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: 811-04791
ALLIANCEBERNSTEIN MUNICIPAL 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)
Mark R. Manley
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: October 31, 2006
Date of reporting period: April 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
- -------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
- -------------------------------------------------------------------------------
AllianceBernstein Municipal Income Fund
National Portfolio
California Portfolio
New York Portfolio
Insured National Portfolio
Insured California Portfolio
Semi-Annual Report
April 30, 2006
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
This shareholder report must be preceded or accompanied by the Fund's
prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P.,
the manager of the funds, and is a member of the NASD.
AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.
June 19, 2006
Semi-Annual Report
This report provides management's discussion of fund performance for the
portfolios of AllianceBernstein Municipal Income Fund (the "Portfolios") for
the semi-annual reporting period ended April 30, 2006.
Investment Objective and Policies
The investment objective of the five portfolios of this open-end fund is to
earn the highest level of current income, exempt from Federal taxation and, in
the case of the State Portfolios, state taxation of the respective state that
is available without assuming undue risk. Each portfolio invests principally in
high-yielding, predominantly investment-grade municipal securities with
interest that is exempt from federal income tax, although these securities may
pay interest that is subject to the federal Alternative Minimum Tax ("AMT") for
certain taxpayers. The Insured National Portfolio and the Insured California
Portfolio invest principally in municipal securities paying interest that is
wholly exempt from federal income taxes, including the AMT, whereas the other
AllianceBernstein Municipal Portfolios may invest without limit in municipal
securities paying interest subject to AMT. The average weighted maturity of the
securities in each AllianceBernstein Municipal Portfolio will normally range
between 10 and 30 years.
Investment Results
The table on page 5 shows performance for each Portfolio compared to its
benchmark, the Lehman Brothers (LB) Municipal Index, for the six- and 12-month
periods ended April 30, 2006.
For both the six- and 12-month periods ended April 30, 2006, the National,
California and New York Portfolios' Class A shares outperformed the benchmark,
the LB Municipal Index, which represents the municipal market and posted
positive returns of 1.56% and 2.16% for the respective time periods. The
Insured California Portfolio underperformed the benchmark during the same time
frames. The Insured National Portfolio underperformed the benchmark for the
six-month period and performed in line with the benchmark during the 12-month
period.
A description of each Portfolio's relative performance versus the benchmark for
the six-month period ended April 30, 2006 follows.
National Portfolio--The National Portfolio's stronger relative performance was
largely the result of security selection in the insured and special tax
sectors. The Portfolio also benefited from its relative weight in the hospital
sector. Security selection in the power sector detracted from the Portfolio's
performance. In addition, the Portfolio's holdings in lower-rated bonds
benefited performance relative to the benchmark.
California Portfolio--The California Portfolio's stronger relative performance
was largely the result of security selection in the special tax and general
obligation sectors. In addition, the Portfolio's holdings in lower-rated bonds
benefited performance relative to the benchmark.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 1
New York Portfolio--The New York Portfolio's stronger relative performance was
largely the result of security selection in the insured and special tax
sectors. Security selection in the housing and industrial development revenue
bond sectors detracted from the Portfolio's performance. In addition, the
Portfolio's holdings in lower-rated bonds benefited performance relative to the
benchmark.
Insured National Portfolio--The Insured National Portfolio's relative
underperformance was largely the result of a lack of exposure to lower-credit
quality bonds.
Insured California Portfolio--The Insured California Portfolio's relative
underperformance was largely the result of a lack of exposure to lower-credit
quality bonds.
Market Review and Investment Strategy
From April 2005 through the end of April 2006, the U.S. Federal Reserve (the
"Fed") raised the target for the Federal funds rate from 2.75% to 4.75%; 0.75%
of that increase was since October 2005. In response to the Fed's actions, the
yields for most maturities of domestic bonds increased. Municipal bond yields
increased less than U.S. Treasury bond yields. For example, during the
six-month reporting period, 10-year municipal yields increased 0.16% and
30-year municipal yields actually declined 0.06%. Over the same time period,
10-year and 30-year U.S. Treasury bond yields rose 0.50% and 0.46%,
respectively. The outperformance for municipal bonds largely resulted from
relatively light supply-the amount of bonds issued in the first quarter of 2006
was down 29% from the first quarter of 2005. Municipal bond prices have also
been supported by ongoing demand from a diverse set of investors including
traditional buyers such as U.S. individuals, as well as relatively newer
municipal market participants, such as hedge funds and other institutional
leveraged investors. The municipal market showed similar relative performance
over the 12-month period as over the six-month period ended April 30, 2006. For
the 12-month period, despite 10-year U.S. Treasury yields increasing 0.85% and
30-year U.S. Treasury yields increasing 0.66%, 10-year and 30-year municipal
yields rose 0.51% and 0.16%, respectively.
The market for lower-credit quality, or high yield, municipal bonds continues
to post even stronger returns than the general municipal market. The LB High
Yield Municipal Index returned 5.23% and 7.46% over the six- and 12-month
periods ended April 30, 2006, respectively. This compares to 1.56% and 2.16%
for the same periods for the LB Municipal Bond Index, which represents the
overall general market for investment-grade municipal bonds. The strong
performance for lower-credit quality municipal bonds was in part due to the
relatively favorable credit environment, but of more importance, due to the
continued, very strong demand for higher-yielding bonds. According to AMG Data,
a provider of mutual fund money flow and holdings data, new money into high
yield municipal bond mutual funds accounted for approximately 40% of the flow
in municipal bond mu-
2 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
tual funds during the first quarter of 2006. By comparison, high yield bonds
currently represent about 4% of the outstanding supply of municipal bonds.
During the past year, the Municipal Bond Investment Team's (the "team's")
strategy has remained consistent. Given that interest rates are still
relatively low compared to the level of inflation, the team continues to
maintain less interest rate exposure than in the Portfolios' relative to that
of the Portfolios' benchmark. Also, because high yield municipals have
displayed such strong performance, the team has reduced the Portfolios'
exposure to such holdings, and further diversified the Portfolios' remaining
holdings. Recently, as market conditions allow, the team has also been selling
longer-maturity holdings and replacing them with bonds with shorter maturities.
In the team's view, these shorter-maturity holdings should outperform
longer-maturity bonds if rates rise and the difference between long and short
yields increases.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 3
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Portfolios
will fluctuate, so that your shares, when redeemed, may be worth more or less
than their original cost. You should consider the investment objectives, risks,
charges and expenses of the Portfolios carefully before investing. For a free
copy of the Portfolios' prospectus, which contains this and other information,
visit our web site at www.alliancebernstein.com or call your financial advisor
or AllianceBernstein Investments at (800) 227-4618. You should read the
prospectus carefully before you invest.
Returns are annualized for periods longer than one year. All fees and expenses
related to the operation of the Portfolios have been deducted. NAV returns do
not reflect sales charges; if sales charges were reflected, the Portfolios'
quoted performance would be lower. SEC returns reflect the applicable sales
charges for each share class: a 4.25% maximum front-end sales charge for Class
A shares; the applicable contingent deferred sales charge for Class B shares
(3% year 1, 2% year 2, 1% year 3, 0% year 4); a 1% 1 year contingent deferred
sales charge for Class C shares. Returns for the different share classes will
vary due to different expenses associated with each class. Performance assumes
reinvestment of distributions and does not account for taxes. During the
reporting period, the Adviser waived a portion of its advisory fee or
reimbursed the Portfolio for a portion of its expenses to the extent necessary
to limit National Portfolio's expenses on an annual basis to 0.68%, 1.38% and
1.38% of the average daily net assets of Class A, Class B and Class C shares,
respectively. During the reporting period, the Adviser waived a portion of its
advisory fee or reimbursed the Portfolio for a portion of its expenses to the
extent necessary to limit California Portfolio's expenses on an annual basis to
0.77%, 1.47% and 1.47% of the average daily net assets of Class A, Class B and
Class C shares, respectively. During the reporting period, the Adviser waived a
portion of its advisory fee or reimbursed the Portfolio for a portion of its
expenses to the extent necessary to limit New York Portfolio's expenses on an
annual basis to 0.58%, 1.28% and 1.28% of the average daily net assets of Class
A, Class B and Class C shares, respectively. During the reporting period, the
Adviser waived a portion of its advisory fee or reimbursed the Portfolio for a
portion of its expenses to the extent necessary to limit Insured National
Portfolio's expenses on an annual basis to 1.04%, 1.74% and 1.74% of the
average daily net assets of Class A, Class B and Class C shares, respectively.
These waivers extend through the Portfolios' current fiscal year and may be
extended by the Adviser for additional one-year terms. Without the waivers, the
Portfolios' expenses would have been higher and their performance would have
been lower than that shown.
Benchmark Disclosure
The unmanaged Lehman Brothers (LB) Municipal Index does not reflect fees and
expenses associated with the active management of a mutual fund portfolio. The
Index is a total return performance benchmark for the long-term investment
grade, tax-exempt bond market. An investor cannot invest directly in an index,
and its results are not indicative of the performance for any specific
investment, including the Portfolios.
A Word About Risk
Price fluctuation in the Portfolios' securities may be caused by changes in the
general level of interest rates or changes in bond credit quality ratings.
Changes in interest rates have a greater effect on bonds with longer maturities
than on those with shorter maturities. Please note, as interest rates rise,
existing bond prices fall and can cause the value of an investment in the
Portfolios to decline. Individual state municipal portfolios are
non-diversified and are subject to geographic risk based on their narrow
investment objectives. The Portfolios may invest in high yield bonds (i.e.,
junk bonds) which involves a greater risk of default and price volatility than
other bonds. Investing in non-investment grade presents special risks,
including credit risk. While the Portfolios invest principally in bonds and
other fixed-income securities, in order to achieve their investment objectives,
the Portfolios may at times use certain types of investment derivatives, such
as options, futures, forwards and swaps. These instruments involve risks
different from, and in certain cases, greater than, the risks presented by more
traditional investments. These risks are fully discussed in the Portfolios'
prospectus.
(Historical Performance continued on next page)
4 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE PORTFOLIOS VS. THEIR BENCHMARKS -----------------------------
PERIODS ENDED APRIL 30, 2006 6 Months 12 Months
- -------------------------------------------------------------------------
National Portfolio
Class A 2.05% 2.93%
Class B 1.60% 2.13%
Class C 1.60% 2.22%
LB Municipal Index 1.56% 2.16%
California Portfolio
Class A 1.99% 2.90%
Class B 1.64% 2.19%
Class C 1.64% 2.19%
LB Municipal Index 1.56% 2.16%
New York Portfolio
Class A 1.79% 2.68%
Class B 1.44% 2.08%
Class C 1.54% 2.07%
LB Municipal Index 1.56% 2.16%
Insured National Portfolio
Class A 1.39% 2.16%
Class B 1.04% 1.45%
Class C 1.05% 1.55%
LB Municipal Index 1.56% 2.16%
Insured California Portfolio
Class A 1.15% 1.57%
Class B 0.80% 0.86%
Class C 0.88% 0.93%
LB Municipal Index 1.56% 2.16%
See Historical Performance and Benchmark disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 5
NATIONAL PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2006
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 2.93% -1.42%
5 Years 4.76% 3.86%
10 Years 5.25% 4.80%
SEC Yield* 4.70%
Taxable Equivalent Yield** 7.23%
Class B Shares
1 Year 2.13% -0.82%
5 Years 4.02% 4.02%
10 Years(a) 4.84% 4.84%
SEC Yield* 4.22%
Taxable Equivalent Yield** 6.49%
Class C Shares
1 Year 2.22% 1.24%
5 Years 4.04% 4.04%
10 Years 4.55% 4.55%
SEC Yield* 4.21%
Taxable Equivalent Yield** 6.48%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2006)
- --------------------------------------------------------------
SEC Returns
Class A Shares
1 Year 0.20%
5 Years 3.74%
10 Years 4.76%
Class B Shares
1 Year 0.97%
5 Years 3.93%
10 Years(a) 4.81%
Class C Shares
1 Year 2.86%
5 Years 3.93%
10 Years 4.52%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended April 30, 2006.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state, city and local taxes where
applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
6 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
CALIFORNIA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2006
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 2.90% -1.49%
5 Years 5.27% 4.37%
10 Years 5.72% 5.26%
SEC Yield* 4.49%
Taxable Equivalent Yield** 7.70%
Class B Shares
1 Year 2.19% -0.76%
5 Years 4.54% 4.54%
10 Years(a) 5.26% 5.26%
SEC Yield* 3.99%
Taxable Equivalent Yield** 6.84%
Class C Shares
1 Year 2.19% 1.21%
5 Years 4.54% 4.54%
10 Years 4.98% 4.98%
SEC Yield* 3.99%
Taxable Equivalent Yield** 6.84%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2006)
- --------------------------------------------------------------
SEC Returns
Class A Shares
1 Year 0.46%
5 Years 4.03%
10 Years 5.26%
Class B Shares
1 Year 1.19%
5 Years 4.19%
10 Years(a) 5.27%
Class C Shares
1 Year 3.18%
5 Years 4.19%
10 Years 4.97%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended April 30, 2006.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state, city and local taxes where
applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 7
NEW YORK PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2006
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 2.68% -1.67%
5 Years 4.87% 3.96%
10 Years 5.67% 5.21%
SEC Yield* 4.24%
Taxable Equivalent Yield** 7.07%
Class B Shares
1 Year 2.08% -0.87%
5 Years 4.10% 4.10%
10 Years(a) 5.22% 5.22%
SEC Yield* 3.73%
Taxable Equivalent Yield** 6.22%
Class C Shares
1 Year 2.07% 1.09%
5 Years 4.12% 4.12%
10 Years 4.92% 4.92%
SEC Yield* 3.72%
Taxable Equivalent Yield** 6.20%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2006)
- --------------------------------------------------------------
SEC Returns
Class A Shares
1 Year -0.09%
5 Years 3.88%
10 Years 5.20%
Class B Shares
1 Year 0.68%
5 Years 4.03%
10 Years(a) 5.20%
Class C Shares
1 Year 2.77%
5 Years 4.03%
10 Years 4.91%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended April 30, 2006.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state, city and local taxes where
applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
8 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
INSURED NATIONAL PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2006
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 2.16% -2.21%
5 Years 5.13% 4.23%
10 Years 5.42% 4.97%
SEC Yield* 3.66%
Taxable Equivalent Yield** 5.63%
Class B Shares
1 Year 1.45% -1.49%
5 Years 4.40% 4.40%
10 Years(a) 4.99% 4.99%
SEC Yield* 3.13%
Taxable Equivalent Yield** 4.82%
Class C Shares
1 Year 1.55% 0.57%
5 Years 4.42% 4.42%
10 Years 4.71% 4.71%
SEC Yield* 3.13%
Taxable Equivalent Yield** 4.82%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2006)
- --------------------------------------------------------------
SEC Returns
Class A Shares
1 Year -0.61%
5 Years 4.08%
10 Years 4.88%
Class B Shares
1 Year -0.02%
5 Years 4.26%
10 Years(a) 4.91%
Class C Shares
1 Year 2.07%
5 Years 4.28%
10 Years 4.63%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended April 30, 2006.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state, city and local taxes where
applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 9
INSURED CALIFORNIA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2006
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 1.57% -2.74%
5 Years 4.70% 3.80%
10 Years 5.55% 5.09%
SEC Yield* 3.98%
Taxable Equivalent Yield** 6.83%
Class B Shares
1 Year 0.86% -2.02%
5 Years 3.94% 3.94%
10 Years(a) 5.07% 5.07%
SEC Yield* 3.44%
Taxable Equivalent Yield** 5.90%
Class C Shares
1 Year 0.93% -0.03%
5 Years 3.94% 3.94%
10 Years 4.79% 4.79%
SEC Yield* 3.45%
Taxable Equivalent Yield** 5.92%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2006)
- --------------------------------------------------------------
SEC Returns
Class A Shares
1 Year -0.48%
5 Years 3.41%
10 Years 5.04%
Class B Shares
1 Year 0.24%
5 Years 3.56%
10 Years(a) 5.03%
Class C Shares
1 Year 2.22%
5 Years 3.56%
10 Years 4.73%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended April 30, 2006.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state, city and local taxes where
applicable.
See Historical Performance disclosures on page 4.
10 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed annual rate of return of 5% before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds by comparing this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
National Portfolio November 1, 2005 April 30, 2006 During Period*
- ------------------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,020.48 $3.41
Hypothetical (5% return before expenses) $1,000 $1,021.42 $3.41
Class B
Actual $1,000 $1,016.00 $6.90
Hypothetical (5% return before expenses) $1,000 $1,017.95 $6.90
Class C
Actual $1,000 $1,015.96 $6.90
Hypothetical (5% return before expenses) $1,000 $1,017.95 $6.90
California Portfolio
- ------------------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,019.91 $3.86
Hypothetical (5% return before expenses) $1,000 $1,020.98 $3.86
Class B
Actual $1,000 $1,016.44 $7.35
Hypothetical (5% return before expenses) $1,000 $1,017.50 $7.35
Class C
Actual $1,000 $1,016.38 $7.35
Hypothetical (5% return before expenses) $1,000 $1,017.50 $7.35
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 11
Beginning Ending
Account Value Account Value Expenses Paid
New York Portfolio November 1, 2005 April 30, 2006 During Period*
- ------------------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,017.89 $2.90
Hypothetical (5% return before expenses) $1,000 $1,021.92 $2.91
Class B
Actual $1,000 $1,014.41 $6.39
Hypothetical (5% return before expenses) $1,000 $1,018.45 $6.41
Class C
Actual $1,000 $1,015.41 $6.40
Hypothetical (5% return before expenses) $1,000 $1,018.45 $6.41
Insured National Portfolio
- ------------------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,013.88 $5.19
Hypothetical (5% return before expenses) $1,000 $1,019.64 $5.21
Class B
Actual $1,000 $1,010.43 $8.67
Hypothetical (5% return before expenses) $1,000 $1,016.17 $8.70
Class C
Actual $1,000 $1,010.45 $8.67
Hypothetical (5% return before expenses) $1,000 $1,016.17 $8.70
Insured California Portfolio
- ------------------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,011.48 $5.14
Hypothetical (5% return before expenses) $1,000 $1,019.69 $5.16
Class B
Actual $1,000 $1,008.00 $8.66
Hypothetical (5% return before expenses) $1,000 $1,016.17 $8.70
Class C
Actual $1,000 $1,008.75 $8.62
Hypothetical (5% return before expenses) $1,000 $1,016.22 $8.65
Annualized Expense Ratio
-----------------------------------------------------------------
Insured Insured
National California New York National California
- -------------------------------------------------------------------------------
Class A 0.68% 0.77% 0.58% 1.04% 1.03%
Class B 1.38% 1.47% 1.28% 1.74% 1.74%
Class C 1.38% 1.47% 1.28% 1.74% 1.73%
* Expenses are equal to the classes' annualized expense ratios, shown in the
table below, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
12 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
BOND RATING SUMMARY*
April 30, 2006 (unaudited)
NATIONAL PORTFOLIO
Quality Rating
[ ] 34.2% AAA [PIE CHART OMITTED]
[ ] 17.7% AA
[ ] 14.2% A
[ ] 21.7% BBB
[ ] 11.7% BB
[ ] 0.5% B
CALIFORNIA PORTFOLIO
Quality Rating
[ ] 54.9% AAA [PIE CHART OMITTED]
[ ] 4.8% AA
[ ] 15.4% A
[ ] 17.4% BBB
[ ] 7.4% BB
[ ] 0.1% B
NEW YORK PORTFOLIO
Quality Rating
[ ] 52.2% AAA [PIE CHART OMITTED]
[ ] 16.2% AA
[ ] 19.0% A
[ ] 5.1% BBB
[ ] 7.1% BB
[ ] 0.4% B
* All data are as of April 30, 2006. Each Portfolio's quality rating
distribution is expressed as a percentage of the Portfolio's total investments
rated in particular ratings categories by Standard & Poor's Rating Services and
Moody's Investors Service. The distributions may vary over time. If ratings are
not available, the Fund's Adviser will assign ratings that are considered to be
of equivalent quality to such ratings.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 13
BOND RATING SUMMARY*
April 30, 2006 (unaudited)
INSURED NATIONAL PORTFOLIO
Quality Rating
[ ] 71.7% AAA [PIE CHART OMITTED]
[ ] 26.0% AA
[ ] 2.2% A
[ ] 0.1% BBB
INSURED CALIFORNIA PORTFOLIO
Quality Rating
[ ] 98.1% AAA [PIE CHART OMITTED]
[ ] 1.9% AA
* All data are as of April 30, 2006. Each Portfolio's quality rating
distribution is expressed as a percentage of the Portfolio's total investments
rated in particular ratings categories by Standard & Poor's Rating Services and
Moody's Investors Service. The distributions may vary over time. If ratings are
not available, the Fund's Adviser will assign ratings that are considered to be
of equivalent quality to such ratings.
