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: October 31, 2004
Date of reporting period: October 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
Investment Grade Fixed Income
AllianceBernstein Bond Fund
Quality Bond Portfolio
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Annual Report--October 31, 2004
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Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
- ---------------------------
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
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.
This shareholder report must be preceded or accompanied by the Fund's
prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
AllianceBernstein 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.
December 16, 2004
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Bond Fund Quality Bond Portfolio (the "Portfolio") for the
annual reporting period ended October 31, 2004.
Investment Objective and Policies
This open-end Portfolio seeks high current income consistent with preservation
of capital by investing in investment-grade fixed income securities. Under
normal circumstances, at least 80% of the Portfolio's net assets will be
invested in bonds and other debt securities. The Portfolio invests in readily
marketable securities that do not involve undue risk of capital.
Investment Results
The table on page 4 shows the Portfolio's performance compared to its
benchmark, the Lehman Brothers (LB) U.S. Aggregate Index, which is a standard
measure of the performance of a basket of unmanaged debt securities, for the
six- and 12-month periods ended October 31, 2004.
During the six- and 12-month periods ended October 31, 2004, the Portfolio's
Class A shares underperformed the LB U.S. Aggregate Index. The Portfolio's
yield curve strategy was the primary detractor from relative performance. The
Portfolio's duration was positioned below that of the LB U.S. Aggregate Index
in anticipation of higher-than-expected interest rates which did not
materialize. Also detracting from performance was the Portfolio's positioning
for a flatter yield curve. Contributing positively to performance was its
higher coupon selection within its mortgage holdings, and a focus on BBB-rated
corporates within its credit allocation.
Market Review and Investment Strategy
Bond market returns were relatively modest for the annual reporting period. The
returns, however, masked intra-period volatility as changing perceptions of the
direction 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 Fed tightenings bolstered
the bond markets back into positive returns.
For the year, most non-government sectors outperformed U.S. government sectors.
According to the LB U.S. Aggregate Index, Treasuries posted a return of 4.97%
and agencies a return of 4.53% for the annual reporting period ended October
31, 2004. Within non-government sectors, mortgage securities returned 5.51% for
the year, as represented by the LB U.S. Aggregate Index, supported by strong
investor demand, coupled with rela-
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ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 1
tively low volatility. Collateralized mortgage-backed securities also
outperformed governments at 5.56%, as real estate markets remained strong.
Asset-backed securities returned 4.13%, as strong demand tightened spreads to
multi-year lows.
During the annual reporting period ended October 31, 2004, investment-grade
corporates provided robust returns benefiting from a stronger economy and
improving credit fundamentals. Record free cash flow, improving profitability
and declining leverage, driven by a stronger economy, led the credit sectors to
outperform. Within the credit sector BBB-rated securities outperformed
like-duration Treasuries by more than two full percentage points, according to
the LB U.S. Aggregate Index.
During the annual reporting period ended October 31, 2004, the Portfolio was
concentrated on high coupon mortgages which provided an attractive yield
advantage. Within the corporate sector, the Portfolio generally maintained a
greater-than-neutral exposure to investment-grade credit with an overweight in
long-maturity and BBB-rated debt. The Portfolio also maintained a modestly
shorter-than-benchmark duration in anticipation of higher interest rates.
In Memory
It is with sadness that we announce the passing of Clifford L. Michel, a member
of the Board of Directors of AllianceBernstein Bond Fund Quality Bond
Portfolio. Mr. Michel served the interests of the Fund's shareholders for the
last five years. His hard work, dedication and contributions to the Fund will
be greatly missed.
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2 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND 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. During
the reporting period, the Adviser waived a portion of its advisory fee or
reimbursed the Portfolio for a portion of its expenses to the extent necessary
to limit AllianceBernstein Bond Fund Quality Bond Portfolio expenses on an
annual basis to 0.98%, 1.68%, 1.68%, 1.18% and 0.68% of the average daily nest
assets of Class A, Class, B, Class C, Class R and Advisor Class shares,
respectively. These waivers extend through the Portfolio's current fiscal year
and may be extended by the Adviser for additional one-year terms. Without the
waivers, the Portfolio's expenses would have been higher and its performance
would have been lower than that shown.
Benchmark Disclosure
The unmanaged Lehman Brothers (LB) U.S. Aggregate Index does not reflect fees
and expenses associated with the active management of a mutual fund portfolio.
The Index covers the U.S. investment-grade fixed-rate bond market, including
government and credit securities, agency mortgage pass-through securities,
asset-backed securities and commercial mortgage-backed securities. An investor
cannot invest directly in an index, and its results are not indicative of the
performance for any specific investment, including the Portfolio.
A Word About Risk
The Portfolio normally invests all of its assets in securities that are rated
at least BBB by Standard & Poor's or, if unrated, are of comparable quality.
The Portfolio may invest in convertible debt securities, preferred stock and
dividend-paying stocks, U.S. government obligations, and foreign fixed-income
securities. The Portfolio may invest a portion of its assets in foreign
securities, which may magnify fluctuations. Price fluctuations may also be
caused by changes in interest rates or bond credit quality ratings. These
changes have a greater effect on bonds with longer maturities than on those
with shorter maturities. While the Portfolio invests principally in bonds and
other fixed-income securities, the Portfolio may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
instruments involve risks different from, and in certain cases, greater than,
the risks presented by more traditional investments. These risks are fully
discussed in the prospectus.
(Historical Performance continued on next page)
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ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 3
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARK Returns
PERIODS ENDED OCTOBER 31, 2004 6 Months 12 Months
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AllianceBernstein Bond Fund
Quality Bond Portfolio
Class A 3.45% 4.66%
Class B 3.08% 3.93%
Class C 3.09% 3.93%
Class R 3.24% 4.63%*
Advisor Class 3.61% 5.08%
Lehman Brothers U.S.
Aggregate Index 4.23% 5.53%
*Since Inception: The Class R share inception date is 11/3/03.
GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO
7/1/99* TO 10/31/04
Lehman Brothers U.S. Aggregate Index: $ 14,585
AllianceBernstein Bond Fund Quality Bond Portfolio Class A: $13,280
AllianceBernstein Bond Fund Lehman Brothers
Quality Bond Portfolio Class A U.S. Aggregate Index
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7/1/99* 9,575 10,000
10/31/99 9,682 10,122
10/31/00 10,328 10,861
10/31/01 11,726 12,442
10/31/02 12,138 13,175
10/31/03 12,689 13,821
10/31/04 13,280 14,585
* Since inception of the Portfolio's Class A shares on 7/1/99.
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Bond Fund Quality Bond Portfolio Class A shares (from 7/1/99*
to 10/31/04) as compared to the performance of its benchmark, the LB U.S.
Aggregate Index. The chart reflects the deduction of the maximum 4.25% sales
charge from the initial $10,000 investment in the Portfolio and assumes the
reinvestment of dividends and capital gains.
See Historical Performance and Benchmark disclosures on previous page.
(Historical Performance continued on next page)
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4 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF OCTOBER 31, 2004
NAV Returns SEC Returns
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Class A Shares
1 Year 4.66% 0.20%
5 Years 6.52% 5.60%
Since Inception* 6.32% 5.47%
SEC Yield** 4.17%
Class B Shares
1 Year 3.93% 0.96%
5 Years 5.77% 5.77%
Since Inception* 5.57% 5.57%
SEC Yield ** 3.69%
Class C Shares
1 Year 3.93% 2.94%
5 Years 5.78% 5.78%
Since Inception* 5.54% 5.54%
SEC Yield** 3.69%
Class R Shares
Since Inception* 4.63%
SEC Yield** 4.18%
Advisor Class Shares
1 Year 5.08%
Since Inception* 6.83%
SEC Yield ** 4.68%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (SEPTEMBER 30, 2004)
Class A Shares
1 Year -1.34%
5 Years 5.52%
Since Inception* 5.40%
Class B Shares
1 Year -0.64%
5 Years 5.68%
Since Inception* 5.52%
Class C Shares
1 Year 1.31%
5 Years 5.72%
Since Inception* 5.49%
* Inception dates: 7/1/99 for Class A, B and C shares; 11/3/03 for Class R
shares; 10/10/00 for Advisor Class shares.
