UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07618
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: September 30, 2007
Date of reporting period: March 31, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
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SEMI-ANNUAL REPORT
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AllianceBernstein Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
Semi-Annual Report
March 31, 2007
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
This shareholder report must be preceded or accompanied by the Fund's
prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P.,
the manager of the AllianceBernstein funds, and is a member of the NASD.
AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.
May 11, 2007
Semi-Annual Report
This report provides management's discussion of fund performance for the
portfolios of AllianceBernstein Municipal Income Fund II (the "Portfolios") for
the semi-annual reporting period ended March 31, 2007.
Investment Objectives and Policies
The nine portfolios of this open-end fund, by investing principally in
high-yielding, predominantly investment-grade municipal securities, seek to
provide their shareholders with the highest level of income exempt from Federal
and state personal income tax that is available without assuming undue risk.
Each of the Portfolios pursues its objective by investing at least 80% of its
net assets in municipal securities issued by the named state or municipal
securities with interest that is otherwise exempt from the named state's income
tax. Pennsylvania Portfolio and Virginia Portfolio are non-diversified, meaning
they can invest more of their assets in a fewer number of issuers.
Investment Results
The tables on pages 5-7 show performance for each Portfolio compared to its
benchmark, the Lehman Brothers (LB) Municipal Index, for the six- and 12-month
periods ended March 31, 2007. For the six-month period ended March 31, 2007,
the Arizona, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
Pennsylvania and Virginia Portfolios' Class A shares underperformed the
benchmark, the LB Municipal Index, which represents the municipal market and
posted a positive return of 1.93%, while the Ohio Portfolio's Class A shares
outperformed the benchmark. For the 12-month period ended March 31, 2007, all
of the Portfolios underperformed the benchmark, which returned 5.43% over the
period.
A description of each Portfolio's relative performance versus the benchmark for
the six-month reporting period ended March 31, 2007 follows.
Arizona Portfolio-The Arizona Portfolio's relative underperformance compared to
the benchmark was largely the result of security selection in the housing,
industrial revenue bond, hospital and insured sectors. Security selection in
the pre-refunded and special tax sectors was beneficial to performance.
Florida Portfolio-The Florida Portfolio's relative underperformance compared to
the benchmark was largely the result of security selection in the insured
sector.
Massachusetts Portfolio-The Massachusetts Portfolio's relative underperformance
compared to the benchmark was largely the result of security selection in the
insured sector. Security selection in the pre-refunded sector benefited the
Portfolio's performance.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 1
Michigan Portfolio-The Michigan Portfolio's relative underperformance compared
to the benchmark was largely the result of security selection in the general
obligation and education sectors.
Minnesota Portfolio-The Minnesota Portfolio's relative underperformance
compared to the benchmark was largely the result of security selection in the
insured sector. The Portfolio's relative weight in the pre-refunded and general
obligation sectors contributed positively to the Portfolio's performance.
New Jersey Portfolio-The New Jersey Portfolio's relative underperformance
compared to the benchmark was largely the result of security selection in the
industrial revenue bond and hospital sectors. Security selection in the insured
and special tax sectors was beneficial to the Portfolio's performance. The
Portfolio's relative weight in the industrial revenue bond sector also
contributed positively to performance.
Ohio Portfolio-The Ohio Portfolio's outperformance was largely the result of
security selection in the pre-refunded sector. The Portfolio's relative weight
in the pre-refunded and industrial revenue bond sectors also contributed
positively to performance. Security selection in the industrial revenue bond
sector detracted from the Portfolio's performance.
Pennsylvania Portfolio-The Pennsylvania Portfolio's relative underperformance
was largely the result of security selection in the industrial revenue bond,
hospital and insured tax sectors.
Virginia Portfolio-The Virginia Portfolio's relative underperformance was
largely the result of security selection in the leasing, industrial revenue
bond, insured and airport sectors. The Portfolio's relative weight in the
housing sector contributed positively to the Portfolio's performance.
Market Review and Investment Strategy
Rising short-term rates, falling long-term rates and a continued strong bid for
lower-quality bonds drove municipal-bond returns over the six-month period
ended March 31, 2007. Consistent with the pattern in the U.S. Treasury market,
the shorter the municipal bond's maturity, the more its yield increased over
the six-month reporting period. Yields for bonds maturing within 20 years rose
by up to 10 basis points; those maturing beyond 20 years actually declined.
The difference between long-term and short-term municipal bonds is the smallest
that it has been over the past 30 years. The average of this difference has
been 230 basis points since the early 1970s and is a mere 50 basis points to-
2 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
day. Issuers responded to low long-term interest rates by selling a record $104
billion in bonds during the first quarter of 2007--49% more than in the same
period in 2006.
Investors' demand for income continued to be a significant influence in the
municipal market. High-yield municipal funds accounted for about 40% of the
money invested in municipal mutual funds. Speculative-grade bonds were the
best-performing sector as demand drove prices up, causing the LB High Yield
Index to return 3.78%--nearly twice the 1.93% return of the LB Municipal Index
which represents only the investment-grade portion of the municipal market.
One result of the continued strong performance of lower-rated bonds is that the
extra yield for assuming credit risk is very small by historical standards. For
example, the difference in yield between intermediate BBB-rated and AAA-rated
insured municipal bonds stood at only 0.2% at March 31, 2007. A widening of
just 0.05% would negate the income benefit of owning lower-rated bonds over a
12-month period.
The low levels of compensation for assuming credit risk or interest rate risk
have been engendered, at least in part, by benign economic and inflation
outlooks, as well as by the strongest municipal balance sheets in a very long
time. It is impossible to know when investors will become more risk averse, or
what the catalyst will be. However, with so little reward for taking risk, the
Portfolios' Municipal Bond Investment Team finds the best values in
high-quality bonds and has focused new purchases on bonds maturing in 10-15
years rather than longer maturities which provide only marginally more income.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 3
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Portfolios
will fluctuate, so that your shares, when redeemed, may be worth more or less
than their original cost. You should consider the investment objectives, risks,
charges and expenses of the Portfolios carefully before investing. For a free
copy of the Portfolios' prospectus, which contains this and other information,
visit our website at www.alliancebernstein.com or call your financial advisor
or AllianceBernstein Investments at 800.227.4618. You should read the
prospectus carefully before you invest.
All fees and expenses related to the operation of the Portfolios have been
deducted. NAV returns do not reflect sales charges; if sales charges were
reflected, the Portfolios' quoted performance would be lower. SEC returns
reflect the applicable sales charges for each share class: a 4.25% maximum
front-end sales charge for Class A shares; the applicable contingent deferred
sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0% year 4); a
1% 1 year contingent deferred sales charge for Class C shares. Returns for the
different share classes will vary due to different expenses associated with
each class. Performance assumes reinvestment of distributions and does not
account for taxes.
Benchmark Disclosure
The unmanaged Lehman Brothers (LB) Municipal Index does not reflect fees and
expenses associated with the active management of a mutual fund portfolio. The
Index is a total return performance benchmark for the long-term investment
grade, tax-exempt bond market. An investor cannot invest directly in an index,
and its results are not indicative of the performance for any specific
investment, including the Portfolios.
A Word About Risk
Price fluctuations may be caused by changes in the general level of interest
rates or changes in bond credit quality ratings. Please note, as interest rates
rise, existing bond prices fall and can cause the value of an investment in the
Portfolios to decline. Changes in interest rates have a greater effect on bonds
with longer maturities than on those with shorter maturities. The individual
state municipal portfolios are non-diversified and are subject to geographic
risk based on their narrow investment objectives. Additionally, the
Pennsylvania and Virginia Portfolios can invest in a relatively small number of
issuers, and are more susceptible to risks associated with a single economic,
political or regulatory occurrence than a more diversified portfolio might be.
The Portfolios may invest in high yield bonds (i.e., "junk bonds") which
involves a greater risk of default and price volatility than other bonds.
Investing in non-investment grade presents special risks, including credit
risk. While the Portfolios invest principally in bonds and other fixed-income
securities, in order to achieve their investment objectives, the Portfolios may
at times use certain types of investment derivatives, such as options, futures,
forwards and swaps. These instruments involve risks different from, and in
certain cases, greater than, the risks presented by more traditional
investments. These risks are fully discussed in the Portfolios' prospectus.
(Historical Performance continued on next page)
4 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
HISTORICAL PERFORMANCE
(continued from previous page)
THE PORTFOLIOS VS. THEIR BENCHMARKS
PERIODS ENDED MARCH 31, 2007
Returns
----------------------------------
6 Months 12 Months
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Arizona Portfolio
Class A 1.91% 5.14%
Class B 1.56% 4.41%
Class C 1.56% 4.42%
LB Municipal Index 1.93% 5.43%
Returns
----------------------------------
6 Months 12 Months
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Florida Portfolio
Class A 1.75% 5.39%
Class B 1.49% 4.66%
Class C 1.49% 4.66%
LB Municipal Index 1.93% 5.43%
Returns
----------------------------------
6 Months 12 Months
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Massachusetts Portfolio
Class A 1.76% 4.93%
Class B 1.40% 4.21%
Class C 1.41% 4.21%
LB Municipal Index 1.93% 5.43%
See Historical Performance and Benchmark disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 5
HISTORICAL PERFORMANCE
(continued from previous page)
THE PORTFOLIOS VS. THEIR BENCHMARKS
PERIODS ENDED MARCH 31, 2007
Returns
----------------------------------
6 Months 12 Months
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Michigan Portfolio
Class A 1.80% 4.94%
Class B 1.45% 4.22%
Class C 1.45% 4.22%
LB Municipal Index 1.93% 5.43%
Returns
----------------------------------
6 Months 12 Months
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Minnesota Portfolio
Class A 1.73% 4.84%
Class B 1.28% 4.00%
Class C 1.28% 4.00%
LB Municipal Index 1.93% 5.43%
Returns
----------------------------------
6 Months 12 Months
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New Jersey Portfolio
Class A 1.92% 5.36%
Class B 1.57% 4.62%
Class C 1.56% 4.61%
LB Municipal Index 1.93% 5.43%
See Historical Performance and Benchmark disclosures on page 4.
(Historical Performance continued on next page)
6 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
HISTORICAL PERFORMANCE
(continued from previous page)
THE PORTFOLIOS VS. THEIR BENCHMARKS
PERIODS ENDED MARCH 31, 2007
Returns
----------------------------------
6 Months 12 Months
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Ohio Portfolio
Class A 2.00% 5.36%
Class B 1.65% 4.63%
Class C 1.55% 4.64%
LB Municipal Index 1.93% 5.43%
Returns
----------------------------------
6 Months 12 Months
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Pennsylvania Portfolio
Class A 1.76% 5.18%
Class B 1.40% 4.45%
Class C 1.40% 4.45%
LB Municipal Index 1.93% 5.43%
Returns
----------------------------------
6 Months 12 Months
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Virginia Portfolio
Class A 1.72% 4.80%
Class B 1.37% 4.08%
Class C 1.38% 4.00%
LB Municipal Index 1.93% 5.43%
See Historical Performance and Benchmark disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 7
ARIZONA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
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NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.32% 5.35%
1 Year 5.14% 0.63%
5 Years 5.41% 4.50%
10 Years 5.87% 5.41%
Class B Shares 2.77% 4.47%
1 Year 4.41% 1.41%
5 Years 4.69% 4.69%
10 Years(a) 5.43% 5.43%
Class C Shares 2.77% 4.47%
1 Year 4.42% 3.42%
5 Years 4.69% 4.69%
10 Years 5.14% 5.14%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
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SEC Returns
Class A Shares
1 Year 0.63%
5 Years 4.50%
10 Years 5.41%
Class B Shares
1 Year 1.41%
5 Years 4.69%
10 Years(a) 5.43%
Class C Shares
1 Year 3.42%
5 Years 4.69%
10 Years 5.14%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
8 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
FLORIDA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
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NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.57% 5.49%
1 Year 5.39% 0.94%
5 Years 5.60% 4.69%
10 Years 5.77% 5.31%
Class B Shares 3.03% 4.66%
1 Year 4.66% 1.66%
5 Years 4.87% 4.87%
10 Years(a) 5.33% 5.33%
Class C Shares 3.03% 4.66%
1 Year 4.66% 3.66%
5 Years 4.86% 4.86%
10 Years 5.03% 5.03%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
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SEC Returns
Class A Shares
1 Year 0.94%
5 Years 4.69%
10 Years 5.31%
Class B Shares
1 Year 1.66%
5 Years 4.87%
10 Years(a) 5.33%
Class C Shares
1 Year 3.66%
5 Years 4.86%
10 Years 5.03%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 9
MASSACHUSETTS PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
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NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.20% 5.20%
1 Year 4.93% 0.48%
5 Years 5.09% 4.19%
10 Years 5.52% 5.06%
Class B Shares 2.64% 4.29%
1 Year 4.21% 1.21%
5 Years 4.37% 4.37%
10 Years(a) 5.09% 5.09%
Class C Shares 2.65% 4.31%
1 Year 4.21% 3.21%
5 Years 4.37% 4.37%
10 Years 4.80% 4.80%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
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SEC Returns
Class A Shares
1 Year 0.48%
5 Years 4.19%
10 Years 5.06%
Class B Shares
1 Year 1.21%
5 Years 4.37%
10 Years(a) 5.09%
Class C Shares
1 Year 3.21%
5 Years 4.37%
10 Years 4.80%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
10 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
MICHIGAN PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
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NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.11% 4.98%
1 Year 4.94% 0.47%
5 Years 5.35% 4.45%
10 Years 6.10% 5.65%
Class B Shares 2.56% 4.10%
1 Year 4.22% 1.22%
5 Years 4.62% 4.62%
10 Years(a) 5.66% 5.66%
Class C Shares 2.56% 4.10%
1 Year 4.22% 3.22%
5 Years 4.61% 4.61%
10 Years 5.37% 5.37%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
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SEC Returns
Class A Shares
1 Year 0.47%
5 Years 4.45%
10 Years 5.65%
Class B Shares
1 Year 1.22%
5 Years 4.62%
10 Years(a) 5.66%
Class C Shares
1 Year 3.22%
5 Years 4.61%
10 Years 5.37%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 11
MINNESOTA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
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NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.21% 5.36%
1 Year 4.84% 0.37%
5 Years 5.10% 4.18%
10 Years 5.58% 5.12%
Class B Shares 2.65% 4.42%
1 Year 4.00% 1.00%
5 Years 4.35% 4.35%
10 Years(a) 5.12% 5.12%
Class C Shares 2.65% 4.42%
1 Year 4.00% 3.00%
5 Years 4.34% 4.34%
10 Years 4.83% 4.83%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
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SEC Returns
Class A Shares
1 Year 0.37%
5 Years 4.18%
10 Years 5.12%
Class B Shares
1 Year 1.00%
5 Years 4.35%
10 Years(a) 5.12%
Class C Shares
1 Year 3.00%
5 Years 4.34%
10 Years 4.83%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
12 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
NEW JERSEY PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
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NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.46% 5.85%
1 Year 5.36% 0.83%
5 Years 4.82% 3.93%
10 Years 5.13% 4.68%
Class B Shares 2.91% 4.92%
1 Year 4.62% 1.62%
5 Years 4.08% 4.08%
10 Years(a) 4.69% 4.69%
Class C Shares 2.91% 4.92%
1 Year 4.61% 3.61%
5 Years 4.08% 4.08%
10 Years 4.39% 4.39%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
- -------------------------------------------------------------------------------
SEC Returns
Class A Shares
1 Year 0.83%
5 Years 3.93%
10 Years 4.68%
Class B Shares
1 Year 1.62%
5 Years 4.08%
10 Years(a) 4.69%
Class C Shares
1 Year 3.61%
5 Years 4.08%
10 Years 4.39%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 13
OHIO PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
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NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.21% 5.28%
1 Year 5.36% 0.84%
5 Years 5.04% 4.13%
10 Years 5.46% 5.01%
Class B Shares 2.65% 4.36%
1 Year 4.63% 1.63%
5 Years 4.32% 4.32%
10 Years(a) 5.00% 5.00%
Class C Shares 2.65% 4.36%
1 Year 4.64% 3.64%
5 Years 4.29% 4.29%
10 Years 4.71% 4.71%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
- -------------------------------------------------------------------------------
SEC Returns
Class A Shares
1 Year 0.84%
5 Years 4.13%
10 Years 5.01%
Class B Shares
1 Year 1.63%
5 Years 4.32%
10 Years(a) 5.00%
Class C Shares
1 Year 3.64%
5 Years 4.29%
10 Years 4.71%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
14 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
PENNSYLVANIA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
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NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.11% 4.94%
1 Year 5.18% 0.74%
5 Years 5.27% 4.37%
10 Years 5.65% 5.19%
Class B Shares 2.54% 4.03%
1 Year 4.45% 1.45%
5 Years 4.54% 4.54%
10 Years(a) 5.21% 5.21%
Class C Shares 2.54% 4.03%
1 Year 4.45% 3.45%
5 Years 4.54% 4.54%
10 Years 4.92% 4.92%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
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SEC Returns
Class A Shares
1 Year 0.74%
5 Years 4.37%
10 Years 5.19%
Class B Shares
1 Year 1.45%
5 Years 4.54%
10 Years(a) 5.21%
Class C Shares
1 Year 3.45%
5 Years 4.54%
10 Years 4.92%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 15
VIRGINIA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2007
- -------------------------------------------------------------------------------
NAV SEC SEC Taxable Equivalent
Returns Returns Yields* Yields**
Class A Shares 3.25% 5.31%
1 Year 4.80% 0.32%
5 Years 5.58% 4.67%
10 Years 5.85% 5.39%
Class B Shares 2.70% 4.41%
1 Year 4.08% 1.08%
5 Years 4.86% 4.86%
10 Years(a) 5.42% 5.42%
Class C Shares 2.70% 4.41%
1 Year 4.00% 3.00%
5 Years 4.85% 4.85%
10 Years 5.12% 5.12%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
- -------------------------------------------------------------------------------
SEC Returns
Class A Shares
1 Year 0.32%
5 Years 4.67%
10 Years 5.39%
Class B Shares
1 Year 1.08%
5 Years 4.86%
10 Years(a) 5.42%
Class C Shares
1 Year 3.00%
5 Years 4.85%
10 Years 5.12%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended March 31, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
16 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed annual rate of return of 5% before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds by comparing this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Beginning Ending
Arizona Account Value Account Value Expenses Paid Annualized
Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,019.09 $3.93 0.78%
Hypothetical ** $1,000 $1,021.04 $3.93 0.78%
Class B
Actual $1,000 $1,015.56 $7.44 1.48%
Hypothetical ** $1,000 $1,017.55 $7.44 1.48%
Class C
Actual $1,000 $1,015.60 $7.44 1.48%
Hypothetical ** $1,000 $1,017.55 $7.44 1.48%
(Fund Expenses continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 17
FUND EXPENSES
(continued from previous page)
Beginning Ending
Florida Account Value Account Value Expenses Paid Annualized
Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,017.46 $3.92 0.78%
Hypothetical ** $1,000 $1,021.04 $3.93 0.78%
Class B
Actual $1,000 $1,014.94 $7.43 1.48%
Hypothetical ** $1,000 $1,017.55 $7.44 1.48%
Class C
Actual $1,000 $1,014.92 $7.43 1.48%
Hypothetical ** $1,000 $1,017.55 $7.44 1.48%
Beginning Ending
Massachusetts Account Value Account Value Expenses Paid Annualized
Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,017.55 $4.12 0.82%
Hypothetical ** $1,000 $1,020.84 $4.13 0.82%
Class B
Actual $1,000 $1,014.04 $7.63 1.52%
Hypothetical ** $1,000 $1,017.35 $7.64 1.52%
Class C
Actual $1,000 $1,014.06 $7.63 1.52%
Hypothetical ** $1,000 $1,017.35 $7.64 1.52%
Beginning Ending
Michigan Account Value Account Value Expenses Paid Annualized
Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,018.02 $5.08 1.01%
Hypothetical ** $1,000 $1,019.90 $5.09 1.01%
Class B
Actual $1,000 $1,014.53 $8.59 1.71%
Hypothetical ** $1,000 $1,016.40 $8.60 1.71%
Class C
Actual $1,000 $1,014.50 $8.59 1.71%
Hypothetical ** $1,000 $1,016.40 $8.60 1.71%
(Fund Expenses continued on next page)
18 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
FUND EXPENSES
(continued from previous page)
Beginning Ending
Minnesota Account Value Account Value Expenses Paid Annualized
Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,017.32 $4.53 0.90%
Hypothetical ** $1,000 $1,020.44 $4.53 0.90%
Class B
Actual $1,000 $1,012.77 $8.03 1.60%
Hypothetical ** $1,000 $1,016.95 $8.05 1.60%
Class C
Actual $1,000 $1,012.78 $8.03 1.60%
Hypothetical ** $1,000 $1,016.95 $8.05 1.60%
Beginning Ending
New Jersey Account Value Account Value Expenses Paid Annualized
Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,019.20 $4.38 0.87%
Hypothetical ** $1,000 $1,020.59 $4.38 0.87%
Class B
Actual $1,000 $1,015.66 $7.89 1.57%
Hypothetical ** $1,000 $1,017.10 $7.90 1.57%
Class C
Actual $1,000 $1,015.64 $7.89 1.57%
Hypothetical ** $1,000 $1,017.10 $7.90 1.57%
Beginning Ending
Account Value Account Value Expenses Paid Annualized
Ohio Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,020.02 $4.28 0.85%
Hypothetical ** $1,000 $1,020.69 $4.28 0.85%
Class B
Actual $1,000 $1,016.50 $7.79 1.55%
Hypothetical ** $1,000 $1,017.20 $7.80 1.55%
Class C
Actual $1,000 $1,015.50 $7.79 1.55%
Hypothetical ** $1,000 $1,017.20 $7.80 1.55%
(Fund Expenses continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 19
FUND EXPENSES
(continued from previous page)
Beginning Ending
Pennsylvania Account Value Account Value Expenses Paid Annualized
Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,017.60 $4.78 0.95%
Hypothetical ** $1,000 $1,020.19 $4.78 0.95%
Class B
Actual $1,000 $1,014.03 $8.29 1.65%
Hypothetical ** $1,000 $1,016.70 $8.30 1.65%
Class C
Actual $1,000 $1,014.03 $8.29 1.65%
Hypothetical ** $1,000 $1,016.70 $8.30 1.65%
Beginning Ending
Virginia Account Value Account Value Expenses Paid Annualized
Portfolio October 1, 2006 March 31, 2007 During Period* Expense Ratio*
- -----------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,017.20 $3.62 0.72%
Hypothetical ** $1,000 $1,021.34 $3.63 0.72%
Class B
Actual $1,000 $1,013.69 $7.13 1.42%
Hypothetical ** $1,000 $1,017.85 $7.14 1.42%
Class C
Actual $1,000 $1,013.75 $7.13 1.42%
Hypothetical ** $1,000 $1,017.85 $7.14 1.42%
* Expenses are equal to each Class' annualized expense ratio, multiplied by
the average account value over the period, multiplied by 182/365 (to reflect
the one-half year period).
** Assumes 5% return before expenses.
20 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
BOND RATING SUMMARY*
March 31, 2007 (unaudited)
ARIZONA PORTFOLIO
Quality Rating
[ ] 63.8% AAA [PIE CHART OMITTED]
[ ] 6.2% AA
[ ] 6.8% A
[ ] 19.7% BBB
[ ] 3.5% BB
FLORIDA PORTFOLIO
Quality Rating
[ ] 54.6% AAA [PIE CHART OMITTED]
[ ] 9.5% AA
[ ] 12.0% A
[ ] 14.3% BBB
[ ] 9.4% BB
[ ] 0.2% B
MASSACHUSETTS PORTFOLIO
Quality Rating
[ ] 65.2% AAA [PIE CHART OMITTED]
[ ] 16.7% AA
[ ] 4.1% A
[ ] 9.4% BBB
[ ] 4.2% BB
[ ] 0.4% B
* All data are as of March 31, 2007. Each Portfolio's quality rating
distribution is expressed as a percentage of the Portfolio's total investments
rated in particular ratings categories by Standard & Poor's Rating Services and
Moody's Investors Service. The distributions may vary over time. If ratings are
not available, the Fund's Adviser will assign ratings that are considered to be
of equivalent quality to such ratings.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 21
BOND RATING SUMMARY*
March 31, 2007 (unaudited)
MICHIGAN PORTFOLIO
Quality Rating
[ ] 58.6% AAA [PIE CHART OMITTED]
[ ] 22.5% AA
[ ] 3.4% A
[ ] 9.6% BBB
[ ] 5.9% BB
MINNESOTA PORTFOLIO
Quality Rating
[ ] 58.5% AAA [PIE CHART OMITTED]
[ ] 15.5% AA
[ ] 18.4% A
[ ] 5.4% BBB
[ ] 2.2% BB
NEW JERSEY PORTFOLIO
Quality Rating
[ ] 51.9% AAA [PIE CHART OMITTED]
[ ] 20.5% AA
[ ] 13.6% A
[ ] 9.5% BBB
[ ] 4.5% BB
* All data are as of March 31, 2007. Each Portfolio's quality rating
distribution is expressed as a percentage of the Portfolio's total investments
rated in particular ratings categories by Standard & Poor's Rating Services and
Moody's Investors Service. The distributions may vary over time. If ratings are
not available, the Fund's Adviser will assign ratings that are considered to be
of equivalent quality to such ratings.
22 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
BOND RATING SUMMARY*
March 31, 2007 (unaudited)
OHIO PORTFOLIO
Quality Rating
[ ] 60.7% AAA [PIE CHART OMITTED]
[ ] 10.3% AA
[ ] 14.5% A
[ ] 10.0% BBB
[ ] 4.5% BB
PENNSYLVANIA PORTFOLIO
Quality Rating
[ ] 58.4% AAA [PIE CHART OMITTED]
[ ] 11.7% AA
[ ] 11.5% A
[ ] 10.4% BBB
[ ] 7.7% BB
[ ] 0.3% B
VIRGINIA PORTFOLIO
Quality Rating
[ ] 57.5% AAA [PIE CHART OMITTED]
[ ] 22.6% AA
[ ] 6.6% A
[ ] 6.5% BBB
[ ] 6.8% BB
* All data are as of March 31, 2007. Each Portfolio's quality rating
distribution is expressed as a percentage of the Portfolio's total investments
rated in particular ratings categories by Standard & Poor's Rating Services and
Moody's Investors Service. The distributions may vary over time. If ratings are
not available, the Fund's Adviser will assign ratings that are considered to be
of equivalent quality to such ratings.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 23
ARIZONA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-100.7%
Long-Term Municipal Bonds-100.4%
Arizona-82.4%
Arizona Cap Facs Fin Corp Student Hsg
Rev
(Arizona St Univ Proj)
Ser 00
6.25%, 9/01/32 $ 2,000 $ 2,074,280
Arizona Game & Fish Dept
5.00%, 7/01/26 1,000 1,044,320
Arizona Health Facs Auth Rev
(Blood System Inc.)
Ser 04
5.00%, 4/01/19 750 779,115
Arizona Hlth Fac Auth Hosp Rev
(Phoenix Childrens Hosp)
Ser 02A
6.00%, 2/15/32 5,700 6,320,730
Arizona School Brd Fac Rev
Ser 01
5.00%, 7/01/19 6,730 7,089,045
Arizona State Transn Brd Hwy Rev
Ser 04B
5.00%, 7/01/24 4,300 4,540,112
Arizona State Univ COP
(Research Infrastructure Projs)
AMBAC Ser 05A
5.00%, 9/01/23 2,000 2,113,540
Arizona Student Loan Auth
(Student Loan Rev) AMT
Ser 99B-1
5.90%, 5/01/24 1,500 1,584,360
Arizona Tourism & Sports Auth Tax Rev
(Multipurpose Stadium Fac)
MBIA Ser 03A
5.00%, 7/01/25 2,400 2,512,368
Arizona Wtr Infrastructure Fin Auth Rev
(Wtr Quality)
Ser 06A
5.00%, 10/01/24 4,000 4,287,200
Estrella Mtn Ranch CFD
(Desert Village)
7.375%, 7/01/27 1,741 1,917,746
Estrella Mtn Ranch CFD
(Golf Village)
Ser 01A
7.875%, 7/01/25 3,355 3,690,668
24 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Gilbert Wtr Res Muni Ppty Corp
(Wastewater Sys & Util Rev)
Ser 04
4.90%, 4/01/19 $ 2,500 $ 2,532,725
Glendale IDA
(John C Lincoln Hlth)
Ser 05B
5.25%, 12/01/22 1,000 1,054,700
Glendale IDA Ed Fac
(Midwestern Univ)
CONNIE LEE Ser 96A
6.00%, 5/15/26 475 481,503
Ser 01A
5.875%, 5/15/31 3,770 4,120,044
Goodyear CFD
(Palm Valley)
Ser 96C
7.25%, 7/01/16 2,900 2,937,062
Goodyear IDA Water & Sewer Rev
(Litchfield Pk Svc Proj) AMT
Ser 99
5.95%, 10/01/23 3,160 3,284,536
Greater Arizona Dev Auth Infrastructure Rev
MBIA Ser 05A
5.00%, 8/01/21 1,600 1,707,584
MBIA Ser 05B
5.00%, 8/01/25 4,320 4,579,114
Hassayampa CFD
Ser 96
7.75%, 7/01/21 2,670 2,726,444
Hassayampa CFD No. 2
(Forest Ridge Estates)
Ser 00
7.50%, 7/01/24 785 849,244
Maricopa Cnty SFMR
(Mortgage Rev) AMT
GNMA/ FNMA/ FHLMC Ser 00-1C
6.25%, 12/01/30 30 30,167
GNMA/ FNMA/ FHLMC Ser 01
5.63%, 3/01/33 695 722,578
GNMA/ FNMA/ FHLMC Ser 02-B1
6.20%, 3/01/34 (a) 135 135,836
Mesa Cnty IDA Health Fac
(Discovery Hlth Sys)
MBIA Ser 99A
5.75%, 1/01/25 15,000 15,953,700
Nogales Municipal Dev Auth
AMBAC Ser 05
5.00%, 6/01/27 1,000 1,057,550
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 25
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Northern Arizona University COP
(Northern Arizona University Research Projs)
AMBAC Ser 04
5.125%, 9/01/21-9/01/24 $ 7,140 $ 7,700,933
Phoenix Az Civic Impt Corp.
MBIA
5.00%, 7/01/18 6,555 7,063,471
Phoenix Children's Hosp
4.65%, 2/01/42(b) 1,150 1,162,190
Phoenix Civic Impt Corp Excise Tax Rev
(Civic Plaza Exp Proj) Sub
FGIC Ser 05A
5.00%, 7/01/23 5,500 5,862,725
Phoenix IDA
(Capitol Mall LLC Proj)
AMBAC Ser 05
5.00%, 9/15/25 5,935 6,295,611
Phoenix IDA SFMR
(Mortgage Rev) AMT
GNMA/ FNMA/ FHLMC Ser 02A-1
5.75%, 9/01/33(a) 60 60,346
Pima Cnty IDA
(Horizon Cmnty Learning Center)
Ser 05
5.125%, 6/01/20 1,500 1,508,205
Pima Cnty IDA MFHR
(La Hacienda)
GNMA Ser 99
7.00%, 12/20/31 1,290 1,388,698
Pima Cnty IDA SFMR
GNMA/ FNMA Ser 01A-1
5.35%, 11/01/24 25 25,058
Pima Cnty IDA SFMR
(Mortgage Rev) AMT
GNMA/ FNMA Ser 99B-1
6.10%, 5/01/31 90 90,492
Pinal Cnty COP
Ser 04
5.00%, 12/01/24 3,780 3,918,424
Pinal Cnty IDA Correctional Facs Contract
(Florence West Prison Proj)
ACA Ser 06A
5.25%, 10/01/22 1,400 1,489,278
Pinal Cnty Prop Corp.
AMBAC Ser 01
5.125%, 6/01/21 1,000 1,049,560
Queen Creek Improvement District No 1
5.00%, 1/01/26 600 612,228
Show Low Assessment Dist No. 6
(Torreon)
ACA Ser 00
6.00%, 1/01/18 955 1,010,476
26 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Show Low IDA Hosp Rev
(Navapache Regl Med Ctr)
RADIAN Ser 05
5.00%, 12/01/25 $ 1,415 $ 1,486,939
Stoneridge CFD
Ser 01
6.75%, 7/15/26 1,650 1,818,052
Sundance CFD
Ser 02
7.75%, 7/01/22 2,225 2,431,747
Tax Exempt Municipal Infrastructure Trust
Ser 04B, Class A
4.05%, 12/01/08(c) 4,470 4,382,164
Tempe Excise Tax Rev
5.00%, 7/01/24 1,035 1,097,297
Tolleson IDA MFHR
(Copper Cove) AMT
GNMA Ser 01A
5.50%, 11/20/41 5,825 6,072,329
Tucson & Pima HFA SFMR(Mortgage Rev)
AMT
GNMA/ FNMA Ser 02A
5.50%, 1/01/35 (a) 480 485,813
Tucson & Pima IDA SFMA
(Mtg Bkd Secs Prog) AMT
GNMA/ FNMA/ FHLMC Ser 01A-1
6.35%, 1/01/34(a) 810 834,106
Tucson Airport Auth Rev AMT
AMBAC Ser 01
5.35%, 6/01/31 6,475 6,718,460
Tucson COP
MBIA Ser 04A
5.00%, 7/01/23-7/01/24 6,100 6,456,174
Tucson Higher Ed
(University Arizona)
AMBAC Ser 02A
5.00%, 7/15/32 1,000 1,036,990
University Med Ctr Corp Hosp Rev
5.00%, 7/01/35 3,500 3,590,055
University of Arizona COP
AMBAC
5.00%, 6/01/12 3,040 3,222,430
5.25%, 6/01/14-6/01/15 5,000 5,445,340
West Campus Hsg LLC Student Hsg Rev
(Arizona State University West Campus)
AMBAC Ser 05
5.00%, 7/01/30 1,500 1,582,770
Yavapai Cnty Hosp Rev
(Regional Medical Center)
RADIAN Ser 03A
5.25%, 8/01/21 4,000 4,201,480
-------------
170,226,112
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 27
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California-0.7%
California GO
5.00%, 2/01/33 $ 1,405 $ 1,460,863
Florida-0.7%
Double Branch CDD
(Oakleaf Village)
Ser 02A
6.70%, 5/01/34 990 1,083,684
Fiddlers Creek CDD
Ser 99B
5.80%, 5/01/21 405 416,607
-------------
1,500,291
Puerto Rico-15.7%
Puerto Rico Comwlth GO
(Pub Impt)
5.25%, 7/01/23 575 620,356
Ser 01A
5.50%, 7/01/19 500 560,155
Ser 03A
5.25%, 7/01/23 500 529,655
Puerto Rico Comwlth Govt Dev Bank
(Sr Notes)
Ser 06B
5.00%, 12/01/15 500 535,125
Puerto Rico Convention Ctr Dist Auth Hotel
Occupancy Rev
AMBAC Ser 06A
5.00%, 7/01/18 6,000 6,502,800
Puerto Rico Elec Pwr Auth Rev
XLCA Ser 02-1
5.25%, 7/01/22(d) 8,000 8,588,160
Puerto Rico GO
FGIC Ser 02A
5.00%, 7/01/32 2,500 2,663,250
Puerto Rico HFA
(Cap Fd Prog)
5.00%, 12/01/17 4,870 5,172,135
Puerto Rico Highway & Transportation Authority
FSA
5.00%, 7/01/32 3,400 3,575,070
Puerto Rico IFA Health Fac
(Ascension Health)
Ser 00A
6.125%, 11/15/30 1,500 1,630,815
University of Puerto Rico Rev
5.00%, 6/01/18 1,855 1,966,764
-------------
32,344,285
28 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Texas-0.9%
Texas Turnpike Auth
AMBAC Ser 02A
5.50%, 8/15/39 $ 1,750 $ 1,882,493
Total Long-Term Municipal Bonds
(cost $199,817,159) 207,414,044
Short-Term Municipal Notes-0.3%
Alaska-0.3%
Valdez Marine Term Rev
(BP Pipelines Project)
Ser 03B
3.80%, 7/01/37(e)
(cost $500,000) 500 500,000
Total Municipal Obligations
(cost $200,317,159) 207,914,044
SHORT-TERM INVESTMENTS-0.2%
Time Deposit-0.2%
The Bank of New York
4.25%, 4/02/07
(cost $387,000) 387 387,000
Total Investments-100.9%
(cost $200,704,159) 208,301,044
Other assets less liabilities-(0.9)% (1,781,364)
Net Assets-100.0% $ 206,519,680
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $1,900 6/22/07 BMA 2.962% $ (3,105)
CitiGroup, Inc. 2,700 11/10/26 3.884% BMA 12,169
JPMorgan Chase 1,800 4/05/07 BMA 2.988% (2,720)
JPMorgan Chase 1,000 10/01/07 BMA 3.635% 565
JPMorgan Chase 7,500 11/10/11 BMA 3.482% 17,696
Merrill Lynch 1,100 7/12/08 BMA 3.8154% 5,277
Merrill Lynch 1,440 2/12/12 BMA 3.548% 8,491
Merrill Lynch 1,000 8/09/26 4.0632% BMA (18,039)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 29
(a) Variable rate coupon, rate shown as of March 31, 2007.
