370 | 01/15/2025 | 2.613% | CPI# | Maturity | 38,132 | – 0 | – | 38,132 | |||||||||||||||||
| USD | 240 | 01/15/2025 | 4.028% | CPI# | Maturity | 10,742 | – 0 | – | 10,742 | |||||||||||||||||
| USD | 1,150 | 01/15/2026 | CPI# | 3.720% | Maturity | (54,192 | ) | – 0 | – | (54,192 | ) | |||||||||||||||
| USD | 1,150 | 01/15/2027 | CPI# | 3.320% | Maturity | (69,621 | ) | – 0 | – | (69,621 | ) | |||||||||||||||
| USD | 1,150 | 01/15/2027 | CPI# | 3.466% | Maturity | (59,058 | ) | (1,449 | ) | (57,609 | ) | |||||||||||||||
| USD | 900 | 01/15/2027 | CPI# | 3.323% | Maturity | (54,316 | ) | – 0 | – | (54,316 | ) | |||||||||||||||
| USD | 2,840 | 01/15/2028 | 1.230% | CPI# | Maturity | 566,165 | – 0 | – | 566,165 | |||||||||||||||||
| USD | 2,140 | 01/15/2028 | 0.735% | CPI# | Maturity | 505,069 | – 0 | – | 505,069 | |||||||||||||||||
| USD | 2,200 | 01/15/2029 | CPI# | 3.390% | Maturity | (87,080 | ) | – 0 | – | (87,080 | ) | |||||||||||||||
| USD | 1,330 | 01/15/2029 | CPI# | 3.735% | Maturity | (13,149 | ) | – 0 | – | (13,149 | ) | |||||||||||||||
| USD | 640 | 01/15/2029 | CPI# | 3.290% | Maturity | (30,759 | ) | – 0 | – | (30,759 | ) | |||||||||||||||
| USD | 510 | 01/15/2030 | 1.572% | CPI# | Maturity | 98,914 | – 0 | – | 98,914 | |||||||||||||||||
| USD | 510 | 01/15/2030 | 1.587% | CPI# | Maturity | 98,192 | – 0 | – | 98,192 | |||||||||||||||||
| USD | 650 | 01/15/2031 | 2.782% | CPI# | Maturity | 57,849 | – 0 | – | 57,849 | |||||||||||||||||
| USD | 630 | 01/15/2031 | 2.680% | CPI# | Maturity | 62,598 | – 0 | – | 62,598 | |||||||||||||||||
| USD | 540 | 01/15/2031 | 2.989% | CPI# | Maturity | 36,575 | – 0 | – | 36,575 | |||||||||||||||||
| USD | 530 | 01/15/2032 | CPI# | 3.064% | Maturity | (30,152 | ) | – 0 | – | (30,152 | ) | |||||||||||||||
| USD | 490 | 04/15/2032 | CPI# | 2.909% | Maturity | (34,835 | ) | – 0 | – | (34,835 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 1,157,297 | $ | (1,449 | ) | $ | 1,158,746 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| # | Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI). |
CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)
Rate Type | ||||||||||||||||||||||||||
Notional | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 11,400 | 01/15/2027 | 1 Day SOFR | 2.445% | Annual | $ | (39,411 | ) | $ | – 0 | – | $ | (39,411 | ) | ||||||||||||
| USD | 3,200 | 01/15/2028 | 1.058% | 3 Month LIBOR | Semi-Annual/ Quarterly | 291,267 | – 0 | – | 291,267 | |||||||||||||||||
| USD | 2,400 | 01/15/2028 | 1.209% | 3 Month LIBOR | Semi-Annual/ Quarterly | 198,206 | – 0 | – | 198,206 | |||||||||||||||||
| USD | 1,100 | 01/15/2031 | 1.427% | 3 Month LIBOR | Semi-Annual/ Quarterly | 118,976 | – 0 | – | 118,976 | |||||||||||||||||
| USD | 3,500 | 04/15/2032 | 2.542% | 1 Day SOFR | Annual | 27,159 | – 0 | – | 27,159 | |||||||||||||||||
| USD | 1,000 | 04/15/2032 | 1.280% | 1 Day SOFR | Annual | 117,174 | – 0 | – | 117,174 | |||||||||||||||||
| USD | 1,800 | 02/15/2041 | 1 Day SOFR | 1.770% | Annual | (241,871 | ) | – 0 | – | (241,871 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 471,500 | $ | – 0 | – | $ | 471,500 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 49 | |
PORTFOLIO OF INVESTMENTS (continued)
AB ARIZONA PORTFOLIO
INTEREST RATE SWAPS (see Note D)
Rate Type | ||||||||||||||||||||||||||||||
| Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||
Citibank, N.A. | USD | 1,675 | 10/09/2029 | 1.125% | SIFMA* | Quarterly | $ | 152,157 | $ | – 0 | – | $ | 152,157 | |||||||||||||||||
| * | Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index. |
| (a) | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2022, the aggregate market value of these securities amounted to $4,346,071 or 3.9% of net assets. |
| (b) | When-Issued or delayed delivery security. |
| (c) | Affiliated investments. |
| (d) | The rate shown represents the 7-day yield as of period end. |
| (e) | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
As of May 31, 2022, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 0.3% and 0.0%, respectively.
Glossary:
AGC – Assured Guaranty Corporation
AGM – Assured Guaranty Municipal
BAM – Build American Mutual
COP – Certificate of Participation
CPI – Consumer Price Index
ETM – Escrowed to Maturity
LIBOR – London Interbank Offered Rate
SOFR – Secured Overnight Financing Rate
See notes to financial statements.
50 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS
AB MASSACHUSETTS PORTFOLIO
May 31, 2022
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
MUNICIPAL OBLIGATIONS – 95.4% |
| |||||||
Long-Term Municipal Bonds – 94.1% |
| |||||||
Massachusetts – 79.7% |
| |||||||
City of Quincy MA | $ | 3,060 | $ | 3,794,632 | ||||
City of Worcester MA | 2,600 | 2,244,352 | ||||||
Commonwealth of Massachusetts | 10,000 | 10,698,833 | ||||||
Series 2018-A | 5,000 | 5,554,023 | ||||||
Series 2022-B | 7,000 | 7,380,994 | ||||||
CIFGNA Series 2007-A | 3,000 | 2,840,711 | ||||||
Commonwealth of Massachusetts Transportation Fund Revenue | 2,500 | 2,823,862 | ||||||
Marthas Vineyard Land Bank | 1,000 | 1,060,607 | ||||||
Massachusetts Bay Transportation Authority Assessment Revenue | 2,000 | 2,135,437 | ||||||
Massachusetts Clean Water Trust (The) | 2,680 | 3,169,731 | ||||||
Massachusetts Clean Water Trust (The) (Massachusetts Water Pollution Abatement Trust (The) SRF) | 3,000 | 3,514,449 | ||||||
Massachusetts Development Finance Agency Series 2012-A | 1,720 | 1,725,361 | ||||||
5.00%, 07/01/2032 (Pre-refunded/ETM) | 2,260 | 2,267,044 | ||||||
5.25%, 07/01/2042 (Pre-refunded/ETM) | 1,330 | 1,334,411 | ||||||
Massachusetts Development Finance Agency (Atrius Health Obligated Group) | 1,400 | 1,611,464 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 51 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Massachusetts Development Finance Agency (Baystate Medical Obligated Group) | $ | 7,000 | $ | 7,161,093 | ||||
Massachusetts Development Finance Agency (Beth Israel Lahey Health Obligated Group) | 5,000 | 5,304,262 | ||||||
Series 2019 | 1,000 | 1,088,581 | ||||||
Massachusetts Development Finance Agency (Boston Medical Center Corp. Obligated Group) | 3,755 | 3,880,634 | ||||||
Massachusetts Development Finance Agency (Brandeis University) | 4,915 | 5,503,403 | ||||||
Massachusetts Development Finance Agency (Children’s Hospital Corp. Obligated | 1,055 | 1,126,307 | ||||||
Massachusetts Development Finance Agency (Emerson College) | 2,435 | 2,547,992 | ||||||
5.25%, 01/01/2042 | 1,000 | 1,049,313 | ||||||
Massachusetts Development Finance Agency (Emmanuel College/MA) | 4,100 | 4,314,972 | ||||||
Massachusetts Development Finance Agency (Equitable School Revolving Fund LLC Obligated Group) | 1,000 | 987,379 | ||||||
Massachusetts Development Finance Agency (Franklin W Olin College of Engineering, Inc.) | 5,000 | 5,141,999 | ||||||
Massachusetts Development Finance Agency (Lasell University) | 3,580 | 3,314,467 | ||||||
52 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Massachusetts Development Finance Agency | $ | 2,055 | $ | 2,162,566 | ||||
Massachusetts Development Finance Agency | 5,855 | 5,881,016 | ||||||
Massachusetts Development Finance Agency | 1,000 | 1,013,827 | ||||||
Massachusetts Development Finance Agency | 1,825 | 1,715,954 | ||||||
Massachusetts Development Finance Agency | 2,000 | 2,111,317 | ||||||
Massachusetts Development Finance Agency (President & Fellows of Harvard College) | 6,100 | 7,418,485 | ||||||
Massachusetts Development Finance Agency | 1,020 | 1,031,892 | ||||||
Massachusetts Development Finance Agency | 3,980 | 4,267,143 | ||||||
Series 2020-M | 2,500 | 2,365,444 | ||||||
Massachusetts Development Finance Agency | 2,000 | 2,011,928 | ||||||
5.00%, 07/01/2041 | 2,500 | 2,612,219 | ||||||
Massachusetts Development Finance Agency | 1,500 | 1,600,120 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 53 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Massachusetts Development Finance Agency | $ | 3,000 | $ | 2,738,995 | ||||
Series 2021-B | 1,000 | 936,465 | ||||||
Massachusetts Development Finance Agency | 1,250 | 1,336,337 | ||||||
Series 2020-A | 1,400 | 1,347,853 | ||||||
Series 2021 | 2,270 | 2,155,216 | ||||||
Massachusetts Development Finance Agency | 1,000 | 1,098,131 | ||||||
Massachusetts Development Finance Agency | 1,500 | 1,576,665 | ||||||
Massachusetts Development Finance Agency | 4,000 | 4,301,553 | ||||||
Massachusetts Development Finance Agency | 3,000 | 3,298,432 | ||||||
Massachusetts Port Authority | 4,685 | 5,171,226 | ||||||
Series 2019-C | 1,000 | 1,078,473 | ||||||
Series 2021-E | 3,250 | 3,613,489 | ||||||
Massachusetts School Building Authority | 2,500 | 2,582,008 | ||||||
Series 2015-B | 3,770 | 4,056,786 | ||||||
Massachusetts Water Resources Authority | 5,500 | 6,140,056 | ||||||
54 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Town of Weymouth MA | $ | 2,000 | $ | 1,409,690 | ||||
University of Massachusetts Building Authority | 2,000 | 2,142,768 | ||||||
University of Massachusetts Building Authority | 2,500 | 2,779,795 | ||||||
Series 2020 | 2,000 | 1,584,784 | ||||||
|
| |||||||
| 177,116,946 | ||||||||
|
| |||||||
Alabama – 0.0% | ||||||||
Tuscaloosa County Industrial Development Authority | 100 | 101,267 | ||||||
|
| |||||||
American Samoa – 0.2% | ||||||||
American Samoa Economic Development Authority | 395 | 469,260 | ||||||
|
| |||||||
Arizona – 2.2% | ||||||||
Arizona Sports & Tourism Authority | 4,065 | 4,077,635 | ||||||
Salt Verde Financial Corp. | 660 | 744,846 | ||||||
|
| |||||||
| 4,822,481 | ||||||||
|
| |||||||
California – 0.4% | ||||||||
Golden State Tobacco Securitization Corp. | 875 | 875,000 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 55 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Colorado – 0.5% | ||||||||
City & County of Denver CO | $ | 1,000 | $ | 1,003,799 | ||||
|
| |||||||
Connecticut – 0.5% | ||||||||
State of Connecticut | 1,000 | 1,074,865 | ||||||
|
| |||||||
Florida – 1.5% | ||||||||
County of Miami-Dade FL Aviation Revenue | 3,000 | 3,135,354 | ||||||
Palm Beach County Health Facilities Authority | 100 | 91,606 | ||||||
|
| |||||||
| 3,226,960 | ||||||||
|
| |||||||
Guam – 2.4% | ||||||||
Antonio B Won Pat International Airport Authority | 535 | 470,360 | ||||||
Guam Government Waterworks Authority | 1,525 | 1,646,753 | ||||||
Guam Power Authority | 1,770 | 1,865,103 | ||||||
Territory of Guam | 230 | 238,461 | ||||||
Territory of Guam | 1,255 | 1,139,035 | ||||||
|
| |||||||
| 5,359,712 | ||||||||
|
| |||||||
Illinois – 0.9% | ||||||||
Chicago Board of Education | 650 | 686,884 | ||||||
56 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Illinois Finance Authority | $ | 1,050 | $ | 1,133,554 | ||||
Village of Bolingbrook IL | 201 | 194,685 | ||||||
|
| |||||||
| 2,015,123 | ||||||||
|
| |||||||
Indiana – 0.1% | ||||||||
Indiana Finance Authority | 270 | 225,308 | ||||||
|
| |||||||
Michigan – 0.0% | ||||||||
City of Detroit MI | 90 | 95,087 | ||||||
|
| |||||||
New Jersey – 0.6% | ||||||||
New Jersey Transportation Trust Fund Authority | 1,170 | 1,262,663 | ||||||
|
| |||||||
North Carolina – 0.7% | ||||||||
North Carolina Medical Care Commission | 540 | 541,208 | ||||||
North Carolina Turnpike Authority | 1,000 | 1,066,244 | ||||||
|
| |||||||
| 1,607,452 | ||||||||
|
| |||||||
Ohio – 0.3% | ||||||||
Ohio Water Development Authority | 600 | 600,000 | ||||||
|
| |||||||
Pennsylvania – 1.0% | ||||||||
City of Philadelphia PA | 1,000 | 1,099,700 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 57 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Pennsylvania Economic Development Financing Authority | $ | 1,140 | $ | 1,187,555 | ||||
|
| |||||||
| 2,287,255 | ||||||||
|
| |||||||
Puerto Rico – 1.8% | ||||||||
Commonwealth of Puerto Rico | 405 | 305,138 | ||||||
4.00%, 07/01/2033 | 100 | 97,806 | ||||||
5.25%, 07/01/2023 | 115 | 116,504 | ||||||
5.375%, 07/01/2025 | 200 | 210,437 | ||||||
5.625%, 07/01/2027-07/01/2029 | 300 | 329,982 | ||||||
5.75%, 07/01/2031 | 100 | 113,049 | ||||||
Puerto Rico Electric Power Authority | 240 | 251,530 | ||||||
Puerto Rico Highway & Transportation Authority | 100 | 105,895 | ||||||
AGC Series 2007-N | 490 | 519,400 | ||||||
Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth | 640 | 663,288 | ||||||
Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue | 238 | 181,137 | ||||||
Series 2019-A | 180 | 179,775 | ||||||
4.55%, 07/01/2040 | 22 | 22,230 | ||||||
5.00%, 07/01/2058 | 815 | 828,623 | ||||||
|
| |||||||
| 3,924,794 | ||||||||
|
| |||||||
Tennessee – 0.1% | ||||||||
Bristol Industrial Development Board | 310 | 310,907 | ||||||
|
| |||||||
58 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Texas – 0.7% | ||||||||
Mission Economic Development Corp. | $ | 540 | $ | 559,793 | ||||
North Texas Tollway Authority | 1,000 | 1,052,116 | ||||||
|
| |||||||
| 1,611,909 | ||||||||
|
| |||||||
Wisconsin – 0.5% | ||||||||
Wisconsin Public Finance Authority | 1,000 | 1,070,050 | ||||||
|
| |||||||
Total Long-Term Municipal Bonds | 209,060,838 | |||||||
|
| |||||||
Short-Term Municipal Notes – 1.3% | ||||||||
Massachusetts – 1.3% | ||||||||
Massachusetts Health & Educational Facilities Authority | 2,975 | 2,975,000 | ||||||
|
| |||||||
Total Municipal Obligations | 212,035,838 | |||||||
|
| |||||||
| Shares | ||||||||
SHORT-TERM INVESTMENTS – 2.9% | ||||||||
Investment Companies – 2.9% | ||||||||
AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB, 0.71%(d)(e)(f) | 6,459,181 | 6,459,181 | ||||||
|
| |||||||
Total Investments – 98.3% | 218,495,019 | |||||||
Other assets less liabilities – 1.7% | 3,667,168 | |||||||
|
| |||||||
Net Assets – 100.0% | $ | 222,162,187 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 59 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||||||
| Notional Amount (000) | Termination Date | �� | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||
| USD | 1,325 | 01/15/2025 | 2.565% | CPI# | Maturity | $ | 139,090 | $ | – 0 | – | $ | 139,090 | ||||||||||||||||||
| USD | 663 | 01/15/2025 | 2.613% | CPI# | Maturity | 68,327 | – 0 | – | 68,327 | |||||||||||||||||||||
| USD | 662 | 01/15/2025 | 2.585% | CPI# | Maturity | 68,959 | – 0 | – | 68,959 | |||||||||||||||||||||
| USD | 510 | 01/15/2025 | 4.028% | CPI# | Maturity | 22,828 | – 0 | – | 22,828 | |||||||||||||||||||||
| USD | 2,270 | 01/15/2026 | CPI# | 3.765% | Maturity | (101,585 | ) | – 0 | – | (101,585 | ) | |||||||||||||||||||
| USD | 2,060 | 01/15/2027 | CPI# | 3.466% | Maturity | (105,790 | ) | (2,595 | ) | (103,195 | ) | |||||||||||||||||||
| USD | 2,050 | 01/15/2027 | CPI# | 3.320% | Maturity | (124,107 | ) | – 0 | – | (124,107 | ) | |||||||||||||||||||
| USD | 1,660 | 01/15/2027 | CPI# | 3.323% | Maturity | (100,184 | ) | – 0 | – | (100,184 | ) | |||||||||||||||||||
| USD | 5,260 | 01/15/2028 | 1.230% | CPI# | Maturity | 1,048,601 | – 0 | – | 1,048,601 | |||||||||||||||||||||
| USD | 3,970 | 01/15/2028 | 0.735% | CPI# | Maturity | 936,975 | – 0 | – | 936,975 | |||||||||||||||||||||
| USD | 3,900 | 01/15/2029 | CPI# | 3.390% | Maturity | (154,369 | ) | – 0 | – | (154,369 | ) | |||||||||||||||||||
| USD | 2,420 | 01/15/2029 | CPI# | 3.735% | Maturity | (23,926 | ) | – 0 | – | (23,926 | ) | |||||||||||||||||||
| USD | 1,250 | 01/15/2029 | CPI# | 3.331% | Maturity | (55,739 | ) | – 0 | – | (55,739 | ) | |||||||||||||||||||
| USD | 870 | 01/15/2030 | 1.572% | CPI# | Maturity | 168,735 | – 0 | – | 168,735 | |||||||||||||||||||||
| USD | 870 | 01/15/2030 | 1.587% | CPI# | Maturity | 167,504 | – 0 | – | 167,504 | |||||||||||||||||||||
| USD | 1,300 | 01/15/2031 | 2.782% | CPI# | Maturity | 115,698 | – 0 | – | 115,698 | |||||||||||||||||||||
| USD | 1,130 | 01/15/2031 | 2.680% | CPI# | Maturity | 112,280 | – 0 | – | 112,280 | |||||||||||||||||||||
| USD | 1,000 | 01/15/2031 | 2.989% | CPI# | Maturity | 67,731 | – 0 | – | 67,731 | |||||||||||||||||||||
| USD | 1,000 | 01/15/2032 | CPI# | 3.064% | Maturity | (56,891 | ) | – 0 | – | (56,891 | ) | |||||||||||||||||||
| USD | 950 | 04/15/2032 | CPI# | 2.909% | Maturity | (67,537 | ) | – 0 | – | (67,537 | ) | |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
| $ | 2,126,600 | $ | (2,595 | ) | $ | 2,129,195 | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
| # | Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI). |
CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||
| Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 10,500 | 01/15/2027 | 1 Day SOFR | 2.587% | Annual | $ | 34,618 | $ | – 0 | – | $ | 34,618 | ||||||||||||||
| USD | 4,250 | 01/15/2028 | 1.092% | 3 Month LIBOR | Semi-Annual/ Quarterly | 378,886 | – 0 | – | 378,886 | |||||||||||||||||
| USD | 3,750 | 01/15/2028 | 1.117% | 3 Month LIBOR | Semi-Annual/ Quarterly | 329,074 | – 0 | – | 329,074 | |||||||||||||||||
| USD | 2,450 | 01/15/2028 | 1.208% | 3 Month LIBOR | Semi-Annual/ Quarterly | 202,472 | – 0 | – | 202,472 | |||||||||||||||||
| USD | 2,500 | 01/15/2031 | 1.270% | 3 Month LIBOR | Semi-Annual/ Quarterly | 302,247 | – 0 | – | 302,247 | |||||||||||||||||
| USD | 2,100 | 01/15/2031 | 1.427% | 3 Month LIBOR | Semi-Annual/ Quarterly | 227,136 | – 0 | – | 227,136 | |||||||||||||||||
60 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| Rate Type | ||||||||||||||||||||||||||
| Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 2,000 | 01/15/2031 | 1.241% | 3 Month LIBOR | Semi-Annual/ Quarterly | $ | 248,388 | $ | – 0 | – | $ | 248,388 | ||||||||||||||
| USD | 4,800 | 04/15/2032 | 1 Day SOFR | 1.756% | Annual | (360,218 | ) | – 0 | – | (360,218 | ) | |||||||||||||||
| USD | 2,750 | 04/15/2032 | 1.280% | 1 Day SOFR | Annual | 322,228 | – 0 | – | 322,228 | |||||||||||||||||
| USD | 1,350 | 04/15/2032 | 1.284% | 1 Day SOFR | Annual | 157,766 | – 0 | – | 157,766 | |||||||||||||||||
| USD | 4,150 | 04/01/2039 | 0.834% | 3 Month LIBOR | Semi-Annual/ Quarterly | 1,218,934 | – 0 | – | 1,218,934 | |||||||||||||||||
| USD | 3,000 | 04/01/2039 | 0.780% | 3 Month LIBOR | Semi-Annual/ Quarterly | 903,046 | (108 | ) | 903,154 | |||||||||||||||||
| USD | 3,000 | 04/01/2039 | 0.930% | 3 Month LIBOR | Semi-Annual/ Quarterly | 841,879 | – 0 | – | 841,879 | |||||||||||||||||
| USD | 1,550 | 04/01/2039 | 1.442% | 3 Month LIBOR | Semi-Annual/ Quarterly | 326,739 | – 0 | – | 326,739 | |||||||||||||||||
| USD | 2,600 | 02/15/2041 | 1 Day SOFR | 2.900% | Annual | 76,200 | – 0 | – | 76,200 | |||||||||||||||||
| USD | 2,500 | 02/15/2041 | 1 Day SOFR | 1.770% | Annual | (335,932 | ) | – 0 | – | (335,932 | ) | |||||||||||||||
| USD | 2,300 | 02/15/2041 | 1 Day SOFR | 1.813% | Annual | (293,571 | ) | – 0 | – | (293,571 | ) | |||||||||||||||
| USD | 1,400 | 02/15/2041 | 1 Day SOFR | 1.697% | Annual | (203,480 | ) | – 0 | – | (203,480 | ) | |||||||||||||||
| USD | 250 | 02/15/2041 | 1 Day SOFR | 1.715% | Annual | (35,641 | ) | – 0 | – | (35,641 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 4,340,771 | $ | (108 | ) | $ | 4,340,879 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||||||||||||
| Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||||||
Citibank, NA | USD | 3,025 | 10/09/2029 | 1.125 | % | SIFMA | * | Quarterly | $ | 274,791 | $ | – 0 | – | $ | 274,791 | |||||||||||||||||||||
| * | Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index. |
| (a) | Floating Rate Security. Stated interest/floor/ceiling rate was in effect at May 31, 2022. |
| (b) | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2022, the aggregate market value of these securities amounted to $3,777,852 or 1.7% of net assets. |
| (c) | Variable Rate Demand Notes 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. |
| (d) | Affiliated investments. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 61 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MASSACHUSETTS PORTFOLIO
| (e) | The rate shown represents the 7-day yield as of period end. |
| (f) | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
As of May 31, 2022, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 5.9% and 0.0%, respectively.
Glossary:
AGC – Assured Guaranty Corporation
AGM – Assured Guaranty Municipal
BAM – Build American Mutual
CCRC – Congregate Care Retirement Center
CIFGNA – CIFG Assurance North America, Inc.
CPI – Consumer Price Index
ETM – Escrowed to Maturity
LIBOR – London Interbank Offered Rate
SOFR – Secured Overnight Financing Rate
SRF – State Revolving Fund
See notes to financial statements.
