-----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, UsHnhslv8VsoV/8Z4XY1TbCXYQ7411FXXixIXbWHqiFA2G0qwmvJDoCrgqKxnG5r XRRX6MMR5jWUYSswSr4izA== 0000936772-05-000027.txt : 20050110 0000936772-05-000027.hdr.sgml : 20050110 20050110124926 ACCESSION NUMBER: 0000936772-05-000027 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041031 FILED AS OF DATE: 20050110 DATE AS OF CHANGE: 20050110 EFFECTIVENESS DATE: 20050110 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: 05520161 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 edg10541_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: 811-02383 ALLIANCEBERNSTEIN BOND FUND, INC. (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley Alliance Capital Management L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: October 31, 2004 Date of reporting period: October 31, 2004 ITEM 1. REPORTS TO STOCKHOLDERS. [LOGO] ALLIANCEBERNSTEIN (SM) Investment Research and Management Investment Grade Fixed Income AllianceBernstein Bond Fund Quality Bond Portfolio - ------------------------------------------------------------------------------- Annual Report--October 31, 2004 - ------------------------------------------------------------------------------- - --------------------------- Investment Products Offered o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed - --------------------------- The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein at (800) 227-4618. Please read the prospectus carefully before you invest. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein's web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission's (the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618. The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein Investment Research and Management, Inc., is an affiliate of Alliance Capital Management L.P., the manager of the funds, and is a member of the NASD. December 16, 2004 Annual Report This report provides management's discussion of fund performance for AllianceBernstein Bond Fund Quality Bond Portfolio (the "Portfolio") for the annual reporting period ended October 31, 2004. Investment Objective and Policies This open-end Portfolio seeks high current income consistent with preservation of capital by investing in investment-grade fixed income securities. Under normal circumstances, at least 80% of the Portfolio's net assets will be invested in bonds and other debt securities. The Portfolio invests in readily marketable securities that do not involve undue risk of capital. Investment Results The table on page 4 shows the Portfolio's performance compared to its benchmark, the Lehman Brothers (LB) U.S. Aggregate Index, which is a standard measure of the performance of a basket of unmanaged debt securities, for the six- and 12-month periods ended October 31, 2004. During the six- and 12-month periods ended October 31, 2004, the Portfolio's Class A shares underperformed the LB U.S. Aggregate Index. The Portfolio's yield curve strategy was the primary detractor from relative performance. The Portfolio's duration was positioned below that of the LB U.S. Aggregate Index in anticipation of higher-than-expected interest rates which did not materialize. Also detracting from performance was the Portfolio's positioning for a flatter yield curve. Contributing positively to performance was its higher coupon selection within its mortgage holdings, and a focus on BBB-rated corporates within its credit allocation. Market Review and Investment Strategy Bond market returns were relatively modest for the annual reporting period. The returns, however, masked intra-period volatility as changing perceptions of the direction of the U.S. economy effected bond performance. In the first quarter of 2004, heightened geopolitical risk, weak domestic employment data and strong foreign demand for U.S. securities, led to falling interest rates and strong bond-market returns. In the second quarter, bond market returns dramatically reversed course with a sharp sell-off sparked by April's surprisingly strong