-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IqNPdkDp/F3AcEDREFx1HQG7sSvm9ZbQ1Ocglv681MaNHB80kuiDMwP07jcb7sX1 H2XjpAISXpDuG45jEZSU7Q== 0000936772-03-000473.txt : 20031211 0000936772-03-000473.hdr.sgml : 20031211 20031210210512 ACCESSION NUMBER: 0000936772-03-000473 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031211 EFFECTIVENESS DATE: 20031211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCEBERNSTEIN BOND FUND INC CENTRAL INDEX KEY: 0000003794 IRS NUMBER: 132754393 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02383 FILM NUMBER: 031048347 BUSINESS ADDRESS: STREET 1: 500 PLAZA DRIVE STREET 2: 1345 AVENUE OF THE AMERICAS CITY: SECAUCUS STATE: NJ ZIP: 07094 BUSINESS PHONE: 2013194105 MAIL ADDRESS: STREET 1: 500 PLAZA DRIVE STREET 2: 1345 AVENUE OF THE AMERICAS CITY: SECAUCUS STATE: NJ ZIP: 07094 FORMER COMPANY: FORMER CONFORMED NAME: ALLIANCE BOND FUND INC DATE OF NAME CHANGE: 19920703 N-CSR 1 edg9544_ar.txt United States Securities and Exchange Commission Washington, D.C. 20549 Form N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-2383 AllianceBernstein Bond Fund, Inc. (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley. Alliance Capital Management, L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: September 30, 2003 Date of reporting period: September 30, 2003 ITEM 1. REPORTS TO STOCKHOLDERS. [LOGO] ALLIANCEBERNSTEIN(SM) Investment Research and Management AllianceBernstein Bond Fund Corporate Bond Portfolio - -------------------------------------------------------------------------------- Corporate Fixed Income Annual Report--September 30, 2003 - -------------------------------------------------------------------------------- Investment Products Offered --------------------------- o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed --------------------------- This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, without charge, upon request by visiting Alliance Capital's web site at www.investor.alliancecapital.com or on the Securities and Exchange Commission's web site at http://www.sec.gov, or by calling Alliance Capital at (800) 227-4618. AllianceBernstein Investment Research and Management, Inc., the principal underwriter of the AllianceBernstein mutual funds and an affiliate of Alliance Capital Management L.P., the manager of the funds, is a member of the NASD. November 12, 2003 Annual Report This report provides management's discussion of fund performance for AllianceBernstein Bond Fund Corporate Bond Portfolio (the "Portfolio") for the annual reporting period ended September 30, 2003. Investment Objectives and Policies The primary objective of this open-end fund is to maximize income over the long-term, to the extent consistent with providing reasonable safety in the value of each shareholder's investment. As a secondary objective, the Portfolio seeks capital appreciation. To achieve its objectives, the Portfolio invests primarily in corporate bonds. The Portfolio may also hold debt securities issued by the U.S. and foreign governments. While the Portfolio invests primarily in investment-grade debt securities (currently 65%), it may also invest a significant amount of its assets in lower-rated debt securities. Investment Results The following table shows how the Portfolio performed over the past six- and 12-month periods ended September 30, 2003. For comparison, we have included the Lehman Brothers (LB) Long BAA U.S. Credit Index, a measure of the performance of a basket of unmanaged corporate debt securities. We have also included the performance for the Lipper Corporate Debt BBB-Rated Funds Average (the "Lipper Average"), the average performance of a group of corporate bond funds with similar objectives to the Portfolio. INVESTMENT RESULTS* Periods Ended September 30, 2003 --------------------- Returns --------------------- 6 Months 12 Months - ------------------------------------------------------------------------------- AllianceBernstein Bond Fund Corporate Bond Portfolio Class A 7.89% 21.12% - ------------------------------------------------------------------------------- Class B 7.45% 20.22% - ------------------------------------------------------------------------------- Class C 7.45% 20.22% - ------------------------------------------------------------------------------- Lehman Brothers Long BAA U.S. Credit Index 9.39% 20.88% - ------------------------------------------------------------------------------- Lipper Corporate Debt BBB-Rated Funds Average 4.49% 9.91% - ------------------------------------------------------------------------------- * The Portfolio's investment results are returns for the periods shown and are based on the net asset value (NAV) of each class of shares as of September 30, 2003. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for sales charges that may apply when shares are purchased or redeemed. Returns for the Portfolio include the reinvestment of any distributions paid during each period. Past performance is no guarantee of future results. The unmanaged Lehman Brothers (LB) Long BAA U.S. Credit Index is a measure of corporate and non-corporate fixed income securities that are rated investment grade (Baa by Moody's Investors Service or BBB by Standard & Poor's) and - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 1 have at least 10 years to final maturity. The unmanaged Lipper Corporate Debt BBB-Rated Funds Average (the "Lipper Average") is based on the performance of a universe of funds that invest at least 65% of their assets in corporate or government debt issues rated in the top four grades. For the six- and 12-month periods ended September 30, 2003, the Lipper Average consisted of 184 and 175 funds, respectively. An investor cannot invest directly in an index or an average, and its results are not indicative of any specific investment, including AllianceBernstein Bond Fund Corporate Bond Portfolio. Additional investment results appear on page 6. For the 12-month period ended September 30, 2003, the Portfolio's Class A shares outperformed the benchmark, the LB Long BAA U.S. Credit Index, and significantly outperformed the Lipper Average. The Portfolio's holdings of high yield debt were the primary reason for the relative outperformance versus the investment grade only indices. The high yield market significantly outperformed investment grade corporates during the annual period, as high yield positions in the Portfolio averaged between 20%-25%. Additionally, the Portfolio's overweight position in investment grade cable/media, finance/banking and utilities industries also contributed positively to performance. Another positive contributor to performance was the Portfolio's holdings of long Russia paper, held throughout most of the first half of the year. This credit outperformed most investment grade and high yield issues. For the six-month period ended September 30, 2003, the Portfolio modestly underperformed the LB Long BAA U.S. Credit Index and outperformed the Lipper Average. The Portfolio's underperformance relative to the benchmark is attributable to its shorter duration strategy in the second quarter in an environment of declining interest rates. The Portfolio's duration positioning remains comparable to our estimates of the Lipper BBB universe. Market Review and Investment Strategy Increasing evidence of positive economic growth led to continued outperformance for the credit sectors, particularly lower-rated debt. Reflecting the continued improvement in corporate fundamentals year-to-date, the ratio of credit-rating downgrades continued to fall, and spreads continued to narrow versus Treasuries. Year-to-date, the corporate spread compressed 73 basis points from 184 to 111 against like duration Treasuries, according to the LB Corporate Index. Top industry performers within the investment grade credit market for the annual period included media/cable and telecommunications, while underperformers included consumer non-cyclicals, such as tobacco, supermarkets and food/beverage. Lower-rated BBB corporate securities, which returned 15.53%, significantly outpaced higher A-rated corporates and AAA-rated corporates, which returned 9.24% and 4.92%, respectively. Lower-rated credit has outperformed, benefiting from greater sensitivity to improving credit fundamentals. As risk aversion abated, the high yield sector rebounded strongly during the annual - -------------------------------------------------------------------------------- 2 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO period, returning 23.10%, as measured by the Credit Suisse First Boston High Yield Index. Similar to investment grade corporates, the telecommunication, media, utility and technology sectors outperformed within the high yield market. During the period under review, we increased the Portfolio's allocation to high yield corporates in light of an improving economy, a decline in risk aversion and improving fundamentals. We added to the Portfolio's auto and broadcast/media sectors where we saw value. We also added a modest position of banking-sector preferred stock as well as BBB-rated Yankee bonds. Additionally, we have maintained an interest rate hedge using Treasury futures since the end of the first quarter to keep the Portfolio's duration risk at a moderate level, in line with our forecast. Duration now stands around 6.5 years, as opposed to 9.0 years at year-end 2002. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 3 Performance Update - -------------------------------------------------------------------------------- PERFORMANCE UPDATE ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO GROWTH OF A $10,000 INVESTMENT 9/30/93 TO 9/30/03 AllianceBernstein Bond Fund Corporate Bond Portfolio Class A: $19,182 Lehman Brothers Long BAA U.S. Credit Index: $21,964 Lipper Corporate Debt BBB-Rated Funds Average: $18,722 [THE FOLLOWING TABLE WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL.] AllianceBernstein Bond Lehman Brothers Lipper Corporate Fund Corporate Long BAA U.S. Debt BBB-Rated Bond Portfolio Class A Credit Index Funds Average - -------------------------------------------------------------------------------- 9/30/93 $10,000 $10,000 $10,000 9/30/94 9,734 9,327 9,567 9/30/95 11,001 11,485 11,029 9/30/96 12,207 11,948 11,688 9/30/97 14,426 13,663 13,161 9/30/98 13,824 15,157 14,050 9/30/99 14,260 14,663 14,050 9/30/00 15,397 15,345 14,779 9/30/01 16,569 17,141 16,113 9/30/02 15,833 18,170 16,687 9/30/03 19,182 21,964 18,722 This chart illustrates the total value of an assumed $10,000 investment in AllianceBernstein Bond Fund Corporate Bond Portfolio Class A shares (from 9/30/93 to 9/30/03) as compared to the performance of an appropriate broad-based index and the Lipper Corporate Debt BBB-Rated Funds Average. