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, 2007
Date of reporting period: April 30, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
AllianceBernstein Municipal Income Fund
National Portfolio
California Portfolio
New York Portfolio
Insured National Portfolio
Insured California Portfolio
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Semi-Annual Report
April 30, 2007
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[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
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Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
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The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
This shareholder report must be preceded or accompanied by the Fund's
prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P.,
the manager of the AllianceBernstein funds, and is a member of the NASD.
AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.
June 15, 2007
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, 2007.
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 what the Adviser considers to be undue risk. Each
Portfolio invests principally in high-yielding, predominantly investment-grade
municipal securities. Each Portfolio invests, under normal circumstances, at
least 80% of its net assets in municipal securities with interest that is
exempt from federal income tax. These securities may pay interest that is
subject to the federal Alternative Minimum Tax ("AMT") for certain taxpayers,
except for the Insured National Portfolio and the Insured California Portfolio,
which invest principally in municipal securities paying interest that is wholly
exempt from federal income taxes, including the AMT.
Each of the Portfolios that invest in a named state pursues its objective by
investing at least 80% of its net assets in municipal securities issued by the
named state or municipal securities with interest that is otherwise exempt from
the named state's income tax. The National Portfolio and Insured National
Portfolio may invest 25% or more of their net assets in a single state. The
Insured California Portfolio is non-diversified, meaning that it can invest
more of its assets in a fewer number of issues. Each of the Insured National
Portfolio and the Insured California Portfolio also pursues its objective by
investing at least 80% of its net assets in insured municipal securities.
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, 2007, the National
Portfolio's Class A shares (unadjusted for sales charges) outperformed the
benchmark, the LB Municipal Index, which represents the municipal market and
posted positive returns of 1.59% and 5.78% for the respective time periods. The
California and New York Portfolios' Class A shares (unadjusted for sales
charges) underperformed the benchmark during the six-month period, but
outperformed the benchmark during the 12-month period. The Insured California
and Insured National Portfolios' Class A shares (unadjusted for sales charges)
underperformed the benchmark during both time frames.
A description of each Portfolio's relative performance versus the benchmark for
the six-month reporting period ended April 30, 2007 follows:
National Portfolio--The National Portfolio's stronger relative perfor-
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 1
mance was largely the result of security selection in the special tax, hospital
and education. The Portfolio's relative weight in the insurance, pre-refunded
and industrial revenue bond sectors was beneficial to performance. Security
selection in the industrial revenue bond sector detracted from the Portfolio's
performance. The Portfolio's holdings in lower-rated bonds benefited
performance relative to the benchmark.
California Portfolio--The California Portfolio's relative underperformance was
largely the result of the Portfolio's relative weight in the industrial revenue
bond, special tax and transportation sectors. Security selection in the
education sector also detracted from performance. Security selection in the
general obligation and special tax sectors, in addition to the Portfolio's
relative weight in the pre-refunded and housing sectors, was beneficial to the
Portfolio's performance. The Portfolio's holdings in lower-rated bonds
benefited performance relative to the benchmark.
New York Portfolio--The New York Portfolio's relative underperformance was
largely the result of security selection in the insured, industrial revenue
bond and transportation sectors. The Portfolio's relative weight in the housing
and industrial revenue bond sectors was beneficial to performance. 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
Short-term rates rising more than long-term rates and a continued strong bid
for lower-quality bonds drove municipal bond returns over the six-month
reporting period. Consistent with the pattern in the U.S. Treasury market, in
general, the shorter the municipal bond's maturity, the more its yield
increased over the past six months. Yields for bonds maturing within 20 years
rose by up to 0.15%; those maturing in 30 years rose only 0.03%.
The difference between long-term and short-term municipal bonds is near the
least that it has been over the past 30 years. The average of this difference
has been 230 basis points since the early 1970s and is a mere 43 basis points
today. Issuers responded to low long-term interest rates by selling a record
$104 billion in bonds during the first quarter of 2007--49% more than the same
period in 2006.
Investors' demand for income continued to be a significant influence in the
municipal market. High-yield municipal funds accounted for about 40% of the
money invested in municipal mutual funds. Speculative-grade bonds were the
best-performing sector as demand drove prices up, causing the LB
2 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Municipal High Yield Index to return 3.41%--over twice the 1.59% return of the
LB Municipal Index which represents only the investment-grade portion of the
municipal market.
One result of the continued strong performance of lower-rated bonds is that the
extra yield for assuming credit risk is very small by historical standards. For
example, the difference in yield between intermediate BBB-rated and AAA-rated
insured municipal bonds stood at only 0.23% at quarter-end. A widening of just
0.05% would negate the income benefit of owning lower-rated bonds over a
12-month period.
The low levels of compensation for assuming credit risk or interest rate risk
have been engendered, at least in part, by benign economic and inflation
outlooks, as well as by the strongest municipal balance sheets in a very long
time. It is impossible to know when investors will become more risk averse, or
what the catalyst will be. However, with so little reward for taking risk, the
Portfolios' Municipal Bond Investment Team found the best values in
high-quality bonds and has focused new purchases on bonds maturing in 10-15
years rather than longer maturities which provide only marginally more income.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND 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.
All fees and expenses related to the operation of the Portfolios have been
deducted. NAV returns do not reflect sales charges; if sales charges were
reflected, the Portfolios' quoted performance would be lower. SEC returns
reflect the applicable sales charges for each share class: a 4.25% maximum
front-end sales charge for Class A shares; the applicable contingent deferred
sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0% year 4); a
1% 1 year contingent deferred sales charge for Class C shares. Returns for the
different share classes will vary due to different expenses associated with
each class. Performance assumes reinvestment of distributions and does not
account for taxes.
Benchmark Disclosure
The unmanaged Lehman Brothers (LB) Municipal Index does not reflect fees and
expenses associated with the active management of a mutual fund portfolio. The
Index is a total return performance benchmark for the long-term investment
grade, tax-exempt bond market. An investor cannot invest directly in an index,
and its results are not indicative of the performance for any specific
investment, including the Portfolios.
A Word About Risk
Price 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. The yield or value of the Portfolios' investments in
municipal securities may be affected by political or legislative changes and
uncertainties related to the tax status of municipal securities or the rights
of investors in these securities. 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 debt 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, 2007 6 Months 12 Months
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National Portfolio
Class A 1.68% 6.05%
Class B 1.34% 5.43%
Class C 1.44% 5.42%
LB Municipal Index 1.59% 5.78%
California Portfolio
Class A 1.51% 5.92%
Class B 1.07% 5.10%
Class C 1.07% 5.09%
LB Municipal Index 1.59% 5.78%
New York Portfolio
Class A 1.53% 5.79%
Class B 1.19% 5.07%
Class C 1.19% 4.95%
LB Municipal Index 1.59% 5.78%
Insured National Portfolio
Class A 1.38% 4.97%
Class B 0.94% 4.26%
Class C 1.04% 4.25%
LB Municipal Index 1.59% 5.78%
Insured California Portfolio
Class A 1.27% 5.31%
Class B 0.92% 4.58%
Class C 0.99% 4.58%
LB Municipal Index 1.59% 5.78%
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, 2007
Taxable
NAV SEC SEC Equivalent
Returns Returns Yields* Yields**
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Class A Shares 4.17% 6.42%
1 Year 6.05% 1.59%
5 Years 5.03% 4.13%
10 Years 5.07% 4.61%
Class B Shares 3.66% 5.63%
1 Year 5.43% 2.43%
5 Years 4.31% 4.31%
10 Years(a) 4.64% 4.64%
Class C Shares 3.66% 5.63%
1 Year 5.42% 4.42%
5 Years 4.33% 4.33%
10 Years 4.36% 4.36%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
SEC Returns
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Class A Shares
1 Year 1.22%
5 Years 4.28%
10 Years 4.66%
Class B Shares
1 Year 2.03%
5 Years 4.45%
10 Years(a) 4.69%
Class C Shares
1 Year 4.03%
5 Years 4.45%
10 Years 4.41%
The Portfolio's total annual operating expense ratios are 1.01%, 1.73% and
1.72% for Class A, Class B and Class C, respectively, per the prospectus, gross
of any fee waivers or expense reimbursements. There are contractual fee waivers
currently in place for this Portfolio to the extent necessary in keeping the
Portfolio's operating expense ratios from exceeding 0.78%, 1.48% and 1.48% for
Class A, Class B and Class C, respectively, of average net assets per year.
These waivers extend through the Portfolio's current fiscal year and may be
extended by the Adviser for additional one-year terms. Absent reimbursements or
waivers, performance would have been lower.
(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, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
6 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
CALIFORNIA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2007
Taxable
NAV SEC SEC Equivalent
Returns Returns Yields* Yields**
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Class A Shares 3.89% 6.67%
1 Year 5.92% 1.43%
5 Years 5.31% 4.39%
10 Years 5.53% 5.07%
Class B Shares 3.37% 5.78%
1 Year 5.10% 2.10%
5 Years 4.58% 4.58%
10 Years(a) 5.08% 5.08%
Class C Shares 3.37% 5.78%
1 Year 5.09% 4.09%
5 Years 4.58% 4.58%
10 Years 4.78% 4.78%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
SEC Returns
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Class A Shares
1 Year 0.83%
5 Years 4.58%
10 Years 5.14%
Class B Shares
1 Year 1.64%
5 Years 4.76%
10 Years(a) 5.15%
Class C Shares
1 Year 3.64%
5 Years 4.76%
10 Years 4.86%
The Portfolio's total annual operating expense ratios are 0.85%, 1.56% and
1.56% for Class A, Class B and Class C, respectively, per the prospectus, gross
of any fee waivers or expense reimbursements. There are contractual fee waivers
currently in place for this Portfolio to the extent necessary in keeping the
Portfolio's operating expense ratios from exceeding 0.77%, 1.47% and 1.47% for
Class A, Class B and Class C, respectively, of average net assets per year.
These waivers extend through the Portfolio's current fiscal year and may be
extended by the Adviser for additional one-year terms. Absent reimbursements or
waivers, performance would have been lower.
(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, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 7
NEW YORK PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
NEW YORK PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2007
Taxable
NAV SEC SEC Equivalent
Returns Returns Yields* Yields**
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Class A Shares 3.89% 6.42%
1 Year 5.79% 1.33%
5 Years 5.14% 4.24%
10 Years 5.46% 5.00%
Class B Shares 3.37% 5.57%
1 Year 5.07% 2.07%
5 Years 4.37% 4.37%
10 Years(a) 5.00% 5.00%
Class C Shares 3.37% 5.57%
1 Year 4.95% 3.95%
5 Years 4.37% 4.37%
10 Years 4.71% 4.71%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
SEC Returns
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Class A Shares
1 Year 0.85%
5 Years 4.31%
10 Years 5.11%
Class B Shares
1 Year 1.66%
5 Years 4.46%
10 Years(a) 5.10%
Class C Shares
1 Year 3.54%
5 Years 4.43%
10 Years 4.81%
The Portfolio's total annual operating expense ratios are 0.89%, 1.60% and
1.60% for Class A, Class B and Class C, respectively, per the prospectus, gross
of any fee waivers or expense reimbursements. There are contractual fee waivers
currently in place for this Portfolio to the extent necessary in keeping the
Portfolio's operating expense ratios from exceeding 0.58%, 1.28% and 1.28% for
Class A, Class B and Class C, respectively, of average net assets per year.
These waivers extend through the Portfolio's current fiscal year and may be
extended by the Adviser for additional one-year terms. Absent reimbursements or
waivers, performance would have been lower.
(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, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
8 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
INSURED NATIONAL PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2007
Taxable
NAV SEC SEC Equivalent
Returns Returns Yields* Yields**
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Class A Shares 3.36% 5.17%
1 Year 4.97% 0.50%
5 Years 4.99% 4.08%
10 Years 5.22% 4.77%
Class B Shares 2.83% 4.35%
1 Year 4.26% 1.26%
5 Years 4.29% 4.29%
10 Years(a) 4.78% 4.78%
Class C Shares 2.82% 4.34%
1 Year 4.25% 3.25%
5 Years 4.28% 4.28%
10 Years 4.50% 4.50%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
SEC Returns
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Class A Shares
1 Year 0.13%
5 Years 4.36%
10 Years 4.83%
Class B Shares
1 Year 0.85%
5 Years 4.53%
10 Years(a) 4.85%
Class C Shares
1 Year 2.84%
5 Years 4.55%
10 Years 4.56%
The Portfolio's total annual operating expense ratios are 1.04%, 1.75% and
1.74% for Class A, Class B and Class C, respectively, per the prospectus, gross
of any fee waivers or expense reimbursements. There are contractual fee waivers
currently in place for this Portfolio to the extent necessary in keeping the
Portfolio's operating expense ratios from exceeding 1.04%, 1.74% and 1.74% for
Class A, Class B and Class C, respectively, of average net assets per year.
These waivers extend through the Portfolio's current fiscal year and may be
extended by the Adviser for additional one-year terms. Absent reimbursements or
waivers, performance would have been lower.
(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, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 9
INSURED CALIFORNIA PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2007
Taxable
NAV SEC SEC Equivalent
Returns Returns Yields* Yields**
- -------------------------------------------------------------------------------
Class A Shares 3.34% 5.73%
1 Year 5.31% 0.81%
5 Years 4.60% 3.70%
10 Years 5.26% 4.81%
Class B Shares 2.78% 4.77%
1 Year 4.58% 1.58%
5 Years 3.87% 3.87%
10 Years(a) 4.80% 4.80%
Class C Shares 2.79% 4.79%
1 Year 4.58% 3.58%
5 Years 3.86% 3.86%
10 Years 4.52% 4.52%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007)
SEC Returns
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Class A Shares
1 Year 0.22%
5 Years 4.03%
10 Years 4.91%
Class B Shares
1 Year 1.01%
5 Years 4.19%
10 Years(a) 4.90%
Class C Shares
1 Year 3.01%
5 Years 4.19%
10 Years 4.61%
The Portfolio's total annual operating expense ratios are 1.03%, 1.74% and
1.73% for Class A, Class B and Class C, respectively, per the prospectus, gross
of any fee waivers or expense reimbursements.
(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, 2007.
** Taxable equivalent yields are based on SEC yields and a 35% marginal
Federal income tax rate and maximum state taxes where applicable.
See Historical Performance disclosures on page 4.
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, 2006 April 30, 2007 During Period*
- -------------------------------------------------------------------------------
Class A
Actual $1,000 $1,016.82 $3.40
Hypothetical
(5% return
before expenses) $1,000 $1,021.42 $3.41
Class B
Actual $1,000 $1,013.35 $6.89
Hypothetical
(5% return
before expenses) $1,000 $1,017.95 $6.90
Class C
Actual $1,000 $1,014.35 $6.89
Hypothetical
(5% return
before expenses) $1,000 $1,017.95 $6.90
California Portfolio
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Class A
Actual $1,000 $1,015.10 $3.85
Hypothetical
(5% return
before expenses) $1,000 $1,020.98 $3.86
Class B
Actual $1,000 $1,010.72 $7.33
Hypothetical
(5% return
before expenses) $1,000 $1,017.50 $7.35
Class C
Actual $1,000 $1,010.66 $7.33
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, 2006 April 30, 2007 During Period*
- -------------------------------------------------------------------------------
Class A
Actual $1,000 $1,015.34 $2.90
Hypothetical
(5% return
before expenses) $1,000 $1,021.92 $2.91
Class B
Actual $1,000 $1,011.87 $6.39
Hypothetical
(5% return
before expenses) $1,000 $1,018.45 $6.41
Class C
Actual $1,000 $1,011.85 $6.39
Hypothetical
(5% return
before expenses) $1,000 $1,018.45 $6.41
Insured National Portfolio
- -------------------------------------------------------------------------------
Class A
Actual $1,000 $1,013.79 $5.19
Hypothetical
(5% return
before expenses) $1,000 $1,019.64 $5.21
Class B
Actual $1,000 $1,009.37 $8.67
Hypothetical
(5% return
before expenses) $1,000 $1,016.17 $8.70
Class C
Actual $1,000 $1,010.35 $8.67
Hypothetical
(5% return
before expenses) $1,000 $1,016.17 $8.70
Insured California Portfolio
- -------------------------------------------------------------------------------
Class A
Actual $1,000 $1,012.68 $5.29
Hypothetical
(5% return
before expenses) $1,000 $1,019.54 $5.31
Class B
Actual $1,000 $1,009.16 $8.82
Hypothetical
(5% return
before expenses) $1,000 $1,016.02 $8.85
Class C
Actual $1,000 $1,009.94 $8.77
Hypothetical
(5% return
before expenses) $1,000 $1,016.07 $8.80
* 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).
Annualized Expense Ratio
- -------------------------------------------------------------------------------
Insured Insured
National California New York National California
- -----------------------------------------------------------------------------
Class A 0.68% 0.77% 0.58% 1.04% 1.06%
Class B 1.38% 1.47% 1.28% 1.74% 1.77%
Class C 1.38% 1.47% 1.28% 1.74% 1.76%
12 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
BOND RATING SUMMARY*
April 30, 2007 (unaudited)
NATIONAL PORTFOLIO
Quality Rating
o 34.8% AAA
o 21.6% AA
o 11.7% A [PIE CHART OMITTED]
o 19.9% BBB
o 11.5% BB
o 0.5% B
CALIFORNIA PORTFOLIO
Quality Rating
o 57.0% AAA
o 3.4% AA
o 17.7% A A [PIE CHART OMITTED]
o 17.3% BBB
o 4.6% BB
NEW YORK PORTFOLIO
Quality Rating
o 59.9% AAA
o 18.6% AA
o 8.6% A A [PIE CHART OMITTED]
o 7.5% BBB
o 4.8% BB
o 0.6% B
* All data are as of April 30, 2007. Each Portfolio's quality rating
distribution is expressed as a percentage of the Portfolio's total investments
rated in particular ratings categories by Standard & Poor's Rating Services and
Moody's Investors Service. The distributions may vary over time. If ratings are
not available, the Fund's Adviser will assign ratings that are considered to be
of equivalent quality to such ratings.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 13
BOND RATING SUMMARY*
April 30, 2007 (unaudited)
INSURED NATIONAL PORTFOLIO
Quality Rating
o 69.5% AAA
o 27.9% AA
o 2.5% A [PIE CHART OMITTED]
n 0.1% BBB
INSURED CALIFORNIA PORTFOLIO
Quality Rating
o 92.7% AAA [PIE CHART OMITTED]
o 7.3% AA
* All data are as of April 30, 2007. Each Portfolio's quality rating
distribution is expressed as a percentage of the Portfolio's total investments
rated in particular ratings categories by Standard & Poor's Rating Services and
Moody's Investors Service. The distributions may vary over time. If ratings are
not available, the Fund's Adviser will assign ratings that are considered to be
of equivalent quality to such ratings.
