N-CSR 1 d450427dncsr.htm AB MUNICIPAL INCOME FUND II, INC. AB Municipal Income Fund II, Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-07618

 

 

AB MUNICIPAL INCOME FUND II

(Exact name of registrant as specified in charter)

 

 

1345 Avenue of the Americas, New York, New York 10105

(Address of principal executive offices) (Zip code)

 

 

Joseph J. Mantineo

AllianceBernstein L.P.

1345 Avenue of the Americas

New York, New York 10105

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: (800) 221-5672

Date of fiscal year end: May 31, 2023

Date of reporting period: May 31, 2023

 

 

 


ITEM 1.

REPORTS TO STOCKHOLDERS.

 


MAY    05.31.23

LOGO

 

ANNUAL REPORT

AB MUNICIPAL INCOME FUND II

 

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AB ARIZONA PORTFOLIO

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AB MASSACHUSETTS PORTFOLIO

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AB MINNESOTA PORTFOLIO

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AB NEW JERSEY PORTFOLIO

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AB OHIO PORTFOLIO

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AB PENNSYLVANIA PORTFOLIO

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AB VIRGINIA PORTFOLIO

 

LOGO

 


 

 

 
Investment Products Offered  

  Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed

Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.abfunds.com or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.

This shareholder report must be preceded or accompanied by the Fund’s prospectus for individuals who are not current shareholders of the Fund.

You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com, or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.

The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov. AB publishes full portfolio holdings for the Fund monthly at www.abfunds.com.

AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.

The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.


 

FROM THE PRESIDENT    LOGO

Dear Shareholder,

We’re pleased to provide this report for the AB Municipal Income Fund II: AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio (each a “Portfolio,” and collectively, the “Portfolios”). Please review the discussion of Portfolio performance, the market conditions during the reporting period and the Portfolios’ investment strategies.

As always, AB strives to keep clients ahead of what’s next by:

 

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Transforming uncommon insights into uncommon knowledge with a global research scope

 

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Navigating markets with seasoned investment experience and sophisticated solutions

 

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Providing thoughtful investment insights and actionable ideas

Whether you’re an individual investor or a multi-billion-dollar institution, we put knowledge and experience to work for you.

AB’s global research organization connects and collaborates across platforms and teams to deliver impactful insights and innovative products. Better insights lead to better opportunities—anywhere in the world.

For additional information about AB’s range of products and shareholder resources, please log on to www.abfunds.com.

Thank you for your investment in the AB Mutual Funds.

Sincerely,

 

LOGO

Onur Erzan

President and Chief Executive Officer, AB Mutual Funds

 

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AB MUNICIPAL INCOME FUND II    |    1


 

ANNUAL REPORT

 

July 17, 2023

This report provides management’s discussion of fund performance for the AB Municipal Income Fund II: AB Arizona Portfolio, AB Massachusetts Portfolio, AB Minnesota Portfolio, AB New Jersey Portfolio, AB Ohio Portfolio, AB Pennsylvania Portfolio and AB Virginia Portfolio for the annual reporting period ended May 31, 2023.

The investment objective of the Portfolios is to earn the highest level of current income, exempt from both federal income tax and state taxation of the respective state, that is available without assuming what the Adviser considers to be undue risk.

NAV RETURNS AS OF MAY 31, 2023 (unaudited)

 

     6 Months      12 Months  
AB ARIZONA PORTFOLIO      
Class A Shares      0.96%        -1.09%  
Class C Shares      0.69%        -1.83%  
Advisor Class Shares1      1.09%        -0.84%  
Bloomberg Municipal Bond Index      1.94%        0.49%  

 

     6 Months      12 Months  
AB MASSACHUSETTS PORTFOLIO      
Class A Shares      1.37%        -0.64%  
Class C Shares      0.99%        -1.39%  
Advisor Class Shares1      1.59%        -0.39%  
Bloomberg Municipal Bond Index      1.94%        0.49%  

 

     6 Months      12 Months  
AB MINNESOTA PORTFOLIO      
Class A Shares      0.96%        -0.84%  
Class C Shares      0.58%        -1.59%  
Bloomberg Municipal Bond Index      1.94%        0.49%  

 

1

Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios.

 

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NAV RETURNS AS OF MAY 31, 2023 (unaudited)

 

     6 Months      12 Months  
AB NEW JERSEY PORTFOLIO      
Class A Shares      2.20%        0.55%  
Class C Shares      1.70%        -0.31%  
Bloomberg Municipal Bond Index      1.94%        0.49%  

 

     6 Months      12 Months  
AB OHIO PORTFOLIO      
Class A Shares      1.38%        -0.84%  
Class C Shares      1.00%        -1.58%  
Bloomberg Municipal Bond Index      1.94%        0.49%  

 

     6 Months      12 Months  
AB PENNSYLVANIA PORTFOLIO      
Class A Shares      1.44%        -1.01%  
Class C Shares      1.06%        -1.76%  
Bloomberg Municipal Bond Index      1.94%        0.49%  

 

     6 Months      12 Months  
AB VIRGINIA PORTFOLIO      
Class A Shares      1.43%        -0.37%  
Class C Shares      0.96%        -1.11%  
Advisor Class Shares1      1.46%        -0.12%  
Bloomberg Municipal Bond Index      1.94%        0.49%  

 

1

Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios.

INVESTMENT RESULTS

The preceding tables show performance for each Portfolio compared with its benchmark, the Bloomberg Municipal Bond Index, for the six- and 12-month periods ended May 31, 2023.

During both periods, all share classes of the Portfolios underperformed the benchmark, except for Class A of the New Jersey Portfolio, before sales charges. For the 12-month period, an overweight to municipal credit detracted, relative to the benchmark, for all Portfolios except Minnesota. For the six-month period, an overweight to municipal credit contributed for all Portfolios.

 

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Arizona Portfolio: During both periods, security and industry selection detracted. Security selection within the miscellaneous revenue sector detracted, while selection in not-for-profit health care contributed.

Massachusetts Portfolio: During both periods, security selection detracted, while industry selection contributed. For the 12-month period, security selection in private higher education detracted, while selection in toll roads/transit contributed. During the six-month period, security selection in not-for-profit health care detracted, while selection in toll roads/transit contributed.

Minnesota Portfolio: During both periods, security selection detracted. During the 12-month period, security selection in miscellaneous revenue detracted, while selection in not-for-profit health care contributed. During the six-month period, security selection in not-for-profit health care detracted, while selection in airports/ports contributed.

New Jersey Portfolio: During the 12-month period, security selection within the special tax sector detracted, while selection in not-for-profit health care contributed. During the six-month period, security selection in airlines detracted, while selection in primary/secondary public education contributed. During both periods, security and industry selection contributed.

Ohio Portfolio: For the 12-month and six-month period, security selection in private higher education and not-for-profit health care detracted, while selection in multi-family housing contributed. During the six-month period, security selection in the special tax sector contributed.

Pennsylvania Portfolio: For the 12-month period, security selection within the private higher education and not-for-profit health care sectors detracted, while selection within the public primary/secondary education and pre-refunded sectors contributed. For the six-month period, security selection within tax-supported state lease and not-for-profit health care detracted, while selection in public primary/secondary education and pre-refunded contributed.

Virginia Portfolio: During the 12-month period, security selection in the toll roads/transit and tobacco sectors detracted, while selection within senior living and not-for-profit health care contributed. Over the six-month period, selection in the state lease and toll roads/transit sectors detracted, while selection in the senior living and special tax sectors contributed.

All Portfolios used derivatives in the form of interest rate swaps and Consumer Price Index (“CPI”) swaps for hedging purposes. CPI swaps had no material impact on returns for all Portfolios for either period, while interest rate swaps added to returns for both periods.

 

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MARKET REVIEW AND INVESTMENT STRATEGY

During the 12-month period ended May 31, 2023, the market was volatile as the yield on a 10-year AAA municipal bond rose from 2.45% to a peak of 3.41% at the end of October, then fell back down to 2.64%. This fall in yields took place after the November inflation print was lower than expected. After-tax spreads widened over the 12-month period, indicating municipals underperformed Treasuries. BBB credit spreads fluctuated due to rate volatility and outflow pressure, but remained relatively unchanged by the end of the period.

The Portfolios’ Senior Investment Management Team continues to focus on real after-tax return by investing in municipal bonds that generate income exempt from federal income taxes.

The Portfolios may purchase municipal securities that are insured under policies issued by certain insurance companies. In the past, insured municipal securities typically received a higher credit rating, which meant that the issuer of the securities paid a lower interest rate. As a result of declines in the credit quality and associated downgrades of most bond insurers, insurance has less value than it did in the past. The market now values insured municipal securities primarily based on the credit quality of the issuer of the security, with little value given to the insurance feature. In purchasing such insured securities, the Adviser evaluates the risk and return of municipal securities through its own research. If an insurance company’s rating is downgraded or the company becomes insolvent, the prices of municipal securities insured by the insurance company may decline.

 

Portfolio    Insured Bonds1     

Pre-refunded/

ETM2/Insured Bonds1

 
Arizona      7.99%        0.00%  
Massachusetts      3.43%        0.00%  
Minnesota      0.00%        0.00%  
New Jersey      14.32%        0.00%  
Ohio      2.5%        0.00%  
Pennsylvania      7.95%        0.29%  
Virginia      1.67%        0.00%  

 

1

Breakdowns expressed as a percentage of investments in municipal bonds.

 

2

Escrowed to maturity.

 

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INVESTMENT POLICIES

Each of the Portfolios pursues its objective by investing principally in high-yielding, predominantly investment-grade municipal securities. Each of the Portfolios invests, under normal circumstances, at least 80% of its net assets in municipal securities that pay interest that is exempt from federal income tax. These securities may pay interest that is subject to the federal alternative minimum tax for certain taxpayers. Each of the Portfolios pursues its objective by investing at least 80% of its net assets in municipal securities issued by the named state or municipal securities with interest that is otherwise exempt from the named state’s income tax.

The Portfolios may also invest in forward commitments; zero-coupon municipal securities and variable-, floating- and inverse-floating-rate municipal securities; and derivatives, such as options, futures contracts, forwards and swaps.

 

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DISCLOSURES AND RISKS

 

Benchmark Disclosure

The Bloomberg Municipal Bond Index is unmanaged and does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Bloomberg Municipal Bond Index represents the performance of the long-term tax-exempt bond market consisting of investment-grade bonds. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolios.

A Word About Risk

Market Risk: The value of the Portfolios’ assets will fluctuate as the bond market fluctuates. The value of the Portfolios’ investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market.

Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Investments in fixed-income securities with lower ratings tend to have a higher probability that an issuer will default or fail to meet its payment obligations.

Municipal Market Risk: This is the risk that special factors may adversely affect the value of municipal securities and have a significant effect on the yield or value of the Portfolios’ investments in municipal securities. These factors include economic conditions, political or legislative changes, public health crises, uncertainties related to the tax status of municipal securities, and the rights of investors in these securities. To the extent that the Portfolios invest more of their assets in a particular state’s municipal securities, the Portfolios may be vulnerable to events adversely affecting that state, including economic, political and regulatory occurrences, court decisions, terrorism public health crises (including the occurrence of a contagious disease or illness) and catastrophic natural disasters, such as hurricanes, fires, flooding or earthquakes. For example, the novel coronavirus (COVID-19) pandemic has significantly stressed the financial resources of many issuers of municipal securities, which could impair any such issuer’s ability to meet its financial obligations when due and adversely impact the value of its securities held by the Portfolios. As the full effects of the

 

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DISCLOSURES AND RISKS (continued)

 

COVID-19 pandemic on state and local economies and on issuers of municipal securities are still uncertain, the financial difficulties of issuers of municipal securities may worsen, adversely affecting the performance of the Portfolios. The Portfolios’ investments in certain municipal securities with principal and interest payments that are made from the revenues of a specific project or facility, and not general tax revenues, may have increased risks. Factors affecting the project or facility, such as local business or economic conditions, could have a significant effect on the project’s ability to make payments of principal and interest on these securities.

In addition, changes in tax rates or the treatment of income from certain types of municipal securities, among other things, could negatively affect the municipal securities markets.

The Portfolios invest from time to time in the municipal securities of Puerto Rico and other US territories and their governmental agencies and municipalities, which are exempt from federal, state, and, where applicable, local income taxes. These municipal securities may have more risks than those of other US issuers of municipal securities. Puerto Rico continues to face a very challenging economic and fiscal environment, worsened by the spread of COVID-19 and the adverse effect that related governmental and public responses have had on Puerto Rico’s economy. If the general economic situation in Puerto Rico continues to persist or worsens, the volatility and credit quality of Puerto Rican municipal securities could continue to be adversely affected, and the market for such securities may deteriorate further.

Tax Risk: There is no guarantee that the income on the Portfolios’ municipal securities will be exempt from regular federal, and if applicable, state income taxes. From time to time, the US government and the US Congress consider changes in federal tax law that could limit or eliminate the federal tax exemption for municipal bond income, which would in effect reduce the income received by shareholders from the Portfolios by increasing taxes on that income. In such event, the Portfolios’ net asset value (“NAV”) could also decline as yields on municipal bonds, which are typically lower than those on taxable bonds, would be expected to increase to approximately the yield of comparable taxable bonds. Actions or anticipated actions affecting the tax-exempt status of municipal bonds could also result in significant shareholder redemptions of Portfolio shares as investors anticipate adverse effects on the Portfolios or seek higher yields to offset the potential loss of the tax deduction. As a result, the Portfolios would be required to maintain higher levels of cash to meet the redemptions, which would negatively affect the Portfolios’ yield.