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The chart reflects the deduction of the maximum 4.25% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains. Performance for Class B and Class C shares will vary from the results shown above due to differences in expenses charged to these classes. Past performance is not indicative of future results, and is not representative of future gain or loss in capital value or dividend income. The unmanaged Lehman Brothers Long BAA U.S. Credit Index is a measure of corporate and non-corporate fixed income securities that are rated investment grade (Baa by Moody's Investors Service or BBB by Standard & Poor's) and have at least 10 years to final maturity. The unmanaged Lipper Corporate Debt BBB-Rated Funds Average reflects performance of 23 funds (based on the number of funds in the average from 9/30/93 to 9/30/03). These funds have generally similar investment objectives to AllianceBernstein Bond Fund Corporate Bond Portfolio, although the investment policies of some funds included in the average may vary. When comparing AllianceBernstein Bond Fund Corporate Bond Portfolio to the index and average shown above, you should note that no charges or expenses are reflected in the performance of the index. Lipper results include fees and expenses. An investor cannot invest directly in an index or an average, and its results are not indicative of any specific investment, including AllianceBernstein Bond Fund Corporate Bond Portfolio. - -------------------------------------------------------------------------------- 4 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Portfolio Summary - -------------------------------------------------------------------------------- PORTFOLIO SUMMARY September 30, 2003 INCEPTION DATES PORTFOLIO STATISTICS Class A Shares Net Assets ($mil): $1,079.7 3/11/74 Class B Shares 1/8/93 Class C Shares 5/3/93 SECURITY TYPE 9.1% Preferred Stock 0.4% Yankee Bonds CORPORATE 12.7% Public Utilities-Electric & Gas 8.7% Broadcasting/Media 7.6% Automotive 6.2% Cable 6.1% Banking 5.8% Paper/Packaging [PIE CHART OMITTED] 5.0% Communications 4.9% Financial 3.9% Communications-Mobile 3.8% Petroleum Products 3.3% Insurance 2.7% Building/Real Estate 2.6% Energy 15.9% Other 1.3% Short-Term All data as of September 30, 2003. The Portfolio's security type breakdown is expressed as a percentage of total investments and may vary over time. "Other" represents less than 2.5% weightings in Chemicals, Communications-Fixed, Containers, Electronics, Entertainment & Leisure, Food/Beverage, Gaming, Health Care, Hotel/Lodging, Industrial, Metals/Mining, Publishing, Retail, Services, Technology and Supermarket/Drug. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 5 Investment Results - -------------------------------------------------------------------------------- INVESTMENT RESULTS AVERAGE ANNUAL RETURNS AS OF SEPTEMBER 30, 2003 Class A Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 21.12% 15.97% 5 Years 6.77% 5.85% 10 Years 6.73% 6.27% SEC Yield* 5.17% Class B Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 20.22% 17.22% 5 Years 5.99% 5.99% 10 Years(a) 6.31% 6.31% SEC Yield* 4.69% Class C Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 20.22% 19.22% 5 Years 5.99% 5.99% 10 Years 5.99% 5.99% SEC Yield* 4.70% The Portfolio's investment results represent average annual returns. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The returns reflect reinvestment of dividends and/or capital gains distributions in additional shares without and with the effect of the 4.25% maximum front-end sales charge for Class A or applicable contingent deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4); and for Class C shares (1% year 1). Returns for Class A shares do not reflect the imposition of the 1 year, 1% contingent deferred sales charge for accounts over $1,000,000. The Portfolio invests a portion of its assets in foreign securities which may magnify fluctuations, particularly in emerging markets. Price fluctuations may also be caused by changes in interest rates or bond credit quality ratings. These changes have a greater effect on bonds with longer maturities than on those with shorter maturities. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. * SEC Yields are based on SEC guidelines and are calculated on 30 days ended September 30, 2003. (a) Assumes conversion of Class B shares into Class A shares after six years. - -------------------------------------------------------------------------------- 6 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS September 30, 2003 Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- CORPORATE DEBT OBLIGATIONS-95.3% Automotive-8.1% Dana Corp. 10.125%, 3/15/10 ............................... $ 2,769 $ 3,108,203 Ford Motor Co. 7.45%, 7/16/31 ................................. 25,000 23,120,000 Ford Motor Credit Co. 7.375%, 2/01/11 ................................ 10,000 10,533,330 7.875%, 6/15/10 ................................ 10,000 10,856,640 General Motors Acceptance Corp. 8.00%, 11/01/31 ................................ 15,000 15,451,380 General Motors Corp. 8.375%, 7/15/33 ................................ 17,500 18,349,537 TRW Automotive 9.375%, 2/15/13(a) ............................. 3,325 3,757,250 11.00%, 2/15/13(a) ............................. 1,655 1,936,350 ------------ 87,112,690 ------------ Banking-6.5% Great Western Financial Trust II 8.206%, 2/01/27 ................................ 24,456 28,108,064 Greenpoint Bank 9.25%, 10/01/10 ................................ 9,165 11,490,985 HVB Funding Trust III 9.00%, 10/22/31(a) ............................. 9,000 10,214,118 Mizuho JGB Investment 9.87%, 6/30/08(a) .............................. 10,000 10,787,990 UFJ Finance Aruba AEC (Aruba) 6.75%, 7/15/13 ................................. 9,000 9,445,851 ------------ 70,047,008 ------------ Broadcasting/Media-9.3% AOL Time Warner, Inc. 7.625%, 4/15/31 ................................ 5,000 5,704,475 British Sky Broadcasting Group Plc 6.875%, 2/23/09 ................................ 13,500 15,112,116 8.20%, 7/15/09 ................................. 10,090 11,988,353 Clear Channel Communications, Inc. 5.75%, 1/15/13 ................................. 3,500 3,722,166 News America Holdings 9.25%, 2/01/13 ................................. 5,000 6,552,490 News America, Inc. 7.30%, 4/30/28(b) .............................. 25,000 28,221,350 Sinclair Broadcast Group, Inc. 8.00%, 3/15/12 ................................. 4,525 4,796,500 Time Warner, Inc. 8.375%, 3/15/23(b) ............................. 20,000 24,804,640 ------------ 100,902,090 ------------ - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 7 Portfolio of Investments - -------------------------------------------------------------------------------- Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- Building/Real Estate-2.9% KB HOME 7.75%, 2/01/10 ................................. $ 2,775 $ 2,941,500 LNR Property Corp. 7.625%, 7/15/13(a) ............................. 2,910 3,011,850 M.D.C. Holdings, Inc. 5.50%, 5/15/13 ................................. 5,000 5,008,935 7.00%, 12/01/12 ................................ 5,365 5,907,117 NVR, Inc. 5.00%, 6/15/10 ................................. 10,000 9,600,000 Pulte Homes, Inc. 6.375%, 5/15/33 ................................ 5,000 4,813,230 ------------ 31,282,632 ------------ Cable-6.6% AT&T Broadband Corp. 9.455%, 11/15/22(b) ............................ 30,420 42,201,240 EchoStar DBS Corp. 5.75%, 10/01/08(a) ............................. 3,135 3,154,594 6.375%, 10/01/11(a) ............................ 1,865 1,874,325 9.375%, 2/01/09 ................................ 11,785 12,624,681 Insight Midwest LP 9.75%, 10/01/09 ................................ 2,000 2,025,000 Rogers Cable, Inc. (Canada) 6.25%, 6/15/13 ................................. 9,085 9,119,069 ------------ 70,998,909 ------------ Chemicals-1.2% FMC Corp. 10.25%, 11/01/09 ............................... 3,470 3,973,150 Huntsman International LLC 9.875%, 3/01/09 ................................ 6,000 6,330,000 Resolution Performance Products 13.50%, 11/15/10 ............................... 2,524 2,271,600 ------------ 12,574,750 ------------ Communications-5.4% AT&T Corp. 8.50%, 11/15/31 ................................ 2,000 2,376,218 Koninklijke KPN NV (Netherlands) 8.00%, 10/01/10 ................................ 15,000 18,160,575 Sprint Capital Corp. 6.875%, 11/15/28 ............................... 4,445 4,349,970 8.75%, 3/15/32(b) .............................. 23,000 27,425,315 TCI Communications Financing III 9.65%, 3/31/27 ................................. 5,000 5,931,250 ------------ 58,243,328 ------------ - -------------------------------------------------------------------------------- 8 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- Communications-Fixed-0.1% Eircom Funding (Ireland) 8.25%, 8/15/13(a) .............................. $ 1,340 $ 1,447,200 ------------ Communications-Mobile-4.1% AT&T Wireless Services, Inc. 7.875%, 3/01/11 ................................ 5,000 5,830,295 8.125%, 5/01/12 ................................ 11,500 13,680,389 Nextel Communications, Inc. 9.375%, 11/15/09 ............................... 12,285 13,390,650 9.95%, 2/15/08 ................................. 11,050 11,671,562 ------------ 44,572,896 ------------ Containers-1.9% Crown European Holdings, SA (France) 9.50%, 3/01/11(a) .............................. 5,225 5,643,000 Greif Bros. Corp. Cl.A 8.875%, 8/01/12 ................................ 3,800 4,132,500 Sealed Air Corp. 6.875%, 7/15/33(a) ............................. 10,000 10,268,500 ------------ 20,044,000 ------------ Electronics-0.2% L-3 Communications Corp. 6.125%, 7/15/13 ................................ 2,000 1,990,000 ------------ Energy-2.8% Devon Energy Corp. 7.95%, 4/15/32 ................................. 10,000 12,398,800 Hilcorp Energy 10.50%, 9/01/10(a) ............................. 2,000 2,135,000 Kerr-McGee Corp. 7.875%, 9/15/31 ................................ 5,000 5,891,375 Valero Energy Corp. 7.50%, 4/15/32 ................................. 9,000 10,053,324 ------------ 30,478,499 ------------ Entertainment & Leisure-1.1% Six Flags, Inc. 9.50%, 2/01/09 ................................. 6,125 5,864,688 Universal City Development Partners 11.75%, 4/01/10(a) ............................. 5,055 5,712,150 ------------ 11,576,838 ------------ Financial-5.2% Brascan Corp. (Canada) 7.375%, 3/01/33 ................................ 4,500 5,073,120 Cendant Corp. 7.375%, 1/15/13 ................................ 10,000 11,552,530 JSG Funding Plc (Ireland) 9.625%, 10/01/12 ............................... 2,605 2,865,500 - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 9 Portfolio of Investments - -------------------------------------------------------------------------------- Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- MBNA America Bank 7.125%, 11/15/12 ............................... $ 5,000 $ 5,744,780 Ohio National Financial Services, Inc. 6.35%, 4/01/13(a) .............................. 5,000 5,229,905 Safeco Capital Trust I 8.072%, 7/15/37 ................................ 13,000 15,161,991 Transamerica Capital II 7.65%, 12/01/26(a) ............................. 10,000 11,036,630 ------------ 56,664,456 ------------ Food/Beverage-1.2% Dole Food Co., Inc. 8.875%, 3/15/11 ................................ 2,170 2,321,900 Swift & Co. . 10.125%, 10/01/09 .............................. 3,500 3,885,000 Tyson Foods, Inc. 7.00%, 1/15/28 ................................. 6,465 6,683,284 ------------ 12,890,184 ------------ Gaming-0.4% Park Place Entertainment Corp. 9.375%, 2/15/07 ................................ 3,500 3,876,250 ------------ Healthcare-1.7% Concentra Operating Corp. 13.00%, 8/15/09 ................................ 2,390 2,664,850 HCA, Inc. 6.25%, 2/15/13 ................................. 4,000 4,063,348 6.30%, 10/01/12 ................................ 5,000 5,104,815 6.75%, 7/15/13 ................................. 6,000 6,313,026 ------------ 18,146,039 ------------ Hotel/Lodging-1.0% Corrections Corp. of America 9.875%, 5/01/09 ................................ 