62 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS
AB MINNESOTA PORTFOLIO
May 31, 2022
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
MUNICIPAL OBLIGATIONS – 94.9% | ||||||||
Long-Term Municipal Bonds – 94.9% | ||||||||
Minnesota – 94.9% | ||||||||
Anoka-Hennepin Independent School District No. 11 | $ | 1,695 | $ | 1,771,558 | ||||
City of Apple Valley MN | 270 | 226,900 | ||||||
City of Center City MN | ||||||||
Series 2014 | 800 | 821,981 | ||||||
Series 2019 | 850 | 826,459 | ||||||
City of Duluth MN | 1,000 | 1,098,819 | ||||||
City of Maple Grove MN | 1,000 | 1,071,822 | ||||||
City of Minneapolis MN | 1,000 | 1,014,327 | ||||||
City of Minneapolis MN | ||||||||
Series 2015-A | 1,000 | 1,048,871 | ||||||
Series 2018-A | 2,000 | 2,150,695 | ||||||
City of Minneapolis MN | 300 | 244,841 | ||||||
City of Minneapolis MN/St. Paul Housing & Redevelopment Authority | ||||||||
Series 2017-A | 1,355 | 1,492,188 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 63 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MINNESOTA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
NATL Series 1998 | $ | 275 | $ | 275,000 | ||||
City of Rochester MN | ||||||||
Series 2016-B | 60 | 74,010 | ||||||
Series 2018 | 1,000 | 1,017,179 | ||||||
City of St. Paul MN | 2,900 | 3,090,920 | ||||||
City of Wayzata MN | 395 | 398,814 | ||||||
City of Woodbury MN | 215 | 175,765 | ||||||
Cloquet Independent School District No. 94 | 2,200 | 2,364,207 | ||||||
County of Hennepin MN | 1,575 | 1,799,766 | ||||||
Duluth Economic Development Authority | 400 | 387,412 | ||||||
Duluth Economic Development Authority | ||||||||
Series 2018 | 500 | 504,742 | ||||||
Series 2018-A | 1,000 | 1,054,877 | ||||||
Housing & Redevelopment Authority of The City of St. Paul Minnesota | 600 | 653,800 | ||||||
Housing & Redevelopment Authority of The City of St. Paul Minnesota | 1,575 | 1,687,516 | ||||||
64 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB MINNESOTA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Housing & Redevelopment Authority of The City of St. Paul Minnesota | $ | 1,000 | $ | 1,045,159 | ||||
Housing & Redevelopment Authority of The City of St. Paul Minnesota | 110 | 112,453 | ||||||
Housing & Redevelopment Authority of The City of St. Paul Minnesota | 225 | 180,254 | ||||||
Hutchinson Utilities Commission | 420 | 427,396 | ||||||
Minneapolis Special School District No. 1 | 3,000 | 3,341,234 | ||||||
Minnesota Higher Education Facilities Authority | 750 | 758,702 | ||||||
Minnesota Higher Education Facilities Authority | 500 | 514,963 | ||||||
Minnesota Higher Education Facilities Authority | 1,100 | 1,179,047 | ||||||
Minnesota Higher Education Facilities Authority | ||||||||
Series 2021 | 1,000 | 897,343 | ||||||
Series 2015-8 | 1,000 | 1,072,156 | ||||||
Minnesota Higher Education Facilities Authority | 800 | 811,168 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 65 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MINNESOTA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Minnesota Housing Finance Agency | $ | 50 | $ | 54,003 | ||||
Minnesota Municipal Power Agency | 750 | 801,047 | ||||||
New Prague Independent School District No. 721 | 1,000 | 1,039,519 | ||||||
North St. Paul-Maplewood-Oakdale Independent School District No. 622 | 1,000 | 964,278 | ||||||
Northern Municipal Power Agency | 1,150 | 1,256,750 | ||||||
Southern Minnesota Municipal Power Agency | 2,000 | 2,209,041 | ||||||
State of Minnesota | 1,000 | 1,153,949 | ||||||
Series 2021-A | 1,000 | 1,069,500 | ||||||
University of Minnesota | 2,000 | 2,037,613 | ||||||
Western Minnesota Municipal Power Agency | 1,500 | 1,575,633 | ||||||
|
| |||||||
Total Municipal Obligations | 47,753,677 | |||||||
|
| |||||||
66 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB MINNESOTA PORTFOLIO
| Company | Shares | U.S. $ Value | ||||||
| ||||||||
SHORT-TERM INVESTMENTS – 3.7% | ||||||||
Investment Companies – 3.7% | ||||||||
AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB, | 1,881,060 | $ | 1,881,060 | |||||
|
| |||||||
Total Investments – 98.6% | 49,634,737 | |||||||
Other assets less liabilities – 1.4% | 713,954 | |||||||
|
| |||||||
Net Assets – 100.0% | $ | 50,348,691 | ||||||
|
| |||||||
CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)
Rate Type | ||||||||||||||||||||||||||
Notional | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Paid/ | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 365 | 01/15/2025 | 2.565% | CPI# | Maturity | $ | 38,315 | $ | – 0 | – | $ | 38,315 | ||||||||||||||
| USD | 183 | 01/15/2025 | 2.585% | CPI# | Maturity | 19,063 | – 0 | – | 19,063 | |||||||||||||||||
| USD | 182 | 01/15/2025 | 2.613% | CPI# | Maturity | 18,757 | – 0 | – | 18,757 | |||||||||||||||||
| USD | 120 | 01/15/2025 | 4.028% | CPI# | Maturity | 5,371 | – 0 | – | 5,371 | |||||||||||||||||
| USD | 680 | 01/15/2026 | CPI# | 3.765% | Maturity | (30,431 | ) | – 0 | – | (30,431 | ) | |||||||||||||||
| USD | 570 | 01/15/2027 | CPI# | 3.466% | Maturity | (29,272 | ) | (717 | ) | (28,555 | ) | |||||||||||||||
| USD | 500 | 01/15/2027 | CPI# | 3.320% | Maturity | (30,270 | ) | – 0 | – | (30,270 | ) | |||||||||||||||
| USD | 420 | 01/15/2027 | CPI# | 3.323% | Maturity | (25,348 | ) | – 0 | – | (25,348 | ) | |||||||||||||||
| USD | 1,410 | 01/15/2028 | 1.230% | CPI# | Maturity | 281,089 | – 0 | – | 281,089 | |||||||||||||||||
| USD | 1,070 | 01/15/2028 | 0.735% | CPI# | Maturity | 252,535 | – 0 | – | 252,535 | |||||||||||||||||
| USD | 1,050 | 01/15/2029 | CPI# | 3.390% | Maturity | (41,561 | ) | – 0 | – | (41,561 | ) | |||||||||||||||
| USD | 620 | 01/15/2029 | CPI# | 3.735% | Maturity | (6,130 | ) | – 0 | – | (6,130 | ) | |||||||||||||||
| USD | 330 | 01/15/2029 | CPI# | 3.331% | Maturity | (14,715 | ) | – 0 | – | (14,715 | ) | |||||||||||||||
| USD | 255 | 01/15/2030 | 1.572% | CPI# | Maturity | 49,457 | – 0 | – | 49,457 | |||||||||||||||||
| USD | 255 | 01/15/2030 | 1.587% | CPI# | Maturity | 49,096 | – 0 | – | 49,096 | |||||||||||||||||
| USD | 300 | 01/15/2031 | 2.680% | CPI# | Maturity | 29,809 | – 0 | – | 29,809 | |||||||||||||||||
| USD | 300 | 01/15/2031 | 2.782% | CPI# | Maturity | 26,700 | – 0 | – | 26,700 | |||||||||||||||||
| USD | 250 | 01/15/2031 | 2.989% | CPI# | Maturity | 16,933 | – 0 | – | 16,933 | |||||||||||||||||
| USD | 260 | 01/15/2032 | CPI# | 3.064% | Maturity | (14,792 | ) | – 0 | – | (14,792 | ) | |||||||||||||||
| USD | 260 | 04/15/2032 | CPI# | 2.909% | Maturity | (18,484 | ) | – 0 | – | (18,484 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 576,122 | $ | (717 | ) | $ | 576,839 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| # | Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI). |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 67 | |
PORTFOLIO OF INVESTMENTS (continued)
AB MINNESOTA PORTFOLIO
CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)
Rate Type | ||||||||||||||||||||||||||
Notional | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Paid/ | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 6,600 | 01/15/2027 | 1 Day SOFR | 2.467% | Annual | $ | (11,980 | ) | $ | – 0 | – | $ | (11,980 | ) | ||||||||||||
| USD | 1,500 | 01/15/2028 | 1.092% | 3 Month LIBOR | Semi-Annual/ Quarterly | 133,724 | – 0 | – | 133,724 | |||||||||||||||||
| USD | 4,070 | 01/15/2030 | 1.023% | 3 Month LIBOR | Semi-Annual/ Quarterly | 510,227 | – 0 | – | 510,227 | |||||||||||||||||
| USD | 1,400 | 01/15/2031 | 1.427% | 3 Month LIBOR | Semi-Annual/ Quarterly | 151,424 | – 0 | – | 151,424 | |||||||||||||||||
| USD | 650 | 01/15/2031 | 1.270% | 3 Month LIBOR | Semi-Annual/ Quarterly | 78,584 | – 0 | – | 78,584 | |||||||||||||||||
| USD | 500 | 01/15/2031 | 1.241% | 3 Month LIBOR | Semi-Annual/ Quarterly | 62,097 | – 0 | – | 62,097 | |||||||||||||||||
| USD | 800 | 04/15/2032 | 1 Day SOFR | 1.756% | Annual | (60,036 | ) | – 0 | – | (60,036 | ) | |||||||||||||||
| USD | 990 | 11/12/2039 | 3 Month LIBOR | 3.320% | Semi-Annual/ Quarterly | 44,275 | – 0 | – | 44,275 | |||||||||||||||||
| USD | 700 | 02/15/2041 | 1 Day SOFR | 1.770% | Annual | (94,061 | ) | – 0 | – | (94,061 | ) | |||||||||||||||
| USD | 600 | 02/15/2041 | 1 Day SOFR | 1.657% | Annual | (90,813 | ) | – 0 | – | (90,813 | ) | |||||||||||||||
| USD | 470 | 02/15/2041 | 1 Day SOFR | 1.715% | Annual | (67,004 | ) | – 0 | – | (67,004 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 656,437 | $ | – 0 | – | $ | 656,437 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||||||||||||
| Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||||||
Citibank, NA | USD | 835 | 10/09/2029 | 1.125 | % | SIFMA | * | Quarterly | $ | 75,851 | $ | – 0 | – | $ | 75,851 | |||||||||||||||||||||
| * | Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index. |
| (a) | 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 May 31, 2022 and the aggregate market value of this security amounted to $275,000 or 0.55% of net assets. |
68 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB MINNESOTA PORTFOLIO
| (b) | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. This security is considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2022, the market value of this security amounted to $180,254 or 0.4% of net assets. |
| (c) | Affiliated investments. |
| (d) | The rate shown represents the 7-day yield as of period end. |
| (e) | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
As of May 31, 2022, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 0.6% and 0.0%, respectively.
Glossary:
AGC – Assured Guaranty Corporation
COP – Certificate of Participation
CPI – Consumer Price Index
ETM – Escrowed to Maturity
LIBOR – London Interbank Offered Rate
NATL – National Interstate Corporation
SOFR – Secured Overnight Financing Rate
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 69 | |
PORTFOLIO OF INVESTMENTS
AB NEW JERSEY PORTFOLIO
May 31, 2022
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
MUNICIPAL OBLIGATIONS – 98.4% | ||||||||
Long-Term Municipal Bonds – 98.4% | ||||||||
New Jersey – 83.3% | ||||||||
City of Jersey City NJ | $ | 1,500 | $ | 1,672,041 | ||||
Hudson County Improvement Authority | 1,400 | 1,514,096 | ||||||
Morris-Union Jointure Commission | 2,320 | 2,391,787 | ||||||
New Jersey Economic Development Authority | 1,000 | 1,019,570 | ||||||
New Jersey Economic Development Authority | 961 | 985,798 | ||||||
New Jersey Economic Development Authority | 1,000 | 1,047,594 | ||||||
New Jersey Economic Development Authority | 1,000 | 1,026,663 | ||||||
5.50%, 01/01/2027 | 1,000 | 1,036,532 | ||||||
New Jersey Economic Development Authority | 2,000 | 2,094,072 | ||||||
New Jersey Economic Development Authority | 1,765 | 1,901,958 | ||||||
New Jersey Economic Development Authority | 1,165 | 1,172,598 | ||||||
70 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB NEW JERSEY PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
New Jersey Educational Facilities Authority | $ | 2,500 | $ | 2,676,238 | ||||
New Jersey Educational Facilities Authority | 1,000 | 1,014,351 | ||||||
New Jersey Educational Facilities Authority | 1,750 | 1,828,522 | ||||||
New Jersey Health Care Facilities Financing Authority | 3,000 | 3,019,759 | ||||||
Series 2013 | 320 | 331,633 | ||||||
New Jersey Health Care Facilities Financing Authority | 45 | 45,143 | ||||||
New Jersey Health Care Facilities Financing Authority | 1,950 | 2,092,236 | ||||||
New Jersey Health Care Facilities Financing Authority | 1,835 | 1,960,021 | ||||||
New Jersey Health Care Facilities Financing Authority | 2,500 | 2,527,906 | ||||||
New Jersey Transportation Trust Fund Authority | 2,750 | 2,972,865 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 71 | |
PORTFOLIO OF INVESTMENTS (continued)
AB NEW JERSEY PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
New Jersey Transportation Trust Fund Authority | $ | 1,250 | $ | 1,305,774 | ||||
Series 2018-A | 1,750 | 1,895,243 | ||||||
Series 2020-A | 1,415 | 1,405,545 | ||||||
Series 2022-A | 1,000 | 1,128,035 | ||||||
New Jersey Turnpike Authority | 680 | 749,306 | ||||||
Series 2020-D | 1,350 | 1,483,423 | ||||||
North Hudson Sewerage Authority/NJ | 2,625 | 2,494,175 | ||||||
Rahway Valley Sewerage Authority (The) | 3,445 | 2,168,256 | ||||||
Tobacco Settlement Financing Corp./NJ | 2,675 | 2,750,278 | ||||||
Union County Improvement Authority | 835 | 837,355 | ||||||
Union County Utilities Authority | 3,050 | 3,056,597 | ||||||
|
| |||||||
| 53,605,370 | ||||||||
|
| |||||||
Alabama – 0.1% |
| |||||||
Tuscaloosa County Industrial Development Authority | 85 | 86,611 | ||||||
|
| |||||||
72 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB NEW JERSEY PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
American Samoa – 0.3% | ||||||||
American Samoa Economic Development Authority | $ | 145 | $ | 172,260 | ||||
|
| |||||||
Arizona – 0.2% | ||||||||
Maricopa County Industrial Development Authority | 100 | 109,511 | ||||||
|
| |||||||
Delaware – 3.4% | ||||||||
Delaware River & Bay Authority | 1,000 | 1,017,459 | ||||||
Series 2022 | 1,000 | 1,162,537 | ||||||
|
| |||||||
| 2,179,996 | ||||||||
|
| |||||||
Florida – 0.1% |
| |||||||
Palm Beach County Health Facilities Authority | 100 | 101,866 | ||||||
|
| |||||||
Guam – 3.3% |
| |||||||
Antonio B Won Pat International Airport Authority | 100 | 89,054 | ||||||
Guam Power Authority | 805 | 848,214 | ||||||
Territory of Guam | 720 | 763,941 | ||||||
Territory of Guam | 440 | 399,343 | ||||||
|
| |||||||
| 2,100,552 | ||||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 73 | |
PORTFOLIO OF INVESTMENTS (continued)
AB NEW JERSEY PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Illinois – 0.5% | ||||||||
Chicago Board of Education | $ | 305 | $ | 322,307 | ||||
|
| |||||||
Louisiana – 0.2% |
| |||||||
Parish of St. James LA | 100 | 114,404 | ||||||
|
| |||||||
Michigan – 0.1% |
| |||||||
City of Detroit MI | 50 | 52,826 | ||||||
|
| |||||||
Nevada – 0.1% | ||||||||
City of Reno NV | 500 | 58,798 | ||||||
|
| |||||||
New York – 1.8% |
| |||||||
Port Authority of New York & New Jersey | 1,100 | 1,150,200 | ||||||
|
| |||||||
North Dakota – 0.2% |
| |||||||
County of Grand Forks ND | 110 | 68,072 | ||||||
7.00%, 12/15/2043(a) | 110 | 66,250 | ||||||
|
| |||||||
| 134,322 | ||||||||
|
| |||||||
Ohio – 0.9% |
| |||||||
Buckeye Tobacco Settlement Financing Authority | 335 | 340,071 | ||||||
Ohio Water Development Authority Water Pollution Control Loan Fund | 280 | 280,000 | ||||||
|
| |||||||
| 620,071 | ||||||||
|
| |||||||
74 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB NEW JERSEY PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Puerto Rico – 2.3% | ||||||||
Commonwealth of Puerto Rico | $ | 100 | $ | 59,192 | ||||
4.00%, 07/01/2033-07/01/2046 | 200 | 190,943 | ||||||
5.25%, 07/01/2023 | 35 | 35,458 | ||||||
5.625%, 07/01/2029 | 100 | 110,456 | ||||||
Puerto Rico Electric Power Authority AGM | 155 | 162,446 | ||||||
Puerto Rico Highway & Transportation Authority | 145 | 153,813 | ||||||
Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth | 300 | 310,916 | ||||||
Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue Series 2018-A | 104 | 79,152 | ||||||
Series 2019-A | 70 | 69,913 | ||||||
5.00%, 07/01/2058 | 305 | 310,098 | ||||||
|
| |||||||
| 1,482,387 | ||||||||
|
| |||||||
Tennessee – 0.4% |
| |||||||
Bristol Industrial Development Board | 145 | 145,424 | ||||||
Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board | 260 | 117,000 | ||||||
|
| |||||||
| 262,424 | ||||||||
|
| |||||||
Texas – 0.4% |
| |||||||
Mission Economic Development Corp. | 245 | 253,980 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 75 | |
PORTFOLIO OF INVESTMENTS (continued)
AB NEW JERSEY PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Washington – 0.5% | ||||||||
Kalispel Tribe of Indians | $ | 210 | $ | 228,662 | ||||
Washington State Convention Center Public Facilities District | 100 | 95,532 | ||||||
|
| |||||||
| 324,194 | ||||||||
|
| |||||||
Wisconsin – 0.3% |
| |||||||
UMA Education, Inc. | 200 | 210,898 | ||||||
|
| |||||||
Total Municipal Obligations | 63,342,977 | |||||||
|
| |||||||
| Shares | ||||||||
SHORT-TERM INVESTMENTS – 2.0% | ||||||||
Investment Companies – 2.0% |
| |||||||
AB Fixed Income Shares, Inc. — Government Money Market Portfolio —Class AB, | 1,284,373 | $ | 1,284,373 | |||||
|
| |||||||
Total Investments – 100.4% | 64,627,350 | |||||||
Other assets less liabilities – (0.4)% | (270,226 | ) | ||||||
|
| |||||||
Net Assets – 100.0% | $ | 64,357,124 | ||||||
|
| |||||||
CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||
Notional (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 465 | 01/15/2025 | 2.565% | CPI# | Maturity | $ | 48,813 | $ | – 0 | – | $ | 48,813 | ||||||||||||||
| USD | 233 | 01/15/2025 | 2.585% | CPI# | Maturity | 24,271 | – 0 | – | 24,271 | |||||||||||||||||
| USD | 232 | 01/15/2025 | 2.613% | CPI# | Maturity | 23,909 | – 0 | – | 23,909 | |||||||||||||||||
| USD | 870 | 01/15/2026 | CPI# | 3.611% | Maturity | (45,981 | ) | – 0 | – | (45,981 | ) | |||||||||||||||
| USD | 800 | 01/15/2026 | CPI# | 3.766% | Maturity | (35,759 | ) | – 0 | – | (35,759 | ) | |||||||||||||||
| USD | 2,070 | 01/15/2028 | 1.230% | CPI# | Maturity | 412,662 | – 0 | – | 412,662 | |||||||||||||||||
76 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB NEW JERSEY PORTFOLIO
| Rate Type | ||||||||||||||||||||||||||
Notional (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 1,640 | 01/15/2028 | 0.735% | CPI# | Maturity | $ | 387,063 | $ | – 0 | – | $ | 387,063 | ||||||||||||||
| USD | 3,470 | 01/15/2029 | CPI# | 3.406% | Maturity | (132,623 | ) | – 0 | – | (132,623 | ) | |||||||||||||||
| USD | 530 | 01/15/2029 | CPI# | 3.735% | Maturity | (5,240 | ) | – 0 | – | (5,240 | ) | |||||||||||||||
| USD | 240 | 01/15/2029 | CPI# | 3.408% | Maturity | (9,132 | ) | – 0 | – | (9,132 | ) | |||||||||||||||
| USD | 225 | 01/15/2030 | 1.572% | CPI# | Maturity | 43,638 | – 0 | – | 43,638 | |||||||||||||||||
| USD | 225 | 01/15/2030 | 1.587% | CPI# | Maturity | 43,320 | – 0 | – | 43,320 | |||||||||||||||||
| USD | 450 | 01/15/2031 | 2.782% | CPI# | Maturity | 40,049 | – 0 | – | 40,049 | |||||||||||||||||
| USD | 370 | 01/15/2031 | 2.680% | CPI# | Maturity | 36,764 | – 0 | – | 36,764 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 831,754 | $ | – 0 | – | $ | 831,754 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| # | Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI). |
CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||
Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 3,430 | 08/09/2022 | 3 Month LIBOR | 1.486% | Quarterly/ Semi-Annual | $ | 13,150 | $ | – 0 | – | $ | 13,150 | ||||||||||||||
| USD | 8,300 | 01/15/2027 | 1 Day SOFR | 2.482% | Annual | (8,942 | ) | – 0 | – | (8,942 | ) | |||||||||||||||
| USD | 1,150 | 01/15/2028 | 1.173% | 3 Month LIBOR | Semi-Annual/ Quarterly | 96,903 | – 0 | – | 96,903 | |||||||||||||||||
| USD | 3,000 | 01/15/2029 | 1.370% | 3 Month LIBOR | Semi-Annual/ Quarterly | 260,693 | – 0 | – | 260,693 | |||||||||||||||||
| USD | 1,650 | 01/15/2031 | 1.456% | 3 Month LIBOR | Semi-Annual/ Quarterly | 176,167 | 33,643 | 142,524 | ||||||||||||||||||
| USD | 1,350 | 01/15/2031 | 1.270% | 3 Month LIBOR | Semi-Annual/ Quarterly | 163,213 | – 0 | – | 163,213 | |||||||||||||||||
| USD | 1,000 | 01/15/2031 | 1.240% | 3 Month LIBOR | Semi-Annual/ Quarterly | 124,275 | – 0 | – | 124,275 | |||||||||||||||||
| USD | 2,450 | 04/15/2032 | 1.284% | 1 Day SOFR | Annual | 286,317 | – 0 | – | 286,317 | |||||||||||||||||
| USD | 900 | 02/15/2036 | 1 Day SOFR | 2.286% | Annual | (40,634 | ) | – 0 | – | (40,634 | ) | |||||||||||||||
| USD | 700 | 02/15/2041 | 1 Day SOFR | 1.770% | Annual | (94,061 | ) | – 0 | – | (94,061 | ) | |||||||||||||||
| USD | 600 | 02/15/2041 | 1 Day SOFR | 1.657% | Annual | (90,812 | ) | – 0 | – | (90,812 | ) | |||||||||||||||
| USD | 490 | 02/15/2041 | 1 Day SOFR | 1.715% | Annual | (69,856 | ) | – 0 | – | (69,856 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 816,413 | $ | 33,643 | $ | 782,770 | |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 77 | |
PORTFOLIO OF INVESTMENTS (continued)
AB NEW JERSEY PORTFOLIO
INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||||||||||||
| Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||||||
Citibank, NA | USD | 1,235 | 10/09/2029 | 1.125 | % | SIFMA | * | Quarterly | $ | 112,188 | $ | – 0 | – | $ | 112,188 | |||||||||||||||||||||
| * | Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index. |
| (a) | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2022, the aggregate market value of these securities amounted to $1,631,870 or 2.5% of net assets. |
| (b) | When-Issued or delayed delivery security. |
| (c) | Defaulted. |
| (d) | Non-income producing security. |
| (e) | Affiliated investments. |
| (f) | The rate shown represents the 7-day yield as of period end. |
| (g) | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
As of May 31, 2022, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 18.8% and 3.9%, respectively.
Glossary:
AGC – Assured Guaranty Corporation
AGM – Assured Guaranty Municipal
CCRC – Congregate Care Retirement Center
COP – Certificate of Participation
CPI – Consumer Price Index
LIBOR – London Interbank Offered Rate
NATL – National Interstate Corporation
SOFR – Secured Overnight Financing Rate
See notes to financial statements.
78 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS
AB OHIO PORTFOLIO
May 31, 2022
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
MUNICIPAL OBLIGATIONS – 98.6% |
| |||||||
Long-Term Municipal Bonds – 98.6% |
| |||||||
Ohio – 86.4% |
| |||||||
Akron Bath Copley Joint Township Hospital District | $ | 1,000 | $ | 1,011,491 | ||||
American Municipal Power, Inc. | 2,000 | 2,150,677 | ||||||
Series 2019 | 1,000 | 1,012,657 | ||||||
Buckeye Tobacco Settlement Financing Authority | 1,245 | 1,263,844 | ||||||
City of Chillicothe OH | 505 | 498,834 | ||||||
5.00%, 12/01/2037 | 1,700 | 1,812,694 | ||||||
City of Cleveland OH | 25 | 25,401 | ||||||
City of Middleburg Heights OH | 1,100 | 1,111,327 | ||||||
Cleveland Department of Public Utilities Division of Public Power AGM | 1,100 | 1,233,156 | ||||||
Cleveland Municipal School District | 3,000 | 3,087,282 | ||||||
Cleveland-Cuyahoga County Port Authority | 500 | 429,234 | ||||||
County of Allen/OH Hospital Facilities Revenue | 1,650 | 1,751,816 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 79 | |
PORTFOLIO OF INVESTMENTS (continued)
AB OHIO PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Series 2020 | $ | 1,370 | $ | 1,389,636 | ||||
County of Cuyahoga OH | 1,400 | 1,480,436 | ||||||
County of Darke OH | 190 | 199,180 | ||||||
County of Franklin OH | 770 | 771,508 | ||||||
5.80%, 05/20/2044 | 1,150 | 1,151,888 | ||||||
County of Franklin OH | 160 | 144,429 | ||||||
County of Hamilton OH | 1,000 | 1,001,432 | ||||||
County of Hamilton OH Sewer System Revenue | 4,305 | 4,509,361 | ||||||
County of Hardin OH | 500 | 495,396 | ||||||
County of Marion OH | 200 | 201,867 | ||||||
County of Montgomery OH | 1,000 | 1,015,188 | ||||||
County of Montgomery OH | 450 | 202,500 | ||||||
County of Scioto OH | 1,000 | 1,052,982 | ||||||
80 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB OHIO PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Gallia County Local School District | $ | 1,000 | $ | 1,070,708 | ||||
Jefferson County Port Authority/OH | 550 | 419,259 | ||||||
Miami University/Oxford OH | 1,000 | 1,153,547 | ||||||
Series 2021-A | 1,530 | 1,737,158 | ||||||
Ohio Air Quality Development Authority | 1,000 | 1,040,068 | ||||||
Ohio Air Quality Development Authority | 105 | 105,000 | ||||||
Ohio Air Quality Development Authority | 640 | 610,036 | ||||||
Series 2021 | 1,000 | 934,635 | ||||||
Ohio Higher Educational Facility Commission | 2,000 | 2,171,494 | ||||||
Ohio Higher Educational Facility Commission | 3,000 | 3,085,058 | ||||||
Ohio Higher Educational Facility Commission | 2,000 | 1,952,563 | ||||||
Ohio Higher Educational Facility Commission | 3,365 | 3,574,838 | ||||||
Ohio State University (The) | 2,000 | 2,058,531 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 81 | |
PORTFOLIO OF INVESTMENTS (continued)
AB OHIO PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Ohio Turnpike & Infrastructure Commission | $ | 1,000 | $ | 1,136,493 | ||||
Series 2022 | 2,000 | 2,291,882 | ||||||
Ohio Water Development Authority | 1,500 | 1,753,297 | ||||||
Port of Greater Cincinnati Development Authority | 415 | 431,093 | ||||||
State of Ohio | 2,035 | 2,035,690 | ||||||
State of Ohio | 800 | 808,208 | ||||||
Summit County Development Finance Authority | 2,015 | 2,050,586 | ||||||
Summit County Development Finance Authority | 615 | 625,737 | ||||||
University of Akron (The) | 3,080 | 3,190,249 | ||||||
|
| |||||||
| 63,240,346 | ||||||||
|
| |||||||
Alabama – 0.1% |
| |||||||
Tuscaloosa County Industrial Development Authority | 85 | 86,611 | ||||||
|
| |||||||
American Samoa – 0.2% |
| |||||||
American Samoa Economic Development Authority | 140 | 166,320 | ||||||
|
| |||||||
82 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB OHIO PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Arizona – 0.2% |
| |||||||
Maricopa County Industrial Development Authority | ||||||||
Series 2018-A | $ | 100 | $ | 109,511 | ||||
|
| |||||||
California – 0.3% |
| |||||||
California Pollution Control Financing Authority | ||||||||
Series 2012 | 220 | 220,803 | ||||||
State of California | ||||||||
Series 2004 | 5 | 5,014 | ||||||
|
| |||||||
| 225,817 | ||||||||
|
| |||||||
Connecticut – 0.6% |
| |||||||
Connecticut State Health & Educational Facilities Authority | ||||||||
Series 2018-K1 | 415 | 430,433 | ||||||
|
| |||||||
Florida – 1.9% |
| |||||||
County of Miami-Dade FL Aviation Revenue | ||||||||
Series 2014-A | 1,300 | 1,353,845 | ||||||
|
| |||||||
Georgia – 0.1% |
| |||||||
Municipal Electric Authority of Georgia | ||||||||
Series 2019 | 100 | 106,085 | ||||||
|
| |||||||
Guam – 2.0% |
| |||||||
Antonio B Won Pat International Airport Authority | ||||||||
Series 2021-A | 100 | 89,054 | ||||||
Guam Government Waterworks Authority | ||||||||
Series 2016 | 615 | 654,816 | ||||||
Guam Power Authority | ||||||||
Series 2017-A | 690 | 728,400 | ||||||
|
| |||||||
| 1,472,270 | ||||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 83 | |
PORTFOLIO OF INVESTMENTS (continued)
AB OHIO PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Indiana – 0.1% |
| |||||||
Indiana Finance Authority | $ | 110 | $ | 91,792 | ||||
|
| |||||||
Kansas – 0.4% | ||||||||
Wyandotte County-Kansas City Unified Government (Wyandotte County-Kansas City Unified Government Sales Tax) | 275 | 252,978 | ||||||
|
| |||||||
Michigan – 0.1% | ||||||||
City of Detroit MI | 50 | 52,826 | ||||||
|
| |||||||
New York – 2.4% | ||||||||
Metropolitan Transportation Authority Series 2020-E 5.00%, 11/15/2027 | 1,000 | 1,099,487 | ||||||
New York State Dormitory Authority | 500 | 643,520 | ||||||
|
| |||||||
| 1,743,007 | ||||||||
|
| |||||||
North Carolina – 0.5% | ||||||||
North Carolina Medical Care Commission | 375 | 378,668 | ||||||
|
| |||||||
Puerto Rico – 1.5% | ||||||||
Commonwealth of Puerto Rico | 120 | 110,276 | ||||||
4.00%, 07/01/2033 | 100 | 97,806 | ||||||
5.25%, 07/01/2023 | 35 | 35,458 | ||||||
5.625%, 07/01/2029 | 100 | 110,456 | ||||||
Puerto Rico Electric Power Authority AGM | 100 | 104,804 | ||||||
Puerto Rico Highway & Transportation Authority AGC | 240 | 254,410 | ||||||
84 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB OHIO PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth | $ | 255 | $ | 264,279 | ||||
Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue | 100 | 76,108 | ||||||
Series 2019-A | 70 | 69,913 | ||||||
|
| |||||||
| 1,123,510 | ||||||||
|
| |||||||
Tennessee – 0.2% | ||||||||
Bristol Industrial Development Board | 125 | 125,366 | ||||||
|
| |||||||
Texas – 1.6% | ||||||||
City of Houston TX Airport System Revenue | 215 | 220,459 | ||||||
Mission Economic Development Corp. | 215 | 222,880 | ||||||
North Texas Tollway Authority | 700 | 738,268 | ||||||
|
| |||||||
| 1,181,607 | ||||||||
|
| |||||||
Total Municipal Obligations | 72,140,992 | |||||||
|
| |||||||
| Shares | ||||||||
SHORT-TERM INVESTMENTS – 4.6% | ||||||||
Investment Companies – 4.6% | ||||||||
AB Fixed Income Shares, Inc. – Government | 3,382,807 | 3,382,807 | ||||||
|
| |||||||
Total Investments – 103.2% | 75,523,799 | |||||||
Other assets less liabilities – (3.2)% | (2,308,604 | ) | ||||||
|
| |||||||
Net Assets – 100.0% | $ | 73,215,195 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 85 | |
PORTFOLIO OF INVESTMENTS (continued)
AB OHIO PORTFOLIO
CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)
Rate Type | ||||||||||||||||||||||||||
| Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 460 | 01/15/2025 | 2.565% | CPI# | Maturity | $ | 48,288 | $ | – 0 | – | $ | 48,288 | ||||||||||||||
| USD | 230 | 01/15/2025 | 2.585% | CPI# | Maturity | 23,959 | – 0 | – | 23,959 | |||||||||||||||||
| USD | 230 | 01/15/2025 | 2.613% | CPI# | Maturity | 23,703 | – 0 | – | 23,703 | |||||||||||||||||
| USD | 150 | 01/15/2025 | 4.028% | CPI# | Maturity | 6,714 | – 0 | – | 6,714 | |||||||||||||||||
| USD | 1,070 | 01/15/2026 | CPI# | 3.720% | Maturity | (50,422 | ) | – 0 | – | (50,422 | ) | |||||||||||||||
| USD | 700 | 01/15/2027 | CPI# | 3.320% | Maturity | (42,378 | ) | – 0 | – | (42,378 | ) | |||||||||||||||
| USD | 670 | 01/15/2027 | CPI# | 3.466% | Maturity | (34,407 | ) | (843 | ) | (33,564 | ) | |||||||||||||||
| USD | 530 | 01/15/2027 | CPI# | 3.323% | Maturity | (31,986 | ) | – 0 | – | (31,986 | ) | |||||||||||||||
| USD | 2,020 | 01/15/2028 | 1.230% | CPI# | Maturity | 402,695 | – 0 | – | 402,695 | |||||||||||||||||
| USD | 1,520 | 01/15/2028 | 0.735% | CPI# | Maturity | 358,741 | – 0 | – | 358,741 | |||||||||||||||||
| USD | 1,280 | 01/15/2029 | CPI# | 3.390% | Maturity | (50,665 | ) | – 0 | – | (50,665 | ) | |||||||||||||||
| USD | 770 | 01/15/2029 | CPI# | 3.735% | Maturity | (7,613 | ) | – 0 | – | (7,613 | ) | |||||||||||||||
| USD | 390 | 01/15/2029 | CPI# | 3.290% | Maturity | (18,744 | ) | – 0 | – | (18,744 | ) | |||||||||||||||
| USD | 180 | 01/15/2030 | 1.572% | CPI# | Maturity | 34,911 | – 0 | – | 34,911 | |||||||||||||||||
| USD | 180 | 01/15/2030 | 1.587% | CPI# | Maturity | 34,656 | – 0 | – | 34,656 | |||||||||||||||||
| USD | 400 | 01/15/2031 | 2.782% | CPI# | Maturity | 35,599 | – 0 | – | 35,599 | |||||||||||||||||
| USD | 380 | 01/15/2031 | 2.680% | CPI# | Maturity | 37,758 | – 0 | – | 37,758 | |||||||||||||||||
| USD | 320 | 01/15/2031 | 2.989% | CPI# | Maturity | 21,674 | – 0 | – | 21,674 | |||||||||||||||||
| USD | 320 | 01/15/2032 | CPI# | 3.064% | Maturity | (18,205 | ) | – 0 | – | (18,205 | ) | |||||||||||||||
| USD | 340 | 04/15/2032 | CPI# | 2.909% | Maturity | (24,171 | ) | – 0 | – | (24,171 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 750,107 | $ | (843 | ) | $ | 750,950 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| # | Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI). |
CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)
Rate Type | ||||||||||||||||||||||||||
| Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 2,600 | 01/15/2027 | 1 Day SOFR | 2.438% | Annual | $ | (8,526 | ) | $ | – 0 | – | $ | (8,526 | ) | ||||||||||||
| USD | 1,100 | 01/15/2027 | 1 Day SOFR | 2.448% | Annual | (3,136 | ) | – 0 | – | (3,136 | ) | |||||||||||||||
| USD | 3,300 | 01/15/2028 | 1.468% | 1 Day SOFR | Annual | 179,223 | – 0 | – | 179,223 | |||||||||||||||||
| USD | 1,000 | 01/15/2031 | 1.427% | 3 Month LIBOR | Semi-Annual/ Quarterly | 108,160 | – 0 | – | 108,160 | |||||||||||||||||
| USD | 600 | 01/15/2031 | 1.323% | 3 Month LIBOR | Semi-Annual/ Quarterly | 69,980 | – 0 | – | 69,980 | |||||||||||||||||
| USD | 1,500 | 04/15/2032 | 2.773% | 1 Day SOFR | Annual | (20,313 | ) | – 0 | – | (20,313 | ) | |||||||||||||||
| USD | 500 | 02/15/2041 | 1 Day SOFR | 1.770% | Annual | (67,186 | ) | – 0 | – | (67,186 | ) | |||||||||||||||
86 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB OHIO PORTFOLIO
| Rate Type | ||||||||||||||||||||||||||||||
| Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||||||
| USD | 450 | 02/15/2041 | | 1 Day SOFR | | 1.715% | Annual | $ | (64,153 | ) | $ | – 0 | – | $ | (64,153 | ) | ||||||||||||||
| USD | 250 | 02/15/2041 | | 1 Day SOFR | | 1.657% | Annual | (37,838 | ) | – 0 | – | (37,838 | ) | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
| $ | 156,211 | $ | – 0 | – | $ | 156,211 | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||||||||||||
| Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||||||
Citibank, NA | USD | 1,175 | 10/09/2029 | 1.125 | % | SIFMA | * | Quarterly | $ | 106,737 | $ | – 0 | – | $ | 106,737 | |||||||||||||||||||||
| * | Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index. |
| (a) | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2022, the aggregate market value of these securities amounted to $2,074,276 or 2.8% of net assets. |
| (b) | Defaulted. |
| (c) | Non-income producing security. |
| (d) | When-Issued or delayed delivery security. |
| (e) | Affiliated investments. |
| (f) | The rate shown represents the 7-day yield as of period end. |
| (g) | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
As of May 31, 2022, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 2.2% and 0.0%, respectively.
