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: 811-05207
ALLIANCEBERNSTEIN INCOME FUND, INC.
(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: December 31, 2009
Date of reporting period: June 30, 2009
ITEM 1. | REPORTS TO STOCKHOLDERS. |
SEMI-ANNUAL REPORT
AllianceBernstein Income Fund
June 30, 2009
Semi-Annual Report
Investment Products Offered
• | Are Not FDIC Insured |
• | May Lose Value |
• | Are Not Bank Guaranteed |
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein’s web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission’s (the “Commission”) web site at www.sec.gov, or call AllianceBernstein® at (800) 227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s web site at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AllianceBernstein family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the manager of the funds.
AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P.
August 20, 2009
Semi-Annual Report
This report provides management’s discussion of fund performance for AllianceBernstein Income Fund (the “Fund”) for the semi-annual reporting period ended June 30, 2009. The Fund is a closed-end fund that trades under the New York Stock Exchange symbol “ACG”.
Investment Objectives and Policies
This closed-end fund is designed to provide high current income consistent with the preservation of capital. The Fund normally invests at least 80% of its net assets in income-producing securities. The Fund normally invests at least 65% of its total assets in securities issued or guaranteed by the US Government, its agencies or instrumentalities, and repurchase agreements pertaining to US Government securities. The Fund may also invest up to 35% of its total assets in other fixed-income securities, including those issued by non-governmental issuers in the US and those issued by foreign governments. The Fund may invest up to 35% of its net assets in below-investment grade securities. Additionally, the Fund may utilize other investment instruments, including options, swaps, forwards and futures, and may employ leverage. For more information regarding the Fund’s risks, please see “A Word About Risk” on pages 3-4 and “Note F—Risks Involved in Investing in the Fund” of the Notes to Financial Statements on pages 48-50.
Investment Results
The table on page 5 provides performance data for the Fund and the benchmark, the Barclays Capital (formerly Lehman Brothers) US Aggregate Index,
for the six- and 12-month periods ended June 30, 2009.
The Fund outperformed the benchmark for the six-month period ended June 30, 2009. Non-benchmark exposure to high-yield corporates, bank loan debt and emerging market debt as well as an overweight in commercial mortgage-backed securities (CMBS) contributed positively as credit markets rebounded sharply. The Fund’s non-US currency exposure and use of leverage also added to its outperformance for the reporting period.
Conversely, the Fund underperformed the benchmark for the 12-month period ended June 30, 2009. The Fund’s performance relative to the benchmark was almost the reverse for the 12-month period due to the negative impact of the financial crisis in late 2008. The Fund’s exposure to high-yield corporates and bank loan debt, as well as exposure to emerging market debt and an overweight in CMBS detracted from relative performance. The Fund’s non-US currency exposure also detracted from performance. Finally, the Fund’s leverage detracted from performance for the 12-month period.
Market Review and Investment Strategy
Global fixed-income markets continued to face challenges into early 2009 as asset prices in many markets continued falling and policymakers scrambled to combat the severe global economic slowdown. By the second quarter of 2009, however, signs of a bottoming of the recession resulted in
ALLIANCEBERNSTEIN INCOME FUND • | 1 |
a significant rally in credit sectors as well as equities. Capital markets rebounded on growing evidence that aggressive policy action on a global scale had been successful at staving off a depression-type scenario. More recently, indicators pointed toward some recovery in consumer and business confidence and a global rebound in industrial production. The dramatic recovery in capital markets in the second quarter suggested that massive government efforts to thaw the credit markets and revive economic growth had started to take effect.
There are also signs that the troubled financial sector may be slowly recovering. Following severe losses in the fourth quarter of 2008, earnings at many large banks rebounded in the first quarter of 2009, helped by increased capital-markets activity and a higher volume of mortgage refinancings in the US. Most important, banks have increasingly been able to raise capital without government support. In the US, several institutions—including Goldman Sachs, JPMorgan Chase and Morgan Stanley—have repaid funding from the Treasury Department’s Troubled Asset Relief Program (TARP). In the UK, Lloyds Banking Group recently bought back the government’s holdings of its preference shares, although the government still retains a sizable stake in the bank.
For the semi-annual period ended June 30, 2009, Treasuries were the only fixed-income sector in negative territory, returning - -4.30% as investor
risk aversion and the demand for safety eased. Outperforming fixed-income sectors for the period included high-yield corporate debt at 30.43%, CMBS at 10.36% and investment-grade corporates at 8.32%, all of which rebounded strongly from poor returns in 2008. With improving economic data and market sentiment, credit spreads tightened significantly. US dollar-denominated emerging market debt, which proved more resilient during the financial crisis, returned 14.56%, while local emerging market debt, unhedged to the US dollar, returned 8.28%.
While markets have responded to signs of economic stability and hopes for eventual recovery, great uncertainties still remain. While risk aversion has receded considerably from the peaks of late 2008, it remains well above the historical average, creating opportunities for active managers. Risk premiums across the capital markets are at multiples of their historical norms. In the fixed-income markets, wide yield spreads continue to compensate investors generously as they wait for recovery. The Fund’s management team (the “Team”) believes that, while Fund performance tracked the indices lower as the credit crisis deepened, the Fund is well positioned as markets recover, as evidenced by its very strong recent performance. The Team believes that investors are likely to be well rewarded for remaining calm and disciplined in the face of continued uncertainties and for taking a long-term approach to asset allocation.
2 | • ALLIANCEBERNSTEIN INCOME FUND |
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance on page 5 represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. All fees and expenses related to the operation of the Fund have been deducted. Performance assumes reinvestment of distributions and does not account for taxes.
AllianceBernstein Income Fund Shareholder Information
The Fund’s NYSE trading symbol is “ACG.” Weekly comparative net asset value (NAV) and market price information about the Fund is published each Monday in The Wall Street Journal and each Saturday in Barron’s and in other newspapers in a table called “Closed-End Bond Funds.” For additional shareholder information regarding this Fund, please see page 59.
Benchmark Disclosure
The unmanaged Barclays Capital US Aggregate Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index covers the US investment-grade fixed-rate bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. The Index is not leveraged, whereas the Fund utilizes leverage. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Fund.
A Word About Risk
Until May 22, 2009, the Fund participated in a credit facility for the purpose of utilizing investment leverage. The Fund may continue to utilize leverage through other investment techniques or reverse repurchase agreements and dollar rolls.
Reverse repurchase agreements involve sales by the Fund of portfolio assets concurrently with an agreement by the Fund to repurchase the same assets at a later date at a fixed price. Generally, the effect of such a transaction is that the Fund can recover all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement, while it will be able to keep the interest income associated with those portfolio securities. Such transactions are only advantageous if the interest cost to the Fund of the reverse repurchase agreement transaction is less than the cost of otherwise obtaining the cash.
The Fund may enter into dollar rolls in which the Fund sells securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type and coupon) securities on a specified future date. During the roll period, the Fund forgoes principal and interest paid on the securities. The Fund is compensated by the difference between the current sales price and the lower forward price for the future purchase (often referred to as the “drop”) as well as by the interest earned on the cash proceeds of the initial sale.
Reverse repurchase agreements and dollar rolls are speculative techniques and are considered borrowings by the Fund.
The effect of leverage can realize shareholders higher returns than if the Fund were not leveraged, and the use of leverage techniques can add to the net asset value (NAV) of the Common Stock. However, the risks of such techniques are potentially a higher volatility of the NAV of the Common Stock, potentially more volatility in the market value of the Common Stock, and the relatively greater effect on the NAV of the Common Stock caused by favorable or adverse changes in the currency exchange rates. In addition, changes in the interest rate environment can increase or decrease shareholder returns. The Fund maintains asset coverage of at least 200% with respect to borrowings.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN INCOME FUND • | 3 |
Historical Performance
HISTORICAL PERFORMANCE
(continued from previous page)
To the extent that the current interest rate on the Fund’s indebtedness approaches the net return on the leveraged portion of the Fund’s investment portfolio, then the benefit to the shareholders will be reduced. If the rate on indebtedness were to exceed the net return on the same portion of the portfolio, then this would result in a lower rate of return for the shareholders. Similarly, the use of leverage in a declining market can advance the decrease of the Fund’s NAV more so than if the Fund were not leveraged, which would likely be reflected in a greater decline in the market price for shares of Common Stock than if the Fund were not leveraged. In extreme cases, if the Fund’s current investment income were not sufficient to meet interest payments on indebtedness or if the Fund failed to maintain the asset coverage required by the 1940 Act, then it could be necessary for the Fund to liquidate certain investments at a time when it may be disadvantageous to do so, thereby reducing its NAV.
Part of the Fund’s assets will be invested in foreign securities. A significant portion of the Fund’s investments in foreign securities is in emerging markets. Since the Fund invests in foreign currency denominated securities, fluctuations may be magnified by changes in foreign exchange rates. The Fund also may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures swaps and options. Foreign markets can be more volatile than the US market due to increased risks of adverse issuer, political, regulatory, market or economic developments. The Fund may invest in high yield bonds or below-investment grade securities (“junk bonds”). High yield bonds involve a greater risk of default and price volatility than other bonds.
While the Fund invests principally in fixed-income securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks include the risk that the value of a derivative instrument may not correlate perfectly, or at all, with the value of the assets, reference rates or indices that they are designed to track. Other risks include: the possible absence of a liquid secondary market for a particular instrument and possible exchange-imposed price fluctuation limits, either of which may make it difficult or impossible to close out a position when desired; the risk that adverse price movements in an instrument can result in a loss substantially greater than the Fund’s initial investment in that instrument (in some cases, the potential loss is unlimited); and the risk that the counterparty will not perform its obligations.
(Historical Performance continued on the next page)
4 | • ALLIANCEBERNSTEIN INCOME FUND |
Historical Performance
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARK PERIODS ENDED JUNE 30, 2009 | Returns | |||||
6 Months | 12 Months | |||||
AllianceBernstein Income Fund (NAV) | 8.75% | 1.78% | ||||
Barclays Capital† US Aggregate Index | 1.90% | 6.05% | ||||
The Fund’s Market Price per share on June 30, 2009, was $7.71. The Fund’s Net Asset Value Price per share on June 30, 2009, was $7.87. For additional Financial Highlights, please see page 53. | ||||||
† Formerly Lehman Brothers. | ||||||
See Historical Performance and Benchmark disclosures on pages 3-4.