(b) Floating Rate Security. Stated interest rate was in effect at March 31,
2007.
(c) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security is considered liquid and may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At March
31, 2007, the market value of this security amounted to $4,382,164 or 2.1% of
net assets.
(d) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(e) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
Glossary:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
CDD - Community Development District
CFD - Community Facilities District
CONNIE LEE - Connie Lee Insurance Company
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Company
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
IDA - Industrial Development Authority/Agency
IFA - Industrial Finance Authority
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
RADIAN - Radian Group, Inc.
SFMR - Single Family Mortgage Revenue
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
30 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
FLORIDA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-96.0%
Long-Term Municipal Bonds-93.3%
Florida-71.7%
Beacon Tradeport CDD
Ser 02B
7.25%, 5/01/33 $ 965 $ 1,033,978
Bonnet Creek Resort CDD
Ser 02
7.25%, 5/01/18 2,000 2,177,120
Brevard Cnty Loc Opt Fuel Tax Rev
FGIC Ser 05
5.00%, 8/01/25 3,290 3,477,859
Capital Trust Agy Arpt Fac
(Cargo Acq Grp) AMT
Ser 02
6.25%, 1/01/19 495 525,408
Ser 03
5.75%, 1/01/32 2,000 2,098,000
Concorde Estates CDD
Ser 04B
5.00%, 5/01/11 900 898,371
Crossings at Fleming Island CDD
(Eagle Harbor)
Ser 00C
7.10%, 5/01/30 2,240 2,379,821
Dade Cnty HFA MFHR
(Golden Lakes Apts) AMT
Ser 97A
6.00%, 11/01/32 250 255,718
6.05%, 11/01/39 750 767,865
Deltona Util Sys Rev
MBIA Ser 03
5.125%, 10/01/27 2,440 2,577,006
Florida HFA MFHR
(Turtle Creek Apts) AMT
AMBAC Ser 96C
6.20%, 5/01/36 3,245 3,280,468
Florida HFC MFHR
(Cobblestone Apts) AMT
GNMA Ser 00K-1
6.10%, 6/01/42 7,740 8,222,279
Florida HFC MFHR
(Logans Pointe Apts) AMT
FSA Ser 99
6.00%, 6/01/39(a) 5,080 5,310,226
Florida HFC MFHR
(Mystic Pointe II) AMT
GNMA Ser 00
6.30%, 12/01/41 1,165 1,236,671
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 31
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Florida HFC MFHR
(Sabal Chase Apts) AMT
FSA Ser 00
6.00%, 5/01/40 $ 3,650 $ 3,856,262
Florida HFC MFHR
(Spring Harbor Apts) AMT
Ser 99C-1
5.90%, 8/01/39 2,540 2,627,884
Florida HFC MFHR
(Walker Ave Club) AMT
FSA Ser 00L-1
6.00%, 12/01/38 3,435 3,570,373
Florida HFC MFHR
(Waverly Apts) AMT
FSA Ser 00C-1
6.50%, 7/01/40 2,790 2,947,607
Florida State Brd of Ed GO
MBIA Ser 02A
5.00%, 6/01/32(b) 2,500 2,606,025
Gateway CDD
(Sun City Center)
Ser 03B
5.50%, 5/01/10 395 398,211
Hamal CDD
Ser 01
6.65%, 5/01/21 1,100 1,231,142
Herons Glen Recreation Dist
Ser 99
5.90%, 5/01/19 2,680 2,799,903
Highlands Cnty Hlth Facs Auth
(Adventist/Sunbelt Hosp)
Ser 01A
6.00%, 11/15/31 2,000 2,214,760
Indian River Cnty Sch Brd COP
MBIA Ser 05
5.00%, 7/01/23 2,480 2,616,846
Indian Trace Dev Dist Spl Assmt
(Wtr Mgmt Spl Benefit)
MBIA Ser 05
5.00%, 5/01/22 680 725,444
Jacksonville Elec Auth
AMBAC Ser 02B
5.00%, 10/01/26 3,925 4,097,111
Ser 02A
5.50%, 10/01/41 3,750 3,784,950
Lee Cnty Arpt Rev
(Southwest Int'l Arpt) AMT
FSA Ser 00A
6.00%, 10/01/32 13,500 14,439,195
32 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Lee Cnty Hlth Facs Auth Rev
(Shell Point)
Ser 99A
5.50%, 11/15/29 $ 2,000 $ 2,108,540
Manatee Cnty Hsg Fin Agy SFMR
(Mortgage Rev) AMT
GNMA Ser 99
6.25%, 11/01/28 365 371,986
Marshall Creek CDD
Ser 02A
6.625%, 5/01/32 1,000 1,060,470
Miami Beach Health Facs Auth Rev
(Mt Sinai Med Ctr)
Ser 01A
6.80%, 11/15/31 1,600 1,761,424
Miami-Dade Cnty HFA MFHR
(Cntry Club Villas Apts) AMT
Ser 99A
6.20%, 10/01/39 5,145 5,357,900
Miami-Dade Cnty HFA MFHR
(Marbrisa Apts) AMT
FSA Ser 00-2A
6.15%, 8/01/38 1,515 1,605,324
Miami-Dade Cnty HFA SFMR
(Home Ownship Mortgage) AMT
GNMA/ FNMA Ser 00A-1
6.00%, 10/01/32 950 956,242
Miromar Lakes CDD
Ser 00A
7.25%, 5/01/12 2,880 3,022,992
North Broward Hosp Dist Rev
(Prerefunded)
Ser 01
6.00%, 1/15/31 1,500 1,630,860
North Broward Hosp Dist Rev
(Unrefunded)
Ser 01
6.00%, 1/15/31 200 214,738
North Miami HFA Rev
(Catholic Hlth Svcs Oblig Grp)
Ser 96
6.00%, 8/15/24 1,200 1,221,492
Northern Palm Beach Assessment Dist
(Unit Development 27B)
Ser 02
6.40%, 8/01/32 1,110 1,166,810
Northern Palm Beach Cnty Impt Dist
(Mirasol Unit No. 43)
6.10%, 8/01/21 655 683,204
6.125%, 8/01/31 1,000 1,040,900
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 33
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Orange Cnty HFA MFHR
(Loma Vista Proj) AMT
Ser 99G
5.50%, 3/01/32 $ 2,000 $ 2,020,160
Orange Cnty HFA Rev
(Mayflower Retirement Proj)
RADIAN Ser 99
5.25%, 6/01/29 1,060 1,094,365
Orange Cnty Hospital Rev
(Orlando Regional)
Ser 02
5.75%, 12/01/32 1,320 1,459,062
Palm Beach Cnty Pub Impt Rev
(Biomedical Research Pk Proj)
AMBAC Ser 05A
5.00%, 6/01/22 7,000 7,417,760
Preserve At Wilderness Lake CDD
Ser 02A
7.10%, 5/01/33 1,470 1,602,815
South Miami Health Facs Hosp Rev
(Baptist Health)
5.25%, 11/15/33 2,000 2,090,580
St. Johns CDD
(Julington Creek Plantation)
Ser 97
7.125%, 5/01/19 7,725 7,899,121
Tallahassee Hosp Rev
(Tallahassee Memorial)
Ser 00
6.375%, 12/01/30 2,750 2,908,648
Tampa Higher Ed
(Tampa University Proj)
RADIAN Ser 02
5.625%, 4/01/32 3,175 3,401,917
Village Ctr CDD
MBIA
5.125%, 10/01/28 1,000 1,061,570
Volusia Cnty Ed Fac Auth
(Embry Riddle Aero Univ)
Ser 99A
5.75%, 10/15/29 2,000 2,075,540
Waterlefe CDD
Ser 01
6.95%, 5/01/31 695 739,327
West Palm Beach Cmnty Redev Agy
(Northwood-Pleasant Cmnty Redev)
5.00%, 3/01/25-3/01/29 3,640 3,779,516
-------------
141,909,766
34 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Arizona-0.9%
Arizona Hlth Fac Auth Hosp
(Phoenix Children's Hosp)
4.65%, 2/01/42(c) $ 1,250 $ 1,263,250
Queen Creek Improvement Dist No. 1
5.00%, 1/01/26 600 612,228
-------------
1,875,478
Colorado-0.6%
Colorado Health Facs Auth
5.25%, 6/01/23 360 382,003
Colorado Hlth Facs Auth
(Evangelical Lutheran)
5.25%, 6/01/19 340 363,953
Vista Ridge Met Dist Co
RADIAN
5.00%, 12/01/26 500 519,380
-------------
1,265,336
District Of Columbia-2.7%
Washington Convention Ctr Auth Ded Tax Rev
AMBAC
5.00%, 10/01/23 5,000 5,302,400
Illinois-1.2%
Chicago ILL Increment Allocation
(Diversey/Narragausett PJ-NT)
7.46%, 2/15/26 830 887,627
Hampshire ILL Spl Svc Area 14
(Lakewood Crossing Subdivision)
5.80%, 3/01/26 775 789,353
Village of Manhattan
(No 04-1 Brookstone Springs Proj)
Ser 05
5.875%, 3/01/28 775 800,381
-------------
2,477,361
Indiana-3.6%
Franklin Twp Ind Sch Bldg
AMBAC
5.00%, 7/15/21 3,715 3,963,422
Franklin Twp Ind Sch Bldg
5.00%, 7/15/22 2,910 3,097,375
-------------
7,060,797
Louisiana-0.6%
Ernest N Morial-New Orleans
(Exhibit Hall Auth Spl Tax)
AMBAC Ser 03A
5.25%, 7/15/16-7/15/17 1,185 1,273,235
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 35
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Minnesota-0.8%
St. Paul Hsg & Redev Auth Hosp Rev
(Healtheast Proj)
Ser 05
6.00%, 11/15/25 $ 500 $ 555,185
Western Minnesota Municipal Pwr Agy
FSA
5.00%, 1/01/17 900 981,072
-------------
1,536,257
New Jersey-1.4%
Garden State Preservation Trust
(Open Space & Farmland)
FSA Ser 05A
5.80%, 11/01/16 2,400 2,748,384
New York-0.3%
Liberty NY Dev Corp Rev
(National Sports Museum Proj-A)
6.125%, 2/15/19 500 522,885
North Dakota-0.4%
Ward Cnty Health Care Fac
(Trinity Health)
5.125%, 7/01/20 685 720,202
Ohio-1.6%
Cleveland Cuyahoga Port Auth
Ser 01
7.35%, 12/01/31 3,000 3,224,310
Puerto Rico-1.5%
Puerto Rico Comwlth GO
(Pub Impt)
5.25%, 7/01/23 600 647,328
Ser 01A
5.50%, 7/01/19 500 560,155
Ser 04A
5.25%, 7/01/19 960 1,029,754
University of Puerto Rico
Ser 06Q
5.00%, 6/01/19 730 772,274
-------------
3,009,511
South Carolina-0.5%
Scago Edl Facs Corp For Sch
RADIAN
5.00%, 12/01/21 945 989,170
Tennessee-0.4%
Sullivan Cnty Tenn Health Edl
5.00%, 9/01/22 725 751,397
36 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Texas-0.1%
Bexar County Health Facilities
Development Corp Rev
5.00%, 7/01/27 $ 150 $ 154,476
Utah-0.2%
Spanish Fork City Utah Charter
5.55%, 11/15/21 370 380,164
Washington-4.0%
Energy Northwest Wash Wind
AMBAC
5.00%, 7/01/21 2,865 3,050,165
King Cnty Wash Sch Dist No 414
(Lake Washington)
MBIA SCH BD GTY
5.00%, 12/01/24 4,500 4,797,900
-------------
7,848,065
Wisconsin-0.8%
Wisconsin Hlth & Ed Fac Auth Rev
(Wheaton Franciscan)
5.25%, 8/15/20 1,600 1,695,808
Total Long-Term Municipal Bonds
(cost $177,142,405) 184,745,002
Short-Term Municipal Notes-2.7%
Florida-2.7%
Brevard Cnty Hlth Fac
(Health First Inc)
3.80%, 8/01/14(d) 3,800 3,800,000
Jacksonville Hlth Facs Auth Hosp
MBIA
3.75%, 8/15/19(d) 1,500 1,500,000
Total Short-Term Municipal Notes
(cost $5,300,000) 5,300,000
Total Investments-96.0%
(cost $182,442,405) 190,045,002
Other assets less liabilities-4.0% 7,868,797
Net Assets-100.0% $ 197,913,799
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 37
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $ 2,200 6/22/07 BMA 2.962% $ (3,596)
CitiGroup, Inc. 2,700 11/10/26 3.884% BMA 12,172
JPMorgan Chase 2,000 4/05/07 BMA 2.988% (3,022)
JPMorgan Chase 1,100 10/01/07 BMA 3.635% 622
JPMorgan Chase 7,500 11/10/11 BMA 3.482% 17,696
Merrill Lynch 1,100 7/12/08 BMA 3.8154% 5,277
Merrill Lynch 1,540 2/12/12 BMA 3.548% 9,081
Merrill Lynch 5,300 10/21/16 BMA 4.1285% 196,886
FINANCIAL FUTURES CONTRACTS (see Note D)
Value at
Number of Expiration Original March 31, Unrealized
Type Contracts Month Value 2007 Appreciation
- --------------------------------------------------------------------------------------
Purchased Contracts
U.S. Treasury
Note 10 Yr Future 124 June 2007 $13,308,184 $13,407,500 $ 99,316
(a) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(b) Position, or a portion thereof, has been segregated to collateralize
margin requirements for open futures contracts. The aggregate market value of
these securities amounted to $135,513.
(c) Floating Rate Security. Stated interest rate was in effect at March 31,
2007.
(d) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as 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.
Glossary:
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
CDD - Community Development District
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Company
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
HFC - Housing Finance Corporation
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
RADIAN - Radian Group, Inc.
SFMR - Single Family Mortgage Revenue
See notes to financial statements.
38 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
MASSACHUSETTS PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-98.5%
Long-Term Municipal Bonds-98.1%
Massachusetts-76.0%
City of Springfield MA
5.00%, 8/01/19 $ 3,000 $ 3,239,070
Massachusetts Bay Trans Auth
Ser 04A
5.25%, 7/01/21(a) 2,000 2,193,900
Massachusetts Dev Fin Agy
(Massachusetts Biomedical)
Ser 00C
6.25%, 8/01/20 3,000 3,231,390
Massachusetts Dev Fin Agy
(Worchester Redev)
RADIAN Ser 99
5.25%, 6/01/19 2,350 2,444,000
Massachusetts Ed Fac
(Massachusetts College of Pharmacy)
Ser 99B
6.75%, 7/01/30 3,350 3,651,466
Massachusetts Ed Fac
(Suffolk Univ)
Ser 99
5.85%, 7/01/29 1,375 1,451,519
Massachusetts Ed Fin Auth
(Educational Loan)
MBIA Ser 00G AMT
6.00%, 12/01/16 935 961,432
Massachusetts GO
(Prerefunded)
Ser 02C
5.25%, 11/01/30 3,075 3,309,838
Massachusetts Hlth & Ed Fac Auth
(Covenant Medical Center)
Ser 02
6.00%, 7/01/31 2,500 2,715,350
Massachusetts Hlth & Ed Fac Auth
(New England Med Ctr)
FGIC Ser 02H
5.00%, 5/15/25 2,000 2,076,580
Massachusetts Hlth & Ed Fac Auth
(Partners Healthcare System)
Ser 01C
5.75%, 7/01/32 4,000 4,289,560
Massachusetts Hlth & Ed Fac Auth
(University of Massachusetts Proj)
MBIA Ser 02C
5.25%, 10/01/31(b) 6,440 6,948,567
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 39
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Massachusetts Hlth & Ed Fac Auth
(Winchester Hosp)
Ser 00E
6.75%, 7/01/30 $ 4,500 $ 4,898,475
Massachusetts Hlth & Ed Fac Hosp Rev
(Berkshire Hlth Sys)
RADIAN Ser 01E
5.70%, 10/01/25 4,000 4,320,800
Massachusetts Hlth & Ed Fac Hosp Rev
(Cape Cod Healthcare)
RADIAN Ser 01C
5.25%, 11/15/31 2,600 2,734,758
Massachusetts Hsg Fin Agy
(Rental Rev)
AMBAC Ser 95E
6.00%, 7/01/41 4,125 4,363,508
Massachusetts Hsg Fin Agy MFHR
(Rental Rev)
MBIA Ser 00H AMT
6.65%, 7/01/41 4,730 5,025,530
Massachusetts Ind Fin Agy MFHR
(Heights Crossing) AMT
FHA Ser 95
6.15%, 2/01/35 6,000 6,071,220
Massachusetts Port Auth Spec Fac
(Bosfuel Corp) AMT
MBIA Ser 97
6.00%, 7/01/36 6,155 6,303,459
Massachusetts Port Auth Spec Fac
(US Air Proj) AMT
MBIA Ser 96A
5.875%, 9/01/23 2,000 2,037,860
Massachusetts State Health & Edl
5.00%, 7/15/22 1,220 1,264,591
Massachusetts State Water Pollution
Abatement
5.00%, 8/01/24 5,000 5,407,514
Massachusetts State College Bldg
AMBAC
5.00%, 5/01/23 2,635 2,813,126
Massachusetts State Dev Fin Agy
(Boston Architectural College)
ACA
5.00%, 1/01/27 1,750 1,815,485
Massachusetts State Dev Fin Agy
(Pharmacy & Allied Health)
ASSURED GTY Ser 05D
5.00%, 7/01/24 3,500 3,653,475
Massachusetts State GO
FSA Ser 05A
5.00%, 3/01/17 5,000 5,364,000
40 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Massachusetts State Sch Bldg Auth
(Dedicated Sales Tax Revenue)
MBIA Ser 05A
5.00%, 8/15/19 $ 7,000 $ 7,513,730
Massachusetts State Spl Oblig Rev
(Cons Ln)
FSA Ser 05A
5.00%, 6/01/23 1,500 1,595,940
Massachusetts State Wtr Pollutn
5.00%, 8/01/20 3,000 3,229,020
-------------
104,925,163
Arizona-1.9%
Goodyear IDA Water & Sewer Rev
(Litchfield Pk Svc Proj) AMT
Ser 01
6.75%, 10/01/31 1,160 1,262,776
Stoneridge CFD
Ser 01
6.75%, 7/15/26 1,265 1,393,840
-------------
2,656,616
California-0.8%
California State GO
Ser 03
5.25%, 11/01/25 1,000 1,065,070
Colorado-0.4%
Murphy Creek Metro Dist No 3
(Ref & Impt)
Ser 06
6.00%, 12/01/26 500 532,415
Florida-1.3%
Crossings at Fleming Island CDD
(Eagle Harbor)
Ser 00C
7.10%, 5/01/30 1,750 1,859,235
Georgia-0.4%
Atlanta Tax Allocation
(Eastside Proj)
Ser 05B
5.60%, 1/01/30 500 520,140
Illinois-0.6%
Bolingbrook Sales Tax Rev
(Bolingbrook)
0.00%, 1/01/24(c) 500 496,825
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 41
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Plano Spl Svc Area No. 3 Spl Tax
(Lakewood Springs Proj)
Ser 05A
5.95%, 3/01/28 $ 395 $ 413,893
-------------
910,718
Nevada-1.4%
Clark Cnty Impt Dist No. 142
Ser 03
6.10%, 8/01/18 995 1,028,034
Henderson Loc Impt Dist
Ser 03
5.80%, 3/01/23 895 925,009
-------------
1,953,043
Puerto Rico-15.3%
Puerto Rico Comwlth GO
Ser 06A
5.25%, 7/01/22 500 540,235
Puerto Rico Comwlth GO
(Pub Impt)
Ser 01A
5.50%, 7/01/19 500 560,155
Puerto Rico Comwlth Govt Dev Bank
(Sr Notes)
Ser 06B
5.00%, 12/01/15 500 535,125
Puerto Rico Comwlth Hwy & Trans Auth
Rev
FGIC Ser 03
5.25%, 7/01/14 4,225 4,584,294
FGIC Ser 03G
5.25%, 7/01/14 4,410 4,785,026
Puerto Rico Elec Pwr Auth Rev
XLCA Ser 02-1
5.25%, 7/01/22 6,400 6,870,528
Puerto Rico HFA
(Cap Fd Prog)
5.00%, 12/01/20 1,740 1,831,385
Puerto Rico Municipal Fin Agy
Ser 05A
5.25%, 8/01/23 275 294,893
University of Puerto Rico
Ser 06Q
5.00%, 6/01/19 1,025 1,084,358
-------------
21,085,999
Total Long-Term Municipal Bonds
(cost $129,325,302) 135,508,399
42 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Short-Term Municipal Notes-0.4%
Massachusetts-0.4%
Massachusetts State GO
(Central Artery)
Ser 00A
3.80%, 12/01/30(d)
(cost $500,000) $ 500 $ 500,000
Total Investments-98.5%
(cost $129,825,302) 136,008,399
Other assets less liabilities-1.5% 2,118,632
Net Assets-100.0% $ 138,127,031
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $1,400 6/22/07 BMA 2.962% $ (2,288)
CitiGroup, Inc. 1,800 11/10/26 3.884% BMA 8,113
JPMorgan Chase 1,200 4/05/07 BMA 2.988% (1,813)
JPMorgan Chase 700 10/01/07 BMA 3.635% 396
JPMorgan Chase 5,000 11/10/11 BMA 3.482% 11,797
Merrill Lynch 700 7/12/08 BMA 3.82% 3,358
Merrill Lynch 195 2/12/12 BMA 3.548% 1,150
Merrill Lynch 5,100 10/01/16 BMA 4.15% 197,929
FINANCIAL FUTURES CONTRACTS (see Note D)
Value at
Number of Expiration Original March 31, Unrealized
Type Contracts Month Value 2007 Appreciation
- --------------------------------------------------------------------------------------
Purchased Contracts
U.S. Treasury
Note 10 Yr Future 30 June 2007 $3,219,722 $3,243,750 $ 24,028
(a) Position, or a portion thereof, has been segregated to collateralize
margin requirements for open futures contracts. The market value of this
security amounted to $65,817.
(b) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(c) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective until
final maturity.
(d) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as 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.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 43
Glossary:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
ASSURED GTY - Assured Guaranty
BMA - Bond Market Association
CDD - Community Development District
CFD - Community Facilities District
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Administration
FSA - Financial Security Assurance Inc.
GO - General Obligation
HFA - Housing Finance Authority/Agency
IDA - Industrial Development Authority/Agency
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
RADIAN - Radian Group, Inc.
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
44 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
MICHIGAN PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-98.0%
Long-Term Municipal Bonds-98.0%
Michigan-74.1%
Allen Park Pub Sch Dist GO
Q-SBLF Ser 03
5.00%, 5/01/14-5/01/22 $ 10,915 $ 11,659,463
Cedar Springs Pub Sch Dist
Q-SBLF Ser 03
5.00%, 5/01/28 1,835 1,962,643
Charles Stewart Mott Cmnty College
(Cmnty College Facs)
MBIA
5.00%, 5/01/21 1,675 1,778,867
Detroit GO
AMBAC Ser 04A-1
5.25%, 4/01/22 6,930 7,366,867
Detroit School Board
(School Board Loan Fund)
FSA Ser 01A
5.125%, 5/01/31 2,900 3,089,544
Detroit Tax Increment
(Diamler/Chrysler Assembly Plant)
Ser 98A
5.50%, 5/01/21 1,625 1,631,614
Detroit Wtr Supply Sys
FGIC Ser 01B
5.50%, 7/01/33 3,550 3,834,710
Genesee County GO
(Water Supply Sys)
AMBAC Ser 04
5.00%, 11/01/26 3,000 3,168,210
Kalamazoo Hosp Fin Auth Rev
(Borgess Med Ctr)
FGIC Ser 94A ETM
6.708%, 6/01/11(a) 2,360 2,372,366
Kent Hosp Fin Auth Mich Rev
(Metropolitan Hospital Proj)
Ser 05A
5.75%, 7/01/25 210 225,500
Lansing Water & Elec System
FSA Ser 03A
5.00%, 7/01/25 2,200 2,304,236
Michigan State
(Trunk Line Fund)
FSA Ser 01A
5.25%, 11/01/30 4,000 4,262,080
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 45
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Michigan HDA MFHR
(Arbor Pointe)
GNMA Ser 99
5.40%, 6/20/40 $ 1,810 $ 1,855,684
Michigan HDA MFHR
(Danbury Manor) AMT
FNMA Ser 02A
5.30%, 6/01/35(b) 2,490 2,586,612
Michigan HDA MFHR
(Oakbrook Villa Proj) AMT
GNMA Ser 00A
6.50%, 1/20/42 2,970 3,157,704
Michigan HDA MFHR
(Rental Rev) AMT
AMBAC Ser 97A
6.10%, 10/01/33(c) 5,400 5,533,866
GNMA Ser 02A
5.50%, 10/20/43 1,950 2,031,900
Michigan Higher Ed Fac
(Hope College)
Ser 02A
5.90%, 4/01/32 3,465 3,702,041
Michigan Higher Ed Student Loan Auth AMT
AMBAC Ser 17G
5.20%, 9/01/20 3,500 3,657,290
Michigan Hosp Fin Auth
(Crittenton Hosp)
Ser 02A
5.625%, 3/01/27 1,250 1,335,537
Michigan Hosp Fin Auth
(Marquette Gen Hosp Oblig Grp)
Ser 05A
5.00%, 5/15/26 785 802,294
Michigan Hosp Fin Auth
(Trinity Health)
Ser 00A
6.00%, 12/01/27 1,485 1,605,285
Michigan Hosp Fin Auth Rev
(Chelsea Cmnty Hosp Oblig)
5.00%, 5/15/25 415 424,142
Michigan Municipal Bond Auth Rev
(Sch Dist City of Detroit)
FSA Ser 05
5.00%, 6/01/20 2,000 2,119,360
Michigan Strategic Fund
(Detroit Edison) AMT
XLCA Ser 02C
5.45%, 12/15/32 3,000 3,191,190
Michigan Strategic Fund Hlth Fac
(Autumn Wood)
GNMA Ser 02 A
5.20%, 12/20/22 3,000 3,179,040
46 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Michigan Strategic Fund Hlth Fac
(Holland Home)
Ser 98
5.75%, 11/15/18-11/15/28 $ 2,000 $ 2,083,380
North Muskegon Sch Dist
Q-SBLF Ser 03
5.25%, 5/01/28 1,500 1,624,575
Olivet School Board Fund
Q-SBLF Ser 02
5.125%, 5/01/28 1,065 1,141,904
Ovid Elsie School Board Fund
Q-SBLF Ser 02
5.00%, 5/01/25 2,650 2,824,794
Plymouth Ed Ctr Chrtr Sch Pub Sch
Academy Rev
Ser 05
5.125%, 11/01/18 1,050 1,071,903
Royal Oak Hosp Fin Auth Rev
(William Beaumont Hosp)
MBIA Ser 01M
5.25%, 11/15/35 3,200 3,321,792
Saginaw Hosp Fin Auth
(Covenant Med Ctr)
Ser 00F
6.50%, 7/01/30 1,770 1,928,309
Southfield Michigan Libr Bldg Auth
MBIA
5.00%, 5/01/25 3,340 3,514,281
-------------
96,348,983
California-1.8%
California Hlth Fac Fin Auth
(Sutter Health)
Ser 00A
6.25%, 8/15/35 1,100 1,199,077
California State GO
Ser 03
5.25%, 11/01/25 1,000 1,065,070
-------------
2,264,147
Florida-4.5%
Crossings at Fleming Island CDD
(Eagle Harbor)
Ser 00C
7.10%, 5/01/30 1,835 1,949,541
Double Branch CDD
(Oakleaf Village)
Ser 02A
6.70%, 5/01/34 975 1,067,264
Fiddlers Creek CDD
Ser 96
7.50%, 5/01/18 1,170 1,183,432
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 47
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Gateway CDD
(Sun City Center)
Ser 03B
5.50%, 5/01/10 $ 405 $ 408,293
Northern Palm Beach Assessment Dist
(Unit Development 27B)
Ser 02
6.40%, 8/01/32 780 819,920
Waterlefe CDD
Ser 01B
6.25%, 5/01/10 385 390,009
-------------
5,818,459
Illinois-1.1%
Antioch Village Spcl Svc Area
(Clublands Proj)
Ser 03
6.625%, 3/01/33 500 528,485
Antioch Village Spcl Svc Area
(Deercrest Proj)
Ser 03
6.625%, 3/01/33 500 528,485
Plano Spl Svc Area No. 3 Spl Tax
(Lakewood Springs Proj)
Ser 05A
5.95%, 3/01/28 395 413,893
-------------
1,470,863
Puerto Rico-16.5%
Puerto Rico Comwlth GO
Ser 06A
5.25%, 7/01/22 500 540,235
Puerto Rico Comwlth GO
(Pub Impt)
Ser 01A
5.50%, 7/01/19 500 560,155
Puerto Rico Elec Pwr Auth Rev
XLCA Ser 02-1
5.25%, 7/01/22 5,000 5,367,600
Puerto Rico HFA
(Cap Fd Prog)
5.00%, 12/01/17 3,160 3,356,046
Puerto Rico Hsg Fin Corp SFMR
(Mtg Rev) AMT
GNMA Ser 01B
5.50%, 12/01/23 2,010 2,060,049
Puerto Rico Hsg Fin Corp SFMR
(Mtg Rev) AMT
GNMA Ser 01C
5.30%, 12/01/28 1,770 1,805,559
48 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Puerto Rico IFA Health Fac
(Ascension Health)
Ser 00A
6.125%, 11/15/30 $ 3,000 $ 3,261,630
Puerto Rico Municipal Fin Agy
Ser 05A
5.25%, 8/01/23 275 294,894
Puerto Rico Pub Fin Corp.
MBIA Ser 01A
5.00%, 8/01/31 2,875 3,034,735
University of Puerto Rico
Ser 06Q
5.00%, 6/01/19 1,145 1,211,307
-------------
21,492,210
Total Investments-98.0%
(cost $121,919,443) 127,394,662
Other assets less liabilities-2.0% 2,589,083
Net Assets-100.0% $ 129,983,745
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $1,400 6/22/07 BMA 2.962% $ (2,288)
CitiGroup, Inc. 1,700 11/10/26 3.884% BMA 7,662
JPMorgan Chase 1,300 4/05/07 BMA 2.988% (1,965)
JPMorgan Chase 700 10/01/07 BMA 3.635% 396
JPMorgan Chase 4,700 11/10/11 BMA 3.482% 11,089
Merrill Lynch 700 7/12/08 BMA 3.8154% 3,358
Merrill Lynch 185 2/12/12 BMA 3.548% 1,091
Merrill Lynch 6,200 10/01/16 BMA 4.1475% 240,620
(a) Inverse Floater Security-Security with variable or floating interest rate
that moves in the opposite direction of short-term interest rates.
(b) Variable rate coupon, rate shown as of March 31, 2007.