14 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2006 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-98.9%
Long-Term Municipal Bonds-98.9%
Alabama-1.5%
Jefferson Cnty
Ltd Oblig Sch Warrants Ser 04A
5.25%, 1/01/18-1/01/23 $ 3,900 $ 4,066,599
Montgomery Spl Care Facs Fin Auth Rev
(Baptist Health) Ser 04C
5.25%, 11/15/29 2,190 2,371,420
-------------
6,438,019
Alaska-0.5%
Anchorage Waste Wtr Rev
MBIA Ser 04
5.125%, 5/01/29 2,075 2,155,614
Arizona-2.5%
Estrella Mtn Ranch CFD
(Desert Village) Ser 02
7.375%, 7/01/27 2,810 3,008,218
Phoenix Civic Impt Corp Wastewtr Sys Rev
MBIA Ser 04
5.00%, 7/01/23 1,750 1,817,585
Pima Cnty IDA
(Horizon Cmnty Learning Center) Ser 05
5.125%, 6/01/20 3,310 3,264,024
Sundance CFD
Ser 02
7.75%, 7/01/22 875 953,426
Vistancia CFD
Ser 02
6.75%, 7/15/22 2,000 2,108,500
-------------
11,151,753
California-3.2%
California Dept of Wtr
Ser 02A
5.375%, 5/01/22 2,000 2,185,660
California GO
AMBAC Ser 02B
5.00%, 4/01/27 2,650 2,711,082
Ser 02
5.25%, 4/01/30 825 856,334
Ser 04
5.125%, 2/01/28 1,000 1,032,490
Chula Vista IDR
(San Diego Gas) Ser 96A
5.30%, 7/01/21 4,000 4,200,320
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 15
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Manteca Uni Sch Dist
MBIA Ser 01
Zero coupon, 9/01/31 $ 11,910 $ 3,326,344
-------------
14,312,230
Colorado-2.0%
Colorado Ed & Cult Facs Auth Rev
(Knowledge Quest Charter Sch) Ser 05
6.50%, 5/01/36 500 500,665
Colorado HFA SFMR
(Mtg Rev) Ser 99A-2 AMT
6.45%, 4/01/30 715 740,940
Colorado Hlth Facs Auth Rev
(Parkview Med Ctr) Ser 04
5.00%, 9/01/25 1,690 1,696,050
Murphy Creek Metro Dist No 3
(Ref & Impt) Ser 06
6.00%, 12/01/26 500 522,455
Park Creek Metro Dist Rev
(Ref-Sr-Ltd Tax Ppty Tax) Ser 05
5.50%, 12/01/30 2,400 2,458,032
PV Wtr & San Met Dist
Cap Appreciation Ser 06
Zero coupon, 12/15/17 4,500 2,250,855
Todd Creek Farms Metro Dist No 1 Wtr Rev
(Ref & Impt) Ser 04
6.125%, 12/01/19 820 818,336
-------------
8,987,333
Connecticut-0.2%
Connecticut Hlth & Ed Facs Auth Rev
(Griffin Hosp) RADIAN Ser 05B
5.00%, 7/01/23 750 769,920
Florida-18.9%
Beacon Tradeport CDD
Ser 02B
7.25%, 5/01/33 170 180,419
Bonnet Creek CDD
Ser 02
7.25%, 5/01/18 2,000 2,164,820
Clay Cnty CDD
(Crossings at Fleming Island) Ser 00C
7.05%, 5/01/15 1,965 2,089,286
Collier Cnty IDR
(Southern St Util) Ser 96 AMT
6.50%, 10/01/25 3,605 3,685,247
Fiddlers Creek CDD
Ser 96
7.50%, 5/01/18 895 920,248
16 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Gateway CDD
(Sun City Center)
5.50%, 5/01/10 $ 500 $ 502,860
Indian Trace Dev Dist Spl Assmt
(Wtr Mgmt Spl Benefit) MBIA Ser 05
5.00%, 5/01/22-5/01/23 1,800 1,885,054
Jacksonville Elec Auth
Ser 02A
5.50%, 10/01/41 3,750 3,847,050
Jacksonville Hosp Rev
(Mayo Clinic) Ser 01C
5.50%, 11/15/36 6,750 7,181,190
Lee Cnty CDD
(Miromar Lakes) Ser 00A
7.25%, 5/01/12 4,200 4,396,812
(Stoneybrook) Ser 98
5.70%, 5/01/08 85 85,000
Lee Cnty CFD
(Herons Glen) Ser 99
6.00%, 5/01/29 6,300 6,429,843
Lee Cnty HFA SFMR
(Mtg Rev) GNMA/FNMA Ser 00A-1 AMT
7.20%, 3/01/33 95 96,003
Lee Cnty Trans Fac
(Sanibel Brdgs & Causway) CIFG Ser 05B
5.00%, 10/01/30 1,600 1,660,768
Manatee Cnty CDD
(Tara) Ser 00A
7.15%, 5/01/31 1,880 1,982,723
Marshall Creek CDD
Ser 02A
6.625%, 5/01/32 1,705 1,781,930
Miami Beach Hosp Rev
(Mt Sinai Med Center) Ser 01A
6.80%, 11/15/31 3,500 3,854,900
Miami Dade Cnty HFA MFHR
(Marbrisa Apts) FSA Ser 00-2A AMT
6.15%, 8/01/38 4,200 4,435,200
Northern Palm Beach Cnty
(ABACOA) Ser 96A
7.20%, 8/01/16 8,000 8,229,120
7.30%, 8/01/27 8,000 8,231,040
Orange Cnty HFA MFHR
(Seminole Pt Proj) Ser 99L AMT
5.80%, 6/01/32 5,000 5,060,450
Orlando Assess Dist
(Conroy Rd Proj) Ser 98A
5.80%, 5/01/26 3,250 3,296,150
Pasco Cnty HFA MFHR
(Pasco Woods Apts) Ser 99A AMT
5.90%, 8/01/39 3,690 3,820,515
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 17
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Pier Park CDD
Ser 02-1
7.15%, 5/01/34 $ 3,245 $ 3,457,028
Preserve at Wilderness Lake CDD
Ser 02B
6.20%, 11/01/08 190 190,346
Volusia Cnty Ed Fac
(Embry-Riddle Aero Univ) Ser 96A
6.125%, 10/15/26 4,135 4,261,449
-------------
83,725,451
Illinois-3.4%
Chicago Arpt Rev
(O'Hare Int'l Arpt) XLCA Ser 03B-1
5.25%, 1/01/34 3,400 3,543,344
Chicago HFA SFMR
(Mtg Rev) GNMA/FNMA/FHLMC Ser 98A AMT
6.45%, 9/01/29 360 368,975
(Mtg Rev) GNMA/FNMA/FHLMC Ser 98C-1 AMT
6.30%, 9/01/29 295 298,322
(Mtg Rev) GNMA/FNMA/FHLMC Ser 99A AMT
6.35%, 10/01/30 355 367,269
(Mtg Rev) GNMA/FNMA/FHLMC Ser 99C AMT
7.05%, 10/01/30 90 89,896
Chicago Spec Assess
(Lake Shore East) Ser 03
6.75%, 12/01/32 3,500 3,746,645
Gilberts Special Service Area No 15 Spl Tax
(Gilberts Town Ctr Proj) Ser 05
6.00%, 3/01/28 2,430 2,411,969
Illinois Fin Auth Rev
(Inst of Technology) Ser 06A
5.00%, 4/01/31 750 754,628
Manhattan
No. 04-1 (Brookstone Springs Proj) Ser 05
5.875%, 3/01/28 1,685 1,697,435
Met Pier & Expo Auth
(McCormick Place) MBIA Ser 02A
5.25%, 6/15/42 1,750 1,827,997
-------------
15,106,480
Indiana-0.7%
Hendricks Cnty Bldg Facs Corp
(First Mtg) Ser 04
5.50%, 7/15/23 1,165 1,260,483
Indiana St Dev Fin Auth Rev
(Exempt Facs Inland Steel) Ser 97
5.75%, 10/01/11 1,825 1,858,544
-------------
3,119,027
18 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Louisiana-1.5%
De Soto Parish PCR
(Int'l Paper Co) Ser 02A
5.00%, 10/01/12 $ 2,200 $ 2,240,964
Louisiana Arpt Fac
(Cargo ACQ Grp) Ser 02 AMT
6.65%, 1/01/25 1,035 1,090,279
New Orleans GO
MBIA Ser 05
5.00%, 12/01/29 3,420 3,469,282
-------------
6,800,525
Maryland-2.6%
Maryland CDA SFMR
(Mtg Rev) Ser 00A AMT
6.10%, 7/01/38 6,285 6,483,480
Maryland IDR
(Med Waste Assoc) Ser 89 AMT
8.75%, 11/15/10(a) 1,225 928,182
Tax Exempt Municipal Infrastructure
Ser 04A
3.80%, 5/01/08(b) 4,007 3,963,805
-------------
11,375,467
Massachusetts-7.5%
Massachusetts Dev Fin Agy Hlth Fac
(Seven Hills) Asset Gty Ser 99
5.15%, 9/01/28 6,035 6,165,416
Massachusetts GO
Ser 02C Prerefunded
5.25%, 11/01/30 1,780 1,914,586
Ser 02C Unrefunded
5.25%, 11/01/30 3,220 3,463,464
Massachusetts Port Auth
Ser 99D AMT
6.00%, 7/01/29 7,500 7,991,325
Massachusetts Port Auth Spec Fac
(BosFuel Corp) MBIA Ser 97 AMT
6.00%, 7/01/36 11,920 12,287,971
New England Student Loan Rev
Ser 93H AMT
6.90%, 11/01/09 1,500 1,564,485
-------------
33,387,247
Michigan-5.1%
Detroit Dev Fin Auth
(DaimlerChrysler Plant) Ser 98A
5.50%, 5/01/21 535 497,930
Kent Hosp Fin Auth
(Met Hosp Proj) Ser 05A
5.75%, 7/01/25 710 748,169
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 19
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Michigan HDA MFHR
(Rental Rev) AMBAC Ser 97A AMT
6.10%, 10/01/33 $ 1,000 $ 1,039,690
Michigan Hosp Fin Auth
(Sparrow Med Ctr) Ser 01
5.625%, 11/15/36 2,650 2,756,265
(Trinity Health) Ser 00A
6.00%, 12/01/27 4,515 4,885,456
Michigan State Hosp Fin Auth
(Marquette Gen Hosp Oblig Grp) Ser 05A
5.00%, 5/15/26 1,150 1,141,352
Midland Cnty PCR
(CMS Energy) Ser 00A AMT
6.875%, 7/23/09 2,900 2,913,079
Plymouth Ed Ctr Charter Sch Public Sch
Academy Rev
Ser 05
5.375%, 11/01/30 2,000 1,958,940
Saginaw Hosp Fin Auth Hosp Rev
(Covenant Med Ctr) Ser 00F
6.50%, 7/01/30 6,125 6,689,174
-------------
22,630,055
Minnesota-1.6%
Minn-St Paul Met Arpt Rev
FGIC Ser 00B AMT
6.00%, 1/01/21 3,520 3,749,363
Shakopee Hlth Care Facs Rev
(St. Francis Regl Med Ctr) Ser 04
5.10%, 9/01/25 2,700 2,751,165
St Paul Hsg & Redev Auth Hosp Rev
(Hlth East Proj) Ser 05
6.00%, 11/15/25 500 538,650
-------------
7,039,178
Missouri-0.7%
Kansas City Arpt Fac Rev
(Cargo ACQ Grp) Ser 02
6.25%, 1/01/30 1,980 2,089,514
Missouri Dev Fin Brd Infrastructure Fac Rev
(Crackerneck Creek Project) Ser 05C
5.00%, 3/01/26 1,000 1,008,310
-------------
3,097,824
Nevada-0.8%
Carson City Hosp Rev
(Carson-Tahoe Hosp Proj) RADIAN Ser 03A
5.125%, 9/01/29 2,700 2,745,144
North Las Vegas CDD
Ser 03
6.40%, 12/01/22 990 1,019,938
-------------
3,765,082
20 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New Hampshire-0.9%
New Hampshire Bus Fin Auth PCR
(Public Service Co) Ser 93E AMT
6.00%, 5/01/21 $ 4,000 $ 4,150,600
New Jersey-4.6%
Morris-Union Jointure Commn COP
RADIAN Ser 04
5.00%, 5/01/27 5,175 5,283,986
New Jersey Eco Dev Auth Rev
(Sch Facs Constr) Ser 05O
5.25%, 3/01/25 6,200 6,512,232
New Jersey Ed Facs Auth Rev
(High Ed Cap Impt) AMBAC Ser 02A
5.25%, 9/01/21 8,005 8,481,057
-------------
20,277,275
New York-6.8%
Erie Cnty IDA Sch Fac Rev
(Buffalo Sch Dist Proj) FSA Ser 04
5.75%, 5/01/25-5/01/26 3,800 4,228,850
New York City Ed Fac
(Lycee Francais) ACA Ser 02C
6.80%, 6/01/28 2,500 2,619,300
New York City GO
Ser 03
5.50%, 8/01/21 5,000 5,360,100
Ser 03
5.75%, 3/01/15 2,350 2,555,413
Ser 03I
5.75%, 3/01/17 1,900 2,070,772
Ser 04G
5.00%, 12/01/23 895 922,029
Ser 97A Prerefunded
6.25%, 8/01/17 5,750 5,872,361
New York City TFA
Ser 05A-2
5.00%, 11/01/17 5,000 5,278,450
New York State HFA
(Eco Dev & Hsg) FGIC Ser 05A
5.00%, 9/15/25 1,200 1,252,332
-------------
30,159,607
Ohio-5.5%
Cuyahoga Cnty
(Port Auth Rev) Ser 01
7.35%, 12/01/31 5,400 5,631,066
Franklin Cnty
(OCLC Online Computer Libry Ctr) Ser 98
5.20%, 10/01/20 1,200 1,241,124
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 21
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Port Auth of Columbiana Cnty SWR
(Apex Environmental Llc) Ser 04A AMT
7.125%, 8/01/25 $ 1,240 $ 1,231,568
Toledo Lucas Cnty Port Auth Rev
(Crocker Park Proj) Ser 03
5.375%, 12/01/35 5,000 5,206,800
Toledo Lucas Cnty Port Fac Rev
(CSX Transp) Ser 92
6.45%, 12/15/21 9,730 11,030,220
-------------
24,340,778
Oregon-1.4%
Forest Grove Rev
(Ref & Campus Impt Pacific Proj A)
RADIAN Ser 05A
5.00%, 5/01/28 2,995 3,053,672
Oregon Hsg Dev Agy SFMR
(Mtg Rev) Ser 02B AMT
5.45%, 7/01/32 2,900 2,943,471
-------------
5,997,143
Pennsylvania-4.6%
Ephrata Area Sch Dist
Ser 05 FGIC
5.00%, 3/01/22 2,565 2,682,143
Montgomery Cnty Hosp Rev
(Abington Mem Hosp) Ser 02A
5.125%, 6/01/32 2,000 2,028,940
Montgomery Cnty IDA Rev
(Whitemarsh Con Care Proj) Ser 05
6.00%, 2/01/21 1,210 1,275,050
Pennsylvania HFA
FSA Ser 03-1235
8.12%, 6/01/08(c) 575 575,000
Ser 04-1263 AMT
6.226%, 6/01/07(c) 625 625,000
Pennsylvania HFA SFMR
(Mtg Rev) Ser 03 AMT
4.32%, 6/01/08(c) 3,451 3,450,954
Pennsylvania Hgr Ed Hosp Rev
(UPMC) Ser 01A
6.00%, 1/15/31 3,845 4,173,901
Philadelphia Auth IDR
(Leadership Learning Partners) Ser 05A
5.25%, 7/01/24 1,030 988,851
South Central Hosp Rev
(Wellspan Health) MBIA Ser 01
5.25%, 5/15/31 685 719,134
Prerefunded MBIA Ser 01
5.25%, 5/15/31(d) 3,115 3,356,288
22 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Susquehanna Area Regl Arpt Auth
(Aero Harrisburg Llc Proj) Ser 99
5.50%, 1/01/24 $ 500 $ 477,315
-------------
20,352,576
South Carolina-1.3%
Dorchester Cnty Sch Dist No 2
(No 002 Installment Pur Rev) Ser 06
5.00%, 12/01/30 1,500 1,522,110
Newberry Investing in Childrens Ed
(Newberry Cnty Sch Dist Proj) Ser 05
5.00%, 12/01/27-12/01/30 4,225 4,304,726
-------------
5,826,836
Tennessee-0.3%
Johnson City Hlth & Ed Facs Hosp Rev
(First Mtg-MTN Sts Hlth) Ser 06A
5.50%, 7/01/31 1,360 1,409,178
Texas-16.5%
Alliance Arpt Fac
(Federal Express) Ser 96 AMT
6.375%, 4/01/21 12,550 12,808,781
Brownwood ISD
(Schl Bldg) FGIC Ser 05
5.25%, 2/15/22-2/15/24 3,505 3,732,740
Corpus Christi Arpt Rev
(Corpus Christi Int'l) FSA Ser 00B
5.375%, 2/15/30 7,100 7,475,519
Dallas-Fort Worth Arpt Rev
(Int'l Arpt) FGIC Ser 01 AMT
5.50%, 11/01/35 13,400 13,894,058
Ector Cnty Sch Dist
Ser 03
5.25%, 8/15/27 3,000 3,166,800
Garza Cnty Pub Fac Corp
Ser 05
5.50%, 10/01/19 535 549,284
Grapevine Arpt Rev
(Cargo ACQ Grp) Ser 02 AMT
6.50%, 1/01/24 1,000 1,069,970
Guadalupe-Blanco Riv Auth & Surp
(Contract & Sub Wtr Res) MBIA Ser 04A
5.00%, 8/15/24 1,440 1,478,923
Hidalgo Cnty Hlth Svcs
(Mission Hosp Inc Proj) Ser 05
5.00%, 8/15/14-8/15/19 730 733,028
Houston Arpt Rev
(Cargo ACQ Grp) Ser 02 AMT
6.375%, 1/01/23 3,000 3,191,700
Laredo ISD Pub Fac Corp
Lease Rev AMBAC Ser 04A
5.00%, 8/01/24 1,000 1,025,410
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 23
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Lubbock
(Ctfs Oblig-Tax & Wtrwks Surp) FSA
5.125%, 2/15/24 $ 3,335 $ 3,496,947
Richardson Hosp Auth Rev
(Richardson Regional) Ser 04
5.875%, 12/01/24 2,310 2,415,336
6.00%, 12/01/19 1,830 1,964,450
San Antonio GO
Ser 02 Unrefunded
5.00%, 2/01/22 3,060 3,152,106
Seguin Hgr Ed Rev
(Texas Lutheran Univ Proj) Ser 04
5.25%, 9/01/28 1,000 1,003,270
Texas Turnpike Auth Rev
(First Tier) AMBAC Ser 02A
5.50%, 8/15/39 7,500 7,977,675
Tyler Hosp Rev
(Mother Francis Regl Hlth) Ser 01
6.00%, 7/01/31 3,900 4,108,533
-------------
73,244,530
U.S. Virgin Islands-1.8%
Virgin Islands Pub Fin Auth
FSA Ser 03
5.00%, 10/01/13-10/01/14 2,025 2,153,586
5.25%, 10/01/15-10/01/17 5,460 5,879,580
-------------
8,033,166
Virginia-1.7%
Arlington IDA Hosp Rev
(Arlington Hlth Sys) Ser 01
5.25%, 7/01/31 1,000 1,076,530
Bell Creek CDD
Ser 03A
6.75%, 3/01/22 2,043 2,089,989
Broad Str Parking Fac
Ser 03
7.50%, 6/01/33 3,000 3,255,540
Pocahontas Pkwy Assoc Toll Rd Rev
(Cap Appreciation) Sr Ser 98B
Zero coupon, 8/15/15 2,000 1,205,220
-------------
7,627,279
Wisconsin-0.8%
Milwaukee Arpt Rev
(Cargo ACQ Grp) Ser 02 AMT
6.50%, 1/01/25 2,335 2,498,380
Wisconsin Hlth & Ed Fac Auth Rev
(Bell Tower Residence Proj) Ser 05
5.00%, 7/01/25 1,270 1,266,812
-------------
3,765,192
24 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
U.S. $ Value
- -------------------------------------------------------------------------------
Total Investments-98.9%
(cost $424,014,925) $ 439,045,365
Other assets less liabilities-1.1% 4,849,136
Net Assets-100% $ 443,894,501
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-----------------------
Payments Payments
Notional made received Unrealized
Swap Amount Termination by the by the Appreciation/
Counterparty (000) Date Portfolio Portfolio (Depreciation)
- -------------------------------------------------------------------------------
Citigroup $4,700 6/22/07 BMA* 2.962% $(36,165)
Goldman Sachs 2,300 7/05/06 BMA* 3.283% (1,896)
Goldman Sachs 2,300 1/05/07 BMA* 3.405% (4,005)
J.P. Morgan 4,400 4/05/07 BMA* 2.988% (26,424)
J.P. Morgan+ 2,200 10/01/07 BMA* 3.635% 420
Morgan Stanley 2,300 10/06/06 BMA* 3.217% (4,831)
* BMA (Bond Market Association)
+ Represents a forward interest rate swap whose effective date of the exchange
of cash flows is June 7, 2006.
(a) Security is in default and is non-income producing.
(b) Security is exempt from registration under rule 144A of the Securities Act
of 1933. This security is considered liquid and may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At April
30, 2006, the market value of these securities amounted to $3,963,805 or 0.9%
of net assets.
(c) Inverse floater--security with variable or floating interest rate that
moves in opposite direction of short-term interest rates.
(d) Represents entire or partial position segregated as collateral for
interest rate swaps.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 25
Glossary of Terms:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Municipal Bond Assurance Corporation
AMT - Alternative Minimum Tax-(subject to)
CDA - Community Development Administration
CDD - Community Development District
CFD - Community Facilities District
CIFG - CIFG Assurance North America, Inc.
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Company
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance, Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HFA - Housing Finance Authority
IDA - Industrial Development Authority
IDR - Industrial Development Revenue
ISD - Independent School District
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
MTN - Medium Term Note
PCR - Pollution Control Revenue
RADIAN - Radian Group, Inc.
SFMR - Single-Familty Mortgage Revenue
SWR - Solid Waste Revenue
TFA - Transitional Finance Authority
XLCA - XL Capital Assurance
See notes to financial statements.
26 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
INSURED NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2006 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-98.8%
Long-Term Municipal Bonds-97.5%
Alabama-0.7%
Jefferson Cnty Wtr & Swr Rev
FGIC Ser 02B
5.00%, 2/01/41 $ 625 $ 663,806
FGIC Ser 02B Prerefunded
5.00%, 2/01/41 375 397,219
-------------
1,061,025
Alaska-1.8%
Alaska HFC SFMR
(Mtg Rev) MBIA Ser 97A
6.00%, 6/01/27 2,635 2,659,426
California-6.9%
California GO
AMBAC Ser 02B
5.00%, 4/01/27 3,000 3,069,150
FSA Ser 03
5.00%, 2/01/29 1,445 1,481,963
Ser 04
5.125%, 2/01/28 1,500 1,548,735
Golden State
Tob Settlement Bonds XLCA Ser 03B
5.50%, 6/01/33 2,000 2,184,560
San Bernardino Cnty Redev
(Ontario Proj #1) MBIA Ser 93 ETM
5.80%, 8/01/23 2,000 2,009,820
-------------
10,294,228
Colorado-5.9%
Northwest Parkway Toll Rev
FSA Ser 01C
Zero coupon, 6/15/25(a) 9,000 7,716,060
SBC Met Dist
ACA Ser 05
5.00%, 12/01/29 1,000 999,960
-------------
8,716,020
Florida-2.1%
Volusia Cnty Hlth Fac
(John Knox Village) Asset Gty Ser 96A
6.00%, 6/01/17 3,000 3,062,160
Illinois-7.1%
Chicago Arpt Rev
(O'Hare Int'l Arpt) XLCA Ser 03B-1
5.25%, 1/01/34 1,700 1,771,672
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 27
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Chicago Stadium Rev
(Soldier Field) AMBAC Ser 01
Zero coupon, 6/15/30(a) $ 8,000 $ 6,944,080
Met Pier & Expo Auth
(McCormick Place) MBIA Ser 02A
5.25%, 6/15/42 1,750 1,827,997
-------------
10,543,749
Louisiana-0.4%
New Orleans GO
MBIA Ser 05
5.00%, 12/01/29 570 578,214
Massachusetts-6.0%
Massachusetts Hlth & Ed Fac Hosp Rev
(Berkshire Hlth Sys) Asset Gty RADIAN
Ser 01E
5.70%, 10/01/25 6,800 7,329,448
(Cape Cod Healthcare) Asset Gty RADIAN
Ser 01C
5.25%, 11/15/31 1,600 1,665,104
-------------
8,994,552
Michigan-7.7%
Detroit Wtr Sply Sys
FGIC Ser 01
5.50%, 7/01/33 1,450 1,549,659
Kalamazoo Hosp Rev
(Borgess Med Ctr) FGIC Ser 94A ETM
6.908%, 6/01/11(b) 5,140 5,158,812
Michigan Mun Bd Auth Rev
(Sch Dist City of Detroit) FSA Ser 05
5.00%, 6/01/20 1,500 1,561,005
Michigan Trunk Line Fund
FSA Ser 01A
5.25%, 11/01/30 1,000 1,064,660
PontiacTax Increment
ACA Ser 02
5.625%, 6/01/22 700 736,421
Royal Oak Hosp Rev
(William Beaumont) MBIA Ser 01M
5.25%, 11/15/35 1,300 1,334,463
-------------
11,405,020
Minnesota-4.4%
Waconia Hlth Fac
(Ridgeview Med Ctr) Asset Gty Ser 99A
6.125%, 1/01/29 6,095 6,520,919
Nevada-1.4%
Carson City Hosp Rev
(Carson-Tahoe Hosp Proj) RADIAN Ser 03A
5.125%, 9/01/29 2,100 2,135,112
28 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New Hampshire-1.6%
New Hampshire Hosp Rev
(Mary Hitchcock Hosp) FSA Ser 02
5.50%, 8/01/27 $ 2,250 $ 2,424,173
New Jersey-4.6%
Morris-Union Jointure COP
RADIAN Ser 04
5.00%, 5/01/27 1,700 1,735,802
New Jersey Ed Facs Auth Rev
AMBAC Ser 02A
5.125%, 9/01/22 2,500 2,614,450
(High Ed Cap Impt) AMBAC Ser 02A
5.25%, 9/01/21 2,420 2,563,917
-------------
6,914,169
New York-6.5%
Erie Cnty IDA Sch Fac Rev
(Buffalo Sch Dist Proj) FSA Ser 04
5.75%, 5/01/26 1,300 1,445,899
Nassau Cnty Hlth Fac
(Nassau Hlth Sys Rev) FSA Ser 99
5.75%, 8/01/29 7,600 8,201,844
-------------
9,647,743
North Carolina-0.7%
North Carolina Eastern Municipal Pwr Agy
Pwr Sys Rev
Ref Ser 05A
5.25%, 1/01/20 1,000 1,065,440
Ohio-8.7%
Hamilton Cnty Sales Tax Rev
AMBAC Ser 00B
5.25%, 12/01/32 7,100 7,401,395
Summit Cnty GO
FGIC Ser 00 Prerefunded
6.00%, 12/01/21 5,000 5,522,300
-------------
12,923,695
Pennsylvania-9.5%
Allegheny Cnty Hgr Ed Rev
(Carnegie Mellon Univ) Ser 02
5.50%, 3/01/28 6,665 7,129,684
Pennsylvania Turnpike Transp Rev
AMBAC Ser 01
5.25%, 7/15/41 6,500 7,000,370
-------------
14,130,054
Puerto Rico-4.9%
Puerto Rico Elec Pwr Auth
XLCA Ser 02-1
5.25%, 7/01/22(c) 6,935 7,372,113
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 29
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Rhode Island-4.7%
Rhode Island Eco Dev Auth
(Providence Place Mall Proj) Asset Gty Ser 00
6.125%, 7/01/20 $ 6,500 $ 7,058,740
South Carolina-2.0%
Dorchester Cnty Sch Dist No 2
(No 002 Installment Pur Rev) Ser 06
5.00%, 12/01/29 400 410,232
Newberry Investing in Childrens Ed
(Newberry Cnty Sch Dist Proj) Ser 05
5.00%, 12/01/27-12/01/30 2,450 2,498,701
-------------
2,908,933
Texas-8.1%
Carrollton Texas
(Ref & Impt) AMBAC Ser 05
5.25%, 8/15/25 4,300 4,554,173
Guadalupe-Blanco Riv Auth & Surp
(Contract & Sub Wtr Res) MBIA Ser 04A
5.00%, 8/15/24 455 467,299
Lubbock
(Ctfs Oblig-Tax & Wtrwks Surp) FSA Ser 05
5.125%, 2/15/23 3,160 3,318,158
San Antonio GO
Ser 02
5.00%, 2/01/23 1,485 1,526,654
Texas Turnpike Auth Rev
(First Tier) AMBAC Ser 02A
5.50%, 8/15/39 2,000 2,127,380
-------------
11,993,664
West Virginia-1.8%
Fairmont Higher Ed
(Fairmont St Col) FGIC Ser 02A
5.375%, 6/01/27 2,500 2,661,625
Total Long-Term Municipal Bonds
(cost $137,351,731) 145,070,774
Short-Term Municipal Note(d)-1.3%
Nevada-1.3%
Clark Cnty Nev Sch Dist
Ser 01A
3.78%, 6/15/21 2,000 2,000,000
Total Investments-98.8%
(cost $139,351,731) 147,070,774
Other assets less liabilities-1.2% 1,780,027
Net Assets-100% $ 148,850,801
30 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
----------------------
Payments Payments
Notional made received Unrealized
Swap Amount Termination by the by the Appreciation/
Counterparty (000) Date Portfolio Portfolio (Depreciation)
- -------------------------------------------------------------------------------
Citigroup $1,600 6/22/07 BMA* 2.962% $ (12,312)
Goldman Sachs 800 7/05/06 BMA* 3.283% (660)
Goldman Sachs 800 1/05/07 BMA* 3.405% (1,393)
J.P. Morgan 1,500 4/05/07 BMA* 2.988% (9,008)
J.P Morgan+ 800 10/01/07 BMA* 3.635% 153
Merrill Lynch++ 1,000 10/21/16 BMA* 4.128% 792
Merrill Lynch 3,100 11/01/19 3.896% BMA* 86,245
Merrill Lynch+++ 2,500 7/30/26 4.090% BMA* 86,888
Morgan Stanley 800 10/06/06 BMA* 3.217% (1,680)
* BMA (Bond Market Association)
+ Represents a forward interest rate swap whose effective date of the exchange
of cash flows is June 7, 2006.