ALLIANCEBERNSTEIN INCOME FUND • | 5 |
Historical Performance
PORTFOLIO SUMMARY
June 30, 2009 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $1,909.3
* | All data are as of June 30, 2009. The Fund’s security type and country breakdowns are expressed as a percentage of total investments and may vary over time. “Other” country weightings represent 0.2% or less in the following countries: Argentina, Austria, Bermuda, Canada, El Salvador, France, Germany, Greece, Netherlands, Peru, Poland, South Africa, Switzerland and Venezuela. |
6 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio Summary
PORTFOLIO OF INVESTMENTS
June 30, 2009 (unaudited)
Principal Amount (000) | U.S. $ Value | ||||||
GOVERNMENTS - TREASURIES – 79.8% | |||||||
Brazil – 2.8% | |||||||
Republic of Brazil | BRL | 20,818 | $ | 10,464,777 | |||
12.50%, 1/05/16-1/05/22 | 76,429 | 43,059,831 | |||||
53,524,608 | |||||||
Hungary – 1.2% | |||||||
Hungary Government Bond | HUF | 3,143,840 | 13,702,454 | ||||
Series 15/A | 1,912,350 | 9,071,173 | |||||
22,773,627 | |||||||
United States – 75.8% | |||||||
U.S. Treasury Bonds | US$ | 225,000 | 217,617,750 | ||||
5.375%, 2/15/31 | 1,961 | 2,250,859 | |||||
6.625%, 2/15/27 | 73,570 | 94,847,842 | |||||
8.00%, 11/15/21 | 9,117 | 12,578,340 | |||||
11.25%, 2/15/15(a) | 101,000 | 145,574,128 | |||||
12.50%, 8/15/14 | 6,770 | 6,868,781 | |||||
U.S. Treasury Notes | 220,000 | 219,210,200 | |||||
1.375%, 4/15/12(a) | 156,858 | 156,282,017 | |||||
1.75%, 3/31/14 | 50,000 | 48,359,400 | |||||
1.875%, 4/30/14(a) | 27,000 | 26,200,530 | |||||
4.00%, 3/15/10(a) | 55,000 | 56,385,725 | |||||
4.125%, 8/15/10-5/15/15 | 22,639 | 23,559,713 | |||||
4.375%, 8/15/12 | 700 | 757,532 | |||||
4.50%, 2/15/16 | 598 | 648,503 | |||||
4.625%, 7/31/12(a) | 81,000 | 88,182,432 | |||||
4.875%, 8/15/16(a) | 49,000 | 54,171,803 | |||||
5.125%, 5/15/16 | 3,000 | 3,364,686 | |||||
U.S. Treasury STRIPS | 259,750 | 195,627,336 | |||||
Zero Coupon, 11/15/21(c) | 164,379 | 95,335,420 | |||||
1,447,822,997 | |||||||
Total Governments - Treasuries | 1,524,121,232 | ||||||
MORTGAGE PASS-THRU’S – 18.7% | |||||||
Agency Fixed Rate 30-Year – 10.7% | |||||||
Federal Home Loan Mortgage Corp. Gold | 53,259 | 55,689,696 | |||||
Series 2007 | 14,740 | 15,877,571 |
ALLIANCEBERNSTEIN INCOME FUND • | 7 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Federal National Mortgage Association | US$ | 68 | $ | 74,143 | |||
Series 1999 | 88 | 96,105 | |||||
Series 2006 | 40,419 | 42,340,045 | |||||
6.50%, 8/01/36-11/01/36 | 29,020 | 30,956,634 | |||||
Series 2007 | 15,504 | 16,240,856 | |||||
6.50%, 8/01/37 | 39,977 | 42,632,138 | |||||
Government National Mortgage Association | 72 | 77,923 | |||||
203,985,111 | |||||||
Agency ARMS – 8.0% | |||||||
Federal Home Loan Mortgage Corp. | 31,560 | 33,000,545 | |||||
5.802%, 2/01/37(d) | 19,323 | 20,240,917 | |||||
5.827%, 3/01/37(d) | 19,867 | 20,829,611 | |||||
5.974%, 2/01/37(d) | 23,455 | 24,589,983 | |||||
6.072%, 3/01/37(d) | 12,263 | 12,874,298 | |||||
Federal National Mortgage Association | 15,896 | 16,694,823 | |||||
Series 2007 | 23,045 | 24,218,523 | |||||
152,448,700 | |||||||
Total Mortgage Pass-Thru’s | 356,433,811 | ||||||
CORPORATES - INVESTMENT GRADES – 11.5% | |||||||
Financial Institutions – 5.7% | |||||||
Banking – 4.2% | |||||||
American Express Co. | 7,495 | 7,753,083 | |||||
Bank of America Corp. | 9,500 | 9,542,380 | |||||
Barclays Bank PLC | EUR | 10,000 | 6,382,964 | ||||
8.55%, 6/15/11(e)(f) | US$ | 638 | 427,460 | ||||
The Bear Stearns Co., Inc. | 14,000 | 12,974,556 | |||||
Citigroup, Inc. | 9,100 | 9,256,875 |
8 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
JP Morgan Chase & Co. | RUB | 46,000 | $ | 655,517 | |||
JP Morgan Chase Capital XXV | US$ | 5,100 | 4,386,005 | ||||
Manufacturers & Traders Trust Co. | 506 | 481,331 | |||||
Merrill Lynch & Co., Inc. | 13,500 | 11,579,571 | |||||
6.05%, 5/16/16 | 2,678 | 2,397,873 | |||||
Morgan Stanley | BRL | 11,615 | 4,801,301 | ||||
National Australia Bank Ltd. | EUR | 50 | 73,446 | ||||
Rabobank Nederland | US$ | 345 | 383,813 | ||||
UBS Preferred Funding Trust I | 3,760 | 2,677,515 | |||||
VTB Capital SA | 700 | 658,000 | |||||
6.875%, 5/29/18(f) | 2,716 | 2,457,980 | |||||
Wachovia Bank NA | 3,841 | 3,667,732 | |||||
80,557,402 | |||||||
Finance – 0.7% | |||||||
General Electric Capital Corp. | GBP | 198 | 317,926 | ||||
SLM Corp. | US$ | 3,610 | 2,793,057 | ||||
Series A | 11,385 | 9,150,238 | |||||
12,261,221 | |||||||
Insurance – 0.8% | |||||||
American International Group, Inc. | 4,480 | 2,595,080 | |||||
AMP Group Finance Services Ltd. | GBP | 50 | 81,702 | ||||
AMP UK Finance Services PLC | 110 | 183,495 | |||||
Principal Financial Group, Inc. | US$ | 3,665 | 3,861,045 | ||||
Prudential Financial, Inc. | 8,765 | 8,568,576 | |||||
7.375%, 6/15/19 | 575 | 564,552 | |||||
15,854,450 | |||||||
ALLIANCEBERNSTEIN INCOME FUND • | 9 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Other Finance – 0.0% | |||||||
IIRSA Norte Finance Ltd. | US$ | 350 | $ | 325,857 | |||
Red Arrow International Leasing PLC | RUB | 10,226 | 291,997 | ||||
617,854 | |||||||
109,290,927 | |||||||
Industrial – 3.7% | |||||||
Basic – 2.0% | |||||||
Freeport-McMoRan Copper & Gold, Inc. | US$ | 7,500 | 7,556,250 | ||||
GTL Trade Finance, Inc. | 2,536 | 2,396,520 | |||||
Rio Tinto Finance USA Ltd. | 7,280 | 8,089,871 | |||||
Southern Copper Corp. | 5,107 | 4,617,091 | |||||
Union Carbide Corp. | 1,785 | 1,099,153 | |||||
Usiminas Commercial Ltd. | 4,263 | 4,294,972 | |||||
Vale Overseas Ltd. | 10,673 | 10,134,067 | |||||
38,187,924 | |||||||
Capital Goods – 0.1% | |||||||
Legrand France SA | 10 | 8,613 | |||||
Tyco International Finance SA | 140 | 142,355 | |||||
8.50%, 1/15/19 | 1,850 | 2,051,243 | |||||
2,202,211 | |||||||
Communications - Media – 0.4% | |||||||
BSKYB Finance UK PLC | 350 | 344,600 | |||||
CBS Corp. | 3,700 | 3,794,195 | |||||
Reed Elsevier Capital, Inc. | 3,005 | 3,172,967 | |||||
7,311,762 | |||||||
Communications - Telecommunications – 0.3% | |||||||
AT&T Corp. | 1,000 | 1,154,181 | |||||
Embarq Corp. | 1,277 | 1,247,108 | |||||
Qwest Corp. | 700 | 658,000 |
10 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Telekom Finanzmanagement | EUR | 1,112 | $ | 1,603,959 | |||
4,663,248 | |||||||
Consumer Non-Cyclical – 0.1% | |||||||
Cadbury Schweppes US Finance LLC | US$ | 1,000 | 987,396 | ||||
Whirlpool Corp. | 520 | 543,400 | |||||
1,530,796 | |||||||
Energy – 0.6% | |||||||
TNK-BP Finance SA | 5,353 | 4,657,110 | |||||
Valero Energy Corp. | 2,410 | 2,745,024 | |||||
Weatherford International Ltd. | 1,595 | 1,590,792 | |||||
6.00%, 3/15/18 | 730 | 716,866 | |||||
9.625%, 3/01/19 | 1,560 | 1,835,195 | |||||
11,544,987 | |||||||
Transportation - Airlines – 0.2% | |||||||
Qantas Airways Ltd. | 5,000 | 4,516,765 | |||||
Transportation - Railroads – 0.0% | |||||||
Canadian Pacific Railway Co. | 11 | 10,932 | |||||
69,968,625 | |||||||
Non Corporate Sectors – 1.8% | |||||||
Agencies - Not Government Guaranteed – 1.8% | |||||||
Gaz Capital SA | 12,232 | 10,274,880 | |||||
6.51%, 3/07/22(f) | 14,249 | 10,579,883 | |||||
TransCapitalInvest Ltd. for OJSC AK Transneft | 7,606 | 6,427,070 | |||||
7.70%, 8/07/13(f) | 7,416 | 7,160,148 | |||||
34,441,981 | |||||||
Utility – 0.3% | |||||||
Natural Gas – 0.3% | |||||||
Sempra Energy | 5,700 | 5,949,905 | |||||
Total Corporates - Investment Grades | 219,651,438 | ||||||
ALLIANCEBERNSTEIN INCOME FUND • | 11 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
INFLATION-LINKED SECURITIES – 6.0% | |||||||
Brazil – 0.1% | |||||||
Unibanco Grand Cayman | BRL | 5,253 | $ | 2,561,991 | |||
United States – 5.9% | |||||||
U.S. Treasury Notes | US$ | 26,579 | 27,334,827 | ||||
2.125%, 1/15/19 (TIPS)(a) | 36,500 | 37,697,638 | |||||
2.375%, 4/15/11 (TIPS)(a) | 45,988 | 47,353,512 | |||||
112,385,977 | |||||||
Total Inflation-Linked Securities | 114,947,968 | ||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES – 5.9% | |||||||
Non-Agency Fixed Rate CMBS – 5.9% | |||||||
Banc of America Commercial Mortgage, Inc. | 3,919 | 2,750,911 | |||||
Bear Stearns Commercial Mortgage Securities, Inc. | 9,100 | 7,730,334 | |||||
Citigroup/Deutsche Bank Commercial Mortgage Trust | 150 | 137,202 | |||||
Commercial Mortgage Pass Through Certificates | 4,830 | 3,521,363 | |||||
Series 2007-C9, Class A4 | 5,030 | 3,997,649 | |||||
Credit Suisse Mortgage Capital Certificates | 15,915 | 11,615,921 | |||||
Series 2006-C4, Class A3 | 11,700 | 8,186,904 | |||||
Series 2006-C4, Class AM | 13,000 | 6,365,349 | |||||
Series 2006-C5, Class A3 | 13,000 | 8,909,884 | |||||
CS First Boston Mortgage Securities Corp. | 2,662 | 2,356,256 | |||||
Greenwich Capital Commercial Funding Corp. | 3,088 | 2,899,381 |
12 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | US$ | 15,890 | $ | 12,497,857 | |||
Series 2006-CB15, Class AM | 1,651 | 829,251 | |||||
Series 2006-CB17, Class A4 | 21,106 | 17,062,707 | |||||
Series 2007-C1, Class A4 | 5,224 | 3,440,082 | |||||
Series 2007-CB18, Class A4 | 155 | 116,716 | |||||
Merrill Lynch Mortgage Trust | 6,000 | 3,965,710 | |||||
Merrill Lynch/Countrywide Commercial Mortgage Trust | 10,000 | 4,493,717 | |||||
Series 2007-9, Class A4 | 5,220 | 3,600,431 | |||||
Morgan Stanley Capital I | 7,800 | 6,663,798 | |||||
Series 2007-IQ15, Class A4 | 2,306 | 1,736,497 | |||||
Wachovia Bank Commercial Mortgage Trust | 100 | 79,940 | |||||
112,957,860 | |||||||
Non-Agency Floating Rate CMBS – 0.0% | |||||||
Eclipse PLC | GBP | 59 | 38,176 | ||||
Total Commercial Mortgage-Backed Securities | 112,996,036 | ||||||
AGENCIES – 4.9% | |||||||
Agency Debentures – 4.9% | |||||||
Federal National Mortgage Association | US$ | 59,222 | 66,074,163 | ||||
The Goldman Sachs Group, Inc. – FDIC Insured | 8,600 | 8,900,132 | |||||
JP Morgan Chase & Co. – FDIC Insured | 8,600 | 8,896,287 |
ALLIANCEBERNSTEIN INCOME FUND • | 13 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Morgan Stanley – FDIC Insured | US$ | 8,600 | $ | 8,921,502 | |||
Total Agencies | 92,792,084 | ||||||
CORPORATES - NON-INVESTMENT GRADES – 4.8% | |||||||
Industrial – 3.4% | |||||||
Basic – 0.5% | |||||||
Evraz Group SA | 489 | 386,310 | |||||
Georgia Gulf Corp. | 250 | 25,000 | |||||
Quality Distribution LLC | 1,875 | 993,750 | |||||
Steel Capital SA for OAO Severstal | 230 | 186,300 | |||||
United States Steel Corp. | 965 | 823,043 | |||||
Vedanta Resources PLC | 7,226 | 6,575,660 | |||||
8,990,063 | |||||||
Capital Goods – 0.3% | |||||||
AMH Holdings, Inc. | 13,045 | 5,739,800 | |||||
Berry Plastics Holding Corp. | 150 | 107,250 | |||||
5,847,050 | |||||||
Communications - Media – 0.2% | |||||||
CCH I LLC | 4,009 | 481,080 | |||||
11.75%, 5/15/14(g)(h) | 11,000 | 68,750 | |||||