1,155 1,302,263 Extended Stay America, Inc. 9.875%, 6/15/11 ................................ 6,250 6,929,687 Intrawest Corp. 9.75%, 8/15/08 ................................. 2,600 2,746,250 ------------ 10,978,200 ------------ Industrial-1.9% CRH America, Inc. 6.40%, 10/15/33 ................................ 6,000 6,233,496 Flowserve Corp. 12.25%, 8/15/10 ................................ 1,173 1,360,680 SPX Corp. 7.50%, 1/01/13 ................................. 2,345 2,479,837 Tyco International Group, SA (Luxembourg) 6.375%, 10/15/11 ............................... 10,000 10,362,500 ------------ 20,436,513 ------------ - -------------------------------------------------------------------------------- 10 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- Insurance-3.5% Crum & Forster 10.375%, 6/15/13(a) ............................ $ 1,935 $ 2,113,988 Mangrove Bay PassThru Trust 6.102%, 7/15/33(a) ............................. 10,000 9,942,100 Nationwide Mutual Insurance Co. 7.875%, 4/01/33(a) ............................. 5,000 5,754,875 8.25%, 12/01/31(a) ............................. 5,000 5,978,795 Zurich Capital Trust I 8.376%, 6/01/37(a) ............................. 12,500 14,373,937 ------------ 38,163,695 ------------ Metals / Mining-0.5% Inco, Ltd. (Canada) 7.20%, 9/15/32 ................................. 5,000 5,478,090 ------------ Paper/Packaging-6.2% Abitibi-Consolidated, Inc. (Canada) 8.85%, 8/01/30 ................................. 7,000 7,326,928 Anchor Glass Container Corp. 11.00%, 2/15/13 ................................ 2,510 2,823,750 Berry Plastics Corp. 10.75%, 7/15/12 ................................ 3,925 4,396,000 Georgia-Pacific Corp. 9.375%, 2/01/13 ................................ 2,500 2,803,125 Norske Skogindustrier ASA (Norway) 7.625%, 10/15/11(a) ............................ 10,000 11,254,120 Owens-Brockway Glass Container 8.25%, 5/15/13 ................................. 2,000 2,050,000 8.875%, 2/15/09 ................................ 7,660 8,196,200 Packaging Corp. of America 5.75%, 8/01/13(a) .............................. 7,000 7,122,710 Plastipak Holdings, Inc. 10.75%, 9/01/11 ................................ 1,961 2,157,100 Pliant Corp. 13.00%, 6/01/10 ................................ 1,980 1,851,300 Smurfit-Stone Container Corp. 8.25%, 10/01/12 ................................ 4,205 4,415,250 Stone Container Corp. 9.75%, 2/01/11 ................................. 1,625 1,779,375 Weyerhaeuser Co. 6.875%, 12/15/33 ............................... 10,000 10,609,250 ------------ 66,785,108 ------------ Petroleum Products-4.1% Amerada Hess Corp. 7.875%, 10/01/29 ............................... 10,000 11,417,100 CITGO Petroleum Corp. 11.375%, 2/01/11(a) ............................ 5,000 5,675,000 - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 11 Portfolio of Investments - -------------------------------------------------------------------------------- Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- Pemex Project Funding Master Trust 7.375%, 12/15/14(a)(b) ......................... $ 10,000 $ 10,800,000 8.625%, 2/01/22(a)(b) .......................... 10,000 11,200,000 PF Export Receivables Master Trust Series A 6.436%, 6/01/15(a) ............................. 4,873 4,849,728 ------------ 43,941,828 ------------ Public Utilities-Electric & Gas-13.6% American Electric Power Co., Inc. Series C 5.375%, 3/15/10 ................................ 5,000 5,255,585 Calenergy Co., Inc. 8.48%, 9/15/28 ................................. 30,000 38,139,000 CenterPoint Energy Resources Corp. 7.875%, 4/01/13(a) ............................. 29,935 33,687,322 Consumers Energy Co. 6.00%, 2/15/14(a) .............................. 9,000 9,384,858 Dominion Resources Capital Trust III 8.40%, 1/15/31 ................................. 29,000 35,529,263 FirstEnergy Corp. 7.375%, 11/15/31 ............................... 11,455 11,768,409 FirstEnergy Corp. Series A 5.50%, 11/15/06 ................................ 1,570 1,632,879 Oncor Electric Delivery Co. 7.00%, 9/01/22 ................................. 5,000 5,491,605 PG&E Corp. 6.875%, 7/15/08(a) ............................. 1,335 1,408,425 SEMCO Energy, Inc. 7.125%, 5/15/08(a) ............................. 415 419,150 7.75%, 5/15/13(a) .............................. 1,585 1,604,813 The AES Corp. 8.75%, 5/15/13(a) .............................. 955 1,007,525 9.00%, 5/15/15(a) .............................. 1,565 1,662,812 ------------ 146,991,646 ------------ Publishing-0.7% Dex Media East LLC 9.875%, 11/15/09 ............................... 4,000 4,550,000 Dex Media West LLC 8.50%, 8/15/10(a) .............................. 585 639,113 9.875%, 8/15/13(a) ............................. 2,305 2,616,175 ------------ 7,805,288 ------------ Retail-1.7% Sears Roebuck Acceptance Corp. 7.00%, 6/01/32 ................................. 9,500 10,463,889 Toys "R" Us, Inc. 7.875%, 4/15/13 ................................ 7,500 8,215,635 ------------ 18,679,524 ------------ - -------------------------------------------------------------------------------- 12 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- Shares or Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- Services-1.6% Allied Waste North America, Inc. 10.00%, 8/01/09 ................................. $ 6,500 $ 7,076,875 Iron Mountain, Inc. 8.625%, 4/01/13 ................................. 5,000 5,350,000 Service Corp. 6.00%, 12/15/05 ................................. 2,500 2,525,000 7.70%, 4/15/09 .................................. 2,500 2,568,750 -------------- 17,520,625 -------------- Supermarket/Drug-1.1% Delhaize America, Inc. 9.00%, 4/15/31 .................................. 10,555 11,795,212 -------------- Technology-0.7% Flextronics International, Ltd. (Singapore) 6.50%, 5/15/13(a) ............................... 5,000 4,987,500 ON Semiconductor Corp. 12.00%, 3/15/10 ................................. 2,500 2,943,750 -------------- 7,931,250 -------------- Total Corporate Debt Obligations (cost $946,987,677) ............................. 1,029,354,748 -------------- PREFERRED STOCKS-9.7% Banking-3.8% BNY Capital V Series F ........................................ 400,000 10,024,000 Equity Residential Series N ........................................ 200,000 4,893,760 Lehman Brothers Holdings, Inc. Series F ........................................ 400,000 10,540,000 Wachovia Corp. Series A ........................................ 200,000 5,537,500 Wells Fargo Capital Trust VII ...................... 399,500 10,299,629 -------------- 41,294,889 -------------- Communications-3.2% Centaur Funding Corp. (Cayman Island) Series B(a) ..................................... 28,280 34,172,704 -------------- Financial-1.3% Household Finance Corp. ............................ 545,000 14,388,000 -------------- Public Utilities-Electric & Gas-1.4% Southern California Edison Co. ..................... 155,000 15,180,312 -------------- Total Preferred Stocks (cost $97,839,314) .............................. 105,035,905 -------------- - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 13 Portfolio of Investments - -------------------------------------------------------------------------------- Shares or Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- YANKEE BOND-0.5% TPSA Finance BV (Netherlands) 7.75%, 12/10/08(a) (cost $4,893,750) ....................... $ 4,500 $ 5,085,000 --------------- SHORT-TERM INVESTMENTS-1.4% Time Deposit-0.9% State Street Euro Dollar 0.50%, 10/01/03 ......................... 9,600 9,600,000 --------------- U.S. Treasury Bill-0.5% U.S. Treasury Bill Zero coupon, 10/16/03(c) ................ 5,000 4,998,167 --------------- Total Short-Term Investments (amortized cost $14,598,167) ............ 14,598,167 --------------- Total Investments Before Security Lending Collateral-106.9% (cost $1,064,318,908) ................... 1,154,073,820 --------------- INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED*-12.5% Short-Term Investments CC USA Prime 1.06%, 6/14/04 .......................... 25,000 24,998,750 Federal Home Loan Bank 1.40%, 1/24/05 .......................... 15,000 15,000,000 Federal Home Loan Mortgage Corp. 1.14%, 8/10/04 .......................... 25,000 25,000,000 Federal National Mortgage Association 2.00%, 12/09/04 ......................... 12,300 12,392,113 General Electric 5.375%, 4/23/04 ......................... 2,714 2,837,447 Gatham 1.13%, 10/23/03 ......................... 16,102 16,087,343 KFW International Finance 7.625%, 2/15/04 ......................... 9,500 10,161,370 --------------- 106,477,023 --------------- UBS Private Money Market Fund, LLC 1.03% ................................... 28,617,201 28,617,201 --------------- Total Investments of Cash Collateral for Securities Loaned (cost $135,094,224) ..................... 135,094,224 --------------- Total Investments-119.4% (cost $1,199,413,132) ................... 1,289,168,044 Other assets less liabilities-(19.4%) ...... (209,485,229) --------------- Net Assets-100% ............................ $ 1,079,682,815 =============== - -------------------------------------------------------------------------------- 14 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- FINANCIAL FUTURES CONTRACTS SOLD (see Note D)
Value at Number of Expiration Original September 30, Unrealized Type Contracts Month Value 2003 Depreciation ================= ============= ============= ============= ============= ============= U.S. Treasury Note 5 Yr Futures 3,138 December 2003 $ 346,979,327 $ 355,763,063 $ (8,783,736)
REVERSE REPURCHASE AGREEMENTS (see Note D) Broker Interest Rate Maturity Amount =================== ============= ========== ============= Deutsche Alex Brown 1.15% 10/27/03 $30,314,434 Deutsche Bank 1.30% 10/07/03 10,991,791 Deutsche Bank 1.30% 12/31/03 11,674,074 Morgan Stanley 1.41% 10/07/03 25,894,414 ----------- $78,874,713 =========== * See Note E for securities lending information. (a) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2003, the aggregate market value of these securities amounted to $261,949,512 or 24.3% of net assets. (b) Positions, or portions thereof, with an aggregate market value of $92,439,949 have been segregated to collateralize reverse repurchase agreements. (c) Position with a market value of $4,998,167 has been segregated to collateralize margin requirements for the open futures contracts. See notes to financial statements. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 15 Statement of Assets & Liabilities - -------------------------------------------------------------------------------- STATEMENT OF ASSETS & LIABILITIES September 30, 2003 Assets Investments in securities, at value (cost $1,199,413,132)--including investment of cash collateral for securities loaned of $135,094,224 ............... $ 1,289,168,044(a) Cash ................................................................... 1,540,360 Interest receivable .................................................... 20,213,419 Receivable for investment securities sold .............................. 6,514,985 Receivable for capital stock sold ...................................... 5,396,024 --------------- Total assets ........................................................... 1,322,832,832 --------------- Liabilities Payable for collateral on securities loaned ............................ 135,094,224 Payable for reverse repurchase agreements .............................. 