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: 811-02383
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: September 30, 2004
Date of reporting period: March 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] AllianceBernstein(SM)
Investment Research and Management
AllianceBernstein Bond Fund
U.S. Government Portfolio
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U.S. Government
Fixed Income
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Semi-Annual Report--March 31, 2004
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Investment Products Offered
==================================
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
==================================
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or Alliance 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 (click on Investors/ Products & Services/
Mutual Funds).
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.alliancebernstein.com (click on Investors, then the "proxy voting policies
and procedures" link on the left side of the page), or by going to the
Securities and Exchange Commission's web site at www.sec.gov, or by calling
Alliance Capital at (800) 227-4618.
AllianceBernstein Investment Research and Management, Inc., is an affiliate of
Alliance Capital Management L.P., the manager of the
funds, and is a member of the NASD.
May 24, 2004
Semi-Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Bond Fund U.S. Government Portfolio (the "Portfolio") for the
semi-annual reporting period ended March 31, 2004.
Investment Objective and Policies
This open-end fund seeks a high level of current income that is consistent with
Alliance's determination of prudent investment risk. The Portfolio invests in
U.S. government securities, repurchase agreements and forward contracts relating
to U.S. government securities.
Investment Results
The following table shows the performance of the Portfolio for the six- and
12-month periods ended March 31, 2004. Also included in the table are returns
for the Portfolio's benchmark, the Lehman Brothers (LB) Government Index, which
represents the U.S. government bond market, and the Lipper General U.S.
Government Funds Average (the "Lipper Average").
INVESTMENT RESULTS*
Periods Ended March 31, 2004
Returns
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6 Months 12 Months
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AllianceBernstein Bond Fund
U.S. Government Portfolio
Class A 2.62% 2.84%
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Class B 2.25% 2.10%
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Class C 2.25% 2.10%
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Lehman Brothers
Government
Index 2.49% 4.24%
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Lipper General
U.S. Government
Funds Average 2.11% 2.98%
* 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 March 31, 2004.
Performance assumes reinvestment of distributions and does not account for
taxes. 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 Class R and Advisor
Class shares will vary due to different expenses associated with these
classes. Past performance is no guarantee of future results.
The unmanaged Lehman Brothers (LB) Government Index does not reflect fees
and expenses associated with the active management of a mutual fund
portfolio. The Index is composed of the LB Treasury Index and the LB Agency
Index. For the six- and 12-month periods ended March 31, 2004, the Lipper
General U.S. Government Funds Average consisted of 188 and 181 funds,
respectively. Those funds have generally similar investment objectives to
AllianceBernstein Bond Fund U.S. Government Portfolio, although some may have
different investment policies and sales and management fees. An investor
cannot invest directly in an index or average, and its results are not
indicative of the performance for
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 1
any specific investment, including AllianceBernstein Bond Fund
U.S. Government Portfolio.
Additional investment results appear on pages 4-6.
The Portfolio's Class A shares outperformed its benchmark, the LB Government
Index, as well as the Lipper Average, for the six-month reporting period ended
March 31, 2004. During this time period, the yield curve slope flattened from
historically steep levels as the 2-year U.S. Treasury rose 0.11% in yield, while
the 10-year U.S. Treasury declined 0.10% in yield. This flattening was a drag on
performance as the Portfolio's yield curve exposure was set for steepening.
Overall duration management was beneficial to performance as the Portfolio was
managed 0.35 years short to its benchmark during the last quarter of 2003, a
period when interest rates rose by 0.35%, on average.
The Portfolio's overweighted position in non-Index sectors was the other
significant contributor to its outperformance versus the benchmark. Mortgage
product, in the form of pass-throughs and structured collateralized mortgage
obligations (CMOs), were over-weighted in the Portfolio in lieu of U.S.
Treasuries and Agencies. For the six-month period ended March 31, 2004, the LB
Mortgage Index generated an excess return of 1.16% relative to comparable
duration U.S. Treasuries.
Market Review and Investment Strategy
U.S. Treasury securities, which sold off in the fourth quarter of 2003 on
positive economic data, rebounded strongly in the first quarter of 2004 as
escalating geopolitical tensions and concerns about the sustainability of the
U.S. economic recovery, due to a weak jobs market, began to surface. The
Portfolio's effective duration, which was short relative to that of its
benchmark, was removed in December 2003. The Portfolio was managed neutral to
the benchmark's duration for the first quarter of 2004 to reflect uncertain
market conditions.
As stated, the overweight to the mortgage sector was a positive contributor to
portfolio performance. Mortgage valuations were at historically tight levels as
we entered the last quarter of 2003. Despite this perceived richness, the lower
volatility in the market caused hedging to be minimal. As prepayment
expectations and effective durations of mortgage securities remained steady,
investors were able to realize the significant yield and carry advantages of
mortgages versus U.S. Treasuries. This environment was especially favorable to
commercial banks as continued weakness in commercial and industrial (C&I) loan
demand left banks with an appetite for high yielding mortgage assets. This led
to even tighter valuations, and in anticipation of higher volatility and
possible weakening, pass-throughs were swapped out of the portfolio for
structured CMOs, which offered prepayment protection and less exposure to
volatility and negative convexity.
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2 o AllianceBernstein Bond Fund U.S. Government Portfolio
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Portfolio Summary
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PORTFOLIO SUMMARY
March 31, 2004 (unaudited)
INCEPTION DATES
Class A Shares
12/1/85
Class B Shares
9/30/91
Class C Shares
5/3/93
PORTFOLIO STATISTICS
Net Assets ($mil): $1,361.6
SECURITY TYPE BREAKDOWN
o 55.5% U.S. Treasury Securities
o 13.8% Federal National Mortgage Association
o 11.9% Federal Home Loan Mortgage Corporation
o 11.9% Collateralized Mortgage Obligations/Asset Backed Securities
o 2.6% Government National Mortgage Association
o 1.9% Stripped Mortgage Backed Securities
o 0.8% Federal Agricultural Mortgage Corporation
o 1.6% Short-Term
All data as of March 31, 2004. The Portfolio's security type breakdown is
expressed as a percentage of total investments (excluding security lending
collateral) and may vary over time.
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AllianceBernstein Bond Fund U.S. Government Portfolio o 3
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Investment Results
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INVESTMENT RESULTS
CLASS A SHARE AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2004
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NAV Returns SEC Returns
1 Year 2.84% -1.54%
5 Years 5.77% 4.85%
10 Years 5.91% 5.45%
SEC Yield* 4.98%
The performance shown above 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 (click on
Investors/Products & Services/Mutual Funds). Returns are for Class A shares and
are annualized for periods longer than one year. All fees and expenses related
to the operation of the Portfolio have been deducted. NAV returns do not reflect
sales charges; if sales charges were reflected, the Portfolio's quoted
performance would be lower. SEC returns reflect the 4.25% maximum front-end
sales charge for Class A shares. Performance assumes reinvestment of
distributions and does not account for taxes.
The investment return and principal value of an investment in the Portfolio 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 Portfolio carefully before investing. For a free
copy of the Portfolio's prospectus, which contains this and other information,
visit our web site at www.alliancebernstein.com or call your financial advisor
or Alliance at (800) 227-4618. Please read the prospectus carefully before you
invest.
A Word About Risk: Price fluctuations 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. While the Portfolio invests principally in bonds
and other fixed-income securities, in order to achieve its investment
objectives, the Portfolio 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 prospectus.
* SEC yields are calculated based on SEC guidelines for the 30-day period ended
March 31, 2004.
