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: 811-2383
AllianceBernstein Bond 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
Alliance Capital Management, 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, 2003
Date of reporting period: October 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
AllianceBernstein Bond Fund
Quality Bond Portfolio
Investment Grade Fixed Income
Annual Report--October 31, 2003
Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
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, without charge, upon request by visiting Alliance Capital's web
site at www.investor.alliancecapital.com or on the Securities and Exchange
Commission's web site at http://www.sec.gov, or by calling Alliance Capital at
(800) 227-4618.
AllianceBernstein Investment Research and Management, Inc., the principal
underwriter of the AllianceBernstein mutual funds and an affiliate of Alliance
Capital Management L.P., the manager of the funds, is a member of the NASD.
December 18, 2003
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Bond Fund Quality Bond Portfolio (the "Portfolio") for the
annual reporting period ended October 31, 2003.
Investment Objective and Policies
This open-end fund seeks high current income consistent with preservation of
capital by investing in investment-grade fixed income securities. The Portfolio
invests in readily marketable securities that do not involve undue risk of
capital.
Investment Results
The following table shows the performance of the Portfolio for the six- and
12-month periods ended October 31, 2003. For comparison, we have included the
Lehman Brothers (LB) Aggregate Bond Index, a standard measure of the
performance of a basket of unmanaged debt securities.
- -------------------------------------------------------------------------------
INVESTMENT RESULTS*
Periods Ended October 31, 2003
Returns
6 Months 12 Months
--------------------------------
AllianceBernstein
Bond Fund Quality Bond
Portfolio
Class A 0.11% 4.54%
Class B -0.24% 3.82%
Class C -0.24% 3.82%
Lehman Brothers (LB) Aggregate
Bond Index 0.57% 4.91%
* The Portfolio's investment results are for the periods shown and are based
on the net asset value (NAV) of each class of shares as of October 31, 2003.
Returns do not reflect the deduction of taxes that a shareholder would pay on
fund distributions or the redemption of fund shares. All fees and expenses
related to the operation of the Portfolio have been deducted, but no adjustment
has been made for sales charges that may apply when shares are purchased or
redeemed. Returns for Advisor Class shares will vary due to different expenses
associated with this class. Returns for the Portfolio include the reinvestment
of any distributions paid during each period. During the reporting period, the
Advisor waived a portion of its advisory fee or reimbursed the Portfolio for a
portion of its expenses to the extent necessary to limit the Portfolio's
expenses to 0.98% for Class A, 1.68% for Class B, 1.68% for Class C and 0.68%
for Advisor Class. This waiver extends through the Portfolio's current fiscal
year and may be extended by the Advisor for additional one-year terms. Without
the waiver, the Portfolio's expenses would have been higher and its performance
would have been lower than that shown above. Past performance is no guarantee
of future results.
The unmanaged Lehman Brothers (LB) Aggregate Bond Index does not reflect fees
and expenses associated with the active management of a mutual fund portfolio.
The Index is a standard measure of the performance of a basket of unmanaged
debt securities. It is composed of the LB Mortgage-Backed Securities Index, the
LB Asset-Backed Securities Index and the LB Government/Credit Bond
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 1
Index. An investor cannot invest directly in an index, and its results are not
indicative of any specific investment, including AllianceBernstein Bond Fund
Quality Bond Portfolio.
Additional investment results appear on page 6.
- -------------------------------------------------------------------------------
For the six- and 12-month periods ended October 31, 2003, the Portfolio
underperformed its benchmark, the Lehman Brothers Aggregate Bond Index. The
Portfolio's yield curve positioning was the primary detractor from performance.
With our expectation of stronger growth earlier in the year, we anticipated
higher rates and a flatter curve, driven by tighter Fed policy. This did not
materialize and, in fact, rates fell and the yield curve steepened, dampening
performance. Also dampening performance relative to the index was the
Portfolio's slight mortgage overweight and coupon selection. In July, as
interest rates rose and prepayments declined, mortgage durations lengthened
causing mortgage prices to fall sharply.
A greater-than-benchmark exposure to investment-grade corporates--including an
overweight in BBB-rated bonds--contributed positively to performance. Corporate
securities during the 12-month period posted a strong return of 11.45%,
according to the Lehman Brothers Corporate Bond Index, as compared to 4.91% for
the overall Lehman Brothers Aggregate Bond Index. By quality, BBB-rated
securities within the corporate index posted a very strong 15.86% return
compared to 4.28% for AAA-rated corporates and 9.77% for A-rated corporates.
Both our overweight position in corporate securities and our focus on l
ower-rated corporates proved to be advantageous for the Portfolio.
Market Overview and Investment Strategy
The annual period was marked by volatility in the fixed income markets as
investors reacted to rapidly changing economic data and current market
perceptions. Business conditions worsened in the first three months of 2003,
despite record high corporate cash flow and signs of consumer strength in
rising building permits and new highs in the mortgage refinance index. The
United States economy contracted in February and March, in part because of bad
weather, and also because of corporate and consumer hesitancy to make purchase
and investment decisions during the Iraqi conflict. As the economy began to
recover, mid-year proved to be one of the most volatile periods in recent
history of the U.S. fixed income markets. Through late June, interest rates
fell as the economic landscape appeared bleak and the Federal Reserve raised
the possibility of quantitative easing. After a 25 basis point cut in rates on
June 25, interest rates suddenly reversed course and began a two-month bear
market that saw longer-term Treasury rates rise more than 100 basis points. The
result was a period of sustained interest rate volatility, driven not only by
economic uncertainty, but also by mortgage hedging from large financial
institutions.
As an economic recovery took hold, we reduced the Portfolio's Treasury holdings
on expectations of increased supply to service the deficit. We also
2 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
increased the Portfolio's credit position, overweighting our corporate
allocation which we thought would outperform. Within our corporate allocation,
we emphasized BBB-rated debt, which we believed would benefit most from
improving quality and economic growth. In the face of a massive refinancing
wave during the second quarter, we trimmed our mortgage overweight, reducing
15-year exposure in favor of 30-year and lowering the average coupon.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 3
PERFORMANCE UPDATE
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO CLASS A
GROWTH OF A $10,000 INVESTMENT
7/1/99* TO 10/31/03
AllianceBernstein Bond Fund
Quality Bond Portfolio Class A: $12,693
Lehman Brothers Aggregate Bond Index: $13,822
[The following represents a mountain chart in the printed report.]
AllianceBernstein
Bond Fund Quality Lehman Brothers
Bond Portfolio Class A Aggregate Bond Index
- -------------------------------------------------------------------------------
7/1/99* $ 9,579 $ 10,000
10/31/99 9,686 10,122
10/31/00 10,329 10,862
10/31/01 11,728 12,443
10/31/02 12,142 13,175
10/31/03 12,693 13,822
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Bond Fund Quality Bond Portfolio Class A shares (from 7/1/99*
to 10/31/03) as compared to the performance of an appropriate index. Returns do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The chart reflects the
deduction of the maximum 4.25% sales charge from the initial $10,000 investment
in the Fund and assumes the reinvestment of dividends and capital gains.
Performance for Class B, Class C and Advisor Class shares will vary from the
results shown above due to differences in expenses charged to these classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The unmanaged Lehman Brothers (LB) Aggregate Bond Index does not reflect fees
and expenses associated with the active management of a mutual fund portfolio.
The Index is a standard measure of the performance of a basket of unmanaged
debt securities. It is composed of the LB Mortgage-Backed Securities Index, the
LB Asset-Backed Securities Index and the LB Government/Credit Bond Index. An
investor cannot invest directly in an index, and its results are not indicative
of any specific investment, including AllianceBernstein Bond Fund Quality Bond
Portfolio.
* Fund and benchmark data is from the Fund's Class A share inception date of
7/1/99.