78,874,713 Payable for investment securities purchased ............................ 14,819,110 Payable for capital stock redeemed ..................................... 8,535,253 Payable for variation margin on futures contracts ...................... 2,688,750 Dividends payable ...................................................... 1,561,140 Distribution fee payable ............................................... 573,530 Advisory fee payable ................................................... 490,364 Accrued expenses ....................................................... 512,933 --------------- Total liabilities ...................................................... 243,150,017 --------------- Net Assets ............................................................. $ 1,079,682,815 =============== Composition of Net Assets Capital stock, at par .................................................. $ 90,238 Additional paid-in capital ............................................. 1,357,124,708 Distributions in excess of net investment income ....................... (2,349,426) Accumulated net realized loss on investment transactions ........................................................ (356,153,881) Net unrealized appreciation of investments ............................. 80,971,176 --------------- $ 1,079,682,815 --------------- Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ($535,317,666/44,723,144 shares of capital stock issued and outstanding) ............................................. $11.97 Sales charge--4.25% of public offering price .......................... .53 ------ Maximum offering price ................................................. $12.50 ====== Class B Shares Net asset value and offering price per share ($383,762,853/32,091,526 shares of capital stock issued and outstanding) ............................................. $11.96 ====== Class C Shares Net asset value and offering price per share ($157,719,189/13,182,634 shares of capital stock issued and outstanding) ............................................. $11.96 ====== Advisor Class Shares Net asset value, redemption and offering price per share ($2,883,107/240,704 shares of capital stock issued and outstanding) ............................................. $11.98 ======
(a) Includes securities on loan with a value of $130,856,571 (see Note E). See notes to financial statements. - -------------------------------------------------------------------------------- 16 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Statement of Operations - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS July 1, 2003 to Year Ended September 30, June 30, 2003* 2003 ============= ============= Investment Income Interest .................................... $ 18,826,092 $ 85,957,808 Dividends ................................... 1,366,004 3,583,948 ------------- ------------- 20,192,096 89,541,756 Expenses Advisory fee ................................ 1,524,079 6,127,526 Distribution fee--Class A ................... 400,436 1,554,225 Distribution fee--Class B ................... 991,759 4,195,104 Distribution fee--Class C ................... 400,277 1,619,502 Transfer agency ............................. 534,159 2,090,187 Printing .................................... 89,844 414,642 Custodian ................................... 72,804 258,504 Audit and legal ............................. 47,140 72,429 Administrative .............................. 31,250 125,000 Registration fees ........................... 28,026 89,002 Directors' fees ............................. 4,428 19,728 Miscellaneous ............................... 5,642 64,085 ------------- ------------- Total expenses before interest .............. 4,129,844 16,629,934 Interest expense ............................ 146,424 327,763 ------------- ------------- Total expenses .............................. 4,276,268 16,957,697 Less: expense offset arrangement (see Note B) ............................. (55) (1,897) ------------- ------------- Net expenses ................................ 4,276,213 16,955,800 ------------- ------------- Net investment income ....................... 15,915,883 72,585,956 ------------- ------------- Realized and Unrealized Gain (Loss) on Investment Transactions Net realized gain (loss) on: Investment transactions .................. 11,742,824 (38,974,852) Futures .................................. 13,086,684 (12,430,731) Net change in unrealized appreciation/depreciation of: Investments .............................. (22,266,754) 179,649,612 Futures .................................. (9,526,583) 742,847 ------------- ------------- Net gain (loss) on investment transactions ............................. (6,963,829) 128,986,876 ------------- ------------- Net Increase in Net Assets from Operations .......................... $ 8,952,054 $ 201,572,832 ============= ============= * The Portfolio changed its fiscal year end from June 30 to September 30. See notes to financial statements. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 17 Statement of Changes in Net Assets - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS
July 1, 2003 to Year Ended Year Ended September 30, June 30, June 30, 2003* 2003 2002 =============== =============== =============== Increase (Decrease) in Net Assets from Operations Net investment income ................ $ 15,915,883 $ 72,585,956 $ 94,617,332 Net realized gain (loss) on investment transactions ....................... 24,829,508 (51,405,583) (115,606,822) Net change in unrealized appreciation/depreciation of investments ..................... (31,793,337) 180,392,459 (54,000,835) --------------- --------------- --------------- Net increase (decrease) in net assets from operations .................... 8,952,054 201,572,832 (74,990,325) Dividends and Distributions to Shareholders from Net investment income Class A ............................ (8,307,900) (35,897,785) (43,343,570) Class B ............................ (5,467,237) (26,405,194) (37,442,989) Class C ............................ (2,207,358) (10,193,042) (13,830,773) Advisor Class ...................... (40,918) (69,827) -0- Distributions in excess of net investment income Class A ............................ -0- -0- (277,384) Class B ............................ -0- -0- (239,622) Class C ............................ -0- -0- (88,514) Advisor Class ...................... -0- -0- -0- Tax return of capital Class A ............................ -0- (1,251,077) (1,954,848) Class B ............................ -0- (920,250) (1,688,725) Class C ............................ -0- (355,239) (623,785) Advisor Class ...................... -0- (2,434) -0- Capital Stock Transactions Net increase (decrease) .............. (57,741,250) (140,779,501) 107,857,059 --------------- --------------- --------------- Total decrease ....................... (64,812,609) (14,301,517) (66,623,476) Net Assets Beginning of period .................. 1,144,495,424 1,158,796,941 1,225,420,417 --------------- --------------- --------------- End of period ........................ $ 1,079,682,815 $ 1,144,495,424 $ 1,158,796,941 =============== =============== ===============
* The Portfolio changed its fiscal year end from June 30 to September 30. See notes to financial statements. - -------------------------------------------------------------------------------- 18 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Notes to Financial Statements - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS September 30, 2003 NOTE A Significant Accounting Policies AllianceBernstein Bond Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund, which is a Maryland corporation, operates as a series company currently comprised of three portfolios: the Corporate Bond Portfolio, the Quality Bond Portfolio and the U.S. Government Portfolio. Each series is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the Corporate Bond Portfolio. The Corporate Bond Portfolio (the "Portfolio") offers Class A, Class B, Class C and Advisor Class shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 3% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares six years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Advisor Class shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. Advisor Class shares are offered to investors participating in fee-based programs and certain retirement plan accounts. All four classes of shares have identical voting, dividend, liquidation and other rights, except that each class bears different distribution expenses and has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Additional information about some of the items discussed in these Notes to Financial Statements is contained in the Fund's Statement of Additional Information, which is available upon request. The following is a summary of significant accounting policies followed by the Portfolio. 1. Security Valuation In accordance with Pricing Policies adopted by the Board of Directors of the Fund (the "Pricing Policies") and applicable law, portfolio securities are valued at current market value or at fair value. The Board of Directors has delegated to the Adviser, subject to the Board's continuing oversight, certain responsibilities with respect to the implementation of the Pricing Policies. Pursuant to the Pricing Policies, securities for which market quotations are readily available are valued at their current market value. In general, the market value of these securities is determined as follows: - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 19 Notes to Financial Statements - -------------------------------------------------------------------------------- Securities listed on a national securities exchange or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. If no bid or asked prices are quoted on such day, then the security is valued in good faith at fair value in accordance with the Pricing Policies. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities not listed on an exchange but traded on The Nasdaq Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuations, the last available closing settlement price is used; securities traded in the over-the-counter market, (but excluding securities traded on NASDAQ) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, the Pricing Policies provide that the Adviser may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available are valued at fair value in accordance with the Pricing Policies. 2. Taxes It is the 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. 3. Investment Income and Investment Transactions Dividend income is recorded on the ex-dividend date. Interest income is accrued daily. Investment transactions are accounted for on the trade date securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Portfolio accretes discounts as adjustments to interest income. Additionally, the Portfolio amortizes premiums on debt securities for financial statement reporting purposes. 4. Income and Expenses All income earned and expenses incurred by the Portfolio are borne on a pro-rata basis by each settled class of shares, based on proportionate interest in the Portfolio - -------------------------------------------------------------------------------- 20 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Notes to Financial Statements - -------------------------------------------------------------------------------- represented by the net assets of such class, except that the Portfolio's Class B and Class C shares bear higher distribution and transfer agent fees than Class A and Advisor Class shares. Advisor Class shares have no distribution fees. 5. Dividends and Distributions Dividends and distributions to shareholders are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with accounting principles generally accepted in the United States. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. 6. Change of Fiscal Year End The Portfolio changed its fiscal year end from June 30 to September 30. Accordingly, the statement of operations, the statement of changes in net assets and financial highlights reflect the period from July 1, 2003 to September 30, 2003. NOTE B Advisory Fee and Other Transactions with Affiliates Under the terms of an investment advisory agreement, the Portfolio pays Alliance Capital Management L.P. (the "Adviser"), an advisory fee at an annual rate of ..625 of 1% of the first $500 million and .50 of 1% in excess of $500 million of the Portfolio's average daily net assets. The fee is accrued daily and paid monthly. Pursuant to the advisory agreement, the Portfolio paid $31,250 and $125,000 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser, respectively, for the period ended September 30, 2003 and the year ended June 30, 2003. 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 $311,288 and $1,366,013, respectively, for the period ended September 30, 2003 and the year ended June 30, 2003. For the period ended September 30, 2003 and the year ended June 30, 2003, the Portfolio's expenses were reduced by $55 and $1,897, respectively, under an expense offset arrangement with AGIS. AllianceBernstein Investment Research and Management, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Portfolio's shares. The Distributor has advised the Portfolio that it has retained front-end sales charges of $8,003 and $29,192 from the sales of Class A shares and received $3,000 and $9,048, $148,768 and $598,146, and $5,678 and $46,997, respectively, in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the period ended September 30, 2003 and the year ended June 30, 2003. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 21 Notes to Financial Statements - -------------------------------------------------------------------------------- NOTE C Distribution Services Agreement The Portfolio has adopted a Distribution Services Agreement (the "Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Portfolio pays distribution and servicing fees to the Distributor at an annual rate of up to .30 of 1% of the Portfolio's average daily net assets attributable to Class A shares and 1% of the average daily net assets attributable to both Class B and Class C shares. There are no distribution and servicing fees on the Advisor Class shares. The fees are accrued daily and paid monthly. The 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 $13,736,574 and $5,123,120 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 September 30, 2003, were as follows: Purchases Sales ============ ============ Investment securities (excluding U.S. government securities) ........... $280,068,739 $288,049,773 U.S. government securities ............... 442,384,592 441,404,072 The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation (excluding futures transactions) are as follows: Cost ................................................ $ 1,201,047,576 --------------- Gross unrealized appreciation ....................... $ 91,645,174 Gross unrealized depreciation ....................... (3,524,706) --------------- Net unrealized appreciation ......................... $ 88,120,468 =============== 1. Financial Futures Contracts The Portfolio may buy or sell financial futures contracts for the purpose of hedging its portfolio against adverse effects of anticipated movements in the market. The Portfolio bears the market risk that arises from changes in the value of these financial instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. - -------------------------------------------------------------------------------- 22 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Notes to Financial Statements - -------------------------------------------------------------------------------- At the time the Portfolio enters into a futures contract, the Portfolio deposits and maintains as collateral an initial margin as required by the exchange on which the transaction is affected. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Portfolio as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of the contract. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed. 2. Option Transactions For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign securities exchanges and over-the-counter markets. The risk associated with purchasing an option is that the Portfolio pays a premium whether or not the option is exercised. Additionally, the Portfolio bears the risk of loss of premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums paid. When the Portfolio writes an option, the premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium received is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium received is added to the proceeds from the sale of the underlying security or currency in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. 3. Swap Agreements The Portfolio may enter into swaps on sovereign debt obligations to protect itself from interest rate fluctuations on the underlying debt instruments and for invest- - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 23 Notes to Financial Statements - -------------------------------------------------------------------------------- ment purposes. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the net interest payment to be received by the Portfolio, and/or the termination value at the end of the contract. Therefore, the Portfolio considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying securities. The Portfolio records a net receivable or payable on a daily basis for the net interest income or expense expected to be received or paid during the interest period. Net interest received or paid on these contracts is recorded as interest income (or as an offset to interest income). Fluctuations in the value of swap contracts are recorded for financial statement purposes as a component of change in unrealized appreciation/depreciation of investments. Realized gains and losses from terminated swap contracts are included in net realized gain or loss on investment transactions. 4. Reverse Repurchase Agreements Under a reverse repurchase agreement, the Portfolio sells securities and agrees to repurchase them at a mutually agreed upon date and price. At the time the Portfolio enters into a reverse repurchase agreement, it will establish a segregated account with the custodian containing liquid assets having a value at least equal to the repurchase price. For the period ended September 30, 2003, the average amount of reverse repurchase agreements outstanding was $48,269,197 and the daily weighted average annualized interest rate was 1.10%. 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 - -------------------------------------------------------------------------------- 24 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Notes to Financial Statements - -------------------------------------------------------------------------------- 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. For the period ended September 30, 2003, the Portfolio had loaned securities with a value of $130,856,571 and received cash collateral of $135,094,224 which was invested in short-term securities as included in the accompanying portfolio of investments. For the period ended September 30, 2003 and the year ended June 30, 2003, the Portfolio earned fee income of $146,424 and $252,967, respectively, which is included in interest income in the accompanying statement of operations. NOTE F Capital Stock There are 12,000,000,000 shares of $.001 par value capital stock authorized, divided into four classes, designated Class A, Class B, Class C and Advisor Class shares. Each class consists of 3,000,000,000 authorized shares. Transactions in capital stock were as follows:
------------------------------------------------- Shares ------------------------------------------------- July 1, 2003 to Year Ended Year Ended September 30, June 30, June 30, 2003(a) 2003 2002 ------------------------------------------------ Class A Shares sold 2,299,751 14,552,214 17,526,462 - ------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 463,442 2,138,633 2,351,837 - ------------------------------------------------------------------------------------- Shares converted from Class B 1,013,392 5,513,902 2,816,769 - ------------------------------------------------------------------------------------- Shares redeemed (5,282,724) (24,652,867) (17,165,859) - ------------------------------------------------------------------------------------- Net increase (decrease) (1,506,139) (2,448,118) 5,529,209 ===================================================================================== Class B Shares sold 1,125,168 6,602,364 14,019,337 - ------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 272,119 1,355,293 1,812,162 - ------------------------------------------------------------------------------------- Shares converted to Class A (1,012,515) (5,511,083) (2,817,044) - ------------------------------------------------------------------------------------- Shares redeemed (3,089,416) (10,500,542) (11,640,615) - ------------------------------------------------------------------------------------- Net increase (decrease) (2,704,644) (8,053,968) 1,373,840 =====================================================================================
(a) The Portfolio changed its fiscal year end from June 30 to September 30. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 25 Notes to Financial Statements - --------------------------------------------------------------------------------
------------------------------------------------- Shares ------------------------------------------------- July 1, 2003 to Year Ended Year Ended September 30, June 30, June 30, 2003(a) 2003 2002 - ------------------------------------------------------------------------------------- Class C Shares sold 610,572 3,130,196 6,102,894 - ------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 98,457 476,779 671,626 - ------------------------------------------------------------------------------------- Shares redeemed (1,512,151) (6,386,613) (5,056,101) - ------------------------------------------------------------------------------------- Net increase (decrease) (803,122) (2,779,638) 1,718,419 ===================================================================================== July 1, 2003 to August 8, 2002(b) September 30, to June 30, 2003(a) 2003 ------------------------------------ Advisor Class Shares sold 54,241 424,628 - ------------------------------------------------------------------------ Shares issued in reinvestment of dividends and distributions 3,354 5,258 - ------------------------------------------------------------------------ Shares redeemed (7,816) (238,961) - ------------------------------------------------------------------------ Net increase 49,779 190,925 ========================================================================
(a) The Portfolio changed its fiscal year end from June 30 to September 30. (b) Commencement of distributions.
