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: September 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
AllianceBernstein Bond Fund
Corporate Bond Portfolio
Corporate Fixed Income
Annual Report--September 30, 2004
Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein 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, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com (click on Investors, then the "Proxy voting policies"
link or "Proxy voting records" link on the left side of the page), or go to the
Securities and Exchange Commission's, (The "Commission") web site at
www.sec.gov, or call AllianceBernstein at (800) 227-4618.
Beginning in February 2005, the Fund will file its complete schedule of
portfolio holdings with the Commission for the first and third quarters of each
fiscal year on Form N-Q. The Fund's Forms N-Q will be available on the
Commission's web site at www.sec.gov. The Fund's Forms N-Q will also be able to
be reviewed and copied at the Commission's Public Reference Room in Washington,
DC; information on the operation of the Public Reference Room may be obtained
by calling (800) SEC-0330. Alliance publishes full portfolio holdings for the
Fund monthly at www.alliancebernstein.com.
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.
November 18, 2004
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Bond Fund Corporate Bond Portfolio (the "Portfolio") for the
annual reporting period ended September 30, 2004.
Investment Objective and Policies
The primary objective of this open-end Portfolio is to maximize income over the
long-term, to the extent consistent with providing reasonable safety in the
value of each shareholder's investment. As a secondary objective, the Portfolio
seeks capital appreciation. To achieve its objectives, the Portfolio invests
primarily in corporate bonds. The Portfolio may also hold debt securities
issued by the U.S. and foreign governments. While the Portfolio invests
primarily in investment-grade debt securities (currently 65%), it may also
invest a significant amount of its assets in lower-rated debt securities.
Investment Results
The table on page 5 shows the Portfolio's performance compared to its
benchmark, the Lehman Brothers (LB) Long Baa U.S. Credit Index for the six- and
12-month periods ended September 30, 2004. We have also included performance
for the Lipper Corporate Debt Funds BBB-Rated Funds Average. Funds in the
Lipper Average have generally similar investment objectives to the Portfolio,
although some may have different investment policies and sales and management
fees.
The Portfolio's Class A shares slightly underperformed the LB Long Baa U.S.
Credit Index for the annual reporting period but outperformed the Lipper
Corporate Debt Funds BBB-Rated Average, an average of a universe of similarly
managed funds. Detracting from the Portfolio's relative performance was the
shorter duration of its portfolio (6.01 years) relative to the LB Long Baa U.S.
Credit Index (11.02 years). During the period, longer duration corporates
outperformed. The largest positive contributor to the Portfolio's performance
was its high yield allocation, which outperformed relative to the Portfolio's
investment-grade only index. High yield was the best performing sector for the
period within the U.S. fixed income markets. Also contributing positively to
performance was the Portfolio's underweighted position in the non-corporate
component of the benchmark and the sector, as well as security selection in the
Portfolio's energy holdings. Additionally, an overweighted position of the
Portfolio's insurance holdings, particularly property and casualty, as well as
the issuer selection within that industry, contributed positively to relative
returns. The Portfolio's overweighted allocation in the wireless communications
sector also contributed positively to performance.
Market Review and Investment Strategy
During the annual reporting period, both investment-grade and high yield
corporates provided robust returns, which benefited from a stronger economy and
improving credit fundamentals. Record free cash flow and improving
profitability, plus declining leverage driven by a stronger economy, led the
credit sectors to outperform. The decline in the ratio of downgrades to
upgrades reflected the improvement
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 1
in credit fundamentals. According to the LB Long Baa U.S. Credit Index, the
long Baa investment-grade corporate market posted a solid 8.04% positive return
for the 12-month period ended September 30, 2004. This strong return, however,
masked volatility within bond market returns during the year. In April, a
surprisingly strong employment number jolted the fixed income market and led to
a sharp bond market sell-off. In a third quarter reversal, bond markets rallied
back sharply as investors worried that higher oil prices, disappointing job
data and lower consumer confidence would slow the rate at which the Federal
Reserve would tighten monetary policy. For the annual period under review,
lower-rated Baa corporates outperformed higher quality rated corporates and
longer duration corporates outperformed shorter duration corporates.
On a nominal basis, top performing industries within the investment-grade
corporate sector included autos, airlines, tobacco, services and home
construction. Underperforming industries included media/cable, consumer
products, retailers, finance and wireline communications.
Returns within the high yield sector were even stronger for the period.
According to the Lehman Brothers (LB) High Yield Index, the high yield market
posted a robust 12.55% positive return for the 12-month period ended September
30, 2004. High yield securities have benefited from steadily improving credit
fundamentals, as reflected in low default rates. The high yield default rate,
as measured by Moody's Investors Service, declined to 1.0% in September, well
below the 9.4% peak of January 2002. Spread levels for high yield compressed
103 basis points to 414 basis points above like-duration Treasuries. By
industry, finance, metals/mining, consumer products, utilities and media/cable
outperformed, while telecommunications, health care, media non-cable and
food/beverage underperformed within the LB High Yield Index.
Within the investment-grade corporate sector, we overweighted crossover and
lower-rated Baa issuers that we believed to be undervalued and would benefit
most from an improving economy. We also overweighted the Portfolio's holdings
in the automotive and cable/media sectors early in the period based on value.
Subsequently, we reduced the auto sector to an underweighted position after
that industry experienced dramatic spread tightening, and more recently,
buffeted by weaker employment data and high energy prices that have hurt sales.
As spread dispersion among industries narrowed during the reporting period, our
strategy turned more toward specific issuer selection and diversifying
portfolio holdings across industry sectors.
Within the Portfolio's high yield allocation, one of its largest industry
concentrations was wireless communications. Within the wireless sector, we were
focused on rural providers that have less competition, that are less af
2 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
fected by the implementation of number portability, and that have improved
balance sheets as a result of recent capital-market transactions. We continued
to have an underweighted position in lower-rated utilities, but held a
significant position in crossover utilities. In addition, the duration strategy
of the Portfolio continued to reflect the expectation of eventual higher rates
with the Portfolio's duration positioned well short of the LB Long Baa U.S.
Credit benchmark.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 3
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the 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 AllianceBernstein at (800) 227-4618. You should read the prospectus
carefully before you invest.
Returns are annualized for periods longer than one year. All fees and expenses
related to the operation of the 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 sales
charges for each share class: a 4.25% maximum front-end sales charge for Class
A shares; the applicable contingent deferred sales charge for Class B shares
(3% year 1, 2% year 2, 1% year 3, 0% year 4); a 1% 1 year contingent deferred
sales charge for Class C shares. Returns for Class R and Advisor Class shares
will vary due to different expenses associated with these classes. Performance
assumes reinvestment of distributions and does not account for taxes.
Benchmark Disclosure
The unmanaged Lehman Brothers (LB) Long Baa U.S. Credit Index does not reflect
fees and expenses associated with the active management of a mutual fund
portfolio. The Index is a measure of corporate and non-corporate fixed income
securities that are rated investment grade (Baa by Moody's Investors Service or
BBB by Standard & Poor's) and have at least 10 years to final maturity. The
unmanaged Lipper Corporate Debt BBB-Rated Funds Average (the "Lipper Average")
is based on the performance of a universe of funds that invest at least 65% of
their assets in corporate or government debt issues rated in the top four
grades. For the six- and 12-month periods ended September 30, 2004, the Lipper
Average consisted of 183 and 175 funds, respectively. Investors cannot invest
directly in an index or an average, and their results are not indicative of any
specific investment, including the Portfolio.
A Word About Risk
The Portfolio invests a portion of its assets in foreign securities which may
magnify fluctuations, particularly in emerging markets. Price fluctuations may
also be caused by changes in interest rates or bond credit quality ratings.
These changes have a greater effect on bonds with longer maturities than on
those with shorter maturities. The Portfolio may also invest a portion of its
assets in below investment-grade securities which are subject to greater risk
than higher-rated securities. 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, 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
Portfolio's prospectus.
(Historical Performance continued on next page)
4 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
Historical Performance
THE PORTFOLIO VS. ITS BENCHMARK Returns
----------------------
PERIODS ENDED SEPTEMBER 30, 2004 6 Months 12 Months
AllianceBernstein Bond Fund Corporate
Bond Portfolio
Class A 2.26% 8.01%
Class B 1.90% 7.26%
Class C 1.90% 7.35%
Class R 2.16% 8.04%*
Advisor Class 2.42% 8.34%
Lehman Brothers Long Baa U.S. Credit Index 1.53% 8.04%
Lipper Corporate Debt Funds BBB-Rated
Funds Average 0.63% 4.76%
* Since Inception: The Class R share inception date is 11/3/03.
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO
9/30/94 TO 9/30/04
AllianceBernstein Bond Fund Corporate Bond Portfolio Class A: $20,381
Lehman Brothers Long Baa U.S. Credit Index: $25,442
[The following was depicted in a mountain chart]
AllianceBernstein Lehman Brothers
Bond Fund Corporate Long BAA U.S.
