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.
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
AllianceBernstein Bond Fund
U.S. Government Portfolio
U.S. Government
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 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 29, 2004
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Bond Fund U.S. Government Portfolio (the "Portfolio") for the
annual reporting period ended September 30, 2004.
Investment Objective and Policies
This open-end fund seeks a high level of current income that is consistent with
Alliance's determination of prudent investment risk. The Portfolio invests in
U.S. government securities, repurchase agreements and forward contracts
relating to U.S. government securities.
Investment Results
The table on page 4 shows the Portfolio's performance compared to its
benchmark, the Lehman Brothers (LB) Government Index, which represents the U.S.
government bond market, for the six- and 12-month periods ended September 30,
2004. We have also included performance for the Lipper General U.S. Government
Funds Average (the "Lipper Average"). Funds in the Lipper Average have
generally similar investment objectives to the Fund, although some may have
different investment policies and sales and management fees.
The Portfolio's Class A shares modestly underperformed the LB Government Index
for both the six- and 12-month periods ended September 30, 2004. The
Portfolio's Class A shares, outperformed the Lipper peer group during the
12-month reporting period. The Portfolio's Class A shares ranked in the 31st
percentile (58 out of 188 of similarly managed funds) in the Lipper General
U.S. Government Funds category. For the 12-month period ended September 30,
2004, the Lipper General U.S. Government Funds Average consisted of 188 funds.
These funds have generally similar investment objectives to AllianceBernstein
Bond Fund U.S. Government Portfolio, although some may have different
investment policies and sales and management fees. An investor cannot invest
directly in an index or average, and their results are not indicative of the
performance for any specific investment, including the Portfolio.
The Portfolio's overweighted holdings of non-index sectors contributed
positively to its performance. Mortgage product, in the form of pass-throughs
and structured CMOs, were overweighted in the Portfolio in lieu of Treasuries
and agencies. For the 12-month reporting period ended September 30, 2004, the
LB Mortgage Index generated an excess return of 1.41% relative to comparable
duration Treasuries. The Portfolio's positioning for a flattening yield curve
also contributed to its positive performance as short and intermediate rates
rose.
The Portfolio's underweighted spread duration relative to the LB Government
Index in the third quarter of 2004 detracted modestly from its performance.
Spread product outperformed in the third quarter; however, the Portfolio's
shorter spread duration dampened the impact of the excess returns over
Treasuries.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 1
Market Review and Investment Strategy
Bond market returns were relatively modest for the annual reporting period
ended September 30, 2004. The returns, however, masked intra-period volatility
as changing perceptions of the U.S. economy effected bond performance. In the
first quarter of 2004, heightened geopolitical risk, weak domestic employment
data and strong foreign demand for U.S. securities, led to falling interest
rates and strong bond-market returns. In the second quarter, bond market
returns dramatically reversed course with a sharp sell-off sparked by April's
surprisingly strong U.S. employment number. Interest rates began to rise in
anticipation of eventual Federal Reserve (Fed) rate hikes. By late June, soft
consumer confidence readings, weak inflation data and slower payroll numbers
allowed bond markets to rebound as the U.S. economy hit a mid-year slowdown.
Additionally, the prospects of slower, more measured Federal Reserve
tightenings bolstered the bond markets back into positive returns.
During the annual period, the yield curve flattened with a rise in short and
intermediate term rates. Two-year yields rose 115 basis points to yield 2.61%
according to the LB Government Index, while 10-year yields rose 18 basis points
to 4.12%. For the year, 30-year yields remained relatively flat gaining only 1
basis point to yield 4.89%.
For the annual reporting period ended September 30, 2004, most spread sectors
outperformed U.S. Governments. According to the LB Government Index, Treasuries
posted a modest return of 2.55% and agencies a return of 2.43%. Longer maturity
Treasuries returned 3.20%, as represented by the 10-year Treasury, which
outperformed shorter maturity Treasuries that returned 1.00%, as represented by
the two-year Treasury. Within the spread sectors, mortgage securities returned
4.36% for the year, as represented by the LB Government Index, supported by
strong investor demand coupled with relatively low volatility. Premium-coupon
pass-throughs outperformed lower coupons as interest rates declined.
Collateralized mortgage-backed securities also outperformed governments with
positive returns at 3.53%, as real estate markets remained strong. Asset-backed
securities returned 2.95% as strong demand tightened spreads to multi-year lows.
During the annual reporting period ended September 30, 2004, we
opportunistically held non-Treasury sectors in our belief that a strengthening
economy would benefit spread product. Specifically, we concentrated the
Portfolio on high coupon mortgages which provided an attractive yield advantage
over Treasuries. The Portfolio utilized adjustable rate mortgages, as well as
agency and non-agency collateralized mortgage obligations, which re-priced
during the period and offered the Portfolio relative value and a favorable
yield advantage over Treasuries. Additionally, we utilized asset-backed
holdings, specifically home-equity loans. The Portfolio's duration was
maintained close to the benchmark while its yield curve exposure was slightly
biased towards a flattening yield curve.
2 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
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) Government Index does not reflect fees and
expenses associated with the active management of a mutual fund portfolio. The
Index is composed of the LB Treasury Index and the LB Agency Index. For the
six- and 12-month periods ended September 30, 2004, the Lipper General U.S.
Government Funds Average consisted of 192 and 188 funds, respectively. These
funds have generally similar investment objectives to the Portfolio, although
some may have different investment policies and sales and management fees. An
investor cannot invest directly in an index or average, and their results are
not indicative of the performance for any specific investment, including the
Portfolio.
A Word About Risk
Price fluctuations in the Portfolio's securities may be caused by changes in
the general level of interest rates or changes in bond credit quality ratings.
Changes in interest rates have a greater effect on bonds with longer maturities
than on those with shorter maturities. Treasury securities provide fixed rates
of return as well as principal guarantees if held to maturity. Investment
returns and principal value of a mutual fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. While the Portfolio invests principally in bonds and other fixed-income
securities, in order to achieve its investment objectives, the Portfolio may at
times use certain types of investment derivatives, such as options, futures,
forwards and swaps. These instruments involve risks different from, and in
certain cases, greater than, the risks presented by more traditional
investments. These risks are fully discussed in the Portfolio's prospectus.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 3
HISTORICAL PERFORMANCE
(continued from previous page)
THE PORTFOLIO VS. ITS BENCHMARK Returns
PERIODS ENDED SEPTEMBER 30, 2004 6 Months 12 Months
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund
U.S. Government Portfolio
Class A -0.14% 2.49%
Class B -0.51% 1.74%
Class C -0.51% 1.73%
Class R -0.24% 3.72%*
Advisor Class 0.03% 2.82%
Lehman Brothers Government Index 0.04% 2.52%
Lipper General U.S. Government Funds Average 0.07% 2.19%
* Since Inception: the Class R share since inception date is 11/3/03.