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4 o AllianceBernstein Bond Fund U.S. Government Portfolio
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Investment Results
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INVESTMENT RESULTS
CLASS B SHARE AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2004
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NAV Returns SEC Returns
1 Year 2.10% -0.85%
5 Years 4.99% 4.99%
10 Years(a) 5.45% 5.45%
SEC Yield* 4.47%
The performance shown above 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 (click on
Investors/Products & Services/Mutual Funds). Returns are for Class B shares and
are annualized for periods longer than one year. All fees and expenses related
to the operation of the Portfolio have been deducted. NAV returns do not reflect
sales charges; if sales charges were reflected, the Portfolio's quoted
performance would be lower. SEC returns reflect the applicable contingent
deferred sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0%
year 4). Performance assumes reinvestment of distributions and does not account
for taxes.
The investment return and principal value of an investment in the Portfolio 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 Portfolio carefully before investing. For a free
copy of the Portfolio's prospectus, which contains this and other information,
visit our web site at www.alliancebernstein.com or call your financial advisor
or Alliance at (800) 227-4618. Please read the prospectus carefully before you
invest.
A Word About Risk: Price fluctuations 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. While the Portfolio invests principally in bonds
and other fixed-income securities, in order to achieve its investment
objectives, the Portfolio 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 prospectus.
(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
March 31, 2004.
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AllianceBernstein Bond Fund U.S. Government Portfolio o 5
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Investment Results
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INVESTMENT RESULTS
CLASS C SHARE AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2004
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NAV Returns SEC Returns
1 Year 2.10% 1.12%
5 Years 5.01% 5.01%
10 Years 5.15% 5.15%
SEC Yield* 4.47%
The performance shown above 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 (click on
Investors/Products & Services/Mutual Funds). Returns are for Class C shares and
are annualized for periods longer than one year. All fees and expenses related
to the operation of the Portfolio have been deducted. NAV returns do not reflect
sales charges; if sales charges were reflected, the Portfolio's quoted
performance would be lower. SEC returns reflect the applicable contingent
deferred sales charge for Class C shares (1% year 1). Performance assumes
reinvestment of distributions and does not account for taxes.
The investment return and principal value of an investment in the Portfolio 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 Portfolio carefully before investing. For a free
copy of the Portfolio's prospectus, which contains this and other information,
visit our web site at www.alliancebernstein.com or call your financial advisor
or Alliance at (800) 227-4618. Please read the prospectus carefully before you
invest.
A Word About Risk: Price fluctuations 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. While the Portfolio invests principally in bonds
and other fixed-income securities, in order to achieve its investment
objectives, the Portfolio 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 prospectus.
* SEC yields are calculated based on SEC guidelines for the 30-day period ended
March 31, 2004.
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6 o AllianceBernstein Bond Fund U.S. Government Portfolio
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Portfolio of Investments
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PORTFOLIO OF INVESTMENTS
March 31, 2004 (unaudited)
Principal
Amount
(000) U.S. $ Value
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U.S. GOVERNMENT & GOVERNMENT SPONSORED
AGENCY OBLIGATIONS-109.0%
U.S. Treasury Notes-38.5%
2.375%, 8/15/06(a) .......................... $ 151,000 $ 153,271,040
3.00%, 2/15/08-2/15/09 ...................... 35,600 36,376,263
3.125%, 9/15/08(a) .......................... 76,300 77,966,087
3.25%, 1/15/09 .............................. 28,600 29,262,519
3.375%, 11/15/08 ............................ 106,250 109,512,300
4.00%, 2/15/14 .............................. 26,820 27,180,407
4.25%, 8/15/13 .............................. 86,800 89,973,669
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523,542,285
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U.S. Treasury Bonds-33.1%
5.375%, 2/15/31 ............................. 33,000 35,980,329
6.125%, 11/15/27 ............................ 15,000 17,701,185
6.25%, 8/15/23(a) ........................... 33,300 39,604,889
6.375%, 8/15/27(a) .......................... 40,000 48,587,520
7.125%, 2/15/23(a) .......................... 45,000 58,515,840
7.25%, 5/15/16 .............................. 20,000 25,828,140
7.50%, 11/15/16 ............................. 95,000 125,273,840
11.25%, 2/15/15 ............................. 20,000 32,887,500
12.50%, 8/15/14(a) .......................... 45,150 66,492,224
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450,871,467
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Federal National Mortgage Association-17.7%
zero coupon, 7/15/26 ........................ 11,376 1,279,759
zero coupon, 2/15/08 ........................ 22,130 19,894,870
2.90%, 10/25/32 ............................. 9,881 9,986,035
4.00%, 8/25/13 .............................. 7,347 7,564,369
4.125%, 4/15/14 ............................. 34,000 33,428,120
5.00%, TBA .................................. 10,825 10,875,748
5.00%, 4/25/13-10/25/15 ..................... 20,434 10,608,421
6.00%, 10/25/12-4/25/20 ..................... 29,734 31,286,676
6.50%, 9/25/42-1/25/44 ...................... 12,108 12,984,014
7.00%, 4/01/07-1/01/21 ...................... 73,353 78,277,510
7.50%, 12/01/09-4/01/17 ..................... 9,449 10,096,101
8.00%, 3/25/07 .............................. 2,438 2,568,197
8.50%, 4/01/08 .............................. 2,025 2,089,894
9.00%, 8/01/21 .............................. 597 642,297
10.00%, 11/01/13-10/01/14 ................... 8,000 9,045,887
11.00%, 7/01/16 ............................. 768 868,256
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241,496,154
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Federal Home Loan Mortgage Corp.-15.4%
1.00%, 5/15/34 .............................. 9,640 10,016,538
2.75%, 10/06/06 ............................. 30,000 30,159,000
4.05%, 6/21/05 .............................. 25,000 25,162,750
4.50%, 9/15/13-4/15/35 ...................... 44,043 44,818,891
5.00%, 1/15/17-6/15/27 ...................... 76,263 63,865,101
5.50%, 6/15/29 .............................. 3,720 3,881,002
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AllianceBernstein Bond Fund U.S. Government Portfolio o 7
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Portfolio of Investments
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Principal
Amount
(000) U.S. $ Value
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6.00%, 9/15/16 .............................. $ 11,946 $ 12,470,035
6.50%, 3/15/31 .............................. 3,559 3,778,648
7.00%, 12/01/10 ............................. 3,016 3,185,087
7.50%, 6/15/17 .............................. 6,041 6,597,471
8.00%, 9/01/11 .............................. 1,495 1,564,292
12.00%, 8/01/15-7/01/20 ..................... 3,299 3,746,515
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209,245,330
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Government National Mortgage Association-3.4%
Single Family Homes
5.00%, 2/20/30 .............................. 11,024 11,420,202
6.00%, 6/20/20 .............................. 5,685 5,940,825
7.50%, 12/15/14 ............................. 15,584 16,789,865
8.00%, 3/15/12 .............................. 7,427 7,961,741
8.15%, 9/15/20 .............................. 1,082 1,161,557
9.00%, 12/15/09-12/15/19 .................... 2,452 2,657,996
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45,932,186
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Federal Agricultural Mortgage Association-0.9%
6.725%, 7/25/13 ............................. 11,774 12,561,911
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Total U.S. Government & Government
Sponsored Agency Obligations
(cost $1,440,707,384) ....................... 1,483,649,333
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COLLATERALIZED MORTGAGE OBLIGATIONS-8.0%
Bank of America Alternative Loan Trust
Series 2003-7 Cl.1A1
5.50%, 9/25/33 .............................. 18,742 19,122,160
Citicorp Mortgage Securities, Inc.