Glossary:
AGC – Assured Guaranty Corporation
AGM – Assured Guaranty Municipal
CPI – Consumer Price Index
LIBOR – London Interbank Offered Rate
SOFR – Secured Overnight Financing Rate
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 87 | |
PORTFOLIO OF INVESTMENTS
AB PENNSYLVANIA PORTFOLIO
May 31, 2022
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
MUNICIPAL OBLIGATIONS – 98.8% |
| |||||||
Long-Term Municipal Bonds – 98.8% |
| |||||||
Pennsylvania – 91.8% |
| |||||||
Allegheny County Airport Authority | $ | 1,000 | $ | 1,098,365 | ||||
Allegheny County Hospital Development Authority | 1,600 | 1,713,693 | ||||||
Allentown Neighborhood Improvement Zone Development Authority | 500 | 502,657 | ||||||
Altoona Area School District BAM | 2,000 | 2,191,830 | ||||||
Beaver County Industrial Development Authority | 415 | 415,100 | ||||||
Berks County Industrial Development Authority | 500 | 513,657 | ||||||
Berks County Municipal Authority (The) | 750 | 748,699 | ||||||
Bucks County Industrial Development Authority | 420 | 452,902 | ||||||
Bucks County Water and Sewer Authority | 780 | 831,918 | ||||||
Centre County Hospital Authority | 1,000 | 1,059,664 | ||||||
Chambersburg Area Municipal Authority | 650 | 677,239 | ||||||
88 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB PENNSYLVANIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Chester County Industrial Development Authority | $ | 360 | $ | 366,993 | ||||
City of Erie Higher Education Building Authority | 550 | 542,300 | ||||||
City of Philadelphia PA | 2,500 | 2,639,036 | ||||||
Series 2017 | 1,000 | 1,111,659 | ||||||
City of Philadelphia PA Water & Wastewater Revenue | 1,700 | 1,901,368 | ||||||
Series 2018-A | 1,000 | 1,104,433 | ||||||
Commonwealth Financing Authority | 2,500 | 2,763,276 | ||||||
Commonwealth of Pennsylvania | 2,200 | 2,450,566 | ||||||
Crawford County Hospital Authority | 635 | 668,762 | ||||||
Cumberland County Municipal Authority | 2,440 | 2,249,168 | ||||||
Delaware County Authority | 1,625 | 1,643,602 | ||||||
Hospitals & Higher Education Facilities Authority of Philadelphia (The) | 660 | 703,371 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 89 | |
PORTFOLIO OF INVESTMENTS (continued)
AB PENNSYLVANIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Montgomery County Higher Education and Health Authority | $ | 1,100 | $ | 1,159,847 | ||||
Montgomery County Higher Education and Health Authority | 2,000 | 2,167,958 | ||||||
Montgomery County Industrial Development Authority/PA | 500 | 538,923 | ||||||
Moon Industrial Development Authority | 765 | 777,232 | ||||||
Northeastern Pennsylvania Hospital and Education Authority | 520 | 545,792 | ||||||
Pennsylvania Economic Development Financing Authority | 270 | 228,774 | ||||||
Pennsylvania Economic Development Financing Authority | 2,000 | 2,012,264 | ||||||
Pennsylvania Economic Development Financing Authority | 1,020 | 1,024,432 | ||||||
Pennsylvania Economic Development Financing Authority | 670 | 678,537 | ||||||
90 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB PENNSYLVANIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Series 2022-C | $ | 1,000 | $ | 982,040 | ||||
Pennsylvania Higher Educational Facilities Authority | 1,000 | 1,010,798 | ||||||
Series 2022 | 1,125 | 1,159,945 | ||||||
Pennsylvania State University (The) | 500 | 506,924 | ||||||
Pennsylvania Turnpike Commission | 1,000 | 1,078,762 | ||||||
Pennsylvania Turnpike Commission | 2,000 | 2,181,323 | ||||||
Philadelphia Authority for Industrial Development | 400 | 405,477 | ||||||
Philadelphia Authority for Industrial Development | 480 | 501,814 | ||||||
Philadelphia Authority for Industrial Development | 300 | 313,656 | ||||||
Philadelphia Authority for Industrial Development | 500 | 409,544 | ||||||
Philadelphia Authority for Industrial Development | 1,000 | 1,018,745 | ||||||
Philadelphia Authority for Industrial Development | 1,000 | 1,064,997 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 91 | |
PORTFOLIO OF INVESTMENTS (continued)
AB PENNSYLVANIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
School District of Philadelphia (The) | $ | 750 | $ | 834,773 | ||||
Scranton School District/PA | 1,800 | 1,995,242 | ||||||
State Public School Building Authority | 135 | 151,104 | ||||||
5.00%, 12/01/2029 | 865 | 958,016 | ||||||
Susquehanna Area Regional Airport Authority | 1,000 | 1,052,957 | ||||||
Township of Lower Paxton PA | 1,000 | 1,056,727 | ||||||
|
| |||||||
| 54,166,861 | ||||||||
|
| |||||||
American Samoa – 0.3% |
| |||||||
American Samoa Economic Development Authority | 135 | 160,380 | ||||||
|
| |||||||
Arizona – 0.2% |
| |||||||
Maricopa County Industrial Development Authority | 100 | 109,511 | ||||||
|
| |||||||
Colorado – 0.4% |
| |||||||
City & County of Denver CO | 215 | 215,817 | ||||||
|
| |||||||
Guam – 1.4% |
| |||||||
Antonio B Won Pat International Airport Authority | 100 | 89,054 | ||||||
Guam Power Authority | 645 | 679,624 | ||||||
Territory of Guam | 90 | 93,311 | ||||||
|
| |||||||
| 861,989 | ||||||||
|
| |||||||
92 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB PENNSYLVANIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Kentucky – 0.5% |
| |||||||
Kentucky Economic Development Finance Authority | $ | 315 | $ | 328,398 | ||||
|
| |||||||
Michigan – 0.1% |
| |||||||
City of Detroit MI | 35 | 36,979 | ||||||
|
| |||||||
New Jersey – 0.7% | ||||||||
Tobacco Settlement Financing Corp./NJ | 425 | 436,960 | ||||||
|
| |||||||
New York – 1.4% |
| |||||||
Build NYC Resource Corp. | 190 | 198,174 | ||||||
New York State Dormitory Authority | 500 | 643,520 | ||||||
|
| |||||||
| 841,694 | ||||||||
|
| |||||||
Puerto Rico – 1.8% |
| |||||||
Commonwealth of Puerto Rico | 100 | 59,192 | ||||||
4.00%, 07/01/2033 | 100 | 97,806 | ||||||
5.25%, 07/01/2023 | 30 | 30,392 | ||||||
5.625%, 07/01/2029 | 100 | 110,456 | ||||||
Puerto Rico Electric Power Authority | 100 | 104,804 | ||||||
Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth | 250 | 259,097 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 93 | |
PORTFOLIO OF INVESTMENTS (continued)
AB PENNSYLVANIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue | $ | 100 | $ | 76,108 | ||||
Series 2019-A | 65 | 64,919 | ||||||
5.00%, 07/01/2058 | 250 | 254,179 | ||||||
|
| |||||||
| 1,056,953 | ||||||||
|
| |||||||
Tennessee – 0.2% |
| |||||||
Bristol Industrial Development Board | 120 | 120,351 | ||||||
|
| |||||||
Total Municipal Obligations | 58,335,893 | |||||||
|
| |||||||
| Shares | ||||||||
SHORT-TERM INVESTMENTS – 0.6% | ||||||||
Investment Companies – 0.6% |
| |||||||
AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB, 0.71%(d)(e)(f) | 357,162 | 357,162 | ||||||
|
| |||||||
Total Investments – 99.4% | 58,693,055 | |||||||
Other assets less liabilities – 0.6% | 330,693 | |||||||
|
| |||||||
Net Assets – 100.0% | $ | 59,023,748 | ||||||
|
| |||||||
94 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB PENNSYLVANIA PORTFOLIO
CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||
Notional | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 435 | 01/15/2025 | 2.565% | CPI# | Maturity | $ | 45,664 | $ | — 0 | — | $ | 45,664 | ||||||||||||||
| USD | 218 | 01/15/2025 | 2.613% | CPI# | Maturity | 22,467 | — 0 | — | 22,467 | |||||||||||||||||
| USD | 217 | 01/15/2025 | 2.585% | CPI# | Maturity | 22,604 | — 0 | — | 22,604 | |||||||||||||||||
| USD | 120 | 01/15/2025 | 4.028% | CPI# | Maturity | 5,371 | — 0 | — | 5,371 | |||||||||||||||||
| USD | 820 | 01/15/2026 | CPI# | 3.765% | Maturity | (36,696 | ) | — 0 | — | (36,696 | ) | |||||||||||||||
| USD | 650 | 01/15/2027 | CPI# | 3.320% | Maturity | (39,351 | ) | — 0 | — | (39,351 | ) | |||||||||||||||
| USD | 620 | 01/15/2027 | CPI# | 3.466% | Maturity | (31,840 | ) | (780 | ) | (31,060 | ) | |||||||||||||||
| USD | 490 | 01/15/2027 | CPI# | 3.323% | Maturity | (29,572 | ) | — 0 | — | (29,572 | ) | |||||||||||||||
| USD | 1,970 | 01/15/2028 | 1.230% | CPI# | Maturity | 392,727 | — 0 | — | 392,727 | |||||||||||||||||
| USD | 1,460 | 01/15/2028 | 0.735% | CPI# | Maturity | 344,580 | — 0 | — | 344,580 | |||||||||||||||||
| USD | 1,810 | 01/15/2029 | CPI# | 3.331% | Maturity | (80,710 | ) | — 0 | — | (80,710 | ) | |||||||||||||||
| USD | 740 | 01/15/2029 | CPI# | 3.735% | Maturity | (7,316 | ) | — 0 | — | (7,316 | ) | |||||||||||||||
| USD | 240 | 01/15/2029 | CPI# | 3.408% | Maturity | (9,132 | ) | — 0 | — | (9,132 | ) | |||||||||||||||
| USD | 170 | 01/15/2030 | 1.572% | CPI# | Maturity | 32,971 | — 0 | — | 32,971 | |||||||||||||||||
| USD | 170 | 01/15/2030 | 1.587% | CPI# | Maturity | 32,731 | — 0 | — | 32,731 | |||||||||||||||||
| USD | 400 | 01/15/2031 | 2.782% | CPI# | Maturity | 35,599 | — 0 | — | 35,599 | |||||||||||||||||
| USD | 340 | 01/15/2031 | 2.680% | CPI# | Maturity | 33,783 | — 0 | — | 33,783 | |||||||||||||||||
| USD | 300 | 01/15/2031 | 2.989% | CPI# | Maturity | 20,319 | — 0 | — | 20,319 | |||||||||||||||||
| USD | 290 | 01/15/2032 | CPI# | 3.064% | Maturity | (16,498 | ) | — 0 | — | (16,498 | ) | |||||||||||||||
| USD | 140 | 04/15/2032 | CPI# | 2.909% | Maturity | (9,953 | ) | — 0 | — | (9,953 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 727,748 | $ | (780 | ) | $ | 728,528 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| # | Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI). |
CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||
Notional | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 2,700 | 01/15/2027 | 1 Day SOFR | 2.227% | Annual | $ | (33,565 | ) | $ | — 0 | — | $ | (33,565 | ) | ||||||||||||
| USD | 1,100 | 01/15/2028 | 1.208% | 3 Month LIBOR | Semi-Annual/ Quarterly | 90,906 | — 0 | — | 90,906 | |||||||||||||||||
| USD | 1,250 | 01/15/2031 | 1.241% | 3 Month LIBOR | Semi-Annual/ Quarterly | 155,243 | — 0 | — | 155,243 | |||||||||||||||||
| USD | 1,650 | 04/15/2032 | 1.284% | 1 Day SOFR | Annual | 192,825 | — 0 | — | 192,825 | |||||||||||||||||
| USD | 800 | 02/15/2041 | 1 Day SOFR | 1.770% | Annual | (107,498 | ) | — 0 | — | (107,498 | ) | |||||||||||||||
| USD | 450 | 02/15/2041 | 1 Day SOFR | 1.657% | Annual | (68,109 | ) | — 0 | — | (68,109 | ) | |||||||||||||||
| USD | 380 | 02/15/2041 | 1 Day SOFR | 1.715% | Annual | (54,174 | ) | — 0 | — | (54,174 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 175,628 | $ | — 0 | — | $ | 175,628 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 95 | |
PORTFOLIO OF INVESTMENTS (continued)
AB PENNSYLVANIA PORTFOLIO
INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||||||||||||
| Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||||||
Citibank, NA | USD | 1,140 | 10/09/2029 | 1.125 | % | SIFMA | * | Quarterly | $ | 103,558 | $ | — 0 | — | $ | 103,558 | |||||||||||||||||||||
| * | Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index. |
| (a) | When-Issued or delayed delivery security. |
| (b) | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2022, the aggregate market value of these securities amounted to $2,705,585 or 4.6% of net assets. |
| (c) | Floating Rate Security. Stated interest/floor/ceiling rate was in effect at May 31, 2022. |
| (d) | Affiliated investments. |
| (e) | The rate shown represents the 7-day yield as of period end. |
| (f) | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
As of May 31, 2022, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 10.7% and 4.0%, respectively.
Glossary:
AGM – Assured Guaranty Municipal
BAM – Build American Mutual
COP – Certificate of Participation
CPI – Consumer Price Index
ETM – Escrowed to Maturity
LIBOR – London Interbank Offered Rate
MUNIPSA – SIFMA Municipal Swap Index
SOFR – Secured Overnight Financing Rate
UPMC – University of Pittsburgh Medical Center
See notes to financial statements.
96 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS
AB VIRGINIA PORTFOLIO
May 31, 2022
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
MUNICIPAL OBLIGATIONS – 99.3% | ||||||||
Long-Term Municipal Bonds – 96.3% | ||||||||
Virginia – 68.2% | ||||||||
Arlington County Industrial Development Authority | $ | 4,000 | $ | 3,991,054 | ||||
Cherry Hill Community Development Authority | 585 | 593,136 | ||||||
Chesapeake Bay Bridge & Tunnel District | 4,000 | 4,198,130 | ||||||
City of Newport News VA | 1,000 | 1,064,140 | ||||||
5.00%, 07/15/2032 (Pre-refunded/ETM) | 1,000 | 1,064,140 | ||||||
City of Richmond VA Public Utility Revenue | 1,970 | 2,013,931 | ||||||
Series 2016 | 9,000 | 9,780,197 | ||||||
County of Arlington VA | 5,190 | 5,523,353 | ||||||
Culpeper County Economic Development Authority | 2,955 | 3,054,089 | ||||||
Dulles Town Center Community Development Authority | 1,000 | 989,711 | ||||||
Fairfax County Economic Development Authority | 1,000 | 1,069,717 | ||||||
Series 2016 | 2,000 | 2,140,755 | ||||||
Series 2016-A | 1,200 | 1,299,404 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 97 | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Fairfax County Industrial Development Authority | $ | 2,000 | $ | 2,077,722 | ||||
Series 2018-A | 1,500 | 1,465,416 | ||||||
Fairfax County Water Authority | 5,445 | 5,759,693 | ||||||
Greater Richmond Convention Center Authority | 3,000 | 3,262,838 | ||||||
5.00%, 06/15/2031 (Pre-refunded/ETM) | 2,000 | 2,175,225 | ||||||
Halifax County Industrial Development Authority | 3,000 | 2,951,346 | ||||||
Hampton Roads Sanitation District | 3,550 | 3,982,490 | ||||||
Hampton Roads Transportation Accountability Commission | 4,000 | 4,560,678 | ||||||
Series 2021-A | 5,000 | 5,561,509 | ||||||
Hanover County Economic Development Authority | 1,000 | 1,002,985 | ||||||
Henrico County Economic Development Authority | 2,000 | 2,028,956 | ||||||
Henrico County Economic Development Authority | 765 | 788,703 | ||||||
Henrico County Economic Development Authority | 1,000 | 1,065,572 | ||||||
98 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
James City County Economic Development Authority | $ | 1,575 | $ | 1,293,677 | ||||
Lexington Industrial Development Authority | 1,500 | 1,452,246 | ||||||
Lynchburg Economic Development Authority | 1,750 | 1,828,175 | ||||||
Norfolk Airport Authority/VA | 2,870 | 3,126,382 | ||||||
Norfolk Economic Development Authority | 2,200 | 2,233,236 | ||||||
Richmond Redevelopment & Housing Authority | 980 | 922,966 | ||||||
Roanoke County Economic Development Authority | 1,750 | 1,898,054 | ||||||
Roanoke Economic Development Authority | 2,550 | 2,620,912 | ||||||
Roanoke Economic Development Authority | 3,660 | 3,915,207 | ||||||
Rockingham County Economic Development Authority | 1,265 | 1,087,328 | ||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 99 | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Rockingham County Economic Development Authority | $ | 1,000 | $ | 1,076,973 | ||||
Suffolk Economic Development Authority | 1,000 | 1,041,065 | ||||||
Tobacco Settlement Financing Corp./VA | 2,400 | 2,403,809 | ||||||
Virginia Beach Development Authority | 1,750 | 1,760,997 | ||||||
Virginia College Building Authority | 1,000 | 987,500 | ||||||
Virginia College Building Authority | 1,615 | 1,644,903 | ||||||
Virginia College Building Authority | 9,140 | 8,411,084 | ||||||
Virginia Commonwealth University Health System Authority | 2,000 | 2,110,752 | ||||||
Virginia Port Authority | 6,160 | 6,597,600 | ||||||
Virginia Resources Authority | 20 | 20,060 | ||||||
Series 2016-C | 2,000 | 2,087,135 | ||||||
Virginia Resources Authority | 4,000 | 4,175,652 | ||||||
100 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Virginia Small Business Financing Authority | $ | 5,000 | $ | 5,464,719 | ||||
Virginia Small Business Financing Authority | 3,500 | 3,502,788 | ||||||
Virginia Small Business Financing Authority | 600 | 600,230 | ||||||
Virginia Small Business Financing Authority | 1,000 | 1,004,550 | ||||||
Virginia Small Business Financing Authority | 2,500 | 2,507,550 | ||||||
5.50%, 01/01/2042 | 1,000 | 1,003,220 | ||||||
Series 2022 | 5,000 | 4,977,165 | ||||||
Virginia Small Business Financing Authority | 4,125 | 4,414,484 | ||||||
Virginia Small Business Financing Authority | 3,780 | 3,923,766 | ||||||
Virginia Small Business Financing Authority | 1,500 | 1,498,981 | ||||||
Winchester Economic Development Authority | 3,500 | 3,666,660 | ||||||
|
| |||||||
| 158,724,716 | ||||||||
|
| |||||||
Alabama – 0.1% |
| |||||||
Tuscaloosa County Industrial Development Authority | 100 | 101,267 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 101 | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
American Samoa – 0.2% |
| |||||||
American Samoa Economic Development Authority | $ | 420 | $ | 498,960 | ||||
|
| |||||||
Arizona – 2.1% |
| |||||||
Arizona Sports & Tourism Authority | 3,945 | 3,957,262 | ||||||
Maricopa County Industrial Development Authority | 200 | 219,022 | ||||||
Salt Verde Financial Corp. | 705 | 795,630 | ||||||
|
| |||||||
| 4,971,914 | ||||||||
|
| |||||||
District of Columbia – 13.8% | ||||||||
Metropolitan Washington Airports Authority | 1,000 | 1,009,133 | ||||||
Series 2018-A | 5,000 | 5,359,016 | ||||||
Series 2020-A | 2,000 | 2,067,666 | ||||||
Series 2021-A | 2,220 | 2,288,369 | ||||||
5.00%, 10/01/2036 | 2,250 | 2,527,080 | ||||||
Metropolitan Washington Airports Authority Dulles | 5,000 | 5,020,389 | ||||||
Metropolitan Washington Airports Authority Dulles | 4,300 | 5,022,055 | ||||||
102 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Washington Metropolitan Area Transit Authority | $ | 5,095 | $ | 5,677,526 | ||||
Series 2021-A | 3,000 | 3,154,907 | ||||||
|
| |||||||
| 32,126,141 | ||||||||
|
| |||||||
Florida – 0.6% | ||||||||
Pinellas County Educational Facilities Authority | 400 | 401,922 | ||||||
5.25%, 10/01/2030 | 1,000 | 1,005,153 | ||||||
|
| |||||||
| 1,407,075 | ||||||||
|
| |||||||
Georgia – 0.2% | ||||||||
Municipal Electric Authority of Georgia | 355 | 380,054 | ||||||
|
| |||||||
Guam – 2.8% | ||||||||
Antonio B Won Pat International Airport Authority | 565 | 496,735 | ||||||
Guam Department of Education | 1,095 | 1,117,241 | ||||||
Guam Power Authority | 1,630 | 1,723,105 | ||||||
Territory of Guam | 230 | 238,461 | ||||||
Territory of Guam | 1,370 | 1,243,409 | ||||||
Territory of Guam | 1,500 | 1,574,905 | ||||||
|
| |||||||
| 6,393,856 | ||||||||
|
| |||||||
Illinois – 1.0% | ||||||||
Metropolitan Pier & Exposition Authority | 2,200 | 2,292,460 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 103 | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Michigan – 0.0% | ||||||||
City of Detroit MI | $ | 85 | $ | 89,805 | ||||
|
| |||||||
Nevada – 0.0% | ||||||||
City of Reno NV | 500 | 58,798 | ||||||
|
| |||||||
New York – 1.6% | ||||||||
Metropolitan Transportation Authority | 1,750 | 1,924,101 | ||||||
New York State Dormitory Authority | 1,465 | 1,885,515 | ||||||
|
| |||||||
| 3,809,616 | ||||||||
|
| |||||||
North Carolina – 0.2% | ||||||||
North Carolina Medical Care Commission | 560 | 561,252 | ||||||
|
| |||||||
Ohio – 0.3% | ||||||||
Ohio Water Development Authority Water Pollution Control Loan Fund | 600 | 600,000 | ||||||
|
| |||||||
Puerto Rico – 2.1% | ||||||||
Commonwealth of Puerto Rico | 505 | 343,693 | ||||||
4.00%, 07/01/2033-07/01/2046 | 214 | 204,277 | ||||||
5.25%, 07/01/2023 | 133 | 134,982 | ||||||
5.375%, 07/01/2025 | 203 | 213,835 | ||||||
5.625%, 07/01/2027-07/01/2029 | 206 | 225,110 | ||||||
5.75%, 07/01/2031 | 103 | 116,507 | ||||||
Series 2022-C | 20 | 10,431 | ||||||
104 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Puerto Rico Electric Power Authority | $ | 235 | $ | 246,290 | ||||
Puerto Rico Highway & Transportation Authority | 210 | 222,379 | ||||||
AGC Series 2007-N | 415 | 439,944 | ||||||
Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth | 115 | 129,240 | ||||||
Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth | 615 | 637,379 | ||||||
Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth | 570 | 570,775 | ||||||
5.00%, 07/01/2034 | 110 | 123,987 | ||||||
Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue | 223 | 169,721 | ||||||
Series 2019-A | 180 | 179,775 | ||||||
5.00%, 07/01/2058 | 955 | 970,963 | ||||||
|
| |||||||
| 4,939,288 | ||||||||
|
| |||||||
South Carolina – 0.1% |
| |||||||
South Carolina Public Service Authority | 205 | 202,362 | ||||||
|
| |||||||
Tennessee – 0.1% |
| |||||||
Bristol Industrial Development Board | 295 | 295,863 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 105 | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Texas – 0.9% |
| |||||||
Mission Economic Development Corp. | $ | 520 | $ | 539,060 | ||||
Tarrant County Cultural Education Facilities Finance Corp. | 1,150 | 460,000 | ||||||
Texas Private Activity Bond Surface Transportation Corp. | 1,000 | 1,039,005 | ||||||
|
| |||||||
| 2,038,065 | ||||||||
|
| |||||||
Washington – 0.4% |
| |||||||
Pend Oreille County Public Utility District No. 1 Box Canyon | 650 | 681,640 | ||||||
Washington State Convention Center Public Facilities District | 180 | 171,958 | ||||||
Washington State Housing Finance Commission (Presbyterian Retirement Communities Northwest Obligated Group) | 100 | 92,315 | ||||||
|
| |||||||
| 945,913 | ||||||||
|
| |||||||
Wisconsin – 1.6% |
| |||||||
Wisconsin Health & Educational Facilities Authority | 2,700 | 2,720,829 | ||||||
Wisconsin Public Finance Authority | 1,000 | 1,034,231 | ||||||
|
| |||||||
| 3,755,060 | ||||||||
|
| |||||||
Total Long-Term Municipal Bonds | 224,192,465 | |||||||
|
| |||||||
106 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Short-Term Municipal Notes – 3.0% |
| |||||||
Virginia – 3.0% |
| |||||||
Loudoun County Economic Development Authority | $ | 3,250 | $ | 3,250,000 | ||||
Roanoke Economic Development Authority | 1,460 | 1,460,000 | ||||||
Virginia Small Business Financing Authority | 2,310 | 2,310,000 | ||||||
|
| |||||||
Total Short-Term Municipal Notes | 7,020,000 | |||||||
|
| |||||||
Total Municipal Obligations | 231,212,465 | |||||||
|
| |||||||
CORPORATES – NON-INVESTMENT GRADE – 0.0% |
| |||||||
Industrial – 0.0% |
| |||||||
Banks – 0.0% |
| |||||||
UMB Financial Corp. | 30 | 29,930 | ||||||
|
| |||||||
| Shares | ||||||||
SHORT-TERM INVESTMENTS – 1.7% |
| |||||||
Investment Companies – 1.7% |
| |||||||
AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB, 0.71%(h)(i)(j) | 4,016,441 | 4,016,441 | ||||||
|
| |||||||
Total Investments – 101.0% | 235,258,836 | |||||||
Other assets less liabilities – (1.0)% | (2,369,479 | ) | ||||||
|
| |||||||
Net Assets – 100.0% | $ | 232,889,357 | ||||||
|
| |||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 107 | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||
Notional | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 1,450 | 01/15/2025 | 2.565% | CPI# | Maturity | $ | 152,212 | $ | – 0 | – | $ | 152,212 | ||||||||||||||
| USD | 725 | 01/15/2025 | 2.585% | CPI# | Maturity | 75,521 | – 0 | – | 75,521 | |||||||||||||||||
| USD | 725 | 01/15/2025 | 2.613% | CPI# | Maturity | 74,717 | – 0 | – | 74,717 | |||||||||||||||||
| USD | 470 | 01/15/2025 | 4.028% | CPI# | Maturity | 21,037 | – 0 | – | 21,037 | |||||||||||||||||
| USD | 1,700 | 01/15/2026 | CPI# | 3.720% | Maturity | (80,110 | ) | – 0 | – | (80,110 | ) | |||||||||||||||
| USD | 2,260 | 01/15/2027 | CPI# | 3.466% | Maturity | (116,062 | ) | (2,848 | ) | (113,214 | ) | |||||||||||||||
| USD | 2,250 | 01/15/2027 | CPI# | 3.320% | Maturity | (136,214 | ) | – 0 | – | (136,214 | ) | |||||||||||||||
| USD | 1,770 | 01/15/2027 | CPI# | 3.323% | Maturity | (106,822 | ) | – 0 | – | (106,822 | ) | |||||||||||||||
| USD | 5,020 | 01/15/2028 | 1.230% | CPI# | Maturity | 1,000,756 | – 0 | – | 1,000,756 | |||||||||||||||||
| USD | 3,740 | 01/15/2028 | 0.735% | CPI# | Maturity | 882,691 | – 0 | – | 882,691 | |||||||||||||||||
| USD | 4,250 | 01/15/2029 | CPI# | 3.390% | Maturity | (168,223 | ) | – 0 | – | (168,223 | ) | |||||||||||||||
| USD | 2,650 | 01/15/2029 | CPI# | 3.735% | Maturity | (26,199 | ) | – 0 | – | (26,199 | ) | |||||||||||||||
| USD | 1,550 | 01/15/2029 | CPI# | 3.290% | Maturity | (74,494 | ) | – 0 | – | (74,494 | ) | |||||||||||||||
| USD | 1,375 | 01/15/2030 | 1.572% | CPI# | Maturity | 266,679 | – 0 | – | 266,679 | |||||||||||||||||
| USD | 1,375 | 01/15/2030 | 1.587% | CPI# | Maturity | 264,733 | – 0 | – | 264,733 | |||||||||||||||||
| USD | 1,350 | 01/15/2031 | 2.782% | CPI# | Maturity | 120,148 | – 0 | – | 120,148 | |||||||||||||||||
| USD | 1,230 | 01/15/2031 | 2.680% | CPI# | Maturity | 122,216 | – 0 | – | 122,216 | |||||||||||||||||
| USD | 1,080 | 01/15/2031 | 2.989% | CPI# | Maturity | 73,150 | – 0 | – | 73,150 | |||||||||||||||||
| USD | 1,050 | 01/15/2032 | CPI# | 3.064% | Maturity | (59,735 | ) | – 0 | – | (59,735 | ) | |||||||||||||||
| USD | 1,060 | 04/15/2032 | CPI# | 2.909% | Maturity | (75,357 | ) | – 0 | – | (75,357 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 2,210,644 | $ | (2,848 | ) | $ | 2,213,492 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| # | Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI). |
CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||
| Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 21,000 | 01/15/2027 | 1 Day SOFR | 2.393% | Annual | $ | (98,679 | ) | $ | – 0 | – | $ | (98,679 | ) | ||||||||||||
| USD | 15,000 | 01/15/2028 | 1.468% | 1 Day SOFR | Annual | 814,232 | – 0 | – | 814,232 | |||||||||||||||||
| USD | 5,800 | 01/15/2028 | 1.208% | 3 Month LIBOR | Semi- Annual/ Quarterly | 479,322 | – 0 | – | 479,322 | |||||||||||||||||
| USD | 3,750 | 01/15/2028 | 1.117% | 3 Month LIBOR | Semi- Annual/ Quarterly | 329,074 | – 0 | – | 329,074 | |||||||||||||||||
| USD | 7,500 | 01/15/2030 | 1 Day SOFR | 1.982% | Annual | (299,496 | ) | – 0 | – | (299,496 | ) | |||||||||||||||
| USD | 4,000 | 01/15/2031 | 1.240% | 3 Month LIBOR | Semi- Annual/ Quarterly | 497,098 | – 0 | – | 497,098 | |||||||||||||||||
108 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
| Rate Type | ||||||||||||||||||||||||||
| Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| USD | 3,700 | 01/15/2031 | 1.270% | 3 Month LIBOR | Semi- Annual/ Quarterly | $ | 447,326 | $ | – 0 | – | $ | 447,326 | ||||||||||||||
| USD | 3,600 | 01/15/2031 | 1.456% | 3 Month LIBOR | Semi- Annual/ Quarterly | 384,579 | – 0 | – | 384,579 | |||||||||||||||||
| USD | 2,700 | 04/15/2032 | 2.308% | 1 Day SOFR | Annual | 70,835 | – 0 | – | 70,835 | |||||||||||||||||
| USD | 1,700 | 02/15/2041 | 1 Day SOFR | 1.715% | Annual | (242,357 | ) | – 0 | – | (242,357 | ) | |||||||||||||||
| USD | 1,650 | 02/15/2041 | 1 Day SOFR | 1.770% | Annual | (221,715 | ) | – 0 | – | (221,715 | ) | |||||||||||||||
| USD | 1,250 | 02/15/2041 | 1 Day SOFR | 1.639% | Annual | (192,480 | ) | – 0 | – | (192,480 | ) | |||||||||||||||
| USD | 600 | 02/15/2041 | 1 Day SOFR | 1.657% | Annual | (90,813 | ) | – 0 | – | (90,813 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| $ | 1,876,926 | $ | – 0 | – | $ | 1,876,926 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
INTEREST RATE SWAPS (see Note D)
| Rate Type | ||||||||||||||||||||||||||||||||||||
| Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Payment Frequency Paid/ Received | Market Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||||||
Citibank, NA | USD | 2,965 | 10/09/2029 | 1.125 | % | SIFMA | * | Quarterly | $ | 269,341 | $ | – 0 | – | $ | 269,341 | |||||||||||||||||||||
| * | Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index. |
| (a) | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2022, the aggregate market value of these securities amounted to $5,970,840 or 2.6% of net assets. |
| (b) | When-Issued or delayed delivery security. |
| (c) | Defaulted. |
| (d) | Non-income producing security. |
| (e) | Variable Rate Demand Notes 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. |
| (f) | Security in which significant unobservable inputs (Level 3) were used in determining fair value. |
| (g) | Fair valued by the Adviser. |
| (h) | Affiliated investments. |
| (i) | The rate shown represents the 7-day yield as of period end. |
| (j) | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 109 | |
PORTFOLIO OF INVESTMENTS (continued)
AB VIRGINIA PORTFOLIO
As of May 31, 2022, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 2.6% and 0.0%, respectively.