Clear Channel Communications, Inc. | 220 | 53,900 | |||||
Gallery Capital SA | 3,315 | 497,250 | |||||
Paxson Communications Corp. | 7,081 | 70,807 | |||||
Rainbow National Services LLC | 1,750 | 1,813,437 | |||||
RH Donnelley Corp. | 3 | 154 | |||||
Series A-2 | 6 | 307 | |||||
Sirius Satellite Radio, Inc. | 1,650 | 1,216,875 | |||||
4,202,560 | |||||||
14 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Communications - Telecommunications – 1.2% | |||||||
Centennial Communications Corp. | US$ | 1,700 | $ | 1,793,500 | |||
Cricket Communications, Inc. | 670 | 639,850 | |||||
Digicel Ltd. | 5,465 | 5,301,050 | |||||
Inmarsat Finance PLC | 6,475 | 6,701,625 | |||||
Intelsat Bermuda Ltd. | 3,300 | 3,366,000 | |||||
Terrestar Networks, Inc. | 3,014 | 994,497 | |||||
Vip Finance (Vimpelcom) | 3,985 | 3,690,907 | |||||
22,487,429 | |||||||
Consumer Cyclical - Automotive – 0.1% | |||||||
Ford Motor Credit Co. LLC | 2,350 | 1,889,475 | |||||
Consumer Cyclical - Other – 0.1% | |||||||
Broder Brothers Co. | 489 | 346,521 | |||||
12.00%, 10/15/13 | 49 | 0 | |||||
Sheraton Holding Corp. | 1,213 | 1,115,960 | |||||
Six Flags Operations, Inc. | 1,023 | 143,220 | |||||
12.25%, 7/15/16(f)(g) | 423 | 293,985 | |||||
William Lyon Homes, Inc. | 2,000 | 710,000 | |||||
2,609,686 | |||||||
Consumer Cyclical - Retailers – 0.3% | |||||||
Burlington Coat Factory Warehouse Corp. | 1,600 | 1,272,000 | |||||
Limited Brands, Inc. | 5,593 | 4,839,668 | |||||
6,111,668 | |||||||
Consumer Non-Cyclical – 0.4% | |||||||
Chaoda Modern Agriculture Holdings Ltd. | 4,505 | 3,878,625 | |||||
HCA, Inc. | 395 | 388,087 | |||||
Select Medical Corp. | 250 | 203,125 | |||||
7.654%, 9/15/15(d) | 5,000 | 3,550,000 | |||||
8,019,837 | |||||||
ALLIANCEBERNSTEIN INCOME FUND • | 15 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Other Industrial – 0.3% | |||||||
Central European Distribution Corp. | EUR | 62 | $ | 73,970 | |||
Noble Group Ltd. | US$ | 3,560 | 2,918,559 | ||||
RBS Global, Inc. and Rexnord Corp. | 2,150 | 1,585,625 | |||||
Yioula Glassworks SA | EUR | 253 | 124,222 | ||||
4,702,376 | |||||||
Services – 0.0% | |||||||
West Corp. | US$ | 150 | 125,250 | ||||
Technology – 0.0% | |||||||
Freescale Semiconductor, Inc. | 300 | 102,000 | |||||
65,087,394 | |||||||
Financial Institutions – 1.4% | |||||||
Banking – 0.7% | |||||||
ABN Amro Bank NV | EUR | 6,790 | 3,905,392 | ||||
CenterCredit International | US$ | 2,297 | 1,630,870 | ||||
Commerzbank Capital Funding Trust I | EUR | 3,550 | 1,593,637 | ||||
Dexia Credit Local | 4,450 | 2,247,364 | |||||
HBOS Capital Funding LP | 1,202 | 556,454 | |||||
HBOS Euro Finance LP | 2,336 | 1,310,822 | |||||
Kazkommerts International BV | US$ | 325 | 204,750 | ||||
Royal Bank of Scotland Group PLC | 1,629 | 806,355 | |||||
RS Finance (RSB) | 386 | 337,750 | |||||
12,593,394 | |||||||
Brokerage – 0.0% | |||||||
Lehman Brothers Holdings, Inc. | 3,605 | 576,800 | |||||
Finance – 0.5% | |||||||
CIT Group, Inc. | 2,540 | 1,497,157 | |||||
GMAC LLC | 6,140 | 4,819,900 |
16 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
6.875%, 9/15/11(f) | US$ | 2,507 | $ | 2,193,625 | |||
8.00%, 11/01/31(f) | 2,456 | 1,719,200 | |||||
10,229,882 | |||||||
Insurance – 0.2% | |||||||
Fairfax Financial Holdings Ltd. | 5,000 | 3,700,000 | |||||
Resolution PLC | GBP | 50 | 12,339 | ||||
3,712,339 | |||||||
27,112,415 | |||||||
Total Corporates - Non-Investment Grades | 92,199,809 | ||||||
BANK LOANS – 2.9% | |||||||
Industrial – 2.5% | |||||||
Basic – 0.3% | |||||||
Flakeboard US GP I/Flakeboard America Limited | US$ | 1,874 | 1,143,084 | ||||
Georgia-Pacific Corp. | 1,322 | 1,243,729 | |||||
Hexion Specialty Chemicals, Inc. | 26 | 17,357 | |||||
3.50%, 5/05/13(d) | 119 | 80,107 | |||||
Huntsman International LLC | 930 | 836,121 | |||||
John Maneely Co. | 800 | 630,400 | |||||
Lyondell Chemical Company | 239 | 103,659 | |||||
4.07%-6.0%, 12/22/14(d) | 145 | 62,794 | |||||
7.00%, 12/22/14(d) | 629 | 272,478 | |||||
Lyondell Chemical Company | 374 | 384,908 | |||||
Lyondell Chemical Company | 374 | 310,453 | |||||
Newpage Corp. | 487 | 419,400 | |||||
Trinidad USA Partnership LLLP | 968 | 784,350 | |||||
6,288,840 | |||||||
Capital Goods – 0.2% | |||||||
Graham Packaging Company, L.P. | 88 | 83,675 | |||||
6.75%, 4/05/14(d) | 884 | 873,281 |
ALLIANCEBERNSTEIN INCOME FUND • | 17 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Graphic Packaging International, Inc. | US$ | 970 | $ | 911,075 | |||
Manitowoc Co., Inc. | 522 | 472,096 | |||||
Sequa Corp. | 397 | 304,500 | |||||
TRW Automotive Inc. | 627 | 555,815 | |||||
3,200,442 | |||||||
Communications - Media – 0.4% | |||||||
Cengage Learning Acquisitions, Inc. (Thomson Learning) | 728 | 607,640 | |||||
Cequel Communications LLC (Cebridge) | 1,250 | 1,059,375 | |||||
Charter Communications Operating LLC | 1,478 | 1,325,436 | |||||
CSC Holdings, Inc. (Cablevision) | 941 | 882,602 | |||||
Idearc, Inc. (Verizon) | 366 | 154,328 | |||||
Sunshine Acquisition Limited | 732 | 519,744 | |||||
Univision Communications, Inc. | 2,140 | 1,597,639 | |||||
Wide Open West Finance LLC | 1,496 | 1,274,311 | |||||
7,421,075 | |||||||
Communications - Telecommunications – 0.2% | |||||||
Level 3 Financing, Inc. | 1,316 | 1,088,478 | |||||
Sorenson Communications, Inc. | 1,068 | 970,417 | |||||
Telesat Canada | 978 | 908,605 | |||||
2,967,500 | |||||||
Consumer Cyclical - Automotive – 0.0% | |||||||
Ford Motor Co. | 471 | 341,078 | |||||
Visteon Corp. | 600 | 246,000 | |||||
587,078 | |||||||
Consumer Cyclical - Entertainment – 0.1% | |||||||
London Arena and Waterfront Finance, LLC (O2 Arena) | 1,355 | 1,124,931 |
18 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Metro-Goldwyn-Mayer Inc. | US$ | 1,424 | $ | 797,379 | |||
1,922,310 | |||||||
Consumer Cyclical - Other – 0.2% | |||||||
Hanesbrands, Inc. | 872 | 865,053 | |||||
Harrah’s Operating Co., Inc. | 608 | 445,503 | |||||
4.09%, 1/28/15(d) | 651 | 475,564 | |||||
Las Vegas Sands LLC | 363 | 255,323 | |||||
5/23/14(n) | 73 | 51,584 | |||||
Penn National Gaming, Inc. | 288 | 274,899 | |||||
VML US Finance LLC | 1,746 | 1,476,502 | |||||
3,844,428 | |||||||
Consumer Cyclical - Retailers – 0.0% | |||||||
Mattress Holding Corp. | 490 | 213,159 | |||||
Targus Group International | 902 | 442,162 | |||||
655,321 | |||||||
Consumer Non-Cyclical – 0.5% | |||||||
Best Brands Corp. | 626 | 469,662 | |||||
CHS/Community Health Systems, Inc. | 1,170 | 1,051,648 | |||||
Harlan Laboratories, Inc. (fka Harlan Sprague Dawley, Inc.) | 897 | 776,141 | |||||
HCA, Inc. | 1,479 | 1,334,075 | |||||
HCR Healthcare, LLC | 542 | 479,981 | |||||
Health Management Associates, Inc. | 944 | 828,903 | |||||
Mylan Inc. | 582 | 560,571 | |||||
Onex Carestream Finance LP | 1,000 | 655,630 | |||||
Talecris Biotherepeutics Holdings Corp. | 2,046 | 1,851,312 | |||||
7.42%, 12/06/14(d) | 900 | 803,250 | |||||
Wrigley Jr Company | 878 | 880,606 | |||||
9,691,779 | |||||||
ALLIANCEBERNSTEIN INCOME FUND • | 19 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Energy – 0.2% | |||||||
Ashmore Energy International | US$ | 179 | $ | 143,514 | |||
3.60%, 3/30/14(d) | 758 | 606,783 | |||||
Dalbo, Inc. | 622 | 497,407 | |||||
Infrastrux Group, Inc. | 1,677 | 1,503,975 | |||||
2,751,679 | |||||||
Services – 0.1% | |||||||
Sabre, Inc. | 972 | 698,487 | |||||
Travelport LLC | 445 | 344,739 | |||||
3.10%, 8/23/13(d) | 89 | 69,172 | |||||
West Corp. | 978 | 888,977 | |||||
2,001,375 | |||||||
Technology – 0.3% | |||||||
Dealer Computer Services, Inc. | 500 | 292,500 | |||||
Dresser, Inc. | 949 | 860,298 | |||||
First Data Corp. | 983 | 734,419 | |||||
Freescale Semiconductor, Inc. | 649 | 470,175 | |||||
IPC Systems, Inc. | 1,853 | 1,403,858 | |||||
5.85%, 6/01/15(d) | 2,000 | 720,000 | |||||
Sungard Data Systems, Inc. | 34 | 31,187 | |||||
3.63%-4.11%, 2/28/16(d) | 951 | 887,923 | |||||
5,400,360 | |||||||
Transportation - Airlines – 0.0% | |||||||
Delta Airlines | 630 | 428,400 | |||||
47,160,587 | |||||||
Utility – 0.3% | |||||||
Electric – 0.3% | |||||||
FirstLight Power Resources, Inc. | 959 | 853,108 | |||||
5.13%, 5/01/14(d) | 1,000 | 740,000 | |||||
GBGH, LLC (US Energy) | 86 | 0 | |||||
4.00%, 6/09/13(d)(i)(o) | 286 | 145,135 |
20 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Riverside Energy Center, LLC | US$ | 1,457 | $ | 1,398,295 | |||
Rocky Mountain Energy Center, LLC | 795 | 762,801 | |||||
Texas Competitive Electric Holdings Company LLC | 2,513 | 1,792,698 | |||||
5,692,037 | |||||||
Financial Institutions – 0.1% | |||||||
Banking – 0.0% | |||||||
North Las Vegas | 61 | 20,120 | |||||
12.36%, 5/09/12(d)(g)(i)(o) | 2,119 | 105,954 | |||||
126,074 | |||||||
Finance – 0.1% | |||||||
Levlad LLC & Arbonne International LLC | 913 | 210,100 | |||||
LPL Holdings | 814 | 734,681 | |||||
944,781 | |||||||
Insurance – 0.0% | |||||||
Asurion Corp. | 1,000 | 938,000 | |||||
Other Finance – 0.0% | |||||||
Grosvenor Capital Management Holdings, LLLP | 922 | 765,234 | |||||
REITS – 0.0% | |||||||
Crescent Resources, LLC | 150 | 150,000 | |||||
5.04%, 9/07/12(d)(g) | 977 | 156,343 | |||||
306,343 | |||||||
3,080,432 | |||||||
Total Bank Loans | 55,933,056 | ||||||
QUASI-SOVEREIGNS – 2.8% | |||||||
Indonesia – 0.2% | |||||||
Majapahit Holding BV | 6,188 | 4,764,760 | |||||
Kazakhstan – 0.5% | |||||||
KazMunaiGaz Finance Sub BV | 9,625 | 8,879,063 | |||||
ALLIANCEBERNSTEIN INCOME FUND • | 21 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Russia – 2.1% | |||||||
RSHB Capital SA for OJSC Russian Agricultural Bank | US$ | 22,568 | $ | 19,408,480 | |||
7.125%, 1/14/14(f) | 12,351 | 11,671,695 | |||||
7.75%, 5/29/18(f) | 9,905 | 8,988,787 | |||||
40,068,962 | |||||||
Total Quasi-Sovereigns | 53,712,785 | ||||||
EMERGING MARKETS - | |||||||
Colombia – 0.9% | |||||||
Republic of Colombia | COP | 4,287,000 | 2,024,488 | ||||
12.00%, 10/22/15 | 29,313,000 | 15,637,337 | |||||
17,661,825 | |||||||
Turkey – 1.8% | |||||||
Turkey Government Bond | TRY | 47,390 | 33,170,832 | ||||
Total Emerging Markets - Treasuries | 50,832,657 | ||||||
EMERGING MARKETS - | |||||||
Argentina – 0.1% | |||||||
Argentina Bonos | US$ | 125 | 58,990 | ||||
7.82%, 12/31/33 | EUR | 5,070 | 2,862,493 | ||||
2,921,483 | |||||||
El Salvador – 0.3% | |||||||
Republic of El Salvador | US$ | 5,957 | 5,003,880 | ||||
Indonesia – 1.5% | |||||||
Republic of Indonesia | 720 | 594,000 | |||||
6.75%, 3/10/14(f) | 565 | 565,000 | |||||
6.875%, 1/17/18(f) | 8,285 | 7,974,312 | |||||
7.75%, 1/17/38(f) | 5,073 | 4,730,573 | |||||
8.50%, 10/12/35(f) | 801 | 804,548 | |||||
11.625%, 3/04/19(f) | 4,043 | 5,154,825 | |||||
12.90%, 3/15/16(f) | IDR | 2,102,200 | 225,308 | ||||
14.25%, 6/19/13(f) | 80,000,000 | 8,886,678 | |||||