** SEC yields are calculated based on SEC guidelines for the 30-day period
ended October 31, 2004.
See Historical Performance disclosures on page 3.
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ALLIANCEBERNSTEIN BOND FUND QUALITY BOND 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.
Beginning Ending
Account Value Account Value Expenses Paid
May 1, 2004 October 31, 2004 During Period*
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Class A
Actual $1,000 $1,034.47 $5.01
Hypothetical
(5% return
before expenses) $1,000 $1,020.21 $4.98
Class B
Actual $1,000 $1,030.80 $8.58
Hypothetical
(5% return
before expenses) $1,000 $1,016.69 $8.52
Class C
Actual $1,000 $1,030.85 $8.58
Hypothetical
(5% return
before expenses) $1,000 $1,016.69 $8.52
Class R
Actual $1,000 $1,032.43 $6.03
Hypothetical
(5% return
before expenses) $1,000 $1,019.20 $5.99
Advisor Class
Actual $1,000 $1,036.06 $3.48
Hypothetical
(5% return
before expenses) $1,000 $1,021.72 $3.46
* Expenses are equal to the classes' annualized expense ratios of 0.98%, 1.68%,
1.68%, 1.18% and 0.68%, respectively, multiplied by the average account value
over the period, multiplied by the number of days in the most recent fiscal
half-year/366 (to reflect the one-half year period).
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6 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
PORTFOLIO SUMMARY
October 31, 2004
PORTFOLIO STATISTICS
Net Assets ($mil): $452.1
SECURITY TYPE BREAKDOWN*
[Pie Chart omitted]
o 35.5% Mortgage-Backed Securities
o 14.9% Corporate Debt Obligations
o 14.1% U.S. Treasury
o 3.4% Commercial Mortgage Backed Securities
o 2.6% Asset Backed Securities
o 0.8% Sovereign Debt Securities
o 0.4% Collateralized Mortgage Obligations
o 0.1% Yankee Bond
o 28.2% Short-Term
* All data is as of October 31, 2004. The Portfolio's security type breakdown
is expressed as a percentage of total investments (excluding security lending
collateral) and may vary over time.
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ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 7
PORTFOLIO OF INVESTMENTS
October 31, 2004
Principal
Amount
(000) U.S. $ Value
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MORTGAGE BACKED SECURITIES-48.0%
Federal National Mortgage
Association-40.2%
3.125%, 7/15/06 $ 2,850 $ 2,870,893
3.25%, 6/28/06 8,330 8,338,581
3.41%, 8/30/07 8,785 8,790,447
4.50%, TBA 16,265 16,305,663
5.00%, TBA 16,885 16,821,681
5.00%, 4/25/14-2/01/34 12,070 12,115,742
5.25%, 8/01/12 4,465 4,669,551
5.50%, TBA 39,940 40,919,999
6.00%, TBA 29,405 30,480,106
6.00%, 2/01/17 1,817 1,905,067
6.50%, TBA 32,425 34,086,781
6.50%, 1/01/28-3/01/29 4,427 4,668,228
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181,972,739
Federal Home Loan Mortgage Corp.-4.1%
3.75%, 8/03/07 5,685 5,724,056
4.25%, 7/15/09 5,990 6,162,710
6.00%, TBA 6,510 6,739,881
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18,626,647
Government National Mortgage
Association-2.9%
5.00%, TBA 8,920 8,945,083
6.00%, TBA 3,845 3,996,397
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12,941,480
Federal Home Loan Bank-0.8%
3.75%, 8/18/09 3,500 3,530,716
Total Mortgage Backed Securities
(cost $216,038,773) 217,071,582
U.S. TREASURY SECURITIES-19.1%
U.S. Treasury Notes-14.1%
2.50%, 9/30/06* 25,720 25,698,910
4.25%, 8/15/14* 10,410 10,593,799
3.50%, 8/15/09* 27,305 27,587,662
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63,880,371
U.S. Treasury Bonds-5.0%
5.375%, 2/15/31 4,685 5,088,533
8.75%, 5/15/17 2,870 4,078,987
10.75%, 8/15/05 10,900 11,625,962
11.25%, 2/15/15 1,000 1,598,477
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22,391,959
Total U.S. Treasury Securities
(cost $86,025,040) 86,272,330
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8 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Portfolio of Investments
Principal
Amount
(000) U.S. $ Value
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CORPORATE DEBT OBLIGATIONS-20.1%
Aerospace & Defense-0.1%
Boeing Capital Corp.
4.75%, 8/25/08 $ 365 $ 381,880
Automotive-1.3%
Ford Motor Co.
7.45%, 7/16/31 425 413,902
Ford Motor Credit Co.
6.375%, 2/01/29 275 240,631
7.00%, 10/01/13* 505 533,307
7.375%, 2/01/11 1,630 1,768,216
General Motors Acceptance Corp.
5.625%, 5/15/09 778 785,617
6.875%, 9/15/11 840 874,427
General Motors Corp.
7.125%, 7/15/13 90 93,378
8.375%, 7/15/33 1,260 1,311,140
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6,020,618
Banking-2.1%
Bank of America Corp.
6.25%, 4/15/12 305 340,377
Barclays Bank Plc pfd.
(United Kingdom)
8.55%, 9/29/49(a) 905 1,114,551
Capital One Bank
6.50%, 6/13/13 290 318,460
CBA Capital Trust I pfd.
5.805%, 12/31/49(a) 630 658,211
J.P. Morgan Chase & Co.
6.75%, 2/01/11 1,390 1,568,251
Mizuho Financial Group
(Cayman Islands)
5.79%, 4/15/14(a) 585 608,721
8.375%, 12/29/49 1,170 1,275,183
RBS Capital Trust I pfd.
4.709%, 12/29/49 1,475 1,443,111
RBS Capital Trust III pfd.
5.512%, 9/29/49 1,375 1,410,068
Suntrust Bank
1.91%, 6/02/09 800 799,840
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9,536,773
Broadcasting/Media-1.2%
AOL Time Warner, Inc.
7.70%, 5/01/32 1,145 1,371,181
News America, Inc.
6.55%, 3/15/33* 1,070 1,151,179
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ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 9
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Time Warner Entertainment Co. LP
8.375%, 3/15/23 $ 1,990 $ 2,436,647
WPP Finance (UK) Corp.
(United Kingdom)
5.875%, 6/15/14(a) 570 587,911
------------
5,546,918
Cable-0.8%
AT&T Broadband Corp.
9.455%, 11/15/22 655 899,118
Comcast Cable Communication, Inc.
6.875%, 6/15/09 1,905 2,131,129
Comcast Corp.
7.05%, 3/15/33 465 525,228
------------
3,555,475
Communications-1.7%
British Telecommunications Plc
(United Kingdom)
8.875%, 12/15/30 595 795,218
Deutsche Telekom International
Finance BV
(Netherlands)
8.75%, 6/15/30 445 587,206
Koninklijke (Royal) KPN NV
(Netherlands)
8.00%, 10/01/10 555 664,192
SBC Communications, Inc.
5.10%, 9/15/14 695 699,834
5.625%, 6/15/16 170 175,795
5.875%, 8/15/12 295 318,570
Sprint Capital Corp.
8.75%, 3/15/32 2,045 2,679,588
Telecom Italia Capital (Italy)
4.00%, 1/15/10(a) 1,815 1,798,110
------------
7,718,513
Communications - Mobile-0.7%
AT&T Wireless Services, Inc.