4 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
PORTFOLIO SUMMARY
October 31, 2003
INCEPTION DATES
Class A Shares
7/1/99
Class B Shares
7/1/99
Class C Shares
7/1/99
PORTFOLIO STATISTICS
Net Assets ($mil): $449.0
[Pie Chart Omitted]
SECURITY TYPE
21.6% Corporate Debt Obligations
18.1% Federal National Mortgage Association
14.5% Treasury
6.5% Federal Home Loan Mortgage Corporation
5.1% Asset-Backed Securities
3.8% Commercial Mortgage Backed Securities
3.5% Government National Mortgage Association
1.2% Sovereign Debt Securities
25.7% Short-Term Investments
All data as of October 31, 2003. The Portfolio's security type breakdown is
expressed as a percentage of total investments and may vary over time.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 5
INVESTMENT RESULTS
AVERAGE ANNUAL RETURNS AS OF OCTOBER 31, 2003
Class A Shares
- -------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 4.54% 0.14%
Since Inception* 6.71% 5.66%
SEC Yield** 3.54%
Class B Shares
- -------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 3.82% 0.82%
Since Inception* 5.95% 5.95%
SEC Yield** 3.00%
Class C Shares
- -------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 3.82% 2.82%
Since Inception* 5.92% 5.92%
SEC Yield** 3.02%
AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT QUARTER-END (SEPTEMBER 30, 2003)
Class A Class B Class C
Shares Shares Shares
- -------------------------------------------------------------------------------
1 Year 0.52% 1.28% 3.28%
Since Inception* 5.97% 6.30% 6.26%
The Portfolio's investment results represent average annual returns. Returns do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The returns reflect
reinvestment of dividends and/or capital gains distributions in additional
shares without and with the effect of the 4.25% maximum front-end sales charge
for Class A or applicable contingent deferred sales charge for Class B (3% year
1, 2% year 2, 1% year 3, 0% year 4); and for Class C shares (1% year 1).
Returns for Class A shares do not reflect the imposition of the 1 year, 1%
contingent deferred sales charge for accounts over $1,000,000. Returns for
Advisor Class shares will vary due to different expenses associated with this
class.
The Portfolio normally invests all of its assets in securities that are rated
at least BBB by Standard & Poor's or, if unrated, are of comparable quality.
The Portfolio also may invest in convertible debt securities, preferred stock
and dividend-paying stocks, U.S. government obligations, and foreign
fixed-income securities. The Portfolio may invest a portion of its assets in
foreign securities, which may magnify fluctuations. Price fluctuations may also
be caused by changes in interest rates or bond credit quality ratings. These
changes have a greater effect on bonds with longer maturities than on those
with shorter maturities.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception date: 7/1/99 for all share classes.
** SEC yields are based on SEC guidelines and are calculated on 30 days ended
October 31, 2003.
6 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 2003
Portfolio of Investments
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES-36.9%
Federal National Mortgage
Association-23.8%
4.00%, 8/01/18-10/01/18 $ 8,155 $ 7,950,692
5.00%, TBA 6,160 6,258,178
5.50%, TBA 14,305 14,594,706
5.50%, 2/01/18 5,657 5,828,622
6.00%, TBA 35,225 36,337,081
6.50%, TBA 28,260 29,363,892
6.50%, 1/01/28-10/01/32 4,083 4,247,421
7.50%, 10/01/29-5/01/32 2,009 2,141,170
------------
106,721,762
Federal Home Loan Mortgage Corp.-8.5%
2.125%, 11/15/05 2,040 2,040,635
2.875%, 11/03/06 6,420 6,439,003
5.50%, TBA 21,765 21,948,653
6.00%, TBA 7,725 7,930,192
------------
38,358,483
Government National Mortgage
Association-4.6%
5.50%, TBA 10,675 10,778,419
6.00%, TBA 9,485 9,796,222
------------
20,574,641
Total Mortgage Backed Securities
(cost $165,213,205) 165,654,886
U.S. TREASURY SECURITIES-18.9%
U.S. Treasury Bonds-9.6%
5.375%, 2/15/31 2,220 2,294,838
6.625%, 2/15/27 645 764,250
7.875%, 2/15/21 5,640 7,449,210
8.75%, 5/15/17 6,345 8,841,117
10.75%, 8/15/05 10,900 12,622,712
11.25%, 2/15/15 1,000 1,596,954
12.00%, 8/15/13 7,000 9,716,602
------------
43,285,683
U.S. Treasury Notes-9.3%
2.25%, 7/31/04 41,235 41,584,549
4.25%, 8/15/13 265 264,007
------------
41,848,556
Total U.S. Treasury Securities
(cost $86,514,112) 85,134,239
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 7
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-28.2%
Aerospace/Defense-0.2%
Boeing Capital Corp.
4.75%, 8/25/08 $ 365 $ 376,173
Northrop Grumman Corp.
7.125%, 2/15/11 540 621,412
------------
997,585
Automotive-2.1%
DaimlerChrysler NA Holdings
4.75%, 1/15/08 1,140 1,140,139
Ford Motor Credit Co.
7.00%, 10/01/13 1,050 1,034,012
7.375%, 10/28/09-2/01/11 3,300 3,383,271
General Motors Acceptance Corp.
6.875%, 9/15/11 1,960 2,024,999
8.00%, 11/01/31 400 412,526
General Motors Corp.
8.375%, 7/15/33 1,515 1,602,944
------------
9,597,891
Banking-5.4%
Bank of America Corp.
6.25%, 4/15/12 1,380 1,516,662
Barclays Bank Plc pfd. (United Kingdom)
8.55%, 6/15/11(a) 780 958,446
Capital One Bank
6.50%, 6/13/13 630 650,523
CBA Capital Trust I pfd.
5.805%, 6/30/15(a) 1,185 1,211,372
Citicorp
6.375%, 11/15/08 1,940 2,144,049
Citigroup, Inc.
7.25%, 10/01/10 2,860 3,331,920
GreenPoint Financial Corp.
3.20%, 6/06/08 1,115 1,072,463
HSBC Capital Funding LP pfd. (United Kingdom)
10.176%, 6/30/30(a) 570 830,265
ING Capital Funding Trust III pfd.
8.439%, 12/31/10 960 1,197,520
J.P. Morgan Chase & Co.
3.625%, 5/01/08 1,195 1,194,500
6.75%, 8/15/08-2/01/11 1,880 2,114,886
M&T Bank Corp.
3.85%, 4/01/13 525 521,477
MBNA America Bank
6.50%, 6/20/06 985 1,073,358
National City Corp.
3.20%, 4/01/08 530 521,173
8 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
RBS Capital Trust I pfd.
4.709%, 7/01/13 $ 2,090 $ 1,971,631
U.S. Bank NA
6.375%, 8/01/11 1,110 1,235,215
UFJ Finance Aruba AEC (Aruba)
6.75%, 7/15/13 890 933,443
Unicredito Italiano Capital Trust pfd.
9.20%, 10/05/10(a) 1,510 1,879,801
------------
24,358,704
Broadcasting/Media-1.9%
AOL Time Warner, Inc.
7.70%, 5/01/32 1,205 1,366,583
Clear Channel Communications, Inc.
4.25%, 5/15/09 680 676,484
4.625%, 1/15/08 865 891,133
Liberty Media Corp.
5.70%, 5/15/13 1,220 1,195,346
News America, Inc.
6.55%, 3/15/33 1,175 1,204,193
Time Warner Entertainment Co. LP
8.375%, 3/15/23-7/15/33 2,795 3,427,582
------------
8,761,321
Building/Real Estate-0.5%
EOP Operating LP
5.875%, 1/15/13 650 677,412
ERP Operating LP
5.20%, 4/01/13 470 471,152
Lennar Corp.
5.95%, 3/01/13 230 240,332
Vornado Realty Trust
5.625%, 6/15/07 640 676,527
------------
2,065,423
Cable-1.1%
AT&T Broadband Corp.
9.455%, 11/15/22 670 901,973
Comcast Cable Communications, Inc.
6.20%, 11/15/08 1,650 1,800,724
Comcast Corp.
7.05%, 3/15/33 465 497,319
Cox Communications, Inc.
7.125%, 10/01/12 525 596,878
Lenfest Communications, Inc.
8.375%, 11/01/05 1,005 1,114,138
------------
4,911,032
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 9
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Communications-2.3%
AT&T Corp.
7.80%, 11/15/11 $ 485 $ 550,633
British Telecommunications Plc
(United Kingdom)
8.875%, 12/15/30 1,025 1,324,521
Citizens Communications Co.
9.00%, 8/15/31 385 499,773
Deutsche Telekom International Finance BV
(Netherlands)
8.75%, 6/15/30 690 871,140
France Telecom, SA (France)
9.75%, 3/01/31 325 430,413
Koninklijke (Royal) KPN NV (Netherlands)
8.00%, 10/01/10 670 799,839
Sprint Capital Corp.