28,935,244 | |||||||
22 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
Venezuela – 0.3% | |||||||
Republic of Venezuela | US$ | 4,034 | $ | 2,305,512 | |||
8.50%, 10/08/14 | 3,490 | 2,486,625 | |||||
13.625%, 8/15/18 | 458 | 398,460 | |||||
5,190,597 | |||||||
Total Emerging Markets - Sovereigns | 42,051,204 | ||||||
EMERGING MARKETS - CORPORATE BONDS – 1.0% | |||||||
Industrial – 0.8% | |||||||
Basic – 0.6% | |||||||
Evraz Group SA | 3,697 | 3,114,722 | |||||
Steel Capital SA for OAO Severstal | 9,646 | 8,150,870 | |||||
11,265,592 | |||||||
Consumer Cyclical - Other – 0.0% | |||||||
Peermont Global Pty Ltd. | EUR | 50 | 50,503 | ||||
Consumer Non-Cyclical – 0.0% | |||||||
Foodcorp Ltd. | 194 | 225,887 | |||||
Other Industrial – 0.2% | |||||||
Noble Group Ltd. | US$ | 3,093 | 2,938,350 | ||||
14,480,332 | |||||||
Financial Institutions – 0.2% | |||||||
Banking – 0.2% | |||||||
Alfa Bond Issuance PLC | 300 | 216,165 | |||||
ATF Bank | 5,223 | 3,656,100 | |||||
Banco BMG SA | 400 | 380,000 | |||||
4,252,265 | |||||||
Other Finance – 0.0% | |||||||
AES El Salvador Trust | 350 | 248,783 | |||||
4,501,048 | |||||||
Total Emerging Markets - Corporate Bonds | 18,981,380 | ||||||
ALLIANCEBERNSTEIN INCOME FUND • | 23 |
Portfolio of Investments
Principal Amount (000) | U.S. $ Value | ||||||
CMOS – 0.2% | |||||||
Non-Agency ARMS – 0.2% | |||||||
Merrill Lynch Mortgage Investors, Inc. | US$ | 4,835 | $ | 4,101,524 | |||
Agency Fixed Rate – 0.0% | |||||||
Government National Mortgage Association | 5,877 | 210,881 | |||||
Total CMOs | 4,312,405 | ||||||
Shares | |||||||
PREFERRED STOCKS – 0.1% | |||||||
Financial Institutions – 0.1% | |||||||
Banking – 0.1% | |||||||
Preferred Blocker, Inc. | 2,680 | 1,152,568 | |||||
Non Corporate Sectors – 0.0% | |||||||
Agencies - Government Sponsored – 0.0% | |||||||
Federal National Mortgage | 125,325 | 167,935 | |||||
Total Preferred Stocks | 1,320,503 | ||||||
Principal Amount (000) | |||||||
LOCAL GOVERNMENTS - REGIONAL BONDS – 0.0% | |||||||
Colombia – 0.0% | |||||||
Bogota Distrio Capital | COP | 438,000 | 171,643 | ||||
Shares | |||||||
WARRANTS – 0.0% | |||||||
Republic of Venezuela, expiring 4/15/20(p) | 1,785 | 0 | |||||
24 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
| U.S. $ Value | |||||||
SHORT-TERM INVESTMENTS – 4.8% | ||||||||
Investment Companies – 4.8% | ||||||||
AllianceBernstein Fixed-Income Shares, Inc. - Government STIF Portfolio(q) | 90,879,636 | $ | 90,879,636 | |||||
Total Investments – 148.3% | 2,831,337,647 | |||||||
Other assets less liabilities – (48.3)% | (922,055,311 | ) | ||||||
Net Assets – 100.0% | $ | 1,909,282,336 | ||||||
CREDIT DEFAULT SWAP CONTRACTS ON CORPORATE AND SOVEREIGN ISSUES (see Note C)
Swap Counterparty & Referenced Obligation | Fixed Deal (Pay) Receive Rate | Implied Credit Spread at June 30, 2009 | Notional Amount (000) | Market Value | Upfront Premiums (Paid) Received | Unrealized Appreciation/ (Depreciation) | ||||||||||||||
Buy Contracts: | ||||||||||||||||||||
Citibank, N.A.: | ||||||||||||||||||||
Qantas Airways Ltd. | (1.75 | )% | 1.911 | % | $ | 5,000 | $ | 43,122 | $ | — | $ | 43,122 | ||||||||
Sale Contracts: | ||||||||||||||||||||
Citigroup Global Markets Limited: | ||||||||||||||||||||
Federal Republic of Brazil | 3.09 | 1.01 | 1,910 | 66,753 | — | 66,753 | ||||||||||||||
Gazprom OAO | 1.04 | 4.515 | 10,000 | (415,300 | ) | — | (415,300 | ) | ||||||||||||
JPMorgan Chase Bank, N.A.: | ||||||||||||||||||||
Gazprom OAO | 1.04 | 4.515 | 1,380 | (57,311 | ) | — | (57,311 | ) |
* | Termination date. |
ALLIANCEBERNSTEIN INCOME FUND • | 25 |
Portfolio of Investments
FUTURES CONTRACTS (see Note C)
Type | Number of Contracts | Expiration Month | Original Value | Value at June 30, 2009 | Unrealized Appreciation/ (Depreciation) | |||||||||
Sold Contracts | ||||||||||||||
U.S. Treasury Bond 30 yr Futures | 2,260 | September 2009 | $ | 264,926,916 | $ | 267,492,188 | $ | (2,565,2.72 | ) | |||||
U.S. Treasury Note 10 yr Futures | 3,059 | September 2009 | 359,903,525 | 355,656,547 | 4,246,978 | |||||||||
$ | 1,681,706 | |||||||||||||
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note C)
Contract Amount (000) | U.S. $ Value on Origination Date | U.S. $ Value at June 30, 2009 | Unrealized Appreciation/ (Depreciation) | |||||||||
Buy Contracts: | ||||||||||||
Australian Dollar settling 8/10/09 | 24,045 | $ | 19,620,800 | $ | 19,320,034 | $ | (300,766 | ) | ||||
Australian Dollar settling 8/10/09 | 11,520 | 9,012,290 | 9,256,649 | 244,359 | ||||||||
Australian Dollar settling 8/10/09 | 12,411 | 9,838,300 | 9,972,606 | 134,306 | ||||||||
Australian Dollar settling 8/10/09 | 10,825 | 8,526,336 | 8,697,814 | 171,478 | ||||||||
New Zealand Dollar settling 7/21/09 | 14,944 | 9,199,056 | 9,631,457 | 432,401 | ||||||||
New Zealand Dollar settling 7/21/09 | 15,195 | 9,590,553 | 9,793,484 | 202,931 | ||||||||
Norwegian Krone settling 8/06/09 | 362,328 | 58,270,789 | 56,297,174 | (1,973,615 | ) | |||||||
Russian Ruble settling 7/15/09 | 277,483 | 8,904,256 | 8,873,881 | (30,375 | ) | |||||||
South Korean Won settling 7/10/09 | 12,356,124 | 9,865,957 | 9,703,636 | (162,321 | ) | |||||||
Sale Contracts: | ||||||||||||
British Pound settling 8/25/09 | 414 | 677,217 | 680,524 | (3,307 | ) | |||||||
Canadian Dollar settling 8/21/09 | 21,016 | 18,628,649 | 18,073,516 | 555,133 | ||||||||
Colombain Peso settling 7/23/09 | 5,244,408 | 2,523,376 | 2,437,729 | 85,647 | ||||||||
Colombain Peso settling 9/23/09 | 6,312,752 | 2,983,511 | 2,906,049 | 77,462 | ||||||||
Euro settling 7/08/09 | 117 | 153,972 | 163,544 | (9,572 | ) | |||||||
Euro settling 7/08/09 | 531 | 739,535 | 744,485 | (4,950 | ) | |||||||
Euro settling 7/08/09 | 1,080 | 1,530,769 | 1,514,646 | 16,123 | ||||||||
Euro settling 7/08/09 | 699 | 981,927 | 981,071 | 856 | ||||||||
Euro settling 7/08/09 | 8,401 | 11,224,990 | 11,785,216 | (560,226 | ) | |||||||
Euro settling 7/08/09 | 2,894 | 4,031,136 | 4,059,951 | (28,815 | ) | |||||||
Japanese Yen settling 7/10/09 | 967,166 | 9,865,957 | 10,040,511 | (174,554 | ) | |||||||
Japanese Yen settling 7/15/09 | 5,246 | 54,199 | 54,469 | (270 | ) | |||||||
Swiss Franc settling 7/27/09 | 41,925 | 37,674,311 | 38,597,564 | (923,253 | ) | |||||||
Swiss Franc settling 7/27/09 | 19,490 | 17,832,343 | 17,943,384 | (111,041 | ) |
26 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
REVERSE REPURCHASE AGREEMENTS (see Note C)
Broker | Interest Rate | Maturity | Amount | |||||
Barclays | 0.15 | % | 7/01/09 | $ | 36,684,640 | |||
Barclays | 0.23 | % | 7/01/09 | 30,493,352 | ||||
Barclays | (1.80 | )%* | 7/01/09 | 119,994,000 | ||||
Barclays | 0.05 | % | 7/07/09 | 98,750,137 | ||||
Barclays | 0.10 | % | 7/07/09 | 26,055,072 | ||||
Barclays | 1.75 | % | 7/07/09 | 47,750,000 | ||||
Barclays | 1.75 | % | 7/07/09 | 71,625,000 | ||||
Barclays | 0.18 | % | 7/08/09 | 67,674,375 | ||||
Deutsche Bank | 0.25 | % | 7/06/09 | 200,611,215 | ||||
Deutsche Bank | 1.75 | % | 7/06/09 | 47,687,500 | ||||
Deutsche Bank | 0.05 | % | 7/07/09 | 97,750,136 | ||||
ING | 0.23 | % | 7/01/09 | 54,394,865 | ||||
ING | 0.25 | % | 7/01/09 | 89,105,569 | ||||
ING | (1.80 | )%* | 7/01/09 | 48,747,562 | ||||
ING | 0.24 | % | 7/06/09 | 84,014,560 | ||||
ING | 0.19 | % | 7/15/09 | 55,063,750 | ||||
ING | 0.20 | % | 7/15/09 | 89,808,750 | ||||
JP Morgan Chase | 0.10 | % | 7/07/09 | 19,750,055 | ||||
JP Morgan Chase | (0.20 | )%* | 8/17/09 | 48,987,206 | ||||
$ | 1,334,947,744 | |||||||
* | Interest payment due from counterparty. |
(a) | Position, or a portion thereof, has been segregated to collateralize reverse repurchase agreements. The aggregate market value of these securities amounted to $956,405,175. |
(b) | Position, or a portion thereof, has been segregated to collateralize margin requirements for open futures contracts. The market value of this security amounted to $17,819,221. |
(c) | Position, or a portion thereof, has been segregated to collateralize interest rate swaps. |
(d) | Floating Rate Security. Stated interest rate was in effect at June 30, 2009. |
(e) | Variable rate coupon, rate shown as of June 30, 2009. |
(f) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2009, the aggregate market value of these securities amounted to $212,735,897 or 11.1% of net assets. |
(g) | Security is in default and is non-income producing. |
(h) | Indicates a security that has a zero coupon that remains in effect until a predetermined date at which time the stated coupon rate becomes effective until final maturity. |
(i) | Pay-In-Kind Payments (PIK). |
(j) | Coupon rate adjusts periodically based upon a predetermined schedule. Stated interest rate in effect at June 30, 2009. |
(k) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security, which represents 0.0% of net assets as of June 30, 2009, is considered illiquid and restricted. |
Restricted Securities | Acquisition Date | Cost | Market Value | Percentage of Net Assets | |||||||
Broder Brothers Co. | 8/22/2006 | $ | 1,049,173 | $ | 346,521 | 0.02 | % |
(l) | Fair valued. |
(m) | This position represents unfunded or partially unfunded loan commitments. Investments in unfunded loan commitments obligate the Fund to fund these commitments at the borrower’s |
ALLIANCEBERNSTEIN INCOME FUND • | 27 |
Portfolio of Investments
discretion. At period end, the market value and unrealized gain/(loss) of these unfunded loan commitments amounted to $128,263 and $3,479, respectively. The coupon rate will be determined at the time of funding and will be based upon the London-Interbank Offered Rate (“LIBOR”) plus a premium which was determined at the time of purchase. |
(n) | Position or a portion of this position represents an unsettled loan purchase. At June 30, 2009, the market value and unrealized gain/(loss) of these unsettled loan purchases amounted to $1,918,921 and $(109,299), respectively. The coupon rate will be determined at the time of settlement and will be based upon the London-Interbank Offered Rate (“LIBOR”) plus a premium which was determined at the time of purchase. |
(o) | Illiquid security. |
(p) | Non-income producing security. |
(q) | Investment in affiliated money market mutual fund. |
Currency Abbreviations:
BRL – Brazilian Real
COP – Colombian Peso
EUR – Euro Dollar
GBP – Great British Pound
HUF – Hungarian Forint
IDR – Indonesian Rupiah
RUB – Russian Rouble
TRY – New Turkish Lira
Glossary:
ARMS – Adjustable Rate Mortgages
CMBS – Commercial Mortgage-Backed Securities
FDIC – Federal Deposit Insurance Corporation
LP – Limited Partnership
OJSC – Open Joint Stock Company
REIT – Real Estate Investment Trust
STP – Structured Product
TIPS – Treasury Inflation Protected Security
See notes to financial statements.