8.75%, 3/01/31 1,420 1,906,376
Telus Corp. (Canada)
7.50%, 6/01/07 990 1,087,788
------------
2,994,164
Conglomerate/Miscellaneous-0.3%
Hutchison Whampoa International, Ltd
(Cayman Islands)
7.45%, 11/24/33(a) 1,220 1,276,008
Consumer Manufacturing-0.1%
Fortune Brands, Inc.
2.875%, 12/01/06 510 508,944
Energy-0.8%
Amerada Hess Corp.
7.875%, 10/01/29 850 1,014,674
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10 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Conoco, Inc.
6.95%, 4/15/29 $ 855 $1,000,047
Valero Energy Corp.
7.50%, 4/15/32 1,150 1,375,405
------------
3,390,126
Financial-4.0%
American General Finance Corp.
4.625%, 5/15/09 1,500 1,541,202
Berkshire Hathaway Finance Corp.
4.20%, 12/15/10 905 901,865
Capital One Financial Corp.
6.25%, 11/15/13 365 394,512
CIT Group, Inc.
1.94%, 5/18/07 630 629,810
Citigroup, Inc.
2.00%, 6/09/09 570 571,265
5.00%, 9/15/14(a) 879 891,830
Countrywide Home Loans, Inc.
4.00%, 3/22/11 1,135 1,105,887
Credit Suisse First Boston
5.50%, 8/15/13 780 817,942
Duke Capital LLC
5.668%, 8/15/14 640 662,707
General Electric Capital Corp.
1.979%, 6/22/07 3,630 3,630,773
Goldman Sachs Capital Trust I
6.345%, 2/15/34 920 937,624
Household Finance Corp.
6.50%, 11/15/08 1,505 1,661,178
7.00%, 5/15/12 595 687,401
MBNA Corp.
4.625%, 9/15/08 915 940,571
Morgan Stanley
4.75%, 4/01/14 1,240 1,214,744
Royal & Sun Alliance Insurance Group plc
(United Kingdom)
8.95%, 10/15/29 640 806,903
The Goldman Sachs Group, Inc.
4.75%, 7/15/13 685 678,780
------------
18,074,994
Food/Beverages-0.8%
Kraft Foods, Inc.
5.25%, 10/01/13 1,050 1,079,284
Pepsi Bottling Group, Inc.
7.00%, 3/01/29 1,950 2,336,568
------------
3,415,852
Health Care-0.1%
Humana, Inc.
6.30%, 8/01/18 635 653,788
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ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 11
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Industrial-0.1%
General Electric Co.
5.00%, 2/01/13 $ 590 $ 611,581
Insurance-1.2%
Assurant, Inc.
5.625%, 2/15/14 660 680,465
Liberty Mutual Group
5.75%, 3/15/14(a) 640 627,264
Mangrove Bay Pass-Through Trust pfd.
6.102%, 7/15/33(a) 1,780 1,822,239
MetLife, Inc.
5.00%, 11/24/13 740 745,376
Zurich Capital Trust I
8.376%, 6/01/37(a) 1,485 1,683,586
------------
5,558,930
Paper/Packaging-0.7%
International Paper Co.
5.30%, 4/01/15 900 903,528
Weyerhaeuser Co.
7.375%, 3/15/32 2,010 2,344,649
------------
3,248,177
Petroleum Products-0.2%
Amerada Hess Corp.
7.125%, 3/15/33 835 924,246
Public Utilities - Electric & Gas-2.0%
Carolina Power & Light Co.
6.50%, 7/15/12 1,005 1,120,038
CenterPoint Energy, Inc.
6.85%, 6/01/15 170 187,795
Consumers Energy Co.
4.25%, 4/15/08 445 453,140
FirstEnergy Corp.
7.375%, 11/15/31 2,715 3,093,498
MidAmerican Energy Holdings Co.
5.875%, 10/01/12 395 422,685
Nisource Finance Corp.
7.875%, 11/15/10 590 700,348
Pacific Gas & Electric Co.
6.05%, 3/01/34 1,105 1,138,071
Public Service Company of Colorado
7.875%, 10/01/12 450 550,833
TXU Australia Holdings Pty, Ltd.
(Australia)
6.15%, 11/15/13(a) 290 317,772
Union Electric Co.
5.10%, 10/01/19 290 291,523
Xcel Energy, Inc.
7.00%, 12/01/10 650 741,099
------------
9,016,802
- -------------------------------------------------------------------------------
12 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Public Utilities - Telephone-0.4%
BellSouth Corp.
4.20%, 9/15/09 $ 515 $ 519,947
Telecom Italia Capital (Italy)
6.375%, 11/15/33(a) 1,235 1,281,771
------------
1,801,718
Savings and Loan-0.5%
Washington Mutual Finance Corp.
6.875%, 5/15/11 1,945 2,221,974
Services-0.6%
Pershing Road Development Co. LLC
2.19%, 9/01/26(a) 1,545 1,545,000
Waste Management, Inc.
6.875%, 5/15/09 960 1,076,338
------------
2,621,338
Supermarket/Drug-0.3%
Albertsons, Inc.
7.45%, 8/01/29 625 719,610
Safeway Inc.
4.95%, 8/16/10 740 757,222
------------
1,476,832
Technology-0.1%
IBM Corp.
4.375%, 6/01/09 285 291,945
Total Corporate Debt Obligations
(cost $86,354,889) 90,847,596
COMMERCIAL MORTGAGE BACKED
SECURITIES-4.5%
Banc America Commercial Mortgage, Inc.
Series 2004-1, Class A2
4.037%, 11/10/39 1,495 1,496,719
Series 2004-4, Class A3
4.128%, 7/10/42 1,400 1,406,986
Series 2004-1, Class A4
4.76%, 11/10/39 2,055 2,076,393
Series 2004-3, Class A5
5.306%, 6/10/39 2,210 2,340,920
Bear Stearns Commercial Mortgage
Securities, Inc.
Series 2004-PWR5, Class A5
4.978%, 7/11/42 2,155 2,201,074
CS First Boston Mortgage Securities Corp.
Series 2003-CK2, Class A2
3.861%, 3/15/36 1,215 1,222,472
GE Capital Commercial Mortgage Corp.
Series 2004-C3, Class A4
5.189%, 7/10/39 1,545 1,606,553
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 13
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp.
Series 2003-C1, Class A4
4.111%, 7/05/35 $ 1,490 $1,446,298
LB-UBS Commercial Mortgage Trust
Series 2004-C7, Class A2
3.992%, 10/15/29 1,325 1,330,817
Merrill Lynch Mortgage Trust
Series 2004-KEY2, Class A2
4.166%, 8/12/39 1,165 1,173,784
Morgan Stanley Capital I Inc.
Series 2004-T13, Class A2
3.94%, 9/13/45 1,400 1,397,368
Series 2003-IQ6, Class A4
4.97%, 12/15/41 1,085 1,113,362
Series 2004-HQ4, Class A7
4.97%, 4/14/40 1,605 1,640,759
Total Commercial Mortgage Backed Securities
(cost $20,017,576) 20,453,505
ASSET BACKED SECURITIES-3.5%
Ameriquest Mortgage Securities, Inc.
Series 2004-R4, Class A2
2.042%, 6/25/34 992 991,682
Centex Home Equity Loan Trust
Series 2003-C, Class AV
2.232%, 9/25/33 800 800,665
DLJ Commercial Mortgage Corp.
Series 2000-CF1, Class A1B
7.62%, 6/10/33 2,430 2,826,552
Equity One Abs, Inc.
Series 2004-3, Class AF1
2.092%, 7/25/34 947 946,438
Ford Credit Floorplan Master Owner Trust
Series 2004-1, Class A
1.80%, 7/15/09 1,460 1,459,766
Long Beach Mortgage Loan Trust
Series 2004-4, Class 2A2
2.112%, 10/25/34 2,556 2,555,346
Merrill Lynch Mortgage Investors, Inc.
Series 2004-SL1, Class A
2.192%, 4/25/35 557 557,384
Residential Asset Mortgage Products, Inc.