(c) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
Glossary:
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
CDD - Community Development District
FGIC - Financial Guaranty Insurance Company
FNMA - Federal National Mortgage Association
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 49
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HFA - Housing Finance Authority/Agency
IFA - Industrial Finance Authority
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
Q-SBLF - Qualified School Bond Loan Fund
SFMR - Single Family Mortgage Revenue
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
50 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
MINNESOTA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-98.3%
Long-Term Municipal Bonds-94.6%
Minnesota-94.6%
Bemidji Hlth Fac
(North Country Hlth Svcs)
RADIAN Ser 02
5.00%, 9/01/31 $ 1,500 $ 1,545,015
Brooklyn Park MFHR
(Brooks Landing) AMT
FNMA Ser 99A
5.50%, 7/01/19 1,355 1,404,579
Cass Lake Sch Dist
FGIC
5.00%, 2/01/26 1,760 1,845,888
Chaska Elec Rev
(Generating Facs)
Ser 05A
5.25%, 10/01/25 1,000 1,072,870
Farmington Indpt Sch Dist 192
FSA Ser 05B
5.00%, 2/01/24 3,875 4,114,204
Golden Valley Hlth Fac
(Covenant Retirement Cmnty)
Ser 99A
5.50%, 12/01/29 1,000 1,032,320
Minneapolis & St. Paul Arpt Rev
MBIA Ser 03A
5.00%, 1/01/28 1,500 1,562,115
Minneapolis & St. Paul Arpt Rev
FGIC Ser 00B AMT
6.00%, 1/01/21 3,455 3,650,553
Minneapolis Common Bond Fund
Ser 01G-3
5.45%, 12/01/31 1,500 1,614,630
Minneapolis Common Bond Fund
Ser 97-2 AMT
6.20%, 6/01/17 1,325 1,329,664
Minneapolis Health Care Sys Rev
(Fairview Hlth Svcs)
AMBAC Ser 05D
5.00%, 11/15/30 1,000 1,057,280
Minneapolis Hosp Rev
(Allina Hlth Sys)
Ser 02A
5.75%, 11/15/32 1,500 1,611,255
Minneapolis MFHR
(Bottineau Commons Proj) AMT
GNMA Ser 02
5.45%, 4/20/43 2,000 2,060,280
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 51
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Minneapolis MFHR
(Sumner Field) AMT
GNMA Ser 02
5.60%, 11/20/43 $ 2,505 $ 2,590,170
Minneapolis Pkg Assmt GO
MBIA Ser 02
5.25%, 12/01/26 2,000 2,131,620
Minnesota Agric & Eco Dev
(Small Business Loan Proj) AMT
Ser 00C
7.25%, 8/01/20 1,000 1,047,790
Ser 00D
7.25%, 8/01/20 1,000 1,047,790
Minnesota Agric & Eco Dev Brd Rev
(Prerefunded-Health Care Sys)
Ser 00A
6.375%, 11/15/29 1,700 1,870,952
Minnesota Agric & Eco Dev Hlth Fac
(Benedictine Hlth Sys)
MBIA Ser 99
5.125%, 2/15/29 (a) 4,000 4,144,920
Minnesota Agric & Eco Dev Hlth Fac
(Evangelical Lutheran Proj)
Ser 02
6.00%, 2/01/22-2/01/27 2,880 3,116,548
Minnesota Higher Ed Fac Auth
(College Art & Design)
Ser 00-5D
6.75%, 5/01/26 1,000 1,088,150
Minnesota Higher Ed Fac Auth
(Hamline Univ)
Ser 99-5B
6.00%, 10/01/29 1,250 1,303,000
Minnesota Higher Ed Fac Auth
(St Catherine College)
5.375%, 10/01/32 1,000 1,051,090
Minnesota Higher Ed Fac Auth
(Univ St Thomas)
Ser 04-5
5.00%, 10/01/24 1,000 1,050,960
5.25%, 10/01/34 1,000 1,064,240
Minnesota Hsg Fin Agy SFMR AMT
Ser 96F
6.30%, 1/01/28 585 590,569
Ser 96G
6.25%, 7/01/26 980 989,261
Ser 98H
6.05%, 7/01/31 1,825 1,849,601
Minnesota Municipal Pwr Agy Elec Rev
5.25%, 10/01/21 3,000 3,240,840
Ser 04A
5.25%, 10/01/24 500 533,445
52 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Minnetonka MFHR
(Archer Heights Apts Proj) AMT
GNMA Ser 99A
5.30%, 1/20/27 $ 1,620 $ 1,670,350
North St Paul Maplewood Indpt Sch Dist
No. 622
FSA
5.00%, 8/01/20 3,425 3,706,603
Prior Lake Indpt Sch Dist No. 719
(School Bldg)
FSA Ser 05B
5.00%, 2/01/23 3,350 3,561,418
Shakopee Health Care Facs
(St Francis Regl Med Center)
Ser 04
5.10%, 9/01/25 600 625,512
Shoreview MFHR
(Lexington Shores Proj) AMT
GNMA Ser 01A
5.55%, 8/20/42 1,445 1,486,486
St. Cloud Hosp Rev
(Saint Cloud Hosp)
FSA Ser 00A
5.875%, 5/01/30 3,750 3,999,225
St. Paul Hsg & Redev Auth Hosp Rev
(Healtheast Proj)
Ser 05
6.00%, 11/15/25 500 555,185
St. Paul MFHR
(Burlington Apt-8)
GNMA
5.35%, 5/01/31 1,550 1,561,517
St. Paul Pkg Auth Rev
(Block 19 Ramp)
FSA Ser 02A
5.35%, 8/01/29 3,075 3,241,357
St. Paul Port Auth Lease Rev
Ser 02
5.25%, 12/01/27 1,725 1,823,291
St. Paul Port Auth Lease Rev
(Cedar St. Office Building)
Ser 03
5.00%, 12/01/23 1,000 1,050,740
St. Paul Recreational Facs Gross Rev
(Highland National Proj)
5.00%, 10/01/20-10/01/25 2,750 2,933,743
Waconia Hlth Care Fac Rev
(Ridgeview Med Ctr)
RADIAN Ser 99A
6.125%, 1/01/29 3,415 3,603,235
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 53
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Western Minnesota Municipal Pwr Agy
FSA
5.00%, 1/01/17 $ 700 $ 763,056
Western Pwr Agy
MBIA Ser 03A
5.00%, 1/01/26-1/01/30 3,100 3,237,419
White Bear Lake MFHR
(Renova Partners Proj) AMT
FNMA Ser 01
5.60%, 10/01/30 1,000 1,033,880
Willmar Hosp Rev
(Rice Mem Hosp Proj)
FSA Ser 02
5.00%, 2/01/32 2,000 2,086,000
Total Long-Term Municipal Bonds
(cost $85,630,771) 89,550,616
Short-Term Municipal Notes-3.7%
Minnesota-3.7%
Univ Minnesota Frn
Ser 99a
3.63%, 1/01/34(b)
(cost $3,500,000) 3,500 3,500,000
Total Investments-98.3%
(cost $89,130,771) 93,050,616
Other assets less liabilities-1.7% 1,577,650
Net Assets-100.0% $ 94,628,266
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $1,000 6/22/07 BMA 2.962% $ (1,635)
CitiGroup, Inc. 1,200 11/10/26 3.884% BMA 5,407
JPMorgan Chase 900 4/05/07 BMA 2.988% (1,360)
JPMorgan Chase 500 10/01/07 BMA 3.635% 283
JPMorgan Chase 3,300 11/10/11 BMA 3.482% 7,786
Merrill Lynch 500 7/12/08 BMA 3.8154% 2,398
Merrill Lynch 130 2/12/12 BMA 3.548% 767
Merrill Lynch 3,500 8/01/16 BMA 4.071% 114,282
54 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
(a) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(b) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
Glossary:
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
FGIC - Financial Guaranty Insurance Company
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
RADIAN - Radian Group, Inc.
SFMR - Single Family Mortgage Revenue
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 55
NEW JERSEY PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-98.5%
Long-Term Municipal Bonds-95.6%
New Jersey-72.9%
Bergen Cnty Impt Auth Sch
(Wyckoff Twp Brd Ed Proj)
Ser 05
5.00%, 4/01/25 $ 1,555 $ 1,645,206
Hoboken Parking Auth
AMBAC Ser 01A
5.30%, 5/01/27 3,700 3,995,889
Lafayette Yard Com Dev Corp
(Conv Ctr Hotel Proj)
MBIA Ser 00
5.80%, 4/01/35 2,100 2,247,567
Middlesex Cnty MFHR AMT
FNMA Ser 01
5.25%, 7/01/21 750 790,687
Morris-Union Jointure Commn COP
RADIAN Ser 04
5.00%, 5/01/24 2,200 2,296,426
New Jersey Eco Dev Auth
(American Water Co) AMT
FGIC
6.875%, 11/01/34 5,000 5,012,300
New Jersey Eco Dev Auth
(Anheuser-Busch) AMT
Ser 95
5.85%, 12/01/30 2,500 2,529,450
New Jersey Eco Dev Auth
(Hackensack Wtr Co.) AMT
MBIA Ser 94B
5.90%, 3/01/24 4,000 4,007,320
New Jersey Eco Dev Auth
(Kapkowski Rd)
Ser 98B
6.50%, 4/01/28 4,500 5,470,110
New Jersey Eco Dev Auth
(Liberty State Park Proj)
Ser A
5.00%, 3/01/24 1,500 1,581,375
New Jersey Eco Dev Auth
(Masonic Charity Foundation Proj)
Ser 01
5.50%, 6/01/31 1,000 1,069,070
Ser 02
5.25%, 6/01/24 540 574,954
56 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New Jersey Eco Dev Auth
(NUI Corp) AMT
ACA Ser 98A
5.25%, 11/01/33 $ 3,700 $ 3,799,049
New Jersey Eco Dev Auth
(Pub Svc Elec & Gas) AMT
MBIA Ser 94A
6.40%, 5/01/32 5,000 5,010,500
New Jersey Eco Dev Auth Rev
(Sch Facs Constr)
Ser 05
5.25%, 3/01/25 3,300 3,542,484
New Jersey Eco Dev Auth Sch Fac
Ser 04-I
5.25%, 9/01/24 2,510 2,754,876
New Jersey Ed Facs Auth Rev
(Higher Ed Cap Impt)
AMBAC Ser 02A
5.125%, 9/01/22 2,500 2,679,425
New Jersey Health Care Fac
(Atlantic City Med Ctr)
Ser 02
5.75%, 7/01/25 1,875 1,988,606
New Jersey Health Care Fac
(Bayshore Cmnty Hosp)
RADIAN Ser 02
5.125%, 7/01/32 9,250 9,613,803
New Jersey Health Care Fac
(Capital Health System)
ACA Ser 03
5.00%, 7/01/26 1,250 1,288,400
New Jersey Health Care Fac
(Good Shepard)
RADIAN Ser 01A
5.20%, 7/01/31 1,350 1,406,660
New Jersey Health Care Fac
(Kennedy Health System)
Ser 01
5.625%, 7/01/31 2,700 2,853,252
New Jersey Health Care Fac
(Newton Memorial Hosp)
FSA Ser 01
5.00%, 7/01/26 1,500 1,558,860
New Jersey Health Care Fac
(Palisades Med Ctr)
ACA Ser 99
5.25%, 7/01/28 1,000 1,022,320
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 57
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New Jersey Health Care Fac
(Southern Ocean Cnty Hosp)
RADIAN Ser 01
5.125%, 7/01/31 $ 4,500 $ 4,672,305
New Jersey Health Care Fac
(Wood Johnson)
Ser 00
5.75%, 7/01/31 3,350 3,553,546
New Jersey Health Care Facs Fin Auth
Rev
(St Clare's Hospital Inc.)
RADIAN Ser 04A
5.25%, 7/01/23 2,085 2,204,345
New Jersey Higher Ed
(Student Loan) AMT
MBIA Ser 00A
6.15%, 6/01/19 845 866,987
New Jersey Hsg & Mtg Fin Agy MFHR
(Rental Hsg) AMT
FSA Ser 00A1
6.35%, 11/01/31 2,000 2,089,180
New Jersey State Ed Facs Auth Rev
(Princeton Univ)
Ser 05A
5.00%, 7/01/23 3,480 3,712,012
New Jersey State Ed Facs Auth Rev
(Ramapo College of New Jersey)
AMBAC Ser 01D
5.00%, 7/01/31 1,000 1,053,350
FGIC Ser 04E
5.00%, 7/01/28 1,000 1,081,210
New Jersey State Trans Auth
(Transportation System)
Ser 03C
5.50%, 6/15/24 3,750 4,124,925
New Jersey Trans Trust Fund
FGIC Ser 06A
5.00%, 6/15/18 3,400 3,659,284
Newark Hsg Auth
(Newark Marine Terminal)
MBIA Ser 04
5.25%, 1/01/21-1/01/22(a) 3,580 3,905,959
North Hudson Swr Auth
MBIA Ser 01A
Zero Coupon, 8/01/24 12,340 5,815,348
Salem Cnty PCR
(PSE&G Power) AMT
Ser 01A
5.75%, 4/01/31 1,500 1,602,630
South Jersey Port Corp
(Marine Terminal) AMT
5.20%, 1/01/23 1,000 1,032,960
58 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Union Cnty Impt Auth
MBIA Ser 03A
5.25%, 8/15/23 $ 2,885 $ 3,104,173
Vineland Sewer Rev
(Landis Sewerage)
FGIC Ser 93C
7.52%, 9/19/19(b) 3,250 3,886,480
-------------
115,103,283
California-0.7%
California State GO
Ser 03
5.25%, 11/01/25 1,000 1,065,070
Florida-3.4%
Crossings at Fleming Island CDD
(Eagle Harbor)
Ser 00C
7.10%, 5/01/30 2,500 2,656,050
Double Branch CDD
(Oakleaf Village)
Ser 02A
6.70%, 5/01/34 990 1,083,683
Hammock Bay CDD
(Special Assessment)
Ser 04A
6.15%, 5/01/24 300 321,441
Northern Palm Beach Assessment Dist
(Unit Development 27B)
Ser 02
6.40%, 8/01/32 1,265 1,329,743
-------------
5,390,917
Guam-0.3%
Guam Govt Wtrwks Auth
(Water & Wastewtr Sys Rev)
Ser 05
6.00%, 7/01/25 500 546,095
Illinois-1.0%
Antioch Village Spcl Svc Area
(Clublands Proj)
Ser 03
6.625%, 3/01/33 1,000 1,056,970
Plano Spl Svc Area No. 3 Spl Tax
(Lakewood Springs Proj)
Ser 05A
5.95%, 3/01/28 550 576,307
-------------
1,633,277
Nevada-0.6%
Henderson Loc Impt Dist
Ser 03
5.80%, 3/01/23 840 868,165
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 59
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York-9.9%
Port Auth NY & NJ
(121st)
MBIA Ser 00
5.375%, 10/15/35 $ 5,000 $ 5,091,250
Port Auth NY & NJ
(126th)
FGIC Ser 02
5.25%, 5/15/37 2,500 2,631,525
Port Auth NY & NJ
(JFK Int'l Airport Proj) AMT
MBIA Ser 97-6
5.75%, 12/01/22 7,675 7,916,072
-------------
15,638,847
Ohio-0.3%
Port Auth of Columbiana Cnty SWR
(Apex Environmental LLC) AMT
Ser 04A
7.125%, 8/01/25 500 508,560
Pennsylvania-1.1%
Delaware Riv Jt Toll Bridge Rev
(PA/NJ Bridge)
Ser 03
5.00%, 7/01/28 1,625 1,691,999
Puerto Rico-4.5%
Puerto Rico Comwlth GO
Ser 06A
5.25%, 7/01/22 500 540,235
Puerto Rico Comwlth GO
(Pub Impt)
Ser 01A
5.50%, 7/01/19 500 560,155
Ser 04A
5.25%, 7/01/19 710 761,588
Puerto Rico HFA
(Cap Fd Prog)
5.00%, 12/01/17 3,665 3,892,377
University of Puerto Rico
Ser 06Q
5.00%, 6/01/20 1,260 1,331,001
-------------
7,085,356
Virginia-0.9%
Broad Street CDD
(Parking Fac)
Ser 03
7.50%, 6/01/33 1,200 1,356,192
Total Long-Term Municipal Bonds
(cost $142,073,150) 150,887,761
60 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Short-Term Municipal Notes-2.9%
New Jersey-1.0%
New Jersey Economic Dev Auth
3.72%, 9/01/31(c) $ 1,500 $ 1,500,000
Alaska-1.9%
Valdez Marine Term Rev
3.75%, 12/01/33(c) 3,000 3,000,000
Total Short-Term Municipal Notes
(cost $4,500,000) 4,500,000
Total Municipal Obligations
(cost $146,573,150) 155,387,761
SHORT-TERM INVESTMENTS-0.2%
Time Deposit-0.2%
The Bank of New York
4.25%, 4/02/07
(cost $380,000) 380 380,000
Total Investments-98.7%
(cost $146,953,150) 155,767,761
Other assets less liabilities-1.3% 2,077,741
Net Assets-100.0% $ 157,845,502
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $1,800 6/22/07 BMA 2.962% $ (2,942)
CitiGroup, Inc. 2,000 11/10/26 3.884% BMA 9,014
JPMorgan Chase 1,700 4/05/07 BMA 2.988% (2,569)
JPMorgan Chase 800 10/01/07 BMA 3.635% 452
JPMorgan Chase 5,600 11/10/11 BMA 3.482% 13,213
Merrill Lynch 800 7/12/08 BMA 3.8154% 3,838
Merrill Lynch 215 2/12/12 BMA 3.548% 1,268
Merrill Lynch 3,000 10/21/16 BMA 4.1285% 111,445
(a) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(b) Inverse Floater Security-Security with variable or floating interest rate
that moves in the opposite direction of short-term interest rates.
(c) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as 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.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 61
Glossary:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
CDD - Community Development District
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Company
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance Inc.
GO - General Obligation
HFA - Housing Finance Authority/Agency
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
PCR - Pollution Control Revenue
RADIAN - Radian Group, Inc.
SWR - Solid Waste Revenue
See notes to financial statements.
62 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
OHIO PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-98.2%
Long-Term Municipal Bonds-97.2%
Ohio-82.2%
Akron GO
MBIA Ser 02
5.00%, 12/01/23 $ 1,000 $ 1,044,990
Brookville Sch Dist GO
FSA Ser 03
5.00%, 12/01/26 2,000 2,154,560
Canton City Sch Dist
MBIA Ser 04B
5.00%, 12/01/22-12/01/23 2,150 2,278,819
Central Ohio Solid Waste Auth
AMBAC Ser 04B
5.00%, 12/01/21 2,035 2,159,725
Cincinnati Tech & Comnty College
AMBAC Ser 02
5.00%, 10/01/28 5,000 5,242,600
Cleveland Cuyahoga Port Auth
Ser 01
7.35%, 12/01/31 2,000 2,149,540
Cleveland Cuyahoga Port Auth
(Rita Proj)
RADIAN Ser 04
5.00%, 11/15/19 1,850 1,936,913
Cleveland GO
AMBAC Ser 04
5.25%, 12/01/24 1,200 1,294,764
MBIA Ser 02
5.25%, 12/01/27(a) 4,380 4,645,428
Cleveland Pub Pwr Sys Rev
FGIC Ser 06A
5.00%, 11/15/18 2,165 2,343,483
Columbus Sch Dist
FGIC Ser 03
5.00%, 12/01/24-12/01/25 4,730 5,071,033
County of Hamilton
(Prerefunded)
AMBAC Ser B
5.25%, 12/01/32 10,525 11,107,348
County of Hamilton
(Unrefunded)
AMBAC Ser B
5.25%, 12/01/32 2,660 2,783,025
Cuyahoga Cnty Hosp Facs Rev
(University Hosp Hlth)
Ser 00
7.50%, 1/01/30 1,900 2,104,611
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 63
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Cuyahoga Cnty MFHR
(Livingston Park Apts)
GNMA Ser 02A
5.45%, 9/20/39 $ 1,500 $ 1,553,850
Cuyahoga Cnty MFHR
(Longwood Proj) AMT
GNMA Ser 01
5.60%, 1/20/43 3,620 3,767,479
Dayton Ohio Arpt Rev
(James M Cox Dayton Intl)
RADIAN Ser 03A
5.00%, 12/01/23 1,280 1,328,320
Dayton Sch Dist
(Administrative Fac Proj)
Ser 03
6.00%, 12/01/19-12/01/21 3,040 3,354,694
Delaware Sch Dist
MBIA Ser 04
5.00%, 12/01/19 1,340 1,430,303
Dublin Sch Dist GO
FSA Ser 03
5.00%, 12/01/22 1,500 1,581,465
Erie Cnty Hosp Rev
(Firelands Med Ctr)
Ser 02A
5.625%, 8/15/32 1,500 1,595,040
Fairfield Cnty Hosp Rev
(Fairfield Med Ctr Proj)
RADIAN Ser 03
5.00%, 6/15/24 1,000 1,027,070
Franklin Cnty
(OCLC Online Computer Library Ctr)
Ser 98A
5.20%, 10/01/20 2,800 2,883,608
Franklin Cnty MFHR
(Agler Green) AMT
GNMA Ser 02A
5.65%, 5/20/32 770 809,539
5.80%, 5/20/44 1,150 1,205,924
Greater Cleveland Regl Tran Auth
MBIA Ser 04
5.00%, 12/01/24 1,350 1,428,178
Hamilton City Sch Dist
MBIA
5.00%, 12/01/24 1,000 1,057,550
Hamilton Cnty Convention Facs Auth Rev
FGIC Ser 04
5.00%, 12/01/23 1,330 1,403,536
Hamilton Cnty Health Fac
(Twin Towers)
Ser 99A
5.80%, 10/01/23 1,775 1,846,994
64 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Lucas Cnty Health Fac
(Altenheim Proj)
GNMA Ser 99
5.50%, 7/20/40 $ 3,200 $ 3,357,408
Madeira City Sch Dist GO
MBIA Ser 04
5.00%, 12/01/22-12/01/23 2,665 2,892,245
Oak Hills Ohio Loc Sch Dist
FSA Ser 05
5.00%, 12/01/25 1,000 1,059,750
Ohio Air Quality Dev Auth PCR
(Toledo Edison Co) AMT
Ser 97A
6.10%, 8/01/27 2,500 2,567,025
Ohio HFA MFHR
(Park Trails Apt) AMT
AMBAC Ser 01A
5.50%, 12/01/34 1,480 1,530,971
Ohio HFA SFMR
(Mortgage Rev) AMT
GNMA Ser 02
5.375%, 9/01/33 1,740 1,780,629
GNMA Ser 02-A2
5.60%, 9/01/34 190 195,314
GNMA Ser 02-A3
5.50%, 9/01/34 1,085 1,097,977
Ohio Sewer & Solid Waste Disp Facs
(Anheuser-Busch) AMT
Ser 01
5.50%, 11/01/35 3,000 3,156,870
Ohio State Bldg Auth
(Adult Correctl Proj)
MBIA Ser 04A
5.00%, 4/01/22 2,975 3,143,742
Ohio State Bldg Auth
(St Facs-Admin Bldg Fd Proj)
FSA Ser 05A
5.00%, 4/01/24 1,500 1,588,050
Ohio State GO
Ser 04A
5.00%, 6/15/22 3,000 3,181,980
Ohio State Higher Ed Fac Cmnty
(Denison University Proj)
Ser 04
5.00%, 11/01/21-11/01/24 3,440 3,637,251
Ohio State University
MBIA Ser 04
5.00%, 12/01/22 1,950 2,062,769
Ohio Wtr Dev Auth
(Anheuser-Busch) AMT
Ser 99
6.00%, 8/01/38(b) 2,250 2,350,845
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 65
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Ohio Wtr Dev Auth PCR
(Cleveland Electric) AMT
Ser 97A
6.10%, 8/01/20 $ 2,000 $ 2,052,280
Pinnacle Comnty Fin Auth
Ser A
6.00%, 12/01/22 2,155 2,262,276
Port Auth of Columbiana Cnty SWR
(Apex Environmental LLC) AMT
Ser 04A
7.125%, 8/01/25 500 508,560
Princeton Sch Dist
MBIA Ser 03
5.00%, 12/01/24 1,600 1,723,648
Riversouth Auth Rev
(Area Redevelopment)
Ser 04A
5.25%, 12/01/21-12/01/22 2,000 2,150,950
Ser 05A
5.00%, 12/01/24 3,590 3,799,153
Steubenville Hosp Rev
(Trinity Hlth)
Ser 00
6.50%, 10/01/30 2,500 2,710,275
Toledo Lucas Cnty Port Auth Rev
(Crocker Park Proj)
Ser 03
5.375%, 12/01/35 2,000 2,130,120
Toledo Lucas Cnty Port Auth Rev
(CSX Transportation)
Ser 92
6.45%, 12/15/21 1,270 1,535,621
Toledo School Dist
FGIC Ser 03B
5.00%, 12/01/23 2,940 3,087,412
Toledo-Lucas Cnty Port Auth Rev
(Cargill, Inc. Project)
Ser 04B
4.50%, 12/01/15 2,500 2,561,150
University of Cincinnati COP
(Univ Cincinnati Ctr Proj)
MBIA
5.00%, 6/01/24 4,470 4,711,469
Youngstown City Sch Dist
FSA
5.00%, 12/01/25 2,155 2,271,111
-------------
137,697,240
66 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California-1.9%
California State GO
Ser 04
5.20%, 4/01/26 $ 1,000 $ 1,061,910
5.25%, 4/01/29 2,000 2,138,580
-------------
3,200,490
Florida-3.0%
Collier Cnty IDR
(Southern State Util) AMT
Ser 96
6.50%, 10/01/25 200 202,230
Crossings at Fleming Island CDD
(Eagle Harbor)
Ser 00C
7.10%, 5/01/30 2,000 2,124,840
Double Branch CDD
(Oakleaf Village)
Ser 02A
6.70%, 5/01/34 950 1,039,899
Fiddlers Creek CPD
Ser 96
7.50%, 5/01/18 1,190 1,203,661
Hammock Bay CDD
(Special Assessment)
Ser 04A
6.15%, 5/01/24 400 428,588
Manatee Cnty CDD
(Heritage Harbor South)
Ser 02B
5.40%, 11/01/08 10 10,030
-------------
5,009,248
Georgia-0.3%
Atlanta Tax Allocation
(Eastside Proj)
Ser 05B
5.60%, 1/01/30 500 520,140
Illinois-1.0%
Antioch Village Spcl Svc Area
(Deercrest Proj)
Ser 03
6.625%, 3/01/33 1,000 1,056,970
Plano Spl Svc Area No. 3 Spl Tax
(Lakewood Springs Proj)
Ser 05A
5.95%, 3/01/28 565 592,024
-------------
1,648,994
Puerto Rico-8.8%
Puerto Rico Comwlth GO
Ser 06A
5.25%, 7/01/22 500 540,235
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 67
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Puerto Rico Comwlth GO
(Pub Impt)
Ser 01A
5.50%, 7/01/19 $ 500 $ 560,155
Puerto Rico Comwlth Govt Dev Bank
(Sr Notes)
Ser 06B
5.00%, 12/01/15 500 535,125
Puerto Rico Convention Ctr Dist Auth Hotel
Occupancy Rev
AMBAC Ser 06A
5.00%, 7/01/18-7/01/19 6,370 6,891,706
Puerto Rico Municipal Fin Agy
Ser 05A
5.25%, 8/01/23 375 402,127
Puerto Rico Tobacco Settlement Rev
(Childrens Trust Fund)
Ser 00
6.00%, 7/01/26 4,000 4,285,920
University of Puerto Rico Rev
5.00%, 6/01/22 1,350 1,421,888
-------------
14,637,156
Total Long-Term Municipal Bonds
(cost $155,542,554) 162,713,268
Short-Term Municipal Notes-1.0%
Ohio-0.1%
Butler Cnty Hlthcare Facs Rev
(Lifesphere Proj)
3.66%, 5/01/27(c) 265 265,000
Alaska-0.9%
Valdez Alaska
3.75%, 12/01/33(c) 1,500 1,500,000
Total Short-Term Municipal Notes
(cost $1,765,000) 1,765,000
Total Municipal Obligations
(cost $157,307,554) 164,478,268
SHORT-TERM INVESTMENTS-0.3%
Time Deposit-0.3%
The Bank of New York
4.25%, 4/02/07
(cost $496,000) 496 496,000
Total Investments-98.5%
(cost $157,803,554) 164,974,268
Other assets less liabilities-1.5% 2,479,449
Net Assets-100.0% $ 167,453,717
68 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $2,000 6/22/07 BMA 2.962% $ (3,269)
CitiGroup, Inc. 2,200 11/10/26 3.884% BMA 9,916
JPMorgan Chase 1,800 4/05/07 BMA 2.988% (2,720)
JPMorgan Chase 900 10/01/07 BMA 3.635% 509
JPMorgan Chase 6,100 11/10/11 BMA 3.482% 14,392
Merrill Lynch 900 7/12/08 BMA 3.8154% 4,317
Merrill Lynch 235 2/12/12 BMA 3.548% 1,386
Merrill Lynch 3,600 8/01/16 BMA 4.071% 117,547
(a) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(b) Variable rate coupon, rate shown as of March 31, 2007.
(c) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
Glossary:
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
CDD - Community Development District
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
PCR - Pollution Control Revenue
RADIAN - Radian Group, Inc.
SFMR - Single Family Mortgage Revenue
SWR - Solid Waste Revenue
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 69
PENNSYLVANIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-98.5%
Long-Term Municipal Bonds-96.6%
Pennsylvania-78.6%
Alleghany Cnty IDA
5.00%, 9/01/21 $ 500 $ 508,275
Allegheny Cnty Arpt Rev AMT
MBIA Ser 97
5.75%, 1/01/10 2,540 2,666,289
Allegheny Cnty GO
FGIC Ser 05C-57
5.00%, 11/01/23 6,390 6,739,725
Allegheny Cnty Higher Ed
(Thiel College)
ACA Ser 99A
5.375%, 11/15/19-11/15/29 2,500 2,576,090
Allegheny Cnty Hlth Fac
(South Hills Hlth)
Ser 00B
6.75%, 5/01/25 1,555 1,690,658
Allegheny Cnty Hlth Rev
(Residential Resources)
Ser 01
6.60%, 9/01/31 1,540 1,718,070
Allegheny Cnty PCR
(USX Corp.)
Ser 98
5.50%, 12/01/29 2,680 2,769,700
Allegheny Cnty Redev Auth Rev
(Pittsburgh Mills Proj)
5.60%, 7/01/23 1,500 1,566,600
Allegheny Cnty San Auth Swr Rev
MBIA Ser 05A
5.00%, 12/01/24 7,490 7,943,145
Butler Cnty
FGIC Ser 03
5.25%, 7/15/26 1,625 1,763,970
Chester Upland Sch Dist
4.30%, 5/15/14 1,705 1,716,304
Crawford Cnty Hlth Fac
(Westbury Methodist)
Ser 99
6.25%, 8/15/29 1,600 1,636,272
Delaware Cnty Higher Ed
(Eastern College)
Ser 99
5.625%, 10/01/28 2,500 2,530,925
Ephrata Area Sch Dist
FGIC Ser 05
5.00%, 3/01/22 1,000 1,061,620
70 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Harrisburg Arpt Auth
(Susquehanna Arpt Proj) AMT
Ser 99
5.50%, 1/01/24 $ 3,490 $ 3,482,392
Lancaster Swr Auth Rev
MBIA Ser 04
5.00%, 4/01/22 1,330 1,402,126
Lehigh Northampton Airport Rev AMT
MBIA Ser 00
6.00%, 5/15/30 4,400 4,633,948
Lycoming Cnty Higher Ed
(College of Technology)
AMBAC Ser 02
5.25%, 5/01/32 2,250 2,361,082
McKean Cnty Hosp Auth Rev
(Bradford Hosp Proj)
ACA
5.00%, 10/01/17 1,205 1,256,634
Meadville PA GO
XLCA
5.00%, 10/01/25 3,080 3,261,227
Montgomery Cnty Higher Ed
(Beaver College)
RADIAN Ser 99
5.70%, 4/01/27 6,000 6,236,520
Montgomery Cnty Hosp Rev
(Abington Mem Hosp)
Ser 02A
5.125%, 6/01/32 3,000 3,111,120
Montgomery Cnty IDA Rev
(Whitemarsh Continuing Care Ret
Comm)
6.00%, 2/01/21 415 439,427
Pennsylvania Eco Dev Auth
(30th St Station ) AMT
ACA Ser 02
5.875%, 6/01/33 3,485 3,766,971
Pennsylvania Eco Dev Auth
(Amtrak) AMT
Ser 01A
6.375%, 11/01/41 3,000 3,241,500
Pennsylvania HFA SFMR
(Mtg Rev) AMT
FSA Ser 03
4.17%, 6/01/08 (a) 3,300 3,300,000
Pennsylvania Hgr Ed Hosp Rev
(UPMC Health Sys)
Ser 01A
6.00%, 1/15/31 2,405 2,610,387
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 71
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Pennsylvania Higher Ed
(Dickinson College)
RADIAN Ser 03AA-1
5.00%, 11/01/26 $ 1,000 $ 1,031,600
Pennsylvania Higher Ed Facs Auth Rev
(Univ Health Sys)
AMBAC Ser 05A
5.00%, 8/15/20 2,000 2,123,360
Philadelphia Auth IDR
(Leadership Learning Partners)
Ser 05A
5.25%, 7/01/24 350 351,957
Philadelphia Auth Indl Dev Lease Rev
FSA Ser 01B
5.25%, 10/01/30 8,000 8,392,160
Philadelphia Gas Wks Rev
ASSURED GTY Ser 04A-1
5.25%, 9/01/19 1,015 1,086,882
Philadelphia Sch Dist Lease Rev
FSA Ser 03
5.25%, 6/01/26(b) 5,000 5,420,200
Pittsburgh GO
FSA Ser 06C
5.25%, 9/01/17 5,000 5,514,750
Pittsburgh Pub Pkg Auth Pkg Rev
FGIC Ser 05A
5.00%, 12/01/19 2,435 2,595,077
Pittsburgh Urban Redev Auth SFMR
(Mortgage Rev) AMT
FHA Ser 97A
6.25%, 10/01/28 790 811,204
Potter Cnty Hosp Rev
(Charles Cole Memorial)
RADIAN Ser 96
6.05%, 8/01/24 4,340 4,412,565
South Central Gen Auth
(Wellspan Health)
MBIA Ser 01
5.25%, 5/15/31 795 836,531
South Central Hosp Rev
(Prerefunded)
MBIA Ser 01
5.25%, 5/15/31 3,905 4,173,625
Southcentral Gen Auth Rev
(Hanover Hosp, Inc.)
RADIAN
5.00%, 12/01/25 1,570 1,632,533
State Pub Sch Bldg Auth Sch Rev
(Colonial Northampton Inter Unit 20)
FGIC Ser 05
5.00%, 5/15/26 2,025 2,141,032
-------------
116,514,453
72 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California-0.7%
California GO
5.00%, 2/01/33 $ 1,000 $ 1,039,760
Florida-4.0%
Collier Cnty IDR
(Southern State Util) AMT
Ser 96
6.50%, 10/01/25 400 404,460
Crossings at Fleming Island CDD
(Eagle Harbor)
Ser 00C
7.10%, 5/01/30 2,000 2,124,840
Double Branch CDD
(Oakleaf Village)
Ser 02A
6.70%, 5/01/34 1,030 1,127,469
Fiddlers Creek CDD
Ser 96
7.50%, 5/01/18 1,010 1,021,595
Hammock Bay CDD
(Special Assessment)
Ser 04A
6.15%, 5/01/24 300 321,441
Northern Palm Beach Assessment Dist
(Unit Development 27B)
Ser 02
6.40%, 8/01/32 935 982,853
-------------
5,982,658
Guam-0.7%
Guam Govt Wtrwks Auth
(Water & Wastewtr Sys Rev)
Ser 05
6.00%, 7/01/25 500 546,095
Guam Intl Arpt Auth
MBIA Ser 03B
5.25%, 10/01/23 500 537,195
-------------
1,083,290
Illinois-1.6%
Antioch Village Spcl Svc Area
(Deercrest Proj)
Ser 03
6.625%, 3/01/33 1,000 1,056,970
Plano Spl Svc Area No. 3 Spl Tax
(Lakewood Springs Proj)
Ser 05A
5.95%, 3/01/28 465 487,241
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 73
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Yorkville Cmnty Fac Dist
(Raintree Village)
Ser 03
6.875%, 3/01/33 $ 800 $ 856,856
-------------
2,401,067
Puerto Rico-9.1%
Puerto Rico Comwlth GO
(Pub Impt)
5.25%, 7/01/23 500 539,440
Ser 01A
5.50%, 7/01/19 500 560,155
Puerto Rico Comwlth Hwy & Trans Auth
Rev
FGIC Ser 03
5.25%, 7/01/14 3,195 3,466,703
FGIC Ser 03G
5.25%, 7/01/14 3,335 3,618,608
Puerto Rico Highway & Transportation
Authority
FSA
5.00%, 7/01/27 4,000 4,224,834
Puerto Rico Municipal Fin Agy
Ser 05A
5.25%, 8/01/23 300 321,702
University of Puerto Rico Rev
5.00%, 6/01/22 655 689,879
-------------
13,421,321
Virgin Islands-1.9%
Virgin Islands Pub Fin Auth
FSA Ser 03
5.00%, 10/01/13-10/01/14 675 728,310
5.25%, 10/01/15-10/01/17 1,840 2,016,166
-------------
2,744,476
Total Long-Term Municipal Bonds
(cost $136,218,557) 143,187,025
Short-Term Municipal Notes-1.9%
Alaska-1.0%
Valdez Alaska Marine Term Rev
(BP Pipelines, Inc. Proj)
3.80%, 7/01/37(c) 1,200 1,200,000
Valdez Marine Term Rev
(BP Pipelines Project)
Ser 03B
3.80%, 7/01/37(c) 300 300,000
-------------
1,500,000
Illinois-0.9%
Romoeoville IL Rev
3.77%, 10/01/36(a) 1,300 1,300,000
74 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
U.S. $ Value
- -------------------------------------------------------------------------------
Total Short-Term Municipal Notes
(cost $2,800,000) $ 2,800,000
Total Investments-98.5%
(cost $139,018,557) 145,987,025
Other assets less liabilities-1.5% 2,199,477
Net Assets-100.0% $ 148,186,502
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $1,600 6/22/07 BMA 2.962% $ (2,615)
CitiGroup, Inc. 1,900 11/10/26 3.884% BMA 8,564
JPMorgan Chase 1,500 4/05/07 BMA 2.988% (2,267)
JPMorgan Chase 800 10/01/07 BMA 3.635% 452
JPMorgan Chase 5,300 11/10/11 BMA 3.482% 12,505
Merrill Lynch 700 7/12/08 BMA 3.8154% 3,358
Merrill Lynch 205 2/12/12 BMA 3.548% 1,209
(a) Variable rate couon, rate shown as of March 31, 2007.