++ Represents a forward interest rate swap whose effective date for the
exchange of cash flows is October 23, 2006.
+++ Represents a forward interest rate swap whose effective date for the
exchange of cash flows is July 30, 2006.
(a) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective until
final maturity.
(b) Inverse floater--security with variable or floating interest rate that
moves in opposite direction of short-term interest rates.
(c) Represents entire or partial position segregated as collateral for
interest rate swap.
(d) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as prime
interest rate). This instrument is payable on demand and is secured by letters
of credit support or other credit support agreements.
Glossary of Terms:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Municipal Bond Assurance Corporation
COP - Certificate of Participation
ETM - Escrowed to Maturity
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Assurance, Inc.
GO - General Obligation
HFC - Housing Finance Corporation
IDA - Industrial Development Authority
MBIA - Municipal Bond Investors Assurance
RADIAN - Radian Group, Inc.
SFMR - Single-Familty Mortgage Revenue
XLCA - XL Capital Assurance, Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 31
NEW YORK PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2006 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-97.6%
Long-Term Municipal Bonds-96.0%
Arizona-0.5%
Goodyear IDA Wtr & Swr Rev
(Litchfield Park Proj) Ser 01 AMT
6.75%, 10/01/31 $ 1,000 $ 1,086,670
Quailwood Meadows CFD
Ser 04
6.00%, 7/15/22 1,120 1,118,522
-------------
2,205,192
California-0.2%
California GO
Ser 03
5.25%, 11/01/25 650 680,719
Ser 04
5.20%, 4/01/26 350 366,618
-------------
1,047,337
Florida-3.0%
Crossings at Fleming Island CDD
(Eagle Harbor) Ser 00
7.10%, 5/01/30 5,500 5,781,435
Fiddlers Creek CDD
Ser 96
7.50%, 5/01/18 2,805 2,884,129
Ser 99B
5.80%, 5/01/21 1,185 1,214,850
Hammock Bay CDD
Ser 04A
6.15%, 5/01/24 800 797,136
Manatee Cnty CDD
(Heritage Harbor South) Ser 02B
5.40%, 11/01/08 55 54,962
Marshall Creek CDD
Ser 02A
6.625%, 5/01/32 950 992,864
Midtown Miami CDD
Ser 04A
6.00%, 5/01/24 2,500 2,650,075
-------------
14,375,451
Georgia-0.1%
Atlanta Tax Alloc
(Eastside Proj) Ser 05B
5.60%, 1/01/30 500 509,485
32 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Guam-0.1%
Guam Wtrwrks Auth Wtr & Wastewtr Sts Rev
Ser 05
6.00%, 7/01/25 $ 500 $ 533,205
Illinois-0.9%
Antioch Village Spl Svc Area
(Clublands Proj) Ser 03
6.625%, 3/01/33 1,000 1,038,350
Plano Spl Svcs Area No.3
(Lakewood Springs Proj) Ser 05A
5.95%, 3/01/28 1,350 1,328,643
Yorkville Spl Svc Area
(Raintree Vlg Proj) Ser 03
6.875%, 3/01/33 1,951 2,058,851
-------------
4,425,844
Nevada-0.7%
Clark Cnty Impt Dist
Ser 03
6.10%, 8/01/18 1,500 1,551,810
Henderson Local Impt Dist
Ser 03
5.80%, 3/01/23 945 975,117
North Las Vegas CDD
Ser 03
6.40%, 12/01/22 990 1,019,938
-------------
3,546,865
New Jersey-0.4%
Garden St Pres Tr
Open Space & Farmland FSA Ser 05A
5.80%, 11/01/17 1,500 1,691,340
New York-85.1%
Cattaraugus Cnty Hgr Ed
(Jamestown) Ser 00A
6.50%, 7/01/30 1,000 1,122,110
Cortland Cnty Hosp Rev
(Cortland Mem Hosp) RADIAN Ser 02
5.25%, 7/01/32 2,700 2,802,546
Erie Cnty
(Pub Impt) Ser 05A
5.00%, 12/01/20 5,990 6,272,968
Erie Cnty IDA Sch Fac Rev
(Buffalo Sch Dist Proj) FSA Ser 04
5.75%, 5/01/24-5/01/25(a) 3,800 4,232,954
Glen Cove IDR
(The Regency at Glen Cove) Ser 92B ETM
Zero coupon, 10/15/19 11,745 6,446,713
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 33
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Hempstead Hgr Ed
(Adelphi Univ Civic Fac) Ser 02
5.50%, 6/01/32 $ 1,000 $ 1,055,890
Herkimer Cnty IDR Hgr Ed
(Herkimer CC Stud Hsg) Ser 00
6.50%, 11/01/30 2,000 2,184,460
Horseheads CCRC
(Appleridge Retrmt Cmnty) GNMA Ser 99
5.75%, 9/01/41 4,000 4,230,560
Long Island Pwr Auth Elec Rev
FGIC Ser 06 A
5.00%, 12/01/24 4,000 4,173,640
FSA Ser 01A
5.25%, 9/01/28 10,000 10,442,600
XLCA Ser 06A
5.00%, 12/01/26 4,300 4,465,464
Metro Trans Auth of New York Rev
AMBAC Ser 05B
5.00%, 11/15/26 7,500 7,811,625
Ser 05F
5.00%, 11/15/30 3,500 3,596,110
Monroe Cnty MFHR
(Southview Towers Proj) SONYMA
Ser 00 AMT
6.25%, 2/01/31 1,130 1,223,982
Montgomery Cnty IDA Lease Rev
(HFM Boces) XLCA Ser 05A
5.00%, 7/01/24 1,500 1,546,530
Nassau Cnty Interim Fin Auth
(Sales Tax Secd) MBIA Ser 05A
5.00%, 11/15/24 3,000 3,117,540
New York City Ed Fac
(Lycee Francais) ACA Ser 02C
6.80%, 6/01/28 2,500 2,619,300
(Magen David Yeshivah Proj) ACA Ser 02
5.70%, 6/15/27 2,500 2,613,725
(Spence School)
5.20%, 7/01/34 3,155 3,296,659
New York City GO
FSA Ser 04E
5.00%, 11/01/21 4,000 4,154,200
Ser 01B Prerefunded 12/01/11 @ 100
5.50%, 12/01/31 9,850 10,720,346
Ser 01B Unrefunded
5.50%, 12/01/31 2,150 2,281,042
Ser 03
5.75%, 3/01/15 2,350 2,555,413
Ser 03I
5.75%, 3/01/17 1,900 2,070,772
Ser 04
5.00%, 8/01/21 11,400 11,764,458
34 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Ser 04G
5.00%, 12/01/23 $ 3,225 $ 3,322,395
Ser 05J
5.00%, 3/01/24 12,000 12,353,040
Ser 96A Prerefunded
6.25%, 8/01/17 15,500 15,829,840
XLCA Ser 04I
5.00%, 8/01/18 10,000 10,424,500
New York City HDC
(NYC Hsg Auth) FGIC Ser 05P6-A
5.00%, 7/01/19 10,000 10,440,100
New York City HDC MFHR
(Rental Hsg) Ser 01C-2 AMT
5.40%, 11/01/33 3,030 3,090,812
(Rental Hsg) Ser 02A AMT
5.50%, 11/01/34 1,250 1,275,537
New York City Hlth & Hosp Rev
AMBAC Ser 03A
5.25%, 2/15/22 5,700 6,018,744
New York City Hosp Rev
(Health Sys) FSA Ser 02A
5.125%, 2/15/23 1,500 1,561,110
New York City IDA
(Brooklyn Navy Yard) Ser 97 AMT
5.75%, 10/01/36 3,000 3,001,590
(Staten Island Hosp) Ser 01B
6.375%, 7/01/31 1,980 2,008,552
New York City IDA Spl Fac
(Airis JFK Proj) Ser 01A
5.50%, 7/01/28 9,000 9,183,420
(British Airways) Ser 98 AMT
5.25%, 12/01/32 1,175 1,066,501
(Terminal One Group Assc Proj) Ser 05
5.50%, 1/01/24 800 835,280
New York City Mun Wtr
Ser 03A
5.00%, 6/15/27 1,000 1,030,110
New York City Spec Fac
(Museum of Modern Art) AMBAC Ser 01D
5.125%, 7/01/31 14,000 14,572,320
New York City TFA
Future Tax Secured MBIA Ser 03D
5.25%, 2/01/18 10,000 10,604,500
Ser 00B Prerefunded
6.00%, 11/15/29 6,000 6,576,120
Ser 02A
5.50%, 11/01/26 5,000 5,384,550
Ser 05A-2
5.00%, 11/01/17 5,000 5,278,450
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 35
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York Convention Ctr Dev Corp Rev
(Hotel Unit Fee Secured) AMBAC Ser 05
5.00%, 11/15/30 $ 10,000 $ 10,384,000
New York State Dorm Auth
(FHA Insd Maimonides) MBIA Ser 04
5.75%, 8/01/29 3,515 3,922,213
Ser 02
5.00%, 7/01/32 4,000 4,265,800
New York State Dorm Auth Hlth Fac
(Eger Rehab Ctr) FHA Ser 00
6.10%, 8/01/37 3,695 4,088,517
(Nursing Home) FHA Ser 02-34
5.20%, 2/01/32 3,965 4,157,699
New York State Dorm Auth Hosp Rev
(Mem Sloan-Kettering Ctr) MBIA Ser 03A
5.00%, 7/01/22 5,000 5,185,400
(Mount Sinai) NYU Health System Ser 00
6.50%, 7/01/25 7,500 7,996,350
New York State Dorm Auth Lease Rev
(Master Boces Program Wayne Finger) FSA
Ser 04
5.00%, 8/15/23 3,175 3,299,142
New York State Dorm Auth MFHR
(Joachim & Anne Residence) Ser 02
5.25%, 7/01/27 1,000 1,020,480
New York State Dorm Auth Rev
(Leake & Watts Svcs Inc) MBIA Ser 04
5.00%, 7/01/22-7/01/23 3,275 3,399,221
(Montefiore Hosp) FGIC/FHA Ser 04
5.00%, 8/01/23 5,000 5,189,750
(New York University) FGIC Ser 04A
5.00%, 7/01/24 2,240 2,332,736
(Rochester University) Ser 04A
5.25%, 7/01/21-7/01/24 1,825 1,935,327
(Westchester Cnty Court Facs Lease) Ser 06A
5.00%, 8/01/17 9,510 10,096,767
New York State Energy Res & Dev Auth Elec Rev
(Long Island Ltg Co) Ser 95A AMT
5.30%, 8/01/25 7,500 7,672,350
New York State MTA
Ser 02
5.25%, 11/15/31 5,000 5,227,400
Ser 02A
5.125%, 11/15/31 5,500 5,695,745
5.25%, 11/15/30 10,000 10,483,700
New York State Mtg Agy SFMR
(Mtg Rev) Ser 01-31A AMT
5.30%, 10/01/31 8,500 8,650,110
(Mtg Rev) Ser 82 AMT
5.65%, 4/01/30 3,195 3,215,097
36 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York State SFMR
(Mtg Rev) Ser 01-29 AMT
5.45%, 4/01/31 $ 9,000 $ 9,187,740
New York State Twy Auth Personal Income Tax Rev
(Transport) AMBAC Ser 04A
5.00%, 3/15/24 5,000 5,204,300
New York State UDC
(Empire State) Ser 02A
5.25%, 3/15/32 3,945 4,247,384
(State Pers Income Tax) AMBAC Ser 05A-1
5.00%, 12/15/25 2,450 2,562,185
Niagara Frontier Trans Arpt Rev
(Buffalo Niagara) MBIA AMT
5.625%, 4/01/29 2,500 2,638,425
Onondaga Cnty IDA Airport Fac
(Cargo ACQ Grp) Ser 02 AMT
6.125%, 1/01/32 1,000 1,048,360
Onondaga Cnty IDR Swr Rev
(Anheuser Busch) Ser 99 AMT
6.25%, 12/01/34 2,000 2,134,120
Onondaga Cnty PCR
(Bristol-Myers Squibb) AMT
5.75%, 3/01/24 4,000 4,441,320
Port Auth of NY & NJ
(Cons One Hundred Forty-Second) Ser 06
5.00%, 7/15/25 13,600 14,085,520
(JFK Int'l Proj) MBIA Ser 97-6 AMT
5.75%, 12/01/22 6,820 7,132,902
Spencerport Uni Sch Dist
MBIA Ser 02
5.00%, 6/15/21 2,500 2,602,800
Tob Settlement Bond
Ser 03A-1
5.50%, 6/01/14 5,000 5,226,800
Western Nassau Cnty Wtr Auth Wtr Sys Rev
AMBAC Ser 05
5.00%, 5/01/24 1,945 2,025,037
Yonkers IDA Health Fac
(Malotz Pavilion Proj) MBIA Ser 99
5.65%, 2/01/39 700 729,652
-------------
402,143,427
Ohio-0.2%
Port Auth of Columbiana Cnty SWR
(Apex Environmental Llc) Ser 04A AMT
7.125%, 8/01/25 1,200 1,191,840
Puerto Rico-4.0%
Puerto Rico Elec Pwr Auth
XLCA Ser 02-1
5.25%, 7/01/22(b) 10,000 10,630,300
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 37
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Puerto Rico HFC SFMR
(Mtg Rev) Ser 01A
5.20%, 12/01/33 $ 1,725 $ 1,743,768
Puerto Rico Hsg Fin Auth
Capital Funding Program
5.00%, 12/01/20 5,215 5,384,070
Puerto Rico Muni Fin Agy
Ser 05A
5.25%, 8/01/23 935 974,551
-------------
18,732,689
Virginia-0.8%
Bell Creek CDD
Ser 03A
6.75%, 3/01/22 680 695,640
Broad Str Parking Fac
Ser 03
7.50%, 6/01/33 2,680 2,908,282
-------------
3,603,922
Total Long-Term Municipal Bonds
(cost $440,249,465) 454,006,597
Short-Term Municipal Notes(c)-1.6%
New York-0.3%
New York City TFA
(NYC Recovery) Ser 02-Subser 3E
3.78%, 11/01/22 500 500,000
Long Island Pwr Auth Elec Rev
Ser 98-2B
3.49%, 5/01/33 1,000 1,000,000
-------------
1,500,000
Utah-1.3%
Salt Lake Cnty PCR
(Svc Station Hldgs Proj) Ser 94
3.81%, 2/01/08 6,000 6,000,000
Total Short-Term Municipal Notes
(cost $7,500,000) 7,500,000
Total Investments-97.6%
(cost $447,749,465) 461,506,597
Other assets less liabilities-2.4% 11,225,826
Net Assets-100% $ 472,732,423
38 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
------------------------
Payments Payments
Notional made received Unrealized
Swap Amount Termination by the by the Appreciation/
Counterparty (000) Date Portfolio Portfolio (Depreciation)
- -------------------------------------------------------------------------------
Citigroup $4,800 6/22/07 BMA* 2.962% $(36,935)
Citigroup 2,200 1/25/26 BMA* 4.108% (67,199)
Goldman Sachs 2,400 7/05/06 BMA* 3.283% (1,979)
Goldman Sachs 2,400 1/05/07 BMA* 3.405% (4,179)
J.P. Morgan 4,300 4/05/07 BMA* 2.988% (25,823)
J.P. Morgan+ 2,400 10/01/07 BMA* 3.635% 458
J.P. Morgan 4,500 6/15/15 3.777% BMA* 68,836
Morgan Stanley 2,400 10/06/06 BMA* 3.217% (5,041)
* BMA (Bond Market Association)
+ Represents a forward interest rate swap whose effective date of the exchange
of cash flows is June 7, 2006.
FINANCIAL FUTURES CONTRACTS PURCHASED (see Note D)
Value at
Number of Expiration Original April 30, Unrealized
Type Contracts Month Value 2006 Depreciation
- -------------------------------------------------------------------------------
U.S. T-Note
10 Yr Future 13 June 2006 $1,399,986 $1,372,515 $(27,471)
(a) Position, or portion thereof, with a market value of $250,738 has been
segregated to collateralize margin requirements for open futures contracts.
(b) Represents entire or partial position segregated as collateral for
interest rate swap.
(c) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as prime
interest rate). This instrument is payable on demand and is secured by letters
of credit support or other credit support agreements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 39
Glossary of Terms:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Municipal Bond Assurance Corporation
AMT - Alternative Minimum Tax-(subject to)
CCRC - Congregate Care Retirement Center
CDD - Community Development District
CFD - Community Facilities District
COP - Certificate of Participation
ETM - Escrowed to Maturity
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Administration
FSA - Financial Security Assurance, Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HDC - Housing Development Corporation
HFC - Housing Finance Corporation
IDA - Industrial Development Authority
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
MTA - Metropolitan Transportation Authority
PCR - Pollution Control Revenue
RADIAN - Radian Group, Inc.
SFMR - Single-Familty Mortgage Revenue
SONYMA - State of New York Mortgage Agency
SWR - Solid Waste Revenue
TFA - Transitional Finance Authority
UDC - Urban Development Corporation
XLCA - XL Capital Assurance
See notes to financial statements.