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO
9/30/94 TO 9/30/04
AllianceBernstein Lehman
Bond Fund Brothers
U.S. Government Government
Portfolio Class A Index
- -------------------------------------------------------------------------------
9/30/94 9,575 10,000
9/30/95 10,707 11,357
9/30/96 10,890 11,859
9/30/97 11,796 12,945
9/30/98 13,256 14,705
9/30/99 12,900 14,455
9/30/00 13,766 15,493
9/30/01 15,368 17,547
9/30/02 16,559 19,308
9/30/03 16,729 19,993
9/30/04 17,169 20,498
Lehman Brothers Government Index: $20,498
AllianceBernstein Bond Fund U.S. Government Portfolio Class A: $17,169
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Bond Fund U.S. Government 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)
4 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
Historical Performance
AVERAGE ANNUAL RETURNS AS OF SEPTEMBER 30, 2004
NAV Returns SEC Returns
- -------------------------------------------------------------------------------
Class A Shares
1 Year 2.49% -1.83%
5 Years 5.88% 4.95%
10 Years 6.01% 5.55%
SEC Yield** 5.43%
Class B Shares
1 Year 1.74% -1.20%
5 Years 5.10% 5.10%
10 Years(a) 5.54% 5.54%
SEC Yield** 4.96%
Class C Shares
1 Year 1.73% 0.75%
5 Years 5.13% 5.13%
10 Years 5.25% 5.25%
SEC Yield** 4.96%
Class R Shares
1 Year -0.24%
Since Inception* 3.72%
SEC Yield** 5.47%
Advisor Class Shares
1 Year 2.82%
Since Inception* 6.08%
SEC Yield** 5.98%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (SEPTEMBER 30, 2004)
- -------------------------------------------------------------------------------
Class A Shares
1 Year -1.83%
5 Years 4.95%
10 Years 5.55%
Class B Shares
1 Year -1.20%
5 Years 5.10%
10 Years(a) 5.54%
Class C Shares
1 Year 0.75%
5 Years 5.13%
10 Years 5.25%
* Inception dates: 11/3/03 for Class R shares and 10/6/00 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 3.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 5
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.
Ending
Beginning Account Value
Account Value September 30, Expenses Paid
April 1, 2004 2004 During Period*
- -------------------------------------------------------------------------------
Class A
Actual $1,000 $998.65 $6.06
Hypothetical
(5% return before expenses) $1,000 $1,018.95 $6.12
Class B
Actual $1,000 $994.95 $9.70
Hypothetical
(5% return before expenses) $1,000 $1,015.30 $9.80
Class C
Actual $1,000 $994.94 $9.65
Hypothetical
(5% return before expenses) $1,000 $1,015.35 $9.75
Class R
Actual $1,000 $997.65 $7.01
Hypothetical
(5% return before expenses) $1,000 $1,018.00 $7.08
Advisor Class
Actual $1,000 $1,000.28 $4.56
Hypothetical
(5% return before expenses) $1,000 $1,020.45 $4.61
* Expenses are equal to the classes' annualized expense ratios of 1.21%, 1.94%,
1.93%, 1.40%, and 0.91%, respectively, multiplied by the average account value
over the period, multiplied by the number of days in the most recent fiscal
half-year/366 (reflect the one-half year period).
6 o AllianceBernstein Bond Fund U.S. Government Portfolio
PORTFOLIO SUMMARY
September 30, 2004
PORTFOLIO STATISTICS
Net Assets ($mil): $1,210.0
SECURITY TYPE BREAKDOWN*
o 62.2% U.S. Treasury Securities
o 13.6% Federal National Mortgage Association
o 7.4% Federal Home Loan Mortgage Corp.
o 7.0% Collateralized Mortgage Obligations
o 2.9% Asset Backed Securities
o 2.1% Collateralized Mortgage Backed Securities
o 2.0% Government National Mortgage Association
o 1.6% Stripped Mortgage Backed Securities
o 0.8% Federal Agricultural Mortgage Association
o 0.4% 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.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 7
PORTFOLIO OF INVESTMENTS
September 30, 2004
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
U.S. GOVERNMENT & GOVERNMENT
SPONSORED AGENCY OBLIGATIONS-104.0%
U.S. Treasury Notes-40.4%
2.375%, 8/15/06(a) $ 151,000 $ 150,516,347
3.00%, 2/15/09* 65,600 64,941,442
3.25%, 1/15/09 28,600 28,613,413
3.375%, 11/15/08* 80,250 80,817,367
3.875%, 5/15/09* 28,545 29,238,558
4.00%, 2/15/14(a)* 49,500 49,117,167
4.25%, 8/15/13* 24,715 25,084,761
4.75%, 5/15/14* 57,385 60,236,346
--------------
488,565,401
U.S. Treasury Bonds-34.8%
5.375%, 2/15/31* 33,000 35,351,250
6.25%, 8/15/23 33,300 38,885,542
6.375%, 8/15/27 40,000 47,770,320
7.125%, 2/15/23(a) 45,000 57,371,490
7.25%, 5/15/16 20,000 25,176,560
7.50%, 11/15/16* 95,000 122,086,115
11.25%, 2/15/15 20,000 31,822,660
12.50%, 8/15/14* 45,150 63,430,468
--------------
421,894,405
Federal National Mortgage Association-16.5%
2.90%, 10/25/42 7,289 7,289,094
4.23%, 4/01/33 2,917 2,952,779
4.615%, 2/01/34 7,689 7,823,473
5.00%, 4/25/13-10/25/33 49,503 30,996,265
5.50%, TBA 39,165 40,213,741
6.00%, 12/01/13-5/25/30 22,389 23,295,826
6.50%, 9/25/42-1/25/44 9,735 10,271,392
7.00%, 4/01/07-1/01/21 56,608 59,865,717
7.50%, 12/01/09-4/01/17 7,265 7,679,221
8.50%, 4/01/08 1,353 1,386,118
9.00%, 8/01/21 538 571,185
10.00%, 11/01/13-10/01/14 6,018 6,647,839
11.00%, 7/01/16 680 762,233
--------------
199,754,883
Federal Home Loan Mortgage Corp.-8.9%
4.50%, 9/15/13-10/15/26 35,408 35,528,031
5.00%, 6/15/14-8/15/27 73,871 61,134,672
6.50%, 3/15/28 4,252 4,459,402
7.00%, 12/01/10 2,113 2,195,301
8.00%, 9/01/11 1,136 1,176,821
12.00%, 8/01/15-7/01/20 2,847 3,181,213
--------------
107,675,440
8 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Government National Mortgage
Association-2.4%
Single Family Homes
7.00%, 12/15/26 $ 5,365 $ 5,750,736
7.50%, 12/15/14 13,051 13,955,147
8.00%, 3/15/12 6,034 6,434,717
8.15%, 9/15/20 748 807,077
9.00%, 12/15/09-12/15/19 1,956 2,117,312
--------------
29,064,989
Federal Agricultural Mortgage
Association-1.0%
6.75%, 7/25/13 11,578 12,125,600
Total U.S. Government & Government
Sponsored Agency Obligations
(cost $1,237,839,627) 1,259,080,718
COLLATERALIZED MORTGAGE OBLIGATIONS-8.3%
Bank America Funding Corp.
Series 2004-B Cl.5A1
5.24%, 11/20/34(b) 5,855 5,952,339
Bear Stearns Trust
Series 2004-11 Cl.2A3
5.05%, 11/25/34 5,795 5,899,136
Citicorp Mortgage Securities, Inc.