Bond Portfolio Credit Bond Index
Class A
9/30/94 9,575 10,000
9/30/95 10,822 12,314
9/30/96 12,008 12,810
9/30/97 14,191 14,649
9/30/98 13,598 16,251
9/30/99 14,027 15,721
9/30/00 15,152 16,452
9/30/01 16,305 18,377
9/30/02 15,576 19,481
9/30/03 18,869 23,459
9/30/04 20,381 25,442
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Bond Fund Corporate Bond Portfolio Class A shares (from
9/30/94 to 9/30/04) as compared to the performance of its benchmark.
See Historical Performance and Benchmark disclosures on previous page.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 5
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF SEPTEMBER 30, 2004
NAV Return SEC Returns
Class A Shares
1 Year 8.01% 3.43%
5 Years 7.75% 6.83%
10 Years 7.84% 7.38%
SEC Yield** 6.08%
Class B Shares
1 Year 7.26% 4.26%
5 Years 6.96% 6.96%
10 Years(a) 7.40% 7.40%
SEC Yield ** 5.63%
Class C Shares
1 Year 7.35% 6.35%
5 Years 7.00% 7.00%
10 Years 7.09% 7.09%
SEC Yield** 5.63%
Class R Shares
1 Year 2.16%
Since Inception* 8.04%
SEC Yield** 6.15%
Advisor Class Shares
1 Year 8.34%
Since Inception* 16.14%
SEC Yield ** 6.71%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (SEPTEMBER 30, 2004)
Class A Shares
1 Year 3.43%
5 Years 6.83%
10 Years 7.38%
Class B Shares
1 Year 4.26%
5 Years 6.96%
10 Years(a) 7.40%
Class C Shares
1 Year 6.35%
5 Years 7.00%
10 Years 7.09%
* Inception dates: 11/3/03 for Class R shares and 8/8/02 for Advisor Class
shares.
** SEC yields are calculated based on SEC guidelines for the 30-day period
ended September 30, 2004.
(a) Assumes conversion of Class B shares into Class A shares after six years.
See Historical Performance disclosures on page 4.
6 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
FUND EXPENSES
Fund Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed annual rate of return of 5% before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds by comparing this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
April 1, 2004 September 30, 2004 During Period*
Class A
Actual $ 1,000 $ 1,022.59 $ 5.61
Hypothetical (5% return before expenses) $ 1,000 $ 1,019.45 $ 5.60
Class B
Actual $ 1,000 $ 1,019.01 $ 9.29
Hypothetical (5% return before expenses) $ 1,000 $ 1,015.80 $ 9.27
Class C
Actual $ 1,000 $ 1,019.00 $ 9.19
Hypothetical (5% return before expenses) $ 1,000 $ 1,015.90 $ 9.17
Class R
Actual $ 1,000 $ 1,021.56 $ 6.62
Hypothetical (5% return before expenses) $ 1,000 $ 1,018.45 $ 6.61
Advisor Class
Actual $ 1,000 $ 1,024.15 $ 4.25
Hypothetical (5% return before expenses) $ 1,000 $ 1,020.80 $ 4.24
* Expenses are equal to the classes' annualized expense ratios of 1.11%,
1.84%, 1.82%, 1.31%, and 0.84%, respectively, multiplied by the average account
value over the period, multiplied by the number of days in the most recent
fiscal half-year/366 (reflect the one-half year period).
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 7
PORTFOLIO SUMMARY
September 30, 2004
PORTFOLIO STATISTICS
Net Assets ($mil): $890.4
[Pie Chart Omitted]
SECURITY TYPE*
5.5% Preferred Stock
CORPORATE DEBT OBLIGATIONS
13.6% Public Utilities-Electric & Gas
10.5% Communications
8.8% Automotive
8.6% Banking
5.8% Paper/Packaging
5.1% Insurance
4.9% Cable
4.5% Building/Real Estate
3.6% Broadcasting/Media
3.6% Communications-Mobile
3.5% Petroleum Products
3.3% Financial
3.1% Supermarket/Drug
3.0% Energy
11.5% Other
1.1% Short-Term
* All data is as of September 30, 2004. The Portfolio's security type
breakdown is expressed as a percentage of total investments and may vary over
time. "Other" represents less than 3% weightings in Aerospace/Defense,
Chemicals, Containers, Electronic, Entertainment & Leisure, Food/Beverage,
Gaming, Hotel/Lodging, Industrial, Metals/Mining, Publishing Services,
Technology and Health Care.
8 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
September 30, 2004
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-93.4%
Aerospace/Defense-1.3%
Goodrich Corp.
7.00%, 4/15/38 $ 6,000 $6,415,920
7.10%, 11/15/27 5,000 5,418,080
------------
11,834,000
------------
Automotive-8.8%
Dana Corp.
10.125%, 3/15/10 2,769 3,142,815
Ford Motor Co.
7.45%, 7/16/31 * 15,000 14,707,950
Ford Motor Credit Co.
7.375%, 2/01/11 * 10,000 10,875,120
7.875%, 6/15/10 * 10,000 11,153,540
General Motors Acceptance Corp.
8.00%, 11/01/31 15,000 15,524,865
General Motors Corp.
8.375%, 7/15/33 * 17,500 18,581,010
TRW Automotive
9.375%, 2/15/13 2,967 3,389,797
11.00%, 2/15/13 * 1,076 1,280,440
------------
78,655,537
------------
Banking-8.6%
CA Preferred Funding Trust
7.00%, 1/30/09 17,000 17,620,823
Dime Capital Trust I
Series A
9.33%, 5/06/27 9,028 10,439,437
Dresdner Funding Trust I
8.151%, 6/30/31(a) 10,000 12,085,680
Great Western Financial Trust II
8.206%, 2/01/27 14,456 16,335,150
HVB Funding Trust III
9.00%, 10/22/31(a) 4,000 5,147,352
Mizuho Finance Group (Cayman Islands)
8.375%, 4/27/09 14,000 15,146,334
------------
76,774,776
------------
Broadcasting/Media-3.6%
Time Warner, Inc.
7.625%, 4/15/31 5,000 5,754,995
7.70%, 5/01/32 22,500 26,162,932
------------
31,917,927
------------
Building/Real Estate-4.5%
D.R. Horton, Inc.
6.875%, 5/01/13 7,000 7,647,500
K. Hovnanian Enterprises, Inc.
6.375%, 12/15/14 * 10,000 10,125,000
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 9
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
KB HOME
7.75%, 2/01/10 $ 2,775 $3,017,813
LNR Property Corp.
7.625%, 7/15/13 2,910 3,186,450
Pulte Homes, Inc.
6.375%, 5/15/33 * 5,000 4,915,730
The Ryland Group, Inc.
9.75%, 9/01/10 9,939 11,019,866
------------
39,912,359
------------
Cable-4.9%
AT&T Broadband Corp.
9.455%, 11/15/22 20,420 27,369,682
Cablevision Systems New York Group
8.00%, 4/15/12(a)* 3,995 4,174,775
CSC Holdings, Inc.
6.75%, 4/15/12(a) 1,005 1,007,512
Insight Midwest LP
9.75%, 10/01/09 2,000 2,090,000
Rogers Cable, Inc. (Canada)
5.50%, 3/15/14 * 9,500 8,740,000
------------
43,381,969
------------
Chemicals-0.7%
Huntsman International LLC
9.875%, 3/01/09 * 6,000 6,615,000
------------
Communications-10.6%
AT&T Corp.
8.75%, 11/15/31 5,000 5,450,000
British Telecommunications Plc
(United Kingdom)
8.875%, 12/15/30 13,000 17,078,152
Deutsche Telekom International Finance BV
(Netherlands)
8.75%, 6/15/30 10,000 12,925,780
Eircom Funding (Ireland)
8.25%, 8/15/13 1,340 1,467,300
Sprint Capital Corp.
8.75%, 3/15/32 * 18,000 22,845,438
TCI Communications Financing III
9.65%, 3/31/27 5,000 5,855,295
Telecom Italia Capital, SA (Luxembourg)
4.00%, 1/15/10(a) 5,000 4,962,185
Verizon New York, Inc. Series A
6.875%, 4/01/12 * 16,000 17,792,528
7.375%, 4/01/32 * 5,000 5,563,250
------------
93,939,928
------------
Communications-Mobile-3.6%
AT&T Wireless Services, Inc.
8.125%, 5/01/12 11,500 13,895,760
10 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Portfolio of Investments
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Nextel Communications, Inc.
6.875%, 10/31/13 $ 5,000 $5,200,000
9.375%, 11/15/09 * 2,285 2,419,244
PanAmSat Corp.
9.00%, 8/15/14(a) 5,000 5,200,000
Rural Cellular Corp.