14 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-99.6%
Long-Term Municipal Bonds-99.6%
Alabama-1.5%
Jefferson Cnty Ltd Oblig Sch Warrants
Ser 04A
5.25%, 1/01/18-1/01/23 $ 3,900 $ 4,163,100
Montgomery Spl Care Facs Fin Auth
(Baptist Health)
Ser 04C (Prerefunded)
5.25%, 11/15/29 2,190 2,393,298
------------
6,556,398
Alaska-0.5%
Anchorage Waste Wtr Rev
MBIA Ser 04
5.125%, 5/01/29 2,075 2,199,313
------------
Arizona-2.9%
Arizona Hlth Fac Auth Phoenix Children's
Hosp
4.70%, 2/01/42(a) 2,600 2,627,352
Estrella Mtn Ranch CFD
(Desert Village)
7.375%, 7/01/27 2,694 2,967,926
Phoenix Civic Impt Corp Waste Wtr Sys
Rev
MBIA Ser 04
5.00%, 7/01/23 1,750 1,852,357
Pima Cnty IDA
(Horizon Cmnty Learning Center)
Ser 05
5.125%, 6/01/20 3,310 3,335,818
Queen Creek Improvement District No 1
5.00%, 1/01/26 1,300 1,327,976
Sundance CFD
Ser 02
7.75%, 7/01/22 725 792,817
------------
12,904,246
California-3.4%
California GO
(Prerefunded)
5.125%, 2/01/28 1,000 1,086,180
AMBAC Ser 02B
5.00%, 4/01/27 2,650 2,764,612
Ser 02
5.25%, 4/01/30 825 872,050
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 15
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California State Dept of Wtr Res Pwr Sup
Rev
(Prerefunded)
Ser 02A
5.375%, 5/01/22 $ 2,000 $ 2,175,780
Chula Vista IDR
(San Diego Gas)
Ser 96A
5.30%, 7/01/21 4,000 4,275,600
Manteca Uni Sch Dist
MBIA Ser 01
Zero Coupon, 9/01/31 11,910 3,967,340
------------
15,141,562
Colorado-3.1%
Colorado Ed & Cult Facs Auth
(Knowledge Quest Charter Sch)
Ser 05
6.50%, 5/01/36 500 517,290
Colorado HFA SFMR
(Mtg Rev) AMT
Ser 99A-2
6.45%, 4/01/30 600 611,238
Colorado Hlth Facs Auth
(Evangelical Lutheran)
5.25%, 6/01/19 1,500 1,601,460
Colorado Hlth Facs Auth
(Parkview Med Ctr)
Ser 04
5.00%, 9/01/25 1,690 1,728,498
Midcities Met Dist No 2
RADIAN
5.125%, 12/01/21 2,000 2,129,960
Park Creek Metro Dist Rev Ltd
(Ref-Sr-Ltd Tax Ppty Tax)
Ser 05
5.50%, 12/01/30 2,400 2,525,136
PV Wtr & San Met Dist Cap Appreciation
Ser 06
Zero Coupon, 12/15/17 4,224 2,283,157
Todd Creek Farms Metro Dist No 1
6.125%, 12/01/22 1,210 1,238,943
Todd Creek Farms Metro Dist No 1 Wtr
Rev
(Ref & Impt)
Ser 04
6.125%, 12/01/19 820 863,763
16 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Vista Ridge Met Dist Co
RADIAN
5.00%, 12/01/26 $ 500 $ 519,260
------------
14,018,705
Connecticut-0.2%
Connecticut Hlth & Ed Facs Auth Rev
(Griffin Hosp)
RADIAN Ser 05B
5.00%, 7/01/23 750 785,243
------------
District Of Columbia-0.2%
District Columbia Rev
ACA
5.00%, 6/01/26 1,000 1,036,140
------------
Florida-11.8%
Beacon Tradeport CDD
Ser 02B
7.25%, 5/01/33 170 182,112
Bonnet Creek Resort CDD
Ser 02
7.25%, 5/01/18 2,000 2,175,900
Clay Cnty CDD
(Crossings at Fleming Island)
Ser 00C
7.05%, 5/01/15 1,830 1,940,441
Collier Cnty IDR
(Southern State Util) AMT
Ser 96
6.50%, 10/01/25 705 712,861
Fiddlers Creek CDD
Ser 96 (Prerefunded)
7.50%, 5/01/18 790 796,928
Gateway CDD
(Sun City Center)
Ser 03B
5.50%, 5/01/10 405 407,669
Indian Trace Dev Dist Spl Assmt
(Wtr Mgmt Spl Benefit)
MBIA Ser 05
5.00%, 5/01/22-5/01/23 1,800 1,912,820
Jacksonville Elec Auth
Ser 02A (Prerefunded)
5.50%, 10/01/41 3,750 3,778,275
Jacksonville Hosp Rev
(Mayo Clinic)
Ser 01C
5.50%, 11/15/36 6,750 7,242,615
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 17
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Lee Cnty CFD
(Herons Glen)
Ser 99 (Prerefunded)
6.00%, 5/01/29 $ 6,090 $ 6,412,344
Lee Cnty HFA SFMR
(Mtg Rev) AMT
GNMA/ FNMA Ser 00A-1
7.20%, 3/01/33 85 85,495
Manatee Cnty CDD
Ser 00A
7.15%, 5/01/31 1,855 1,981,121
Marshall Creek CDD
Ser 02A
6.625%, 5/01/32 1,670 1,825,477
Miami Beach Health Facs Auth Rev
(Mt Sinai Med Ctr)
Ser 01A
6.80%, 11/15/31 3,500 3,845,065
Miromar Lakes CDD
Ser 00A
7.25%, 5/01/12 3,755 3,937,343
Orange Cnty HFA MFHR(Seminole Pt
Proj) AMT
Ser 99L
5.80%, 6/01/32 5,000 5,144,350
Orlando Assess Dist
(Conroy Rd Proj)
Ser 98A
5.80%, 5/01/26 3,250 3,316,950
Pasco Cnty HFA MFHR
(Pasco Woods Apts) AMT
Ser 99A
5.90%, 8/01/39 3,690 3,792,914
Pier Park CDD
Ser 02-1
7.15%, 5/01/34 3,245 3,523,778
Preserve at Wildnerness Lake CDD
Ser 02B
6.20%, 11/01/08 35 35,069
------------
53,049,527
Illinois-4.2%
Chicago Arpt Rev
(O'Hare Int'l Arpt)
XLCA Ser 03B-1
5.25%, 1/01/34 3,400 3,605,360
Chicago HFA SFMR
(Mtg Rev)
GNMA/ FNMA/ FHLMC Ser 99C
7.05%, 10/01/30 80 81,403
18 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Chicago HFA SFMR
(Mtg Rev) AMT
GNMA/ FNMA/ FHLMC Ser 98A
6.45%, 9/01/29 $ 260 $ 263,286
GNMA/ FNMA/ FHLMC Ser 98C-1
6.30%, 9/01/29 205 212,482
GNMA/ FNMA/ FHLMC Ser 99 A
6.35%, 10/01/30 295 310,656
Chicago Il Increment Allocation
7.46%, 2/15/26 1,770 1,893,511
Chicago Spec Assess
(Lake Shore East)
Ser 03
6.75%, 12/01/32 3,500 3,789,205
Gilberts Special Service Area No 15 Spl
Tax
(Gilberts Town Ctr Proj)
Ser 03
6.00%, 3/01/28 2,430 2,485,331
Hampshire Il Spl Svc Area 14
5.80%, 3/01/26 1,595 1,629,516
Illinois Fin Auth Rev
(Illinois Inst of Technology)
Ser 06A
5.00%, 4/01/31 750 764,010
Manhattan
(No 04-1 Brookstone Springs Proj)
Ser 05
5.875%, 3/01/28 1,685 1,744,969
Met Pier & Expo Auth
(McCormick Place)
MBIA Ser 02A
5.25%, 6/15/42 1,750 1,851,185
------------
18,630,914
Indiana-0.7%
Hendricks Cnty Bldg Facs Corp
5.50%, 7/15/23 1,165 1,267,741
Indiana Dev Fin Auth
(Inland Steel)
Ser 97
5.75%, 10/01/11 1,825 1,865,953
------------
3,133,694
Louisiana-2.9%
De Soto Parish PCR
(Int'l Paper Co)
Ser 02a
5.00%, 10/01/12 2,200 2,278,936
Ernest N Morial-New Orleans
(Exhibit Hall Auth Spl Tax)
AMBAC Ser A
5.25%, 7/15/16-7/15/17 2,475 2,656,779
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 19
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Louisiana Arpt Fac
(Cargo ACQ Grp) AMT
Ser 02
6.65%, 1/01/25 $ 925 $ 982,008
New Orleans GO
MBIA Ser 05
5.00%, 12/01/29 3,420 3,590,111
5.25%, 12/01/21 3,360 3,621,845
------------
13,129,679
Maryland-2.5%
Maryland CDA SFMR
(Mtg Rev) AMT
Ser 00A
6.10%, 7/01/38 6,285 6,486,372
Maryland IDR
(Med Waste Assoc) AMT
Ser 89
8.75%, 11/15/10(b)(c) 1,225 999,416
Tax Exempt Muni Infrastructure
Ser 04A
3.80%, 5/01/08(d) 3,978 3,954,649
------------
11,440,437
Massachusetts-7.4%
Massachusetts Dev Fin Agy Hlth Fac
(Seven Hills Fdn)
RADIAN Ser 99
5.15%, 9/01/28 6,035 6,162,700
Massachusetts GO
(Prerefunded)
Ser 02C
5.25%, 11/01/30 5,000 5,369,300
Massachusetts Port Auth AMT
Ser 99D
6.00%, 7/01/29 7,500 7,897,425
Massachusetts Port Auth Spec Fac
(Bosfuel Corp) AMT
MBIA Ser 97
6.00%, 7/01/36 11,920 12,190,465
New England Student Loan Rev AMT
Ser 93H
6.90%, 11/01/09 1,500 1,562,805
------------
33,182,695
Michigan-4.4%
Detroit Tax Increment
(Diamler/Chrysler Assembly Plant)
Ser 98A
5.50%, 5/01/21 530 532,708
20 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Kent Hosp Fin Auth
(Metropolitan Hospital Proj)
Ser 05A
5.75%, 7/01/25 $ 710 $ 760,495
Michigan HDA MFHR
(Rental Rev) AMT
AMBAC Ser 97A
6.10%, 10/01/33 1,000 1,023,790
Michigan Hosp Fin Auth
(Sparrow Med Ctr)
Ser 01 (Prerefunded)
5.625%, 11/15/36 2,650 2,881,213
Michigan Hosp Fin Auth
(Trinity Health)
Ser 00A
6.00%, 12/01/27 4,515 4,867,938
Michigan State Hosp Fin Auth
(Marquette Gen Hosp Oblig Grp)
Ser 05A
5.00%, 5/15/26 1,150 1,172,839
Plymouth Ed Ctr Charter Sch Public Sch
Academy Rev
Ser 05
5.375%, 11/01/30 2,000 2,035,300
Saginaw Hosp Fin Auth
(Covenant Med Ctr)
Ser 00F
6.50%, 7/01/30 6,125 6,653,832
------------
19,928,115
Minnesota-1.9%
Minneapolis & St. Paul Arpt Rev AMT
FGIC Ser 00B
6.00%, 1/01/21 3,520 3,714,691
Shakopee Health Care Facs
(St Francis Regl Med Center)
Ser 04
5.10%, 9/01/25 2,700 2,808,540
St. Paul Hsg & Redev Auth Hosp Rev
(Healtheast Proj)
Ser 05
6.00%, 11/15/25 500 554,020
Western Minnesota Municipal Pwr Agy
FSA
5.00%, 1/01/17 1,400 1,526,434
------------
8,603,685
Missouri-0.8%
Kansas City Arpt Fac Rev
(Cargo ACQ Grp)
Ser 02
6.25%, 1/01/30 1,975 2,099,820
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 21
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Missouri Dev Fin Brd Infrastructure Fac
Rev
(Crackerneck Creek Project)
Ser 05C
5.00%, 3/01/26 $ 1,000 $ 1,026,090
Riverside IDA
(Riverside Horizons Proj)
ACA
5.00%, 5/01/27(e) 370 383,553
------------
3,509,463
Nevada-0.6%
Carson City Hosp Rev
(Carson-Tahoe Hosp Proj)
RADIAN Ser 03A
5.125%, 9/01/29 2,700 2,794,878
------------
New Hampshire-1.3%
New Hampshire Bus Fin Auth PCR
(Public Service Co) AMT
Ser 93E
6.00%, 5/01/21 4,000 4,156,120
New Hampshire Health & Ed Facs
(Covenant Health)
Ser 04
5.375%, 7/01/24 1,680 1,775,357
------------
5,931,477
New Jersey-4.6%
Morris-Union Jointure COP
RADIAN Ser 04
5.00%, 5/01/27 5,175 5,389,452
New Jersey Eco Dev Auth Rev
(Sch Facs Constr)
Ser 05
5.25%, 3/01/25 6,200 6,651,484
New Jersey St Edl Facs Auth Rev
AMBAC Ser 02A (Prerefunded)
5.25%, 9/01/21 8,005 8,599,611
------------
20,640,547
New Mexico-2.0%
Clayton N Mex Jail Proj Rev
CIFG
5.00%, 11/01/25-11/01/27 8,475 8,866,963
------------
New York-5.7%
Erie Cnty IDA Sch Fac Rev
(Buffalo Sch Dist Proj)
FSA Ser 04
5.75%, 5/01/25-5/01/26 3,800 4,212,738
22 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York City Ed Fac
(Lycee Francais)
ACA Ser 02C
6.80%, 6/01/28 $ 2,500 $ 2,682,575
New York City GO
Ser 03
5.75%, 3/01/15 2,350 2,582,251
Ser 03A
5.50%, 8/01/21 5,000 5,407,600
Ser 04G
5.00%, 12/01/23 895 940,439
New York City GO
(Prerefunded)
5.75%, 3/01/17 1,480 1,640,106
New York City GO
(Unrefunded)
5.75%, 3/01/17 420 461,047
New York City TFA
Ser 05A-2
5.00%, 11/01/17 5,000 5,398,200
New York Liberty Dev Corp Rev
6.125%, 2/15/19 850 891,021
New York State HFA
(Eco Dev & Hsg)
FGIC Ser 05A
5.00%, 9/15/25 1,200 1,268,628
------------
25,484,605
North Dakota-0.3%
Ward Cnty ND Health Care Fac
(Trinity Health)
5.125%, 7/01/18-7/01/20 1,380 1,439,141
------------
Ohio-5.4%
Cleveland Cuyahoga Port Auth
Ser 01
7.35%, 12/01/31 5,400 5,808,348
Cleveland OH Pub Pwr Sys Rev
FGIC Ser 06A
5.00%, 11/15/18 2,335 2,530,089
Franklin Cnty
(OCLC Online Computer Library Ctr)
Ser 98A
5.20%, 10/01/20 1,200 1,233,708
Port Auth of Columbiana Cnty Swr
(Apex Environmental LLC) AMT
Ser 04A
7.125%, 8/01/25 1,240 1,263,610
Toledo Lucas Cnty Port Auth Rev
(Crocker Park Proj)
Ser 03
5.375%, 12/01/35 5,000 5,308,300
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 23
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Toledo Lucas Cnty Port Auth Rev
(CSX Transportation)
Ser 92
6.45%, 12/15/21 $ 6,730 $ 8,116,043
------------
24,260,098
Oregon-1.3%
Forest Grove Rev
(Ref & Campus Impt Pacific Proj A)
RADIAN Ser 05A
5.00%, 5/01/28 2,995 3,119,113
Oregon Hsg Dev Agy SFMR
(Mtg Rev) AMT
Ser 02B
5.45%, 7/01/32 2,470 2,537,209
------------
5,656,322
Pennsylvania-5.0%
Ephrata Area Sch Dist
FGIC Ser 05 (Prerefunded)
5.00%, 3/01/22 2,565 2,771,585
Harrisburg Arpt Auth
(Susquehanna Arpt Proj) AMT
Ser 99
5.50%, 1/01/24 500 499,725
Montgomery Cnty Hosp Rev
(Abington Mem Hosp)
Ser 02A
5.125%, 6/01/32 2,000 2,068,980
Montgomery Cnty IDA
(Whitemarsh Continuing Care Ret
Comm)
6.00%, 2/01/21 1,210 1,283,774
Pennsylvania HFA
Ser 03-1235
8.24%, 6/01/08(a)(d)(f) 365 365,000
Pennsylvania HFA SFMR
(Mtg Rev) AMT
FSA Ser 03
4.08%, 6/01/08(a)(g)(h) 6,397 6,396,594
Pennsylvania Hgr Ed Hosp Rev
(UPMC Health Sys)
Ser 01A
6.00%, 1/15/31 3,845 4,162,059
Philadelphia Auth IDR
(Leadership Learning Partners)
Ser 05A
5.25%, 7/01/24 1,030 1,037,684
South Central Gen Auth
(Wellspan Health)
MBIA Ser 01
5.25%, 5/15/31 685 719,222
24 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
South Central Hosp Rev
(Prerefunded)
MBIA Ser 01
5.25%, 5/15/31(g) $ 3,115 $ 3,321,182
------------
22,625,805
Puerto Rico-2.0%
Puerto Rico Comwlth GO
(Pub Impt)
5.25%, 7/01/23 1,100 1,180,960
Ser 01A
5.50%, 7/01/19 500 560,360
Ser 03A
5.25%, 7/01/23 500 529,045
Ser 04A
5.25%, 7/01/19 1,920 2,059,411
Puerto Rico Comwlth Govt Dev Bank
(Sr Notes)
Ser 06B
5.00%, 12/01/15 500 533,370
Univ of Puerto Rico
Ser 06Q
5.00%, 6/01/19-6/01/20 3,730 3,942,776
------------
8,805,922
South Carolina-2.3%
Dorchester Cnty Sch Dist No 2
(No 002 Installment Pur Rev)
Ser 06
5.00%, 12/01/30 1,500 1,562,520
Newberry Investing In Childrens Ed
(Newberry Cnty Sch Dist Proj)
ASSURED GTY Ser 05
5.00%, 12/01/27 3,890 4,069,290
Ser 05
5.00%, 12/01/30 335 342,966
Scago Edl Facs Corp For Sch
RADIAN
5.00%, 12/01/21 4,300 4,503,132
------------
10,477,908
Tennessee-0.7%
Johnson City Hlth & Ed Facs Hosp Rev
(First Mtg-MTN Sts Hlth)
Ser 06A
5.50%, 7/01/31 1,360 1,451,623
Sullivan Cnty Health Edl
5.00%, 9/01/22 1,265 1,303,911
Sullivan Cnty Tenn Health Edl
(Wellmont Health Sys Proj)
5.25%, 9/01/26 275 286,721
3,042,255
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 25
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Texas-12.8%
Bexar Cnty Hlth Fac Dev Corp Rev
5.00%, 7/01/27 $ 325 $ 331,204
Corpus Christi Arpt Rev
(Corpus Christi Int'l)
FSA Ser 00B
5.375%, 2/15/30 7,100 7,467,993
Dallas-Fort Worth Arpt Rev
(Int'l Arpt)
FGIC Ser 01
5.50%, 11/01/35 13,400 14,045,210
Ector County Independent School District
5.25%, 8/15/27 3,000 3,249,913
Garza Cnty Pub Fac Corp
5.50%, 10/01/19 535 576,799
Grapevine Arpt Rev
6.50%, 1/01/24 995 1,070,302
Guadalupe-Blanco Riv Auth & Surp
(Contract & Sub Wtr Res)
MBIA Ser 04A
5.00%, 8/15/24 1,440 1,492,603
Hidalgo Cnty Hlth Svcs
(Mission Hosp Inc Proj)
Ser 05
5.00%, 8/15/14-8/15/19 730 745,368
Houston Arpt Rev
(Cargo ACQ Grp) AMT
Ser 02
6.375%, 1/01/23 3,000 3,211,560
Laredo ISD Pub Fac Corp Lease Rev
AMBAC Ser 04A
5.00%, 8/01/24 1,000 1,031,920
Lubbock
(Ctfs Oblig-Tax & Wtrwks Surp)
FSA
5.125%, 2/15/24 3,335 3,553,743
Richardson Hosp Auth Rev
(Richardson Regional Med Ctr)
FSA Ser 04
5.875%, 12/01/24 2,310 2,495,839
Ser 04
6.00%, 12/01/19 1,830 1,994,499
San Antonio GO Unrefunded
Ser 02
5.00%, 2/01/22 3,060 3,182,798
Seguin Hgr Ed Auth
(Texas Lutheran Univ Project)
Ser 04
5.25%, 9/01/28 1,000 1,026,830
26 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Texas Turnpike Auth
AMBAC Ser 02A
5.50%, 8/15/39 $ 7,500 $ 8,037,900
Tyler Hosp Rev
(Mother Francis Regl Hlth)
Ser 01
6.00%, 7/01/31 3,900 4,155,411
------------
57,669,892
Utah-0.2%
Spanish Fork City Utah Charter
5.55%, 11/15/21 880 906,717
------------
Virgin Islands-1.8%
Virgin Islands Pub Fin Auth
FSA Ser 03
5.00%, 10/01/13-10/01/14 2,025 2,182,461
5.25%, 10/01/15-10/01/17 5,460 5,981,978
------------
8,164,439
Virginia-1.5%
Arlington IDA Hosp Rev
(Arlington Hlth Sys)
Ser 01 (Prerefunded)
5.25%, 7/01/31 1,000 1,068,200
Bell Creek CDD
Ser 03A
6.75%, 3/01/22 852 858,884
Broad Street CDD
(Parking Fac)
Ser 03
7.50%, 6/01/33 3,000 3,393,570
Pocahontas Pkwy Assoc Toll Rd Rev
(Cap Appreciation) Sr
Ser 98B (Prerefunded)
Zero Coupon, 8/15/15 2,000 1,312,720
------------
6,633,374
Washington-2.1%
Energy Northwest Wash Wind
AMBAC
5.00%, 7/01/21 (i) 6,105 6,501,581
Tacoma Solid Waste Util Rev
XLCA Ser 06
5.00%, 12/01/18 2,750 2,946,570
------------
9,448,151
Wisconsin-1.6%
Milwaukee Arpt Rev
(Cargo ACQ Corp) AMT
Ser 02
6.50%, 1/01/25 2,330 2,506,334
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 27
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Wisconsin Hlth & Ed Fac Auth Rev
(Bell Tower Residence Proj)
FHLB Ser 05
5.00%, 7/01/25 $ 1,270 $ 1,299,820
Wisconsin Hlth & Ed Fac Auth Rev
(Wheaton Franciscan)
MBIA
5.25%, 8/15/20 3,400 3,588,870
--------------
7,395,024
--------------
Total Investments-99.6%
(cost $427,079,087) 447,493,334
Other assets less liabilities-0.4% 1,619,495
--------------
Net Assets-100.0% $ 449,112,829
--------------
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-----------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------
Citigroup $ 4,700 6/22/07 BMA 22.962% $ (10,181)
Citigroup 5,600 11/10/26 3.884% BMA 13,126
JPMorgan Chase 2,200 10/01/07 BMA 33.635% (1,485)
JPMorgan Chase 15,600 11/10/11 BMA 33.482% 36,269
Merrill Lynch 2,200 7/12/08 BMA 33.815% 7,760
Merrill Lynch 3,205 2/12/12 BMA 33.548% 14,997
(a) Floating Rate Security. Stated interest rate was in effect at April 30,
2007.
(b) Illiquid security, valued at fair value. (See note A)
(c) Security is in default and is non-income producing.
(d) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in the
transactions exempt from registration, normally to qualified institutional
buyers. At April 30, 2007, the aggregate market value of these securities
amounted to $4,319,649 or 1.0% of net assets.
(e) When-Issued security.
(f) Inverse Floater Security-Security with variable or floating interest rate
that moves in the opposite direction of short-term interest rates.
(g) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(h) Private Placement
(i) Position, or a portion thereof, has been segregated to collateralize when
issued securities.
28 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Glossary:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
ASSURED GTY - Assured Guaranty
BMA - Bond Market Association
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
FHLB - Federal Home Loan Bank
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/Agency
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 Family Mortgage Revenue
TFA - Transitional Finance Authority
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 29
INSURED NATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-99.0%
Long-Term Municipal Bonds-98.5%
Alabama-0.7%
Jefferson Cnty Wtr & Swr Rev
FGIC Ser 02B (Prerefunded)
5.00%, 2/01/41 $ 625 $ 663,069
Jefferson Cnty Wtr & Swr Rev
(Prerefunded)
FGIC Ser 02B
5.00%, 2/01/41 375 397,474
-------------
1,060,543
Alaska-1.9%
Alaska HFC SFMR
(Mtg Rev)
MBIA Ser 97A
6.00%, 6/01/27 2,635 2,690,335
-------------
California-6.7%
California GO
(Prerefunded)
5.125%, 2/01/28 1,500 1,629,270
AMBAC Ser 02B
5.00%, 4/01/27 3,000 3,129,750
FSA Ser 03
5.00%, 2/01/29 1,445 1,512,669
Golden St Tobacco Securitization Corp.
XLCA Ser 03B (Prerefunded)
5.50%, 6/01/33 2,000 2,189,720
San Bernardino Cnty Redev ETM
(Ontario Proj #1)
MBIA Ser 93
5.80%, 8/01/23 1,000 1,139,060
-------------
9,600,469
Colorado-7.3%
Midcities Met Dist No 2
RADIAN
5.125%, 12/01/21 1,000 1,064,980
Northwest Parkway Toll Rev
FSA Ser 01C
5.80%, 6/15/25(a) 9,000 8,236,440
SBC Met Dist
ACA Ser 05
5.00%, 12/01/29 1,000 1,030,910
-------------
10,332,330
30 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Florida-2.1%
Volusia Cnty Hlth Fac
(John Knox Village)
RADIAN Ser 96A
6.00%, 6/01/17 $ 3,000 $ 3,035,490
Illinois-7.9%
Chicago Arpt Rev
(O'Hare Int'l Arpt)
XLCA Ser 03B-1
5.25%, 1/01/34 1,700 1,802,680
Chicago Stadium Rev
(Soldier Field)
AMBAC Ser 01
5.50%, 6/15/30(a) 8,000 7,526,720
Met Pier & Expo Auth
(McCormick Place)
MBIA Ser 02A
5.25%, 6/15/42 1,750 1,851,185
-------------
11,180,585
Louisiana-1.9%
Ernest N Morial-New Orleans
(Exhibit Hall Auth Spl Tax)
AMBAC Ser A
5.25%, 7/15/16-7/15/17 815 874,862
New Orleans GO
MBIA Ser 05
5.00%, 12/01/29 570 598,352
5.25%, 12/01/21 1,135 1,223,450
-------------
2,696,664
Massachusetts-6.3%
Massachusetts Hlth & Ed Fac Hosp Rev
(Berkshire Hlth Sys)
RADIAN Ser 01E
5.70%, 10/01/25 6,800 7,334,412
Massachusetts Hlth & Ed Fac Hosp Rev
(Cape Cod Healthcare)
RADIAN Ser 01C
5.25%, 11/15/31 1,600 1,681,920
-------------
9,016,332
Michigan-8.1%
Detroit Wtr Supply Sys
FGIC Ser 01B (Prerefunded)
5.50%, 7/01/33 1,450 1,562,172
Kalamazoo Hosp Fin Auth Rev
(Borgess Med Ctr) ETM
FGIC Ser 94A
6.378%, 6/01/11(b) 5,140 5,152,953
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 31
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Michigan
(Trunk Line Fund)
FSA Ser 01A (Prerefunded)
5.25%, 11/01/30 $ 1,000 $ 1,062,790
Michigan Mun Bd Auth Rev
(Sch Dist City of Detroit)
FSA Ser 05
5.00%, 6/01/20 1,500 1,590,930
Pontiac Tax Increment
ACA Ser 02
5.625%, 6/01/22 700 745,213
Royal Oak Hosp Fin Auth Rev
(William Beaumont Hosp)
MBIA Ser 01M
5.25%, 11/15/35 1,300 1,350,362
-------------
11,464,420
Minnesota-4.5%
Waconia Hlth Care Fac Rev
(Ridgeview Med Ctr)
RADIAN Ser 99A
6.125%, 1/01/29 6,095 6,473,926
-------------
Missouri-0.1%
Riverside IDA
(Riverside Horizons Proj)
ACA
5.00%, 5/01/27(c) 120 124,396
-------------
Nevada-1.5%
Carson City Hosp Rev
(Carson-Tahoe Hosp Proj)
RADIAN Ser 03A
5.125%, 9/01/29 2,100 2,173,794
-------------
New Hampshire-1.7%
New Hampshire Hosp Rev
(Mary Hitchcock Hosp)
FSA Ser 02
5.50%, 8/01/27 2,250 2,421,315
-------------
New Jersey-3.1%
Morris-Union Jointure COP
RADIAN Ser 04
5.00%, 5/01/27 1,700 1,770,448
New Jersey Ed Facs Auth Rev
(Higher Ed Cap Impt)
AMBAC Ser 02A (Prerefunded)
5.125%, 9/01/22 2,500 2,670,700
-------------
4,441,148
32 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York-6.7%
Erie Cnty IDA Sch Fac Rev
(Buffalo Sch Dist Proj)
FSA Ser 04
5.75%, 5/01/26 $ 1,300 $ 1,440,959
Nassau Cnty Hlth Fac
(Nassau Hlth Sys Rev)
FSA Ser 99 (Prerefunded)
5.75%, 8/01/29 7,600 8,087,388
-------------
9,528,347
North Carolina-0.8%
North Carolina Eastern Municipal Pwr Agy
Pwr Sys Rev
AMBAC Ser 05A
5.25%, 1/01/20 1,000 1,090,690
-------------
Ohio-9.4%
Cleveland OH Pub Pwr Sys Rev
FGIC Ser 06A
5.00%, 11/15/18 500 541,775
County of Hamilton
(Prerefunded)
AMBAC Ser B
5.25%, 12/01/32 5,660 5,957,094
County of Hamilton
(Prerefunded)
AMBAC Ser B
5.25%, 12/01/32 1,440 1,500,379
Summit Cnty GO
(Prerefunded)
FGIC Ser 00
6.00%, 12/01/21 5,000 5,431,000
-------------
13,430,248
Pennsylvania-9.9%
Allegheny Cnty Hgr Ed Rev
(Carnegie Mellon Univ)
Ser 02
5.50%, 3/01/28 6,665 7,132,816
Pennsylvania Turnpike Transp Rev
AMBAC Ser 01 (Prerefunded)
5.25%, 7/15/41 6,500 6,943,950
-------------
14,076,766
Puerto Rico-5.3%
Puerto Rico Elec Pwr Auth Rev
XLCA Ser 02-1
5.25%, 7/01/22(d) 6,935 7,516,708
-------------
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND O 33
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Rhode Island-5.0%
Rhode Island Eco Dev Auth
(Providence Place Mall Proj)
ASSET GTY Ser 00
6.125%, 7/01/20 $ 6,500 $ 7,109,440
-------------
South Carolina-2.1%
Dorchester Cnty Sch Dist No 2
ASSURED GTY
5.00%, 12/01/29 400 420,816
Newberry Investing In Childrens Ed
(Newberry Cnty Sch Dist Proj)
ASSURED GTY Ser 05
5.00%, 12/01/27 2,335 2,442,620
Ser 05
5.00%, 12/01/30 115 117,735
-------------
2,981,171
Texas-2.9%
Guadalupe-Blanco Riv Auth & Surp
(Contract & Sub Wtr Res)
MBIA Ser 04A
5.00%, 8/15/24 455 471,621
San Antonio GO
Ser 02
5.00%, 2/01/23 1,485 1,541,356
Texas Turnpike Auth
AMBAC Ser 02A
5.50%, 8/15/39 2,000 2,143,440
-------------
4,156,417
Washington-0.7%
Tacoma Solid Waste Util Rev
XLCA Ser 06
5.00%, 12/01/18 865 926,830
-------------
West Virginia-1.9%
Fairmont Higher Ed
(Fairmont St Coll)
FGIC Ser 02A
5.375%, 6/01/27 2,500 2,685,275
-------------
Total Long-Term Municipal Bonds
(cost $131,163,598) 140,213,639
-------------
Short-Term Municipal Notes-0.5%
New York-0.5%
New York City Mun Wtr Fin Auth
FGIC
4.00%, 6/15/25(e)(f)
(cost $700,000) 700 700,000
-------------
34 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
U.S. $ Value
- -------------------------------------------------------------------------------
Total Investments-99.0%
(cost $131,863,598) $140,913,639
Other assets less liabilities-1.0% 1,436,790
-------------
Net Assets-100.0% $142,350,429
-------------
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-----------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- -------------------------------------------------------------------------------------
Citigroup $1,600 6/22/07 BMA 2.962% $ (3,466)
Citigroup 1,800 11/10/26 3.884% BMA 4,219
JPMorgan Chase 800 10/01/07 BMA 3.635% (540)
JPMorgan Chase 5,000 11/10/11 BMA 3.482% 11,625
Merrill Lynch 700 7/12/08 BMA 3.815% 2,469
Merrill Lynch 195 2/12/12 BMA 3.548% 913
Merrill Lynch 1,000 10/21/16 BMA 4.129% 36,682
Merrill Lynch 2,500 7/30/26 4.090% BMA (56,905)
Merrill Lynch 2,500 11/15/26 4.378% BMA (146,818)
(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-Security with variable or floating interest rate
that moves in the opposite direction of short-term interest rates.