Series 1987-3 Cl.A1
9.00%, 5/01/17 .............................. 1,560 1,560,270
Countrywide Alternative Loan Trust
Series 2003-21T1c Cl.A1
5.00%, 12/25/33 ............................. 25,964 26,386,291
MLCC Mortgage Investors, Inc.
Series 2003-F Cl.A1
1.41%, 10/25/28 ............................. 19,233 19,268,675
Structured Asset Securities Corp.
Series 2003-20 Cl.1A1
5.50%, 7/25/33 .............................. 17,547 17,887,331
Series 2003-33H Cl.1A1
5.50%, 10/25/33 ............................. 12,506 12,693,555
Series 2003-6A Cl.B3
5.58%, 3/25/33 .............................. 3,492 3,579,956
Series 2002-3 Cl.B3
6.50%, 3/25/32 .............................. 3,474 3,551,974
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8 o AllianceBernstein Bond Fund U.S. Government Portfolio
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Portfolio of Investments
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Principal
Amount
(000) U.S. $ Value
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Summit Mortgage Trust
Series 2003-1 Cl.1A1
6.91%, 4/28/35(b) ........................... $ 4,821 $ 4,878,166
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Total Collateralized Mortgage Obligations
(cost $108,732,605) .......................... 108,928,378
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COMMERCIAL MORTGAGE BACKED SECURITIES-4.8%
Asset Securitization Corp.
Series 1997-MD7 Cl.A1B
7.41%, 1/13/30 .............................. 16,847 18,555,623
Commercial Mortgage Acceptance Corp.
Series 1997-ML1 Cl.A2
6.53%, 12/15/30 ............................. 13,077 13,763,019
Host Marriot Pool Trust
Series 1999-HMTA Cl.E
8.07%, 8/03/15(b) ........................... 9,800 10,906,812
Merrill Lynch Mortgage Investors, Inc.
Series 1995-C3 Cl.D
7.75%, 12/26/25 ............................. 20,016 21,624,486
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Total Commercial Mortgage Backed Securities
(cost $62,273,845) .......................... 64,849,940
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ASSET BACKED SECURITIES-2.6%
Adjustable Rate
Bayview Financial Acquisition Trust
Series 2003-E Cl. A
1.59%, 10/28/34 ............................. 20,165 20,165,307
Winston Funding, Ltd.
Series 2003-1 Cl.A2
2.02%, 4/23/09(b) ........................... 15,000 15,037,500
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Total Asset Backed Securities
(cost $35,165,307) .......................... 35,202,807
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STRIPPED MORTGAGE BACKED SECURITIES-2.5%
Credit Suisse First Boston Mortgage
Series 2001-CK3 Cl.AX
zero coupon, 6/15/34(b) ..................... 37,836 2,095,381
Series 2004-R2 Cl.A1
6.00%, 12/29/33(b) .......................... 6,083 6,019,311
Greenwich Capital Commercial Funding Corp.
Series 2003-C1 Cl.XC
zero coupon, 2/11/35(b) ..................... 112,348 5,566,843
Morgan Stanley Capital I
Series 2003-IQ4 Cl.X1
zero coupon, 5/15/40(b) ..................... 101,775 3,753,476
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AllianceBernstein Bond Fund U.S. Government Portfolio o 9
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Portfolio of Investments
- ------------------------
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Mortgage Capital Funding, Inc.
Series 1996-MC2 Cl.X
zero coupon, 12/21/26 ....................... $ 73,066 $ 3,516,675
Prudential Securities Secured Financing Corp.
Series 1999-NRF1 Cl.AEC
zero coupon, 10/15/18(b) .................... 320,045 12,132,898
SACO I, Inc.
Series 1997-2 Cl.X
1.59%, 8/25/36(b) ........................... 24,252 545,661
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Total Stripped Mortgage Backed Securities
(cost $39,039,010) .......................... 33,630,245
---------------
SHORT-TERM INVESTMENTS-2.1%
U.S. Treasury Bill-0.3%
zero coupon, 5/20/04 ........................ 4,000 3,995,018
---------------
Repurchase Agreement-1.8%
1.0%, dated 03/31/04, due 04/01/04 in the
amount of $25,417,706 (cost $25,417,000;
collateralized by $25,740,000 Federal National
Mortgage Association, 1.875%, due 02/15/05,
value $25,930,347) .......................... 25,417 25,417,000
---------------
Total Short-Term Investments
(amortized cost $29,412,018) ................ 29,412,018
---------------
Total Investments Before Security Lending
Collateral-129.0%
(cost $1,715,289,254) ....................... 1,755,672,721
---------------
INVESTMENT OF CASH COLLATERAL FOR
SECURITIES LOANED+-33.6%
Short-Term Investments
Awbhar
1.03% ....................................... 50,000 49,969,959
Bank of America
1.26%, 6/15/04 .............................. 25,295 27,452,924
Deutsche Bank
1.209%, 10/25/04 ............................ 20,000 20,000,000
Fed Open
1.14% ....................................... 25,000 25,000,000
Federal Home Loan Bank
1.27%, 4/26/05 .............................. 12,500 12,500,000
Federal NationalMortgage Association
1.33%, 2/23/05 .............................. 50,000 50,000,000
Freddie Mac
1.107%, 9/09/05 ............................. 25,000 25,000,000
Goldman Sachs
1.05%, 4/13/04 .............................. 15,000 14,994,313
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10 o AllianceBernstein Bond Fund U.S. Government Portfolio
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Portfolio of Investments
- ------------------------
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Gotham Finance
1.061%, 4/12/04 ............................. $ 15,000 $ 14,988,958
Household Finance
1.35%, 5/01/04 .............................. 5,779 6,047,993
KT00 Float Fed
1.15%, 4/26/04 .............................. 10,000 10,040,972
LB Baden-Wuertenberg
1.27%, 4/15/04 .............................. 5,000 5,332,956
Morgan Stanley
1.10%, 6/08/04 .............................. 10,000 10,000,000
Sigma Finance
1.12%, 1.219%, 6/16/04-12/03/04 ............. 125,000 124,980,000
Wells Fargo
1.204% ...................................... 12,000 12,672,958
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408,981,033
--------------
Shares
------------
UBS Private Money Market Fund, LLC
1.00% ....................................... 48,747,112 48,747,112
--------------
Total Investment of Cash Collateral for
Securities Loaned
(cost $457,728,145) ......................... 457,728,145
---------------
Total Investments-162.6%
(cost $2,173,017,399) ....................... 2,213,400,866
Other assets less liabilities-(62.6%) .......... (851,805,498)
--------------
Net Assets-100%................................. $ 1,361,595,368
---------------
FINANCIAL FUTURES CONTRACTS SOLD (see Note D)
Value at Unrealized
Number of Expiration Original March 31, Appreciation/
Type Contracts Month Value 2004 (Depreciation)
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U.S.Treasury
Note 2 Yr
Future 400 June 2004 $86,004,289 $86,068,750 $ (64,461)
Interest Rate
Swap 10 Yr
Future 600 June 2004 68,209,560 67,987,500 222,060
---------
$ 157,599
---------
REVERSE REPURCHASE AGREEMENTS (see Note D)
Broker Interest Rate Maturity Amount
- -------------------------------------------------------------------------------
Citigroup Global Markets 1.05% 04/06/04 $214,230,496
Citigroup Global Markets 0.85 04/06/04 157,676,446
------------
$371,906,942
------------
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 11
- ------------------------
Portfolio of Investments
- ------------------------
* Represents entire or partial securities out on loan.