8.25%, 3/15/12(a)* 4,995 5,082,413
------------
31,797,417
------------
Containers-1.1%
Crown Euro Holdings, SA (France)
9.50%, 3/01/11 * 5,225 5,825,875
Greif Bros. Corp. Cl.A
8.875%, 8/01/12 3,800 4,237,000
------------
10,062,875
------------
Electronics-0.2%
L-3 Communications Corp.
6.125%, 7/15/13 * 2,000 2,025,000
------------
Energy-3.0%
Hilcorp Energy
10.50%, 9/01/10(a) 2,000 2,215,000
Kerr-McGee Corp.
7.875%, 9/15/31 21,000 24,829,917
------------
27,044,917
------------
Entertainment & Leisure-1.3%
Six Flags, Inc.
9.50%, 2/01/09 * 6,125 5,987,188
Universal City Development Partners
11.75%, 4/01/10 5,055 5,889,075
------------
11,876,263
------------
Financial-3.3%
Duke Capital LLC
8.00%, 10/01/19 9,000 10,762,965
iStar Financial, Inc.
6.00%, 12/15/10 4,505 4,687,335
JSG Funding Plc (Ireland)
9.625%, 10/01/12 2,605 2,943,650
Transamerica Capital II
7.65%, 12/01/26 (a) 10,000 11,036,710
------------
29,430,660
------------
Food/Beverage-0.3%
Dole Food Co., Inc.
8.875%, 3/15/11 2,170 2,359,875
------------
Gaming-0.4%
Park Place Entertainment Corp.
9.375%, 2/15/07 3,500 3,902,500
------------
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 11
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Healthcare-2.5%
HCA, Inc.
5.75%, 3/15/14 * $ 10,000 $9,913,530
6.75%, 7/15/13 * 6,000 6,378,600
8.70%, 2/10/10 5,000 5,763,255
------------
22,055,385
------------
Hotel/Lodging-0.6%
Intrawest Corp. (Canada)
7.50%, 10/15/13 5,000 5,181,250
------------
Industrial-0.3%
SPX Corp.
7.50%, 1/01/13 2,345 2,383,106
------------
Insurance-5.1%
Assurant, Inc.
6.75%, 2/15/34 6,500 6,826,573
Crum & Forster Holdings Corp.
10.375%, 6/15/13 1,935 2,065,613
Mangrove Bay PassThru Trust
6.102%, 7/15/33(a) 10,000 10,176,900
Ohio Casualty Corp.
7.30%, 6/15/14 6,650 7,017,752
W. R. Berkley Corp.
6.15%, 8/15/19 5,000 5,063,705
Zurich Capital Trust I
8.376%, 6/01/37(a) 12,500 14,265,312
------------
45,415,855
------------
Metals/Mining-0.3%
International Steel Group, Inc.
6.50%, 4/15/14 (a) 2,565 2,565,000
------------
Paper/Packaging-5.8%
Abitibi-Consolidated, Inc. (Canada)
8.85%, 8/01/30 * 4,220 4,177,800
Anchor Glass Container Corp.
11.00%, 2/15/13 * 2,510 2,861,400
Berry Plastics Corp.
10.75%, 7/15/12 3,925 4,435,250
Georgia-Pacific Corp.
9.375%, 2/01/13 2,500 2,943,750
Norske Skogindustrier ASA (Norway)
7.625%, 10/15/11(a) 10,000 11,368,670
Owens-Brockway Glass Container
8.875%, 2/15/09 * 7,660 8,330,250
Pliant Corp.
13.00%, 6/01/10 * 1,980 1,702,800
Smurfit-Stone Container Corp.
8.25%, 10/01/12 * 4,205 4,636,012
12 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Portfolio of Investments
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Weyerhaeuser Co.
6.875%, 12/15/33 * $ 10,000 $10,847,130
------------
51,303,062
------------
Petroleum Products-3.5%
Amerada Hess Corp.
7.125%, 3/15/33 11,000 11,810,623
7.875%, 10/01/29 10,000 11,563,980
Enterprise Products Operating LP
6.65%, 10/15/34(a) 8,000 8,020,432
------------
31,395,035
------------
Public Utilities-Electric & Gas-13.6%
AVA Capital Trust III
6.50%, 4/01/34 10,000 10,037,500
Calenergy Co., Inc.
8.48%, 9/15/28 23,000 29,185,459
CenterPoint Energy Resources Corp.
Series B
7.875%, 4/01/13 * 19,935 23,498,780
Dominion Resources Capital Trust III
8.40%, 1/15/31 21,000 25,711,539
FirstEnergy Corp.
7.375%, 11/15/31 24,480 27,493,292
Semco Energy, Inc.
7.125%, 5/15/08 415 437,825
7.75%, 5/15/13 1,585 1,707,838
The AES Corp.
8.75%, 5/15/13(a) 955 1,076,763
9.00%, 5/15/15(a) 1,565 1,764,537
------------
120,913,533
------------
Publishing-0.9%
Dex Media East LLC
9.875%, 11/15/09 4,000 4,600,000
Dex Media West LLC Series B
8.50%, 8/15/10 585 663,975
9.875%, 8/15/13 * 2,251 2,644,925
------------
7,908,900
------------
Services-0.9%
Iron Mountain, Inc.
8.625%, 4/01/13 5,000 5,425,000
Service Corp.
6.00%, 12/15/05 203 208,583
Service Corporation International
7.70%, 4/15/09 * 2,500 2,693,750
------------
8,327,333
------------
Supermarket/Drug-3.1%
Delhaize America, Inc.
9.00%, 4/15/31 18,555 22,328,141
Safeway, Inc.
5.625%, 8/15/14 5,500 5,618,508
------------
27,946,649
------------
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 13
Contracts(b),
Shares or
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Technology-0.6%
Flextronics International, Ltd. (Singapore)
6.50%, 5/15/13 * $ 5,000 $5,112,500
------------
Total Corporate Debt Obligations
(cost $778,207,642) 832,038,611
------------
PREFERRED STOCKS-5.5%
Banking-1.4%
CoBank
Series B(a) 100,000 5,460,200
Corporate-Backed Trust Certificates
Series LMG 2001-32 73,000 1,930,850
Equity Residential
Series N 200,000 4,950,000
------------
12,341,050
------------
Communications-4.1%
Centaur Funding Corp.
(Cayman Islands) Series B(a) 28,280 36,484,594
------------
Total Preferred Stocks
(cost $40,466,965) 48,825,644
------------
CREDIT DEFAULT SWAPTIONS
PURCHASED-0.0%
Payer Swaptions:
General Motors Acceptance Corp.
Expiring December '04 @ 2.20%
6.875%, 8/28/12 10 44,000
General Motors Corp.
Expiring December '04 @ 1.90%
8.375%, 7/15/33 10 67,000
------------
Total CreditDefault Swaptions Purchased
(cost $265,000) 111,000
------------
SHORT-TERM INVESTMENT-1.1%
Time Deposit-1.1%
State Street Euro Dollar
1.10%, 10/01/04
(cost $10,163,000) $ 10,163 10,163,000
------------
Total Investments Before Security Lending
Collateral
(cost $829,102,607) 891,138,255
------------
14 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Portfolio of Investments
Shares or
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED-13.8%
Short-Term Investments
Deutsche Bank
1.21%, 10/25/04 $ 15,000 $15,000,000
Federal Home Loan Bank
1.27%-1.35%, 4/26/05-4/29/05 20,000 20,000,000
Gotham Funding
1.83%, 10/05/04 20,000 19,992,883
Morgan Stanley
1.89%-2.04%, 3/18/05-4/19/05 30,000 30,000,000
Sigma Finance
1.22%, 12/03/04 10,000 10,000,000
UBS Finance
1.88%, 10/01/04 19,000 18,999,008
UBS Private Money Market Fund, LLC
1.66% 8,430,071 8,430,071
------------
Total Investment of Cash Collateral for
Securities Loaned
(cost $122,421,962) 122,421,962
------------
Total Investments-113.8%
(cost $951,524,569) 1,013,560,217
Other assets less liabilities-(13.8%) (123,148,132)
------------
Net Assets-100% $890,412,085
============
CREDIT DEFAULT SWAP OPTIONS WRITTEN (see Note D)
Exercise Expiration
Description Contracts(b) Price Month U.S. $ Value
- -------------------------------------------------------------------------------
Receiver Swaptions:
CenterPoint Energy Resources Corp. 15 0.65% December '04 $(37,500)
General Motors Acceptance Corp. 10 1.60 December '04 (36,000)
General Motors Corp. 10 1.90 December '04 (51,000)
-----------
(premiums received $119,500) $ (124,500)
-----------
CREDIT DEFAULT SWAP CONTRACTS (see Note D)
Notional
Swap Counterparty & Amount Interest Termination Unrealized
Referenced Obligation (000) Rate Date Depreciation
- -------------------------------------------------------------------------------
Buy:
Lehman Brothers
Delhaize America, Inc.