28 | • ALLIANCEBERNSTEIN INCOME FUND |
Portfolio of Investments
STATEMENT OF ASSETS & LIABILITIES
June 30, 2009 (unaudited)
Assets | ||||
Investments in securities, at value | ||||
Unaffiliated issuers (cost $2,737,090,906) | $ | 2,740,458,011 | ||
Affiliated issuers (cost $90,879,636) | 90,879,636 | |||
Cash | 155,285 | |||
Foreign currencies, at value (cost $2,189,477) | 2,226,397 | |||
Receivable for investment securities sold | 380,797,139 | |||
Interest and dividends receivable | 34,718,571 | |||
Unrealized appreciation of forward currency exchange contracts | 1,920,696 | |||
Receivable for variation margin on futures contracts | 1,032,625 | |||
Unrealized appreciation on credit default swap contracts | 109,875 | |||
Other assets | 11,000 | |||
Total assets | 3,252,309,235 | |||
Liabilities | ||||
Reverse repurchase agreements | 1,334,968,976 | |||
Unrealized depreciation of forward currency exchange contracts | 4,283,065 | |||
Payable for investment securities purchased | 2,038,543 | |||
Advisory fee payable | 1,023,916 | |||
Unrealized depreciation on credit default swap contracts | 472,611 | |||
Administrative fee payable | 37,049 | |||
Dividends payable | 9,514 | |||
Accrued expenses and other liabilities | 193,225 | (a) | ||
Total liabilities | 1,343,026,899 | |||
Net Assets | $ | 1,909,282,336 | ||
Composition of Net Assets | ||||
Common stock, at par | $ | 2,427,057 | ||
Additional paid-in capital | 2,174,109,539 | |||
Distributions in excess of net investment income | (8,513,632 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (261,610,861 | ) | ||
Net unrealized appreciation on investments and foreign currency denominated assets and liabilities | 2,870,233 | |||
$ | 1,909,282,336 | |||
Net Asset Value Per Share—300 million shares of common stock authorized, $0.01 par value (based on 242,705,693 shares outstanding) | $ | 7.87 | ||
(a) | Includes an amount of $88,458 owed to Lehman Brothers resulting from the termination of credit default swap contracts subsequent to its bankruptcy filing on September 15, 2008. |
See notes to financial statements.
ALLIANCEBERNSTEIN INCOME FUND • | 29 |
Statement of Assets & Liabilities
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2009 (unaudited)
Investment Income | |||||||
Interest | $ | 74,510,325 | |||||
Dividends | |||||||
Affiliated issuers | 164,837 | ||||||
Unaffiliated issuers | 72,735 | $ | 74,747,897 | ||||
Expenses | |||||||
Advisory fee (see Note B) | 5,796,679 | ||||||
Custodian | 153,163 | ||||||
Printing | 118,260 | ||||||
Registration fees | 106,386 | ||||||
Administrative | 64,235 | ||||||
Transfer agency | 62,761 | ||||||
Audit | 54,731 | ||||||
Directors’ fees | 25,433 | ||||||
Legal | 12,377 | ||||||
Miscellaneous | 23,816 | ||||||
Total expenses before interest expense | 6,417,841 | ||||||
Interest expense | 2,633,382 | ||||||
Total expenses | 9,051,223 | ||||||
Net investment income | 65,696,674 | ||||||
Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions | |||||||
Net realized gain (loss) on: | |||||||
Investment transactions | 41,718,771 | ||||||
Futures contracts | 4,261,148 | ||||||
Swap contracts | 399,134 | ||||||
Foreign currency transactions | (9,990,953 | ) | |||||
Net change in unrealized appreciation/depreciation of: | |||||||
Investments | (4,752,790 | ) | |||||
Futures contracts | 51,652,587 | ||||||
Swap contracts | 1,986,674 | ||||||
Foreign currency denominated assets and liabilities | 654,996 | ||||||
Net gain on investment and foreign currency transactions | 85,929,567 | ||||||
Net Increase in Net Assets from Operations | $ | 151,626,241 | |||||
See notes to financial statements.
30 | • ALLIANCEBERNSTEIN INCOME FUND |
Statement of Operations
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended June 30, 2009 (unaudited) | Year Ended December 31, 2008 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 65,696,674 | $ | 142,591,228 | ||||
Net realized gain (loss) on investment and foreign currency transactions | 36,388,100 | (96,359,688 | ) | |||||
Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities | 49,541,467 | (161,775,619 | ) | |||||
Contributions from Adviser | – 0 | – | 1,062 | |||||
Net increase (decrease) in net assets from operations | 151,626,241 | (115,543,017 | ) | |||||
Dividends to Shareholders from | ||||||||
Net investment income | (60,676,423 | ) | (151,597,871 | ) | ||||
Common Stock Transactions | ||||||||
Reinvestment of dividends resulting in the issuance of Common Stock | 1,101,292 | – 0 | – | |||||
Total increase (decrease) | 92,051,110 | (267,140,888 | ) | |||||
Net Assets | ||||||||
Beginning of period | 1,817,231,226 | 2,084,372,114 | ||||||
End of period (including distributions in excess of net investment income of ($8,513,632) and ($13,533,883), respectively) | $ | 1,909,282,336 | $ | 1,817,231,226 | ||||
See notes to financial statements.
ALLIANCEBERNSTEIN INCOME FUND • | 31 |
Statement of Changes in Net Assets
STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2009 (unaudited)
Increase (Decrease) in Cash from Operating Activities: | ||||||||
Interest and dividends received | $ | 64,016,446 | ||||||
Interest expense paid | (3,327,225 | ) | ||||||
Operating expenses paid | (6,800,247 | ) | ||||||
Net increase in cash from operating activities | $ | 53,888,974 | ||||||
Investing Activities: | ||||||||
Purchases of long-term investments | (1,470,580,823 | ) | ||||||
Proceeds from disposition of long-term investments | 1,131,560,637 | |||||||
Purchase of short-term investments, net | (61,647,486 | ) | ||||||
Proceeds from swap contracts | 399,134 | |||||||
Variation margin paid on futures contracts | 43,731,579 | |||||||
Realized currency gains on foreign forward currency contracts closed | 5,893,042 | |||||||
Net decrease in cash from investing activities | (350,643,917 | ) | ||||||
Financing Activities: | ||||||||
Cash dividends paid | (77,763,389 | ) | ||||||
Effect of exchange rate on cash | (829,766 | ) | ||||||
Decrease in loan payable | (400,000,000 | ) | ||||||
Increase in reverse repurchase agreements | 773,781,378 | |||||||
Net increase in cash from financing activities | 295,188,223 | |||||||
Net decrease in cash | (1,566,720 | ) | ||||||
Cash at beginning of period | 3,948,402 | |||||||
Cash at end of period | $ | 2,381,682 | ||||||
Reconciliation of Net Increase in Net Assets from Operations to Net Increase in Cash from Operating Activities: | ||||||||
Net increase in net assets from operations | $ | 151,626,241 | ||||||
Adjustments: | ||||||||
Decrease in interest and dividends receivable | $ | (3,618,424 | ) | |||||
Accretion of bond discount and amortization of bond premium | (7,113,027 | ) | ||||||
Decrease in interest payable | (693,843 | ) | ||||||
Decrease in accrued expenses | (382,406 | ) | ||||||
Net realized loss on investment and foreign currency transactions | (36,388,100 | ) | ||||||
Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities | (49,541,467 | ) | ||||||
Total adjustments | (97,737,267 | ) | ||||||
Net increase in cash from operating activities | $ | 53,888,974 | ||||||
See notes to financial statements
32 | • ALLIANCEBERNSTEIN INCOME FUND |
Statement of Cash Flows
NOTES TO FINANCIAL STATEMENTS
June 30, 2009 (unaudited)
NOTE A
Significant Accounting Policies
AllianceBernstein Income Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940 as a diversified, closed-end management investment company. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at “fair value” as determined in accordance with procedures established by and under the general supervision of the Fund’s Board of Directors.
In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market (“OTC”) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, AllianceBernstein L.P. (the “Adviser”) may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other
ALLIANCEBERNSTEIN INCOME FUND • | 33 |
Notes to Financial Statements
derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Investments in money market funds are valued at their net asset value each day.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities.
2. Fair Value Measurements
The Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), effective January 1, 2008. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
• | Level 1—quoted prices in active markets for identical investments |
• | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
34 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of June 30, 2009:
Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||
Governments - Treasuries | $ | — | $ | 1,470,596,624 | $ | 53,524,608 | $ | 1,524,121,232 | ||||||
Mortgage Pass-Thru’s | — | 356,433,811 | — | 356,433,811 | ||||||||||
Corporates - Investment Grades | — | 171,361,695 | 48,289,743 | 219,651,438 | ||||||||||
Inflation Linked Securities | — | 112,385,977 | 2,561,991 | 114,947,968 | ||||||||||
Commercial Mortgage Backed Securities | — | 112,957,860 | 38,176 | 112,996,036 | ||||||||||
Agencies | — | 92,792,084 | — | 92,792,084 | ||||||||||
Corporates - Non Investment Grades | — | 78,475,977 | 13,723,832 | 92,199,809 | ||||||||||
Bank Loans | — | — | 55,933,056 | 55,933,056 | ||||||||||
Quasi-Sovereigns | — | — | 53,712,785 | 53,712,785 | ||||||||||
Emerging Markets - Treasuries | — | — | 50,832,657 | 50,832,657 | ||||||||||
Emerging Markets - Sovereigns | — | 3,260,954 | 38,790,250 | 42,051,204 | ||||||||||
Emerging Markets - Corporate Bonds | — | 3,453,800 | 15,527,580 | 18,981,380 | ||||||||||
CMOS | — | 210,881 | 4,101,524 | 4,312,405 | ||||||||||
Preferred Stocks | — | 1,320,503 | — | 1,320,503 | ||||||||||
Local Governments - Regional Bonds | — | — | 171,643 | 171,643 | ||||||||||
Short Term Investments | 90,879,636 | — | — | 90,879,636 | ||||||||||
Total Investments in Securities | 90,879,636 | 2,403,250,166 | 337,207,845 | 2,831,337,647 | ||||||||||
Other Financial Instruments* | 1,681,706 | (2,725,105 | ) | — | (1,043,399 | ) | ||||||||
$ | 92,561,342 | $ | 2,400,525,061 | $ | 337,207,845 | $ | 2,830,294,248 | |||||||
* | Other financial instruments are derivative instruments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument. |
ALLIANCEBERNSTEIN INCOME FUND • | 35 |
Notes to Financial Statements
Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
Governments - Treasuries | Corporates - Investment Grades | Inflation Linked Securities | Commercial Mortgage Backed Securities | |||||||||||||
Balance as of 12/31/08 | $ | 52,399,223 | $ | 8,477,461 | $ | 2,107,845 | $ | 53,633 | ||||||||
Accrued discounts/premiums | (80,663 | ) | 310,793 | 2,684 | 504 | |||||||||||
Realized gain (loss) | 923,824 | (9,122 | ) | (2,236 | ) | — | ||||||||||
Change in unrealized appreciation/depreciation | 11,736,416 | 12,300,658 | 481,178 | (15,961 | ) | |||||||||||
Net purchases (sales) | (11,454,192 | ) | 7,563,178 | (27,480 | ) | — | ||||||||||
Net transfers in and/or out of Level 3 | — | 19,646,775 | — | — | ||||||||||||
Balance as of 6/30/09 | $ | 53,524,608 | $ | 48,289,743 | $ | 2,561,991 | $ | 38,176 | ||||||||
Net change in unrealized appreciation/depreciation from Investments held as of 6/30/09* | $ | 10,850,565 | $ | 12,300,658 | $ | 481,178 | $ | (15,961 | ) | |||||||
Corporates - Non Investment Grades | Bank Loans | Quasi- Sovereigns | Emerging Markets - Treasuries | |||||||||||||
Balance as of 12/31/08 | $ | 4,356,119 | $ | 59,085,587 | $ | 15,178,100 | $ | 27,032,574 | ||||||||
Accrued discounts/premiums | (10,302 | ) | 245,106 | 357,566 | 2,331 | |||||||||||
Realized gain (loss) | — | (11,787,251 | ) | — | (2,228,142 | ) | ||||||||||
Change in unrealized appreciation/depreciation | 2,554,523 | 25,328,247 | 15,668,254 | 8,647,273 | ||||||||||||
Net purchases (sales) | 2,299,392 | (16,938,633 | ) | — | 17,378,621 | |||||||||||
Net transfers in and/or out of Level 3 | 4,524,100 | — | 22,508,865 | — | ||||||||||||
Balance as of 6/30/09 | $ | 13,723,832 | $ | 55,933,056 | $ | 53,712,785 | $ | 50,832,657 | ||||||||
Net change in unrealized appreciation/depreciation from Investments held as of 6/30/09* | $ | 2,554,523 | $ | 17,677,473 | $ | 14,227,584 | $ | 8,647,273 | ||||||||
36 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
Emerging Markets - Sovereigns | Emerging Markets - Corporate Bonds | CMOS | Local Governments - Regional Bonds | ||||||||||||
Balance as of 12/31/08 | $ | 54,466,966 | $ | 2,310,668 | $ | 4,513,739 | $ | 158,313 | |||||||
Accrued discounts/premiums | 300,672 | (2,787 | ) | 6,837 | 123 | ||||||||||
Realized gain (loss) | (7,250,977 | ) | — | 66,377 | — | ||||||||||
Change in unrealized appreciation/depreciation | 13,337,541 | 5,077,979 | 481,452 | 13,207 | |||||||||||
Net purchases (sales) | (22,589,552 | ) | — | (966,881 | ) | — | |||||||||
Net transfers in and/or out of Level 3 | 525,600 | 8,141,720 | — | — | |||||||||||
Balance as of 6/30/09 | $ | 38,790,250 | $ | 15,527,580 | $ | 4,101,524 | $ | 171,643 | |||||||
Net change in unrealized appreciation/depreciation from Investments held as of 6/30/09* | $ | 6,382,820 | $ | 5,077,979 | $ | 481,451 | $ | 13,207 | |||||||
Governments - Sovereign Bonds | Total | ||||||||||||||
Balance as of 12/31/08 | $ | 5,294,648 | $ | 235,434,876 | |||||||||||
Accrued discounts/premiums | (1,027 | ) | 1,131,837 | ||||||||||||
Realized gain (loss) | 533,222 | (19,754,305 | ) | ||||||||||||
Change in unrealized appreciation/depreciation | (769,101 | ) | 94,841,666 | ||||||||||||
Net purchases (sales) | (5,057,742 | ) | (29,793,289) | ||||||||||||
Net transfers in and/or out of Level 3 | — | 55,347,060 | |||||||||||||
Balance as of 6/30/09 | $ | — | $ | 337,207,845 | |||||||||||
Net change in unrealized appreciation/depreciation from Investments held as of 6/30/09* | $ | — | $ | 78,678,750 | |||||||||||
* | The unrealized appreciation/depreciation is included in net change in unrealized appreciation/depreciation of investments and other financial instruments in the accompanying statement of operations. |
ALLIANCEBERNSTEIN INCOME FUND • | 37 |
Notes to Financial Statements
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities.