Glossary:
AGC – Assured Guaranty Corporation
AGM – Assured Guaranty Municipal
COP – Certificate of Participation
CPI – Consumer Price Index
ETM – Escrowed to Maturity
LIBOR – London Interbank Offered Rate
SOFR – Secured Overnight Financing Rate
SRF – State Revolving Fund
See notes to financial statements.
110 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
STATEMENT OF ASSETS & LIABILITIES
May 31, 2022
| AB Arizona | AB Massachusetts | |||||||
| Assets |
| |||||||
Investments in securities, at value |
| |||||||
Unaffiliated issuers (cost $118,275,236 and $219,012,798, respectively) | $ | 115,926,674 | $ | 212,035,838 | ||||
Affiliated issuers (cost $383,928 and $6,459,181, respectively) | 383,928 | 6,459,181 | ||||||
Cash | 466 | – 0 | – | |||||
Cash collateral due from broker | 172,024 | 403,750 | ||||||
Interest receivable | 1,913,563 | 3,147,998 | ||||||
Receivable for shares of beneficial interest sold | 771,432 | 1,767,096 | ||||||
Unrealized appreciation on interest rate swaps | 152,157 | 274,791 | ||||||
Receivable for variation margin on centrally cleared swaps | 8,214 | 73,834 | ||||||
Affiliated dividends receivable | 392 | 2,559 | ||||||
|
|
|
| |||||
Total assets | 119,328,850 | 224,165,047 | ||||||
|
|
|
| |||||
| Liabilities |
| |||||||
Due to custodian | – 0 | – | 1,083 | |||||
Payable for investment securities purchased | 7,238,724 | – 0 | – | |||||
Payable for shares of beneficial interest redeemed | 151,307 | 1,623,325 | ||||||
Administrative fee payable | 38,019 | 37,935 | ||||||
Distribution fee payable | 23,574 | 28,909 | ||||||
Advisory fee payable | 17,239 | 68,625 | ||||||
Dividends payable | 13,421 | 110,972 | ||||||
Trustees’ fees payable | 4,700 | 5,012 | ||||||
Transfer Agent fee payable | 1,451 | 1,479 | ||||||
Accrued expenses | 110,438 | 125,520 | ||||||
|
|
|
| |||||
Total liabilities | 7,598,873 | 2,002,860 | ||||||
|
|
|
| |||||
Net Assets | $ | 111,729,977 | $ | 222,162,187 | ||||
|
|
|
| |||||
| Composition of Net Assets |
| |||||||
Shares of beneficial interest, at par | $ | 106,004 | $ | 208,399 | ||||
Additional paid-in capital | 114,336,399 | 223,898,878 | ||||||
Accumulated loss | (2,712,426 | ) | (1,945,090 | ) | ||||
|
|
|
| |||||
| $ | 111,729,977 | $ | 222,162,187 | |||||
|
|
|
| |||||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
| AB Arizona Portfolio | Net Assets | Shares Outstanding | Net Asset Value | |||||||||
| ||||||||||||
| Class A | $ | 98,962,527 | 9,388,826 | $ | 10.54 | * | ||||||
| ||||||||||||
| Class C | $ | 4,585,450 | 435,626 | $ | 10.53 | |||||||
| ||||||||||||
| Advisor Class | $ | 8,182,000 | 775,960 | $ | 10.54 | |||||||
| ||||||||||||
| AB Massachusetts Portfolio | ||||||||||||
| ||||||||||||
| Class A | $ | 104,116,726 | 9,762,814 | $ | 10.66 | * | ||||||
| ||||||||||||
| Class C | $ | 8,903,564 | 836,539 | $ | 10.64 | |||||||
| ||||||||||||
| Advisor Class | $ | 109,141,897 | 10,240,569 | $ | 10.66 | |||||||
| ||||||||||||
| * | The maximum offering price per share for Class A of AB Arizona Portfolio and AB Massachusetts Portfolio were $10.87 and $10.99, respectively, which reflects a sales charge of 3.00%. |
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 111 | |
STATEMENT OF ASSETS & LIABILITIES (continued)
| AB Minnesota | AB New Jersey | |||||||
| Assets |
| |||||||
Investments in securities, at value |
| |||||||
Unaffiliated issuers (cost $48,510,235 and $63,542,445, respectively) | $ | 47,753,677 | $ | 63,342,977 | ||||
Affiliated issuers (cost $1,881,060 and $1,284,373, respectively) | 1,881,060 | 1,284,373 | ||||||
Cash | 159 | 159 | ||||||
Cash collateral due from broker | 141,618 | 108,705 | ||||||
Interest receivable | 578,361 | 1,017,444 | ||||||
Receivable for shares of beneficial interest sold | 111,517 | 19,296 | ||||||
Unrealized appreciation on interest rate swaps | 75,851 | 112,188 | ||||||
Affiliated dividends receivable | 1,173 | 373 | ||||||
Receivable for investment securities sold | – 0 | – | 5,000 | |||||
Receivable for variation margin on centrally cleared swaps | – 0 | – | 7,401 | |||||
|
|
|
| |||||
Total assets | 50,543,416 | 65,897,916 | ||||||
|
|
|
| |||||
| Liabilities |
| |||||||
Custody and accounting fees payable | 46,008 | 48,008 | ||||||
Payable for shares of beneficial interest redeemed | 35,666 | 71,461 | ||||||
Audit and tax fee payable | 29,961 | 29,961 | ||||||
Administrative fee payable | 16,221 | 37,753 | ||||||
Distribution fee payable | 12,121 | 14,021 | ||||||
Legal fee payable | 11,318 | 11,379 | ||||||
Payable for variation margin on centrally cleared swaps | 10,857 | – 0 | – | |||||
Printing fee payable | 9,801 | 9,205 | ||||||
Dividends payable | 5,476 | 28,807 | ||||||
Advisory fee payable | 5,300 | 4,344 | ||||||
Trustees’ fees payable | 4,514 | 4,545 | ||||||
Transfer Agent fee payable | 1,452 | 1,450 | ||||||
Payable for investment securities purchased | – 0 | – | 1,276,100 | |||||
Accrued expenses | 6,030 | 3,758 | ||||||
|
|
|
| |||||
Total liabilities | 194,725 | 1,540,792 | ||||||
|
|
|
| |||||
Net Assets | $ | 50,348,691 | $ | 64,357,124 | ||||
|
|
|
| |||||
| Composition of Net Assets |
| |||||||
Shares of beneficial interest, at par | $ | 51,712 | $ | 69,276 | ||||
Additional paid-in capital | 50,144,463 | 63,474,986 | ||||||
Distributable earnings | 152,516 | 812,862 | ||||||
|
|
|
| |||||
| $ | 50,348,691 | $ | 64,357,124 | |||||
|
|
|
| |||||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
| AB Minnesota Portfolio | Net Assets | Shares Outstanding | Net Asset Value | |||||||||
| ||||||||||||
| Class A | $ | 47,331,010 | 4,861,574 | $ | 9.74 | * | ||||||
| ||||||||||||
| Class C | $ | 3,017,681 | 309,614 | $ | 9.75 | |||||||
| ||||||||||||
| AB New Jersey Portfolio | ||||||||||||
| ||||||||||||
| Class A | $ | 61,999,965 | 6,674,023 | $ | 9.29 | * | ||||||
| ||||||||||||
| Class C | $ | 2,357,159 | 253,561 | $ | 9.30 | |||||||
| ||||||||||||
| * | The maximum offering price per share for Class A of AB Minnesota Portfolio and AB New Jersey Portfolio were $10.04 and $9.58, respectively, which reflects a sales charge of 3.00%. |
See notes to financial statements.
112 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
STATEMENT OF ASSETS & LIABILITIES (continued)
| AB Ohio | AB Pennsylvania | |||||||
| Assets |
| |||||||
Investments in securities, at value |
| |||||||
Unaffiliated issuers (cost $74,465,633 and $58,908,056, respectively) | $ | 72,140,992 | $ | 58,335,893 | ||||
Affiliated issuers (cost $3,382,807 and $357,162, respectively) | 3,382,807 | 357,162 | ||||||
Cash collateral due from broker | 117,743 | 65,756 | ||||||
Interest receivable | 1,068,393 | 872,921 | ||||||
Unrealized appreciation on interest rate swaps | 106,737 | 103,558 | ||||||
Receivable for shares of beneficial interest sold | 51,319 | 4,310 | ||||||
Receivable for investment securities sold | 35,000 | – 0 | – | |||||
Receivable for variation margin on centrally cleared swaps | 9,664 | – 0 | – | |||||
Affiliated dividends receivable | 2,049 | 419 | ||||||
|
|
|
| |||||
Total assets | 76,914,704 | 59,740,019 | ||||||
|
|
|
| |||||
| Liabilities |
| |||||||
Due to custodian | 386 | 12 | ||||||
Payable for investment securities purchased | 3,443,260 | 500,000 | ||||||
Payable for shares of beneficial interest redeemed | 69,570 | 35,016 | ||||||
Custody and accounting fees payable | 52,531 | 52,513 | ||||||
Administrative fee payable | 37,905 | 38,019 | ||||||
Distribution fee payable | 15,679 | 12,624 | ||||||
Dividends payable | 12,181 | 12,684 | ||||||
Advisory fee payable | 7,942 | 2,286 | ||||||
Trustees’ fees payable | 4,555 | 4,543 | ||||||
Transfer Agent fee payable | 1,452 | 1,454 | ||||||
Payable for variation margin on centrally cleared swaps | – 0 | – | 4,692 | |||||
Accrued expenses | 54,048 | 52,428 | ||||||
|
|
|
| |||||
Total liabilities | 3,699,509 | 716,271 | ||||||
|
|
|
| |||||
Net Assets | $ | 73,215,195 | $ | 59,023,748 | ||||
|
|
|
| |||||
| Composition of Net Assets |
| |||||||
Shares of beneficial interest, at par | $ | 77,061 | $ | 59,250 | ||||
Additional paid-in capital | 76,530,223 | 58,811,980 | ||||||
Distributable earnings (accumulated loss) | (3,392,089 | ) | 152,518 | |||||
|
|
|
| |||||
| $ | 73,215,195 | $ | 59,023,748 | |||||
|
|
|
| |||||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
| AB Ohio Portfolio | Net Assets | Shares Outstanding | Net Asset Value | |||||||||
| ||||||||||||
| Class A | $ | 71,344,774 | 7,509,112 | $ | 9.50 | * | ||||||
| ||||||||||||
| Class C | $ | 1,870,421 | 197,003 | $ | 9.49 | |||||||
| ||||||||||||
| AB Pennsylvania Portfolio | ||||||||||||
| ||||||||||||
| Class A | $ | 57,968,055 | 5,819,005 | $ | 9.96 | * | ||||||
| ||||||||||||
| Class C | $ | 1,055,693 | 105,955 | $ | 9.96 | |||||||
| ||||||||||||
| * | The maximum offering price per share for Class A of AB Ohio Portfolio and AB Pennsylvania Portfolio were $9.79 and $10.27, respectively, which reflects a sales charge of 3.00%. |
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 113 | |
STATEMENT OF ASSETS & LIABILITIES (continued)
| AB Virginia | ||||
| Assets |
| |||
Investments in securities, at value |
| |||
Unaffiliated issuers (cost $238,316,985) | $ | 231,242,395 | ||
Affiliated issuers (cost $4,016,441) | 4,016,441 | |||
Cash collateral due from broker | 193,308 | |||
Interest receivable | 3,119,203 | |||
Receivable for shares of beneficial interest sold | 303,972 | |||
Unrealized appreciation on interest rate swaps | 269,341 | |||
Receivable for variation margin on centrally cleared swaps | 23,480 | |||
Affiliated dividends receivable | 2,840 | |||
|
| |||
Total assets | 239,170,980 | |||
|
| |||
| Liabilities |
| |||
Due to custodian | 81 | |||
Payable for investment securities purchased | 5,519,400 | |||
Payable for shares of beneficial interest redeemed | 406,887 | |||
Advisory fee payable | 80,347 | |||
Dividends payable | 69,005 | |||
Administrative fee payable | 38,019 | |||
Distribution fee payable | 34,259 | |||
Trustees’ fees payable | 5,062 | |||
Transfer Agent fee payable | 1,798 | |||
Accrued expenses | 126,765 | |||
|
| |||
Total liabilities | 6,281,623 | |||
|
| |||
Net Assets | $ | 232,889,357 | ||
|
| |||
| Composition of Net Assets |
| |||
Shares of beneficial interest, at par | $ | 219,331 | ||
Additional paid-in capital | 237,337,633 | |||
Accumulated loss | (4,667,607 | ) | ||
|
| |||
| $ | 232,889,357 | |||
|
| |||
Net Asset Value Per Share—unlimited shares authorized, $.01 par value
| AB Virginia Portfolio | Net Assets | Shares Outstanding | Net Asset Value | |||||||||
| ||||||||||||
| Class A | $ | 133,625,674 | 12,585,179 | $ | 10.62 | * | ||||||
| ||||||||||||
| Class C | $ | 8,452,384 | 798,119 | $ | 10.59 | |||||||
| ||||||||||||
| Advisor Class | $ | 90,811,299 | 8,549,768 | $ | 10.62 | |||||||
| ||||||||||||
| * | The maximum offering price per share for Class A shares was $10.95 which reflects a sales charge of 3.00%. |
See notes to financial statements.
114 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
STATEMENT OF OPERATIONS
Year Ended May 31, 2022
| AB Arizona | AB Massachusetts | |||||||
| Investment Income | ||||||||
Interest | $ | 3,715,896 | $ | 6,325,483 | ||||
Dividends – Affiliated issuers | 1,085 | 4,073 | ||||||
|
|
|
| |||||
Total income | 3,716,981 | 6,329,556 | ||||||
|
|
|
| |||||
| Expenses | ||||||||
Advisory fee (see Note B) | 536,734 | 999,031 | ||||||
Distribution fee – Class A | 271,195 | 304,988 | ||||||
Distribution fee – Class C | 49,167 | 106,375 | ||||||
Transfer agency – Class A | 35,901 | 31,710 | ||||||
Transfer agency – Class C | 1,670 | 3,012 | ||||||
Transfer agency – Advisor Class | 1,962 | 22,545 | ||||||
Administrative | 93,388 | 93,574 | ||||||
Custody and accounting | 53,225 | 59,918 | ||||||
Audit and tax | 50,128 | 49,199 | ||||||
Legal | 34,226 | 34,853 | ||||||
Printing | 24,614 | 19,137 | ||||||
Trustees’ fees | 19,339 | 20,546 | ||||||
Registration fees | 17,178 | 25,225 | ||||||
Miscellaneous | 14,318 | 16,655 | ||||||
|
|
|
| |||||
Total expenses | 1,203,045 | 1,786,768 | ||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (251,940 | ) | (227,015 | ) | ||||
|
|
|
| |||||
Net expenses | 951,105 | 1,559,753 | ||||||
|
|
|
| |||||
Net investment income | 2,765,876 | 4,769,803 | ||||||
|
|
|
| |||||
| Realized and Unrealized Gain (Loss) on Investment Transactions | ||||||||
Net realized gain (loss) on: |
| |||||||
Investment transactions | 64,090 | (148,765 | ) | |||||
Swaps | (676,259 | ) | (665,159 | ) | ||||
Net change in unrealized appreciation/depreciation of: | ||||||||
Investments | (9,982,228 | ) | (21,327,203 | ) | ||||
Swaps | 1,104,055 | 2,328,572 | ||||||
|
|
|
| |||||
Net loss on investment transactions | (9,490,342 | ) | (19,812,555 | ) | ||||
|
|
|
| |||||
Net Decrease in Net Assets from Operations | $ | (6,724,466 | ) | $ | (15,042,752 | ) | ||
|
|
|
| |||||
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 115 | |
STATEMENT OF OPERATIONS (continued)
| AB Minnesota | AB New Jersey | |||||||
| Investment Income | ||||||||
Interest | $ | 1,593,478 | $ | 2,460,459 | ||||
Dividends – Affiliated issuers | 2,187 | 639 | ||||||
|
|
|
| |||||
Total income | 1,595,665 | 2,461,098 | ||||||
|
|
|
| |||||
| Expenses | ||||||||
Advisory fee (see Note B) | 251,688 | 314,918 | ||||||
Distribution fee – Class A | 131,821 | 167,257 | ||||||
Distribution fee – Class C | 32,025 | 30,791 | ||||||
Transfer agency – Class A | 36,398 | 34,204 | ||||||
Transfer agency – Class C | 2,387 | 1,626 | ||||||
Audit and tax | 49,199 | 49,399 | ||||||
Custody and accounting | 46,970 | 43,039 | ||||||
Legal | 33,819 | 33,919 | ||||||
Trustees’ fees | 18,588 | 18,734 | ||||||
Printing | 18,166 | 16,383 | ||||||
Registration fees | 9,707 | 8,399 | ||||||
Administrative | – 0 | – | 92,686 | |||||
Miscellaneous | 10,182 | 13,202 | ||||||
|
|
|
| |||||
Total expenses | 640,950 | 824,557 | ||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (143,298 | ) | (225,823 | ) | ||||
|
|
|
| |||||
Net expenses | 497,652 | 598,734 | ||||||
|
|
|
| |||||
Net investment income | 1,098,013 | 1,862,364 | ||||||
|
|
|
| |||||
| Realized and Unrealized Gain (Loss) on Investment Transactions | ||||||||
Net realized gain (loss) on: |
| |||||||
Investment transactions | 25,117 | (33,699 | ) | |||||
Swaps | (86,144 | ) | (556,000 | ) | ||||
Net change in unrealized appreciation/depreciation of: | ||||||||
Investments | (4,720,785 | ) | (5,969,371 | ) | ||||
Swaps | 373,176 | 987,106 | ||||||
|
|
|
| |||||
Net loss on investment transactions | (4,408,636 | ) | (5,571,964 | ) | ||||
|
|
|
| |||||
Net Decrease in Net Assets from Operations | $ | (3,310,623 | ) | $ | (3,709,600 | ) | ||
|
|
|
| |||||
See notes to financial statements.
116 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
STATEMENT OF OPERATIONS (continued)
| AB Ohio | AB Pennsylvania | |||||||
| Investment Income | ||||||||
Interest | $ | 2,236,861 | $ | 2,176,578 | ||||
Dividends – Affiliated issuers | 2,460 | 840 | ||||||
|
|
|
| |||||
Total income | 2,239,321 | 2,177,418 | ||||||
|
|
|
| |||||
| Expenses | ||||||||
Advisory fee (see Note B) | 322,744 | 296,438 | ||||||
Distribution fee – Class A | 173,455 | 161,388 | ||||||
Distribution fee – Class C | 23,388 | 13,200 | ||||||
Transfer agency – Class A | 36,860 | 35,857 | ||||||
Transfer agency – Class C | 1,338 | 781 | ||||||
Administrative | 92,926 | 93,468 | ||||||
Audit and tax | 49,199 | 47,513 | ||||||
Custody and accounting | 47,841 | 47,894 | ||||||
Legal | 33,921 | 33,883 | ||||||
Trustees’ fees | 18,756 | 18,697 | ||||||
Printing | 17,525 | 16,915 | ||||||
Registration fees | 8,894 | 8,951 | ||||||
Miscellaneous | 13,631 | 11,247 | ||||||
|
|
|
| |||||
Total expenses | 840,478 | 786,232 | ||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (247,197 | ) | (216,932 | ) | ||||
|
|
|
| |||||
Net expenses | 593,281 | 569,300 | ||||||
|
|
|
| |||||
Net investment income | 1,646,040 | 1,608,118 | ||||||
|
|
|
| |||||
| Realized and Unrealized Gain (Loss) on Investment Transactions | ||||||||
Net realized gain (loss) on: |
| |||||||
Investment transactions | 332,345 | (25,534 | ) | |||||
Swaps | (163,470 | ) | (193,491 | ) | ||||
Net change in unrealized appreciation/depreciation of: | ||||||||
Investments | (6,555,968 | ) | (5,992,727 | ) | ||||
Swaps | 608,171 | 455,597 | ||||||
|
|
|
| |||||
Net loss on investment transactions | (5,778,922 | ) | (5,756,155 | ) | ||||
|
|
|
| |||||
Net Decrease in Net Assets from Operations | $ | (4,132,882 | ) | $ | (4,148,037 | ) | ||
|
|
|
| |||||
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 117 | |
STATEMENT OF OPERATIONS (continued)
| AB Virginia | ||||
| Investment Income | ||||
Interest | $ | 6,822,121 | ||
Dividends – Affiliated issuers | 5,203 | |||
Other income | 5,019 | |||
|
| |||
Total income | 6,832,343 | |||
|
| |||
| Expenses | ||||
Advisory fee (see Note B) | 1,081,999 | |||
Distribution fee – Class A | 369,233 | |||
Distribution fee – Class C | 98,569 | |||
Transfer agency – Class A | 45,039 | |||
Transfer agency – Class C | 3,158 | |||
Transfer agency – Advisor Class | 25,248 | |||
Administrative | 93,467 | |||
Custody and accounting | 56,663 | |||
Audit and tax | 49,199 | |||
Legal | 35,007 | |||
Registration fees | 21,587 | |||
Trustees’ fees | 20,774 | |||
Printing | 19,239 | |||
Miscellaneous | 17,169 | |||
|
| |||
Total expenses | 1,936,351 | |||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (151,402 | ) | ||
|
| |||
Net expenses | 1,784,949 | |||
|
| |||
Net investment income | 5,047,394 | |||
|
| |||
| Realized and Unrealized Gain (Loss) on Investment Transactions | ||||
Net realized gain (loss) on: |
| |||
Investment transactions | 239,536 | |||
Swaps | (1,128,598 | ) | ||
Net change in unrealized appreciation/depreciation of: | ||||
Investments | (23,685,784 | ) | ||
Swaps | 2,967,530 | |||
|
| |||
Net loss on investment transactions | (21,607,316 | ) | ||
|
| |||
Net Decrease in Net Assets from Operations | $ | (16,559,922 | ) | |
|
| |||
See notes to financial statements.