7.625%, 1/30/11 1,595 1,757,802
8.75%, 3/15/32 1,200 1,369,554
Telecom Italia Capital (Italy)
6.375%, 11/15/33(a) 900 895,207
Verizon Global Funding Corp.
7.375%, 9/01/12 1,465 1,683,432
------------
10,182,314
Communications - Mobile-1.0%
AT&T Wireless Services, Inc.
8.75%, 3/01/31 1,160 1,399,826
Telus Corp. (Canada)
7.50%, 6/01/07 1,145 1,272,812
Verizon Wireless Capital LLC
5.375%, 12/15/06 1,045 1,117,006
Vodafone Airtouch Plc (United Kingdom)
7.875%, 2/15/30 450 542,713
------------
4,332,357
Energy-1.3%
Amerada Hess Corp.
7.875%, 10/01/29 1,575 1,680,484
Conoco Funding Co.
5.45%, 10/15/06 695 747,937
Conoco, Inc.
6.95%, 4/15/29 1,455 1,635,143
Devon Energy Corp.
7.95%, 4/15/32 450 539,780
Devon Financing Corp.
7.875%, 9/30/31 420 498,512
Valero Energy Corp.
7.50%, 4/15/32 650 713,454
------------
5,815,310
10 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Financial-4.2%
American General Finance Corp.
4.50%, 11/15/07 $ 650 $ 674,302
CIT Group, Inc.
4.125%, 2/21/06 985 1,015,541
5.50%, 11/30/07 510 545,771
Countrywide Home Loans, Inc.
4.25%, 12/19/07 1,090 1,112,967
Credit Suisse First Boston
5.50%, 8/15/13 780 787,675
General Electric Capital Corp.
5.45%, 1/15/13 1,095 1,132,878
6.75%, 3/15/32 2,790 3,104,043
Household Finance Corp.
6.50%, 11/15/08 1,505 1,681,941
7.00%, 5/15/12 595 676,831
John Deere Capital Corp.
4.50%, 8/22/07 690 718,947
Lehman Brothers Holdings, Inc.
4.00%, 1/22/08 1,945 1,975,187
6.625%, 1/18/12 670 750,929
MBNA Corp.
4.625%, 9/15/08 915 951,567
Morgan Stanley
7.25%, 4/01/32 750 868,498
National Rural Utilities Cooperative
Finance Corp.
7.25%, 3/01/12 270 313,074
The Bear Stearns Cos., Inc.
4.00%, 1/31/08 640 650,871
The Goldman Sachs Group, Inc.
4.75%, 7/15/13 685 662,739
6.125%, 2/15/33 1,070 1,071,924
------------
18,695,685
Food/Beverages-1.0%
Kellogg Co.
2.875%, 6/01/08 690 664,696
Kraft Foods, Inc.
5.25%, 10/01/13 1,050 1,046,320
Pepsi Bottling Group, Inc.
7.00%, 3/01/29 1,950 2,231,350
Safeway, Inc.
7.25%, 2/01/31 630 694,618
------------
4,636,984
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 11
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Health Care-0.8%
Bristol-Myers Squibb Co.
4.75%, 10/01/06 $ 515 $ 543,471
HCA, Inc.
6.75%, 7/15/13 525 538,643
7.125%, 6/01/06 855 916,293
Health Net, Inc.
8.375%, 4/15/11 520 615,851
Humana, Inc.
6.30%, 8/01/18 760 780,145
------------
3,394,403
Industrial-0.8%
General Electric Co.
1.22%, 10/24/05 2,545 2,545,000
5.00%, 2/01/13 715 720,851
Praxair, Inc.
2.75%, 6/15/08 525 503,645
------------
3,769,496
Insurance-0.9%
Anthem, Inc.
6.80%, 8/01/12 610 689,200
Mangrove Bay Pass-Through Trust pfd.
6.102%, 7/15/33(a) 1,010 978,185
MetLife, Inc.
6.50%, 12/15/32 505 533,116
New York Life Insurance Co.
5.875%, 5/15/33(a) 880 865,809
Oil Insurance, Ltd. (Bermuda)
5.15%, 8/15/33(a) 945 950,859
------------
4,017,169
Metals/Mining-0.1%
Alcan, Inc. (Canada)
4.50%, 5/15/13 420 405,928
Non-Air Transportation-0.3%
CSX Corp.
7.95%, 5/01/27 995 1,201,161
Paper/Packaging-0.3%
International Paper Co.
5.30%, 4/01/15 560 544,339
Weyerhaeuser Co.
7.375%, 3/15/32 555 599,337
------------
1,143,676
Petroleum Products-0.2%
Petronas Capital, Ltd.
7.00%, 5/22/12(a) 1,010 1,126,756
12 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Public Utilities - Electric & Gas-1.8%
Carolina Power & Light Co.
6.50%, 7/15/12 $ 675 $ 739,510
CenterPoint Energy Resources Corp.
6.50%, 2/01/08 825 885,821
Cincinnati Gas & Electric Co.
5.70%, 9/15/12 385 402,044
Columbus Southern Power Co.
5.50%, 3/01/13(a) 170 174,032
Dominion Resources, Inc.
5.00%, 3/15/13 690 685,834
Duke Energy Corp.
3.75%, 3/05/08 860 860,467
FirstEnergy Corp.
7.375%, 11/15/31 415 444,965
KeySpan Corp.
7.25%, 11/15/05 1,430 1,569,203
MidAmerican Energy Holdings Co.
5.875%, 10/01/12 395 409,404
Nisource Finance Corp.
7.875%, 11/15/10 590 699,079
Public Service Company of Colorado
7.875%, 10/01/12 450 544,599
Xcel Energy, Inc.
7.00%, 12/01/10 650 731,324
------------
8,146,282
Public Utilities - Telephone-0.2%
Telefonos de Mexico SA de CV (Mexico)
8.25%, 1/26/06 800 885,040
Retail-0.4%
Limited Brands
6.95%, 3/01/33 355 384,385
Sears Roebuck Acceptance Corp.
7.00%, 6/01/32 485 531,463
Target Corp.
5.875%, 3/01/12 615 666,087
Toys "R" Us, Inc.
7.875%, 4/15/13 305 337,528
------------
1,919,463
Savings and Loan-1.0%
Great Western Financial Trust II
8.206%, 2/01/27 2,090 2,341,828
Washington Mutual Finance Corp.
6.875%, 5/15/11 1,945 2,187,592
------------
4,529,420
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 13
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Services-0.2%
Waste Management, Inc.
6.875%, 5/15/09 $ 960 $ 1,078,739
Technology-0.2%
Hewlett-Packard Co.
7.15%, 6/15/05 670 723,452
Total Corporate Debt Obligations
(cost $120,849,493) 126,695,591
ASSET BACKED SECURITIES-6.6%
Chase Funding Mortgage Loan
1.24%, 2/25/21 2,414 2,413,724
Citibank Credit Card Issuance Trust
3.50%, 8/16/10 9,565 9,452,802
4.15%, 7/07/17 2,035 1,867,302
Countrywide Asset-Backed Certificates
1.25%, 10/25/19 1,241 1,240,630
Discover Card Master Trust I
6.35%, 7/15/08 3,190 3,467,664
Fleet Credit Card Master Trust II
5.60%, 12/15/08 2,300 2,464,072
Honda Auto Receivables Owner Trust
2.19%, 5/15/07 1,340 1,340,000
Master Asset Backed Securities Trust
1.27%, 3/25/20 1,068 1,067,834
MBNA Credit Card Master Note Trust
2.75%, 10/15/10 2,545 2,461,699
Residential Asset Mortgage Products, Inc.
1.31%, 10/25/22 1,215 1,215,000
Residential Funding Mortgage Securities, Inc.
1.25%, 7/25/18 1,205 1,204,760
Structured Asset Investment Loan Trust
1.25%, 7/25/33 1,684 1,684,018
Total Asset Backed Securities
(cost $29,988,446) 29,879,505
COMMERCIAL MORTGAGE BACKED SECURITIES-4.7%
Bear Stearns Commerical Mortgage
Securities, Inc.