(b) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(c) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
Glossary:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
ASSURED GTY - Assured Guaranty
BMA - Bond Market Association
CDD - Community Development District
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Administration
FSA - Financial Security Assurance Inc.
GO - General Obligation
HFA - Housing Finance Authority/Agency
IDA - Industrial Development Authority/Agency
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance
PCR - Pollution Control Revenue
RADIAN - Radian Group, Inc.
SFMR - Single Family Mortgage Revenue
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II . 75
VIRGINIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-99.1%
Long-Term Municipal Bonds-97.1%
Virginia-74.7%
Albemarle Cnty Ed Fac
(The Convent School)
Ser 01A
7.75%, 7/15/32 $ 4,260 $ 4,671,729
Arlington Cnty IDA Rev Sew Rev
(Ogden Martin) AMT
FSA Ser 98B
5.25%, 1/01/09 2,295 2,349,254
Arlington Cnty MFHR
(Arlington View Terrace) AMT
FNMA Ser 01
5.15%, 11/01/31 1,550 1,609,411
Arlington IDA Hosp Rev
(Arlington Hlth Sys)
Ser 01
5.25%, 7/01/31 5,900 6,318,133
Bell Creek CDD
Ser 03A
6.75%, 3/01/22 300 301,806
Broad Street CDD
(Parking Fac)
Ser 03
7.50%, 6/01/33 1,500 1,695,240
Celebrate North Cmnty Dev Dist
Ser 03B
6.60%, 3/01/25 1,250 1,342,125
Chesterfield Cnty
(Elec & Pwr Co)
Ser 02
5.875%, 6/01/17 3,800 4,100,770
Dinwiddie Cnty IDA
(Lease Rev)
MBIA Ser 04B
5.00%, 2/15/24 3,200 3,358,912
Dulles Town CDA
(Dulles Town Ctr Proj)
Ser 98
6.25%, 3/01/26 2,035 2,096,477
Fairfax Water Auth Rev
Ser 02
5.00%, 4/01/32(a) 3,380 3,506,784
Greater Richmond Hotel Tax Rev
(Convention Ctr Proj)
Ser 00
6.25%, 6/15/32 6,000 6,525,480
76 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Hampton Convention Ctr Rev
AMBAC Ser 02
5.00%, 1/15/35(b) $ 5,150 $ 5,372,635
Harrisonburg MFHR
(Greens of Salem Run) AMT
FSA Ser 97
6.30%, 4/01/29 1,110 1,140,114
Harrisonburg Va IDA
AMBAC
5.00%, 8/15/22-8/15/25 7,850 8,354,348
James City Cnty Solid Waste Rev
(Anheuser Busch Proj) AMT
Ser 97
6.00%, 4/01/32 4,200 4,259,598
James City Cnty Econ Dev
FSA
5.00%, 6/15/22 4,385 4,703,395
Newport Cmnty Dev Auth
(Spl Assmt)
5.50%, 9/01/26 1,000 1,045,920
Newport News Health Care Fac
(Mennowood)
GNMA Ser 96A
6.25%, 8/01/36 2,580 2,670,352
Newport News MFHR
(Walker Village Proj) AMT
GNMA Ser 02A
5.55%, 9/20/34 1,880 1,952,474
5.65%, 3/20/44 1,660 1,718,980
Norfolk Arpt Auth Rev
(Air Cargo) AMT
Ser 02
6.25%, 1/01/30 990 1,051,677
Norfolk Arpt Auth Rev AMT
FGIC Ser 01B
5.30%, 7/01/25 10,000 10,426,600
Northwestern Regl Jail Auth Facs Rev
MBIA
5.00%, 7/01/25 1,500 1,585,995
Pocahontas Pkwy Assoc Toll Rd Rev
(Cap Appreciation) Sr
Ser 98B
Zero Coupon, 8/15/15 750 491,070
Portsmouth Virginia GO
(Prerefunded Ref & Pub Util)
FGIC Ser B
5.00%, 6/01/26 1,405 1,427,536
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 77
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Portsmouth Virginia GO
(Unrefunded Ref Pub Util)
FGIC Ser B
5.00%, 6/01/26 $ 95 $ 96,254
Prince William MFHR
(Woodwind Gables) AMT
AMBAC Ser 01A
5.30%, 12/01/34 2,860 2,956,239
Richmond
FSA Ser 05A
5.00%, 7/15/22 2,500 2,669,150
Upper Occoquan Sew Auth Rev
FSA
5.00%, 7/01/25 2,500 2,659,450
Virginia Beach MFHR
(Beth Sholom Terrace)
GNMA Ser 02
5.40%, 4/01/44 2,900 3,078,292
Virginia Beach Wtr & Swr Rev
5.00%, 10/01/30 2,000 2,114,740
Virginia Biotechnology Auth
(Consolidated Laboratories Proj)
Ser 01
5.00%, 9/01/21 4,170 4,355,690
Virginia College Bldg Auth Facs Rev
(Pub Higher Ed Financing Prog)
Ser 05A
5.00%, 9/01/16-9/01/17 11,725 12,667,743
Virginia HDA SFMR
(Mortgage Rev) AMT
Ser 01D
5.40%, 6/01/24 3,155 3,249,334
Virginia Hsg Dev Auth MFHR
(Rental Hsg) AMT
Ser 02B
5.50%, 4/01/27 5,000 5,156,850
Ser 99
5.95%, 2/01/23 5,525 5,703,844
Virginia Port Auth Rev
(Newport News) AMT
Ser 02
5.00%, 7/01/27 1,000 1,037,610
5.125%, 7/01/24 4,000 4,190,880
-------------
134,012,891
California-0.6%
California State GO
Ser 04
5.25%, 4/01/29 1,000 1,069,290
78 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
District Of Columbia-5.3%
Metropolitan Washington Arpt Rev AMT
Ser 97B
5.50%, 10/01/23 $ 9,410 $ 9,582,768
Florida-1.8%
Fleming Island Plantation Cmnty Dev Dist
Ser 00B
7.375%, 5/01/31 3,000 3,191,100
Georgia-0.3%
Atlanta Tax Allocation
(Eastside Proj)
Ser 05B
5.60%, 1/01/30 500 520,140
Illinois-0.8%
Plano Spl Svc Area No. 3 Spl Tax
(Lakewood Springs Proj)
Ser 05A
5.95%, 3/01/28 465 487,241
Yorkville Cmnty Fac Dist
(Raintree Village)
Ser 03
6.875%, 3/01/33 1,000 1,071,070
-------------
1,558,311
New Jersey-2.9%
Garden State Preservation Trust
(Open Space & Farmland)
FSA Ser 05A
5.80%, 11/01/16 4,500 5,153,220
Puerto Rico-10.7%
Puerto Rico Comwlth GO
(Pub Impt)
Ser 01A
5.50%, 7/01/19 500 560,155
Puerto Rico Comwlth Govt Dev Bank
(Sr Notes)
Ser 06B
5.00%, 12/01/15 500 535,125
Puerto Rico Comwlth Hwy & Trans Auth
Rev
FGIC Ser 03
5.25%, 7/01/14 1,760 1,909,670
FGIC Ser 03G
5.25%, 7/01/14 1,840 1,996,474
Puerto Rico Elec Pwr Auth
MBIA
5.50%, 7/01/17 5,000 5,687,950
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 79
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Puerto Rico Elec Pwr Auth
XLCA Ser 02-1
5.25%, 7/01/22 $ 1,100 $ 1,180,872
Puerto Rico HFA
(Cap Fd Prog)
5.00%, 12/01/20 4,870 5,125,772
Puerto Rico Municipal Fin Agy
Ser 05A
5.25%, 8/01/23 340 364,596
University of Puerto Rico Rev
5.00%, 6/01/22 1,740 1,832,655
-------------
19,193,269
Total Long-Term Municipal Bonds
(cost $167,905,885) 174,280,989
Short-Term Municipal Notes-2.0%
Virginia-2.0%
Loudoun Cnty IDA
3.77%, 2/15/38(c)
(cost $3,530,000) 3,530 3,530,000
Total Investments-99.1%
(cost $171,435,885) 177,810,989
Other assets less liabilities-0.9% 1,584,814
Net Assets-100.0% $ 179,395,803
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
CitiGroup, Inc. $1,600 6/22/07 BMA 2.962% $ (2,615)
CitiGroup, Inc. 2,300 11/10/26 3.884% BMA 10,367
JPMorgan Chase 1,500 4/05/07 BMA 2.988% (2,266)
JPMorgan Chase 900 10/01/07 BMA 3.635% 509
JPMorgan Chase 6,400 11/10/11 BMA 3.482% 15,100
Merrill Lynch 900 7/12/08 BMA 3.82% 4,317
Merrill Lynch 250 2/12/12 BMA 3.548% 1,474
FINANCIAL FUTURES CONTRACTS (see Note D)
Value at
Number of Expiration Original March 31, Unrealized
Type Contracts Month Value 2007 Appreciation
- --------------------------------------------------------------------------------------
Purchased Contracts
U.S. Treasury
Note 10 Yr Future 115 June 2007 $12,342,267 $12,434,375 $ 92,108
80 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
(a) Position, or a portion thereof, has been segregated to collateralize
margin requirements for open futures contracts. The aggregate market value of
these securities amounted to $129,689.
(b) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(c) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
Glossary:
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
CDA - Community Development Administration
CDD - Community Development District
FGIC - Financial Guaranty Insurance Company
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HFA - Housing Finance Authority/Agency
IDA - Industrial Development Authority/Agency
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
SFMR - Single Family Mortgage Revenue
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 81
STATEMENT OF ASSETS & LIABILITIES
March 31, 2007 (unaudited)
Arizona Florida
-------------- --------------
Assets
Investments in securities, at value
(cost: $200,704,159 and $182,442,405,
respectively) $ 208,301,044 $ 190,045,002
Cash 71 57,120
Unrealized appreciation of interest rate
swap contracts 44,198 241,734
Interest receivable 2,812,765 3,653,395
Receivable for shares of beneficial interest
sold 1,067,670 961,162
Receivable for investment securities sold -0- 5,000,000
Total assets 212,225,748 199,958,413
Liabilities
Unrealized depreciation of interest rate
swap contracts 23,864 6,618
Payable for shares of beneficial interest
redeemed 5,163,370 1,493,430
Dividends payable 261,866 275,064
Distribution fee payable 100,331 94,628
Advisory fee payable 54,621 46,773
Administrative fee payable 20,166 23,977
Transfer Agent fee payable 2,772 3,070
Variation margin on futures contracts -0- 15,500
Accrued expenses and other liabilities 79,078 85,554
Total liabilities 5,706,068 2,044,614
Net Assets $ 206,519,680 $ 197,913,799
Composition of Net Assets
Shares of beneficial interest, at par $ 186,813 $ 192,601
Additional paid-in capital 199,948,311 196,851,825
Distributions in excess of net investment
income (179,827) (217,946)
Accumulated net realized loss on
investment transactions (1,052,836) (6,849,710)
Net unrealized appreciation of investments 7,617,219 7,937,029
$ 206,519,680 $ 197,913,799
Net Asset Value Per Share--unlimited shares authorized, $.01 par value
Shares Net Asset
Arizona Portfolio Net Assets Outstanding Value
- -------------------------------------------------------------------------------
Class A $ 135,081,746 12,212,893 $ 11.06*
Class B $ 45,724,081 4,140,119 $ 11.04
Class C $ 25,713,853 2,328,317 $ 11.04
Florida Portfolio
- -------------------------------------------------------------------------------
Class A $ 130,438,492 12,695,816 $ 10.27*
Class B $ 31,208,042 3,036,398 $ 10.28
Class C $ 36,267,265 3,527,874 $ 10.28
* The maximum offering price per share for Class A shares of Arizona Portfolio
and Florida Portfolio were $11.55 and $10.73, respectively, which reflects a
sales charge of 4.25%.
See notes to financial statements.
82 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Massachusetts Michigan
-------------- --------------
Assets
Investments in securities, at value
(cost: $129,825,302 and $121,919,443,
respectively) $ 136,008,399 $ 127,394,662
Cash 313,008 299,690
Unrealized appreciation of interest rate
swap contracts 222,743 264,216
Interest receivable 1,879,113 2,290,137
Receivable for shares of beneficial interest
sold 888,535 454,066
Total assets 139,311,798 130,702,771
Liabilities
Unrealized depreciation of interest rate
swap contracts 4,101 4,253
Payable for shares of beneficial interest
redeemed 794,971 352,791
Dividends payable 172,171 149,413
Distribution fee payable 80,887 76,241
Advisory fee payable 26,684 50,529
Administrative fee payable 20,439 -0-
Variation margin on futures contracts 3,750 -0-
Transfer Agent fee payable 3,363 4,573
Accrued expenses and other liabilities 78,401 81,226
Total liabilities 1,184,767 719,026
Net Assets $ 138,127,031 $ 129,983,745
Composition of Net Assets
Shares of beneficial interest, at par $ 126,756 $ 119,902
Additional paid-in capital 141,239,247 124,208,841
Distributions in excess of net investment
income (136,464) (130,346)
Accumulated net realized gain (loss) on
investment transactions (9,528,275) 50,166
Net unrealized appreciation of investments 6,425,767 5,735,182
$ 138,127,031 $ 129,983,745
Net Asset Value Per Share--unlimited shares authorized, $.01 par value
Shares Net Asset
Massachusetts Portfolio Net Assets Outstanding Value
- -------------------------------------------------------------------------------
Class A $ 67,326,079 6,172,548 $ 10.91*
Class B $ 34,716,418 3,188,911 $ 10.89
Class C $ 36,084,534 3,314,146 $ 10.89
Michigan Portfolio
- -------------------------------------------------------------------------------
Class A $ 62,573,035 5,766,922 $ 10.85*
Class B $ 28,013,152 2,586,546 $ 10.83
Class C $ 39,397,558 3,636,753 $ 10.83
* The maximum offering price per share for Class A shares of Massachusetts
Portfolio and Michigan Portfolio were $11.39 and $11.33, respectively, which
reflects a sales charge of 4.25%.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 83
Minnesota New Jersey
-------------- --------------
Assets
Investments in securities, at value
(cost: $89,130,771 and $146,953,150,
respectively) $ 93,050,616 $ 155,767,761
Cash 268,116 89
Unrealized appreciation of interest rate
swap contracts 130,923 139,230
Interest receivable 1,405,949 2,329,779
Receivable for shares of beneficial interest
sold 251,726 936,743
Total assets 95,107,330 159,173,602
Liabilities
Unrealized depreciation of interest rate
swap contracts 2,995 5,511
Payable for shares of beneficial interest
redeemed 212,285 877,832
Dividends payable 119,894 200,735
Distribution fee payable 39,408 84,915
Custodian fee payable 29,332 32,408
Advisory fee payable 24,361 42,120
Transfer Agent fee payable 2,622 5,626
Administrative fee payable -0- 19,251
Accrued expenses and other liabilities 48,167 59,702
Total liabilities 479,064 1,328,100
Net Assets $ 94,628,266 $ 157,845,502
Composition of Net Assets
Shares of beneficial interest, at par $ 93,072 $ 159,275
Additional paid-in capital 92,256,118 161,990,876
Distributions in excess of net investment
income (101,074) (155,185)
Accumulated net realized loss on
investment transactions (1,667,623) (13,097,794)
Net unrealized appreciation of investments 4,047,773 8,948,330
$ 94,628,266 $ 157,845,502
Net Asset Value Per Share--unlimited shares authorized, $.01 par value
Shares Net Asset
Minnesota Portfolio Net Assets Outstanding Value
- -------------------------------------------------------------------------------
Class A $ 71,561,702 7,039,292 $ 10.17*
Class B $ 8,673,237 853,292 $ 10.16
Class C $ 14,393,327 1,414,596 $ 10.17
New Jersey Portfolio
- -------------------------------------------------------------------------------
Class A $ 88,296,410 8,911,665 $ 9.91*
Class B $ 36,410,711 3,673,401 $ 9.91
Class C $ 33,138,381 3,342,409 $ 9.91
* The maximum offering price per share for Class A shares of Minnesota
Portfolio and New Jersey Portfolio were $10.62 and $10.35, respectively, which
reflects a sales charge of 4.25%.
See notes to financial statements.
84 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Ohio Pennsylvania
-------------- --------------
Assets
Investments in securities, at value
(cost: $157,803,554 and $139,018,557,
respectively) $ 164,974,268 $ 145,987,025
Cash 997 2,128
Unrealized appreciation of interest rate
swap contracts 148,067 26,088
Interest receivable 2,718,846 2,428,811
Receivable for shares of beneficial interest
sold 406,759 935,533
Total assets 168,248,937 149,379,585
Liabilities
Unrealized depreciation of interest rate
swap contracts 5,989 4,882
Payable for shares of beneficial interest
redeemed 340,817 781,737
Dividends payable 200,266 174,312
Distribution fee payable 93,090 77,787
Advisory fee payable 43,968 49,977
Administrative fee payable 20,591 21,273
Transfer Agent fee payable 8,330 4,884
Accrued expenses and other liabilities 82,169 78,231
Total liabilities 795,220 1,193,083
Net Assets $ 167,453,717 $ 148,186,502
Composition of Net Assets
Shares of beneficial interest, at par $ 164,876 $ 140,343
Additional paid-in capital 166,577,134 143,318,169
Distributions in excess of net investment
income (124,142) (113,279)
Accumulated net realized loss on
investment transactions (6,476,943) (2,148,405)
Net unrealized appreciation of investments 7,312,792 6,989,674
$ 167,453,717 $ 148,186,502
Net Asset Value Per Share--unlimited shares authorized, $.01 par value
Shares Net Asset
Ohio Portfolio Net Assets Outstanding Value
- -------------------------------------------------------------------------------
Class A $ 88,751,504 8,735,953 $ 10.16*
Class B $ 36,764,413 3,621,793 $ 10.15
Class C $ 41,937,800 4,129,843 $ 10.15
Pennsylvania Portfolio
- -------------------------------------------------------------------------------
Class A $ 86,365,921 8,179,939 $ 10.56*
Class B $ 28,861,389 2,733,010 $ 10.56
Class C $ 32,959,192 3,121,353 $ 10.56
* The maximum offering price per share for Class A shares of Ohio Portfolio
and Pennsylvania Portfolio were $10.61 and $11.03, respectively, which reflects
a sales charge of 4.25%.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 85
Virginia
--------------
Assets
Investments in securities, at value (cost $171,435,885) $ 177,810,989
Cash 3,533,182
Unrealized appreciation of interest rate swap contracts 31,767
Interest receivable 2,560,310
Receivable for shares of beneficial interest sold 950,218
Total assets 184,886,466
Liabilities
Unrealized depreciation of interest rate swap contracts 4,881
Payable for investment securities purchased 3,539,919
Payable for shares of beneficial interest redeemed 1,485,907
Dividends payable 231,881
Distribution fee payable 89,601
Advisory fee payable 39,025
Variation margin on futures contracts 14,375
Transfer Agent fee payable 3,213
Accrued expenses and other liabilities 81,861
Total liabilities 5,490,663
Net Assets $ 179,395,803
Composition of Net Assets
Shares of beneficial interest, at par $ 166,296
Additional paid-in capital 175,337,414
Undistributed net investment income 152,014
Accumulated net realized loss on investment transactions (2,754,019)
Net unrealized appreciation of investments 6,494,098
$ 179,395,803
Net Asset Value Per Share--unlimited shares authorized, $.01 par value
Shares Net Asset
Virginia Portfolio Net Assets Outstanding Value
- -------------------------------------------------------------------------------
Class A $ 112,774,739 10,445,710 $ 10.80*
Class B $ 31,446,458 2,917,513 $ 10.78
Class C $ 35,174,606 3,266,339 $ 10.77
* The maximum offering price per share for Class A shares of Virginia
Portfolio was $11.28 which reflects a sales charge of 4.25%.
See notes to financial statements.
86 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
STATEMENT OF OPERATIONS
Six Months Ended March 31, 2007 (unaudited)
Arizona Florida
-------------- --------------
Investment Income
Interest $ 5,148,672 $ 5,446,083
Expenses
Advisory fee 484,903 467,409
Distribution fee--Class A 210,354 202,589
Distribution fee--Class B 247,855 175,603
Distribution fee--Class C 128,525 187,788
Transfer agency--Class A 18,042 24,274
Transfer agency--Class B 9,075 8,380
Transfer agency--Class C 3,678 7,098
Custodian 70,147 64,242
Administrative 41,000 41,000
Audit 19,493 19,581
Legal 16,404 17,095
Registration 11,349 10,797
Printing 9,294 8,537
Trustees' fees 2,200 2,200
Miscellaneous 3,217 5,040
Total expenses 1,275,536 1,241,633
Less: expenses waived and reimbursed
by the Adviser (see Note B) (170,727) (176,270)
Less: expense offset arrangement
(see Note B) (845) (814)
Net expenses 1,103,964 1,064,549
Net investment income 4,044,708 4,381,534
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions (12,505) 1,022,668
Futures contracts -0- 25,609
Swap contracts (18,801) (11,583)
Net change in unrealized
appreciation/depreciation of:
Investments (190,848) (1,992,672)
Futures contracts -0- 19,812
Swap contracts 42,288 80,777
Net loss on investment transactions (179,866) (855,389)
Net Increase in Net Assets from
Operations $ 3,864,842 $ 3,526,145
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 87
Massachusetts Michigan
-------------- --------------
Investment Income
Interest $ 3,461,033 $ 3,249,826
Expenses
Advisory fee 319,942 300,160
Distribution fee--Class A 99,997 95,342
Distribution fee--Class B 192,118 147,145
Distribution fee--Class C 185,541 202,068
Transfer agency--Class A 14,445 18,761
Transfer agency--Class B 10,303 10,539
Transfer agency--Class C 8,758 13,009
Custodian 66,952 73,063
Administrative 43,000 45,000
Audit 19,434 19,572
Legal 16,710 17,225
Printing 11,886 11,991
Registration 10,020 7,933
Trustees' fees 2,200 2,200
Miscellaneous 5,157 4,015
Total expenses 1,006,463 968,023
Less: expenses waived and reimbursed
by the Adviser (see Note B) (157,724) (48,058)
Less: expense offset arrangement
(see Note B) (1,372) (1,950)
Net expenses 847,367 918,015
Net investment income 2,613,666 2,331,811
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions 45,085 113,105
Futures contracts 7,050 -0-
Swap contracts (4,639) (3,284)
Net change in unrealized
appreciation/depreciation of:
Investments (486,440) (353,876)
Futures contracts (8,203) -0-
Swap contracts 56,586 61,699
Net loss on investment transactions (390,561) (182,356)
Net Increase in Net Assets from
Operations $ 2,223,105 $ 2,149,455
See notes to financial statements.
88 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Minnesota New Jersey
-------------- --------------
Investment Income
Interest $ 2,356,632 $ 4,137,070
Expenses
Advisory fee 214,866 355,312
Distribution fee--Class A 105,858 126,338
Distribution fee--Class B 48,186 200,420
Distribution fee--Class C 76,433 168,035
Transfer agency--Class A 17,574 24,848
Transfer agency--Class B 3,094 14,473
Transfer agency--Class C 4,269 10,604
Custodian 65,508 66,004
Administrative 45,000 43,000
Audit 19,739 19,633
Legal 18,926 14,982
Printing 8,987 12,771
Registration 4,971 5,486
Trustees' fees 2,200 2,200
Miscellaneous 3,737 1,194
Total expenses before interest expense 639,348 1,065,300
Interest expense and fees -0- 108,630
Total expenses 639,348 1,173,930
Less: expenses waived and reimbursed
by the Adviser (see Note B) (120,857) (117,615)
Less: expense offset arrangement
(see Note B) (1,526) (2,830)
Net expenses 516,965 1,053,485
Net investment income 1,839,667 3,083,585
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions 44,139 548,429
Swap contracts 100 (11,105)
Net change in unrealized
appreciation/depreciation of:
Investments (422,800) (883,316)
Swap contracts 34,710 50,703
Net loss on investment transactions (343,851) (295,289)
Net Increase in Net Assets from
Operations $ 1,495,816 $ 2,788,296
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 89
Ohio Pennsylvania
-------------- --------------
Investment Income
Interest $ 4,143,756 $ 3,618,523
Expenses
Advisory fee 385,210 335,885
Distribution fee--Class A 132,360 125,601
Distribution fee--Class B 197,903 158,679
Distribution fee--Class C 216,918 169,063
Transfer agency--Class A 23,631 22,696
Transfer agency--Class B 13,085 10,406
Transfer agency--Class C 12,523 10,030
Custodian 68,640 64,298
Administrative 39,000 41,000
Audit 19,275 19,581
Legal 17,229 16,895
Printing 10,740 8,128
Registration 5,355 6,189
Trustees' fees 2,200 2,200
Miscellaneous 6,926 3,082
Total expenses 1,150,995 993,733
Less: expenses waived and reimbursed
by the Adviser (see Note B) (131,502) (52,289)
Less: expense offset arrangement
(see Note B) (1,500) (2,933)
Net expenses 1,017,993 938,511
Net investment income 3,125,763 2,680,012
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions 126,612 61,976
Swap contracts (7,439) (13,363)
Net change in unrealized
appreciation/depreciation of:
Investments (207,728) (411,132)
Swap contracts 52,461 31,540
Net loss on investment transactions (36,094) (330,979)
Net Increase in Net Assets from
Operations $ 3,089,669 $ 2,349,033
See notes to financial statements.
90 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Virginia
--------------
Investment Income
Interest $ 4,460,656
Expenses
Advisory fee 409,017
Distribution fee--Class A 166,699
Distribution fee--Class B 175,906
Distribution fee--Class C 177,357
Transfer agency--Class A 23,556
Transfer agency--Class B 8,384
Transfer agency--Class C 7,721
Custodian 68,086
Administrative 39,000
Audit 19,483
Legal 17,727
Printing 6,621
Registration 6,201
Trustees' fees 2,200
Miscellaneous 4,284
Total expenses 1,132,242
Less: expenses waived and reimbursed by the Adviser
(see Note B) (229,075)
Less: expense offset arrangement (see Note B) (1,455)
Net expenses 901,712
Net investment income 3,558,944
Realized and Unrealized Gain (Loss) on Investment
Transactions
Net realized gain (loss) on:
Investment transactions 244,876
Futures contracts (88,288)
Swap contracts (13,827)
Net change in unrealized appreciation/depreciation of:
Investments (1,006,804)
Futures contracts 65,249
Swap contracts 35,784
Net loss on investment transactions (763,010)
Net Increase in Net Assets from Operations $ 2,795,934
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 91
STATEMENT OF CHANGES IN NET ASSETS
Arizona
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 4,044,708 $ 7,894,681
Net realized gain (loss) on investment
transactions (31,306) 112,807
Net change in unrealized
appreciation/depreciation of
investments (148,560) 235,761
Net increase in net assets from
operations 3,864,842 8,243,249
Dividends to Shareholders from
Net investment income
Class A (2,789,840) (5,034,561)
Class B (814,090) (1,986,406)
Class C (422,344) (877,013)
Transactions in Shares of Beneficial
Interest
Net increase (decrease) (9,714,347) 16,165,619
Total increase (decrease) (9,875,779) 16,510,888
Net Assets
Beginning of period 216,395,459 199,884,571
End of period (including distributions in
excess of net investment income of
$(179,827) and $(198,261),
respectively) $ 206,519,680 $ 216,395,459
See notes to financial statements.
92 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Florida
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 4,381,534 $ 9,325,277
Net realized gain on investment
transactions 1,036,694 1,054,455
Net change in unrealized
appreciation/depreciation of
investments (1,892,083) (408,285)
Net increase in net assets from
operations 3,526,145 9,971,447
Dividends to Shareholders from
Net investment income
Class A (3,011,669) (6,108,809)
Class B (658,999) (1,715,989)
Class C (705,421) (1,505,113)
Transactions in Shares of Beneficial
Interest
Net decrease (16,630,196) (6,734,730)
Total decrease (17,480,140) (6,093,194)
Net Assets
Beginning of period 215,393,939 221,487,133
End of period (including distributions in
excess of net investment income of
$(217,946) and $(223,391),
respectively) $ 197,913,799 $ 215,393,939
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 93
Massachusetts
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 2,613,666 $ 5,207,931
Net realized gain on investment
transactions 47,496 496,991
Net change in unrealized
appreciation/depreciation of
investments (438,057) (778,292)
Net increase in net assets from
operations 2,223,105 4,926,630
Dividends to Shareholders from
Net investment income
Class A (1,349,538) (2,314,758)
Class B (643,962) (1,593,222)
Class C (622,657) (1,299,532)
Transactions in Shares of Beneficial
Interest
Net increase (decrease) (3,822,195) 4,595,839
Total increase (decrease) (4,215,247) 4,314,957
Net Assets
Beginning of period 142,342,278 138,027,321
End of period (including distributions in
excess of net investment income of
$(136,464) and $(133,973),
respectively) $ 138,127,031 $ 142,342,278
See notes to financial statements.
94 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Michigan
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 2,331,811 $ 5,008,197
Net realized gain on investment
transactions 109,821 558,659
Net change in unrealized
appreciation/depreciation of
investments (292,177) (164,385)
Net increase in net assets from
operations 2,149,455 5,402,471
Dividends and Distributions to
Shareholders from
Net investment income
Class A (1,229,007) (2,433,142)
Class B (467,169) (1,204,158)
Class C (641,099) (1,373,126)
Net realized gain on investments
Class A (259,975) (57,135)
Class B (121,587) (37,261)
Class C (165,841) (39,589)
Transactions in Shares of Beneficial
Interest
Net decrease (6,287,941) (2,627,344)
Total decrease (7,023,164) (2,369,284)
Net Assets
Beginning of period 137,006,909 139,376,193
End of period (including distributions in
excess of net investment income of
$(130,346) and $(124,882),
respectively) $ 129,983,745 $ 137,006,909
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 95
Minnesota
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 1,839,667 $ 3,849,931
Net realized gain on investment
transactions 44,239 178,373
Net change in unrealized
appreciation/depreciation of
investments (388,090) (113,622)
Net increase in net assets from
operations 1,495,816 3,914,682
Dividends to Shareholders from
Net investment income
Class A (1,424,635) (2,885,957)
Class B (160,628) (411,238)
Class C (254,933) (557,346)
Transactions in Shares of Beneficial
Interest
Net decrease (2,411,285) (3,427,560)
Total decrease (2,755,665) (3,367,419)
Net Assets
Beginning of period 97,383,931 100,751,350
End of period (including distributions in
excess of net investment income of
$(101,074) and $(100,545),
respectively) $ 94,628,266 $ 97,383,931
See notes to financial statements.
96 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
New Jersey
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 3,083,585 $ 6,427,008
Net realized gain on investment
transactions 537,324 1,142,297
Net change in unrealized
appreciation/depreciation of
investments (832,613) (727,965)
Net increase in net assets from
operations 2,788,296 6,841,340
Dividends to Shareholders from
Net investment income
Class A (1,779,768) (3,396,985)
Class B (705,397) (1,796,564)
Class C (590,889) (1,239,006)
Transactions in Shares of Beneficial
Interest
Net decrease (1,762,533) (12,068,085)
Total decrease (2,050,291) (11,659,300)
Net Assets
Beginning of period 159,895,793 171,555,093
End of period (including distributions in
excess of net investment income of
$(155,185) and $(162,716),
respectively) $ 157,845,502 $ 159,895,793
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 97
Ohio
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 3,125,763 $ 6,774,706
Net realized gain on investment
transactions 119,173 770,982
Net change in unrealized
appreciation/depreciation of
investments (155,267) (487,893)
Net increase in net assets from
operations 3,089,669 7,057,795
Dividends to Shareholders from
Net investment income
Class A (1,756,143) (3,573,196)
Class B (650,112) (1,655,774)
Class C (712,511) (1,552,095)
Transactions in Shares of Beneficial
Interest
Net decrease (6,244,256) (15,019,332)
Total decrease (6,273,353) (14,742,602)
Net Assets
Beginning of period 173,727,070 188,469,672
End of period (including distributions in
excess of net investment income of
$(124,142) and $(131,139),
respectively) $ 167,453,717 $ 173,727,070
See notes to financial statements.
98 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Pennsylvania
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 2,680,012 $ 5,541,207
Net realized gain on investment
transactions 48,613 273,378
Net change in unrealized
appreciation/depreciation of
investments (379,592) 404,931
Net increase in net assets from
operations 2,349,033 6,219,516
Dividends to Shareholders from
Net investment income
Class A (1,624,623) (3,169,657)
Class B (504,402) (1,239,222)
Class C (537,686) (1,136,126)
Transactions in Shares of Beneficial
Interest
Net decrease (426,827) (6,680,062)
Total decrease (744,505) (6,005,551)
Net Assets
Beginning of period 148,931,007 154,936,558
End of period (including distributions in
excess of net investment income of
$(113,279) and $(126,580),
respectively) $ 148,186,502 $ 148,931,007
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 99
Virginia
-------------------------------
Six Months
Ended Year Ended
March 31, 2007 September 30,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 3,558,944 $ 6,925,953
Net realized gain on investment
transactions 142,761 13,758
Net change in unrealized
appreciation/depreciation of
investments (905,771) 445,302
Net increase in net assets from
operations 2,795,934 7,385,013
Dividends to Shareholders from
Net investment income
Class A (2,316,439) (4,266,428)
Class B (611,043) (1,519,323)
Class C (617,476) (1,143,354)
Transactions in Shares of Beneficial
Interest
Net increase (decrease) (747,712) 15,931,078
Total increase (decrease) (1,496,736) 16,386,986
Net Assets
Beginning of period 180,892,539 164,505,553
End of period (including undistributed net
investment income of $152,014 and
$138,028, respectively) $ 179,395,803 $ 180,892,539
See notes to financial statements.