Series 1987-3 Cl.A1
9.00%, 5/01/17 1,317 1,290,317
Countrywide Home Loans
Series 2004-22 Cl.A1
5.198%, 11/25/34 5,625 5,730,469
Master Adjustable Rate Mortgages Trust
Series 2004-8 Cl.5A1
4.818%, 8/25/34 5,855 5,920,346
Master Asset Securitization Trust
Series 2004-9 Cl.3A1
5.25%, 7/25/34 7,518 7,602,581
Merrill Lynch Mortgage Investors, Inc.
Series 2004-A2 Cl.1A
3.845%, 7/25/34 6,342 6,351,522
MLCC Mortgage Investors, Inc.
Series 2003-F Cl.A1
2.16%, 10/25/28 17,426 17,412,467
Morgan Stanley Mortgage Loan Trust
Series 2004-8AR Cl.4A1
5.47%, 10/25/34 5,635 5,767,084
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 9
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Residential Asset Mortgage Products, Inc.
Series 2004-SL2 Cl.A2
6.50%, 10/25/31 $ 10,260 $ 10,560,910
SASCO Net Interest Margin Trust
Series 2004-9XS Cl.A
5.25%, 5/25/34(c) 4,283 4,271,487
Structured Asset Securities Corp.
Series 2003-6A Cl.B3
5.55%, 3/25/33 3,481 3,434,742
Series 2002-3 Cl.B3
6.50%, 3/25/32 3,453 3,466,230
Wells Fargo Mortgage Backed Securities Trust
Series 2004-S Cl.A1
3.54%, 9/25/34 6,753 6,599,936
Series 2004-P Cl.2A1
4.30%, 9/25/34 4,883 4,891,176
Series 2004-W Cl.A1
4.68%, 11/25/34 5,635 5,683,010
--------------
Total Collateralized Mortgage Obligations
(cost $100,598,923) 100,833,752
ASSET BACKED SECURITIES-3.5%
Fixed Rate-1.0%
Countrywide Asset-Backed Certificates
Series 2004-2N Cl.N1
5.00%, 2/25/35(c) 3,877 3,865,929
Residential Asset Mortgage Products, Inc.
Series 2004-SP2 Cl.A21
6.00%, 1/25/32 7,851 8,034,639
------------
11,900,568
Adjustable Rate-2.5%
Bayview Financial Acquisition Trust
Series 2003-E Cl.A
2.34%, 10/28/34 15,448 15,448,463
Winston Funding, Ltd.
Series 2003-1 Cl.A2
2.02%, 4/23/09(c) 15,000 15,000,000
------------
30,448,463
Total Asset Backed Securities
(cost $42,330,713) 42,349,031
COMMERCIAL MORTGAGE BACKED
SECURITIES-2.6%
Asset Securitization Corp.
Series 1997-MD7 Cl.A1B
7.41%, 1/13/30 16,847 17,996,976
Commercial Mortgage Acceptance Corp.
Series 1997-ML1 Cl.A2
6.53%, 12/15/30 13,077 13,207,770
10 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Total Commercial Mortgage Backed Securities
(cost $30,485,702) $ 31,204,746
STRIPPED MORTGAGE BACKED
SECURITIES-1.9%
Credit Suisse First Boston Mortgage
Series 2001-CK3 Cl.AX
1.25%, 6/15/34(c) $ 37,651 1,916,075
Series 2004-R2 Cl.A1
5.31%, 12/28/33(c) 5,212 4,942,055
Morgan Stanley Capital I
Series 2003-IQ4 Cl.X1
Zero coupon, 5/15/40(c) 101,084 3,663,280
Mortgage Capital Funding, Inc.
Series 1996-MC2 Cl.X
Zero coupon, 12/21/26 50,365 1,778,890
Prudential Securities Secured Financing Corp.
Series 1999-NRF1 Cl.AEC
Zero coupon, 10/15/18(c) 312,155 10,282,371
SACO I, Inc.
Series 1997-2 Cl.X
1.59%, 8/25/36(c) 19,942 373,918
------------
Total Stripped Mortgage Backed Securities
(cost $31,443,771) 22,956,589
SHORT-TERM INVESTMENTS-0.5%
U.S. Treasury Bill-0.2%
Zero coupon, 11/18/04(d) 3,000 2,994,192
Repurchase Agreement-0.3%
State Street Bank & Trust Co.
1.67%, dated 09/30/04, due 10/01/04 in the
amount of $3,000,139 (cost $3,000,000;
collateralized by $2,325,000 U.S. Treasury
Bond, 7.50%, due 11/15/16, value
$3,066,456) 3,000 3,000,000
Total Short-Term Investments
(amortized cost $5,994,192) 5,994,192
Total Investments Before Security Lending Collateral
(cost $1,448,692,928) 1,462,419,028
INVESTMENT OF CASH COLLATERAL FOR
SECURITIES LOANED-37.6%
Short-Term Investments
Bradford & Bingley PLC
1.813%-1.939%, 10/27/04-12/29/04 160,000 159,477,500
Deutsche Bank
1.209%, 10/25/04 20,000 20,000,000
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 11
Shares or
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Federal Home Loan Bank
1.27%-1.35%, 4/26/05-4/29/05 $ 32,500 $ 32,500,000
Federal Home Loan Mortgage Corp.
1.825%, 9/09/05 25,000 25,000,000
Federal National Mortgage Association
1.33%, 2/23/05 50,000 50,000,000
Gotham Funding
1.843%, 10/28/04 55,528 55,448,533
Morgan Stanley
1.888%-2.04%, 12/6/04-4/19/05 70,000 70,000,000
Sigma Finance
1.22%, 12/03/04 25,000 25,000,000
UBS Finance
1.88%, 10/01/04 14,000 13,999,269
UBS Private Money Market Fund, LLC
1.66% 3,208,955 3,208,955
--------------
Total Investment of Cash Collateral for
Securities Loaned
(cost $454,634,257) 454,634,257
Total Investments-158.4%
(cost $1,903,327,185) 1,917,053,285
Other assets less liabilities-(58.4%) (707,011,709)
---------------
Net Assets-100% $1,210,041,576
FINANCIAL FUTURES CONTRACTS SOLD (see Note D)
Value at Unrealized
Number of Expiration Original September 30, Appreciation/
Type Contracts Month Value 2004 (Depreciation)
- ----------------------------------------------------------------------------------------------------------
U.S. Treasury
Note 2 Yr December
Future 1,176 2004 $ 248,571,237 $ 248,411,626 $ 159,611
U.S. Treasury
Note 5 Yr December
Future 400 2004 43,848,040 44,300,000 (451,960)
U.S. Treasury
Note 10 Yr December
Future 400 2004 44,979,290 45,050,000 (70,710)
Intetrest Rate
Swap 10 Yr December
Future 250 2004 27,498,775 27,687,500 (188,725)
------------
$ (551,784)
12 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
REVERSE REPURCHASE AGREEMENTS (see Note D)
Broker Interest Rate Maturity Amount
- -------------------------------------------------------------------------------
Citigroup Global Markets 1.70% 10/04/04 $ 42,947,083
Citigroup Global Markets 1.65 10/04/04 150,831,737
Citigroup Global Markets 1.45 10/04/04 35,223,256
-------------
$ 229,002,076
* Represents entire or partial securities out on loan. See Note E for
securities lending information.