+ See Note E for securities lending information.
(a) Positions, or portions thereof, with an aggregate market value of
$444,437,600 have been segregated to collateralize reverse repurchase
agreements.
(b) Security 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 buyers. At March 31, 2004, the
aggregate market value of these securities amounted to $60,936,048
representing 4.5% of net assets.
(c) Position with a market value of $3,995,018 has been segregated to
collaterlize margin requirements for open futures contracts.
Glossary:
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.
- -------------------------------------------------------------------------------
12 o AllianceBernstein Bond Fund U.S. Government Portfolio
- ---------------------------------
Statement of Assets & Liabilities
- ---------------------------------
STATEMENT OF ASSETS & LIABILITIES
March 31, 2004 (unaudited)
Assets
Investments in securities, at value
(cost $2,173,017,399--including investment of
cash collateral for securities
loaned of $457,728,145)............................... $ 2,213,400,866(a)
Cash.................................................... 112,515
Receivable for investment securities sold............... 20,528,168
Interest receivable..................................... 13,179,565
Receivable for capital stock sold....................... 75,990
---------------
Total assets............................................ 2,247,297,104
---------------
Liabilities
Payable for collateral received on securities loaned.... 457,728,145
Payable for reverse repurchase agreement................ 371,906,942
Payable for investment securities purchased............. 49,106,974
Payable for capital stock redeemed...................... 1,976,764
Dividends payable....................................... 1,663,805
Advisory fee payable.................................... 1,535,215
Distribution fee payable................................ 546,756
Payable for variation margin on futures contracts....... 406,250
Accrued expenses........................................ 830,885
---------------
Total liabilities....................................... 885,701,736
---------------
Net Assets.............................................. $ 1,361,595,368
---------------
Composition of Net Assets
Capital stock, at par................................... $ 186,759
Additional paid-in capital.............................. 1,503,140,001
Distributions in excess of net investment income........ (17,645,498)
Accumulated net realized loss on investment
transactions ........................................ (164,625,126)
Net unrealized appreciation of investments.............. 40,539,232
---------------
$ 1,361,595,368
---------------
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($702,315,315 / 96,366,838 shares of capital stock
issued and outstanding).............................. $ 7.29
Sales charge--4.25% of public offering price............ .32
-------
Maximum offering price.................................. $ 7.61
-------
Class B Shares
Net asset value and offering price per share
($299,605,215 / 41,115,826 shares of capital stock
issued and outstanding).............................. $ 7.29
-------
Class C Shares
Net asset value and offering price per share
($126,629,119 / 17,353,766 shares of capital stock
issued and outstanding).............................. $ 7.30
-------
Class R Shares
Net asset value, redemption and offering price per share
($10,211 / 1,401 shares of capital stock
issued and outstanding).............................. $ 7.29
-------
Advisor Class Shares
Net asset value, redemption and offering price per share
($233,035,508 / 31,921,626 shares of capital stock
issued and outstanding)............................... $ 7.30
-------
(a) Includes securities on loan with a value of $444,243,749 (see Note E).
See notes to financial statements.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 13
- -----------------------
Statement of Operations
- -----------------------
STATEMENT OF OPERATIONS
Six Months Ended March 31, 2004 (unaudited)
Investment Income
Interest.................................. $ 39,620,069
Expenses
Advisory fee.............................. 3,721,144
Distribution fee--Class A................. 1,104,634
Distribution fee--Class B................. 1,702,106
Distribution fee--Class C................. 704,432
Distribution fee--Class R................. 21
Transfer agency........................... 1,694,889
Custodian................................. 187,125
Printing.................................. 157,194
Audit and legal........................... 64,627
Administrative............................ 58,000
Registration fees......................... 44,576
Directors' fees........................... 8,152
Miscellaneous............................. 18,582
---------------
Total expenses before interest expense.... 9,465,482
Interest expense.......................... 2,611,965
---------------
Total expenses............................ 12,077,447
Less: expenses waived and reimbursed
by the Adviser (see Note B)............ (292,024)
Less: expense offset arrangement
(see Note B)........................... (156)
---------------
Net expenses.............................. 11,785,267
---------------
Net investment income..................... 27,834,802
---------------
Realized and Unrealized Gain (Loss) on
Investment Transactions
Net realized gain (loss) on:
Investment transactions................ 1,750,949
Written options ....................... 1,072,265
Futures contracts...................... (18,711,771)
Net change in unrealized appreciation/
depreciation of:
Investments............................ 8,033,294
Written options ....................... 2,847,658
Futures contracts...................... 10,347,137
---------------
Net gain on investment transactions....... 5,339,532
---------------
Net Increase in Net Assets
from Operations........................ $ 33,174,334
---------------
See notes to financial statements.
- -------------------------------------------------------------------------------
14 o AllianceBernstein Bond Fund U.S. Government Portfolio
- ----------------------------------
Statement of Changes in Net Assets
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended July 1, 2003 to Year Ended
March 31, 2004 September 30, June 30,
(unaudited) 2003* 2003
-------------- -------------- --------------
Increase (Decrease) in
Net Assets from
Operations
Net investment income......... $ 27,834,802 $ 13,351,669 $ 61,910,773
Net realized gain (loss) on
investment transactions.... (15,888,557) (13,791,136) 39,787,086
Net change in unrealized
appreciation/depreciation
of investments............. 21,228,089 (36,137,621) 46,086,548
-------------- -------------- --------------
Net increase (decrease) in net
assets from operations..... 33,174,334 (36,577,088) 147,784,407
Dividends to Shareholders from
Net investment income
Class A.................... (17,130,039) (9,719,429) (41,821,063)
Class B.................... (6,655,210) (4,297,353) (20,589,855)
Class C.................... (2,752,912) (1,766,382) (9,059,572)
Class R.................... (183) -0- -0-
Advisor Class.............. (5,365,523) (2,444,044) (8,628,587)
Capital Stock Transactions
Net increase (decrease)....... (221,558,421) (149,688,274) 72,866,684
-------------- -------------- --------------
Total increase (decrease)..... (220,287,954) (204,492,570) 140,552,014
Net Assets
Beginning of period........... 1,581,883,322 1,786,375,892 1,645,823,878
-------------- -------------- --------------
End of period (including
distributions in excess
of net investment
income of ($17,645,498),
($13,576,433) and
($12,613,658),
respectively).............. $1,361,595,368 $1,581,883,322 $1,786,375,892
-------------- -------------- --------------
* The Fund changed its fiscal year end from June 30 to September 30.
