N-CSR 1 edg9608_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: October 31, 2003 Date of reporting period: October 31, 2003 ITEM 1. REPORTS TO STOCKHOLDERS. [LOGO] ALLIANCEBERNSTEIN (SM) Investment Research and Management AllianceBernstein Bond Fund Quality Bond Portfolio Investment Grade Fixed Income Annual Report--October 31, 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. December 18, 2003 Annual Report This report provides management's discussion of fund performance for AllianceBernstein Bond Fund Quality Bond Portfolio (the "Portfolio") for the annual reporting period ended October 31, 2003. Investment Objective and Policies This open-end fund seeks high current income consistent with preservation of capital by investing in investment-grade fixed income securities. The Portfolio invests in readily marketable securities that do not involve undue risk of capital. Investment Results The following table shows the performance of the Portfolio for the six- and 12-month periods ended October 31, 2003. For comparison, we have included the Lehman Brothers (LB) Aggregate Bond Index, a standard measure of the performance of a basket of unmanaged debt securities. ------------------------------------------------------------------------------- INVESTMENT RESULTS* Periods Ended October 31, 2003 Returns 6 Months 12 Months -------------------------------- AllianceBernstein Bond Fund Quality Bond Portfolio Class A 0.11% 4.54% Class B -0.24% 3.82% Class C -0.24% 3.82% Lehman Brothers (LB) Aggregate Bond Index 0.57% 4.91% * The Portfolio's investment results are for the periods shown and are based on the net asset value (NAV) of each class of shares as of October 31, 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 Advisor Class shares will vary due to different expenses associated with this class. Returns for the Portfolio include the reinvestment of any distributions paid during each period. During the reporting period, the Advisor waived a portion of its advisory fee or reimbursed the Portfolio for a portion of its expenses to the extent necessary to limit the Portfolio's expenses to 0.98% for Class A, 1.68% for Class B, 1.68% for Class C and 0.68% for Advisor Class. This waiver extends through the Portfolio's current fiscal year and may be extended by the Advisor for additional one-year terms. Without the waiver, the Portfolio's expenses would have been higher and its performance would have been lower than that shown above. Past performance is no guarantee of future results. The unmanaged Lehman Brothers (LB) Aggregate Bond Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index is a standard measure of the performance of a basket of unmanaged debt securities. It is composed of the LB Mortgage-Backed Securities Index, the LB Asset-Backed Securities Index and the LB Government/Credit Bond ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 1 Index. An investor cannot invest directly in an index, and its results are not indicative of any specific investment, including AllianceBernstein Bond Fund Quality Bond Portfolio. Additional investment results appear on page 6. ------------------------------------------------------------------------------- For the six- and 12-month periods ended October 31, 2003, the Portfolio underperformed its benchmark, the Lehman Brothers Aggregate Bond Index. The Portfolio's yield curve positioning was the primary detractor from performance. With our expectation of stronger growth earlier in the year, we anticipated higher rates and a flatter curve, driven by tighter Fed policy. This did not materialize and, in fact, rates fell and the yield curve steepened, dampening performance. Also dampening performance relative to the index was the Portfolio's slight mortgage overweight and coupon selection. In July, as interest rates rose and prepayments declined, mortgage durations lengthened causing mortgage prices to fall sharply. A greater-than-benchmark exposure to investment-grade corporates--including an overweight in BBB-rated bonds--contributed positively to performance. Corporate securities during the 12-month period posted a strong return of 11.45%, according to the Lehman Brothers Corporate Bond Index, as compared to 4.91% for the overall Lehman Brothers Aggregate Bond Index. By quality, BBB-rated securities within the corporate index posted a very strong 15.86% return compared to 4.28% for AAA-rated corporates and 9.77% for A-rated corporates. Both our overweight position in corporate securities and our focus on l ower-rated corporates proved to be advantageous for the Portfolio. Market Overview and Investment Strategy The annual period was marked by volatility in the fixed income markets as investors reacted to rapidly changing economic data and current market perceptions. Business conditions worsened in the first three months of 2003, despite record high corporate cash flow and signs of consumer strength in rising building permits and new highs in the mortgage refinance index. The United States economy contracted in February and March, in part because of bad weather, and also because of corporate and consumer hesitancy to make purchase and investment decisions during the Iraqi conflict. As the economy began to recover, mid-year proved to be one of the most volatile periods in recent history of the U.S. fixed income markets. Through late June, interest rates fell as the economic landscape appeared bleak and the Federal Reserve raised the possibility of quantitative easing. After a 25 basis point cut in rates on June 25, interest rates suddenly reversed course and began a two-month bear market that saw longer-term Treasury rates rise more than 100 basis points. The result was a period of sustained interest rate volatility, driven not only by economic uncertainty, but also by mortgage hedging from large financial institutions. As an economic recovery took hold, we reduced the Portfolio's Treasury holdings on expectations of increased supply to service the deficit. We also 2 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO increased the Portfolio's credit position, overweighting our corporate allocation which we thought would outperform. Within our corporate allocation, we emphasized BBB-rated debt, which we believed would benefit most from improving quality and economic growth. In the face of a massive refinancing wave during the second quarter, we trimmed our mortgage overweight, reducing 15-year exposure in favor of 30-year and lowering the average coupon. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 3 PERFORMANCE UPDATE ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO CLASS A GROWTH OF A $10,000 INVESTMENT 7/1/99* TO 10/31/03 AllianceBernstein Bond Fund Quality Bond Portfolio Class A: $12,693 Lehman Brothers Aggregate Bond Index: $13,822 [The following represents a mountain chart in the printed report.] AllianceBernstein Bond Fund Quality Lehman Brothers Bond Portfolio Class A Aggregate Bond Index ------------------------------------------------------------------------------- 7/1/99* $ 9,579 $ 10,000 10/31/99 9,686 10,122 10/31/00 10,329 10,862 10/31/01 11,728 12,443 10/31/02 12,142 13,175 10/31/03 12,693 13,822 This chart illustrates the total value of an assumed $10,000 investment in AllianceBernstein Bond Fund Quality Bond Portfolio Class A shares (from 7/1/99* to 10/31/03) as compared to the performance of an appropriate index. 