Series 2003-T12, Class A4
4.68%, 8/13/39 2,700 2,655,168
First Union-Lehman Brothers-Bank of America
Series 1998-C2, Class A2
6.56%, 11/18/35 3,675 4,094,458
14 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
GS Mortgage Securities Corp. II
Series 2003-C1, Class A2A
3.59%, 1/10/40 $ 2,070 $ 2,068,349
LB UBS Commercial Mortgage Trust
Series 2003-C5, Class A2
3.48%, 7/15/27 3,730 3,686,732
Morgan Stanley Capital I
Series 2003-T11, Class A4
5.15%, 6/13/41 4,425 4,433,850
Nomura Asset Securities Corp.
Series 1998-D6, Class A1B
6.59%, 3/15/30 3,665 4,099,297
Total Commercial Mortgage Backed Securities
(cost $22,450,773) 21,037,854
SOVEREIGN DEBT SECURITIES-1.6%
Korea Development Bank
5.75%, 9/10/13 380 390,493
Quebec Province of Canada
7.50%, 9/15/29 755 932,252
United Mexican States
4.625%, 10/08/08 3,325 3,349,938
7.50%, 1/14/12 2,075 2,324,000
Total Sovereign Debt Securities
(cost $6,758,036) 6,996,683
COLLATERALIZED MORTGAGE OBLIGATION-0.3%
Countrywide Home Loans
Series 2003-49, Class A1
1.64%, 12/19/33
(cost $1,314,611) 1,316 1,310,495
SHORT-TERM INVESTMENT-33.7%
Time Deposit-33.7%
State Street Euro Dollar
0.50%, 11/03/03
(cost $151,223,000) 151,223 151,223,000
Total Investments Before Security Lending
Collateral-130.9%
(cost $584,311,676) 587,932,253
INVESTMENT OF CASH COLLATERAL FOR
SECURITIES LOANED*-18.8%
Short-Term Investments
Bank of America
1.22%, 7/15/04 5,990 6,285,144
Fleet Boston Financial
1.27%, 2/01/04 14,100 14,848,401
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 15
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
FNMA
1.20%, 12/09/03 $17,000 $ 17,151,423
Gotham Funding
1.12%, 11/18/03-11/25/03 23,315 23,297,203
Toyota
1.13%, 11/13/03 2,500 2,560,844
Wells Fargo Corp.
1.16%, 2/01/04 3,000 3,119,041
------------
67,262,056
Shares
------------
UBS Private Money Market Fund, LLC
1.01% 17,075,591 17,075,591
Total Investment of Cash Collateral for
Securities Loaned
(cost $84,337,647) 84,337,647
Total Investments-149.7%
(cost $668,649,323) 672,269,900
Other assets less liabilities-(49.7%) (223,255,347)
Net Assets-100% $ 449,014,553
* See Note E for security lending information.
(a) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31, 2003,
the aggregate market value of these securities amounted to $9,870,732 or 2.2%
of net assets.
Glossary of Terms:
FNMA - Federal National Mortgage Assoc.
TBA - (To Be Assigned) - Securities are purchased on a forward commitment
with an appropriate principal amount (generally +/-1.0%) and no definite
maturity date. The actual principal amount and maturity date will be determined
upon settlement when the specific mortgage pools are assigned.
See notes to financial statements.
16 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
STATEMENT OF ASSETS & LIABILITIES
October 31, 2003
Assets
Investments in securities, at value
(cost $668,649,323--including investment of cash
collateral for securities loaned of $84,337,647) $ 672,269,900(a)
Cash 464,548
Receivable for investment securities sold 8,680,308
Interest receivable 3,618,138
Receivable for capital stock sold 577,105
Total assets 685,609,999
Liabilities
Payable for investment securities purchased 150,576,685
Payable for collateral on securities loaned 84,337,647
Payable for capital stock redeemed 713,065
Dividends payable 477,664
Distribution fee payable 120,394
Advisory fee payable 84,030
Accrued expenses 285,961
Total liabilities 236,595,446
Net Assets $ 449,014,553
Composition of Net Assets
Capital stock, at par $ 42,557
Additional paid-in capital 442,458,084
Distributions in excess of net investment income (1,896,258)
Accumulated net realized gain on investment and
foreign currency transactions 4,789,593
Net unrealized appreciation of investments 3,620,577
$ 449,014,553
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($68,212,608 / 6,461,779 shares of capital stock
issued and outstanding) $10.56
Sales charge--4.25% of public offering price .47
Maximum offering price $11.03
Class B Shares
Net asset value and offering price per share
($96,033,294 / 9,105,837 shares of capital stock
issued and outstanding) $10.55
Class C Shares
Net asset value and offering price per share
($26,021,458 / 2,471,598 shares of capital stock
issued and outstanding) $10.53
Advisor Class Shares
Net asset value, redemption and offering price per share
($258,747,193 / 24,518,034 shares of capital stock
issued and outstanding $10.55
(a) Includes securities on loan with a value of $82,495,906 (see Note E).
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 17
STATEMENT OF OPERATIONS
July 1, 2003
to Year Ended
October 31, June 30,
2003* 2003
------------- -------------
Investment Income
Interest $ 5,441,736 $ 16,018,006
Expenses
Advisory fee 831,665 2,163,652
Distribution fee--Class A 73,782 195,491
Distribution fee--Class B 346,615 926,913
Distribution fee--Class C 81,232 244,627
Transfer agency 486,995 1,237,319
Custodian 68,546 191,425
Printing 49,208 125,347
Audit and legal 42,351 81,878
Registration fees 41,544 83,992
Administrative 40,000 120,000
Directors' fees and expenses 6,389 20,000
Miscellaneous 5,575 28,807
Total expenses 2,073,902 5,419,451
Less: expense offset arrangement
(see Note B) (183) (1,103)
Less: expenses waived and reimbursed
by the Adviser (see Note B) (543,850) (1,376,256)
Net expenses 1,529,869 4,042,092
Net investment income 3,911,867 11,975,914
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions (3,807,440) 15,242,181
Foreign currency transactions -0- (282,560)
Net change in unrealized
appreciation/depreciation
of investments (6,091,822) 8,812,869
Net gain (loss) on investment
and foreign currency
transactions (9,899,262) 23,772,490
Net Increase (Decrease) in
Net Assets from Operations $(5,987,395) $ 35,748,404
* The Portfolio changed its fiscal year end from June 30 to October 31.
See notes to financial statements.
18 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
July 1, 2003
to Year Ended Year Ended
October 31, June 30, June 30,
2003* 2003 2002
----------------------------------------------
Increase (Decrease) in Net
Assets from Operations
Net investment income $ 3,911,867 $ 11,975,914 $ 7,878,464
Net realized gain (loss) on
investment and foreign currency
transactions (3,807,440) 14,959,621 (1,208,743)
Net change in unrealized
appreciation/depreciation
of investments (6,091,822) 8,812,869 1,069,652
Net increase (decrease) in net
assets from operations (5,987,395) 35,748,404 7,739,373
Dividends and Distributions
to Shareholders from
Net investment income
Class A (896,295) (2,559,355) (1,504,476)
Class B (1,015,450) (2,981,723) (1,172,187)
Class C (239,505) (803,086) (388,314)
Advisor Class (3,303,792) (8,978,394) (4,813,487)
Distributions in excess of
net investment income
Class A -0- -0- (322,169)
Class B -0- -0- (251,012)
Class C -0- -0- (83,154)
Advisor Class -0- -0- (1,030,761)
Net realized gain on investment
transactions
Class A -0- -0- (37,302)
Class B -0- -0- (34,427)
Class C -0- -0- (11,308)
Advisor Class -0- -0- (89,616)
Distributions in excess of net
realized gain on investment
transactions
Class A -0- -0- (100,078)
Class B -0- -0- (92,363)
Class C -0- -0- (30,340)
Advisor Class -0- -0- (240,432)
Capital Stock Transactions
Net increase (decrease) (1,912,603) 145,535,331 233,107,087
Total increase (decrease) (13,355,040) 165,961,177 230,645,034
Net Assets
Beginning of period 462,369,593 296,408,416 65,763,382
End of period $449,014,553 $462,369,593 $296,408,416
* The Portfolio changed its fiscal year end from June 30 to October 31.
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 19
NOTES TO FINANCIAL STATEMENTS
October 31, 2003
NOTE A
Significant Accounting Policies
AllianceBernstein Bond Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund, which is a Maryland corporation, operates as a series
company currently comprised of three portfolios: the Corporate Bond Portfolio,
the Quality Bond Portfolio and the U.S. Government Portfolio. Each series is
considered to be a separate entity for financial reporting and tax purposes.