118 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
STATEMENT OF CHANGES IN NET ASSETS
| AB Arizona | ||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||
| Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 2,765,876 | $ | 2,820,942 | ||||
Net realized loss on investment transactions | (612,169 | ) | (236,984 | ) | ||||
Net change in unrealized appreciation/depreciation of investments | (8,878,173 | ) | 4,607,687 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | (6,724,466 | ) | 7,191,645 | |||||
Distributions to Shareholders |
| |||||||
Class A | (2,491,529 | ) | (2,740,700 | ) | ||||
Class C | (75,915 | ) | (131,577 | ) | ||||
Advisor Class(a) | (151,271 | ) | (9,388 | ) | ||||
| Transactions in Shares of Beneficial Interest | ||||||||
Net increase | 1,634,441 | 978,616 | ||||||
|
|
|
| |||||
Total increase (decrease) | (7,808,740 | ) | 5,288,596 | |||||
| Net Assets |
| |||||||
Beginning of period | 119,538,717 | 114,250,121 | ||||||
|
|
|
| |||||
End of period | $ | 111,729,977 | $ | 119,538,717 | ||||
|
|
|
| |||||
| (a) | Commenced distribution on March 25, 2021. |
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 119 | |
STATEMENT OF CHANGES IN NET ASSETS (continued)
| AB Massachusetts | ||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||
| Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 4,769,803 | $ | 4,925,925 | ||||
Net realized gain (loss) on investment transactions | (813,924 | ) | 1,086,769 | |||||
Net change in unrealized appreciation/depreciation of investments | (18,998,631 | ) | 8,159,067 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | (15,042,752 | ) | 14,171,761 | |||||
Distributions to Shareholders |
| |||||||
Class A | (2,555,284 | ) | (2,879,327 | ) | ||||
Class C | (141,757 | ) | (320,998 | ) | ||||
Advisor Class | (2,109,716 | ) | (1,885,176 | ) | ||||
| Transactions in Shares of Beneficial Interest | ||||||||
Net increase | 25,407,314 | 8,161,617 | ||||||
|
|
|
| |||||
Total increase | 5,557,805 | 17,247,877 | ||||||
| Net Assets |
| |||||||
Beginning of period | 216,604,382 | 199,356,505 | ||||||
|
|
|
| |||||
End of period | $ | 222,162,187 | $ | 216,604,382 | ||||
|
|
|
| |||||
See notes to financial statements.
120 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
STATEMENT OF CHANGES IN NET ASSETS (continued)
| AB Minnesota | ||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||
| Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 1,098,013 | $ | 1,142,407 | ||||
Net realized gain (loss) on investment transactions | (61,027 | ) | 1,237,986 | |||||
Net change in unrealized appreciation/depreciation of investments | (4,347,609 | ) | 246,686 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | (3,310,623 | ) | 2,627,079 | |||||
Distributions to Shareholders |
| |||||||
Class A | (1,076,792 | ) | (1,283,303 | ) | ||||
Class C | (41,005 | ) | (79,227 | ) | ||||
| Transactions in Shares of Beneficial Interest | ||||||||
Net increase (decrease) | (4,575,433 | ) | 3,442,980 | |||||
|
|
|
| |||||
Total increase (decrease) | (9,003,853 | ) | 4,707,529 | |||||
| Net Assets |
| |||||||
Beginning of period | 59,352,544 | 54,645,015 | ||||||
|
|
|
| |||||
End of period | $ | 50,348,691 | $ | 59,352,544 | ||||
|
|
|
| |||||
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 121 | |
STATEMENT OF CHANGES IN NET ASSETS (continued)
| AB New Jersey | ||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||
| Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 1,862,364 | $ | 2,065,980 | ||||
Net realized gain (loss) on investment transactions | (589,699 | ) | 251,994 | |||||
Net change in unrealized appreciation/depreciation of investments | (4,982,265 | ) | 3,910,247 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | (3,709,600 | ) | 6,228,221 | |||||
Distributions to Shareholders |
| |||||||
Class A | (1,843,509 | ) | (2,027,812 | ) | ||||
Class C | (60,713 | ) | (134,143 | ) | ||||
| Transactions in Shares of Beneficial Interest | ||||||||
Net decrease | (5,443,271 | ) | (2,989,181 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | (11,057,093 | ) | 1,077,085 | |||||
| Net Assets | ||||||||
Beginning of period | 75,414,217 | 74,337,132 | ||||||
|
|
|
| |||||
End of period | $ | 64,357,124 | $ | 75,414,217 | ||||
|
|
|
| |||||
See notes to financial statements.
122 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
STATEMENT OF CHANGES IN NET ASSETS (continued)
| AB Ohio | ||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||
| Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 1,646,040 | $ | 1,815,862 | ||||
Net realized gain on investment transactions | 168,875 | 919,934 | ||||||
Net change in unrealized appreciation/depreciation of investments | (5,947,797 | ) | 2,450,077 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | (4,132,882 | ) | 5,185,873 | |||||
Distributions to Shareholders |
| |||||||
Class A | (1,555,075 | ) | (1,779,396 | ) | ||||
Class C | (34,278 | ) | (86,135 | ) | ||||
| Transactions in Shares of Beneficial Interest | ||||||||
Net increase (decrease) | 5,418,417 | (2,102,677 | ) | |||||
|
|
|
| |||||
Total increase (decrease) | (303,818 | ) | 1,217,665 | |||||
| Net Assets | ||||||||
Beginning of period | 73,519,013 | 72,301,348 | ||||||
|
|
|
| |||||
End of period | $ | 73,215,195 | $ | 73,519,013 | ||||
|
|
|
| |||||
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 123 | |
STATEMENT OF CHANGES IN NET ASSETS (continued)
| AB Pennsylvania | ||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||
| Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 1,608,118 | $ | 1,805,016 | ||||
Net realized gain (loss) on investment transactions | (219,025 | ) | 127,404 | |||||
Net change in unrealized appreciation/depreciation of investments | (5,537,130 | ) | 2,848,863 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | (4,148,037 | ) | 4,781,283 | |||||
Distributions to Shareholders |
| |||||||
Class A | (1,605,640 | ) | (1,772,341 | ) | ||||
Class C | (22,799 | ) | (71,987 | ) | ||||
| Transactions in Shares of Beneficial Interest | ||||||||
Net decrease | (2,927,400 | ) | (5,965,576 | ) | ||||
|
|
|
| |||||
Total decrease | (8,703,876 | ) | (3,028,621 | ) | ||||
| Net Assets | ||||||||
Beginning of period | 67,727,624 | 70,756,245 | ||||||
|
|
|
| |||||
End of period | $ | 59,023,748 | $ | 67,727,624 | ||||
|
|
|
| |||||
See notes to financial statements.
124 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
STATEMENT OF CHANGES IN NET ASSETS (continued)
| AB Virginia | ||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||
| Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 5,047,394 | $ | 5,120,511 | ||||
Net realized gain (loss) on investment transactions | (889,062 | ) | 212,102 | |||||
Net change in unrealized appreciation/depreciation of investments | (20,718,254 | ) | 9,720,841 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | (16,559,922 | ) | 15,053,454 | |||||
Distributions to Shareholders | ||||||||
Class A | (2,988,419 | ) | (3,263,479 | ) | ||||
Class C | (124,992 | ) | (238,263 | ) | ||||
Advisor Class | (1,890,758 | ) | (1,634,796 | ) | ||||
| Transactions in Shares of Beneficial Interest | ||||||||
Net increase | 17,983,338 | 15,894,906 | ||||||
|
|
|
| |||||
Total increase (decrease) | (3,580,753 | ) | 25,811,822 | |||||
| Net Assets | ||||||||
Beginning of period | 236,470,110 | 210,658,288 | ||||||
|
|
|
| |||||
End of period | $ | 232,889,357 | $ | 236,470,110 | ||||
|
|
|
| |||||
See notes to financial statements.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 125 | |
NOTES TO FINANCIAL STATEMENTS
May 31, 2022
NOTE A
Significant Accounting Policies
AB Municipal Income Fund II (the “Fund”) which is a Massachusetts Business Trust, is registered under the Investment Company Act of 1940, as a diversified, open-end management investment company. The Fund operates as a series company currently comprised of seven portfolios: AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio (the “Portfolios”). Each series is considered to be a separate entity for financial reporting and tax purposes. Each Portfolio offers Class A and Class C shares. Class B shares, Class T shares and Class Z shares have been authorized but currently are not offered. AB Massachusetts Portfolio and AB Virginia Portfolio offer Advisor Class shares. Effective March 25, 2021, AB Arizona Portfolio commenced offering Advisor Class shares. Advisor Class shares for AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio and AB Pennsylvania Portfolio have been authorized but currently are not offered. Class A shares are sold with a front-end sales charge of up to 3% for purchases up to $500,000; purchases of $500,000 or more are not subject to a sales charge. With respect to purchases of $500,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase, and 0% after the first year of purchase. Effective May 31, 2021, Class C shares automatically convert to Class A shares eight years after the end of the calendar month of purchase. Prior to May 31, 2021, Class C shares automatically converted to Class A shares 10 years after the end of the calendar month of purchase. Advisor Class shares are sold without any initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All six classes of shares have identical voting, dividend, liquidation and other rights, 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 (“U.S. GAAP”), 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. Each Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolios.
126 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
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 Trustees (the “Board”).
In general, the market values 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 been no sale on such day, the securities are valued at the last traded price from the previous 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 or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, AllianceBernstein L.P. (the “Adviser”) will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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, 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 127 | |
NOTES TO FINANCIAL STATEMENTS (continued)
Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. 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 Portfolios may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolios value their 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. To account for this, the Portfolios generally value many of their foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolios would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolios. Unobservable inputs reflect the Portfolios’ own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| • | Level 1—quoted prices in active markets for identical investments |
| • | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3—significant unobservable inputs (including the Portfolios’ own assumptions in determining the fair value of investments) |
128 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3.
Other fixed income investments, including non-U.S. government and corporate debt, are generally valued using quoted market prices, if available, which are typically impacted by current interest rates, maturity dates and any perceived credit risk of the issuer. Additionally, in the absence of quoted market prices, these inputs are used by pricing vendors to derive a valuation based upon industry or proprietary models which incorporate issuer specific data with relevant yield/spread comparisons with more widely quoted bonds with similar key characteristics. Those investments for which there are observable inputs are classified as Level 2. Where the inputs are not observable, the investments are classified as Level 3.
The following tables summarize the valuation of the Portfolios’ investments by the above fair value hierarchy levels as of May 31, 2022:
| AB Arizona Portfolio | ||||||||||||||||
| Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Long-Term Municipal Bonds | $ | – 0 | – | $ | 115,926,674 | $ | – 0 | – | $ | 115,926,674 | ||||||
Short-Term Investments | 383,928 | – 0 | – | – 0 | – | 383,928 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | 383,928 | 115,926,674 | – 0 | – | 116,310,602 | |||||||||||
Other Financial Instruments(a): | ||||||||||||||||
Assets: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | 1,590,459 | – 0 | – | 1,590,459 | (b) | |||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | 752,782 | – 0 | – | 752,782 | (b) | |||||||||
Interest Rate Swaps | – 0 | – | 152,157 | – 0 | – | 152,157 | ||||||||||
Liabilities: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | (433,162 | ) | – 0 | – | (433,162 | )(b) | ||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | (281,282 | ) | – 0 | – | (281,282 | )(b) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 383,928 | $ | 117,707,628 | $ | – 0 | – | $ | 118,091,556 | |||||||
|
|
|
|
|
|
|
| |||||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 129 | |
NOTES TO FINANCIAL STATEMENTS (continued)
| AB Massachusetts Portfolio | ||||||||||||||||
| Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Long-Term Municipal Bonds | $ | – 0 | – | $ | 209,060,838 | $ | – 0 | – | $ | 209,060,838 | ||||||
Short-Term Municipal Notes | – 0 | – | 2,975,000 | – 0 | – | 2,975,000 | ||||||||||
Short-Term Investments | 6,459,181 | – 0 | – | – 0 | – | 6,459,181 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | 6,459,181 | 212,035,838 | – 0 | – | 218,495,019 | |||||||||||
Other Financial Instruments(a): | ||||||||||||||||
Assets: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | 2,916,728 | – 0 | – | 2,916,728 | (b) | |||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | 5,569,613 | – 0 | – | 5,569,613 | (b) | |||||||||
Interest Rate Swaps | – 0 | – | 274,791 | – 0 | – | 274,791 | ||||||||||
Liabilities: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | (790,128 | ) | – 0 | – | (790,128 | )(b) | ||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | (1,228,842 | ) | – 0 | – | (1,228,842 | )(b) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 6,459,181 | $ | 218,778,000 | $ | – 0 | – | $ | 225,237,181 | |||||||
|
|
|
|
|
|
|
| |||||||||
| AB Minnesota Portfolio | ||||||||||||||||
| Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Long-Term Municipal Bonds | $ | – 0 | – | $ | 47,753,677 | $ | – 0 | – | $ | 47,753,677 | ||||||
Short-Term Investments | 1,881,060 | – 0 | – | – 0 | – | 1,881,060 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | 1,881,060 | 47,753,677 | – 0 | – | 49,634,737 | |||||||||||
Other Financial Instruments(a): | ||||||||||||||||
Assets: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | 787,125 | – 0 | – | 787,125 | (b) | |||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | 980,331 | – 0 | – | 980,331 | (b) | |||||||||
Interest Rate Swaps | – 0 | – | 75,851 | – 0 | – | 75,851 | ||||||||||
Liabilities: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | (211,003 | ) | – 0 | – | (211,003 | )(b) | ||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | (323,894 | ) | – 0 | – | (323,894 | )(b) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 1,881,060 | $ | 49,062,087 | $ | – 0 | – | $ | 50,943,147 | |||||||
|
|
|
|
|
|
|
| |||||||||
130 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
| AB New Jersey Portfolio | ||||||||||||||||
| Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Long-Term Municipal Bonds | $ | – 0 | – | $ | 63,342,977 | $ | – 0 | – | $ | 63,342,977 | ||||||
Short-Term Investments | 1,284,373 | – 0 | – | – 0 | – | 1,284,373 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | 1,284,373 | 63,342,977 | – 0 | – | 64,627,350 | |||||||||||
Other Financial Instruments(a): | ||||||||||||||||
Assets: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | 1,060,489 | – 0 | – | 1,060,489 | (b) | |||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | 1,120,718 | – 0 | – | 1,120,718 | (b) | |||||||||
Interest Rate Swaps | – 0 | – | 112,188 | – 0 | – | 112,188 | ||||||||||
Liabilities: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | (228,735 | ) | – 0 | – | (228,735 | )(b) | ||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | (304,305 | ) | – 0 | – | (304,305 | )(b) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 1,284,373 | $ | 65,103,332 | $ | – 0 | – | $ | 66,387,705 | |||||||
|
|
|
|
|
|
|
| |||||||||
| AB Ohio Portfolio | ||||||||||||||||
| Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Long-Term Municipal Bonds | $ | – 0 | – | $ | 72,140,992 | $ | – 0 | – | $ | 72,140,992 | ||||||
Short-Term Investments | 3,382,807 | — | – 0 | – | 3,382,807 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | 3,382,807 | 72,140,992 | – 0 | – | 75,523,799 | |||||||||||
Other Financial Instruments(a): | ||||||||||||||||
Assets: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | 1,028,698 | – 0 | – | 1,028,698 | (b) | |||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | 357,363 | – 0 | – | 357,363 | (b) | |||||||||
Interest Rate Swaps | – 0 | – | 106,737 | – 0 | – | 106,737 | ||||||||||
Liabilities: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | (278,591 | ) | – 0 | – | (278,591 | )(b) | ||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | (201,152 | ) | – 0 | – | (201,152 | )(b) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 3,382,807 | $ | 73,154,047 | $ | – 0 | – | $ | 76,536,854 | |||||||
|
|
|
|
|
|
|
| |||||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 131 | |
NOTES TO FINANCIAL STATEMENTS (continued)
| AB Pennsylvania Portfolio | ||||||||||||||||
| Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Long-Term Municipal Bonds | $ | – 0 | – | $ | 58,335,893 | $ | – 0 | – | $ | 58,335,893 | ||||||
Short-Term Investments | 357,162 | – 0 | – | – 0 | – | 357,162 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | 357,162 | 58,335,893 | – 0 | – | 58,693,055 | |||||||||||
Other Financial Instruments(a): | ||||||||||||||||
Assets: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | 988,816 | – 0 | – | 988,816 | (b) | |||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | 438,974 | – 0 | – | 438,974 | (b) | |||||||||
Interest Rate Swaps | – 0 | – | 103,558 | – 0 | – | 103,558 | ||||||||||
Liabilities: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | (261,068 | ) | – 0 | – | (261,068 | )(b) | ||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | (263,346 | ) | – 0 | – | (263,346 | )(b) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 357,162 | $ | 59,342,827 | $ | – 0 | – | $ | 59,699,989 | |||||||
|
|
|
|
|
|
|
| |||||||||
| AB Virginia Portfolio | ||||||||||||||||
| Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Long-Term Municipal Bonds | $ | – 0 | – | $ | 224,192,465 | $ | – 0 | – | $ | 224,192,465 | ||||||
Short-Term Municipal Notes | – 0 | – | 7,020,000 | – 0 | – | 7,020,000 | ||||||||||
Corporates—Non-Investment Grade | – 0 | – | – 0 | – | 29,930 | 29,930 | ||||||||||
Short-Term Investments | 4,016,441 | – 0 | – | – 0 | – | 4,016,441 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | 4,016,441 | 231,212,465 | 29,930 | 235,258,836 | ||||||||||||
Other Financial Instruments(a): | ||||||||||||||||
Assets: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | 3,053,860 | – 0 | – | 3,053,860 | (b) | |||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | 3,022,466 | – 0 | – | 3,022,466 | (b) | |||||||||
Interest Rate Swaps | – 0 | – | 269,341 | – 0 | – | 269,341 | ||||||||||
Liabilities: | ||||||||||||||||
Centrally Cleared Inflation (CPI) Swaps | – 0 | – | (843,216 | ) | – 0 | – | (843,216 | )(b) | ||||||||
Centrally Cleared Interest Rate Swaps | – 0 | – | (1,145,540 | ) | – 0 | – | (1,145,540 | )(b) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 4,016,441 | $ | 235,569,376 | $ | 29,930 | $ | 239,615,747 | ||||||||
|
|
|
|
|
|
|
| |||||||||
132 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
| (a) | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation/(depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, options written and swaptions written which are valued at market value. |
| (b) | Only variation margin receivable/(payable) at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation/(depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. Where applicable, centrally cleared swaps with upfront premiums are presented here at market value. |
3. 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. The Portfolios have a tax year-end of November 30 concurrent with the filing of the Portfolios’ tax returns.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolios’ tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolios’ financial statements.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolios are informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. The Portfolios amortize premiums and accrete original issue and market discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
5. 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 each Portfolio represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to the Portfolios or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 133 | |
NOTES TO FINANCIAL STATEMENTS (continued)
6. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. GAAP. 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, each Portfolio 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 each Portfolio’s average daily net assets. Such fee is accrued daily and paid monthly.
The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit the total portfolio operating expenses as a percentage of daily average net assets on an annual basis (the “Expense Caps”) as follows:
| Portfolio | Class A | Class C | Advisor Class | |||||||||
AB Arizona | .78 | % | 1.53 | % | .53 | % | ||||||
AB Massachusetts | .77 | % | 1.52 | % | .52 | % | ||||||
AB Minnesota | .85 | % | 1.60 | % | N/A | |||||||
AB New Jersey | .82 | % | 1.57 | % | N/A | |||||||
AB Ohio | .80 | % | 1.55 | % | N/A | |||||||
AB Pennsylvania | .85 | % | 1.60 | % | N/A | |||||||
AB Virginia | .80 | % | 1.55 | % | .55 | % | ||||||
The Expense Caps will extend through September 30, 2022 and then may be extended by the Adviser for additional one year terms. For the year ended May 31, 2022, such reimbursements/waivers amounted to $250,325, $220,791, $141,446, $225,036, $246,078, $215,632 and $146,042 for AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio, respectively.
Pursuant to the investment advisory agreement, each Portfolio may reimburse the Adviser for certain legal and accounting services provided to each Portfolio by the Adviser. For the year ended May 31, 2022, the reimbursement for such services amounted to $93,388, $93,574, $0, $92,686, $92,926, $93,468 and $93,467 for AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio, respectively.
134 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
The Portfolios compensate 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 the Portfolios. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. For the year ended May 31, 2022, such compensation retained by ABIS amounted to: $18,015, $19,952, $17,968, $17,996, $17,999, $17,874 and $22,437 for AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio, respectively.
AllianceBernstein Investments, Inc. (the “Distributor”), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Portfolios’ shares. The Distributor has advised the Portfolios that it has retained front-end sales charges from the sale of Class A shares and received contingent deferred sales charges imposed upon redemptions by shareholders of Class A and Class C shares for each Portfolio for the year ended May 31, 2022, as follows:
| Front-End Sales Charges | Contingent Deferred Sales Charges | |||||||||||
| Portfolio | Class A | Class A | Class C | |||||||||
AB Arizona | $ | 91 | $ | 5,984 | $ | 256 | ||||||
AB Massachusetts | 142 | 7,207 | 1,482 | |||||||||
AB Minnesota | 195 | 564 | 195 | |||||||||
AB New Jersey | – 0 | – | 119 | 509 | ||||||||
AB Ohio | 61 | 249 | – 0 | – | ||||||||
AB Pennsylvania | 30 | 1,487 | 76 | |||||||||
AB Virginia | 392 | 1,102 | 853 | |||||||||
The Portfolios may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser has contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. In connection with the investment by the Portfolios in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolios in an amount equal to each Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolios as an acquired fund fee and expense. For the year ended May 31, 2022, such waiver amounted to:
| abfunds.com | AB MUNICIPAL INCOME FUND II | 135 | |
NOTES TO FINANCIAL STATEMENTS (continued)
| Portfolio | Amount | Portfolio | Amount | |||||||
Arizona | $ | 1,615 | Ohio | $ | 1,119 | |||||
Massachusetts | 6,224 | Pennsylvania | 1,300 | |||||||
Minnesota | 1,852 | Virginia | 5,360 | |||||||
New Jersey | 787 | |||||||||
A summary of the Portfolios’ transactions in the Government Money Market Portfolio for the year ended May 31, 2022 is as follows:
| Portfolio | Market 5/31/21 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Market 5/31/22 (000) | Dividend Income (000) | |||||||||||||||
AB Arizona | $ | 5,551 | $ | 23,597 | $ | 28,764 | $ | 384 | $ | 1 | ||||||||||
AB Massachusetts | 8,323 | 73,451 | 75,315 | 6,459 | 4 | |||||||||||||||
AB Minnesota | 3,431 | 12,005 | 13,555 | 1,881 | 2 | |||||||||||||||
AB New Jersey | 1,548 | 17,203 | 17,467 | 1,284 | 1 | |||||||||||||||
AB Ohio | 2,925 | 21,864 | 21,406 | 3,383 | 2 | |||||||||||||||
AB Pennsylvania | 343 | 14,104 | 14,090 | 357 | 1 | |||||||||||||||
AB Virginia | 8,033 | 84,466 | 88,483 | 4,016 | 5 | |||||||||||||||
NOTE C
Distribution Services Agreement
The Portfolios have adopted a Distribution Services Agreement (the “Agreement”) pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Portfolios pay distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Portfolios’ average daily net assets attributable to Class A shares and 1% of the Portfolios’ average daily net assets attributable to Class C shares. Payments under the Agreement in respect of Class A shares are currently limited to an annual rate of .25% of Class A shares’ average daily net assets. There are no distribution and servicing fees on the Advisor Class shares. The 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. Since the commencement of the Portfolios’ operations, the distributor has incurred expenses in excess of the distribution costs reimbursed by each Portfolio as follows:
Portfolio | Class C | |||
AB Arizona | $ | 2,295,944 | ||
AB Massachusetts | 4,181,487 | |||
AB Minnesota | 2,896,609 | |||
AB New Jersey | 3,849,414 | |||
AB Ohio | 4,094,944 | |||
AB Pennsylvania | 3,613,654 | |||
AB Virginia | 3,555,170 | |||
While such costs may be recovered from the Portfolios 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 share-
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NOTES TO FINANCIAL STATEMENTS (continued)
holder 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 the Portfolios’ shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments) for the year ended May 31, 2022, were as follows:
| Purchases | Sales | |||||||||||||||
Portfolio | Investments | Government Securities | Investments | Government Securities | ||||||||||||
AB Arizona | $ | 17,711,960 | $ | – 0 | – | $ | 8,162,880 | $ | – 0 | – | ||||||
AB Massachusetts | 48,819,893 | – 0 | – | 21,795,995 | – 0 | – | ||||||||||
AB Minnesota | 4,862,842 | – 0 | – | 6,317,941 | – 0 | – | ||||||||||
AB New Jersey | 14,352,078 | – 0 | – | 19,366,027 | – 0 | – | ||||||||||
AB Ohio | 20,295,017 | – 0 | – | 10,548,799 | – 0 | – | ||||||||||
AB Pennsylvania | 8,221,843 | – 0 | – | 11,060,344 | – 0 | – | ||||||||||
AB Virginia | 60,972,318 | – 0 | – | 28,481,784 | – 0 | – | ||||||||||
As of May 31, 2022, the cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| Gross Unrealized | Net Unrealized Appreciation/ (Depreciation) | |||||||||||||||
Portfolio | Cost | Appreciation | (Depreciation) | |||||||||||||
AB Arizona | $ | 118,659,164 | $ | 4,283,032 | $ | (4,801,254 | ) | $ | (518,222 | ) | ||||||
AB Massachusetts | 225,471,979 | 11,133,242 | (11,346,624 | ) | (213,382 | ) | ||||||||||
AB Minnesota | 50,391,295 | 2,446,778 | (1,876,544 | ) | 570,234 | |||||||||||
AB New Jersey | 64,826,818 | 3,554,780 | (2,024,218 | ) | 1,530,562 | |||||||||||
AB Ohio | 77,848,440 | 2,236,017 | (3,521,447 | ) | (1,285,430 | ) | ||||||||||
AB Pennsylvania | 59,265,218 | 2,570,504 | (2,141,159 | ) | 429,345 | |||||||||||
AB Virginia | 242,333,426 | 9,489,459 | (12,173,872 | ) | (2,684,413 | ) | ||||||||||
1. Derivative Financial Instruments
Each Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The principal type of derivative utilized by the Portfolios, as well as the methods in which they may be used are:
| • | Swaps |
Each Portfolio may enter into swaps to hedge its exposure to interest rates or credit risk. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or
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NOTES TO FINANCIAL STATEMENTS (continued)
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. In addition, collateral may be pledged or received by the Portfolios in accordance with the terms of the respective swaps to provide value and recourse to the Portfolios or their counterparties in the event of default, bankruptcy or insolvency by one of the parties to the swap.
Risks may arise as a result of the failure of the counterparty to the swap to comply with the terms of the swap. The loss incurred by the failure of a counterparty is generally limited to the net interim payment to be received by the Portfolio, and/or the termination value at the end of the contract. Therefore, the Portfolio considers the creditworthiness of each counterparty to a swap in evaluating potential counterparty risk. This risk is mitigated by having a netting arrangement between the Portfolio and the counterparty and by the posting of collateral by the counterparty to the Portfolio to cover the Portfolios’ exposure to the counterparty. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying securities. The Portfolio accrues for the interim payments on swaps on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swaps on the statement of assets and liabilities, where applicable. Once the interim payments are settled in cash, the net amount is recorded as realized gain/(loss) on swaps on the statement of operations, in addition to any realized gain/(loss) recorded upon the termination of swaps. Upfront premiums paid or received for swaps are recognized as cost or proceeds on the statement of assets and liabilities and are amortized on a straight line basis over the life of the contract. Amortized upfront premiums are included in net realized gain/(loss) from swaps on the statement of operations. Fluctuations in the value of swaps are recorded as a component of net change in unrealized appreciation/depreciation of swaps on the statement of operations.
Certain standardized swaps, including certain interest rate swaps and credit default swaps, are (or soon will be) subject to mandatory central clearing. Cleared swaps are transacted through futures commission merchants (“FCMs”) that are members of central clearinghouses, with the clearinghouse serving as central counterparty, similar to transactions in futures contracts. Centralized clearing will be required for additional categories of swaps on a phased-in basis based on requirements published by the Securities and Exchange Commission and Commodity Futures Trading Commission.
At the time the Portfolios enter into a centrally cleared swap, each Portfolio deposits and maintains as collateral an initial margin with the
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NOTES TO FINANCIAL STATEMENTS (continued)
broker, as required by the clearinghouse on which the transaction is effected. Such amount is shown as cash collateral due from broker on the statement of assets and liabilities. 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. Risks may arise from the potential inability of a counterparty to meet the terms of the contract. The credit/counterparty risk for centrally cleared swaps is generally less than non-centrally cleared swaps, since the clearinghouse, which is the issuer or counterparty to each centrally cleared swap, has robust risk mitigation standards, including the requirement to provide initial and variation margin. 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.
Interest Rate Swaps:
Each Portfolio is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. Because the Portfolios hold fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, the Portfolios may enter into interest rate swaps. Interest rate swaps are agreements between two parties to exchange cash flows based on a notional amount. The Portfolios may elect to pay a fixed rate and receive a floating rate, or, receive a fixed rate and pay a floating rate on a notional amount.
In addition, the Portfolios may also enter into interest rate swap transactions to preserve a return or spread on a particular investment or portion of its portfolio, or protecting against an increase in the price of securities the Portfolios anticipate purchasing at a later date. Interest rate swaps involve the exchange by a Portfolio with another party of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments) computed based on a contractually-based principal (or “notional”) amount. Interest rate swaps are entered into on a net basis (i.e., the two payment streams are netted out, with the Portfolios receiving or paying, as the case may be, only the net amount of the two payments).
During the year ended May 31, 2022, the Portfolios held interest rate swaps for hedging purposes.