Series 2004-RS2, Class AI1
2.063%, 1/25/24 574 573,569
Series 2004-RS6, Class AI1
2.082%, 8/25/22 651 649,981
Series 2004-RS7, Class AI1
2.102%, 8/25/22 27 26,609
Series 2004-SP1, Class AI1
2.112%, 6/25/13 607 606,870
- -------------------------------------------------------------------------------
14 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Residential Asset Securities Corp.
Series 2004-KS7, Class AI1
2.082%, 10/25/21 $ 768 $ 767,541
Series 2003-KS3, Class A2
2.232%, 5/25/33 1,247 1,247,866
Series 2002-KS7, Class A2
2.302%, 11/25/32 1,026 1,028,184
Residential Funding Mortgage Securities, Inc.
Series 2004-HS2, Class AI1
2.082%, 12/25/18 863 862,401
Total Asset Backed Securities
(cost $15,881,310) 15,900,854
SOVEREIGN DEBT SECURITIES-1.1%
United Mexican States
4.625%, 10/08/08 2,540 2,581,910
7.50%, 1/14/12 2,075 2,357,200
Total Sovereign Debt Securities
(cost $4,735,160) 4,939,110
COLLATERALIZED MORTGAGE
OBLIGATIONS-0.6%
Countrywide Home Loans
Series 2003-49, Class A1
1.642%, 12/19/33 692 689,859
Deutsche Mortgage Securities, Inc.
Series 2004-4, Class 1A1
2.142%, 4/25/34 736 736,008
Washington Mutual Finance Corp.
Series 2004-AR10, Class A2C
2.192%, 7/25/44 1,240 1,239,668
Total Collateralized Mortgage Obligations
(cost $2,666,918) 2,665,535
YANKEE BOND-0.1%
British Sky Broadcasting Group plc
(United Kingdom)
6.875%, 2/23/09
(cost $537,991) 490 544,356
SHORT-TERM INVESTMENTS-38.1%
U.S. Treasury Bill-32.9%
Zero coupon, 12/23/04* 149,235 148,894,708
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 15
Shares or
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Time Deposit-5.2%
State Street Euro Dollar
1.10%, 11/01/04 $23,210 $ 23,210,000
Total Short-Term Investments
(amortized cost $172,104,708) 172,104,708
Total Investments Before Security Lending
Collateral-135.1%
(cost $604,362,365) 610,799,576
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED-38.8%
Short-Term Investments
Concord
1.80%, 11/09/04 11,247 11,235,191
Federal Home Loan Bank
1.27%-1.35%, 4/26/05-4/29/05 17,500 17,500,000
Gotham Funding
1.82-2.26%, 11/01/04-11/15/04 131,800 131,667,257
Morgan Stanley
1.89%, 4/19/04 10,000 10,000,000
Sigma Finance
1.22%, 12/03/04 5,000 5,000,000
UBS Private Money Market Fund, LLC
1.70% 33,976 33,976
Total Investment of Cash Collateral for
Securities Loaned
(cost $175,436,424) 175,436,424
Total Investments-173.9%
(cost $779,798,789) 786,236,000
Other assets less liabilities-(73.9%) (334,109,391)
Net Assets-100% $ 452,126,609
* Represents entire or partial securities out on loan. See Note E for
securities lending information.
(a) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At October 31, 2004, the aggregate market value of these securities
amounted to $14,212,974 or 3.1% of net assets.
Glossary of Terms:
TBA - (To Be Announced) - Securities are purchased on a forward commitment
with an appropriate principal amount (generally +/-1.0%) and no definite
maturity date. The actual principal amount and maturity date will be determined
upon settlement when the specific mortgage pools are assigned.
See notes to financial statements.
- -------------------------------------------------------------------------------
16 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
STATEMENT OF ASSETS & LIABILITIES
October 31, 2004
Assets
Investments in securities, at value
(cost $779,798,789--including investment of
cash collateral for securities loaned
of $175,436,424) $ 786,236,000(a)
Cash 598
Receivable for investment securities sold 23,758,105
Interest receivable 2,902,756
Receivable for capital stock sold 281,370
Total assets 813,178,829
Liabilities
Payable for collateral on securities loaned 175,436,424
Payable for investment securities purchased 184,116,151
Payable for capital stock redeemed 564,050
Dividends payable 448,269
Advisory fee payable 149,331
Transfer Agent fee payable 135,086
Distribution fee payable 87,330
Accrued expenses 115,579
Total liabilities 361,052,220
Net Assets $ 452,126,609
Composition of Net Assets
Capital stock, at par $ 43,373
Additional paid-in capital 450,777,056
Distributions in excess of net investment income (2,348,644)
Accumulated net realized loss on investment transactions (2,782,387)
Net unrealized appreciation of investments 6,437,211
$ 452,126,609
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($56,778,246 / 5,444,517 shares of capital stock
issued and outstanding) $10.43
Sales charge--4.25% of public offering price .46
Maximum offering price $10.89
Class B Shares
Net asset value and offering price per share
($66,634,695 / 6,394,890 shares of capital stock
issued and outstanding) $10.42
Class C Shares
Net asset value and offering price per share
($19,007,452 / 1,827,100 shares of capital stock
issued and outstanding) $10.40
Class R Shares
Net asset value, redemption and offering price per share
($15,971 / 1,532 shares of capital stock
issued and outstanding) $10.42
Advisor Class Shares
Net asset value, redemption and offering price per share
($309,690,245 / 29,704,617 shares of capital stock
issued and outstanding) $10.43
(a) Includes securities on loan with a value of $171,279,461 (see Note E).
See notes to financial statements.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 17
STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income
Interest $13,828,666
Income from dollar rolls 4,775,815 $18,604,481
Expenses
Advisory fee 2,379,225
Distribution fee--Class A 178,297
Distribution fee--Class B 783,892
Distribution fee--Class C 214,801
Distribution fee--Class R 66
Transfer agency 1,317,466
Custodian 214,904
Audit and legal 114,905
Administrative 89,000
Registration fees 79,053
Printing 71,622
Directors' fees 20,888
Miscellaneous 21,839
Total expenses 5,485,958
Less: expenses waived and reimbursed
by the Adviser (see Note B) (1,283,975)
Less: expense offset arrangement
(see Note B) (99)
Net expenses 4,201,884
Net investment income 14,402,597
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions 3,269,090
Foreign currency transactions (43,183)
Net change in unrealized
appreciation/depreciation
of investments 2,816,634
Net gain on investment and foreign
currency transactions 6,042,541
Net Increase in Net Assets
from Operations $20,445,138
See notes to financial statements.
- -------------------------------------------------------------------------------
18 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
July 1, 2003
Year Ended to Year Ended
October 31, October 31, June 30,
2004 2003* 2003
------------ ------------- -----------
Increase (Decrease)
in Net Assets from
Operations
Net investment
income $14,402,597 $3,911,867 $11,975,914
Net realized gain (loss)
on investment and
foreign currency
transactions 3,225,907 (3,807,440) 14,959,621
Net change in unrealized
appreciation/depreciation
of investments 2,816,634 (6,091,822) 8,812,869
Net increase(decrease)
in net assets
from operations 20,445,138 (5,987,395) 35,748,404
Dividends and
Distributions to
Shareholders from
Net investment income
Class A (2,175,102) (896,295) (2,559,355)
Class B (2,309,764) (1,015,450) (2,981,723)
Class C (633,482) (239,505) (803,086)
Class R (450) -0- -0-
Advisor Class (11,331,550) (3,303,792) (8,978,394)
Net realized gain on
investment transactions
Class A (1,348,611) -0- -0-
Class B (1,909,068) -0- -0-
Class C (511,130) -0- -0-
Class R (214) -0- -0-
Advisor Class (5,670,270) -0- -0-
Capital Stock
Transactions
Net increase
(decrease) 8,556,559 (1,912,603) 145,535,331
Total increase
(decrease) 3,112,056 (13,355,040) 165,961,177
Net Assets
Beginning of period 449,014,553 462,369,593 296,408,416
End of period (including
distributions in excess
of net investment
income of ($2,348,644),
($1,896,258) and
($1,298,018),
respectively) $452,126,609 $449,014,553 $462,369,593
* The Portfolio changed its fiscal year end from June 30 to October 31.