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 $10,000 investment in the Fund and assumes the reinvestment of dividends and capital gains. Performance for Class B, Class C and Advisor Class shares will vary from the results shown above due to differences in expenses charged to these classes. Past performance is not indicative of future results, and is not representative of future gain or loss in capital value or dividend income. The unmanaged Lehman Brothers (LB) Aggregate Bond Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index is a standard measure of the performance of a basket of unmanaged debt securities. It is composed of the LB Mortgage-Backed Securities Index, the LB Asset-Backed Securities Index and the LB Government/Credit Bond Index. An investor cannot invest directly in an index, and its results are not indicative of any specific investment, including AllianceBernstein Bond Fund Quality Bond Portfolio. * Fund and benchmark data is from the Fund's Class A share inception date of 7/1/99. 4 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO PORTFOLIO SUMMARY October 31, 2003 INCEPTION DATES Class A Shares 7/1/99 Class B Shares 7/1/99 Class C Shares 7/1/99 PORTFOLIO STATISTICS Net Assets ($mil): $449.0 [Pie Chart Omitted] SECURITY TYPE 21.6% Corporate Debt Obligations 18.1% Federal National Mortgage Association 14.5% Treasury 6.5% Federal Home Loan Mortgage Corporation 5.1% Asset-Backed Securities 3.8% Commercial Mortgage Backed Securities 3.5% Government National Mortgage Association 1.2% Sovereign Debt Securities 25.7% Short-Term Investments All data as of October 31, 2003. The Portfolio's security type breakdown is expressed as a percentage of total investments and may vary over time. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 5 INVESTMENT RESULTS AVERAGE ANNUAL RETURNS AS OF OCTOBER 31, 2003 Class A Shares ------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 4.54% 0.14% Since Inception* 6.71% 5.66% SEC Yield** 3.54% Class B Shares ------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 3.82% 0.82% Since Inception* 5.95% 5.95% SEC Yield** 3.00% Class C Shares ------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 3.82% 2.82% Since Inception* 5.92% 5.92% SEC Yield** 3.02% AVERAGE ANNUAL RETURNS (WITH SALES CHARGES) AS OF THE MOST RECENT QUARTER-END (SEPTEMBER 30, 2003) Class A Class B Class C Shares Shares Shares ------------------------------------------------------------------------------- 1 Year 0.52% 1.28% 3.28% Since Inception* 5.97% 6.30% 6.26% 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. Returns for Advisor Class shares will vary due to different expenses associated with this class. The Portfolio normally invests all of its assets in securities that are rated at least BBB by Standard & Poor's or, if unrated, are of comparable quality. The Portfolio also may invest in convertible debt securities, preferred stock and dividend-paying stocks, U.S. government obligations, and foreign fixed-income securities. The Portfolio may invest a portion of its assets in foreign securities, which may magnify fluctuations. Price fluctuations may also be caused by changes in interest rates or bond credit quality ratings. These changes have a greater effect on bonds with longer maturities than on those with shorter maturities. 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 cost. * Inception date: 7/1/99 for all share classes. ** SEC yields are based on SEC guidelines and are calculated on 30 days ended October 31, 2003. 6 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO PORTFOLIO OF INVESTMENTS October 31, 2003 Portfolio of Investments Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- MORTGAGE BACKED SECURITIES-36.9% Federal National Mortgage Association-23.8% 4.00%, 8/01/18-10/01/18 $ 8,155 $ 7,950,692 5.00%, TBA 6,160 6,258,178 5.50%, TBA 14,305 14,594,706 5.50%, 2/01/18 5,657 5,828,622 6.00%, TBA 35,225 36,337,081 6.50%, TBA 28,260 29,363,892 6.50%, 1/01/28-10/01/32 4,083 4,247,421 7.50%, 10/01/29-5/01/32 2,009 2,141,170 ------------ 106,721,762 Federal Home Loan Mortgage Corp.-8.5% 2.125%, 11/15/05 2,040 2,040,635 2.875%, 11/03/06 6,420 6,439,003 5.50%, TBA 21,765 21,948,653 6.00%, TBA 7,725 7,930,192 ------------ 38,358,483 Government National Mortgage Association-4.6% 5.50%, TBA 10,675 10,778,419 6.00%, TBA 9,485 9,796,222 ------------ 20,574,641 Total Mortgage Backed Securities (cost $165,213,205) 165,654,886 U.S. TREASURY SECURITIES-18.9% U.S. Treasury Bonds-9.6% 5.375%, 2/15/31 2,220 2,294,838 6.625%, 2/15/27 645 764,250 7.875%, 2/15/21 5,640 7,449,210 8.75%, 5/15/17 6,345 8,841,117 10.75%, 8/15/05 10,900 12,622,712 11.25%, 2/15/15 1,000 1,596,954 12.00%, 8/15/13 7,000 9,716,602 ------------ 43,285,683 U.S. Treasury Notes-9.3% 2.25%, 7/31/04 41,235 41,584,549 4.25%, 8/15/13 265 264,007 ------------ 41,848,556 Total U.S. Treasury Securities (cost $86,514,112) 85,134,239 ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 7 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- CORPORATE DEBT OBLIGATIONS-28.2% Aerospace/Defense-0.2% Boeing Capital Corp. 4.75%, 8/25/08 $ 365 $ 376,173 Northrop Grumman Corp. 7.125%, 2/15/11 540 621,412 ------------ 997,585 Automotive-2.1% DaimlerChrysler NA Holdings 4.75%, 1/15/08 1,140 1,140,139 Ford Motor Credit Co. 7.00%, 10/01/13 1,050 1,034,012 7.375%, 10/28/09-2/01/11 3,300 3,383,271 General Motors Acceptance Corp. 6.875%, 9/15/11 1,960 2,024,999 8.00%, 11/01/31 400 412,526 General Motors Corp. 8.375%, 7/15/33 1,515 1,602,944 ------------ 9,597,891 Banking-5.4% Bank of America Corp. 6.25%, 4/15/12 1,380 1,516,662 Barclays Bank Plc pfd. (United Kingdom) 8.55%, 6/15/11(a) 780 958,446 Capital One Bank 6.50%, 6/13/13 630 650,523 CBA Capital Trust I pfd. 5.805%, 6/30/15(a) 1,185 1,211,372 Citicorp 6.375%, 11/15/08 1,940 2,144,049 Citigroup, Inc. 7.25%, 10/01/10 2,860 3,331,920 GreenPoint Financial Corp. 3.20%, 6/06/08 1,115 1,072,463 HSBC Capital Funding LP pfd. (United Kingdom) 10.176%, 6/30/30(a) 570 830,265 ING Capital Funding Trust III pfd. 8.439%, 12/31/10 960 1,197,520 J.P. Morgan Chase & Co. 3.625%, 5/01/08 1,195 1,194,500 6.75%, 8/15/08-2/01/11 1,880 2,114,886 M&T Bank Corp. 3.85%, 4/01/13 525 521,477 MBNA America Bank 6.50%, 6/20/06 985 1,073,358 National City Corp. 3.20%, 4/01/08 530 521,173 8 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- RBS Capital Trust I pfd. 4.709%, 7/01/13 $ 2,090 $ 1,971,631 U.S. Bank NA 6.375%, 8/01/11 1,110 1,235,215 UFJ Finance Aruba AEC (Aruba) 6.75%, 7/15/13 890 933,443 Unicredito Italiano Capital Trust pfd. 9.20%, 10/05/10(a) 1,510 1,879,801 ------------ 24,358,704 Broadcasting/Media-1.9% AOL Time Warner, Inc. 7.70%, 5/01/32 1,205 1,366,583 Clear Channel Communications, Inc. 4.25%, 5/15/09 680 676,484 4.625%, 1/15/08 865 891,133 Liberty Media Corp. 