(a) Positions, or portions thereof, with an aggregate market value of
$257,005,004 have been segregated to collateralize reverse repurchase
agreements.
(b) When-Issued security.
(c) Security 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 buyers. At September 30, 2004,
the aggregate market value of these securities amounted to $44,315,115
representing 3.7% of net assets.
(d) Positions, or a portion thereof, with a market value of $2,850,000 have
been segregated to collaterlize margin requirements for open futures contracts.
Glossary:
TBA-(To Be Assigned)-Securities are purchased on a forward commitment with an
appropriate principal amount (generally +/- 1.0%) and no definite maturity
date. The actual principal amount and maturity date will be determined upon
settlement when the specific mortgage pools are assigned.
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 13
STATEMENT OF ASSETS & LIABILITIES
September 30, 2004
Assets
Investments in securities, at value (cost $1,903,327,185--
including investment of cash collateral for securities
loaned of $454,634,257) $1,917,053,285(a)
Cash 490,812
Receivable for investment securities sold 109,185,321
Interest receivable 12,575,992
Receivable for capital stock sold 2,310,797
Receivable for variation margin on futures contracts 46,000
--------------
Total assets 2,041,662,207
Liabilities
Payable for collateral received on securities loaned 454,634,257
Payable for reverse repurchase agreement 229,002,076
Payable for investment securities purchased 140,313,655
Payable for capital stock redeemed 3,886,157
Dividends payable 1,531,489
Advisory fee payable 1,369,054
Distribution fee payable 435,978
Transfer Agent fee payable 234,023
Accrued expenses 213,942
--------------
Total liabilities 831,620,631
--------------
Net Assets $1,210,041,576
Composition of Net Assets
Capital stock, at par $ 170,086
Additional paid-in capital 1,334,855,019
Distributions in excess of net investment income (10,925,696)
Accumulated net realized loss on investment transactions (127,230,325)
Net unrealized appreciation of investments 13,172,492
$1,210,041,576
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($626,181,154 / 88,054,764 shares of capital stock
issued and outstanding) $7.11
Sales charge--4.25% of public offering price .32
Maximum offering price $7.43
Class B Shares
Net asset value and offering price per share
($229,822,616 / 32,319,202 shares of capital stock
issued and outstanding) $7.11
Class C Shares
Net asset value and offering price per share
($107,002,290 / 15,025,789 shares of capital stock
issued and outstanding) $7.12
Class R Shares
Net asset value, redemption and offering price per share
($16,171 / 2,274 shares of capital stock
issued and outstanding) $7.11
Advisor Class Shares
Net asset value, redemption and offering price per share
($247,019,345 / 34,684,034 shares of capital stock
issued and outstanding) $7.12
(a) Includes securities on loan with a value of $439,960,691 (see Note E).
See notes to financial statements.
14 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
STATEMENT OF OPERATIONS
Year Ended September 30, 2004
Investment Income
Interest $ 74,823,284
Expenses
Advisory fee $ 6,948,374
Distribution fee--Class A 2,073,268
Distribution fee--Class B 2,977,706
Distribution fee--Class C 1,266,889
Distribution fee--Class R 59
Transfer agency 2,914,459
Custodian 305,688
Printing 250,097
Audit and legal 140,445
Administrative 97,728
Registration fees 83,192
Directors' fees 15,000
Miscellaneous 64,788
Total expenses before interest expense 17,137,693
Interest expense 3,942,066
Total expenses 21,079,759
Less: expenses waived
by the Adviser (see Note B) (774,933)
Less: expense offset arrangement
(see Note B) (229)
Net expenses 20,304,597
Net investment income 54,518,687
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions (1,769,319)
Written options 1,072,265
Futures Contracts (20,430,203)
Net change in unrealized
appreciation/depreciation of:
Investments (18,624,063)
Written options 2,847,658
Futures contracts 9,637,754
Net loss on investment transactions (27,265,908)
Net Increase in Net Assets
from Operations $ 27,252,779
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO O 15
STATEMENT OF CHANGES IN NET ASSETS
Year Ended July 1, 2003 to Year Ended
September 30, September 30, June 30,
2004 2003* 2003
- --------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 54,518,687 $ 13,351,669 $ 61,910,773
Net realized gain (loss) on
investment transactions (21,127,257) (13,791,136) 39,787,086
Net change in unrealized
appreciation/depreciation
of investments (6,138,651) (36,137,621) 46,086,548
Net increase (decrease) in net
Assets from operations 27,252,779 (36,577,088) 147,784,407
Dividends to Shareholders from
Net investment income
Class A (32,446,874) (9,719,429) (41,821,063)
Class B (11,746,705) (4,297,353) (20,589,855)
Class C (4,996,461) (1,766,382) (9,059,572)
Class R (529) -0- -0-
Advisor Class (11,309,550) (2,444,044) (8,628,587)
Capital Stock Transactions
Net increase (decrease) (338,594,406) (149,688,274) 72,866,684
Total increase (decrease) (371,841,746) (204,492,570) 140,552,014
Net Assets
Beginning of period 1,581,883,322 1,786,375,892 1,645,823,878
End of period (including
distributions
in excess of net investment
income of ($10,925,696),
($13,576,433) and
($12,613,658),
respectively) $1,210,041,576 $1,581,883,322 $1,786,375,892
* The Portfolio changed its fiscal year end from June 30 to September 30.
See notes to financial statements.
16 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
STATEMENT OF CASH FLOWS
Year Ended September 30, 2004
Increase (Decrease) in Cash from
Operating Activities:
Interest and dividends received (includes
accretion of discount and amortization
of premium of $5,626,376) $ 81,502,724
Interest expense paid (3,942,066)
Operating expenses paid (17,685,112)
Net increase in cash from operating
activities $ 59,875,546
Investing Activities:
Purchases of long-term investments (2,780,935,507)
Proceeds from disposition of
long-term investments 3,266,164,392
Proceeds from disposition of short-term
investments, net 107,390,135
Decrease in collateral for securities
loaned (110,098,981)
Variation margin paid on
futures contracts (13,065,949)
Net decrease in cash from investing
activities 469,454,090
Financing Activities*:
Cash dividends paid (18,202,317)
Redemptions of capital stock, net (382,813,203)
Cash collateral received from
securities lending --
Proceeds from reverse
repurchase agreements (148,613,616)
Net increase in cash from
financing activities (549,629,136)
Net decrease in cash (20,299,500)
Cash at beginning of period 20,790,312
Cash at end of period $ 490,812
Reconciliation of Net Increase in Net
Assets from Operations to Net Increase
in Cash from Operating Activities:
Net increase in net assets from operations $ 27,252,779
Adjustments:
Decrease in interest and
dividends receivable $1,053,064
Accretion of bond discount and
amortization of bond premium 5,626,376
Decrease in accrued expenses (1,322,581)
Net realized loss on investment
transactions 21,127,257
Net change in unrealized appreciation/
depreciation of investments 6,138,651
Total adjustments 32,622,767
Net increase in cash from operating
activities $59,875,546
* Non-cash financing activities not included herein consist of reinvestment of
dividends.