4. Taxes
It is the Fund’s policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with FASB Interpretation No. 48, “Accounting for Uncertainties in Income Taxes” (“FIN 48”), management has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. The Fund amortizes premiums and accretes discounts as adjustments to interest income.
38 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
6. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification.
7. Repurchase Agreements
It is the Fund’s policy that its custodian or designated subcustodian take control of securities as collateral under repurchase agreements and to determine on a daily basis that the value of such securities are sufficient to cover the value of the repurchase agreements. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of collateral by the Fund may be delayed or limited.
8. Recent Accounting Pronouncements
During the period ended June 30, 2009, the Fund adopted FASB Statement of Financial Accounting Standards No. 161 (“FAS 161”), “Disclosures about Derivative Instruments and Hedging Activities.” FAS 161 requires enhanced disclosure about an entity’s derivative and hedging activities including qualitative disclosures about the objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements (see Note C.1).
In accordance with the provision set forth in FASB Statement of Financial Accounting Standards No. 165 “Subsequent Events”, adopted by the Fund as of June 30, 2009, management has evaluated the possibility of subsequent events existing in the Fund financial statements issued on August 26, 2009. Management has determined that there are no material events that would require disclosure in the Fund financial statements through this date.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement (the “Advisory Agreement”), the Fund pays the Adviser a monthly advisory fee in an amount equal to the sum of 1/12th of .30 of 1% of the Fund’s average weekly net assets up to $250 million, 1/12th of .25 of 1% of the Fund’s average weekly net assets in excess of $250 million, and 4.75% of the Fund’s daily gross income (i.e., income other than gains from the sale of securities and foreign currency transactions or gains realized from options and futures contracts less interest on money borrowed by the Fund) accrued by the Fund during the month. However, such monthly advisory fee shall not exceed in the aggregate 1/12th of .80% of the Fund’s average weekly net assets during the month (approximately
ALLIANCEBERNSTEIN INCOME FUND • | 39 |
Notes to Financial Statements
.80% on an annual basis). Prior to February 12, 2007 the advisory fee could not exceed in the aggregate 1/12th of .95% of the Fund’s average weekly net assets during the month (approximately .95% on an annual basis).
During the year ended December 31, 2008, the Adviser reimbursed the Fund $1,062 for trading losses incurred due to a trade entry error.
Under the terms of the Shareholder Inquiry Agency Agreement with AllianceBernstein Investor Services, Inc. (“ABIS”), a wholly-owned subsidiary of the Adviser, the Fund reimburses ABIS for costs relating to servicing phone inquiries on behalf of the Fund. During the six months ended June 30, 2009, there was no reimbursement paid to ABIS.
Pursuant to the investment advisory agreement, the Fund paid $64,235 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the six months ended June 30, 2009.
The Fund may invest in the AllianceBernstein Fixed-Income Shares, Inc. – Government STIF Portfolio, an open-end management investment company managed by the Adviser. The Government STIF Portfolio is offered as a cash management option to mutual funds and other institutional accounts of the Adviser, and is not available for direct purchase by members of the public. The Government STIF Portfolio pays no investment management fees but does bear its own expenses. A summary of the Fund’s transactions in shares of the Government STIF Portfolio for the six months ended June 30, 2009 is as follows:
Market Value December 31, 2008 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Dividend Income (000) | Market Value June 30, 2009 (000) | |||||||||
$ | 29,232 | $ | 683,933 | $ | 622,285 | $ | 165 | $ | 90,880 |
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2009 were as follows:
Purchases | Sales | |||||
Investment securities (excluding U.S. government securities) | $ | 169,224,884 | $ | 275,785,082 | ||
U.S. government securities | 1,301,813,610 | 1,151,775,388 |
40 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
The cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation (excluding futures, foreign currency and swap transactions) are as follows:
Gross unrealized appreciation | $ | 135,540,086 | ||
Gross unrealized depreciation | (132,172,981 | ) | ||
Net unrealized appreciation | $ | 3,367,105 | ||
1. Derivative Financial Instruments
The Fund may use derivatives to earn income and enhance returns, to hedge or adjust the risk profile of its portfolio, to replace more traditional direct investments, or to obtain exposure to otherwise inaccessible markets. The Fund may also use derivatives for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.
The principal types of derivatives utilized by the Fund, as well as the methods in which they may be used are:
• | Futures Contracts |
The Fund may buy or sell futures contracts for the purpose of hedging its portfolio against adverse effects of anticipated movements in the market or for investment purposes. The Fund bears the market risk that arises from changes in the value of these instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. The Fund may also purchase or sell futures contracts for foreign currencies or options thereon for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.
At the time the Fund enters into a futures contract, the Fund deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of the contract. The credit/counterparty risk for futures contracts is generally less than privately negotiated futures contracts, since the clearinghouse, which is the issuer or counterparty to each exchange-traded future, provides a guarantee of performance. This guarantee is supported by a daily payment system (i.e., margin requirements). When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed.
ALLIANCEBERNSTEIN INCOME FUND • | 41 |
Notes to Financial Statements
• | Forward Currency Exchange Contracts |
The Fund may enter into forward currency exchange contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to hedge certain firm purchase and sale commitments denominated in foreign currencies and for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions.”
A forward currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Fund. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars reflects the total exposure the Fund has in that particular currency contract.
• | Option Transactions |
For hedging and investment purposes, the Fund may purchase and write (sell) put and call options on U.S. and foreign securities, including government securities, and foreign currencies that are traded on U.S. and foreign securities exchanges and over-the-counter markets. The Fund may also use options transactions for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions”.
The risk associated with purchasing an option is that the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of the premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from written options which expire unexercised are recorded by the Fund on the expiration date as realized gains from options written. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium received is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium
42 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
received is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Fund. In writing an option, the Fund bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Fund could result in the Fund selling or buying a security or currency at a price different from the current market value. For the six months ended June 30, 2009, the Fund had no transactions in written options.
• | Swap Agreements |
The Fund may enter into swaps to hedge their exposure to interest rates, credit risk, or currencies. The Fund may also enter into swaps for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions”. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. The payment flows are usually netted against each other, with the difference being paid by one party to the other. In addition, collateral may be pledged or received by the Fund in accordance with the terms of the respective swap agreements to provide value and recourse to the Fund or its counterparties in the event of default, bankruptcy or insolvency by one of the parties to the swap agreement.
Interest Rate Swaps:
The Fund is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. Because the Fund holds fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, the Fund may enter into interest rate swap contracts. Interest rate swaps are agreements between two parties to exchange cash flows based on a notional amount. The Fund may elect to pay a fixed rate and receive a floating rate, or, receive a fixed rate and pay a floating rate on a notional amount.
A Fund may enter into interest rate swap transactions to reserve a return or spread on a particular investment or portion of its portfolio, or protecting against an increase in the price of securities the Fund anticipates purchasing at a later date. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments) computed based on a contractually-based principal (or “notional”) amount. Interest rate swaps are entered into on a net basis (i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments).
ALLIANCEBERNSTEIN INCOME FUND • | 43 |
Notes to Financial Statements
Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the net interim payment to be received by the Fund, and/or the termination value at the end of the contract. Therefore, the Fund considers the creditworthiness of each counterparty to a swap contract in evaluating potential counterparty risk. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund exposure to the counterparty. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying securities. The Fund accrues for the interim payments on swap contracts on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain/(loss) on swaps on the statement of operations, in addition to any realized gain/(loss) recorded upon the termination of swap contracts. Fluctuations in the value of swap contracts are recorded as a component of net change in unrealized appreciation/depreciation of swap contracts on the statement of operations.
Credit Default Swaps:
The Fund may enter into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults by corporate and sovereign issuers held by the Fund, or to create exposure to corporate or sovereign issuers to which it is not otherwise exposed. The Fund may purchase credit protection (“Buy Contract”) or provide credit protection (“Sale Contract”) on the referenced obligation of the credit default swap. During the term of the swap agreement, the Fund receives/(pays) fixed payments from/(to) the respective counterparty, calculated at the agreed upon interest rate applied to the notional amount. The accrual for these interim payments is recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Upfront premiums paid or received in connection with credit default swap contracts are recognized as cost or proceeds on the statement of assets and liabilities and are amortized on a straight line basis over the life of the contract. Amortized upfront premiums are included in net realized gain/(loss) from swaps on the statement of operations. If the Fund is a buyer/(seller) of protection and a credit event occurs, as defined under the terms of the swap agreement, the Fund will either (i) receive from the seller/(pay to the buyer) of protection an amount equal to the notional amount of the swap contract (the “Maximum Payout Amount”) and deliver/(take delivery of) the referenced obligation or (ii) receive/(pay) a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
44 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
Credit default swaps may involve greater risks than if a Fund had invested in the referenced obligation directly. Credit default swaps are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Fund is a buyer of protection and no credit event occurs, it will lose its investment. If the Fund is a seller of protection and a credit event occurs, the value of the referenced obligation received by the Fund coupled with the periodic payments previously received, may be less than the Maximum Payout Amount it pays to the buyer, resulting in a net loss to the Fund.
Implied credit spreads utilized in determining the market value of credit default swaps on issuers as of period end are disclosed in the portfolio of investments. The implied spreads serve as an indicator of the current status of the payment/ performance risk and typically reflect the likelihood of default by the issuer of the referenced obligation. The implied credit spread of a particular reference obligation also reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Widening credit spreads and, with respect to buy contracts, increasing market values, in absolute terms when compared to the notional amount of the swap, typically represent a deterioration of the referenced obligation’s credit soundness and greater likelihood of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced obligation.
At June 30, 2009, the Fund had Sale Contracts outstanding with Maximum Payout Amounts aggregating $13,290,000, with net unrealized depreciation of $405,858, and terms ranging from 1 year 2 months to 1 year 4 months, as reflected in the portfolio of investments.
In certain circumstances Maximum Payout Amounts may be partially offset by recovery values of the respective referenced obligations, upfront premium received upon entering into the agreement, or net amounts received from settlement of buy protection credit default swap agreements entered into by the Fund for the same reference obligation with the same counterparty. As of June 30, 2009, the Fund did not have Buy Contracts outstanding with respect to the same referenced obligation and same counterparty for its Sale Contracts outstanding.