5.70%, 5/15/13 1,220 1,195,346 News America, Inc. 6.55%, 3/15/33 1,175 1,204,193 Time Warner Entertainment Co. LP 8.375%, 3/15/23-7/15/33 2,795 3,427,582 ------------ 8,761,321 Building/Real Estate-0.5% EOP Operating LP 5.875%, 1/15/13 650 677,412 ERP Operating LP 5.20%, 4/01/13 470 471,152 Lennar Corp. 5.95%, 3/01/13 230 240,332 Vornado Realty Trust 5.625%, 6/15/07 640 676,527 ------------ 2,065,423 Cable-1.1% AT&T Broadband Corp. 9.455%, 11/15/22 670 901,973 Comcast Cable Communications, Inc. 6.20%, 11/15/08 1,650 1,800,724 Comcast Corp. 7.05%, 3/15/33 465 497,319 Cox Communications, Inc. 7.125%, 10/01/12 525 596,878 Lenfest Communications, Inc. 8.375%, 11/01/05 1,005 1,114,138 ------------ 4,911,032 ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 9 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Communications-2.3% AT&T Corp. 7.80%, 11/15/11 $ 485 $ 550,633 British Telecommunications Plc (United Kingdom) 8.875%, 12/15/30 1,025 1,324,521 Citizens Communications Co. 9.00%, 8/15/31 385 499,773 Deutsche Telekom International Finance BV (Netherlands) 8.75%, 6/15/30 690 871,140 France Telecom, SA (France) 9.75%, 3/01/31 325 430,413 Koninklijke (Royal) KPN NV (Netherlands) 8.00%, 10/01/10 670 799,839 Sprint Capital Corp. 7.625%, 1/30/11 1,595 1,757,802 8.75%, 3/15/32 1,200 1,369,554 Telecom Italia Capital (Italy) 6.375%, 11/15/33(a) 900 895,207 Verizon Global Funding Corp. 7.375%, 9/01/12 1,465 1,683,432 ------------ 10,182,314 Communications - Mobile-1.0% AT&T Wireless Services, Inc. 8.75%, 3/01/31 1,160 1,399,826 Telus Corp. (Canada) 7.50%, 6/01/07 1,145 1,272,812 Verizon Wireless Capital LLC 5.375%, 12/15/06 1,045 1,117,006 Vodafone Airtouch Plc (United Kingdom) 7.875%, 2/15/30 450 542,713 ------------ 4,332,357 Energy-1.3% Amerada Hess Corp. 7.875%, 10/01/29 1,575 1,680,484 Conoco Funding Co. 5.45%, 10/15/06 695 747,937 Conoco, Inc. 6.95%, 4/15/29 1,455 1,635,143 Devon Energy Corp. 7.95%, 4/15/32 450 539,780 Devon Financing Corp. 7.875%, 9/30/31 420 498,512 Valero Energy Corp. 7.50%, 4/15/32 650 713,454 ------------ 5,815,310 10 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Financial-4.2% American General Finance Corp. 4.50%, 11/15/07 $ 650 $ 674,302 CIT Group, Inc. 4.125%, 2/21/06 985 1,015,541 5.50%, 11/30/07 510 545,771 Countrywide Home Loans, Inc. 4.25%, 12/19/07 1,090 1,112,967 Credit Suisse First Boston 5.50%, 8/15/13 780 787,675 General Electric Capital Corp. 5.45%, 1/15/13 1,095 1,132,878 6.75%, 3/15/32 2,790 3,104,043 Household Finance Corp. 6.50%, 11/15/08 1,505 1,681,941 7.00%, 5/15/12 595 676,831 John Deere Capital Corp. 4.50%, 8/22/07 690 718,947 Lehman Brothers Holdings, Inc. 4.00%, 1/22/08 1,945 1,975,187 6.625%, 1/18/12 670 750,929 MBNA Corp. 4.625%, 9/15/08 915 951,567 Morgan Stanley 7.25%, 4/01/32 750 868,498 National Rural Utilities Cooperative Finance Corp. 7.25%, 3/01/12 270 313,074 The Bear Stearns Cos., Inc. 4.00%, 1/31/08 640 650,871 The Goldman Sachs Group, Inc. 4.75%, 7/15/13 685 662,739 6.125%, 2/15/33 1,070 1,071,924 ------------ 18,695,685 Food/Beverages-1.0% Kellogg Co. 2.875%, 6/01/08 690 664,696 Kraft Foods, Inc. 5.25%, 10/01/13 1,050 1,046,320 Pepsi Bottling Group, Inc. 7.00%, 3/01/29 1,950 2,231,350 Safeway, Inc. 7.25%, 2/01/31 630 694,618 ------------ 4,636,984 ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 11 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Health Care-0.8% Bristol-Myers Squibb Co. 4.75%, 10/01/06 $ 515 $ 543,471 HCA, Inc. 6.75%, 7/15/13 525 538,643 7.125%, 6/01/06 855 916,293 Health Net, Inc. 8.375%, 4/15/11 520 615,851 Humana, Inc. 6.30%, 8/01/18 760 780,145 ------------ 3,394,403 Industrial-0.8% General Electric Co. 1.22%, 10/24/05 2,545 2,545,000 5.00%, 2/01/13 715 720,851 Praxair, Inc. 2.75%, 6/15/08 525 503,645 ------------ 3,769,496 Insurance-0.9% Anthem, Inc. 6.80%, 8/01/12 610 689,200 Mangrove Bay Pass-Through Trust pfd. 6.102%, 7/15/33(a) 1,010 978,185 MetLife, Inc. 6.50%, 12/15/32 505 533,116 New York Life Insurance Co. 5.875%, 5/15/33(a) 880 865,809 Oil Insurance, Ltd. (Bermuda) 5.15%, 8/15/33(a) 945 950,859 ------------ 4,017,169 Metals/Mining-0.1% Alcan, Inc. (Canada) 4.50%, 5/15/13 420 405,928 Non-Air Transportation-0.3% CSX Corp. 7.95%, 5/01/27 995 1,201,161 Paper/Packaging-0.3% International Paper Co. 5.30%, 4/01/15 560 544,339 Weyerhaeuser Co. 7.375%, 3/15/32 555 599,337 ------------ 1,143,676 Petroleum Products-0.2% Petronas Capital, Ltd. 7.00%, 5/22/12(a) 1,010 1,126,756 12 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Public Utilities - Electric & Gas-1.8% Carolina Power & Light Co. 6.50%, 7/15/12 $ 675 $ 739,510 CenterPoint Energy Resources Corp. 6.50%, 2/01/08 825 885,821 Cincinnati Gas & Electric Co. 5.70%, 9/15/12 385 402,044 Columbus Southern Power Co. 5.50%, 3/01/13(a) 170 174,032 Dominion Resources, Inc. 5.00%, 3/15/13 690 685,834 Duke Energy Corp. 3.75%, 3/05/08 860 860,467 FirstEnergy Corp. 7.375%, 11/15/31 415 444,965 KeySpan Corp. 7.25%, 11/15/05 1,430 1,569,203 MidAmerican Energy Holdings Co. 5.875%, 10/01/12 395 409,404 Nisource Finance Corp. 7.875%, 11/15/10 590 699,079 Public Service Company of Colorado 7.875%, 10/01/12 450 544,599 Xcel Energy, Inc. 7.00%, 12/01/10 650 731,324 ------------ 8,146,282 Public Utilities - Telephone-0.2% Telefonos de Mexico SA de CV (Mexico) 8.25%, 1/26/06 800 885,040 Retail-0.4% Limited Brands 6.95%, 3/01/33 355 384,385 Sears Roebuck Acceptance Corp. 7.00%, 6/01/32 485 531,463 Target Corp. 5.875%, 3/01/12 615 666,087 Toys "R" Us, Inc. 7.875%, 4/15/13 305 337,528 ------------ 1,919,463 Savings and Loan-1.0% Great Western Financial Trust II 8.206%, 2/01/27 2,090 2,341,828 Washington Mutual Finance Corp. 6.875%, 5/15/11 1,945 2,187,592 ------------ 4,529,420 ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 13 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Services-0.2% Waste Management, Inc. 6.875%, 5/15/09 $ 960 $ 1,078,739 Technology-0.2% Hewlett-Packard Co. 7.15%, 6/15/05 670 723,452 Total Corporate Debt Obligations (cost $120,849,493) 126,695,591 ASSET BACKED SECURITIES-6.6% Chase Funding Mortgage Loan 1.24%, 2/25/21 2,414 2,413,724 Citibank Credit Card Issuance Trust 3.50%, 8/16/10 9,565 9,452,802 4.15%, 7/07/17 2,035 1,867,302 Countrywide Asset-Backed Certificates 1.25%, 10/25/19 1,241 1,240,630 Discover Card Master Trust I 6.35%, 7/15/08 3,190 3,467,664 Fleet Credit Card Master Trust II 5.60%, 12/15/08 2,300 2,464,072 Honda Auto Receivables Owner Trust 2.19%, 5/15/07 1,340 1,340,000 Master Asset Backed Securities Trust 1.27%, 3/25/20 1,068 1,067,834 MBNA Credit Card Master Note Trust 2.75%, 10/15/10 2,545 2,461,699 Residential Asset Mortgage Products, Inc. 1.31%, 10/25/22 1,215 1,215,000 Residential Funding Mortgage Securities, Inc. 1.25%, 7/25/18 1,205 1,204,760 Structured Asset Investment Loan Trust 1.25%, 7/25/33 1,684 1,684,018 Total Asset Backed Securities (cost $29,988,446) 29,879,505 COMMERCIAL MORTGAGE BACKED SECURITIES-4.7% Bear Stearns Commerical Mortgage Securities, Inc. Series 2003-T12, Class A4 4.68%, 8/13/39 2,700 2,655,168 First Union-Lehman Brothers-Bank of America Series 1998-C2, Class A2 6.56%, 11/18/35 3,675 