See notes to financial statements.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 15
- -----------------------
Statement of Cash Flows
- -----------------------
STATEMENT OF CASH FLOWS
Six Months Ended March 31, 2004 (unaudited)
Increase (Decrease) in Cash from
Operating Activities:
Interest and dividends received
(includes accretion of discount
and amortization of premium
of $2,925,875)...................... $ 43,137,033
Interest expense paid.................. (2,611,965)
Operating expenses paid................ (9,836,024)
---------------
Net increase in cash from
operating activities................ $ 30,689,044
Investing Activities:
Purchases of long-term investments..... (1,589,645,276)
Proceeds from disposition of
long-term investments................ 1,835,292,476
Proceeds from disposition of short-term
investments, net.................... 80,857,239
Decrease in collateral for securities
loaned.............................. (107,005,093)
Variation margin paid on
futures contracts................... (10,231,884)
---------------
Net increase in cash from
investing activities................ 209,267,462
Financing Activities*:
Cash dividends paid.................... (9,932,346)
Redemptions of capital stock, net...... (244,993,207)
Cash collateral received from
securities lending.................. --
Proceeds from reverse
repurchase agreements............... (5,708,750)
---------------
Net increase in cash from
financing activities................ (260,634,303)
---------------
Net decrease in cash................... (20,677,797)
Cash at beginning of period............ 20,790,312
---------------
Cash at end of period.................. $ 112,515
---------------
- -------------------------------------------------------------------------------
Reconciliation of Net Increase in Net
Assets from Operations to Net Increase
in Cash from Operating Activities:
Net increase in net assets from
operations.......................... $ 33,174,334
Adjustments:
Decrease in interest and
dividends receivable................ $ 591,089
Accretion of bond discount and
amortization of bond premium........ 2,925,875
Decrease in accrued expenses........... (662,722)
Net realized loss on investment
transactions........................ 15,888,557
Net change in unrealized
appreciation/depreciation of
investments......................... (21,228,089)
---------------
Total adjustments...................... (2,485,290)
---------------
Net increase in cash from operating
activities.......................... $ 30,689,044
---------------
* Non-cash financing activities not included herein consist of reinvestment of
dividends.
See notes to financial statements.
- -------------------------------------------------------------------------------
16 o AllianceBernstein Bond Fund U.S. Government Portfolio
- -----------------------------
Notes to Financial Statements
- -----------------------------
NOTES TO FINANCIAL STATEMENTS
March 31, 2004 (unaudited)
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 U.S. Government Portfolio. The U.S. Government
Portfolio (the "Portfolio") offers Class A, Class B, Class C, Class R 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. Class R
shares are sold without an initial or contingent deferred sales charge and are
offered to certain group retirement plans. Advisor Class shares are sold without
any 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
five 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:
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 17
- -----------------------------
Notes to Financial Statements
- -----------------------------
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. Taxes
It is the 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. 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.
- -------------------------------------------------------------------------------
18 o AllianceBernstein Bond Fund U.S. Government Portfolio
- -----------------------------
Notes to Financial Statements
- -----------------------------
4. 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 the 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, Class R and Advisor Class shares. Advisor Class shares
have no distribution fees.
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 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.
6. Repurchase Agreements
It is the Portfolio's policy that its custodian or designated subcustodian take
control of securities as collateral under repurchase agreements and to determine
on a daily basis that the value of such securities are sufficient to cover the
value of the repurchase agreements. If the seller defaults and the value of the
collateral declines or if bankruptcy proceedings are commenced with respect to
the seller of the security, realization of collateral by the Portfolio may be
delayed or limited.
7. Change of Fiscal Year End
The Portfolio changed its fiscal year end from June 30 to September 30.
Accordingly, the statement of changes in net assets and financial highlights
include the period from July 1, 2003 to September 30, 2003.
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 a quarterly rate of .15 of 1% (approximately .60 of
1% on an annual basis) of the first $500 million of the Portfolio's net assets
and .125 of 1% (approximately .50 of 1% on an annual basis) of its net assets
over $500 million, valued on the last business day of the previous quarter.
Effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee so as to charge the Portfolio at the reduced 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 the Portfolio's net assets valued on the last business day of the
previous quarter. Through March 31, 2004, such waiver amounted to $292,024. The
amount of the fee waiver may increase or decrease as a result of a final,
definitive agreement with the New York Attorney General's Office ("NYAG"). For a
more complete discussion of the Adviser's settlement with the NYAG, please see
"Legal Proceedings" below.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 19
- -----------------------------
Notes to Financial Statements
- -----------------------------
Pursuant to the advisory agreement, the Portfolio paid $58,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Portfolio by the Adviser for the six months ended March 31, 2004.
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 $1,095,327 for the six months ended
March 31, 2004.
For the period ended March 31, 2004, the Portfolio's expenses were reduced by
$156 under an expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc. (the "Distributor"),
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 $6,400 from the sales of Class A shares and
received $7,786, $423,209 and $8,860 in contingent deferred sales charges
imposed upon redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the six months ended March 31, 2004.
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, .50% of 1% of the Portfolio's average daily net
assets attributable to Class R 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 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 $4,878,411,
and $5,968,726 for Class B and Class C shares, respectively; such costs may be
recovered from the Portfolio in future periods as 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.
- -------------------------------------------------------------------------------
20 o AllianceBernstein Bond Fund U.S. Government Portfolio
- -----------------------------
Notes to Financial Statements
- -----------------------------
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the period ended March 31, 2004, were as follows:
Purchases Sales
--------------- ---------------
Investment securities (excluding
U.S. government securities)......... $ 30,003,484 $ 123,119,658
U.S. government securities............. 1,282,041,636 1,311,154,617
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 the written option and
futures) are as follows:
Gross unrealized appreciation........................... $ 51,761,311
Gross unrealized depreciation........................... (11,377,844)
---------------
Net unrealized appreciation............................. $ 40,383,467
---------------
1. Financial Futures Contracts
The Portfolio may buy or sell financial futures contracts for the purpose of
hedging its portfolio against adverse effects of anticipated movements in the
market. The Portfolio 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 Portfolio enters into a futures contract, the Portfolio deposits
and maintains as collateral an initial margin as required by the exchange on
which the transaction is affected. Pursuant to the contract, the Portfolio
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 Portfolio 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 Portfolio records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the time it was closed.
2. Swap Agreements
The Portfolio may enter into interest rate swaps to protect itself from interest
rate fluctuations on the underlying debt instruments. 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.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 21
- -----------------------------
Notes to Financial Statements
- -----------------------------
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by the
failure of a counterparty is generally limited to the net interest payment to be
received by the Portfolio, and/or the termination value at the end of the
contract. Therefore, the Portfolio 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.
The Portfolio records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as interest
income (or as an offset to interest income). Fluctuations in the value of swap
contracts are recorded for financial statement purposes as a component of net
change in unrealized appreciation/depreciation of investments. Realized gains
and losses from terminated swaps are included in net realized gains or losses on
investment transactions.
3. Option Transactions
For hedging and investment purposes, the Portfolio may purchase and write (sell)
put and call options on U.S. and foreign government securities and foreign
currencies that are traded on U.S. and foreign securities exchanges and
over-the-counter markets.
The risk associated with purchasing an option is that the Portfolio pays a
premium whether or not the option is exercised. Additionally, the Portfolio
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of securities
acquired through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Portfolio writes an option, the premium received by the Portfolio is
recorded as a liability and is subsequently adjusted to the current market value
of the option written. Premiums received from written options which expire
unexercised are recorded by the Portfolio on the expiration date as realized
gains from options written. The difference between the premium received and the
amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium received is
less than the amount paid for the closing purchase transaction, as a realized
loss. If a call option is exercised, the premium received is added to the
proceeds from the sale of the underlying security in determining whether the
Portfolio has realized a gain or loss. If a put option is exercised, the premium
received reduces the cost basis of the security purchased by the Portfolio. In
writing an option, the
- -------------------------------------------------------------------------------
22 o AllianceBernstein Bond Fund U.S. Government Portfolio
- -----------------------------
Notes to Financial Statements
- -----------------------------
Portfolio bears the market risk of an unfavorable change in the price of the
security underlying the written option. Exercise of an option written by the
Portfolio could result in the Portfolio selling or buying a security at a price
different from the current market value.