ALLIANCEBERNSTEIN INCOME FUND • | 45 |
Notes to Financial Statements
At June 30, 2009, the Fund had entered into the following derivatives (not designated as hedging instruments under FAS No. 133 “Accounting for Derivative Instruments and Hedging Activities”):
Asset Derivatives | Liability Derivatives | |||||||||||
Derivatives Not | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Foreign exchange contracts | Unrealized appreciation of forward currency exchange contracts | $ | 1,920,696 |
| Unrealized depreciation of forward currency exchange contracts | $ | 4,283,065 |
| ||||
Credit contracts | Unrealized appreciation of credit default swap contracts | 109,875 | Unrealized depreciation of credit default swap contracts | 472,611 | ||||||||
Interest rate contracts | Receivable for variation margin on futures contracts |
| 4,246,978 | * | Payable for variation margin on futures contracts |
| 2,565,272 | * | ||||
Total | $ | 6,277,549 | $ | 7,320,948 | ||||||||
* | Includes cumulative appreciation/(depreciation) of futures contracts as reported in portfolio of investments. Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. |
46 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
The effect of derivative instruments on the Statement of Operations for the six months ended June 30, 2009:
Derivatives Not | Location of Gain | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | ||||||
Foreign exchange contracts | Net realized gain (loss) on foreign currency transactions; change in unrealized appreciation/(depreciation) of foreign currency denominated assets and liabilities | $ | 4,964,533 | $ | (438,507 | ) | |||
Credit contracts | Net realized gain (loss) on swap contracts; change in unrealized appreciation/(depreciation) of swap contracts | 399,134 | 1,986,674 | ||||||
Interest rate contracts | Net realized gain (loss) on futures contracts; change in unrealized appreciation (depreciation) of futures contracts | 4,261,148 | 51,652,587 | ||||||
Total | $ | 9,624,815 | $ | 53,200,754 | |||||
2. Currency Transactions
The Fund may invest in non-U.S. Dollar securities on a currency hedged or unhedged basis. The Fund may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and options. The Fund may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Fund and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Fund may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
3. Dollar Rolls
The Fund may enter into dollar rolls. Dollar rolls involve sales by the Fund of securities for delivery in the current month and the Fund’s simultaneously contracting to repurchase substantially similar (same type and coupon) securities on a specified future date. During the roll period, the Fund forgoes principal and
ALLIANCEBERNSTEIN INCOME FUND • | 47 |
Notes to Financial Statements
interest paid on the securities. The Fund is compensated by the difference between the current sales price and the lower forward price for the future purchase (often referred to as the “drop”) as well as by the interest earned on the cash proceeds of the initial sale. Dollar rolls involve the risk that the market value of the securities the Fund is obligated to repurchase under the agreement may decline below the repurchase price. Dollar rolls are speculative techniques and may be considered to be borrowings by the Fund. For the six months ended June 30, 2009, the Fund had no transactions in dollar rolls.
4. Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to repurchase them at a mutually agreed upon date and price. At the time the Fund enters into a reverse repurchase agreement, it will establish a segregated account with the custodian containing liquid assets having a value at least equal to the repurchase price.
For the six months ended June 30, 2009, the average amount of reverse repurchase agreements outstanding was $646,596,589 and the daily weighted average interest rate was 0.16%.
NOTE D
Common Stock
During the six months ended June 30, 2009, the Fund issued 149,099 shares in connection with the Fund’s dividend reinvestment plan. During the year ended December 31, 2008, the Fund did not issue any shares in connection with the Fund’s dividend reinvestment plan.
NOTE E
Bank Borrowing
During the reporting period, the Fund participated in a credit facility for a commercial paper asset securitization program with Societe Generale (“SG”) as Administrative Agent, and Barton Capital Corporation (“Barton”) as lender. The Fund terminated the credit facility, which had a maximum limit of $400 million, on May 22, 2009. Under the SG Program, Barton funded advances to the Fund through the issuance of commercial paper rated A-1+ by Standard & Poor’s Ratings Services and P-1 by Moody’s Investors Service, Inc. The collateral value must have been at least 171% of outstanding borrowings. The borrowings under the SG program were secured by the pledging of the Fund’s portfolio securities as collateral. The interest rate on the Fund’s borrowings was based on the interest rate carried by the commercial paper. For the period beginning January 1, 2009 through May 22, 2009, the weighted average annual interest rate was 0.01% and average borrowing was $341,615,395.
NOTE F
Risks Involved in Investing in the Fund
Interest Rate Risk and Credit Risk—Interest rate risk is the risk that changes in interest rates will affect the value of the Fund’s investments in fixed-income debt
48 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
securities such as bonds or notes. Increases in interest rates may cause the value of the Fund’s investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as “junk bonds”) have speculative elements or are predominantly speculative risks.
Derivatives Risk—The Fund may invest in derivatives such as forwards, options, futures and swaps. These investments may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Fund, and subject to counterparty risk to a greater degree than more traditional investments.
Foreign Securities Risk—Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies or of the U.S. government.
The Fund invests in the sovereign debt obligations of countries that are considered emerging market countries at the time of purchase. Therefore, the Fund is susceptible to governmental factors and economic and debt restructuring developments adversely affecting the economics of these emerging market countries. In addition, these debt obligations may be less liquid and subject to greater volatility than debt obligations of more developed countries.
Currency Risk—This is the risk that changes in foreign currency exchange rates may negatively affect the value of the Fund’s investments or reduce the returns of the Fund. For example, the value of the Fund’s investments in foreign currency-denominated securities or currencies may decrease if the U.S. Dollar is strong (i.e., gaining value relative to other currencies) and other currencies are weak (i.e., losing value relative to the U.S. Dollar). Currency markets are generally not as regulated as securities markets. Independent of the Fund’s investments denominated in foreign currencies, the Fund’s positions in various foreign currencies may cause the Fund to experience investment losses due to the changes in exchange rates and interest rates.
Leverage Risk—Until May 22, 2009, the Fund participated in a credit facility for the purpose of utilizing investment leverage. The Fund may continue to utilize leverage through the investment techniques of reverse repurchase agreements and dollar rolls. Reverse repurchase agreements and dollar rolls are speculative techniques and are considered borrowings by the Fund.
ALLIANCEBERNSTEIN INCOME FUND • | 49 |
Notes to Financial Statements
The effect of leverage can produce higher shareholder returns than if the Fund were not leveraged, and the use of leverage techniques can add to the net asset value (NAV) of the Common Stock. However, the risks of such techniques are potentially a higher volatility of the NAV of the Common Stock, potentially more volatility in the market value of the Common Stock and the relatively greater effect on the NAV of the Common Stock caused by favorable or adverse changes in the currency exchange rates. In addition, changes in the interest rate environment can increase or decrease shareholder returns. The Fund maintains asset coverage of at least 200% with respect to borrowings.
To the extent that the current interest rate on the Fund’s indebtedness approaches the net return on the leveraged portion of the Fund’s investment portfolio, then the benefit to the shareholders will be reduced. If the rate on indebtedness were to exceed the net return on the same portion of the portfolio, then this would result in a lower rate of return for the shareholders. Similarly, the use of leverage in a declining market can advance the decrease of the Fund’s NAV more so than if the Fund were not leveraged, which would likely be reflected in a greater decline in the market price for shares of Common Stock than if the Fund were not leveraged. In extreme cases, if the Fund’s current investment income were not sufficient to meet interest payments on indebtedness or if the Fund failed to maintain the asset coverage required by the 1940 Act, then it could be necessary for the Fund to liquidate certain investments at a time when it may be disadvantageous to do so, thereby reducing its NAV.
The use of derivative instruments by the Fund, such as forwards, futures, options and swaps, may also result in a form of leverage.
Indemnification Risk—In the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote.
NOTE G
Distributions to Shareholders
The tax character of distributions to be paid for the year ending December 31, 2009 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2008 and December 31, 2007 were as follows:
2008 | 2007 | |||||
Distributions paid from: | ||||||
Ordinary income | $ | 151,597,871 | $ | 176,652,954 | ||
�� | ||||||
Total taxable distributions | 151,597,871 | 176,652,954 | ||||
Total distributions paid | $ | 151,597,871 | $ | 176,652,954 | ||
50 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
As of December 31, 2008, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed ordinary income | $ | 2,160,665 | ||
Accumulated capital and other losses | (344,307,820 | )(a) | ||
Unrealized appreciation/(depreciation) | (16,056,923 | )(b) | ||
Total accumulated earnings/(deficit) | $ | (358,204,078 | ) | |
(a) | On December 31, 2008, the Fund had a net capital loss carryforward of $198,560,038 of which $48,113,872 expires in the year 2009, $137,668,099 expires in the year 2010, $3,846,510 expires in the year 2014 and $8,931,557 expires in the year 2016. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Based on certain provisions in the Internal Revenue Code, various limitations regarding the future utilization of these carryforwards, brought forward as a result of the Fund’s merger with ACM Government Securities Fund, ACM Government Spectrum Fund, and ACM Government Opportunity Fund may apply. In addition the Fund had $8,878,672 of capital loss carryforward which expired in the fiscal year ended December 31, 2008. For the year ended December 31, 2008, the Fund deferred losses on straddles of $14,684,022. Net capital losses and net currency losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year. The Fund deferred to January 1, 2009, post October capital loss of $126,010,904 and post October currency loss of 5,052,855. |
(b) | The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales, the difference between book and tax amortization methods for premium, the realization for tax purposes of unrealized gains and losses on certain derivative instruments and the difference between book and tax treatment of swap income. |
NOTE H
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange Commission (“SEC”) and the Office of the New York Attorney General (“NYAG”) have been investigating practices in the mutual fund industry identified as “market timing” and “late trading” of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. The shares of the Fund are not redeemable by the Fund, but are traded on an exchange at prices established by the market. Accordingly, the Fund and its shareholders are not subject to the market timing and late trading practices that are the subject of the investigations mentioned above or the lawsuits described below.
Numerous lawsuits have been filed against the Adviser and certain other defendants in which plaintiffs make claims purportedly based on or related to the same practices that are the subject of the SEC and NYAG investigations referred to above. Some of these lawsuits name the Fund as a party. The lawsuits are now pending in the United States District Court for the District of Maryland pursuant to a ruling by the Judicial Panel on Multidistrict Litigation transferring and
ALLIANCEBERNSTEIN INCOME FUND • | 51 |
Notes to Financial Statements
centralizing all of the mutual funds involving market and late trading in the District of Maryland.
The Adviser believes that these matters are not likely to have a material adverse effect on the Fund or the Adviser’s ability to perform advisory services relating to the Fund.
52 | • ALLIANCEBERNSTEIN INCOME FUND |
Notes to Financial Statements
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Six Months Ended June 30, 2009 (unaudited) | Year Ended December 31, | |||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004(a) | ||||||||||||||
Net asset value, beginning of period | $ 7.49 | $ 8.59 | $ 8.31 | $ 8.25 | $ 8.27 | $ 8.39 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||
Net investment income(b) | .27 | .59 | .57 | .60 | .66 | .67 | ||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .36 | (1.06 | ) | .44 | .08 | – 0 | – | (.01 | ) | |||||||||
Contributions from Adviser | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||
Net increase (decrease) in net asset value from operations | .63 | (.47 | ) | 1.01 | .68 | .66 | .66 | |||||||||||
Less: Dividends | ||||||||||||||||||
Dividends from net investment income | (.25 | ) | (.63 | ) | (.73 | ) | (.62 | ) | (.68 | ) | (.78 | ) | ||||||
Net asset value, end of period | $ 7.87 | $ 7.49 | $ 8.59 | $ 8.31 | $ 8.25 | $ 8.27 | ||||||||||||
Market value, end of period | $ 7.71 | $ 7.08 | $ 8.05 | $ 8.14 | $ 8.28 | $ 8.16 | ||||||||||||
Premium/(Discount), end of period | (2.03 | )% | (5.47 | )% | (6.29 | )% | (2.05 | )% | .36 | % | (1.33 | )% | ||||||
Total Return | ||||||||||||||||||
Total investment return based on:(d) | ||||||||||||||||||
Market value | 12.71 | % | (4.64 | )% | 8.01 | % | 6.10 | % | 10.18 | % | 4.63 | % | ||||||
Net asset value | 8.75 | % | (5.46 | )%* | 12.89 | %* | 8.71 | % | 8.32 | % | 8.44 | % | ||||||
Ratios/Supplemental Data | ||||||||||||||||||
Net assets, end of period (000’s omitted) | $1,909,282 | $1,817,231 | $2,084,372 | $1,907,332 | $1,889,926 | $1,888,272 | ||||||||||||
Ratio to average net assets of: | ||||||||||||||||||
Expenses | 1.00 | %(e) | 2.02 | % | 3.35 | % | 3.47 | % | 2.46 | % | 1.66 | % | ||||||
Expenses, excluding interest expense(f) | .71 | %(e) | .72 | % | .71 | % | .74 | % | .79 | % | .98 | % | ||||||
Net investment income | 7.25 | %(e) | 7.15 | % | 6.74 | % | 7.35 | % | 7.99 | % | 8.27 | % | ||||||
Portfolio turnover rate | 53 | % | 51 | % | 90 | % | 177 | % | 160 | % | 139 | % | ||||||
Asset coverage ratio | – 0 | – %(g) | 530 | % | 589 | % | 529 | % | 443 | % | 492 | % | ||||||
Bank borrowing outstanding (in millions) | $– 0 | – (g) | $400 | $400 | $400 | $400 | $400 |
See footnote summary on page 54.