Interest-Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value

 

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DISCLOSURES AND RISKS (continued)

 

of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest-rate risk is generally greater for fixed-income securities with longer maturities or durations. The Portfolios may be subject to a greater risk of rising interest rates than would normally be the case due to the end of the recent period of historically low rates and the effect of potential central bank monetary policy, and government fiscal policy, initiatives and resulting market reactions to those initiatives.

Duration Risk: Duration is a measure that relates the expected price volatility of a fixed-income security to changes in interest rates. The duration of a fixed-income security may be shorter than or equal to the full maturity of a fixed-income security. Fixed-income securities with longer durations have more risk and will decrease in price as interest rates rise.

Inflation Risk: This is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Portfolios’ assets can decline as can the value of the Portfolios’ distributions. This risk is significantly greater for fixed-income securities with longer maturities.

Illiquid Investments Risk: Illiquid investments risk exists when certain investments are or become difficult to purchase or sell. Difficulty in selling such investments may result in sales at disadvantageous prices affecting the value of your investment in the Portfolios. Causes of illiquid investments risk may include low trading volumes, large positions and heavy redemptions of Portfolio shares. Illiquid investments risk may be higher in a rising interest-rate environment, when the value and liquidity of fixed-income securities generally decline. Municipal securities may have more illiquid investments risk than other fixed-income securities because they trade less frequently and the market for municipal securities is generally smaller than many other markets.

Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolios. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying instrument, which could cause the Portfolios to suffer a (potentially unlimited) loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolios.

Management Risk: The Portfolios are subject to management risk because they are actively managed investment funds. The Adviser will apply its investment techniques and risk analyses in making investment

 

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DISCLOSURES AND RISKS (continued)

 

decisions, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.

These risks are fully discussed in the Portfolios’ prospectus. As with all investments, you may lose money by investing in the Portfolios.

An Important Note About Historical Performance

The investment return and principal value of an investment in the Portfolios will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.abfunds.com.

All fees and expenses related to the operation of the Portfolios have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Portfolios’ quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 3.00% maximum front-end sales charge for Class A shares and a 1% 1-year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes.

 

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HISTORICAL PERFORMANCE

AB ARIZONA PORTFOLIO

 

GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)

5/31/2013 TO 5/31/2023

 

LOGO

This chart illustrates the total value of an assumed $10,000 investment in AB Arizona Portfolio Class A shares (from 5/31/2013 to 5/31/2023) as compared with the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.

 

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HISTORICAL PERFORMANCE (continued)

AB ARIZONA PORTFOLIO

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2023 (unaudited)

 

    NAV Returns     SEC Returns
(reflects applicable
sales charges)
    SEC Yields1     Taxable
Equivalent
Yields2
 
CLASS A SHARES         2.76%       4.45%  
1 Year     -1.09%       -4.09%      
5 Years     1.04%       0.43%      
10 Years     1.92%       1.61%      
CLASS C SHARES         2.09%       3.37%  
1 Year     -1.83%       -2.79%      
5 Years     0.31%       0.31%      
10 Years3     1.17%       1.17%      
ADVISOR CLASS SHARES4         3.10%       4.99%  
1 Year     -0.84%       -0.84%      
Since Inception5     -2.15%       -2.15%      

The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.99%, 1.74% and 0.74% for Class A, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.78%, 1.53% and 0.53% for Class A, Class C and Advisor Class shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2023, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.

 

1

SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2023.

 

2

Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable.

 

3

Assumes conversion of Class C shares into Class A shares after eight years.

 

4

This share class is offered at NAV to eligible investors and the SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios.

 

5

Inception date: 3/25/2021.

 

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HISTORICAL PERFORMANCE (continued)

AB ARIZONA PORTFOLIO

 

SEC AVERAGE ANNUAL RETURNS

AS OF THE MOST RECENT CALENDAR QUARTER-END

JUNE 30, 2023 (unaudited)

 

    SEC Returns
(reflects applicable
sales charges)
 
CLASS A SHARES  
1 Year     -1.83%  
5 Years     0.50%  
10 Years     1.95%  
CLASS C SHARES  
1 Year     -0.52%  
5 Years     0.36%  
10 Years1     1.52%  
ADVISOR CLASS SHARES2  
1 Year     1.47%  
Since Inception3     -1.84%  

 

1

Assumes conversion of Class C shares into Class A shares after eight years.

 

2

Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios.

 

3

Inception date: 3/25/2021.

 

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HISTORICAL PERFORMANCE

AB MASSACHUSETTS PORTFOLIO

 

GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)

5/31/2013 TO 5/31/2023

 

LOGO

This chart illustrates the total value of an assumed $10,000 investment in AB Massachusetts Portfolio Class A shares (from 5/31/2013 to 5/31/2023) as compared with the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.

 

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HISTORICAL PERFORMANCE (continued)

AB MASSACHUSETTS PORTFOLIO

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2023 (unaudited)

 

    NAV Returns     SEC Returns
(reflects applicable
sales charges)
    SEC Yields1     Taxable
Equivalent
Yields2
 
CLASS A SHARES         3.05%       4.94%  
1 Year     -0.64%       -3.63%      
5 Years     1.15%       0.54%      
10 Years     1.72%       1.41%      
CLASS C SHARES         2.38%       3.85%  
1 Year     -1.39%       -2.35%      
5 Years     0.39%       0.39%      
10 Years3     0.98%       0.98%      
ADVISOR CLASS SHARES4         3.40%       5.51%  
1 Year     -0.39%       -0.39%      
5 Years     1.42%       1.42%      
Since Inception5     1.11%       1.11%      

The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.87%, 1.62% and 0.62% for Class A, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.77%, 1.52% and 0.52% for Class A, Class C and Advisor Class shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2023, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.

 

1

SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2023.

 

2

Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable.

 

3

Assumes conversion of Class C shares into Class A shares after eight years.

 

4

This share class is offered at NAV to eligible investors and the SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios.

 

5

Inception date: 7/25/2016.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    15


 

HISTORICAL PERFORMANCE (continued)

AB MASSACHUSETTS PORTFOLIO

 

SEC AVERAGE ANNUAL RETURNS

AS OF THE MOST RECENT CALENDAR QUARTER-END

JUNE 30, 2023 (unaudited)

 

    SEC Returns
(reflects applicable
sales charges)
 
CLASS A SHARES  
1 Year     -1.17%  
5 Years     0.61%  
10 Years     1.79%  
CLASS C SHARES  
1 Year     0.11%  
5 Years     0.47%  
10 Years1     1.35%  
ADVISOR CLASS SHARES2  
1 Year     2.12%  
5 Years     1.49%  
Since Inception3     1.16%  

 

1

Assumes conversion of Class C shares into Class A shares after eight years.

 

2

Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios.

 

3

Inception date: 7/25/2016.

 

16    |    AB MUNICIPAL INCOME FUND II

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HISTORICAL PERFORMANCE

AB MINNESOTA PORTFOLIO

 

GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)

5/31/2013 TO 5/31/2023

 

LOGO

This chart illustrates the total value of an assumed $10,000 investment in AB Minnesota Portfolio Class A shares (from 5/31/2013 to 5/31/2023) as compared with the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    17


 

HISTORICAL PERFORMANCE (continued)

AB MINNESOTA PORTFOLIO

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2023 (unaudited)

 

    NAV Returns     SEC Returns
(reflects applicable
sales charges)
    SEC Yields1     Taxable
Equivalent
Yields2
 
CLASS A SHARES         1.95%       3.33%  
1 Year     -0.84%       -3.81%      
5 Years     1.05%       0.44%      
10 Years     1.72%       1.41%      
CLASS C SHARES         1.26%       2.15%  
1 Year     -1.59%       -2.55%      
5 Years     0.29%       0.29%      
10 Years3     0.97%       0.97%      

The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.27% and 2.02% for Class A and Class C shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.85% and 1.60% for Class A and Class C shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2023, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.

 

1

SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2023.

 

2

Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable.

 

3

Assumes conversion of Class C shares into Class A shares after eight years.

 

18    |    AB MUNICIPAL INCOME FUND II

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HISTORICAL PERFORMANCE (continued)

AB MINNESOTA PORTFOLIO

 

SEC AVERAGE ANNUAL RETURNS

AS OF THE MOST RECENT CALENDAR QUARTER-END

JUNE 30, 2023 (unaudited)

 

    SEC Returns
(reflects applicable
sales charges)
 
CLASS A SHARES  
1 Year     -1.76%  
5 Years     0.50%  
10 Years     1.71%  
CLASS C SHARES  
1 Year     -0.42%  
5 Years     0.35%  
10 Years1     1.27%  

 

1

Assumes conversion of Class C shares into Class A shares after eight years.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    19


 

HISTORICAL PERFORMANCE

AB NEW JERSEY PORTFOLIO

 

GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)

5/31/2013 TO 5/31/2023

 

LOGO

This chart illustrates the total value of an assumed $10,000 investment in AB New Jersey Portfolio Class A shares (from 5/31/2013 to 5/31/2023) as compared with the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.

 

20    |    AB MUNICIPAL INCOME FUND II

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HISTORICAL PERFORMANCE (continued)

AB NEW JERSEY PORTFOLIO

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2023 (unaudited)

 

    NAV Returns     SEC Returns
(reflects applicable
sales charges)
    SEC Yields1     Taxable
Equivalent
Yields2
 
CLASS A SHARES         2.84%       4.90%  
1 Year     0.55%       -2.50%      
5 Years     1.80%       1.18%      
10 Years     2.23%       1.92%      
CLASS C SHARES         2.18%       3.76%  
1 Year     -0.31%       -1.29%      
5 Years     1.02%       1.02%      
10 Years3     1.47%       1.47%      

The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.15% and 1.89% for Class A and Class C shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.82% and 1.57% for Class A and Class C shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2023, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.

 

1

SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2023.

 

2

Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable.

 

3

Assumes conversion of Class C shares into Class A shares after eight years.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    21


 

HISTORICAL PERFORMANCE (continued)

AB NEW JERSEY PORTFOLIO

 

SEC AVERAGE ANNUAL RETURNS

AS OF THE MOST RECENT CALENDAR QUARTER-END

JUNE 30, 2023 (unaudited)

 

    SEC Returns
(reflects applicable
sales charges)
 
CLASS A SHARES  
1 Year     -0.40%  
5 Years     1.27%  
10 Years     2.28%  
CLASS C SHARES  
1 Year     0.89%  
5 Years     1.13%  
10 Years1     1.83%  

 

1

Assumes conversion of Class C shares into Class A shares after eight years.

 

22    |    AB MUNICIPAL INCOME FUND II

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HISTORICAL PERFORMANCE

AB OHIO PORTFOLIO

 

GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)

5/31/2013 TO 5/31/2023

 

LOGO

This chart illustrates the total value of an assumed $10,000 investment in AB Ohio Portfolio Class A shares (from 5/31/2013 to 5/31/2023) as compared with the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    23


 

HISTORICAL PERFORMANCE (continued)

AB OHIO PORTFOLIO

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2023 (unaudited)

 

    NAV Returns     SEC Returns
(reflects applicable
sales charges)
    SEC Yields1     Taxable
Equivalent
Yields2
 
CLASS A SHARES         2.59%       4.15%  
1 Year     -0.84%       -3.77%      
5 Years     1.25%       0.65%      
10 Years     1.69%       1.38%      
CLASS C SHARES         1.92%       3.08%  
1 Year     -1.58%       -2.54%      
5 Years     0.47%       0.47%      
10 Years3     0.93%       0.93%      

The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.15% and 1.90% for Class A and Class C shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.80% and 1.55% for Class A and Class C shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2023, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.

 

1

SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2023.

 

2

Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable.

 

3

Assumes conversion of Class C shares into Class A shares after eight years.

 

24    |    AB MUNICIPAL INCOME FUND II

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HISTORICAL PERFORMANCE (continued)

AB OHIO PORTFOLIO

 

SEC AVERAGE ANNUAL RETURNS

AS OF THE MOST RECENT CALENDAR QUARTER-END

JUNE 30, 2023 (unaudited)

 

    SEC Returns
(reflects applicable
sales charges)
 
CLASS A SHARES  
1 Year     -1.11%  
5 Years     0.69%  
10 Years     1.73%  
CLASS C SHARES  
1 Year     0.23%  
5 Years     0.52%  
10 Years1     1.28%  

 

1

Assumes conversion of Class C shares into Class A shares after eight years.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    25


 

HISTORICAL PERFORMANCE

AB PENNSYLVANIA PORTFOLIO

 

GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)

5/31/2013 TO 5/31/2023

 

LOGO

This chart illustrates the total value of an assumed $10,000 investment in AB Pennsylvania Portfolio Class A shares (from 5/31/2013 to 5/31/2023) as compared with the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.

 

26    |    AB MUNICIPAL INCOME FUND II

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HISTORICAL PERFORMANCE (continued)

AB PENNSYLVANIA PORTFOLIO

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2023 (unaudited)

 

    NAV Returns     SEC Returns
(reflects applicable
sales charges)
    SEC Yields1     Taxable
Equivalent
Yields2
 
CLASS A SHARES         2.59%       4.11%  
1 Year     -1.01%       -4.00%      
5 Years     1.26%       0.65%      
10 Years     1.98%       1.67%      
CLASS C SHARES         1.92%       3.05%  
1 Year     -1.76%       -2.72%      
5 Years     0.48%       0.48%      
10 Years3     1.22%       1.22%      

The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.18% and 1.93% for Class A and Class C shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.85% and 1.60% for Class A and Class C shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2023, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.