Transactions in options written for the period ended March 31, 2004 were as
follows:
Number of Premiums
Contracts Received
--------------- ---------------
Options outstanding at beginning of
the period.......................... 2,250 $ 1,072,265
Options written........................ -0- -0-
Options Expired........................ (2,250) (1,072,265)
Options terminated in closing purchase
transactions........................ -0- -0-
Options exercised...................... -0- -0-
--------------- ---------------
Options outstanding at
March 31, 2004...................... -0- $ -0-
--------------- ---------------
4. Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Portfolio sells securities and agrees
to repurchase them at a mutually agreed upon date and price. At the time the
Portfolio enters into a reverse repurchase agreement, it will establish a
segregated account with the custodian containing liquid assets having a value at
least equal to the repurchase price.
For the six months ended March 31, 2004, the average amount of reverse
repurchase agreements outstanding was $520,124,432 and the daily weighted
average annualized interest rate was 0.98%.
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
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 23
- -----------------------------
Notes to Financial Statements
- -----------------------------
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 March 31, 2004, the Portfolio had loaned securities with a value of
$444,243,749 and received cash collateral which was invested in short-term
securities valued at $457,728,145 as included in the accompanying portfolio of
investments. For the six months ended March 31, 2004, the Portfolio earned fee
income of $790,367 which is included in the accompanying statement of
operations.
NOTE F
Capital Stock
There are 15,000,000,000 shares of $.001 par value capital stock authorized,
divided into five classes, designated Class A, Class B, Class C, Class R and
Advisor Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
Shares
------------------------------------------------
Six Months
Ended July 1, 2003 to Year Ended
March 31, 2004 September 30, June 30,
(unaudited) 2003(a) 2003
------------------------------------------------
Class A
Shares sold 2,352,620 7,081,876 99,871,241
------------------------------------------------
Shares issued in reinvestment
of dividends 1,485,320 842,226 3,397,687
------------------------------------------------
Shares converted from Class B 1,281,931 623,756 2,638,670
------------------------------------------------
Shares redeemed (20,411,894) (15,589,912) (107,352,732)
------------------------------------------------
Net decrease (15,292,023) (7,042,054) (1,445,134)
------------------------------------------------
Class B
Shares sold 1,260,310 1,785,384 41,363,192
------------------------------------------------
Shares issued in reinvestment
of dividends 605,807 384,985 1,747,439
------------------------------------------------
Shares converted to Class A (1,281,931) (623,756) (2,666,482)
------------------------------------------------
Shares redeemed (14,393,407) (12,799,293) (29,791,395)
------------------------------------------------
Net increase (decrease) (13,809,221) (11,252,680) 10,652,754
------------------------------------------------
Class C
Shares sold 600,519 743,732 17,523,866
------------------------------------------------
Shares issued in reinvestment
of dividends 238,947 147,804 741,897
------------------------------------------------
Shares redeemed (6,490,355) (5,091,572) (19,058,320)
------------------------------------------------
Net decrease (5,650,889) (4,200,036) (792,557)
------------------------------------------------
(a) The Fund changed its fiscal year end from June 30 to September 30.
- -------------------------------------------------------------------------------
24 o AllianceBernstein Bond Fund U.S. Government Portfolio
- -----------------------------
Notes to Financial Statements
- -----------------------------
Shares
------------------------------------------------
Six Months
Ended July 1, 2003 to Year Ended
March 31, 2004 September 30, June 30,
(unaudited) 2003(a) 2003
------------------------------------------------
Advisor Class
Shares sold 3,488,128 1,553,934 5,728,180
------------------------------------------------
Shares issued in reinvestment
of dividends 734,950 332,740 1,166,739
------------------------------------------------
Shares redeemed (341,059) (186,666) (5,229,251)
------------------------------------------------
Net increase 3,882,019 1,700,008 1,665,668
------------------------------------------------
November 13,
2004(b) to
March 31,
2004
(unaudited)
------------------------------------------------
Class R
Shares sold 1,401
------------------------------------------------
Net increase 1,401
------------------------------------------------
(a) The Fund changed its fiscal year end from June 30 to September 30.
(b) Commencement of distribution.
Amount
------------------------------------------------
Six Months
Ended July 1, 2003 to Year Ended
March 31, 2004 September 30, June 30,
(unaudited) 2003(a) 2003
------------------------------------------------
Class A
Shares sold $ 17,100,033 $ 51,268,823 $ 738,562,949
------------------------------------------------
Shares issued in reinvestment
of dividends 10,706,041 6,086,303 25,217,655
------------------------------------------------
Shares converted from Class B 9,093,661 4,387,602 19,834,712
------------------------------------------------
Shares redeemed (146,611,301) (112,373,614) (794,926,312)
------------------------------------------------
Net decrease $(109,711,566) $(50,630,886) $ (11,310,996)
------------------------------------------------
Class B
Shares sold $ 9,079,175 $ 12,927,847 $ 305,612,817
------------------------------------------------
Shares issued in reinvestment
of dividends 4,364,846 2,781,869 12,971,394
------------------------------------------------
Shares converted to Class A (9,093,661) (4,387,602) (19,834,712)
------------------------------------------------
Shares redeemed (103,596,857) (92,309,168) (221,190,959)
------------------------------------------------
Net increase (decrease) $(99,246,497) $(80,987,054) $ 77,558,540
------------------------------------------------
(a) The Fund changed its fiscal year end from June 30 to September 30.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 25
- -----------------------------
Notes to Financial Statements
- -----------------------------
Amount
------------------------------------------------
Six Months
Ended July 1, 2003 to Year Ended
March 31, 2004 September 30, June 30,
(unaudited) 2003(a) 2003
------------------------------------------------
Class C
Shares sold $ 4,340,133 $ 5,399,978 $ 129,704,727
------------------------------------------------
Shares issued in reinvestment
of dividends 1,724,084 1,069,553 5,512,251
------------------------------------------------
Shares redeemed (46,678,016) (36,840,779) (141,500,884)
------------------------------------------------
Net decrease $(40,613,799) $(30,371,248) $ (6,283,906)
------------------------------------------------
Advisor Class
Shares sold $ 25,157,034 $ 11,241,378 $ 42,725,185
------------------------------------------------
Shares issued in reinvestment
of dividends 5,307,730 2,407,372 8,673,997
------------------------------------------------
Shares redeemed (2,461,323) (1,347,836) (38,496,136)
------------------------------------------------
Net increase $ 28,003,441 $ 12,300,914 $ 12,903,046
------------------------------------------------
November 13,
2003(b) to
March 31,
2004
(unaudited)
------------------------------------------------
Class R
Shares sold $ 10,000
------------------------------------------------
Net Increase 10,000
------------------------------------------------
(a) The Fund changed its fiscal year end from June 30 to September 30.
(b) Commencement of distribution.
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") 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 the miscellaneous expenses in the
statement of operations. The Portfolio did not utilize the Facility during the
six months ended March 31, 2004.
- -------------------------------------------------------------------------------
26 o AllianceBernstein Bond Fund U.S. Government Portfolio
- -----------------------------
Notes to Financial Statements
- -----------------------------
NOTE H
Distributions to Shareholders
The tax character of distributions to be paid for the year ending September 30,
2004 will be determined at the end of the current fiscal year. The tax character
of distributions paid during the period ended September 30, 2003, and the fiscal
years ended June 30, 2003 and June 30, 2002 were as follows:
July 1, 2003 to Year Ended Year Ended
September 30, June 30, June 30,
2003* 2003 2002
--------------- -------------- ---------------
Distributions paid
from:
Ordinary income.. $ 18,227,208 $ 80,099,077 $ 82,835,463
--------------- -------------- ---------------
Total taxable
distributions.... 18,227,208 80,099,077 82,835,463
Tax return of
capital........ -0- -0- 5,174,446
--------------- -------------- ---------------
Total distributions
paid............. $ 18,227,208 $ 80,099,077 $ 88,009,909(a)
--------------- -------------- ---------------
* The Portfolio changed its fiscal year end from June 30 to September 30.