(c) When-Issued security.
(d) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(e) Position, or a portion thereof, has been segregated to collateralize when
issued security.
(f) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 35
Glossary:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Bond Assurance Corporation
ASSET GTY - Asset Guaranty Insurance Company
ASSURED GTY - Assured Guaranty
BMA - Bond Market Association
COP - Certificate of Participation
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Assurance Inc.
GO - General Obligation
HFC - Housing Finance Corporation
IDA - Industrial Development Authority/Agency
MBIA - Municipal Bond Investors Assurance
RADIAN - Radian Group, Inc.
SFMR - Single Family Mortgage Revenue
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
36 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NEW YORK PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-99.3%
Long-Term Municipal Bonds-98.4%
New York-86.3%
Cattaraugus Cnty Hgr Ed
(Jamestown)
Ser 00A (Prerefunded)
6.50%, 7/01/30 $ 1,000 $ 1,101,510
Cortland Cnty Hosp Rev
(Cortland Mem Hosp)
RADIAN Ser 02
5.25%, 7/01/32 2,700 2,850,660
Dutchess Cnty NY Indl Dev Agy
5.00%, 8/01/19-8/01/21(a) 1,450 1,521,245
Erie Cnty
(Pub Impt)
MBIA Ser 05A
5.00%, 12/01/20 5,990 6,403,190
Erie Cnty IDA Sch Fac Rev
(Buffalo Sch Dist Proj)
FSA
5.75%, 5/01/24 2,400 2,661,768
FSA Ser 04
5.75%, 5/01/25 1,400 1,552,698
Glen Cove IDR
(The Regency at Glen Cove) ETM
Ser 92B
Zero Coupon, 10/15/19 11,745 7,086,111
Hempstead Hgr Ed
(Adelphi Univ Civic Fac)
Ser 02
5.50%, 6/01/32 1,000 1,064,500
Herkimer Cnty IDR Hgr Ed
(Herkimer CC Stud Hsg)
Ser 00
6.50%, 11/01/30 2,000 2,181,960
Horseheads CCRC
(Appleridge Retrmt Cmnty)
GNMA Ser 99
5.75%, 9/01/41 4,000 4,225,920
Long Island Power Auth Elec Rev
FGIC Ser 06A
5.00%, 12/01/19 4,300 4,624,521
FSA Ser 01A (Prerefunded)
5.25%, 9/01/28 10,000 10,647,000
Long Island Pwr Auth Elec Rev
FGIC Ser 06A
5.00%, 12/01/24 4,000 4,254,880
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 37
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Monroe Cnty MFHR
(Southview Towers Proj) AMT
SONYMA Ser 00
6.25%, 2/01/31 $ 1,130 $ 1,209,473
Montgomery Cnty IDA Lease Rev
(HFM Boces)
XLCA Ser 05A
5.00%, 7/01/24 1,500 1,573,470
MTA NY Dedicated Tax Fund
5.25%, 11/15/30 10,000 10,584,300
MBIA
5.00%, 11/15/18-11/15/21 11,890 12,865,134
Ser 02
5.25%, 11/15/31 5,000 5,276,950
Ser 02A
5.125%, 11/15/31 5,500 5,743,265
Ser 05F
5.00%, 11/15/30 3,500 3,670,870
New York City Ed Fac
(Lycee Francais)
ACA Ser 02C
6.80%, 6/01/28 2,500 2,682,575
New York City Ed Fac
(Magen David Yeshivah Proj)
ACA Ser 02
5.70%, 6/15/27 2,500 2,664,775
New York City Ed Fac
(Spence School)
5.20%, 7/01/34 3,155 3,331,301
New York City GO
5.00%, 1/01/21 5,000 5,331,050
FSA Ser 04E
5.00%, 11/01/21 4,000 4,238,200
Ser 03
5.75%, 3/01/15 2,350 2,582,251
Ser 04G
5.00%, 12/01/23 3,225 3,388,733
Ser 04I
5.00%, 8/01/21 11,400 11,992,914
Ser 05J
5.00%, 3/01/24 5,000 5,254,000
XLCA Ser 04I
5.00%, 8/01/18 10,000 10,648,800
New York City GO
(Prerefunded)
5.75%, 3/01/17 1,480 1,640,106
Ser 01B
5.50%, 12/01/31 11,995 12,938,047
38 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York City GO
(Unrefunded)
5.75%, 3/01/17 $ 420 $ 461,047
Ser 01B
5.50%, 12/01/31 5 5,300
New York City HDC
(NYC Hsg Auth)
FGIC Ser 05P6-A
5.00%, 7/01/19 10,000 10,618,400
New York City HDC MFHR
(Rental Hsg) AMT
Ser 01C-2
5.40%, 11/01/33 3,030 3,123,930
Ser 02A
5.50%, 11/01/34 1,250 1,291,250
New York City Hlth & Hosp Rev
AMBAC Ser 03A
5.25%, 2/15/22 5,700 6,064,287
New York City Hosp Rev
(Health Sys)
FSA Ser 02A
5.125%, 2/15/23 1,500 1,571,385
New York City IDA
(Brooklyn Navy Yard) AMT
Ser 97
5.75%, 10/01/36 3,000 3,067,710
New York City IDA
(Staten Island Hosp)
Ser 01B
6.375%, 7/01/31 1,965 2,045,211
New York City IDA Spl Fac
(Airis JFK Proj)
Ser 01A
5.50%, 7/01/28 9,000 9,297,720
New York City IDA Spl Fac Rev
(Terminal One Group Assc Proj)
Ser 05
5.50%, 1/01/24(b) 800 859,184
New York City Muni Wtr
Ser 03A
5.00%, 6/15/27 1,000 1,043,260
New York City Spec Fac
(Museum of Modern Art)
AMBAC Ser 01D
5.125%, 7/01/31 14,000 14,713,860
New York City TFA
5.00%, 7/15/21 7,000 7,546,140
Ser 02A
5.50%, 11/01/26(b) 5,000 5,352,400
Ser 05A-2
5.00%, 11/01/17 5,000 5,398,200
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 39
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York City TFA Future Tax Secured
MBIA Ser 03D
5.25%, 2/01/18 $ 10,000 $ 10,714,700
New York City TFA Prerefunded
Ser 00B
6.00%, 11/15/29 6,000 6,464,040
New York Convention Ctr Dev Corp Rev
(Hotel Unit Fee Secured)
AMBAC Ser 05
5.00%, 11/15/30 10,000 10,598,100
New York Liberty Dev Corp Rev
6.125%, 2/15/19 900 943,434
New York State Dorm Auth
5.00%, 11/01/21 1,000 1,056,490
Ser 02 (Prerefunded)
5.00%, 7/01/32 4,000 4,251,760
New York State Dorm Auth
(FHA Insd Maimonides)
MBIA Ser 04
5.75%, 8/01/29 3,515 3,959,507
New York State Dorm Auth Hlth Fac
(Eger Rehab Ctr) FHA
FHA INS Ser 00
6.10%, 8/01/37 3,455 3,740,072
New York State Dorm Auth Hlth Fac
(Nursing Home)
FHA Ser 02-34
5.20%, 2/01/32 3,965 4,246,674
New York State Dorm Auth Hosp Rev
(Mem Sloan-Kettering Ctr)
MBIA Ser 03A
5.00%, 7/01/22 5,000 5,242,550
New York State Dorm Auth Hosp Rev
(Mount Sinai) NYU Health System
Ser 00
6.50%, 7/01/25 4,000 4,315,600
New York State Dorm Auth Lease Rev
(Master Boces Program Wayne Finger)
FSA Ser 04
5.00%, 8/15/23 3,175 3,349,085
New York State Dorm Auth MFHR
(Joachim & Anne Residence)
Ser 02
5.25%, 7/01/27 1,000 1,037,400
New York State Dorm Auth Personal
Income Tax
5.00%, 3/15/21 2,000 2,151,640
New York State Dorm Auth Rev
(Cabrini of Westchester)
GNMA
5.10%, 2/15/26 1,900 2,044,286
40 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York State Dorm Auth Rev
(Leake & Watts Svcs Inc)
MBIA Ser 04
5.00%, 7/01/22-7/01/23 $ 3,275 $ 3,451,248
New York State Dorm Auth Rev
(Montefiore Hosp)
FGIC FHA Ser 04
5.00%, 8/01/23 5,000 5,275,350
New York State Dorm Auth Rev
(New York University)
FGIC Ser 04A
5.00%, 7/01/24 2,240 2,363,894
New York State Dorm Auth Rev
(NYU Hosp Ctr)
Ser 07A
5.00%, 7/01/22 1,200 1,238,004
New York State Dorm Auth Rev
(Rochester University)
Ser 04A (Prerefunded)
5.25%, 7/01/21-7/01/24 1,825 1,971,144
New York State Dorm Auth Rev
(Westchester Cnty Court Facs Lease)
Ser 06A
5.00%, 8/01/17 9,510 10,276,506
New York State Energy Res & Dev Auth
Elec Rev
(Long Island Ltg Co) AMT
Ser 95A
5.30%, 8/01/25 7,500 7,740,300
New York State Mtg Agy SFMR
(Mtg Rev) AMT
Ser 01-31A
5.30%, 10/01/31 8,500 8,679,945
Ser 82
5.65%, 4/01/30 3,165 3,253,683
New York State SFMR
(Mtg Rev) AMT
Ser 01-29
5.45%, 4/01/31 9,000 9,248,040
New York State Twy Auth
AMBAC Ser 05B
5.00%, 4/01/21 7,500 8,019,900
FGIC Ser 05B
5.00%, 4/01/17 12,750 13,794,608
New York State Twy Auth Personal
Income Tax Rev
(Transport)
AMBAC Ser 04A
5.00%, 3/15/24 5,000 5,283,400
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 41
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
New York State UDC
(Empire State)
Ser 02A (Prerefunded)
5.25%, 3/15/32 $ 3,945 $ 4,227,580
New York State UDC
(State Pers Income Tax)
AMBAC Ser 05A-1
5.00%, 12/15/25 2,450 2,606,776
Niagara Frontier Trans Arpt Rev
(Buffalo Niagara) AMT
MBIA
5.625%, 4/01/29 2,500 2,594,300
Onondaga Cnty IDA Airport Fac
(Cargo ACQ) AMT
Ser 02
6.125%, 1/01/32 1,000 1,058,040
Onondaga Cnty IDA Swr Rev
(Anheuser Busch) AMT
Ser 99
6.25%, 12/01/34 2,000 2,120,180
Onondaga Cnty PCR
(Bristol-Meyers Squibb) AMT
5.75%, 3/01/24 4,000 4,616,240
Port Auth NY & NJ
(JFK Int'l Airport Proj) AMT
MBIA Ser 97-6
5.75%, 12/01/22 6,820 7,022,963
Sachem Cent Sd Holbrook
5.00%, 10/15/21-10/15/22 5,415 5,820,630
Spencerport Uni Sch Dist
MBIA Ser 02
5.00%, 6/15/21 2,500 2,630,750
Tobacco Settlement Financing Authority
Ser 03A-1
5.50%, 6/01/14 5,000 5,172,150
Western Nassau Cnty Wtr Auth Wtr Sys
Rev
AMBAC Ser 05
5.00%, 5/01/24 1,945 2,063,295
Yonkers IDA Hlth Fac
(Malotz Pavillion Proj)
MBIA Ser 99
5.65%, 2/01/39 700 726,362
-------------
415,622,087
Arizona-0.2%
Goodyear IDA Water & Sewer Rev
(Litchfield Pk Svc Proj) AMT
Ser 01
6.75%, 10/01/31 1,000 1,088,490
-------------
42 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California-0.2%
California State GO
Ser 03
5.25%, 11/01/25 $ 650 $ 691,860
Ser 04
5.20%, 4/01/26 350 371,441
-------------
1,063,301
Florida-2.9%
Crossings at Fleming Island CDD
(Eagle Harbor)
Ser 00C
7.10%, 5/01/30 5,500 5,838,195
Fiddlers Creek CDD
Ser 96 (Prerefunded)
7.50%, 5/01/18 2,630 2,653,065
Ser 99B
5.80%, 5/01/21 840 863,755
Hammock Bay CDD
(Special Assessment)
Ser 04A
6.15%, 5/01/24 800 857,384
Manatee Cnty CDD
(Heritage Harbor South)
Ser 02B
5.40%, 11/01/08 10 10,024
Marshall Creek CDD
Ser 02A
6.625%, 5/01/32 950 1,038,445
Midtown Miami CDD
Ser 04A
6.00%, 5/01/24 2,500 2,701,050
-------------
13,961,918
Georgia-0.1%
Atlanta Tax Allocation
(Eastside Proj)
Ser 05B
5.60%, 1/01/30 500 521,615
-------------
Guam-0.1%
Guam Govt
(Water & Waste Sys Rev)
Ser 05
6.00%, 7/01/25 500 546,785
-------------
Illinois-1.0%
Antioch Village Spcl Svc Area
(Clublands Proj)
Ser 03
6.625%, 3/01/33 993 1,051,627
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 43
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Plano Spl Svc Area No. 3 Spl Tax
(Lakewood Springs Proj)
Ser 05A
5.95%, 3/01/28 $ 1,350 $ 1,418,337
Yorkville Cmnty Fac Dist
(Raintree Village)
Ser 03
6.875%, 3/01/33 1,933 2,073,104
-------------
4,543,068
Nevada-0.5%
Clark Cnty Impt Dist No. 142
Ser 03
6.10%, 8/01/18 1,495 1,543,528
Henderson Local Impt Dist
Ser 03
5.80%, 3/01/23 860 888,302
-------------
2,431,830
Ohio-0.3%
Port Auth of Columbiana Cnty Swr
(Apex Environmental LLC) AMT
Ser 04A
7.125%, 8/01/25 1,200 1,222,848
-------------
Puerto Rico-6.1%
Puerto Rico Comwlth GO
(Pub Impt)
5.25%, 7/01/23 1,600 1,717,760
Ser 01A
5.50%, 7/01/19 915 1,025,459
Puerto Rico Comwlth Govt Dev Bank
(Sr Notes)
Ser 06B
5.00%, 12/01/15 500 533,370
Puerto Rico Elec Pwr Auth Rev
5.00%, 7/01/22 2,085 2,214,603
XLCA Ser 02-1
5.25%, 7/01/22(c)(d) 10,000 10,838,800
Puerto Rico HFA
(Cap Fd Prog)
5.00%, 12/01/20 5,215 5,486,128
Puerto Rico HFC SFMR
(Mtg Rev)
GNMA/ FNMA/ FHLMC Ser 01A
5.20%, 12/01/33 1,720 1,757,651
Puerto Rico Municipal Fin Agy
Ser 05A
5.25%, 8/01/23 935 1,001,413
Univ of Puerto Rico
Ser 06Q
5.00%, 6/01/20 4,225 4,461,473
44 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Univ of Puerto Rico Rev
5.00%, 6/01/22 $ 255 $ 268,487
-------------
29,305,144
Virginia-0.7%
Bell Creek CDD
Ser 03A
6.75%, 3/01/22 284 286,295
Broad Street CDA
(Parking Fac)
Ser 03
7.50%, 6/01/33 2,680 3,031,589
-------------
3,317,884
-------------
Total Long-Term Municipal Bonds
(cost $453,284,630) 473,624,970
-------------
Short-Term Municipal Notes-0.9%
New York-0.9%
MTA New York Svc Contract
SubSer G-2
4.10%, 11/01/26(d)(e) 1,440 1,440,000
New York City Muni Wtr Fin Auth
Ser 05 AA-1
4.07%, 6/15/32(d)(e) 3,000 3,000,000
-------------
Total Short-Term Municipal Notes
(cost $4,440,000) 4,440,000
-------------
Total Investments-99.3%
(cost $457,724,630) 478,064,970
Other assets less liabilities-0.7% 3,327,926
-------------
Net Assets-100.0% $481,392,896
-------------
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-----------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- -------------------------------------------------------------------------------------
Citigroup $4,800 6/22/07 BMA 2.962% $(10,398)
Citigroup 2,200 1/25/26 BMA 4.108% 54,927
Citigroup 6,000 11/10/26 3.884% BMA 14,064
JPMorgan Chase 2,400 10/01/07 BMA 3.635% (1,620)
JPMorgan Chase 16,700 11/10/11 BMA 3.482% 38,827
JPMorgan Chase 4,500 6/15/15 3.777% BMA (59,333)
Merrill Lynch 2,300 7/12/08 BMA 3.815% 8,112
Merrill Lynch 645 2/12/12 BMA 3.548% 3,018
Merrill Lynch 3,100 10/01/16 BMA 4.147% 118,886
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 45
(a) When-Issued security.
(b) Variable rate coupon, rate shown as of April 30, 2007.
(c) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(d) Position, or a portion thereof, has been segregated to collateralize when
issued securities.