4,094,458 14 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- GS Mortgage Securities Corp. II Series 2003-C1, Class A2A 3.59%, 1/10/40 $ 2,070 $ 2,068,349 LB UBS Commercial Mortgage Trust Series 2003-C5, Class A2 3.48%, 7/15/27 3,730 3,686,732 Morgan Stanley Capital I Series 2003-T11, Class A4 5.15%, 6/13/41 4,425 4,433,850 Nomura Asset Securities Corp. Series 1998-D6, Class A1B 6.59%, 3/15/30 3,665 4,099,297 Total Commercial Mortgage Backed Securities (cost $22,450,773) 21,037,854 SOVEREIGN DEBT SECURITIES-1.6% Korea Development Bank 5.75%, 9/10/13 380 390,493 Quebec Province of Canada 7.50%, 9/15/29 755 932,252 United Mexican States 4.625%, 10/08/08 3,325 3,349,938 7.50%, 1/14/12 2,075 2,324,000 Total Sovereign Debt Securities (cost $6,758,036) 6,996,683 COLLATERALIZED MORTGAGE OBLIGATION-0.3% Countrywide Home Loans Series 2003-49, Class A1 1.64%, 12/19/33 (cost $1,314,611) 1,316 1,310,495 SHORT-TERM INVESTMENT-33.7% Time Deposit-33.7% State Street Euro Dollar 0.50%, 11/03/03 (cost $151,223,000) 151,223 151,223,000 Total Investments Before Security Lending Collateral-130.9% (cost $584,311,676) 587,932,253 INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED*-18.8% Short-Term Investments Bank of America 1.22%, 7/15/04 5,990 6,285,144 Fleet Boston Financial 1.27%, 2/01/04 14,100 14,848,401 ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 15 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- FNMA 1.20%, 12/09/03 $17,000 $ 17,151,423 Gotham Funding 1.12%, 11/18/03-11/25/03 23,315 23,297,203 Toyota 1.13%, 11/13/03 2,500 2,560,844 Wells Fargo Corp. 1.16%, 2/01/04 3,000 3,119,041 ------------ 67,262,056 Shares ------------ UBS Private Money Market Fund, LLC 1.01% 17,075,591 17,075,591 Total Investment of Cash Collateral for Securities Loaned (cost $84,337,647) 84,337,647 Total Investments-149.7% (cost $668,649,323) 672,269,900 Other assets less liabilities-(49.7%) (223,255,347) Net Assets-100% $ 449,014,553 * See Note E for security 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 October 31, 2003, the aggregate market value of these securities amounted to $9,870,732 or 2.2% of net assets. Glossary of Terms: FNMA - Federal National Mortgage Assoc. TBA - (To Be Assigned) - Securities are purchased on a forward commitment with an appropriate principal amount (generally +/-1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. See notes to financial statements. 16 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO STATEMENT OF ASSETS & LIABILITIES October 31, 2003 Assets Investments in securities, at value (cost $668,649,323--including investment of cash collateral for securities loaned of $84,337,647) $ 672,269,900(a) Cash 464,548 Receivable for investment securities sold 8,680,308 Interest receivable 3,618,138 Receivable for capital stock sold 577,105 Total assets 685,609,999 Liabilities Payable for investment securities purchased 150,576,685 Payable for collateral on securities loaned 84,337,647 Payable for capital stock redeemed 713,065 Dividends payable 477,664 Distribution fee payable 120,394 Advisory fee payable 84,030 Accrued expenses 285,961 Total liabilities 236,595,446 Net Assets $ 449,014,553 Composition of Net Assets Capital stock, at par $ 42,557 Additional paid-in capital 442,458,084 Distributions in excess of net investment income (1,896,258) Accumulated net realized gain on investment and foreign currency transactions 4,789,593 Net unrealized appreciation of investments 3,620,577 $ 449,014,553 Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ($68,212,608 / 6,461,779 shares of capital stock issued and outstanding) $10.56 Sales charge--4.25% of public offering price .47 Maximum offering price $11.03 Class B Shares Net asset value and offering price per share ($96,033,294 / 9,105,837 shares of capital stock issued and outstanding) $10.55 Class C Shares Net asset value and offering price per share ($26,021,458 / 2,471,598 shares of capital stock issued and outstanding) $10.53 Advisor Class Shares Net asset value, redemption and offering price per share ($258,747,193 / 24,518,034 shares of capital stock issued and outstanding $10.55 (a) Includes securities on loan with a value of $82,495,906 (see Note E). See notes to financial statements. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 17 STATEMENT OF OPERATIONS July 1, 2003 to Year Ended October 31, June 30, 2003* 2003 ------------- ------------- Investment Income Interest $ 5,441,736 $ 16,018,006 Expenses Advisory fee 831,665 2,163,652 Distribution fee--Class A 73,782 195,491 Distribution fee--Class B 346,615 926,913 Distribution fee--Class C 81,232 244,627 Transfer agency 486,995 1,237,319 Custodian 68,546 191,425 Printing 49,208 125,347 Audit and legal 42,351 81,878 Registration fees 41,544 83,992 Administrative 40,000 120,000 Directors' fees and expenses 6,389 20,000 Miscellaneous 5,575 28,807 Total expenses 2,073,902 5,419,451 Less: expense offset arrangement (see Note B) (183) (1,103) Less: expenses waived and reimbursed by the Adviser (see Note B) (543,850) (1,376,256) Net expenses 1,529,869 4,042,092 Net investment income 3,911,867 11,975,914 Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions Net realized gain (loss) on: Investment transactions (3,807,440) 15,242,181 Foreign currency transactions -0- (282,560) Net change in unrealized appreciation/depreciation of investments (6,091,822) 8,812,869 Net gain (loss) on investment and foreign currency transactions (9,899,262) 23,772,490 Net Increase (Decrease) in Net Assets from Operations $(5,987,395) $ 35,748,404 * The Portfolio changed its fiscal year end from June 30 to October 31. See notes to financial statements. 18 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS July 1, 2003 to Year Ended Year Ended October 31, June 30, June 30, 2003* 2003 2002 ---------------------------------------------- Increase (Decrease) in Net Assets from Operations Net investment income $ 3,911,867 $ 11,975,914 $ 7,878,464 Net realized gain (loss) on investment and foreign currency transactions (3,807,440) 14,959,621 (1,208,743) Net change in unrealized appreciation/depreciation of investments (6,091,822) 8,812,869 1,069,652 Net increase (decrease) in net assets from operations (5,987,395) 35,748,404 7,739,373 Dividends and Distributions to Shareholders from Net investment income Class A (896,295) (2,559,355) (1,504,476) Class B (1,015,450) (2,981,723) (1,172,187) Class C (239,505) (803,086) (388,314) Advisor Class (3,303,792) (8,978,394) (4,813,487) Distributions in excess of net investment income Class A -0- -0- (322,169) Class B -0- -0- (251,012) Class C -0- -0- (83,154) Advisor Class -0- -0- (1,030,761) Net realized gain on investment transactions Class A -0- -0- (37,302) Class B -0- -0- (34,427) Class C -0- -0- (11,308) Advisor Class -0- -0- (89,616) Distributions in excess of net realized gain on investment transactions Class A -0- -0- (100,078) Class B -0- -0- (92,363) Class C -0- -0- (30,340) Advisor Class -0- -0- (240,432) Capital Stock Transactions Net increase (decrease) (1,912,603) 145,535,331 233,107,087 Total increase (decrease) (13,355,040) 165,961,177 230,645,034 Net Assets Beginning of period 462,369,593 296,408,416 65,763,382 End of period $449,014,553 $462,369,593 $296,408,416 * The Portfolio changed its fiscal year end from June 30 to October 31. See notes to financial statements. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 19 NOTES TO FINANCIAL STATEMENTS October 31, 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 Quality Bond Portfolio. The Quality 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 to 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 Alliance Capital Management L.P. (the "Adviser"), subject to the Board's continuing oversight, certain responsibilities with respect to the implementation of the Pricing Policies. Pursuant to the Pricing Policies, securities for which market quotations are readily available are valued at their current market value. In general, the market value of these securities is determined as follows: 20 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO 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. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward exchange currency contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at the rates of exchange prevailing when accrued. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 21 Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities. 3. Taxes It is the policy of the Portfolio to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. 4. Investment Income and Investment Transactions Interest income is accrued daily. Investment transactions are accounted for on the date securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Portfolio accretes discounts as adjustments to interest income. Additionally, the Portfolio amortizes premiums on debt securities for financial statement reporting purposes only. 5. Income and Expenses All income earned and expenses incurred by the Portfolio are borne on a pro rata basis by each settled class of shares, based on proportionate interest in the Portfolio represented by the net assets of such class, except that the Portfolio's Class B and Class C shares bear higher distribution and transfer agent fees than Class A and Advisor Class shares. Advisor Class shares have no distribution fees. 6. Dividends and Distributions Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined 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. 7. Change of Fiscal Year End The Portfolio changed its fiscal year end from June 30 to October 31. Accordingly, the statement of operations, the statement of changes in net assets and financial highlights reflect the period from July 1, 2003 to October 31, 2003. 22 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO NOTE B Advisory Fee and Other Transactions with Affiliates Under the terms of an investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an annual rate of .55 of 1% of the Portfolio's average daily net assets. The fee is accrued daily and paid monthly. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis to .98%, 1.68%, 1.68% and .68% of the average daily net assets of Class A, Class B, Class C and Advisor Class shares, respectively. For the period ended October 31, 2003 and the year ended June 30, 2003, such waiver amounted to $503,850 and $1,256,256 respectively. Pursuant to the advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the period ended October 31, 2003, and the year ended June 30, 2003, the Advisor agreed to waive its fees for services. Such waiver amounted to $40,000 and $120,000, respectively. 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 $352,784 and $1,014,792, respectively, for the period ended October 31, 2003 and the year ended June 30, 2003. For the period ended October 31, 2003 and the year ended June 30, 2003, the Portfolio's expenses were reduced by $183 and $1,103, respectively, under an expense offset arrangement with AGIS. AllianceBernstein Investment Research and Management, Inc., a wholly-owned subsidiary of the Adviser, serves as the distributor of the Portfolio's shares. The Distributor has advised the Portfolio that it has retained front-end sales charges of $3,585 and $16,996 from the sale of Class A shares and received $16,048 and $3,950, $89,224 and $262,207 and $3,040 and $16,470, 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 October 31, 2003 and the year ended June 30, 2003. 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 ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 23 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 $942,950 and $354,415 for Class B and Class C shares, respectively. Such costs may be recovered from the Portfolio in future periods so long as the Agreement is in effect. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of the Portfolio's shares. NOTE D Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the period ended October 31, 2003, were as follows: Purchases Sales --------- --------- Investment securities (excluding U.S. government securities) $ 64,322,343 $ 23,076,090 U.S. government securities 815,749,995 823,324,790 The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows: Cost $ 670,184,066 Gross unrealized appreciation $ 5,709,970 Gross unrealized depreciation (3,624,136) Net unrealized appreciation $ 2,085,834 Forward Exchange Currency Contracts The Portfolio may enter into forward exchange currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to hedge certain firm purchase and sale commitments denominated in foreign currencies and for investment purposes. A forward exchange currency contract is a commitment to purchase or sell a foreign currency on a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. 24 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation or depreciation by the Portfolio. The Portfolio's custodian will place and maintain cash not available for investment or other liquid assets in a separate account of the Portfolio having a value at least equal to the aggregate amount of the Portfolio's commitments under forward exchange currency contracts entered into with respect to position hedges. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars, reflects the total exposure the Portfolio has in that particular currency contract. NOTE E Securities Lending The Portfolio has entered into a securities lending agreement with AG Edwards &Sons, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent, on behalf of the Portfolio, administers the lending of portfolio securities to certain broker-dealers. In return, the Portfolio receives fee income from the lending transactions or it retains a portion of interest on the investment of any cash received as collateral. The Portfolio also continues to receive dividends or interest on the securities loaned. Unrealized gain or loss on the value of the securities loaned that may occur during the term of the loan will be reflected in the accounts of the Portfolio. All loans are continuously secured by collateral exceeding the value of the securities loaned. All collateral consists of either cash or U.S. government securities. The Lending Agent may invest the cash collateral received in accordance with the investment restrictions of the Portfolio in one or more of the following investments: U.S. government or U.S. government agency obligations, bank obligations, corporate debt obligations, asset-backed securities, investment funds, structured products, repurchase agreements and an eligible money market fund. The Lending Agent will indemnify the Portfolio for any loss resulting from a borrower's failure to return a loaned security when due. As of October 31, 2003, the Portfolio had loaned securities with a value of $82,495,906 and received cash collateral of $84,337,647 which was invested in short-term securities as included in the accompanying portfolio of investments. For the period ended October 31, 2003 and the year ended June 30, 2003, the Portfolio earned fee income of $59,644 and $110,476, respectively, which is included in interest income in the accompanying statement of operations. ALLIANCEBERNSTEIN Bond Fund Quality Bond Portfolio o 25 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 October 31, June 30, June 30, 2003(a) 2003 2002 ---------------------------------------------- Class A Shares sold 1,188,424 7,320,478 4,696,262 Shares issued in reinvestment of dividends and distributions 69,498 188,816 130,123 Shares converted from Class B 72,114 183,885 118,430 Shares redeemed (1,944,017) (4,991,928) (2,534,079) Net increase (decrease) (613,981) 2,701,251 2,410,736 Class B Shares sold 900,731 10,491,815 4,915,718 Shares issued in reinvestment of dividends and distributions 65,907 187,182 97,916 Shares converted to Class A (73,115) (183,857) (118,478) Shares redeemed (2,261,947) (4,937,099) (1,346,260) Net increase (decrease) (1,368,424) 5,558,041 3,548,896 Class C Shares sold 748,714 3,020,966 1,732,851 Shares issued in reinvestment of dividends and distributions 12,921 40,953 28,077 Shares redeemed (740,569) (2,189,012) (606,701) Net increase 21,066 872,907 1,154,227 Advisor Class Shares sold 1,716,510 6,206,900 15,000,776 Shares issued in reinvestment of dividends and distributions 305,930 854,656 576,188 Shares redeemed (257,118) (2,365,708) (204,144) Net increase 1,765,322 4,695,848 15,372,820 (a) The Portfolio changed its fiscal year end from June 30 to October 31. 26 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Notes to Financial Statements Amount July 1, 2003 to Year Ended Year Ended October 31, June 30, June 30, 2003(a) 2003 2002 ---------------------------------------------- Class A Shares sold $ 12,601,915 $ 77,100,650 $ 49,488,409 Shares issued in reinvestment of dividends and distributions 733,739 1,997,352 1,344,953 Shares converted from Class B 771,300 1,956,325 521,783 Shares redeemed (20,507,158) (52,684,749) (26,178,704) Net increase (decrease) $ (6,400,204) $ 28,369,578 $ 25,176,441 Class B Shares sold $ 9,506,335 $110,463,465 $ 50,969,528 Shares issued in reinvestment of dividends and distributions 695,223 1,979,554 1,011,618 Shares converted to Class A (771,300) (1,956,325) (521,783) Shares redeemed (23,810,699) (52,323,161) (14,625,886) Net increase (decrease) $(14,380,441) $ 58,163,533 $ 36,833,477 Class C Shares sold $ 7,877,594 $ 31,610,879 $ 17,979,445 Shares issued in reinvestment of dividends and distributions 136,077 431,766 290,031 Shares redeemed (7,783,898) (22,969,541) (6,294,895) Net increase $ 229,773 $ 9,073,104 $ 11,974,581 Advisor Class Shares sold $ 18,114,331 $ 65,432,463 $ 155,281,551 Shares issued in reinvestment of dividends and distributions 3,228,730 9,029,421 5,942,746 Shares redeemed (2,704,792) (24,532,768) (2,101,709) Net increase $ 18,638,269 $ 49,929,116 $ 159,122,588 (a) The Portfolio changed its fiscal year end from June 30 to October 31. 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") intended to provide short-term financing if necessary, in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the period ended October 31, 2003. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 27 NOTE H Distributions to Shareholders The tax character of distributions paid during the period ended October 31, 2003, and the fiscal years ended June 30, 2003 and June 30, 2002 were as follows: July 1, 2003 to Year Ended Year Ended October 31, June 30, June 30, 2003* 2003 2002 ------------------------------------------------------------------------------- Distributions paid from: Ordinary income $ 5,455,042 $ 15,322,558 $ 9,824,526 Net long-term capital gains -0- -0- 53,837 Total taxable distributions 5,455,042 15,322,558 9,878,363 Total distributions paid $ 5,455,042 $ 15,322,558 $ 9,878,363(a) As of October 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 6,468,174 Undistributed long-term capital gains 2,678,430 Accumulated capital and other losses (4,240,862)(b) Unrealized appreciation/(depreciation) 2,085,834(c) Total accumulated earnings/(deficit) $ 6,991,576 (a) Total distributions paid differ from Statement of Changes in Net Assets because for tax purposes dividends are recognized when actually paid. (b) On October 31, 2003, the Fund had a net capital loss carryforward for federal income tax purposes of $4,240,862 all of which expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. (c) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between book and tax amortization methods for premium and market discount. During the current fiscal year, permanent differences, primarily due to tax character of distributions, tax character of paydown losses and the tax treatment of bond premium, resulted in a net decrease in distributions in excess of net investment income and a net decrease in accumulated net realized gain on investment and foreign currency transactions. This reclassification had no effect on net assets. * The Portfolio changed its fiscal year end from June to October 31. 28 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO NOTE I Legal Proceedings As has been previously reported in the press, the Staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of the New York Attorney General ("NYAG") have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that Alliance Capital Management L.P. ("Alliance Capital"), the Fund's Adviser, provide information to them. Alliance Capital has been cooperating and will continue to cooperate with all of these authorities. Please see "Subsequent Events" below for a description of the agreements reached by Alliance Capital and the SEC and NYAG in connection with the investigations mentioned above. A special committee of Alliance Capital's Board of Directors, comprised of the members of Alliance Capital's Audit Committee and the other independent member of the Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against Alliance Capital; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with Alliance Capital. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with Alliance Capital, including recovery of all fees paid to Alliance Capital pursuant to such contracts. Since October 2, 2003, more than thirty 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. As a result of the matters more fully discussed in the note entitled "Subsequent Events" below, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 29 to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. NOTE J Subsequent Events On December 18, 2003, Alliance Capital, the Fund's Adviser, confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) Alliance Capital agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to the market timing relationships described in the SEC Order (i.e., relationships Alliance Capital maintained with some investors who were permitted to engage in market timing trades in some of the 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). According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) Alliance Capital agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) Alliance Capital agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that Alliance Capital's registered investment company clients, including the Fund, will introduce governance and compliance changes. 30 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Financial Highlights