See notes to financial statements
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO O 17
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 U.S. Government Portfolio. The U.S. Government
Portfolio (the "Portfolio") offers Class A, Class B, Class C, Class R and
Advisor Class shares. Class A shares are sold with a front-end sales charge of
up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases
of $1,000,000 or more, Class A shares redeemed within one year of purchase may
be subject to a contingent deferred sales charge of 1%. Class B shares are
currently sold with a contingent deferred sales charge which declines from 3%
to zero depending on the period of time the shares are held. Class B shares
will automatically convert to Class A shares six years after the end of the
calendar month of purchase. Class C shares are subject to a contingent deferred
sales charge of 1% on redemptions made within the first year after purchase.
Class R shares are sold without an initial or contingent deferred sales charge
and are offered to certain group retirement plans. Advisor Class shares are
sold without any initial or contingent deferred sales charge and are not
subject to ongoing distribution expenses. Advisor Class shares are offered to
investors participating in fee-based programs and to certain retirement plan
accounts. All five classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The financial statements have been prepared in conformity
with 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
18 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
close of the exchange or foreign securities exchange. If there has been no sale
on such day, the securities are valued at the mean of the closing bid and asked
prices on such day. Securities listed on more than one exchange are valued by
reference to the principal exchange on which the securities are traded;
securities not listed 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 Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Taxes
It is the Portfolio's policy to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for Federal income or excise taxes are
required. 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 repatri-
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 19
ated. 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.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Portfolio accretes discounts as
adjustments to interest income. Additionally, the Portfolio amortizes premiums
on debt securities for financial statement reporting purposes.
4. Income and Expenses
All income earned and expenses incurred by the Portfolio are borne on a pro
rata basis by each settled class of shares, based on the proportionate interest
in the Portfolio represented by the net assets of such class, except that the
Portfolio's Class B and Class C shares bear higher distribution and transfer
agent fees than Class A, Class R and Advisor Class shares. Advisor Class shares
have no distribution fees.
5. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the
ex-dividend date. Income dividends and capital gains distributions are
determined in accordance with federal tax regulations and may differ from those
determined in accordance with 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. Repurchase Agreements
It is the Portfolio's policy that its custodian or designated subcustodian take
control of securities as collateral under repurchase agreements and to
determine on a daily basis that the value of such securities are sufficient to
cover the value of the repurchase agreements. If the seller defaults and the
value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of collateral by the
Portfolio may be delayed or limited.
7. Change of Fiscal Year End
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.
20 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
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 a quarterly rate of .15%
(approximately .60% on an annual basis) of the first $500 million of the
Portfolio's net assets and .125% (approximately .50% on an annual basis) of its
net assets over $500 million, valued on the last business day of the previous
quarter. 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 .45% of the first $2.5 billion, .40% of the next $2.5 billion and .35% in
excess of $5 billion, of the Portfolio's net assets valued on the last business
day of the previous quarter. 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 $774,933. For a more complete discussion of the
Adviser's settlement with the NYAG, please see "Legal Proceedings" below.
Pursuant to the advisory agreement, the Portfolio paid $97,728 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 $2,010,042 for the year ended
September 30, 2004.
For the year ended September 30, 2004, the Portfolio's expenses were reduced by
$229 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 $11,758 from the sales of Class A shares
and received $15,805, $657,982 and $11,394 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.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 21
NOTE C
Distribution Services Agreement
The Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Portfolio pays distribution and servicing fees to the
Distributor at an annual rate of up to .30 of 1% of the Portfolio's average
daily net assets attributable to Class A shares, .50% of 1% of the Portfolio's
average daily net assets attributable to Class R shares and 1% of the average
daily net assets attributable to both Class B and Class C shares. There are no
distribution and servicing fees on the Advisor Class shares. The fees are
accrued daily and paid monthly. The Agreement provides that the Distributor
will use such payments in their entirety for distribution assistance and
promotional activities. The Distributor has advised the Portfolio that it has
incurred expenses in excess of the distribution costs reimbursed by the
Portfolio in the amount of $962,706, and $1,894,516 for Class B and Class C
shares, respectively; such costs may be recovered from the Portfolio in future
periods as long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs incurred by the Distributor beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Portfolio's shares.
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) $172,567,866 $287,210,391
U.S. government securities 2,419,758,819 2,586,768,446
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding written options and
futures) are as follows:
Cost $1,919,030,057
Gross unrealized appreciation $19,008,861
Gross unrealized depreciation (20,985,633)
Net unrealized appreciation $(1,976,772)
1. Financial Futures Contracts
The Portfolio may buy or sell financial futures contracts for the purpose of
hedging its portfolio against adverse effects of anticipated movements in the
market. The Portfolio bears the market risk that arises from changes in the
value
22 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
of these financial instruments and the imperfect correlation between movements
in the price of the futures contracts and movements in the price of the
securities hedged or used for cover.
At the time the Portfolio enters into a futures contract, the Portfolio
deposits and maintains as collateral an initial margin as required by the
exchange on which the transaction is affected. Pursuant to the contract, the
Portfolio agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in the value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Portfolio as
unrealized gains or losses. Risks may arise from the potential inability of a
counterparty to meet the terms of the contract. When the contract is closed,
the Portfolio records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the time it was closed.
2. Swap Agreements
The Portfolio may enter into interest rate swaps to protect itself from
interest rate fluctuations on the underlying debt instruments. A swap is an
agreement that obligates two parties to exchange a series of cash flows at
specified intervals based upon or calculated by reference to changes in
specified prices or rates for a specified amount of an underlying asset. The
payment flows are usually netted against each other, with the difference being
paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net interest payment
to be received by the Portfolio, and/or the termination value at the end of the
contract. Therefore, the Portfolio considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the value of the underlying securities.
The Portfolio records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as
interest income (or as an offset to interest income). Fluctuations in the value
of swap contracts are recorded for financial statement purposes as a component
of net change in unrealized appreciation/depreciation of investments. Realized
gains and losses from terminated swaps are included in net realized gains or
losses on investment transactions.
3. Option Transactions
For hedging and investment purposes, the Portfolio may purchase and write
(sell) put and call options on U.S. and foreign government securities and
foreign
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 23
currencies that are traded on U.S. and foreign securities exchanges and
over-the-counter markets.
The risk associated with purchasing an option is that the Portfolio pays a
premium whether or not the option is exercised. Additionally, the Portfolio
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of
securities acquired through the exercise of call options is increased by
premiums paid. The proceeds from securities sold through the exercise of put
options are decreased by the premiums paid.
When the Portfolio writes an option, the premium received by the Portfolio is
recorded as a liability and is subsequently adjusted to the current market
value of the option written. Premiums received from written options which
expire unexercised are recorded by the Portfolio on the expiration date as
realized gains from options written. The difference between the premium
received and the amount paid on effecting a closing purchase transaction,
including brokerage commissions, is also treated as a realized gain, or if the
premium received is less than the amount paid for the closing purchase
transaction, as a realized loss. If a call option is exercised, the premium
received is added to the proceeds from the sale of the underlying security in
determining whether the Portfolio has realized a gain or loss. If a put option
is exercised, the premium received reduces the cost basis of the security
purchased by the Portfolio. In writing an option, the Portfolio bears the
market risk of an unfavorable change in the price of the security underlying
the written option. Exercise of an option written by the Portfolio could result
in the Portfolio selling or buying a security at a price different from the
current market value.