U.S. employment number. Interest rates began to rise in anticipation of eventual Federal Reserve (Fed) rate hikes. By late June, soft consumer confidence readings, weak inflation data and slower payroll numbers allowed bond markets to rebound as the U.S. economy hit a mid-year slowdown. Additionally, the prospects of slower, more measured Fed tightenings bolstered the bond markets back into positive returns. For the year, most non-government sectors outperformed U.S. government sectors. According to the LB U.S. Aggregate Index, Treasuries posted a return of 4.97% and agencies a return of 4.53% for the annual reporting period ended October 31, 2004. Within non-government sectors, mortgage securities returned 5.51% for the year, as represented by the LB U.S. Aggregate Index, supported by strong investor demand, coupled with rela- - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 1 tively low volatility. Collateralized mortgage-backed securities also outperformed governments at 5.56%, as real estate markets remained strong. Asset-backed securities returned 4.13%, as strong demand tightened spreads to multi-year lows. During the annual reporting period ended October 31, 2004, investment-grade corporates provided robust returns benefiting from a stronger economy and improving credit fundamentals. Record free cash flow, improving profitability and declining leverage, driven by a stronger economy, led the credit sectors to outperform. Within the credit sector BBB-rated securities outperformed like-duration Treasuries by more than two full percentage points, according to the LB U.S. Aggregate Index. During the annual reporting period ended October 31, 2004, the Portfolio was concentrated on high coupon mortgages which provided an attractive yield advantage. Within the corporate sector, the Portfolio generally maintained a greater-than-neutral exposure to investment-grade credit with an overweight in long-maturity and BBB-rated debt. The Portfolio also maintained a modestly shorter-than-benchmark duration in anticipation of higher interest rates. In Memory It is with sadness that we announce the passing of Clifford L. Michel, a member of the Board of Directors of AllianceBernstein Bond Fund Quality Bond Portfolio. Mr. Michel served the interests of the Fund's shareholders for the last five years. His hard work, dedication and contributions to the Fund will be greatly missed. - ------------------------------------------------------------------------------- 2 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO HISTORICAL PERFORMANCE An Important Note About the Value of Historical Performance The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. The investment return and principal value of an investment in the Portfolio will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For a free copy of the Portfolio's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein at (800) 227-4618. You should read the prospectus carefully before you invest. Returns are annualized for periods longer than one year. All fees and expenses related to the operation of the Portfolio have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Portfolio's quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for Class R and Advisor Class shares will vary due to different expenses associated with these classes. Performance assumes reinvestment of distributions and does not account for taxes. During the reporting period, the Adviser waived a portion of its advisory fee or reimbursed the Portfolio for a portion of its expenses to the extent necessary to limit AllianceBernstein Bond Fund Quality Bond Portfolio expenses on an annual basis to 0.98%, 1.68%, 1.68%, 1.18% and 0.68% of the average daily nest assets of Class A, Class, B, Class C, Class R and Advisor Class shares, respectively. These waivers extend through the Portfolio's current fiscal year and may be extended by the Adviser for additional one-year terms. Without the waivers, the Portfolio's expenses would have been higher and its performance would have