Class A ----------------------------------------------------------------- July 1, July 1, 2003 to 1999(c) to October 31, Year Ended June 30, June 30, 2003(a) 2003 2002(b) 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $ 10.82 $ 10.25 $ 10.22 $ 9.85 $ 10.00 Income From Investment Operations Net investment income(d)(e) .12 .33 .46 .55 .60 Net realized and unrealized gain (loss) on investment and foreign currency transactions (.25) .66 .17 .42 (.21) Net increase (decrease) in net asset value from operations (.13) .99 .63 .97 .39 Less: Dividends and Distributions Dividends from net investment income (.13) (.42) (.46) (.55) (.54) Distributions in excess of net investment income -0- -0- (.10) (.04) -0- Distributions from net realized gain on investment transactions -0- -0- (.01) (.01) -0- Distributions in excess of net realized gain on investment transactions -0- -0- (.03) -0- -0- Total dividends and distributions (.13) (.42) (.60) (.60) (.54) Net asset value, end of period $ 10.56 $ 10.82 $ 10.25 $ 10.22 $ 9.85 Total Return Total investment return based on net asset value(f) (1.20)% 9.87% 6.23% 10.09% 4.40% Ratios/Supplemental Data Net assets, end of period (000's omitted) $ 68,213 $ 76,565 $ 44,852 $ 20,068 $ 5,071 Ratio to average net assets of: Expenses, net of waivers/ reimbursements .98%(g) .98% .98% .98% .98%(g) Expenses, before waivers/ reimbursements 1.33%(g) 1.32% 1.48% 2.85% 13.10%(g) Net investment income(e) 2.60%(g) 3.08% 4.39% 5.49% 5.96%(g) Portfolio turnover rate 199% 867% 573% 385% 215%
See footnote summary on page 35. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 31 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B ----------------------------------------------------------------- July 1, July 1, 2003 to 1999(c) to October 31, Year Ended June 30, June 30, 2003(a) 2003 2002(b) 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $ 10.81 $ 10.24 $ 10.21 $ 9.84 $ 10.00 Income From Investment Operations Net investment income(d)(e) .09 .26 .38 .47 .50 Net realized and unrealized gain (loss) on investment and foreign currency transactions (.25) .66 .16 .43 (.18) Net increase (decrease) in net asset value from operations (.16) .92 .54 .90 .32 Less: Dividends and Distributions Dividends from net investment income (.10) (.35) (.38) (.47) (.48) Distributions in excess of net investment income -0- -0- (.09) (.05) -0- Distributions from net realized gain on investment transactions -0- -0- (.01) (.01) -0- Distributions in excess of net realized gain on investment transactions -0- -0- (.03) -0- -0- Total dividends and distributions (.10) (.35) (.51) (.53) (.48) Net asset value, end of period $ 10.55 $ 10.81 $ 10.24 $ 10.21 $ 9.84 Total Return Total investment return based on net asset value(f) (1.44)% 9.12% 5.52% 9.34% 3.56% Ratios/Supplemental Data Net assets, end of period (000's omitted) $96,033 $113,233 $50,354 $13,960 $1,007 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.68%(g) 1.68% 1.68% 1.68% 1.68%(g) Expenses, before waivers/ reimbursements 2.06%(g) 2.05% 2.19% 3.36% 11.29%(g) Net investment income(e) 2.01%(g) 2.41% 3.70% 4.82% 5.32%(g) Portfolio turnover rate. 199% 867% 573% 385% 215%
See footnote summary on page 35. 32 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Financial Highlights
Class C ----------------------------------------------------------------- July 1, July 1, 2003 to 1999(c) to October 31, Year Ended June 30, June 30, 2003(a) 2003 2002(b) 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $ 10.79 $ 10.23 $ 10.19 $ 9.83 $ 10.00 Income From Investment Operations Net investment income(d)(e) .09 .26 .38 .48 .51 Net realized and unrealized gain (loss) on investment and foreign currency transactions (.25) .65 .17 .41 (.20) Net increase (decrease) in net asset value from operations (.16) .91 .55 .89 .31 Less: Dividends and Distributions Dividends from net investment income (.10) (.35) (.38) (.48) (.48) Distributions in excess of net investment income -0- -0- (.09) (.04) -0- Distributions from net realized gain on investment transactions -0- -0- (.01) (.01) -0- Distributions in excess of net realized gain on investment transactions -0- -0- (.03) -0- -0- Total dividends and distributions (.10) (.35) (.51) (.53) (.48) Net asset value, end of period $ 10.53 $ 10.79 $ 10.23 $ 10.19 $ 9.83 Total Return Total investment return based on net asset value(f) (1.44)% 9.03% 5.63% 9.25% 3.47% Ratios/Supplemental Data Net assets, end of period (000's omitted) $26,021 $26,445 $16,131 $4,315 $514 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.68%(g) 1.68% 1.68% 1.68% 1.68%(g) Expenses, before waivers/ reimbursements 2.06%(g) 2.03% 2.19% 3.42% 11.75%(g) Net investment income(e) 2.03%(g) 2.41% 3.71% 4.88% 5.35%(g) Portfolio turnover rate. 199% 867% 573% 385% 215%
See footnote summary on page 35. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 33 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class ---------------------------------------------------- July 1, October 9, 2003 to 2000(h) to October 31 Year Ended June 30, June 30, 2003(a) 2003 2002(b) 2001 ----------- ----------- ----------- ----------- Net asset value, beginning of period $ 10.82 $ 10.25 $ 10.22 $ 9.97 Income From Investment Operations Net investment income(d)(e) .13 .36 .48 .42 Net realized and unrealized gain (loss) on investment and foreign currency transactions (.26) .66 .18 .30 Net increase (decrease) in net asset value from operations (.13) 1.02 .66 .72 Less: Dividends and Distributions Dividends from net investment income (.14) (.45) (.48) (.42) Distributions in excess of net investment income -0- -0- (.11) (.04) Distributions from net realized gain on investment transactions -0- -0- (.01) (.01) Distributions in excess of net realized gain on investment transactions -0- -0- (.03) -0- Total dividends and distributions (.14) (.45) (.63) (.47) Net asset value, end of period $ 10.55 $ 10.82 $ 10.25 $ 10.22 Total Return Total investment return based on net asset value(f) (1.19)% 10.20% 6.57% 7.28% Ratios/Supplemental Data Net assets, end of period (000's omitted) $258,747 $246,127 $185,071 $27,420 Ratio to average net assets of: Expenses, net of waivers/ reimbursements .68%(g) .68% .68% .68%(g) Expenses, before waivers/ reimbursements 1.03%(g) 1.20% 1.20% 2.29%(g) Net investment income(e) 2.87%(g) 3.39% 4.69% 5.89%(g) Portfolio turnover rate. 199% 867% 573% 385%