(e) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
Glossary:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
CCRC - Congregate Care Retirement Center
CDA - Community Development Administration
CDD - Community Development District
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Administration
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
GO - General Obligation
HDC - Housing Development Corporation
HFA - Housing Finance Authority
HFC - Housing Finance Corporation
IDA - Industrial Development Authority/Agency
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 Family Mortgage Revenue
SONYMA - State of New York Mortgage Agency
TFA - Transitional Finance Authority
UDC - Urban Development Corporation
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
46 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-99.5%
Long-Term Municipal Bonds-98.8%
California-95.0%
Acalanes Union High Sch Dist
(Ref-2013 Crossover)
FSA Ser 05B
5.25%, 8/01/24(a) $ 3,000 $ 3,285,240
Banning Util Auth Wtr & Enterprise Rev
(Ref & Impt Proj)
FGIC Ser 05
5.25%, 11/01/30 7,265 7,946,530
Bay Area Infrastructure
FGIC
5.00%, 8/01/17 25,000 26,866,500
Bay Area Infrastructure Fin Auth
FGIC
5.00%, 8/01/17 2,000 2,116,940
Beaumont Calif Fing Auth
AMBAC
5.00%, 9/01/26(b) 2,900 3,077,683
Calfornia GO
MBIA Ser 02 (Prerefunded)
5.00%, 2/01/32 3,500 3,711,785
California Dept of Wtr Res
Ser 02A (Prerefunded)
5.375%, 5/01/21 3,000 3,263,670
California Ed Facs Auth
(University of Pacific)
5.00%, 11/01/21 990 1,039,599
California Ed Facs Auth Rev
(Col of Arts & Crafts)
Ser 01
5.875%, 6/01/30 2,200 2,311,452
California Ed Facs Auth Rev
(University of Pacific)
Ser 04
5.00%, 11/01/20 1,000 1,047,700
5.25%, 11/01/34 1,000 1,064,930
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 47
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California GO
(Prerefunded)
5.00%, 8/01/22-2/01/33 $ 35,125 $ 37,148,396
(Prerefunded)
5.125%, 2/01/28-6/01/31 5,230 5,599,515
5.25%, 2/01/30 14,000 14,711,480
MBIA-IBC Ser 03
5.25%, 2/01/16 2,050 2,211,868
Ser 02
5.25%, 4/01/30 1,175 1,242,010
Ser 03
5.25%, 2/01/24 3,500 3,719,555
Ser 04
5.30%, 4/01/29 6,400 6,857,920
California Health Fac Auth
(Lucile Salter Packard Hosp)
AMBAC Ser 03C
5.00%, 8/15/21 3,365 3,532,947
California HFA SFMR
(Mtg Rev) AMT
Ser 99A-2
5.25%, 8/01/26 1,705 1,720,788
California HFA SFMR
(Mtg Rev) FHA AMT
Ser 95A-2
6.45%, 8/01/25 185 186,136
California Hlth Fac Auth
(Cottage Hlth Sys)
MBIA Ser 03B
5.00%, 11/01/23 2,500 2,618,425
California Infrastructure & Econ Dev Bank
(Kaiser Hosp)
Ser 01A
5.55%, 8/01/31 18,000 19,113,120
California Poll Ctl Fin Auth
(Pacific Gas & Elec) AMT
MBIA Ser 96A
5.35%, 12/01/16 15,500 16,509,825
California Poll Ctl Fin Auth
(So Calif Edison) AMT
MBIA Ser 99C
5.55%, 9/01/31 7,950 8,295,109
California Poll Ctl Fin Auth
(Tracy Material Recovery) AMT
ACA Ser 99A
5.70%, 8/01/14 3,670 3,724,573
California Pub Wks Bd Lease Rev
(Coalinga)
Ser 04A
5.50%, 6/01/22-6/01/23 6,790 7,366,673
48 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California Pub Wks Bd Lease Rev
(Dept of Hlth Svcs-Richmond Lab)
XLCA Ser 05B
5.00%, 11/01/30 $ 1,270 $ 1,332,700
California Pub Wks Bd Lease Rev
(Univ of Calif Proj)
Ser 05C
5.00%, 4/01/23 3,130 3,303,433
California Pub Wks Bd Lease Rev
(Various Univ Calif Projs)
Ser 04F
5.00%, 11/01/26 8,065 8,465,589
California Rural MFA SFMR
(Mtg Rev) AMT
GNMA/ FNMA Ser 00B
6.25%, 12/01/31 110 110,515
GNMA/ FNMA Ser 00D
6.00%, 12/01/31 395 398,796
GNMA/ FNMA Ser 99A
5.40%, 12/01/30 335 341,754
MBIA Ser 99A
5.40%, 12/01/30 830 848,077
California State Dept of Wtr Res Pwr Sup
Rev
(Prerefunded)
FGIC Ser 02A
5.125%, 5/01/18 10,000 10,765,600
California State Univ
FGIC Ser 03A
5.00%, 11/01/22 6,000 6,326,820
FSA
5.00%, 11/01/22 5,525 5,943,463
California Statewide CDA
(Daughters of Charity Health)
Ser 05A
5.25%, 7/01/24 3,225 3,408,793
California Statewide CDA
(San Diego Space & Science)
Ser 96
7.50%, 12/01/16 2,410 2,598,848
California Statewide CDA Ed Fac
(Drew College Prep)
Ser 00
7.25%, 10/01/30 8,000 8,499,520
California Statewide CDA Ed Fac
(Saint Mark's Sch)
Ser 01
6.75%, 6/01/28 2,510 2,630,605
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 49
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
California Statewide CDA Ed Fac
(Wildwood Elem Sch)
Ser 01
7.00%, 11/01/29 $ 3,915 $ 4,181,925
California Statewide CDA Ed Fac
(Windward Sch)
Ser 99
6.90%, 9/01/23 1,960 1,990,008
California Statewide CDA MFHR
(Highland Creek Apts) AMT
FNMA Ser 01K
5.40%, 4/01/34 5,745 5,958,714
California Statewide CDA MFHR
(Santa Paula Vlg Apt) AMT
FNMA Ser 98D
5.43%, 5/01/28 2,090 2,113,868
California Veterans Hsg
AMBAC Ser 02A
5.35%, 12/01/27 22,320 23,683,752
Castaic Lake Wtr Agy
AMBAC Ser 04A
5.00%, 8/01/16-8/01/18 4,325 4,627,988
MBIA Ser 01A
5.20%, 8/01/30 1,625 1,697,443
Chino Hills CFD
(Fairfield Ranch 10)
Ser 00
6.95%, 9/01/30 5,200 5,554,276
Commerce Joint Pwrs Fin Auth Lease Rev
(Cmnty Ctr Proj)
XLCA Ser 04
5.00%, 10/01/34 2,015 2,099,731
Corona CFD
(Eagle Glen 97-2) ETM
Ser 98
5.875%, 9/01/23 2,910 2,997,707
Corona CFD
(Eagle Glen)
Ser 98
5.875%, 9/01/23 3,260 3,358,256
East Palo Alto Pub Fin Auth
(University Circle Gateway 101)
RADIAN Ser 05A
5.00%, 10/01/25 4,390 4,619,597
Eastern Wtr Dist Imprt Area A
(Morningstar Ranch)
Ser 02
6.40%, 9/01/32 3,715 3,803,826
50 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
El Centro Fin Auth Hosp Rev
(El Centro Med Ctr)
Ser 01
5.375%, 3/01/26 $ 18,000 $ 18,713,880
Elk Grove Assmt Dist
(E. Franklin Cmnty)
Ser 02 (Prerefunded)
5.80%, 8/01/25 1,000 1,044,930
(Prerefunded)
6.00%, 8/01/33 5,000 5,227,050
Encinitas Rec Ranch Golf Auth
(Encinitas Ranch Golf Course)
Ser 04
5.50%, 9/01/23-9/01/24 1,110 1,122,902
5.60%, 9/01/26 1,000 1,014,830
Fontana
(Heritage West End)
Ser 99A
6.50%, 9/01/28 8,620 9,068,154
Fontana Pub Fin Auth
(No Fontana Redev Proj)
AMBAC Ser 03A
5.50%, 9/01/32 1,000 1,074,450
Foothill/Eastern Corridor Agy
Ser 95
Zero Coupon, 1/01/24 10,255 4,969,470
Zero Coupon, 1/01/25 15,000 6,935,700
Fremont Uni Sch Dist
(Election 2002)
FSA Ser 05B
5.00%, 8/01/26 1,745 1,852,562
Fresno Joint Pwrs Lease Rev
XLCA Ser 04A
5.25%, 10/01/21-10/01/24 3,425 3,673,728
5.375%, 10/01/17 1,315 1,442,292
Fullerton Agy Redev
RADIAN
5.00%, 4/01/21 2,225 2,351,380
Gilroy Uni Sch Dist
FGIC
5.00%, 8/01/27 1,500 1,576,155
Huntington Park Pub Fin Auth
FSA Ser 04A
5.25%, 9/01/17 1,000 1,113,240
Kaweah Delta Health Care Dist
MBIA Ser 04
5.25%, 8/01/25-8/01/26 3,780 4,060,502
La Verne CFD 88-1 Spl Tax
Ser 98
5.875%, 3/01/14 4,390 4,494,438
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 51
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Lammersville Sch Dist CFD Spl Tax
(Mountain House)
Ser 02
6.375%, 9/01/32 $ 4,250 $ 4,560,633
Lancaster Redev Agy Tax Alloc Rev
(Fire Protn Fac Proj)
XLCA Ser 04
5.00%, 12/01/23 1,120 1,176,862
Lancaster Redev Agy Tax Alloc Rev
(Sheriffs Fac Proj)
XLCA Ser 04
5.00%, 12/01/23 1,875 1,970,194
Loma Linda Hosp Rev
(Loma Linda Univ Med Ctr)
Ser 05A
5.00%, 12/01/23 2,000 2,069,000
Los Angeles Cmnty Redev Agy
Ser 04L
5.00%, 3/01/17 2,565 2,622,020
5.10%, 3/01/19 1,350 1,373,031
Los Angeles Cmnty Redev MFHR
(Grand Ctrl Proj) AMT
Ser 93A
5.85%, 12/01/26 4,030 4,034,796
Los Angeles Cnty MTA
FGIC Ser 00A (Prerefunded)
5.25%, 7/01/30 2,750 2,913,103
Los Angeles Cnty Pub Works Fin Auth
AMBAC Ser 97V-B (Prerefunded)
5.125%, 12/01/29 3,400 3,464,566
Los Angeles Dept of Wtr & Rev Pwr Sys
MBIA Ser 01A
5.00%, 7/01/24 1,500 1,536,615
Los Angeles MFHR
(Park Plaza West) AMT
GNMA
5.50%, 1/20/43 5,000 5,258,350
Manteca Uni Sch Dist
FSA Ser 04 (Prerefunded)
5.25%, 8/01/22 1,390 1,530,376
Marin Wtr Dist Rev
AMBAC Ser 04
5.25%, 7/01/20 3,040 3,296,090
Murrieta Valley Uni Sch Dist
(Election 2002)
FSA Ser 05B
5.125%, 9/01/29 1,275 1,367,272
Norco Redev Agy Tax Alloc
(Norco Redev Proj No 1)
RADIAN Ser 04
5.00%, 3/01/24 3,060 3,132,644
52 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Norco Redev Agy Tax Alloc
(Ref Norco Redev Proj Area No 1)
AMBAC Ser 05
5.00%, 3/01/26 $ 1,360 $ 1,430,938
Oakland Uni Sch Dist
MBIA Ser 05
5.00%, 8/01/25 7,455 7,893,130
Ohlone Cmnty College Dist
FSA Ser 05B
5.00%, 8/01/24 1,850 1,966,698
Ontario Assmt Dist
(Calif Commerce Ctr So)
7.70%, 9/02/10 3,170 3,227,599
Ontario COP
(Wtr Sys Impt Proj)
MBIA Ser 04
5.25%, 7/01/21 1,700 1,839,893
Orange Cnty CFD 99-1
(Ladera Ranch)
Ser 99A (Prerefunded)
6.70%, 8/15/29 3,000 3,259,980
Orange Cnty Sr Lien
(San Joaquin Hills Transp Corr)
MBIA
Zero Coupon, 1/15/36 47,415 13,036,280
Palm Springs COP ETM
Ser 91B
Zero Coupon, 4/15/21 37,500 20,686,500
Palmdale Wtr Dist Rev COP
FGIC Ser 04
5.00%, 10/01/24 1,775 1,871,507
Pittsburg Redev Agy
(Los Medanos Proj)
MBIA Ser 03A
5.00%, 8/01/21 6,410 6,764,345
Placentia-Yorba Linda Uni Sch Dist
FGIC Ser 06
5.00%, 10/01/27 4,200 4,429,782
Port of Oakland AMT
FGIC Ser 02L
5.375%, 11/01/27 2,500 2,646,575
Rancho Cordova CFD No 2003-1
(Sunridge Anatolia)
Ser 03
6.00%, 9/01/28 2,000 2,049,320
Rancho Etiwanda Pub Fac CFD 1
(Rancho Etiwanda)
Ser 01
6.40%, 9/01/31 8,000 8,402,240
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 53
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Rancho Etiwanda Pub Fac CFD 1
(Rancho Etiwanda) ETM
Ser 01
6.40%, 9/01/31 $ 3,135 $ 3,253,158
Riverside CFD No 89-1
(MTN Cove)
Ser 00 (Prerefunded)
6.50%, 9/01/25 3,390 3,669,031
Riverside Cmnty College Dist
MBIA Ser 04A (Prerefunded)
5.25%, 8/01/25-8/01/26 1,980 2,179,960
Riverside Cnty Pub Fin Auth Tax Alloc
(Redev Proj)
XLCA Ser 04
5.00%, 10/01/35 2,475 2,579,074
Rocklin Uni Sch Dist
MBIA Ser 04
5.00%, 9/01/25 1,000 1,049,660
Roseville CFD
(No 1 Central Roseville Highland Park)
Ser 99-A
5.80%, 9/01/17 6,650 6,928,967
Roseville High Sch Dist
Ser 01E
5.25%, 8/01/26 2,435 2,577,082
Sacramento CFD 97-01B
(N Natomas Drain)
Ser 00B (Prerefunded)
7.25%, 9/01/30 5,375 5,906,587
Sacramento City Uni Sch Dist
FSA Ser 04D
5.25%, 7/01/21-7/01/23 8,525 9,137,121
Sacramento Cnty Hsg Auth MFHR
(Cottage Estates) AMT
FNMA Ser 00B
6.00%, 2/01/33 5,300 5,575,335
Sacramento Cnty Hsg Auth MFHR
(Verandas Apts) AMT
FNMA Ser 00H
5.70%, 3/01/34 2,875 2,996,670
Sacramento Muni Util Dist Elec Rev
MBIA Ser 03S
5.00%, 11/15/17 5,000 5,341,200
MBIA Ser 04R-289-2
5.00%, 8/15/17 10,000 10,658,800
San Bernardino Cnty CFD 2002-1
(Kaiser Commerce Cntr)
Ser 02-1
5.90%, 9/01/33 4,750 5,056,945
54 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
San Bernardino SFMR
(Mtg Rev) AMT
GNMA/ FNMA Ser 01-A1
6.35%, 7/01/34(c) $ 585 $ 590,522
San Diego Cnty COP
Ser 04A
5.50%, 9/01/44 5,000 5,321,650
San Diego HFA MFHR
(Rental Rev) AMT
GNMA/ FNMA Ser 98C
5.25%, 1/20/40 6,105 6,213,608
San Diego Hsg Auth MFHR
(Vista La Rosa Apt) AMT
GNMA Ser 00A
6.00%, 7/20/41 10,230 10,795,719
San Diego Uni Sch Dist
(Election of 1998)
MBIA Ser 04E-1
5.00%, 7/01/23-7/01/24 2,240 2,392,744
San Francisco City & Cnty Int'l Arpt AMT
FSA Ser 00A
6.125%, 1/01/27 1,480 1,527,774
San Francisco Univ Fndn Inc.
ACA Ser 99
5.25%, 7/01/32 16,650 17,383,765
San Joaquin Hills Tran Corridor Agy ETM
Ser 93
Zero Coupon, 1/01/19 10,000 6,160,400
Zero Coupon, 1/01/20 20,000 11,747,400
Zero Coupon, 1/01/21 20,000 11,144,600
Zero Coupon, 1/01/23 25,000 12,691,500
San Jose Calif Redev Agy Tax Alloc Rev
AMBAC
5.00%, 8/01/22 8,000 8,583,040
San Jose Redev Agy Tax Alloc Rev
MBIA Ser 04A
5.25%, 8/01/19 5,000 5,435,250
San Marcos Pub Facs Auth Tax Alloc Rev
(Proj Areas No 1 & 3)
AMBAC Ser 05A
5.00%, 8/01/25 5,715 6,092,076
San Mateo Cnty Cmnty College Dist COP
MBIA Ser 04 (Prerefunded)
5.25%, 10/01/20 2,870 3,165,725
San Mateo Uni Sch Dist
FSA Ser 04
5.00%, 9/01/24 2,000 2,114,120
Santa Margarita Wtr Fac Dist
(Talega)
Ser 99
6.25%, 9/01/29 11,550 12,251,431
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 55
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Semitropic Impt Dist Wtr Storage
XLCA Ser 04A
5.50%, 12/01/23 $ 1,640 $ 1,802,770
South Gate Pub Fin Auth
(South Gate Redev Proj No 1)
XLCA Ser 02
5.125%, 9/01/24 1,800 1,905,138
Tejon Ranch Pub Fac Fin Auth 2000-1 CFD
Ser 03
6.125%, 9/01/27 1,000 1,023,990
6.20%, 9/01/33 2,375 2,428,651
Tejon Ranch Pub Fac Fin Auth CFD 1
(Tejon Industrial Complex)
Ser 00A
7.20%, 9/01/30 9,900 10,212,345
Torrance COP
(Ref & Pub Impt Proj)
AMBAC Ser 05B
5.00%, 6/01/24 2,900 3,051,554
Univ of Calif
FGIC Ser 01M (Prerefunded)
5.125%, 9/01/30 12,270 12,813,316
FSA Ser 05B
5.00%, 5/15/24 3,600 3,798,432
West Contra Costa Healthcare Dist COP
AMBAC Ser 04
5.375%, 7/01/21-7/01/24 4,720 5,033,518
West Kern Cnty Wtr Rev
Ser 01 (Prerefunded)
5.625%, 6/01/31 3,000 3,200,460
Westminster Redev Agy MFHR
(Rose Garden Apt) AMT
Ser 93A
6.75%, 8/01/24 4,300 4,321,844
Yorba Linda Rec Rev
(Black Gold Golf Course Proj Rev)
Ser 00 (Prerefunded)
7.50%, 10/01/30 5,680 5,991,264
-------------
747,602,171
Ohio-0.3%
Port Auth of Columbiana Cnty Swr
(Apex Environmental LLC) AMT
Ser 04A
7.125%, 8/01/25 2,000 2,038,080
-------------
56 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Puerto Rico-3.3%
Puerto Rico Comwlth GO
(Pub Impt)
5.25%, 7/01/23 $ 3,000 $ 3,220,800
Ser 01A
5.50%, 7/01/19 1,880 2,106,954
Ser 03A
5.25%, 7/01/23 800 846,472
Puerto Rico Comwlth Govt Dev Bank
(Sr Notes)
Ser 06B
5.00%, 12/01/15 500 533,370
Puerto Rico Convention Ctr
AMBAC
5.00%, 7/01/17 10,730 11,683,146
Univ of Puerto Rico
Ser 06Q
5.00%, 6/01/19 2,490 2,635,117
Univ of Puerto Rico Rev
5.00%, 6/01/18 4,930 5,232,603
-------------
26,258,462
Texas-0.2%
Richardson Hosp Auth Rev
(Richardson Regional Med Ctr)
Ser 04
6.00%, 12/01/19 1,715 1,869,161
-------------
Total Long-Term Municipal Bonds
(cost $719,075,183) 777,767,874
-------------
Short-Term Municipal Notes-0.7%
California-0.7%
California Infrastructure & Econ Dev Bank
Rev
(Rand Corp)
AMBAC Ser B
4.05%, 4/01/42(d)(e) 1,000 1,000,000
California Pollution Control Financing
Authority
3.96%, 11/01/26(d)(e) 3,500 3,500,000
California State
(Daily Kindergarten Univ)
Ser 04A-1
4.00%, 5/01/34(d)(e) 1,000 1,000,000
Illinois-0.0%
Illinois Dev Fin Auth PCR
(Illinois Pwr Proj)
AMBAC Ser 01
3.75%, 11/01/28(c)(d) 100 100,000
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 57
U.S. $ Value
- -------------------------------------------------------------------------------
Total Short-Term Municipal Notes
(cost $5,600,000) $ 5,600,000
-------------
Total Investments-99.5%
(cost $724,675,183) 783,367,874
Other assets less liabilities-0.5% 3,823,004
-------------
Net Assets-100.0% $787,190,878
-------------
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-----------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- -------------------------------------------------------------------------------------
Citigroup $ 8,700 6/22/07 BMA 2.962% $(18,847)
Citigroup 5,600 1/25/26 BMA 4.108% 139,813
Citigroup 10,000 11/10/26 3.884% BMA 23,440
JPMorgan Chase 4,100 10/01/07 BMA 3.635% (2,767)
JPMorgan Chase 27,900 11/10/11 BMA 3.482% 64,866
Merrill Lynch 3,900 7/12/08 BMA 3.815% 13,756
Merrill Lynch 1,075 2/12/12 BMA 3.548% 5,030
Merrill Lynch 2,800 10/01/16 BMA 4.147% 107,381
Merrill Lynch 13,800 7/30/26 4.090% BMA (314,115)
Merrill Lynch 10,200 8/09/26 4.063% BMA (204,870)
Merrill Lynch 13,400 11/15/26 4.378% BMA (786,945)
(a) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(b) When-Issued security.
(c) Variable rate coupon, rate shown as of April 30, 2007.
(d) Position, or a portion thereof, has been segregated to collateralize when
issued securities.
(e) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
58 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Glossary:
ACA - American Capital Access Financial Guaranty Corporation
AMBAC - American Bond Assurance Corporation
AMT - Alternative Minimum Tax (subject to)
BMA - Bond Market Association
CDA - Community Development Administration
CFD - Community Facilities District
COP - Certificate of Participation
ETM - Escrow 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 Finanace Authority
MFHR - Multi-Family Housing Revenue
MTA - Metropolitan Transportation Authority
PCR - Pollution Control Revenue
RADIAN - Radian Group, Inc.
SFMR - Single Family Mortgage Revenue
XLCA - XL Capital Assurance Inc.
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 59
INSURED CALIFORNIA PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2007 (unaudited)
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-99.5%
Long-Term Municipal Bonds-97.7%
California-97.7%
Acalanes Union High Sch Dist
(Ref-2013 Crossover)
FSA Ser 05B
5.25%, 8/01/24 $ 2,000 $ 2,190,160
Banning Util Auth Wtr & Enterprise Rev
(Ref & Impt Proj)
FGIC Ser 05
5.25%, 11/01/30 1,140 1,246,944
Bay Area Infrastructure Fin Auth
FGIC
5.00%, 8/01/17 6,000 6,350,820
Beaumont Calif Fing Auth
AMBAC
5.00%, 9/01/26(a) 405 429,814
Butte-Glenn Cmnty College Dist
(Election 2002)
MBIA Ser 05B
5.00%, 8/01/25 3,620 3,845,743
California HFA MFHR
(Mtg Rev)
AMBAC Ser 95A
6.25%, 2/01/37 1,235 1,246,066
California Pub Wks Bd Lease Rev
(Dept of Hlth Svcs-Richmond Lab)
XLCA Ser 05B
5.00%, 11/01/30 3,000 3,148,110
Capistrano Uni Sch Dist
FGIC Ser 00A
6.00%, 8/01/24 1,550 1,672,698
FSA Ser 01B
Zero Coupon, 8/01/25 8,000 3,577,520
Central Coast Wtr Auth Ca Rev
FSA
5.00%, 10/01/20 5,000 5,388,750
Chino Redev Agy Spl Tax ETM
AMBAC Ser 01B
5.25%, 9/01/30 5,325 5,605,787
Coachella Valley Sch Dist Uni
AMBAC
5.00%, 9/01/23 2,500 2,650,925
East Palo Alto Pub Fin Auth
(University Circle Gateway 101)
RADIAN Ser 05A
5.00%, 10/01/25 680 715,564
60 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Fontana Pub Fin Auth
(No Fontana Redev Proj)
AMBAC Ser 03A
5.50%, 9/01/32 $ 4,200 $ 4,512,690
Franklin-McKinley Sch Dist
FSA Ser 02B (Prerefunded)
5.00%, 1/08/27 700 753,522
Fremont Uni Sch Dist
(Election 2002)
FSA Ser B
5.00%, 8/01/27 920 976,046
Fullerton Agy Redev
RADIAN
5.00%, 4/01/21 500 528,400
Golden St Tobacco Securitization Corp.
RADIAN Ser 03 (Prerefunded)
5.50%, 6/01/43 1,400 1,532,804
Jurupa Uni Sch Dist
(Election 2001)
FGIC Ser 04
5.00%, 8/01/22 1,340 1,415,590
Long Beach
(Aquarium of the Pacific Proj)
AMBAC Ser 01
5.25%, 11/01/30 6,500 6,871,865
Los Angeles Comm College Dist GO
FSA
5.00%, 8/01/22 5,000 5,366,950
Los Angeles Dept of Wtr & Rev Pwr Sys
MBIA Ser 01A
5.00%, 7/01/24 5,900 6,044,019
Murrieta Valley Uni Sch Dist
(Election 2002)
FSA Ser 05B
5.125%, 9/01/29 225 241,283
Norco Redev Agy Tax Alloc
(Ref Norco Redev Proj Area No 1)
AMBAC Ser 05
5.00%, 3/01/26 540 568,166
Orange Cnty COP
(Loma Ridge Data Ctr Proj)
(Prerefunded @100)
AMBAC
6.00%, 6/01/21 1,000 1,138,720
Perris Union High Sch Dist
FGIC Ser 05A
5.00%, 9/01/24 800 848,000
Poway Redev Agy
(Paguay Proj) ETM
AMBAC Ser 01
5.375%, 12/15/31 6,060 6,468,868
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND O 61
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Rancho Cordova COP
(City Hall Fac Acq Proj)
XLCA Ser 05 (Prerefunded)
5.00%, 2/01/24 $ 2,645 $ 2,874,560
Redding Elec Sys Rev
MBIA Ser 92A
8.903%, 7/01/22(b)(c) 1,850 2,470,527
Riverside Cnty Pub Fin Auth Tax Alloc Rev
(Redev Proj)
XLCA Ser 04
5.00%, 10/01/23 1,955 2,052,379
Riverside Cnty Redev Agy
(Jurupa Valley Pjct)
AMBAC Ser 01
5.125%, 10/01/35 5,000 5,291,950
Riverside Cnty Redev Agy
(Jurupa Valley Pjct) ETM
AMBAC Ser 01
5.25%, 10/01/35(d) 8,000 8,541,520
Rowland Ca Uni Sch Dist
FSA
5.00%, 8/01/22 4,000 4,283,960
San Diego Uni Sch Dist
(Election of 1998)
MBIA Ser 04E-1
5.00%, 7/01/23 1,000 1,067,320
Southwestern Cmnty College Dist
MBIA Ser 05
5.00%, 8/01/24 1,000 1,073,760
Stockton Public Financing Authority
RADIAN Ser 06A
5.00%, 9/01/17-9/01/21 5,060 5,386,196
Torrance COP
(Ref & Pub Impt Proj)
AMBAC Ser 05B
5.00%, 6/01/24 465 489,301
Univ of Calif
FSA Ser 05B
5.00%, 5/15/24 1,400 1,477,167
-------------
Total Long-Term Municipal Bonds
(cost $104,917,676) 110,344,464
-------------
62 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Short-Term Municipal Notes-1.8%
California-1.8%
California Econ Rec
3.98%, 7/01/23(e) $ 500 $ 500,000
California St
(Daily Kindergarten Univ B2)
Series B2
3.90%, 5/01/34(e)(f) 1,500 1,500,000
-------------
Total Short-Term Municipal Notes
(cost $2,000,000) 2,000,000
-------------
Total Investments-99.5%
(cost $106,917,676) 112,344,464
Other assets less liabilities-0.5% 523,216
-------------
Net Assets-100.0% $112,867,680
-------------
INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type
-----------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- -------------------------------------------------------------------------------------
Citigroup $1,400 6/22/07 BMA 2.962% $ (3,033)
Citigroup 900 1/25/26 BMA 4.108% 22,470
Citigroup 1,500 11/10/26 3.884% BMA 3,516
JPMorgan Chase 600 10/01/07 BMA 3.635% (405)
JPMorgan Chase 4,200 11/10/11 BMA 3.482% 9,765
Merrill Lynch 600 7/12/08 BMA 3.815% 2,116
Merrill Lynch 160 2/12/12 BMA 3.548% 749
Merrill Lynch 3,100 10/21/16 BMA 4.129% 113,714
Merrill Lynch 700 7/30/26 4.090% BMA (15,933)
Merrill Lynch 1,600 11/15/26 4.378% BMA (93,964)
(a) When-Issued security.
(b) Variable rate coupon, rate shown as of April 30, 2007.
(c) Inverse Floater Security-Security with variable or floating interest rate
that moves in the opposite direction of short-term interest rates.
(d) Position, or a portion thereof, has been segregated to collateralize
interest rate swaps.
(e) Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specific date (such as coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). This instrument is payable on demand and is secured by
letters of credit or other credit support agreements from major banks.
(f) Position, or a portion thereof, has been segregated to collateralize when
issued security.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 63
Glossary:
AMBAC - American Bond Assurance Corporation
BMA - Bond Market Association
COP - Certificate of Participation
ETM - Escrow 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 Inc.
See notes to financial statements.
64 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
STATEMENT OF ASSETS & LIABILITIES
April 30, 2007 (unaudited)
Insured
National National
- -------------------------------------------------------------------------------
Assets
Investments in securities, at value
(cost $427,079,087 and $131,863,598,
respectively) $ 447,493,334 $ 140,913,639
Cash -0- 273,900
Interest receivable 7,989,157 1,905,696
Receivable for capital stock sold 1,232,391 286,585
Unrealized appreciation of interest rate
swap contracts 72,152 55,908
Total assets 456,787,034 143,435,728
Liabilities
Due to custodian 1,206,848 -0-
Payable for floating rate notes issued 3,785,376 -0-
Payable for capital stock redeemed 1,476,049 456,090
Payable for investment securities
purchased 382,480 124,048
Dividends payable 416,695 121,182
Distribution fee payable 165,346 46,642
Advisory fee payable 79,147 47,086
Administrative fee payable 27,550 28,268
Interest expense and fees payable 14,362 -0-
Unrealized depreciation of interest rate
swap contracts 11,666 207,729
Transfer Agent fee payable 11,640 2,476
Accrued expenses and other liabilities 97,046 51,778
Total liabilities 7,674,205 1,085,299
Net Assets $ 449,112,829 $ 142,350,429
Composition of Net Assets
Capital stock, at par $ 44,154 $ 13,946
Additional paid-in capital 478,959,651 135,563,354
Undistributed/(distributions in excess)
of net investment income (172,995) 243,876
Accumulated net realized loss on
investment transactions (50,191,958) (2,368,967)
Net unrealized appreciation of
investments 20,473,977 8,898,220
$ 449,112,829 $ 142,350,429
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 65
New York California
- -------------------------------------------------------------------------------
Assets
Investments in securities, at value
(cost $457,724,630 and $724,675,183,
respectively) $ 478,064,970 $ 783,367,874
Cash 60,061 140,171
Interest receivable 7,289,731 9,200,343
Receivable for capital stock sold 2,858,976 2,526,080
Unrealized appreciation of interest
rate swap contracts 237,834 354,286
Total assets 488,511,572 795,588,754
Liabilities
Payable for investment securities
purchased 3,713,810 3,072,086
Payable for capital stock redeemed 2,545,134 2,645,594
Dividends payable 407,627 650,701
Distribution fee payable 203,788 299,375
Unrealized depreciation of interest
rate swap contracts 71,351 1,327,544
Advisory fee payable 51,928 239,146
Administrative fee payable 27,966 35,945
Transfer Agent fee payable 3,302 1,070
Accrued expenses and other liabilities 93,770 126,415
Total liabilities 7,118,676 8,397,876
Net Assets $ 481,392,896 $ 787,190,878
Composition of Net Assets
Capital stock, at par $ 48,549 $ 71,519
Additional paid-in capital 473,660,216 751,319,986
Distributions in excess of net
investment income (360,152) (592,769)
Accumulated net realized loss on
investment transactions (12,462,540) (21,327,291)
Net unrealized appreciation of
investments 20,506,823 57,719,433
$ 481,392,896 $ 787,190,878
See notes to financial statements.