8.125%, 04/15/11 15,000 1.00% 9/20/07 $ (111,033)
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 15
INTEREST RATE SWAP CONTRACTS (see Note D)
Rate Type
-----------------------------------
Notional Payments Payments Unrealized
Swap Amount Termination made by received by Appreciation/
Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
- ------------------------------------------------------------------------------------------------
J. P. Morgan 150,000 09/30/10 4.216% 85.10% of $ 755,274
3 Month LIBOR(t)
J. P. Morgan 115,000 09/01/14 4.692% 85.10% of (1,697,927)
3 Month LIBOR(t)
J. P. Morgan 100,000 09/30/14 4.725% 85.10% of 751,977
3 Month LIBOR(t)
(t) LIBOR (London Interbank Offered Rate)
* Represents entire or partial securities out on loan. See Note E for
securities lending information.
(a) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At September 30, 2004, the aggregate market value of these securities
amounted to $142,094,035 or 16.0% of net assets.
(b) One contract relates to principal amout of $1,000,000.
See notes to financial statements.
16 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
STATEMENT OF ASSETS & LIABILITIES
September 30, 2004
Assets
Investments in securities, at value (cost $951,524,569--
including investment of cash collateral for
securities loaned of $122,421,962) $1,013,560,217(a)
Receivable for investment securities sold 260,025,067
Interest and dividends receivable 16,178,152
Receivable for capital stock sold 4,743,079
Unrealized appreciation of swap contracts 1,507,251
--------------
Total assets 1,296,013,766
--------------
Liabilities
Due to custodian 2,442,864
Outstanding written swaptions, at value
(premiums received $119,500) 124,500
Payable for investment securities purchased 269,445,053
Payable for collateral on securities loaned 122,421,962
Payable for capital stock redeemed 6,838,219
Unrealized depreciation of swap contracts 1,808,960
Dividends payable 1,430,654
Distribution fee payable 439,652
Advisory fee payable 365,835
Transfer Agent fee payable 120,733
Accrued expenses 163,249
--------------
Total liabilities 405,601,681
--------------
Net Assets $ 890,412,085
==============
Composition of Net Assets
Capital stock, at par $ 73,113
Additional paid-in capital 1,151,986,314
Undistributed net investment income 359,434
Accumulated net realized loss on investment transactions (323,735,715)
Net unrealized appreciation of investments 61,728,939
--------------
$ 890,412,085
==============
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($512,458,159 / 42,060,995 shares of capital stock
issued and outstanding) $12.18
Sales charge--4.25% of public offering price .54
------
Maximum offering price $12.72
======
Class B Shares
Net asset value and offering price per share
($251,172,386 / 20,641,234 shares of capital stock
issued and outstanding) $12.17
======
Class C Shares
Net asset value and offering price per share
($126,684,964 / 10,402,969 shares of capital stock
issued and outstanding) $12.18
======
Class R Shares
Net asset value, redemption and offering price per share
($10,309 / 846.055 shares of capital stock
issued and outstanding) $12.18
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($86,267 / 7,078 shares of capital stock
issued and outstanding) $12.19
======
(a) Includes securities on loan with a value of $113,076,983 (see Note E).
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 17
STATEMENT OF OPERATIONS
Year Ended September 30, 2004
Investment Income
Interest $67,570,408
Dividends 4,880,100 $72,450,508
-----------
Expenses
Advisory fee 5,468,755
Distribution fee--Class A 1,548,135
Distribution fee--Class B 3,177,100
Distribution fee--Class C 1,399,116
Distribution fee--Class R 46
Transfer agency 1,774,999
Custodian 265,554
Printing 192,872
Audit and legal 162,316
Administrative 98,000
Registration fees 88,938
Directors' fees 18,463
Miscellaneous 52,682
-----------
Total expenses before interest expense 14,246,976
Interest expense 823,851
-----------
Total expenses 15,070,827
Less: expenses waived and reimbursed
by the Adviser (see Note B) (446,912)
Less: expense offset arrangement
(see Note B) (139)
-----------
Net expenses 14,623,776
-----------
Net investment income 57,826,732
-----------
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions 46,942,350
Written options (6,750,324)
Futures contracts (1,261,741)
Swap contracts (6,327,430)
Net change in unrealized
appreciation/depreciation of:
Investments (27,719,264)
Written options (5,000)
Futures contracts 8,783,736
Swap contracts (301,709)
-----------
Net gain on investment
transactions 13,360,618
-----------
Net Increase in Net Assets
from Operations $71,187,350
===========
See notes to financial statements.
18 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
July 1, 2003
Year Ended to Year Ended
September 30, September 30, June 30,
2004 2003* 2003
============ ============== ==============
Net Increase (Decrease) in Net
Assets from Operations
Net investment income $57,826,732 $15,915,883 $72,585,956
Net realized gain (loss) on
investment transactions 32,602,855 24,829,508 (51,405,583)
Net change in unrealized
appreciation/depreciation
of investments (19,242,237) (31,793,337) 180,392,459
------------ -------------- --------------
Net increase in net assets
from operations 71,187,350 8,952,054 201,572,832
Dividends and Distributions to
Shareholders from
Net investment income
Class A (30,964,784) (8,307,900) (35,897,785)
Class B (16,743,588) (5,467,237) (26,405,194)
Class C (7,389,724) (2,207,358) (10,193,042)
Class R (534) -0- -0-
Advisor Class (203,931) (40,918) (69,827)
Tax return of capital
Class A -0- -0- (1,251,077)
Class B -0- -0- (920,250)
Class C -0- -0- (355,239)
Advisor Class -0- -0- (2,434)
Capital Stock Transactions
Net decrease (205,155,519) (57,741,250) (140,779,501)
------------ -------------- --------------
Total decrease (189,270,730) (64,812,609) (14,301,517)
Net Assets
Beginning of period 1,079,682,815 1,144,495,424 1,158,796,941
------------ -------------- --------------
End of period (including undistributed/
(distributions in excess of) net
investment income of $359,434,
($2,349,426) and ($2,436,049),
respectively) $890,412,085 $1,079,682,815 $1,144,495,424
============ ============== ==============
* The Portfolio changed its fiscal year end from June 30 to September 30.
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 19
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
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 Corporate Bond Portfolio. The Corporate Bond
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 an initial or contingent deferred sales charge and are not subject
to ongoing distribution expenses. Advisor Class shares are offered to investors
participating in fee-based programs and 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 U.S. generally accepted
accounting principles which require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. Additional
information about some of the items discussed in these Notes to Financial
Statements is contained in the Fund's Statement of Additional Information,
which is available upon request. The following is a summary of significant
accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange 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
20 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Notes to Financial Statements
on such day. Securities listed on more than one exchange are valued by
reference to the principal exchange on which the securities are traded;
securities not listed on an exchange but traded on The NASDAQ Stock Market,
Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing
Price; listed put or call options are valued at the last sale price. If there
has been no sale on that day, such securities will be valued at the closing bid
prices on that day; open futures contracts and options thereon are valued using
the closing settlement price or, in the absence of such a price, the most
recent quoted bid price. If there are no quotations available for the day of
valuation, the last available closing settlement price is used; securities
traded in the over-the-counter market, (OTC) (but excluding securities traded
on NASDAQ) are valued at the mean of the current bid and asked prices as
reported by the National Quotation Bureau or other comparable sources; U.S.
Government securities and other debt instruments having 60 days or less
remaining until maturity are valued at amortized cost if their original
maturity was 60 days or less; or by amortizing their fair value as of the 61st
day prior to maturity if their original term to maturity exceeded 60 days;
fixed-income securities, including mortgage backed and asset backed securities,
may be valued on the basis of prices provided by a pricing service or at a
price obtained from one or more of the major broker/dealers. In cases where
broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the
"Adviser") may establish procedures whereby changes in market yields or spreads
are used to adjust, on a daily basis, a recently obtained quoted price on a
security; and OTC and other derivatives are valued on the basis of a quoted bid
price or spread from a major broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Portfolio may use fair value pricing for securities primarily traded in
non-U.S. markets because, most foreign markets close well before the Portfolio
values its securities at 4:00 p.m., Eastern Time. The earlier close of these
foreign markets gives rise to the possibility that significant events,
including broad market moves, may have occurred in the interim and may
materially affect the value of those securities.
2. Taxes
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The Portfolio may be subject to taxes imposed by countries in which
it invests. Such taxes are generally based on income and/or capital gains
earned or repatriated. Taxes are accrued and applied to net investment income,
net realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 21
3. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio
is informed of the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the trade 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.