40 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2006 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-96.5%
Long-Term Municipal Bonds-96.3%
California-95.7%
Acalanes California Union High Sch Dist
(Ref-2013 Crossover) FSA Ser 05B
5.25%, 8/01/24(a) $ 3,000 $ 3,220,050
Banning Utility Auth Wtr & Enterprise Rev
(Ref & Impt Proj) FGIC Ser 05
5.25%, 11/01/30 7,265 7,723,058
California Dept of Wtr Res
FGIC Ser 02A
5.125%, 5/01/18 10,000 10,795,300
Ser 02A
5.375%, 5/01/21 3,000 3,278,490
California Dept Transp Rev
FGIC Ser 04A
5.00%, 2/01/13 10,000 10,658,500
California Ed Facs Auth Rev
(University of Pacific) Ser 04
5.00%, 11/01/20 1,000 1,021,510
5.25%, 5/01/34 1,000 1,046,710
California GO
5.00%, 2/01/32 13,200 13,409,088
5.125%, 6/01/31 1,730 1,768,285
5.25%, 2/01/30 14,000 14,518,140
MBIA-IBC Ser 03
5.25%, 2/01/16 2,050 2,187,555
MBIA Ser 02
5.00%, 2/01/32 3,500 3,567,970
Ser 02
5.25%, 4/01/30 1,175 1,219,627
Ser 03
5.25%, 2/01/24 3,500 3,664,920
Ser 04
5.00%, 2/01/33 6,925 7,040,093
5.125%, 2/01/28 3,500 3,613,715
5.30%, 4/01/29 6,400 6,716,544
California Health Fac Auth
(Lucile Salter Packard Hosp) AMBAC Ser 03C
5.00%, 8/15/21 3,365 3,474,598
California HFA SFMR
(Mtg Rev) FHA Ser 95A-2 AMT
6.45%, 8/01/25 345 348,478
(Mtg Rev) Ser 99A-2 AMT
5.25%, 8/01/26 1,705 1,709,586
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 41
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California Hgr Ed
(Col of Arts & Crafts) Ser 01
5.875%, 6/01/30 $ 2,200 $ 2,291,278
California Hlth Fac Rev
(Cottage Health Sys) MBIA Ser 03B
5.00%, 11/01/23 2,500 2,575,550
California Poll Ctl Fin Auth
(Pacific Gas & Elec) MBIA Ser 96A AMT
5.35%, 12/01/16 15,500 16,397,140
(So Calif Edison) MBIA Ser 99C AMT
5.55%, 9/01/31 7,950 8,285,887
(Tracy Material Recovery) ACA Ser 99A AMT
5.70%, 8/01/14 3,670 3,755,328
California Pub Wks Bd Lease Rev
(Coalinga) Ser 04A
5.50%, 6/01/22-6/01/23 6,790 7,221,820
(Dept of Hlth Svcs-Richmond Lab)
XLCA Ser 05B
5.00%, 11/01/30 1,270 1,299,883
(Univ of Calif Proj) Ser 05C
5.00%, 4/01/23 3,130 3,229,816
(Various Univ Calif Projs) Ser 04F
5.00%, 11/01/26 8,065 8,272,593
California Rural MFA SFMR
(Mtg Rev) GNMA/FNMA Ser 00B AMT
6.25%, 12/01/31 165 165,894
(Mtg Rev) GNMA/FNMA Ser 00D AMT
6.00%, 12/01/31 520 522,137
(Mtg Rev) GNMA/FNMA Ser 99A AMT
5.40%, 12/01/30 450 454,901
(Mtg Rev) MBIA Ser 99A AMT
5.40%, 12/01/30 1,110 1,124,297
California State University Rev
FGIC Ser 03A
5.00%, 11/01/22 6,000 6,218,340
California Statewide Cmnty Dev Auth
(Kaiser Hosp) Ser 01A
5.55%, 8/01/31 18,000 18,838,800
(San Diego Space & Science) Ser 96
7.50%, 12/01/16 2,570 2,720,782
California Statewide Cmnty Dev Auth Ed Fac
(Drew College Prep) Ser 00
7.25%, 10/01/30 8,000 8,577,280
(Saint Mark's Sch) Ser 01
6.75%, 6/01/28 2,555 2,642,049
(Sonoma Cntry Day Sch) Ser 99
6.00%, 1/01/29 11,315 11,877,355
(Wildwood Elem Sch) Ser 01
7.00%, 11/01/29 4,000 4,294,760
(Windward Sch) Ser 99
6.90%, 9/01/23 1,960 2,007,256
42 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California Statewide Cmnty Dev Auth Rev
(Daughters of Charity Health) Ser 05A
5.25%, 7/01/24 $ 3,225 $ 3,316,880
California Statewide MFHR
(Highland Creek Apts) FNMA Ser 01K AMT
5.40%, 4/01/34 5,745 5,867,771
(Santa Paula Vlg Apt) FNMA Ser 98D AMT
5.43%, 5/01/28 2,090 2,111,799
California Veterans Hsg
AMBAC Ser 02A
5.35%, 12/01/27 22,320 23,403,190
Carson Assmt Dist
(Dominguez Tech Ctr) Ser 01-1
6.35%, 9/02/23 3,825 3,950,498
6.375%, 9/02/31 5,000 5,163,100
Castaic Lake Wtr Agy
AMBAC Ser 04A
5.00%, 8/01/16-8/01/18 4,325 4,537,754
MBIA Ser 01A
5.20%, 8/01/30 1,625 1,678,576
Chino CFD
(Spectrum South) Ser 99
6.35%, 9/01/29 3,450 3,529,523
Chino Hills CFD
(Fairfield Ranch) Ser 00
6.95%, 9/01/30 5,200 5,487,768
Coachella Valley Uni Sch Dist
FGIC Ser 05A
5.00%, 8/01/25 2,900 3,019,625
Commerce Joint Pwrs Fin Auth Lease Rev
(Cmnty Ctr Proj) XLCA Ser 04
5.00%, 10/01/34 2,015 2,052,318
Corona CFD
(Eagle Glen) Ser 98
5.875%, 9/01/23 3,260 3,337,132
(Eagle Glen) Ser 98 ETM
5.875%, 9/01/23 3,005 3,076,098
East Bay Mun Util Dist Wtr Sys Rev
MBIA Sub Ser 05A
5.00%, 6/01/27 3,600 3,732,804
East Palo Alto Pub Fin Auth Rev
(University Circle Gateway 101)
RADIAN Ser 05A
5.00%, 10/01/25 4,390 4,505,106
Eastern Wtr CFD
(Morningstar Ranch) Ser 02
6.40%, 9/01/32 3,765 3,844,630
El Centro Fin Auth Hosp Rev
(El Centro Med Ctr) Ser 01
5.375%, 3/01/26 18,000 18,659,700
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 43
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Elk Grove Assmt Dist
(E. Franklin Cmnty) Ser 02
5.80%, 8/01/25 $ 1,000 $ 1,064,100
6.00%, 8/01/33 5,000 5,332,550
Encinitas Rec Rev
(Encinitas Ranch Golf Course) Ser 04
5.50%, 9/01/23-9/01/24 1,110 1,092,978
5.60%, 9/01/26 1,000 990,220
(Encinitas Ranch Golf Course) Ser 96A
7.75%, 9/01/26 9,735 10,058,397
Fontana
(Heritage West End) Ser 99A
6.50%, 9/01/28 8,720 9,235,614
Fontana Pub Fin Auth
(No Fontana Redev Proj) AMBAC Ser 03A
5.50%, 9/01/32 1,000 1,061,560
Fremont Uni Sch Dist
(Election 2002) FSA Ser 05B
5.00%, 8/01/26 1,745 1,812,950
Fresno Joint Pwrs Lease Rev
XLCA Ser 04A
5.25%, 10/01/21-10/01/24 3,425 3,618,472
5.375%, 10/01/17 1,315 1,416,728
Gilroy Uni Sch Dist
FGIC
5.00%, 8/01/27 1,500 1,545,825
Huntington Park Pub Fin Auth Rev
FSA Ser 04A
5.25%, 9/01/17 1,000 1,093,160
Kaweah Delta Health Care Dist
MBIA Ser 04
5.25%, 8/01/25-8/01/26 3,780 3,994,667
Kern Cnty
(Tejon Industrial Complex) Ser 00A
7.20%, 9/01/30 9,925 10,137,296
La Verne Spl Tax
Ser 98
5.875%, 3/01/14 4,830 4,954,904
Lammersville Sch Dist CFD
(Mountain House) Ser 02
6.375%, 9/01/32 4,250 4,549,582
Lancaster Redev Agy Tax Alloc
(Fire Protn Fac Proj) XLCA Ser 04
5.00%, 12/01/23 1,120 1,154,619
(Sheriffs Fac Proj) XLCA Ser 04
5.00%, 12/01/23 1,875 1,932,956
Loma Linda Hosp Rev
(Loma Linda Univ Med Ctr) Ser 05A
5.00%, 12/01/23 2,000 2,018,100
44 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Los Angeles Cmnty Redev Agy
Ser 04L
5.00%, 3/01/17 $ 2,565 $ 2,560,588
5.10%, 3/01/19 1,350 1,342,373
Los Angeles Cmnty Redev MFHR
(Grand Ctrl Proj) Ser 93A AMT
5.85%, 12/01/26 4,030 4,031,813
Los Angeles Cnty Arpt
(Ontario Int'l Arpt) FGIC Ser 96A AMT
6.00%, 5/15/22 12,780 13,025,632
Los Angeles Cnty MTA
FGIC Ser 00A
5.25%, 7/01/30 2,750 2,878,728
Los Angeles Cnty Pub Works
AMBAC Ser 97V-B
5.125%, 12/01/29 3,400 3,513,526
Los Angeles Dept of Wtr & Pwr
MBIA Ser 01A
5.00%, 7/01/24 1,500 1,536,885
Los Angeles Harbor Rev
MBIA Ser 96B AMT
6.20%, 8/01/25 10,000 10,159,500
Ser 96B AMT
5.375%, 11/01/23 8,250 8,398,087
Los Angeles MFHR
(Park Plaza West) GNMA AMT
5.50%, 1/20/43 5,000 5,187,750
Los Angeles Uni Sch Dist
MBIA Ser 03A
5.375%, 7/01/16 9,700 10,522,851
Manteca Uni Sch Dist
FSA Ser 04
5.25%, 8/01/22 1,390 1,517,032
Marin Wtr Dist Rev
AMBAC Ser 04
5.25%, 7/01/20 3,040 3,241,126
Murrieta Valley Uni Sch Dist
(Election 2002) FSA Ser 05B
5.125%, 9/01/29 1,275 1,332,107
Natomas Uni Sch Dist
(Election of 2002) FGIC Ser 04B
5.00%, 9/01/28 3,000 3,098,820
Norco Redev Agy Tax Alloc
(Norco Redev Proj No 1) RADIAN Ser 04
5.00%, 3/01/24 3,060 3,073,556
(Ref Norco Redev Proj Area No 1)
AMBAC Ser 05
5.00%, 3/01/26 1,360 1,386,166
Ohlone Cmnty College Dist
FSA Ser 05B
5.00%, 8/01/24 1,850 1,929,162
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 45
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Ontario Assmt Dist
(Calif Commerce Ctr So)
7.70%, 9/02/10 $ 3,805 $ 3,839,625
Ontario COP
(Wtr Sys Impt Proj) MBIA Ser 04
5.25%, 7/01/21 1,700 1,810,075
Orange Cnty CFD
(Ladera Ranch) Ser 99A
6.70%, 8/15/29 3,000 3,329,820
Orange Cnty Sr Lien
(Foothill/Eastern Corr) Ser 95 ETM
Zero coupon, 1/01/24-1/01/25 25,255 10,679,173
(San Joaquin Hills Transp Corr) MBIA
Zero coupon, 1/15/36 47,415 10,631,391
(San Joaquin Hills Transp Corr) Ser 93 ETM
Zero coupon, 1/01/19-1/01/23 75,000 37,833,250
Palm Springs Arpt Rev
(Palm Springs Regional Arpt) MBIA Ser 92 AMT
6.00%, 1/01/22 6,860 6,873,720
Palm Springs COP
Ser 91B ETM
Zero coupon, 4/15/21 37,500 18,325,125
Palmdale Wtr Dist Rev COP
FGIC Ser 04
5.00%, 10/01/24 1,775 1,839,024
Pittsburg Redev Agy
(Los Medanos Proj) Ser 03A
5.00%, 8/01/21 6,410 6,617,812
Placentia-Yorba Linda Uni Sch Dist
(Election 2002) MBIA Ser 05C
5.00%, 8/01/27 3,300 3,423,453
FGIC Ser 06
5.00%, 10/01/27 4,200 4,343,220
Port of Oakland
FGIC Ser 02L AMT
5.375%, 11/01/27 2,500 2,614,850
Rancho Cordova CFD
(Sunridge Anatolia) Ser 03
6.00%, 9/01/28 2,000 2,055,200
Riverside CFD
(MTN Cove) Ser 00
6.50%, 9/01/25 3,390 3,505,870
Riverside Cmnty College Dist
MBIA Ser 04A
5.25%, 8/01/25-8/01/26 1,980 2,160,952
Riverside Cnty Pub Fin Auth Tax Alloc
(Redev Proj) XLCA Ser 04
5.00%, 10/01/35 2,475 2,519,105
Rocklin Uni Sch Dist
MBIA Ser 04
5.00%, 9/01/25 1,000 1,034,010
46 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Roseville CFD
(No Central Roseville Highland Park) Ser 99-A
5.80%, 9/01/17 $ 6,685 $ 6,910,151
Roseville COP
AMBAC Ser 03A
5.00%, 8/01/25 7,490 7,718,819
Roseville High Sch Dist
Ser 01E
5.25%, 8/01/26 2,435 2,549,469
Sacramento CFD
(N Natomas Drain) Ser 00B
7.25%, 9/01/30 5,375 6,063,860
Sacramento City Uni Sch Dist
FSA Ser 04D
5.25%, 7/01/21-7/01/23 8,525 9,045,951
Sacramento Cnty Arpt Rev
MBIA Ser 96A AMT
5.90%, 7/01/24 5,050 5,168,170
Sacramento Cnty Hsg Auth MFHR
(Cottage Estates) FNMA Ser 00B AMT
6.00%, 2/01/33 5,300 5,561,343
(Verandas Apts) FNMA Ser 00H AMT
5.70%, 3/01/34 2,875 2,960,963
Sacramento Muni Util Dist Elec Rev
MBIA Ser 03S
5.00%, 11/15/17 5,000 5,249,350
MBIA Ser 04R-289-2
8.128%, 8/15/17(b)(c) 2,500 2,984,100
San Bernardino Cnty CFD
(Kaiser Commerce Cntr) Ser 02-1
5.90%, 9/01/33 4,750 4,983,082
(Rancho Etiwanda) Ser 01
6.40%, 9/01/31 8,000 8,217,680
(Rancho Etiwanda) Ser 01 ETM
6.40%, 9/01/31 3,135 3,220,303
San Bernardino SFMR
(Mtg Rev) GNMA/FNMA Ser 01-A1 AMT
6.35%, 7/01/34 795 795,978
San Diego Cnty COP
Ser 04A
5.50%, 9/01/44 5,000 5,206,250
San Diego HFA MFHR
(Rental Rev) GNMA/FNMA Ser 98C AMT
5.25%, 1/20/40 6,105 6,170,446
San Diego Hsg Auth MFHR
(Vista La Rosa Apt) GNMA Ser 00A AMT
6.00%, 7/20/41 10,230 10,725,439
San Diego Uni Sch Dist
(Election of 1998) MBIA Ser 04E-1
5.00%, 7/01/23-7/01/24 2,240 2,343,591
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 47
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
San Francisco City & Cnty Int'l Arpt
FSA Ser 00A AMT
6.125%, 1/01/27 $ 1,480 $ 1,543,033
San Francisco Univ Ed Fac
ACA Ser 99
5.25%, 7/01/32 16,650 16,922,227
San Jose Redev Agy Tax Alloc
MBIA Ser 04A
5.25%, 8/01/19 5,000 5,340,750
San Marcos Pub Facs Auth Tax Alloc Rev
(Proj Areas No 1 & 3) AMBAC Ser 05A
5.00%, 8/01/25 5,715 5,939,028
San Mateo Cnty Cmnty College Dist COP
MBIA Ser 04
5.25%, 10/01/20 2,870 3,075,262
San Mateo Uni Sch Dist
FSA Ser 04
5.00%, 9/01/24 2,000 2,078,560
Santa Margarita Wtr Fac Dist
(Talega) Ser 99
6.25%, 9/01/29 11,550 12,428,724
Semitropic Impt Dist Wtr Storage
XLCA Ser 04A
5.50%, 12/01/23 1,640 1,777,432
South Gate Pub Fin Auth
(South Gate Redev Proj No 1) XLCA Ser 02
5.125%, 9/01/24 1,800 1,873,494
Tejon Ranch CFD
Ser 03
6.125%, 9/01/27 1,000 1,006,490
6.20%, 9/01/33 2,375 2,388,253
Torrance COP
(Ref & Pub Impt Proj) AMBAC Ser 05B
5.00%, 6/01/24 2,900 3,001,152
Univ of Calif Regents Hgr Ed
FGIC Ser 01M
5.125%, 9/01/30 12,270 12,709,757
Vacaville Uni Sch Dist
(Election 2001) MBIA Ser 05
5.00%, 8/01/26 1,075 1,116,861
West Contra Costa Healthcare Dist COP
AMBAC Ser 04
5.375%, 7/01/21-7/01/24 4,720 5,026,722
West Kern Cnty Wtr Rev
Ser 01
5.625%, 6/01/31 3,000 3,242,460
Westminster Redev Agy MFHR
(Rose Garden Apt) Ser 93A AMT
6.75%, 8/01/24 4,300 4,312,083
48 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Yorba Linda Rec Rev
(Black Gold Golf Course Proj Rev) Ser 00
7.50%, 10/01/30 $ 5,680 $ 6,196,994
-------------
770,119,917
Colorado-0.1%
Murphy Creek Metro Dist No 3
(Ref & Impt) Ser 06
6.00%, 12/01/26 500 522,455
Ohio-0.3%
Port Auth of Columbiana Cnty SWR
(Apex Environmental Llc) Ser 04A AMT
7.125%, 8/01/25 2,000 1,986,400
Texas-0.2%
Richardson Hosp Auth Rev
(Richardson Regional) Ser 04
6.00%, 12/01/19 1,715 1,841,001
Total Long-Term Municipal Bonds
(cost $727,354,661) 774,469,773
Short-Term Municipal Notes(d)-0.2%
California-0.2%
Los Angeles Dept of Wtr & Pwr
Ser 01 B-3
3.78%, 7/01/34 1,000 1,000,000
California Dept Wtr Res Pwr Supply Rev
Ser 02 B-2
3.78%, 5/01/22 1,000 1,000,000
-------------
2,000,000
Illinois-0.0%
Illinois Dev Fin Auth PCR
(Illinois Pwr Proj) AMBAC Ser 01
2.95%, 11/01/28 100 100,000
Total Short-Term Municipal Notes
(cost $2,100,000) 2,100,000
Total Investments-96.5%
(cost $729,454,661) 776,569,773
Other assets less liabilities-3.5% 27,970,388
Net Assets-100% $ 804,540,161
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 49
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-----------------------
Payments Payments
Notional made received Unrealized
Swap Amount Termination by the by the Appreciation/
Counterparty (000) Date Portfolio Portfolio (Depreciation)
- -------------------------------------------------------------------------------
Citigroup $17,700 6/06/06 MMD* 3.910% $(337,256)
Citigroup 8,700 6/22/07 BMA** 2.962% (66,944)
Citigroup 5,600 1/25/26 BMA** 4.108% (171,052)
Goldman Sachs 4,200 7/05/06 BMA** 3.283% (3,463)
Goldman Sachs 4,200 1/05/07 BMA** 3.405% (7,313)
J.P. Morgan 8,400 4/05/07 BMA** 2.988% (50,446)
J.P. Morgan+ 4,100 10/01/07 BMA** 3.635% 783
Merrill Lynch 17,000 11/01/19 3.896% BMA** 472,956
Merrill Lynch++ 13,800 7/30/26 4.090% BMA** 479,619
Merrill Lynch+++ 10,200 8/09/26 4.063% BMA** 394,189
Morgan Stanley 4,200 10/06/06 BMA** 3.217% (8,822)
* MMD (Municipal Market Data)
** BMA (Bond Market Association)
+ Represents a forward interest rate swap whose effective date of the exchange
of cash flows is June 7, 2006.
++ Represents a forward interest rate swap whose effective date of the
exchange of cash flows is July 30, 2006.
+++ Represents a forward interest rate swap whose effective date of the
exchange of cash flows is August 9, 2006.
(a) Represents entire or partial position segregated as collateral for swap.
(b) Security is exempt from registration under rule 144A of the Securities Act
of 1933. This security is considered liquid and may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At April
30, 2006, the market value of these securities amounted to $2,984,100 or 0.4%
of net assets.
(c) Inverse floater--security with variable or floating interest rate that
moves in opposite direction of short-term interest rates.
(d) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as prime
interest rate). This instrument is payable on demand and is secured by letters
of credit support or other credit support agreements.
50 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Glossary of Terms:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Municipal Bond Assurance Corporation
AMT - Alternative Minimum Tax-(subject to)
CFD - Community Facilities District
COP - Certificate of Participation
ETM - Escrowed to Maturity
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Administration
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance, Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority
IBC - International Bancshares Corporation
MBIA - Municipal Bond Investors Assurance
MFA - Mortgage Finance Authority
MFHR - Multi-Family Housing Revenue
MTA - Metropolitan Transportation Authority
MTN - Medium Term Note
PCR - Pollution Control Revenue
RADIAN - Radian Group, Inc.
SFMR - Single-Familty Mortgage Revenue
SWR - Solid Waste Revenue
XLCA - XL Capital Assurance
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 51
INSURED CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2006 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL BONDS-97.7%
Long-Term Municipal Bonds-92.3%
California-92.3%
Acalanes California Union High Sch Dist
(Ref-2013 Crossover) FSA Ser 05B
5.25%, 8/01/24 $ 2,000 $ 2,146,700
Banning Util Auth Wtr & Enterprise Rev
(Ref & Impt Proj) FGIC Ser 05
5.25%, 11/01/30 1,140 1,211,877
Butte-Glenn Cmnty College Dist
(Election 2002) MBIA Ser 05B
5.00%, 8/01/25 3,620 3,767,080
California GO
Veterans Housing FSA Ser 01
5.60%, 12/01/32 4,415 4,467,715
California HFA MFHR
(Mtg Rev) AMBAC Ser 95A
6.25%, 2/01/37 5,000 5,074,650
California Pub Wks Bd Lease Rev
(Dept of Hlth Svcs-Richmond Lab) XLCA
Ser 05B
5.00%, 11/01/30 3,000 3,070,590
Capistrano Uni Sch Dist
FGIC Ser 00A
6.00%, 8/01/24 1,550 1,689,221
FSA Ser 01B
Zero coupon, 8/01/25 16,000 6,302,720
Chino Redev Agy Spl Tax
AMBAC Ser 01A
5.125%, 9/01/30 1,000 1,029,730
AMBAC Ser 01B ETM
5.25%, 9/01/30 5,435 5,667,672
Coachella Valley Uni Sch Dist
FGIC Ser 05A
5.00%, 8/01/25 400 416,500
Coronado CDD
FSA Ser 96
6.00%, 9/01/26 6,250 6,423,250
East Bay Mun Util Dist Wtr Sys Rev
MBIA Sub Ser 05A
5.00%, 6/01/27 1,400 1,451,646
East Palo Alto Pub Fin Auth Rev
(University Circle Gateway 101) RADIAN
Ser 05A
5.00%, 10/01/25 680 697,830
52 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Fontana Pub Fin Auth
AMBAC (No Fontana Redev Proj) Ser 03A
5.50%, 9/01/32 $ 4,200 $ 4,458,552
Franklin-McKinley Sch Dist
FSA Ser 02B
5.00%, 8/01/27 700 749,518
Fremont Uni Sch Dist
(Election 2002) FSA Ser 05B
5.00%, 8/01/27 920 953,847
Golden St
Tobacco Settlement Bonds RADIAN Ser 03
5.50%, 6/01/43 1,400 1,529,192
Jurupa Uni Sch Dist
(Election 2001) FGIC Ser 04
5.00%, 8/01/22 1,340 1,390,170
Long Beach
(Aquarium of the Pacific Proj) AMBAC Ser 01
5.25%, 11/01/30(a) 6,500 6,794,190
Los Angeles Dept of Wtr & Pwr
MBIA Ser 01A
5.00%, 7/01/24 5,900 6,045,081
Mojave Wtr Agy Imp Dist
(Morongo Basin Pipeline) FGIC Ser 96
5.80%, 9/01/22 10,000 10,269,500
Murrieta Valley Uni Sch Dist
(Election 2002) FSA Ser 05B
5.125%, 9/01/29 225 235,078
Norco Redev Agy Tax Alloc
(Ref Norco Redev Proj Area No 1) AMBAC
Ser 05
5.00%, 3/01/26 540 550,390
Orange Cnty COP
(Loma Ridge Data Ctr Proj) AMBAC
6.00%, 6/01/21 1,000 1,131,770
Orange Cnty Recovery Certificates
MBIA Ser 96A
6.00%, 7/01/26 3,000 3,071,340
Perris Union High Sch Dist
FGIC Ser 05A
5.00%, 9/01/24 800 834,488
Placentia-Yorba Linda Uni Sch Dist
(Election 2002) MBIA Ser 05C
5.00%, 8/01/27 1,600 1,659,856
Poway Redev Agy
(Paguay Proj) AMBAC Ser 01 ETM
5.375%, 12/15/31 6,170 6,529,958
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 53
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Rancho Cordova COP
(City Hall Fac Acq Proj) XLCA Ser 05
5.00%, 2/01/24 $ 2,645 $ 2,724,112
Redding Elec Sys Rev
MBIA Ser 92A
9.359%, 7/01/22(b) 2,000 2,609,160
Riverside Cnty Pub Fin Auth Tax Alloc Rev
(Redev Proj) XLCA Ser 04
5.00%, 10/01/23 1,955 2,014,451
Riverside Cnty Spl Tax
(Jurupa Valley) AMBAC Ser 01
5.125%, 10/01/35 5,000 5,134,650
(Jurupa Valley) AMBAC Ser 01 ETM
5.25%, 10/01/35(c) 8,000 8,353,760
San Diego Uni Sch Dist
(Election of 1998) MBIA Ser 04E-1
5.00%, 7/01/23 1,000 1,046,340
Southwestern Cmnty College Dist
MBIA Ser 05
5.00%, 8/01/24 1,000 1,056,120
Torrance COP
(Ref & Pub Impt Proj) AMBAC Ser 05B
5.00%, 6/01/24 465 481,219
Total Long-Term Municipal Bonds
(cost $107,853,534) 113,039,923
Short-Term Municipal Notes(d)-5.4%
California-5.4%
California Dept Wtr Res Pwr Rev
(Var-Sub) Ser 05F-2
3.78%, 5/01/20 3,000 3,000,000
Ser 01 B-3
3.80%, 5/01/22 2,500 2,500,000
Los Angeles Dept of Wtr & Pwr
Subser 01B-3
3.78%, 7/01/34 1,050 1,050,000
Total Short-Term Municipal Notes
(cost $6,550,000) 6,550,000
Total Investments-97.7%
(cost $114,403,534) 119,589,923
Other assets less liabilities-2.3% 2,825,786
Net Assets-100% $ 122,415,709
54 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
------------------------
Payments Payments
Notional made received Unrealized
Swap Amount Termination by the by the Appreciation/
Counterparty (000) Date Portfolio Portfolio (Depreciation)
- -------------------------------------------------------------------------------
Citigroup $ 1,400 6/22/07 BMA* 2.962% ($10,773)
Citigroup 900 1/25/26 BMA* 4.108% (27,491)
Goldman Sachs 700 7/05/06 BMA* 3.283% (577)
Goldman Sachs 700 1/05/07 BMA* 3.405% (1,219)
J.P. Morgan 1,300 4/05/07 BMA* 2.988% (7,807)
J.P. Morgan+ 600 10/01/07 BMA* 3.635% 115
Merrill Lynch++ 3,100 10/21/16 BMA* 4.128% 2,455
Merrill Lynch 2,000 11/01/19 3.896% BMA* 55,642
Merrill Lynch+++ 700 7/30/26 4.090% BMA* 24,329
Morgan Stanley 700 10/06/06 BMA* 3.217% (1,470)
* BMA (Bond Market Association)
+ Represents a forward interest rate swap whose effective date of the exchange
of cash flows is June 7, 2006.
++ Represents a forward interest rate swap whose effective date of the
exchange of cash flows is October 23, 2006.
+++ Represents a forward interest rate swap whose effective date of the
exchange of cash flows is July 30, 2006.
FINANCIAL FUTURES CONTRACTS PURCHASED (see Note D)
Value at
Number of Expiration Original April 30, Unrealized
Type Contracts Month Value 2006 Depreciation
- -------------------------------------------------------------------------------
U.S. T-Bond
Future 28 June 2006 $ 3,161,191 $ 2,991,625 $ (169,566)
U.S. T-Note
10 Yr Future 62 June 2006 6,676,858 6,545,844 (131,014)
$ (300,580)
(a) Position with a market value of $280,109 has been segregated to
collateralize margin requirements for open future contracts.
(b) Inverse floater--security with variable or floating interest rate that
moves in opposite direction of short-term interest rates.
(c) Represents entire or partial position segregated as collateral for
interest rate swap.
(d) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as prime
interest rate). This instrument is payable on demand and is secured by letters
of credit support or other credit support agreements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 55
Glossary of Terms:
AMBAC - American Municipal Bond Assurance Corporation
CDD - Community Development District
COP - Certificate of Participation
ETM - Escrowed to Maturity
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Assurance, Inc.
GO - General Obligation
HFA - Housing Finance Authority
MBIA - Municipal Bond Investors Assurance
MFHR - Multi-Family Housing Revenue
RADIAN - Radian Group, Inc.
XLCA - XL Capital Assurance
See notes to financial statements.
56 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
STATEMENT OF ASSETS & LIABILITIES
April 30, 2006 (unaudited)
Insured
National National
-------------- --------------
Assets
Investments in securities, at value
(cost $424,014,925 and $139,351,731,
respectively) $ 439,045,365 $ 147,070,774
Cash -0- 250,250
Interest receivable 7,672,036 1,953,302
Receivable for capital stock sold 731,486 5,390
Unrealized appreciation of swap
contracts 420 174,078
Total assets 447,449,307 149,453,794
Liabilities
Due to custodian 779,814 -0-
Payable for capital stock redeemed 1,755,346 223,966
Dividends payable 543,508 158,337
Distribution fee payable 169,755 51,403
Advisory fee payable 78,493 54,505
Unrealized depreciation of swap
contracts 73,321 25,053
Transfer Agent fee payable 41,303 11,301
Administrative fee payable 5,956 5,971
Accrued expenses and other liabilities 107,310 72,457
Total liabilities 3,554,806 602,993
Net Assets $ 443,894,501 $ 148,850,801
Composition of Net Assets
Capital stock, at par $ 44,331 $ 14,714
Additional paid-in capital 480,686,704 143,403,380
Undistributed/distributions in excess of net
investment income (279,013) 221,811
Accumulated net realized loss on
investment transactions (51,513,990) (2,657,172)
Net unrealized appreciation of
investments 14,956,469 7,868,068
$ 443,894,501 $ 148,850,801
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 57
New York California
-------------- --------------
Assets
Investments in securities, at value
(cost $447,749,465 and $729,454,661,
respectively) $ 461,506,597 $ 776,569,773
Cash 16,091 -0-
Interest receivable 7,301,118 10,364,782
Receivable for investment securities sold 4,665,000 18,657,138
Receivable for capital stock sold 1,502,237 2,742,357
Unrealized appreciation of swap contracts 69,294 1,347,547
Receivable for variation margin on futures
contracts 2,234 -0-
Total assets 475,062,571 809,681,597
Liabilities
Due to custodian -0- 128,483
Payable for capital stock redeemed 1,291,239 2,719,603
Dividends payable 520,302 921,367
Distribution fee payable 215,747 328,396
Unrealized depreciation of
swap contracts 141,156 645,296
Advisory fee payable 44,545 231,758
Transfer Agent fee payable 29,586 34,620
Administrative fee payable 5,980 5,967
Accrued expenses and other liabilities 81,593 125,946
Total liabilities 2,330,148 5,141,436
Net Assets $ 472,732,423 $ 804,540,161
Composition of Net Assets
Capital stock, at par $ 48,385 $ 74,208
Additional paid-in capital 471,909,087 780,849,526
Distributions in excess of net investment
income (394,159) (1,022,461)
Accumulated net realized loss on
investment transactions (12,488,689) (23,178,475)
Net unrealized appreciation of investments 13,657,799 47,817,363
$ 472,732,423 $ 804,540,161
See notes to financial statements.