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NOTES TO FINANCIAL STATEMENTS (continued)
Inflation (CPI) Swaps:
Inflation swap agreements are contracts in which one party agrees to pay the cumulative percentage increase in a price index (the Consumer Price Index with respect to CPI swaps) over the term of the swap (with some lag on the inflation index), and the other pays a compounded fixed rate. Inflation swaps may be used to protect the net asset value, or NAV, of a Portfolio against an unexpected change in the rate of inflation measured by an inflation index since the value of these agreements is expected to increase if there are unexpected inflation increases.
During the year ended May 31, 2022, the Portfolios held inflation (CPI) swaps for hedging purposes.
Credit Default Swaps:
Each Portfolio may enter into credit default swaps, including to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults by corporate and sovereign issuers held by the Portfolio, or to create exposure to corporate or sovereign issuers to which it is not otherwise exposed. The Portfolio may purchase credit protection (“Buy Contract”) or provide credit protection (“Sale Contract”) on the referenced obligation of the credit default swap. During the term of the swap, the Portfolio receives/(pays) fixed payments from/(to) the respective counterparty, calculated at the agreed upon rate applied to the notional amount. If the Portfolio is a buyer/(seller) of protection and a credit event occurs, as defined under the terms of the swap, the Portfolio will either (i) receive from the seller/(pay to the buyer) of protection an amount equal to the notional amount of the swap (the “Maximum Payout Amount”) and deliver/(take delivery of) the referenced obligation or (ii) receive/(pay) a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation. In certain circumstances Maximum Payout Amounts may be partially offset by recovery values of the respective referenced obligations, upfront premium received upon entering into the agreement, or net amounts received from settlement of buy protection credit default swaps entered into by the Portfolio for the same referenced obligations with the same counterparty.
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 of protection and no credit event occurs, it will lose the payments it made to its counterparty. If the Portfolio is a seller of protection 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 net loss to the Portfolio.
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NOTES TO FINANCIAL STATEMENTS (continued)
Implied credit spreads over U.S. Treasuries of comparable maturity utilized in determining the market value of credit default swaps on issuers as of period end are disclosed in the portfolio of investments. The implied spreads serve as an indicator of the current status of the payment/performance risk and typically reflect the likelihood of default by the issuer of the referenced obligation. The implied credit spread of a particular reference obligation also reflects the cost of buying/selling protection and may reflect upfront payments required to be made to enter into the agreement. Widening credit spreads typically represent a deterioration of the referenced obligation’s credit soundness and greater likelihood of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced obligation.
During the year ended May 31, 2022, the AB Arizona Portfolio and the AB Ohio Portfolio held credit default swaps for hedging purposes.
The Portfolios typically enter into International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to OTC counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolios typically may offset with the OTC counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination. In the event of a default by an OTC counterparty, the return of collateral with market value in excess of the Portfolios’ net liability, held by the defaulting party, may be delayed or denied.
The Portfolios’ ISDA Master Agreements may contain provisions for early termination of OTC derivative transactions in the event the net assets of the Portfolios decline below specific levels (“net asset contingent features”). If these levels are triggered, the Portfolios’ OTC counterparty has the right to terminate such transaction and require the Portfolios to pay or receive a settlement amount in connection with the terminated transaction. If OTC derivatives were held at period end, please refer to netting arrangements by the OTC counterparty tables below for additional details.
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NOTES TO FINANCIAL STATEMENTS (continued)
During the year ended May 31, 2022, the Portfolios had entered into the following derivatives:
| AB Arizona Portfolio | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Type | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Receivable/Payable for variation margin on centrally cleared swaps | $ | 2,343,241 | * | Receivable/Payable for variation margin on centrally cleared swaps | $ | 712,995 | * | ||||
Interest rate contracts | Unrealized appreciation on interest rate swaps |
| 152,157 |
| ||||||||
|
|
|
| |||||||||
Total | $ | 2,495,398 | $ | 712,995 | ||||||||
|
|
|
| |||||||||
| * | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. |
This amount reflects cumulative unrealized appreciation/(depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments.
Derivative Type | Location of | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Interest rate contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | $ | (716,773 | ) | $ | 1,104,055 | ||||
Credit contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | 40,514 | ||||||||
|
|
|
| |||||||
Total | $ | (676,259 | ) | $ | 1,104,055 | |||||
|
|
|
| |||||||
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NOTES TO FINANCIAL STATEMENTS (continued)
| AB Massachusetts Portfolio | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Type | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Receivable/Payable for variation margin on centrally cleared swaps | $ | 8,486,449 | * | Receivable/Payable for variation margin on centrally cleared swaps | $ | 2,016,375 | * | ||||
Interest rate contracts | Unrealized appreciation on interest rate swaps |
| 274,791 |
| ||||||||
|
|
|
| |||||||||
Total | $ | 8,761,240 | $ | 2,016,375 | ||||||||
|
|
|
| |||||||||
| * | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation/(depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
Derivative Type | Location of | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Interest rate contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | $ | (665,159 | ) | $ | 2,328,572 | ||||
|
|
|
| |||||||
Total | $ | (665,159 | ) | $ | 2,328,572 | |||||
|
|
|
| |||||||
| AB Minnesota Portfolio | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Type | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Receivable/Payable for variation margin on centrally cleared swaps | $ | 1,767,456 | * | Receivable/Payable for variation margin on centrally cleared swaps | $ | 534,180 | * | ||||
Interest rate contracts | Unrealized appreciation on interest rate swaps |
| 75,851 |
| ||||||||
|
|
|
| |||||||||
Total | $ | 1,843,307 | $ | 534,180 | ||||||||
|
|
|
| |||||||||
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NOTES TO FINANCIAL STATEMENTS (continued)
| * | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation/(depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
Derivative Type | Location of | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Interest rate contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | $ | (86,144 | ) | $ | 373,176 | ||||
|
|
|
| |||||||
Total | $ | (86,144 | ) | $ | 373,176 | |||||
|
|
|
| |||||||
| AB New Jersey Portfolio | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Type | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Receivable/Payable for variation margin on centrally cleared swaps | $ | 2,147,564 | * | Receivable/Payable for variation margin on centrally cleared swaps | $ | 533,040 | * | ||||
Interest rate contracts | Unrealized appreciation on interest rate swaps |
| 112,188 |
| ||||||||
|
|
|
| |||||||||
Total | $ | 2,259,752 | $ | 533,040 | ||||||||
|
|
|
| |||||||||
| * | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation/(depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
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NOTES TO FINANCIAL STATEMENTS (continued)
Derivative Type | Location of | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Interest rate contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | $ | (556,000 | ) | $ | 987,106 | ||||
|
|
|
| |||||||
Total | $ | (556,000 | ) | $ | 987,106 | |||||
|
|
|
| |||||||
| AB Ohio Portfolio | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Type | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Receivable/Payable for variation margin on centrally cleared swaps | $ | 1,386,061 | * | Receivable/Payable for variation margin on centrally cleared swaps | $ | 478,900 | * | ||||
Interest rate contracts | Unrealized appreciation on interest rate swaps |
| 106,737 |
| ||||||||
|
|
|
| |||||||||
Total | $ | 1,492,798 | $ | 478,900 | ||||||||
|
|
|
| |||||||||
| * | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation/(depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
Derivative Type | Location of | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Interest rate contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | $ | (214,346 | ) | $ | 608,171 | ||||
Credit contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | 50,876 | ||||||||
|
|
|
| |||||||
Total | $ | (163,470 | ) | $ | 608,171 | |||||
|
|
|
| |||||||
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NOTES TO FINANCIAL STATEMENTS (continued)
| AB Pennsylvania Portfolio | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Type | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Receivable/Payable for variation margin on centrally cleared swaps | $ | 1,427,790 | * | Receivable/Payable for variation margin on centrally cleared swaps | $ | 523,634 | * | ||||
Interest rate contracts | Unrealized appreciation on interest rate swaps |
| 103,558 |
| ||||||||
|
|
|
| |||||||||
Total | $ | 1,531,348 | $ | 523,634 | ||||||||
|
|
|
| |||||||||
| * | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation/(depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
Derivative Type | Location of | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Interest rate contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | $ | (193,491 | ) | $ | 455,597 | ||||
|
|
|
| |||||||
Total | $ | (193,491 | ) | $ | 455,597 | |||||
|
|
|
| |||||||
| AB Virginia Portfolio | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Type | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Receivable/Payable for variation margin on centrally cleared swaps | $ | 6,076,326 | * | Receivable/Payable for variation margin on centrally cleared swaps | $ | 1,985,908 | * | ||||
Interest rate contracts | Unrealized appreciation on interest rate swaps |
| 269,341 |
| ||||||||
|
|
|
| |||||||||
Total | $ | 6,345,667 | $ | 1,985,908 | ||||||||
|
|
|
| |||||||||
| * | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation/(depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
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NOTES TO FINANCIAL STATEMENTS (continued)
Derivative Type | Location of | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Interest rate contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | $ | (1,128,598 | ) | $ | 2,967,530 | ||||
|
|
|
| |||||||
Total | $ | (1,128,598 | ) | $ | 2,967,530 | |||||
|
|
|
| |||||||
The following tables represent the average monthly volume of the Portfolios’ derivative transactions during the year ended May 31, 2022:
AB Arizona Portfolio | ||||
Interest Rate Swaps: | ||||
Average notional amount | $ | 2,834,615 | ||
Centrally Cleared Interest Rate Swaps: | ||||
Average notional amount | $ | 10,929,615 | ||
Centrally Cleared Inflation Swaps: | ||||
Average notional amount | $ | 14,629,231 | ||
Centrally Cleared Credit Default Swaps: | ||||
Average notional amount of buy contracts | $ | 2,500,000 | (a) |
| (a) | Positions were open for four months during the year. |
AB Massachusetts Portfolio | ||||
Interest Rate Swaps: | ||||
Average notional amount | $ | 5,119,231 | ||
Centrally Cleared Interest Rate Swaps: | ||||
Average notional amount | $ | 46,988,462 | ||
Centrally Cleared Inflation Swaps: | ||||
Average notional amount | $ | 26,830,000 |
AB Minnesota Portfolio | ||||
Interest Rate Swaps: | ||||
Average notional amount | $ | 1,413,077 | ||
Centrally Cleared Interest Rate Swaps: | ||||
Average notional amount | $ | 11,758,462 | ||
Centrally Cleared Inflation Swaps: | ||||
Average notional amount | $ | 7,214,615 |
AB New Jersey Portfolio | ||||
Interest Rate Swaps: | ||||
Average notional amount | $ | 2,090,000 | ||
Centrally Cleared Interest Rate Swaps: | ||||
Average notional amount | $ | 17,345,385 | ||
Centrally Cleared Inflation Swaps: | ||||
Average notional amount | $ | 9,371,538 |
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NOTES TO FINANCIAL STATEMENTS (continued)
AB Ohio Portfolio | ||||
Interest Rate Swaps: | ||||
Average notional amount | $ | 1,988,462 | ||
Centrally Cleared Interest Rate Swaps: | ||||
Average notional amount | $ | 4,557,692 | ||
Centrally Cleared Inflation Swaps: | ||||
Average notional amount | $ | 9,316,923 | ||
Centrally Cleared Credit Default Swaps: | ||||
Average notional amount of buy contracts | $ | 1,410,000 | (a) |
| (a) | Positions were open for eight months during the year. |
AB Pennsylvania Portfolio | ||||
Interest Rate Swaps: | ||||
Average notional amount | $ | 1,929,231 | ||
Centrally Cleared Interest Rate Swaps: | ||||
Average notional amount | $ | 9,756,154 | ||
Centrally Cleared Inflation Swaps: | ||||
Average notional amount | $ | 8,976,923 |
AB Virginia Portfolio | ||||
Interest Rate Swaps: | ||||
Average notional amount | $ | 5,017,692 | ||
Centrally Cleared Interest Rate Swaps: | ||||
Average notional amount | $ | 39,146,154 | ||
Centrally Cleared Inflation Swaps: | ||||
Average notional amount | $ | 28,398,462 |
For financial reporting purposes, the Portfolios do not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
All OTC derivatives held at period end were subject to netting arrangements. The following tables present the Portfolios’ derivative assets and liabilities by OTC counterparty net of amounts available for offset under ISDA Master Agreements (“MA”) and net of the related collateral received/pledged by the Portfolios as of May 31, 2022. Exchange-traded derivatives and centrally cleared swaps are not subject to netting arrangements and as such are excluded from the tables.
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NOTES TO FINANCIAL STATEMENTS (continued)
| AB Arizona Portfolio | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to a MA | Derivatives Available for Offset | Cash Collateral Received* | Security Collateral Received* | Net Amount of Derivative Assets | |||||||||||||||
Citibank, N.A. | $ | 152,157 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 152,157 | |||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 152,157 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 152,157 | ^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
| AB Massachusetts Portfolio | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to a MA | Derivatives Available for Offset | Cash Collateral Received* | Security Collateral Received* | Net Amount of Derivative Assets | |||||||||||||||
Citibank, N.A. | $ | 274,791 | $ | – 0 | – | $ | – 0 | – | $ | (274,791 | ) | $ | – 0 | – | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 274,791 | $ | – 0 | – | $ | – 0 | – | $ | (274,791 | ) | $ | – 0 | –^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
| AB Minnesota Portfolio | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to a MA | Derivatives Available for Offset | Cash Collateral Received* | Security Collateral Received* | Net Amount of Derivative Assets | |||||||||||||||
Citibank, N.A. | $ | 75,851 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 75,851 | |||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 75,851 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 75,851 | ^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
| AB New Jersey Portfolio | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to a MA | Derivatives Available for Offset | Cash Collateral Received* | Security Collateral Received* | Net Amount of Derivative Assets | |||||||||||||||
Citibank, N.A. | $ | 112,188 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 112,188 | |||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 112,188 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 112,188 | ^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 149 | |
NOTES TO FINANCIAL STATEMENTS (continued)
| AB Ohio Portfolio | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to a MA | Derivatives Available for Offset | Cash Collateral Received* | Security Collateral Received* | Net Amount of Derivative Assets | |||||||||||||||
Citibank, N.A. | $ | 106,737 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 106,737 | |||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 106,737 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 106,737 | ^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
| AB Pennsylvania Portfolio | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to a MA | Derivatives Available for Offset | Cash Collateral Received* | Security Collateral Received* | Net Amount of Derivative Assets | |||||||||||||||
Citibank, N.A. | $ | 103,558 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 103,558 | |||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 103,558 | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | $ | 103,558 | ^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
| AB Virginia Portfolio | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to a MA | Derivatives Available for Offset | Cash Collateral Received* | Security Collateral Received* | Net Amount of Derivative Assets | |||||||||||||||
Citibank, N.A. | $ | 269,341 | $ | – 0 | – | $ | – 0 | – | $ | (247,601 | ) | $ | 21,740 | |||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 269,341 | $ | – 0 | – | $ | – 0 | – | $ | (247,601 | ) | $ | 21,740 | ^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
150 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE E
Shares of Beneficial Interest
Transactions in shares of beneficial interest for each Portfolio were as follows:
| AB Arizona Portfolio | ||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||
Shares sold | 1,031,395 | 1,182,992 | $ | 11,630,634 | $ | 13,402,778 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 123,384 | 137,963 | 1,374,056 | 1,559,065 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class C | 80,579 | 121,346 | 919,836 | 1,369,727 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (1,454,631 | ) | (1,402,880 | ) | (16,150,295 | ) | (15,869,460 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | (219,273 | ) | 39,421 | $ | (2,225,769 | ) | $ | 462,110 | ||||||||||||||||
| ||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||
Shares sold | 27,738 | 25,154 | $ | 287,703 | $ | 285,751 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 4,989 | 7,898 | 55,429 | 89,053 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (80,714 | ) | (121,495 | ) | (919,836 | ) | (1,369,727 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (33,566 | ) | (207,402 | ) | (372,441 | ) | (2,337,500 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (81,553 | ) | (295,845 | ) | $ | (949,145 | ) | $ | (3,332,423 | ) | ||||||||||||||
| ||||||||||||||||||||||||
| Advisor Class(a) |
| |||||||||||||||||||||||
Shares sold | 644,861 | 339,794 | $ | 7,076,879 | $ | 3,873,309 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 7,613 | 515 | 84,686 | 5,883 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (214,173 | ) | (2,650 | ) | (2,352,210 | ) | (30,263 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase | 438,301 | 337,659 | $ | 4,809,355 | $ | 3,848,929 | ||||||||||||||||||
| ||||||||||||||||||||||||
| (a) | Commenced distribution on March 25, 2021. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 151 | |
NOTES TO FINANCIAL STATEMENTS (continued)
| AB Massachusetts Portfolio | ||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||
Shares sold | 715,428 | 1,060,488 | $ | 8,121,035 | $ | 12,214,208 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 136,843 | 149,457 | 1,551,623 | 1,720,421 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class C | 578,414 | 608,011 | 6,732,344 | 6,973,602 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (2,078,977 | ) | (1,680,251 | ) | (22,922,007 | ) | (19,295,435 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | (648,292 | ) | 137,705 | $ | (6,517,005 | ) | $ | 1,612,796 | ||||||||||||||||
| ||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||
Shares sold | 103,640 | 108,187 | $ | 1,202,588 | $ | 1,242,530 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 10,196 | 22,896 | 115,391 | 262,863 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (579,425 | ) | (609,076 | ) | (6,732,344 | ) | (6,973,602 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (140,008 | ) | (140,218 | ) | (1,579,663 | ) | (1,606,766 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (605,597 | ) | (618,211 | ) | $ | (6,994,028 | ) | $ | (7,074,975 | ) | ||||||||||||||
| ||||||||||||||||||||||||
| Advisor Class |
| |||||||||||||||||||||||
Shares sold | 5,585,302 | 2,309,191 | $ | 61,547,399 | $ | 26,583,391 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 89,275 | 73,332 | 1,006,264 | 844,170 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (2,160,180 | ) | (1,202,464 | ) | (23,635,316 | ) | (13,803,765 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase | 3,514,397 | 1,180,059 | $ | 38,918,347 | $ | 13,623,796 | ||||||||||||||||||
| ||||||||||||||||||||||||
| AB Minnesota Portfolio | ||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||
Shares sold | 339,163 | 594,783 | $ | 3,483,262 | $ | 6,248,087 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 62,516 | 76,708 | 644,163 | 805,433 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class C | 115,685 | 73,507 | 1,218,083 | 768,324 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (859,538 | ) | (358,625 | ) | (8,760,182 | ) | (3,770,245 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | (342,174 | ) | 386,373 | $ | (3,414,674 | ) | $ | 4,051,599 | ||||||||||||||||
| ||||||||||||||||||||||||
152 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
| AB Minnesota Portfolio | ||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||
Shares sold | 67,581 | 74,068 | $ | 673,944 | $ | 778,331 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 3,780 | 6,612 | 38,935 | 69,473 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (115,568 | ) | (73,425 | ) | (1,218,083 | ) | (768,324 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (64,388 | ) | (65,359 | ) | (655,555 | ) | (688,099 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (108,595 | ) | (58,104 | ) | $ | (1,160,759 | ) | $ | (608,619 | ) | ||||||||||||||
| ||||||||||||||||||||||||
| AB New Jersey Portfolio | ||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||
Shares sold | 861,901 | 743,659 | $ | 8,053,075 | $ | 7,431,915 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 107,905 | 111,884 | 1,063,549 | 1,116,021 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class C | 183,316 | 252,998 | 1,856,557 | 2,497,704 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (1,406,532 | ) | (1,106,783 | ) | (13,724,951 | ) | (11,041,900 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | (253,410 | ) | 1,758 | $ | (2,751,770 | ) | $ | 3,740 | ||||||||||||||||
| ||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||
Shares sold | 15,564 | 22,408 | $ | 155,467 | $ | 222,961 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 4,571 | 10,237 | 45,115 | 102,011 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (183,297 | ) | (252,870 | ) | (1,856,557 | ) | (2,497,704 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (103,312 | ) | (81,761 | ) | (1,035,526 | ) | (820,189 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (266,474 | ) | (301,986 | ) | $ | (2,691,501 | ) | $ | (2,992,921 | ) | ||||||||||||||
| ||||||||||||||||||||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 153 | |
NOTES TO FINANCIAL STATEMENTS (continued)
| AB Ohio Portfolio | ||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||
Shares sold | 1,239,942 | 236,180 | $ | 11,842,936 | $ | 2,419,043 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 90,350 | 102,074 | 910,275 | 1,042,126 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class C | 186,060 | 148,189 | 1,922,379 | 1,501,198 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (731,594 | ) | (499,644 | ) | (7,324,040 | ) | (5,093,162 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | 784,758 | (13,201 | ) | $ | 7,351,550 | $ | (130,795 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||
Shares sold | 66,176 | 34,611 | $ | 678,728 | $ | 354,240 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 3,007 | 6,595 | 30,309 | 67,194 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (186,071 | ) | (148,276 | ) | (1,922,379 | ) | (1,501,198 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (71,774 | ) | (87,282 | ) | (719,791 | ) | (892,118 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (188,662 | ) | (194,352 | ) | $ | (1,933,133 | ) | $ | (1,971,882 | ) | ||||||||||||||
| ||||||||||||||||||||||||
| AB Pennsylvania Portfolio | ||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||
Shares sold | 406,122 | 407,156 | $ | 4,335,608 | $ | 4,384,015 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 98,234 | 102,153 | 1,041,677 | 1,098,065 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class C | 186,596 | 73,687 | 2,035,285 | 790,864 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (796,925 | ) | (1,028,507 | ) | (8,368,772 | ) | (11,031,574 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (105,973 | ) | (445,511 | ) | $ | (956,202 | ) | $ | (4,758,630 | ) | ||||||||||||||
| ||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||
Shares sold | 34,018 | 17,273 | $ | 367,822 | $ | 184,996 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 1,534 | 4,710 | 16,281 | 50,611 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (186,591 | ) | (73,645 | ) | (2,035,285 | ) | (790,864 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (30,565 | ) | (60,735 | ) | (320,016 | ) | (651,689 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (181,604 | ) | (112,397 | ) | $ | (1,971,198 | ) | $ | (1,206,946 | ) | ||||||||||||||
| ||||||||||||||||||||||||
154 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
| AB Virginia Portfolio | ||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Year Ended May 31, 2022 | Year Ended May 31, 2021 | Year Ended May 31, 2022 | Year Ended May 31, 2021 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||
Shares sold | 667,073 | 857,362 | $ | 7,626,364 | $ | 9,771,735 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 154,767 | 166,143 | 1,746,272 | 1,900,135 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class C | 342,082 | 691,764 | 3,949,679 | 7,874,256 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (1,300,252 | ) | (1,013,031 | ) | (14,423,095 | ) | (11,597,066 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | (136,330 | ) | 702,238 | $ | (1,100,780 | ) | $ | 7,949,060 | ||||||||||||||||
| ||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||
Shares sold | 191,112 | 136,948 | $ | 2,183,960 | $ | 1,564,725 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 8,680 | 16,818 | 97,749 | 191,570 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (342,959 | ) | (693,555 | ) | (3,949,679 | ) | (7,874,256 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (191,797 | ) | (183,341 | ) | (2,149,310 | ) | (2,095,958 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (334,964 | ) | (723,130 | ) | $ | (3,817,280 | ) | $ | (8,213,919 | ) | ||||||||||||||
| ||||||||||||||||||||||||
| Advisor Class |
| |||||||||||||||||||||||
Shares sold | 4,666,866 | 2,123,765 | $ | 51,483,796 | $ | 24,388,124 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 102,951 | 84,984 | 1,160,061 | 972,912 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (2,738,897 | ) | (805,040 | ) | (29,742,459 | ) | (9,201,271 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase | 2,030,920 | 1,403,709 | $ | 22,901,398 | $ | 16,159,765 | ||||||||||||||||||
| ||||||||||||||||||||||||
NOTE F
Risks Involved in Investing in the Portfolios
Market Risk—The value of the Portfolios’ assets will fluctuate as the bond market fluctuates. The value of the Portfolios’ investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market.
Credit Risk—An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the
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NOTES TO FINANCIAL STATEMENTS (continued)
possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Investments in fixed-income securities with lower ratings tend to have a higher probability that an issuer will default or fail to meet its payment obligations.
Municipal Market Risk—This is the risk that special factors may adversely affect the value of municipal securities and have a significant effect on the yield or value of the Portfolios’ investments in municipal securities. These factors include economic conditions, political or legislative changes, public health crises, uncertainties related to the tax status of municipal securities, or the rights of investors in these securities. To the extent that the Portfolios invest more of their assets in a particular state’s municipal securities, the Portfolios may be vulnerable to events adversely affecting that state, including economic, political and regulatory occurrences, court decisions, terrorism, public health crises (including the occurrence of a contagious disease or illness) and catastrophic natural disasters, such as hurricanes, fires, flooding or earthquakes. For example, the novel coronavirus (COVID-19) pandemic has significantly stressed the financial resources of many issuers of municipal securities, which could impair any such issuer’s ability to meet its financial obligations when due and adversely impact the value of its securities held by the Portfolios. As the full effects of the COVID-19 pandemic on state and local economies and on issuers of municipal securities are still uncertain, the financial difficulties of issuers of municipal securities may continue or worsen, adversely affecting the performance of the Portfolios. The Portfolios’ investments in certain municipal securities with principal and interest payments that are made from the revenues of a specific project or facility, and not general tax revenues, may have increased risks. Factors affecting the project or facility, such as local business or economic conditions, could have a significant effect on the project’s ability to make payments of principal and interest on these securities.
Congress has previously considered making changes to the municipal securities provisions of the Internal Revenue Code that could change the U.S. federal income tax treatment of certain types of municipal securities.
The Portfolios invest from time to time in the municipal securities of issuers in Puerto Rico or other U.S. territories and their governmental agencies and municipalities, which are exempt from federal, state, and, where applicable, local income taxes. These municipal securities may have more risks than those of other U.S. issuers of municipal securities. Puerto Rico continues to face a very challenging economic and fiscal environment, including as a result of the COVID-19 pandemic. If the general economic situation in Puerto Rico continues to persist or worsens, the volatility and
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NOTES TO FINANCIAL STATEMENTS (continued)
credit quality of Puerto Rican municipal securities could continue to be adversely affected, and the market for such securities may experience continued volatility.
Tax Risk—There is no guarantee that the income on the Portfolios’ municipal securities will be exempt from regular federal, and if applicable, state income taxes. From time to time, the U.S. Government and the U.S. Congress consider changes in federal tax law that could limit or eliminate the federal tax exemption for municipal bond income, which would in effect reduce the income received by shareholders from the Portfolios by increasing taxes on that income. In such event, the Portfolios’ NAV, could also decline as yields on municipal bonds, which are typically lower than those on taxable bonds, would be expected to increase to approximately the yield of comparable taxable bonds. Actions or anticipated actions affecting the tax exempt status of municipal bonds could also result in significant shareholder redemptions of portfolio shares as investors anticipate adverse effects on the Portfolios or seek higher yields to offset the potential loss of the tax deduction. As a result, the Portfolios would be required to maintain higher levels of cash to meet the redemptions, which would negatively affect the Portfolios’ yield.
Interest-Rate Risk—Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest rate risk is generally greater for fixed-income securities with longer maturities or durations. The Portfolios may be subject to greater risk of rising interest rates than would normally be the case due to the end of a recent period of historically low rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives.
Duration Risk—Duration is a measure that relates the expected price volatility of a fixed-income security to changes in interest rates. The duration of a fixed-income security may be shorter than or equal to full maturity of a fixed-income security. Fixed-income securities with longer durations have more risk and will decrease in price as interest rates rise.
Inflation Risk—This is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Portfolios’ assets can decline as can the value of the Portfolios’ distributions. This risk is significantly greater for fixed-income securities with longer maturities.
Illiquid Investments Risk—Illiquid investments risk exists when certain investments are or become difficult to purchase or sell. Difficulty in selling
| abfunds.com | AB MUNICIPAL INCOME FUND II | 157 | |
NOTES TO FINANCIAL STATEMENTS (continued)
such investments may result in sales at disadvantageous prices affecting the value of your investment in the Portfolios. Causes of illiquid investments risk may include low trading volumes, large positions and heavy redemptions of Portfolio shares. Illiquid investments risk may be higher in a rising interest rate environment, when the value and liquidity of fixed-income securities generally decline. Municipal securities may have more illiquid investments risk than other fixed-income securities because they trade less frequently and the market for municipal securities is generally smaller than many other markets.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolios. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolios.
LIBOR Transition and Associated Risk—The Portfolios may be exposed to debt securities, derivatives or other financial instruments that are tied to the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. In 2017, the United Kingdom Financial Conduct Authority (“FCA”), which regulates LIBOR, announced a desire to phase out the use of LIBOR by the end of 2021. The FCA and LIBOR’s administrator, ICE Benchmark Administration, have since announced that most LIBOR settings (which reflect LIBOR rates quoted in different currencies over various time periods) will no longer be published after the end of 2021 but that the most widely used U.S. dollar LIBOR settings will continue to be published until June 30, 2023. However, banks were strongly encouraged to cease entering into agreements with counterparties referencing LIBOR by the end of 2021. It is possible that a subset of LIBOR settings will be published after these dates on a “synthetic” basis, but any such publications would be considered non-representative of the underlying market. The U.S. Federal Reserve, based on the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee (comprised of major derivative market participants and their regulators), has begun publishing a Secured Overnight Funding Rate (referred to as SOFR), which is intended to replace U.S. dollar LIBOR. Proposals for alternative reference rates for other currencies have also been announced or have already begun publication. Markets are slowly developing in response to these new rates.
The elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates could have an adverse impact on the market for, or value of, any securities or payments linked to those reference rates, which may adversely affect
158 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
NOTES TO FINANCIAL STATEMENTS (continued)
the Portfolios’ performance and/or net asset value. Uncertainty and risk also remain regarding the willingness and ability of issuers and lenders to include revised provisions in new and existing contracts or instruments. Consequently, the transition away from LIBOR to other reference rates may lead to increased volatility and illiquidity in markets that are tied to LIBOR, fluctuations in values of LIBOR-related investments or investments in issuers that utilize LIBOR, increased difficulty in borrowing or refinancing and diminished effectiveness of hedging strategies, potentially adversely affecting the Portfolios’ performance. Furthermore, the risks associated with the expected discontinuation of LIBOR and transition may be exacerbated if the work necessary to effect an orderly transition to an alternative reference rate is not completed in a timely manner. The potential effects of a phase out of LIBOR on LIBOR-based investments are currently unknown.
Indemnification Risk—In the ordinary course of business, the Portfolios enter into contracts that contain a variety of indemnifications. The Portfolios’ maximum exposure under these arrangements is unknown. However, the Portfolios have not had prior claims or losses pursuant to these indemnification provisions and expect the risk of loss thereunder to be remote. Therefore, the Portfolios have not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolios are subject to management risk because they are an actively-managed investment funds. The Adviser will apply its investment techniques and risk analyses in making investment decisions, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolios, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolios did not utilize the Facility during the year ended May 31, 2022.
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NOTES TO FINANCIAL STATEMENTS (continued)
NOTE H
Distributions to Shareholders
The tax character of distributions paid during the fiscal period through May 31, 2022 and the tax years ended November 30, 2021 and May 31, 2021 were as follows:
| AB Arizona Portfolio | December 1, 2021 to May 31, 2022 | June 1, 2021 to November 30, 2021 | Year Ended May 31, 2021 | |||||||||
Distributions paid from: | ||||||||||||
Ordinary income | $ | – 0 | – | $ | 9,758 | $ | 82,798 | |||||
|
|
|
|
|
| |||||||
Total taxable distributions | – 0 | – | 9,758 | 82,798 | ||||||||
Tax exempt distributions | 1,398,207 | 1,310,750 | 2,798,867 | |||||||||
|
|
|
|
|
| |||||||
Total distributions paid | $ | 1,398,207 | $ | 1,320,508 | $ | 2,881,665 | ||||||
|
|
|
|
|
| |||||||
| AB Massachusetts Portfolio | December 1, 2021 to May 31, 2022 | June 1, 2021 to November 30, 2021 | Year Ended May 31, 2021 | |||||||||
Distributions paid from: | ||||||||||||
Ordinary income | $ | – 0 | – | $ | 109,938 | $ | 683,822 | |||||
|
|
|
|
|
| |||||||
Total taxable distributions | – 0 | – | 109,938 | 683,822 | ||||||||
Tax exempt distributions | 2,498,123 | 2,198,696 | 4,401,679 | |||||||||
|
|
|
|
|
| |||||||
Total distributions paid | $ | 2,498,123 | $ | 2,308,634 | $ | 5,085,501 | ||||||
|
|
|
|
|
| |||||||
| AB Minnesota Portfolio | December 1, 2021 to May 31, 2022 | June 1, 2021 to November 30, 2021 | Year Ended May 31, 2021 | |||||||||
Distributions paid from: | ||||||||||||
Ordinary income | $ | – 0 | – | $ | 22,566 | $ | 361,497 | |||||
|
|
|
|
|
| |||||||
Total taxable distributions | – 0 | – | 22,566 | 361,497 | ||||||||
Tax exempt distributions | 552,889 | 542,342 | 1,001,033 | |||||||||
|
|
|
|
|
| |||||||
Total distributions paid | $ | 552,889 | $ | 564,908 | $ | 1,362,530 | ||||||
|
|
|
|
|
| |||||||
| AB New Jersey Portfolio | December 1, 2021 to May 31, 2022 | June 1, 2021 to November 30, 2021 | Year Ended May 31, 2021 | |||||||||
Distributions paid from: | ||||||||||||
Ordinary income | $ | – 0 | – | $ | 46,195 | $ | 108,952 | |||||
|
|
|
|
|
| |||||||
Total taxable distributions | – 0 | – | 46,195 | 108,952 | ||||||||
Tax exempt distributions | 941,881 | 916,146 | 2,053,003 | |||||||||
|
|
|
|
|
| |||||||
Total distributions paid | $ | 941,881 | $ | 962,341 | $ | 2,161,955 | ||||||
|
|
|
|
|
| |||||||
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NOTES TO FINANCIAL STATEMENTS (continued)
| AB Ohio Portfolio | December 1, 2021 to May 31, 2022 | June 1, 2021 to November 30, 2021 | Year Ended May 31, 2021 | |||||||||
Distributions paid from: | ||||||||||||
Ordinary income | $ | – 0 | – | $ | 4,910 | $ | 65,076 | |||||
|
|
|
|
|
| |||||||
Total taxable distributions | – 0 | – | 4,910 | 65,076 | ||||||||
Tax exempt distributions | 771,144 | 813,299 | 1,800,455 | |||||||||
|
|
|
|
|
| |||||||
Total distributions paid | $ | 771,144 | $ | 818,209 | $ | 1,865,531 | ||||||
|
|
|
|
|
| |||||||
| AB Pennsylvania Portfolio | December 1, 2021 to May 31, 2022 | June 1, 2021 to November 30, 2021 | Year Ended May 31, 2021 | |||||||||
Distributions paid from: | ||||||||||||
Ordinary income | $ | – 0 | – | $ | 27,752 | $ | 54,880 | |||||
|
|
|
|
|
| |||||||
Total taxable distributions | – 0 | – | 27,752 | 54,880 | ||||||||
Tax exempt distributions | 810,503 | 790,184 | 1,789,448 | |||||||||
|
|
|
|
|
| |||||||
Total distributions paid | $ | 810,503 | $ | 817,936 | $ | 1,844,328 | ||||||
|
|
|
|
|
| |||||||
| AB Virginia Portfolio | December 1, 2021 to May 31, 2022 | June 1, 2021 to November 30, 2021 | Year Ended May 31, 2021 | |||||||||
Distributions paid from: | ||||||||||||
Ordinary income | $ | – 0 | – | $ | 56,233 | $ | 82,046 | |||||
|
|
|
|
|
| |||||||
Total taxable distributions | – 0 | – | 56,233 | 82,046 | ||||||||
Tax exempt distributions | 2,599,114 | 2,348,822 | 5,054,492 | |||||||||
|
|
|
|
|
| |||||||
Total distributions paid | $ | 2,599,114 | $ | 2,405,055 | $ | 5,136,538 | ||||||
|
|
|
|
|
| |||||||
As of November 30, 2021, the Portfolios’ most recent tax year end, the components of accumulated earnings/(deficit) on a tax basis were as follows:
| Portfolio | Undistributed Ordinary Income(a) | Undistributed Long-Term Gains | Accumulated Capital and Losses(b) | Unrealized Appreciation/ (Depreciation)(c) | Total Accumulated Earnings/ (Deficit)(d) | |||||||||||||||
AB Arizona | $ | 3,057 | $ | – 0 | – | $ | (1,629,409 | ) | $ | 8,279,693 | $ | 6,653,341 | ||||||||
AB Massachusetts | – 0 | – | – 0 | – | (445,793 | ) | 18,300,603 | 17,854,810 | ||||||||||||
AB Minnesota | 603 | – 0 | – | (98,611 | ) | 4,731,708 | 4,633,700 | |||||||||||||
AB New Jersey | – 0 | – | – 0 | – | (10,920 | ) | 6,249,029 | 6,238,109 | ||||||||||||
AB Ohio | 2,756 | – 0 | – | (2,161,772 | ) | 4,399,053 | 2,240,037 | |||||||||||||
AB Pennsylvania | – 0 | – | – 0 | – | (62,386 | ) | 5,879,434 | 5,817,048 | ||||||||||||
AB Virginia | – 0 | – | – 0 | – | (984,280 | ) | 17,487,269 | 16,502,989 | ||||||||||||
| (a) | These amounts represent 100% tax exempt income. |
| (b) | At November 30, 2021, AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio, and AB Virginia Portfolio had net |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 161 | |
NOTES TO FINANCIAL STATEMENTS (continued)
| capital loss carryforwards of $1,629,409, $445,793, $98,611, $10,920, $2,161,772, $62,386, and $984,280, respectively. During the tax period ended November 30, 2021, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB Ohio Portfolio, and AB Virginia Portfolio utilized $324,443, $229,054, $135,214, and $71,790, respectively, of capital loss carryforwards to offset current year net realized gains. |
| (c) | The differences between book-basis and tax-basis unrealized appreciation/depreciation are attributable primarily to the tax treatment of swaps. |
| (d) | The differences between book-basis and tax-basis components of accumulated earnings/(deficit) are attributable primarily to dividends payable. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses.
As of November 30, 2021, the Portfolios’ most recent tax year end, the Portfolios had net capital loss carryforwards as follows:
| Portfolio | Short-Term Amount | Long-Term Amount | ||||||
AB Arizona | $ | 1,629,409 | $ | – 0 | – | |||
AB Massachusetts | 445,793 | – 0 | – | |||||
AB Minnesota | 98,611 | – 0 | – | |||||
AB New Jersey | 10,920 | – 0 | – | |||||
AB Ohio | 2,035,753 | 126,019 | ||||||
AB Pennsylvania | 62,386 | – 0 | – | |||||
AB Virginia | 984,280 | – 0 | – | |||||
During the current fiscal year, the Portfolios had adjustments due to permanent differences. Permanent differences have no effect on net assets. The effect of such permanent differences on each Portfolio — primarily due to taxable overdistributions — is reflected as an adjustment to the components of capital as of May 31, 2022 as shown below:
| Portfolio | Increase (Decrease) to Additional Paid-In Capital | Increase (Decrease) to Distributable Earnings/(Accumulated Loss) | ||||||
AB Arizona | $ | – 0 | – | $ | – 0 | – | ||
AB Massachusetts | (7,681 | ) | 7,681 | |||||
AB Minnesota | – 0 | – | – 0 | – | ||||
AB New Jersey | (453 | ) | 453 | |||||
AB Ohio | – 0 | – | – 0 | – | ||||
AB Pennsylvania | (918 | ) | 918 | |||||
AB Virginia | (2,035 | ) | 2,035 | |||||
NOTE I
Recent Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2020-04, “Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on
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NOTES TO FINANCIAL STATEMENTS (continued)
Financial Reporting.” ASU 2020-04 provides optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates. ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, of applying ASU 2020-04.
NOTE J
Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolios’ financial statements through this date.
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FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Arizona Portfolio | ||||||||||||||||||||
| Class A | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 11.43 | $ 11.01 | $ 11.22 | $ 10.98 | $ 11.16 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .26 | .28 | .30 | .32 | .32 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.89 | ) | .43 | (.21 | ) | .24 | (.18 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.63 | ) | .71 | .09 | .56 | .14 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.26 | ) | (.29 | ) | (.30 | ) | (.32 | ) | (.32 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 10.54 | $ 11.43 | $ 11.01 | $ 11.22 | $ 10.98 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (5.63 | )% | 6.47 | % | .77 | % | 5.19 | % | 1.30 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $98,963 | $109,779 | $105,315 | $105,254 | $102,020 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .78 | % | .78 | % | .78 | % | .78 | % | .79 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | .99 | % | 1.02 | % | 1.00 | % | 1.01 | % | 1.00 | % | ||||||||||
Net investment income(b) | 2.34 | % | 2.47 | % | 2.69 | % | 2.90 | % | 2.92 | % | ||||||||||
Portfolio turnover rate | 7 | % | 6 | % | 13 | % | 12 | % | 12 | % | ||||||||||
See footnote summary on page 180-182.
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FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Arizona Portfolio | ||||||||||||||||||||
| Class C | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 11.41 | $ 10.99 | $ 11.20 | $ 10.96 | $ 11.14 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .18 | .20 | .22 | .24 | .24 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.89 | ) | .42 | (.22 | ) | .24 | (.18 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.71 | ) | .62 | 0 | .48 | .06 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.17 | ) | (.20 | ) | (.21 | ) | (.24 | ) | (.24 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 10.53 | $ 11.41 | $ 10.99 | $ 11.20 | $ 10.96 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.26 | )% | 5.68 | % | .02 | % | 4.41 | % | .55 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $4,585 | $5,901 | $8,935 | $12,211 | $16,254 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | 1.53 | % | 1.53 | % | 1.53 | % | 1.53 | % | 1.54 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.74 | % | 1.77 | % | 1.75 | % | 1.76 | % | 1.75 | % | ||||||||||
Net investment income(b) | 1.59 | % | 1.73 | % | 1.95 | % | 2.15 | % | 2.18 | % | ||||||||||
Portfolio turnover rate | 7 | % | 6 | % | 13 | % | 12 | % | 12 | % | ||||||||||
See footnote summary on page 180-182.
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FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Arizona Portfolio | ||||||||
| Advisor Class | ||||||||
| Year Ended May 31, 2022 | March 25 2021(e) to May 31, 2021 | |||||||
|
| |||||||
Net asset value, beginning of period | $ 11.43 | $ 11.30 | ||||||
|
| |||||||
Income From Investment Operations |
| |||||||
Net investment income(a)(b) | .29 | .06 | ||||||
Net realized and unrealized gain (loss) on investment transactions | (.89 | ) | .13 | |||||
|
| |||||||
Net increase (decrease) in net asset value from operations | (.60 | ) | .19 | |||||
|
| |||||||
Dividends from net investment income | (.29 | ) | (.06 | ) | ||||
|
| |||||||
Net asset value, end of period | $ 10.54 | $ 11.43 | ||||||
|
| |||||||
Total Return |
| |||||||
Total investment return based on net asset value(c) | (5.39 | )% | 1.66 | % | ||||
Ratios/Supplemental Data |
| |||||||
Net assets, end of period (000’s omitted) | $8,182 | $3,859 | ||||||
Ratio to average net assets of: |
| |||||||
Expenses, net of waivers/reimbursements(d) | .53 | % | .53 | %^ | ||||
Expenses, before waivers/reimbursements(d) | .74 | % | 1.00 | %^ | ||||
Net investment income(b) | 2.60 | % | 2.70 | %^ | ||||
Portfolio turnover rate | 7 | % | 6 | % | ||||
See footnote summary on page 180-182.
166 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Massachusetts Portfolio | ||||||||||||||||||||
| Class A | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 11.66 | $ 11.15 | $ 11.28 | $ 11.09 | $ 11.35 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .24 | .27 | .31 | .33 | .32 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (1.00 | ) | .52 | (.12 | ) | .19 | (.24 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.76 | ) | .79 | .19 | .52 | .08 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||
Dividends from net investment income | (.24 | ) | (.28 | ) | (.32 | ) | (.33 | ) | (.33 | ) | ||||||||||
Distributions from net realized gain on investment transactions | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.01 | ) | ||||||||||
|
| |||||||||||||||||||
Total dividends and distributions | (.24 | ) | (.28 | ) | (.32 | ) | (.33 | ) | (.34 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 10.66 | $ 11.66 | $ 11.15 | $ 11.28 | $ 11.09 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.63 | )% | 7.15 | % | 1.67 | % | 4.76 | % | .75 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $104,117 | $121,419 | $114,592 | $126,955 | $141,078 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .77 | % | .77 | % | .77 | % | .78 | % | .78 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | .87 | % | .90 | % | .90 | % | .90 | % | .89 | % | ||||||||||
Net investment income(b) | 2.08 | % | 2.36 | % | 2.76 | % | 2.95 | % | 2.89 | % | ||||||||||
Portfolio turnover rate | 11 | % | 4 | % | 13 | % | 12 | % | 19 | % | ||||||||||
See footnote summary on page 180-182.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 167 | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Massachusetts Portfolio | ||||||||||||||||||||
| Class C | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 11.64 | $ 11.13 | $ 11.26 | $ 11.07 | $ 11.33 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .15 | .19 | .23 | .24 | .24 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (1.00 | ) | .51 | (.13 | ) | .20 | (.24 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.85 | ) | .70 | .10 | .44 | .00 | (f) | |||||||||||||
|
| |||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||
Dividends from net investment income | (.15 | ) | (.19 | ) | (.23 | ) | (.25 | ) | (.25 | ) | ||||||||||
Distributions from net realized gain on investment transactions | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.01 | ) | ||||||||||
|
| |||||||||||||||||||
Total dividends and distributions | (.15 | ) | (.19 | ) | (.23 | ) | (.25 | ) | (.26 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 10.64 | $ 11.64 | $ 11.13 | $ 11.26 | $ 11.07 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (7.35 | )% | 6.36 | % | .91 | % | 3.99 | % | (.01 | )% | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $8,904 | $16,789 | $22,940 | $29,381 | $36,735 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | 1.52 | % | 1.52 | % | 1.52 | % | 1.53 | % | 1.53 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.62 | % | 1.65 | % | 1.65 | % | 1.65 | % | 1.64 | % | ||||||||||
Net investment income(b) | 1.32 | % | 1.62 | % | 2.02 | % | 2.20 | % | 2.14 | % | ||||||||||
Portfolio turnover rate | 11 | % | 4 | % | 13 | % | 12 | % | 19 | % | ||||||||||
See footnote summary on page 180-182.
168 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Massachusetts Portfolio | ||||||||||||||||||||
| Advisor Class | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 11.66 | $ 11.15 | $ 11.27 | $ 11.08 | $ 11.34 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .27 | .30 | .34 | .35 | .35 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (1.00 | ) | .52 | (.11 | ) | .20 | (.24 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.73 | ) | .82 | .23 | .55 | .11 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||
Dividends from net investment income | (.27 | ) | (.31 | ) | (.35 | ) | (.36 | ) | (.36 | ) | ||||||||||
Distributions from net realized gain on investment transactions | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.01 | ) | ||||||||||
|
| |||||||||||||||||||
Total dividends and distributions | (.27 | ) | (.31 | ) | (.35 | ) | (.36 | ) | (.37 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 10.66 | $ 11.66 | $ 11.15 | $ 11.27 | $ 11.08 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.39 | )% | 7.42 | % | 2.01 | % | 5.03 | % | 1.00 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $109,141 | $78,396 | $61,825 | $57,879 | $50,825 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .52 | % | .52 | % | .52 | % | .53 | % | .54 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | .62 | % | .65 | % | .65 | % | .65 | % | .64 | % | ||||||||||
Net investment income(b) | 2.34 | % | 2.61 | % | 3.00 | % | 3.20 | % | 3.14 | % | ||||||||||
Portfolio turnover rate | 11 | % | 4 | % | 13 | % | 12 | % | 19 | % | ||||||||||
See footnote summary on page 180-182.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 169 | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Minnesota Portfolio | ||||||||||||||||||||
| Class A | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 10.56 | $ 10.32 | $ 10.33 | $ 10.11 | $ 10.33 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .21 | .22 | .25 | .28 | .28 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.82 | ) | .28 | .01 | (g) | .22 | (.21 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.61 | ) | .50 | .26 | .50 | .07 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||
Dividends from net investment income | (.21 | ) | (.26 | ) | (.27 | ) | (.28 | ) | (.28 | ) | ||||||||||
Distributions from net realized gain on investment transactions | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.01 | ) | ||||||||||
|
| |||||||||||||||||||
Total dividends and distributions | (.21 | ) | (.26 | ) | (.27 | ) | (.28 | ) | (.29 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 9.74 | $ 10.56 | $ 10.32 | $ 10.33 | $ 10.11 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (5.85 | )% | 4.87 | % | 2.51 | % | 5.01 | % | .69 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $47,331 | $54,933 | $49,723 | $51,638 | $60,997 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .85 | % | .85 | % | .85 | % | .87 | % | .86 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.10 | % | 1.22 | % | 1.26 | % | 1.27 | % | 1.17 | % | ||||||||||
Net investment income(b) | 2.01 | % | 2.07 | % | 2.44 | % | 2.73 | % | 2.77 | % | ||||||||||
Portfolio turnover rate | 9 | % | 5 | % | 10 | % | 14 | % | 16 | % | ||||||||||
See footnote summary on page 180-182.
170 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Minnesota Portfolio | ||||||||||||||||||||
| Class C | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 10.57 | $ 10.33 | $ 10.35 | $ 10.12 | $ 10.34 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .13 | .14 | .18 | .20 | .21 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.82 | ) | .28 | (.01 | ) | .23 | (.22 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.69 | ) | .42 | .17 | .43 | (.01 | ) | |||||||||||||
|
| |||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||
Dividends from net investment income | (.13 | ) | (.18 | ) | (.19 | ) | (.20 | ) | (.20 | ) | ||||||||||
Distributions from net realized gain on investment transactions | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.01 | ) | ||||||||||
|
| |||||||||||||||||||
Total dividends and distributions | (.13 | ) | (.18 | ) | (.19 | ) | (.20 | ) | (.21 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 9.75 | $ 10.57 | $ 10.33 | $ 10.35 | $ 10.12 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.56 | )% | 4.08 | % | 1.64 | % | 4.32 | % | (.06 | )% | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $3,018 | $4,420 | $4,922 | $6,226 | $8,164 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | 1.60 | % | 1.60 | % | 1.60 | % | 1.62 | % | 1.61 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.86 | % | 1.97 | % | 2.02 | % | 2.02 | % | 1.92 | % | ||||||||||
Net investment income(b) | 1.25 | % | 1.31 | % | 1.69 | % | 1.98 | % | 2.02 | % | ||||||||||
Portfolio turnover rate | 9 | % | 5 | % | 10 | % | 14 | % | 16 | % | ||||||||||
See footnote summary on page 180-182.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 171 | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB New Jersey Portfolio | ||||||||||||||||||||
| Class A | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 10.13 | $ 9.59 | $ 9.84 | $ 9.63 | $ 9.78 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .27 | .28 | .30 | .31 | .31 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.84 | ) | .55 | (.25 | ) | .21 | (.15 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.57 | ) | .83 | .05 | .52 | .16 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.27 | ) | (.29 | ) | (.30 | ) | (.31 | ) | (.31 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 9.29 | $ 10.13 | $ 9.59 | $ 9.84 | $ 9.63 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (5.71 | )% | 8.74 | % | .50 | % | 5.53 | % | 1.65 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $62,000 | $70,145 | $66,446 | $79,995 | $93,552 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .82 | % | .82 | % | .84 | % | .84 | % | .83 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.15 | % | 1.14 | % | 1.12 | % | 1.07 | % | 1.03 | % | ||||||||||
Net investment income(b) | 2.70 | % | 2.78 | % | 3.09 | % | 3.23 | % | 3.18 | % | ||||||||||
Portfolio turnover rate | 21 | % | 22 | % | 10 | % | 8 | % | 26 | % | ||||||||||
See footnote summary on page 180-182.
172 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB New Jersey Portfolio | ||||||||||||||||||||
| Class C | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 10.13 | $ 9.60 | $ 9.85 | $ 9.64 | $ 9.79 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .19 | .20 | .23 | .24 | .24 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.82 | ) | .54 | (.25 | ) | .21 | (.15 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.63 | ) | .74 | (.02 | ) | .45 | .09 | |||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.20 | ) | (.21 | ) | (.23 | ) | (.24 | ) | (.24 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 9.30 | $ 10.13 | $ 9.60 | $ 9.85 | $ 9.64 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.33 | )% | 7.81 | % | (.25 | )% | 4.74 | % | .89 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $2,357 | $5,269 | $7,891 | $10,244 | $14,007 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | 1.57 | % | 1.57 | % | 1.59 | % | 1.59 | % | 1.58 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.89 | % | 1.89 | % | 1.87 | % | 1.82 | % | 1.77 | % | ||||||||||
Net investment income(b) | 1.92 | % | 2.05 | % | 2.34 | % | 2.48 | % | 2.42 | % | ||||||||||
Portfolio turnover rate | 21 | % | 22 | % | 10 | % | 8 | % | 26 | % | ||||||||||
See footnote summary on page 180-182.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 173 | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Ohio Portfolio | ||||||||||||||||||||
| Class A | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 10.34 | $ 9.88 | $ 10.01 | $ 9.83 | $ 10.05 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .23 | .26 | .28 | .28 | .28 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.84 | ) | .46 | (.13 | ) | .19 | (.22 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.61 | ) | .72 | .15 | .47 | .06 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.23 | ) | (.26 | ) | (.28 | ) | (.29 | ) | (.28 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 9.50 | $ 10.34 | $ 9.88 | $ 10.01 | $ 9.83 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.04 | )% | 7.40 | % | 1.45 | % | 4.82 | % | .58 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $71,345 | $69,533 | $66,573 | $75,542 | $79,767 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .80 | % | .80 | % | .81 | % | .81 | % | .80 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.15 | % | 1.16 | % | 1.13 | % | 1.11 | % | 1.07 | % | ||||||||||
Net investment income(b) | 2.32 | % | 2.52 | % | 2.78 | % | 2.90 | % | 2.81 | % | ||||||||||
Portfolio turnover rate | 15 | % | 17 | % | 19 | % | 8 | % | 12 | % | ||||||||||
See footnote summary on page 180-182.
174 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Ohio Portfolio | ||||||||||||||||||||
| Class C | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 10.34 | $ 9.88 | $10.01 | $ 9.83 | $ 10.04 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .16 | .18 | .20 | .21 | .20 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.86 | ) | .47 | (.13 | ) | .18 | (.21 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.70 | ) | .65 | .07 | .39 | (.01 | ) | |||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.15 | ) | (.19 | ) | (.20 | ) | (.21 | ) | (.20 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 9.49 | $10.34 | $ 9.88 | $10.01 | $ 9.83 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.85 | )% | 6.60 | % | .70 | % | 4.04 | % | (.07 | )% | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $1,870 | $3,986 | $5,728 | $8,040 | $11,967 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | 1.55 | % | 1.55 | % | 1.56 | % | 1.56 | % | 1.55 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.90 | % | 1.91 | % | 1.88 | % | 1.86 | % | 1.82 | % | ||||||||||
Net investment income(b) | 1.55 | % | 1.78 | % | 2.03 | % | 2.15 | % | 2.06 | % | ||||||||||
Portfolio turnover rate | 15 | % | 17 | % | 19 | % | 8 | % | 12 | % | ||||||||||
See footnote summary on page 180-182.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 175 | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Pennsylvania Portfolio | ||||||||||||||||||||
| Class A | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 10.90 | $ 10.45 | $ 10.55 | $ 10.35 | $ 10.54 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .26 | .28 | .31 | .32 | .30 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.93 | ) | .46 | (.11 | ) | .20 | (.19 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.67 | ) | .74 | .20 | .52 | .11 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.27 | ) | (.29 | ) | (.30 | ) | (.32 | ) | (.30 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 9.96 | $ 10.90 | $ 10.45 | $ 10.55 | $ 10.35 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.31 | )% | 7.15 | % | 1.95 | % | 5.10 | % | 1.10 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $57,968 | $64,592 | $66,575 | $74,496 | $80,666 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .85 | % | .85 | % | .85 | % | .86 | % | .86 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.18 | % | 1.19 | % | 1.14 | % | 1.12 | % | 1.09 | % | ||||||||||
Net investment income(b) | 2.46 | % | 2.64 | % | 2.91 | % | 3.07 | % | 2.91 | % | ||||||||||
Portfolio turnover rate | 13 | % | 12 | % | 11 | % | 9 | % | 38 | % | ||||||||||
See footnote summary on page 180-182.
176 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Pennsylvania Portfolio | ||||||||||||||||||||
| Class C | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 10.91 | $10.45 | $ 10.56 | $ 10.36 | $10.55 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .18 | .20 | .23 | .24 | .23 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.95 | ) | .47 | (.12 | ) | .20 | (.19 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.77 | ) | .67 | .11 | .44 | .04 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.18 | ) | (.21 | ) | (.22 | ) | (.24 | ) | (.23 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 9.96 | $10.91 | $ 10.45 | $ 10.56 | $10.36 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (7.11 | )% | 6.45 | % | 1.09 | % | 4.31 | % | .35 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $1,056 | $3,136 | $4,181 | $6,712 | $8,686 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | 1.60 | % | 1.60 | % | 1.60 | % | 1.61 | % | 1.61 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.93 | % | 1.94 | % | 1.89 | % | 1.87 | % | 1.84 | % | ||||||||||
Net investment income(b) | 1.70 | % | 1.89 | % | 2.16 | % | 2.31 | % | 2.16 | % | ||||||||||
Portfolio turnover rate | 13 | % | 12 | % | 11 | % | 9 | % | 38 | % | ||||||||||
See footnote summary on page 180-182.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 177 | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Virginia Portfolio | ||||||||||||||||||||
| Class A | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 11.61 | $ 11.09 | $ 11.19 | $ 10.99 | $ 11.19 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .23 | .26 | .29 | .32 | .32 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.99 | ) | .52 | (.10 | ) | .20 | (.20 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.76 | ) | .78 | .19 | .52 | .12 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.23 | ) | (.26 | ) | (.29 | ) | (.32 | ) | (.32 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 10.62 | $ 11.61 | $ 11.09 | $ 11.19 | $ 10.99 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.64 | )% | 7.10 | % | 1.71 | % | 4.80 | % | 1.10 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $133,626 | $147,660 | $133,346 | $127,353 | $139,827 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .80 | % | .80 | % | .80 | % | .81 | % | .81 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | .86 | % | .89 | % | .90 | % | .90 | % | .89 | % | ||||||||||
Net investment income(b) | 2.04 | % | 2.27 | % | 2.62 | % | 2.89 | % | 2.85 | % | ||||||||||
Portfolio turnover rate | 13 | % | 9 | % | 16 | % | 6 | % | 18 | % | ||||||||||
See footnote summary on page 180-182.