(a) Total distributions paid differ from the Statement of Changes in Net Assets
because for tax purposes dividends are recognized when actually paid.
As of September 30, 2003, the components of accumulated earnings/(deficit) on
a tax basis were as follows:
Accumulated capital and other losses................... $ (158,051,293)(b)
Unrealized appreciation/(depreciation)................. 16,844,419(c)
-------------------
Total accumulated earnings/(deficit)................... $ (141,206,874)
-------------------
(b) On September 30, 2003, the Fund had a net capital loss carryforward for
federal income tax purposes of $153,542,290 (of which $5,207,458 and
$21,956,032 were attributable to the purchase of net assets of Alliance
Limited Maturity Government Income Fund, Inc. and Alliance Mortgage
Securities Income Fund, Inc., respectively, by the Fund in December of
2000), of which $51,829,521 expires in the year 2004, $6,928,773 expires in
the year 2005, $16,083,708 expires in the year 2006, $48,732,137 expires in
the year 2007, $6,470,420 expires in the year 2008 and $23,497,731 expires
in the year 2011. To the extent future capital gains are offset by capital
loss carryforwards, such gains will not be distributed. During the fiscal
year ended September 30, 2003, $64,973,014 of capital loss carryforward
expired. Based on certain provision in the Internal Revenue Code, various
limitations regarding the future utilization of these carryforwards,
brought forward as a result of the Portfolio's merger with Alliance Limited
Maturity Government, Inc. may apply. For the year ended September 30, 2003
the Fund deferred losses on straddles of $4,509,003.
(c) The difference 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.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 27
- -----------------------------
Notes to Financial Statements
- -----------------------------
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 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.
On December 18, 2003, Alliance Capital 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 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) 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.
In anticipation of final, definitive documentation and effective January 1,
2004, the Adviser began waiving a portion of its advisory fee. For a more
complete description of this waiver, please see "Advisory Fee and Other
Transactions with Affiliates" above.
- -------------------------------------------------------------------------------
28 o AllianceBernstein Bond Fund U.S. Government Portfolio
- -----------------------------
Notes to Financial Statements
- -----------------------------
The 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.
In addition, the Independent Directors of the Fund ("the Independent Directors")
have initiated an investigation of the above-mentioned matters with the advice
of an independent economic consultant and independent counsel. The Independent
Directors have formed a special committee to supervise the investigation.
On October 2, 2003, a 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, numerous additional lawsuits making factual allegations
similar to those in the Hindo Complaint were filed against Alliance Capital and
certain other defendants, some of which name the Fund as a defendant. All of
these lawsuits seek an unspecified amount of damages.
As a result of the matters discussed above, investors in the AllianceBernstein
Mutual Funds may choose to redeem their investments. 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.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 29
- --------------------
Financial Highlights
- --------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
----------------------------------------------------------------------------------------
Six Months
Ended July 1,
March 31, 2003 to Year Ended June 30,
2004 Sept. 30, --------------------------------------------------------
(unaudited) 2003(a) 2003 2002(b) 2001 2000 1999
----------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.27 $7.49 $7.21 $7.14 $6.99 $7.19 $7.57
----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment income(c) .15(d) .06 .27 .37 .47 .50 .52
Net realized and
unrealized gain (loss)
on investment
transactions .04 (.20) .35 .13 .17 (.20) (.37)
----------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value from
operations .19 (.14) .62 .50 .64 .30 .15
----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income (.17) (.08) (.34) (.37) (.47) (.49) (.52)
Distributions in excess of
net investment
income -0- -0- -0- (.03) (.01) -0- (.01)
Tax return of capital -0- -0- -0- (.03) (.01) (.01) -0-
----------------------------------------------------------------------------------------
Total dividends and
distributions (.17) (.08) (.34) (.43) (.49) (.50) (.53)
----------------------------------------------------------------------------------------
Net asset value, end of
period $7.29 $7.27 $7.49 $7.21 $7.14 $6.99 $7.19
----------------------------------------------------------------------------------------
Total Return
Total investment return
based on net asset
value(e) 2.62% (1.80)% 8.82% 7.11% 9.30% 4.41% 1.83%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) $702,315 $811,376 $889,115 $865,739 $884,574 $430,895 $426,167
Ratio to average net
assets of:
Expenses, before
waivers/
reimbursements 1.49%(f) 1.18%(f) 1.10% 1.23% 2.11% 2.14% 1.17%
Expenses, net of
waivers/
reimbursements,
excluding interest
expense 1.09%(f) 1.11%(f) 1.09% 1.09% 1.13% 1.12% 1.06%
Expenses, before
waivers/
reimbursements,
excluding interest
expense 1.13%(f) 1.11%(f) 1.09% 1.09% 1.13% 1.12% 1.06%
Net investment
income 4.06%(d)(f) 3.43%(f) 3.64% 5.15% 6.57% 7.13% 6.86%
Portfolio turnover rate 68% 241% 976% 1,009% 712% 398% 320%
See footnote summary on page 35.
- -------------------------------------------------------------------------------
30 o AllianceBernstein Bond Fund U.S. Government Portfolio
- --------------------
Financial Highlights
- --------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
------------------------------------------------------------------------------------------
Six Months
Ended July 1,
March 31, 2003 to Year Ended June 30,
2004 Sept. 30, ----------------------------------------------------------
(unaudited) 2003(a) 2003 2002(b) 2001 2000 1999
------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.27 $7.49 $7.21 $7.14 $7.00 $7.20 $7.57
----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment income(c) .12(d) .05 .22 .32 .42 .44 .46
Net realized and
unrealized gain (loss)
on investment
transactions .04 (.20) .35 .13 .16 (.19) (.36)
----------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value from
operations .16 (.15) .57 .45 .58 .25 .10
----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income (.14) (.07) (.29) (.32) (.42) (.44) (.46)
Distributions in excess of
net investment
income -0- -0- -0- (.03) (.01) -0- (.01)
Tax return of capital -0- -0- -0- (.03) (.01) (.01) -0-
----------------------------------------------------------------------------------------
Total dividends and
distributions (.14) (.07) (.29) (.38) (.44) (.45) (.47)
----------------------------------------------------------------------------------------
Net asset value, end of
period $7.29 $7.27 $7.49 $7.21 $7.14 $7.00 $7.20
----------------------------------------------------------------------------------------
Total Return
Total investment return
based on net asset
value(e) 2.25% (1.98)% 8.07% 6.36% 8.39% 3.64% 1.22%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) $299,605 $399,040 $495,606 $400,221 $276,308 $200,283 $338,310
Ratio to average net
assets of:
Expenses, before
waivers/
reimbursements 2.21%(f) 1.90%(f) 1.82% 1.93% 2.90% 2.80% 1.87%
Expenses, net of
waivers/
reimbursements,
excluding interest
expense 1.81%(f) 1.83%(f) 1.81% 1.80% 1.83% 1.83% 1.79%
Expenses, before
waivers/
reimbursements,
excluding interest
expense 1.85%(f) 1.83%(f) 1.81% 1.80% 1.83% 1.83% 1.79%
Net investment
income 3.41%(d)(f) 2.75%(f) 2.95% 4.41% 5.95% 6.28% 6.13%
Portfolio turnover rate 68% 241% 976% 1,009% 712% 398% 320%
See footnote summary on page 35.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 31
- --------------------
Financial Highlights
- --------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
-----------------------------------------------------------------------------------------
Six Months
Ended July 1,
March 31, 2003 to Year Ended June 30,