See notes to financial statements.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 19
NOTES TO FINANCIAL STATEMENTS
October 31, 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 Quality Bond Portfolio. The Quality Bond
Portfolio (the "Portfolio") offers Class A, Class B, Class C, Class R and
Advisor Class shares. Class A shares are sold with a front-end sales charge of
up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases
of $1,000,000 or more, Class A shares redeemed within one year of purchase may
be subject to a contingent deferred sales charge of 1%. Class B shares are
currently sold with a contingent deferred sales charge which declines from 3%
to zero depending on the period of time the shares are held. Class B shares
will automatically convert to Class A shares six years after the end of the
calendar month of purchase. Class C shares are subject to a contingent deferred
sales charge of 1% on redemptions made within the first year after purchase.
Class R shares are sold without an initial or contingent deferred sales charge
and are offered to certain group retirement plans. Advisor Class shares are
sold without an initial or contingent deferred sales charge and are not subject
to ongoing distribution expenses. Advisor Class shares are offered to investors
participating in fee-based programs and 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 ex-
- -------------------------------------------------------------------------------
20 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
change or on a foreign securities exchange are valued at the last sale price at
the close of the exchange or foreign securities exchange. If there has been no
sale on such day, the securities are valued at the mean of the closing bid and
asked prices on such day. Securities listed on more than one exchange are
valued by reference to the principal exchange on which the securities are
traded; securities 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. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 21
and expenses are translated into U.S. dollars at the rates of exchange
prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on foreign investment transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of net unrealized appreciation or depreciation of investments
and foreign currency denominated assets and liabilities.
3. Taxes
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the trade date securities are purchased or sold. Investment gains and losses
are determined on the identified cost basis. The Portfolio accretes discounts
as adjustments to interest income. Additionally, the Portfolio amortizes
premiums on debt securities for financial statement reporting purposes only.
5. Income and Expenses
All income earned and expenses incurred by the Portfolio are borne on a pro
rata basis by each settled class of shares, based on proportionate interest in
the Portfolio represented by the net assets of such class, except that the
Portfolio's Class B and Class C shares bear higher distribution and transfer
agent fees than Class A, Class R and Advisor Class shares. Advisor Class shares
have no distribution fees.
6. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the
ex-dividend date. Income dividends and capital gains distributions are
determined in accordance with federal tax regulations and may differ from those
determined
- -------------------------------------------------------------------------------
22 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
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.
7. Change of Fiscal Year End
During 2003, the Portfolio changed its fiscal year end from June 30 to October
31. Accordingly, the statement of changes in net assets and financial
highlights include the period from July 1, 2003 to October 31, 2003.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Until September 6, 2004, under the terms of an investment advisory agreement,
the Fund paid the Adviser an advisory fee at an annual rate of .55% of the
Portfolio's average daily net assets. Effective September 7, 2004, the terms of
the investment advisory agreement were amended so that the advisory fee was
reduced to an annual rate of .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 average daily
net assets. The fee is accrued daily and paid monthly. The Adviser has agreed
to waive its fees and bear certain expenses to the extent necessary to limit
total operating expenses on an annual basis .98%, 1.68%, 1.68%, 1.18% and .68%
of the daily average net assets for the Class A, Class B, Class C, Class R and
Advisor Class shares, respectively. For the year ended October 31, 2004, such
waiver amounted to $891,919.
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 $303,056. 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 may reimburse the Adviser for
certain legal and accounting services provided to the Portfolio by the Adviser.
For the year ended October 31, 2004, the Adviser voluntarily agreed to waive
its fees for services. Such waiver amounted to $89,000.
The Portfolio compensates Alliance Global Investor Services, Inc. (AGIS), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Portfolio. Such compensation amounted to $1,082,788 for the year ended October
31, 2004.
For the year ended October 31, 2004, the Portfolio's expenses were reduced by
$99 under an expense offset arrangement with AGIS.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 23
AllianceBernstein Investment Research and Management, Inc., a wholly-owned
subsidiary of the Adviser, serves as the distributor of the Portfolio's shares.
The Distributor has advised the Portfolio that it has retained front-end sales
charges of $4,297 from the sale of Class A shares and received $3,565, $171,225
and $3,406, in contingent deferred sales charges imposed upon redemptions by
shareholders of Class A, Class B and Class C shares, respectively, for the year
ended October 31, 2004.
NOTE C
Distribution Services Agreement
The Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Portfolio pays distribution and servicing fees to the
Distributor at an annual rate of up to .30 of 1% of the Portfolio's average
daily net assets attributable to Class A shares, .50 of 1% of the Portfolio's
average daily net assets attributable to Class R shares, and 1% of the average
daily net assets attributable to both Class B and Class C shares. There are no
distribution and servicing fees on the Advisor Class shares. The fees are
accrued daily and paid monthly. The Agreement provides that the Distributor
will use such payments in their entirety for distribution assistance and
promotional activities. The Distributor has advised the Portfolio that it has
incurred expenses in excess of the distribution costs reimbursed by the
Portfolio in the amount of $446,001 and $374,638 for Class B and Class C
shares, respectively. Such costs may be recovered from the Portfolio in future
periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs incurred by the Distributor beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Portfolio's shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the period ended October 31, 2004, were as follows:
Purchases Sales
--------------- --------------
Investment securities (excluding
U.S. government securities) $ 164,219,214 $ 228,971,814
U.S. government securities 2,622,209,636 2,560,202,150
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation are as follows:
Cost $ 781,936,438
Gross unrealized appreciation $ 6,187,639
Gross unrealized depreciation (1,888,077)
Net unrealized appreciation $ 4,299,562
- -------------------------------------------------------------------------------
24 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
1. Forward Exchange Currency Contracts
The Portfolio may enter into forward exchange currency contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchase and sale commitments
denominated in foreign currencies and for investment purposes. A forward
exchange currency contract is a commitment to purchase or sell a foreign
currency on a future date at a negotiated forward rate. The gain or loss
arising from the difference between the original contract and the closing of
such contract would be included in net realized gain or loss on foreign
currency transactions.
Fluctuations in the value of open forward exchange currency contracts are
recorded for financial reporting purposes as net unrealized appreciation and
depreciation by the Portfolio.
The Portfolio's custodian will place and maintain cash not available for
investment or other liquid assets in a separate account of the Portfolio having
a value at least equal to the aggregate amount of the Portfolio's commitments
under forward exchange currency contracts entered into with respect to position
hedges. Risks may arise from the potential inability of a counterparty to meet
the terms of a contract and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. The face or contract amount, in
U.S. dollars, reflects the total exposure the Portfolio has in that particular
currency contract.
2. Dollar Rolls
The Portfolio may enter into dollar rolls. Dollar rolls involve sales by the
Portfolio of securities for delivery in the current month and the Portfolio's
simultaneously contracting to repurchase substantially similar (same type and
coupon) securities on a specified future date. During the roll period, the
Portfolio forgoes principal and interest paid on the securities. The Portfolio
is compensated by the difference between the current sales price and the lower
forward price for the future purchase (often referred to as the "drop") as well
as by the interest earned on the cash proceeds of the initial sale. Dollar
rolls involve the risk that the market value of the securities the Portfolio is
obligated to repurchase under the agreement may decline below the repurchase
price. Dollar rolls are speculative techniques and may be considered to be
borrowings by the Portfolio.