Transactions in options written for the year ended September 30, 2004 were as
follows:
Number of Premiums
Contracts Received
- -------------------------------------------------------------------------------
Options outstanding at
September 30, 2003 2,250 $ 1,072,265
Options written -0- -0-
Options Expired (2,250) (1,072,265)
Options terminated in closing purchase
transactions -0- -0-
Options exercised -0- -0-
Options outstanding at
September 30, 2004 -0- $ -0-
24 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
4. Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Portfolio sells securities and agrees
to repurchase them at a mutually agreed upon date and price. At the time the
Portfolio enters into a reverse repurchase agreement, it will establish a
segregated account with the custodian containing liquid assets having a value
at least equal to the repurchase price.
For the year ended September 30, 2004, the average amount of reverse repurchase
agreements outstanding was $374,549,672 and the daily weighted average
annualized interest rate was 1.03%.
NOTE E
Securities Lending
The Portfolio has entered into a securities lending agreement with AG Edwards &
Sons, Inc. (the"Lending Agent"). Under the terms of the agreement, the Lending
Agent, on behalf of the Portfolio, administers the lending of portfolio
securities to certain broker-dealers. In return, the Portfolio receives fee
income from the lending transactions or it retains a portion of interest on the
investment of any cash received as collateral. The Portfolio also continues to
receive dividends or interest on the securities loaned. Unrealized gain or loss
on the value of the securities loaned that may occur during the term of the
loan will be reflected in the accounts of the Portfolio. All loans are
continuously secured by collateral exceeding the value of the securities
loaned. All collateral consists of either cash or U.S. government securities.
The Lending Agent may invest the cash collateral received in accordance with
the investment restrictions of the Portfolio in one or more of the following
investments: U.S. government or U.S. government agency obligations, bank
obligations, corporate debt obligations, asset-backed securities, investment
funds, structured products, repurchase agreements and an eligible money market
fund. The Lending Agent will indemnify the Portfolio for any loss resulting
from a borrower's failure to return a loaned security when due. As of September
30, 2004, the Portfolio had loaned securities with a value of $439,960,691 and
received cash collateral which was invested in short-term securities valued at
$454,634,257 as included in the accompanying portfolio of investments. For the
year ended September 30, 2004, the Portfolio earned fee income of $1,208,171
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
Advi-
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 25
sor 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 4,218,101 7,081,876 99,871,241
Shares issued in reinvestment
of dividends 2,862,366 842,226 3,397,687
Shares converted from Class B 2,905,427 623,756 2,638,670
Shares redeemed (33,589,991) (15,589,912) (107,352,732)
Net decrease (23,604,097) (7,042,054) (1,445,134)
Class B
Shares sold 2,167,866 1,785,384 41,363,192
Shares issued in reinvestment
of dividends 1,094,395 384,985 1,747,439
Shares converted to Class A (2,905,568) (623,756) (2,666,482)
Shares redeemed (22,962,538) (12,799,293) (29,791,395)
Net increase (decrease) (22,605,845) (11,252,680) 10,652,754
Class C
Shares sold 1,313,208 743,732 17,523,866
Shares issued in reinvestment
of dividends 441,096 147,804 741,897
Shares redeemed (9,733,170) (5,091,572) (19,058,320)
Net decrease (7,978,866) (4,200,036) (792,557)
Advisor Class
Shares sold 6,165,460 1,553,934 5,728,180
Shares issued in reinvestment
of dividends 1,574,981 332,740 1,166,739
Shares redeemed (1,096,014) (186,666) (5,229,251)
Net increase 6,644,427 1,700,008 1,665,668
November 13,
2004(b) to
September 30,
2004
---------------
Class R
Shares sold 2,258
Shares issued in
reinvestment of
dividends 16
Net increase 2,274
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(b) Commencement of distribution.
26 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
Amount
- --------------------------------------------------------------------------------------------------
Year Ended July 1, 2003 to Year Ended
September 30, September 30, June 30,
2004 2003(a) 2003
---------------------------------------------------------
Class A
Shares sold $ 30,146,844 $ 51,268,823 $ 738,562,949
Shares issued in reinvestment
of dividends 20,389,259 6,086,303 25,217,655
Shares converted from Class B 20,665,943 4,387,602 19,834,712
Shares redeemed (239,197,202) (112,373,614) (794,926,312)
Net decrease $ (167,995,156) $ (50,630,886) $ (11,310,996)
Class B
Shares sold $ 15,470,284 $ 12,927,847 $ 305,612,817
Shares issued in reinvestment
of dividends 7,799,846 2,781,869 12,971,394
Shares converted to Class A (20,665,943) (4,387,602) (19,834,712)
Shares redeemed (163,696,608) (92,309,168) (221,190,959)
Net increase (decrease) $ (161,092,421) $ (80,987,054) $ 77,558,540
Class C
Shares sold $ 9,368,581 $ 5,399,978 $ 129,704,727
Shares issued in reinvestment
of dividends 3,147,594 1,069,553 5,512,251
Shares redeemed (69,513,844) (36,840,779) (141,500,884)
Net decrease $ (56,997,669) $ (30,371,248) $ (6,283,906)
Advisor Class
Shares sold $ 44,040,465 $ 11,241,378 $ 42,725,185
Shares issued in reinvestment
of dividends 11,224,484 2,407,372 8,673,997
Shares redeemed (7,790,298) (1,347,836) (38,496,136)
Net increase $ 47,474,651 $ 12,300,914 $ 12,903,046
November 13,
2003(b) to
September 30,
2004
-------------
Class R
Shares sold $16,074
Shares issued in
reinvestment of
dividends 115
Net increase $16,189
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(b) Commencement of distribution.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 27
NOTE G
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.
Indemnification 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 H
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 I
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended September
30, 2004, September 30, 2003 and June 30, 2003 were as follows:
Year Ended July 1, 2003 to Year Ended
September 30, September 30, June 30,
2004 2003* 2003
- ------------------------------------------------------------------------------
Distributions paid
from:
Ordinary income $60,500,119 $18,227,208 $80,099,077
Total taxable
distributions 60,500,119 18,227,208 80,099,077
Tax return of
capital -0- -0- -0-
Total distributions
paid $60,500,119 $18,227,208 $80,099,077
* The Portfolio changed its fiscal year end from June 30 to September 30.
28 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
As of September 30, 2004, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $(127,782,109)(a)
Undistributed ordinary income 6,308,665
Unrealized appreciation/(depreciation) (1,978,596)(b)
Total accumulated earnings/(deficit) $(123,452,040)
(a) On September 30, 2004, the Portfolio had a net capital loss carryforward
for federal income tax purposes of $101,712,769 (of which $5,207,456 and
$21,956,032 were attributable to the purchase of net assets of Alliance Limited
Maturity Government Income Fund, Inc. and Alliance Mortgage Securities Income
Fund, Inc., respectively, by the Portfolio in December of 2000), of which
$6,928,773 expires in the year 2005, $16,083,708 expires in the year 2006,
$48,732,137 expires in the year 2007, $6,470,420 expires in the year 2008 and
$23,497,731 expires in the year 2011. To the extent future capital gains are
offset by capital loss carryforwards, such gains will not be distributed.