 

1

SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2023.

 

2

Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable.

 

3

Assumes conversion of Class C shares into Class A shares after eight years.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    27


 

HISTORICAL PERFORMANCE (continued)

AB PENNSYLVANIA PORTFOLIO

 

SEC AVERAGE ANNUAL RETURNS

AS OF THE MOST RECENT CALENDAR QUARTER-END

JUNE 30, 2023 (unaudited)

 

    SEC Returns
(reflects applicable
sales charges)
 
CLASS A SHARES  
1 Year     -1.49%  
5 Years     0.73%  
10 Years     2.02%  
CLASS C SHARES  
1 Year     -0.20%  
5 Years     0.58%  
10 Years1     1.57%  

 

1

Assumes conversion of Class C shares into Class A shares after eight years.

 

28    |    AB MUNICIPAL INCOME FUND II

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HISTORICAL PERFORMANCE

AB VIRGINIA PORTFOLIO

 

GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO (unaudited)

5/31/2013 TO 5/31/2023

 

LOGO

This chart illustrates the total value of an assumed $10,000 investment in AB Virginia Portfolio Class A shares (from 5/31/2013 to 5/31/2023) as compared with the performance of the Portfolio’s benchmark. Class A at Offering reflects the deduction of the maximum 3% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains distributions.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    29


 

HISTORICAL PERFORMANCE (continued)

AB VIRGINIA PORTFOLIO

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2023 (unaudited)

 

    NAV Returns     SEC Returns
(reflects applicable
sales charges)
    SEC Yields1     Taxable
Equivalent
Yields2
 
CLASS A SHARES         2.81%       4.59%  
1 Year     -0.37%       -3.37%      
5 Years     1.21%       0.59%      
10 Years     1.91%       1.60%      
CLASS C SHARES         2.14%       3.49%  
1 Year     -1.11%       -2.08%      
5 Years     0.45%       0.45%      
10 Years3     1.16%       1.16%      
ADVISOR CLASS SHARES4         3.16%       5.16%  
1 Year     -0.12%       -0.12%      
5 Years     1.46%       1.46%      
Since Inception5     1.28%       1.28%      

The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.86%, 1.61% and 0.61% for Class A, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.80%, 1.55% and 0.55% for Class A, Class C and Advisor Class shares, respectively. These waivers/reimbursements may not be terminated before September 30, 2023, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.

 

1

SEC yields are calculated based on SEC guidelines for the 30-day period ended May 31, 2023.

 

2

Taxable equivalent yields are based on SEC yields and a 35% marginal federal income tax rate and maximum state taxes where applicable.

 

3

Assumes conversion of Class C shares into Class A shares after eight years.

 

4

This share class is offered at NAV to eligible investors and the SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios.

 

5

Inception date: 7/25/2016.

 

30    |    AB MUNICIPAL INCOME FUND II

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HISTORICAL PERFORMANCE (continued)

AB VIRGINIA PORTFOLIO

 

SEC AVERAGE ANNUAL RETURNS

AS OF THE MOST RECENT CALENDAR QUARTER-END

JUNE 30, 2023 (unaudited)

 

    SEC Returns
(reflects applicable
sales charges)
 
CLASS A SHARES  
1 Year     -0.82%  
5 Years     0.68%  
10 Years     2.03%  
CLASS C SHARES  
1 Year     0.39%  
5 Years     0.54%  
10 Years1     1.60%  
ADVISOR CLASS SHARES2  
1 Year     2.40%  
5 Years     1.53%  
Since Inception3     1.34%  

 

1

Assumes conversion of Class C shares into Class A shares after eight years.

 

2

Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Portfolios.

 

3

Inception date: 7/25/2016.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    31


 

EXPENSE EXAMPLE

(unaudited)

 

As a shareholder of a Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on a Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

32    |    AB MUNICIPAL INCOME  FUND II

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EXPENSE EXAMPLE (continued)

(unaudited)

 

AB Arizona Portfolio

 

     Beginning
Account Value
December 1, 2022
     Ending
Account Value
May 31, 2023
     Expenses
Paid During
Period*
     Annualized
Expense
Ratio*
 
Class A            

Actual

   $   1,000      $   1,009.60      $   4.01        0.80

Hypothetical**

   $ 1,000      $ 1,020.94      $ 4.03        0.80

Class C

           

Actual

   $ 1,000      $ 1,006.90      $ 7.76        1.55

Hypothetical**

   $ 1,000      $ 1,017.20      $ 7.80        1.55

Advisor Class

           

Actual

   $ 1,000      $ 1,010.90      $ 2.76        0.55

Hypothetical**

   $ 1,000      $ 1,022.19      $ 2.77        0.55

AB Massachusetts Portfolio

 

     Beginning
Account Value
December 1, 2022
     Ending
Account Value
May 31, 2023
     Expenses
Paid During
Period*
     Annualized
Expense
Ratio*
 
Class A            

Actual

   $   1,000      $   1,013.70      $   3.87        0.77

Hypothetical**

   $ 1,000      $ 1,021.09      $ 3.88        0.77

Class C

           

Actual

   $ 1,000      $ 1,009.90      $ 7.62        1.52

Hypothetical**

   $ 1,000      $ 1,017.35      $ 7.64        1.52

Advisor Class

           

Actual

   $ 1,000      $ 1,015.90      $ 2.61        0.52

Hypothetical**

   $ 1,000      $ 1,022.34      $ 2.62        0.52

AB Minnesota Portfolio

 

     Beginning
Account Value
December 1, 2022
     Ending
Account Value
May 31, 2023
     Expenses
Paid During
Period*
     Annualized
Expense
Ratio*
 

Class A

           

Actual

   $   1,000      $   1,009.60      $   4.31        0.86

Hypothetical**

   $ 1,000      $ 1,020.64      $ 4.33        0.86

Class C

           

Actual

   $ 1,000      $ 1,005.80      $ 8.05        1.61

Hypothetical**

   $ 1,000      $ 1,016.90      $ 8.10        1.61

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    33


 

EXPENSE EXAMPLE (continued)

(unaudited)

 

AB New Jersey Portfolio

 

     Beginning
Account Value
December 1, 2022
     Ending
Account Value
May 31, 2023
     Expenses
Paid During
Period*
     Annualized
Expense
Ratio*
 

Class A

           

Actual

   $   1,000      $   1,022.00      $   4.18        0.83

Hypothetical**

   $ 1,000      $ 1,020.79      $ 4.18        0.83

Class C

           

Actual

   $ 1,000      $ 1,017.00      $ 7.95        1.58

Hypothetical**

   $ 1,000      $ 1,017.05      $ 7.95        1.58

AB Ohio Portfolio

 

     Beginning
Account Value
December 1, 2022
     Ending
Account Value
May 31, 2023
     Expenses
Paid During
Period*
     Annualized
Expense
Ratio*
 

Class A

           

Actual

   $   1,000      $   1,013.80      $   4.17        0.83

Hypothetical**

   $ 1,000      $ 1,020.79      $ 4.18        0.83

Class C

           

Actual

   $ 1,000      $ 1,010.00      $ 7.92        1.58

Hypothetical**

   $ 1,000      $ 1,017.05      $ 7.95        1.58

AB Pennsylvania Portfolio

 

     Beginning
Account Value
December 1, 2022
     Ending
Account Value
May 31, 2023
     Expenses
Paid During
Period*
     Annualized
Expense
Ratio*
 

Class A

           

Actual

   $   1,000      $   1,014.40      $   4.27        0.85

Hypothetical**

   $ 1,000      $ 1,020.69      $ 4.28        0.85

Class C

           

Actual

   $ 1,000      $ 1,010.60      $ 8.02        1.60

Hypothetical**

   $ 1,000      $ 1,016.95      $ 8.05        1.60

 

34    |    AB MUNICIPAL INCOME FUND II

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EXPENSE EXAMPLE (continued)

(unaudited)

 

AB Virginia Portfolio

 

     Beginning
Account Value
December 1, 2022
     Ending
Account Value
May 31, 2023
     Expenses
Paid During
Period*
     Annualized
Expense
Ratio*
 
Class A            

Actual

   $   1,000      $   1,014.30      $   4.07        0.81

Hypothetical**

   $ 1,000      $ 1,020.89      $ 4.08        0.81

Class C

           

Actual

   $ 1,000      $ 1,009.60      $ 7.82        1.56

Hypothetical**

   $ 1,000      $ 1,017.15      $ 7.85        1.56

Advisor Class

           

Actual

   $ 1,000      $ 1,014.60      $ 2.81        0.56

Hypothetical**

   $ 1,000      $ 1,022.14      $ 2.82        0.56

 

*

Expenses are equal to the classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

 

**

Assumes 5% annual return before expenses.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    35


 

BOND RATING SUMMARY1

May 31, 2023 (unaudited)

 

 

 

LOGO

 

 

 

LOGO

 

1

The Portfolio’s quality rating breakdown is expressed as a percentage of the Portfolio’s total investments in municipal securities and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Portfolio considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the Pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments, such as, equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment.

 

36    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

BOND RATING SUMMARY1 (continued)

May 31, 2023 (unaudited)

 

 

 

LOGO

 

 

 

LOGO

 

1

The Portfolio’s quality rating breakdown is expressed as a percentage of the Portfolio’s total investments in municipal securities and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Portfolio considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the Pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments, such as, equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    37


 

BOND RATING SUMMARY1 (continued)

May 31, 2023 (unaudited)

 

 

 

LOGO

 

 

 

LOGO

 

1

The Portfolio’s quality rating breakdown is expressed as a percentage of the Portfolio’s total investments in municipal securities and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Portfolio considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the Pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments, such as, equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment.

 

38    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

BOND RATING SUMMARY1 (continued)

May 31, 2023 (unaudited)

 

 

 

 

LOGO

 

1

The Portfolio’s quality rating breakdown is expressed as a percentage of the Portfolio’s total investments in municipal securities and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Portfolio considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the Pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments, such as, equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    39


 

PORTFOLIO OF INVESTMENTS

AB ARIZONA PORTFOLIO

May 31, 2023

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

MUNICIPAL OBLIGATIONS – 96.8%

    

Long-Term Municipal Bonds – 92.8%

    

Arizona – 79.9%

    

Arizona Game & Fish Department & Commission
(Arizona Game & Fish Department & Commission State Lease)
Series 2006
5.00%, 07/01/2026

   $ 825     $ 825,962  

Arizona Health Facilities Authority
(HonorHealth)
Series 2014-A
5.00%, 12/01/2034

     3,000       3,071,996  

Arizona Industrial Development Authority
(Benjamin Franklin Charter School Obligated Group)
Series 2023
5.50%, 07/01/2058(a)

     500       470,483  

Arizona Industrial Development Authority
(Equitable School Revolving Fund LLC Obligated Group)
Series 2020
4.00%, 11/01/2045

     1,000       892,328  

4.00%, 11/01/2050

     2,000       1,728,333  

Arizona Industrial Development Authority
(KIPP Nashville Obligated Group)
Series 2022-A
5.00%, 07/01/2057

     1,500       1,429,571  

Arizona Industrial Development Authority
(KIPP NYC Public Charter Schools)
Series 2021-B
4.00%, 07/01/2051

     1,000       815,881  

Arizona Industrial Development Authority
(Legacy Cares, Inc.)
Series 2020
7.75%, 07/01/2050(a)(b)(c)

     300       165,000  

Arizona Industrial Development Authority
(North Carolina Central University Project)
BAM Series 2019
5.00%, 06/01/2058

     2,300       2,440,592  

Arizona Industrial Development Authority
(Phoenix Children’s Hospital Obligated Group)
Series 2020
5.00%, 02/01/2037

     1,500       1,635,122  

Series 2021
4.00%, 02/01/2038

     1,500       1,475,528  

 

40    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Arizona Industrial Development Authority
(Pinecrest Academy of Nevada)
Series 2020-A
4.00%, 07/15/2050(a)

   $ 600     $ 446,670  

Arizona Industrial Development Authority
(Provident Group – EMU Properties LLC)
Series 2018
5.00%, 05/01/2043(b)(c)

     1,000       600,000  

5.00%, 05/01/2048(b)(c)

     1,100       660,000  

Arizona Sports & Tourism Authority
BAM Series 2022
5.00%, 07/01/2031

     2,000       2,233,588  

Arizona State University
Series 2014
5.00%, 08/01/2033

     2,050       2,068,485  

Chandler Industrial Development Authority
(Intel Corp.)
Series 2022
5.00%, 09/01/2042

     2,000       2,050,642  

City of Buckeye AZ
Series 2015
5.00%, 07/01/2035

     3,450       3,539,565  

City of Glendale AZ
(City of Glendale AZ COP)
Series 2021
2.222%, 07/01/2030

     2,000       1,680,012  

City of Phoenix Civic Improvement Corp.
(City of Phoenix AZ Water System Revenue)
Series 2021-A
5.00%, 07/01/2045

     1,500       1,640,739  

City of Phoenix Civic Improvement Corp.
(Phoenix Sky Harbor International Airport)
Series 2017-A
5.00%, 07/01/2033

     750       788,085  

Series 2019
5.00%, 07/01/2049

     2,500       2,614,495  

Series 2019-B
4.00%, 07/01/2038

     2,200       2,141,739  

City of Tempe AZ
(City of Tempe AZ COP)
Series 2021
1.951%, 07/01/2031

     1,250       1,013,370  

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    41


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Gilbert Water Resource Municipal Property Corp.
(Town of Gilbert AZ Waterworks & Sewer System Revenue)
Series 2022
4.00%, 07/15/2042