66 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Insured
California
- -------------------------------------------------------------------------------
Assets
Investments in securities, at value
(cost $106,917,676) $ 112,344,464
Interest receivable 1,250,115
Receivable for capital stock sold 424,510
Unrealized appreciation of interest
rate swap contracts 152,330
Total assets 114,171,419
Liabilities
Due to custodian 119,555
Payable for investment securities purchased 429,033
Payable for capital stock redeemed 382,811
Unrealized depreciation of interest
rate swap contracts 113,335
Dividends payable 83,194
Distribution fee payable 41,961
Advisory fee payable 41,906
Administrative fee payable 27,981
Transfer Agent fee payable 1,651
Accrued expenses and other liabilities 62,312
Total liabilities 1,303,739
Net Assets $ 112,867,680
Composition of Net Assets
Capital stock, at par $ 8,219
Additional paid-in capital 106,674,891
Distributions in excess of net
investment income (82,930)
Accumulated net realized gain on
investment transactions 801,717
Net unrealized appreciation of investments 5,465,783
$ 112,867,680
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 67
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 $354,984,365 34,892,937 $10.17*
Class B $ 32,815,296 3,229,168 $10.16
Class C $ 61,313,168 6,031,477 $10.17
Insured National Portfolio
- -------------------------------------------------------------------------------
Class A $122,667,468 12,013,330 $10.21*
Class B $ 8,985,723 882,276 $10.18
Class C $ 10,697,238 1,049,906 $10.19
New York Portfolio
- -------------------------------------------------------------------------------
Class A $334,236,229 33,696,990 $9.92*
Class B $ 99,725,435 10,066,797 $9.91
Class C $ 47,431,232 4,785,292 $9.91
California Portfolio
- -------------------------------------------------------------------------------
Class A $606,459,094 55,095,877 $11.01*
Class B $ 64,425,810 5,854,810 $11.00
Class C $116,305,974 10,568,537 $11.00
Insured California Portfolio
- -------------------------------------------------------------------------------
Class A $ 88,930,218 6,474,859 $13.73*
Class B $ 8,544,912 622,459 $13.73
Class C $ 15,392,550 1,121,438 $13.73
* 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 $10.62, $10.66, $10.36, $11.50
and $14.34, respectively, which reflects a sales charge of 4.25%.
See notes to financial statements.
68 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2007 (unaudited)
Insured
National National
- -------------------------------------------------------------------------------
Investment Income
Interest $ 11,326,696 $ 3,624,453
Expenses
Advisory fee 1,001,017 324,542
Distribution fee--Class A 521,933 184,586
Distribution fee--Class B 175,483 51,456
Distribution fee--Class C 309,223 54,463
Transfer agency--Class A 133,652 40,476
Transfer agency--Class B 15,930 3,995
Transfer agency--Class C 25,417 3,954
Custodian 78,964 75,430
Administrative 47,000 43,000
Audit 22,701 22,858
Registration fees 16,136 16,525
Legal 14,437 13,869
Printing 13,177 3,518
Directors' fees and expenses 4,000 4,000
Miscellaneous 6,216 3,887
Total expenses before interest
expense: 2,385,286 846,559
Interest expense and fees 74,727 -0-
Total expenses 2,460,013 846,559
Less: advisory fee waived
(see Note B) (520,924) (18,849)
Less: expense offset arrangement
(see Note B) (12,421) (3,512)
Net expenses 1,926,668 824,198
Net investment income 9,400,028 2,800,255
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions 322,590 199,888
Swap contracts (34,969) (23,006)
Net change in unrealized
appreciation/depreciation of:
Investments (2,471,600) (1,125,392)
Swap contracts 77,594 51,876
Net loss on investment transactions (2,106,385) (896,634)
Net Increase in Net Assets from
Operations $ 7,293,643 $ 1,903,621
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 69
New York California
----------- -----------
Investment Income
Interest $11,184,678 $19,394,903
Expenses
Advisory fee 1,074,988 1,768,982
Distribution fee--Class A 483,094 891,319
Distribution fee--Class B 541,732 369,298
Distribution fee--Class C 236,816 590,710
Transfer agency--Class A 94,723 118,597
Transfer agency--Class B 38,553 18,250
Transfer agency--Class C 14,850 25,580
Custodian 78,913 102,588
Administrative 47,000 41,000
Audit 22,693 22,758
Printing 20,669 30,528
Legal 15,664 18,632
Registration fees 8,736 10,199
Directors' fees and expenses 4,000 4,000
Miscellaneous 8,718 3,962
Total expenses 2,691,149 4,016,403
Less: advisory fee waived (see Note B) (749,567) (311,169)
Less: expense offset arrangement
(see Note B) (11,058) (6,304)
Net expenses 1,930,524 3,698,930
Net investment income 9,254,154 15,695,973
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions 32,972 1,080,810
Swap contracts (25,237) (142,500)
Net change in unrealized
appreciation/depreciation of:
Investments (2,568,901) (6,072,606)
Swap contracts 46,664 320,312
Net loss on investment transactions (2,514,502) (4,813,984)
Net Increase in Net Assets from
Operations $6,739,652 $10,881,989
See notes to financial statements.
70 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Insured
California
----------
Investment Income
Interest $2,609,168
Expenses
Advisory fee 256,749
Distribution fee--Class A 132,850
Distribution fee--Class B 48,736
Distribution fee--Class C 78,984
Transfer agency--Class A 18,594
Transfer agency--Class B 2,593
Transfer agency--Class C 3,502
Custodian 58,958
Administrative 43,000
Audit 22,666
Legal 13,624
Registration fees 6,210
Directors' fees and expenses 4,000
Printing 2,864
Miscellaneous 1,386
Total expenses 694,716
Less: expense offset arrangement (see Note B) (968)
Net expenses 693,748
Net investment income 1,915,420
Realized and Unrealized Gain (Loss) on Investment
Transactions
Net realized gain (loss) on:
Investment transactions 824,859
Swap contracts (5,171)
Net change in unrealized appreciation/depreciation of:
Investments (1,379,777)
Swap contracts 20,526
Net loss on investment transactions (539,563)
Net Increase in Net Assets from Operations $1,375,857
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 71
STATEMENT OF CHANGES IN NET ASSETS
National
--------------------------
Six Months
Ended Year Ended
April 30, 2007 October 31,
(unaudited) 2006
----------- -----------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 9,400,028 $ 19,648,241
Net realized gain on investment
transactions 287,621 2,052,623
Net change in unrealized
appreciation/depreciation
of investments (2,394,006) 5,217,291
Net increase in net assets from
operations 7,293,643 26,918,155
Dividends to Shareholders from
Net investment income
Class A (7,584,754) (15,610,866)
Class B (643,052) (1,673,575)
Class C (1,133,137) (2,376,466)
Capital Stock Transactions
Net increase (decrease) 1,450,532 (6,151,539)
Total increase (decrease) (616,768) 1,105,709
Net Assets
Beginning of period 449,729,597 448,623,888
End of period (including distributions
in excess of net investment income
of ($172,995) and ($212,080),
respectively) $449,112,829 $449,729,597
See notes to financial statements.
72 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Insured National
--------------------------
Six Months
Ended Year Ended
April 30, 2007 October 31,
(unaudited) 2006
----------- -----------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 2,800,255 $ 5,829,628
Net realized gain on investment
transactions 176,882 128,696
Net change in unrealized
appreciation/depreciation
of investments (1,073,516) 1,233,195
Net increase in net assets from
operations 1,903,621 7,191,519
Dividends to Shareholders from
Net investment income
Class A (2,429,481) (4,972,450)
Class B (167,856) (454,397)
Class C (177,657) (384,076)
Capital Stock Transactions
Net decrease (4,499,463) (6,723,688)
Total decrease (5,370,836) (5,343,092)
Net Assets
Beginning of period 147,721,265 153,064,357
End of period (including undistributed
net investment income of $243,876,
and $218,615, respectively) $142,350,429 $147,721,265
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 73
New York
--------------------------
Six Months
Ended Year Ended
April 30, 2007 October 31,
(unaudited) 2006
----------- -----------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 9,254,154 $ 19,143,491
Net realized gain on investment
transactions 7,735 4,638,439
Net change in unrealized
appreciation/depreciation
of investments (2,522,237) 2,875,809
Net increase in net assets from
operations 6,739,652 26,657,739
Dividends to Shareholders from
Net investment income
Class A (6,582,771) (13,024,132)
Class B (1,838,430) (4,435,326)
Class C (803,416) (1,666,425)
Capital Stock Transactions
Net increase 1,148,211 1,490,548
Total increase (decrease) (1,336,754) 9,022,404
Net Assets
Beginning of period 482,729,650 473,707,246
End of period (including distributions
in excess of net investment income
of ($360,152) and ($389,689),
respectively) $481,392,896 $482,729,650
See notes to financial statements.
74 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
California
--------------------------
Six Months
Ended Year Ended
April 30, 2007 October 31,
(unaudited) 2006
----------- -----------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 15,695,973 $ 33,555,148
Net realized gain on investment
transactions 938,310 2,003,841
Net change in unrealized
appreciation/depreciation
of investments (5,752,294) 13,161,036
Net increase in net assets from
operations 10,881,989 48,720,025
Dividends to Shareholders from
Net investment income
Class A (12,252,528) (25,391,256)
Class B (1,264,775) (3,656,739)
Class C (2,024,087) (4,434,967)
Capital Stock transactions
Net decrease (3,959,205) (56,664,848)
Total decrease (8,618,606) (41,427,785)
Net Assets
Beginning of period 795,809,484 837,237,269
End of period (including distributions
in excess of net investment income
of ($592,769) and ($747,352),
respectively) $787,190,878 $795,809,484
See notes to financial statements.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 75
Insured California
--------------------------
Six Months
Ended Year Ended
April 30, 2007 October 31,
(unaudited) 2006
----------- -----------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 1,915,420 $ 4,545,678
Net realized gain on investment
transactions 819,688 1,171,962
Net change in unrealized
appreciation/depreciation
of investments (1,359,251) 258,623
Net increase in net assets from
operations 1,375,857 5,976,263
Dividends and Distributions to
Shareholders from
Net investment income
Class A (1,549,761) (3,579,352)
Class B (136,152) (416,882)
Class C (221,272) (543,686)
Net realized gain on investment
transactions
Class A (995,859) (1,583,808)
Class B (114,063) (245,775)
Class C (179,622) (296,689)
Capital Stock Transactions
Net decrease (2,009,135) (13,521,840)
Total decrease (3,830,007) (14,211,769)
Net Assets
Beginning of period 116,697,687 130,909,456
End of period (including distributions
in excess of net investment income
of ($82,930) and ($91,165),
respectively) $112,867,680 $116,697,687
See notes to financial statements.
76 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (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 the classes bear different distribution and transfer agency
expenses. Each class has exclusive voting rights with respect to its
distribution plan. The financial statements have been prepared in conformity
with U.S. generally accepted accounting principles which require management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities in the financial statements and amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of 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 (other than securities listed on the NASDAQ Stock Market,
Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities listed only on NASDAQ are valued in
accordance with the NASDAQ Official
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 77
Closing Price; listed put or call options are valued at the last sale price. If
there has been no sale on that day, such securities will be valued at the
closing bid prices on that day; open futures contracts and options thereon are
valued using the closing settlement price or, in the absence of such a price,
the most recent quoted bid price. If there are no quotations available for the
day of valuation, the last available closing settlement price is used;
securities traded in the over-the-counter market, ("OTC") are valued at the
mean of the current bid and asked prices as reported by the National Quotation
Bureau or other comparable sources; U.S. government securities and other debt
instruments having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less; or by amortizing
their fair value as of the 61st day prior to maturity if their original term to
maturity exceeded 60 days; fixed-income securities, including mortgage backed
and asset backed securities, may be valued on the basis of prices provided by a
pricing service or at a price obtained from one or more of the major
broker/dealers. In cases where broker/dealer quotes are obtained,
AllianceBernstein L.P. (the "Adviser") may establish procedures whereby changes
in market yields or spreads are used to adjust, on a daily basis, a recently
obtained quoted price on a security; and OTC and other derivatives are valued
on the basis of a quoted bid price or spread from a major broker/dealer in such
security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Taxes
It is each Portfolio's policy to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. As described more fully in the
prospectus for the Portfolios, each portfolio may buy and sell securities from
other affiliated funds in accordance with the requirements of Rule 17a-7 of the
Investment Company Act of 1940. Each Portfolio has adopted procedures to ensure
that all such transactions are done in accordance with the requirements of
78 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
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 their respective 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 79
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:
Portfolio 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, 2007, such reimbursement waivers amounted to
$520,924, $18,849, $749,567 and $311,169 for National, Insured National, New
York and California Portfolios, respectively.
Pursuant to the advisory agreement, the National and New York Portfolios each
paid $47,000, the Insured National and Insured California Portfolios paid
$43,000 and the California Portfolio paid $41,000 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, 2007.
Each Portfolio compensates AllianceBernstein Investor Services, Inc. ("ABIS"),
a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for each
Portfolio. ABIS may make payments to intermediaries that provide omnibus
account services, sub-accounting services and/or networking services. Such
compensation retained by ABIS amounted to: National Portfolio, $89,179; Insured
National Portfolio, $25,501; New York Portfolio, $81,420; California Portfolio,
$77,652 and Insured California Portfolio, $11,385 for the six months ended
April 30, 2007.
For the six months ended April 30, 2007, the Fund's expenses were reduced by:
National Portfolio $12,421; Insured National Portfolio $3,512; New York
Portfolio $11,058; California Portfolio $6,304 and Insured California
Portfolio, $968 under an expense offset arrangement with ABIS.
AllianceBernstein Investments, Inc. (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the distributor of the Fund's shares. The
Distributor has advised the Fund that it has received front-end sales charges
from sales of Class A shares and contingent deferred sales charges imposed upon
80 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
redemptions by shareholders of Class A, Class B and Class C shares for the six
months ended April 30, 2007 as follows:
Front-End Contingent Deferred Sales Charges
Sales Charges ----------------------------------------
Portfolio Class A Class A Class B Class C
- -------------------------------------------------------------------------------
National $12,938 $3,933 $3,784 $3,465
Insured National 1,193 -0- 3,042 128
New York 16,100 507 25,105 4,025
California 23,869 6,127 4,513 9,715
Insured California 790 251 1,210 65
Accrued expenses for the National Portfolio includes $766 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 $3,904,013 $4,916,029
Insured National 3,606,201 1,967,363
New York 7,247,681 2,887,295
California 6,992,889 5,892,971
Insured California 3,071,319 1,861,305
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 81
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended April 30, 2007 were as follows:
Portfolio Purchases Sales
- --------- ---------- ----------
National $38,220,021 $15,358,804
Insured National 7,217,350 14,344,125
New York 27,929,973 4,100,984
California 73,214,812 59,688,400
Insured California 10,060,278 12,408,150
There were no purchases or sales of U.S. government and government agency
obligations for the six months ended April 30, 2007.
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 swap
transactions) are as follows:
Gross Unrealized Net
------------------------------ Unrealized
Portfolio Appreciation (Depreciation) Appreciation
- -------------------------------------------------------------------------------
National $20,931,915 $(517,668) $20,414,247
Insured National 9,051,306 (1,265) 9,050,041
New York 20,467,844 (127,504) 20,340,340
California 59,187,302 (494,611) 58,692,691
Insured California 5,497,438 (70,650) 5,426,788
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 contract. 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.
82 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
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
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 83
California Portfolio. All shares are divided evenly into three classes.
Transactions in capital shares for each class were as follows:
Shares Amount
--------------------------- ------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2007 October 31, April 30, 2007 October 31,
National Portfolio (unaudited) 2006 (unaudited) 2006
- -------------------------------------------------------------------------------
Class A
Shares sold 2,307,683 4,624,690 $ 23,534,968 $ 46,644,729
Shares issued in
reinvestment of
dividends 480,586 1,008,163 4,902,195 10,161,664
Shares converted
from Class B 104,206 688,817 1,059,776 6,941,658
Shares redeemed (2,233,131) (5,627,894) (22,780,145) (56,668,567)
Net increase 659,344 693,776 $ 6,716,794 $ 7,079,484
Class B
Shares sold 247,995 501,985 $ 2,527,223 $ 5,043,046
Shares issued in
reinvestment of
dividends 42,415 112,089 432,199 1,128,277
Shares converted
to Class A (104,309) (689,549) (1,059,776) (6,941,658)
Shares redeemed (620,368) (1,220,094) (6,319,737) (12,266,711)
Net decrease (434,267) (1,295,569) $ (4,420,091) $(13,037,046)
Class C
Shares sold 329,470 1,008,743 $ 3,358,871 $ 10,155,447
Shares issued in
reinvestment of
dividends 59,583 131,083 607,279 1,319,972
Shares redeemed (472,426) (1,159,156) (4,812,321) (11,669,396)
Net decrease (83,373) (19,330) $ (846,171) $ (193,977)
84 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Shares Amount
--------------------------- ------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
Insured National April 30, 2007 October 31, April 30, 2007 October 31,
Portfolio (unaudited) 2006 (unaudited) 2006
- -------------------------------------------------------------------------------
Class A
Shares sold 872,519 999,530 $ 8,928,765 $ 10,164,361
Shares issued in
reinvestment of
dividends 148,519 305,448 1,521,663 3,108,799
Shares converted
from Class B 22,040 141,164 225,024 1,437,535
Shares redeemed (1,193,399) (1,560,171) (12,233,579) (15,872,188)
Net decrease (150,321) (114,029) $ (1,558,127) $ (1,161,493)
Class B
Shares sold 7,551 82,522 $ 77,380 $ 838,332
Shares issued in
reinvestment of
dividends 11,414 29,866 116,674 303,263
Shares converted
to Class A (22,105) (141,509) (225,024) (1,437,535)
Shares redeemed (234,650) (463,882) (2,396,851) (4,705,826)
Net decrease (237,790) (493,003) $ (2,427,821) $ (5,001,766)
Class C
Shares sold 27,922 144,344 $ 285,507 $ 1,463,557
Shares issued in
reinvestment of
dividends 6,588 14,461 67,361 146,876
Shares redeemed (84,706) (213,862) (866,383) (2,170,862)
Net decrease (50,196) (55,057) $ (513,515) $ (560,429)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 85
Shares Amount
--------------------------- ------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2007 October 31, April 30, 2007 October 31,
New York Portfolio (unaudited) 2006 (unaudited) 2006
- -------------------------------------------------------------------------------
Class A
Shares sold 3,716,476 5,138,640 $ 36,976,771 $ 50,574,087
Shares issued in
reinvestment of
dividends 481,712 960,545 4,793,853 9,451,279
Shares converted
from Class B 217,788 952,725 2,160,455 9,377,623
Shares redeemed (2,874,433) (4,860,988) (28,591,077) (47,776,881)
Net increase 1,541,543 2,190,922 $ 15,340,002 $ 21,626,108
Class B
Shares sold 418,394 1,076,970 $ 4,158,455 $ 10,581,875
Shares issued in
reinvestment of
dividends 143,285 351,472 1,424,196 3,453,864
Shares converted
to Class A (218,008) (953,888) (2,160,455) (9,377,623)
Shares redeemed (1,738,405) (2,661,381) (17,277,036) (26,118,036)
Net decrease (1,394,734) (2,186,827) $(13,854,840) $(21,459,920)
Class C
Shares sold 296,295 896,934 $ 2,951,209 $ 8,835,401
Shares issued in
reinvestment of
dividends 50,773 110,958 504,799 1,091,049
Shares redeemed (381,921) (874,835) (3,792,959) (8,602,090)
Net increase
(decrease) (34,853) 133,057 $ (336,951) $ 1,324,360
86 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Shares Amount
--------------------------- ------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2007 October 31, April 30, 2007 October 31,
California Portfolio (unaudited) 2006 (unaudited) 2006
- -------------------------------------------------------------------------------
Class A
Shares sold 3,879,034 3,856,561 $ 42,849,608 $ 42,114,386
Shares issued in
reinvestment of
dividends 726,023 1,508,424 8,018,300 16,474,822
Shares converted
from Class B 181,406 1,987,879 1,997,284 21,718,870
Shares redeemed (3,353,095) (8,008,041) (37,021,016) (87,397,554)
Net increase
(decrease) 1,433,368 (655,177) $ 15,844,176 $(7,089,476)
Class B
Shares sold 101,065 316,211 $ 1,115,927 $ 3,451,598
Shares issued in
reinvestment of
dividends 78,696 225,289 868,949 2,459,547
Shares converted
to Class A (181,571) (1,988,528) (1,997,284) (21,718,870)
Shares redeemed (1,454,977) (2,487,349) (16,063,385) (27,114,594)
Net decrease (1,456,787) (3,934,377) $(16,075,793) $(42,922,319)
Class C
Shares sold 407,682 1,151,870 $ 4,500,278 $ 12,593,627
Shares issued in
reinvestment of
dividends 88,903 198,555 981,525 2,168,171
Shares redeemed (834,624) (1,959,634) (9,209,391) (21,414,851)
Net decrease (338,039) (609,209) $ (3,727,588) $ (6,653,053)
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 87
Shares Amount
--------------------------- ------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
Insured California April 30, 2007 October 31, April 30, 2007 October 31,
Portfolio (unaudited) 2006 (unaudited) 2006
- -------------------------------------------------------------------------------
Class A
Shares sold 222,481 172,424 $ 3,078,269 $ 2,384,725
Shares issued in
reinvestment of
dividends and
distributions 121,006 247,752 1,674,254 3,423,860
Shares converted
from Class B 19,969 81,742 274,177 1,136,761
Shares redeemed (302,737) (1,015,397) (4,187,026) (14,030,107)
Net increase
(decrease) 60,719 (513,479) $ 839,674 $ (7,084,761)
Class B
Shares sold 5,723 7,424 $ 79,156 $103,062
Shares issued in
reinvestment of
dividends and
distributions 14,147 34,163 195,670 472,054
Shares converted
to Class A (19,969) (81,772) (274,177) (1,136,761)
Shares redeemed (167,079) (285,833) (2,311,166) (3,948,935)
Net decrease (167,178) (326,018) $(2,310,517) $ (4,510,580)
Class C
Shares sold 19,938 41,427 $ 275,179 $ 570,504
Shares issued in
reinvestment of
dividends and
distributions 16,840 37,254 232,849 514,670
Shares redeemed (75,918) (217,958) (1,046,320) (3,011,673)
Net decrease (39,140) (139,277) $ (538,292) $ (1,926,499)
NOTE F
Risks Involved inInvesting 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
88 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
claims or losses pursuant to these indemnification provisions and expects the
risk of loss thereunder to be remote.
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, 2007.
NOTE H
Distributions to Shareholders
The tax character of distributions to be paid for the year ending October 31,
2007 will be determined by the end of the current fiscal year. The tax
character of distributions paid during the fiscal years ended October 31, 2006
and 2005 were as follows:
National Portfolio 2006 2005
----------- -----------
Distributions paid from:
Ordinary income $ 144,766 $ 687,169
Tax-exempt income 19,516,141 20,342,365
Total distributions paid $19,660,907 $21,029,534
As of October 31, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed tax-exempt net investment income $ 238,367
Accumulated capital and other losses (50,114,090)(a)
Unrealized appreciation 22,507,509(b)
Total accumulated earnings/(deficit) $(27,368,214)(c)
(a) On October 31, 2006, the Portfolio had a net capital loss carryforward of
$50,114,090, of which $7,845,498 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, 2006, the Portfolio utilized capital loss carryforwards of
$2,019,312.
(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 89
Insured National Portfolio 2006 2005
----------- -----------
Distributions paid from:
Ordinary income $ 3,704 $ 37,917
Tax-exempt income 5,807,219 6,218,297
Total distributions paid $5,810,923 $6,256,214
As of October 31, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed tax-exempt net investment income $ 350,303
Accumulated capital and other losses (2,399,129)(a)
Unrealized appreciation 9,829,989(b)
Total accumulated earnings/(deficit) $ 7,781,163(c)
(a) On October 31, 2006, the Portfolio had a net capital loss carryforward of
$2,399,129, of which $385,194 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, 2006, the Portfolio utilized capital loss
carryforwards of $87,017.
(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.
New York Portfolio 2006 2005
----------- -----------
Distributions paid from:
Ordinary income $ 32,211 $ 203,413
Tax-exempt income 19,093,672 20,303,158
Total distributions paid $ 19,125,883 $20,506,571
As of October 31, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed tax-exempt net investment income $ 53,368
Accumulated capital and other losses (12,268,887)(a)
Unrealized appreciation/(depreciation) 22,833,993(b)
Total accumulated earnings/(deficit) $ 10,618,474(c)
(a) On October 31, 2006, the Portfolio had a net capital loss carryforward of
$12,268,887, of which $1,523,575 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, 2006, the Portfolio
utilized capital loss carryforwards of $4,355,137.
(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.
90 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
California Portfolio 2006 2005
----------- -----------
Distributions paid from:
Ordinary income $ 317,409 $ 278,826
Tax-exempt income 33,165,553 35,904,427
Total distributions paid $33,482,962 $36,183,253
As of October 31, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $(21,988,929)(a)
Unrealized appreciation/(depreciation) 63,233,044(b)
Total accumulated earnings/(deficit) $ 41,244,115(c)
(a) On October 31, 2006, the Portfolio had a net capital loss carryforward of
$21,988,929 of which $7,074,902 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, 2006, the Portfolio
utilized capital loss carryforwards of $1,223,942.
(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 treament of
swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable primarily to dividends payable.