58 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Insured
California
--------------
Assets
Investments in securities, at value (cost $114,403,534) $ 119,589,923
Cash 143,921
Receivable for investment securities sold 1,542,219
Interest receivable 1,414,717
Unrealized appreciation of swap contracts 82,541
Receivable for capital stock sold 34,706
Receivable for variation margin on futures contracts 15,031
Total assets 122,823,058
Liabilities
Dividends payable 127,550
Payable for capital stock redeemed 53,493
Unrealized depreciation of swap contracts 49,337
Distribution fee payable 47,834
Advisory fee payable 45,618
Audit fee payable 22,285
Printing fee payable 22,230
Administrative fee payable 5,974
Transfer Agent fee payable 5,880
Accrued expenses and other liabilities 27,148
Total liabilities 407,349
Net Assets $ 122,415,709
Composition of Net Assets
Capital stock, at par $ 8,953
Additional paid-in capital 116,836,717
Distributions in excess of net investment income (145,811)
Accumulated net realized gain on investment transactions 796,837
Net unrealized appreciation of investments 4,919,013
$ 122,415,709
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 59
Net Asset Value Per Share--45,350,000,000 shares of capital stock
authorized, $.001 par value
Shares Net Asset
National Portfolio Net Assets Outstanding Value
- -------------------------------------------------------------------------------
Class A $ 341,428,183 34,090,425 $10.02*
Class B $ 41,753,064 4,173,627 $10.00
Class C $ 60,713,254 6,066,897 $10.01
Insured National Portfolio
- -------------------------------------------------------------------------------
Class A $ 123,472,203 12,200,344 $10.12*
Class B $ 13,705,656 1,357,739 $10.09
Class C $ 11,672,942 1,155,837 $10.10
New York Portfolio
- -------------------------------------------------------------------------------
Class A $ 303,205,073 31,021,063 $ 9.77*
Class B $ 122,878,493 12,587,459 $ 9.76
Class C $ 46,648,857 4,776,078 $ 9.77
California Portfolio
- -------------------------------------------------------------------------------
Class A $ 583,382,574 53,805,314 $10.84*
Class B $ 99,740,982 9,201,811 $10.84
Class C $ 121,416,605 11,200,698 $10.84
Insured California Portfolio
- -------------------------------------------------------------------------------
Class A $ 92,254,632 6,746,506 $13.67*
Class B $ 12,966,317 948,699 $13.67
Class C $ 17,194,760 1,258,248 $13.67
* The maximum offering price per share for Class A shares of National
Portfolio, Insured National Portfolio, New York Portfolio, California Portfolio
and Insured California Portfolio were $10.46, $10.57, $10.20, $11.32 and
$14.28, respectively, which reflects a sales charge of 4.25%.
See notes to financial statements.
60 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2006 (unaudited)
Insured
National National
-------------- --------------
Investment Income
Interest $ 11,963,371 $ 3,790,367
Expenses
Advisory fee 1,003,944 339,074
Distribution fee--Class A 508,619 186,329
Distribution fee--Class B 230,321 74,170
Distribution fee--Class C 305,270 58,229
Transfer agency--Class A 125,318 39,703
Transfer agency--Class B 19,082 5,326
Transfer agency--Class C 23,537 3,914
Custodian 92,870 63,452
Administrative 38,000 38,000
Printing 33,441 12,854
Registration fees 23,155 21,941
Audit 21,546 21,417
Legal 13,516 11,701
Directors' fees and expenses 3,500 2,900
Miscellaneous 13,256 5,873
Total expenses 2,455,375 884,883
Less: advisory fee waived (see Note B) (559,423) (7,427)
Less: expense offset arrangement
(see Note B) (3,967) (1,139)
Net expenses 1,891,985 876,317
Net investment income 10,071,386 2,914,050
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions 1,000,747 (12,087)
Swap contracts (11,960) 48,157
Net change in unrealized
appreciation/depreciation of:
Investments (2,627,996) (910,391)
Swap contracts (69,942) 39,918
Net loss on investment transactions (1,709,151) (834,403)
Net Increase in Net Assets from
Operations $ 8,362,235 $ 2,079,647
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 61
New York California
-------------- --------------
Investment Income
Interest $ 11,814,766 $ 20,991,994
Expenses
Advisory fee 1,066,970 1,841,899
Distribution fee--Class A 449,347 877,897
Distribution fee--Class B 644,140 552,751
Distribution fee--Class C 229,081 614,034
Transfer agency--Class A 91,067 131,986
Transfer agency--Class B 43,921 28,406
Transfer agency--Class C 14,485 28,791
Custodian 83,131 136,882
Printing 41,266 39,074
Administrative 38,000 38,000
Audit 21,417 21,316
Legal 16,516 21,255
Registration fees 9,066 11,417
Directors' fees and expenses 2,900 2,730
Miscellaneous 13,534 22,816
Total expenses 2,764,841 4,369,254
Less: advisory fee waived (see Note B) (775,087) (396,890)
Less: expense offset arrangement
(see Note B) (3,294) (3,919)
Net expenses 1,986,460 3,968,445
Net investment income 9,828,306 17,023,549
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain on:
Investment transactions 4,599,913 710,439
Futures contracts 34,164 212,604
Swap contracts 12,663 228,952
Net change in unrealized
appreciation/depreciation of:
Investments (6,408,269) (2,597,647)
Futures contracts (63,996) (87,539)
Swap contracts (23,187) 191,858
Net loss on investment transactions (1,848,712) (1,341,333)
Net Increase in Net Assets from
Operations $ 7,979,594 $ 15,682,216
See notes to financial statements.
62 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Insured
California
--------------
Investment Income
Interest $ 3,132,076
Expenses
Advisory fee 284,255
Distribution fee--Class A 141,748
Distribution fee--Class B 71,330
Distribution fee--Class C 87,854
Transfer agency--Class A 21,140
Transfer agency--Class B 3,738
Transfer agency--Class C 4,114
Custodian 62,059
Administrative 38,000
Audit 20,528
Legal 9,568
Registration fees 6,407
Directors' fees and expenses 2,800
Printing 2,736
Miscellaneous 5,984
Total expenses 762,261
Less: expense offset arrangement (see Note B) (562)
Net expenses 761,699
Net investment income 2,370,377
Realized and Unrealized Gain (Loss) on Investment
Transactions
Net realized gain (loss) on:
Investment transactions 878,285
Futures contracts (186,248)
Swap contracts 11,620
Net change in unrealized appreciation/depreciation of
Investments (1,455,019)
Futures contracts (193,290)
Swap contracts 911
Net loss on investment transactions (943,741)
Net Increase in Net Assets from Operations $ 1,426,636
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 63
STATEMENT OF CHANGES IN NET ASSETS
National
-------------------------------
Six Months
Ended April 30, Year Ended
2006 October 31,
(unaudited) 2005
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 10,071,386 $ 20,904,148
Net realized gain on investment
transactions 988,787 2,838,059
Net change in unrealized
appreciation/depreciation of
investments (2,697,938) (6,223,658)
Net increase in net assets from
operations 8,362,235 17,518,549
Dividends to Shareholders from
Net investment income
Class A (7,970,379) (15,963,828)
Class B (924,387) (2,450,437)
Class C (1,223,079) (2,615,269)
Capital Stock Transactions
Net decrease (2,973,777) (33,454,693)
Total decrease (4,729,387) (36,965,678)
Net Assets
Beginning of period 448,623,888 485,589,566
End of period (including distributions in
excess of net investment income of
($279,013) and ($232,554),
respectively) $ 443,894,501 $ 448,623,888
See notes to financial statements.
64 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Insured National
-------------------------------
Six Months
Ended April 30, Year Ended
2006 October 31,
(unaudited) 2005
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 2,914,050 $ 6,233,586
Net realized gain on investment
transactions 36,070 1,315,888
Net change in unrealized
appreciation/depreciation of
investments (870,473) (3,004,391)
Net increase in net assets from
operations 2,079,647 4,545,083
Dividends to Shareholders from
Net investment income
Class A (2,474,059) (5,178,839)
Class B (244,795) (670,798)
Class C (191,992) (406,577)
Capital Stock Transactions
Net decrease (3,382,357) (10,278,839)
Total decrease (4,213,556) (11,989,970)
Net Assets
Beginning of period 153,064,357 165,054,327
End of period (including undistributed net
investment income of $221,811, and
$218,607, respectively) $ 148,850,801 $ 153,064,357
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 65
New York
-------------------------------
Six Months
Ended April 30, Year Ended
2006 October 31,
(unaudited) 2005
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 9,828,306 $ 20,507,437
Net realized gain on investment
transactions 4,646,740 2,666,917
Net change in unrealized
appreciation/depreciation of
investments (6,495,452) (8,464,430)
Net increase in net assets from
operations 7,979,594 14,709,924
Dividends to Shareholders from
Net investment income
Class A (6,597,808) (13,054,686)
Class B (2,394,013) (5,686,805)
Class C (850,062) (1,765,080)
Capital Stock Transactions
Net increase 887,466 2,697,090
Total decrease (974,823) (3,099,557)
Net Assets
Beginning of period 473,707,246 476,806,803
End of period (including distributions in
excess of net investment income of
($394,159) and ($380,582),
respectively) $ 472,732,423 $ 473,707,246
See notes to financial statements.
66 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
California
-------------------------------
Six Months
Ended April 30, Year Ended
2006 October 31,
(unaudited) 2005
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 17,023,549 $ 36,148,395
Net realized gain on investment
transactions 1,151,995 7,986,016
Net change in unrealized
appreciation/depreciation of
investments (2,493,328) (13,248,681)
Net increase in net assets from
operations 15,682,216 30,885,730
Dividends to Shareholders from
Net investment income
Class A (12,759,241) (25,712,923)
Class B (2,024,733) (5,556,168)
Class C (2,248,542) (4,914,162)
Capital Stock transactions
Net decrease (31,346,808) (61,585,736)
Total decrease (32,697,108) (66,883,259)
Net Assets
Beginning of period 837,237,269 904,120,528
End of period (including distributions in
excess of net investment income of
($1,022,461) and ($1,013,494),
respectively) $ 804,540,161 $ 837,237,269
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 67
Insured California
-------------------------------
Six Months
Ended April 30, Year Ended
2006 October 31,
(unaudited) 2005
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 2,370,377 $ 5,192,141
Net realized gain on investment
transactions 703,657 2,205,455
Net change in unrealized
appreciation/depreciation of
investments (1,647,398) (4,060,894)
Net increase in net assets from
operations 1,426,636 3,336,702
Dividends and Distributions to
Shareholders from
Net investment income
Class A (1,858,883) (3,949,909)
Class B (230,257) (620,847)
Class C (284,189) (619,928)
Net realized gain on investment transactions
Class A (1,583,808) -0-
Class B (245,775) -0-
Class C (296,689) -0-
Capital Stock Transactions
Net decrease (5,420,782) (11,812,030)
Total decrease (8,493,747) (13,666,012)
Net Assets
Beginning of period 130,909,456 144,575,468
End of period (including distributions in
excess of net investment income of
($145,811) and ($142,859),
respectively) $ 122,415,709 $ 130,909,456
See notes to financial statements.
68 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2006 (unaudited)
NOTE A
Significant Accounting Policies
AllianceBernstein Municipal Income Fund, Inc. (the "Fund"), is registered under
the Investment Company Act of 1940 as an open-end management investment
company. The Fund, which is a Maryland corporation, operates as a series
company currently comprised of the diversified National Portfolio, Insured
National Portfolio, New York Portfolio and California Portfolio and the
non-diversified Insured California Portfolio (the "Portfolios"). Each series is
considered to be a separate entity for financial reporting and tax purposes.
Each Portfolio offers three classes of shares: Class A, Class B and Class C
Shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to
a contingent deferred sales charge of 1%. Class B shares are currently sold
with a contingent deferred sales charge which declines from 3% to zero
depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares six years after the end of the calendar
month of purchase. Class C shares are subject to a contingent deferred sales
charge of 1% on redemptions made within the first year after purchase. All
three classes of shares have identical voting, dividend, liquidation and other
rights, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. The financial
statements have been prepared in conformity with U.S. generally accepted
accounting principles which require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. Additional
information about some of the items discussed in these notes to financial
statements is contained in the Fund's Statement of Additional Information,
which is available upon request. 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 values of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange 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 not listed
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 69
on an exchange but traded on The NASDAQ Stock Market, Inc. ("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) (but excluding securities traded on NASDAQ) 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. (prior to February 24, 2006 known as Alliance Capital
Management L.P.) (the "Adviser") may establish procedures whereby changes in
market yields or spreads are used to adjust, on a daily basis, a recently
obtained quoted price on a security; and OTC and other derivatives are valued
on the basis of a quoted bid price or spread from a major broker/dealer in such
security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Taxes
It is each Portfolio's policy to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the trade date securities are purchased or sold. As described more fully in the
prospectus for the Portfolios, each portfolio may buy and sell securities from
70 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
other affiliated funds in accordance with the requirements of Rule 17a-7 of the
Investment Company Act of 1940. Each Portfolio has adopted procedures to ensure
that all such transactions are done in accordance with the requirements of Rule
17a-7. Investment gains and losses are determined on the identified cost basis.
The Portfolios amortize premiums and accrete original issue discount and market
discount as adjustments to interest income.
The New York, Insured California and California Portfolios follow an investment
policy of investing primarily in municipal obligations of one state. Economic
changes affecting the state and certain of its public bodies and municipalities
may affect the ability of issuers within the state to pay interest on, or repay
principal of, municipal obligations held by the Portfolios.
4. Class Allocations
All income earned and expenses incurred by the Portfolios are borne on a
pro-rata basis by each settled class of shares, based on proportionate interest
in each Portfolio represented by the net assets of such class, except for class
specific expenses which are allocated to the respective class. Expenses of the
Fund are charged to each Portfolio in proportion to net assets. Realized and
unrealized gains and losses are allocated among the various share classes based
on relative net assets.
5. 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.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .45% of the first $2.5 billion, .40% of
the next $2.5 billion and .35% in excess of $5 billion, of each Portfolio's
average daily net assets. Prior to September 7, 2004, the National, New York
and California Portfolios paid the Adviser an advisory fee at an annual rate of
..625% of each Portfolio's average daily net assets. For the Insured National
Portfolio, the Agreement provided for a fee at an annual rate of up to .625% of
the first $200 million, .50% of the next $200 million and .45% in excess of
$400 million of its average daily net assets. For the Insured California
Portfolio, the Agreement provided for a fee at an annual rate of up to .55% of
the first $200 million, .50% of the next $200 million and .45% in excess of
$400 million of its average daily net assets. Such fee is accrued daily and
paid monthly.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 71
Effective June 16, 2004, the Adviser has agreed to waive its fees and bear
certain expenses to the extent necessary to limit the total portfolio operating
expenses on an annual basis as follows:
Portfolios Class A Class B Class C
- --------------------------------------------------------
National .68% 1.38% 1.38%
Insured National 1.04% 1.74% 1.74%
New York .58% 1.28% 1.28%
California .77% 1.47% 1.47%
For the six months ended April 30, 2006, such reimbursement waivers amounted to
$559,423, $7,427, $775,087 and $396,890 for National, Insured National, New
York and California Portfolios, respectively.
Pursuant to the advisory agreement, the National, Insured National, New York,
California and Insured California Portfolios each paid $38,000 to the Adviser
representing the cost of certain legal and accounting services provided to each
portfolio by the Adviser for the six months ended April 30, 2006.
Each Portfolio compensates AllianceBernstein Investor Services, Inc. (prior to
February 24, 2006 known as Alliance Global Investor Services, Inc.) ("ABIS"), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for each
Portfolio. ABIS may make payments to intermediaries that provide omnibus
account services, sub-accounting services and/or networking services. Such
compensation retained by ABIS amounted to: National Portfolio, $121,326;
Insured National Portfolio, $30,170; New York Portfolio, $83,012; California
Portfolio, $88,548 and Insured California Portfolio, $13,525 for the six months
ended April 30, 2006.
For the six months ended April 30, 2006, the Fund's expenses were reduced by:
National Portfolio $3,967; Insured National Portfolio $1,139; New York
Portfolio $3,294; California Portfolio $3,919 and Insured California Portfolio,
$562 under an expense offset arrangement with ABIS.
AllianceBernstein Investments, Inc. (prior to February 24, 2006 known as
AllianceBernstein Investment Research and Management, Inc.) (the
"Distributor"), a wholly-owned subsidiary of the Adviser, serves as the
distributor of the Fund's shares. The Distributor has advised the Fund that it
has received front-end sales charges from sales of Class A shares and
contingent deferred sales
72 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
charges imposed upon redemptions by shareholders of Class A, Class B and Class
C shares for the six months ended April 30, 2006 as follows:
Front-End Contingent Deferred Sales Charges
Sales Charges ------------------------------------
Portfolio Class A Class A Class B Class C
- --------------------------------------------------------------------------
National $ 14,848 $ 4,182 $ 9,309 $ 2,930
Insured National 2,848 6,461 8,659 143
New York 25,124 4,237 43,784 6,548
California 16,603 793 21,472 3,517
Insured California 2,084 110 2,880 71
Accrued expenses for the National Portfolio includes $561 owed to a director
under the trust's deferred compensation plan.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, each Portfolio pays distribution and servicing fees to the
Distributor at an annual rate of up to .30 of 1% of each Portfolio's average
daily net assets attributable to the Class A shares and 1% of each Portfolio's
average daily net assets attributable to both Class B and Class C shares. The
fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by each Portfolio as follows:
Portfolio Class B Class C
- ----------------- -------------- --------------
National $ 4,013,869 $ 4,723,793
Insured National 3,649,798 1,912,883
New York 7,598,394 2,758,022
California 7,436,228 5,662,929
Insured California 3,111,801 1,771,767
Such costs may be recovered from each Portfolio in future periods so long as
the Agreement is in effect. In accordance with the Agreement, there is no
provision for recovery of unreimbursed distribution costs incurred by the
Distributor beyond the current fiscal year for Class A shares. The Agreement
also provides that the Adviser may use its own resources to finance the
distribution of each Portfolio's shares.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 73
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended April 30, 2006 were as follows:
Portfolio Purchases Sales
- ----------------- -------------- --------------
National $ 65,074,197 $ 63,671,939
Insured National 10,968,433 13,804,490
New York 120,707,700 128,675,763
California 31,246,651 74,331,443
Insured California 3,915,220 12,421,661
There were no purchases or sales of U.S. government and government agency
obligations for the six months ended April 30, 2006.
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 and swap
transactions) are as follows:
Gross Unrealized Net
--------------------------------- Unrealized
Portfolio Appreciation (Depreciation) Appreciation
- -------------------------------------------------------------------------------
National $ 16,770,409 $ (1,739,969) $ 15,030,440
Insured National 7,897,120 (178,077) 7,719,043
New York 15,923,831 (2,166,699) 13,757,132
California 48,642,093 (1,526,981) 47,115,112
Insured California 5,497,748 (311,359) 5,186,389
1. Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse affects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments and the imperfect correlation between movements in the
price of the futures contracts and movements in the price of the securities
hedged or used for cover.
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 con-
74 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
tract. 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.
2. Swap Agreements
The Fund may enter into swaps to hedge its exposure to interest rates and
credit risk or for investment purposes. A swap is an agreement that obligates
two parties to exchange a series of cash flows at specified intervals based
upon or calculated by reference to changes in specified prices or rates for a
specified amount of an underlying asset. The payment flows are usually netted
against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net 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 credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the value of the underlying securities.
As of November 1, 2003, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. 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, in addition to realized gain/loss
recorded upon the termination of swap contracts on the statement of operations.
Prior to November 1, 2003, these interim payments were reflected within
interest income/expense in the statement of operations. Fluctuations in the
value of swap contracts are recorded as a component of net change in unrealized
appreciation/depreciation of investments.
NOTE E
Capital Stock
The Fund has allocated 9,100,000,000 of authorized shares each to the National
Portfolio and Insured National Portfolio and 9,050,000,000 of authorized shares
each to the New York Portfolio, California Portfolio and Insured Califor-
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 75
nia Portfolio. All shares are divided evenly into three classes. Transactions
in capital shares for each class were as follows:
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Ended
April 30, Year Ended April 30, Year Ended
2006 October 31, 2006 October 31,
National Portfolio (unaudited) 2005 (unaudited) 2005
- ------------------ ------------ ------------ -------------- --------------
Class A
Shares sold 2,426,265 2,169,106 $ 24,505,004 $ 22,038,954
Shares issued in
reinvestment of
dividends 516,226 1,016,683 5,207,639 10,332,816
Shares converted
from Class B 326,845 1,237,740 3,292,287 12,575,580
Shares redeemed (2,718,728) (4,882,449) (27,413,134) (49,621,231)
Net increase
(decrease) 550,608 (458,920) $ 5,591,796 $ (4,673,881)
Class B
Shares sold 273,405 539,179 $ 2,755,188 $ 5,476,906
Shares issued in
reinvestment of
dividends 61,943 162,344 624,127 1,647,470
Shares converted
to Class A (327,206) (1,238,960) (3,292,287) (12,575,580)
Shares redeemed (793,519) (1,642,058) (7,979,321) (16,670,311)
Net decrease (785,377) (2,179,495) $ (7,892,293) $ (22,121,515)
Class C
Shares sold 449,616 496,836 $ 4,532,828 $ 5,044,011
Shares issued in
reinvestment of
dividends 68,467 147,406 689,970 1,496,899
Shares redeemed (585,366) (1,301,218) (5,896,078) (13,200,207)
Net decrease (67,283) (656,976) $ (673,280) $ (6,659,297)
76 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Ended
April 30, Year Ended April 30, Year Ended
Insured National 2006 October 31, 2006 October 31,
Portfolio (unaudited) 2005 (unaudited) 2005
- ------------------ ------------ ------------ -------------- --------------
Class A
Shares sold 534,267 880,450 $ 5,442,998 $ 9,056,371
Shares issued in
reinvestment of
dividends 151,994 313,426 1,550,893 3,226,217
Shares converted
from Class B 43,342 294,647 441,848 3,029,121
Shares redeemed (806,939) (1,833,727) (8,225,688) (18,852,138)
Net decrease (77,336) (345,204) $ (789,949) $ (3,540,429)
Class B
Shares sold 47,461 203,316 $ 483,153 $ 2,088,215
Shares issued in
reinvestment of
dividends 16,017 42,968 163,064 441,072
Shares converted
to Class A (43,469) (295,467) (441,848) (3,029,121)
Shares redeemed (275,339) (575,604) (2,802,133) (5,908,162)
Net decrease (255,330) (624,787) $ (2,597,764) $ (6,407,996)
Class C
Shares sold 85,336 165,914 $ 867,148 $ 1,705,216
Shares issued in
reinvestment of
dividends 7,307 15,550 74,404 159,710
Shares redeemed (91,965) (214,218) (936,196) (2,195,340)
Net increase
(decrease) 678 (32,754) $ 5,356 $ (330,414)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 77
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Ended
April 30, Year Ended April 30, Year Ended
2006 October 31, 2006 October 31,
New York Portfolio (unaudited) 2005 (unaudited) 2005
- ------------------ ------------ ------------ -------------- --------------
Class A
Shares sold 2,480,308 3,926,953 $ 24,435,089 $ 39,021,649
Shares issued in
reinvestment of
dividends 488,749 963,742 4,817,842 9,574,279
Shares converted
from Class B 350,026 1,328,078 3,445,006 13,202,828
Shares redeemed (2,262,545) (4,470,905) (22,268,155) (44,406,239)
Net increase 1,056,538 1,747,868 $ 10,429,782 $ 17,392,517
Class B
Shares sold 520,466 1,926,045 $ 5,119,650 $ 19,122,910
Shares issued in
reinvestment of
dividends 187,101 432,906 1,841,898 4,294,873
Shares converted
to Class A (350,382) (1,329,811) (3,445,006) (13,202,828)
Shares redeemed (1,418,084) (2,652,730) (13,949,365) (26,320,114)
Net decrease (1,060,899) (1,623,590) $ (10,432,823) $ (16,105,159)
Class C
Shares sold 494,589 676,261 $ 4,876,581 $ 6,723,393
Shares issued in
reinvestment of
dividends 57,211 115,667 563,474 1,148,115
Shares redeemed (462,810) (651,483) (4,549,548) (6,461,776)
Net increase 88,990 140,445 $ 890,507 $ 1,409,732
78 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Ended
April 30, Year Ended April 30, Year Ended
California 2006 October 31, 2006 October 31,
Portfolio (unaudited) 2005 (unaudited) 2005
- ------------------ ------------ ------------ -------------- --------------
Class A
Shares sold 1,861,202 4,523,661 $ 20,348,744 $ 49,667,277
Shares issued in
reinvestment of
dividends 756,699 1,481,158 8,277,343 16,261,227
Shares converted
from Class B 784,531 2,379,633 8,568,596 26,135,781
Shares redeemed (3,914,804) (7,830,684) (42,785,633) (85,984,334)
Net increase
(decrease) (512,372) 553,768 $ (5,590,950) $ 6,079,951
Class B
Shares sold 148,949 369,481 $ 1,627,897 $ 4,060,353
Shares issued in
reinvestment of
dividends 124,390 339,891 1,360,004 3,728,943
Shares converted
to Class A (784,827) (2,379,792) (8,568,596) (26,135,781)
Shares redeemed (1,532,675) (3,112,103) (16,728,527) (34,127,186)
Net decrease (2,044,163) (4,782,523) $ (22,309,222) $ (52,473,671)
Class C
Shares sold 377,558 639,970 $ 4,120,481 $ 7,015,694
Shares issued in
reinvestment of
dividends 102,242 229,716 1,118,005 2,520,877
Shares redeemed (794,887) (2,254,450) (8,685,122) (24,728,587)
Net decrease (315,087) (1,384,764) $ (3,446,636) $ (15,192,016)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 79
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Ended
April 30, Year Ended April 30, Year Ended
Insured California 2006 October 31, 2006 October 31,
Portfolio (unaudited) 2005 (unaudited) 2005
- ------------------ ------------ ------------ -------------- --------------
Class A
Shares sold 100,178 393,065 $ 1,392,611 $ 5,586,379
Shares issued in
reinvestment of
dividends 168,676 166,504 2,338,428 2,364,804
Shares converted
from Class B 41,803 84,972 583,838 1,209,910
Shares redeemed (491,770) (996,530) (6,835,525) (14,120,616)
Net decrease (181,113) (351,989) $ (2,520,648) $ (4,959,523)
Class B
Shares sold 6,052 39,730 $ 84,252 $ 566,584
Shares issued in
reinvestment of
dividends 24,670 28,746 341,836 408,009
Shares converted
to Class A (41,812) (84,985) (583,838) (1,209,910)
Shares redeemed (155,866) (386,094) (2,161,883) (5,473,138)
Net decrease (166,956) (402,603) $ (2,319,633) $ (5,708,455)
Class C
Shares sold 12,111 113,212 $ 168,316 $ 1,603,951
Shares issued in
reinvestment of
dividends 26,768 27,382 370,825 388,653
Shares redeemed (80,486) (221,483) (1,119,642) (3,136,656)
Net decrease (41,607) (80,889) $ (580,501) $ (1,144,052)
NOTE F
Risks Involved in Investing in the Fund
Concentration of Credit Risk--The Portfolios of the AllianceBernstein Municipal
Income Fund are State Portfolios that may invest a large portion of their
assets in a particular state's municipal securities and their various political
subdivisions, and the performance of each of these Portfolios may be closely
tied to economic conditions within the applicable state and the financial
condition of that state and its agencies and municipalities.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
80 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $250 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the six months ended April 30, 2006.