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
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 25
in the accounts of the Portfolio. All loans are continuously secured by
collateral exceeding the value of the securities loaned. All collateral
consists of either cash or U.S. government securities. The Lending Agent may
invest the cash collateral received in accordance with the investment
restrictions of the Portfolio in one or more of the following investments: U.S.
government or U.S. government agency obligations, bank obligations, corporate
debt obligations, asset-backed securities, investment funds, structured
products, repurchase agreements and an eligible money market fund. The Lending
Agent will indemnify the Portfolio for any loss resulting from a borrower's
failure to return a loaned security when due. As of October 31, 2004, the
Portfolio had loaned securities with a value of $171,279,461 and received cash
collateral which was invested in short-term securities valued at $175,436,424
as included in the accompanying portfolio of investments. For the year ended
October 31, 2004, the Portfolio earned fee income of $134,853 which is included
in the accompanying statement of operations.
NOTE F
Capital Stock
There are 15,000,000,000 shares of $.001 par value capital stock authorized,
divided into five classes, designated Class A, Class B, Class C, Class R and
Advisor Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
Shares
------------------------------------------
Year Ended July 1, 2003 to Year Ended
October 31, October 31, June 30,
2004 2003(a) 2003
------------------------------------------
Class A
Shares sold 1,375,400 1,188,424 7,320,478
Shares issued in
reinvestment of
dividends and
distributions 296,232 69,498 188,816
Shares converted
from Class B 253,309 72,114 183,885
Shares redeemed (2,942,203) (1,944,017) (4,991,928)
Net increase
(decrease) (1,017,262) (613,981) 2,701,251
Class B
Shares sold 1,030,452 900,731 10,491,815
Shares issued in
reinvestment of
dividends and
distributions 294,602 65,907 187,182
Shares converted to
Class A (253,544) (73,115) (183,857)
Shares redeemed (3,782,457) (2,261,947) (4,937,099)
Net increase
(decrease) (2,710,947) (1,368,424) 5,558,041
Class C
Shares sold 274,647 748,714 3,020,966
Shares issued in
reinvestment of
dividends and
distributions 51,557 12,921 40,953
Shares redeemed (970,702) (740,569) (2,189,012)
Net increase
(decrease) (644,498) 21,066 872,907
- -------------------------------------------------------------------------------
26 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Shares
------------------------------------------
Year Ended July 1, 2003 to Year Ended
October 31, October 31, June 30,
2004 2003(a) 2003
------------------------------------------
Advisor Class
Shares sold 4,711,221 1,716,510 6,206,900
Shares issued in
reinvestment of
dividends and
distributions 1,632,750 305,930 854,656
Shares redeemed (1,157,388) (257,118) (2,365,708)
Net increase 5,186,583 1,765,322 4,695,848
\
November 3,
2003(b) to
October 31,
2004
------------
Class R
Shares sold 1,522
Shares issued in
reinvestment of
dividends and
distributions 10
Net increase 1,532
(a) The portfolio changed its fiscal year end from June 30 to October 31.
(b) Commencement of distributions.
Amount
------------------------------------------
Year Ended July 1, 2003 to Year Ended
October 31, October 31, June 30,
2004 2003(a) 2003
------------------------------------------
Class A
Shares sold $ 14,301,333 $ 12,601,915 $ 77,100,650
Shares issued in
reinvestment of
dividends and
distributions 3,081,949 733,739 1,997,352
Shares converted
from Class B 2,633,099 771,300 1,956,325
Shares redeemed (30,605,160) (20,507,158) (52,684,749)
Net increase
(decrease) $(10,588,779) $ (6,400,204) $ 28,369,578
Class B
Shares sold $ 10,726,082 $ 9,506,335 $110,463,465
Shares issued in
reinvestment of
dividends and
distributions 3,062,146 695,223 1,979,554
Shares converted to Class A (2,633,099) (771,300) (1,956,325)
Shares redeemed (39,315,080) (23,810,699) (52,323,161)
Net increase
(decrease) $(28,159,951) $(14,380,441) $ 58,163,533
Class C
Shares sold $ 2,862,489 $ 7,877,594 $ 31,610,879
Shares issued in
reinvestment of
dividends and
distributions 534,916 136,077 431,766
Shares redeemed (10,085,462) (7,783,898) (22,969,541)
Net increase
(decrease) $ (6,688,057) $ 229,773 $ 9,073,104
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 27
Amount
------------------------------------------
Year Ended July 1, 2003 to Year Ended
October 31, October 31, June 30,
2004 2003(a) 2003
------------------------------------------
Advisor Class
Shares sold $49,011,188 $18,114,331 $65,432,463
Shares issued in
reinvestment of
dividends and
distributions 16,972,727 3,228,730 9,029,421
Shares redeemed (12,006,589) (2,704,792) (24,532,768)
Net increase $53,977,326 $18,638,269 $49,929,116
November 3,
2003(b) to
October 31,
2004
------------
Class R
Shares sold $15,915
Shares issued in
reinvestment of
dividends and
distributions 105
Net increase $16,020
(a) The portfolio changed its fiscal year end from June 30 to October 31.
(b) Commencement of distributions.
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 Fund's investments in
fixed-income debt securities such as bonds or notes. Increases in interest
rates may cause the value of the Fund'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")
- -------------------------------------------------------------------------------
28 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
intended to provide short-term financing if necessary, in connection with
abnormal redemption activity. Commitment fees related to the Facility are paid
by the participating funds and are included in miscellaneous expenses in the
statement of operations. The Portfolio did not utilize the Facility during the
year ended October 31, 2004.
NOTE I
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended October
31, 2004, October 31, 2003, and June 30, 2003 were as follows:
Year Ended July 1, 2003 to Year Ended
October 31, October 31, June 30,
2004 2003* 2003
------------------------------------------
Distributions paid from:
Ordinary income $23,211,211 $5,455,042 $15,322,558
Net long-term
capital gains 2,678,430 -0- -0-
Total taxable
distributions 25,889,641 5,455,042 15,322,558
Total distributions
paid $25,889,641 $5,455,042 $15,322,558
As of October 31, 2004, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses (2,545,113)(a)
Unrealized appreciation/(depreciation) 4,299,562(b)
Total accumulated earnings/(deficit) $ 1,754,449(c)
(a) On October 31, 2004, the Fund had a net capital loss carryforward for
federal income tax purposes of $2,545,113 all of which expires in the year
2011. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed. During the year ended
October 31, 2004, the Fund utilized $1,695,749 in carryforward losses.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales and the difference between book and tax amortization
methods for premium and market discount.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable primarily to dividends payable.
* The Portfolio changed its fiscal year end from June to October 31.
During the current fiscal year, permanent differences, primarily due to
distributions in excess of net investment income, the tax treatment of foreign
currency gains and losses, tax character of distributions, tax character of
paydown losses and the tax treatment of bond premium, resulted in a net
decrease in distributions in excess of net investment income and a net increase
in accumulated net realized gain on investment and foreign currency
transactions and a decrease in additional paid in capital. This
reclassification had no effect on net assets.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 29
NOTE J
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the NYAG have been investigating practices in the mutual
fund industry identified as "market timing" and "late trading" of mutual fund
shares. Certain other regulatory authorities have also been conducting
investigations into these practices within the industry and have requested that
the Adviser provide information to them. The Adviser has been cooperating and
will continue to cooperate with all of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurrance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order and the NYAG Order
contemplate that the Adviser's registered investment company clients, including
the Fund, will introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
- -------------------------------------------------------------------------------
30 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, is continuing to direct and oversee an internal
investigation and a comprehensive review of the facts and circumstances
relevant to the SEC's and the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent
Directors") have initiated an investigation of the above-mentioned matters with
the advice of an independent economic consultant and independent counsel. The
Independent Directors have formed a special committee to supervise the
investigation.