   $ 5,000     $ 4,960,547  

Glendale Industrial Development Authority
(Beatitudes Campus Obligated Group (The))
Series 2017
5.00%, 11/15/2036

     1,000       895,756  

Glendale Industrial Development Authority
(Royal Oaks Life Care Community)
Series 2016
5.00%, 05/15/2039

     1,000       917,443  

Glendale Municipal Property Corp.
(Glendale Municipal Property Corp. Excise Tax)
Series 2012-C
5.00%, 07/01/2038

     2,500       2,501,930  

Industrial Development Authority of the City of Phoenix (The)
(Downtown Phoenix Student Housing LLC)
Series 2018-A
5.00%, 07/01/2037

     1,000       1,012,028  

5.00%, 07/01/2042

     1,250       1,253,282  

Industrial Development Authority of the County of Pima (The)
(La Posada at Park Centre, Inc. Obligated Group)
Series 2022
7.00%, 11/15/2057(a)

     335       335,670  

Industrial Development Authority of the County of Pima (The)
(TMC HealthCare Obligated Group)
Series 2021
5.00%, 04/01/2034

     1,590       1,730,215  

La Paz County Industrial Development Authority
(Harmony Public Schools)
Series 2016
5.00%, 02/15/2036(a)

     1,200       1,209,385  

Series 2021
4.00%, 02/15/2051

     580       456,121  

4.00%, 02/15/2041

     205       176,136  

4.00%, 02/15/2046

     345       281,651  

 

42    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Maricopa County Industrial Development Authority
(Arizona Autism Charter Schools Obligated Group)
Series 2021
4.00%, 07/01/2061(a)

   $ 990     $ 719,898  

Maricopa County Industrial Development Authority
(Banner Health Obligated Group)
Series 2016-A
5.00%, 01/01/2033

     1,400       1,471,992  

5.00%, 01/01/2035

     2,000       2,097,758  

Maricopa County Industrial Development Authority
(Benjamin Franklin Charter School Ltd.)
Series 2018-A
6.00%, 07/01/2052(a)

     830       842,994  

Maricopa County Industrial Development Authority (Commercial Metals Co.)
Series 2022
4.00%, 10/15/2047(a)

     500       422,506  

Maricopa County Industrial Development Authority
(GreatHearts Arizona Obligated Group)
Series 2017-A
5.00%, 07/01/2037

     750       773,136  

Maricopa County Industrial Development Authority
(Legacy Traditional School Obligated Group)
Series 2019
5.00%, 07/01/2049(a)

     500       439,842  

Maricopa County Industrial Development Authority
(Reid Traditional Schools Obligated Group)
Series 2016
5.00%, 07/01/2047

     1,700       1,703,372  

Maricopa County Industrial Development Authority
(Reid Traditional Schools Painted Rock Academy)
Series 2016
5.00%, 07/01/2036

     750       759,951  

Maricopa County Special Health Care District
Series 2018-C
5.00%, 07/01/2036

     1,700       1,824,053  

McAllister Academic Village LLC
(Arizona State University)
Series 2016
5.00%, 07/01/2037

     2,500       2,594,530  

Northern Arizona University
BAM Series 2015
5.00%, 06/01/2034

     1,000       1,022,228  

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    43


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Salt Verde Financial Corp.
(Citigroup, Inc.)
Series 2007
5.00%, 12/01/2037

   $ 2,500     $ 2,539,621  

5.25%, 12/01/2023

     650       651,893  

Student & Academic Services LLC
(Northern Arizona University)
BAM Series 2014
5.00%, 06/01/2044

     1,200       1,209,524  

Tempe Industrial Development Authority
(Friendship Village of Tempe)
Series 2019
5.00%, 12/01/2054

     815       654,748  

Tempe Industrial Development Authority
(Mirabella at ASU, Inc.)
Series 2017-A
6.125%, 10/01/2047(a)

     400       248,982  

University of Arizona (The)
Series 2014
5.00%, 08/01/2033

     1,765       1,783,318  
    

 

 

 
       73,918,696  
    

 

 

 

American Samoa – 0.3%

    

American Samoa Economic Development Authority
(Territory of American Samoa)
Series 2018
7.125%, 09/01/2038(a)

     225       245,405  
    

 

 

 

Delaware – 0.6%

    

Delaware State Economic Development Authority
(Newark Charter School, Inc.)
Series 2016
5.00%, 09/01/2036

     520       532,272  
    

 

 

 

Georgia – 0.2%

    

Municipal Electric Authority of Georgia
Series 2019
5.00%, 01/01/2056

     200       202,236  
    

 

 

 

Guam – 3.7%

 

Antonio B Won Pat International Airport Authority
Series 2021-A
3.839%, 10/01/2036

     100       80,070  

Series 2023
5.25%, 10/01/2031(d)

     150       152,973  

 

44    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Guam Department of Education
(Guam Department of Education COP)
Series 2020
5.00%, 02/01/2040

   $ 310     $ 307,065  

Guam Government Waterworks Authority
Series 2016
5.00%, 01/01/2046

     775       781,468  

Guam Power Authority
Series 2017-A
5.00%, 10/01/2036

     170       174,763  

5.00%, 10/01/2040

     705       717,457  

Series 2022-A
5.00%, 10/01/2044

     200       204,552  

Territory of Guam
Series 2019
5.00%, 11/15/2031

     85       87,310  

Territory of Guam
(Territory of Guam Business Privilege Tax)
Series 2021-F
4.00%, 01/01/2042

     1,000       876,612  
    

 

 

 
       3,382,270  
    

 

 

 

Illinois – 0.4%

    

Chicago Board of Education
Series 2018-A
5.00%, 12/01/2031

     335       347,062  
    

 

 

 

Indiana – 0.2%

    

Indiana Finance Authority
(Brightmark Plastics Renewal Indiana LLC)
Series 2019
7.00%, 03/01/2039(a)

     140       105,482  

Indiana Finance Authority
(Ohio Valley Electric Corp.)
Series 2020-A
3.00%, 11/01/2030

     100       89,285  
    

 

 

 
       194,767  
    

 

 

 

Kentucky – 1.1%

    

Kentucky Economic Development Finance Authority
(Owensboro Health, Inc. Obligated Group)
Series 2017-A
5.25%, 06/01/2041

     1,000       1,020,613  
    

 

 

 

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    45


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Louisiana – 0.6%

    

Louisiana Local Government Environmental Facilities & Community Development Auth
(St. James Place of Baton Rouge)
Series 2015-A
6.25%, 11/15/2045

   $ 500     $ 462,076  

Parish of St. James LA
(NuStar Logistics LP)
Series 2020-2
6.35%, 07/01/2040(a)

     100       107,583  
    

 

 

 
       569,659  
    

 

 

 

Michigan – 0.1%

    

City of Detroit MI
Series 2018
5.00%, 04/01/2036

     50       50,463  
    

 

 

 

New York – 1.1%

    

Metropolitan Transportation Authority
Series 2020-E
5.00%, 11/15/2027

     1,000       1,051,622  
    

 

 

 

North Carolina – 0.8%

    

North Carolina Medical Care Commission
(Aldersgate United Methodist Retirement Community, Inc.)
Series 2015
4.70%, 07/01/2037

     300       262,741  

North Carolina Medical Care Commission
(Pennybyrn at Maryfield)
Series 2015
5.00%, 10/01/2035

     500       483,436  
    

 

 

 
       746,177  
    

 

 

 

Puerto Rico – 3.0%

    

Commonwealth of Puerto Rico
Series 2021-A
Zero Coupon, 07/01/2024

     1       924  

Zero Coupon, 07/01/2033

     144       84,240  

4.00%, 07/01/2033

     103       94,444  

4.00%, 07/01/2035

     3       2,329  

4.00%, 07/01/2037

     2       1,942  

4.00%, 07/01/2041

     3       2,539  

4.00%, 07/01/2046

     103       83,067  

5.25%, 07/01/2023

     32       31,651  

5.625%, 07/01/2027

     303       316,924  

5.75%, 07/01/2031

     3       3,294  

Series 2022-C
0.00%, 11/01/2043

     19       9,318  

 

46    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

HTA TRRB Custodial Trust
Series 2022
5.25%, 07/01/2034

   $ 130     $ 129,132  

5.25%, 07/01/2036

     130       131,138  

Puerto Rico Commonwealth Aqueduct & Sewer Authority
Series 2020-A
5.00%, 07/01/2030(a)

     250       253,711  

5.00%, 07/01/2035(a)

     250       249,990  

Puerto Rico Electric Power Authority
AGM Series 2007-V
5.25%, 07/01/2031

     100       100,126  

NATL Series 2007-V
5.25%, 07/01/2032

     150       147,934  

Puerto Rico Highway & Transportation Authority
Series 2022-A
5.00%, 07/01/2062

     130       124,638  

Series 2022-B
Zero Coupon, 07/01/2032

     100       63,579  

Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth
(AES Puerto Rico LP)
Series 2000
6.625%, 06/01/2026(b)(c)

     310       314,830  

Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue
Series 2018-A
Zero Coupon, 07/01/2029

     130       99,491  

Series 2019-A
4.329%, 07/01/2040

     105       97,275  

5.00%, 07/01/2058

     480       458,615  
    

 

 

 
       2,801,131  
    

 

 

 

Tennessee – 0.2%

    

Bristol Industrial Development Board
(Bristol Industrial Development Board Sales Tax)
Series 2016-A
5.00%, 12/01/2035(a)

     165       154,003  
    

 

 

 

Texas – 0.3%

    

Mission Economic Development Corp.
(Natgasoline LLC)
Series 2018
4.625%, 10/01/2031(a)

     290       280,535  
    

 

 

 

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    47


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Washington – 0.3%

    

Kalispel Tribe of Indians
Series 2018-B
5.25%, 01/01/2038(a)

   $ 225     $ 231,134  

Washington State Housing Finance Commission
(Presbyterian Retirement Communities Northwest Obligated Group)
Series 2019-A
5.00%, 01/01/2055(a)

     100       70,647  
    

 

 

 
       301,781  
    

 

 

 

Total Long-Term Municipal Bonds
(cost $91,756,185)

       85,798,692  
 

 

 

 

Short-Term Municipal Notes – 4.0%

    

Arizona Industrial Development Authority
(Phoenix Children’s Hospital)
Series 2019
4.00%, 02/01/2048(e)
(cost $3,715,000)

     3,715       3,715,000  
    

 

 

 

Total Municipal Obligations
(cost $95,471,185)

       89,513,692  
 

 

 

 
    

COMMERCIAL MORTGAGE-BACKED SECURITY – 1.0%

    

Non-Agency Fixed Rate CMBS – 1.0%

    

Arizona Industrial Development Authority
Series 2019-2, Class A
3.625%, 05/20/2033
(cost $1,087,117)

     1,011       923,652  
    

 

 

 
     Shares        

SHORT-TERM INVESTMENTS – 0.4%

    

Investment Companies – 0.4%

    

AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB,
5.03%(f)(g)(h)
(cost $365,870)

     365,870       365,870  
    

 

 

 

Total Investments – 98.2%
(cost $96,924,172)

       90,803,214  

Other assets less liabilities – 1.8%

       1,706,998  
 

 

 

 

Net Assets – 100.0%

     $ 92,510,212  
 

 

 

 

 

48    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)

 

                Rate Type                        

Notional
Amount
(000)

    Termination
Date
    Payments
made
by the
Fund
    Payments
received
by the
Fund
    Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     740       01/15/2025       2.565%       CPI#     Maturity   $ 65,075     $ – 0  –    $ 65,075  
USD     370       01/15/2025       2.585%       CPI#     Maturity     32,241       – 0  –      32,241  
USD     370       01/15/2025       2.613%       CPI#     Maturity     31,832       – 0  –      31,832  
USD     240       01/15/2025       4.028%       CPI#     Maturity     6,724       – 0  –      6,724  
USD     1,150       01/15/2026       CPI#       3.720%     Maturity     (30,746     – 0  –      (30,746
USD     1,150       01/15/2027       CPI#       3.320%     Maturity     (44,012     – 0  –      (44,012
USD     1,150       01/15/2027       CPI#       3.466%     Maturity     (33,597     (1,136     (32,461
USD     900       01/15/2027       CPI#       3.323%     Maturity     (34,277     – 0  –      (34,277
USD     2,840       01/15/2028       1.230%       CPI#     Maturity     492,276       – 0  –      492,276  
USD     2,140       01/15/2028       0.735%       CPI#     Maturity     447,989       – 0  –      447,989  
USD     2,200       01/15/2029       CPI#       3.390%     Maturity     (34,970     – 0  –      (34,970
USD     1,330       01/15/2029       CPI#       3.735%     Maturity     17,478       – 0  –      17,478  
USD     640       01/15/2029       CPI#       3.290%     Maturity     (15,479     – 0  –      (15,479
USD     510       01/15/2030       1.572%       CPI#     Maturity     84,053       – 0  –      84,053  
USD     510       01/15/2030       1.587%       CPI#     Maturity     83,350       – 0  –      83,350  
USD     650       01/15/2031       2.782%       CPI#     Maturity     39,309       – 0  –      39,309  
USD     630       01/15/2031       2.680%       CPI#     Maturity     44,432       – 0  –      44,432  
USD     540       01/15/2031       2.989%       CPI#     Maturity     21,518       – 0  –      21,518  
USD     530       01/15/2032       CPI#       3.064%     Maturity     (14,210     – 0  –      (14,210
USD     490       04/15/2032       CPI#       2.909%     Maturity     (19,686     – 0  –      (19,686
           

 

 

   

 

 

   

 

 

 
            $     1,139,300     $     (1,136   $     1,140,436  
           

 

 

   

 

 

   

 

 

 

 

#

Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI).

CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)

 

                Rate Type                      

Notional
Amount
(000)

    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
  Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     5,700       01/15/2027     1 Day SOFR   2.445%   Annual   $ (293,584   $ – 0  –    $ (293,584
USD     2,400       01/15/2027     1 Day SOFR   3.527%   Annual     (25,883     – 0  –      (25,883
USD     4,800       04/30/2030     1 Day SOFR   3.075%   Annual         (107,422     – 0  –          (107,422
USD     2,100       04/30/2030     1 Day SOFR   3.369%   Annual     (8,358     – 0  –      (8,358
USD     3,500       04/15/2032     2.542%   1 Day SOFR   Annual     236,698       – 0  –      236,698  
USD     1,750       04/15/2032     2.444%   1 Day SOFR   Annual     131,578       – 0  –      131,578  
           

 

 

   

 

 

   

 

 

 
            $ (66,971   $     – 0  –    $ (66,971
           

 

 

   

 

 

   

 

 

 

INTEREST RATE SWAPS (see Note D)

 

                      Rate Type                      
Swap
Counterparty
  Notional
Amount
(000)
    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
  Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 

Citibank, NA

    USD       1,675       10/09/2029     1.125%   SIFMA*   Quarterly   $     169,176     $     – 0  –    $     169,176  

 

*

Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index.

 

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    49


 

PORTFOLIO OF INVESTMENTS (continued)

AB ARIZONA PORTFOLIO

 

(a)

Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2023, the aggregate market value of these securities amounted to $6,999,920 or 7.6% of net assets.

 

(b)

Non-income producing security.

 

(c)

Defaulted.

 

(d)

When-Issued or delayed delivery security.

 

(e)

Variable Rate Demand Notes are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks.

 

(f)

Affiliated investments.

 

(g)

The rate shown represents the 7-day yield as of period end.

 

(h)

To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618.

As of May 31, 2023, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 8.0% and 0.0%, respectively.

Glossary:

AGM – Assured Guaranty Municipal

BAM – Build American Mutual

CMBS – Commercial Mortgage-Backed Securities

COP – Certificate of Participation

CPI – Consumer Price Index

NATL – National Interstate Corporation

SOFR – Secured Overnight Financing Rate

See notes to financial statements.

 

50    |    AB MUNICIPAL INCOME FUND II

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PORTFOLIO OF INVESTMENTS

AB MASSACHUSETTS PORTFOLIO

May 31, 2023

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

MUNICIPAL OBLIGATIONS – 93.6%

    

Long-Term Municipal Bonds – 92.6%

    

Massachusetts – 79.2%

    

City of Quincy MA
Series 2022-A
5.00%, 06/01/2047

   $ 3,060     $ 3,453,678  

City of Worcester MA
AGM Series 2022
3.00%, 02/01/2046

     2,600       2,048,338  

Commonwealth of Massachusetts
Series 2015-A
5.00%, 07/01/2035

     10,000       10,341,487  

Series 2018-A
5.00%, 01/01/2042

     5,000       5,288,814  

Series 2022-B
3.00%, 02/01/2045

     4,965       3,964,376  

AGC Series 2007-A
4.12% (LIBOR 3 Month + 0.57%), 05/01/2037(a)

     3,000       2,917,111  

Commonwealth of Massachusetts
(Commonwealth of Massachusetts COVID-19 Recovery Assessment Revenue)
Series 2022-B
4.11%, 07/15/2031

     2,000       1,962,854  

Martha’s Vineyard Land Bank
BAM Series 2014
5.00%, 05/01/2031

     1,000       1,022,605  

Massachusetts Bay Transportation Authority Assessment Revenue
Series 2022-A
4.00%, 07/01/2039

     2,000       2,017,237  

Massachusetts Development Finance Agency
(Atrius Health Obligated Group)
Series 2019-A
5.00%, 06/01/2039 (Pre-refunded/ETM)

     1,400       1,580,255  

Massachusetts Development Finance Agency
(Baystate Medical Obligated Group)
Series 2014-N
5.00%, 07/01/2044

     7,000       7,025,617  

Massachusetts Development Finance Agency
(Beth Israel Lahey Health Obligated Group)
Series 2018-J
5.00%, 07/01/2053

     5,000       5,133,052  

Series 2019
5.00%, 07/01/2026

     1,000       1,041,827  

 

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PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Massachusetts Development Finance Agency
(Boston Medical Center Corp. Obligated Group)
Series 2015-D
5.00%, 07/01/2044

   $ 3,755     $ 3,794,347  

Series 2023
5.25%, 07/01/2048

     2,000       2,093,853  

Massachusetts Development Finance Agency
(Brandeis University)
Series 2019-S
5.00%, 10/01/2035

     1,795       1,955,719  

5.00%, 10/01/2039

     1,780       1,907,399  

Massachusetts Development Finance Agency
(Children’s Hospital Corp. Obligated Group (The))
Series 2014-P
5.00%, 10/01/2034 (Pre-refunded/ETM)

     1,055       1,075,665  

Massachusetts Development Finance Agency
(Emerson College)
Series 2016-A
5.00%, 01/01/2034

     700       718,391  

5.00%, 01/01/2035

     735       752,522  

5.00%, 01/01/2036

     1,000       1,019,976  

5.25%, 01/01/2042

     1,000       1,013,307  

Massachusetts Development Finance Agency
(Emmanuel College/MA)
Series 2016-A
5.00%, 10/01/2031

     2,000       2,037,178  

5.00%, 10/01/2034

     2,100       2,125,268  

Massachusetts Development Finance Agency
(Equitable School Revolving Fund LLC Obligated Group)
Series 2021
4.00%, 11/01/2046

     1,000       898,016  

Massachusetts Development Finance Agency
(Franklin W Olin College of Engineering, Inc.)
Series 2013-E
5.00%, 11/01/2038

     5,000       5,018,997  

Massachusetts Development Finance Agency
(Lasell University)
Series 2021
4.00%, 07/01/2030

     350       336,601  

4.00%, 07/01/2031

     365       348,211  

4.00%, 07/01/2040

     2,000       1,710,116  

4.00%, 07/01/2050

     1,000       777,119  

 

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PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Massachusetts Development Finance Agency
(Lesley University)
Series 2016
5.00%, 07/01/2039

   $ 2,055     $ 2,062,700  

Massachusetts Development Finance Agency
(Mass General Brigham Inc.)
Series 2015-O
4.00%, 07/01/2045

     5,855       5,567,177  

Massachusetts Development Finance Agency
(MCPHS University)
Series 2013-F
4.00%, 07/01/2032

     1,000       1,000,057  

Massachusetts Development Finance Agency
(Merrimack College)
Series 2021-B
4.00%, 07/01/2050

     1,825       1,495,780  

Series 2022
5.00%, 07/01/2052

     1,000       976,581  

Massachusetts Development Finance Agency
(NewBridge on the Charles, Inc. Obligated Group)
Series 2017
4.00%, 10/01/2024(b)

     250       246,964  

Massachusetts Development Finance Agency
(NewBridge on the Charles, Inc.)
Series 2017
5.00%, 10/01/2047(b)

     2,000       1,787,831  

Massachusetts Development Finance Agency
(Northeastern University)
Series 2022
5.00%, 10/01/2042

     5,000       5,563,154  

Massachusetts Development Finance Agency
(President & Fellows of Harvard College)
Series 2016-A
5.00%, 07/15/2036

     700       850,275  

5.00%, 07/15/2040

     2,400       2,778,277  

Massachusetts Development Finance Agency
(Salem Community Corp. Obligated Group)
Series 2022
5.125%, 01/01/2040

     1,020       924,029  

Massachusetts Development Finance Agency
(Simmons University)
Series 2018-L
5.00%, 10/01/2034

     1,525       1,582,485  

5.00%, 10/01/2035

     2,455       2,536,125  

Series 2020-M
4.00%, 10/01/2050

     2,500       2,053,338  

 

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AB MUNICIPAL INCOME FUND II    |    53


 

PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Massachusetts Development Finance Agency
(South Shore Hospital, Inc. Obligated Group)
Series 2016-I
4.00%, 07/01/2036

   $ 2,000     $ 1,869,431  

5.00%, 07/01/2041

     2,500       2,525,565  

Massachusetts Development Finance Agency
(Southcoast Health System Obligated Group)
Series 2021-G
5.00%, 07/01/2050

     1,500       1,523,229  

Massachusetts Development Finance Agency
(Springfield College)
Series 2021
4.00%, 06/01/2056

     3,000       2,337,645  

Series 2021-B
4.00%, 06/01/2050

     1,000       808,788  

Massachusetts Development Finance Agency
(Suffolk University)
Series 2017
5.00%, 07/01/2033

     1,250       1,292,855  

Series 2020-A
4.00%, 07/01/2045

     1,400       1,210,949  

Series 2021
4.00%, 07/01/2046

     1,270       1,090,283  

4.00%, 07/01/2051

     1,000       831,220  

Massachusetts Development Finance Agency
(Trustees of Boston College)
Series 2017-T
5.00%, 07/01/2037

     1,000       1,070,726  

Massachusetts Development Finance Agency
(Tufts Medicine Obligated Group)
Series 2019-A
5.00%, 07/01/2038

     1,000       1,007,255  

5.00%, 07/01/2044

     3,000       2,903,029  

Massachusetts Development Finance Agency
(UMass Memorial Health Care Obligated Group)
Series 2016
5.00%, 07/01/2036

     1,500       1,538,980  

Massachusetts Development Finance Agency
(Woods Hole Oceanographic Institution State Lease)
Series 2018
5.00%, 06/01/2048

     3,000       3,129,038  

Massachusetts Port Authority
Series 2019-A
5.00%, 07/01/2032

     4,685       5,055,076  

 

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PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Series 2019-C
5.00%, 07/01/2049

   $ 1,000     $ 1,026,857  

Series 2021-E
5.00%, 07/01/2037

     2,250       2,413,754  

5.00%, 07/01/2051

     1,000       1,035,424  

Massachusetts Port Authority
(Bosfuel Corp.)
Series 2019-A
5.00%, 07/01/2033

     2,000       2,143,897  

Massachusetts School Building Authority
Series 2015-B
5.00%, 01/15/2030 (Pre-refunded/ETM)

     3,770       3,867,835  

Massachusetts School Building Authority
(Massachusetts School Building Authority Sales Tax)
Series 2009
5.715%, 08/15/2039

     4,000       4,314,345  

Massachusetts Water Resources Authority
Series 2016-C
5.00%, 08/01/2033 (Pre-refunded/ETM)

     5,500       5,854,390  

Town of Weymouth MA
Series 2021
2.00%, 09/15/2045

     2,000       1,245,133  

University of Massachusetts Building Authority
Series 2014-1
5.00%, 11/01/2044 (Pre-refunded/ETM)

     2,000       2,047,802  

University of Massachusetts Building Authority
(University of Massachusetts)
Series 2017
5.00%, 11/01/2034

     2,500       2,710,300  

Series 2020
3.013%, 11/01/2043

     2,000       1,505,118  
    

 

 

 
       161,163,633  
    

 

 

 

American Samoa – 0.2%

    

American Samoa Economic Development Authority
(Territory of American Samoa)
Series 2018
7.125%, 09/01/2038(b)

     395       430,823  
    

 

 

 

Arizona – 0.3%

    

Salt Verde Financial Corp.
(Citigroup, Inc.)
Series 2007
5.00%, 12/01/2037

     660       670,460  
    

 

 

 

 

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PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Connecticut – 0.5%

    

State of Connecticut
Series 2015-F
5.00%, 11/15/2032

   $ 1,000     $ 1,040,002  
    

 

 

 

Florida – 1.5%

    

County of Miami-Dade FL Aviation Revenue
Series 2014
5.00%, 10/01/2027

     3,000       3,028,677  

Palm Beach County Health Facilities Authority
(Federation CCRC Operations Corp. Obligated Group)
Series 2022
4.25%, 06/01/2056

     100       71,238  
    

 

 

 
       3,099,915  
    

 

 

 

Guam – 3.1%

    

Antonio B Won Pat International Airport Authority
Series 2021-A
4.46%, 10/01/2043

     535       404,264  

Series 2023
5.25%, 10/01/2036(c)

     100       99,027  

5.375%, 10/01/2043(c)

     200       195,754  

Guam Government Waterworks Authority
Series 2017
5.00%, 07/01/2040

     1,525       1,542,636  

Guam Power Authority
Series 2017-A
5.00%, 10/01/2036

     350       359,806  

5.00%, 10/01/2040

     1,420       1,445,091  

Territory of Guam
Series 2019
5.00%, 11/15/2031

     210       215,707  

Territory of Guam
(Territory of Guam Business Privilege Tax)
Series 2021-F
4.00%, 01/01/2042

     2,255       1,976,760  
    

 

 

 
       6,239,045  
    

 

 

 

Illinois – 0.9%

    

Chicago Board of Education
Series 2018-A
5.00%, 12/01/2031

     650       673,403  

Illinois Finance Authority
Series 2015
5.00%, 05/15/2037 (Pre-refunded/ETM)

     1,050       1,084,757  

 

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PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Village of Bolingbrook IL Sales Tax Revenue
(Village of Bolingbrook IL)
Series 2005
6.25%, 01/01/2024

   $ 147     $ 144,067  
    

 

 

 
       1,902,227  
    

 