100 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
NOTES TO FINANCIAL STATEMENTS
March 31, 2007 (unaudited)
NOTE A
Significant Accounting Policies
AllianceBernstein Municipal Income Fund II (the "Fund"), which is a
Massachusetts Business Trust, is registered under the Investment Company Act of
1940, as an open-end management investment company. The Arizona Portfolio,
Florida Portfolio, Massachusetts Portfolio, Michigan Portfolio, Minnesota
Portfolio and New Jersey Portfolio are each diversified Portfolios. Each of the
other Portfolios is non-diversified. The Fund operates as a series company
currently comprised of nine portfolios: Arizona Portfolio, Florida Portfolio,
Massachusetts Portfolio, Michigan Portfolio, Minnesota Portfolio, New Jersey
Portfolio, Ohio Portfolio, Pennsylvania Portfolio and Virginia Portfolio (the
"Portfolios"). Each series is considered to be a separate entity for financial
reporting and tax purposes. Each portfolio offers Class A, Class B and Class C
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to
a contingent deferred sales charge of 1%. Class B shares are currently sold
with a contingent deferred sales charge which declines from 3% to zero
depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares six years after the end of the calendar
month of purchase. Class C shares are subject to a contingent deferred sales
charge of 1% on redemptions made within the first year after purchase. All
three classes of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that the classes bear
different distribution and transfer agency expenses. Each class has exclusive
voting rights with respect to its distribution plan. The financial statements
have been prepared in conformity with U.S. generally accepted accounting
principles, which require management to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities in the financial
statements and amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
the significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange (other than securities listed on The NASDAQ Stock Market,
Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 101
sale on such day, the securities are valued at the mean of the closing bid and
asked prices on such day. Securities listed on more than one exchange are
valued by reference to the principal exchange on which the securities are
traded; securities listed only on NASDAQ are valued in accordance with the
NASDAQ Official Closing Price; listed put or call options are valued at the
last sale price. If there has been no sale on that day, such securities will be
valued at the closing bid prices on that day; open futures contracts and
options thereon are valued using the closing settlement price or, in the
absence of such a price; the most recent quoted bid price. If there are no
quotations available for the day of valuation, the last available closing
settlement price is used; securities traded in the over-the-counter market,
("OTC") are valued at the mean of the current bid and asked prices as reported
by the National Quotation Bureau or other comparable sources; U.S. Government
securities and other debt instruments having 60 days or less remaining until
maturity are valued at amortized cost if their original maturity was 60 days or
less; or by amortizing their fair value as of the 61st day prior to maturity if
their original term to maturity exceeded 60 days; fixed-income securities,
including mortgage backed and asset backed securities, may be valued on the
basis of prices provided by a pricing service or at a price obtained from one
or more of the major broker/dealers. In cases where broker/dealer quotes are
obtained, AllianceBernstein L.P. (the "Adviser") may establish procedures
whereby changes in market yields or spreads are used to adjust, on a daily
basis, a recently obtained quoted price on a security; and OTC and other
derivatives are valued on the basis of a quoted bid price or spread from a
major broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Taxes
It is each Portfolio's policy to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
102 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. As described more fully in the
prospectus for the Portfolios, each Portfolio may buy and sell securities from
other affiliated funds in accordance with the requirements of Rule 17a-7 of the
Investment Company Act of 1940. Each Portfolio has adopted procedures to ensure
that all such transactions are done in accordance with the requirements of Rule
17a-7. The Portfolios amortize premium and accrete original issue discount and
market discount as adjustments to interest income.
The Portfolios follow an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations held
by the Portfolios.
4. Class Allocations
All income earned and expenses incurred by the Portfolios are borne on a
pro-rata basis by each settled class of shares, based on the proportionate
interest in the Portfolios represented by the net assets of such class, except
for class specific expenses which are allocated to the respective class.
Realized and unrealized gains and losses are allocated among the various share
classes based on their respective net assets.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
U.S. generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences do not require such
reclassification.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .45% of the first $2.5 billion, .40% of
the next $2.5 billion and .35% in excess of $5 billion, of the average daily
net assets of each Portfolio. Prior to September 7, 2004, the Fund paid the
Adviser an advisory fee at an annual rate of .625% of each Portfolio's average
daily net assets. Such fees are accrued daily and paid monthly.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 103
The Adviser has voluntarily agreed to waive its fees and bear certain expenses
to the extent necessary to limit the total portfolio operating expenses on an
annual basis as follows:
Portfolios Class A Class B Class C
- ----------------------------------------------------------------------------
Arizona 0.78% 1.48% 1.48%
Florida 0.78% 1.48% 1.48%
Massachusetts 0.82% 1.52% 1.52%
Michigan 1.01% 1.71% 1.71%
Minnesota 0.90% 1.60% 1.60%
New Jersey 0.87% 1.57% 1.57%
Ohio 0.85% 1.55% 1.55%
Pennsylvania 0.95% 1.65% 1.65%
Virginia 0.72% 1.42% 1.42%
For the six months ended March 31, 2007, the Adviser has voluntarily agreed to
waive a portion of its advisory fees. The aggregate amounts of such fee waivers
were as follows: Arizona Portfolio, $170,727; Florida Portfolio, $176,270;
Massachusetts Portfolio, $157,724; Michigan Portfolio, $3,058; Minnesota
Portfolio, $75,857; New Jersey Portfolio, $117,615; Ohio Portfolio, $131,502;
Pennsylvania Portfolio, $52,289; and Virginia Portfolio, $190,075.
Pursuant to the advisory agreement, the Arizona, Florida, Massachusetts, New
Jersey, Ohio and Pennsylvania Portfolios each paid $41,000, $41,000, $43,000,
$43,000, $39,000 and $41,000, respectively, to the Adviser representing the
cost of certain legal and accounting services provided to these Portfolios by
the Adviser for the six months ended March 31, 2007. Additionally, the Adviser
voluntarily agreed to waive all such fees for these services for the Michigan,
Minnesota and Virginia Portfolios in the aggregate amount of $45,000, $45,000
and $39,000, respectively, for each of these Portfolios.
Each Portfolio compensates AllianceBernstein Investor Services, Inc. ("ABIS"),
a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement,
for providing personnel and facilities to perform transfer agency services for
each Portfolio. ABIS may make payments to intermediaries that provide omnibus
account services, sub-accounting services and/or networking services. For the
six months ended March 31, 2007, such compensation retained by ABIS amounted
to: Arizona Portfolio, $17,832; Florida Portfolio, $15,594; Massachusetts
Portfolio, $16,409; Michigan Portfolio, $21,565; Minnesota Portfolio, $13,520;
New Jersey Portfolio, $24,863; Ohio Portfolio, $21,761; Pennsylvania Portfolio,
$22,927; and Virginia Portfolio, $18,043.
For the six months ended March 31, 2007, each Portfolio's expenses were reduced
under an expense offset arrangement with ABIS, as follows: Arizona Portfolio,
by $845; Florida Portfolio, by $814; Massachusetts Portfolio, by $1,372;
Michigan Portfolio, by $1,950; Minnesota Portfolio, by $1,526; New
104 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Jersey Portfolio, by $2,830; Ohio Portfolio, by $1,500; Pennsylvania Portfolio,
by $2,933; and Virginia Portfolio, by $1,455.
AllianceBernstein Investments, Inc. (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the distributor of the Fund's shares. The
Distributor has advised the Fund that it has retained front-end sales charges
from sales of Class A shares and received contingent deferred sales charges
imposed upon redemptions by shareholders of Class A, Class B and Class C shares
for each Portfolio for the six months ended March 31, 2007 as follows:
Front End Contingent Deferred Sales Charges
Sales Charges --------------------------------------------
Portfolio Class A Class A Class B Class C
- ---------------------------------------------------------------------------
Arizona $11,567 $5,264 $5,661 $1,648
Florida 7,586 2,748 4,697 96
Massachusetts 4,507 5,180 5,102 6,190
Michigan 5,153 7,531 5,717 1,190
Minnesota 3,797 583 1,423 386
New Jersey 4,284 333 7,473 790
Ohio 3,181 6,117 3,383 575
Pennsylvania 5,117 595 4,076 269
Virginia 8,572 -0- 1,620 3,724
NOTE C
Distribution Services Agreement
Each Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, each Portfolio pays distribution and servicing fees to the
Distributor at an annual rate of up to .30% of each Portfolio's average daily
net assets attributable to Class A shares and 1% of each Portfolio's average
daily net assets attributable to both Class B and Class C shares. Such fees are
accrued daily and paid monthly. The Agreement provides that the Distributor
will use such payments in their entirety for distribution assistance and
promotional activities. The Distributor has incurred expenses in excess of the
distribution costs reimbursed by each Portfolio as follows:
Portfolio Class B Class C
- ------------------------------------------------------------------------
Arizona $ 3,849,776 $ 1,358,342
Florida 4,082,951 2,825,165
Massachusetts 3,686,402 2,933,788
Michigan 3,359,422 3,593,486
Minnesota 2,721,292 2,319,418
New Jersey 5,552,864 2,987,266
Ohio 4,631,670 3,207,311
Pennsylvania 3,757,539 2,839,387
Virginia 3,812,893 2,206,169
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 105
Such costs may be recovered from each Portfolio in future periods so long as
the Agreement is in effect. In accordance with the Agreement, there is no
provision for recovery of unreimbursed distribution costs incurred by the
Distributor beyond the current fiscal year for Class A shares. The Agreement
also provides that the Adviser may use its own resources to finance the
distribution of each Portfolio's shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) for the six months ended March 31, 2007 were as
follows:
Portfolio Purchases Sales
- ------------------------------------------------------------------------
Arizona $ 4,210,806 $ 1,401,680
Florida 22,877,359 42,627,690
Massachusetts 13,495,847 2,965,950
Michigan 1,229,810 6,404,613
Minnesota -0- 5,021,370
New Jersey 1,350,254 6,066,378
Ohio 1,441,233 6,117,715
Pennsylvania 699,265 1,877,355
Virginia 20,736,546 6,050,215
There were no purchases or sales of U.S. government and government agency
obligations during the period.
At March 31, 2007, the cost of investments for federal income tax purposes,
gross unrealized appreciation, gross unrealized depreciation and net unrealized
appreciation/depreciation of investments for each Portfolio were as follows
(excluding futures and swap contracts):
Gross Unrealized Gross Unrealized Net Unrealized
Portfolio Tax Cost Appreciation Depreciation Appreciation
- -------------------------------------------------------------------------------
Arizona $200,704,159 $7,776,869 $179,984 $7,596,885
Florida 182,442,405 7,667,017 64,420 7,602,597
Massachusetts 129,825,302 6,250,328 67,231 6,183,097
Michigan 121,919,443 5,536,460 61,241 5,475,219
Minnesota 89,130,771 3,937,406 17,561 3,919,845
New Jersey 146,953,150 8,831,484 16,873 8,814,611
Ohio 157,803,554 7,214,531 43,817 7,170,714
Pennsylvania 139,018,557 6,998,460 29,992 6,968,468
Virginia 171,435,885 6,520,627 145,523 6,375,104
1. Swap Agreements
The Portfolios may enter into swaps to hedge its exposure to interest rates and
credit risk or for investment purposes. A swap is an agreement that obligates
two parties to exchange a series of cash flows at specified intervals based
upon or calculated by reference to changes in specified prices or rates for a
specified amount
106 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
of an underlying asset. The payment flows are usually netted against each
other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net interest payment
to be received by the Portfolios, and/or the termination value at the end of
the contract. Therefore, the Portfolios consider the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the value of the underlying securities.
The Portfolios accrue for the interim payments on swap contracts on a daily
basis, with the net amount recorded within unrealized appreciation/depreciation
of swap contracts on the statement of assets and liabilities. Once the interim
payments are settled in cash, the net amount is recorded as realized gain/loss
on swaps, in addition to realized gain/loss recorded upon the termination of
swap contracts on the statements of operations. Fluctuations in the value of
swap contracts are recorded as a component of net change in unrealized
appreciation/depreciation of investments.
The Portfolios may enter into credit default swaps. The Portfolios may purchase
credit protection on the referenced obligation of the credit default swap ("Buy
Contract") or provide credit protection on the referenced obligation of the
credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap
provides upon the occurrence of a credit event, as defined in the swap
agreement, for the Portfolio to buy/(sell) from/(to) the counterparty at the
notional amount (the "Notional Amount") and receive/(deliver) the principal
amount of the referenced obligation. If a credit event occurs, the maximum
payout amount for a Sale Contract is limited to the Notional Amount of the swap
contract ("Maximum Payout Amount"). During the term of the swap agreement, the
Portfolio receives/(pays) fixed payments from/(to) the respective counterparty,
calculated at the agreed upon interest rate applied to the Notional Amount.
These interim payments are recorded within unrealized appreciation/depreciation
of swap contracts on the statement of assets and liabilities.
Credit default swaps may involve greater risks than if a Portfolio had invested
in the referenced obligation directly. Credit default swaps are subject to
general market risk, liquidity risk, counterparty risk and credit risk. If the
Portfolio is a buyer and no credit event occurs, it will lose its investment.
In addition, if the Portfolio is a seller and a credit event occurs, the value
of the referenced obligation received by the Portfolio coupled with the
periodic payments previously received, may be less than the Maximum Payout
Amount it pays to the buyer, resulting in a loss to the Portfolio.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 107
2. Financial Futures Contracts
The Portfolios may buy or sell financial futures contracts for the purpose of
hedging its portfolio against adverse affects of anticipated movements in the
market. The Portfolios bear the market risk that arises from changes in the
value of these financial instruments and the imperfect correlation between
movements in the price of the futures contracts and movements in the price of
securities hedged or used to cover.
At the time the Portfolios enter into a futures contract, the Portfolios
deposit and maintain as collateral an initial margin with the broker, as
required by the exchange on which the transaction is affected. Pursuant to the
contract, the Portfolios agree to receive from or pay to the broker an amount
of cash equal to the daily fluctuation in the value of the contract. Such
receipts or payments are known as variation margin and are recorded by the
Portfolios as unrealized gains or losses. Risk may arise from the potential
inability of a counterparty to meet the terms of a contract. When the contract
is closed, the Portfolios record a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
time it was closed.
NOTE E
Shares of Beneficial Interest
Transactions in shares of beneficial interest for each Portfolio were as
follows:
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Arizona Portfolio (unaudited) 2006 (unaudited) 2006
- ----------------- ------------ ------------ -------------- --------------
Class A
Shares sold 998,595 3,812,913 $ 11,060,818 $ 41,789,746
Shares issued in
reinvestment
of dividends 179,743 298,106 1,990,826 3,271,392
Shares converted
from Class B 239,634 234,967 2,651,522 2,582,561
Shares redeemed (1,750,446) (1,900,622) (19,401,591) (20,856,830)
Net increase
(decrease) (332,474) 2,445,364 $ (3,698,425) $ 26,786,869
108 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Arizona Portfolio (unaudited) 2006 (unaudited) 2006
- ----------------- ------------ ------------ -------------- --------------
Class B
Shares sold 66,454 193,507 $ 734,535 $ 2,122,269
Shares issued in
reinvestment
of dividends 50,962 122,439 563,569 1,342,312
Shares converted
to Class A (240,051) (235,327) (2,651,522) (2,582,561)
Shares redeemed (448,016) (1,097,963) (4,955,635) (12,005,729)
Net decrease (570,651) (1,017,344) $ (6,309,053) $ (11,123,709)
Class C
Shares sold 184,013 551,969 $ 2,037,509 $ 6,044,324
Shares issued in
reinvestment
of dividends 26,073 59,236 288,332 649,141
Shares redeemed (183,954) (566,353) (2,032,710) (6,191,006)
Net increase 26,132 44,852 $ 293,131 $ 502,459
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Florida Portfolio (unaudited) 2006 (unaudited) 2006
- ----------------- ------------ ------------ -------------- --------------
Class A
Shares sold 1,050,806 2,976,910 $ 10,828,313 $ 30,460,070
Shares issued in
reinvestment
of dividends 179,243 350,468 1,847,367 3,584,428
Shares converted
from Class B 243,143 506,116 2,507,050 5,173,470
Shares redeemed (2,181,531) (2,832,605) (22,501,535) (28,963,898)
Net increase
(decrease) (708,339) 1,000,889 $ (7,318,805) $ 10,254,070
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 109
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Florida Portfolio (unaudited) 2006 (unaudited) 2006
- ----------------- ------------ ------------ -------------- --------------
Class B
Shares sold 47,079 193,103 $ 485,763 $ 1,977,737
Shares issued in
reinvestment
of dividends 41,793 111,772 430,906 1,143,612
Shares converted
to Class A (243,021) (505,887) (2,507,050) (5,173,470)
Shares redeemed (495,270) (1,361,792) (5,107,524) (13,913,644)
Net decrease (649,419) (1,562,804) $ (6,697,905) $ (15,965,765)
Class C
Shares sold 145,058 540,218 $ 1,498,735 $ 5,529,081
Shares issued in
reinvestment
of dividends 43,244 96,314 445,993 985,512
Shares redeemed (441,927) (737,749) (4,558,214) (7,537,628)
Net decrease (253,625) (101,217) $ (2,613,486) $ (1,023,035)
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
Massachusetts March 31, 2007 September 30, March 31, 2007 September 30,
Portfolio (unaudited) 2006 (unaudited) 2006
- -------------- ------------ ------------ -------------- --------------
Class A
Shares sold 769,179 1,545,223 $ 8,407,433 $ 16,810,875
Shares issued in
reinvestment
of dividends 92,754 150,045 1,014,188 1,629,355
Shares converted
from Class B 182,989 186,197 1,999,866 2,019,260
Shares redeemed (643,028) (950,867) (7,023,322) (10,314,160)
Net increase 401,894 930,598 $ 4,398,165 $ 10,145,330
Class B
Shares sold 34,395 194,913 $ 375,436 $ 2,114,973
Shares issued in
reinvestment
of dividends 44,788 113,372 488,649 1,229,113
Shares converted
to Class A (183,325) (186,522) (1,999,866) (2,019,260)
Shares redeemed (482,663) (936,177) (5,274,038) (10,138,969)
Net decrease (586,805) (814,414) $ (6,409,819) $ (8,814,143)
110 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
Massachusetts March 31, 2007 September 30, March 31, 2007 September 30,
Portfolio (unaudited) 2006 (unaudited) 2006
- -------------- ------------ ------------ -------------- --------------
Class C
Shares sold 114,981 845,015 $ 1,256,578 $ 9,161,295
Shares issued in
reinvestment
of dividends 43,355 92,443 473,158 1,002,006
Shares redeemed (324,459) (637,698) (3,540,277) (6,898,649)
Net increase
(decrease) (166,123) 299,760 $ (1,810,541) $ 3,264,652
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Michigan Portfolio (unaudited) 2006 (unaudited) 2006
- ------------------ ------------ ------------ -------------- --------------
Class A
Shares sold 406,846 1,640,644 $ 4,429,397 $ 17,742,353
Shares issued in
reinvestment
of dividends
and distributions 113,214 183,274 1,233,076 1,980,782
Shares converted
from Class B 91,271 146,144 994,503 1,580,451
Shares redeemed (793,978) (1,040,006) (8,651,997) (11,213,786)
Net increase
(decrease) (182,647) 930,056 $ (1,995,021) $ 10,089,800
Class B
Shares sold 60,854 146,209 $ 661,777 $ 1,577,811
Shares issued in
reinvestment
of dividends
and distributions 42,987 90,368 467,394 975,048
Shares converted
to Class A (91,439) (146,387) (994,503) (1,580,451)
Shares redeemed (254,922) (1,082,297) (2,772,577) (11,661,405)
Net decrease (242,520) (992,107) $ (2,637,909) $ (10,688,997)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 111
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Michigan Portfolio (unaudited) 2006 (unaudited) 2006
- ------------------ ------------ ------------ -------------- --------------
Class C
Shares sold 186,554 413,350 $ 2,027,748 $ 4,460,531
Shares issued in
reinvestment
of dividends
and distributions 60,623 106,400 659,396 1,148,273
Shares redeemed (398,898) (708,791) (4,342,155) (7,636,951)
Net decrease (151,721) (189,041) $ (1,655,011) $ (2,028,147)
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Minnesota Portfolio (unaudited) 2006 (unaudited) 2006
- ------------------- ------------ ------------ -------------- --------------
Class A
Shares sold 458,270 1,026,728 $ 4,677,562 $ 10,384,436
Shares issued in
reinvestment
of dividends 80,785 146,849 823,948 1,486,649
Shares converted
from Class B 82,757 91,735 846,042 930,243
Shares redeemed (558,270) (1,076,264) (5,693,353) (10,873,082)
Net increase 63,542 189,048 $ 654,199 $ 1,928,246
Class B
Shares sold 9,278 27,475 $ 94,477 $ 271,900
Shares issued in
reinvestment
of dividends 11,396 27,937 116,210 282,790
Shares converted
to Class A (82,772) (91,749) (846,042) (930,243)
Shares redeemed (121,559) (342,173) (1,239,241) (3,459,151)
Net decrease (183,657) (378,510) $ (1,874,596) $ (3,834,704)
Class C
Shares sold 61,345 243,427 $ 626,438 $ 2,465,544
Shares issued in
reinvestment
of dividends 19,847 42,970 202,585 435,381
Shares redeemed (197,767) (436,628) (2,019,911) (4,422,027)
Net decrease (116,575) (150,231) $ (1,190,888) $ (1,521,102)
112 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
New Jersey March 31, 2007 September 30, March 31, 2007 September 30,
Portfolio (unaudited) 2006 (unaudited) 2006
- --------------- ------------ ------------ -------------- --------------
Class A
Shares sold 796,328 1,437,584 $ 7,914,172 $ 14,103,550
Shares issued in
reinvestment
of dividends 125,217 221,462 1,243,846 2,177,303
Shares converted
from Class B 438,879 449,383 4,366,075 4,418,293
Shares redeemed (819,507) (1,576,537) (8,140,736) (15,490,295)
Net increase 540,917 531,892 $ 5,383,357 $5,208,851
Class B
Shares sold 141,748 229,392 $ 1,409,636 $ 2,257,148
Shares issued in
reinvestment
of dividends 56,439 149,007 560,798 1,465,862
Shares converted
to Class A (438,879) (449,255) (4,366,075) (4,418,293)
Shares redeemed (392,832) (1,552,323) (3,905,401) (15,256,345)
Net decrease (633,524) (1,623,179) $ (6,301,042) $ (15,951,628)
Class C
Shares sold 203,991 406,393 $ 2,029,256 $ 3,995,670
Shares issued in
reinvestment
of dividends 44,696 92,196 444,332 909,188
Shares redeemed (333,580) (634,079) (3,318,436) (6,230,166)
Net decrease (84,893) (135,490) $ (844,848) $ (1,325,308)
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Ohio Portfolio (unaudited) 2006 (unaudited) 2006
- --------------- ------------ ------------ -------------- --------------
Class A
Shares sold 609,380 1,246,323 $ 6,208,370 $ 12,560,794
Shares issued in
reinvestment
of dividends 133,244 267,765 1,356,571 2,693,831
Shares converted
from Class B 155,652 359,115 1,586,547 3,615,913
Shares redeemed (813,199) (1,682,953) (8,271,778) (16,910,019)
Net increase 85,077 190,250 $ 879,710 $ 1,960,519
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 113
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, 2007 September 30, March 31, 2007 September 30,
Ohio Portfolio (unaudited) 2006 (unaudited) 2006
- --------------- ------------ ------------ -------------- --------------
Class B
Shares sold 85,099 160,497 $ 866,401 $ 1,614,314
Shares issued in
reinvestment
of dividends 48,046 125,529 488,797 1,261,972
Shares converted
to Class A (155,785) (359,374) (1,586,547) (3,615,913)
Shares redeemed (472,834) (1,251,239) (4,817,318) (12,566,978)
Net decrease (495,474) (1,324,587) $ (5,048,667) $ (13,306,605)
Class C
Shares sold 175,399 375,360 $ 1,787,279 $ 3,775,137
Shares issued in
reinvestment
of dividends 51,342 113,660 522,575 1,143,033
Shares redeemed (431,298) (854,251) (4,385,153) (8,591,416)
Net decrease (204,557) (365,231) $ (2,075,299) $ (3,673,246)
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
Pennsylvania March 31, 2007 September 30, March 31, 2007 September 30,
Portfolio (unaudited) 2006 (unaudited) 2006
- -------------- ------------ ------------ -------------- --------------
Class A
Shares sold 597,605 859,609 $ 6,332,652 $ 8,998,699
Shares issued in
reinvestment
of dividends 122,109 233,653 1,292,882 2,445,046
Shares converted
from Class B 259,788 321,265 2,750,459 3,363,475
Shares redeemed (469,229) (1,198,167) (4,968,321) (12,522,458)
Net increase 510,273 216,360 $ 5,407,672 $ 2,284,762
Class B
Shares sold 60,512 118,943 $ 641,025 $ 1,244,478
Shares issued in
reinvestment
of dividends 38,666 97,721 409,408 1,022,909
Shares converted
to Class A (259,788) (321,167) (2,750,459) (3,363,475)
Shares redeemed (267,150) (700,464) (2,829,932) (7,327,059)
Net decrease (427,760) (804,967) $ (4,529,958) $ (8,423,147)
114 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
Pennsylvania March 31, 2007 September 30, March 31, 2007 September 30,
Portfolio (unaudited) 2006 (unaudited) 2006
- -------------- ------------ ------------ -------------- --------------
Class C
Shares sold 104,529 324,629 $ 1,106,998 $ 3,398,081
Shares issued in
reinvestment
of dividends 37,265 79,133 394,594 828,250
Shares redeemed (264,879) (455,281) (2,806,133) (4,768,008)
Net decrease (123,085) (51,519) $ (1,304,541) $ (541,677)
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
Virginia March 31, 2007 September 30, March 31, 2007 September 30,
Portfolio (unaudited) 2006 (unaudited) 2006
- -------------- ------------ ------------ -------------- --------------
Class A
Shares sold 812,788 2,697,272 $ 8,804,025 $ 29,061,573
Shares issued in
reinvestment
of dividends 164,403 293,204 1,780,226 3,160,065
Shares converted
from Class B 334,242 425,979 3,617,654 4,588,717
Shares redeemed (951,695) (1,522,250) (10,304,211) (16,385,521)
Net increase 359,738 1,894,205 $ 3,897,694 $ 20,424,834
Class B
Shares sold 27,162 169,150 $ 293,268 $ 1,818,350
Shares issued in
reinvestment
of dividends 46,692 117,556 504,865 1,265,032
Shares converted
to Class A (334,825) (426,683) (3,617,654) (4,588,717)
Shares redeemed (240,790) (746,049) (2,602,283) (8,022,307)
Net decrease (501,761) (886,026) $ (5,421,804) $ (9,527,642)
Class C
Shares sold 217,598 773,375 $ 2,351,674 $ 8,313,101
Shares issued in
reinvestment
of dividends 48,619 91,728 525,214 986,085
Shares redeemed (194,377) (396,742) (2,100,490) (4,265,300)
Net increase 71,840 468,361 $ 776,398 $ 5,033,886
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 115
NOTE F
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $250 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the six months ended March 31, 2007.
NOTE G
Distributions To Shareholders
The tax character of distributions to be paid for the year ending September 30,
2007 will be determined at the end of the current fiscal year. The tax
character of distributions paid during the fiscal years ended September 30,
2006 and September 30, 2005 were as follows:
Arizona Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 7,890,473 $ 7,400,654
Ordinary income 7,507 46,781
Total distributions paid $ 7,897,980 $ 7,447,435
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed Tax-Exempt Income $ 16,112
Accumulated capital and other losses (1,004,746)(a)
Unrealized appreciation/(depreciation) 7,753,192(b)
Total accumulated earnings/(deficit) $ 6,764,558(c)
(a) On September 30, 2006, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $856,546 of which $385,413 expires in the
year 2008, $383,250 expires in the year 2010 and $87,883 expires in the year
2011. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed. During the fiscal year ended
September 30, 2006, the Portfolio utilized capital loss carryforwards of
$191,728. For fiscal year ended September 30, 2006, the Portfolio deferred to
October 1, 2006 post October capital losses of $148,200.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales, the realization for tax purposes gains/losses on certain
derivative instruments and the difference between the book and tax treatment of
swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
116 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Florida Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 9,306,646 $ 9,106,816
Ordinary income 23,265 102,519
Total distributions paid $ 9,329,911 $ 9,209,335
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed Tax-Exempt Income $ 16,192
Accumulated capital and other losses (7,732,969)(a)
Unrealized appreciation/(depreciation) 9,679,601(b)
Total accumulated earnings/(deficit) $ 1,962,824(c)
(a) On September 30, 2006, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $7,732,969 of which $4,253,064 expires in
the year 2008, $3,475,986 expires in the year 2009 and $3,919 expires in the
year 2010. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed. During the fiscal year ended
September 30, 2006, the Portfolio utilized capital loss carryforwards of
$1,026,501.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales and the difference between the book and tax treatment of
swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 117
Massachusetts Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 5,201,319 $ 5,160,022
Ordinary income 6,193 129,453
Total distributions paid $ 5,207,512 $ 5,289,475
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed Tax-Exempt Income $ 2,537
Accumulated capital and other losses (9,469,288)(a)
Unrealized appreciation/(depreciation) 6,759,736(b)
Total accumulated earnings/(deficit) $ (2,707,015)(c)
(a) On September 30, 2006, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $9,469,288 of which $5,690,960 expires in
the year 2008, $1,585,051 expires in the year 2009 and $2,193,277 expires in
the year 2011. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed. During the fiscal year ended
September 30, 2006, the Portfolio utilized capital loss carryforwards of
$518,324.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales and the difference between the book and tax treatment of
swap income and the tax treatment of open futures contracts.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
118 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Michigan Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 4,978,179 $ 5,052,285
Ordinary income 13,541 46,347
Long term capital gains 152,691 100,074
Total distributions paid $ 5,144,411 $ 5,198,706
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Long term capital gains $ 513,915
Unrealized appreciation/(depreciation) 6,003,727(a)
Total accumulated earnings/(deficit) $ 6,517,642(b)
(a) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales and the difference between the book and tax treatment of
swap income.
(b) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 119
Minnesota Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 3,831,101 $ 3,772,527
Ordinary income 23,440 104,128
Total distributions paid $ 3,854,541 $ 3,876,655
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $ (1,685,384)(a)
Unrealized appreciation/(depreciation) 4,408,183(b)
Total accumulated earnings/(deficit) $ 2,722,799(c)
(a) On September 30, 2006, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $1,685,384 of which $879,267 expires in the
year 2008, $160,146 expires in the year 2009, $46,432 expires in the year 2010,
$179,795 expires in the year 2011, $142,635 expires in the year 2012 and
$277,109 expires in the year 2013. To the extent future capital gains are
offset by capital loss carryforwards, such gains will not be distributed.
During the fiscal year ended September 30, 2006, the Portfolio utilized capital
loss carryforwards of $172,429.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales, and the difference between the book and tax treatment of
swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
120 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
New Jersey Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 6,402,977 $ 6,957,994
Ordinary income 29,578 282,927
Total distributions paid $ 6,432,555 $ 7,240,921
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $ (13,421,185)(a)
Unrealized appreciation/(depreciation) 9,570,370(b)
Total accumulated earnings/(deficit) $ (3,850,815)(c)
(a) On September 30, 2006, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $13,421,185 of which $1,673,160 expires in
the year 2008, $1,077,263 expires in the year 2009, $4,688,584 expires in the
year 2010, $5,617,272 expires in the year 2011 and $364,906 expires in the year
2012. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed. During the fiscal year ended
September 30, 2006, the Portfolio utilized capital loss carryforwards of
$1,121,603.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales, the realization for tax purposes of gains/losses on
certain derivative instruments, and the difference between book and tax
treatment of swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 121
Ohio Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 6,727,534 $ 7,265,838
Ordinary income 53,531 59,799
Total distributions paid $ 6,781,065 $ 7,325,637
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed tax exempt income $ 41,580
Accumulated capital and other losses (6,596,116)(a)
Unrealized appreciation/(depreciation) 7,468,480(b)
Total accumulated earnings/(deficit) $ 913,944(c)
(a) On September 30, 2006, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $6,596,116 of which $1,299,298 expires in
the year 2008, $1,639,021 expires in the year 2009, $3,620,192 expires in the
year 2011 and $37,605 expires in the year 2012. To the extent future capital
gains are offset by capital loss carryforwards, such gains will not be
distributed. During the fiscal year ended September 30, 2006 the Portfolio
utilized capital loss carryforwards of $653,132.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the difference
between book and tax treatment of swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
122 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Pennsylvania Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 5,491,025 $ 6,033,362
Ordinary income 53,980 59,374
Total distributions paid $ 5,545,005 $ 6,092,736
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed Tax Exempt Income $ 14,595
Accumulated capital and other losses (2,195,930)(a)
Unrealized appreciation/(depreciation) 7,371,152(b)
Total accumulated earnings/(deficit) $ 5,189,817(c)
(a) On September 30, 2006, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $2,195,930 of which $1,475,398 expires in
the year 2008, $274,791 expires in the year 2010 and $445,741 expires in the
year 2011. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed. During the fiscal year ended
September 30, 2006, the Portfolio utilized capital loss carryforwards of
$224,553.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales, and the difference between book and tax treatment of swap
income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 123
Virginia Portfolio 2006 2005
-------------- --------------
Distributions paid from:
Tax-exempt income $ 6,880,113 $ 6,674,553
Ordinary income 48,992 45,915
Total distributions paid $ 6,929,105 $ 6,720,468
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed tax-exempt income $ 328,822
Accumulated capital and other losses (2,625,377)(a)
Unrealized appreciation/(depreciation) 7,131,322(b)
Total accumulated earnings/(deficit) $ 4,834,767(c)
(a) On September 30, 2006, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $2,625,377 of which $599,723 expires in the
year 2008, $1,200,330 expires in the year 2009, $793,446 expires in the year
2010 and $31,878 expires in the year 2014. To the extent future capital gains
are offset by capital loss carryforwards, such gains will not be distributed.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales the realization for tax purposes of gains/losses on
certain derivative instruments, and the difference between book and tax
treatment of swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
NOTE H
Risks Involved in Investing in the Fund
Credit Risk--The Portfolios of the AllianceBernstein Municipal Income Fund II
are State Portfolios that may invest a large portion of their assets in a
particular state's municipal securities and their various political
subdivisions, and the performance of each of these Portfolios may be closely
tied to economic conditions within the applicable state and the financial
condition of that state and its agencies and municipalities.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications.The Fund's maximum
exposure under these arrangements is unknown.However, the Fund has not had
prior claims or losses pursuant to these contracts and expects the risk of loss
thereunder to be remote.
NOTE I
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the Office of New York Attorney General ("NYAG") have
been investigating practices in the mutual fund industry identified as "market
timing" and "late trading" of mutual fund shares. Certain other regula-
124 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
tory authorities have also been conducting investigations into these practices
within the industry and have requested that the Adviser provide information to
them. The Adviser has been cooperating and will continue to cooperate with all
of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order and the NYAG Order contemplate that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, directed and oversaw an internal investigation and a
comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 125
In addition, the Independent Trustees of the Trust ("the Independent Trustees")
have conducted an investigation of the above-mentioned matters with the advice
of an independent economic consultant and independent counsel.
On October 2, 2003, a purported class action complaint entitled Hindo, et al.
v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the
AllianceBernstein Funds, certain officers of the Adviser ("Alliance
defendants"), and certain other defendants not affiliated with the Adviser, as
well as unnamed Doe defendants. The Hindo Complaint was filed in the United
States District Court for the Southern District of New York by alleged
shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges
that certain of the Alliance defendants failed to disclose that they improperly
allowed certain hedge funds and other unidentified parties to engage in "late
trading" and "market timing" of AllianceBernstein Fund securities, violating
Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the
Exchange Act and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an
unspecified amount of compensatory damages and rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, 43 additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants. The
plaintiffs in such lawsuits have asserted a variety of theories for recovery
including, but not limited to, violations of the Securities Act, the Exchange
Act, the Advisers Act, the Investment Company Act, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), certain state securities
laws and common law. All state court actions against the Adviser either were
voluntarily dismissed or removed to federal court. On February 20, 2004, the
Judicial Panel on Multidistrict Litigation transferred all actions to the
United States District Court for the District of Maryland (the "Mutual Fund
MDL").
On September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Alliance Holding; and
claims brought under ERISA by participants in the Profit Sharing Plan for
Employees of the Adviser. All four complaints include substantially identical
factual allegations, which appear to be based in large part on the SEC Order
and the NYAG Order.