---------------------------------------------------- Amount ---------------------------------------------------- July 1, 2003 to Year Ended Year Ended September 30, June 30, June 30, 2003(a) 2003 2002 - ------------------------------------------------------------------------------------------ Class A Shares sold $ 26,935,735 $ 185,571,781 $ 211,137,765 - ------------------------------------------------------------------------------------------ Shares issued in reinvestment of dividend and distributions 5,434,050 23,617,128 28,093,903 - ------------------------------------------------------------------------------------------ Shares converted from Class B 11,838,281 36,289,286 33,551,898 - ------------------------------------------------------------------------------------------ Shares redeemed (61,727,603) (271,702,238) (205,172,093) - ------------------------------------------------------------------------------------------ Net increase (decrease) $ (17,519,537) $ (26,224,043) $ 67,611,473 ========================================================================================== Class B Shares sold $ 13,146,628 $ 73,365,336 $ 169,590,699 - ------------------------------------------------------------------------------------------ Shares issued in reinvestment of dividends and distributions 3,188,136 14,932,280 21,677,353 - ------------------------------------------------------------------------------------------ Shares converted to Class A (11,838,281) (36,289,286) (33,551,898) - ------------------------------------------------------------------------------------------ Shares redeemed (35,980,527) (139,384,003) (138,718,474) - ------------------------------------------------------------------------------------------ Net increase (decrease) $ (31,484,044) $ (87,375,673) $ 18,997,680 ==========================================================================================
(a) The Portfolio changed its fiscal year end from June 30 to September 30. - -------------------------------------------------------------------------------- 26 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Notes to Financial Statements - --------------------------------------------------------------------------------
---------------------------------------------------- Amount ---------------------------------------------------- July 1, 2003 to Year Ended Year Ended September 30, June 30, June 30, 2003(a) 2003 2002 - ------------------------------------------------------------------------------------------ Class C Shares sold $ 7,136,477 $ 34,950,768 $ 73,519,678 - ------------------------------------------------------------------------------------------ Shares issued in reinvestment of dividends and distributions 1,154,551 5,255,130 8,042,057 - ------------------------------------------------------------------------------------------ Shares redeemed (17,610,706) (69,528,339) (60,313,829) - ------------------------------------------------------------------------------------------ Net increase (decrease) $ (9,319,678) $ (29,322,441) $ 21,247,906 ========================================================================================== July 1, 2003 to August 8, 2002(b) September 30, to June 30, 2003(a) 2003 - -------------------------------------------------------------------------- Advisor Class Shares sold $ 634,690 $ 4,825,230 - -------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 39,366 60,857 - -------------------------------------------------------------------------- Shares redeemed (92,047) (2,743,431) - -------------------------------------------------------------------------- Net increase $ 582,009 $ 2,142,656 ==========================================================================
(a) The Portfolio changed its fiscal year end from June 30 to September 30. (b) Commencement of distributions. NOTE G Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 million revolving credit facility (the "Facility") to provide short-term financing if necessary, in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in the miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the period ended September 30, 2003. NOTE H Concentration of Risk Investing in securities of foreign companies and foreign governments involves special risks which include the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the United States Government. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 27 Notes to Financial Statements - -------------------------------------------------------------------------------- NOTE I Distributions to Shareholders The tax character of distributions paid during the fiscal period ended September 30, 2003, and the fiscal years ended June 30, 2003 and June 30, 2002 were as follows:
September 30, June 30, June 30, 2003 2003 2002 ============= ============= ============= Distributions paid from: Ordinary income ................ $ 16,023,413 $ 72,565,848 $ 94,986,020 ------------- ------------- ------------- Total taxable distributions .... 16,023,413 72,565,848 94,986,020 Tax return of capital .......... -0- 2,529,000 4,267,358 ------------- ------------- ------------- Total distributions paid .......... $ 16,023,413 $ 75,094,848 $ 99,253,378(a) ------------- ------------- -------------
As of September 30, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income ........................... $ 307,806 Accumulated capital and other losses .................... (364,399,265) Unrealized appreciation/(depreciation) .................. 88,120,468 ------------- Total accumulated earnings/(deficit) .................... $(275,970,991) ============= (a) Total distributions paid differ from the statement of changes in net assets because for tax purposes dividends are recognized when actually paid. (b) On September 30, 2003, the Fund had a net capital loss carryforward of $364,399,265 of which $123,146,537 expires in the year 2007, $54,554,000 expires in the year 2008, $52,066,319 expires in the year 2009, and $134,632,409 expires in the year 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year, the Fund utilized capital loss carryforwards of $14,835,029. (c) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales, the difference between book and tax amortization methods for premium and the realization for tax purposes of gains/losses on certain derivative instruments. During the current fiscal year, permanent differences, primarily due to the tax treatment of bond premium, resulted in a net decrease in distributions in excess of net investment income and an increase in accumulated net realized loss on investment transactions. This reclassification had no effect on net assets. NOTE J Legal Proceedings Alliance Capital Management L.P. ("Alliance Capital"), the Fund's Adviser, is currently under investigation by the Office of the New York State Attorney General ("NYAG") and the United States Securities and Exchange Commission ("SEC") in connection with their investigation of practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities are also conducting investigations into these practices within the industry and have requested that Alliance Capital provide information - -------------------------------------------------------------------------------- 28 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Notes to Financial Statements - -------------------------------------------------------------------------------- to them. Alliance Capital has been cooperating with all of these authorities and has been conducting its own internal investigation into these matters. In addition, Alliance Capital's Board of Directors authorized a special committee, comprised of the members of Alliance Capital's Audit Committee and the other independent member of the Board, to direct and oversee a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against Alliance Capital; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with Alliance Capital. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with Alliance Capital, including recovery of all fees paid to Alliance Capital pursuant to such contracts. Between October 3 and November 13, 2003, twenty-one additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against Alliance Capital and certain other defendants. All of these lawsuits seek an unspecified amount of damages. Through November 14, 2003, Alliance Capital's internal investigation has revealed that Alliance Capital maintained relationships with certain investors who were permitted to engage in market timing trades in certain AllianceBernstein Mutual Funds in return for or in connection with making investments (which were not actively traded) in other Alliance Capital products, including hedge funds and mutual funds, for which Alliance Capital receives advisory fees ("Market Timing Relationships"). Alliance Capital believes that these Market Timing Relationships created conflicts of interest and that certain of the trades made pursuant to these relationships had an adverse effect on some shareholders of the AllianceBernstein Mutual Funds. These matters are the subject of the ongoing internal investigation by Alliance Capital. As a result of Alliance Capital's involvement in market timing or for other reasons, 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 - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 29 Notes to Financial Statements - -------------------------------------------------------------------------------- have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. Any resolution of Alliance Capital's involvement in market timing and the related SEC and NYAG investigations and private lawsuits is likely to include, but not be limited to, sanctions, penalties, appropriate restitution to mutual fund shareholders and structural changes in the governance of Alliance Capital's mutual fund business. Alliance Capital is committed to full restitution of the adverse effects that inappropriate market timing transactions allowed by Alliance Capital had on the shareholders of the AllianceBernstein Mutual Funds. - -------------------------------------------------------------------------------- 30 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Financial Highlights - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
-------------------------------------------------------------------------------- Class A -------------------------------------------------------------------------------- July 1, 2003 to Year Ended June 30, September 30, ------------------------------------------------------------ 2003(a) 2003 2002(b) 2001 2000 1999 -------------------------------------------------------------------------------- Net asset value, beginning of period ......... $ 12.03 $ 10.70 $ 12.29 $ 11.91 $ 12.49 $ 14.19 -------------------------------------------------------------------------------- Income From Investment Operations Net investment income(c) ...... .18 .77 .94 .97 1.04 1.06 Net realized and unrealized gain (loss) on investment transactions ................ (.06) 1.35 (1.55) .42 (.55) (1.64) -------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations .................. .12 2.12 (.61) 1.39 .49 (.58) -------------------------------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.18) (.76) (.94) (.97) (1.04) (1.07) Distributions in excess of net investment income ....... -0- -0- -0- (.01) -0- (.01) Tax return of capital ......... -0- (.03) (.04) (.03) (.03) (.04) -------------------------------------------------------------------------------- Total dividends and distributions ............... (.18) (.79) (.98) (1.01) (1.07) (1.12) -------------------------------------------------------------------------------- Net asset value, end of period ............... $ 11.97 $ 12.03 $ 10.70 $ 12.29 $ 11.91 $ 12.49 ================================================================================ Total Return Total investment return based on net asset value(d) ....... 1.06% 20.75% (5.51)% 12.03% 4.11% (4.08)% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $ 535,318 $555,979 $520,984 $530,446 $473,578 $476,141 Ratio to average net assets of: Expenses .................... 1.20%(e) 1.16% 1.12% 1.31% 1.12% 1.11% Expenses, excluding interest expense .......... 1.15%(e) 1.13% 1.09% 1.09% 1.11% 1.11% Net investment income ....... 6.18%(e) 6.96% 7.79% 7.95% 8.51% 8.13% Portfolio turnover rate ....... 65% 171% 276% 340% 302% 281%
See footnote summary on page 34. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 31 Financial Highlights - -------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
---------------------------------------------------------------------------------- Class B ---------------------------------------------------------------------------------- July 1, 2003 to Year Ended June 30, September 30, -------------------------------------------------------------- 2003(a) 2003 2002(b) 2001 2000 1999 ---------------------------------------------------------------------------------- Net asset value, beginning of period ......... $ 12.02 $ 10.70 $ 12.30 $ 11.92 $ 12.49 $ 14.19 ---------------------------------------------------------------------------------- Income From Investment Operations Net investment income(c) ...... .16 .69 .85 .88 .95 .97 Net realized and unrealized gain (loss) on investment transactions ................ (.06) 1.35 (1.55) .42 (.54) (1.64) ---------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations . .10 2.04 (.70) 1.30 .41 (.67) ---------------------------------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.16) (.70) (.85) (.88) (.95) (.98) Distributions in excess of net investment income ....... -0- -0- (.01) (.01) -0- (.01) Tax return of capital ......... -0- (.02) (.04) (.03) (.03) (.04) ---------------------------------------------------------------------------------- Total dividends and distributions ............... (.16) (.72) (.90) (.92) (.98) (1.03) ---------------------------------------------------------------------------------- Net asset value, end of period $ 11.96 $ 12.02 $ 10.70 $ 12.30 $ 11.92 $ 12.49 ================================================================================== Total Return Total investment return based on net asset value(d) ...... .88% 19.85% (6.23)% 11.24% 3.39% (4.77)% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $ 383,763 $418,095 $458,394 $509,953 $477,259 $630,631 Ratio to average net assets of: Expenses .................... 1.92%(e) 1.88% 1.83% 2.03% 1.83% 1.82% Expenses, excluding interest expense .......... 1.87%(e) 1.85% 1.80% 1.81% 1.83% 1.82% Net investment income ....... 5.48%(e) 6.27% 7.05% 7.18% 7.77% 7.41% Portfolio turnover rate ....... 65% 171% 276% 340% 302% 281%