 

 

Indiana – 0.1%

    

Indiana Finance Authority
(Brightmark Plastics Renewal Indiana LLC)
Series 2019
7.00%, 03/01/2039(b)

     260       195,895  
    

 

 

 

Michigan – 0.0%

    

City of Detroit MI
Series 2018
5.00%, 04/01/2036

     90       90,834  
    

 

 

 

New Jersey – 0.6%

    

New Jersey Transportation Trust Fund Authority
(New Jersey Transportation Fed Hwy Grant)
Series 2016
5.00%, 06/15/2029

     1,170       1,223,140  
    

 

 

 

North Carolina – 0.8%

    

North Carolina Medical Care Commission
(Aldersgate United Methodist Retirement Community, Inc.)
Series 2015
4.70%, 07/01/2037

     540       472,935  

North Carolina Turnpike Authority
Series 2017
5.00%, 01/01/2032

     1,000       1,050,851  
    

 

 

 
       1,523,786  
    

 

 

 

Pennsylvania – 1.1%

    

City of Philadelphia PA
Series 2017-A
5.00%, 08/01/2033

     1,000       1,076,795  

Pennsylvania Economic Development Financing Authority
(PA Bridges Finco LP)
Series 2015
5.00%, 12/31/2034

     1,140       1,157,357  
    

 

 

 
       2,234,152  
    

 

 

 

 

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AB MUNICIPAL INCOME FUND II    |    57


 

PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Puerto Rico – 2.9%

    

Commonwealth of Puerto Rico
Series 2021-A
Zero Coupon, 07/01/2024

   $ 130     $ 123,897  

Zero Coupon, 07/01/2033

     205       120,148  

4.00%, 07/01/2033

     100       91,781  

5.25%, 07/01/2023

     57       57,556  

5.375%, 07/01/2025

     200       204,228  

5.625%, 07/01/2027

     300       313,578  

5.625%, 07/01/2029

     120       127,107  

5.75%, 07/01/2031

     100       107,684  

HTA TRRB Custodial Trust
Series 2022
5.25%, 07/01/2034

     260       258,264  

5.25%, 07/01/2036

     230       232,014  

5.25%, 07/01/2041

     100       100,624  

Puerto Rico Commonwealth Aqueduct & Sewer Authority
Series 2020-A
5.00%, 07/01/2030(b)

     610       619,055  

5.00%, 07/01/2035(b)

     500       499,979  

Puerto Rico Electric Power Authority
AGM Series 2007-V
5.25%, 07/01/2031

     240       240,302  

NATL Series 2007-V
5.25%, 07/01/2032

     300       295,869  

Puerto Rico Highway & Transportation Authority
Series 2022-A
5.00%, 07/01/2062

     295       282,831  

Series 2022-B
Zero Coupon, 07/01/2032

     220       139,874  

Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth
(AES Puerto Rico LP)
Series 2000
6.625%, 06/01/2026(d)(e)

     575       583,959  

Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue
Series 2018-A
Zero Coupon, 07/01/2029

     238       182,145  

Zero Coupon, 07/01/2046

     1,000       268,999  

Series 2019-A
4.329%, 07/01/2040

     180       166,757  

 

58    |    AB MUNICIPAL INCOME FUND II

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PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

4.55%, 07/01/2040

   $ 22     $ 20,938  

5.00%, 07/01/2058

     815       778,690  
    

 

 

 
       5,816,279  
    

 

 

 

Tennessee – 0.1%

    

Bristol Industrial Development Board
(Bristol Industrial Development Board Sales Tax)
Series 2016-A
5.00%, 12/01/2035(b)

     310       289,338  
    

 

 

 

Texas – 0.8%

    

Mission Economic Development Corp.
(Natgasoline LLC)
Series 2018
4.625%, 10/01/2031(b)

     540       522,376  

North Texas Tollway Authority
(North Texas Tollway System)
Series 2015-A
5.00%, 01/01/2034

     1,000       1,022,053  
    

 

 

 
       1,544,429  
    

 

 

 

Wisconsin – 0.5%

    

Wisconsin Public Finance Authority
(Celanese US Holdings LLC)
Series 2016-B
5.00%, 12/01/2025

     1,000       1,013,099  
    

 

 

 

Total Long-Term Municipal Bonds
(cost $200,189,385)

       188,477,057  
 

 

 

 
    

Short-Term Municipal Notes – 1.0%

    

Massachusetts – 1.0%

    

Massachusetts Transportation Trust Fund Metropolitan Highway System Revenue
Series 2022
3.35%, 01/01/2039(f)
(cost $2,000,000)

     2,000       2,000,000  
    

 

 

 

Total Municipal Obligations
(cost $202,189,385)

       190,477,057  
 

 

 

 
    

SHORT-TERM INVESTMENTS – 4.7%

    

U.S. Treasury Bills – 4.6%

    

U.S. Treasury Bill
Zero Coupon, 07/27/2023
(cost $9,432,446)

     9,500       9,423,303  
    

 

 

 

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    59


 

PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

         
    
Shares
    U.S. $ Value  

 

 

Investment Companies – 0.1%

    

AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB,
5.03%(g)(h)(i)
(cost $287,630)

     287,630     $ 287,630  
    

 

 

 

Total Short-Term Investments
(cost $9,720,076)

       9,710,933  
 

 

 

 

Total Investments – 98.3%
(cost $211,909,461)

       200,187,990  

Other assets less liabilities – 1.7%

       3,378,735  
 

 

 

 

Net Assets – 100.0%

     $ 203,566,725  
 

 

 

 

CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)

 

                Rate Type                        

Notional

Amount

(000)

    Termination
Date
    Payments
made
by the
Fund
    Payments
received
by the
Fund
   

Payment
Frequency

Paid/

Received

  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     1,325       01/15/2025       2.565%       CPI#     Maturity   $ 116,519     $ – 0  –    $ 116,519  
USD     663       01/15/2025       2.613%       CPI#     Maturity     57,040       – 0  –      57,040  
USD     662       01/15/2025       2.585%       CPI#     Maturity     57,685       – 0  –      57,685  
USD     510       01/15/2025       4.028%       CPI#     Maturity     14,288       – 0  –      14,288  
USD     2,270       01/15/2026       CPI#       3.765%     Maturity     (55,358     – 0  –      (55,358
USD     2,060       01/15/2027       CPI#       3.466%     Maturity     (60,181     (2,034     (58,147
USD     2,050       01/15/2027       CPI#       3.320%     Maturity     (78,456     – 0  –      (78,456
USD     1,660       01/15/2027       CPI#       3.323%     Maturity     (63,223     – 0  –      (63,223
USD     5,260       01/15/2028       1.230%       CPI#     Maturity     911,751       – 0  –      911,751  
USD     3,970       01/15/2028       0.735%       CPI#     Maturity     831,083       – 0  –      831,083  
USD     3,900       01/15/2029       CPI#       3.390%     Maturity     (61,993     – 0  –      (61,993
USD     2,420       01/15/2029       CPI#       3.735%     Maturity     31,802       – 0  –      31,802  
USD     1,250       01/15/2029       CPI#       3.331%     Maturity     (25,992     – 0  –      (25,992
USD     870       01/15/2030       1.572%       CPI#     Maturity     143,384       – 0  –      143,384  
USD     870       01/15/2030       1.587%       CPI#     Maturity     142,185       – 0  –      142,185  
USD     1,300       01/15/2031       2.782%       CPI#     Maturity     78,618       – 0  –      78,618  
USD     1,130       01/15/2031       2.680%       CPI#     Maturity     79,695       – 0  –      79,695  
USD     1,000       01/15/2031       2.989%       CPI#     Maturity     39,849       – 0  –      39,849  
USD     1,000       01/15/2032       CPI#       3.064%     Maturity     (26,812     – 0  –      (26,812
USD     950       04/15/2032       CPI#       2.909%     Maturity     (38,167     – 0  –      (38,167
           

 

 

   

 

 

   

 

 

 
            $     2,093,717     $     (2,034   $     2,095,751  
           

 

 

   

 

 

   

 

 

 

 

#

Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI).

 

60    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)

 

                Rate Type                      

Notional
Amount
(000)

    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
 

Payment
Frequency

Paid/
Received

  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     10,700       01/15/2027     1 Day SOFR   3.540%   Annual   $ (110,083   $ – 0  –    $ (110,083
USD     6,100       01/15/2027     1 Day SOFR   4.113%   Annual     67,488       – 0  –      67,488  
USD     6,900       04/30/2030     1 Day SOFR   3.075%   Annual         (154,419     – 0  –          (154,419
USD     3,200       04/30/2030     1 Day SOFR   3.369%   Annual     (12,735     – 0  –      (12,735
USD     2,900       04/30/2030     1 Day SOFR   3.486%   Annual     9,773       – 0  –      9,773  
USD     5,100       04/15/2032     3.101%   1 Day SOFR   Annual     125,153       – 0  –      125,153  
USD     4,500       04/15/2032     3.250%   1 Day SOFR   Annual     58,559       – 0  –      58,559  
USD     2,750       04/15/2032     1.280%   1 Day SOFR   Annual     453,690       – 0  –      453,690  
USD     1,350       04/15/2032     1.284%   1 Day SOFR   Annual     222,620       – 0  –      222,620  
           

 

 

   

 

 

   

 

 

 
            $ 660,046     $     – 0  –    $ 660,046  
           

 

 

   

 

 

   

 

 

 

INTEREST RATE SWAPS (see Note D)

 

                      Rate Type                      
Swap
Counterparty
  Notional
Amount
(000)
    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
  Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 

Citibank, NA

    USD       3,025       10/09/2029     1.125%   SIFMA*   Quarterly   $     305,527     $     – 0  –    $     305,527  

 

*

Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index.

 

(a)

Floating Rate Security. Stated interest/floor/ceiling rate was in effect at May 31, 2023.

 

(b)

Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2023, the aggregate market value of these securities amounted to $4,592,261 or 2.3% of net assets.

 

(c)

When-Issued or delayed delivery security.

 

(d)

Non-income producing security.

 

(e)

Defaulted.

 

(f)

Variable Rate Demand Notes are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks.

 

(g)

Affiliated investments.

 

(h)

The rate shown represents the 7-day yield as of period end.

 

(i)

To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618.

As of May 31, 2023, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 3.4% and 0.0%, respectively.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    61


 

PORTFOLIO OF INVESTMENTS (continued)

AB MASSACHUSETTS PORTFOLIO

 

Glossary:

AGC – Assured Guaranty Corporation

AGM – Assured Guaranty Municipal

BAM – Build American Mutual

CCRC – Congregate Care Retirement Center

CPI – Consumer Price Index

ETM – Escrowed to Maturity

LIBOR – London Interbank Offered Rate

NATL – National Interstate Corporation

SOFR – Secured Overnight Financing Rate

See notes to financial statements.

 

62    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS

AB MINNESOTA PORTFOLIO

May 31, 2023

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

MUNICIPAL OBLIGATIONS – 95.8%

    

Long-Term Municipal Bonds – 95.8%

    

Minnesota – 95.8%

    

Anoka-Hennepin Independent School District No. 11
(Anoka-Hennepin Independent School District No. 11 COP)
Series 2014-A
5.00%, 02/01/2034

   $ 1,695     $ 1,709,141  

City of Apple Valley MN
(PHS Apple Valley Senior Housing, Inc.)
Series 2021
4.00%, 09/01/2051

     270       203,765  

City of Center City MN
(Hazelden Betty Ford Foundation)
Series 2014
5.00%, 11/01/2029

     300       303,004  

5.00%, 11/01/2044

     500       501,262  

Series 2019
4.00%, 11/01/2041

     850       750,316  

City of Duluth MN
Series 2016-A
5.00%, 02/01/2034

     1,000       1,034,367  

City of Maple Grove MN
(Maple Grove Hospital Corp.)
Series 2017
5.00%, 05/01/2031

     1,000       1,040,732  

City of Minneapolis MN
(Allina Health Obligated Group)
Series 2023-A
5.00%, 11/15/2052

     1,000       1,073,836  

City of Minneapolis MN
(Fairview Health Services Obligated Group)
Series 2018-A
5.00%, 11/15/2036

     2,000       2,092,291  

City of Minneapolis MN
(Hennepin Schools)
Series 2021-A
4.00%, 07/01/2056

     300       210,213  

City of Ramsey MN
(Pact Charter School)
Series 2022-A
5.00%, 06/01/2032

     200       200,205  

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    63


 

PORTFOLIO OF INVESTMENTS (continued)

AB MINNESOTA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

City of St. Paul MN
(City of St. Paul MN Sales Tax)
Series 2014-G
5.00%, 11/01/2030

   $ 1,500     $ 1,529,189  

City of St. Paul MN Water Revenue
Series 2023-A
4.00%, 12/01/2045

     1,000       998,763  

City of Wayzata MN
(Wayzata Bay Senior Housing, Inc.)
Series 2019
5.00%, 08/01/2049

     395       366,712  

City of Woodbury MN
(Woodbury Leadership Academy)
Series 2021
4.00%, 07/01/2056

     215       149,049  

Cloquet Independent School District No. 94
Series 2015-B
5.00%, 02/01/2031

     1,200       1,226,739  

County of McLeod MN
Series 2019-A
5.00%, 02/01/2024

     1,000       1,010,117  

Duluth Economic Development Authority
(Benedictine Health System Obligated Group)
Series 2021
4.00%, 07/01/2036

     400       332,020  

Duluth Economic Development Authority
(Essentia Health Obligated Group)
Series 2018
4.25%, 02/15/2043