Insured California Portfolio 2006 2005
----------- -----------
Distributions paid from:
Ordinary income $ 71,548 $ 58,179
Tax-exempt income 4,468,372 5,132,505
Net long term capital gains 2,126,272 -0-
Total distributions paid $6,666,192 $5,190,684
As of October 31, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed long term capital gains $1,271,573
Unrealized appreciation/(depreciation) 6,826,992(a)
Total accumulated earnings/(deficit) $8,098,565(b)
(a) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to tax deferral of losses
on wash sales, and the difference between the book and tax treatment of swap
income.
(b) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable 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 Office of New York Attorney General ("NYAG")
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 91
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 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.
92 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
In addition, the Independent Directors of the Fund ("the Independent
Directors") have conducted an investigation of the above-mentioned matters with
the advice of an independent economic consultant and independent counsel.
On October 2, 2003, a purported class action complaint entitled Hindo, et al.
v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the
AllianceBernstein Funds, certain officers of the Adviser ("Alliance
defendants"), and certain other defendants not affiliated with the Adviser, as
well as unnamed Doe defendants. The Hindo Complaint was filed in the United
States District Court for the Southern District of New York by alleged
shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges
that certain of the Alliance defendants failed to disclose that they improperly
allowed certain hedge funds and other unidentified parties to engage in "late
trading" and "market timing" of AllianceBernstein Fund securities, violating
Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the
Exchange Act and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an
unspecified amount of compensatory damages and rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, 43 additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants. On February
20, 2004, the Judicial Panel on Multidistrict Litigation transferred all
actions to the United States District Court for the District of Maryland (the
"Mutual Fund MDL").
On September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Alliance Holding; and
claims brought under ERISA by participants in the Profit Sharing Plan for
Employees of the Adviser. All four complaints include substantially identical
factual allegations, which appear to be based in large part on the SEC Order
and the NYAG Order.
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual
fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding ("MOU") containing
their agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The derivative claims brought on behalf of Alliance Holding remain
pending.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 93
Commission (the "West Virginia Securities Commissioner") (together, the
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State of
West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Alliance Holding, and various other defendants not
affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court
of Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was
transferred to the Mutual Fund MDL.
On August 30, 2005, the West Virginia Securities Commissioner signed a Summary
Order to Cease and Desist, and Notice of Right to Hearing addressed to the
Adviser and Alliance Holding. The Summary Order claims that the Adviser and
Alliance Holding violated the West Virginia Uniform Securities Act, and makes
factual allegations generally similar to those in the Commission Order and the
NYAGOrder. On January 25, 2006, the Adviser and Alliance Holding moved to
vacate the Summary Order. In early September 2006, the court denied this
motion, and the Supreme Court of Appeals in West Virginia denied the
defendants' petition for appeal. On September 22, 2006, the Adviser and
Alliance Holding filed an answer and moved to dismiss the Summary Order with
the West Virginia Securities Commissioner.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA
Financial, Inc., AllianceBernstein Investment Research & Management, Inc.,
certain current and former directors of the AllianceBernstein Mutual Funds, and
unnamed Doe defendants. The Aucoin Complaint names certain of the
AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was
filed in the United States District Court for the Southern District of New York
by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin
Complaint alleges, among other things, (i) that certain of the defendants
improperly authorized the payment of excessive commissions and other fees from
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
94 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
of compensatory damages and punitive damages, rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants. All nine of the lawsuits (i) were brought
as class actions filed in the United States District Court for the Southern
District of New York, (ii) assert claims substantially identical to the Aucoin
Complaint, and (iii) are brought on behalf of shareholders of the Funds.
On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional lawsuits
referenced above. On October 19, 2005, the District Court dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiffs' claim under Section 36(b) of the Investment Company Act. On January
11, 2006, the District Court granted defendants' motion for reconsideration and
dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court
denied plaintiffs' motion for leave to file an amended complaint. On July 5,
2006, plaintiffs filed a notice of appeal which was subsequently withdrawn
subject to plaintiffs' right to reinstate it at a later date.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the AllianceBernstein
Mutual Funds' shares or other adverse consequences to the AllianceBernstein
Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell
investments held by those funds to provide for sufficient liquidity and could
also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds. However, the Adviser believes that these
matters are not likely to have a material adverse effect on its ability to
perform advisory services relating to the AllianceBernstein Mutual Funds.
NOTE J
Recent Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in
the course of preparing a fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded in the current period. Adoption of FIN 48 is required for
fiscal years
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 95
beginning after December 15, 2006 and is to be applied to all open tax years as
of the effective date. On December 22, 2006, the Securities and Exchange
Commission notified the industry that the implementation of FIN 48 by
registered investment companies could be delayed until the last business day of
the first required financial statement reporting period for fiscal years
beginning after December 15, 2006. At this time, management is evaluating the
implications of FIN 48 and its impact on the financial statements has not yet
been determined.
On September 20, 2006, the FASB released Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an
authoritative definition of fair value, sets out a framework for measuring fair
value, and requires additional disclosures about fair-value measurements. The
application of FAS 157 is required for fiscal years beginning after November
15, 2007 and interim periods within those fiscal years. At this time,
management is evaluating the implications of FAS 157 and its impact on the
financial statements has not yet been determined.
96 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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.22 $10.05 $10.13 $9.96 $9.80 $10.34
Income From Investment
Operations
Net investment income(b)(c) .22 .46 .47 .50 .52 .54
Net realized and unrealized
gain (loss) on investment
transactions (.05) .17 (.07) .17 .18 (.53)
Net increase in net asset value
from operations .17 .63 .40 .67 .70 .01
Less: Dividends and
Distributions
Dividends from net
investment income (.22) (.46) (.48) (.50) (.54) (.54)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.01)
Total dividends and distributions (.22) (.46) (.48) (.50) (.54) (.55)
Net asset value, end of period $10.17 $10.22 $10.05 $10.13 $9.96 $9.80
Total Return
Total investment return based on
net asset value(d) 1.68% 6.43% 3.95% 6.92% 7.32% .06%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $354,985 $349,884 $337,201 $344,557 $373,416 $411,408
Ratio to average net assets of:
Expenses, net of fee waivers and
interest expense .68%(e) .68%(f) .68% .68% .68% .65%
Expenses, before fee waivers .94%(e) 1.01%(f) .93%(g) 1.08% 1.11% 1.07%
Expenses, before waiver
excluding interest expense .91%(e) .92% .93% 1.08% 1.11% 1.07%
Net investment income(b) 4.38%(e) 4.56%(f) 4.65% 4.94% 5.25% 5.28%
Portfolio turnover rate 4% 22% 25% 47% 35% 63%
See footnote summary on page 112.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 97
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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.21 $10.04 $10.12 $9.95 $9.79 $10.33
Income From Investment
Operations
Net investment income(b)(c) .19 .39 .40 .43 .45 .46
Net realized and unrealized
gain (loss) on investment
transactions (.05) .17 (.07) .17 .18 (.52)
Net increase (decrease) in
net asset value from
operations .14 .56 .33 .60 .63 (.06)
Less: Dividends and
Distributions
Dividends from net
investment income (.19) (.39) (.41) (.43) (.47) (.47)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.01)
Total dividends and distributions (.19) (.39) (.41) (.43) (.47) (.48)
Net asset value, end of period $10.16 $10.21 $10.04 $10.12 $9.95 $9.79
Total Return
Total investment return based on
net asset value(d) 1.34% 5.70% 3.25% 6.18% 6.57% (.62)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $32,815 $37,399 $49,801 $72,264 $101,287 $122,656
Ratio to average net assets of:
Expenses, net of fee waivers and
interest expense 1.38%(e) 1.38%(f) 1.38% 1.39% 1.39% 1.35%
Expenses, before fee waivers 1.66%(e) 1.73%(f) 1.64%(g) 1.79% 1.81% 1.77%
Expenses, before waiver
excluding interest expense 1.63%(e) 1.64% 1.64% 1.79% 1.81% 1.77%
Net investment income(b) 3.68%(e) 3.89%(f) 3.96% 4.24% 4.54% 4.57%
Portfolio turnover rate 4% 22% 25% 47% 35% 63%
See footnote summary on page 112.
98 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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.21 $10.05 $10.13 $9.95 $9.79 $10.34
Income From Investment
Operations
Net investment income(b)(c) .19 .39 .40 .43 .45 .47
Net realized and unrealized
gain (loss) on investment
transactions (.04) .16 (.07) .18 .18 (.54)
Net increase (decrease) in
net asset value from
operations .15 .55 .33 .61 .63 (.07)
Less: Dividends and
Distributions
Dividends from net
investment income (.19) (.39) (.41) (.43) (.47) (.47)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.01)
Total dividends and distributions (.19) (.39) (.41) (.43) (.47) (.48)
Net asset value, end of period $10.17 $10.21 $10.05 $10.13 $9.95 $9.79
Total Return
Total investment return based on
net asset value(d) 1.44% 5.59% 3.24% 6.28% 6.57% (.72)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $61,313 $62,447 $61,622 $68,769 $82,167 $93,032
Ratio to average net assets of:
Expenses, net of fee waivers and
interest expense 1.38%(e) 1.38%(f) 1.38% 1.38% 1.38% 1.35%
Expenses, before fee waivers 1.65%(e) 1.72%(f) 1.64%(g) 1.78% 1.81% 1.76%
Expenses, before waiver
excluding interest expense 1.62%(e) 1.63% 1.64% 1.78% 1.81% 1.76%
Net investment income(b) 3.68%(e) 3.87%(f) 3.96% 4.24% 4.55% 4.58%
Portfolio turnover rate 4% 22% 25% 47% 35% 63%
See footnote summary on page 112.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 99
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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.27 $10.18 $10.29 $10.11 $9.92 $10.07
Income From Investment
Operations
Net investment income(b)(c) .20 .41 .42 .44 .47 .45
Net realized and unrealized
gain (loss) on investment
transactions (.06) .09 (.11) .20 .14 (.14)
Net increase in net asset value
from operations .14 .50 .31 .64 .61 .31
Less: Dividends and
Distributions
Dividends from net
investment income (.20) (.41) (.42) (.46) (.42) (.45)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.01)
Total dividends and distributions (.20) (.41) (.42) (.46) (.42) (.46)
Net asset value, end of period $10.21 $10.27 $10.18 $10.29 $10.11 $9.92
Total Return
Total investment return based on
net asset value(d) 1.38% 4.98% 3.05% 6.42% 6.32% 3.13%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $122,667 $124,967 $124,957 $129,888 $139,179 $164,154
Ratio to average net assets of:
Expenses, net of fee waivers 1.04%(e) 1.04%(f) 1.04% 1.03% 1.04% 1.01%
Expenses, before fee waivers 1.06%(e) 1.04%(f) 1.04% 1.18% 1.16% 1.13%
Net investment income(b) 3.98%(e) 4.00%(f) 4.07% 4.28% 4.69% 4.49%
Portfolio turnover rate 5% 10% 17% 12% 28% 43%
See footnote summary on page 112.
100 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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.25 $10.15 $10.26 $10.09 $9.89 $10.05
Income From Investment
Operations
Net investment income(b)(c) .17 .34 .35 .36 .40 .37
Net realized and unrealized
gain (loss) on investment
transactions (.07) .10 (.11) .19 .16 (.14)
Net increase in net asset value
from operations .10 .44 .24 .55 .56 .23
Less: Dividends and
Distributions
Dividends from net
investment income (.17) (.34) (.35) (.38) (.36) (.38)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.01)
Total dividends and distributions (.17) (.34) (.35) (.38) (.36) (.39)
Net asset value, end of period $10.18 $10.25 $10.15 $10.26 $10.09 $9.89
Total Return
Total investment return based on
net asset value(d) .94% 4.36% 2.34% 5.60% 5.71% 2.34%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $8,986 $11,477 $16,375 $22,968 $34,243 $35,048
Ratio to average net assets of:
Expenses, net of fee waivers 1.74%(e) 1.74%(f) 1.74% 1.74% 1.75% 1.72%
Expenses, before fee waivers 1.78%(e) 1.75%(f) 1.75% 1.89% 1.87% 1.84%
Net investment income(b) 3.30%(e) 3.32%(f) 3.39% 3.58% 4.00% 3.79%
Portfolio turnover rate 5% 10% 17% 12% 28% 43%
See footnote summary on page 112.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 101
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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.25 $10.16 $10.27 $10.09 $9.90 $10.05
Income From Investment
Operations
Net investment income(b)(c) .17 .34 .35 .37 .40 .37
Net realized and unrealized
gain (loss) on investment
transactions (.06) .09 (.11) .19 .15 (.13)
Net increase in net asset value
from operations .11 .43 .24 .56 .55 .24
Less: Dividends and
Distributions
Dividends from net
investment income (.17) (.34) (.35) (.38) (.36) (.38)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.01)
Total dividends and distributions (.17) (.34) (.35) (.38) (.36) (.39)
Net asset value, end of period $10.19 $10.25 $10.16 $10.27 $10.09 $9.90
Total Return
Total investment return based on
net asset value(d) 1.04% 4.26% 2.34% 5.71% 5.60% 2.44%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $10,697 $11,277 $11,732 $12,198 $14,149 $17,592
Ratio to average net assets of:
Expenses, net of fee waivers 1.74%(e) 1.74%(f) 1.74% 1.73% 1.74% 1.71%
Expenses, before fee waivers 1.77%(e) 1.74%(f) 1.75% 1.88% 1.86% 1.83%
Net investment income(b) 3.30%(e) 3.31%(f) 3.38% 3.59% 3.98% 3.78%
Portfolio turnover rate 5% 10% 17% 12% 28% 43%
See footnote summary on page 112.
102 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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $9.97 $9.81 $9.93 $9.79 $9.69 $9.93
Income From Investment
Operations
Net investment income(b)(c) .20 .42 .46 .48 .50 .53
Net realized and unrealized
gain (loss) on investment
transactions (.05) .16 (.12) .15 .11 (.25)
Net increase in net asset value
from operations .15 .58 .34 .63 .61 .28
Less: Dividends
Dividends from net
investment income (.20) (.42) (.46) (.49) (.51) (.52)
Total dividends (.20) (.42) (.46) (.49) (.51) (.52)
Net asset value, end of period $9.92 $9.97 $9.81 $9.93 $9.79 $9.69
Total Return
Total investment return based on
net asset value(d) 1.53% 6.06% 3.46% 6.58% 6.39% 2.89%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $334,236 $320,580 $294,005 $280,213 $311,596 $322,621
Ratio to average net assets of:
Expenses, net of fee waivers .58%(e) .58%(f) .58% .59% .58% .58%
Expenses, before fee waivers .89%(e) .89%(f) .91% 1.05% 1.06% 1.05%
Net investment income(b) 4.10%(e) 4.27%(f) 4.62% 4.93% 5.09% 5.42%
Portfolio turnover rate 1% 39% 19% 33% 35% 33%
See footnote summary on page 112.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 103
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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $9.96 $9.80 $9.92 $9.78 $9.68 $9.93
Income From Investment
Operations
Net investment income(b)(c) .17 .35 .39 .41 .43 .46
Net realized and unrealized
gain (loss) on investment
transactions (.05) .16 (.12) .15 .11 (.26)
Net increase in net asset value
from operations .12 .51 .27 .56 .54 .20
Less: Dividends
Dividends from net
investment income (.17) (.35) (.39) (.42) (.44) (.45)
Total dividends (.17) (.35) (.39) (.42) (.44) (.45)
Net asset value, end of period $9.91 $9.96 $9.80 $9.92 $9.78 $9.68
Total Return
Total investment return based on
net asset value(d) 1.19% 5.33% 2.75% 5.85% 5.64% 2.04%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $99,725 $114,128 $133,746 $151,474 $171,881 $184,700
Ratio to average net assets of:
Expenses, net of fee waivers 1.28%(e) 1.28%(f) 1.28% 1.30% 1.29% 1.29%
Expenses, before fee waivers 1.60%(e) 1.60%(f) 1.62% 1.76% 1.77% 1.78%
Net investment income(b) 3.41%(e) 3.59%(f) 3.93% 4.22% 4.38% 4.70%
Portfolio turnover rate 1% 39% 19% 33% 35% 33%
See footnote summary on page 112.
104 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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $9.96 $9.80 $9.92 $9.78 $9.68 $9.94
Income From Investment
Operations
Net investment income(b)(c) .17 .35 .39 .41 .43 .46
Net realized and unrealized
gain (loss) on investment
transactions (.05) .16 (.12) .15 .11 (.27)
Net increase in net asset value
from operations .12 .51 .27 .56 .54 .19
Less: Dividends
Dividends from net
investment income (.17) (.35) (.39) (.42) (.44) (.45)
Total dividends (.17) (.35) (.39) (.42) (.44) (.45)
Net asset value, end of period $9.91 $9.96 $9.80 $9.92 $9.78 $9.68
Total Return
Total investment return based on
net asset value(d) 1.19% 5.32% 2.74% 5.85% 5.64% 1.94%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $47,431 $48,022 $45,956 $45,121 $52,206 $57,386
Ratio to average net assets of:
Expenses, net of fee waivers 1.28%(e) 1.28%(f) 1.28% 1.29% 1.29% 1.29%
Expenses, before fee waivers 1.59%(e) 1.60%(f) 1.61% 1.75% 1.77% 1.77%
Net investment income(b) 3.40%(e) 3.58%(f) 3.92% 4.23% 4.38% 4.71%
Portfolio turnover rate 1% 39% 19% 33% 35% 33%
See footnote summary on page 112.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 105
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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.07 $10.86 $10.93 $10.63 $10.84 $11.00
Income From Investment
Operations
Net investment income(b)(c) .23 .47 .48 .51 .53 .55
Net realized and unrealized
gain (loss) on investment
transactions (.06) .21 (.07) .30 (.19) (.15)
Net increase in net asset value
from operations .17 .68 .41 .81 .34 .40
Less: Dividends and
Distributions
Dividends from net
investment income (.23) (.47) (.48) (.51) (.55) (.54)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.02)
Total dividends and distributions (.23) (.47) (.48) (.51) (.55) (.56)
Net asset value, end of period $11.01 $11.07 $10.86 $10.93 $10.63 $10.84
Total Return
Total investment return based on
net asset value(d) 1.51% 6.42% 3.78% 7.80% 3.15% 3.82%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $606,459 $594,150 $590,042 $587,874 $644,868 $725,242
Ratio to average net assets of:
Expenses, net of fee waivers .77%(e) .77%(f) .77% .78% .77% .76%
Expenses, before fee waivers .85%(e) .85%(f) .86% 1.01% 1.02% 1.01%
Net investment income(b) 4.16%(e) 4.33%(f) 4.36% 4.75% 4.93% 5.05%
Portfolio turnover rate 8% 10% 17% 34% 33% 23%
See footnote summary on page 112.
106 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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.07 $10.86 $10.93 $10.63 $10.84 $11.00
Income From Investment
Operations
Net investment income(b)(c) .19 .40 .40 .44 .46 .47
Net realized and unrealized
gain (loss) on investment
transactions (.07) .21 (.07) .30 (.20) (.14)
Net increase in net asset value
from operations .12 .61 .33 .74 .26 .33
Less: Dividends and
Distributions
Dividends from net
investment income (.19) (.40) (.40) (.44) (.47) (.47)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.02)
Total dividends and distributions (.19) (.40) (.40) (.44) (.47) (.49)
Net asset value, end of period $11.00 $11.07 $10.86 $10.93 $10.63 $10.84
Total Return
Total investment return based on
net asset value(d) 1.07% 5.69% 3.06% 7.05% 2.43% 3.10%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $64,426 $80,928 $122,128 $175,215 $237,147 $279,697
Ratio to average net assets of:
Expenses, net of fee waivers 1.47%(e) 1.47%(f) 1.47% 1.48% 1.48% 1.46%
Expenses, before fee waivers 1.56%(e) 1.56%(f) 1.56% 1.71% 1.73% 1.72%
Net investment income(b) 3.46%(e) 3.64%(f) 3.66% 4.05% 4.22% 4.35%
Portfolio turnover rate 8% 10% 17% 34% 33% 23%
See footnote summary on page 112.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 107
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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.07 $10.86 $10.93 $10.63 $10.84 $11.00
Income From Investment
Operations
Net investment income(b)(c) .19 .40 .40 .44 .46 .47
Net realized and unrealized
gain (loss) on investment
transactions (.07) .21 (.07) .30 (.20) (.14)
Net increase in net asset value
from operations .12 .61 .33 .74 .26 .33
Less: Dividends and
Distributions
Dividends from net
investment income (.19) (.40) (.40) (.44) (.47) (.47)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.02)
Total dividends and distributions (.19) (.40) (.40) (.44) (.47) (.49)
Net asset value, end of period $11.00 $11.07 $10.86 $10.93 $10.63 $10.84
Total Return
Total investment return based on
net asset value(d) 1.07% 5.69% 3.06% 7.05% 2.43% 3.10%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $116,306 $120,731 $125,067 $141,031 $170,003 $209,008
Ratio to average net assets of:
Expenses, net of fee waivers 1.47%(e) 1.47%(f) 1.47% 1.48% 1.47% 1.46%
Expenses, before fee waivers 1.55%(e) 1.56%(f) 1.56% 1.71% 1.72% 1.71%
Net investment income(b) 3.47%(e) 3.64%(f) 3.66% 4.05% 4.23% 4.35%
Portfolio turnover rate 8% 10% 17% 34% 33% 23%
See footnote summary on page 112.
108 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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $13.95 $14.01 $14.21 $14.03 $14.17 $14.45
Income From Investment
Operations
Net investment income(c) .24 .53 .57 .61(b) .60 .62
Net realized and unrealized
gain (loss) on investment
transactions (.06) .17 (.20) .18 (.12) (.12)
Net increase in net asset value
from operations .18 .70 .37 .79 .48 .50
Less: Dividends and
Distributions
Dividends from net
investment income (.24) (.53) (.57) (.61) (.62) (.62)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.04)
Distributions from net realized gain
on investment transactions (.16) (.23) -0- -0- -0- (.12)
Total dividends and distributions (.40) (.76) (.57) (.61) (.62) (.78)
Net asset value, end of period $13.73 $13.95 $14.01 $14.21 $14.03 $14.17
Total Return
Total investment return based on
net asset value(d) 1.27% 5.19% 2.60% 5.75% 3.39% 3.65%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $88,930 $89,501 $97,079 $103,414 $124,817 $144,973
Ratio to average net assets of:
Expenses, net of fee waivers 1.06%(e) 1.03%(f) 1.02% 1.00% 1.07% 1.03%
Expenses, before fee waivers 1.06%(e) 1.03%(f) 1.02% 1.07% 1.07% 1.03%
Net investment income 3.51%(e) 3.85%(f) 3.99% 4.29%(b) 4.24% 4.43%
Portfolio turnover rate 9% 26% 37% 5% 34% 31%
See footnote summary on page 112.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 109
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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $13.95 $14.01 $14.20 $14.02 $14.16 $14.46
Income From Investment
Operations
Net investment income(c) .19 .44 .47 .50(b) .50 .52
Net realized and unrealized
gain (loss) on investment
transactions (.06) .16 (.19) .19 (.12) (.14)
Net increase in net asset value
from operations .13 .60 .28 .69 .38 .38
Less: Dividends and
Distributions
Dividends from net
investment income (.19) (.43) (.47) (.51) (.52) (.53)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.03)
Distributions from net realized gain
on investment transactions (.16) (.23) -0- -0- -0- (.12)
Total dividends and distributions (.35) (.66) (.47) (.51) (.52) (.68)
Net asset value, end of period $13.73 $13.95 $14.01 $14.20 $14.02 $14.16
Total Return
Total investment return based on
net asset value(d) .92% 4.45% 1.96% 5.02% 2.67% 2.76%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $8,545 $11,013 $15,626 $21,559 $29,285 $33,133
Ratio to average net assets of:
Expenses, net of fee waivers 1.77%(e) 1.74%(f) 1.73% 1.71% 1.77% 1.73%
Expenses, before fee waivers 1.77%(e) 1.74%(f) 1.73% 1.77% 1.77% 1.73%
Net investment income 2.81%(e) 3.15%(f) 3.29% 3.58%(b) 3.52% 3.70%
Portfolio turnover rate 9% 26% 37% 5% 34% 31%
See footnote summary on page 112.
110 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,
2007 ----------------------------------------------------------------------
(unaudited) 2006 2005 2004(a) 2003 2002
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $13.94 $14.00 $14.20 $14.02 $14.16 $14.47
Income From Investment
Operations
Net investment income(c) .19 .43 .47 .51(b) .50 .52
Net realized and unrealized
gain (loss) on investment
transactions (.05) .17 (.20) .18 (.12) (.15)
Net increase in net asset value
from operations .14 .60 .27 .69 .38 .37
Less: Dividends and
Distributions
Dividends from net
investment income (.19) (.43) (.47) (.51) (.52) (.53)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.03)
Distributions from net realized gain
on investment transactions (.16) (.23) -0- -0- -0- (.12)
Total dividends and distributions (.35) (.66) (.47) (.51) (.52) (.68)
Net asset value, end of period $13.73 $13.94 $14.00 $14.20 $14.02 $14.16
Total Return
Total investment return based on
net asset value(d) .99% 4.46% 1.88% 5.02% 2.67% 2.69%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $15,393 $16,184 $18,204 $19,603 $21,951 $22,715
Ratio to average net assets of:
Expenses, net of fee waivers 1.76%(e) 1.73%(f) 1.73% 1.70% 1.77% 1.73%
Expenses, before fee waivers 1.76%(e) 1.73%(f) 1.73% 1.77% 1.77% 1.73%
Net investment income 2.82%(e) 3.15%(f) 3.29% 3.59%(b) 3.53% 3.71%
Portfolio turnover rate 9% 26% 37% 5% 34% 31%
See footnote summary on page 112.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 111
(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 cost of proxy solicitation.