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual
fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding ("MOU") containing
their agreement to settle these claims. The agreement will be documented by a
stipu-
126 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
lation of settlement and will be submitted for court approval at a later date.
The derivative claims brought on behalf of Alliance Holding remain pending.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commissioner") (together, the
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State of
West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Alliance Holding, and various other defendants not
affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court
of Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was
transferred to the Mutual Fund MDL.
On August 30, 2005, the West Virginia Securities Commissioner signed a Summary
Order to Cease and Desist, and Notice of Right to Hearing addressed to the
Adviser and Alliance Holding. The Summary Order claims that the Adviser and
Alliance Holding violated the West Virginia Uniform Securities Act, and makes
factual allegations generally similar to those in the Commission Order and the
NYAG Order. On January 26, 2006, the Adviser, Alliance Holding, and various
unaffiliated defendants filed a Petition for Writ of Prohibition and Order
Suspending Proceedings in West Virginia state court seeking to vacate the
Summary Order and for other relief. The court denied the writ and in September
2006 the Supreme Court of Appeals declined the defendants' petition for appeal.
On September 22, 2006, Alliance and Alliance Holding filed an answer and motion
to dismiss the Summary Order with the Securities Commissioner.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA
Financial, Inc., AllianceBernstein Investment Research & Management, Inc.,
certain current and former directors of the AllianceBernstein Mutual Funds, and
unnamed Doe defendants. The Aucoin Complaint names certain of the
AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was
filed in the United States District Court for the Southern District of New York
by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin
Complaint alleges, among other things, (i) that certain of the defendants
improperly authorized the payment of excessive commissions and other fees from
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 127
fund assets to broker-dealers in exchange for preferential marketing services,
(ii) that certain of the defendants misrepresented and omitted from
registration statements and other reports material facts concerning such
payments, and (iii) that certain defendants caused such conduct as control
persons of other defendants. The Aucoin Complaint asserts claims for violation
of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206
and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding
and abetting breaches of common law fiduciary duties. Plaintiffs seek an
unspecified amount of compensatory damages and punitive damages, rescission of
their contracts with the Adviser, including recovery of all fees paid to the
Adviser pursuant to such contracts, an accounting of all fund-related fees,
commissions and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.
Since June 22, 2004, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants. All nine of the lawsuits (i) were brought
as class actions filed in the United States District Court for the Southern
District of New York, (ii) assert claims substantially identical to the Aucoin
Complaint, and (iii) are brought on behalf of shareholders of the Funds.
On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional lawsuits
referenced above. On October 19, 2005, the District Court dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiffs' claim under Section 36(b) of the Investment Company Act. On January
11, 2006, the District Court granted defendants' motion for reconsideration and
dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court
denied plaintiffs' motion for leave to file an amended complaint. On July 5,
2006, plaintiffs filed a notice of appeal. On October 4, 2006 the appeal was
withdrawn by stipulation, with plaintiffs reserving the right to reinstate it
at a later date.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the AllianceBernstein
Mutual Funds' shares or other adverse consequences to the AllianceBernstein
Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell
investments held by those funds to provide for sufficient liquidity and could
also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds. However, the Adviser believes that these
matters are not likely to have a material adverse effect on its ability to
perform advisory services relating to the AllianceBernstein Mutual Funds.
128 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
NOTE J
Recent Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in
the course of preparing a fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded in the current period. Adoption of FIN 48 is required for
fiscal years beginning after December 15, 2006 and is to be applied to all open
tax years as of the effective date. On December 22, 2006, the Securities and
Exchange Commission notified the industry that the implementation of FIN 48 by
registered investment companies could be delayed until the last business day of
the first required financial statement reporting period for fiscal years
beginning after December 15, 2006. At this time, management is evaluating the
implications of FIN 48 and its impact on the financial statements has not yet
been determined.
On September 20, 2006, the FASB released Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an
authoritative definition of fair value, sets out a framework for measuring fair
value, and requires additional disclosures about fair-value measurements. The
application of FAS 157 is required for fiscal years beginning after November
15, 2007 and interim periods within those fiscal years. At this time,
management is evaluating the implications of FAS 157 and its impact on the
financial statements has not yet been determined.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 129
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Arizona Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.07 $11.06 $10.95 $10.76 $11.02 $10.80
Income From Investment
Operations
Net investment income(b)(c) .22 .45 .47 .51 .51 .51
Net realized and unrealized
gain (loss) on investment
transactions (.01) .01 .11 .19 (.26) .26
Net increase in net asset value
from operations .21 .46 .58 .70 .25 .77
Less: Dividends and
Distributions
Dividends from net investment
income (.22) (.45) (.47) (.51) (.51) (.51)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.04)
Total dividends and
distributions (.22) (.45) (.47) (.51) (.51) (.55)
Net asset value, end of period $11.06 $11.07 $11.06 $10.95 $10.76 $11.02
Total Return
Total investment return based
on net asset value(d) 1.91% 4.28% 5.36% 6.64% 2.35% 7.33%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $135,082 $138,880 $111,704 $88,701 $101,040 $121,245
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .78%(e) .78%(f) .78% .78% .78% .78%
Expenses, before waivers/
reimbursements .94%(e) .95%(f) .97% 1.13% 1.11% 1.12%
Net investment income,
net of waivers/
reimbursements 4.00%(e) 4.11%(f) 4.22% 4.69% 4.72% 4.73%
Portfolio turnover rate 1% 20% 25% 28% 28% 11%
See footnote summary on page 157.
130 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Arizona Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.05 $11.04 $10.94 $10.74 $11.00 $10.78
Income From Investment
Operations
Net investment income(b)(c) .18 .38 .39 .43 .43 .43
Net realized and unrealized
gain (loss) on investment
transactions (.01) -0- .10 .20 (.26) .27
Net increase in net asset value
from operations .17 .38 .49 .63 .17 .70
Less: Dividends and
Distributions
Dividends from net investment
income (.18) (.37) (.39) (.43) (.43) (.43)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.05)
Total dividends and
distributions (.18) (.37) (.39) (.43) (.43) (.48)
Net asset value, end of period $11.04 $11.05 $11.04 $10.94 $10.74 $11.00
Total Return
Total investment return based
on net asset value(d) 1.56% 3.56% 4.56% 5.98% 1.62% 6.65%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $45,724 $52,070 $63,255 $76,951 $89,938 $92,349
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.48%(e) 1.48%(f) 1.48% 1.48% 1.48% 1.48%
Expenses, before waivers/
reimbursements 1.65%(e) 1.66%(f) 1.68% 1.84% 1.82% 1.82%
Net investment income,
net of waivers/
reimbursements 3.30%(e) 3.42%(f) 3.54% 4.00% 4.03% 4.02%
Portfolio turnover rate 1% 20% 25% 28% 28% 11%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 131
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Arizona Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.05 $11.04 $10.94 $10.74 $11.00 $10.78
Income From Investment
Operations
Net investment income(b)(c) .18 .37 .39 .43 .43 .43
Net realized and unrealized
gain (loss) on investment
transactions (.01) .01 .10 .20 (.26) .27
Net increase in net asset value
from operations .17 .38 .49 .63 .17 .70
Less: Dividends and
Distributions
Dividends from net investment
income (.18) (.37) (.39) (.43) (.43) (.43)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.05)
Total dividends and
distributions (.18) (.37) (.39) (.43) (.43) (.48)
Net asset value, end of period $11.04 $11.05 $11.04 $10.94 $10.74 $11.00
Total Return
Total investment return based
on net asset value(d) 1.56% 3.56% 4.56% 5.98% 1.62% 6.65%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $25,714 $25,445 $24,926 $20,305 $25,110 $24,258
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.48%(e) 1.48%(f) 1.48% 1.48% 1.48% 1.48%
Expenses, before waivers/
reimbursements 1.64%(e) 1.65%(f) 1.67% 1.84% 1.82% 1.82%
Net investment income,
net of waivers/
reimbursements 3.30%(e) 3.42%(f) 3.53% 4.00% 4.03% 4.00%
Portfolio turnover rate 1% 20% 25% 28% 28% 11%
See footnote summary on page 157.
132 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Florida Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.32 $10.28 $10.25 $10.17 $10.34 $10.16
Income From Investment
Operations
Net investment income(b)(c) .23 .46 .47 .49 .49 .52
Net realized and unrealized
gain (loss) on investment
transactions (.05) .04 .03 .08 (.13) .19
Net increase in net asset value
from operations .18 .50 .50 .57 .36 .71
Less: Dividends and
Distributions
Dividends from net investment
income (.23) (.46) (.47) (.49) (.53) (.52)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.01)
Total dividends and
distributions (.23) (.46) (.47) (.49) (.53) (.53)
Net asset value, end of period $10.27 $10.32 $10.28 $10.25 $10.17 $10.34
Total Return
Total investment return based
on net asset value(d) 1.75% 5.00% 5.01% 5.78% 3.54% 7.21%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $130,439 $138,307 $127,541 $101,529 $109,543 $109,373
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense .78%(e) .78%(f) .78% .78% .78% .78%
Expenses, before waivers/
reimbursements .95%(e) .98%(f) 1.08% 1.12% 1.11% 1.09%
Expenses, before waivers/
reimbursements excluding
interest expense .95%(e) .94%(f) .98% 1.11% 1.11% 1.09%
Net investment income,
net of waivers/
reimbursements 4.47%(e) 4.51%(f) 4.60% 4.83% 4.80% 5.18%
Portfolio turnover rate 11% 27% 23% 22% 30% 20%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 133
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Florida Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.32 $10.29 $10.26 $10.18 $10.35 $10.17
Income From Investment
Operations
Net investment income(b)(c) .19 .39 .40 .42 .42 .45
Net realized and unrealized
gain (loss) on investment
transactions (.04) .03 .03 .08 (.14) .18
Net increase in net asset value
from operations .15 .42 .43 .50 .28 .63
Less: Dividends
Dividends from net investment
income (.19) (.39) (.40) (.42) (.45) (.45)
Net asset value, end of period $10.28 $10.32 $10.29 $10.26 $10.18 $10.35
Total Return
Total investment return based
on net asset value(d) 1.49% 4.17% 4.29% 4.96% 2.82% 6.45%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $31,208 $38,045 $53,996 $79,266 $104,874 $105,583
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.48%(e) 1.48%(f) 1.48% 1.48% 1.48% 1.48%
Expenses, before waivers/
reimbursements 1.66%(e) 1.69%(f) 1.78% 1.83% 1.81% 1.79%
Expenses, before waivers/
reimbursements excluding
interest expense 1.66%(e) 1.65%(f) 1.68% 1.82% 1.81% 1.79%
Net investment income,
net of waivers/
reimbursements 3.76%(e) 3.80%(f) 3.91% 4.12% 4.09% 4.47%
Portfolio turnover rate 11% 27% 23% 22% 30% 20%
See footnote summary on page 157.
134 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Florida Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.32 $10.29 $10.25 $10.18 $10.35 $10.17
Income From Investment
Operations
Net investment income(b)(c) .19 .39 .40 .42 .42 .45
Net realized and unrealized
gain (loss) on investment
transactions (.04) .03 .04 .07 (.14) .18
Net increase in net asset value
from operations .15 .42 .44 .49 .28 .63
Less: Dividends
Dividends from net investment
income (.19) (.39) (.40) (.42) (.45) (.45)
Net asset value, end of period $10.28 $10.32 $10.29 $10.25 $10.18 $10.35
Total Return
Total investment return based
on net asset value(d) 1.49% 4.17% 4.38% 4.96% 2.82% 6.45%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $36,267 $39,042 $39,950 $39,170 $46,929 $49,102
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.48%(e) 1.48%(f) 1.48% 1.48% 1.48% 1.48%
Expenses, before waivers/
reimbursements 1.65%(e) 1.68%(f) 1.78% 1.83% 1.81% 1.79%
Expenses, before waivers/
reimbursements excluding
interest expense 1.65%(e) 1.64%(f) 1.68% 1.82% 1.81% 1.79%
Net investment income,
net of waivers/
reimbursements 3.76%(e) 3.80%(f) 3.90% 4.13% 4.09% 4.47%
Portfolio turnover rate 11% 27% 23% 22% 30% 20%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 135
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Massachusetts Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.94 $10.96 $10.92 $10.79 $11.06 $11.05
Income From Investment
Operations
Net investment income(b)(c) .22 .45 .47 .51 .51 .54
Net realized and unrealized
gain (loss) on investment
transactions (.03) (.02) .05 .13 (.26) .04
Net increase in net asset value
from operations .19 .43 .52 .64 .25 .58
Less: Dividends and
Distributions
Dividends from net investment
income (.22) (.45) (.48) (.51) (.52) (.54)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.22) (.45) (.48) (.51) (.52) (.57)
Net asset value, end of period $10.91 $10.94 $10.96 $10.92 $10.79 $11.06
Total Return
Total investment return based
on net asset value(d) 1.76% 4.06% 4.80% 6.13% 2.39% 5.46%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $67,326 $63,120 $53,035 $39,749 $46,342 $66,197
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense .82%(e) .82%(f) .82% .82% .82% .82%
Expenses, before waivers/
reimbursements 1.04%(e) 1.09%(f) 1.17% 1.25% 1.17% 1.12%
Expenses, before waivers/
reimbursements excluding
interest expense 1.04%(e) 1.03%(f) 1.03% 1.20% 1.17% 1.12%
Net investment income,
net of waivers/
reimbursements 4.05%(e) 4.18%(f) 4.29% 4.73% 4.71% 4.97%
Portfolio turnover rate 2% 25% 25% 26% 28% 27%
See footnote summary on page 157.
136 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Massachusetts Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.92 $10.94 $10.91 $10.77 $11.03 $11.03
Income From Investment
Operations
Net investment income(b)(c) .18 .38 .40 .44 .44 .47
Net realized and unrealized
gain (loss) on investment
transactions (.03) (.02) .03 .14 (.25) .03
Net increase in net asset value
from operations .15 .36 .43 .58 .19 .50
Less: Dividends and
Distributions
Dividends from net investment
income (.18) (.38) (.40) (.44) (.45) (.47)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.18) (.38) (.40) (.44) (.45) (.50)
Net asset value, end of period $10.89 $10.92 $10.94 $10.91 $10.77 $11.03
Total Return
Total investment return based
on net asset value(d) 1.40% 3.35% 4.00% 5.38% 1.76% 4.69%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $34,716 $41,221 $50,203 $63,430 $73,979 $79,216
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.52%(e) 1.52%(f) 1.52% 1.52% 1.52% 1.52%
Expenses, before waivers/
reimbursements 1.75%(e) 1.81%(f) 1.88% 1.96% 1.89% 1.83%
Expenses, before waivers/
reimbursements excluding
interest expense 1.75%(e) 1.75%(f) 1.74% 1.91% 1.89% 1.83%
Net investment income,
net of waivers/
reimbursements 3.35%(e) 3.49%(f) 3.61% 4.04% 4.02% 4.28%
Portfolio turnover rate 2% 25% 25% 26% 28% 27%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 137
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Massachusetts Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.92 $10.94 $10.91 $10.77 $11.03 $11.03
Income From Investment
Operations
Net investment income(b)(c) .18 .38 .40 .44 .44 .47
Net realized and unrealized
gain(loss) on investment
transactions (.03) (.02) .03 .14 (.25) .03
Net increase in net asset value
from operations .15 .36 .43 .58 .19 .50
Less: Dividends and
Distributions
Dividends from net investment
income (.18) (.38) (.40) (.44) (.45) (.47)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.18) (.38) (.40) (.44) (.45) (.50)
Net asset value, end of period $10.89 $10.92 $10.94 $10.91 $10.77 $11.03
Total Return
Total investment return based
on net asset value(d) 1.41% 3.35% 3.99% 5.38% 1.76% 4.69%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $36,085 $38,001 $34,789 $35,598 $46,542 $53,156
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.52%(e) 1.52%(f) 1.52% 1.52% 1.52% 1.52%
Expenses, before waivers/
reimbursements 1.74%(e) 1.80%(f) 1.88% 1.95% 1.88% 1.82%
Expenses, before waivers/
reimbursements excluding
interest expense 1.74%(e) 1.74%(f) 1.74% 1.90% 1.88% 1.82%
Net investment income,
net of waivers/
reimbursements 3.35%(e) 3.49%(f) 3.61% 4.04% 4.02% 4.28%
Portfolio turnover rate 2% 25% 25% 26% 28% 27%
See footnote summary on page 157.
138 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Michigan Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.91 $10.88 $10.79 $10.69 $10.91 $10.63
Income From Investment
Operations
Net investment income(b)(c) .21 .43 .46 .48 .47 .49
Net realized and unrealized
gain (loss) on investment
transactions (.01) .03 .09 .11 (.17) .32
Net increase in net asset value
from operations .20 .46 .55 .59 .30 .81
Less: Dividends and
Distributions
Dividends from net investment
income (.21) (.42) (.46) (.49) (.52) (.49)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.04)
Distributions from net realized
gain on investments (.05) (.01) -0- -0- -0- -0-
Total dividends and
distributions (.26) (.43) (.46) (.49) (.52) (.53)
Net asset value, end of period $10.85 $10.91 $10.88 $10.79 $10.69 $10.91
Total Return
Total investment return based
on net asset value(d) 1.80% 4.38% 5.16% 5.65% 2.66% 7.87%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $62,573 $64,920 $54,635 $45,362 $53,022 $55,396
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.01%(e) .98%(f) .99% 1.01% 1.01% 1.01%
Expenses, before waivers/
reimbursements 1.08%(e) 1.04%(f) 1.05% 1.20% 1.20% 1.21%
Net investment income,
net of waivers/
reimbursements 3.86%(e) 3.92%(f) 4.19% 4.51% 4.38% 4.57%
Portfolio turnover rate 1% 17% 18% 18% 46% 18%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 139
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Michigan Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.89 $10.86 $10.77 $10.67 $10.89 $10.62
Income From Investment
Operations
Net investment income(b)(c) .17 .35 .38 .41 .40 .41
Net realized and unrealized
gain (loss) on investment
transactions (.01) .04 .10 .10 (.18) .32
Net increase in net asset value
from operations .16 .39 .48 .51 .22 .73
Less: Dividends and
Distributions
Dividends from net investment
income (.17) (.35) (.39) (.41) (.44) (.41)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.05)
Distributions from net realized
gain on investments (.05) (.01) -0- -0- -0- -0-
Total dividends and
distributions (.22) (.36) (.39) (.41) (.44) (.46)
Net asset value, end of period $10.83 $10.89 $10.86 $10.77 $10.67 $10.89
Total Return
Total investment return based
on net asset value(d) 1.45% 3.66% 4.47% 4.91% 1.95% 7.06%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $28,013 $30,813 $41,516 $47,605 $58,034 $53,097
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.71%(e) 1.69%(f) 1.70% 1.71% 1.71% 1.71%
Expenses, before waivers/
reimbursements 1.79%(e) 1.75%(f) 1.76% 1.91% 1.92% 1.92%
Net investment income,
net of waivers/
reimbursements 3.17%(e) 3.23%(f) 3.50% 3.81% 3.69% 3.88%
Portfolio turnover rate 1% 17% 18% 18% 46% 18%
See footnote summary on page 157.
140 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Michigan Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.89 $10.87 $10.77 $10.67 $10.89 $10.62
Income From Investment
Operations
Net investment income(b)(c) .17 .35 .38 .41 .40 .41
Net realized and unrealized
gain (loss) on investment
transactions (.01) .03 .10 .10 (.18) .32
Net increase in net asset value
from operations .16 .38 .48 .51 .22 .73
Less: Dividends and
Distributions
Dividends from net investment
income (.17) (.35) (.38) (.41) (.44) (.41)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.05)
Distributions from net realized
gain on investments (.05) (.01) -0- -0- -0- -0-
Total dividends and
distributions (.22) (.36) (.38) (.41) (.44) (.46)
Net asset value, end of period $10.83 $10.89 $10.87 $10.77 $10.67 $10.89
Total Return
Total investment return based
on net asset value(d) 1.45% 3.56% 4.54% 4.91% 1.95% 7.06%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $39,398 $41,274 $43,225 $43,382 $54,996 $57,818
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.71%(e) 1.68%(f) 1.70% 1.71% 1.71% 1.71%
Expenses, before waivers/
reimbursements 1.78%(e) 1.74%(f) 1.75% 1.90% 1.90% 1.93%
Net investment income,
net of waivers/
reimbursements 3.16%(e) 3.23%(f) 3.50% 3.82% 3.69% 3.86%
Portfolio turnover rate 1% 17% 18% 18% 46% 18%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 141
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Minnesota Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.20 $10.19 $10.14 $10.15 $10.31 $10.09
Income From Investment
Operations
Net investment income(b)(c) .21 .42 .42 .44 .45 .48
Net realized and unrealized
gain (loss) on investment
transactions (.03) .01 .05 (.01) (.15) .25
Net increase in net asset value
from operations .18 .43 .47 .43 .30 .73
Less: Dividends and
Distributions
Dividends from net investment
income (.21) (.42) (.42) (.44) (.46) (.48)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.21) (.42) (.42) (.44) (.46) (.51)
Net asset value, end of period $10.17 $10.20 $10.19 $10.14 $10.15 $10.31
Total Return
Total investment return based
on net asset value(d) 1.73% 4.29% 4.72% 4.41% 3.05% 7.46%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $71,562 $71,172 $69,174 $64,847 $67,521 $65,850
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense .90%(e) .90%(f) .90% .90% .90% .90%
Expenses, before waivers/
reimbursements 1.15%(e) 1.17%(f) 1.26% 1.32% 1.22% 1.29%
Expenses, before waivers/
reimbursements excluding
interest expense 1.15%(e) 1.10%(f) 1.13% 1.28% 1.20% 1.29%
Net investment income,
net of waivers/
reimbursements 4.04%(e) 4.10%(f) 4.12% 4.36% 4.42% 4.75%
Portfolio turnover rate -0-% 13% 14% 19% 32% 29%
See footnote summary on page 157.
142 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Minnesota Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.20 $10.19 $10.14 $10.15 $10.31 $10.08
Income From Investment
Operations
Net investment income(b)(c) .17 .34 .35 .37 .38 .40
Net realized and unrealized
gain (loss) on investment
transactions (.04) .01 .05 (.01) (.15) .27
Net increase in net asset value
from operations .13 .35 .40 .36 .23 .67
Less: Dividends and
Distributions
Dividends from net investment
income (.17) (.34) (.35) (.37) (.39) (.40)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.04)
Total dividends and
distributions (.17) (.34) (.35) (.37) (.39) (.44)
Net asset value, end of period $10.16 $10.20 $10.19 $10.14 $10.15 $10.31
Total Return
Total investment return based
on net asset value(d) 1.28% 3.56% 3.99% 3.68% 2.34% 6.84%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $8,673 $10,577 $14,424 $16,976 $24,366 $24,340
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.60%(e) 1.60%(f) 1.60% 1.60% 1.60% 1.60%
Expenses, before waivers/
reimbursements 1.87%(e) 1.88%(f) 1.97% 2.04% 1.93% 1.99%
Expenses, before waivers/
reimbursements excluding
interest expense 1.87%(e) 1.81%(f) 1.84% 2.00% 1.91% 1.99%
Net investment income,
net of waivers/
reimbursements 3.33%(e) 3.41%(f) 3.43% 3.65% 3.72% 4.04%
Portfolio turnover rate -0-% 13% 14% 19% 32% 29%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 143
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Minnesota Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.21 $10.20 $10.15 $10.16 $10.32 $10.10
Income From Investment
Operations
Net investment income(b)(c) .17 .34 .35 .37 .38 .40
Net realized and unrealized
gain (loss) on investment
transactions (.04) .01 .05 (.01) (.15) .26
Net increase in net asset value
from operations .13 .35 .40 .36 .23 .66
Less: Dividends and
Distributions
Dividends from net investment
income (.17) (.34) (.35) (.37) (.39) (.40)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.04)
Total dividends and
distributions (.17) (.34) (.35) (.37) (.39) (.44)
Net asset value, end of period $10.17 $10.21 $10.20 $10.15 $10.16 $10.32
Total Return
Total investment return based
on net asset value(d) 1.28% 3.55% 3.98% 3.68% 2.34% 6.72%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $14,393 $15,635 $17,153 $16,402 $19,248 $20,401
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.60%(e) 1.60%(f) 1.60% 1.60% 1.60% 1.60%
Expenses, before waivers/
reimbursements 1.86%(e) 1.87%(f) 1.96% 2.03% 1.92% 1.99%
Expenses, before waivers/
reimbursements excluding
interest expense 1.86%(e) 1.80%(f) 1.83% 1.99% 1.90% 1.99%
Net investment income,
net of waivers/
reimbursements 3.33%(e) 3.40%(f) 3.42% 3.65% 3.70% 4.01%
Portfolio turnover rate -0-% 13% 14% 19% 32% 29%
See footnote summary on page 157.
144 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New Jersey Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $9.93 $9.90 $9.84 $9.80 $10.03 $10.11
Income From Investment
Operations
Net investment income(b)(c) .21 .42 .42 .45 .45 .48
Net realized and unrealized
gain (loss) on investment
transactions (.02) .03 .07 .04 (.22) (.05)
Net increase in net asset value
from operations .19 .45 .49 .49 .23 .43
Less: Dividends and
Distributions
Dividends from net investment
income (.21) (.42) (.43) (.45) (.46) (.48)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.21) (.42) (.43) (.45) (.46) (.51)
Net asset value, end of period $9.91 $9.93 $9.90 $9.84 $9.80 $10.03
Total Return
Total investment return based
on net asset value(d) 1.92% 4.65% 5.03% 5.05% 2.39% 4.42%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $88,297 $83,088 $77,570 $76,164 $81,632 $94,865
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense .87%(e) .87%(f) .87% .87% .87% .87%
Expenses, before waivers/
reimbursements 1.09%(e) 1.15%(f) 1.16% 1.23% 1.16% 1.11%
Expenses, before waivers/
reimbursements excluding
interest expense 1.02%(e) 1.01%(f) 1.02% 1.17% 1.14% 1.11%
Net investment income,
net of waivers/
reimbursements 4.24%(e) 4.25%(f) 4.26% 4.60% 4.53% 4.80%
Portfolio turnover rate 1% 6% 38% 15% 45% 49%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 145
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New Jersey Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $9.93 $9.90 $9.84 $9.80 $10.04 $10.11
Income From Investment
Operations
Net investment income(b)(c) .18 .35 .35 .38 .38 .41
Net realized and unrealized
gain (loss) on investment
transactions (.02) .03 .07 .04 (.23) (.04)
Net increase in net asset value
from operations .16 .38 .42 .42 .15 .37
Less: Dividends and
Distributions
Dividends from net investment
income (.18) (.35) (.36) (.38) (.39) (.41)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.18) (.35) (.36) (.38) (.39) (.44)
Net asset value, end of period $9.91 $9.93 $9.90 $9.84 $9.80 $10.04
Total Return
Total investment return based
on net asset value(d) 1.57% 3.91% 4.30% 4.41% 1.56% 3.79%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $36,411 $42,766 $58,706 $83,835 $110,294 $127,025
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.57%(e) 1.57%(f) 1.57% 1.57% 1.57% 1.57%
Expenses, before waivers/
reimbursements 1.80%(e) 1.86%(f) 1.87% 1.94% 1.87% 1.82%
Expenses, before waivers/
reimbursements excluding
interest expense 1.73%(e) 1.72%(f) 1.73% 1.88% 1.85% 1.82%
Net investment income,
net of waivers/
reimbursements 3.53%(e) 3.55%(f) 3.56% 3.89% 3.83% 4.10%
Portfolio turnover rate 1% 6% 38% 15% 45% 49%
See footnote summary on page 157.
146 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New Jersey Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $9.93 $9.90 $9.84 $9.81 $10.04 $10.11
Income From Investment
Operations
Net investment income(b)(c) .18 .35 .35 .38 .38 .41
Net realized and unrealized
gain (loss) on investment
transactions (.02) .03 .07 .03 (.22) (.04)
Net increase in net asset value
from operations .16 .38 .42 .41 .16 .37
Less: Dividends and
Distributions
Dividends from net investment
income (.18) (.35) (.36) (.38) (.39) (.41)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.18) (.35) (.36) (.38) (.39) (.44)
Net asset value, end of period $9.91 $9.93 $9.90 $9.84 $9.81 $10.04
Total Return
Total investment return based
on net asset value(d) 1.56% 3.92% 4.31% 4.30% 1.66% 3.78%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $33,138 $34,042 $35,279 $37,926 $45,633 $56,295
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.57%(e) 1.57%(f) 1.57% 1.57% 1.57% 1.57%
Expenses, before waivers/
reimbursements 1.79%(e) 1.85%(f) 1.86% 1.93% 1.86% 1.81%
Expenses, before waivers/
reimbursements excluding
interest expense 1.72%(e) 1.71%(f) 1.72% 1.87% 1.84% 1.81%
Net investment income,
net of waivers/
reimbursements 3.53%(e) 3.55%(f) 3.56% 3.89% 3.83% 4.10%
Portfolio turnover rate 1% 6% 38% 15% 45% 49%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 147
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Ohio Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.16 $10.14 $10.10 $10.05 $10.02 $10.01
Income From Investment
Operations
Net investment income(b)(c) .20 .41 .43 .44 .46 .50
Net realized and unrealized
gain (loss) on investment
transactions (.00)(g) .02 .03 .05 .05 .04
Net increase in net asset value
from operations .20 .43 .46 .49 .51 .54
Less: Dividends and
Distributions
Dividends from net investment
income (.20) (.41) (.42) (.44) (.48) (.51)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.02)
Total dividends and
distributions (.20) (.41) (.42) (.44) (.48) (.53)
Net asset value, end of period $10.16 $10.16 $10.14 $10.10 $10.05 $10.02
Total Return
Total investment return based
on net asset value(d) 2.00% 4.40% 4.67% 5.02% 5.20% 5.57%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $88,752 $87,902 $85,749 $78,184 $75,102 $70,223
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .85%(e) .85%(f) .85% .85% .85% .85%
Expenses, before waivers/
reimbursements 1.00%(e) .98%(f) .99% 1.14% 1.15% 1.15%
Net investment income,
net of waivers/
reimbursements 3.99%(e) 4.12%(f) 4.19% 4.38% 4.59% 4.99%
Portfolio turnover rate 1% 11% 23% 33% 23% 34%
See footnote summary on page 157.
148 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Ohio Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.15 $10.13 $10.09 $10.04 $10.02 $10.01
Income From Investment
Operations
Net investment income(b)(c) .17 .34 .36 .37 .39 .43
Net realized and unrealized
gain (loss) on investment
transactions (.00)(g) .02 .03 .05 .04 .05
Net increase in net asset value
from operations .17 .36 .39 .42 .43 .48
Less: Dividends and
Distributions
Dividends from net investment
income (.17) (.34) (.35) (.37) (.41) (.44)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.17) (.34) (.35) (.37) (.41) (.47)
Net asset value, end of period $10.15 $10.15 $10.13 $10.09 $10.04 $10.02
Total Return
Total investment return based
on net asset value(d) 1.65% 3.67% 3.95% 4.30% 4.37% 4.87%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $36,764 $41,802 $55,111 $70,121 $83,422 $73,159
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.55%(e) 1.55%(f) 1.55% 1.55% 1.55% 1.55%
Expenses, before waivers/
reimbursements 1.71%(e) 1.69%(f) 1.69% 1.85% 1.86% 1.85%
Net investment income,
net of waivers/
reimbursements 3.29%(e) 3.42%(f) 3.50% 3.69% 3.88% 4.29%
Portfolio turnover rate 1% 11% 23% 33% 23% 34%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 149
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Ohio Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.16 $10.13 $10.09 $10.05 $10.02 $10.02
Income From Investment
Operations
Net investment income(b)(c) .17 .34 .36 .37 .39 .43
Net realized and unrealized
gain (loss) on investment
transactions (.01) .03 .03 .04 .05 .04
Net increase in net asset value
from operations .16 .37 .39 .41 .44 .47
Less: Dividends and
Distributions
Dividends from net investment
income (.17) (.34) (.35) (.37) (.41) (.44)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.03)
Total dividends and
distributions (.17) (.34) (.35) (.37) (.41) (.47)
Net asset value, end of period $10.15 $10.16 $10.13 $10.09 $10.05 $10.02
Total Return
Total investment return based
on net asset value(d) 1.55% 3.78% 3.94% 4.19% 4.47% 4.77%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $41,938 $44,023 $47,610 $48,233 $54,062 $53,883
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.55%(e) 1.55%(f) 1.55% 1.55% 1.55% 1.55%
Expenses, before waivers/
reimbursements 1.70%(e) 1.68%(f) 1.69% 1.85% 1.85% 1.85%
Net investment income,
net of waivers/
reimbursements 3.29%(e) 3.42%(f) 3.49% 3.69% 3.89% 4.29%
Portfolio turnover rate 1% 11% 23% 33% 23% 34%
See footnote summary on page 157.
150 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Pennsylvania Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.58 $10.53 $10.48 $10.44 $10.58 $10.42
Income From Investment
Operations
Net investment income(b)(c) .21 .42 .44 .48 .50 .51
Net realized and unrealized
gain (loss) on investment
transactions (.02) .05 .05 .04 (.14) .18
Net increase in net asset value
from operations .19 .47 .49 .52 .36 .69
Less: Dividends and
Distributions
Dividends from net investment
income (.21) (.42) (.44) (.48) (.50) (.51)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.02)
Total dividends and
distributions (.21) (.42) (.44) (.48) (.50) (.53)
Net asset value, end of period $10.56 $10.58 $10.53 $10.48 $10.44 $10.58
Total Return
Total investment return based
on net asset value(d) 1.76% 4.57% 4.75% 5.06% 3.57% 6.88%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $86,366 $81,151 $78,472 $74,132 $84,053 $99,426
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense .95%(e) .95%(f) .95% .95% .95% .95%
Expenses, before waivers/
reimbursements 1.02%(e) 1.11%(f) 1.20% 1.24% 1.16% 1.13%
Expenses, before waivers/
reimbursements excluding
interest expense 1.02%(e) 1.01%(f) 1.04% 1.18% 1.16% 1.13%
Net investment income,
net of waivers/
reimbursements 3.90%(e) 4.00%(f) 4.19% 4.55% 4.91% 4.98%
Portfolio turnover rate 1% 23% 36% 19% 17% 38%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 151
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Pennsylvania Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.58 $10.53 $10.48 $10.44 $10.58 $10.41
Income From Investment
Operations
Net investment income(b)(c) .17 .35 .37 .40 .44 .45
Net realized and unrealized
gain (loss) on investment
transactions (.02) .05 .05 .04 (.15) .18
Net increase in net asset value
from operations .15 .40 .42 .44 .29 .63
Less: Dividends and
Distributions
Dividends from net investment
income (.17) (.35) (.37) (.40) (.43) (.45)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.01)
Total dividends and
distributions (.17) (.35) (.37) (.40) (.43) (.46)
Net asset value, end of period $10.56 $10.58 $10.53 $10.48 $10.44 $10.58
Total Return
Total investment return based
on net asset value(d) 1.40% 3.84% 4.01% 4.32% 2.84% 6.26%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $28,862 $33,448 $41,760 $55,552 $68,409 $74,390
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.65%(e) 1.65%(f) 1.65% 1.65% 1.65% 1.65%
Expenses, before waivers/
reimbursements 1.73%(e) 1.82%(f) 1.90% 1.95% 1.87% 1.84%
Expenses, before waivers/
reimbursements excluding
interest expense 1.73%(e) 1.72%(f) 1.74% 1.89% 1.87% 1.84%
Net investment income,
net of waivers/
reimbursements 3.20%(e) 3.31%(f) 3.49% 3.85% 4.21% 4.35%
Portfolio turnover rate 1% 23% 36% 19% 17% 38%
See footnote summary on page 157.