See footnote summary on page 34. - -------------------------------------------------------------------------------- 32 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Financial Highlights - -------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
-------------------------------------------------------------------------------- Class C -------------------------------------------------------------------------------- July 1, 2003 to Year Ended June 30, September 30, ------------------------------------------------------------ 2003(a) 2003 2002(b) 2001 2000 1999 -------------------------------------------------------------------------------- Net asset value, beginning of period ......... $ 12.02 $ 10.70 $ 12.30 $ 11.91 $ 12.49 $ 14.19 -------------------------------------------------------------------------------- Income From Investment Operations Net investment income(c) ...... .16 .69 .85 .89 .94 .97 Net realized and unrealized gain (loss) on investment transactions ................ (.06) 1.35 (1.55) .42 (.54) (1.64) -------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations . .10 2.04 (.70) 1.31 .40 (.67) -------------------------------------------------------------------------------- Less: Dividends and Distributions Dividends from net investment income ........... (.16) (.70) (.85) (.89) (.95) (.98) Distributions in excess of net investment income ....... -0- -0- (.01) -0- -0- (.01) Tax return of capital ......... -0- (.02) (.04) (.03) (.03) (.04) -------------------------------------------------------------------------------- Total dividends and distributions ............... (.16) (.72) (.90) (.92) (.98) (1.03) -------------------------------------------------------------------------------- Net asset value, end of period $ 11.96 $ 12.02 $ 10.70 $ 12.30 $ 11.91 $ 12.49 ================================================================================ Total Return Total investment return based on net asset value(d) ...... .88% 19.85% (6.23)% 11.33% 3.30% (4.77)% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $ 157,719 $168,123 $179,418 $185,022 $176,814 $204,271 Ratio to average net assets of: Expenses .................... 1.91%(e) 1.87% 1.82% 2.03% 1.83% 1.81% Expenses, excluding interest expense .......... 1.86%(e) 1.84% 1.79% 1.81% 1.82% 1.81% Net investment income ....... 5.49%(e) 6.28% 7.07% 7.22% 7.75% 7.37% Portfolio turnover rate ....... 65% 171% 276% 340% 302% 281%
See footnote summary on page 34. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 33 Financial Highlights - -------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
---------------------------- Advisor Class ---------------------------- July 1, 2003 August 8, to, 2002(f) to September 30, June 30, 2003(a) 2003 ---------------------------- Net asset value, beginning of period ............................. $ 12.03 $ 10.21 ---------------------------- Income From Investment Operations Net investment income(c) ......................................... .19 .69 Net realized and unrealized gain (loss) on investment transactions (.05) 1.85 ---------------------------- Net increase in net asset value from operations .................. .14 2.54 ---------------------------- Less: Dividends and Distributions Dividends from net investment income ............................. (.19) (.70) Tax return of capital ............................................ -0- (.02) ---------------------------- Total dividends and distributions ................................ (.19) (.72) ---------------------------- Net asset value, end of period ................................... $ 11.98 $ 12.03 ============================ Total Return Total investment return based on net asset value(d) ............. 1.22% 25.70% Ratios/Supplemental Data Net assets, end of period (000's omitted) ........................ $ 2,883 $ 2,298 Ratio to average net assets of: Expenses(e) .................................................... .91% .88% Expenses, excluding interest expense(e) ........................ .86% .85% Net investment income(e) ....................................... 6.51% 6.90% Portfolio turnover rate .......................................... 65% 171%
(a) The Portfolio changed its fiscal year end from June 30 to September 30. (b) As required, effective July 1, 2001, the Portfolio has adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing premium on debt securities for financial statement reporting purposes only. The effect of this change for the year ended June 30, 2002, was to decrease net investment income per share and net realized and unrealized loss on investments per share by less than $.01 for Class A, Class B and Class C, respectively, and decrease the ratio of net investment income to average net assets from 7.82% to 7.79% for Class A, from 7.08% to 7.05% for Class B and from 7.10% to 7.07% for Class C. Per share, ratios and supplemental data for periods prior to July 1, 2001 have not been restated to reflect this change in presentation. (c) Based on average shares outstanding. (d) Total investment return is calculated assuming an initial investment is made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total investment return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. (e) Annualized. (f) Commencement of distribution. - -------------------------------------------------------------------------------- 34 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Report of Ernst & Young LLP, Independent Auditors - -------------------------------------------------------------------------------- REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS To the Shareholders and Board of Directors of AllianceBernstein Bond Fund, Inc. Corporate Bond Portfolio We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Corporate Bond Portfolio (the "Portfolio") (one of the portfolios constituting the AllianceBernstein Bond Fund, Inc.) as of September 30, 2003, and the related statement of operations for the period from July 1, 2003 to September 30, 2003 and for the year ended June 30, 2003, the statement of changes in net assets for the period from July 1, 2003 to September 30, 2003 and for each of the two years in the period ended June 30, 2003 and the financial highlights for the period from July 1, 2003 to September 30, 2003 and for each of the five years in the period ended June 30, 2003. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2003, by correspondence with the custodian and others. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Corporate Bond Portfolio of the AllianceBernstein Bond Fund, Inc. at September 30, 2003, the results of its operations for the period from July 1, 2003 to September 30, 2003 and for the year ended June 30, 2003, the changes in its net assets for the period from July 1, 2003 to September 30, 2003 and for each of the two years in the period ended June 30, 2003 and the financial highlights for the period from July 1, 2003 to September 30, 2003 and for each of the five years in the period ended June 30, 2003, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP New York, New York November 14, 2003 - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 35 Tax Information - -------------------------------------------------------------------------------- TAX INFORMATION (unaudited) For the fiscal year ended September 30, 2003 certain dividends paid by the Portfolio may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Portfolio designates a maximum amount of $1,366,004 as qualified dividend income, which is taxed at a maximum rate of 15%. The information and distributions reported herein may differ from the information and distributions taxable to the shareholders for the calendar year ending December 31, 2003. Complete information will be computed and reported in conjunction with your 2003 Form 1099-DIV. - -------------------------------------------------------------------------------- 36 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Board of Directors - -------------------------------------------------------------------------------- BOARD OF DIRECTORS William H. Foulk, Jr.(1), Chairman Marc O. Mayer, President Ruth Block(1) David H. Dievler(1) John H. Dobkin(1) Clifford L. Michel(1) Donald J. Robinson(1) OFFICERS Kathleen A. Corbet, Senior Vice President Matthew D.W. Bloom, Vice President Paul J. DeNoon, Vice President S. Sean Kelleher, Vice President Jeffrey S. Phlegar, Vice President Lawrence J. Shaw(2), Vice President Michael A. Snyder(2), Vice President Mark D. Gersten, Treasurer & Chief Financial Officer Vincent S. Noto, Controller Custodian State Street Bank & Trust Company 225 Franklin Street Boston, MA 02110 Principal Underwriter AllianceBernstein Investment Research and Management, Inc. 1345 Avenue of the Americas New York, NY 10105 Transfer Agent Alliance Global Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-Free (800) 221-5672 Independent Auditors Ernst & Young LLP 5 Times Square New York, NY 10036 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 (1) Member of the Audit Committee. (2) Messrs. Shaw and Snyder are the persons primarily responsible for the day-to-day management of the Portfolio's investment portfolio. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 37 Management of the Fund - -------------------------------------------------------------------------------- MANAGEMENT OF THE FUND Board of Directors Information The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund's Directors is set forth below.
PORTFOLIOS IN FUND OTHER NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIP ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR - --------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS William H. Foulk, Jr.,#+, 71 Investment Adviser and an 113 None 2 Sound View Drive independent consultant. He was Suite 100 formerly Senior Manager of Barrett Greenwich, CT 06830 Associates, Inc., a registered (5) investment adviser, with which Chairman of the Board he had been associated since prior to 1998. He was formerly Deputy Comptroller and Chief Investment Officer of the State of New York and, prior thereto, Chief Investment Officer of the New York Bank for Savings. Ruth Block,#+, 73 Formerly Executive Vice President 96 None 500 SE Mizner Blvd and Chief Insurance Officer of The Boca Raton, FL 33432 Equitable Life Assurance Society (15) of the United States; Chairman and Chief Executive Officer of Evlico; Director of Avon, BP (oil and gas), Ecolab Incorporated (specialty chemicals), Tandem Financial Group, and Donaldson Lufkin & Jenrette Securities Corporation; former Governor at Large National Association of Securities Dealers, Inc. David H. Dievler,#+, 74 Independent consultant. Until 100 None P.O. Box 167 December 1994, he was Senior Spring Lake, NJ 07762 Vice President of Alliance Capital (15) Management Corporation ("ACMC") responsible for mutual fund administration. Prior to joining ACMC in 1984, he was Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that, he was Senior Manager at Price Waterhouse & Co. Member of American Institute of Certified Public Accountants since 1953. John Dobkin, #+, 61 Consultant. Formerly President 98 None P.O. Box 12 of Save Venice, Inc. from 2001- Annandale, NY 12504 2002, Senior Advisor from June (5) 1999 - June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989- May 1999. Previously, Director of the National Academy of Design. During 1988-92, he was Director and Chairman of the Audit Committee of ACMC.
- -------------------------------------------------------------------------------- 38 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Management of the Fund - --------------------------------------------------------------------------------
PORTFOLIOS IN FUND OTHER NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIP ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR - --------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) Clifford L. Michel,#+, 64 Senior Counsel of the law firm of 97 Placer Dome, 15 St. Bernard's Road Cahill Gordon & Reindel since Inc. Gladstone, NJ 07934 February 2001 and a partner of (15) that firm for more than twenty-five years prior thereto. He is President and Chief Executive Officer of Wenonah Development Company (investments) and a Director of the Placer Dome, Inc. (mining). Donald J. Robinson,#+, 69 Senior Counsel to the law firm of 96 None 98 Hell's Peak Road Orrick, Herrington & Sutcliffe LLP Weston, VT 05161 since prior to 1998. Formerly a senior (6) partner and a member of the Executive Committee of that firm. He was also a member and Chairman of the Municipal Securities Rulemaking Board and a Trustee of the Museum of the City of New York. INTERESTED DIRECTOR Marc O. Mayer++, 46 Executive Vice President of ACMC 68 None 1345 Avenue of the Americas since 2001; prior thereto, Chief New York, NY 10105 Executive Officer of Sanford C. (1 month) Bernstein & Co., LLC and its predecessor since prior to 1998.
* There is no stated term of office for the Fund's directors. # Member of the Audit Committee. + Member of the Nominating Committee. ++ Mr. Mayer is an "interested director", as defined in the 1940 Act, due to his position as Executive Vice President of ACMC. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 39 Management of the Fund - -------------------------------------------------------------------------------- Officer Information Certain information concerning the Fund's Officers is set forth below.