See footnote summary on page 35. 34 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO (a) The Portfolio changed its fiscal year end from June 30 to October 31. (b) As required, effective July 1, 2001, the Portfolio has adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing premium on debt securities for financial statement reporting purposes only. The effect of this change for the year ended June 30, 2002 was to decrease net investment income per share by $.05, increase net realized and unrealized gain on investments per share by $.05 for Class A, B and C, respectively, and by $.06 for the Advisor Class, and decrease the ratio of net investment income to average net assets from 4.93% to 4.39% for Class A, from 4.24% to 3.70% for Class B, from 4.25% to 3.71% for Class C and from 5.24% to 4.69% for Advisor Class. Per share, ratios and supplemental data for periods prior to July 1, 2001 have not been restated to reflect this change in presentation. (c) Commencement of operations. (d) Based on average shares outstanding. (e) Net of fees waived and expenses reimbursed by the Adviser. (f) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total investment return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. (g) Annualized. (h) Commencement of distribution. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 35 REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS To the Shareholders and Board of Directors of AllianceBernstein Bond Fund, Inc. Quality Bond Portfolio We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Quality Bond Portfolio (the "Portfolio") one of the portfolios constituting the AllianceBernstein Bond Fund, Inc., as of October 31, 2003, and the related statement of operations for the period from July 1, 2003 to October 31, 2003 and for the year ended June 30, 2003, the statement of changes in net assets for the period from July 1, 2003 to October 31, 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 October 31, 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 October 31, 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 Quality Bond Portfolio of the AllianceBernstein Bond Fund, Inc. at October 31, 2003, the results of its operations for the period from July 1, 2003 to October 31, 2003 and for the year ended June 30, 2003, the changes in its net assets for the period from July 1, 2003 to October 31, 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 October 31, 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 December 12, 2003, except for Note J, as to which the date is December 23, 2003 36 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO 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(2), Vice President Paul J. DeNoon, Vice President Jeffrey S. Phlegar(2), Vice President Lawrence J. Shaw, Vice President Michael A. Snyder, Vice President Mark R. Manley, Secretary Mark D. Gersten, Treasurer & Chief Financial Officer Vincent S. Noto, Controller Custodian State Street Bank & Trust Company 225 Franklin Street Boston, MA 02110 Principal Underwriter AllianceBernstein Investment Research and Management, Inc. 1345 Avenue of the Americas New York, NY 10105 Transfer Agent Alliance Global Investor Services, Inc P.O. Box 756003 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. Bloom and Phlegar are the persons primarily responsible for the day-to-day management of the Fund's investment portfolio. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 37 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 DIRECTORSHIPS 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 Suite 100 was formerly Senior Manager Greenwich, CT 06830 of Barrett Associates, Inc., a (5) registered investment adviser, Chairman of the Board with which he had been associ- ated 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 Boca Raton, FL 33432 The Equitable Life Assurance (5) Society 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 (5) 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 a Senior Manager at Price Waterhouse & Co. Member of American Institute of Certified Public Accountants since 1953.
38 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO
PORTFOLIOS IN FUND OTHER NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE) DURING PAST 5 YEARS DIRECTOR DIRECTOR -------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) John H. Dobkin, #+, 61 Consultant. Formerly President 98 None P.O. Box 12 of Save Venice, Inc. (preservation Annandale, NY 12504 organization) from 2001-2002, (5) a Senior Advisor from June 1999 - June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989-May 1999. Previously, he was Director of the National Academy of Design and during 1988-1992, he was Director and Chairman of the Audit Committee of ACMC. Clifford L. Michel, #+, 64 Senior Counsel of the law firm 97 Placer Dome, 15 St. Bernard's Road of Cahill Gordon & Reindel since Inc. Gladstone, NJ 07934 February 2001 and a partner of (5) 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 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 (5) senior 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 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 since 2001; prior thereto, Chief Americas Executive Officer of Sanford C. New York, NY 10105 Bernstein & Co., LLC and its (3 months) predecessor since prior to 1998.
# 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 QUALITY BOND PORTFOLIO o 39 Officer Information Certain information concerning the Fund's Officers is set forth below.
NAME, POSITION(S) PRINCIPAL OCCUPATION ADDRESS* AND AGE HELD WITH FUND DURING PAST 5 YEARS ------------------------------------------------------------------------------- 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 of 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. Jeffrey S. Phlegar, 37 Vice President Senior 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. Mark R. Manley, 41 Secretary Senior Vice President and Acting General Counsel of ACMC,** with which he has been associated since prior to 1998. Mark D. Gersten, 53 Treasurer and Senior Vice President of Alliance Global Chief Financial Officer Investor Services, Inc. ("AGIS")** and a 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. 40 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO 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. ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 41 ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN (SM) Investment Research and Management SM This service mark used under license from the owner, Alliance Capital Management L.P. QBPAR1003 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: December 30, 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: December 30, 2003 By: /s/ Mark D. Gersten Mark D. Gersten Treasurer and Chief Financial Officer Date: December 30, 200