During the fiscal year ended September 30, 2004, $51,265,670 of capital loss
carryforward expired and $563,851 was utilized. Based on certain provision in
the Internal Revenue Code, various limitations regarding the future utilization
of these carryforwards, brought forward as a result of the Portfolio's merger
with Alliance Limited Maturity Government, Inc. may apply. Net capital losses
incurred after October 31, and within the taxable year are deemed to arise on
the first business day of the Portfolio's next taxable year. For the fiscal
year ended September 30, 2004, the Portfolio deferred to October 1, 2004
post-October capital losses of $26,068,744. For the year ended September 30,
2004, the Portfolio deferred losses on straddles of $596.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the difference
between book and tax amortization methods for premium and the realization for
tax purposes of unrealized gains(losses) on certain derivative instruments.
During the current fiscal year, permanent differences, primarily due to the tax
character of paydown losses, expiration of capital loss carryforwards and the
tax treatment of bond premium, resulted in a net decrease in distributions in
excess of net investment income, a net decrease in accumulated net realized
loss on investment transactions and a corresponding decrease in additional
paid-in capital. 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
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 29
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.
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
30 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
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.
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 BOND FUND U.S. GOVERNMENT PORTFOLIO o 31
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.
32 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Class A
------------------------------------------------------------------------------
Year July 1,
Ended 2003 to Year Ended June 30,
Sept. 30, Sept. 30, ---------------------------------------------------
2004 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $7.27 $7.49 $7.21 $7.14 $6.99 $7.19
Income From Investment Operations
Net investment income(c) .30(d) .06 .27 .37 .47 .50
Net realized and unrealized
gain (loss) on investment
transactions (.13) (.20) .35 .13 .17 (.20)
Net increase (decrease) in net asset
value from operations .17 (.14) .62 .50 .64 .30
Less: Dividends and Distributions
Dividends from net investment
income (.33) (.08) (.34) (.37) (.47) (.49)
Distributions in excess of
net investment income -0- -0- -0- (.03) (.01) -0-
Tax return of capital -0- -0- -0- (.03) (.01) (.01)
Total dividends and distributions (.33) (.08) (.34) (.43) (.49) (.50)
Net asset value, end of period $7.11 $7.27 $7.49 $7.21 $7.14 $6.99
Total Return
Total investment return based
on net asset value(e) 2.49% (1.80)% 8.82% 7.11% 9.30% 4.41%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $626,183 $811,376 $889,115 $865,739 $884,574 $430,895
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.34% 1.18%(f) 1.10% 1.23% 2.11% 2.14%
Expenses, before waivers/
reimbursements 1.39% 1.18%(f) 1.10% 1.23% 2.11% 2.14%
Expenses, before waivers/
reimbursements, excluding
interest expense 1.10% 1.11%(f) 1.09% 1.09% 1.13% 1.12%
Net investment income 4.23%(d) 3.43%(f) 3.64% 5.15% 6.57% 7.13%
Portfolio turnover rate 150% 241% 976% 1,009% 712% 398%
See footnote summary on page 38.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO O 33
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
------------------------------------------------------------------------------
Year July 1,
Ended 2003 to Year ended June 30,
Sept. 30, Sept. 30, ---------------------------------------------------
2004 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, beginning of period $7.27 $7.49 $7.21 $7.14 $7.00 $7.20
Income From Investment Operations
Net investment income(c) .25(d) .05 .22 .32 .42 .44
Net realized and unrealized
gain (loss) on investment
transactions (.13) (.20) .35 .13 .16(.19)
Net increase (decrease) in net asset
value from operations .12 (.15) .57 .45 .58 .25
Less: Dividends and Distributions
Dividends from net investment
income (.28) (.07) (.29) (.32) (.42) (.44)
Distributions in excess of
net investment income -0- -0- -0- (.03) (.01) -0-
Tax return of capital -0- -0- -0- (.03) (.01) (.01)
Total dividends and distributions (.28) (.07) (.29) (.38) (.44) (.45)
Net asset value, end of period $7.11 $7.27 $7.49 $7.21 $7.14 $7.00
Total Return
Total investment return based
on net asset value(e) 1.74% (1.98)% 8.07% 6.36% 8.39% 3.64%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $229,823 $399,040 $495,606 $400,221 $276,308 $200,283
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 2.07% 1.90%(f) 1.82% 1.93% 2.90% 2.80%
Expenses, before waivers/
reimbursements 2.13% 1.90%(f) 1.82% 1.93% 2.90% 2.80%
Expenses, before waivers/
reimbursements, excluding
interest expense 1.83% 1.83%(f) 1.81% 1.80% 1.83% 1.83%
Net investment income 3.55%(d) 2.75%(f) 2.95% 4.41% 5.95% 6.28%
Portfolio turnover rate 150% 241% 976% 1,009% 712% 398%
See footnote summary on page 38.
34 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Class C
---------------------------------------------------------------------------
Year July 1,
Ended 2003 to Year Ended June 30,
Sept. 30, Sept. 30, ---------------------------------------------------
2004 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, beginning of period $7.28 $7.50 $7.22 $7.15 $7.00 $7.20
Income From Investment Operations
Net investment income(c) .25(d) .05 .22 .32 .43 .45
Net realized and unrealized
gain (loss) on investment
transactions (.13) (.20) .35 .13 .16 (.20)
Net increase (decrease) in net asset
value from operations .12 (.15) .57 .45 .59 .25
Less: Dividends and Distributions
Dividends from net investment
income (.28) (.07) (.29) (.32) (.43) (.44)
Distributions in excess of
net investment income -0- -0- -0- (.03) (.01) -0-
Tax return of capital -0- -0- -0- (.03) -0- (.01)
Total dividends and distributions (.28) (.07) (.29) (.38) (.44) (.45)
Net asset value, end of period $7.12 $7.28 $7.50 $7.22 $7.15 $7.00
Total Return
Total investment return based
on net asset value(e) 1.73% (1.98)% 8.06% 6.35% 8.54% 3.64%
Ratios/Supplemental Data
Net assets, end of period
(000 omitted) $107,003 $167,359 $204,006 $202,030 $169,213 $112,808
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 2.06% 1.89%(f) 1.81% 1.93% 2.89% 2.82%
Expenses, before waivers/
reimbursements 2.11% 1.89%(f) 1.81% 1.93% 2.89% 2.82%
Expenses, before waivers/
reimbursements, excluding
interest expense 1.82% 1.83%(f) 1.80% 1.79% 1.83% 1.83%
Net investment income 3.56%(d) 2.76%(f) 2.96% 4.42% 5.94% 6.35%
Portfolio turnover rate 150% 241% 976% 1,009% 712% 398%
See footnote summary on page 38.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 35
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class R
------------
November 3,
2003(g) to
Sept. 30,
2004
------------
Net asset value, beginning of period $7.14
Income From Investment Operations
Net investment income(c)(d) .26
Net realized and unrealized
gain on investment
transactions .00
Net increase in net asset
value from operations .26
Less: Dividends
Dividends from net investment
income (.29)
Net asset value, end of period $7.11
Total Return
Total investment return based
on net asset value(e) 3.72%
Ratios/Supplemental Data
Net assets, end of period
(000 omitted) $ 16
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements(f) 1.48%
Expenses, before waivers/
reimbursements(f) 1.54%
Expenses, before waivers/
reimbursements, excluding
interest expense(f) 1.27%
Net investment income(d)(f) 4.08%
Portfolio turnover rate 150%
See footnote summary on page 38.