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 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 are recorded on the ex-dividend
date. Income dividends and capital gains distributions are determined in
accordance with federal tax regulations and may differ from those determined in
accordance with U.S. generally accepted accounting principles. To the extent
these differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary
differences do not require such reclassification.
6. Change of Fiscal Year End
During 2003, 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
Until September 6, 2004, under the terms of an investment advisory agreement,
the Portfolio paid the Adviser an advisory fee at an annual rate of .625% of
the first $500 million and .50% in excess of $500 million of the Portfolio's
average net assets. Effective September 7, 2004 the terms of the investment
advisory agreement were amended so that the advisory fee was reduced to an
annual rate of .50% of the first $2.5 billion, .45% of the next $2.5 billion
and .40% in excess of $5 billion, of the Portfolio's average daily net assets.
The fee is accrued daily and paid monthly.
Effective January 1, 2004 through September 6, 2004, in contemplation of the
final agreement with the Office of New York Attorney General ("NYAG"), the
Adviser began waiving a portion of its advisory fee so as to charge the
Portfolio at the reduced annual rate discussed above. Through September 6, 2004
such waiver amounted to $426,912. For a more complete discussion of the
Adviser's settlement with the NYAG, please see "Legal Proceedings" below.
22 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Notes to Financial Statements
For the year ended September 30, 2004, the Adviser voluntarily agreed to
reimburse the Portfolio for certain expenses in the amount of $20,000.
Pursuant to the advisory agreement, the Portfolio paid $98,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Portfolio by the Adviser for the year ended September 30, 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 $1,081,581 for the year ended
September 30, 2004.
For the year ended September 30, 2004, the Portfolio's expenses were reduced by
$139 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 $21,917 from the sales of Class A shares
and received $13,383, $26,815, and $13,910, respectively, in contingent
deferred sales charges imposed upon redemptions by shareholders of Class A,
Class B and Class C shares, respectively, for the year ended September 30, 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 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 $12,051,057 and $6,266,189 for Class B and Class C
shares, respectively. Such costs may be recovered from the Portfolio in future
periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs incurred by the Distributor beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Portfolio's shares.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 23
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended September 30, 2004, were as follows:
Purchases Sales
============== ============
Investment securities (excluding
U.S. government securities) $2,345,663,884 $2,617,309,960
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding written options and swaps)
are as follows:
Cost $952,955,214
------------
Gross unrealized appreciation $63,367,004
Gross unrealized depreciation (2,762,001)
------------
Net unrealized appreciation $60,605,003
------------
1. Option Transactions
For hedging and investment purposes, the Portfolio may purchase and write
(sell) put and call options on debt securities that are traded on U.S. and
foreign securities exchanges and over-the-counter markets and swap agreements
(commonly referred to as swaptions).
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 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.
24 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Notes to Financial Statements
Transactions in swaptions for the year ended September 30, 2004 were as follows:
Number of Premiums
Contracts Received
============== ============
Swaptions outstanding at September 30,
2003 -0- $ -0-
Swaptions written 4,098 2,896,626
Swaptions terminated in closing purchase
transactions (4,028) (2,579,626)
Swaptions expired (35) (197,500)
------------- -----------
Swaptions outstanding at September 30,
2004 35 $ 119,500
============== ============
2. Swap Agreements
The Portfolio may enter into swaps to hedge its exposure to interest rates and
credit risk or for investment purposes. A swap is an agreement that obligates
two parties to exchange a series of cash flows at specified intervals based
upon or calculated by reference to changes in specified prices or rates for a
specified amount of an underlying asset. The payment flows are usually netted
against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net interim payment
to be received by the 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 accrues for the interim payments on swap contracts on a daily
basis, with the net amount recorded within unrealized appreciation/depreciation
of swap contracts on the statement of assets and liabilities. Once the interim
payments are settled in cash, the net amount is recorded as realized gain/loss
on swaps, in addition to realized gain/loss recorded upon the termination of
swap contracts on the statement of operations. Fluctuations in the value of
swap contracts are recorded as a component of net change in unrealized
appreciation/ depreciation of investments.
The Portfolio may enter into credit default swaps. The Portfolio may purchase
credit protection on the referenced obligation of the credit default swap ("Buy
Contract") or provide credit protection on the referenced obligation of the
credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap
provides upon the occurrence of a credit event, as defined in the swap
agreement, for the Portfolio to buy/(sell) from/(to) the counterparty at the
notional amount (the "Notional Amount") and receive/(deliver) the principal
amount of the referenced obligation. If a credit event occurs, the maximum
payout amount for a
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 25
Sale Contract is limited to the Notional Amount of the swap contract ("Maximum
Payout Amount"). During the term of the swap agreement, the Portfolio
receives/(pays) semi-annual fixed payments from/(to) the respective
counterparty, calculated at the agreed upon interest rate applied to the
Notional Amount. These interim payments are recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities.
Credit default swaps may involve greater risks than if a Portfolio had invested
in the referenced obligation directly. Credit default swaps are subject to
general market risk, liquidity risk, counterparty risk and credit risk. If the
Portfolio is a buyer and no credit event occurs, it will lose its investment.
In addition, if the Portfolio is a seller and a credit event occurs, the value
of the referenced obligation received by the Portfolio coupled with the
periodic payments previously received, may be less than the Maximum Payout
Amount it pays to the buyer, resulting in a loss to the Portfolio.
At September 30, 2004, the Portfolio had no Sale Contracts outstanding.
In certain circumstances, the Portfolio may hold Sale Contracts on the same
referenced obligation and with the same counterparty it has purchased credit
protection, which may reduce its obligation to make payments on Sale Contracts,
if a credit event occurs.
3. 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 year ended September 30, 2004, the average amount of reverse repurchase
agreements outstanding was $66,989,102 and the daily weighted average
annualized interest rate was 1.19%.
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
26 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Notes to Financial Statements
received in accordance with the investment restrictions of the Portfolio in one
or more of the following investments: U.S. government or U.S. government agency
obligations, bank obligations, corporate debt obligations, asset-backed
securities, investment funds, structured products, repurchase agreements and an
eligible money market fund. The Lending Agent will indemnify the Portfolio for
any loss resulting from a borrower's failure to return a loaned security when
due. As of September 30, 2004, the Portfolio had loaned securities with a value
of $113,076,983 and received cash collateral which was invested in short-term
securities valued at $122,421,962 as included in the accompanying portfolio of
investments. For the year ended September 30, 2004, the Portfolio earned fee
income of $191,405 which is included in interest income 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
- -------------------------------------------------------------------------------
Year Ended July 1, 2003 to Year Ended
September 30, September 30, June 30,
2004 2003(a) 2003
- -------------------------------------------------------------------------------
Class A
Shares sold 4,461,502 2,299,751 14,552,214
Shares issued in reinvestment of
dividends and distributions 1,701,230 463,442 2,138,633
Shares converted from Class B 5,004,729 1,013,392 5,513,902
Shares redeemed (13,829,610) (5,282,724) (24,652,867)
Net decrease (2,662,149) (1,506,139) (2,448,118)
- -------------------------------------------------------------------------------
Class B
Shares sold 2,154,985 1,125,168 6,602,364
Shares issued in reinvestment of
dividends and distributions 832,039 272,119 1,355,293
Shares converted to Class A (5,000,439) (1,012,515) (5,511,083)
Shares redeemed (9,436,877) (3,089,416) (10,500,542)
Net decrease (11,450,292) (2,704,644) (8,053,968)
- -------------------------------------------------------------------------------
Class C
Shares sold 1,532,581 610,572 3,130,196
Shares issued in reinvestment of
dividends and distributions 316,396 98,457 476,779
Shares redeemed (4,628,642) (1,512,151) (6,386,613)
Net decrease (2,779,665) (803,122) (2,779,638)
- -------------------------------------------------------------------------------
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 27
Shares
- ---------------------------------------------------------------------------------------
Year Ended July 1, 2003 to August 8, 2002(b)
September 30, September 30, to June 30,
2004 2003(a) 2003
- ---------------------------------------------------------------------------------------
Advisor Class
Shares sold 101,095 54,241 424,628
Shares issued in reinvestment of
dividends and distributions 17,041 3,354 5,258
Shares redeemed (351,762) (7,816) (238,961)
Net increase (decrease) (233,626) 49,779 190,925
- ---------------------------------------------------------------------------------------
November 3,
2003(b) to
September 30,
2004
- ---------------------------------------------
Class R
Shares sold 846
Net increase 846
- ---------------------------------------------
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(b) Commencement of distribution.