(g) During 2006, the Fund determined that the criteria for sale accounting in
Statement of Financial Accounting Standards No. 140 Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, had not
been met for certain transfers of municipal bonds and that the transfers should
have been accounted for as secured borrowings rather than as sales.
Accordingly, the National Portfolio has restated the expense ratios (see table
next page) for the year ended October 31, 2005 to give effect to recording the
transfers of the municipal bonds as secured borrowings. The effects of the
restatement have no effect on the previously reported net assets.
112 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
(Note g continued from previous page)
Class A Class B Class C
---------------------- ---------------------- ----------------------
Previously Previously Previously
Reported Restated Reported Restated Reported Restated
---------- ---------- ---------- ---------- ---------- ----------
Ratio to average net assets of:
Expenses, before fee waivers .93% 1.14% 1.64% 1.85% 1.64% 1.85%
Expenses, before waivers
excluding interest expense N/A .94% N/A 1.65% N/A 1.65%
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 113
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Marshall C. Turner, Jr.(1)
Earl D. Weiner(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Robert B. (Guy) Davidson, III(2), Senior Vice President
Douglas J. Peebles, Senior Vice President
Jeffrey S. Phlegar, Senior Vice President
Michael G. Brooks(2), Vice President
Fred S. Cohen(2), Vice President
Terrance T. Hults(2), Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer and Chief Financial Officer
Thomas R. Manley, Controller
Custodian
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.
114 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
Information Regarding the Review and Approval of the Fund's Advisory Agreement
In this disclosure, the term "Fund" refers to AllianceBernstein Municipal
Income Fund, Inc. and the term "Portfolio" refers to the California Portfolio,
Insured California Portfolio, Insured National Portfolio, National Portfolio
and New York Portfolio, as appropriate (each, a "Portfolio" and together, the
"Portfolios"). There is a single advisory agreement between the Adviser and the
Fund that relates to all five Portfolios.
The Fund's disinterested directors (the "directors") unanimously approved the
continuance of the Advisory Agreement between the Fund and the Adviser in
respect of each Portfolio at a meeting held on October 31-November 2, 2006.
In preparation for the meeting, the directors had requested from the Adviser
and received and evaluated extensive materials, including performance and
expense information for other investment companies with similar investment
objectives as the Portfolios derived from data compiled by Lipper Inc.
("Lipper"), which is not affiliated with the Adviser. The directors also
reviewed an independent evaluation from the Fund's Senior Officer (who is also
the Fund's Independent Compliance Officer) of the reasonableness of the
advisory fees in the Advisory Agreement in respect of each Portfolio (as
contemplated by the September 2004 Assurance of Discontinuance between the
Adviser and the New York Attorney General) wherein the Senior Officer concluded
that such fees were reasonable. In addition, the directors received a
presentation from the Adviser and had an opportunity to ask representatives of
the Adviser various questions relevant to the proposed approvals. The directors
noted that the Senior Officer's evaluation considered the following factors in
respect of each Portfolio: management fees charged to institutional and other
clients of the Adviser for like services; management fees charged by other
mutual fund companies for like services; cost to the Adviser and its affiliates
of supplying services pursuant to the Advisory Agreement, excluding any
intra-corporate profit; profit margins of the Adviser and its affiliates from
supplying such services; possible economies of scale as the Portfolio grows
larger; and nature and quality of the Adviser's services including the
performance of the Portfolio.
Prior to voting, the directors reviewed the proposed continuance of the
Advisory Agreement with management and with experienced counsel who are
independent of the Adviser and received a memorandum from such counsel
discussing the legal standards for their consideration of the proposed
continuances. The directors also discussed the proposed continuances in three
private sessions at which only the directors, their independent counsel and the
Fund's Independent Compliance Officer were present. In reaching their
determinations relating to
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 115
continuance of the Advisory Agreement in respect of each Portfolio, the
directors considered all factors they believed relevant, including the
following:
1. information comparing the performance of the Portfolio to other
investment companies with similar investment objectives and to an index;
2. the nature, extent and quality of investment, compliance,
administrative and other services rendered by the Adviser;
3. payments received by the Adviser from all sources in respect of the
Portfolio and all investment companies in the AllianceBernstein Funds complex;
4. the costs borne by, and profitability of, the Adviser and its
affiliates in providing services to the Portfolio and to all investment
companies in the AllianceBernstein Funds complex;
5. comparative fee and expense data for the Portfolio and other
investment companies with similar investment objectives;
6. the extent to which economies of scale would be realized to the
extent the Portfolio grows and whether fee levels reflect any economies of
scale for the benefit of investors;
7. the Adviser's policies and practices regarding allocation of
portfolio transactions of the Portfolio;
8. information about "revenue sharing" arrangements that the Adviser has
entered into in respect of the Portfolio;
9. portfolio turnover rates for the Portfolio compared to other
investment companies with similar investment objectives;
10. fall-out benefits that the Adviser and its affiliates receive from
their relationships with the Portfolio;
11. the Adviser's representation that there are no institutional products
managed by it which have a substantially similar investment style as the
Portfolio;
12. the Senior Officer's evaluation of the reasonableness of the fees
payable to the Adviser in the Advisory Agreement;
116 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
13. the professional experience and qualifications of the Portfolio's
portfolio management team and other senior personnel of the Adviser; and
14. the terms of the Advisory Agreement.
The directors also considered their knowledge of the nature and quality of the
services provided by the Adviser to the Portfolios gained from their experience
as directors or directors of most of the registered investment companies
advised by the Adviser, their overall confidence in the Adviser's integrity and
competence they have gained from that experience and the Adviser's
responsiveness to concerns raised by them in the past, including the Adviser's
willingness to consider and implement organizational and operational changes
designed to improve investment results and the services provided to the
AllianceBernstein Funds.
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and different directors may
have attributed different weights to the various factors. The directors
evaluated all information available to them on a portfolio-by-portfolio basis,
and their determinations were made separately in respect of each Portfolio.
The directors determined that the overall arrangements between each Portfolio
and the Adviser, as provided in the Advisory Agreement in respect of that
Portfolio, were fair and reasonable in light of the services performed,
expenses incurred and such other matters as the directors considered relevant
in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the directors
reaching their determinations to approve the continuance of the Advisory
Agreement in respect of each Portfolio (including their determinations that the
Adviser should continue to be the investment adviser for each Portfolio, and
that the fees payable to the Adviser pursuant to the Advisory Agreement are
appropriate) were separately discussed by the directors.
Nature, Extent and Quality of Services Provided by the Adviser
The directors noted that, under the Advisory Agreement, the Adviser, subject to
the oversight of the directors, administers each Portfolio's business and other
affairs. The Adviser manages the investment of the assets of each Portfolio,
including making purchases and sales of portfolio securities consistent with
the Portfolio's investment objective and policies. Under the Advisory
Agreement, the Adviser also provides each Portfolio with such office space,
administrative and other services (exclusive of, and in addition to, any such
services provided by any others retained by the Portfolio) and executive and
other personnel as are necessary for the Portfolio's operations. The Adviser
pays all of the compensation
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 117
of directors of the Fund who are affiliated persons of the Adviser and of the
officers of the Fund.
The directors also considered that the Advisory Agreement in respect of each
Portfolio provides that the Portfolio will reimburse the Adviser for the cost
of certain clerical, accounting, administrative and other services provided at
the Portfolio's request by employees of the Adviser or its affiliates. Requests
for these "at no more than cost" reimbursements are approved by the directors
on a quarterly basis and (to the extent requested and paid) result in a higher
rate of total compensation from the Portfolios to the Adviser than the fee
rates stated in the Portfolio's Advisory Agreement.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided by advisers of funds had expanded over time as a result of regulatory
and other developments. The directors noted, for example, that the Adviser is
responsible for maintaining and monitoring its own and, to varying degrees, the
Portfolios' compliance programs, and that these compliance programs have
recently been refined and enhanced. The directors considered the quality of the
in-house investment research capabilities of the Adviser and the other
resources it has dedicated to performing services for the Portfolios. The
quality of administrative and other services, including the Adviser's role in
coordinating the activities of the Portfolios' other service providers, also
were considered. The directors also considered the Adviser's response to recent
regulatory compliance issues affecting a number of the investment companies in
the AllianceBernstein Funds complex. The directors concluded that, overall,
they were satisfied with the nature, extent and quality of services provided to
each of the Portfolios under the Advisory Agreement.
Costs of Services Provided and Profitability to the Adviser
The directors reviewed a schedule of the revenues and expenses indicating the
profitability of each Portfolio to the Adviser for calendar years 2004 and 2005
that had been prepared with an updated expense allocation methodology arrived
at in consultation with an independent consultant. The directors noted that the
updated methodology differed in various respects from the methodology used in
prior years. The directors reviewed the assumptions and methods of allocation
used by the Adviser in preparing fund-specific profitability data, and noted
the Adviser's representation to them that it believed that the methods of
allocation used in preparing the profitability information were reasonable and
appropriate and that the Adviser had previously discussed with the directors
that there is no generally accepted allocation methodology for information of
this type.
The directors recognized that it is difficult to make comparisons of
profitability from fund advisory contracts because comparative information is
not generally publicly available and is affected by numerous factors, including
the structure of
118 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
the particular adviser, the types of funds it manages, its business mix,
numerous assumptions regarding allocations and the adviser's capital structure
and cost of capital. In considering profitability information, the directors
considered the effect of fall-out benefits on the Adviser's expenses, as well
as the "revenue sharing" arrangements the Adviser has entered into with certain
entities that distribute shares of the Portfolios. The directors focused on the
profitability of the Adviser's relationships with the Portfolios before taxes
and distribution expenses. The directors recognized that the Adviser should
generally be entitled to earn a reasonable level of profits for the services it
provides to each Portfolio and, based on their review, concluded that they were
satisfied that the Adviser's level of profitability from its relationship with
each Portfolio was not excessive. The directors noted that the Adviser's
relationship with the New York Portfolio was not profitable to it in calendar
2005.
Fall-Out Benefits
The directors considered that the Adviser benefits from soft dollar
arrangements whereby it receives brokerage and research services from many of
the brokers and dealers that execute purchases and sales of securities on
behalf of its clients on an agency basis. The directors noted that since the
Portfolios do not engage in brokerage transactions, the Adviser does not
receive soft dollar benefits in respect of portfolio transactions of the
Portfolios.
The directors also considered that the Distributor, which is a wholly-owned
subsidiary of the Adviser, receives 12b-1 fees from each Portfolio in respect
of classes of shares of the Portfolio that are subject to the Fund's 12b-1
plans and retains a portion of such 12b-1 fees, and receives all or a portion
of the sales charges on sales or redemptions of certain classes of shares. The
directors also noted that certain affiliates of the Adviser distribute shares
of the Portfolios and receive compensation in that connection and that a
subsidiary of the Adviser provides transfer agency services to the Portfolios
and receives compensation from the Portfolios for such services.
The directors recognized that the Adviser's profitability would be somewhat
lower if the Adviser's affiliates did not receive the benefits described above.
The directors understood that the Adviser also might derive reputational and
other benefits from its association with the Portfolios.
Investment Results
In addition to the information reviewed by the directors in connection with the
meeting, the directors receive detailed comparative performance information for
each Portfolio at each regular Board meeting during the year. At the meeting,
the directors reviewed a report prepared by Lipper showing performance for
Class A shares of each Portfolio as compared to a group of funds in its Lipper
category selected by Lipper (the "Performance Group") and as compared to a
universe of funds in its Lipper category selected by Lipper (the "Performance
Universe"),
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 119
and information prepared by the Adviser showing performance of the Class A
Shares of each Portfolio as compared to the Lehman Brothers Municipal Bond
Index (the "Index").
California Portfolio
The directors reviewed information showing performance for Class A shares of
the California Portfolio as compared to a Performance Group of 12 to 9 funds
(depending on the year) in its Lipper category selected by Lipper and as
compared to a Performance Universe of 34 to 25 funds (depending on the year) in
its Lipper category selected by Lipper for periods ended June 30, 2006 over the
1-, 3-, 5- and 10-year periods, and as compared to the Index for periods ended
June 30, 2006 over the year to date ("YTD"), 1-, 3-, 5- and 10-year and since
inception periods (December 1986 inception). The directors noted that in the
Performance Group and Performance Universe comparisons the California Portfolio
was in the 2nd quintile in the 1- and 3-year periods and 3rd quintile in the
5-year period, and in the 10-year period the California Portfolio was in the
3rd quintile in the Performance Group comparison and 2nd quintile in the
Performance Universe comparison. The comparative information showed that the
California Portfolio outperformed the Index in the YTD, 1- and 3-year periods
and underperformed the Index in the 5- and 10-year and since inception periods.
Based on their review, the directors concluded that the California Portfolio's
relative performance over time was satisfactory.
Insured California Portfolio
The directors reviewed information showing performance for Class A shares of
the Insured California Portfolio as compared to a Performance Group of 4 funds
in its Lipper category selected by Lipper and as compared to a Performance
Universe of 6 funds in its Lipper category selected by Lipper for periods ended
June 30, 2006 over the 1-, 3-, 5- and 10-year periods, and as compared to the
Index for periods ended June 30, 2006 over the year to date ("YTD"), 1-, 3-, 5-
and 10-year and since inception periods (November 1985 inception). The
directors noted that in the Performance Group comparison the Fund was 4 out of
4 in the 1-, 3- and 5-year periods and 2 out of 4 in the 10-year period, and in
the Performance Universe comparison the Fund was in the 5th quintile in all
periods reviewed. The comparative information showed that the Insured
California Portfolio underperformed the Index in all periods reviewed. Based on
their review and their discussion with the portfolio manager of the Insured
California Portfolio, the directors concluded that the Insured California
Portfolio's relative performance over time was understandable.
Insured National Portfolio
The directors reviewed information showing performance for Class A shares of
the Insured National Portfolio as compared to a Performance Group of 9 funds in
its Lipper category selected by Lipper and as compared to a Performance
Universe of 22 to 21 funds (depending on the year) in its Lipper category
120 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
selected by Lipper for periods ended June 30, 2006 over the 1-, 3-, 5- and
10-year periods, and as compared to the Index for periods ended June 30, 2006
over the year to date, 1-, 3-, 5- and 10-year and since inception periods
(December 1986 inception). The directors noted that in the Performance Group
and Performance Universe comparisons the Insured National Portfolio was in the
2nd quintile in the 1- and 5-year periods and 1st quintile in the 3-year
period, and in the 10-year period the Insured National Portfolio was in the 3rd
quintile in the Performance Group comparison and 2nd quintile in the
Performance Universe comparison. The comparative information showed that the
Insured National Portfolio outperformed the Index in the 3-year period and
underperformed the Index in all other periods reviewed. Based on their review,
the directors concluded that the Insured National Portfolio's relative
performance over time was satisfactory.
National Portfolio
The directors reviewed information showing performance for Class A shares of
the National Portfolio as compared to a Performance Group of 15 to 13 funds
(depending on the year) in its Lipper category selected by Lipper and as
compared to a Performance Universe of 73 to 51 funds (depending on the year) in
its Lipper category selected by Lipper for periods ended June 30, 2006 over the
1-, 3-, 5- and 10-year periods, and as compared to the Index for periods ended
June 30, 2006 over the year to date ("YTD"), 1-, 3-, 5- and 10-year and since
inception periods (December 1986 inception). The directors noted that in the
Performance Group comparison the National Portfolio was in the 1st quintile in
the 1- and 3-year periods, 4th quintile in the 5-year period and 3rd quintile
in the 10-year period, and in the Performance Universe comparison the National
Portfolio was in the 1st quintile in the 1- and 3-year periods and 3rd quintile
in the 5- and 10-year periods. The comparative information showed that the
National Portfolio outperformed the Index in the YTD, 1- and 3-year periods and
underperformed the Index in the 5- and 10-year and since inception periods.
Based on their review, the directors concluded that the National Portfolio's
relative performance over time was satisfactory.
New York Portfolio
The directors reviewed information showing performance for Class A shares of
the New York Portfolio as compared to a Performance Group of 11 funds in its
Lipper category selected by Lipper and as compared to a Performance Universe of
30 to 25 funds (depending on the year) in its Lipper category selected by
Lipper for periods ended June 30, 2006 over the 1-, 3-, 5- and 10-year periods,
and as compared to the Index for periods ended June 30, 2006 over the year to
date ("YTD"), 1-, 3-, 5- and 10-year and since inception periods (December 1986
inception). The directors noted that in the Performance Group comparison the
New York Portfolio was in the 2nd quintile in the 1- and 10-year periods, 1st
quintile in the 3-year period and 3rd quintile in the 5-year period, and in the
Performance Universe comparison the New York Portfolio was in the
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 121
1st quintile in the 1- and 3-year periods, 3rd quintile in the 5-year period
and 2nd quintile in the 10-year period. The comparative information showed that
the New York Portfolio outperformed the Index in the YTD, 1- and 3-year periods
and underperformed the Index in the 5- and 10-year and since inception periods.
Based on their review, the directors concluded that the New York Portfolio's
relative performance over time was satisfactory.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate paid by each Portfolio to the
Adviser and information prepared by Lipper concerning fee rates paid by other
funds in the same Lipper category as the Portfolio at a common asset level. The
directors recognized that it is difficult to make comparisons of advisory fees
because there are variations in the services that are included in the fees paid
by other funds.
The Adviser informed the directors that there are no institutional products
managed by it that have a substantially similar investment style as the
Portfolios. The directors reviewed information in the Adviser's Form ADV and
noted that it charged institutional clients lower fees for advising comparably
sized accounts using strategies that differ from those of the Portfolios but
which involved investments in securities of the same type that the Portfolios
invest in (i.e., fixed income municipal securities although such securities are
of a shorter duration than the Portfolios invest in).
The Adviser reviewed with the directors the significant differences in the
scope of services it provides to institutional clients and to the Portfolios.
For example, the Advisory Agreement requires the Adviser to provide, in
addition to investment advice, office facilities and officers (including
officers to provide required certifications). The Adviser also coordinates the
provision of services to the Portfolios by non-affiliated service providers and
is responsible for the compensation of the Fund's Independent Compliance
Officer and certain related expenses. The provision of these non-advisory
services involves costs and exposure to liability. The Adviser explained that
many of these services normally are not provided to non-investment company
clients, and that fees charged to the Portfolios reflect the costs and risks of
the additional obligations. The Adviser also noted that since the Portfolios
are constantly issuing and redeeming their shares, they are more difficult to
manage than an institutional account, where the assets are relatively stable.
In light of these facts, the directors did not place significant weight on
these fee comparisons.
The directors also considered the total expense ratio of the Class A shares of
each Portfolio in comparison to the fees and expenses of funds within two
comparison groups of funds in the same Lipper category created by Lipper: an
Expense Group and an Expense Universe. Lipper described an Expense Group as a
representative sample of comparable funds and an Expense Universe as a broader
group,
122 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
consisting of all funds in the Portfolio's investment classification/objective
with a similar load type as the Portfolio. The directors noted that because of
the small number of funds in the Insured California Portfolio and Insured
National Portfolio Lipper category, at the request of the Adviser and the
Fund's Senior Officer, Lipper had expanded the Expense Group of the Insured
California Portfolio to include peers that had a similar (but not the same)
Lipper investment objective/classification, and the Expense Group of the
Insured National Portfolio to include funds with different load types
(front-end and no load funds). The Expense Universe for these two Portfolios
had also been expanded by Lipper pursuant to Lipper's standard guidelines and
not at the request of the Adviser or the Fund's Senior Officer. The Class A
expense ratio of each Portfolio was based on the Portfolio's latest fiscal year
expense ratio. The directors recognized that the expense ratio information for
each Portfolio potentially reflected on the Adviser's provision of services, as
the Adviser is responsible for coordinating services provided to each Portfolio
by others. The directors noted that it was likely that the expense ratios of
some funds in each Portfolio's Lipper category also were lowered by waivers or
reimbursements by those funds' investment advisers, which in some cases were
voluntary and perhaps temporary.
California Portfolio
The information reviewed by the directors showed that the California
Portfolio's at approximate current size contractual effective fee rate of 45
basis points was somewhat lower than the Expense Group median. The directors
noted that the latest fiscal year administrative expense reimbursement by the
California Portfolio pursuant to the Advisory Agreement was 1 basis point. The
directors also noted that the California Portfolio's total expense ratio, which
had been capped by the Adviser, was slightly lower than the Expense Group
median and somewhat lower than the Expense Universe median. The directors
concluded that the California Portfolio's expense ratio was satisfactory.
Insured California Portfolio
The information reviewed by the directors showed that the Insured California
Portfolio's at approximate current size contractual effective fee rate of 45
basis points was materially lower than the Expense Group median. The directors
noted that the latest fiscal year administrative expense reimbursement by the
Insured California Portfolio pursuant to the Advisory Agreement was 5 basis
points and that as a result the Adviser's total compensation of 50 basis points
received by the Adviser from the Insured California Portfolio pursuant to the
Advisory Agreement was somewhat lower than the Expense Group median. The
directors also noted that the Insured California Portfolio's total expense
ratio was materially higher than the Expense Group and Expense Universe
medians. The directors further noted that the Adviser had recently reviewed
with them steps being taken that are intended to reduce expenses of the
AllianceBernstein Funds. The directors concluded that the Insured California
Portfolio's expense ratio was acceptable.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 123
Insured National Portfolio
The information reviewed by the directors showed that the Insured National
Portfolio's at approximate current size contractual effective fee rate of 45
basis points was materially lower than the Expense Group median. The directors
noted that the latest fiscal year administrative expense reimbursement by the
Insured National Portfolio pursuant to the Advisory Agreement was 5 basis
points and that as a result the total compensation of 50 basis points received
by the Adviser from the Insured National Portfolio pursuant to the Advisory
Agreement was somewhat lower than the Expense Group median. The directors also
noted that the Insured National Portfolio's total expense ratio, which had been
capped by the Adviser, was materially higher than the Expense Group and Expense
Universe medians. The directors further noted that the Adviser had recently
reviewed with them steps being taken that are intended to reduce expenses of
the AllianceBernstein Funds. The directors concluded that the Insured National
Portfolio's expense ratio was acceptable.
National Portfolio
The information reviewed by the directors showed that the National Portfolio's
at approximate current size contractual effective fee rate of 45 basis points
was materially lower than the Expense Group median. The directors noted that
the latest fiscal year administrative expense reimbursement by the National
Portfolio pursuant to the Advisory Agreement was 2 basis points. The directors
also noted that the National Portfolio's total expense ratio, which had been
capped by the Adviser, was significantly lower than the Expense Group median
and materially lower than the Expense Universe median. The directors concluded
that the National Portfolio's expense ratio was satisfactory.
New York Portfolio
The information reviewed by the directors showed that the New York Portfolio's
at approximate current size contractual effective fee rate of 45 basis points
was materially lower than the Expense Group median. The directors noted that
the latest fiscal year administrative expense reimbursement by the New York
Portfolio pursuant to the Advisory Agreement was 2 basis points and as a result
the total compensation of 47 basis points received by the Adviser from the New
York Portfolio pursuant to the Advisory Agreement was somewhat lower than the
Expense Group median. The directors also noted that the New York Portfolio's
total expense ratio, which had been capped by the Adviser, was significantly
lower than the Expense Group and Expense Universe medians. The directors
concluded that the New York Portfolio's expense ratio was satisfactory.
Economies of Scale
The directors noted that the advisory fee schedule for each Portfolio contains
breakpoints so that, if assets were to increase over the breakpoint levels, the
fee rates would be reduced on the incremental assets. The directors also
considered a presentation by an independent consultant discussing economies of
scale issues
124 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
in the mutual fund industry. The directors believe that economies of scale are
realized (if at all) by the Adviser across a variety of products and services,
and not only in respect of a single fund. The directors noted that there is no
uniform methodology for establishing breakpoints that give effect to
fund-specific services provided by the Adviser and to the economies of scale
that the Adviser may realize in its overall mutual fund business or those
components of it which directly or indirectly affect a Portfolio's operations.
The directors observed that in the mutual fund industry as a whole, as well as
among funds similar to the Portfolios, there is no uniformity or pattern in the
fees and asset levels at which breakpoints (if any) apply. Depending on the age
and size of a particular fund and its adviser's cost structure, different
conclusions can be drawn as to whether there are economies of scale to be
realized at any particular level of assets, notwithstanding the intuitive
conclusion that such economies exist, or will be realized at some level of
total assets. Moreover, because different advisers have different cost
structures and service models, it is difficult to draw meaningful conclusions
from the comparison of a fund's advisory fee breakpoints with those of
comparable funds. The directors also noted that the advisory agreements for
many funds do not have breakpoints at all. Having taken these factors into
account, the directors concluded that each Portfolio's breakpoint arrangements
would result in a sharing of economies of scale in the event of a very
significant increase in the Portfolio's net assets.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 125
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
SUMMARY OF SENIOR OFFICER'S EVALUATION OF
INVESTMENT ADVISORY AGREEMENT(1)
The following is a summary of the evaluation of the Investment Advisory
Agreement between AllianceBernstein L.P. (the "Adviser") and AllianceBernstein
Municipal Income Fund, Inc. (the "Fund"), in respect of the following
Portfolios:(2)
--California Portfolio
--Insured California Portfolio
--Insured National Portfolio
--National Portfolio
--New York Portfolio
The evaluation of the Investment Agreement was prepared by Philip L. Kirstein,
the Senior Officer of the Fund, for the Directors of the Fund, as required by
an August 2004 agreement between the Adviser and the New York State Attorney
General (the "NYAG"). The Senior Officer's evaluation of the Investment
Advisory Agreement is not meant to diminish the responsibility or authority of
the Board of Directors of the Fund to perform its duties pursuant to Section 15
of the Investment Company Act of 1940 (the '40 Act) and applicable state law.