On October 2, 2003, a putative class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed
against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital
Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein
Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran
(collectively, the "Alliance Capital defendants"); and certain other defendants
not affiliated with the Adviser. The Hindo Complaint was filed in the United
States District Court for the Southern District of New York by alleged
shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint
alleges that certain of the Alliance Capital defendants failed to disclose that
they improperly allowed certain hedge funds and other unidentified parties to
engage in late trading and market timing of AllianceBernstein Fund securities,
violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of
the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek
an unspecified amount of compensatory damages and rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, numerous additional lawsuits making factual allegations
similar to those in the Hindo Complaint were filed against the Adviser and
certain other defendants, some of which name the Fund as a defendant. All of
these lawsuits seek an unspecified amount of damages. The lawsuits are now
pending in the United States District Court for the District of Maryland
pursuant to a ruling by the Judicial Panel on Multidistrict Litigation
transferring and centralizing all of the mutual fund cases 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.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 31
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
an unaffiliated broker/dealer violated federal securities laws relating to its
receipt of compensation for selling specific mutual funds and the disclosure of
such compensation. The SEC has indicated publicly that, among other things, it
is considering enforcement action in connection with mutual funds' disclosure
of such arrangements and in connection with the practice of considering mutual
fund sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC has issued subpoenas to the Adviser in connection with
this matter and the Adviser has provided documents and other information to the
SEC and is cooperating fully with its investigation.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Aucoin Complaint was filed in the United States District Court
for the Southern District of New York by an alleged shareholder of an
AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other
things, (i) that certain of the defendants improperly authorized the payment of
excessive commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain of the
defendants misrepresented and omitted from registration statements and other
reports material facts concerning such payments, and (iii) that certain
defendants caused such conduct as control persons of other defendants. The
Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and
48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act,
breach of common law fiduciary duties, and aiding and abetting breaches of
common law fiduciary duties. Plaintiffs seek an unspecified amount of
compensatory damages and punitive damages, rescission of their contracts with
the Adviser, including recovery of all fees paid to the Adviser pursuant to
such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the Fund's shares or
other adverse consequences to the Fund. However, the Adviser believes that
these matters are not likely to have a material adverse effect on its ability
to perform advisory services relating to the Fund.
- -------------------------------------------------------------------------------
32 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
------------------------------------------------------------------------------
Year July 1, July 1,
Ended 2003 to Year Ended June 30, 1999(c) to
October 31, October 31, ------------------------------------ June 30,
2004 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $10.56 $10.82 $10.25 $10.22 $9.85 $10.00
Income From Investment Operations
Net investment income(d)(e) .33 .12 .33 .46 .55 .60
Net realized and unrealized
gain (loss) on investment and
foreign currency transactions .15 (.25) .66 .17 .42 (.21)
Net increase (decrease) in net
asset value from operations .48 (.13) .99 .63 .97 .39
Less: Dividends and
Distributions Dividends from
net investment income (.38) (.13) (.42) (.46) (.55) (.54)
Distributions in excess of
net investment income -0- -0- -0- (.10) (.04) -0-
Distributions from net realized
gain on investment transactions (.23) -0- -0- (.01) (.01) -0-
Distributions in excess of
net realized gain on
investment transactions -0- -0- -0- (.03) -0- -0-
Total dividends and distributions (.61) (.13) (.42) (.60) (.60) (.54)
Net asset value, end of period $10.43 $10.56 $10.82 $10.25 $10.22 $9.85
Total Return
Total investment return based on
net asset value(f) 4.66% (1.20)% 9.87% 6.23% 10.09% 4.40%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $56,778 $68,213 $76,565 $44,852 $20,068 $5,071
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .98% .98%(g) .98% .98% .98% .98%(g)
Expenses, before waivers/
reimbursements 1.26% 1.33%(g) 1.32% 1.48% 2.85% 13.10%(g)
Net investment income(e) 3.21% 2.60%(g) 3.08% 4.39% 5.49% 5.96%(g)
Portfolio turnover rate 658% 199% 867% 573% 385% 215%
See footnote summary on page 38.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 33
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
------------------------------------------------------------------------------
Year July 1, July 1,
Ended 2003 to Year Ended June 30, 1999(c) to
October 31, October 31, ------------------------------------ June 30,
2004 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $10.55 $10.81 $10.24 $10.21 $9.84 $10.00
Income From Investment Operations
Net investment income(d)(e) .27 .09 .26 .38 .47 .50
Net realized and unrealized
gain (loss) on investment and
foreign currency transactions .14 (.25) .66 .16 .43 (.18)
Net increase (decrease) in net
asset value from operations .41 (.16) .92 .54 .90 .32
Less: Dividends and Distributions
Dividends from net
investment income (.31) (.10) (.35) (.38) (.47) (.48)
Distributions in excess of net
investment income -0- -0- -0- (.09) (.05) -0-
Distributions from net realized
gain on investment transactions (.23) -0- -0- (.01) (.01) -0-
Distributions in excess of
net realized gain on
investment transactions -0- -0- -0- (.03) -0- -0-
Total dividends and distributions (.54) (.10) (.35) (.51) (.53) (.48)
Net asset value, end of period $10.42 $10.55 $10.81 $10.24 $10.21 $9.84
Total Return
Total investment return based on
net asset value(f) 3.93% (1.44)% 9.12% 5.52% 9.34% 3.56%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $66,635 $96,033 $113,233 $50,354 $13,960 $1,007
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.68% 1.68%(g) 1.68% 1.68% 1.68% 1.68%(g)
Expenses, before waivers/
reimbursements 2.00% 2.06%(g) 2.05% 2.19% 3.36% 11.29%(g)
Net investment income(e) 2.59% 2.01%(g) 2.41% 3.70% 4.82% 5.32%(g)
Portfolio turnover rate 658% 199% 867% 573% 385% 215%
See footnote summary on page 38.
- -------------------------------------------------------------------------------
34 o ALLIANCEBERNSTEIN Bond Fund Quality Bond Portfolio
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
------------------------------------------------------------------------------
Year July 1, July 1,
Ended 2003 to Year Ended June 30, 1999(c) to
October 31, October 31, ------------------------------------- June 30,
2004 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $10.53 $10.79 $10.23 $10.19 $9.83 $10.00
Income From Investment Operations
Net investment income(d)(e) .27 .09 .26 .38 .48 .51
Net realized and unrealized
gain (loss) on investment and
foreign currency transactions .14 (.25) .65 .17 .41 (.20)
Net increase (decrease) in net
asset value from operations .41 (.16) .91 .55 .89 .31
Less: Dividends and Distributions
Dividends from net
investment income (.31) (.10) (.35) (.38) (.48) (.48)
Distributions in excess of net
investment income -0- -0- -0- (.09) (.04) -0-
Distributions from net realized
gain on investment transactions (.23) -0- -0- (.01) (.01) -0-
Distributions in excess of
net realized gain on
investment transactions -0- -0- -0- (.03) -0- -0-
Total dividends and distributions (.54) (.10) (.35) (.51) (.53) (.48)
Net asset value, end of period $10.40 $10.53 $10.79 $10.23 $10.19 $9.83
Total Return
Total investment return based on
net asset value(f) 3.93% (1.44)% 9.03% 5.63% 9.25% 3.47%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $19,008 $26,021 $26,445 $16,131 $4,315 $514
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.68% 1.68%(g) 1.68% 1.68% 1.68% 1.68%(g)
Expenses, before waivers/
reimbursements 1.99% 2.06%(g) 2.03% 2.19% 3.42% 11.75%(g)
Net investment income(e) 2.60% 2.03%(g) 2.41% 3.71% 4.88% 5.35%(g)
Portfolio turnover rate 658% 199% 867% 573% 385% 215%
See footnote summary on page 38.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 35
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class R
-------------
November 3,
2003(h) to
October 31,
2004
-------------
Net asset value, beginning of period $10.53
Income From Investment Operations
Net investment income(d)(e) .33
Net realized and unrealized gain
on investment transactions .15
Net increase in net asset value
from operations .48
Less: Dividends and Distributions
Dividends from net investment income (.36)
Distributions from net realized gain
on investment transactions (.23)
Total dividends and distributions (.59)
Net asset value, end of period $10.42
Total Return
Total investment return based based
on net asset value(f) 4.63%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $16
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.18%(g)
Expenses, before waivers/reimbursements 1.45%(g)
Net investment income 2.98%(e)(g)
Portfolio turnover rate 658%
See footnote summary on page 38.