178 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Virginia Portfolio | ||||||||||||||||||||
| Class C | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 11.58 | $ 11.07 | $ 11.16 | $ 10.96 | $ 11.16 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .15 | .17 | .21 | .23 | .23 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (1.00 | ) | .51 | (.09 | ) | .21 | (.19 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.85 | ) | .68 | .12 | .44 | .04 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.14 | ) | (.17 | ) | (.21 | ) | (.24 | ) | (.24 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 10.59 | $ 11.58 | $ 11.07 | $ 11.16 | $ 10.96 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (7.37 | )% | 6.22 | % | 1.04 | % | 4.04 | % | .35 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $8,452 | $13,118 | $20,540 | $27,759 | $35,435 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | 1.55 | % | 1.55 | % | 1.55 | % | 1.56 | % | 1.56 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | 1.61 | % | 1.64 | % | 1.65 | % | 1.66 | % | 1.65 | % | ||||||||||
Net investment income(b) | 1.29 | % | 1.53 | % | 1.89 | % | 2.15 | % | 2.11 | % | ||||||||||
Portfolio turnover rate | 13 | % | 9 | % | 16 | % | 6 | % | 18 | % | ||||||||||
See footnote summary on page 180-182.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 179 | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| AB Virginia Portfolio | ||||||||||||||||||||
| Advisor Class | ||||||||||||||||||||
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
| |||||||||||||||||||
Net asset value, beginning of period | $ 11.61 | $ 11.10 | $ 11.20 | $ 10.99 | $ 11.19 | |||||||||||||||
|
| |||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net investment income(a)(b) | .26 | .29 | .32 | .34 | .34 | |||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.99 | ) | .51 | (.10 | ) | .22 | (.19 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) in net asset value from operations | (.73 | ) | .80 | .22 | .56 | .15 | ||||||||||||||
|
| |||||||||||||||||||
Less: Dividends | ||||||||||||||||||||
Dividends from net investment income | (.26 | ) | (.29 | ) | (.32 | ) | (.35 | ) | (.35 | ) | ||||||||||
|
| |||||||||||||||||||
Net asset value, end of period | $ 10.62 | $ 11.61 | $ 11.10 | $ 11.20 | $ 10.99 | |||||||||||||||
|
| |||||||||||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net asset value(c) | (6.41 | )% | 7.27 | % | 1.96 | % | 5.16 | % | 1.35 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000’s omitted) | $90,811 | $75,692 | $56,772 | $55,678 | $41,188 | |||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses, net of waivers/reimbursements(d) | .55 | % | .55 | % | .55 | % | .56 | % | .56 | % | ||||||||||
Expenses, before waivers/reimbursements(d) | .61 | % | .64 | % | .65 | % | .65 | % | .64 | % | ||||||||||
Net investment income(b) | 2.30 | % | 2.51 | % | 2.87 | % | 3.14 | % | 3.10 | % | ||||||||||
Portfolio turnover rate. | 13 | % | 9 | % | 16 | % | 6 | % | 18 | % | ||||||||||
| (a) | Based on average shares outstanding. |
| (b) | Net of expenses waived/reimbursed by the Adviser. |
| (c) | Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Total investment return calculated for a period of less than one year is not annualized. |
180 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| (d) | The expense ratios presented below exclude interest/bank overdraft expense: |
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
AB Arizona Portfolio | ||||||||||||||||||||
Class A |
| |||||||||||||||||||
Net of waivers/reimbursements | .78 | % | .78 | % | .78 | % | .78 | % | .78 | % | ||||||||||
Before waivers/reimbursements | .99 | % | 1.02 | % | 1.00 | % | 1.00 | % | .99 | % | ||||||||||
Class C |
| |||||||||||||||||||
Net of waivers/reimbursements | 1.53 | % | 1.53 | % | 1.53 | % | 1.53 | % | 1.53 | % | ||||||||||
Before waivers/reimbursements | 1.74 | % | 1.77 | % | 1.75 | % | 1.75 | % | 1.74 | % | ||||||||||
Advisor Class |
| |||||||||||||||||||
Net of waivers/reimbursements | .53 | % | .53 | %^ | N/A | N/A | N/A | |||||||||||||
Before waivers/reimbursements | .74 | % | 1.00 | %^ | N/A | N/A | N/A | |||||||||||||
AB Massachusetts Portfolio | ||||||||||||||||||||
Class A |
| |||||||||||||||||||
Net of waivers/reimbursements | .77 | % | .77 | % | .77 | % | .77 | % | .77 | % | ||||||||||
Before waivers/reimbursements | .87 | % | .90 | % | .90 | % | .89 | % | .88 | % | ||||||||||
Class C |
| |||||||||||||||||||
Net of waivers/reimbursements | 1.52 | % | 1.52 | % | 1.52 | % | 1.52 | % | 1.52 | % | ||||||||||
Before waivers/reimbursements | 1.62 | % | 1.65 | % | 1.65 | % | 1.64 | % | 1.63 | % | ||||||||||
Advisor Class |
| |||||||||||||||||||
Net of waivers/reimbursements | .52 | % | .52 | % | .52 | % | .52 | % | .52 | % | ||||||||||
Before waivers/reimbursements | .62 | % | .65 | % | .65 | % | .64 | % | .63 | % | ||||||||||
AB Minnesota Portfolio | ||||||||||||||||||||
Class A |
| |||||||||||||||||||
Net of waivers/reimbursements | .85 | % | .85 | % | .85 | % | .85 | % | .85 | % | ||||||||||
Before waivers/reimbursements | 1.10 | % | 1.22 | % | 1.26 | % | 1.26 | % | 1.16 | % | ||||||||||
Class C |
| |||||||||||||||||||
Net of waivers/reimbursements | 1.60 | % | 1.60 | % | 1.60 | % | 1.60 | % | 1.60 | % | ||||||||||
Before waivers/reimbursements | 1.86 | % | 1.97 | % | 2.02 | % | 2.01 | % | 1.91 | % | ||||||||||
AB New Jersey Portfolio | ||||||||||||||||||||
Class A |
| |||||||||||||||||||
Net of waivers/reimbursements | .82 | % | .82 | % | .82 | % | .82 | % | .82 | % | ||||||||||
Before waivers/reimbursements | 1.15 | % | 1.14 | % | 1.10 | % | 1.05 | % | 1.02 | % | ||||||||||
Class C |
| |||||||||||||||||||
Net of waivers/reimbursements | 1.57 | % | 1.57 | % | 1.57 | % | 1.57 | % | 1.57 | % | ||||||||||
Before waivers/reimbursements | 1.89 | % | 1.89 | % | 1.85 | % | 1.80 | % | 1.77 | % | ||||||||||
AB Ohio Portfolio | ||||||||||||||||||||
Class A |
| |||||||||||||||||||
Net of waivers/reimbursements | .80 | % | .80 | % | .80 | % | .80 | % | .80 | % | ||||||||||
Before waivers/reimbursements | 1.15 | % | 1.16 | % | 1.12 | % | 1.10 | % | 1.06 | % | ||||||||||
Class C |
| |||||||||||||||||||
Net of waivers/reimbursements | 1.55 | % | 1.55 | % | 1.55 | % | 1.55 | % | 1.55 | % | ||||||||||
Before waivers/reimbursements | 1.90 | % | 1.91 | % | 1.87 | % | 1.85 | % | 1.82 | % | ||||||||||
AB Pennsylvania Portfolio | ||||||||||||||||||||
Class A |
| |||||||||||||||||||
Net of waivers/reimbursements | .85 | % | .85 | % | .85 | % | .85 | % | .85 | % | ||||||||||
Before waivers/reimbursements | 1.18 | % | 1.19 | % | 1.14 | % | 1.11 | % | 1.08 | % | ||||||||||
Class C |
| |||||||||||||||||||
Net of waivers/reimbursements | 1.60 | % | 1.60 | % | 1.60 | % | 1.60 | % | 1.60 | % | ||||||||||
Before waivers/reimbursements | 1.93 | % | 1.94 | % | 1.89 | % | 1.86 | % | 1.83 | % | ||||||||||
| abfunds.com | AB MUNICIPAL INCOME FUND II | 181 | |
FINANCIAL HIGHLIGHTS (continued)
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
| Year Ended May 31, | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
AB Virginia Portfolio | ||||||||||||||||||||
Class A |
| |||||||||||||||||||
Net of waivers/reimbursements | .80 | % | .80 | % | .80 | % | .80 | % | .80 | % | ||||||||||
Before waivers/reimbursements | .86 | % | .89 | % | .90 | % | .90 | % | .88 | % | ||||||||||
Class C |
| |||||||||||||||||||
Net of waivers/reimbursements | 1.55 | % | 1.55 | % | 1.55 | % | 1.55 | % | 1.55 | % | ||||||||||
Before waivers/reimbursements | 1.61 | % | 1.64 | % | 1.65 | % | 1.65 | % | 1.64 | % | ||||||||||
Advisor Class |
| |||||||||||||||||||
Net of waivers/reimbursements | .55 | % | .55 | % | .55 | % | .55 | % | .55 | % | ||||||||||
Before waivers/reimbursements | .61 | % | .64 | % | .65 | % | .65 | % | .63 | % | ||||||||||
| (e) | Commencement of distributions. |
| (f) | Amount is less than $.005. |
| (g) | Due to timing of sales and repurchase of capital shares, the net realized and unrealized gain (loss) per share is not in accordance with the Portfolio’s change in net realized and unrealized gain (loss) on investment transactions for the period. |
| ^ | Annualized. |
See notes to financial statements.
182 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of
AB Municipal Income Fund II:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of AB Municipal Income Fund II (the “Fund”) (comprising the AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio (collectively referred to as the “Portfolios”)), including the portfolios of investments, as of May 31, 2022, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Portfolios comprising AB Municipal Income Fund II at May 31, 2022, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on each of the Portfolios’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
| abfunds.com | AB MUNICIPAL INCOME FUND II | 183 | |
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM (continued)
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2022, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
July 27, 2022
184 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
BOARD OF DIRECTORS
Marshall C. Turner, Jr.,(1) Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and Chief Executive Officer | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Garry L. Moody(1) |
OFFICERS
Terrance T. Hults,(2) Vice President Matthew J. Norton,(2) Vice President Andrew D. Potter,(2) Vice President Emilie D. Wrapp, Secretary | Michael B. Reyes, Senior Vice President Joseph J. Mantineo, Treasurer and Chief Financial Officer Phyllis J. Clarke, Controller Vincent S. Noto, Chief Compliance Officer |
Custodian and Accounting Agent State Street Bank and Trust Company State Street Corporation CCB/5 1 Iron Street Boston, MA 02210
Principal Underwriter AllianceBernstein Investments, Inc.
Legal Counsel Seward & Kissel LLP | Independent Registered Public Accounting Firm Ernst & Young LLP
Transfer Agent AllianceBernstein Investor P.O. Box 786003 Toll-Free (800) 221-5672 |
| 1 | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| 2 | The day-to-day management of, and investment decisions for, the Fund’s portfolios are made by the Adviser’s Municipal Bond Investment Team. Messrs. Hults, Norton and Potter are the investment professionals with the most significant responsibility for the day-to-day management of the Fund’s portfolios. |
| abfunds.com | AB MUNICIPAL INCOME FUND II | 185 | |
MANAGEMENT OF THE FUND
Board of Trustees Information
The business and affairs of the Fund are managed under the direction of the Board of Trustees. Certain information concerning the Fund’s Trustees is set forth below.
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY TRUSTEE | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY TRUSTEE | |||||
| INTERESTED TRUSTEE | ||||||||
Onur Erzan,# 46 (2021) | Senior Vice President of AllianceBernstein L.P. (the “Adviser”), Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. Erzan is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in 2021, he spent over 19 years with McKinsey, most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, Erzan co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics and digital assets and capabilities) globally. | 73 | None | |||||
186 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
MANAGEMENT OF THE FUND (continued)
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY TRUSTEE | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY TRUSTEE | |||||
| INDEPENDENT TRUSTEE | ||||||||
Marshall C. Turner, Jr.,## Chairman of the Board 80 (2005) | Private Investor since prior to 2017. Former Chairman and CEO of Dupont Photomasks, Inc. (components of semi-conductor manufacturing). He was a Director of Xilinx, Inc. (programmable logic semiconductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. He has extensive operating leadership, and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the boards of two education and science-related non-profit organizations. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has been Chairman of the AB Funds since January 2014, and the Chairman of the Independent Directors Committees of such AB Funds since February 2014. | 73 | None | |||||
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MANAGEMENT OF THE FUND (continued)
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY TRUSTEE | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY TRUSTEE | |||||
INDEPENDENT TRUSTEE (continued) | ||||||||
Jorge A. Bermudez,## 71 (2020) | Private Investor since prior to 2017. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008, Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007, and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2018) of the Texas A&M Foundation Board of Trustees (Trustee since 2013) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016. He has served as director or trustee of the AB Funds since January 2020. | 73 | Moody’s Corporation since April 2011 | |||||
Michael J. Downey,## 78 (2005) | Private Investor since prior to 2017. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) since prior to 2017 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | 73 | None | |||||
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MANAGEMENT OF THE FUND (continued)
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY TRUSTEE | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY TRUSTEE | |||||
INDEPENDENT TRUSTEE (continued) | ||||||||
Nancy P. Jacklin,## 74 (2006) | Private Investor since prior to 2017. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008-2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002-May 2006); Partner, Clifford Chance (1992-2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985-1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982-1985); and Attorney Advisor, U.S. Department of the Treasury (1973-1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and has been Chair of the Governance and Nominating Committees of the AB Funds since August 2014. | 73 | None | |||||
Jeanette W. Loeb,## 70 (2020) | Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to present. Director of New York City Center since 2005. She was a director of AB Multi-Manager Alternative Fund, Inc. (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as a Director of the AB Funds since April 2020. | 73 | Apollo Investment Corp. (business development company) since August 2011 | |||||
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MANAGEMENT OF THE FUND (continued)
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY TRUSTEE | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY TRUSTEE | |||||
INDEPENDENT TRUSTEE (continued) | ||||||||
Carol C. McMullen,## 66 (2016) | Managing Director of Slalom Consulting (consulting) since 2014, private investor and a member of the Advisory Board of Butcher Box (since 2018). Formerly, member, Partners Healthcare Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016. | 73 | None | |||||
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MANAGEMENT OF THE FUND (continued)
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY TRUSTEE | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY TRUSTEE | |||||
INDEPENDENT TRUSTEE (continued) | ||||||||
Garry L. Moody,## 70 (2008) | Private Investor since prior to 2017. Formerly, Partner, Deloitte & Touche LLP (1995-2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993-1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975-1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He is a member of the Trustee Advisory Board of BoardIQ, a biweekly publication focused on issues and news affecting directors of mutual funds. He is also a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council. He has served as a director or trustee, and as Chairman of the Audit Committees, of the AB Funds since 2008. | 73 | None | |||||
| * | The address for each of the Fund’s disinterested Trustees is c/o AllianceBernstein L.P., Attention: Legal and Compliance Department — Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Trustees. |
| *** | The information above includes each Trustee’s principal occupation during the last five years and other information relating to the experience, attributes and skills relevant to each Trustee’s qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the 1940 Act, due to his position as a Senior Vice President of the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. |
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MANAGEMENT OF THE FUND (continued)
Officer Information
Certain information concerning the Fund’s Officers is listed below.
| NAME, ADDRESS* AND AGE | POSITION(S) HELD WITH FUND | PRINCIPAL OCCUPATION DURING PAST FIVE YEARS** | ||
| Onur Erzan 46 | President and Chief Executive Officer | See biography above. | ||
| Terrance T. Hults 56 | Vice President | Senior Vice President of the Adviser**, with which he has been associated since prior to 2017. | ||
| Matthew J. Norton 39 | Vice President | Senior Vice President of the Adviser**, with which he has been associated since prior to 2017. He is also Chief Investment Officer-Municipal Bonds. | ||
| Andrew D. Potter 37 | Vice President | Vice President of the Adviser**, with which he has been associated since prior to 2017. | ||
| Emilie D. Wrapp 66 | Secretary | Senior Vice President, Assistant General Counsel and Assistant Secretary of ABI**, with which she has been associated since prior to 2017. | ||
Michael B. Reyes 45 | Senior Vice President | Vice President of the Adviser**, with which he has been associated since prior to 2017. | ||
| Joseph J. Mantineo 63 | Treasurer and Chief Financial Officer | Senior Vice President of AllianceBernstein Investor Services, Inc. (“ABIS”)**, with which he has been associated since prior to 2017. | ||
| Phyllis J. Clarke 61 | Controller | Vice President of the ABIS**, with which she has been associated since prior to 2017. | ||
Vincent S. Noto 57 | Chief Compliance Officer | Senior Vice President and Mutual Fund Chief Compliance Officer of the Adviser** since prior to 2017. |
| * | The address for each of the Fund’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | The Adviser, ABI and ABIS are affiliates of the Fund. |
The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Trustees and Officers and is available without charge upon request. Contact your financial representative or AB at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
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Operation and Effectiveness of the Portfolios’ Liquidity Risk Management Program:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolios to designate an Administrator of the Portfolios’ Liquidity Risk Management Program. The Administrator of the Portfolios’ LRMP is AllianceBernstein L.P., the Portfolios’ investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolios’ Board of Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolios’ LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2022, which covered the period January 1, 2021 through December 31, 2021 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolios’ compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolios will be unable to meet their redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolios classify the liquidity of their portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolios’ strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolios participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolios are required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolios’ reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
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The Adviser informed the Fund Board that the Committee believes the Portfolios’ LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was significantly recovered and improved compared to the prior reporting period which included extreme levels of price volatility and relative illiquidity beginning in March 2020 with COVID-19 impacts. As such, the program operated in a relatively robust and benign liquidity environment experienced in markets during the Program Reporting Period. There were no liquidity events that impacted the Portfolios or their ability to timely meet redemptions during the Program Reporting Period.
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Information Regarding the Review and Approval of the Advisory Agreement in Respect of Each Fund
The disinterested trustees (the “directors”) of AB Municipal Income Fund II (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of each of the portfolios listed below (each, a “Fund” and collectively, the “Funds”) at a meeting held by video conference on November 2-4, 2021 (the “Meeting”):
| • | AB Arizona Portfolio |
| • | AB Massachusetts Portfolio |
| • | AB Minnesota Portfolio |
| • | AB New Jersey Portfolio |
| • | AB Ohio Portfolio |
| • | AB Pennsylvania Portfolio |
| • | AB Virginia Portfolio |
Prior to approval of the continuance of the Advisory Agreement in respect of each Fund, the directors 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 directors also reviewed additional materials, including comparative analytical data prepared by the Senior Analyst for each Fund. The directors also discussed the proposed continuances in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Funds gained from their experience as directors or trustees 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 directors and its responsiveness, frankness and attention to concerns raised by the directors 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 AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Funds and the money market fund advised by the Adviser in which the Funds invest a portion of their assets.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee in respect of each Fund. The directors did not identify any
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particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage each Fund and the overall arrangements between each Fund 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 directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors 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 each Fund. The directors noted that the Adviser from time to time reviews each Fund’s investment strategies and from time to time proposes changes intended to improve a Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of each Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that each Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to such Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid in respect of a Fund, result in a higher rate of total compensation from such Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of each Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to each of the Funds under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of each Fund to the Adviser for calendar years 2019 and 2020 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationships with the Funds, including
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those relating to its subsidiaries that provide transfer agency and distribution services to the Funds. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationships with the Funds before taxes and distribution expenses. The directors noted that AB Minnesota Portfolio was not profitable to the Adviser in the periods reviewed. The directors concluded that the Adviser’s level of profitability from its relationship with each other Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Funds and the money market fund advised by the Adviser in which the Funds invest, including, but not limited to, benefits relating to 12b-1 fees and sales charges received by the Funds’ principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of certain classes of the Funds’ shares; and transfer agency fees paid by the Funds to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower, and that AB Minnesota Portfolio’s unprofitability to the Adviser would be exacerbated, without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Funds.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for each Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A Shares of each Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A Shares of each Fund against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended July 31, 2021 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that each Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by each Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as such Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included
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in the fees payable by other funds. The directors compared each Fund’s contractual effective advisory fee rate with a peer group median and took into account the impact on the advisory fee rate of the administrative expense reimbursement paid to the Adviser in the latest fiscal year. Taking into account the administrative expense reimbursement paid to the Adviser in the latest fiscal year, the directors noted that the Adviser’s total rate of compensation was above the median for each of AB Arizona Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio and AB Pennsylvania Portfolio.
The Adviser informed the directors that there were no institutional products managed by the Adviser that utilize investment strategies similar to those of any of the Funds.
In connection with their review of each Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of each Fund in comparison to a peer group and a peer universe selected by the 15(c) service provider. The expense ratio of each Fund was based on the Fund’s latest fiscal year and the directors considered the Adviser’s expense cap for each Fund. The directors noted that it was likely that the expense ratios of some of the other funds in each Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Funds by others. Based on their review, the directors concluded that the expense ratios for AB Arizona Portfolio, AB Massachusetts Portfolio and AB Virginia Portfolio were acceptable. The directors noted that the expense ratio for each of AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio and AB Pennsylvania Portfolio was above the median. After reviewing and discussing the Adviser’s explanations of the reasons for this, the directors concluded that each Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Funds contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors 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 directors noted that there is no established methodology for setting 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
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fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Funds’ shareholders would benefit from a sharing of economies of scale in the event a Fund’s net assets exceed a breakpoint in the future.
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This page is not part of the Shareholder Report or the Financial Statements.
AB FAMILY OF FUNDS
US EQUITY
CORE
Core Opportunities Fund
Select US Equity Portfolio
Sustainable US Thematic Portfolio1
GROWTH
Concentrated Growth Fund
Discovery Growth Fund
Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
VALUE
Discovery Value Fund
Equity Income Fund
Relative Value Fund
Small Cap Value Portfolio
Value Fund
INTERNATIONAL/ GLOBAL EQUITY
CORE
Global Core Equity Portfolio
International Strategic Core Portfolio
Sustainable Global Thematic Fund
Sustainable International Thematic Fund
Tax-Managed Wealth Appreciation Strategy
Wealth Appreciation Strategy
GROWTH
Concentrated International Growth Portfolio
VALUE
All China Equity Portfolio
International Value Fund
FIXED INCOME
MUNICIPAL
High Income Municipal Portfolio
Intermediate California Municipal Portfolio
Intermediate Diversified Municipal Portfolio
Intermediate New York Municipal Portfolio
Municipal Bond Inflation Strategy
Tax-Aware Fixed Income Opportunities Portfolio
National Portfolio
Arizona Portfolio
California Portfolio
Massachusetts Portfolio
Minnesota Portfolio
New Jersey Portfolio
New York Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
TAXABLE
Bond Inflation Strategy
Global Bond Fund
High Income Fund
High Yield Portfolio
Income Fund
Intermediate Duration Portfolio
Limited Duration High Income Portfolio
Short Duration Income Portfolio
Short Duration Portfolio
Sustainable Thematic Credit Portfolio
Total Return Bond Portfolio
ALTERNATIVES
All Market Real Return Portfolio
Global Real Estate Investment Fund
Select US Long/Short Portfolio
MULTI-ASSET
All Market Income Portfolio
All Market Total Return Portfolio
Emerging Markets Multi-Asset Portfolio
Global Risk Allocation Fund
Sustainable Thematic Balanced Portfolio1
Tax-Managed All Market Income Portfolio
CLOSED-END FUNDS
AllianceBernstein Global High Income Fund
AllianceBernstein National Municipal Income Fund
We also offer Government Money Market Portfolio, which serves as the money market fund exchange vehicle for the AB mutual funds. You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.abfunds.com or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.
| 1 | Prior to August 23, 2021, Sustainable US Thematic Portfolio was named FlexFee™ US Thematic Portfolio. Prior to December 1, 2021, Sustainable Thematic Balanced Portfolio was named Conservative Wealth Strategy. |
200 | AB MUNICIPAL INCOME FUND II | abfunds.com | |
AB MUNICIPAL INCOME FUND II
1345 Avenue of the Americas
New York, NY 10105
800 221 5672
MIFII-0151-0522 
| ITEM 2. | CODE OF ETHICS. |
(a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant’s code of ethics is filed herewith as Exhibit 12(a)(1).
(b) During the period covered by this report, no material amendments were made to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The registrant’s Board of Directors has determined that independent directors Garry L. Moody, Marshall C. Turner, Jr. and Jorge A. Bermudez qualify as audit committee financial experts.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
(a) - (c) The following table sets forth the aggregate fees billed by the independent registered public accounting firm Ernst & Young LLP, for the Fund’s last two fiscal years for professional services rendered for: (i) the audit of the Fund’s annual financial statements included in the Fund’s annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Fund’s financial statements and are not reported under (i), which include advice and education related to accounting and auditing issues and quarterly press release review (for those Funds which issue press releases), and preferred stock maintenance testing (for those Funds that issue preferred stock); and (iii) tax compliance, tax advice and tax return preparation.
| Audit Fees | Audit-Related Fees | Tax Fees | ||||||||||||||
Arizona Portfolio | 2021 | $ | 28,895 | $ | — | $ | 18,142 | |||||||||
| 2022 | $ | 28,895 | $ | 2,500 | $ | 18,761 | ||||||||||
Massachusetts Portfolio | 2021 | $ | 30,781 | $ | — | $ | 18,142 | |||||||||
| 2022 | $ | 30,781 | $ | — | $ | 17,893 | ||||||||||
Minnesota Portfolio | 2021 | $ | 30,781 | $ | — | $ | 18,142 | |||||||||
| 2022 | $ | 30,781 | $ | — | $ | 17,893 | ||||||||||
New Jersey Portfolio | 2021 | $ | 30,781 | $ | — | $ | 18,142 | |||||||||
| 2022 | $ | 30,781 | $ | — | $ | 18,093 | ||||||||||
Ohio Portfolio | 2021 | $ | 30,781 | $ | — | $ | 18,142 | |||||||||
| 2022 | $ | 30,781 | $ | — | $ | 17,893 | ||||||||||
Pennsylvania Portfolio | 2021 | $ | 28,895 | $ | — | $ | 18,142 | |||||||||
| 2022 | $ | 28,895 | $ | — | $ | 18,093 | ||||||||||
Virginia Portfolio | 2021 | $ | 30,781 | $ | — | $ | 18,142 | |||||||||
| 2022 | $ | 30,781 | $ | — | $ | 17,893 | ||||||||||
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Fund’s Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Fund’s independent registered public accounting firm. The Fund’s Audit Committee policies and procedures also require pre-approval of all audit and non-audit services provided to the Adviser and Service Affiliates to the extent that these services are directly related to the operations or financial reporting of the Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in the table under Item 4 (a)–(c) are for services pre-approved by the Fund’s Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to the Fund, the Fund’s Adviser and entities that control, are controlled by or under common control with the Adviser that provide ongoing services to the Fund:
| All Fees for Non-Audit Services Provided to the Portfolio, the Adviser and Service Affiliates | Total Amount of Foregoing Column Pre-approved by the Audit Committee (Portion Comprised of Audit Related Fees) (Portion Comprised of Tax Fees) | |||||||||||
Arizona Portfolio | 2021 | $ | 1,324,336 | $ | 18,142 | |||||||
| $ | — | |||||||||||
| $ | (18,142) | |||||||||||
| 2022 | $ | 1,634,268 | $ | 21,261 | ||||||||
| $ | (2,500) | |||||||||||
| $ | (18,761) | |||||||||||
Massachusetts Portfolio | 2021 | $ | 1,324,336 | $ | 18,142 | |||||||
| $ | — | |||||||||||
| $ | (18,142) | |||||||||||
| 2022 | $ | 1,630,900 | $ | 17,893 | ||||||||
| $ | — | |||||||||||
| $ | (17,893) | |||||||||||
Minnesota Portfolio | 2021 | $ | 1,324,336 | $ | 18,142 | |||||||
| $ | — | |||||||||||
| $ | (18,142) | |||||||||||
| 2022 | $ | 1,630,900 | $ | 17,893 | ||||||||
| $ | — | |||||||||||
| $ | (17,893) | |||||||||||
New Jersey Portfolio | 2021 | $ | 1,324,336 | $ | 18,142 | |||||||
| $ | — | |||||||||||
| $ | (18,142) | |||||||||||
| 2022 | $ | 1,631,100 | $ | 18,093 | ||||||||
| $ | — | |||||||||||
| $ | (18,093) | |||||||||||
Ohio Portfolio | 2021 | $ | 1,324,336 | $ | 18,142 | |||||||
| $ | — | |||||||||||
| $ | (18,142) | |||||||||||
| 2022 | $ | 1,630,900 | $ | 17,893 | ||||||||
| $ | — | |||||||||||
| $ | (17,893) | |||||||||||
Pennsylvania Portfolio | 2021 | $ | 1,324,336 | $ | 18,142 | |||||||
| $ | — | |||||||||||
| $ | (18,142) | |||||||||||
| 2022 | $ | 1,631,100 | $ | 18,093 | ||||||||
| $ | — | |||||||||||
| $ | (18,093) | |||||||||||
Virginia Portfolio | 2021 | $ | 1,324,336 | $ | 18,142 | |||||||
| $ | — | |||||||||||
| $ | (18,142) | |||||||||||
| 2022 | $ | 1,630,900 | $ | 17,893 | ||||||||
| $ | — | |||||||||||
| $ | (17,893) | |||||||||||
(h) The Audit Committee of the Fund has considered whether the provision of any non-audit services not pre-approved by the Audit Committee provided by the Fund’s independent registered public accounting firm to the Adviser and Service Affiliates is compatible with maintaining the auditor’s independence.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable to the registrant.
| ITEM 6. | 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 period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| ITEM 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the registrant.
| ITEM 13. | EXHIBITS. |
The following exhibits are attached to this Form N-CSR:
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): AB Municipal Income Fund II | ||
| By: | /s/ Onur Erzan | |
| Onur Erzan | ||
| President | ||
Date: March 3, 2023
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/ Onur Erzan | |
| Onur Erzan | ||
| President |
Date: March 3, 2023
| By: | /s/ Joseph J. Mantineo | |
| Joseph J. Mantineo | ||
| Treasurer and Chief Financial Officer |
Date: March 3, 2023