been lower than that shown. Benchmark Disclosure The unmanaged Lehman Brothers (LB) U.S. Aggregate Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio. A Word About Risk The Portfolio normally invests all of its assets in securities that are rated at least BBB by Standard & Poor's or, if unrated, are of comparable quality. The Portfolio may invest in convertible debt securities, preferred stock and dividend-paying stocks, U.S. government obligations, and foreign fixed-income securities. The Portfolio may invest a portion of its assets in foreign securities, which may magnify fluctuations. Price fluctuations may also be caused by changes in interest rates or bond credit quality ratings. These changes have a greater effect on bonds with longer maturities than on those with shorter maturities. While the Portfolio invests principally in bonds and other fixed-income securities, the Portfolio may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks are fully discussed in the prospectus. (Historical Performance continued on next page) - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 3 HISTORICAL PERFORMANCE (continued from previous page) THE FUND VS. ITS BENCHMARK Returns PERIODS ENDED OCTOBER 31, 2004 6 Months 12 Months - ------------------------------------------------------------------------------- AllianceBernstein Bond Fund Quality Bond Portfolio Class A 3.45% 4.66% Class B 3.08% 3.93% Class C 3.09% 3.93% Class R 3.24% 4.63%* Advisor Class 3.61% 5.08% Lehman Brothers U.S. Aggregate Index 4.23% 5.53% *Since Inception: The Class R share inception date is 11/3/03. GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO 7/1/99* TO 10/31/04 Lehman Brothers U.S. Aggregate Index: $ 14,585 AllianceBernstein Bond Fund Quality Bond Portfolio Class A: $13,280 AllianceBernstein Bond Fund Lehman Brothers Quality Bond Portfolio Class A U.S. Aggregate Index - ------------------------------------------------------------------------------- 7/1/99* 9,575 10,000 10/31/99 9,682 10,122 10/31/00 10,328 10,861 10/31/01 11,726 12,442 10/31/02 12,138 13,175 10/31/03 12,689 13,821 10/31/04 13,280 14,585 * Since inception of the Portfolio's Class A shares on 7/1/99. This chart illustrates the total value of an assumed $10,000 investment in AllianceBernstein Bond Fund Quality Bond Portfolio Class A shares (from 7/1/99* to 10/31/04) as compared to the performance of its benchmark, the LB U.S. Aggregate Index. The chart reflects the deduction of the maximum 4.25% sales charge from the initial $10,000 investment in the Portfolio and assumes the reinvestment of dividends and capital gains. See Historical Performance and Benchmark disclosures on previous page. (Historical Performance continued on next page) - ------------------------------------------------------------------------------- 4 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF OCTOBER 31, 2004 NAV Returns SEC Returns - ------------------------------------------------------------------------------- Class A Shares 1 Year 4.66% 0.20% 5 Years 6.52% 5.60% Since Inception* 6.32% 5.47% SEC Yield** 4.17% Class B Shares 1 Year 3.93% 0.96% 5 Years 5.77% 5.77% Since Inception* 5.57% 5.57% SEC Yield ** 3.69% Class C Shares 1 Year 3.93% 2.94% 5 Years 5.78% 5.78% Since Inception* 5.54% 5.54% SEC Yield** 3.69% Class R Shares Since Inception* 4.63% SEC Yield** 4.18% Advisor Class Shares 1 Year 5.08% Since Inception* 6.83% SEC Yield ** 4.68% SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (SEPTEMBER 30, 2004) Class A Shares 1 Year -1.34% 5 Years 5.52% Since Inception* 5.40% Class B Shares 1 Year -0.64% 5 Years 5.68% Since Inception* 5.52% Class C Shares 1 Year 1.31% 5 Years 5.72% Since Inception* 5.49% * Inception dates: 7/1/99 for Class A, B and C shares; 11/3/03 for Class R shares; 10/10/00 for Advisor Class shares. ** SEC yields are calculated based on SEC guidelines for the 30-day period ended October 31, 2004. See Historical Performance disclosures on page 3. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 5 FUND EXPENSES As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Ending Account Value Account Value Expenses Paid May 1, 2004 October 31, 2004 During Period* - ------------------------------------------------------------------------------- Class A Actual $1,000 $1,034.47 $5.01 Hypothetical (5% return before expenses) $1,000 $1,020.21 $4.98 Class B Actual $1,000 $1,030.80 $8.58 Hypothetical (5% return before expenses) $1,000 $1,016.69 $8.52 Class C Actual $1,000 $1,030.85 $8.58 Hypothetical (5% return before expenses) $1,000 $1,016.69 $8.52 Class R Actual $1,000 $1,032.43 $6.03 Hypothetical (5% return before expenses) $1,000 $1,019.20 $5.99 Advisor Class Actual $1,000 $1,036.06 $3.48 Hypothetical (5% return before expenses) $1,000 $1,021.72 $3.46 * Expenses are equal to the classes' annualized expense ratios of 0.98%, 1.68%, 1.68%, 1.18% and 0.68%, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year/366 (to reflect the one-half year period). - ------------------------------------------------------------------------------- 6 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO PORTFOLIO SUMMARY October 31, 2004 PORTFOLIO STATISTICS Net Assets ($mil): $452.1 SECURITY TYPE BREAKDOWN* [Pie Chart omitted] o 35.5% Mortgage-Backed Securities o 14.9% Corporate Debt Obligations o 14.1% U.S. Treasury o 3.4% Commercial Mortgage Backed Securities o 2.6% Asset Backed Securities o 0.8% Sovereign Debt Securities o 0.4% Collateralized Mortgage Obligations o 0.1% Yankee Bond o 28.2% Short-Term * All data is as of October 31, 2004. The Portfolio's security type breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 7 PORTFOLIO OF INVESTMENTS October 31, 2004 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- MORTGAGE BACKED SECURITIES-48.0% Federal National Mortgage Association-40.2% 3.125%, 7/15/06 $ 2,850 $ 2,870,893 3.25%, 6/28/06 8,330 8,338,581 3.41%, 8/30/07 8,785 8,790,447 4.50%, TBA 16,265 16,305,663 5.00%, TBA 16,885 16,821,681 5.00%, 4/25/14-2/01/34 12,070 12,115,742 5.25%, 8/01/12 4,465 4,669,551 5.50%, TBA 39,940 40,919,999 6.00%, TBA 29,405 30,480,106 6.00%, 2/01/17 1,817 1,905,067 6.50%, TBA 32,425 34,086,781 6.50%, 1/01/28-3/01/29 4,427 4,668,228 ------------ 181,972,739 Federal Home Loan Mortgage Corp.-4.1% 3.75%, 8/03/07 5,685 5,724,056 4.25%, 7/15/09 5,990 6,162,710 6.00%, TBA 6,510 6,739,881 ------------ 18,626,647 Government National Mortgage Association-2.9% 5.00%, TBA 8,920 8,945,083 6.00%, TBA 3,845 3,996,397 ------------ 12,941,480 Federal Home Loan Bank-0.8% 3.75%, 8/18/09 3,500 3,530,716 Total Mortgage Backed Securities (cost $216,038,773) 217,071,582 U.S. TREASURY SECURITIES-19.1% U.S. Treasury Notes-14.1% 2.50%, 9/30/06* 25,720 25,698,910 4.25%, 8/15/14* 10,410 10,593,799 3.50%, 8/15/09* 27,305 27,587,662 ------------ 63,880,371 U.S. Treasury Bonds-5.0% 5.375%, 2/15/31 4,685 5,088,533 8.75%, 5/15/17 2,870 4,078,987 10.75%, 8/15/05 10,900 11,625,962 11.25%, 2/15/15 1,000 1,598,477 ------------ 22,391,959 Total U.S. Treasury Securities (cost $86,025,040) 86,272,330 - ------------------------------------------------------------------------------- 8 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Portfolio of Investments Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- CORPORATE DEBT OBLIGATIONS-20.1% Aerospace & Defense-0.1% Boeing Capital Corp. 4.75%, 8/25/08 $ 365 $ 381,880 Automotive-1.3% Ford Motor Co. 7.45%, 7/16/31 425 413,902 Ford Motor Credit Co. 6.375%, 2/01/29 275 240,631 7.00%, 10/01/13* 505 533,307 7.375%, 2/01/11 1,630 1,768,216 General Motors Acceptance Corp. 5.625%, 5/15/09 778 785,617 6.875%, 9/15/11 840 874,427 General Motors Corp. 7.125%, 7/15/13 90 93,378 8.375%, 7/15/33 1,260 1,311,140 ------------ 6,020,618 Banking-2.1% Bank of America Corp. 6.25%, 4/15/12 305 340,377 Barclays Bank Plc pfd. (United Kingdom) 8.55%, 9/29/49(a) 905 1,114,551 Capital One Bank 6.50%, 6/13/13 290 318,460 CBA Capital Trust I pfd. 5.805%, 12/31/49(a) 630 658,211 J.P. Morgan Chase & Co. 6.75%, 2/01/11 1,390 1,568,251 Mizuho Financial Group (Cayman Islands) 5.79%, 4/15/14(a) 585 608,721 8.375%, 