152 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Pennsylvania Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.58 $10.53 $10.48 $10.44 $10.58 $10.41
Income From Investment
Operations
Net investment income(b)(c) .17 .35 .37 .40 .44 .45
Net realized and unrealized
gain (loss) on investment
transactions (.02) .05 .05 .04 (.15) .18
Net increase in net asset value
from operations .15 .40 .42 .44 .29 .63
Less: Dividends and
Distributions
Dividends from net investment
income (.17) (.35) (.37) (.40) (.43) (.45)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.01)
Total dividends and
distributions (.17) (.35) (.37) (.40) (.43) (.46)
Net asset value, end of period $10.56 $10.58 $10.53 $10.48 $10.44 $10.58
Total Return
Total investment return based
on net asset value(d) 1.40% 3.84% 4.02% 4.32% 2.84% 6.26%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $32,959 $34,332 $34,705 $36,168 $42,917 $46,296
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.65%(e) 1.65%(f) 1.65% 1.65% 1.65% 1.65%
Expenses, before waivers/
reimbursements 1.72%(e) 1.82%(f) 1.90% 1.94% 1.87% 1.83%
Expenses, before waivers/
reimbursements excluding
interest expense 1.72%(e) 1.72%(f) 1.74% 1.88% 1.87% 1.83%
Net investment income,
net of waivers/
reimbursements 3.20%(e) 3.30%(f) 3.49% 3.85% 4.20% 4.30%
Portfolio turnover rate 1% 23% 36% 19% 17% 38%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 153
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Virginia Portfolio
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.84 $10.82 $10.77 $10.75 $10.77 $10.54
Income From Investment
Operations
Net investment income(b)(c) .23 .47 .49 .52 .52 .52
Net realized and unrealized
gain (loss) on investment
transactions (.04) .02 .05 .01 (.03) .25
Net increase in net asset value
from operations .19 .49 .54 .53 .49 .77
Less: Dividends and
Distributions
Dividends from net investment
income (.23) (.47) (.49) (.51) (.51) (.52)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.02)
Total dividends and
distributions (.23) (.47) (.49) (.51) (.51) (.54)
Net asset value, end of period $10.80 $10.84 $10.82 $10.77 $10.75 $10.77
Total Return
Total investment return based
on net asset value(d) 1.72% 4.61% 5.11% 5.04% 4.66% 7.58%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $112,775 $109,343 $88,605 $64,089 $71,572 $76,797
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense .72%(e) .72%(f) .72% .72% .72% .72%
Expenses, before waivers/
reimbursements .97%(e) 1.01%(f) 1.09% 1.18% 1.15% 1.15%
Expenses, before waivers/
reimbursements excluding
interest expense .97%(e) 1.00%(f) 1.00% 1.18% 1.15% 1.15%
Net investment income,
net of waivers/
reimbursements 4.18%(e) 4.33%(f) 4.48% 4.82% 4.87% 4.95%
Portfolio turnover rate 4% 31% 23% 10% 25% 16%
See footnote summary on page 157.
154 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Virginia Portfolio
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.82 $10.80 $10.75 $10.73 $10.75 $10.53
Income From Investment
Operations
Net investment income(b)(c) .19 .39 .41 .44 .45 .45
Net realized and unrealized
gain (loss) on investment
transactions (.04) .02 .05 .01 (.04) .24
Net increase in net asset value
from operations .15 .41 .46 .45 .41 .69
Less: Dividends and
Distributions
Dividends from net investment
income (.19) (.39) (.41) (.43) (.43) (.45)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.02)
Total dividends and
distributions (.19) (.39) (.41) (.43) (.43) (.47)
Net asset value, end of period $10.78 $10.82 $10.80 $10.75 $10.73 $10.75
Total Return
Total investment return based
on net asset value(d) 1.37% 3.89% 4.36% 4.32% 3.94% 6.78%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $31,446 $37,006 $46,489 $65,978 $82,541 $85,842
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.42%(e) 1.42%(f) 1.42% 1.42% 1.42% 1.42%
Expenses, before waivers/
reimbursements 1.68%(e) 1.72%(f) 1.80% 1.89% 1.85% 1.86%
Expenses, before waivers/
reimbursements excluding
interest expense 1.68%(e) 1.71%(f) 1.71% 1.89% 1.85% 1.86%
Net investment income,
net of waivers/
reimbursements 3.49%(e) 3.64%(f) 3.81% 4.13% 4.18% 4.27%
Portfolio turnover rate 4% 31% 23% 10% 25% 16%
See footnote summary on page 157.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 155
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Virginia Portfolio
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.81 $10.79 $10.74 $10.73 $10.75 $10.52
Income From Investment
Operations
Net investment income(b)(c) .19 .39 .41 .44 .45 .45
Net realized and unrealized
gain (loss) on investment
transactions (.04) .02 .06 -0- (.04) .25
Net increase in net asset value
from operations .15 .41 .47 .44 .41 .70
Less: Dividends and
Distributions
Dividends from net investment
income (.19) (.39) (.42) (.43) (.43) (.45)
Distributions in excess of net
investment income -0- -0- -0- -0- -0- (.02)
Total dividends and
distributions (.19) (.39) (.42) (.43) (.43) (.47)
Net asset value, end of period $10.77 $10.81 $10.79 $10.74 $10.73 $10.75
Total Return
Total investment return based
on net asset value(d) 1.38% 3.90% 4.41% 4.23% 3.94% 6.88%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $35,175 $34,544 $29,412 $28,654 $33,486 $34,396
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements excluding
interest expense 1.42%(e) 1.42%(f) 1.42% 1.42% 1.42% 1.42%
Expenses, before waivers/
reimbursements 1.67%(e) 1.71%(f) 1.79% 1.88% 1.85% 1.86%
Expenses, before waivers/
reimbursements excluding
interest expense 1.67%(e) 1.70%(f) 1.70% 1.88% 1.85% 1.86%
Net investment income,
net of waivers/
reimbursements 3.50%(e) 3.64%(f) 3.80% 4.13% 4.17% 4.26%
Portfolio turnover rate 4% 31% 23% 10% 25% 16%
See footnote summary on page 157.
156 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
(a) As of October 1, 2003, the Portfolios have adopted the method of
accounting for interim payments on swap contracts in accordance with Financial
Accounting Standards Board Statement No. 133. These interim payments are
reflected within net realized and unrealized gain (loss) on swap contracts,
however prior to October 1, 2003, these interim payments were reflected within
interest income/expense on the statement of operations. For the year ended
September 30, 2004, the effect of this change to the net investment income and
the net realized and unrealized gain (loss) on investment transactions was less
than $0.01 per share. The effect on the ratio of net investment income to
average net assets was as follows:
Class A Class B Class C
-------- -------- --------
Arizona .01% .00% .00%
Florida (.02)% (.02)% (.02)%
Massachusetts (.01)% .00% (.01)%
Michigan .01% .01% .02%
Minnesota .00% .00% .00%
New Jersey .01% .01% .01%
Ohio (.04)% (.03)% (.04)%
Pennsylvania .00% .01% .00%
Virginia (.02)% (.01)% (.02)%
(b) Net of fees waived and expenses reimbursed by the Adviser.
(c) Based on average shares outstanding.
(d) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total return does not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
Total investment return calculated for a period of less than one year is not
annualized.
(e) Annualized.
(f) The ratio includes expenses attributable to costs of proxy solicitation.
(g) Amount is less than $.005.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 157
BOARD OF TRUSTEES
William H. Foulk, Jr.,(1) Chairman
Marc O. Mayer, President and Chief Executive Officer
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Marshall C. Turner, Jr.(1)
Earl D. Weiner(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
(Guy) Robert B. Davidson III(2), Senior Vice President
Douglas J. Peebles, Senior Vice President
Jeffrey S. Phlegar, Senior Vice President
Michael G. Brooks(2), Vice President
Fred S. Cohen(2), Vice President
Terrance T. Hults(2), Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer and Chief Financial Officer
Thomas R. Manley, Controller
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Principal Underwriter
AllianceBernstein Investments, Inc.
1345 Avenue of the Americas
New York, NY 10105
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
Transfer Agent
AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, Texas 78278-6003
Toll-free (800) 227-5672
(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 Portfolios'
portfolios are made by the Municipal Bond Investment Team. Michael G. Brooks,
Fred S. Cohen, (Guy) Robert B. Davidson III and Terrance T. Hults are the
investment professionals with the most significant responsibility for the
day-to-day management of the Portfolios' portfolios.
158 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Information Regarding the Review and Approval of the Fund's Advisory Agreement
In this disclosure, the term "Fund" refers to AllianceBernstein Municipal
Income Fund II and the term "Portfolio" refers to the Arizona Portfolio,
Florida Portfolio, Massachusetts Portfolio, Michigan Portfolio, Minnesota
Portfolio, New Jersey Portfolio, Ohio Portfolio, Pennsylvania Portfolio and
Virginia Portfolio, as appropriate (each, a "Portfolio" and together, the
"Portfolios"). There is a single advisory agreement between the Adviser and the
Fund that relates to all nine Portfolios.
The Fund's disinterested trustees (the "trustees") unanimously approved the
continuance of the Advisory Agreement between the Fund and the Adviser in
respect of each Portfolio at a meeting held on October 31-November 2, 2006.
In preparation for the meeting, the trustees had requested from the Adviser and
received and evaluated extensive materials, including performance and expense
information for other investment companies with similar investment objectives
derived from data compiled by Lipper Inc. ("Lipper"), which is not affiliated
with the Adviser. The trustees also reviewed an independent evaluation from the
Fund's Senior Officer (who is also the Fund's Independent Compliance Officer)
of the reasonableness of the advisory fees in the Advisory Agreement in respect
of each Portfolio (as contemplated by the September 2004 Assurance of
Discontinuance between the Adviser and the New York Attorney General) wherein
the Senior Officer concluded that such fees were reasonable. In addition, the
trustees received a presentation from the Adviser and had an opportunity to ask
representatives of the Adviser various questions relevant to the proposed
approvals. The trustees noted that the Senior Officer's evaluation considered
the following factors in respect of each Portfolio: management fees charged to
institutional and other clients of the Adviser for like services; management
fees charged by other mutual fund companies for like services; cost to the
Adviser and its affiliates of supplying services to the Portfolio pursuant to
the Advisory Agreement, excluding any intra-corporate profit; profit margins of
the Adviser and its affiliates from supplying such services; possible economies
of scale as the Portfolio grows larger; and nature and quality of the Adviser's
services including the performance of the Portfolio.
Prior to voting, the trustees reviewed the proposed continuance of the Advisory
Agreement with management and with experienced counsel who are independent of
the Adviser and received a memorandum from such counsel discussing the legal
standards for their consideration of the proposed continuances. The trustees
also discussed the proposed continuances in three private sessions at which
only the trustees, their independent counsel and the Fund's Independent
Compliance Officer were present. In reaching their determinations relating to
continuance of the Advisory Agreement in respect of each Portfolio, the
trustees considered all factors they believed relevant, including the following:
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 159
1. information comparing the performance of the Portfolio to other investment
companies with similar investment objectives and to an index;
2. the nature, extent and quality of investment, compliance, administrative
and other services rendered by the Adviser;
3. payments received by the Adviser from all sources in respect of the
Portfolio and all investment companies in the AllianceBernstein Funds complex;
4. the costs borne by, and profitability of, the Adviser and its affiliates in
providing services to the Portfolio and to all investment companies in the
AllianceBernstein Funds complex;
5. comparative fee and expense data for the Portfolio and other investment
companies with similar investment objectives;
6. the extent to which economies of scale would be realized to the extent the
Portfolio grows and whether fee levels reflect any economies of scale for the
benefit of investors;
7. the Adviser's policies and practices regarding allocation of portfolio
transactions of the Portfolio;
8. information about "revenue sharing" arrangements that the Adviser has
entered into in respect of the Portfolio;
9. portfolio turnover rates for the Portfolio compared to other investment
companies with similar investment objectives;
10. fall-out benefits which the Adviser and its affiliates receive from their
relationships with the Portfolio;
11. the Adviser's representation that there are no institutional products
managed by the Adviser which have a substantially similar investment style as
the Portfolio;
12. the Senior Officer's evaluation of the reasonableness of the fees payable
to the Adviser in the Advisory Agreement;
13. the professional experience and qualifications of the Portfolio's
portfolio management team and other senior personnel of the Adviser; and
14. the terms of the Advisory Agreement.
160 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
The trustees also considered their knowledge of the nature and quality of the
services provided by the Adviser to the Portfolios gained from their experience
as trustees or directors of most of the registered investment companies advised
by the Adviser, their overall confidence in the Adviser's integrity and
competence they have gained from that experience and the Adviser's
responsiveness to concerns raised by them in the past, including the Adviser's
willingness to consider and implement organizational and operational changes
designed to improve investment results and the services provided to the
AllianceBernstein Funds.
In their deliberations, the trustees did not identify any particular
information that was all-important or controlling, and different trustees may
have attributed different weights to the various factors. The trustees
evaluated all information available to them on a fund-by-fund basis, and their
determinations were made separately in respect of each Portfolio. The trustees
determined that the overall arrangements between each Portfolio and the
Adviser, as provided in the Advisory Agreement in respect of that Portfolio,
were fair and reasonable in light of the services performed, expenses incurred
and such other matters as the trustees considered relevant in the exercise of
their business judgment.
The material factors and conclusions that formed the basis for the trustees
reaching their determinations to approve the continuance of the Advisory
Agreement in respect of each Portfolio (including their determinations that the
Adviser should continue to be the investment adviser for each Portfolio, and
that the fees payable to the Adviser pursuant to the Advisory Agreement are
appropriate) were separately discussed by the trustees.
Nature, Extent and Quality of Services provided by the Adviser
The trustees noted that, under the Advisory Agreement, the Adviser, subject to
the oversight of the trustees, administers each Portfolio's business and other
affairs. The Adviser manages the investment of the assets of each Portfolio,
including making purchases and sales of portfolio securities consistent with
the Portfolios' investment objective and policies. Under the Advisory
Agreement, the Adviser also provides each Portfolio with such office space,
administrative and other services (exclusive of, and in addition to, any such
services provided by any others retained by the Portfolio) and executive and
other personnel as are necessary for the Portfolio's operations. The Adviser
pays all of the compensation of trustees of the Fund who are affiliated persons
of the Adviser and of the officers of the Portfolio.
The trustees also considered that the Advisory Agreement in respect of each
Portfolio provides that the Portfolio will reimburse the Adviser for the cost
of certain clerical, accounting, administrative and other services provided at
the Portfolio's request by employees of the Adviser or its affiliates. Requests
for these "at no more than cost" reimbursements are approved by the trustees on
a quarterly basis and (to the extent requested and paid) result in a higher
rate of total
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 161
compensation from the Portfolios to the Adviser than the fee rates stated in
the Portfolio's Advisory Agreement.
The trustees considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided by advisers of funds had expanded over time as a result of regulatory
and other developments. The trustees noted, for example, that the Adviser is
responsible for maintaining and monitoring its own and, to varying degrees, the
Portfolio's compliance programs, and that these compliance programs have
recently been refined and enhanced in light of current regulatory requirements.
The trustees considered the quality of the in-house investment research
capabilities of the Adviser and the other resources it has dedicated to
performing services for the Portfolios. The quality of administrative and other
services, including the Adviser's role in coordinating the activities of the
Portfolios' other service providers, also were considered. The trustees also
considered the Adviser's response to recent regulatory compliance issues
affecting a number of the investment companies in the AllianceBernstein Funds
complex. The trustees concluded that, overall, they were satisfied with the
nature, extent and quality of services provided to each of the Portfolios under
the Advisory Agreement.
Costs of Services Provided and Profitability to the Adviser
The trustees reviewed a schedule of the revenues, expenses and related notes
indicating the profitability of each Portfolio to the Adviser for calendar
years 2004 and 2005 that had been prepared with an updated expense allocation
methodology arrived at in consultation with an independent consultant. The
trustees noted that the updated methodology differed in various respects from
the methodology used in prior years. The trustees reviewed the assumptions and
methods of allocation used by the Adviser in preparing fund-specific
profitability data, and noted the Adviser's representation to them that it
believed that the methods of allocation used in preparing the profitability
information were reasonable and appropriate and that the Adviser had previously
discussed with the trustees that there is no generally accepted allocation
methodology for information of this type.
The trustees recognized that it is difficult to make comparisons of
profitability from fund advisory contracts because comparative information is
not generally publicly available and is affected by numerous factors, including
the structure of the particular adviser, the types of funds it manages, its
business mix, numerous assumptions regarding allocations and the adviser's
capital structure and cost of capital. In considering profitability
information, the trustees considered the effect of fall-out benefits on the
Adviser's expenses, as well as the "revenue sharing" arrangements the Adviser
has entered into with certain entities that distribute shares of the
Portfolios. The trustees focused on the profitability of the Adviser's
relationships with the Portfolios before taxes and distribution expenses. The
trustees recognized that the Adviser should generally be entitled to earn a
162 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
reasonable level of profits for the services it provides to each Portfolio and,
based on their review, concluded that they were satisfied that the Adviser's
level of profitability from its relationship with each Portfolio was not
excessive.
Fall-Out Benefits
The trustees considered that the Adviser benefits from soft dollar arrangements
whereby it receives brokerage and research services from many of the brokers
and dealers that execute purchases and sales of securities on behalf of its
clients on an agency basis. The trustees noted that since the Portfolios do not
engage in brokerage transactions, the Adviser does not receive soft dollar
benefits in respect of portfolio transactions of the Portfolios.
The trustees also considered that the Distributor, which is a wholly-owned
subsidiary of the Adviser, receives 12b-1 fees from each Portfolio in respect
of classes of shares of the Portfolio that are subject to the Fund's 12b-1 plan
and retains a portion of such 12b-1 fees, and receives all or a portion of the
sales charges on sales or redemptions of certain classes of shares. The
trustees also noted that certain affiliates of the Adviser distribute shares of
the Portfolios and receive compensation in that connection and that a
subsidiary of the Adviser provides transfer agency services to the Portfolios
and receives compensation from the Portfolios for such services.
The trustees recognized that the Adviser's profitability would be somewhat
lower if the Adviser's affiliates did not receive the benefits described above.
The trustees understood that the Adviser also might derive reputational and
other benefits from its association with the Portfolios.
Investment Results
In addition to the information reviewed by the trustees in connection with the
meeting, the trustees receive detailed comparative performance information for
each Portfolio at each regular Board meeting during the year. At the meeting,
the trustees reviewed information from a report prepared by Lipper showing
performance for Class A shares of each Portfolio as compared to a group of
funds in its Lipper category selected by Lipper (the "Performance Group") and
as compared to a universe of funds in its Lipper category selected by Lipper
(the "Performance Universe"). The trustees also reviewed information prepared
by the Adviser showing performance of the Class A Shares of each Portfolio as
compared to the Lehman Brothers Municipal Bond Index (the "Index").
Arizona Portfolio
The trustees reviewed information showing performance for Class A shares of the
Arizona Portfolio as compared to a Performance Group of 5 funds in its Lipper
category selected by Lipper and as compared to a Performance Universe of 11 to
10 funds (depending on the year) in its Lipper category selected by Lipper for
periods ended June 30, 2006 over the 1-, 3-, 5- and 10-year periods, and as
compared to the Index for periods ended June 30, 2006 over the year to date
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 163
("YTD"), 1-, 3-, 5- and 10-year and since inception periods (June 1994
inception). The trustees noted that in the Performance Group and Performance
Universe comparisons the Arizona Portfolio was in the 1st quintile in all
periods reviewed except in the 1-year period when the Arizona Portfolio was in
the 2nd quintile in the Performance Universe comparison. The comparative
information showed that the Arizona Portfolio underperformed the Index in the
YTD period and outperformed the Index in all other periods reviewed. Based on
their review, the trustees concluded that the Arizona Portfolio's relative
performance over time was satisfactory.
Florida Portfolio
The trustees reviewed information showing performance for Class A shares of the
Florida Portfolio as compared to a Performance Group of 8 funds in its Lipper
category selected by Lipper and as compared to a Performance Universe of 16
funds in its Lipper category selected by Lipper for periods ended June 30, 2006
over the 1-, 3-, 5- and 10-year periods, and as compared to the Index for
periods ended June 30, 2006 over the year to date, 1-, 3-, 5- and 10-year and
since inception periods (June 1993 inception). The trustees noted that in the
Performance Group comparison the Florida Portfolio was in the 3rd quintile in
the 1- and 3-year periods, 2nd quintile in the 5-year period and 1st quintile
in the 10-year period, and in the Performance Universe comparison the Florida
Portfolio was in the 2nd quintile in the 1- and 3-year periods and 1st quintile
in the 5- and 10-year periods. The comparative information showed that the
Florida Portfolio underperformed the Index in the since inception period and
outperformed the Index in all other periods reviewed. Based on their review,
the trustees concluded that the Florida Portfolio's relative performance over
time was satisfactory.
Massachusetts Portfolio
The trustees reviewed information showing performance for Class A shares of the
Massachusetts Portfolio as compared to a Performance Group of 10 funds in its
Lipper category selected by Lipper and as compared to a Performance Universe of
17 to 16 funds (depending on the year) in its Lipper category selected by
Lipper for periods ended June 30, 2006 over the 1-, 3-, 5- and 10-year periods,
and as compared to the Index for periods ended June 30, 2006 over the year to
date ("YTD"), 1-, 3-, 5- and 10-year and since inception periods (March 1994
inception). The trustees noted that in the Performance Group comparison the
Massachusetts Portfolio was in the 2nd quintile in the 1- and 10-year periods,
1st quintile in the 3-year period and 5th quintile in the 5-year period, and in
the Performance Universe comparison the Massachusetts Portfolio was in the 1st
quintile in the 1-, 3- and 10-year periods and 4th quintile in the 5-year
period. The comparative information showed that the Massachusetts Portfolio
outperformed the Index in the 1- and 3-year and since inception periods and
underperformed the Index in the YTD, 5- and 10-year periods. Based on their
review, the trustees concluded that the Massachusetts Portfolio's relative
performance over time was satisfactory.
164 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Michigan Portfolio
The trustees reviewed information showing performance for Class A shares of the
Michigan Portfolio as compared to a Performance Group of 6 funds in its Lipper
category selected by Lipper and as compared to a Performance Universe of 11
funds in its Lipper category selected by Lipper for periods ended June 30, 2006
over the 1-, 3-, 5- and 10-year periods, and as compared to the Index for
periods ended June 30, 2006 over the year to date, 1-, 3-, 5- and 10-year and
since inception periods (February 1994 inception). The trustees noted that in
the Performance Group and Performance Universe comparisons the Michigan
Portfolio was in the 1st quintile in all periods reviewed. The comparative
information showed that the Michigan Portfolio outperformed the Index in all
periods reviewed. Based on their review, the trustees concluded that the
Michigan Portfolio's relative performance over time was highly satisfactory.
Minnesota Portfolio
The trustees reviewed information showing performance for Class A shares of the
Minnesota Portfolio as compared to a Performance Group of 7 funds in its Lipper
category selected by Lipper and as compared to a Performance Universe of 18 to
17 funds (depending on the year) in its Lipper category selected by Lipper for
periods ended June 30, 2006 over the 1-, 3-, 5- and 10-year periods, and as
compared to the Index for periods ended June 30, 2006 over the year to date,
1-, 3-, 5- and 10-year and since inception periods (June 1993 inception). The
trustees noted that in the Performance Group comparison the Minnesota Portfolio
was in the 3rd quintile in the 1- and 5-year periods, 2nd quintile in the
3-year period and 1st quintile in the 10-year period, and in the Performance
Universe comparison the Minnesota Portfolio was in the 2nd quintile in the 1-,
3- and 5-year periods and 1st quintile in the 10-year period. The comparative
information showed that the Minnesota Portfolio outperformed the Index in the
1- and 3-year periods and underperformed the Index in all other periods
reviewed. Based on their review, the trustees concluded that the Minnesota
Portfolio's relative performance over time was satisfactory.
New Jersey Portfolio
The trustees reviewed information showing performance for Class A shares of the
New Jersey Portfolio as compared to a Performance Group of 10 funds in its
Lipper category selected by Lipper and as compared to a Performance Universe of
16 funds in its Lipper category selected by Lipper for periods ended June 30,
2006 over the 1-, 3-, 5- and 10-year periods, and as compared to the Index for
periods ended June 30, 2006 over the year to date ("YTD"), 1-, 3-, 5- and
10-year and since inception periods (June 1993 inception). The trustees noted
that in the Performance Group and Performance Universe comparisons the New
Jersey Portfolio was in the 2nd quintile in the 1-, 3- and 10-year periods and
5th quintile in the 5-year period. The comparative information showed that the
New Jersey Portfolio outperformed the Index in the YTD, 1- and 3-year periods
and underperformed the Index in the 5- and 10-year and since inception periods.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 165
Based on their review, the trustees concluded that the New Jersey Portfolio's
relative performance over time was satisfactory.
Ohio Portfolio
The trustees reviewed information showing performance for Class A shares of the
Ohio Portfolio as compared to a Performance Group of 9 funds in its Lipper
category selected by Lipper and as compared to a Performance Universe of 14 to
13 funds (depending on the year) in its Lipper category selected by Lipper for
periods ended June 30, 2006 over the 1-, 3-, 5- and 10-year periods, and as
compared to the Index for periods ended June 30, 2006 over the year to date,
1-, 3-, 5- and 10-year and since inception periods (June 1993 inception). The
trustees noted that in the Performance Group comparison the Ohio Portfolio was
in the 2nd quintile in the 1-, 3- and 5-year periods and 1st quintile in the
10-year period, and in the Performance Universe comparison the Ohio Portfolio
was in the 1st quintile in the 1-, 3- and 10-year periods and 2nd quintile in
the 5-year period. The comparative information showed that the Ohio Portfolio
outperformed the Index in the 3-year period and underperformed the Index in all
other periods reviewed. Based on their review, the trustees concluded that the
Ohio Portfolio's relative performance over time was satisfactory.
Pennsylvania Portfolio
The trustees reviewed information showing performance for Class A shares of the
Pennsylvania Portfolio as compared to a Performance Group of 9 funds in its
Lipper category selected by Lipper and as compared to a Performance Universe of
21 funds in its Lipper category selected by Lipper for periods ended June 30,
2006 over the 1-, 3-, 5- and 10-year periods, and as compared to the Index for
periods ended June 30, 2006 over the year to date ("YTD"), 1-, 3-, 5- and
10-year and since inception periods (June 1993 inception). The trustees noted
that in the Performance Group comparison the Pennsylvania Portfolio was in the
3rd quintile in the 1-year period, 2nd quintile in the 3- and 5-year periods
and 1st quintile in the 10-year period, and in the Performance Universe
comparison the Pennsylvania Portfolio was in the 3rd quintile in the 1-year
period, 1st quintile in the 3- and 10-year periods and 2nd quintile in the
5-year period. The comparative information showed that the Pennsylvania
Portfolio outperformed the Index in the YTD, 1- and 3-year periods and
underperformed the Index in the 5- and 10-year and since inception periods.
Based on their review, the trustees concluded that the Pennsylvania Portfolio's
relative performance over time was satisfactory.
Virginia Portfolio
The trustees reviewed information showing performance for Class A shares of the
Virginia Portfolio as compared to a Performance Group of 6 funds in its Lipper
category selected by Lipper and as compared to a Performance Universe of 10 to
9 funds (depending on the year) in its Lipper category selected by Lipper for
periods ended June 30, 2006 over the 1-, 3-, 5- and 10-year periods, and as
compared to the Index for periods ended June 30, 2006 over the year to
166 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
date, 1-, 3-, 5- and 10-year and since inception periods (April 1994
inception). The trustees noted that in the Performance Group and Performance
Universe comparisons the Virginia Portfolio was in the 1st quintile in all
periods reviewed except in the 1-year period when the Virginia Portfolio was in
the 2nd quintile in the Performance Group comparison. The comparative
information showed that the Virginia Portfolio outperformed the Index in all
periods reviewed. Based on their review, the trustees concluded that the
Virginia Portfolio's relative performance over time was highly satisfactory.
Advisory Fees and Other Expenses
The trustees considered the advisory fee rate paid by each Portfolio to the
Adviser and information prepared by Lipper concerning fee rates paid by other
funds in the same Lipper category as the Portfolio at a common asset level. The
trustees recognized that it is difficult to make comparisons of advisory fees
because there are variations in the services that are included in the fees paid
by other funds.
The Adviser informed the trustees that there are no institutional products
managed by it which have a substantially similar investment style as the
Portfolios. The trustees reviewed information in the Adviser's Form ADV and
noted that it charged institutional clients lower fees for advising comparably
sized accounts using strategies that differ from those of the Portfolios but
which involve investments in securities of the same type that the Portfolios
invest in (i.e., fixed income municipal securities).
The Adviser reviewed with the trustees the significant differences in the scope
of services it provides to institutional clients and to the Portfolios. For
example, the Advisory Agreement requires the Adviser to provide, in addition to
investment advice, office facilities and officers (including officers to
provide required certifications). The Adviser also coordinates the provision of
services to the Portfolios by non-affiliated service providers and is
responsible for the compensation of the Fund's Independent Compliance Officer
and certain related expenses. The provision of these non-advisory services
involves costs and exposure to liability. The Adviser explained that many of
these services normally are not provided to non-investment company clients, and
that fees charged to the Portfolios reflect the costs and risks of the
additional obligations. The Adviser also noted that since the Portfolios are
constantly issuing and redeeming their shares, they are more difficult to
manage than an institutional account, where the assets are relatively stable.
In light of these facts, the trustees did not place significant weight on these
fee comparisons.
The trustees also considered the total expense ratio of the Class A shares of
each Portfolio in comparison to the fees and expenses of funds within two
comparison groups of funds in the same Lipper category created by Lipper: an
Expense Group and an Expense Universe. Lipper described an Expense Group as a
representative sample of comparable funds and an Expense Universe as a broader
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 167
group, consisting of all funds in the Portfolio's investment
classification/objective with a similar load type as the Portfolio. The
trustees noted that because of the small number of funds in each Portfolio's
Lipper category (except the New Jersey Portfolio), at the request of the
Adviser and the Fund's Senior Officer, Lipper had expanded the Expense Group to
include peers that had a similar (but not the same) Lipper investment
objective/ classification. The Expense Universe for each such Portfolio had
also been expanded by Lipper pursuant to Lipper's standard guidelines and not
at the request of the Adviser or the Fund's Senior Officer. The Class A expense
ratio of each Portfolio was based on the Portfolio's latest fiscal year expense
ratio. The trustees recognized that the expense ratio information for each
Portfolio potentially reflected on the Adviser's provision of services, as the
Adviser is responsible for coordinating services provided to each Portfolio by
others. The trustees noted that it was likely that the expense ratios of some
funds in each Portfolio's Lipper category also were lowered by waivers or
reimbursements by those funds' investment advisers, which in some cases were
voluntary and perhaps temporary.
Arizona Portfolio
The information reviewed by the trustees showed that the Arizona Portfolio's at
approximate current size contractual effective fee rate of 45 basis points was
materially lower than the Expense Group median. The trustees noted that the
latest fiscal year administrative expense reimbursement by the Arizona
Portfolio pursuant to the Advisory Agreement was 4 basis points, and that the
total compensation of 49 basis points received by the Adviser from the Arizona
Portfolio pursuant to the Advisory Agreement was somewhat lower than the
Expense Group median. The trustees also noted that the Arizona Portfolio's
total expense ratio, which had been capped by the Adviser, was slightly lower
than the Expense Group median and somewhat lower than the Expense Universe
median. The trustees concluded that the Arizona Portfolio's expense ratio was
satisfactory.
Florida Portfolio
The information reviewed by the trustees showed that the Florida Portfolio's at
approximate current size contractual effective fee rate of 45 basis points was
materially lower than the Expense Group median. The trustees noted that the
latest fiscal year administrative expense reimbursement by the Florida
Portfolio pursuant to the Advisory Agreement was 3 basis points. The trustees
also noted that the Florida Portfolio's total expense ratio, which had been
capped by the Adviser, was somewhat lower than the Expense Group median and
materially lower than the Expense Universe median. The trustees concluded that
the Florida Portfolio's expense ratio was satisfactory.
Massachusetts Portfolio
The information reviewed by the trustees showed that the Massachusetts
Portfolio's at approximate current size contractual effective fee rate of 45
basis points was materially lower than the Expense Group median. The trustees
noted
168 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
that the latest fiscal year administrative expense reimbursement by the
Massachusetts Portfolio pursuant to the Advisory Agreement was 5 basis points,
and that the total compensation of 50 basis points received by the Adviser from
the Massachusetts Portfolio pursuant to the Advisory Agreement was the same as
the Expense Group median. The trustees also noted that the Massachusetts
Portfolio's total expense ratio, which had been capped by the Adviser, was
somewhat lower than the Expense Group and Expense Universe medians. The
trustees concluded that the Massachusetts Portfolio's expense ratio was
satisfactory.
Michigan Portfolio
The information reviewed by the trustees showed that the Michigan Portfolio's
at approximate current size contractual effective fee rate of 45 basis points
was materially lower than the Expense Group median. The trustees noted that in
the Michigan Portfolio's latest fiscal year, the administrative expense
reimbursement of 5 basis points had been waived by the Adviser. The trustees
also noted that the Michigan Portfolio's total expense ratio, which had been
capped by the Adviser (although the expense ratio was currently slightly lower
than the cap), was materially higher than the Expense Group and Expense
Universe medians. The trustees further noted that the Adviser had recently
reviewed with them steps being taken that are intended to reduce expenses of
the AllianceBernstein Funds. They concluded that the Michigan Portfolio's
expense ratio was acceptable.
Minnesota Portfolio
The information reviewed by the trustees showed that the Minnesota Portfolio's
at approximate current size contractual effective fee rate of 45 basis points
was materially lower than the Expense Group median. The trustees noted that in
the Minnesota Portfolio's latest fiscal year, the administrative expense
reimbursement of 7 basis points had been waived by the Adviser. The trustees
also noted that the Minnesota Portfolio's total expense ratio, which had been
capped by the Adviser, was the same as the Expense Group median and slightly
higher than the Expense Universe median. The trustees concluded that the
Minnesota Portfolio's expense ratio was satisfactory.
New Jersey Portfolio
The information reviewed by the trustees showed that the New Jersey Portfolio's
at approximate current size contractual effective fee rate of 45 basis points
was materially lower than the Expense Group median. The trustees noted that the
latest fiscal year administrative expense reimbursement by the New Jersey
Portfolio pursuant to the Advisory Agreement was 4 basis points, and that the
total compensation of 49 basis points received by the Adviser from the New
Jersey Portfolio pursuant to the Advisory Agreement was slightly lower than the
Expense Group median. The trustees also noted that the New Jersey Portfolio's
total expense ratio, which had been capped by the Adviser, was the same as the
Expense Group and Expense Universe medians. The trustees concluded that the New
Jersey Portfolio's expense ratio was satisfactory.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 169
Ohio Portfolio
The information reviewed by the trustees showed that the Ohio Portfolio's at
approximate current size contractual effective fee rate of 45 basis points was
materially lower than the Expense Group median. The trustees noted that the
latest fiscal year administrative expense reimbursement by the Ohio Portfolio
pursuant to the Advisory Agreement was 4 basis points. The trustees also noted
that the Ohio Portfolio's total expense ratio, which had been capped by the
Adviser, was slightly lower than the Expense Group and Expense Universe
medians. The trustees concluded that the Ohio Portfolio's expense ratio was
satisfactory.