The purpose of the summary is to provide shareholders with a synopsis of the
independent evaluation of the reasonableness of the advisory fees proposed to
be paid by the Portfolios which was provided to the Directors in connection
with their review of the proposed approval of the continuance of the Investment
Advisory Agreement. The Senior Officer's evaluation considered the following
factors:
1. Advisory fees charged to institutional and other clients of the
Adviser for like services;
2. Advisory fees charged by other mutual fund companies for like services;
3. Costs to the Adviser and its affiliates of supplying services pursuant
to the advisory agreements, excluding any intra-corporate profit;
4. Profit margins of the Adviser and its affiliates from supplying such
services;
(1) It should be noted that the information in the fee summary was completed
on October 23, 2006 and presented to the Board of Directors on October
31-November 2, 2006.
(2) Future references to the Portfolios do not include "AllianceBernstein."
References in the fee summary pertaining to performance and expense ratios
refer to the Class A shares of the Portfolios.
126 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
5. Possible economies of scale as the Portfolios grow larger; and
6. Nature and quality of the Adviser's services including the performance
of the Portfolios.
PORTFOLIO ADVISORY FEES, EXPENSE CAPS, REIMBURSEMENTS, & RATIOS
The Adviser proposed that the Portfolios pay the advisory fee set forth in the
table below for receiving the services to be provided pursuant to the
Investment Advisory Agreement. The fee schedule below, implemented in January
2004 in consideration of the Adviser's settlement with the NYAG in December
2003 is based on a master schedule that contemplates eight categories of funds
with almost all funds in each category having the same advisory fee schedule.(3)
Category Advisory Fee Fund
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Low Risk Income 45 bp on 1st $2.5 billion Municipal Income Fund, Inc.
40 bp on next $2.5 billion
35 bp on the balance
The Portfolios' net assets on September 30, 2006 are set forth below:
Portfolio Net Assets ($MM)
- -------------------------------------------------------------------------------
California Portfolio $796.9
Insured California Portfolio $118.7
Insured National Portfolio $148.5
National Portfolio $449.7
New York Portfolio $481.9
The Adviser is reimbursed as specified in the Investment Advisory Agreement for
certain clerical, legal, accounting, administrative, and other services
provided to the Portfolios. Indicated below are the reimbursement amounts which
the Adviser received from the Portfolios during their most recently completed
fiscal year; expressed in dollars and as a percentage of average daily net
assets:
As a % of Average
Portfolio Amount Daily Net Assets
- --------------------------------------------------------------------------------
California Portfolio $72,500 0.01%
Insured California Portfolio $72,500 0.05%
Insured National Portfolio $72,500 0.05%
National Portfolio $72,500 0.02%
New York Portfolio $72,500 0.02%
(3) Most of the AllianceBernstein Mutual Funds, which the Adviser manages,
were affected by the Adviser's settlement with the NYAG.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 127
The Adviser has agreed to waive that portion of its advisory fees and/or
reimburse certain of the Portfolios for that portion of the Portfolios' total
operating expenses to the degree necessary to limit each Portfolio's expense
ratios to the amounts set forth below for each Portfolio's current fiscal year.
The waiver agreement is terminable by the Adviser at the end of the Portfolios'
fiscal year upon at least 60 days written notice. In addition, set forth below
are the gross expense ratios of the Portfolios as of the Portfolios' most
recent semi-annual period:
Expense Cap Pursuant to Gross Fiscal
Expense Limitation Expense Year
Portfolio Undertaking Ratio(4) End
- -------------------------------------------------------------------------------
California Portfolio Class A 0.77% 0.87% October 31
Class B 1.47% 1.57%
Class C 1.47% 1.57%
Insured National Portfolio Class A 1.04% 1.05% October 31
Class B 1.74% 1.76%
Class C 1.74% 1.75%
National Portfolio Class A 0.68% 0.93% October 31
Class B 1.38% 1.64%
Class C 1.38% 1.63%
New York Portfolio Class A 0.58% 0.90% October 31
Class B 1.28% 1.61%
Class C 1.28% 1.61%
The table below shows the expense ratio of Insured California Portfolio, which
does not have an expense limitation undertaking as of the Portfolio's most
recent semi-annual period:
Total Fiscal
Expense Year
Portfolio Ratios(4) End
- -------------------------------------------------------------------------------
Insured California Portfolio Class A 1.03% October 31
Class B 1.74%
Class C 1.73%
I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The advisory fees charged to investment companies which the Adviser manages and
sponsors are normally higher than those charged to similar sized institutional
accounts, including pension plans and sub-advised investment companies. The fee
differential reflects, among other things, different services provided to such
clients, and different liabilities assumed. Services provided by the Adviser to
the Portfolios that are not provided to non-investment company clients include
pro-
(4) Annualized.
128 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
viding office space and personnel to serve as Fund Officers, who among other
responsibilities make the certifications required under the Sarbanes-Oxley Act
of 2002, and coordinating with and monitoring the Portfolios' third party
service providers such as Fund counsel, auditors, custodians, transfer agents
and pricing services. The accounting, administrative, legal and compliance
requirements for the Portfolios are more costly than those for institutional
assets due to the greater complexities and time required for investment
companies, although as previously noted, a portion of these expenses are
reimbursed by the Portfolios to the Adviser. Also, retail mutual funds managed
by the Adviser are widely held. Servicing the Portfolios' investors is more
time consuming and labor intensive compared to institutional clients since the
Adviser needs to communicate with a more extensive network of financial
intermediaries and shareholders. In addition, managing the cash flow of an
investment company may be more difficult than that of a stable pool of assets,
such as an institutional account with little cash movement in either direction,
particularly, if a fund is in net redemption and the Adviser is frequently
forced to sell securities to raise cash for redemptions. However, managing a
fund with positive cash flow may be easier at times than managing a stable pool
of assets. Finally, in recent years, investment advisers have been sued by
institutional clients and have suffered reputational damage both by the
attendant publicity and outcomes other than complete victories. Accordingly,
the legal and reputational risks associated with institutional accounts are
greater than previously thought, although still not equal to those related to
the mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, it is worth considering information regarding the
advisory fees charged to institutional accounts with substantially similar
investment styles as the Portfolios. However, with respect to the Portfolios,
the Adviser represented that there is no institutional product in the Form ADV
that has a substantially similar investment style as any of the Portfolios. It
should be noted that the Adviser has represented that it does not manage any
separately managed accounts that that have similar investment guidelines as any
of the Portfolios. The Adviser does manage separately managed accounts that
invest principally in municipal securities but those mandates have
substantially lower risk profile (credit and interest rate risk) than the
Portfolios.
The Adviser manages Sanford C. Bernstein Fund, Inc. ("SCB Fund"), an open-end
management investment company. Several portfolios of SCB Fund have a
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 129
somewhat similar investment styles as certain of the Portfolios and their
advisory fee schedules are set forth below:
Portfolio SCB Fund Portfolio Fee Schedule
- ----------------------------------------------------------------------------------------
California Portfolio Short Duration California Municipal 50 bp on 1st $250 million
National Portfolio Short Duration Diversified Municipal 45 bp on next $500 million
New York Portfolio Short Duration New York Municipal 40 bp thereafter
California Portfolio California Municipal 50 bp on 1st $1 billion
National Portfolio Diversified Municipal 45 bp on next $2 billion
New York Portfolio New York Municipal 40 bp on next $2 billion
35 bp thereafter
The Adviser represented that it does not sub-advise any registered investment
company that has a similar investment strategy as any of the Portfolios.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUNDS COMPANIES FOR LIKE SERVICES.
Lipper, Inc. ("Lipper"), an analytical service that is not affiliated with the
Adviser, compared the fees charged to the Portfolios with fees charged to other
investment companies for similar services by other investment advisers.
Lipper's analysis included each Portfolio's ranking with respect to the
proposed advisory fee relative to the median of each Portfolio's Lipper Expense
Group ("EG")(5) at the approximate current asset level of the subject
Portfolio.(6)
Lipper describes an EG as a representative sample of comparable funds. Lipper's
standard methodology for screening funds to be included in an EG entails the
consideration of several fund criteria, including fund type, investment
classification/objective, load type and similar 12b-1/non-12b-1 service fees,
asset (size) comparability, and expense components and attributes. An EG will
typically consist of seven to twenty funds. However, because certain of the
Portfolios had original EGs with an insufficient number of peers, at the
request of the Adviser and the Senior Officer, Lipper expanded each of those
Portfolios' EGs to include peers that had a similar (but not the same) Lipper
investment classification/objective (with respect to Insured California
Portfolio) or load
(5) It should be noted that Lipper does not consider average account size when
constructing EGs. Funds with relatively small average account sizes tend to
have a higher transfer agent expense ratio than comparable sized funds that
have relatively large average account sizes. Note that there are limitations on
Lipper expense category data because different funds categorize expense
differently.
(6) The contractual management fee is calculated by Lipper using each
Portfolio's contractual management fee rate at a hypothetical asset level. The
hypothetical asset level is based on the combined net assets of all classes of
the Portfolio, rounded up to the next $25 million. Lipper's total expense ratio
information is based on the most recent annual report except as otherwise
noted. A ranking of "1" means that the Portfolio has the lowest effective fee
rate in the Lipper peer group.
130 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
type (with respect to Insured National Portfolio). However, because Lipper had
expanded the EGs of those Portfolios, under Lipper's standard guidelines, each
of those Portfolios' Lipper Expense Universe ("EU") were also expanded to
include the universes of those peers that had a similar (but not the same)
Lipper investment classification/objective (with respect to Insured California
Portfolio) or load type (with respect to Insured National Portfolio).(7) A
"normal" EU will include funds that have the same investment
classification/objective and load type as the subject Portfolio.(8)
Contractual Lipper
Management Expense Group
Portfolio Fee(9) Median Rank
- -------------------------------------------------------------------------------
California Portfolio 0.450 0.497 4/12
Insured California Portfolio(10) 0.450 0.550 1/7
Insured National Portfolio(11) 0.450 0.534 1/10
National Portfolio 0.450 0.550 3/15
New York Portfolio 0.450 0.500 3/11
Set forth below is a comparison of the Portfolios' total expense ratios and the
medians of the Portfolios' EGs and EUs. The Portfolios' total expense ratio
rankings are also shown. With respect to Insured National Portfolio, because
funds with a different load type are included in the Fund's EG/EU, supplemental
information showing the Fund's total expense ratio excluding 12b-1/non-12b-1
service fees is also provided below (shown in bold and italicized).
(7) It should be noted that the expansion of the Portfolios' EUs was not
requested by the Adviser or the Senior Officer. They requested that only the
EGs be expanded.
(8) Except for asset (size) comparability, Lipper uses the same criteria for
selecting an EG when selecting an EU. Unlike the EG, the EU allows for the same
adviser to be represented by more than just one fund.
(9) The contractual management fee rate for the Portfolio does not reflect any
expense reimbursements made by the Portfolio to the Adviser for certain
clerical, legal, accounting, administrative, and other services. In addition,
the contractual management fee does not reflect any management waivers or
expense reimbursements for expense caps that effectively reduce the effective
(actual) advisory fee rate.
(10) The Portfolio's EG includes the Portfolio, three other California Insured
Municipal Debt funds and three Insured Municipal Debt funds.
(11) Nine front end load and one no-load fund were considered for inclusion in
the Portfolio's EG.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 131
Lipper
Expense Lipper Exp. Lipper Expense Lipper
Ratio Group Group Universe Universe
Portfolio (%)(12) Median (%) Rank Median (%) Rank
- -----------------------------------------------------------------------------------------
California Portfolio 0.770 0.785 6/12 0.845 10/29
Insured California Portfolio(13) 1.026 0.883 7/7 0.863 24/26
Insured National Portfolio(14) 1.040 0.879 10/10 0.876 20/22
Insured National Portfolio
(Excluding 12b-1/Non 12b-1
Service Fee) 0.740 0.681 9/10 0.650 18/22
National Portfolio 0.680 0.857 2/15 0.844 6/62
New York Portfolio 0.580 0.840 1/11 0.838 1/28
Based on this analysis, except for National Portfolio and New York Portfolio,
which have a more favorable ranking for total expense ratio basis compared to
management fee basis, the Portfolios have a more favorable ranking on a
management fee basis than they do on a total expense ratio basis.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
A consultant was retained by the Senior Officer to work with the Adviser's
personnel to align the Adviser's two profitability reporting systems. The
alignment, which now has been completed, allows the Adviser's management and
the Directors to receive consistent presentations of the financial results and
profitability although the two profitability reporting systems operate
independently. See Section IV for additional discussion.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The Adviser's profitability information for the Portfolios prepared by the
Adviser for the Board of Directors was reviewed by the Senior Officer and the
consultant. Except for National Portfolio and New York Portfolio, the Adviser's
profitability from providing investment advisory services to the Portfolios
increased during the calendar year 2005, relative to 2004.
In addition to the Adviser's direct profits from managing the Portfolios,
certain of the Adviser's affiliates have business relationships with the
Portfolios and may earn a profit from providing other services to the
Portfolios. The courts have
(12) Most recently completed fiscal year Class A share total expense ratio.
(13) The Portfolio's EU includes all other Insured California Municipal Debt
funds and Insured Municipal Debt funds, excluding outliers.
(14) The Portfolio's EU includes all other Insured Municipal Debt funds with a
load type of front-end load and no-load, excluding outliers.
132 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
referred to this type of business opportunity as "fall-out benefits" to the
Adviser and indicated that they should be factored into the evaluation of the
total relationship between the Portfolios and the Adviser. Neither case law nor
common business practice precludes the Adviser's affiliates from earning a
reasonable profit on this type of relationship. These affiliates provide
transfer agent and distribution related services to the Portfolios and receive
transfer agent fees, Rule 12b-1 payments, front-end sales loads and contingent
deferred sales charges ("CDSC").
AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is
the Portfolios' principal underwriter. ABI and the Adviser have disclosed in
the Portfolios' prospectus that they may make revenue sharing payments from
their own resources, in addition to resources derived from sales loads and Rule
12b-1 fees, to firms that sell shares of the Portfolios. In 2005, ABI paid
approximately 0.042% of the average monthly assets of the AllianceBernstein
Mutual Funds or approximately $18.0 million for distribution services and
educational support (revenue sharing payments). For 2006, it is anticipated,
ABI will pay approximately 0.04% of the average monthly assets of the
AllianceBernstein Mutual Funds or approximately $17.5 million.(15)
ABI retained the following amounts for Class A front-end load sales charges
from sales of the Portfolios' Class A shares during the Portfolios' most
recently completed fiscal year:
Portfolio Amount Received
- -------------------------------------------------------------------------------
California Portfolio $37,213
Insured California Portfolio $ 5,566
Insured National Portfolio $ 7,563
National Portfolio $24,475
New York Portfolio $41,670
ABI received the following Rule 12b-1 fees and CDSC for the Portfolios during
the Portfolios' most recently completed fiscal year:
12b-1 Fee CDSC
Portfolio Received Received
- -------------------------------------------------------------------------------
California Portfolio $4,623,655 $68,445
Insured California Portfolio $ 674,159 $15,618
Insured National Portfolio $ 697,374 $22,308
National Portfolio $2,294,625 $31,938
New York Portfolio $2,743,713 $67,517
(15) ABI currently inserts the "Advance" in quarterly account statements and
pays the incremental costs associated with the mailing. The incremental cost is
less than what an "independent mailing" would cost.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 133
Fees and reimbursements for out of pocket expenses charged by AllianceBernstein
Investor Services, Inc. ("ABIS"), the affiliated transfer agent for the
Portfolios, are charged on a per account basis, based on the level of the
service provided and the class of share held by the account. ABIS also receives
a fee per shareholder sub-account for each account maintained by an
intermediary on an omnibus basis. ABIS' after-tax profitability increased in
2005 in comparison to 2004. Set forth below are the net fees which ABIS
retained from the Portfolios during the Portfolios' most recently completed
fiscal year:(16)
Portfolio ABIS Fee Expense Offset
- -------------------------------------------------------------------------------
California Portfolio $193,014 $1,639
Insured California Portfolio $ 29,743 $ 189
Insured National Portfolio $ 70,628 $ 471
National Portfolio $227,951 $1,638
New York Portfolio $169,841 $1,322
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule being
proposed reflect a sharing of economies of scale to the extent the breakpoints
are reached. Based on some of the professional literature that has considered
economies of scale in the mutual fund industry, it is thought that to the
extent economies of scale exist, they may more often exist across a fund family
as opposed to a specific fund. This is because the costs incurred by the
Adviser, such as investment research or technology for trading or compliance
systems can be spread across a greater asset base as the fund family increases
in size. It is also possible that as the level of services required to operate
a successful investment company has increased over time, and advisory firms
have made such investments in their business to provide improved services,
there may be a sharing of economies of scale without a reduction in advisory
fees.
An independent consultant, retained by the Senior Officer, made a presentation
to the Board of Directors 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, economists, who have written on this subject, had to infer facts
about the costs from the behavior of fund expenses; there was a lack of
consensus among economists as to whether economies of scale were being passed
on to the shareholders. In the meantime, it is clear that to the extent a
fund's assets were to exceed the initial breakpoint its shareholders benefit
from a lower fee rate.
(16) The fees disclosed are net of any expense offsets with ABIS. An expense
offset is created by the interest earned on the positive cash balance that
occur within the transfer agent account as there is a one day lag with regards
to money movement from the shareholder's account to the transfer agent's
account and then from the transfer agent's account to the Portfolio's account.
134 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF
THE PORTFOLIOS.
With assets under management of $659 billion as of September 30, 2006, the
Adviser has the investment experience to manage and provide non-investment
services (described in Section I) to the Portfolios.
The information in the table below shows the 1, 3, 5 and 10 year performance
returns and rankings of the Portfolios(17) relative to their Lipper Performance
Group ("PG") and Lipper Performance Universe ("PU")(18) for the periods ended
June 30, 2006.(19)
Portfolio PG PU PG PU
California Portfolio Return Median Median Rank Rank
- ------------------------------------------------------------------------------
1 year 1.51 1.14 1.07 4/12 10/34
3 year 4.04 3.46 3.38 3/11 7/33
5 year 4.87 4.84 4.78 5/10 13/29
10 year 5.62 5.59 5.45 4/9 6/25
Portfolio PG PU PG PU
Insured California Portfolio Return Median Median Rank Rank
- ------------------------------------------------------------------------------
1 year -0.16 0.20 0.36 4/4 6/6
3 year 2.38 2.78 2.78 4/4 5/6
5 year 4.28 4.61 4.66 4/4 6/6
10 year 5.36 5.26 5.37 2/4 4/6
Portfolio PG PU PG PU
Insured National Portfolio Return Median Median Rank Rank
- ------------------------------------------------------------------------------
1 year 0.67 0.14 0.29 3/9 7/22
3 year 3.74 2.43 2.58 1/9 1/22
5 year 4.77 4.42 4.43 2/9 6/21
10 year 5.24 5.11 5.11 4/9 7/21
(17) The performance returns and rankings are for the Class A shares of the
Fund. It should be noted that the performance returns of the Fund that is shown
was provided by the Adviser. Lipper maintains its own database that includes
the Fund's performance returns. However, differences in the distribution price
(ex-date versus payable date) and rounding differences may cause the Adviser's
own performance returns of the Fund to be one or two basis points different
from Lipper. To maintain consistency in this evaluation, the performance
returns of the Fund, as reported by the Adviser, are provided instead of Lipper.
(18) A Portfolio's PG and PU may not necessarily be identical to its
respective EG and EU. Outliers and funds with negative management fees are
excluded from EGs and EUs but not necessarily from PGs and PUs. In addition,
PGs and PUs only include funds of the same Lipper investment
classification/objective as the Portfolios, in contrast to certain of the
Portfolios' EGs and EUs, which may include funds of similar but not the same
investment classification/objective.
(19) Note that the current Lipper investment classification/objective dictates
that the PG and PU throughout the life of each Portfolio even if a Portfolio
may have had a different investment classification/objective at a different
point in time.
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND o 135
Portfolio PG PU PG PU
National Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 1.61 0.91 0.60 3/15 14/73
3 year 4.51 3.63 3.05 2/15 5/72
5 year 4.44 4.68 4.62 12/15 40/67
10 year 5.13 5.13 5.12 7/13 24/51
Portfolio PG PU PG PU
New York Portfolio Return Median Median Rank Rank
- -------------------------------------------------------------------------------
1 year 1.26 0.77 0.61 4/11 6/30
3 year 4.01 3.11 2.73 2/11 3/30
5 year 4.50 4.49 4.34 6/11 12/27
10 year 5.55 5.23 5.23 4/11 7/25
Set forth below are the 1, 3, 5, 10 year and since inception performance
returns of the Portfolios (in bold) versus their benchmarks:(20) Note that each
Portfolio's benchmark is the Lehman Brothers Municipal Bond Index.(21)
Periods Ending June 30, 2006
Annualized Performance
- -------------------------------------------------------------------------------
1 3 5 10 Since
Portfolios Year Year Year Year Inception
- -------------------------------------------------------------------------------
California Portfolio 1.51 4.04 4.87 5.62 6.67
Lehman Brothers Municipal Bond Index 0.89 3.23 5.05 5.79 6.71
Insured California Portfolio -0.16 2.38 4.28 5.36 6.54
Lehman Brothers Municipal Bond Index 0.89 3.23 5.05 5.79 7.30
Insured National Portfolio 0.67 3.74 4.77 5.24 6.37
Lehman Brothers Municipal Bond Index 0.89 3.23 5.05 5.79 6.71
National Portfolio 1.61 4.51 4.44 5.13 6.50
Lehman Brothers Municipal Bond Index 0.89 3.23 5.05 5.79 6.71
New York Portfolio 1.26 4.01 4.50 5.55 6.22
Lehman Brothers Municipal Bond Index 0.89 3.23 5.05 5.79 6.71
CONCLUSION:
Based on the factors discussed above the Senior Officer's conclusion is that
the proposed advisory fees for the Portfolios are reasonable and within the
range of what would have been negotiated at arms-length in light of all the
surrounding circumstances. This conclusion in respect of the Portfolios is
based on an evaluation of all of these factors and no single factor was
dispositive.
Dated: December 1, 2006
(20) The Adviser provided Portfolio and benchmark performance return
information for periods through June 30, 2006.
(21) The Lehman Brother's Municipal Index is a rules-based,
market-value-weighted index engineered for the long-term tax-exempt bond
market. To be included, bonds must be investment grade and be at least one year
from maturity. The index has four main sectors: general obligation bonds,
revenue bonds, insured bonds, and pre-funded bonds. The index represents a
national municipal bond index as opposed to a specific state index.
136 o ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- -----------------------------------------
Wealth Strategies Funds
- -----------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
- -----------------------------------------
Blended Style Funds
- -----------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- -----------------------------------------
Growth Funds
- -----------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Global & International
Global Health Care Fund
Global Research Growth Fund
Global Technology Fund
Greater China '97 Fund
International Growth Fund
International Research Growth Fund
- -----------------------------------------
Value Funds
- -----------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
Small/Mid Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Real Estate Investment Fund*
Global Value Fund
International Value Fund
- -----------------------------------------
Taxable Bond Funds
- -----------------------------------------
Global Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Intermediate Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
- -----------------------------------------
Municipal Bond Funds
- -----------------------------------------
National Michigan
Insured National Minnesota
Arizona New Jersey
California New York
Insured California Ohio
Florida Pennsylvania
Massachusetts Virginia
- -----------------------------------------
Intermediate Municipal Bond Funds
- -----------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- -----------------------------------------
Closed-End Funds
- -----------------------------------------
All-Market Advantage Fund
AllianceBernstein Global High Income Fund*
AllianceBernstein Income Fund*
AllianceBernstein National Municipal
Income Fund*
ACM Managed Dollar Income Fund
ACM Managed Income Fund
California Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
- -----------------------------------------
Retirement Strategies Funds
- -----------------------------------------
2000 Retirement Strategy
2005 Retirement Strategy
2010 Retirement Strategy
2015 Retirement Strategy
2020 Retirement Strategy
2025 Retirement Strategy
2030 Retirement Strategy
2035 Retirement Strategy
2040 Retirement Strategy
2045 Retirement Strategy
We also offer Exchange Reserves,** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
You should consider the investment objectives, risks, charges and expenses of
any AllianceBernstein fund/portfolio carefully before investing. For free
copies of our prospectuses, which contain this and other information, visit us
online at www.alliancebernstein.com or contact your financial advisor. Please
read the prospectus carefully before investing.
* Prior to January 26, 2007, AllianceBernstein Global High Income Fund was
named Alliance World Dollar Government Fund II and AllianceBernstein Income
Fund was named ACM Income Fund. Prior to March 1, 2007, Global Real Estate
Investment Fund was named Real Estate Investment Fund. Prior to May 18, 2007,
AllianceBernstein National Municipal Income Fund was named National Municipal
Income Fund.
** An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
AllianceBernstein Municipal Income Fund o 137
ALLIANCEBERNSTEIN MUNICIPAL INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
800.221.5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
MI-0152-0407
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
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Marc O. Mayer
President
Date: June 29, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
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Marc O. Mayer
President
Date: June 29, 2007
By: /s/ Joseph J. Mantineo
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Joseph J. Mantineo
Treasurer and Chief Financial Officer
Date: June 29, 2007