Amount
- ---------------------------------------------------------------------------------------
Year Ended July 1, 2003 to Year Ended
September 30, September 30, June 30,
2004 2003(a) 2003
- ---------------------------------------------------------------------------------------
Class A
Shares sold $53,778,453 $26,935,735 $185,571,781
Shares issued in reinvestment of
dividends and distributions 20,476,419 5,434,050 23,617,128
Shares converted from Class B 60,239,503 11,838,281 36,289,286
Shares redeemed (166,068,888) (61,727,603) (271,702,238)
Net decrease $(31,574,513) $(17,519,537) $(26,224,043)
- ---------------------------------------------------------------------------------------
Class B
Shares sold $25,956,985 $13,146,628 $73,365,336
Shares issued in reinvestment of
dividends and distributions 10,006,532 3,188,136 14,932,280
Shares converted to Class A (60,239,503) (11,838,281) (36,289,286)
Shares redeemed (113,115,838) (35,980,527) (139,384,003)
Net decrease $(137,391,824) $(31,484,044) $(87,375,673)
- ---------------------------------------------------------------------------------------
Class C
Shares sold $18,454,991 $7,136,477 $34,950,768
Shares issued in reinvestment of
dividends and distributions 3,805,919 1,154,551 5,255,130
Shares redeemed (55,668,836) (17,610,706) (69,528,339)
Net decrease $(33,407,926) $(9,319,678) $(29,322,441)
- ---------------------------------------------------------------------------------------
(a)The Portfolio changed its fiscal year end from June 30 to September 30.
28 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Notes to Financial Statements
Amount
Year Ended July 1, 2003 to August 8, 2002(b)
September 30, September 30, to June 30,
2004 2003(a) 2003
- ---------------------------------------------------------------------------------------
Advisor Class
Shares sold $1,220,358 $634,690 $4,825,230
Shares issued in reinvestment of
dividends and distributions 204,868 39,366 60,857
Shares redeemed (4,216,532) (92,047) (2,743,431)
Net increase (decrease) $(2,791,306) $582,009 $2,142,656
- ---------------------------------------------------------------------------------------
November 3,
2003(b) to
September 30,
2004
- ----------------------------------------------
Class R
Shares sold $10,050
Net increase $10,050
- ----------------------------------------------
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(b) Commencement of distributions.
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 year ended September 30, 2004.
NOTE H
Risks Involved in Investing in the Portfolio
Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes
in interest rates will affect the value of the Portfolio's investments in
fixed-income debt securities such as bonds or notes. Increases in interest
rates may cause the value of the Portfolio's investments to decline. Credit
risk is the risk that the issuer or guarantor of a debt security, or the
counterparty to a derivative contract, will be unable or unwilling to make
timely principal and/or interest payments, or to otherwise honor its
obligations. The degree of risk for a particular security may be reflected in
its credit risk rating. Credit risk is greater for medium quality and
lower-rated securities. Lower-rated debt securities and similar unrated
securities (commonly known as "junk bonds") have speculative elements or are
predominantly speculative risks.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 29
Foreign Securities Risk--Investing in securities of foreign companies or
foreign governments involves special risks which include changes in foreign
exchange rates and the possibility of future political and economic
developments which could adversely affect the value of such securities.
Moreover, securities of many foreign companies or foreign governments and their
markets may be less liquid and their prices more volatile than those of
comparable United States companies or of the United States government.
Idemnification Risk--In the ordinary course of business, the Portfolio enters
into contracts that contain a variety of indemnifications. The Portfolio's
maximum exposure under these arrangements is unknown. However, the Portfolio
has not had prior claims or losses pursuant to these indemnification provisions
and expects the risk of loss thereunder to be remote.
NOTE I
Distributions to Shareholders
The tax character of distributions paid during the fiscal periods ended
September 30, 2004, September 30, 2003 and June 30, 2003 were as follows:
September 30, September 30, June 30,
2004 2003 2003
Distributions paid from:
Ordinary income $55,302,561 $16,023,413 $72,565,848
----------- ----------- -----------
Total taxable distributions 55,302,561 16,023,413 72,565,848
Tax return of capital -0- -0- 2,529,000
----------- ---------- -----------
Total distributions paid $55,302,561 $16,023,413 $75,094,848
----------- ---------- -----------
As of September 30, 2004, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed ordinary income $2,860,922
Accumulated capital and other losses (323,656,056)(a)
Unrealized appreciation/(depreciation) 60,578,446(b)
-------------
Total accumulated earnings/(deficit) $(260,216,688)
-------------
(a) On September 30, 2004, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $323,656,056 of which $82,403,328 expires in
the year 2007, $54,554,000 expires in the year 2008, $52,066,319 expires in the
year 2009 and $134,632,409 expires in the year 2010. To the extent future
capital gains are offset by capital loss carryforwards, such gains will not be
distributed. During the fiscal year, the Portfolio utilized capital loss
carryforwards of $40,743,209.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales, the difference between book and tax treatment of swap
income and the difference between book and tax amortization methods for premium.
During the current fiscal year, permanent differences, primarily due to the tax
treatment of bond premium and the tax treatment of swap income, resulted in a
net increase in undistributed net investment income and a net increase in accu-
30 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Notes to Financial Statements
mulated net realized loss on investment transactions. This reclassification had
no effect on net assets.
NOTE J
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the NYAG have been investigating practices in the mutual
fund industry identified as "market timing" and "late trading" of mutual fund
shares. Certain other regulatory authorities have also been conducting
investigations into these practices within the industry and have requested that
the Adviser provide information to them. The Adviser has been cooperating and
will continue to cooperate with all of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurrance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order and the NYAG Order contemplate that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 31
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, 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 the Adviser; 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 the Adviser. 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 the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, numerous additional lawsuits making factual allegations
similar to those in the Hindo Complaint were filed against the Adviser and
certain other defendants, some of which name the Fund as a defendant. All of
these lawsuits seek an unspecified amount of damages. The lawsuits are now
pending in the United States District Court for the District of Maryland
pursuant to a ruling by the Judicial Panel on Multidistrict Litigation
transferring and centralizing all of the mutual funds involving market and late
trading in the District of Maryland.
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.
32 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Notes to Financial Statements
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
an unaffiliated broker/dealer violated federal securities laws relating to its
receipt of compensation for selling specific mutual funds and the disclosure of
such compensation. The SEC has indicated publicly that, among other things, it
is considering enforcement action in connection with mutual funds' disclosure
of such arrangements and in connection with the practice of considering mutual
fund sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC has issued subpoenas to the Adviser in connection with
this matter and the Adviser has provided documents and other information to the
SEC and is cooperating fully with its investigation.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Aucoin Complaint was filed in the United States District Court
for the Southern District of New York by an alleged shareholder of an
AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other
things, (i) that certain of the defendants improperly authorized the payment of
excessive commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain of the
defendants misrepresented and omitted from registration statements and other
reports material facts concerning such payments, and (iii) that certain
defendants caused such conduct as control persons of other defendants. The
Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and
48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act,
breach of common law fiduciary duties, and aiding and abetting breaches of
common law fiduciary duties. Plaintiffs seek an unspecified amount of
compensatory damages and punitive damages, rescission of their contracts with
the Adviser, including recovery of all fees paid to the Adviser pursuant to
such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the Fund's shares or
other adverse consequences to the Fund. However, the Adviser believes that
these matters are not likely to have a material adverse effect on its ability
to perform advisory services relating to the Fund.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 33
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
------------------------------------------------------------------------------
July 1,
Year 2003
Ended to Year Ended June 30,
Sept. 30, Sept. 30, --------------------------------------------------
2004(a) 2003(b) 2003 2002(c) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.97 $12.03 $10.70 $12.29 $11.91 $12.49
Income From Investment
Operations
Net investment income(d) .75(e) .18 .77 .94 .97 1.04
Net realized and unrealized
gain (loss) on investment
transactions .18 (.06) 1.35 (1.55) .42 (.55)
Net increase (decrease) in net asset
value from operations .93 .12 2.12 (.61) 1.39 .49
Less: Dividends and
Distributions
Dividends from net investment
income (.72) (.18) (.76) (.94) (.97) (1.04)
Distributions in excess of
net investment income -0- -0- -0- -0- (.01) -0-
Tax return of capital -0- -0- (.03) (.04) (.03) (.03)
Total dividends and distributions (.72) (.18) (.79) (.98) (1.01) (1.07)
Net asset value, end of period $12.18 $11.97 $12.03 $10.70 $12.29 $11.91
Total Return
Total investment return based on
net asset value(f) 8.01% 1.06% 20.75% (5.51)% 12.03% 4.11%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $512,458 $535,318 $555,979 $520,984 $530,446 $473,578
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.16% 1.20%(g) 1.16% 1.12% 1.31% 1.12%
Expenses, before waivers/
reimbursements 1.20% 1.20%(g) 1.16% 1.12% 1.31% 1.12%
Expenses, before waivers/
reimbursements, excluding
interest expense 1.12% 1.15%(g) 1.13% 1.09% 1.09% 1.11%
Net investment income 6.25%(e) 6.18%(g) 6.96% 7.79% 7.95% 8.51%
Portfolio turnover rate 230% 65% 171% 276% 340% 302%
See footnote summary on page 39.