NOTE H
Distributions to Shareholders
The tax character of distributions to be paid for the year ending October 31,
2006 will be determined at the end of the current fiscal year. The tax
character of distributions paid during the fiscal years ended October 31, 2005
and 2004 were as follows:
National Portfolio 2005 2004
-------------- --------------
Distributions paid from:
Ordinary income $ 687,169 $ 736,836
Tax-exempt income 20,342,365 24,050,076
Total distributions paid $ 21,029,534 $ 24,786,912
As of October 31, 2005, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed tax-exempt net investment income $ 410,701
Accumulated capital and other losses (52,133,402)(a)
Unrealized appreciation 17,269,575(b)
Total accumulated earnings/(deficit) $ (34,453,126)(c)
(a) On October 31, 2005, the Portfolio had a net capital loss carryforward of
$52,133,402, of which $9,864,810 expires in the year 2007, $18,808,737 expires
in the year 2008, $12,984,821 expires in the year 2010 and $10,475,034 expires
in the year 2011. To the extent future capital gains are offset by capital loss
carryforward, such gains will not be distributed. During the fiscal year ended
October 31, 2005, the Portfolio utilized capital loss carryforwards of
$2,296,682.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales, and the difference between the book and tax treatment of
swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable primarily to dividends payable.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 81
Insured National Portfolio 2005 2004
-------------- --------------
Distributions paid from:
Ordinary income $ 37,917 $ 12,360
Tax-exempt income 6,218,297 7,513,579
Total distributions paid $ 6,256,214 $ 7,525,939
As of October 31, 2005, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed ordinary income $ 394,739
Accumulated capital and other losses (2,486,146)(a)
Unrealized appreciation 8,536,408(b)
Total accumulated earnings/(deficit) $ 6,445,001(c)
(a) On October 31, 2005, the Portfolio had a net capital loss carryforward of
$2,486,146, of which $472,211 expires in the year 2007, $1,593,951 in 2008 and
$419,984 expires in the year 2010. To the extent future capital gains are
offset by capital loss carryforward, such gains will not be distributed. During
the fiscal year ended October 31, 2005, the Portfolio utilized capital loss
carryforwards of $1,402,812.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales and the realization for tax purpose of gain/losses on
certain derivative instruments, and the difference between the book and tax
treatment of swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable primarily to dividends payable.
New York Portfolio 2005 2004
-------------- --------------
Distributions paid from:
Ordinary income $ 203,413 $ -0-
Tax-exempt income 20,303,158 23,112,230
Total distributions paid $ 20,506,571 $ 23,112,230
82 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
As of October 31, 2005, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed tax-exempt net investment income $ 213,485
Accumulated capital and other losses (16,624,024)(a)
Unrealized appreciation/(depreciation) 19,657,273(b)
Total accumulated earnings/(deficit) $ 3,246,734(c)
(a) On October 31, 2005, the Portfolio had a net capital loss carryforward of
$16,624,024, of which $5,878,712 expires in the year 2008, $6,973,404 expires
in the year 2009 and $3,771,908 expires in the year 2011. To the extent future
capital gains are offset by capital loss carryforward, such gains will not be
distributed. During the fiscal year ended October 31, 2005, the Portfolio
utilized capital loss carryforwards of $2,394,416.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales and the realization for tax purposes of unrealized
gains/(losses) on certain derivative instruments, and the difference between
the book and tax treatment of swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable primarily to dividends payable.
California Portfolio 2005 2004
-------------- --------------
Distributions paid from:
Ordinary income $ 278,826 $ 662,168
Tax-exempt income 35,904,427 42,858,791
Total distributions paid $ 36,183,253 $ 43,520,959
As of October 31, 2005, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed tax-exempt net investment income $ 10,698
Accumulated capital and other losses (23,212,871)(a)
Unrealized appreciation/(depreciation) 49,219,919(b)
Total accumulated earnings/(deficit) $ 26,017,746(c)
(a) On October 31, 2005, the Portfolio had a net capital loss carryforward of
$23,212,871 of which $8,298,844 expires in the year 2008, $10,406,492 expires
in the year 2009 and $4,507,535 expires in the year 2010. To the extent future
capital gains are offset by capital loss carryforward, such gains will not be
distributed. During the fiscal year ended October 31, 2005, the Portfolio
utilized capital loss carryforwards of $9,177,413.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales and the realization for tax purposes of gains/(losses) on
certain derivative instruments and the difference between the book and tax
treament of swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable primarily to dividends payable.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 83
Insured California Portfolio 2005 2004
-------------- --------------
Distributions paid from:
Ordinary income $ 58,179 $ 193,787
Tax-exempt income 5,132,505 6,427,993
Total distributions paid $ 5,190,684 $ 6,621,780
As of October 31, 2005, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Long term capital gains $ 2,112,162(a)
Unrealized appreciation/(depreciation) 6,676,332(b)
Total accumulated earnings/(deficit) $ 8,788,494(c)
(a) During the fiscal year ended October 31, 2005, the Portfolio utilized
capital loss carryforwards of $63,273.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the realization for
tax purposes of gains/losses on certain derivative instruments, and the
difference between the book and tax treatment of swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable primarily to dividends payable.
NOTE I
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the 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.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based
84 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
on (i) their aliquot share of losses suffered by the fund due to market timing,
and (ii) a proportionate share of advisory fees paid by such fund during the
period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order and the NYAG Order contemplate that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, directed and oversaw an internal investigation and a
comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent
Directors") have initiated an investigation of the above-mentioned matters with
the advice of an independent economic consultant and independent counsel. The
Independent Directors have formed a special committee to supervise the
investigation.
On October 2, 2003, a purported class action complaint entitled Hindo, et al.
v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the
AllianceBernstein Funds, certain officers of the Adviser ("Alliance
defendants"), and certain other defendants not affiliated with the Adviser, as
well as unnamed Doe defendants. The Hindo Complaint was filed in the United
States District Court for the Southern District of New York by alleged
shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges
that certain of the Alliance defendants failed to disclose that they improperly
allowed certain hedge funds and other unidentified parties to engage in "late
trading" and "market timing" of AllianceBernstein Fund securities, violating
Sections 11 and 15 of the
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 85
Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Sections 206
and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of
compensatory damages and rescission of their contracts with the Adviser,
including recovery of all fees paid to the Adviser pursuant to such contracts.
Since October 2, 2003, 43 additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants. The
plaintiffs in such lawsuits have asserted a variety of theories for recovery
including, but not limited to, violations of the Securities Act, the Exchange
Act, the Advisers Act, the Investment Company Act, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), certain state securities
laws and common law. All state court actions against the Adviser either were
voluntarily dismissed or removed to federal court. On February 20, 2004, the
Judicial Panel on Multidistrict Litigation transferred all actions to the
United States District Court for the District of Maryland (the "Mutual Fund
MDL").
On September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Alliance Holding; and
claims brought under ERISA by participants in the Profit Sharing Plan for
Employees of the Adviser. All four complaints include substantially identical
factual allegations, which appear to be based in large part on the SEC Order
and the NYAG Order. The claims in the mutual fund derivative consolidated
amended complaint are generally based on the theory that all fund advisory
agreements, distribution agreements and 12b-1 plans between the Adviser and the
AllianceBernstein Funds should be invalidated, regardless of whether market
timing occurred in each individual fund, because each was approved by fund
trustees on the basis of materially misleading information with respect to the
level of market timing permitted in funds managed by the Adviser. The claims
asserted in the other three consolidated amended complaints are similar to
those that the respective plaintiffs asserted in their previous federal
lawsuits. All of these lawsuits seek an unspecified amount of damages.
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual
fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding ("MOU") containing
their agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commissioner") (together, the "In-
86 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
formation Requests"). Both Information Requests require the Adviser to produce
documents concerning, among other things, any market timing or late trading in
the Adviser's sponsored mutual funds. The Adviser responded to the Information
Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State of
West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Alliance Holding, and various other defendants not
affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court
of Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was
transferred to the Mutual Fund MDL.
On August 30, 2005, the deputy commissioner of securities of the West Virginia
Securities Commissioner signed a Summary Order to Cease and Desist, and Notice
of Right to Hearing addressed to the Adviser and Alliance Holding. The Summary
Order claims that the Adviser and Alliance Holding violated the West Virginia
Uniform Securities Act, and makes factual allegations generally similar to
those in the Commission Order and the NYAGOrder. On January 26, 2006, the
Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition
for Writ of Prohibition and Order Suspending Proceedings in West Virginia state
court seeking to vacate the Summary Order and for other relief. On April 12,
2006, respondents' petition was denied. On May 4, 2006, respondents appealed
the court's determination.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA
Financial, Inc., AllianceBernstein Investment Research & Management, Inc.,
certain current and former directors of the AllianceBernstein Mutual Funds, and
unnamed Doe defendants. The Aucoin Complaint names certain of the
AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was
filed in the United States District Court for the Southern District of New York
by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin
Complaint alleges, among other things, (i) that certain of the defendants
improperly authorized the payment of excessive commissions and other fees from
fund assets to broker-dealers in exchange for preferential marketing services,
(ii) that certain of the defendants misrepresented and omitted from
registration statements and other reports material facts concerning such
payments, and (iii) that certain defendants caused such conduct as control
persons of other defendants. The Aucoin Complaint asserts claims for violation
of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206
and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding
and abetting breaches of common law fiduciary duties. Plaintiffs seek an
unspecified amount
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 87
of compensatory damages and punitive damages, rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants. All nine of the lawsuits (i) were brought
as class actions filed in the United States District Court for the Southern
District of New York, (ii) assert claims substantially identical to the Aucoin
Complaint, and (iii) are brought on behalf of shareholders of the Funds.
On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional lawsuits
referenced above. On October 19, 2005, the District Court dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiffs' claim under Section 36(b) of the Investment Company Act. On January
11, 2006, the District Court granted defendants' motion for reconsideration and
dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court
denied plaintiffs' motion for leave to file an amended complaint.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the AllianceBernstein
Mutual Funds' shares or other adverse consequences to the AllianceBernstein
Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell
investments held by those funds to provide for sufficient liquidity and could
also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds. However, the Adviser believes that these
matters are not likely to have a material adverse effect on its ability to
perform advisory services relating to the AllianceBernstein Mutual Funds.
88 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
National Portfolio
-------------------------------------------------------------------------------
Class A
-------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.05 $10.13 $9.96 $9.80 $10.34 $10.14
Income From Investment
Operations
Net investment income(b)(c) .23 .47 .50 .52 .54 .54
Net realized and unrealized
gain (loss) on investment
transactions (.02) (.07) .17 .18 (.53) .21
Net increase in net asset value
from operations .21 .40 .67 .70 .01 .75
Less: Dividends and
Distributions
Dividends from net
investment income (.24) (.48) (.50) (.54) (.54) (.54)
Distributions in excess of net
investment income -0- -0- -0- -0- (.01) (.01)
Total dividends and
distributions (.24) (.48) (.50) (.54) (.55) (.55)
Net asset value,
end of period $10.02 $10.05 $10.13 $9.96 $9.80 $10.34
Total Return
Total investment return based
on net asset value(d) 2.05% 3.95% 6.92% 7.32% .06% 7.55%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $341,428 $337,201 $344,557 $373,416 $411,408 $425,506
Ratio to average net assets of:
Expenses,
net of fee waivers .68%(e)(f) .68% .68% .68% .65% .64%
Expenses,
before fee waivers .93%(e)(f) .93% 1.08% 1.11% 1.07% 1.06%
Net investment income(b) 4.68%(e)(f) 4.65% 4.94% 5.25% 5.28% 5.22%
Portfolio turnover rate 15% 25% 47% 35% 63% 194%
See footnote summary on page 104.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 89
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
National Portfolio
------------------------------------------------------------------------------
Class B
------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.04 $10.12 $9.95 $9.79 $10.33 $10.13
Income From Investment
Operations
Net investment income(b)(c) .20 .40 .43 .45 .46 .47
Net realized and unrealized
gain (loss) on investment
transactions (.04) (.07) .17 .18 (.52) .21
Net increase (decrease) in
net asset value from
operations .16 .33 .60 .63 (.06) .68
Less: Dividends and
Distributions
Dividends from net
investment income (.20) (.41) (.43) (.47) (.47) (.47)
Distributions in excess of net
investment income -0- -0- -0- -0- (.01) (.01)
Total dividends and
distributions (.20) (.41) (.43) (.47) (.48) (.48)
Net asset value,
end of period $10.00 $10.04 $10.12 $9.95 $9.79 $10.33
Total Return
Total investment return based
on net asset value(d) 1.60% 3.25% 6.18% 6.57% (.62)% 6.84%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $41,753 $49,801 $72,264 $101,287 $122,656 $132,074
Ratio to average net assets of:
Expenses,
net of fee waivers 1.38%(e)(f) 1.38% 1.39% 1.39% 1.35% 1.36%
Expenses,
before fee waivers 1.64%(e)(f) 1.64% 1.79% 1.81% 1.77% 1.79%
Net investment income(b) 3.99%(e)(f) 3.96% 4.24% 4.54% 4.57% 4.59%
Portfolio turnover rate 15% 25% 47% 35% 63% 194%
See footnote summary on page 104.
90 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
National Portfolio
------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.05 $10.13 $9.95 $9.79 $10.34 $10.13
Income From Investment
Operations
Net investment income(b)(c) .20 .40 .43 .45 .47 .47
Net realized and unrealized
gain (loss) on investment
transactions (.04) (.07) .18 .18 (.54) .22
Net increase (decrease) in
net asset value from
operations .16 .33 .61 .63 (.07) .69
Less: Dividends and
Distributions
Dividends from net
investment income (.20) (.41) (.43) (.47) (.47) (.47)
Distributions in excess of net
investment income -0- -0- -0- -0- (.01) (.01)
Total dividends and
distributions (.20) (.41) (.43) (.47) (.48) (.48)
Net asset value,
end of period $10.01 $10.05 $10.13 $9.95 $9.79 $10.34
Total Return
Total investment return based
on net asset value(d) 1.60% 3.24% 6.28% 6.57% (.72)% 6.94%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $60,714 $61,622 $68,769 $82,167 $93,032 $98,825
Ratio to average net assets of:
Expenses,
net of fee waivers 1.38%(e)(f) 1.38% 1.38% 1.38% 1.35% 1.35%
Expenses,
before fee waivers 1.63%(e)(f) 1.64% 1.78% 1.81% 1.76% 1.78%
Net investment income(b) 3.99%(e)(f) 3.96% 4.24% 4.55% 4.58% 4.61%
Portfolio turnover rate 15% 25% 47% 35% 63% 194%
See footnote summary on page 104.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 91
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Insured National Portfolio
-------------------------------------------------------------------------------
Class A
-------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.18 $10.29 $10.11 $9.92 $10.07 $9.58
Income From Investment
Operations
Net investment income(b)(c) .20 .42 .44 .47 .45 .45
Net realized and unrealized
gain (loss) on investment
transactions (.06) (.11) .20 .14 (.14) .50
Net increase in net asset value
from operations .14 .31 .64 .61 .31 .95
Less: Dividends and
Distributions
Dividends from net
investment income (.20) (.42) (.46) (.42) (.45) (.45)
Distributions in excess of net
investment income -0- -0- -0- -0- (.01) (.01)
Total dividends and
distributions (.20) (.42) (.46) (.42) (.46) (.46)
Net asset value,
end of period $10.12 $10.18 $10.29 $10.11 $9.92 $10.07
Total Return
Total investment return based
on net asset value(d) 1.39% 3.05% 6.42% 6.32% 3.13% 10.11%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $123,472 $124,957 $129,888 $139,179 $164,154 $169,744
Ratio to average net assets of:
Expenses,
net of fee waivers 1.04%(e)(f) 1.04% 1.03% 1.04% 1.01% 1.04%
Expenses,
before fee waivers 1.05%(e)(f) 1.04% 1.18% 1.16% 1.13% 1.14%
Net investment income(b) 3.99%(e)(f) 4.07% 4.28% 4.69% 4.49% 4.53%
Portfolio turnover rate 7% 17% 12% 28% 43% 105%
See footnote summary on page 104.
92 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Insured National Portfolio
------------------------------------------------------------------------------
Class B
------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.15 $10.26 $10.09 $9.89 $10.05 $9.56
Income From Investment
Operations
Net investment income(b)(c) .17 .35 .36 .40 .37 .38
Net realized and unrealized
gain (loss) on investment
transactions (.06) (.11) .19 .16 (.14) .50
Net increase in net asset value
from operations .11 .24 .55 .56 .23 .88
Less: Dividends and
Distributions
Dividends from net
investment income (.17) (.35) (.38) (.36) (.38) (.38)
Distributions in excess of net
investment income -0- -0- -0- -0- (.01) (.01)
Total dividends and
distributions (.17) (.35) (.38) (.36) (.39) (.39)
Net asset value,
end of period $10.09 $10.15 $10.26 $10.09 $9.89 $10.05
Total Return
Total investment return based
on net asset value(d) 1.04% 2.34% 5.60% 5.71% 2.34% 9.39%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $13,706 $16,375 $22,968 $34,243 $35,048 $35,326
Ratio to average net assets of:
Expenses,
net of fee waivers 1.74%(e)(f) 1.74% 1.74% 1.75% 1.72% 1.75%
Expenses,
before fee waivers 1.76%(e)(f) 1.75% 1.89% 1.87% 1.84% 1.85%
Net investment income(b) 3.31%(e)(f) 3.39% 3.58% 4.00% 3.79% 3.83%
Portfolio turnover rate 7% 17% 12% 28% 43% 105%
See footnote summary on page 104.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 93
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Insured National Portfolio
------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.16 $10.27 $10.09 $9.90 $10.05 $9.56
Income From Investment
Operations
Net investment income(b)(c) .17 .35 .37 .40 .37 .38
Net realized and unrealized
gain (loss) on investment
transactions (.06) (.11) .19 .15 (.13) .50
Net increase in net asset value
from operations .11 .24 .56 .55 .24 .88
Less: Dividends and
Distributions
Dividends from net
investment income (.17) (.35) (.38) (.36) (.38) (.38)
Distributions in excess of net
investment income -0- -0- -0- -0- (.01) (.01)
Total dividends and
distributions (.17) (.35) (.38) (.36) (.39) (.39)
Net asset value,
end of period $10.10 $10.16 $10.27 $10.09 $9.90 $10.05
Total Return
Total investment return based
on net asset value(d) 1.05% 2.34% 5.71% 5.60% 2.44% 9.39%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $11,673 $11,732 $12,198 $14,149 $17,592 $16,650
Ratio to average net assets of:
Expenses,
net of fee waivers 1.74%(e)(f) 1.74% 1.73% 1.74% 1.71% 1.74%
Expenses,
before fee waivers 1.75%(e)(f) 1.75% 1.88% 1.86% 1.83% 1.85%
Net investment income(b) 3.30%(e)(f) 3.38% 3.59% 3.98% 3.78% 3.84%
Portfolio turnover rate 7% 17% 12% 28% 43% 105%
See footnote summary on page 104.
94 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New York Portfolio
-------------------------------------------------------------------------------
Class A
-------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $9.81 $9.93 $9.79 $9.69 $9.93 $9.70
Income From Investment
Operations
Net investment income(b)(c) .22 .46 .48 .50 .53 .53
Net realized and unrealized
gain (loss) on investment
transactions (.04) (.12) .15 .11 (.25) .22
Net increase in net asset value
from operations .18 .34 .63 .61 .28 .75
Less: Dividends
Dividends from net
investment income (.22) (.46) (.49) (.51) (.52) (.52)
Total dividends (.22) (.46) (.49) (.51) (.52) (.52)
Net asset value,
end of period $9.77 $9.81 $9.93 $9.79 $9.69 $9.93
Total Return
Total investment return based
on net asset value(d) 1.79% 3.46% 6.58% 6.39% 2.89% 7.86%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $303,205 $294,005 $280,213 $311,596 $322,621 $326,500
Ratio to average net assets of:
Expenses,
net of fee waivers .58%(e)(f) .58% .59% .58% .58% .59%
Expenses,
before fee waivers .90%(e)(f) .91% 1.05% 1.06% 1.05% 1.04%
Net investment income(b) 4.40%(e)(f) 4.62% 4.93% 5.09% 5.42% 5.28%
Portfolio turnover rate 27% 19% 33% 35% 33% 92%
See footnote summary on page 104.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 95
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New York Portfolio
-------------------------------------------------------------------------------
Class B
-------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $9.80 $9.92 $9.78 $9.68 $9.93 $9.70
Income From Investment
Operations
Net investment income(b)(c) .18 .39 .41 .43 .46 .45
Net realized and unrealized
gain (loss) on investment
transactions (.04) (.12) .15 .11 (.26) .23
Net increase in net asset value
from operations .14 .27 .56 .54 .20 .68
Less: Dividends
Dividends from net
investment income (.18) (.39) (.42) (.44) (.45) (.45)
Total dividends (.18) (.39) (.42) (.44) (.45) (.45)
Net asset value,
end of period $9.76 $9.80 $9.92 $9.78 $9.68 $9.93
Total Return
Total investment return based
on net asset value(d) 1.44% 2.75% 5.85% 5.64% 2.04% 7.10%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $122,878 $133,746 $151,474 $171,881 $184,700 $165,787
Ratio to average net assets of:
Expenses,
net of fee waivers 1.28%(e)(f) 1.28% 1.30% 1.29% 1.29% 1.30%
Expenses,
before fee waivers 1.61%(e)(f) 1.62% 1.76% 1.77% 1.78% 1.76%
Net investment income(b) 3.71%(e)(f) 3.93% 4.22% 4.38% 4.70% 4.59%
Portfolio turnover rate 27% 19% 33% 35% 33% 92%
See footnote summary on page 104.