This report relates only to the Quality Bond Portfolio. The Quality Bond
Portfolio (the "Portfolio") offers Class A, Class B, Class C and Advisor Class
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. Advisor
Class shares are sold without an initial or contingent deferred sales charge
and are not subject to ongoing distribution expenses. Advisor Class shares are
offered to investors participating in fee-based programs and to certain
retirement plan accounts. All four classes of shares have identical voting,
dividend, liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The financial statements have been prepared in conformity
with accounting principles generally accepted in the United States which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. Additional information about some of the
items discussed in these Notes to Financial Statements is contained in the
Fund's Statement of Additional Information, which is available upon request.
The following is a summary of significant accounting policies followed by the
Portfolio.
1. Security Valuation
In accordance with Pricing Policies adopted by the Board of Directors of the
Fund (the "Pricing Policies") and applicable law, portfolio securities are
valued at current market value or at fair value. The Board of Directors has
delegated to Alliance Capital Management L.P. (the "Adviser"), subject to the
Board's continuing oversight, certain responsibilities with respect to the
implementation of the Pricing Policies. Pursuant to the Pricing Policies,
securities for which market quotations are readily available are valued at
their current market value. In general, the market value of these securities is
determined as follows:
20 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Securities listed on a national securities exchange or on a foreign securities
exchange are valued at the last sale price at the close of the exchange or
foreign securities exchange. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked prices on such
day. If no bid or asked prices are quoted on such day, then the security is
valued in good faith at fair value in accordance with the Pricing Policies.
Securities listed on more than one exchange are valued by reference to the
principal exchange on which the securities are traded; securities not listed on
an exchange but traded on The Nasdaq Stock Market, Inc. ("NASDAQ") are valued
in accordance with the NASDAQ Official Closing Price; listed put or call
options are valued at the last sale price. If there has been no sale on that
day, such securities will be valued at the closing bid prices on that day; open
futures contracts and options thereon are valued using the closing settlement
price or, in the absence of such a price, the most recent quoted bid price. If
there are no quotations available for the day of valuations, the last available
closing settlement price is used; securities traded in the over-the-counter
market, (but excluding securities traded on NASDAQ) are valued at the mean of
the current bid and asked prices as reported by the National Quotation Bureau
or other comparable sources; U.S. Government securities and other debt
instruments having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less, or by amortizing
their fair value as of the 61st day prior to maturity if their original term to
maturity exceeded 60 days; fixed-income securities, including mortgage backed
and asset backed securities, may be valued on the basis of prices provided by a
pricing service or at a price obtained from one or more of the major
broker/dealers. In cases where broker/dealer quotes are obtained, the Pricing
Policies provide that 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 are
valued at fair value in accordance with the Pricing Policies.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at the rates of
exchange prevailing when accrued.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 21
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on foreign investment transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of net unrealized appreciation or depreciation of investments
and foreign currency denominated assets and liabilities.
3. Taxes
It is the policy of the Portfolio 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.
4. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Portfolio accretes discounts as
adjustments to interest income. Additionally, the Portfolio amortizes premiums
on debt securities for financial statement reporting purposes only.
5. Income and Expenses
All income earned and expenses incurred by the Portfolio are borne on a pro
rata basis by each settled class of shares, based on proportionate interest in
the Portfolio represented by the net assets of such class, except that the
Portfolio's Class B and Class C shares bear higher distribution and transfer
agent fees than Class A and Advisor Class shares. Advisor Class shares have no
distribution fees.
6. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the
ex-dividend date. Income dividends and capital gains distributions are
determined in accordance with federal tax regulations and may differ from those
determined in accordance with accounting principles generally accepted in the
United States. To the extent these differences are permanent, such amounts are
reclassified within the capital accounts based on their federal tax basis
treatment; temporary differences do not require such reclassification.
7. Change of Fiscal Year End
The Portfolio changed its fiscal year end from June 30 to October 31.
Accordingly, the statement of operations, the statement of changes in net
assets and financial highlights reflect the period from July 1, 2003 to October
31, 2003.
22 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of an investment advisory agreement, the Portfolio pays the
Adviser an advisory fee at an annual rate of .55 of 1% of the Portfolio's
average daily net assets. The fee is accrued daily and paid monthly. The
Adviser has agreed to waive its fees and bear certain expenses to the extent
necessary to limit total operating expenses on an annual basis to .98%, 1.68%,
1.68% and .68% of the average daily net assets of Class A, Class B, Class C
and Advisor Class shares, respectively. For the period ended October 31, 2003
and the year ended June 30, 2003, such waiver amounted to $503,850 and
$1,256,256 respectively.
Pursuant to the advisory agreement, the Portfolio may reimburse the Adviser for
certain legal and accounting services provided to the Portfolio by the Adviser.
For the period ended October 31, 2003, and the year ended June 30, 2003, the
Advisor agreed to waive its fees for services. Such waiver amounted to $40,000
and $120,000, respectively.
The Portfolio compensates Alliance Global Investor Services, Inc. (AGIS), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Portfolio. Such compensation amounted to $352,784 and $1,014,792, respectively,
for the period ended October 31, 2003 and the year ended June 30, 2003.
For the period ended October 31, 2003 and the year ended June 30, 2003, the
Portfolio's expenses were reduced by $183 and $1,103, respectively, under an
expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc., a wholly-owned
subsidiary of the Adviser, serves as the distributor of the Portfolio's shares.
The Distributor has advised the Portfolio that it has retained front-end sales
charges of $3,585 and $16,996 from the sale of Class A shares and received
$16,048 and $3,950, $89,224 and $262,207 and $3,040 and $16,470, respectively,
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class A, Class B and Class C shares, respectively, for the period ended
October 31, 2003 and the year ended June 30, 2003.
NOTE C
Distribution Services Agreement
The Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Portfolio pays distribution and servicing fees to the
Distributor at an annual rate of up to .30 of 1% of the Portfolio's average
daily net assets attributable to Class A shares and 1% of the average daily net
assets attributable to both Class B and Class C shares. There are no
distribution and servicing fees on the Advisor Class shares. The fees are
accrued daily and paid monthly. The
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 23
Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has advised the Portfolio that it has incurred expenses in excess
of the distribution costs reimbursed by the Portfolio in the amount of $942,950
and $354,415 for Class B and Class C shares, respectively. Such costs may be
recovered from the 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 the Portfolio's shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the period ended October 31, 2003, were as follows:
Purchases Sales
--------- ---------
Investment securities (excluding
U.S. government securities) $ 64,322,343 $ 23,076,090
U.S. government securities 815,749,995 823,324,790
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation are as follows:
Cost $ 670,184,066
Gross unrealized appreciation $ 5,709,970
Gross unrealized depreciation (3,624,136)
Net unrealized appreciation $ 2,085,834
Forward Exchange Currency Contracts
The Portfolio may enter into forward exchange currency contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchase and sale commitments
denominated in foreign currencies and for investment purposes. A forward
exchange currency contract is a commitment to purchase or sell a foreign
currency on a future date at a negotiated forward rate. The gain or loss
arising from the difference between the original contract and the closing of
such contract would be included in net realized gain or loss on foreign
currency transactions.
24 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Fluctuations in the value of open forward exchange currency contracts are
recorded for financial reporting purposes as unrealized appreciation or
depreciation by the Portfolio.
The Portfolio's custodian will place and maintain cash not available for
investment or other liquid assets in a separate account of the Portfolio having
a value at least equal to the aggregate amount of the Portfolio's commitments
under forward exchange currency contracts entered into with respect to position
hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, reflects the total exposure the Portfolio has in that particular
currency contract.
NOTE E
Securities Lending
The Portfolio has entered into a securities lending agreement with AG Edwards
&Sons, Inc. (the "Lending Agent"). Under the terms of the agreement, the
Lending Agent, on behalf of the Portfolio, administers the lending of portfolio
securities to certain broker-dealers. In return, the Portfolio receives fee
income from the lending transactions or it retains a portion of interest on the
investment of any cash received as collateral. The Portfolio also continues to
receive dividends or interest on the securities loaned. Unrealized gain or loss
on the value of the securities loaned that may occur during the term of the
loan will be reflected in the accounts of the Portfolio. All loans are
continuously secured by collateral exceeding the value of the securities
loaned. All collateral consists of either cash or U.S. government securities.