PRINCIPAL NAME, POSITION(S) PRINCIPAL OCCUPATION ADDRESS*, AND AGE HELD WITH FUND DURING PAST 5 YEARS - ------------------------------------------------------------------------------------------------------- Marc O. Mayer, 46 President See biography above. Kathleen A. Corbet, 43 Senior Vice President Executive Vice President of Alliance Capital Management Corporation (ACMC)**, with which she has been associated since prior to 1998. Matthew D.W. Bloom, 47 Vice President Senior Vice President ACMC**, with which he has been associated since prior to 1998. Paul J. DeNoon, 41 Vice President Senior Vice President of ACMC**, with which he has been associated since prior to 1998. S. Sean Kelleher, 42 Vice President Senior Vice President of ACMC** since 1999; prior thereto worked in fixed income research at Merrill Lynch since prior to 1998. Jeffrey S. Phlegar, 37 Vice President Vice President of ACMC**, with which he has been associated since prior to 1998. Lawrence J. Shaw, 52 Vice President Senior Vice President of ACMC, **with which he has been associated since prior to 1998. Michael A. Snyder, 41 Vice President Senior Vice President of ACMC** since May, 2001. Previously he was a Managing Director in the high yield asset management group at Donaldson, Lufkin & Jenrette Corporation from 1998 to 2001, and a Managing Director at Bear Stearns & Co. from 1997 to 1998. Prior thereto, he was a Senior Vice President at Prudential Capital since prior to 1998.
- -------------------------------------------------------------------------------- 40 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO Management of the Fund - --------------------------------------------------------------------------------
PRINCIPAL NAME, POSITION(S) PRINCIPAL OCCUPATION ADDRESS*, AND AGE HELD WITH FUND DURING PAST 5 YEARS - ------------------------------------------------------------------------------------------------------- Mark D. Gersten, 53 Treasurer and Chief Senior Vice President of Alliance Global 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 1998. Vincent S. Noto, 39 Controller Vice President of AGIS**, with which he has been associated since prior to 1998.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas, New York, NY 10105. ** ACMC, ABIRM and AGIS are affiliates of the Fund. The Fund's Statement of Additional Information ("SAI") has additional information about the Fund's Directors and officers and is available without charge upon request. Contact your financial representative or Alliance Capital at 800-227-4618 for a free prospectus or SAI. - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 41 AllianceBernstein Family of Funds - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN FAMILY OF FUNDS - -------------------------------------------------------------------------------- Wealth Strategies Funds - -------------------------------------------------------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy* Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy** - -------------------------------------------------------------------------------- Blended Style Series - -------------------------------------------------------------------------------- U.S. Large Cap Portfolio - -------------------------------------------------------------------------------- Growth Funds - -------------------------------------------------------------------------------- Domestic Growth Fund Health Care Fund Mid-Cap Growth Fund Premier Growth Fund Small Cap Growth Fund+ Technology Fund Global & International All-Asia Investment Fund Global Small Cap Fund Greater China '97 Fund International Premier Growth Fund New Europe Fund Worldwide Privatization Fund Select Investor Series Biotechnology Portfolio Premier Portfolio Technology Portfolio - -------------------------------------------------------------------------------- Value Funds - -------------------------------------------------------------------------------- Domestic Balanced Shares Disciplined Value Fund Growth & Income Fund Real Estate Investment Fund Small Cap Value Fund Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund - -------------------------------------------------------------------------------- Taxable Bond Funds - -------------------------------------------------------------------------------- Americas Government Income Trust Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Quality Bond Portfolio Short Duration Portfolio U.S. Government Portfolio - -------------------------------------------------------------------------------- Municipal Bond Funds - -------------------------------------------------------------------------------- National Insured National Arizona California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Ohio Pennsylvania Virginia - -------------------------------------------------------------------------------- Intermediate Municipal Bond Funds - -------------------------------------------------------------------------------- Intermediate California Intermediate Diversified Intermediate New York - -------------------------------------------------------------------------------- Closed-End Funds - -------------------------------------------------------------------------------- All-Market Advantage Fund ACM Income Fund ACM Government Opportunity Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II We also offer Exchange Reserves,++ which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. For more complete information on any AllianceBernstein mutual fund, including investment objectives and policies, sales charges, expenses, risks and other matters of importance to prospective investors, visit our web site at www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus. Please read the prospectus carefully before you invest or send money. * Formerly Growth Investors Fund. ** Formerly Conservative Investors Fund. + Quasar Fund changed its name to Small Cap Growth Fund on 11/3/03. ++ An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. - -------------------------------------------------------------------------------- 42 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO NOTES - -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO o 43 NOTES - -------------------------------------------------------------------------------- 44 o ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO ALLIANCEBERNSTEIN BOND FUND CORPORATE BOND PORTFOLIO 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN(SM) Investment Research and Management (SM) This service mark used under license from the owner, Alliance Capital Management L.P. CBPAR0903 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant's code of ethics is filed herewith as Exhibit 10(a)(1). (b) During the period covered by this report, no amendments were made to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors has determined that independent directors David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial experts. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Form N-CSR disclosure requirement not yet effective with respect to the registrant. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no significant changes in the registrant's internal controls that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. The following exhibits are attached to this Form N-CSR: Exhibit No. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 10 (a) (1) Code of ethics that is subject to the disclosure of Item 2 hereof 10 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 10 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 10 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): AllianceBernstein Bond Fund, Inc. By: /s/ Marc O. Mayer ----------------------------------- Marc O. Mayer President Date: November 25, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Marc O. Mayer ------------------------------- Marc O. Mayer President Date: November 25, 2003 By: /s/Mark D. Gersten ------------------------------ Mark D. Gersten Treasurer and Chief Financial Officer Date: November 25, 2003 EX-99.CERT 3 edg9544-ex10b_302.txt Exhibit 10(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, certify that: 1. I have reviewed this report on Form N-CSR (the "Report") of AllianceBernstein Bond Fund, Inc. (the "Fund"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this Report; 4. The Fund's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this Report based on such evaluation; and c) disclosed in this Report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year [or second fiscal half-year in the case of an annual report] that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer and I have disclosed to the Fund's auditors and the audit committee of the Fund's board of directors: a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls. Date: November 25, 2003 /s/Marc O. Mayer --------------------------- Marc O. Mayer President Exhibit 10(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Mark D. Gersten, certify that: 1. I have reviewed this report on Form N-CSR (the "Report") of AllianceBernstein Bond Fund, Inc. (the "Fund"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this Report; 4. The Fund's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this Report based on such evaluation; and c) disclosed in this Report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year [or second fiscal half-year in the case of an annual report] that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer and I have disclosed to the Fund's auditors and the audit committee of the Fund's board of directors: a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls. Date: November 25, 2003 /s/Mark D. Gersten --------------------------- Mark D. Gersten Treasurer and Chief Financial Officer EX-99.CERT 4 edg9544-ex10c_906.txt Exhibit 10(c) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of AllianceBernstein Bond Fund, Inc. (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended September 30, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: November 25, 2003 By:/s/ Marc O. Mayer -------------------------------------------- Marc O. Mayer President By: /s/ Mark D. Gersten -------------------------------------------- Mark D. Gersten Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. EX-99.CODE ETH 5 edg9544-ethics.txt Exhibit 10(a)(1) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code The AllianceBernstein Mutual Fund Complex's code of ethics (this "Code") for the investment companies within the complex (collectively, the "Funds" and each, a "Company") applies to each Company's Principal Executive Officer, Principal Financial and Accounting Officer and Controller (the "Covered Officers," each of whom is set forth in Exhibit A) for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company. For the purposes of this Code, members of the Covered Officer's family include his or her spouse, children, stepchildren, financial dependents, parents and stepparents. Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as "affiliated persons" of the Company. The Company's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Company's Board of Directors or Trustees (the "Directors") that the Covered Officers may also be officers or employees of one or more of the other Funds or of other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. Each Covered Officer must: o not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Company whereby the Covered Officer would benefit personally to the detriment of the Company; o not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Company; o not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; There are some conflict of interest situations, whether involving a Covered Officer directly or a member of his family, that should always be discussed with the General Counsel of AllianceBernstein Investment Research and Management, Inc.(the "General Counsel"), if material. Examples of these include: o service as a director on the board of directors or trustees of any public or private company (other than a not-for-profit organization); o the receipt of any non-nominal gifts; o the receipt of any entertainment from any company with which the Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance o Each Covered Officer should familiarize himself with the disclosure requirements and disclosure controls and procedures generally applicable to the Company; o each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations; o each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the General Counsel that he has received, read, and understands the Code; o annually thereafter affirm to the General Counsel that he has complied with the requirements of the Code; o complete at least annually a questionnaire relating to affiliations or other relationships that may give rise to conflicts of interest; o not retaliate against any other Covered Officer or any employee of the Company or their affiliated persons for reports of potential violations that are made in good faith; and o notify the General Counsel promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, waivers sought by a Covered Officer will be considered by the Company's Audit Committee (the "Committee"). The Company will follow these procedures in investigating and enforcing this Code: o the General Counsel will take all appropriate action to investigate any potential violations reported to him; o if, after such investigation, the General Counsel believes that no material violation has occurred, the General Counsel is not required to take any further action; o any matter that the General Counsel believes is a material violation will be reported to the Committee; o if the Committee concurs that a material violation has occurred, it will inform and make a recommendation to the Directors, who will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; o the Committee will be responsible for granting waivers, as appropriate; and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Company for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Company, the Company's adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, it is understood that this Code is in all respects separate and apart from, and operates independently of, any such policies and procedures. In particular, the Company's and its investment adviser's and principal underwriter's codes of ethics under Rule 17j-l under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Directors, including a majority of independent directors. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Directors, the investment adviser, their counsel, counsel to the Company and, if deemed appropriate by the Directors of the Company, to the Directors of the other Funds. VIII. Internal Use The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. Date: July 22, 2003 Exhibit A Persons Covered by this Code of Ethics John Carifa, Principal Executive Officer Mark Gersten, Principal Financial and Accounting Officer Vince Noto, Controller -----END PRIVACY-ENHANCED MESSAGE-----