96 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
New York Portfolio
------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $9.80 $9.92 $9.78 $9.68 $9.94 $9.71
Income From Investment
Operations
Net investment income(b)(c) .18 .39 .41 .43 .46 .46
Net realized and unrealized
gain (loss) on investment
transactions (.03) (.12) .15 .11 (.27) .22
Net increase in net asset value
from operations .15 .27 .56 .54 .19 .68
Less: Dividends
Dividends from net
investment income (.18) (.39) (.42) (.44) (.45) (.45)
Total dividends (.18) (.39) (.42) (.44) (.45) (.45)
Net asset value,
end of period $9.77 $9.80 $9.92 $9.78 $9.68 $9.94
Total Return
Total investment return based
on net asset value(d) 1.54% 2.74% 5.85% 5.64% 1.94% 7.09%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $46,649 $45,956 $45,121 $52,206 $57,386 $54,631
Ratio to average net assets of:
Expenses,
net of fee waivers 1.28%(e)(f) 1.28% 1.29% 1.29% 1.29% 1.30%
Expenses,
before fee waivers 1.61%(e)(f) 1.61% 1.75% 1.77% 1.77% 1.76%
Net investment income(b) 3.71%(e)(f) 3.92% 4.23% 4.38% 4.71% 4.60%
Portfolio turnover rate 27% 19% 33% 35% 33% 92%
See footnote summary on page 104.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 97
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
California Portfolio
-------------------------------------------------------------------------------
Class A
-------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.86 $10.93 $10.63 $10.84 $11.00 $10.88
Income From Investment
Operations
Net investment income(b)(c) .24 .48 .51 .53 .55 .54
Net realized and unrealized
gain (loss) on investment
transactions (.02) (.07) .30 (.19) (.15) .14
Net increase in net asset value
from operations .22 .41 .81 .34 .40 .68
Less: Dividends and
Distributions
Dividends from net
investment income (.24) (.48) (.51) (.55) (.54) (.54)
Distributions in excess of net
investment income -0- -0- -0- -0- (.02) (.02)
Total dividends and
distributions (.24) (.48) (.51) (.55) (.56) (.56)
Net asset value,
end of period $10.84 $10.86 $10.93 $10.63 $10.84 $11.00
Total Return
Total investment return based
on net asset value(d) 1.99% 3.78% 7.80% 3.15% 3.82% 6.47%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $583,382 $590,042 $587,874 $644,868 $725,242 $755,947
Ratio to average net assets of:
Expenses,
net of fee waivers .77%(e)(f) .77% .78% .77% .76% .77%
Expenses,
before fee waivers .87%(e)(f) .86% 1.01% 1.02% 1.01% 1.02%
Net investment income(b) 4.36%(e)(f) 4.36% 4.75% 4.93% 5.05% 4.98%
Portfolio turnover rate 4% 17% 34% 33% 23% 78%
See footnote summary on page 104.
98 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
California Portfolio
-------------------------------------------------------------------------------
Class B
-------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.86 $10.93 $10.63 $10.84 $11.00 $10.88
Income From Investment
Operations
Net investment income(b)(c) .20 .40 .44 .46 .47 .46
Net realized and unrealized
gain (loss) on investment
transactions (.02) (.07) .30 (.20) (.14) .15
Net increase in net asset value
from operations .18 .33 .74 .26 .33 .61
Less: Dividends and
Distributions
Dividends from net
investment income (.20) (.40) (.44) (.47) (.47) (.46)
Distributions in excess of net
investment income -0- -0- -0- -0- (.02) (.03)
Total dividends and
distributions (.20) (.40) (.44) (.47) (.49) (.49)
Net asset value,
end of period $10.84 $10.86 $10.93 $10.63 $10.84 $11.00
Total Return
Total investment return based
on net asset value(d) 1.64% 3.06% 7.05% 2.43% 3.10% 5.74%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $99,741 $122,128 $175,215 $237,147 $279,697 $269,726
Ratio to average net assets of:
Expenses,
net of fee waivers 1.47%(e)(f) 1.47% 1.48% 1.48% 1.46% 1.48%
Expenses,
before fee waivers 1.57%(e)(f) 1.56% 1.71% 1.73% 1.72% 1.73%
Net investment income(b) 3.66%(e)(f) 3.66% 4.05% 4.22% 4.35% 4.26%
Portfolio turnover rate 4% 17% 34% 33% 23% 78%
See footnote summary on page 104.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 99
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
California Portfolio
-------------------------------------------------------------------------------
Class C
-------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $10.86 $10.93 $10.63 $10.84 $11.00 $10.88
Income From Investment
Operations
Net investment income(b)(c) .20 .40 .44 .46 .47 .46
Net realized and unrealized
gain (loss) on investment
transactions (.02) (.07) .30 (.20) (.14) .15
Net increase in net asset value
from operations .18 .33 .74 .26 .33 .61
Less: Dividends and
Distributions
Dividends from net
investment income (.20) (.40) (.44) (.47) (.47) (.46)
Distributions in excess of net
investment income -0- -0- -0- -0- (.02) (.03)
Total dividends and
distributions (.20) (.40) (.44) (.47) (.49) (.49)
Net asset value,
end of period $10.84 $10.86 $10.93 $10.63 $10.84 $11.00
Total Return
Total investment return based
on net asset value(d) 1.64% 3.06% 7.05% 2.43% 3.10% 5.74%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $121,417 $125,067 $141,031 $170,003 $209,008 $211,502
Ratio to average net assets of:
Expenses,
net of fee waivers 1.47%(e)(f) 1.47% 1.48% 1.47% 1.46% 1.47%
Expenses,
before fee waivers 1.57%(e)(f) 1.56% 1.71% 1.72% 1.71% 1.72%
Net investment income(b) 3.66%(e)(f) 3.66% 4.05% 4.23% 4.35% 4.25%
Portfolio turnover rate 4% 17% 34% 33% 23% 78%
See footnote summary on page 104.
100 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Insured California Portfolio
------------------------------------------------------------------------------
Class A
------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.01 $14.21 $14.03 $14.17 $14.45 $13.74
Income From Investment
Operations
Net investment income(c) .27 .57 .61(b) .60 .62 .63
Net realized and unrealized
gain (loss) on investment
transactions (.11) (.20) .18 (.12) (.12) .74
Net increase in net asset value
from operations .16 .37 .79 .48 .50 1.37
Less: Dividends and
Distributions
Dividends from net
investment income (.27) (.57) (.61) (.62) (.62) (.63)
Distributions in excess of net
investment income -0- -0- -0- -0- (.04) (.03)
Distributions from net realized
gain on investment
transactions (.23) -0- -0- -0- (.12) -0-
Total dividends and
distributions (.50) (.57) (.61) (.62) (.78) (.66)
Net asset value,
end of period $13.67 $14.01 $14.21 $14.03 $14.17 $14.45
Total Return
Total investment return based
on net asset value(d) 1.15% 2.60% 5.75% 3.39% 3.65% 10.16%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $92,255 $97,079 $103,414 $124,817 $144,973 $168,469
Ratio to average net assets of:
Expenses,
net of fee waivers 1.03%(e)(f) 1.02% 1.00% 1.07% 1.03% 1.04%
Expenses,
before fee waivers 1.03%(e)(f) 1.02% 1.07% 1.07% 1.03% 1.04%
Net investment income 3.93%(e)(f) 3.99% 4.29%(b) 4.24% 4.43% 4.44%
Portfolio turnover rate 3% 37% 5% 34% 31% 140%
See footnote summary on page 104.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 101
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Insured California Portfolio
------------------------------------------------------------------------------
Class B
------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.01 $14.20 $14.02 $14.16 $14.46 $13.75
Income From Investment
Operations
Net investment income(c) .22 .47 .50(b) .50 .52 .52
Net realized and unrealized
gain (loss) on investment
transactions (.11) (.19) .19 (.12) (.14) .75
Net increase in net asset value
from operations .11 .28 .69 .38 .38 1.27
Less: Dividends and
Distributions
Dividends from net
investment income (.22) (.47) (.51) (.52) (.53) (.52)
Distributions in excess of net
investment income -0- -0- -0- -0- (.03) (.04)
Distributions from net realized
gain on investment
transactions (.23) -0- -0- -0- (.12) -0-
Total dividends and
distributions (.45) (.47) (.51) (.52) (.68) (.56)
Net asset value,
end of period $13.67 $14.01 $14.20 $14.02 $14.16 $14.46
Total Return
Total investment return based
on net asset value(d) .80% 1.96% 5.02% 2.67% 2.76% 9.38%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $12,966 $15,626 $21,559 $29,285 $33,133 $27,015
Ratio to average net assets of:
Expenses,
net of fee waivers 1.74%(e)(f) 1.73% 1.71% 1.77% 1.73% 1.74%
Expenses,
before fee waivers 1.74%(e)(f) 1.73% 1.77% 1.77% 1.73% 1.74%
Net investment income 3.22%(e)(f) 3.29% 3.58%(b) 3.52% 3.70% 3.72%
Portfolio turnover rate 3% 37% 5% 34% 31% 140%
See footnote summary on page 104.
102 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Insured California Portfolio
------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------
Six Months
Ended
April 30, Year Ended October 31,
2006 ---------------------------------------------------------------
(unaudited) 2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.00 $14.20 $14.02 $14.16 $14.47 $13.75
Income From Investment
Operations
Net investment income(c) .22 .47 .51(b) .50 .52 .52
Net realized and unrealized
gain (loss) on investment
transactions (.10) (.20) .18 (.12) (.15) .76
Net increase in net asset value
from operations .12 .27 .69 .38 .37 1.28
Less: Dividends and
Distributions
Dividends from net
investment income (.22) (.47) (.51) (.52) (.53) (.52)
Distributions in excess of net
investment income -0- -0- -0- -0- (.03) (.04)
Distributions from net realized
gain on investment
transactions (.23) -0- -0- -0- (.12) -0-
Total dividends and
distributions (.45) (.47) (.51) (.52) (.68) (.56)
Net asset value,
end of period $13.67 $14.00 $14.20 $14.02 $14.16 $14.47
Total Return
Total investment return based
on net asset value(d) .88% 1.88% 5.02% 2.67% 2.69% 9.46%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $17,195 $18,204 $19,603 $21,951 $22,715 $20,541
Ratio to average net assets of:
Expenses,
net of fee waivers 1.73%(e)(f) 1.73% 1.70% 1.77% 1.73% 1.74%
Expenses,
before fee waivers 1.73%(e)(f) 1.73% 1.77% 1.77% 1.73% 1.74%
Net investment income 3.23%(e)(f) 3.29% 3.59%(b) 3.53% 3.71% 3.73%
Portfolio turnover rate 3% 37% 5% 34% 31% 140%
See footnote summary on page 104.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 103
(a) As of November 1, 2003, 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
November 1, 2003, these interim payments were reflected within interest
income/expense on the statement of operations. The effects of these changes for
the year ended October 31, 2004 were as follows:
Realized
and Unrealized Ratio of Net
Gain (Loss) on Investment
Investment Investment Income
Income Transactions to Average
Per Share* Per Share* Net Assets
----------------------------------------------
National Portfolio
Class A $ .00 $ .00 .01%
Class B .00 .00 .01%
Class C .00 .00 .01%
Insured National Portfolio
Class A .00 .00 .01%
Class B .00 .00 .01%
Class C .00 .00 .01%
New York Portfolio
Class A .00 .00 .05%
Class B .00 .00 .05%
Class C .00 .00 .05%
California Portfolio
Class A .00 .00 .00%+
Class B .00 .00 .00%+
Class C .00 .00 .00%+
Insured California Portfolio
Class A .00 .00 .00%+
Class B .00 .00 .00%+
Class C .00 .00 .00%+
* Per share amounts less than $0.01
+ Amount is less than .01%
(b) Net of fees waived by the Adviser.
(c) Based on average shares outstanding.
(d) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total return does not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. Total
investment return calculated for a period of less than one year is not
annualized.
(e) Annualized.
(f) The ratio includes expenses attributable to estimated cost of proxy
solicitation.
104 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
CALIFORNIA PORTFOLIO
RESULTS OF SHAREHOLDERS MEETING
(unaudited)
A Special Meeting of the Stockholders of the AllianceBernstein Municipal Income
Fund, Inc.--California Portfolio (the "Portfolio") was held on November 15,
2005, December 6, 2005, December 19, 2005 and December 21, 2005. At the
November 15, 2005 Meeting, with respect to the first item of business, the
election of Directors, the required number of outstanding shares were voted in
favor of the proposal, and the proposal was approved. At the December 6, 2005
Meeting, with respect to the third item of business, the amendment,
elimination, or reclassification as non-fundamental of the fundamental
investment restrictions, and the fourth item of business, the reclassification
of the Portfolio's fundamental investment objective as non-fundamental with
changes to the Portfolio's investment objective, the required number of
outstanding shares voted in favor of the proposals, and the proposals were
approved. At the December 21, 2005 Meeting, with respect to the second item of
business, the amendment and restatement of the Portfolio's Charter, the
required number of outstanding shares voted in favor of the proposal, and the
proposal was approved. A description of each proposal and number of shares
voted at the Meeting are as follows (the proposal numbers shown below
correspond to the proposal numbers in the Portfolio's proxy statement):
1. To elect eight Directors of the Portfolio, each such Director to hold
office until his or her successor is duly elected and qualified.
Withheld
Voted For Authority
--------------------------------------------
Ruth Block 118,644,255 4,286,322
David H. Dievler 118,695,836 4,234,741
John H. Dobkin 118,889,769 4,040,807
Michael J. Downey 118,872,732 4,057,845
William H. Foulk, Jr. 118,786,439 4,144,137
D. James Guzy 118,270,202 4,660,374
Marc O. Mayer 118,800,780 4,129,797
Marshall C. Turner, Jr. 118,806,850 4,123,727
Voted
Voted For Against Abstained
- -------------------------------------------------------------------------------
2. The amendment and 97,606,855 3,619,023 7,488,218
restatement of the
Portfolio's Charter.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 105
3. To amend, eliminate, or reclassify as non-fundamental, the fundamental
investment restrictions regarding:
Voted Broker
Voted For Against Abstained Non-Votes
- ------------------------------------------------------------------------------------------
3.B. Issuing Senior Securities 36,708,325 2,492,679 827,170 9,786,749
and Borrowing Money
3.C. Underwriting Securities 36,763,040 2,441,164 823,970 9,786,749
3.D. Concentration of 36,857,943 2,358,995 811,237 9,786,749
Investments
3.E. Real Estate and 36,845,906 2,380,642 801,626 9,786,749
Companies That Deal
In Real Estate
3.F. Commodity Contracts 36,850,966 2,413,948 763,260 9,786,749
and Futures Contracts
3.G. Loans 36,799,316 2,399,428 829,431 9,786,749
3.H. Joint Securities Trading 36,925,579 2,285,797 816,798 9,786,749
Accounts
3.L. Purchases of Securities 36,798,085 2,489,626 740,463 9,786,749
on Margin
3.M. Short Sales 36,629,381 2,606,115 792,678 9,786,749
3.N. Pledging, Hypothecating, 36,746,532 2,492,290 789,352 9,786,749
Mortgaging, or Otherwise
Encumbering Assets
4.B. The reclassification of the 35,042,960 1,866,474 3,118,740 9,786,749
Portfolio's fundamental
investment objective as
non-fundamental with
changes to the Portfolio's
investment objective.
106 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
INSURED CALIFORNIA PORTFOLIO
RESULTS OF SHAREHOLDERS MEETING
(unaudited)
A Special Meeting of the Stockholders of the AllianceBernstein Municipal Income
Fund, Inc.--Insured California Portfolio (the "Portfolio") was held on November
15, 2005, December 6, 2005, December 19, 2005 and December 21, 2005. At the
November 15, 2005 Meeting, with respect to the first item of business, the
election of Directors, and the third item of business, the amendment,
elimination, or reclassification as non-fundamental of the fundamental
investment restrictions, the required number of outstanding shares voted in
favor of the proposals, and the proposals were approved. At the December 6,
2005 Meeting, with respect to the fourth item of business, the reclassification
of the Portfolio's fundamental investment objective as non-fundamental with
changes to the Portfolio's investment objective, the required number of
outstanding shares voted in favor of the proposals, and the proposal was
approved. At the December 21, 2005 Meeting, with respect to the second item of
business, the amendment and restatement of the Portfolio's Charter, the
required number of outstanding shares voted in favor of the proposal, and the
proposal was approved. A description of each proposal and number of shares
voted at the Meeting are as follows (the proposal numbers shown below
correspond to the proposal numbers in the Portfolio's proxy statement):
1. To elect eight Directors of the Portfolio, each such Director to hold
office until his or her successor is duly elected and qualified.
Withheld
Voted For Authority
--------------------------------------------
Ruth Block 118,644,255 4,286,322
David H. Dievler 118,695,836 4,234,741
John H. Dobkin 118,889,769 4,040,807
Michael J. Downey 118,872,732 4,057,845
William H. Foulk, Jr. 118,786,439 4,144,137
D. James Guzy 118,270,202 4,660,374
Marc O. Mayer 118,800,780 4,129,797
Marshall C. Turner, Jr. 118,806,850 4,123,727
Voted
Voted For Against Abstained
- -------------------------------------------------------------------------------
2. The amendment and 97,606,855 3,619,023 7,488,218
restatement of the
Portfolio's Charter.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 107
3. To amend, eliminate, or reclassify as non-fundamental, the fundamental
investment restrictions regarding:
Voted Broker
Voted For Against Abstained Non-Votes
- ------------------------------------------------------------------------------------------
3.B. Issuing Senior Securities 3,830,105 167,387 103,229 1,379,541
and Borrowing Money
3.C. Underwriting Securities 3,834,492 148,384 117,845 1,379,541
3.D. Concentration of 3,834,222 148,394 118,105 1,379,541
Investments
3.E. Real Estate and 3,830,388 163,221 107,112 1,379,541
Companies That Deal
In Real Estate
3.F. Commodity Contracts 3,827,536 166,333 106,852 1,379,541
and Futures Contracts
3.G. Loans 3,830,606 163,651 106,464 1,379,541
3.L. Purchases of Securities 3,820,599 174,913 105,208 1,379,541
on Margin
3.M. Short Sales 3,821,765 169,623 109,333 1,379,541
3.N. Pledging, Hypothecating, 3,824,486 165,499 110,736 1,379,541
Mortgaging, or Otherwise
Encumbering Assets
3.S. 65% Investment Limitation 3,839,773 146,727 114,222 1,379,541
3.X. Repurchase Agreements 3,832,766 147,889 120,066 1,379,541
4.B. The reclassification of the 4,044,010 165,867 424,668 1,202,590
Portfolio's fundamental
investment objective as
non-fundamental with
changes to the Portfolio's
investment objective.
108 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
INSURED NATIONAL PORTFOLIO
RESULTS OF SHAREHOLDERS MEETING
(unaudited)
A Special Meeting of the Stockholders of the AllianceBernstein Municipal Income
Fund, Inc.--Insured National Portfolio (the "Portfolio") was held on November
15, 2005, December 6, 2005, December 19, 2005 and December 21, 2005. At the
November 15, 2005 Meeting, with respect to the first item of business, the
election of Directors, the third item of business, the amendment, elimination,
or reclassification as non-fundamental of the fundamental investment
restrictions, and the fourth item of business, the reclassification of the
Portfolio's fundamental investment objective as non-fundamental with changes to
the Portfolio's investment objective, the required number of outstanding shares
voted in favor of the proposals, and the proposals were approved. At the
December 21, 2005 Meeting, with respect to the second item of business, the
amendment and restatement of the Portfolio's Charter, the required number of
outstanding shares voted in favor of the proposal, and the proposal was
approved. A description of each proposal and number of shares voted at the
Meeting are as follows (the proposal numbers shown below correspond to the
proposal numbers in the Portfolio's proxy statement):
1. To elect eight Directors of the Portfolio, each such Director to hold
office until his or her successor is duly elected and qualified.
Withheld
Voted For Authority
--------------------------------------------
Ruth Block 118,644,255 4,286,322
David H. Dievler 118,695,836 4,234,741
John H. Dobkin 118,889,769 4,040,807
Michael J. Downey 118,872,732 4,057,845
William H. Foulk, Jr. 118,786,439 4,144,137
D. James Guzy 118,270,202 4,660,374
Marc O. Mayer 118,800,780 4,129,797
Marshall C. Turner, Jr. 118,806,850 4,123,727
Voted
Voted For Against Abstained
- -------------------------------------------------------------------------------
2. The amendment and 97,606,855 3,619,023 7,488,218
restatement of the
Portfolio's Charter.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 109
3. To amend, eliminate, or reclassify as non-fundamental, the fundamental
investment restrictions regarding:
Voted Broker
Voted For Against Abstained Non-Votes
- ------------------------------------------------------------------------------------------
3.A. Diversification 7,644,018 273,177 261,444 2,168,999
3.B. Issuing Senior Securities 7,668,092 297,720 212,827 2,168,999
and Borrowing Money
3.C. Underwriting Securities 7,685,909 282,535 210,194 2,168,999
3.D. Concentration of 7,685,925 281,579 211,134 2,168,999
Investments
3.E. Real Estate and 7,674,550 296,035 208,053 2,168,999
Companies That Deal
In Real Estate
3.F. Commodity Contracts 7,655,626 320,133 202,879 2,168,999
and Futures Contracts
3.G. Loans 7,652,759 320,742 205,139 2,168,999
3.H. Joint Securities Trading 7,693,804 280,077 204,758 2,168,999
Accounts
3.L. Purchases of Securities 7,627,579 345,499 205,561 2,168,999
on Margin
3.M. Short Sales 7,657,068 315,089 206,482 2,168,999
3.N. Pledging, Hypothecating, 7,613,099 348,937 216,602 2,168,999
Mortgaging, or Otherwise
Encumbering Assets
3.S. 65% Investment Limitation 7,684,755 277,539 216,345 2,168,999
4.B. The reclassification of the 7,349,198 294,947 534,494 2,168,999
Portfolio's fundamental
investment objective as
non-fundamental with
changes to the Portfolio's
investment objective.
110 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NATIONAL PORTFOLIO
RESULTS OF SHAREHOLDERS MEETING
(unaudited)
A Special Meeting of the Stockholders of the AllianceBernstein Municipal Income
Fund, Inc.--National Portfolio (the "Portfolio") was held on November 15, 2005,
December 6, 2005, December 19, 2005 and December 21, 2005. At the November 15,
2005 Meeting, with respect to the first item of business, the election of
Directors, the third item of business, the amendment, elimination, or
reclassification as non-fundamental of the fundamental investment restrictions,
and the fourth item of business, the reclassification of the Portfolio's
fundamental investment objective as non-fundamental with changes to the
Portfolio's investment objective, the required number of outstanding shares
voted in favor of the proposals, and the proposals were approved. At the
December 21, 2005 Meeting, with respect to the second item of business, the
amendment and restatement of the Portfolio's Charter, the required number of
outstanding shares voted in favor of the proposal, and the proposal was
approved. A description of each proposal and number of shares voted at the
Meeting are as follows (the proposal numbers shown below correspond to the
proposal numbers in the Portfolio's proxy statement):
1. To elect eight Directors of the Portfolio, each such Director to hold
office until his or her successor is duly elected and qualified.
Withheld
Voted For Authority
--------------------------------------------
Ruth Block 118,644,255 4,286,322
David H. Dievler 118,695,836 4,234,741
John H. Dobkin 118,889,769 4,040,807
Michael J. Downey 118,872,732 4,057,845
William H. Foulk, Jr. 118,786,439 4,144,137
D. James Guzy 118,270,202 4,660,374
Marc O. Mayer 118,800,780 4,129,797
Marshall C. Turner, Jr. 118,806,850 4,123,727
Voted
Voted For Against Abstained
- -------------------------------------------------------------------------------
2. The amendment and 97,606,855 3,619,023 7,488,218
restatement of the
Portfolio's Charter.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 111
3. To amend, eliminate, or reclassify as non-fundamental, the fundamental
investment restrictions regarding:
Voted Broker
Voted For Against Abstained Non-Votes
- ------------------------------------------------------------------------------------------
3.A. Diversification 20,901,168 1,263,146 646,882 6,824,432
3.B. Issuing Senior Securities 20,758,979 1,374,513 677,705 6,824,432
and Borrowing Money
3.C. Underwriting Securities 20,865,020 1,267,052 679,125 6,824,432
3.D. Concentration of 20,935,361 1,209,652 666,185 6,824,432
Investments
3.E. Real Estate and 20,877,481 1,258,777 674,939 6,824,432
Companies That Deal
In Real Estate
3.F. Commodity Contracts 20,718,589 1,396,168 696,440 6,824,432
and Futures Contracts
3.G. Loans 20,780,532 1,320,298 710,367 6,824,432
3.H. Joint Securities Trading 20,836,122 1,259,229 715,845 6,824,432
Accounts
3.L. Purchases of Securities 20,764,294 1,446,423 600,480 6,824,432
on Margin
3.M. Short Sales 20,786,788 1,366,647 657,762 6,824,432
3.N. Pledging, Hypothecating, 20,695,512 1,418,560 697,125 6,824,432
Mortgaging, or Otherwise
Encumbering Assets
4.B. The reclassification of the 20,501,955 1,068,443 1,240,799 6,824,432
Portfolio's fundamental
investment objective as
non-fundamental with
changes to the Portfolio's
investment objective.
112 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NEW YORK PORTFOLIO
RESULTS OF SHAREHOLDERS MEETING
(unaudited)
A Special Meeting of the Stockholders of the AllianceBernstein Municipal Income
Fund, Inc.--New York Portfolio (the "Portfolio") was held on November 15, 2005,
December 6, 2005, December 19, 2005 and December 21, 2005. At the November 15,
2005 Meeting, with respect to the first item of business, the election of
Directors, the required number of outstanding shares were voted in favor of the
proposal, and the proposal was approved. At the December 6, 2005 Meeting, with
respect to the third item of business, the amendment, elimination, or
reclassification as non-fundamental of the fundamental investment restrictions,
and the fourth item of business, the reclassification of the Portfolio's
fundamental investment objective as non-fundamental with changes to the
Portfolio's investment objective, the required number of outstanding shares
voted in favor of the proposals, and the proposals were approved. At the
December 21, 2005 Meeting, with respect to the second item of business, the
amendment and restatement of the Portfolio's Charter, the required number of
outstanding shares voted in favor of the proposal, and the proposal was
approved. A description of each proposal and number of shares voted at the
Meeting are as follows (the proposal numbers shown below correspond to the
proposal numbers in the Portfolio's proxy statement):
1. To elect eight Directors of the Portfolio, each such Director to hold
office until his or her successor is duly elected and qualified.