Pennsylvania Portfolio
The information reviewed by the trustees showed that the Pennsylvania
Portfolio's at approximate current size contractual effective fee rate of 45
basis points was materially lower than the Expense Group median. The trustees
noted that the latest fiscal year administrative expense reimbursement by the
Pennsylvania Portfolio pursuant to the Advisory Agreement was 5 basis points,
and that the total compensation of 50 basis points received by the Adviser from
the Pennsylvania Portfolio pursuant to the Advisory Agreement was somewhat
lower than the Expense Group median. The trustees also noted that the
Pennsylvania Portfolio's total expense ratio, which had been capped by the
Adviser, was somewhat lower than the Expense Group and Expense Universe
medians. The trustees concluded that the Pennsylvania Portfolio's expense ratio
was satisfactory.
Virginia Portfolio
The information reviewed by the trustees showed that the Virginia Portfolio's
at approximate current size contractual effective fee rate of 45 basis points
was materially lower than the Expense Group median. The trustees noted that in
the Virginia Portfolio's latest fiscal year, the administrative expense
reimbursement of 4 basis points had been waived by the Adviser. The trustees
also noted that the Virginia Portfolio's total expense ratio, which had been
capped by the Adviser, was materially lower than the Expense Group and Expense
Universe medians. The trustees concluded that the Virginia Portfolio's expense
ratio was satisfactory.
Economies of Scale
The trustees noted that the advisory fee schedule for each Portfolio contains
breakpoints so that, if assets were to increase over the breakpoint levels, the
fee rates would be reduced on the incremental assets. The trustees also
considered a presentation by an independent consultant discussing economies of
scale issues in the mutual fund industry. The trustees believe that economies
of scale are realized (if at all) by the Adviser across a variety of products
and services, and not only in respect of a single fund. The trustees noted that
there is no uniform methodology for establishing breakpoints that give effect
to fund-specific services provided by the Adviser and to the economies of scale
that the Adviser may
170 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
realize in its overall mutual fund business or those components of it which
directly or indirectly affect a Portfolio's operations. The trustees observed
that in the mutual fund industry as a whole, as well as among funds similar to
the Portfolios, there is no uniformity or pattern in the fees and asset levels
at which breakpoints (if any) apply. Depending on the age and size of a
particular fund and its adviser's cost structure, different conclusions can be
drawn as to whether there are economies of scale to be realized at any
particular level of assets, notwithstanding the intuitive conclusion that such
economies exist, or will be realized at some level of total assets. Moreover,
because different advisers have different cost structures and service models,
it is difficult to draw meaningful conclusions from the comparison of a fund's
advisory fee breakpoints with those of comparable funds. The trustees also
noted that the advisory agreements for many funds do not have breakpoints at
all. Having taken these factors into account, the trustees concluded that each
Portfolio's breakpoint arrangements would result in a sharing of economies of
scale in the event of a very significant increase in the Portfolio's net assets.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 171
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS.
SUMMARY OF SENIOR OFFICER'S EVALUATION OF
INVESTMENT ADVISORY AGREEMENT(1)
The following is a summary of the evaluation of the Investment Advisory
Agreement between AllianceBernstein L.P. (the "Adviser") and AllianceBernstein
Municipal Income Fund II (the "Trust") in respect of the following
Portfolios:(2)
- - Arizona Portfolio
- - Florida Portfolio
- - Massachusetts Portfolio
- - Michigan Portfolio
- - Minnesota Portfolio
- - New Jersey Portfolio
- - Ohio Portfolio
- - Pennsylvania Portfolio
- - Virginia Portfolio
This is a summary prepared by Philip L. Kirstein, the Senior Officer of the
Trust, for the Trustees of the Trust, as required by an August 2004 agreement
between the Adviser and the New York State Attorney General ("the NYAG"). The
Senior Officer's evaluation of the Investment Advisory Agreement is not meant
to diminish the responsibility or authority of the Trustees of the Trust to
perform its duties pursuant to Section 15 of the Investment Company Act of 1940
(the "40 Act") and applicable state law. The purpose of the summary is to
provide shareholders with a synopsis of the independent evaluation of the
reasonableness of the advisory fees proposed to be paid by the Portfolios,
which was provided to the Trustees in connection with their review of the
proposed approval of the continuance of the Investment Advisory Agreement. The
Senior Officer's evaluation considered the following factors:
1. Advisory fees charged to institutional and other clients of the Adviser for
like services;
2. Advisory fees charged by other mutual fund companies for like services;
3. Costs to the Adviser and its affiliates of supplying services pursuant to
the advisory agreements, excluding any intra-corporate profit;
(1) It should be noted that the information in the fee summary was completed
on October 23, 2006 and presented to the Board of Directors on October
31-November 2, 2006.
(2) Future references to the Portfolios do not include "AllianceBernstein."
References in the fee summary pertaining to performance and expense ratios
refer to the Class A shares of the Portfolios.
172 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
4. Profit margins of the Adviser and its affiliates from supplying such
services;
5. Possible economies of scale as the Portfolios grow larger; and
6. Nature and quality of the Adviser's services including the performance of
the Portfolios.
PORTFOLIO ADVISORY FEES, EXPENSE REIMBURSEMENTS, CAPS & RATIOS
The Adviser proposed that the Portfolios pay the advisory fee set forth in the
table below for receiving the services to be provided pursuant to the
Investment Advisory Agreement. The fee schedule below, implemented in January
2004 in consideration of the Adviser's settlement with the NYAG in December
2003 is based on a master schedule that contemplates eight categories of funds
with almost all funds in each category having the same advisory fee schedule.(3)
Category Advisory Fee(4) Trust
- -------------------------------------------------------------------------------
Low Risk Income 45 bp on 1st $2.5 billion Municipal Income Fund II
40 bp on next $2.5 billion
35 bp on the balance
The Portfolios' net assets on September 30, 2006 are set forth below:
Portfolio Net Assets ($MM)
- ----------------------------------------------------
Arizona Portfolio $216.3
Florida Portfolio $215.8
Massachusetts Portfolio $142.4
Michigan Portfolio $137.1
Minnesota Portfolio $97.3
New Jersey Portfolio $160.3
Ohio Portfolio $173.7
Pennsylvania Portfolio $148.9
Virginia Portfolio $180.9
The Adviser is reimbursed as specified in the Investment Advisory Agreement for
certain clerical, legal, accounting, administrative, and other services.
Indicated below are the reimbursement amounts, which the Adviser received from
the
(3) Most of the AllianceBernstein Mutual Funds, which the Adviser manages,
were affected by the Adviser's settlement with the NYAG.
(4) The management fees for each Portfolio are based on the percentage of each
Portfolio's average daily net assets, not a combination of any of the
Portfolios.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 173
Portfolios during their most recently completed fiscal year; expressed in
dollars and as a percentage of average daily net assets:
As a % of Average
Portfolio Amount Daily Net Assets
- -------------------------------------------------------------------------------
Arizona Portfolio $ 72,500 0.04%
Florida Portfolio $ 72,500 0.03%
Massachusetts Portfolio $ 72,500 0.05%
Michigan Portfolio(5) $ 72,500 0.05%
Minnesota Portfolio(5) $ 72,500 0.07%
New Jersey Portfolio $ 72,500 0.04%
Ohio Portfolio $ 72,500 0.04%
Pennsylvania Portfolio $ 72,500 0.05%
Virginia Portfolio(6) $ 72,500 0.04%
The Adviser has agreed to waive that portion of its advisory fees and/or
reimburse certain of the Portfolios for that portion of the Portfolios' total
operating expenses to the degree necessary to limit each Portfolio's expense
ratios to the amounts set forth below for each Portfolio's current fiscal year.
The waiver agreement is terminable by the Adviser at the end of the Portfolios'
fiscal year upon at least 60 days written notice. In addition, set forth below
are the gross expense ratios of the Portfolios as of the Portfolios' most
recent semi-annual period:
Expense Cap Gross
Pursuant to Expense Expense
Fund Limitation Undertaking Ratio(7) Fiscal Year End
- -------------------------------------------------------------------------------
Arizona Portfolio Class A 0.78% 0.95% September 30
Class B 1.48% 1.66%
Class C 1.48% 1.66%
Florida Portfolio Class A 0.78% 0.92% September 30
Class B 1.48% 1.63%
Class C 1.48% 1.62%
Massachusetts Portfolio Class A 0.82% 1.03% September 30
Class B 1.52% 1.74%
Class C 1.52% 1.73%
Michigan Portfolio Class A 1.01% 1.03% September 30
Class B 1.71% 1.74%
Class C 1.71% 1.73%
Minnesota Portfolio Class A 0.90% 1.09% September 30
Class B 1.60% 1.80%
Class C 1.60% 1.80%
New Jersey Portfolio Class A 0.87% 1.03% September 30
Class B 1.57% 1.74%
Class C 1.57% 1.73%
Ohio Portfolio Class A 0.85% 0.99% September 30
Class B 1.55% 1.70%
Class C 1.55% 1.69%
(5) The Adviser waived the amount in its entirety.
(6) See footnote 5.
(7) Annualized.
174 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Pennsylvania Portfolio Class A 0.95% 1.01% September 30
Class B 1.65% 1.71%
Class C 1.65% 1.71%
Virginia Portfolio Class A 0.72% 0.98% September 30
Class B 1.42% 1.69%
Class C 1.42% 1.68%
I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The advisory fees charged to investment companies which the Adviser manages and
sponsors are normally higher than those charged to similar sized institutional
accounts, including pension plans and sub-advised investment companies. The fee
differential reflects, among other things, different services provided to such
clients, and different liabilities assumed. Services provided by the Adviser to
the Portfolios that are not provided to non-investment company clients include
providing office space and personnel to serve as Fund Officers, who among other
responsibilities make the certifications required under the Sarbanes-Oxley Act
of 2002, and coordinating with and monitoring the Portfolios' third party
service providers such as Fund counsel, auditors, custodians, transfer agents
and pricing services. The accounting, administrative, legal and compliance
requirements for the Portfolios are more costly than those for institutional
assets due to the greater complexities and time required for investment
companies, although as previously noted, a portion of these expenses are
reimbursed by the Portfolios to the Adviser. Also, retail mutual funds managed
by the Adviser are widely held. Servicing the Portfolios' investors is more
time consuming and labor intensive compared to institutional clients since the
Adviser needs to communicate with a more extensive network of financial
intermediaries and shareholders. In addition, managing the cash flow of an
investment company may be more difficult than that of a stable pool of assets,
such as an institutional account with little cash movement in either direction,
particularly, if a fund is in net redemption and the Adviser is frequently
forced to sell securities to raise cash for redemptions. However, managing a
fund with positive cash flow may be easier at times than managing a stable pool
of assets. Finally, in recent years, investment advisers have been sued by
institutional clients and have suffered reputational damage both by the
attendant publicity and outcomes other than complete victories. Accordingly,
the legal and reputational risks associated with institutional accounts are
greater than previously thought, although still not equal to those related to
the mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, it is worth considering information regarding the
advisory fees charged to institutional accounts with substantially similar
investment styles as the Portfolios. However, with respect to the Portfolios,
the Adviser represented that there is no institutional product in the Form ADV
that has a substantially similar investment style as the Portfolios. It should
be noted that the Adviser has represented that it does not manage any
separately managed accounts
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 175
that have similar investment guidelines as any of the Portfolios. The Adviser
does manage separately managed accounts that invest principally in municipal
securities but those mandates have a substantially lower risk profile (credit
and interest rate risk) than the Portfolios.
The Adviser represented that it does not sub-advise any registered investment
companies of other fund families with a substantially similar investment style
as any of the Portfolios.(8)
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUNDS COMPANIES FOR LIKE SERVICES.
Lipper, Inc. ("Lipper"), an analytical service that is not affiliated with the
Adviser, compared the fees charged to the Portfolios with fees charged to other
investment companies for similar services by other investment advisers.
Lipper's analysis included each Portfolio's ranking with respect to the
proposed advisory fee relative to the median of each Portfolio's Lipper Expense
Group ("EG")(9) at the approximate current asset level of the subject
Portfolio.(10)
Lipper describes an EG as a representative sample of comparable funds. Lipper's
standard methodology for screening funds to be included in an EG entails the
consideration of several fund criteria, including fund type, investment
classification/objective, load type and similar 12b-1/non-12b-1 service fees,
asset (size) comparability, and expense components and attributes. An EG will
typically consist of seven to twenty funds. However, because certain of the
Portfolios had original EGs with an insufficient number of peers, at the
request of the Adviser and the Senior Officer, Lipper expanded each of the
Portfolios' EGs to include peers that had a similar (but not the same) Lipper
investment classification/ objective. However, because Lipper had expanded the
EGs of those Portfolios, under Lipper's standard guidelines, each of the
Portfolios' Lipper Expense Universe ("EU") were also expanded to include the
universes of those peers that had a similar (but not the same) Lipper
investment classification/objective.(11) A
(8) The Adviser manages certain portfolios of Sanford C. Bernstein Fund, Inc.
which invests principally in municipal securities but they are of different
states.
(9) It should be noted that Lipper does not consider average account size when
constructing EGs. Portfolios with relatively small average account sizes tend
to have a higher transfer agent expense ratio than comparable sized funds that
have relatively large average account sizes. Note that there are limitations on
Lipper expense category data because different funds categorize expense
differently.
(10) The contractual management fee is calculated by Lipper using each
Portfolio's contractual management fee rate at a hypothetical asset level. The
hypothetical asset level is based on the combined net assets of all classes of
the Portfolio, rounded up to the next $25 million. Lipper's total expense ratio
information is based on the most recent annual report except as otherwise
noted. A ranking of "1" means that the Portfolio has the lowest effective fee
rate in the Lipper peer group.
(11) The expansion of the Portfolios' EUs was not requested by the Adviser or
the Senior Officer. They requested that only the EGs be expanded.
176 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
"normal" EU will include funds that have the same investment
classification/objective and load type as the subject Portfolio.(12)
Contractual Lipper
Management Expense Group
Portfolio Fee(13) Median Rank
- -------------------------------------------------------------------------------
Arizona Portfolio(14) 0.450 0.520 3/11
Florida Portfolio(15) 0.450 0.547 3/12
Massachusetts Portfolio(16) 0.450 0.500 3/15
Michigan Portfolio(17) 0.450 0.550 2/13
Minnesota Portfolio(18) 0.450 0.525 2/14
New Jersey Portfolio 0.450 0.510 2/10
Ohio Portfolio(19) 0.450 0.550 2/13
Pennsylvania Portfolio(20) 0.450 0.549 2/12
Virginia Portfolio(21) 0.450 0.510 4/12
Set forth below is a comparison of the Portfolios' total expense ratios and the
medians of the Portfolios' EGs and EUs. The Portfolios' total expense ratio
rankings are also shown.
(12) Except for asset (size) comparability, Lipper uses the same criteria for
selecting a Lipper Expense Group when selecting a Lipper Expense Universe.
Unlike the Lipper Expense Group, the Lipper Expense Universe allows for the
same adviser to be represented by more than just one fund.
(13) The contractual management fees for the Portfolios do not reflect any
expense reimbursements made by the Portfolios to the Adviser for certain
clerical, legal, accounting, administrative, and other services. In addition,
the contractual management fees do not reflect any management waivers for
expense caps that effectively reduce the contractual management fee.
(14) The Portfolio's EG includes the Portfolio, four other Arizona Municipal
Debt funds, one Virginia Municipal Debt fund, one Georgia Municipal Debt fund,
one Louisiana Municipal Debt Fund, one Minnesota Municipal Debt fund, one
Hawaii Municipal Debt fund and one Connecticut Municipal Debt fund.
(15) The Portfolio's EG includes the Portfolio, seven other Florida Municipal
Debt funds, two Minnesota Municipal Debt funds, one Massachusetts Municipal
Debt fund and one Ohio Municipal Debt fund.
(16) The Portfolio's EG includes the Portfolio, nine other Massachusetts
Municipal Debt funds, two Florida Municipal Debt funds, one Minnesota Debt
fund, one Ohio Municipal Debt fund and one Pennsylvania Municipal Debt fund.
(17) The Portfolio's EG includes the Portfolio, five other Michigan Municipal
Debt funds, two Ohio Municipal Debt funds, two Florida Municipal Debt funds,
one Minnesota Municipal Debt fund, one Massachusetts Municipal Debt fund and
one Pennsylvania Municipal Debt fund.
(18) The Portfolio's EG includes the Portfolio, six other Minnesota Municipal
Debt funds, three Massachusetts Municipal Debt funds, two Pennsylvania
Municipal Debt funds and two Ohio Municipal Debt funds.
(19) The Portfolio's EG includes the Portfolio, eight other Ohio Municipal
Debt funds, one Florida Municipal Debt fund, one Pennsylvania Municipal Debt
fund, one Minnesota Municipal Debt fund and one Massachusetts Municipal Debt
fund.
(20) The Portfolio's EG includes the Portfolio, eight other Pennsylvania
Municipal Debt funds, two Florida Municipal Debt funds and one Ohio Municipal
Debt fund.
(21) The Portfolio's EG includes the Portfolio, five other Virginia Municipal
Debt funds, two Minnesota Municipal Debt funds, one Connecticut Municipal Debt
fund, one Wisconsin Municipal Debt fund, one Missouri Municipal Debt fund and
one Hawaii Municipal Debt fund.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 177
Expense Lipper Exp. Lipper Lipper Exp. Lipper
Ratio Group Group Universe Universe
Portfolio (%)(22) Median(%) Rank Median(%) Rank
- -------------------------------------------------------------------------------
Arizona Portfolio(23) 0.780 0.800 5/11 0.837 24/64
Florida Portfolio(24) 0.780 0.852 2/12 0.869 14/61
Massachusetts Portfolio(25) 0.820 0.888 3/15 0.876 26/81
Michigan Portfolio(26) 0.999 0.897 11/13 0.871 115/127
Minnesota Portfolio(27) 0.900 0.897 8/14 0.878 42/66
New Jersey Portfolio 0.870 0.871 5/10 0.870 8/15
Ohio Portfolio(28) 0.850 0.871 5/13 0.876 32/81
Pennsylvania Portfolio(29) 0.950 0.885 9/12 0.869 36/48
Virginia Portfolio(30) 0.720 0.841 3/12 0.850 15/72
Based on this analysis, except for Florida Portfolio and Virginia Portfolio,
which have a more favorable ranking on a total expense ratio basis than on a
management fee basis and Massachusetts Portfolio, which has equally favorable
rankings, the Portfolios have a more favorable ranking on a management fee
basis than they do on a total expense ratio basis.
(22) Most recently completed fiscal year Class A share total expense ratio.
(23) The Portfolio's EU includes all other retail front-end load Arizona
Municipal Debt funds, Virginia Municipal Debt funds, Georgia Municipal Debt
funds, Louisiana Municipal Debt funds, Minnesota Municipal Debt funds, Hawaii
Municipal Debt funds and Connecticut Municipal Debt funds, excluding outliers.
(24) The Portfolio's EU includes all other retail front-end load Florida
Municipal Debt funds, Minnesota Municipal Debt funds, Massachusetts Municipal
Debt funds and Ohio Municipal Debt funds, excluding outliers.
(25) The Portfolio's EU includes all other retail front-end load Massachusetts
Municipal Debt funds, Florida Municipal Debt funds, Minnesota Municipal Debt
funds, Ohio Municipal Debt funds and Pennsylvania Municipal Debt funds,
excluding outliers.
(26) The Portfolio's EU includes all other retail front-end load Michigan
Municipal Debt funds, Ohio Municipal Debt funds, Florida Municipal Debt funds,
Minnesota Municipal Debt funds, Massachusetts Municipal Debt funds and
Pennsylvania Municipal Debt funds, excluding outliers.
(27) The Portfolio's EU includes all other retail front-end load Minnesota
Municipal Debt funds, Massachusetts Municipal Debt funds, Pennsylvania
Municipal Debt funds and Ohio Municipal Debt funds, excluding outliers.
(28) The Portfolio's EU includes all other retail front-end load Ohio
Municipal Debt funds, Florida Municipal Debt funds, Pennsylvania Municipal Debt
funds, Minnesota Municipal Debt funds and Massachusetts Municipal Debt funds,
excluding outliers.
(29) The Portfolio's EU includes all other retail front-end load Pennsylvania
Municipal Debt funds, Florida Municipal Debt funds, and Ohio Municipal Debt
funds, excluding outliers.
(30) The Portfolio's EU includes all other retail front-end load Virginia
Municipal Debt funds, Minnesota Municipal Debt funds, Connecticut Municipal
Debt funds, Wisconsin Municipal Debt funds, Missouri Municipal Debt funds and
Hawaii Municipal Debt funds, excluding outliers.
178 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
A consultant was retained by the Senior Officer to work with the Adviser's
personnel to align the Adviser's two profitability reporting systems. The
alignment, which now has been completed, allows the Adviser's management and
the Trustees to receive consistent presentations of the financial results and
profitability although the two profitability reporting systems operate
independently. See Section IV for additional discussion.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The Adviser's profitability information for the Portfolios prepared by the
Adviser for the Trustees of the Trust was reviewed by the Senior Officer and
the consultant. The Adviser's profitability from providing investment advisory
services to the Portfolios increased during the calendar year 2005, relative to
2004.
In addition to the Adviser's direct profits from managing the Portfolios,
certain of the Adviser's affiliates have business relationships with the
Portfolios and may earn a profit from providing other services to the
Portfolios. The courts have referred to this type of business opportunity as
"fall-out benefits" to the Adviser and indicated that they should be factored
into the evaluation of the total relationship between the Portfolios and the
Adviser. Neither case law nor common business practice precludes the Adviser's
affiliates from earning a reasonable profit on this type of relationship. These
affiliates provide transfer agent and distribution services to the Portfolios
and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads and
contingent deferred sales charges ("CDSC").
AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is
the Portfolios' principal underwriter. ABI and the Adviser have disclosed in
the Portfolios' prospectus that they may make revenue sharing payments from
their own resources, in addition to resources derived from sales loads and Rule
12b-1 fees, to firms that sell shares of the Portfolios. In 2005, ABI paid
approximately 0.042% of the average monthly assets of the AllianceBernstein
Mutual Funds or approximately $18.0 million for distribution services and
educational support (revenue sharing payments). For 2006, it is anticipated,
ABI will pay approximately 0.04% of the average monthly assets of the
AllianceBernstein Mutual Funds or approximately $17.5 million.(31)
(31) ABI currently inserts the "Advance" in quarterly account statements and
pays the incremental costs associated with the mailing. The incremental cost is
less than what an "independent mailing" would cost.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 179
ABI retained the following amounts for Class A front-end load sales charges
from sales of the Portfolios' Class A shares during the Portfolios' most
recently completed fiscal year:
Portfolio Amount Received
- -------------------------------------------------------------------------------
Arizona Portfolio $ 38,075
Florida Portfolio $ 33,138
Massachusetts Portfolio $ 9,833
Michigan Portfolio $ 15,465
Minnesota Portfolio $ 9,447
New Jersey Portfolio $ 5,870
Ohio Portfolio $ 18,079
Pennsylvania Portfolio $ 8,837
Virginia Portfolio $ 21,636
ABI received the following Rule 12b-1 fees and CDSC for the Portfolios during
the Portfolios' most recently completed fiscal year:
Portfolio 12b-1 Fee Received CDSC Received
- -------------------------------------------------------------------------------
Arizona Portfolio $ 1,227,750 $ 47,987
Florida Portfolio $ 1,402,560 $ 58,320
Massachusetts Portfolio $ 1,061,013 $ 31,534
Michigan Portfolio $ 1,038,592 $ 57,631
Minnesota Portfolio $ 525,174 $ 8,148
New Jersey Portfolio $ 1,296,061 $ 54,382
Ohio Portfolio $ 1,366,284 $ 74,003
Pennsylvania Portfolio $ 1,071,744 $ 21,119
Virginia Portfolio $ 1,079,158 $ 27,314
Fees and reimbursements for out of pocket expenses charged by AllianceBernstein
Investor Services, Inc. ("ABIS"), the affiliated transfer agent for the
Portfolios, are charged on a per account basis, based on the level of service
provided and the class of share held by the account. ABIS also receives a fee
per shareholder sub-account for each account maintained by an intermediary on
an omnibus basis. ABIS' after-tax profitability increased in 2005 in comparison
to 2004. Set forth below are the net fees which ABIS retained from the
Portfolios during the Portfolios' most recently completed fiscal year:(32)
Portfolio ABIS Fee Expense Offset
- -------------------------------------------------------------------------------
Arizona Portfolio $ 35,339 $ 470
Florida Portfolio $ 35,969 $ 451
Massachusetts Portfolio $ 37,112 $ 543
Michigan Portfolio $ 47,767 $ 544
Minnesota Portfolio $ 31,415 $ 325
New Jersey Portfolio $ 61,832 $ 620
Ohio Portfolio $ 51,028 $ 652
Pennsylvania Portfolio $ 54,671 $ 524
Virginia Portfolio $ 37,609 $ 414
(32) The fees disclosed are net of any expense offsets with ABIS. An expense
offset is created by the interest earned on the positive cash balance that
occur within the transfer agent account as there is a one day lag with regards
to money movement from the shareholder's account to the transfer agent's
account and then from the transfer agent's account to the Portfolio's account.
180 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule in the
Investment Advisory Agreement reflect a sharing of economies of scale to the
extent the breakpoints are reached. Based on some of the professional
literature that has considered economies of scale in the mutual fund industry
it is thought that to the extent economies of scale exist, they may more often
exist across a fund family as opposed to a specific fund. This is because the
costs incurred by the Adviser, such as investment research or technology for
trading or compliance systems can be spread across a greater asset base as the
fund family increases in size. It is also possible that as the level of
services required to operate a successful investment company has increased over
time, and advisory firms have made such investments in their business to
provide improved services, there may be a sharing of economies of scale without
a reduction in advisory fees.
An independent consultant, retained by the Senior Officer, made a presentation
to the Board of Trustees regarding possible economies of scale or scope in the
mutual fund industry. Based on the presentation, it was evident that fund
management companies benefit from economies of scale. However, due to lack of
cost data, researchers had to infer facts about the costs from the behavior of
fund expenses; there was a lack of consensus among researchers as to whether
economies of scale were being passed on to the shareholders. In the meantime,
it is clear that to the extent a fund's assets exceed the initial breakpoint
its shareholders benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF
THE PORTFOLIOS.
With assets under management of $659 billion as of September 30, 2006, the
Adviser has the investment experience to manage and provide non-investment
services (described in Section I) to the Portfolios.
The information in the table below shows the 1, 3, 5 and 10 year performance
returns and rankings of the Portfolios(33) relative to their Lipper Performance
Group ("PG") and Lipper Performance Universe ("PU")(34) for the periods ended
June 30, 2006.(35)
(33) The performance returns and rankings are for the Class A shares of the
Portfolios. It should be noted that the performance returns of the Portfolios
that is shown was provided by the Adviser. Lipper maintains its own database
that includes the Portfolios' performance returns. However, differences in the
distribution price (ex-date versus payable date) and rounding differences may
cause the Adviser's own performance returns of the Portfolios to be one or two
basis points different from Lipper. To maintain consistency in this evaluation,
the performance returns of the Portfolios, as reported by the Adviser, are
provided instead of Lipper.
(34) A Portfolio's PG and PU may not necessarily be identical to its
respective EG and EU. Funds with negative management fees are excluded from EGs
and EUs but not necessarily from PGs and PUs. In addition, PGs and PUs only
include funds of the same Lipper investment classification/objective as the
Portfolios, in contrast to certain of the Portfolios' EGs and EUs, which may
include funds of similar but not the same investment classification/objective.
(35) Note that the current Lipper investment classification/objective dictates
the PG and PU throughout the life of each Portfolio even if a Portfolio may
have had a different investment classification/objective at different points in
time.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 181
Portfolio PG PU PG PU
Arizona Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 0.96 0.53 0.53 1/5 3/11
3 year 4.46 2.80 2.80 1/5 1/11
5 year 5.10 4.54 4.54 1/5 2/11
10 year 6.03 4.92 4.99 1/5 1/10
Portfolio PG PU PG PU
Florida Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 1.68 1.43 1.10 4/8 4/16
3 year 4.00 3.98 3.05 4/8 4/16
5 year 5.20 4.75 4.43 3/8 3/16
10 year 5.80 5.25 5.12 1/8 1/16
Massachusetts Portfolio PG PU PG PU
Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 1.00 0.59 0.54 3/10 3/17
3 year 3.66 3.16 2.89 2/10 2/17
5 year 4.36 4.81 4.64 9/10 13/17
10 year 5.60 5.33 5.19 3/10 3/16
Portfolio PG PU PG PU
Michigan Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 1.14 0.59 0.47 1/6 2/11
3 year 3.77 2.61 2.57 1/6 1/11
5 year 5.20 4.25 4.34 1/6 1/11
10 year 6.25 5.03 5.09 1/6 1/11
Portfolio PG PU PG PU
Minnesota Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 0.97 0.88 0.75 3/7 6/18
3 year 3.29 2.93 2.88 2/7 5/18
5 year 4.74 4.64 4.58 3/7 6/17
10 year 5.60 5.12 5.11 1/7 2/17
Portfolio PG PU PG PU
New Jersey Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 1.23 0.75 0.75 4/10 5/16
3 year 3.48 3.08 2.79 4/10 6/16
5 year 3.68 4.17 4.17 10/10 16/16
10 year 5.18 5.04 5.04 3/10 5/16
Portfolio PG PU PG PU
Ohio Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 0.77 0.34 0.22 2/9 2/14
3 year 3.50 2.55 2.42 2/9 2/14
5 year 4.51 4.27 4.27 3/9 4/13
10 year 5.52 4.91 4.91 1/9 1/13
182 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
Pennsylvania Portfolio PG PU PG PU
Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 0.92 0.48 0.44 4/9 9/21
3 year 3.62 3.25 3.06 2/9 3/21
5 year 4.97 4.66 4.66 3/9 7/21
10 year 5.71 5.19 5.12 1/9 3/21
Portfolio PG PU PG PU
Virginia Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 1.80 0.65 0.51 2/6 2/10
3 year 4.09 3.39 3.02 1/6 1/9
5 year 5.15 4.72 4.64 1/6 1/9
10 year 5.95 5.15 5.15 1/6 1/9
Set forth below are the 1, 3, 5, 10 year and since inception performance
returns of the Portfolios (in bold) versus their benchmarks.(36) Note that each
Portfolio's benchmark is the Lehman Brothers Municipal Bond Index.(37)
Periods Ending June 30, 2006
Annualized Performance
- -------------------------------------------------------------------------------
1 3 5 10 Since
Portfolio Year Year Year Year Inception
- -------------------------------------------------------------------------------
Arizona Portfolio 0.96 4.46 5.10 6.03 6.16
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 6.11
Florida Portfolio 1.68 4.00 5.20 5.80 5.53
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 5.64
Massachusetts Portfolio 1.00 3.66 4.36 5.60 6.32
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 6.08
Michigan Portfolio 1.14 3.77 5.20 6.25 6.21
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 5.68
Minnesota Portfolio 0.97 3.29 4.74 5.60 5.25
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 5.64
New Jersey Portfolio 1.23 3.48 3.68 5.18 4.99
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 5.64
(36) The Adviser provided Portfolio and benchmark performance return
information for periods through June 30, 2006.
(37) The Lehman Brothers Municipal Index is a rules-based,
market-value-weighted index engineered for the long-term tax-exempt bond
market. To be included, bonds must be investment grade and be at least one year
from maturity. The index has four main sectors: general obligation bonds,
revenue bonds, insured bonds and pre-funded bonds. The index represents a
national municipal bond index as opposed to a specific state index.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 183
Ohio Portfolio 0.77 3.50 4.51 5.52 5.23
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 5.64
Pennsylvania Portfolio 0.92 3.62 4.97 5.71 5.56
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 5.64
Virginia Portfolio 1.80 4.09 5.15 5.95 6.37
Lehman Brothers Municipal
Bond Index 0.89 3.23 5.05 5.79 6.05
CONCLUSION:
Based on the factors discussed above the Senior Officer's conclusion is that
the proposed fees for the Portfolios are reasonable and within the range of
what would have been negotiated at arms-length in light of all the surrounding
circumstances. This conclusion in respect of the Portfolios is based on an
evaluation of all of these factors and no single factor was dispositive.
Dated: November 15, 2006
184 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- --------------------------------------------------
Wealth Strategies Funds
- --------------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
- --------------------------------------------------
Blended Style Funds
- --------------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- --------------------------------------------------
Growth Funds
- --------------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Global & International
Global Health Care Fund
Global Research Growth Fund
Global Technology Fund
Greater China '97 Fund
International Growth Fund
International Research Growth Fund
- --------------------------------------------------
Value Funds
- --------------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
Small/Mid Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Real Estate Investment Fund*
Global Value Fund
International Value Fund
- --------------------------------------------------
Taxable Bond Funds
- --------------------------------------------------
Global Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Intermediate Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
- --------------------------------------------------
Municipal Bond Funds
- --------------------------------------------------
National Michigan
Insured National Minnesota
Arizona New Jersey
California New York
Insured California Ohio
Florida Pennsylvania
Massachusetts Virginia
- --------------------------------------------------
Intermediate Municipal Bond Funds
- --------------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- --------------------------------------------------
Closed-End Funds
- --------------------------------------------------
All-Market Advantage Fund
AllianceBernstein Global High Income Fund*
AllianceBernstein Income Fund*
ACM Managed Dollar Income Fund
ACM Managed Income Fund
California Municipal Income Fund
AllianceBernstein National Municipal Income Fund*
New York Municipal Income Fund
The Spain Fund
- --------------------------------------------------
Retirement Strategies Funds
- --------------------------------------------------
2000 Retirement Strategy
2005 Retirement Strategy
2010 Retirement Strategy
2015 Retirement Strategy
2020 Retirement Strategy
2025 Retirement Strategy
2030 Retirement Strategy
2035 Retirement Strategy
2040 Retirement Strategy
2045 Retirement Strategy
We also offer Exchange Reserves,** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
You should consider the investment objectives, risks, charges and expenses of
any AllianceBernstein fund/portfolio carefully before investing. For free
copies of our prospectuses, which contain this and other information, visit us
online at www.alliancebernstein.com or contact your financial advisor. Please
read the prospectus carefully before investing.
* Prior to January 26, 2007, AllianceBernstein Global High Income Fund was
named Alliance World Dollar Government Fund II and AllianceBernstein Income
Fund was named ACM Income Fund. Prior to March 1, 2007, Global Real Estate
Investment Fund was named Real Estate Investment Fund. Prior to May 18, 2007,
AllianceBernstein National Municipal Income Fund was named National Municipal
Income Fund.
** An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II o 185
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND II
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
MIFII-0152-0307
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- -------------------------------------------------------------------------------
12 (b) (1) Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
12 (b) (2) Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
12 (c) Certification of Principal Executive Officer
and Principal Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Municipal Income Fund II
By: /s/ Marc O. Mayer
-----------------
Marc O. Mayer
President
Date: May 30, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
-----------------
Marc O. Mayer
President
Date: May 30, 2007
By: /s/ Joseph J. Mantineo
-------------------------------------
Joseph J. Mantineo
Treasurer and Chief Financial Officer
Date: May 30, 2007