     500       481,835  

Series 2018-A
5.00%, 02/15/2048

     1,000       1,014,531  

Housing & Redevelopment Authority of The City of St. Paul Minnesota
(Amherst H Wilder Foundation/MN)
Series 2020
5.00%, 12/01/2036

     1,575       1,546,213  

Housing & Redevelopment Authority of The City of St. Paul Minnesota
(HealthPartners Obligated Group)
Series 2015-A
5.00%, 07/01/2032

     1,000       1,028,118  

Housing & Redevelopment Authority of The City of St. Paul Minnesota
(Hmong College Prep Academy)
Series 2020
5.00%, 09/01/2040

     110       102,867  

 

64    |    AB MUNICIPAL INCOME FUND II

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PORTFOLIO OF INVESTMENTS (continued)

AB MINNESOTA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Housing & Redevelopment Authority of The City of St. Paul Minnesota
(Minnesota Math & Science Academy)
Series 2021
4.00%, 06/01/2041(a)

   $ 100     $ 76,341  

4.00%, 06/01/2051(a)

     125       86,087  

Hutchinson Utilities Commission
Series 2012-A
5.00%, 12/01/2025

     420       420,510  

Minneapolis Special School District No. 1
Series 2016
5.00%, 02/01/2031

     1,750       1,891,437  

Minneapolis-St. Paul Metropolitan Airports Commission
Series 2019-B
5.00%, 01/01/2035

     2,000       2,127,609  

Minnesota Higher Education Facilities Authority
(College of St. Scholastica, Inc.)
Series 2019
4.00%, 12/01/2040

     1,000       865,891  

Minnesota Higher Education Facilities Authority
(Hamline University)
Series 2017-B
5.00%, 10/01/2036

     500       507,425  

Minnesota Higher Education Facilities Authority
(St. Catherine University)
Series 2018-A
5.00%, 10/01/2045

     1,100       1,119,045  

Minnesota Higher Education Facilities Authority
(St. Olaf College)
Series 2021
3.00%, 10/01/2041

     1,000       791,632  

Series 2015-8
5.00%, 12/01/2032

     750       774,538  

Minnesota Higher Education Facilities Authority
(University of St. Thomas/Minneapolis)
Series 2017-A
4.00%, 10/01/2034

     800       813,591  

Minnesota Housing Finance Agency
(Minnesota Housing Finance Agency State Lease)
Series 2019-A
4.00%, 08/01/2031

     50       51,965  

Minnesota Municipal Power Agency
Series 2014
5.00%, 10/01/2032

     750       764,102  

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    65


 

PORTFOLIO OF INVESTMENTS (continued)

AB MINNESOTA PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

New Prague Independent School District No. 721
Series 2015-A
4.00%, 02/01/2032

   $ 1,000     $ 1,016,184  

North St. Paul-Maplewood-Oakdale Independent School District No. 622
Series 2019-A
3.00%, 02/01/2038

     1,000       872,028  

3.00%, 02/01/2039

     1,000       860,893  

Northern Municipal Power Agency
Series 2017
5.00%, 01/01/2033

     235       248,301  

5.00%, 01/01/2034

     215       226,789  

5.00%, 01/01/2041

     700       721,263  

Southern Minnesota Municipal Power Agency
Series 2017-A
5.00%, 01/01/2047

     1,000       1,056,945  
    

 

 

 

Total Municipal Obligations
(cost $36,012,793)

       34,197,861  
 

 

 

 
     Shares        

SHORT-TERM INVESTMENTS – 2.3%

    

Investment Companies – 2.3%

    

AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB,
5.03%(b)(c)(d)
(cost $812,739)

     812,739       812,739  
    

 

 

 

Total Investments – 98.1%
(cost $36,825,532)

       35,010,600  

Other assets less liabilities – 1.9%

       662,840  
 

 

 

 

Net Assets – 100.0%

     $ 35,673,440  
 

 

 

 

CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)

 

                Rate Type                      

Notional
Amount
(000)

    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
  Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     365       01/15/2025     2.565%   CPI#   Maturity   $ 32,098     $ – 0  –    $ 32,098  
USD     183       01/15/2025     2.585%   CPI#   Maturity     15,946       – 0  –      15,946  
USD     182       01/15/2025     2.613%   CPI#   Maturity     15,658       – 0  –      15,658  
USD     120       01/15/2025     4.028%   CPI#   Maturity     3,362       – 0  –      3,362  
USD     680       01/15/2026     CPI#   3.765%   Maturity     (16,583     – 0  –      (16,583
USD     570       01/15/2027     CPI#   3.466%   Maturity     (16,652         (562     (16,090
USD     500       01/15/2027     CPI#   3.320%   Maturity         (19,136     – 0  –          (19,136
USD     420       01/15/2027     CPI#   3.323%   Maturity     (15,996     – 0  –      (15,996

 

66    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS (continued)

AB MINNESOTA PORTFOLIO

 

                Rate Type                        

Notional
Amount
(000)

    Termination
Date
    Payments
made
by the
Fund
    Payments
received
by the
Fund
    Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     1,410       01/15/2028       1.230%       CPI#     Maturity   $ 244,405     $ – 0  –    $ 244,405  
USD     1,070       01/15/2028       0.735%       CPI#     Maturity     223,995       – 0  –      223,995  
USD     1,050       01/15/2029       CPI#       3.390%     Maturity     (16,690     – 0  –      (16,690
USD     620       01/15/2029       CPI#       3.735%     Maturity     8,148       – 0  –      8,148  
USD     330       01/15/2029       CPI#       3.331%     Maturity     (6,862     – 0  –      (6,862
USD     255       01/15/2030       1.572%       CPI#     Maturity     42,027       – 0  –      42,027  
USD     255       01/15/2030       1.587%       CPI#     Maturity     41,675       – 0  –      41,675  
USD     300       01/15/2031       2.680%       CPI#     Maturity     21,158       – 0  –      21,158  
USD     300       01/15/2031       2.782%       CPI#     Maturity     18,143       – 0  –      18,143  
USD     250       01/15/2031       2.989%       CPI#     Maturity     9,962       – 0  –      9,962  
USD     260       01/15/2032       CPI#       3.064%     Maturity     (6,971     – 0  –      (6,971
USD     260       04/15/2032       CPI#       2.909%     Maturity     (10,446     – 0  –      (10,446
           

 

 

   

 

 

   

 

 

 
            $     567,241     $     (562   $     567,803  
           

 

 

   

 

 

   

 

 

 

 

#

Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI).

CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)

 

                Rate Type                      

Notional
Amount
(000)

    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
  Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     3,400       01/15/2027     1 Day SOFR   3.943%   Annual   $ 14,641     $ – 0  –    $ 14,641  
USD     500       01/15/2027     1 Day SOFR   3.941%   Annual     2,106       – 0  –      2,106  
USD     1,900       04/20/2028     1 Day SOFR   3.439%   Annual     (11,670     – 0  –      (11,670
USD     740       04/20/2028     1 Day SOFR   3.519%   Annual     (2,226     – 0  –      (2,226
USD     1,100       04/30/2030     1 Day SOFR   3.486%   Annual     3,707       – 0  –      3,707  
USD     1,000       04/30/2030     1 Day SOFR   3.075%   Annual         (22,380     – 0  –          (22,380
USD     800       04/30/2030     1 Day SOFR   3.369%   Annual     (3,184     – 0  –      (3,184
USD     730       04/15/2032     3.149%   1 Day SOFR   Annual     15,212       – 0  –      15,212  
USD     600       04/15/2032     3.081%   1 Day SOFR   Annual     15,626       – 0  –      15,626  
USD     550       03/31/2033     3.171%   1 Day SOFR   Annual     10,231       – 0  –      10,231  
           

 

 

   

 

 

   

 

 

 
            $ 22,063     $     – 0  –    $ 22,063  
           

 

 

   

 

 

   

 

 

 

INTEREST RATE SWAPS (see Note D)

 

                      Rate Type                      
Swap
Counterparty
  Notional
Amount
(000)
    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
  Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 

Citibank, NA

    USD       835       10/09/2029     1.125%   SIFMA*   Quarterly   $     84,335     $     – 0  –    $     84,335  

 

*

Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    67


 

PORTFOLIO OF INVESTMENTS (continued)

AB MINNESOTA PORTFOLIO

 

(a)

Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2023, the aggregate market value of these securities amounted to $162,428 or 0.5% of net assets.

 

(b)

Affiliated investments.

 

(c)

The rate shown represents the 7-day yield as of period end.

 

(d)

To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618.

Glossary:

COP – Certificate of Participation

CPI – Consumer Price Index

SOFR – Secured Overnight Financing Rate

See notes to financial statements.

 

68    |    AB MUNICIPAL INCOME FUND II

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PORTFOLIO OF INVESTMENTS

AB NEW JERSEY PORTFOLIO

May 31, 2023

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

MUNICIPAL OBLIGATIONS – 99.5%

    

Long-Term Municipal Bonds – 99.5%

    

New Jersey – 88.3%

    

Camden County Improvement Authority (The)
(KIPP Cooper Norcross Obligated Group)
Series 2022
6.00%, 06/15/2052

   $ 1,000     $ 1,055,321  

City of Jersey City NJ
Series 2017-A
5.00%, 11/01/2031

     500       542,899  

Essex County Improvement Authority
(Friends of TEAM Academy Charter School Obligated Group)
Series 2021
4.00%, 06/15/2051

     500       417,627  

Hudson County Improvement Authority
(County of Hudson NJ)
Series 2016
5.00%, 05/01/2036

     1,400       1,463,116  

Morris-Union Jointure Commission
(Morris-Union Jointure Commission COP)
AGM Series 2013
5.00%, 08/01/2026

     2,320       2,326,743  

New Jersey Economic Development Authority
(Bancroft Neurohealth Obligated Group)
Series 2016-A
5.00%, 06/01/2041

     1,000       894,899  

New Jersey Economic Development Authority
(Lutheran Social Ministries at Crane’s Mill, Inc.)
Series 2018
5.00%, 01/01/2049

     500       409,186  

New Jersey Economic Development Authority
(New Jersey Economic Development Authority State Lease)
Series 2023
5.298%, 03/01/2032

     1,050       1,063,789  

New Jersey Economic Development Authority
(New Jersey-American Water Co., Inc.)
Series 2023
3.75%, 11/01/2034(a)

     1,500       1,493,733  

New Jersey Economic Development Authority
(NJ Metromall Urban Renewal, Inc.)
Series 2002
6.50%, 04/01/2028

     836       830,006  

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    69


 

PORTFOLIO OF INVESTMENTS (continued)

AB NEW JERSEY PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

New Jersey Economic Development Authority
(North Star Academy Charter School of Newark, Inc.)
Series 2017
5.00%, 07/15/2032

   $ 1,000     $ 1,035,498  

New Jersey Economic Development Authority
(NYNJ Link Borrower LLC)
Series 2013
5.00%, 01/01/2028

     1,000       1,006,053  

5.125%, 01/01/2034

     500       503,100  

5.50%, 01/01/2027

     1,000       1,008,659  

New Jersey Economic Development Authority
(Port Newark Container Terminal LLC)
Series 2017
5.00%, 10/01/2047

     2,500       2,465,165  

New Jersey Economic Development Authority
(Seeing Eye, Inc. (The))
Series 2017
5.00%, 06/01/2032

     1,765       1,859,038  

New Jersey Economic Development Authority
(State of New Jersey)
Series 2024-S
5.25%, 06/15/2039(a)

     1,000       1,053,291  

New Jersey Economic Development Authority
(United Airlines, Inc.)
Series 2012
5.25%, 09/15/2029

     1,165       1,167,623  

New Jersey Educational Facilities Authority
(Kean University)
AGM Series 2015-H
5.00%, 07/01/2034

     2,500       2,608,785  

New Jersey Educational Facilities Authority
(Stevens Institute of Technology)
Series 2017
5.00%, 07/01/2047

     1,750       1,768,033  

New Jersey Health Care Facilities Financing Authority
(AHS Hospital Corp.)
Series 2016
4.00%, 07/01/2041

     2,000       1,945,036  

New Jersey Health Care Facilities Financing Authority
(Inspira Health Obligated Group)
Series 2017-A
5.00%, 07/01/2035

     1,835       1,917,659  

 

70    |    AB MUNICIPAL INCOME FUND II

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PORTFOLIO OF INVESTMENTS (continued)

AB NEW JERSEY PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

New Jersey Health Care Facilities Financing Authority
(RWJ Barnabas Health Obligated Group)
Series 2021
4.00%, 07/01/2051

   $ 1,000     $ 937,029  

New Jersey Health Care Facilities Financing Authority
(Valley Health System Obligated Group/NJ)
Series 2019
4.00%, 07/01/2039

     2,500       2,454,490  

New Jersey Transportation Trust Fund Authority
(New Jersey Transportation Fed Hwy Grant)
Series 2016
5.00%, 06/15/2028

     1,000       1,045,202  

5.00%, 06/15/2029

     1,750       1,829,483  

New Jersey Transportation Trust Fund Authority
(New Jersey Transportation Trust Fund Authority State Lease)
Series 2015-A
5.25%, 06/15/2041

     1,250       1,269,273  

Series 2018-A
5.00%, 12/15/2035

     1,750       1,856,220  

Series 2022
4.00%, 06/15/2050

     1,415       1,311,232  

Series 2022-A
5.00%, 06/15/2032

     1,000       1,128,261  

Series 2023-A
5.00%, 06/15/2039(a)