Withheld
Voted For Authority
--------------------------------------------
Ruth Block 118,644,255 4,286,322
David H. Dievler 118,695,836 4,234,741
John H. Dobkin 118,889,769 4,040,807
Michael J. Downey 118,872,732 4,057,845
William H. Foulk, Jr. 118,786,439 4,144,137
D. James Guzy 118,270,202 4,660,374
Marc O. Mayer 118,800,780 4,129,797
Marshall C. Turner, Jr. 118,806,850 4,123,727
Voted
Voted For Against Abstained
- -------------------------------------------------------------------------------
2. The amendment and 97,606,855 3,619,023 7,488,218
restatement of the
Portfolio's Charter.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 113
3. To amend, eliminate, or reclassify as non-fundamental, the fundamental
investment restrictions regarding:
Voted Broker
Voted For Against Abstained Non-Votes
- ------------------------------------------------------------------------------------------
3.B. Issuing Senior Securities 21,524,594 1,504,295 982,397 5,943,665
and Borrowing Money
3.C. Underwriting Securities 21,593,325 1,486,157 931,804 5,943,665
3.D. Concentration of 21,417,358 1,569,377 1,024,551 5,943,665
Investments
3.E. Real Estate and 21,589,857 1,427,040 994,389 5,943,665
Companies That Deal
In Real Estate
3.F. Commodity Contracts 21,553,426 1,780,908 676,952 5,943,665
and Futures Contracts
3.G. Loans 21,312,700 1,980,465 718,122 5,943,665
3.H. Joint Securities Trading 21,685,025 1,339,411 986,850 5,943,665
Accounts
3.L. Purchases of Securities 21,576,739 1,744,741 689,806 5,943,665
on Margin
3.M. Short Sales 21,577,189 1,505,266 928,831 5,943,665
3.N. Pledging, Hypothecating, 21,663,393 1,347,223 1,000,670 5,943,665
Mortgaging, or Otherwise
Encumbering Assets
4.B. The reclassification of the 21,057,231 1,219,307 1,734,748 5,943,665
Portfolio's fundamental
investment objective as
non-fundamental with
changes to the Portfolio's
investment objective.
114 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Marshall C. Turner, Jr.(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Robert B. Davidson, III(2), Senior Vice President
Douglas J. Peebles, Senior Vice President
Jeffrey S. Phlegar, Senior Vice President
Michael Brooks(2), Vice President
Fred S. Cohen(2), Vice President
Terrance T. Hults(2), Vice President
Emilie D. Wrapp, Secretary
Mark D. Gersten, Treasurer and Chief Financial Officer
Thomas R. Manley, Controller
Custodian
State Street Bank & Trust Company
One Lincoln Street
Boston, MA 02111
Principal Underwriter
AllianceBernstein Investments, Inc.
1345 Avenue of the Americas
New York, NY 10105
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
Transfer Agent
AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-free (800) 221-5672
(1) Member of the Audit Committee, the Governance and Nominating Committee and
the Independent Directors Committee.
(2) The day-to-day management of and investment decisions for the Portfolios'
portfolios are made by the Municipal Bond Investment Team. Messrs. Brooks,
Cohen, Davidson and Hults are the investment professionals with the most
significant responsibility for the day-to-day management of the Portfolios'
portfolios.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 115
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- --------------------------------------------
Wealth Strategies Funds
- --------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
- --------------------------------------------
Blended Style Funds
- --------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- --------------------------------------------
Growth Funds
- --------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Global & International
Global Health Care Fund
Global Research Growth Fund
Global Technology Fund
Greater China '97 Fund
International Growth Fund
International Research Growth Fund*
- --------------------------------------------
Value Funds
- --------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
Real Estate Investment Fund
Small/Mid-Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
- --------------------------------------------
Taxable Bond Funds
- --------------------------------------------
Global Government Income Trust*
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Intermediate Bond Portfolio*
Short Duration Portfolio
U.S. Government Portfolio
- --------------------------------------------
Municipal Bond Funds
- --------------------------------------------
National Michigan
Insured National Minnesota
Arizona New Jersey
California New York
Insured California Ohio
Florida Pennsylvania
Massachusetts Virginia
- --------------------------------------------
Intermediate Municipal Bond Funds
- --------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- --------------------------------------------
Closed-End Funds
- --------------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
- --------------------------------------------
Retirement Strategies Funds
- --------------------------------------------
2000 Retirement Strategy
2005 Retirement Strategy
2010 Retirement Strategy
2015 Retirement Strategy
2020 Retirement Strategy
2025 Retirement Strategy
2030 Retirement Strategy
2035 Retirement Strategy
2040 Retirement Strategy
2045 Retirement Strategy
We also offer Exchange Reserves,** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our website at
www.alliancebernstein.com or call us at (800) 227-4618 for a current
prospectus. You should read the prospectus carefully before you invest.
* On July 8, 2005, New Europe Fund merged into International Research Growth
Fund. Prior to February 1, 2006, Global Government Income Trust was named
Americas Government Income Trust and Intermediate Bond Portfolio was named
Quality Bond Portfolio.
** 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.
116 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1)
The following is a summary of the evaluation of the investment advisory
agreement between Alliance Capital Management L.P. (the "Adviser") and
AllianceBernstein Municipal Income Fund, Inc. on behalf of California
Portfolio, Insured California Portfolio, National Portfolio, Insured National
Portfolio and New York Portfolio (each a "Fund" and collectively the "Funds"),
prepared by Philip L. Kirstein, the Senior Officer, for the independent
directors of the Funds, as required by the Assurance of Discontinuance between
the New York State Attorney General and the Adviser. The Senior Officer's
evaluation of the investment advisory agreement is not meant to diminish the
responsibility or authority of the Board of Directors of the Funds to perform
its duties pursuant to Section 15 of the Investment Company Act of 1940 (the
"40 Act") and applicable state law. The purpose of the summary is to provide
shareholders with a synopsis of the independent evaluation of the
reasonableness of the advisory fees which was provided to the independent
directors in connection with their review of the proposed continuance of the
investment advisory agreement. The Senior Officer's evaluation considered the
following factors:
1. Management fees charged to institutional and other clients of the Adviser
for like services.
2. Management fees charged by other mutual fund companies for like services.
3. Costs to the Adviser and its affiliates of supplying services pursuant to
the advisory agreements, excluding any intra-corporate profit.
4. Profit margins of the Adviser and its affiliates from supplying such
services.
5. Possible economies of scale as the Funds grow larger.
6. Nature and quality of the Adviser's services including the performance of
the Funds.
(1) It should be noted that the information in the fee summary was completed
on September 2, 2005 and presented to the Board of Directors on September 14,
2005 in accordance with the Assurance of Discontinuance between the New York
State Attorney General and the Adviser. It also should be noted that references
in the fee summary pertaining to performance and expense ratios refer to Class
A shares of the Funds.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 117
FUNDS ADVISORY FEES, EXPENSE REIMBURSEMENTS, CAPS & RATIOS
The table below describes the Funds' advisory fees pursuant to the Investment
Advisory Agreement. This is the fee schedule the Adviser implemented in January
2004 as a result of the settlement with the New York State Attorney General.(2)
Advisory Fee Based on % of
Fund Average Daily Net Assets
- -------------------------------------------------------------------------------
California Portfolio First $2.5 billion 0.45%
Next $2.5 billion 0.40%
Excess of $5 billion 0.35%
Insured California Portfolio First $2.5 billion 0.45%
Next $2.5 billion 0.40%
Excess of $5 billion 0.35%
National Portfolio First $2.5 billion 0.45%
Next $2.5 billion 0.40%
Excess of $5 billion 0.35%
Insured National Portfolio First $2.5 billion 0.45%
Next $2.5 billion 0.40%
Excess of $5 billion 0.35%
New York Portfolio First $2.5 billion 0.45%
Next $2.5 billion 0.40%
Excess of $5 billion 0.35%
The Adviser is reimbursed as specified in the Investment Advisory Agreement for
certain clerical, legal, accounting, administrative and other services provided
to the Funds as indicated below:
As a %
of average
Fund Amount daily net assets
- -------------------------------------------------------------------------------
California Portfolio $ 78,666 0.01
Insured California Portfolio $ 78,666 0.05
National Portfolio $ 78,666 0.02
Insured National Portfolio $ 78,666 0.04
New York Portfolio $ 78,666 0.02
The Adviser has agreed to waive that portion of its management fees and/or
reimburse each Fund for that portion of its total operating expenses to the
degree necessary to limit each Fund's expense ratio to the amounts set forth
(2) The advisory fee schedule implemented in January 2004 contemplates eight
categories of the AllianceBernstein Mutual Funds with all AllianceBernstein
Funds in each category having the same advisory fee schedule.
118 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
below for each Fund's current fiscal year. The waiver agreement is terminable
by the Adviser at the end of the Funds' fiscal year upon at least 60 days
written notice.
Expense Cap
Pursuant to Expense Gross
Limitation Expense Fiscal
Fund Undertaking Ratio(3) Year End
- -------------------------------------------------------------------------------
California Portfolio Class A-0.77% 0.86% October 31
Class B-1.47% 1.56%
Class C-1.47% 1.55%
National Portfolio Class A-0.68% 0.93% October 31
Class B-1.38% 1.64%
Class C-1.38% 1.63%
Insured National Portfolio Class A-1.04% 1.04% October 31
Class B-1.74% 1.74%
Class C-1.74% 1.74%
New York Portfolio Class A-0.58% 0.90% October 31
Class B-1.28% 1.60%
Class C-1.28% 1.60%
The table below shows Insured California Portfolio's expense ratio calculated
from the beginning of the Fund's current fiscal year through May 31, 2005. The
Fund does not have an expense cap pursuant to an expense limitation undertaking.
Fund Expense Ratio Fiscal Year End
- -------------------------------------------------------------------------------
Insured California Portfolio Class A-1.02% October 31
Class B-1.73%
Class C-1.72%
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The management fees charged to investment companies which the Adviser manages
and sponsors is normally higher than those charged to similar sized
institutional accounts, including pension plans and sub-advised investment
companies. The fee differential reflects, among other things, different
services provided to such clients, and different liabilities assumed. Services
provided by the Adviser to the Funds that are not provided to non-investment
company clients include providing office space and personnel to serve as Fund
Officers, who among other responsibilities make the certifications required
under the SarbanesnOxley Act of 2002, and coordinating with and monitoring the
Funds' third party service providers such as Fund counsel, auditors,
custodians, transfer agents and pricing services. The accounting,
administrative, legal and compliance requirements for
(3) These gross expense ratios are calculated from the beginning of each
Fund's current fiscal year through May 31, 2005.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 119
the Funds are more costly than those for institutional assets due to the
greater complexities and time required for investment companies, although as
previously noted, a portion of these expenses are reimbursed by the Funds to
the Adviser. In addition, managing the cash flow of an investment company may
be more difficult than that of a stable pool of assets, such as an
institutional account with little cash movement in either direction,
particularly, if a Fund is in net redemption and the Adviser is frequently
forced to sell securities to raise cash for redemptions. However, managing a
fund with positive cash flow may be easier at times than managing a stable pool
of assets. Finally, in recent years, investment advisers have been sued by
institutional clients and have suffered reputational damage both by the
attendant publicity and outcomes other than complete victories. Accordingly,
the legal and reputational risks associated with institutional accounts are
greater than previously thought, although still not equal to those related to
the mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, it is worth considering information regarding the
advisory fees charged to institutional accounts with substantially similar
investment styles as the Funds. However, the Adviser represented that it does
not manage any separate managed account that has similar investment guidelines
as the Funds. The Adviser does manage separately managed accounts that invest
principally in municipal securities but those mandates have a substantially
lower risk profile (credit and interest rate risk) than the Funds.
The Adviser manages the Sanford C. Bernstein Fund, Inc., an open-end investment
company. The Adviser charges the following fees to the Portfolios that invest
in municipal securities like the Funds, although they invest in securities of
different maturities and qualities:
Portfolio Advisory Fee
- ------------------------------------------------------------------------------------------
California Municipal Portfolio 0.50% of the first $1 billion;
Diversified Municipal Portfolio 0.45% in excess of $1 billion up to but
New York Municipal Portfolio not exceeding $3 billion; 0.40% in
excess of $3 billion
Short Duration California Municipal Portfolio 0.50% of the first $250 million;
Short Duration Diversified Municipal Portfolio 0.45% in excess of $250 million up to
Short Duration New York Municipal Portfolio but not exceeding $750 million; 0.40%
in excess of $750 million
The Adviser also manages and sponsors retail mutual funds which are organized
in jurisdictions outside the United States, generally Luxembourg, and sold to
non-United States resident investors. The Adviser charges the following fees
for an offshore mutual fund that invests in fixed income securities:
120 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Asset Class Fee(4)
- ------------------------------------------------------------------
Fixed Income 0.65%
The Adviser represented that it does not sub-advise any registered investment
companies of other fund families with a similar investment style as the Fund.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUNDS COMPANIES FOR LIKE SERVICES.
Lipper, Inc., an analytical service that is not affiliated with the Adviser,
compared the fees charged to the Funds with fees charged to other investment
companies for similar services by other investment advisers. Lipper's analysis
included the Funds' ranking with respect to the proposed management fees
relative to the Lipper group median at the approximate current asset levels of
the Funds.(5)
Effective Lipper
Management Group
Fund Fee(6) Median Rank
- -------------------------------------------------------------------------------
California Portfolio 0.450 0.485 4/10
Insured California Portfolio 0.450 0.548 1/5
National Portfolio 0.450 0.613 2/13
Insured National Portfolio 0.450 0.500 1/7
New York Portfolio(7) 0.450 0.500 3/11
Lipper also analyzed the expense ratio of the Funds in comparison to its Lipper
Expense Group(8) and Lipper Expense Universe(9). Lipper describes a Lipper
Expense Group as a representative sample of comparable funds, consisting of all
(4) The fees charged to the fund include a 0.10% fee for administrative
services provided by the Adviser or its affiliates.
(5) It should be noted that "effective management fee" is calculated by Lipper
using each Fund's contractual management fee rate at a hypothetical asset
level. The hypothetical asset level is based on the combined net assets of all
classes of each Fund, rounded up to the next $25 million. Lipper's total
expense ratio information is based on the most recent annual report except as
otherwise noted. A ranking of "1" means that the AllianceBernstein Fund has the
lowest effective fee rate in the Lipper peer group.
(6) It should be noted that the "effective management fee" rate for the Funds
does not reflect the payments by the Funds to the Adviser for certain clerical,
legal, accounting, administrative and other services. The dollar amount and
basis point impact of such payments on the Funds is discussed in Section I.
(7) The number of funds used in Lipper's group ranking for management fees is
one less than the number of funds used in Lipper's group ranking for total
expenses. According to Lipper, the excluded fund's contractual management fee
cannot be computed because of its breakpoint gross income component.
(8) Lipper uses the following criteria in screening funds to be included in
each Fund's Expense Group: fund type, investment classification/objective, load
type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and
expense components and attributes. An Expense Group will typically consist of
seven to twenty funds.
(9) Except for asset (size) comparability and load type, Lipper uses the same
criteria for selecting an Expense Group when selecting an Expense Universe.
Unlike an Expense Group, an Expense Universe allows for the same adviser to be
represented by more than just one fund.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 121
funds in the investment classification/objective with a similar load type as
the subject Fund. The Lipper Expense Universe is a broader collection of. The
results of that analysis are set forth below:
Lipper Lipper Lipper Lipper
Expense Universe Universe Group Group
Fund Ratio(10) Median Rank Median Rank
- -------------------------------------------------------------------------------
California Portfolio 0.778 0.835 12/31 0.768 6/10
Insured California Portfolio 0.996 0.856 6/6 0.862 5/5
National Portfolio 0.680 0.875 5/74 0.884 1/13
Insured National Portfolio 1.028 0.930 12/15 0.982 6/7
New York Portfolio(11) 0.590 0.859 2/29 0.863 1/12
Based on this analysis, except for National Portfolio and New York Portfolio,
which have a more favorable ranking for total expense ratio compared to
management fees, the Funds have a more favorable ranking on a management fee
basis than they do on a total expense ratio basis. This has resulted in a
variety of efforts by the Adviser to lower non-management expenses.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
The profitability information for the Funds prepared by the Adviser for the
Board of Directors was reviewed by the Senior Officer. An independent
consultant is working with the Adviser's personnel on a new system to produce
profitability information at the Fund level which will reflect the Adviser's
management reporting approach. It is possible that future Fund profitability
information may differ from previously reviewed information due to changes in
methodologies and allocations. See Section IV for additional discussion.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The Adviser's profitability from providing investment advisory services to the
Funds decreased during calendar 2004 relative to 2003 primarily as a result of
the reduction in the advisory fee schedule implemented early in 2004.
In addition to the Adviser's direct profits from managing the Funds, certain of
the Adviser's affiliates have business relationships with the Funds and may
earn a profit from providing other services to the Funds. The courts have
referred to this type of business opportunity as "fall-out benefits" to the
Adviser and indicated that they should be factored into the evaluation of the
total relationship between the Funds and the Adviser. Neither case law nor
common business practice precludes the Adviser's affiliates from earning a
reasonable profit on this type
(10) Most recent fiscal year end Class A share expense ratio.
(11) See footnote 7 on page 121.
122 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
of relationship. These affiliates provide transfer agent and distribution
services to the Funds and receive transfer agent fees, Rule 12b-1 payments,
front-end sales loads and contingent deferred sales charges ("CDSC").
Additional information regarding distribution related fees can be found in the
prospectus of the Funds.
The Adviser's affiliate, AllianceBernstein Investment Research and Management,
Inc. ("ABIRM"), is the Funds' principal underwriter. ABIRM and the Adviser have
disclosed in the Funds prospectus that they may make payments(12) from their
own resources, in addition to resources derived from sales loads and Rule 12b-1
fees, to firms that sell shares of the Funds. In 2004, ABIRM paid approximately
0.04% of the average monthly assets of the AllianceBernstein Mutual Funds for
distribution services and educational support. For 2005, it is anticipated,
ABIRM will pay approximately 0.04% of the average monthly assets of each of the
Funds for such purposes.
After payments to third party intermediaries, ABIRM retained the following
amount in Class A front-end load sales charge from sales of the Funds' shares
in the Funds' most recent fiscal year.
Fund Amount Received
- -------------------------------------------------------------------------------
California Portfolio $ 39,251
Insured California Portfolio $ 4,636
National Portfolio $ 28,633
Insured National Portfolio $ 5,256
New York Portfolio $ 25,534
ABIRM received the amounts set forth below in Rule 12b-1 fees for the Funds
during the Funds most recent fiscal year. A significant percentage of such
amounts were paid out to third party intermediaries by ABIRM.
12b-1Fee
Fund Received CDSC Received
- -------------------------------------------------------------------------------
California Portfolio $ 5,426,523 $ 51,798
Insured California Portfolio $ 805,741 $ 191,927
National Portfolio $ 1,064,679 $ 241,418
Insured National Portfolio $ 824,338 $ 183,133
New York Portfolio $ 2,941,261 $ 75,292
Fees and reimbursements for out of pocket expenses charged by Alliance Global
Investor Services, Inc. ("AGIS"), the affiliated transfer agent, are based on
the level of the network account and the class of share held by the account.
AGIS also receives a fee per shareholder sub-account for each account
maintained by an
(12) The total amount paid to the financial intermediary in connection with
the sale of shares will generally not exceed the sum of (a) 0.25% of the
current year's Fund sales by that firm and (b) 0.10% of the average daily net
assets attributable to that firm over the year.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 123
intermediary on an omnibus basis. AGIS' after-tax profitability decreased in
2004 in comparison to 2003.
AGIS received the following fees from the Funds in the most recent fiscal year:
Fund AGIS Fee
- -------------------------------------------------------------------------------
California Portfolio $ 225,239
Insured California Portfolio $ 35,048
National Portfolio $ 256,626
Insured National Portfolio $ 74,396
New York Portfolio $ 184,156
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule in the
Investment Advisory Agreement reflect a sharing of economies of scale to the
extent the breakpoints are reached. Based on some of the professional
literature that has considered economies of scale in the mutual fund industry
it is thought that to the extent economies of scale exist, they may more often
exist across a fund family as opposed to a specific fund. This is because the
costs incurred by the Adviser, such as investment research or technology for
trading or compliance systems can be spread across a greater asset base as the
fund family increases in size. It is also possible that as the level of
services required to operate a successful investment company has increased over
time, and advisory firms have made such investments in their business to
provide improved services, there may be a sharing of economies of scale without
a reduction in advisory fees.
An independent consultant made a presentation to the Board of Directors and the
Senior Officer regarding possible economies of scale or scope in the mutual
fund industry. Based on the presentation, it was evident that fund management
companies benefit from economies of scale. However, due to lack of cost data,
researchers had to infer facts about the costs from the behavior of fund
expenses; there was a lack of consensus among researchers as to whether
economies of scale were being passed on to the shareholders. It is contemplated
that additional work will be performed to determine if the benefits of
economies of scale or scope are being passed to shareholders by the Adviser. In
the meantime, it is clear that to the extent the Funds' assets exceed the
initial breakpoint its shareholders benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF
THE FUNDS.
With assets under management of $516 billion as of June 30, 2005, the Adviser
has the investment experience to manage and provide non-investment services
(described in Section II) to the Funds.
124 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
The information prepared by Lipper showed the 1, 3, 5 and 10 year performance
ranking of the Funds(13) relative to its Lipper group and universe for the
periods ended May 31, 2005:
California Portfolio Group Universe
- --------------------------------------------------------------------
1 year 4/10 11/35
3 year 3/9 8/31
5 year 8/9 24/30
10 year 3/9 6/26
Insured California Portfolio Group Universe
- --------------------------------------------------------------------
1 year 2/5 3/6
3 year 4/5 5/6
5 year 4/5 5/6
10 year 3/5 4/6
National Portfolio Group Universe
- --------------------------------------------------------------------
1 year 2/13 8/80
3 year 7/13 35/74
5 year 8/13 38/68
10 year 6/11 22/53
Insured National Portfolio Group Universe
- --------------------------------------------------------------------
1 year 1/7 1/16
3 year 2/7 2/15
5 year 3/7 4/15
10 year 3/7 4/14
New York Portfolio Group Universe
- --------------------------------------------------------------------
1 year 3/12 6/31
3 year 4/12 8/28
5 year 9/12 20/28
10 year 4/12 7/26
Set forth below are the 1, 3, 5, 10 year and since inception performance
returns of the Funds (in bold)(14) versus its benchmarks(15). It should be
noted that each Fund has the Lehman Brothers Municipal Bond Index as its
benchmark. The Lehman Brothers Municipal Bond Index is a rules-based,
market-value-weighted index engineered for the long-term tax-exempt bond
market. To be included, bonds must be investment grade and be at least one year
from maturity. The index has four main sectors: general obligation bonds,
revenue bonds, insured
(13) The performance rankings are for the Class A shares of the Funds.
(14) The Funds' performance returns are for the Class A shares of the Funds.
(15) The Adviser provided Fund and benchmark performance return information
for periods through May 31, 2005 in order to maintain consistency with Lipper's
performance rankings in the analysis.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 125
bonds and pre-funded bonds. The index represents a national municipal bond
index as opposed to a specific state index.
Periods Ending May 31, 2005
Annualized Performance
- -------------------------------------------------------------------------------
1 3 5 10 Since
Funds Year Year Year Year Inception
- -------------------------------------------------------------------------------
California Portfolio 9.41 6.01 6.48 5.98 6.89
Lehman Brothers Municipal Bond Index 7.96 6.00 7.30 6.22 7.03
Insured California Portfolio 7.94 5.39 6.78 5.67 6.88
Lehman Brothers Municipal Bond Index 7.96 6.00 7.30 6.22 7.64
National Municipal Portfolio 8.99 5.48 6.49 5.45 6.75
Lehman Brothers Municipal Bond Index 7.96 6.00 7.30 6.22 7.03
Insured National Portfolio 8.44 5.98 7.13 5.66 6.72
Lehman Brothers Municipal Bond Index 7.96 6.00 7.30 6.22 7.03
New York Portfolio 8.70 5.88 6.69 5.90 6.48
Lehman Brothers Municipal Bond Index 7.96 6.00 7.30 6.22 7.03
CONCLUSION:
Based on the factors discussed above the Senior Officer's conclusion is that
the proposed fees for the Funds are reasonable and within the range of what
would have been negotiated at arms-length in light of all the surrounding
circumstances. This conclusion in respect of the Funds is based on an
evaluation of all of these factors and no single factor was dispositive.
Dated: October 12, 2005
126 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NOTES
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 127
NOTES
128 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
MI-0152-0406
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
12 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (c) Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Municipal Income Fund, Inc.
By: /s/ Marc O. Mayer
-----------------
Marc O. Mayer
President
Date: June 28, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
-----------------
Marc O. Mayer
President
Date: June 28, 2006
By: /s/ Mark D. Gersten
-------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: June 28, 2006