34 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Class B
------------------------------------------------------------------------------
July 1,
Year 2003
Ended to Year Ended June 30,
Sept. 30, Sept. 30, --------------------------------------------------
2004(a) 2003(b) 2003 2002(c) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.96 $12.02 $10.70 $12.30 $11.92 $12.49
Income From Investment
Operations
Net investment income(d) .66(e) .16 .69 .85 .88 .95
Net realized and unrealized
gain (loss) on investment
transactions .19 (.06) 1.35 (1.55) .42 (.54)
Net increase (decrease) in net asset
value from operations .85 .10 2.04 (.70) 1.30 .41
Less: Dividends and
Distributions
Dividends from net investment
income (.64) (.16) (.70) (.85) (.88) (.95)
Distributions in excess of
net investment income -0- -0- -0- (.01) (.01) -0-
Tax return of capital -0- -0- (.02) (.04) (.03) (.03)
Total dividends and distributions (.64) (.16) (.72) (.90) (.92) (.98)
Net asset value, end of period $12.17 $11.96 $12.02 $10.70 $12.30 $11.92
Total Return
Total investment return based on
net asset value(f) 7.26% .88% 19.85% (6.23)% 11.24% 3.39%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $251,173 $383,763 $418,095 $458,394 $509,953 $477,259
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.89% 1.92%(g) 1.88% 1.83% 2.03% 1.83%
Expenses, before waivers/
reimbursements 1.93% 1.92%(g) 1.88% 1.83% 2.03% 1.83%
Expenses, before waivers/
reimbursements, excluding
interest expense 1.84% 1.87%(g) 1.85% 1.80% 1.81% 1.83%
Net investment income 5.55%(e) 5.48%(g) 6.27% 7.05% 7.18% 7.77%
Portfolio turnover rate 230% 65% 171% 276% 340% 302%
See footnote summary on page 39.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 35
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
------------------------------------------------------------------------------
July 1,
Year 2003
Ended to Year Ended June 30,
Sept. 30, Sept. 30, --------------------------------------------------
2004(a) 2003(b) 2003 2002(c) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.96 $12.02 $10.70 $12.30 $11.91 $12.49
Income From Investment
Operations
Net investment income(d) .67(e) .16 .69 .85 .89 .94
Net realized and unrealized
gain (loss) on investment
transactions .19 (.06) 1.35 (1.55) .42 (.54)
Net increase (decrease) in net asset
value from operations .86 .10 2.04 (.70) 1.31 .40
Less: Dividends and
Distributions
Dividends from net
investment income (.64) (.16) (.70) (.85) (.89) (.95)
Distributions in excess of
net investment income -0- -0- -0- (.01) -0- -0-
Tax return of capital -0- -0- (.02) (.04) (.03) (.03)
Total dividends and distributions (.64) (.16) (.72) (.90) (.92) (.98)
Net asset value, end of period $12.18 $11.96 $12.02 $10.70 $12.30 $11.91
Total Return
Total investment return based on
net asset value(f) 7.35% .88% 19.85% (6.23)% 11.33% 3.30%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $126,685 $157,719 $168,123 $179,418 $185,022 $176,814
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.87% 1.91%(g) 1.87% 1.82% 2.03% 1.83%
Expenses, before waivers/
reimbursements 1.92% 1.91%(g) 1.87% 1.82% 2.03% 1.83%
Expenses, before waivers/
reimbursements,
excluding interest
expense 1.84% 1.86%(g) 1.84% 1.79% 1.81% 1.82%
Net investment income 5.55%(e) 5.49%(g) 6.28% 7.07% 7.22% 7.75%
Portfolio turnover rate 230% 65% 171% 276% 340% 302%
See footnote summary on page 39.
36 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Financial Highlights
Class R
- -----------------------------------------------------------------
November 3,
2003(h) to
Sept. 30,
2004(a)
- -----------------------------------------------------------------
Net asset value, beginning of period $11.88
Income From Investment Operations
Net investment income(d)(e) .66
Net realized and unrealized gain on investment transactions .27
Net increase in net asset value from operations .93
Less: Dividends
Dividends from net investment income (.63)
Net asset value, end of period $12.18
Total Return
Total investment return based on net asset value(f) 8.04%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(g) 1.34%
Expenses, before waivers/reimbursements(g) 1.39%
Expenses, before waivers/reimbursements,
excluding interest expense(g) 1.31%
Net investment income(e)(g) 6.04%
Portfolio turnover rate 230%
See footnote summary on page 39.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 37
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
------------------------------------
Year July 1, August 8,
Ended 2003 to, 2002(h)
Sept. 30, Sept. 30, to June 30,
2004(a) 2003(b) 2003
----------- ----------- -----------
Net asset value, beginning of period $11.98 $12.03 $10.21
Income From Investment Operations
Net investment income(d) .84(e) .19 .69
Net realized and unrealized gain (loss) on
investment transactions .13 (.05) 1.85
Net increase in net asset value from operations .97 .14 2.54
Less: Dividends and Distributions
Dividends from net investment income (.76) (.19) (.70)
Tax return of capital -0- -0- (.02)
Total dividends and distributions (.76) (.19) (.72)
Net asset value, end of period $12.19 $11.98 $12.03
Total Return
Total investment return based on
net asset value(f) 8.34% 1.22% 25.70%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $86 $2,883 $2,298
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .88% .91%(g) .88%(g)
Expenses, before waivers/reimbursements .92% .91%(g) .88%(g)
Expenses, before waivers/reimbursements,
excluding interest expense .83% .86%(g) .85%(g)
Net investment income 6.52%(e) 6.51%(g) 6.90%(g)
Portfolio turnover rate 230% 65% 171%
See footnote summary on page 39.
38 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
(a) As of October 1, 2003, the Portfolio has adopted the method of accounting
for interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. These interim payments are reflected within
net realized and unrealized gain (loss) on swap contracts, however, prior to
October 1, 2003, these interim payments were reflected within interest
income/expense on the statement of operations. The effect of this change for
the year ended September 30, 2004, was to increase net investment income per
share by $.02 for Class A, B, C, R and Advisor Class and decrease net realized
and unrealized gain on investment transactions per share by $.02 for Classs A,
B, C, R and Advisor Class. Consequently, the ratios of net investment income
to average net assets increased by 0.18%, 0.16%, 0.16%, 0.17% and 0.18% for
Class A, B, C, R and Advisor Class, respectively.
(b) The Portfolio changed its fiscal year end from June 30 to September 30.
(c) 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 and net realized
and unrealized loss on investments per share by less than $.01 for Class A,
Class B and Class C, respectively, and decrease the ratio of net investment
income to average net assets from 7.82% to 7.79% for Class A, from 7.08% to
7.05% for Class B and from 7.10% to 7.07% for Class C. Per share, ratios and
supplemental data for periods prior to July 1, 2001 have not been restated to
reflect this change in presentation.
(d) Based on average shares outstanding.
(e) Net of expenses waived and reimbursed by the Adviser.
(f) Total investment return is calculated assuming an initial investment is
made at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return does not reflect the deduction of taxes that a
shareholder would pay on Portfolio distributions or the redemption of Portfolio
shares. Total investment return calculated for a period of less than one year
is not annualized.
(g) Annualized.
(h) Commencement of distribution.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 39
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
AllianceBernstein Bond Fund, Inc. Corporate Bond Portfolio
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Corporate Bond Portfolio (the "Portfolio")
(one of the portfolios constituting the AllianceBernstein Bond Fund, Inc.) as
of September 30, 2004, and the related statements of operations, changes in net
assets and the financial highlights for the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of
September 30, 2004, by correspondence with the custodian and others. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Corporate Bond Portfolio of the AllianceBernstein Bond Fund, Inc. at September
30, 2004, the results of its operations, the changes in its net assets and the
financial highlights for the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
New York, New York
November 22, 2004
40 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
BOARD OF DIRECTORS
Board of Directors
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Donald J. Robinson(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Matthew D.W. Bloom, Vice President
Paul J. DeNoon, Vice President
Jeffrey S. Phlegar, Vice President
Lawrence J. Shaw(2), Vice President
Michael A. Snyder(2), Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer and 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 Registered Public
Accounting Firm
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 and Governance and Nominating Committee.
(2) Messrs. Shaw and Snyder are the persons primarily responsible for the
day-to-day management of the Portfolio's investment portfolio.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 41
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, PRINCIPAL COMPLEX DIRECTORSHIP
ADDRESS, DATE OF BIRTH, OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- -----------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr. Investment Adviser and an 113 None
2 Sound View Drive independent consultant. He was
Suite 100 formerly Senior Manager of Barrett
Greenwich, CT 06830 Associates, Inc., a registered
9/7/32 investment adviser, with which
(1998) he had been associated since
Chairman of the Board prior to 1999. He was formerly
Deputy Comptroller and Chief
Investment Officer of the State
of New York and, prior thereto,
Chief Investment Officer of the
New York Bank for Savings.