36 O ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Advisor Class
------------------------------------------------------------------
YEAR JULY 1, OCTOBER 6,
Ended 2003 to Year Ended June 30, 2000(g) to
Sept. 30, Sept. 30, ---------------------------- June 30,
2004 2003(a) 2003 2002(b) 2001
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $7.28 $7.50 $7.21 $7.14 $7.05
Income From Investment Operations
Net investment income(c) .32(d) .07 .29 .39 .34
Net realized and unrealized
gain (loss) on investment
transactions (.12) (.20) .37 .13 .12
Net increase (decrease) in net asset
value from operations .20 (.13) .66 .52 .46
Less: Dividends and Distributions
Dividends from net investment
income (.36) (.09) (.37) (.39) (.34)
Distributions in excess of
net investment income -0- -0- -0- (.03) (.02)
Tax return of capital -0- -0- -0- (.03) (.01)
Total dividends and distributions (.36) (.09) (.37) (.45) (.37)
Net asset value, end of period $7.12 $7.28 $7.50 $7.21 $7.14
Total Return
Total investment return based
on net asset value(e) 2.82% (1.72)% 9.29% 7.41% 6.65%
Ratios/Supplemental Data
Net assets, end of period
(000 omitted) $247,020 $204,108 $197,649 $177,834 $27,154
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.02% .89%(f) .81% .89% 1.38%(f)
Expenses, before waivers/
reimbursements 1.08% .89%(f) .81% .89% 1.38%(f)
Expenses, before waivers/
reimbursements, excluding
interest expense .79% .81%(f) .80% .81% .81%(f)
Net investment income 4.52%(d) 3.72%(f) 3.96% 5.41% 6.74%(f)
Portfolio turnover rate 150% 241% 976% 1,009% 712%
See footnote summary on page 38.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 37
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(b) As required, effective July 1, 2001, the Portfolio has adopted the
provisions of the AICPA Audit and Accounting Guide, Audits of Investment
Companies, and began amortizing premium on debt securities for financial
statement reporting purposes only. The effect of this change for the year ended
June 30, 2002 was to decrease net investment income per share by $.03, increase
net realized and unrealized gain on investment transactions per share by $.03,
and decrease the ratio of net investment income to average net assets from
5.56% to 5.15% for Class A, from 4.82% to 4.41% for Class B, from 4.83% to
4.42% for Class C and from 5.81% to 5.41% for Advisor Class. Per share, ratios
and supplemental data for periods prior to July 1, 2001 have not been restated
to reflect this change in presentation.
(c) Based on average shares outstanding.
(d) Net of expenses waived and reimbursed by the Adviser.
(e) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return does not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.Total investment return calculated for a period of less than one year is
not annualized.
(f) Annualized.
(g) Commencement of distribution.
38 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
AllianceBernstein Bond Fund, Inc. U.S. Government Portfolio
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the U.S. Government Portfolio (the
"Portfolio"), one of the portfolios constituting the AllianceBernstein Bond
Fund, Inc., as of September 30, 2004, and the related statements of operations
and cash flows for the period then ended, the statement of changes in net
assets, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund'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
AccountingOversight 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. 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
U.S. Government Portfolio of the AllianceBernstein Bond Fund, Inc. at September
30, 2004, the results of its operations and its cash flows for the year then
ended, the changes in its net assets, and the financial highlights for each of
the indicated periods, in conformity with U.S. generally accepted accounting
principles.
New York, New York
November 22, 2004
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO O 39
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
Kewjin Yuoh(2), Vice President
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Mark R. Manley, Secretary
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, Texas 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) Mr. Yuoh is the person primarily responsible for the day-to-day management
of the Portfolio's investment portfolio.
40 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
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, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
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 prior
Chairman of the Board 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 94 None
500 SE Mizner Blvd. President and Chief Insurance
Boca Raton, FL 33432 Officer of The Equitable Life
11/7/30 Assurance Society of the United
(1987) States; Chairman and Chief
Executive Officer of Evlico; Director
of Avon, BP (oil and gas), Ecolab
Incorporated (specialty chemicals),
Tandem Financial Group, and
Donaldson, Lufkin & Jenrette
Securities Corporation; former
Governor at Large, National
Association of Securities Dealers,
Inc.
David H. Dievler, # 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
the American Institute of
Certified Public Accountants
since 1953.
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO o 41
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
John H. Dobkin,# Consultant. Formerly President of 96 None
P.O. Box 12, Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002,
2/19/42 Senior Advisor from June 1999 -
(1998) June 2000 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.
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
8/24/34 senior partner and a member of
(1996) the Executive 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 since 2001; prior thereto, Chief
Americas Executive Officer of Sanford C.
New York, NY 10105 Bernstein & Co., LLC and its
10/2/57 predecessor since prior to 1999.
(2003)
* 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.
42 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
Officer Information
Certain information concerning the Fund's Officers is set forth below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS**
- ----------------------------------------------------------------------------------------------------------------
Marc O. Mayer President See biography above.
10/2/57
Philip L. Kirstein Senior Vice President Senior Vice President and Independent
5/29/45 and 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 of ACMC,** with
7/15/56 which he has been associated since
prior to 1999.
Paul J. DeNoon Vice President Senior Vice President of ACMC,** with
4/18/62 which he has been associated since
prior to 1999.
Jeffrey S. Phlegar Vice President Executive Vice President of ACMC,**
6/28/66 with which he has been associated since
prior to 1999.
Kewjin Yuoh Vice President Vice President of ACMC** since March
3/11/71 2003. Previously, he was a Vice President
of Credit Suisse Asset Management from
2000 to 2002 and a Vice President of
Brundage, Story & Rose since prior to 1999.
Mark R. Manley Secretary Senior Vice President, Deputy General
10/23/62 Counsel and Chief Compliance Officer of
ACMC with which he has been associated
since prior to 1999.
Mark D. Gersten Treasurer and Chief Senior Vice President of Alliance Global
10/4/50 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
12/14/64 he 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 U.S. GOVERNMENT PORTFOLIO o 43
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.
44 o ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
ALLIANCEBERNSTEIN BOND FUND U.S. GOVERNMENT PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
SM This service mark used under license from
the owner, Alliance Capital Management L.P.
USGAR0904
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
- -------------------------------------------------------------------------------
U.S. Government Portfolio** 2003 32,500 1,138 3,356
2004 50,000 5,250 22,871
** During the course of calandar year 2003, the U.S. Government Portfolio
changed its 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)
-------------------------------------------------------
U.S. Government Portfolio** 2003 34,544 4,494
(1,138)
(3,256)
2004 1,229,853 278,121
(255,250)
(22,871)
** During the course of calandar year 2003, the U.S. Government Portfolio
changed its 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