The Lending Agent may invest the cash collateral received in accordance with
the investment restrictions of the Portfolio in one or more of the following
investments: U.S. government or U.S. government agency obligations, bank
obligations, corporate debt obligations, asset-backed securities, investment
funds, structured products, repurchase agreements and an eligible money market
fund. The Lending Agent will indemnify the Portfolio for any loss resulting
from a borrower's failure to return a loaned security when due. As of October
31, 2003, the Portfolio had loaned securities with a value of $82,495,906 and
received cash collateral of $84,337,647 which was invested in short-term
securities as included in the accompanying portfolio of investments. For the
period ended October 31, 2003 and the year ended June 30, 2003, the Portfolio
earned fee income of $59,644 and $110,476, respectively, which is included in
interest income in the accompanying statement of operations.
ALLIANCEBERNSTEIN Bond Fund Quality Bond Portfolio o 25
NOTE F
Capital Stock
There are 12,000,000,000 shares of $.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
----------------------------------------------
Shares
----------------------------------------------
July 1, 2003 to Year Ended Year Ended
October 31, June 30, June 30,
2003(a) 2003 2002
----------------------------------------------
Class A
Shares sold 1,188,424 7,320,478 4,696,262
Shares issued in reinvestment
of dividends and distributions 69,498 188,816 130,123
Shares converted
from Class B 72,114 183,885 118,430
Shares redeemed (1,944,017) (4,991,928) (2,534,079)
Net increase
(decrease) (613,981) 2,701,251 2,410,736
Class B
Shares sold 900,731 10,491,815 4,915,718
Shares issued in reinvestment
of dividends and distributions 65,907 187,182 97,916
Shares converted to
Class A (73,115) (183,857) (118,478)
Shares redeemed (2,261,947) (4,937,099) (1,346,260)
Net increase
(decrease) (1,368,424) 5,558,041 3,548,896
Class C
Shares sold 748,714 3,020,966 1,732,851
Shares issued in reinvestment
of dividends and distributions 12,921 40,953 28,077
Shares redeemed (740,569) (2,189,012) (606,701)
Net increase 21,066 872,907 1,154,227
Advisor Class
Shares sold 1,716,510 6,206,900 15,000,776
Shares issued in reinvestment
of dividends and distributions 305,930 854,656 576,188
Shares redeemed (257,118) (2,365,708) (204,144)
Net increase 1,765,322 4,695,848 15,372,820
(a) The Portfolio changed its fiscal year end from June 30 to October 31.
26 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Notes to Financial Statements
Amount
July 1, 2003 to Year Ended Year Ended
October 31, June 30, June 30,
2003(a) 2003 2002
----------------------------------------------
Class A
Shares sold $ 12,601,915 $ 77,100,650 $ 49,488,409
Shares issued in
reinvestment of
dividends and distributions 733,739 1,997,352 1,344,953
Shares converted from Class B 771,300 1,956,325 521,783
Shares redeemed (20,507,158) (52,684,749) (26,178,704)
Net increase (decrease) $ (6,400,204) $ 28,369,578 $ 25,176,441
Class B
Shares sold $ 9,506,335 $110,463,465 $ 50,969,528
Shares issued in reinvestment
of dividends and distributions 695,223 1,979,554 1,011,618
Shares converted to Class A (771,300) (1,956,325) (521,783)
Shares redeemed (23,810,699) (52,323,161) (14,625,886)
Net increase (decrease) $(14,380,441) $ 58,163,533 $ 36,833,477
Class C
Shares sold $ 7,877,594 $ 31,610,879 $ 17,979,445
Shares issued in reinvestment
of dividends and distributions 136,077 431,766 290,031
Shares redeemed (7,783,898) (22,969,541) (6,294,895)
Net increase $ 229,773 $ 9,073,104 $ 11,974,581
Advisor Class
Shares sold $ 18,114,331 $ 65,432,463 $ 155,281,551
Shares issued in reinvestment
of dividends and distributions 3,228,730 9,029,421 5,942,746
Shares redeemed (2,704,792) (24,532,768) (2,101,709)
Net increase $ 18,638,269 $ 49,929,116 $ 159,122,588
(a) The Portfolio changed its fiscal year end from June 30 to October 31.
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the
Portfolio, participate in a $500 million revolving credit facility (the
"Facility") intended to provide short-term financing if necessary, 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 Portfolio did not utilize the
Facility during the period ended October 31, 2003.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 27
NOTE H
Distributions to Shareholders
The tax character of distributions paid during the period ended October 31,
2003, and the fiscal years ended June 30, 2003 and June 30, 2002 were as
follows:
July 1, 2003 to Year Ended Year Ended
October 31, June 30, June 30,
2003* 2003 2002
- -------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 5,455,042 $ 15,322,558 $ 9,824,526
Net long-term
capital gains -0- -0- 53,837
Total taxable
distributions 5,455,042 15,322,558 9,878,363
Total distributions
paid $ 5,455,042 $ 15,322,558 $ 9,878,363(a)
As of October 31, 2003, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed ordinary income $ 6,468,174
Undistributed long-term capital gains 2,678,430
Accumulated capital and other losses (4,240,862)(b)
Unrealized appreciation/(depreciation) 2,085,834(c)
Total accumulated earnings/(deficit) $ 6,991,576
(a) Total distributions paid differ from Statement of Changes in Net Assets
because for tax purposes dividends are recognized when actually paid.
(b) On October 31, 2003, the Fund had a net capital loss carryforward for
federal income tax purposes of $4,240,862 all of which expires in the year
2011. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed.
(c) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales and the difference between book and tax amortization
methods for premium and market discount.
During the current fiscal year, permanent differences, primarily due to tax
character of distributions, tax character of paydown losses and the tax
treatment of bond premium, resulted in a net decrease in distributions in
excess of net investment income and a net decrease in accumulated net realized
gain on investment and foreign currency transactions. This reclassification had
no effect on net assets.
* The Portfolio changed its fiscal year end from June to October 31.
28 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
NOTE I
Legal Proceedings
As has been previously reported in the press, the Staff of the U.S. Securities
and Exchange Commission ("SEC") and the Office of the New York Attorney General
("NYAG") have been investigating practices in the mutual fund industry
identified as "market timing" and "late trading" of mutual fund shares. Certain
other regulatory authorities have also been conducting investigations into
these practices within the industry and have requested that Alliance Capital
Management L.P. ("Alliance Capital"), the Fund's Adviser, provide information
to them. Alliance Capital has been cooperating and will continue to cooperate
with all of these authorities. Please see "Subsequent Events" below for a
description of the agreements reached by Alliance Capital and the SEC and NYAG
in connection with the investigations mentioned above.
A special committee of Alliance Capital's Board of Directors, comprised of the
members of Alliance Capital's Audit Committee and the other independent member
of the Board, is continuing to direct and oversee an internal investigation and
a comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
On October 2, 2003, a putative class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed
against Alliance Capital; Alliance Capital Management Holding L.P.; Alliance
Capital Management Corporation; AXA Financial, Inc.; certain of the
AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles
Schaffran (collectively, the "Alliance Capital defendants"); and certain other
defendants not affiliated with Alliance Capital. 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 Mutual Funds. The Hindo
Complaint alleges that certain of the Alliance Capital 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 Alliance Capital,
including recovery of all fees paid to Alliance Capital pursuant to such
contracts.
Since October 2, 2003, more than thirty additional lawsuits making factual
allegations similar to those in the Hindo Complaint were filed against Alliance
Capital and certain other defendants. All of these lawsuits seek an unspecified
amount of damages.
As a result of the matters more fully discussed in the note entitled
"Subsequent Events" below, investors in the AllianceBernstein Mutual Funds may
choose to redeem their investments. This may require the AllianceBernstein
Mutual Funds
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 29
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.