Ruth Block** Formerly Executive Vice President 94 None
500 SE Mizner Blvd. and Chief Insurance Officer of The
Boca Raton, FL 33432 Equitable Life Assurance Society
11/7/30 of the United States; Chairman and
(1987) Chief Executive Officer of Evlico;
Director of Avon, BP (oil and gas),
Ecolab Incorporated (specialty
chemicals), Tandem Financial
Group, and Donaldson Lufkin &
Jenrette Securities Corporation;
former Governor at Large, National
Association of Securities Dealers, Inc.
David H. Dievler Independent consultant. Until 98 None
P.O. Box 167 December 1994, he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
10/23/29 Management Corporation ("ACMC")
(1987) responsible for mutual fund administration.
Prior to joining ACMC in 1984, he was
Chief Financial Officer of Eberstadt
Asset Management since 1968.
Prior to that, he was Senior Manager
at Price Waterhouse & Co. Member
of American Institute of Certified
Public Accountants since 1953.
John Dobkin Consultant. Formerly President 96 None
P.O. Box 12 of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001 - 2002, Senior
2/19/42 Advisor from June 1999 - June 2000
(1998) and President of Historic Hudson Valley
(historic preservation) from December
1989 - May 1999. Previously, Director
of the National Academy of Design.
During 1988 - 1992, he was Director
and Chairman of the Audit Committee
of ACMC.
42 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Management of the Fund
PORTFOLIOS
IN FUND OTHER
NAME, PRINCIPAL COMPLEX DIRECTORSHIP
ADDRESS, DATE OF BIRTH, OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- -----------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
Donald J. Robinson Senior Counsel to the law firm of 95 None
98 Hell's Peak Road Orrick, Herrington & Sutcliffe LLP
Weston, VT 05161 since prior to 1999. Formerly a senior
8/24/34 partner and a member of the Executive
(1996) Committee of that firm. He was also a
member and Chairman of the Municipal
Securities Rulemaking Board and a
Trustee of the Museum of the City of
New York.
INTERESTED DIRECTOR
Marc O. Mayer++ Executive Vice President of ACMC 66 None
1345 Avenue of the Americas since 2001; prior thereto, Chief
New York, NY 10105 Executive Officer of Sanford C.
10/2/57 Bernstein &Co., LLC and its
(2003) predecessor since prior to 1999.
* There is no stated term of office for the Fund's directors.
** Ms.Block was an "interested person", as defined in the 1940 Act, until
October 21, 2004 by reason of her ownership of 116 American Depositary Shares
of AXA having a value of approximately $2,396. AXA is a controlling person of
ACMC. Ms. Block received shares of The Equitable Companies Incorporated as part
of the demutualization of The Equitable Life Assurance Society of the United
States, which were subsequently converted through a corporate action into 116
American Depositary Shares of AXA.
# Member of the Audit Committee and Governance and Nominating Committee.
++ Mr.Mayer is an "interested director", as defined in the 1940 Act, due to his
position as Executive Vice President of ACMC, investment adviser.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 43
Officer Information
Certain information concerning the Fund's Officers is set forth below.
PRINCIPAL
NAME, ADDRESS*, POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
- ----------------------------------------------------------------------------------------------------
Marc O. Mayer President and Chief See biography above.
10/2/1957 Executive Officer
Philip L. Kirstein Senior Vice President Senior Vice President and Independent
5/29/1945 & Independent Compliance Officer--Mutual Funds of
Compliance Officer ACMC with which he has been associated since
October 2004. Prior thereto, he was Counsel
of Kirkpatrick & Lockhart, LLP from 2003 to
October 2004, and General Counsel and First
Vice President of Merrill Lynch Investment
Managers since prior to 1999
Matthew D.W. Bloom Vice President Senior Vice President ACMC**, with
7/15/1956 which he has been associated since prior to
1999.
Paul J. DeNoon Vice President Senior Vice President of ACMC**, with
4/18/1962 which he has been associated since prior to
1999.
Jeffrey S. Phlegar Vice President Executive Vice President of ACMC**,
6/28/1966 with which he has been associated since prior
to 1999.
Lawrence J. Shaw Vice President Senior Vice President of ACMC, **with
2/9/1951 which he has been associated since prior to
1999.
Michael A. Snyder Vice President Senior Vice President of ACMC** since
4/18/1962 May, 2001. Previously he was a Managing
Director in the high yield asset group at
Donaldson, Lufkin & Jenrette Corporation since
prior to 1999.
Mark R. Manley Secretary Senior Vice President, Deputy General
10/23/1962 Counsel and Chief Compliance Officer of ACMC
with which he has been associated since prior
to 1999.
44 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
Management of the Fund
PRINCIPAL
NAME, ADDRESS*, POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
- ----------------------------------------------------------------------------------------------------
Mark D. Gersten Treasurer and Chief Senior Vice President of Alliance Global
10/4/1950 Financial Officer Investor Services,Inc. ("AGIS")** and Vice
President of AllianceBernstein Investment
Research and Management,Inc. ("ABIRM")**, with
which he has been associated since prior to
1999.
Vincent S. Noto Controller Vice President of AGIS**, with which he
12/14/1964 has been associated since prior to 1999.
* The address for each of the Fund's officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM and AGIS are affiliates of the Fund
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and officers and is available without
charge upon request. Contact your financial representative or Alliance Capital
at 1-800-227-4618 for a free prospectus or SAI.
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 45
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. You should read the prospectus carefully before you invest or send
money.
* Effective December 15, 2004, these Funds will be renamed as follows: Health
Care Fund to Global Health Care Fund; Premier Growth Fund to Large Cap Growth
Fund; Technology Fund to Global Technology Fund; and Disciplined Value Fund to
Focused Growth & Income Fund.
** An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
46 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
NOTES
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 47
NOTES
48 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO
ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND 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.
CBPAR0904
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer. A copy of the registrant?s code of ethics is filed herewith as
Exhibit 11(a)(1).
(b) During the period covered by this report, no material amendments were made
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant?s Board of Directors has determined that independent directors
William H. Foulk, Jr. and David H. Dievler qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent auditor, Ernst & Young LLP, for the Fund?s last two fiscal years
for professional services rendered for: (i) the audit of the Fund?s annual
financial statements included in the Fund?s annual report to stockholders; (ii)
assurance and related services that are reasonably related to the performance
of the audit of the Fund?s financial statements and are not reported under (i),
which include multi-class distribution testing, advice and education on
accounting and auditing issues, and consent letters; and (iii) tax compliance,
tax advice and tax return preparation.
Audit-Related
Audit Fees Fees Tax Fees
- -------------------------------------------------------------------------------
Corporate Bond Portfolio 2003* $29,250 $1,024 $ 3,469
2004 $47,000 $5,145 $25,064
*During the course of calendar year 2003, the Portfolio changed it's fiscal year
end from June 30 to September 30. Fees for 2003 are for the period July 1, 2003
through September 30, 2003.
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or
after May 6, 2003, the Fund?s Audit Committee policies and procedures require
the pre-approval of all audit and non-audit services provided to the Fund by
the Fund?s independent auditors. The Fund?s Audit Committee policies and
procedures also require pre-approval of all audit and non-audit services
provided to the Adviser and Service Affiliates to the extent that these
services are directly related to the operations or financial reporting of the
Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) ? (c) are for services pre-approved by the Fund?s
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to
the Fund, the Fund?s Adviser and entities that control, are controlled by or
under common control with the Adviser that provide ongoing services to the Fund
(?Service Affiliates?), which include conducting an annual internal control
report pursuant to Statement on Accounting Standards No. 70:
Total Amount of
Foregoing Column Pre-
All Fees for approved by the Audit
Non-Audit Services Committee
Provided to the (Portion Comprised of
Portfolio, the Adviser Audit Related Fees)
and Service (Portion Comprised of
Affiliates Tax Fees)
-------------------------------------------------------
Corporate Bond Portfolio 2003* $ 34,543 [$4,493]
($1,024)
($3,469)
2004 $1,231,941 [$280,209]
($255,145)
($25,064)
*During the course of calendar year 2003, the Portfolio changed it's fiscal
year end from June 30 to September 30. Fees for 2003 are for the period July 1,
2003 through September 30, 2003.
(h) The Audit Committee of the Fund has considered whether the provision of any
non-audit services not pre-approved by the Audit Committee provided by the
Fund?s independent auditor to the Adviser and Service Affiliates is compatible
with maintaining the auditor?s independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. 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.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund?s Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 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 (a) (1) Code of ethics that is subject to the disclosure of
Item 2 hereof
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: November 29, 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: November 29, 2004
By: s/ Mark D. Gersten
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: November 29, 2004