- -------------------------------------------------------------------------------
36 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
---------------------------------------------------------------
Year July 1, July 1,
Ended 2003 to Year Ended June 30, 1999(c) to
October 31, October 31, ----------------------- June 30,
2004 2003(a) 2003 2002(b) 2001
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $10.55 $10.82 $10.25 $10.22 $9.97
Income From Investment Operations
Net investment income(d)(e) .36 .13 .36 .48 .42
Net realized and unrealized
gain (loss) on investment and
foreign currency transactions .16 (.26) .66 .18 .30
Net increase (decrease) in net
asset value from operations .52 (.13) 1.02 .66 .72
Less: Dividends and Distributions
Dividends from net
investment income (.41) (.14) (.45) (.48) (.42)
Distributions in excess of net
investment income -0- -0- -0- (.11) (.04)
Distributions from net realized gain
on investment transactions (.23) -0- -0- (.01) (.01)
Distributions in excess of
net realized gain on
investment transactions -0- -0- -0- (.03) -0-
Total dividends and distributions (.64) (.14) (.45) (.63) (.47)
Net asset value, end of period $10.43 $10.55 $10.82 $10.25 $10.22
Total Return
Total investment return based on
net asset value(f) 5.08% (1.19)% 10.20% 6.57% 7.28%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $309,690 $258,747 $246,127 $185,071 $27,420
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .68% .68%(g) .68% .68% .68%(g)
Expenses, before waivers/
reimbursements .96% 1.03%(g) 1.20% 1.20% 2.29%(g)
Net investment income(e) 3.47% 2.87%(g) 3.39% 4.69% 5.89%(g)
Portfolio turnover rate 658% 199% 867% 573% 385%
See footnote summary on page 38.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 37
(a) The Portfolio changed its fiscal year end from June 30 to October 31.
(b) As required, effective July 1, 2001, the Portfolio has adopted the
provisions of the AICPA Audit and Accounting Guide, Audits of Investment
Companies, and began amortizing premium on debt securities for financial
statement reporting purposes only. The effect of this change for the year ended
June 30, 2002 was to decrease net investment income per share by $.05, increase
net realized and unrealized gain on investments per share by $.05 for Class A,
B and C, respectively, and by $.06 for the Advisor Class, and decrease the
ratio of net investment income to average net assets from 4.93% to 4.39% for
Class A, from 4.24% to 3.70% for Class B, from 4.25% to 3.71% for Class C and
from 5.24% to 4.69% for Advisor Class. Per share, ratios and supplemental data
for periods prior to July 1, 2001 have not been restated to reflect this change
in presentation.
(c) Commencement of operations.
(d) Based on average shares outstanding.
(e) Net of fees waived and expenses reimbursed by the Adviser.
(f) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return does not reflect the deduction of taxes that a
shareholder would pay on Portfolio distributions or the redemption of Portfolio
shares. Total investment return calculated for a period of less than one year
is not annualized.
(g) Annualized.
(h) Commencement of distribution.
- -------------------------------------------------------------------------------
38 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of
Directors of AllianceBernstein Bond Fund, Inc. Quality Bond Portfolio
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Quality Bond Portfolio (the "Portfolio")
one of the portfolios constituting the AllianceBernstein Bond Fund, Inc., as of
October 31, 2004, and the related statement of operations for the year 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 Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of October 31, 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
Quality Bond Portfolio of the AllianceBernstein Bond Fund, Inc. at October 31,
2004, the results of its operations for the year then ended, the changes in its
net assets and the financial highlights for each of the periods indicated
therein in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
December 15, 2004
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND 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
Paul J. DeNoon, Vice President
Matthew D.W. Bloom(2), Vice President
Jeffrey S. Phlegar, Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer and Chief Financial Officer
Vincent S. Noto, Controller
Custodian
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
AllianceBernstein Investment Research and Management, Inc.
1345 Avenue of the Americas
New York, NY 10105
Transfer Agent
Alliance Global Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-Free (800) 221-5672
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee and Governance and Nominating Committee.
(2) Mr. Bloom is the person primarily responsible for the day-to-day
management of the Portfolio's investment portfolio.
- -------------------------------------------------------------------------------
40 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND 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
Suite 100 was formerly Senior Manager
Greenwich, CT 06830 of Barrett Associates, Inc., a
9/7/32 registered investment adviser,
(1998) with which he had been associ-
ated since prior to 1999. He was
formerly Deputy Comptroller and
Chief Investment Officer of the
State of New York and, prior
thereto, Chief Investment
Officer of the New York Bank
for Savings.
Ruth Block, #, ** Formerly an 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 95 None
P.O. Box 167 December 1994 he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
10/23/29 Management Corporation
(1987) ("ACMC") responsible for mutual
fund administration. Prior to
joining ACMC in 1984 he was
Chief Financial Officer of
Eberstadt Asset Management
since 1968. Prior to that he was
Senior Manager at Price
Waterhouse & Co. Member of
American Institute of Certified
Public Accountants since 1953.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND 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 95 None
P.O. Box 12 of 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
and 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
(1996) of the Executive Committee of
that firm. He was also a member
and Chairman of the Municipal
Securities Rulemaking Board
and Trustee of the Museum of the
City of New York.
INTERESTED DIRECTOR
Marc O. Mayer, ++ 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 $2,356. 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 QUALITY BOND PORTFOLIO
Officer Information
Certain information concerning the Fund's Officers is set forth below.
NAME, ADDRESS* PRINCIPAL POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------
Marc O. Mayer President and Chief See biography above.
10/2/57 Executive Officer
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 Of Counsel to
Kirkpatrick & Lockhart, LLP from 2003
to October 2004, and General Counsel
and First Vice President of Merrill Lynch
Investment Managers 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.
Matthew D.W. Bloom Vice President Senior Vice President of ACMC,** with
7/15/56 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.
Mark R. Manley Secretary Senior Vice President, Deputy General
10/23/62 Counsel and Chief Compliance Officer
with which he has been associated
since prior to 1999.
Mark D. Gersten Treasurer and Senior Vice President of Alliance Global
10/4/50 Chief 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
12/4/64 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 QUALITY BOND 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
Mid-Cap Growth Fund
Large Cap Growth Fund*
Small Cap Growth Fund
Global & International
All-Asia Investment Fund
Global Health Care Fund*
Global Research Growth Fund
Global Technology Fund*
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
- -------------------------------------------------------------------------------
Value Funds
Domestic
Balanced Shares
Focused Growth & Income 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.
* Prior to December 15, 2004, these Funds were named as follows: Global
Health Care Fund was Health Care Fund; Large Cap Growth Fund was Premier Growth
Fund; Global Technology Fund was Technology Fund; and Focused Growth & Income
Fund was Disciplined Value Fund.
** Effective February 1, 2005, Small Cap Value Fund will be renamed
Small/Mid-Cap Value 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 QUALITY BOND PORTFOLIO
ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
(SM) This service mark used under license from
the owner, Alliance Capital Management L.P.
QBPAR1004
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
---------- ---- --------
Quality Bond Portfolio** 2003 21,450 751 3,356
2004 42,000 4,970 22,871
** During the course of calendar year 2003, the Quality Bond Portfolio changed
its fiscal year end from June 30 to October 31. Fees for 2003 are for the period
July 1, 2003 through October 31, 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-approved by the
All Fees for Audit Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit Related Fees)
Portfolio, the Adviser (Portion Comprised of
and Service Affiliates Tax Fees)
------------------------ ------------------------
Quality Bond Portfolio 2003 134,157 104,107
100,751
3,356
2004 1,129,573 177,841
154,970
22,871
(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: December 31, 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: December 31, 2004
By: /s/ Mark D. Gersten
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: December 31, 2004