2004 Sept. 30, ---------------------------------------------------------
(unaudited) 2003(a) 2003 2002(b) 2001 2000 1999
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.28 $7.50 $7.22 $7.15 $7.00 $7.20 $7.57
----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment income(c) .12(d) .05 .22 .32 .43 .45 .46
Net realized and
unrealized gain (loss)
on investment
transactions .04 (.20) .35 .13 .16 (.20) (.36)
----------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value from
operations .16 (.15) .57 .45 .59 .25 .10
----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income (.14) (.07) (.29) (.32) (.43) (.44) (.46)
Distributions in excess of
net investment
income -0- -0- -0- (.03) (.01) -0- (.01)
Tax return of capital -0- -0- -0- (.03) -0- (.01) -0-
----------------------------------------------------------------------------------------
Total dividends and
distributions (.14) (.07) (.29) (.38) (.44) (.45) (.47)
----------------------------------------------------------------------------------------
Net asset value, end of
period $7.30 $7.28 $7.50 $7.22 $7.15 $7.00 $7.20
----------------------------------------------------------------------------------------
Total Return
Total investment return
based on net asset
value(d) 2.25% (1.98)% 8.06% 6.35% 8.54% 3.64% 1.22%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) $126,629 $167,359 $204,006 $202,030 $169,213 $112,808 $144,145
Ratio to average net
assets of:
Expenses, before
waivers/
reimbursements 2.20%(f) 1.89%(f) 1.81% 1.93% 2.89% 2.82% 1.87%
Expenses, net of
waivers/
reimbursements,
excluding interest
expense 1.80%(f) 1.83%(f) 1.80% 1.79% 1.83% 1.83% 1.78%
Expenses, before
waivers/
reimbursements,
excluding interest
expense 1.84%(f) 1.83%(f) 1.80% 1.79% 1.83% 1.83% 1.78%
Net investment
income 3.41%(d)(f) 2.76%(f) 2.96% 4.42% 5.94% 6.35% 6.13%
Portfolio turnover rate 68% 241% 976% 1,009% 712% 398% 320%
See footnote summary on page 35.
- -------------------------------------------------------------------------------
32 o AllianceBernstein Bond Fund U.S. Government Portfolio
- --------------------
Financial Highlights
- --------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class R
------------
November 3,
2003(g) to
March 31,
2004
(unaudited)
------------
Net asset value, beginning of period $7.14
------------
Income From Investment Operations
Net investment income(c)(d) .12
Net realized and unrealized gain
(loss) on investment transactions .16
------------
Net increase (decrease) in net asset
value from operations .28
------------
Less: Dividends and Distributions
Dividends from net investment income (.13)
Distributions in excess of net investment
income -0-
Tax return of capital -0-
------------
Total dividends and distributions (.13)
------------
Net asset value, end of period $7.29
------------
Total Return
Total investment return based on net
asset value(e) 3.96%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $10
Ratio to average net assets of:
Expenses, before waivers/reimbursements(f) 1.67%
Expenses, net of waivers/reimbursements,
excluding interest expense(f) 1.23%
Expenses, before waivers/reimbursements,
excluding interest expense(f) 1.28%
Net investment income(d)(f) 3.96%
Portfolio turnover rate 68%
See footnote summary on page 35.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 33
- --------------------
Financial Highlights
- --------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
-----------------------------------------------------------------
Six Months
Ended July 1, Year Ended October 6,
March 31, 2003 to June 30, 2000(g) to
2004 Sept. 30, ----------------------- June 30,
(unaudited) 2003(a) 2003 2002(b) 2001
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $7.28 $7.50 $7.21 $7.14 $7.05
-----------------------------------------------------------------
Income From Investment
Operations
Net investment income(c) .16(d) .07 .29 .39 .34
Net realized and unrealized
gain (loss) on
investment transactions .04 (.20) .37 .13 .12
-----------------------------------------------------------------
Net increase (decrease)
in net asset value
from operations .20 (.13) .66 .52 .46
-----------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income (.18) (.09) (.37) (.39) (.34)
Distributions in excess of
net investment income -0- -0- -0- (.03) (.02)
Tax return of capital -0- -0- -0- (.03) (.01)
-----------------------------------------------------------------
Total dividends and
distributions (.18) (.09) (.37) (.45) (.37)
-----------------------------------------------------------------
Net asset value,
end of period $7.30 $7.28 $7.50 $7.21 $7.14
-----------------------------------------------------------------
Total Return
Total investment return
based on
net asset value(e) 2.78% (1.72)% 9.29% 7.41% 6.65%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $233,036 $204,108 $197,649 $177,834 $27,154
Ratio to average net assets of:
Expenses, before waivers/
reimbursements 1.19%(f) .89%(f) .81% .89% 1.38%(f)
Expenses, net of waivers/
reimbursements, excluding
interest expense .78%(f) .81%(f) .80% .81% .81%(f)
Expenses, before waivers/
reimbursements, excluding
interest expense .82%(f) .81%(f) .80% .81% .81%(f)
Net investment income 4.34%(d)(f) 3.72%(f) 3.96% 5.41% 6.74%(f)
Portfolio turnover rate 68% 241% 976% 1,009% 712%
See footnote summary on page 35.
- -------------------------------------------------------------------------------
34 o AllianceBernstein Bond Fund U.S. Government Portfolio
- --------------------
Financial Highlights
- --------------------
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(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 $.03, increase
net realized and unrealized gain on investment transactions per share by $.03,
and decrease the ratio of net investment income to average net assets from 5.56%
to 5.15% for Class A, from 4.82% to 4.41% for Class B, from 4.83% to 4.42% for
Class C and from 5.81% to 5.41% 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) Based on average shares outstanding.
(d) Net of expenses waived and reimbursed by the Advisor.
(e) 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 fund distributions or the redemption of fund
shares.Total investment return calculated for a period of less than one year is
not annualized.
(f) Annualized.
(g) Commencement of distribution.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund U.S. Government Portfolio o 35
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
Paul J. DeNoon, Vice President
Jeffrey S. Phlegar, Vice President
Kewjin Yuoh(2), 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 786003
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) Mr. Yuoh is the person primarily responsible for the day-to-day management
of the Portfolio's investment portfolio.
- -------------------------------------------------------------------------------
36 o AllianceBernstein Bond Fund U.S. Government Portfolio
- ---------------------------------
AllianceBernstein Family of Funds
- ---------------------------------
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
Health Care Fund
Mid-Cap Growth Fund
Premier Growth Fund
Small Cap Growth Fund
Technology Fund
Global & International
All-Asia Investment Fund
Global Research Growth 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.
+ 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 U.S. Government Portfolio o 37
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
(SM) This service mark used under license from the owner, Alliance Capital
Management L.P.
USGSR0304
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. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On March 17, 2004 the Fund adopted procedures effective April 1, 2004, by which
shareholders may recommend nominees to the Fund's Board of Directors. Prior
thereto, the Fund's Board did not accept shareholder recommendations for
nominees to the Fund's Board.
ITEM 10. 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 11. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
Exhibit No. DESCRIPTION OF EXHIBIT
----------- ----------------------
11 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (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: June 7, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/Marc O. Mayer
--------------------------------
Marc O. Mayer
President
Date: June 7, 2004
By: /s/Mark D. Gersten
-------------------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: June 7, 2004