     1,000       1,076,315  

New Jersey Turnpike Authority
Series 2019-A
5.00%, 01/01/2048

     680       716,791  

Passaic County Improvement Authority (The)
(Paterson Arts & Science Charter School)
Series 2023
5.50%, 07/01/2058

     1,000       1,005,855  

Rahway Valley Sewerage Authority (The)
NATL Series 2005-A
Zero Coupon, 09/01/2035

     3,445       2,160,036  

South Jersey Transportation Authority
Series 2022
4.625%, 11/01/2047

     1,000       1,011,128  

BAM Series 2022
5.25%, 11/01/2052

     1,000       1,085,286  

State of New Jersey
Series 2020
4.00%, 06/01/2023

     700       700,000  

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    71


 

PORTFOLIO OF INVESTMENTS (continued)

AB NEW JERSEY PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Tobacco Settlement Financing Corp./NJ
Series 2018-B
5.00%, 06/01/2046

   $ 2,495     $ 2,505,937  

Union County Improvement Authority
(Township of Union NJ/Union County Lease)
NATL Series 2003-A
5.25%, 08/15/2023

     430       430,593  

Union County Utilities Authority
(County of Union NJ Lease)
Series 2011-A
5.25%, 12/01/2031

     2,975       2,978,128  
    

 

 

 
       54,336,518  
    

 

 

 

American Samoa – 0.2%

    

American Samoa Economic Development Authority
(Territory of American Samoa)
Series 2018
7.125%, 09/01/2038(b)

     145       158,150  
    

 

 

 

Arizona – 0.2%

    

Maricopa County Industrial Development Authority
(Benjamin Franklin Charter School Ltd.)
Series 2018-A
6.00%, 07/01/2052(b)

     100       101,566  
    

 

 

 

Delaware – 1.6%

    

Delaware River & Bay Authority
Series 2019
4.00%, 01/01/2044

     1,000       971,626  
    

 

 

 

Florida – 0.1%

    

Palm Beach County Health Facilities Authority
(Federation CCRC Operations Corp. Obligated Group)
Series 2020
5.00%, 06/01/2055

     100       84,358  
    

 

 

 

Guam – 3.2%

    

Antonio B Won Pat International Airport Authority
Series 2021-A
3.839%, 10/01/2036

     100       80,070  

Guam Power Authority
Series 2017-A
5.00%, 10/01/2036

     150       154,203  

5.00%, 10/01/2040

     655       666,574  

 

72    |    AB MUNICIPAL INCOME FUND II

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PORTFOLIO OF INVESTMENTS (continued)

AB NEW JERSEY PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Territory of Guam
(Guam Section 30 Income Tax)
Series 2016-A
5.00%, 12/01/2046

   $ 720     $ 691,689  

Territory of Guam
(Territory of Guam Business Privilege Tax)
Series 2021-F
4.00%, 01/01/2042

     440       385,709  
    

 

 

 
       1,978,245  
    

 

 

 

Illinois – 0.5%

    

Chicago Board of Education
Series 2018-A
5.00%, 12/01/2031

     305       315,982  
    

 

 

 

Michigan – 0.1%

    

City of Detroit MI
Series 2018
5.00%, 04/01/2036

     50       50,463  
    

 

 

 

Nevada – 0.1%

    

City of Reno NV
(County of Washoe NV Sales Tax Revenue)
Series 2018-C
Zero Coupon, 07/01/2058(b)

     500       63,193  
    

 

 

 

North Dakota – 0.2%

    

County of Grand Forks ND
(Red River Biorefinery LLC)
Series 2021
6.625%, 12/15/2031(c)(d)(e)

     110       60,500  

7.00%, 12/15/2043(c)(d)(e)

     110       60,500  
    

 

 

 
       121,000  
    

 

 

 

Ohio – 0.5%

    

Buckeye Tobacco Settlement Financing Authority
Series 2020-B
5.00%, 06/01/2055

     330       305,281  
    

 

 

 

Puerto Rico – 2.9%

    

Commonwealth of Puerto Rico
Series 2021-A
Zero Coupon, 07/01/2033

     100       58,609  

4.00%, 07/01/2033

     100       91,781  

4.00%, 07/01/2046

     100       80,519  

5.25%, 07/01/2023

     18       17,518  

5.625%, 07/01/2029

     100       105,923  

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    73


 

PORTFOLIO OF INVESTMENTS (continued)

AB NEW JERSEY PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

HTA TRRB Custodial Trust
Series 2022
5.25%, 07/01/2036

   $ 145     $ 146,269  

Puerto Rico Commonwealth Aqueduct & Sewer Authority
Series 2020-A
5.00%, 07/01/2030(b)

     250       253,711  

Puerto Rico Electric Power Authority
AGM Series 2007-V
5.25%, 07/01/2031

     155       155,195  

Puerto Rico Highway & Transportation Authority
Series 2022-A
5.00%, 07/01/2062

     150       143,812  

Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Auth
(AES Puerto Rico LP)
Series 2000
6.625%, 06/01/2026(c)(e)

     270       274,207  

Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue
Series 2018-A
Zero Coupon, 07/01/2029

     104       79,593  

Series 2019-A
4.329%, 07/01/2040

     70       64,850  

5.00%, 07/01/2058

     305       291,412  
    

 

 

 
       1,763,399  
    

 

 

 

Tennessee – 0.4%

    

Bristol Industrial Development Board
(Bristol Industrial Development Board Sales Tax)
Series 2016-A
5.00%, 12/01/2035(b)

     145       135,336  

Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board
(Trousdale Foundation Obligated Group)
Series 2018-A
6.25%, 04/01/2049(b)(c)(e)

     260       91,000  
    

 

 

 
       226,336  
    

 

 

 

Texas – 0.4%

    

Mission Economic Development Corp.
(Natgasoline LLC)
Series 2018
4.625%, 10/01/2031(b)

     245       237,004  
    

 

 

 

 

74    |    AB MUNICIPAL INCOME FUND II

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PORTFOLIO OF INVESTMENTS (continued)

AB NEW JERSEY PORTFOLIO

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

Washington – 0.5%

    

Kalispel Tribe of Indians
Series 2018-B
5.25%, 01/01/2038(b)

   $ 210     $ 215,725  

Washington State Convention Center Public Facilities District
(Washington State Convention Center Public Facilities District Hotel Occupancy Tax)
Series 2021
4.00%, 07/01/2031

     100       95,151  
    

 

 

 
       310,876  
    

 

 

 

Wisconsin – 0.3%

    

UMA Education, Inc.
Series 2019
5.00%, 10/01/2034(b)

     200       200,416  
    

 

 

 

Total Municipal Obligations
(cost $62,255,765)

       61,224,413  
 

 

 

 
    

CORPORATES - NON-INVESTMENT GRADE – 0.0%

    

Industrial – 0.0%

    

Energy – 0.0%

    

Red River Biorefinery LLC
Series 23A
15.00%, 12/31/2023(b)
(cost $15,000)

     15       15,000  
    

 

 

 
     Shares        

SHORT-TERM INVESTMENTS – 4.3%

    

Investment Companies – 4.3%

    

AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB,
5.03%(f)(g)(h)
(cost $2,656,985)

     2,656,985       2,656,985  
    

 

 

 

Total Investments – 103.8%
(cost $64,927,750)

       63,896,398  

Other assets less liabilities – (3.8)%

       (2,343,640
 

 

 

 

Net Assets – 100.0%

     $ 61,552,758  
 

 

 

 

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    75


 

PORTFOLIO OF INVESTMENTS (continued)

AB NEW JERSEY PORTFOLIO

 

CENTRALLY CLEARED INFLATION (CPI) SWAPS (see Note D)

 

                Rate Type                        

Notional
Amount
(000)

    Termination
Date
    Payments
made
by the
Fund
    Payments
received
by the
Fund
    Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     465       01/15/2025       2.565%       CPI#     Maturity   $ 40,892     $ – 0  –    $ 40,892  
USD     233       01/15/2025       2.585%       CPI#     Maturity     20,303       – 0  –      20,303  
USD     232       01/15/2025       2.613%       CPI#     Maturity     19,959       – 0  –      19,959  
USD     870       01/15/2026       CPI#       3.611%     Maturity     (28,196     – 0  –      (28,196
USD     800       01/15/2026       CPI#       3.766%     Maturity     (19,468     – 0  –      (19,468
USD     2,070       01/15/2028       1.230%       CPI#     Maturity     358,807       – 0  –      358,807  
USD     1,640       01/15/2028       0.735%       CPI#     Maturity     343,319       – 0  –      343,319  
USD     3,470       01/15/2029       CPI#       3.406%     Maturity     (50,537     – 0  –      (50,537
USD     530       01/15/2029       CPI#       3.735%     Maturity     6,965       – 0  –      6,965  
USD     240       01/15/2029       CPI#       3.408%     Maturity     (3,455     – 0  –      (3,455
USD     225       01/15/2030       1.572%       CPI#     Maturity     37,082       – 0  –      37,082  
USD     225       01/15/2030       1.587%       CPI#     Maturity     36,772       – 0  –      36,772  
USD     450       01/15/2031       2.782%       CPI#     Maturity     27,214       – 0  –      27,214  
USD     370       01/15/2031       2.680%       CPI#     Maturity     26,095       – 0  –      26,095  
           

 

 

   

 

 

   

 

 

 
            $     815,752     $     – 0  –    $     815,752  
           

 

 

   

 

 

   

 

 

 

 

#

Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI).

CENTRALLY CLEARED INTEREST RATE SWAPS (see Note D)

 

                Rate Type                      

Notional
Amount
(000)

    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
  Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 
USD     300       04/20/2028     1 Day SOFR   3.416%   Annual   $ (2,280   $ – 0  –    $ (2,280
USD     1,400       04/30/2030     1 Day SOFR   3.369%   Annual     (5,572     – 0  –      (5,572
           

 

 

   

 

 

   

 

 

 
            $     (7,852   $     – 0  –    $     (7,852
           

 

 

   

 

 

   

 

 

 

INTEREST RATE SWAPS (see Note D)

 

                      Rate Type                      
Swap
Counterparty
  Notional
Amount
(000)
    Termination
Date
    Payments
made
by the
Fund
  Payments
received
by the
Fund
  Payment
Frequency
Paid/
Received
  Market
Value
    Upfront
Premiums
Paid
(Received)
    Unrealized
Appreciation
(Depreciation)
 

Citibank, NA

    USD       1,235       10/09/2029     1.125%   SIFMA*   Quarterly   $     124,736     $     – 0  –    $     124,736  

 

*

Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index.

 

(a)

When-Issued or delayed delivery security.

 

(b)

Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At May 31, 2023, the aggregate market value of these securities amounted to $1,471,101 or 2.4% of net assets.

 

(c)

Non-income producing security.

 

76    |    AB MUNICIPAL INCOME FUND II

  abfunds.com


 

PORTFOLIO OF INVESTMENTS (continued)

AB NEW JERSEY PORTFOLIO

 

(d)

Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities, which represent 0.20% of net assets as of May 31, 2023, are considered illiquid and restricted. Additional information regarding such securities follows:

 

144A/Restricted & Illiquid Securities   Acquisition
Date
    Cost     Market
Value
    Percentage of
Net Assets
 

County of Grand Forks ND
(Red River Biorefinery LLC)
Series 2021
6.625%, 12/15/2031

    05/21/2021     $     110,000     $     60,500       0.10

County of Grand Forks ND
(Red River Biorefinery LLC)
Series 2021
7.00%, 12/15/2043

    05/21/2021       110,000       60,500       0.10

 

(e)

Defaulted.

 

(f)

Affiliated investments.

 

(g)

The rate shown represents the 7-day yield as of period end.

 

(h)

To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618.

As of May 31, 2023, the Portfolio’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 14.3% and 0.0%, respectively.

Glossary:

AGM – Assured Guaranty Municipal

BAM – Build American Mutual

CCRC – Congregate Care Retirement Center

COP – Certificate of Participation

CPI – Consumer Price Index

NATL – National Interstate Corporation

SOFR – Secured Overnight Financing Rate

See notes to financial statements.

 

abfunds.com  

AB MUNICIPAL INCOME FUND II    |    77


 

PORTFOLIO OF INVESTMENTS

AB OHIO PORTFOLIO

May 31, 2023

 

     Principal
Amount
(000)
    U.S. $ Value  

 

 

MUNICIPAL OBLIGATIONS – 100.5%

    

Long-Term Municipal Bonds – 100.5%

    

Ohio – 88.5%

    

Akron Bath Copley Joint Township Hospital District
(Summa Health System Obligated Group)
Series 2020
4.00%, 11/15/2035

   $ 1,000     $ 938,297  

American Municipal Power, Inc.
(American Municipal Power Combined Hydroelectric Revenue)
Series 2016-A
5.00%, 02/15/2034

     1,000       1,035,016  

American Municipal Power, Inc.
(American Municipal Power Prairie State Energy Campus Revenue)
Series 2019
4.00%, 02/15/2039

     1,000       966,371  

Buckeye Tobacco Settlement Financing Authority
Series 2020-B
5.00%, 06/01/2055

     1,225       1,133,240  

City of Chillicothe OH
(Adena Health System Obligated Group)
Series 2017
4.00%, 12/01/2042

     505       457,781  

5.00%, 12/01/2037

     1,700       1,744,937  

City of Cleveland OH
Series 2012
5.00%, 12/01/2028

     25       25,029  

Cleveland Department of Public Utilities Division of Public Power
AGM Series 2018
5.00%, 11/15/2035

     1,100       1,185,086  

Cleveland Municipal School District
Series 2015-A
5.00%, 12/01/2033 (Pre-refunded/ETM)

     2,000