NOTE J
Subsequent Events
On December 18, 2003, Alliance Capital, the Fund's 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
subject to final, definitive documentation. Among the key provisions of these
agreements are the following:
(i) Alliance Capital agreed to establish a $250 million fund (the
"Reimbursement Fund") to compensate mutual fund shareholders for the adverse
effects of market timing attributable to the market timing relationships
described in the SEC Order (i.e., relationships Alliance Capital maintained
with some investors who were permitted to engage in market timing trades in
some of the AllianceBernstein Mutual Funds in return for or in connection with
making investments (which were not actively traded) in other Alliance Capital
products, including hedge funds and mutual funds, for which Alliance Capital
receives advisory fees). 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) Alliance Capital agreed to reduce the advisory fees it receives from some
of the AllianceBernstein long-term, open-end retail funds, commencing January
1, 2004, for a period of at least five years. The determination of which funds
will have their fees reduced and to what degree is subject to the terms of the
definitive agreement with the NYAG; and
(iii) Alliance Capital agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order contemplates that Alliance
Capital's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
30 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Class A
-----------------------------------------------------------------
July 1, July 1,
2003 to 1999(c) to
October 31, Year Ended June 30, June 30,
2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $ 10.82 $ 10.25 $ 10.22 $ 9.85 $ 10.00
Income From Investment
Operations
Net investment income(d)(e) .12 .33 .46 .55 .60
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions (.25) .66 .17 .42 (.21)
Net increase (decrease) in net
asset value from operations (.13) .99 .63 .97 .39
Less: Dividends and
Distributions
Dividends from net
investment income (.13) (.42) (.46) (.55) (.54)
Distributions in excess of
net investment income -0- -0- (.10) (.04) -0-
Distributions from
net realized gain on
investment transactions -0- -0- (.01) (.01) -0-
Distributions in excess
of net realized gain on
investment transactions -0- -0- (.03) -0- -0-
Total dividends and
distributions (.13) (.42) (.60) (.60) (.54)
Net asset value,
end of period $ 10.56 $ 10.82 $ 10.25 $ 10.22 $ 9.85
Total Return
Total investment return based
on net asset value(f) (1.20)% 9.87% 6.23% 10.09% 4.40%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $ 68,213 $ 76,565 $ 44,852 $ 20,068 $ 5,071
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .98%(g) .98% .98% .98% .98%(g)
Expenses, before waivers/
reimbursements 1.33%(g) 1.32% 1.48% 2.85% 13.10%(g)
Net investment income(e) 2.60%(g) 3.08% 4.39% 5.49% 5.96%(g)
Portfolio turnover rate 199% 867% 573% 385% 215%
See footnote summary on page 35.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 31
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
-----------------------------------------------------------------
July 1, July 1,
2003 to 1999(c) to
October 31, Year Ended June 30, June 30,
2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $ 10.81 $ 10.24 $ 10.21 $ 9.84 $ 10.00
Income From Investment
Operations
Net investment income(d)(e) .09 .26 .38 .47 .50
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions (.25) .66 .16 .43 (.18)
Net increase (decrease) in net
asset value from operations (.16) .92 .54 .90 .32
Less: Dividends and
Distributions
Dividends from net
investment income (.10) (.35) (.38) (.47) (.48)
Distributions in excess of
net investment income -0- -0- (.09) (.05) -0-
Distributions from
net realized gain on
investment transactions -0- -0- (.01) (.01) -0-
Distributions in excess
of net realized gain on
investment transactions -0- -0- (.03) -0- -0-
Total dividends and
distributions (.10) (.35) (.51) (.53) (.48)
Net asset value,
end of period $ 10.55 $ 10.81 $ 10.24 $ 10.21 $ 9.84
Total Return
Total investment return based
on net asset value(f) (1.44)% 9.12% 5.52% 9.34% 3.56%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $96,033 $113,233 $50,354 $13,960 $1,007
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.68%(g) 1.68% 1.68% 1.68% 1.68%(g)
Expenses, before waivers/
reimbursements 2.06%(g) 2.05% 2.19% 3.36% 11.29%(g)
Net investment income(e) 2.01%(g) 2.41% 3.70% 4.82% 5.32%(g)
Portfolio turnover rate. 199% 867% 573% 385% 215%
See footnote summary on page 35.
32 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Class C
-----------------------------------------------------------------
July 1, July 1,
2003 to 1999(c) to
October 31, Year Ended June 30, June 30,
2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $ 10.79 $ 10.23 $ 10.19 $ 9.83 $ 10.00
Income From Investment
Operations
Net investment income(d)(e) .09 .26 .38 .48 .51
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions (.25) .65 .17 .41 (.20)
Net increase (decrease) in net
asset value from operations (.16) .91 .55 .89 .31
Less: Dividends and
Distributions
Dividends from net
investment income (.10) (.35) (.38) (.48) (.48)
Distributions in excess of
net investment income -0- -0- (.09) (.04) -0-
Distributions from
net realized gain on
investment transactions -0- -0- (.01) (.01) -0-
Distributions in excess
of net realized gain on
investment transactions -0- -0- (.03) -0- -0-
Total dividends and
distributions (.10) (.35) (.51) (.53) (.48)
Net asset value,
end of period $ 10.53 $ 10.79 $ 10.23 $ 10.19 $ 9.83
Total Return
Total investment return based
on net asset value(f) (1.44)% 9.03% 5.63% 9.25% 3.47%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $26,021 $26,445 $16,131 $4,315 $514
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.68%(g) 1.68% 1.68% 1.68% 1.68%(g)
Expenses, before waivers/
reimbursements 2.06%(g) 2.03% 2.19% 3.42% 11.75%(g)
Net investment income(e) 2.03%(g) 2.41% 3.71% 4.88% 5.35%(g)
Portfolio turnover rate. 199% 867% 573% 385% 215%
See footnote summary on page 35.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 33
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
----------------------------------------------------
July 1, October 9,
2003 to 2000(h) to
October 31 Year Ended June 30, June 30,
2003(a) 2003 2002(b) 2001
----------- ----------- ----------- -----------
Net asset value, beginning of period $ 10.82 $ 10.25 $ 10.22 $ 9.97
Income From Investment Operations
Net investment income(d)(e) .13 .36 .48 .42
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions (.26) .66 .18 .30
Net increase (decrease) in net asset value
from operations (.13) 1.02 .66 .72
Less: Dividends and Distributions
Dividends from net investment income (.14) (.45) (.48) (.42)
Distributions in excess of net investment
income -0- -0- (.11) (.04)
Distributions from net realized gain on
investment transactions -0- -0- (.01) (.01)
Distributions in excess of net realized
gain on investment transactions -0- -0- (.03) -0-
Total dividends and distributions (.14) (.45) (.63) (.47)
Net asset value, end of period $ 10.55 $ 10.82 $ 10.25 $ 10.22
Total Return
Total investment return based on
net asset value(f) (1.19)% 10.20% 6.57% 7.28%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $258,747 $246,127 $185,071 $27,420
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .68%(g) .68% .68% .68%(g)
Expenses, before waivers/
reimbursements 1.03%(g) 1.20% 1.20% 2.29%(g)
Net investment income(e) 2.87%(g) 3.39% 4.69% 5.89%(g)
Portfolio turnover rate. 199% 867% 573% 385%
See footnote summary on page 35.
34 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
(a) The Portfolio changed its fiscal year end from June 30 to October 31.
(b) As required, effective July 1, 2001, the Portfolio has adopted the
provisions of the AICPA Audit and Accounting Guide, Audits of Investment
Companies, and began amortizing premium on debt securities for financial
statement reporting purposes only. The effect of this change for the year ended
June 30, 2002 was to decrease net investment income per share by $.05, increase
net realized and unrealized gain on investments per share by $.05 for Class A,
B and C, respectively, and by $.06 for the Advisor Class, and decrease the
ratio of net investment income to average net assets from 4.93% to 4.39% for
Class A, from 4.24% to 3.70% for Class B, from 4.25% to 3.71% for Class C and
from 5.24% to 4.69% for Advisor Class. Per share, ratios and supplemental data
for periods prior to July 1, 2001 have not been restated to reflect this change
in presentation.
(c) Commencement of operations.
(d) Based on average shares outstanding.
(e) Net of fees waived and expenses reimbursed by the Adviser.
(f) 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 investment return does not reflect the deduction of taxes that a
shareholder would pay on Portfolio distributions or the redemption of Portfolio
shares. Total investment return calculated for a period of less than one year
is not annualized.
(g) Annualized.