ALLIANCEBERNSTEIN INCOME FUND • | 53 |
Financial Highlights
(a) | As of January 1, 2004, the Fund has adopted the method of accounting for interim payments on swap contracts in accordance with Financial Accounting Standards Board Statement No. 133. These interim payments are reflected within net realized and unrealized gain (loss) on swap contracts, however prior to January 1, 2004, these interim payments were reflected within interest income/expense on the statement of operations. The effect of this change for the year ended December 31, 2004, was to decrease net investment income per share and increase net realized and unrealized gain (loss) on investment transactions. The effect on the per share amounts was less than $0.005. The ratio of net investment income to average net assets was decreased by 0.02%. |
(b) | Based on average shares outstanding. |
(c) | Amount is less than $0.005. |
(d) | Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. Total investment return calculated for a period of less than one year is not annualized. |
(e) | Annualized. |
(f) | Excludes net interest expense of .29%, 1.30%, 2.64%, 2.73%, 1.67% and .68%, respectively, on borrowings (see Notes C and F). |
(g) | The credit facility was terminated on May 22, 2009. |
* | Includes the impact of proceeds received and credited to the Fund resulting from class action settlements, which enhanced the Fund’s performance for the years ended December 31, 2008 and December 31, 2007 by 0.33% and 1.69%, respectively. |
See notes to financial statements.
54 | • ALLIANCEBERNSTEIN INCOME FUND |
Financial Highlights
ADDITIONAL INFORMATION
(unaudited)
Dividend Reinvestment and Cash Purchase Plan
Shareholders whose shares are registered in their own names may elect to be participants in the Dividend Reinvestment and Cash Purchase Plan (the “Plan”), pursuant to which dividends and capital gain distributions to shareholders will be paid in or reinvested in additional shares of the Fund (the “Dividend Shares”). Computershare Trust Company, N.A. (the “Agent”) will act as agent for participants under the Plan. The Plan also allows you to make optional cash investments in Fund shares through the Agent. Shareholders whose shares are held in the name of a broker or nominee should contact such broker or nominee to determine whether or how they may participate in the Plan.
If the Board declares an income distribution or determines to make a capital gain distribution payable either in shares or in cash, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in shares of Common Stock of the Fund valued as follows:
(i) | If the shares of Common Stock are trading at net asset value or at a premium above net asset value at the time of valuation, the Fund will issue new shares at the greater of net asset value or 95% of the then current market price. |
(ii) | If the shares of Common Stock are trading at a discount from net asset value at the time of valuation, the Plan Agent will receive the dividend or distribution in cash and apply it to the purchase of the Fund’s shares of Common Stock in the open market on the New York Stock Exchange or elsewhere, for the participants’ accounts. Such purchases will be made on or shortly after the payment date for such dividend or distribution and in no event more than 30 days after such date except where temporary curtailment or suspension of purchase is necessary to comply with Federal securities laws. If, before the Plan Agent has completed its purchases, the market price exceeds the net asset value of a share of Common Stock, the average purchase price per share paid by the Plan Agent may exceed the net asset value of the Fund’s shares of Common Stock, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. |
The Plan Agent will maintain all shareholders’ accounts in the Plan and furnish written confirmation of all transactions in the account, including information needed by shareholders for tax records. Shares in the account of each Plan participant will be held by the Plan Agent in non-certificate form in the name of the participant, and each shareholder’s proxy will include those shares purchased or received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to satisfy the dividend reinvestment requirements. However, each participant will
ALLIANCEBERNSTEIN INCOME FUND • | 55 |
Additional Information
pay a pro-rata share of brokerage commissions incurred with respect to the Plan Agent’s open market purchases of shares.
The automatic reinvestment of dividends and distributions will not relieve participants of any income taxes that may be payable (or required to be withheld) on dividends and distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly, the Fund reserves the right to amend or terminate the Plan as applied to any voluntary cash payments made and any dividend or distribution paid subsequent to written notice of the change sent to participants in the Plan at least 90 days before the record date for such dividend or distribution. The Plan may also be amended or terminated by the Plan Agent on at least 90 days written notice to participants in the Plan. All correspondence concerning the Plan should be directed to the Plan Agent at Computershare Trust Company, N.A., P.O. Box 43010, Providence, RI 02940-3010.
56 | • ALLIANCEBERNSTEIN INCOME FUND |
Additional Information
SUPPLEMENTAL PROXY INFORMATION
The Annual Meeting of Stockholders of the AllianceBernstein Income Fund, Inc. was held on March 31, 2009 and each proposal was approved by stockholders.
A description of each proposal and number of shares voted at the meeting are as follows:
Voted For | Abstain/ Authority | |||||
1. To Elect Class Two Director: | ||||||
(term expires in 2011) | Robert M. Keith | 205,407,744 | 10,261,519 | |||
2. To Elect Class Three Directors: | ||||||
(term expires in 2012) | Garry L. Moody | 203,996,440 | 11,672,823 | |||
Marshall C. Turner | 203,749,244 | 11,920,019 | ||||
Earl D. Weiner | 203,651,076 | 12,018,187 |
ALLIANCEBERNSTEIN INCOME FUND • | 57 |
Supplemental Proxy Information
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman | Robert M. Keith | |
John H. Dobkin(1) Michael J. Downey(1) D. James Guzy(1) Nancy P. Jacklin(1) | Garry L. Moody(1) Marshall C. Turner, Jr.(1) Earl D. Weiner(1) |
OFFICERS
Robert M. Keith, President and Chief Executive Officer Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Paul J. DeNoon(2), Vice President Gershon M. Distenfeld(2), Michael L. Mon, Vice President Douglas J. Peebles(2), Vice President | Matthew S. Sheridan(2), Vice President Emilie D. Wrapp, Secretary Joseph J. Mantineo, Treasurer and Chief Financial Officer Phyllis J. Clarke, Controller |
Administrator AllianceBernstein L.P. 1345 Avenue of the Americas New York, NY 10105
Dividend Paying Agent, Transfer Agent and Registrar Computershare Trust Company, N.A. P.O. Box 43010 Providence, RI 02940-3010
Custodian and Accounting Agent State Street Bank and Trust Company One Lincoln Street Boston, MA 02111 | Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004
Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York, NY 10036 |
(1) | Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. Mr. Foulk is the sole member of the Fair Value Pricing Committee. |
(2) | The most significant responsibility for the day-to-day management of, and investment decisions for, the Fund’s portfolio are made by a team of investment professionals consisting of Messrs. DeNoon, Distenfeld, Peebles and Sheridan. |
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase from time to time at market prices shares of its Common Stock in the open market. |
This report, including the financial statements herein, is transmitted to the shareholders of AllianceBernstein Income Fund for their information. The financial information included herein is taken from the records of the Fund. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report. |
Annual Certifications—As required, on April 29, 2009, the Fund submitted to the New York Stock Exchange (“NYSE”) the annual certification of the Fund’s Chief Executive Officer certifying that he is not aware of any violations of the NYSE’s Corporate Governance listing standards. The Fund has also included the certifications of the Fund’s Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to the Fund’s Form N-CSR filed with the Securities and Exchange Commission for the reporting period. |
58 | • ALLIANCEBERNSTEIN INCOME FUND |
Board of Directors
SUMMARY OF GENERAL INFORMATION
Shareholder Information
The daily net asset value of the Fund’s shares is available from the Fund’s Transfer Agent by calling (800) 426-5523. The Fund also distributes its daily net asset value to various financial publications or independent organizations such as Lipper Inc., Morningstar, Inc. and Bloomberg.
The Fund’s NYSE trading symbol is “ACG.” Weekly comparative net asset value (NAV) and market price information about the Fund is published each Monday in The Wall Street Journal and other newspapers in a table called “Closed-End Bond Funds.”
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and capital gains distributions in additional Fund shares. The Plan also allows you to make optional cash investments in Fund Shares through the Plan Agent. If you wish to participate in the Plan and your shares are held in your name, simply complete and mail the enrollment form in the brochure. If your shares are held in the name of your brokerage firm, bank or other nominee, you should ask them whether or how you can participate in the Plan.
For questions concerning shareholder account information, or if you would like a brochure describing the Dividend Reinvestment Plan, please call Computershare Trust Company, N.A. at (800) 219-4218.
ALLIANCEBERNSTEIN INCOME FUND • | 59 |
Summary of General Information
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
Wealth Strategies Funds
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
Blended Style Funds
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
Growth Funds
Domestic
Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Small/Mid Cap Growth Fund*
Global & International
Global Growth Fund*
Global Thematic Growth Fund*
Greater China ‘97 Fund
International Growth Fund
Value Funds
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
Small/Mid Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Real Estate Investment Fund
Global Value Fund
International Value Fund
Taxable Bond Funds
Diversified Yield Fund
Global Bond Fund
High Income Fund
Intermediate Bond Portfolio
Short Duration Portfolio
Municipal Bond Funds
National Arizona California Massachusetts Michigan Minnesota | New Jersey New York Ohio Pennsylvania Virginia |
Intermediate Municipal Bond Funds
Intermediate California
Intermediate Diversified
Intermediate New York
Closed-End Funds
AllianceBernstein Global High Income Fund
AllianceBernstein Income Fund
AllianceBernstein National Municipal Income Fund
ACM Managed Dollar Income Fund
Alliance California Municipal Income Fund
Alliance New York Municipal Income Fund
The Spain Fund
Retirement Strategies Funds
2000 Retirement Strategy | 2020 Retirement Strategy | 2040 Retirement Strategy | ||
2005 Retirement Strategy | 2025 Retirement Strategy | 2045 Retirement Strategy | ||
2010 Retirement Strategy | 2030 Retirement Strategy | 2050 Retirement Strategy | ||
2015 Retirement Strategy | 2035 Retirement Strategy | 2055 Retirement Strategy |
We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds.
You should consider the investment objectives, risks, charges and expenses of any AllianceBernstein fund/portfolio carefully before investing. For free copies of our prospectuses, which contain this and other information, visit us online at www.alliancebernstein.com or contact your financial advisor. Please read the prospectus carefully before investing.
* | Prior to November 3, 2008, Small/Mid Cap Growth Fund was named Mid-Cap Growth Fund, Global Growth Fund was named Global Research Growth Fund, and Global Thematic Growth Fund was named Global Technology Fund. |
** | An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. |
60 | • ALLIANCEBERNSTEIN INCOME FUND |
AllianceBernstein Family of Funds
NOTES
ALLIANCEBERNSTEIN INCOME FUND • | 61 |
NOTES
62 | • ALLIANCEBERNSTEIN INCOME FUND |
NOTES
ALLIANCEBERNSTEIN INCOME FUND • | 63 |
NOTES
64 | • ALLIANCEBERNSTEIN INCOME FUND |
NOTES
ALLIANCEBERNSTEIN INCOME FUND • | 65 |
NOTES
66 | • ALLIANCEBERNSTEIN INCOME FUND |
NOTES
ALLIANCEBERNSTEIN INCOME FUND • | 67 |
Privacy Notice (This information is not part of the Shareholder Report.)
AllianceBernstein L.P., the AllianceBernstein Family of Funds and AllianceBernstein Investments, Inc. (collectively, “AllianceBernstein” or “we”) understand the importance of maintaining the confidentiality of our clients’ nonpublic personal information. Nonpublic personal information is personally identifiable financial information about our clients who are natural persons. To provide financial products and services to our clients, we may collect information about clients from sources, including: (1) account documentation, including applications or other forms, which may contain information such as a client’s name, address, phone number, social security number, assets, income, and other household information, (2) clients’ transactions with us and others, such as account balances and transactions history, and (3) information from visitors to our websites provided through online forms, site visitorship data, and online information collecting devices known as “cookies.”
It is our policy not to disclose nonpublic personal information about our clients (or former clients) except to our affiliates, or to others as permitted or required by law. From time to time, AllianceBernstein may disclose nonpublic personal information that we collect about our clients (or former clients), as described above, to non-affiliated third parties, including those that perform processing or servicing functions and those that provide marketing services for us or on our behalf under a joint marketing agreement that requires the third party provider to adhere to AllianceBernstein’s privacy policy. We have policies and procedures to safeguard nonpublic personal information about our clients (and former clients) that include restricting access to such nonpublic personal information and maintaining physical, electronic and procedural safeguards, that comply with applicable standards, to safeguard such nonpublic personal information.
ALLIANCEBERNSTEIN INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
800.221.5672
ACMI-0152-0609 | ![]() |
ITEM 2. | CODE OF ETHICS. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 6. | SCHEDULE OF INVESTMENTS. |
Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR.
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable when filing a semi-annual report to shareholders.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
There have been no purchases of equity securities by the Fund or by affiliated parties for the reporting period.
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Directors since the Fund last provided disclosure in response to this item.
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no changes in the registrant’s internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 12. | EXHIBITS. |
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. | DESCRIPTION OF EXHIBIT | |
12 (b) (1) | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
12 (b) (2) | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
12 (c) | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Income Fund, Inc.
By: | /s/ Robert M. Keith | |
Robert M. Keith | ||
President | ||
Date: | August 25, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Robert M. Keith | |
Robert M. Keith | ||
President | ||
Date: | August 25, 2009 | |
By: | /s/ Joseph J. Mantineo | |
Joseph J. Mantineo | ||
Treasurer and Chief Financial Officer | ||
Date: | August 25, 2009 |