(h) Commencement of distribution.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 35
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
To the Shareholders and Board of
Directors of AllianceBernstein Bond Fund, Inc. Quality Bond Portfolio
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Quality Bond Portfolio (the "Portfolio")
one of the portfolios constituting the AllianceBernstein Bond Fund, Inc., as of
October 31, 2003, and the related statement of operations for the period from
July 1, 2003 to October 31, 2003 and for the year ended June 30, 2003, the
statement of changes in net assets for the period from July 1, 2003 to October
31, 2003 and for each of the two years in the period ended June 30, 2003 and
the financial highlights for the period from July 1, 2003 to October 31, 2003
and for each of the five years in the period ended June 30, 2003. These
financial statements and financial highlights are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2003, by correspondence with
the custodian and others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Quality Bond Portfolio of the AllianceBernstein Bond Fund, Inc. at October 31,
2003, the results of its operations for the period from July 1, 2003 to October
31, 2003 and for the year ended June 30, 2003, the changes in its net assets
for the period from July 1, 2003 to October 31, 2003 and for each of the two
years in the period ended June 30, 2003, and the financial highlights for the
period from July 1, 2003 to October 31, 2003 and for each of the five years in
the period ended June 30, 2003, in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
December 12, 2003,
except for Note J,
as to which the date is
December 23, 2003
36 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
Kathleen A. Corbet, Senior Vice President
Matthew D.W. Bloom(2), Vice President
Paul J. DeNoon, Vice President
Jeffrey S. Phlegar(2), Vice President
Lawrence J. Shaw, Vice President
Michael A. Snyder, Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Custodian
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
AllianceBernstein Investment Research and Management, Inc.
1345 Avenue of the Americas
New York, NY 10105
Transfer Agent
Alliance Global Investor Services, Inc
P.O. Box 756003
San Antonio, TX 78278-6003
Toll-Free (800) 221-5672
Independent Auditors
Ernst & Young LLP
5 Times Square
New York, NY 10036
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
(2) Messrs. Bloom and Phlegar are the persons primarily responsible for the
day-to-day management of the Fund's investment portfolio.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 37
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
YEARS OF SERVICE) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr., #+, 71 Investment adviser and an 113 None
2 Sound View Drive independent consultant. He
Suite 100 was formerly Senior Manager
Greenwich, CT 06830 of Barrett Associates, Inc., a
(5) registered investment adviser,
Chairman of the Board with which he had been associ-
ated since prior to 1998. He was
formerly Deputy Comptroller and
Chief Investment Officer of the
State of New York and, prior
thereto, Chief Investment Officer
of the New York Bank for Savings.
Ruth Block, #+, 73 Formerly Executive Vice President 96 None
500 SE Mizner Blvd., and Chief Insurance Officer of
Boca Raton, FL 33432 The Equitable Life Assurance
(5) Society of the United States;
Chairman and Chief Executive
Officer of Evlico; Director of
Avon, BP (oil and gas), Ecolab
Incorporated (specialty chemicals),
Tandem Financial Group and Donaldson,
Lufkin & Jenrette Securities
Corporation; former Governor at
Large National Association of
Securities Dealers, Inc.
David H. Dievler, #+, 74 Independent consultant. Until 100 None
P.O. Box 167 December 1994 he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
(5) Management Corporation
("ACMC") responsible for mutual
fund administration. Prior to joining
ACMC in 1984 he was Chief Financial
Officer of Eberstadt Asset Management
since 1968. Prior to that he was a
Senior Manager at Price Waterhouse & Co.
Member of American Institute of
Certified Public Accountants since 1953.
38 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS (continued)
John H. Dobkin, #+, 61 Consultant. Formerly President 98 None
P.O. Box 12 of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002,
(5) a Senior Advisor from June
1999 - June 2000 and President
of Historic Hudson Valley
(historic preservation) from
December 1989-May 1999.
Previously, he was Director of
the National Academy of Design
and during 1988-1992, he was
Director and Chairman of the
Audit Committee of ACMC.
Clifford L. Michel, #+, 64 Senior Counsel of the law firm 97 Placer Dome,
15 St. Bernard's Road of Cahill Gordon & Reindel since Inc.
Gladstone, NJ 07934 February 2001 and a partner of
(5) that firm for more than twenty-
five years prior thereto. He is
President and Chief Executive
Officer of Wenonah Development
Company (investments) and a
Director of Placer Dome, Inc.
(mining).
Donald J. Robinson, #+, 69 Senior Counsel to the law firm of 96 None
98 Hell's Peak Road Orrick, Herrington & Sutcliffe LLP
Weston, VT 05161 since prior to 1998. Formerly a
(5) senior partner and a member
of the Executive Committee of
that firm. He was also a member
and Chairman of the Municipal
Securities Rulemaking Board
and Trustee of the Museum of
the City of New York.
INTERESTED DIRECTOR
Marc O. Mayer, ++, 46 Executive Vice President of ACMC 68 None
1345 Avenue of the since 2001; prior thereto, Chief
Americas Executive Officer of Sanford C.
New York, NY 10105 Bernstein & Co., LLC and its
(3 months) predecessor since prior to 1998.
# Member of the Audit Committee.
+ Member of the Nominating Committee.
++ Mr. Mayer is an "interested director", as defined in the 1940 Act, due to
his position as Executive Vice President of ACMC.
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 39
Officer Information
Certain information concerning the Fund's Officers is set forth below.
NAME, POSITION(S) PRINCIPAL OCCUPATION
ADDRESS* AND AGE HELD WITH FUND DURING PAST 5 YEARS
- -------------------------------------------------------------------------------
Kathleen A. Corbet, 43 Senior Vice President Executive Vice President of Alliance
Capital Management Corporation
(ACMC)** with which she has been
associated since prior to 1998.
Matthew D.W. Bloom, 47 Vice President Senior Vice President of ACMC,** with
which he has been
associated since prior to 1998.
Paul J. DeNoon, 41 Vice President Senior Vice President of ACMC,** with
which he has been associated since
prior to 1998.
Jeffrey S. Phlegar, 37 Vice President Senior Vice President of ACMC,** with
which he has been associated since
prior to 1998.
Lawrence J. Shaw, 52 Vice President Senior Vice President of ACMC,** with
which he has been associated since
prior to 1998.
Michael A. Snyder, 41 Vice President Senior Vice President of ACMC,**
since May 2001. Previously he was a
Managing Director in the high yield
asset management group at Donaldson,
Lufkin & Jenrette Corporation
from 1998 to 2001.
Mark R. Manley, 41 Secretary Senior Vice President and Acting
General Counsel of ACMC,** with
which he has been associated since
prior to 1998.
Mark D. Gersten, 53 Treasurer and Senior Vice President of Alliance Global
Chief Financial Officer Investor Services, Inc. ("AGIS")** and
a Vice President of AllianceBernstein
Investment Research and Management,
Inc. ("ABIRM")** with which he has
been associated since prior to 1998.
Vincent S. Noto, 39 Controller Vice President of AGIS,** with which
he has been associated since prior to
1998.
* The address for each of the Fund's officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM and AGIS are affiliates of the Fund.
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and Officers and is available without
charge upon request. Contact your financial representative or Alliance Capital
at (800) 227-4618 for a free prospectus or SAI.
40 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
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 Series
U.S. Large Cap Portfolio
Growth Funds
Domestic
Growth Fund
Health Care Fund
Mid-Cap Growth Fund
Premier Growth Fund
Small Cap Growth Fund#
Technology Fund
Global & International
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
Value Funds
Domestic
Balanced Shares
Disciplined Value Fund
Growth & Income Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
Taxable Bond Funds
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
Municipal Bond Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Intermediate Municipal Bond Funds
Intermediate California
Intermediate Diversified
Intermediate New York
Closed-End Funds
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
We also offer Exchange Reserves,## which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current
prospectus. Please read the prospectus carefully before you invest or send
money.
* Formerly Growth Investors Fund.
** Formerly Conservative Investors Fund.
# Quasar Fund changed its name to Small Cap Growth Fund on 11/3/03.
## 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 BOND FUND QUALITY BOND PORTFOLIO o 41
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
SM This service mark used under license from
the owner, Alliance Capital Management L.P.
QBPAR1003
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer. A copy of the registrant's code of ethics is filed herewith as
Exhibit 10(a)(1).
(b) During the period covered by this report, no amendments were made to the
provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. [RESERVED]
ITEM 9. 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 significant changes in the registrant's internal controls
that could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
10 (a) (1) Code of ethics that is subject to the disclosure of Item 2 hereof
10 (b) (1) Certification of Principal Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
10 (b) (2) Certification of Principal Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
10 (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 Bond Fund, Inc.
By: /s/ Marc O. Mayer
Marc O. Mayer
President
Date: December 30, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
Marc O. Mayer
President
Date: December 30, 2003
By: /s/ Mark D. Gersten
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: December 30, 200