12/29/49 1,170 1,275,183 RBS Capital Trust I pfd. 4.709%, 12/29/49 1,475 1,443,111 RBS Capital Trust III pfd. 5.512%, 9/29/49 1,375 1,410,068 Suntrust Bank 1.91%, 6/02/09 800 799,840 ------------ 9,536,773 Broadcasting/Media-1.2% AOL Time Warner, Inc. 7.70%, 5/01/32 1,145 1,371,181 News America, Inc. 6.55%, 3/15/33* 1,070 1,151,179 - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 9 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Time Warner Entertainment Co. LP 8.375%, 3/15/23 $ 1,990 $ 2,436,647 WPP Finance (UK) Corp. (United Kingdom) 5.875%, 6/15/14(a) 570 587,911 ------------ 5,546,918 Cable-0.8% AT&T Broadband Corp. 9.455%, 11/15/22 655 899,118 Comcast Cable Communication, Inc. 6.875%, 6/15/09 1,905 2,131,129 Comcast Corp. 7.05%, 3/15/33 465 525,228 ------------ 3,555,475 Communications-1.7% British Telecommunications Plc (United Kingdom) 8.875%, 12/15/30 595 795,218 Deutsche Telekom International Finance BV (Netherlands) 8.75%, 6/15/30 445 587,206 Koninklijke (Royal) KPN NV (Netherlands) 8.00%, 10/01/10 555 664,192 SBC Communications, Inc. 5.10%, 9/15/14 695 699,834 5.625%, 6/15/16 170 175,795 5.875%, 8/15/12 295 318,570 Sprint Capital Corp. 8.75%, 3/15/32 2,045 2,679,588 Telecom Italia Capital (Italy) 4.00%, 1/15/10(a) 1,815 1,798,110 ------------ 7,718,513 Communications - Mobile-0.7% AT&T Wireless Services, Inc. 8.75%, 3/01/31 1,420 1,906,376 Telus Corp. (Canada) 7.50%, 6/01/07 990 1,087,788 ------------ 2,994,164 Conglomerate/Miscellaneous-0.3% Hutchison Whampoa International, Ltd (Cayman Islands) 7.45%, 11/24/33(a) 1,220 1,276,008 Consumer Manufacturing-0.1% Fortune Brands, Inc. 2.875%, 12/01/06 510 508,944 Energy-0.8% Amerada Hess Corp. 7.875%, 10/01/29 850 1,014,674 - ------------------------------------------------------------------------------- 10 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Conoco, Inc. 6.95%, 4/15/29 $ 855 $1,000,047 Valero Energy Corp. 7.50%, 4/15/32 1,150 1,375,405 ------------ 3,390,126 Financial-4.0% American General Finance Corp. 4.625%, 5/15/09 1,500 1,541,202 Berkshire Hathaway Finance Corp. 4.20%, 12/15/10 905 901,865 Capital One Financial Corp. 6.25%, 11/15/13 365 394,512 CIT Group, Inc. 1.94%, 5/18/07 630 629,810 Citigroup, Inc. 2.00%, 6/09/09 570 571,265 5.00%, 9/15/14(a) 879 891,830 Countrywide Home Loans, Inc. 4.00%, 3/22/11 1,135 1,105,887 Credit Suisse First Boston 5.50%, 8/15/13 780 817,942 Duke Capital LLC 5.668%, 8/15/14 640 662,707 General Electric Capital Corp. 1.979%, 6/22/07 3,630 3,630,773 Goldman Sachs Capital Trust I 6.345%, 2/15/34 920 937,624 Household Finance Corp. 6.50%, 11/15/08 1,505 1,661,178 7.00%, 5/15/12 595 687,401 MBNA Corp. 4.625%, 9/15/08 915 940,571 Morgan Stanley 4.75%, 4/01/14 1,240 1,214,744 Royal & Sun Alliance Insurance Group plc (United Kingdom) 8.95%, 10/15/29 640 806,903 The Goldman Sachs Group, Inc. 4.75%, 7/15/13 685 678,780 ------------ 18,074,994 Food/Beverages-0.8% Kraft Foods, Inc. 5.25%, 10/01/13 1,050 1,079,284 Pepsi Bottling Group, Inc. 7.00%, 3/01/29 1,950 2,336,568 ------------ 3,415,852 Health Care-0.1% Humana, Inc. 6.30%, 8/01/18 635 653,788 - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 11 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Industrial-0.1% General Electric Co. 5.00%, 2/01/13 $ 590 $ 611,581 Insurance-1.2% Assurant, Inc. 5.625%, 2/15/14 660 680,465 Liberty Mutual Group 5.75%, 3/15/14(a) 640 627,264 Mangrove Bay Pass-Through Trust pfd. 6.102%, 7/15/33(a) 1,780 1,822,239 MetLife, Inc. 5.00%, 11/24/13 740 745,376 Zurich Capital Trust I 8.376%, 6/01/37(a) 1,485 1,683,586 ------------ 5,558,930 Paper/Packaging-0.7% International Paper Co. 5.30%, 4/01/15 900 903,528 Weyerhaeuser Co. 7.375%, 3/15/32 2,010 2,344,649 ------------ 3,248,177 Petroleum Products-0.2% Amerada Hess Corp. 7.125%, 3/15/33 835 924,246 Public Utilities - Electric & Gas-2.0% Carolina Power & Light Co. 6.50%, 7/15/12 1,005 1,120,038 CenterPoint Energy, Inc. 6.85%, 6/01/15 170 187,795 Consumers Energy Co. 4.25%, 4/15/08 445 453,140 FirstEnergy Corp. 7.375%, 11/15/31 2,715 3,093,498 MidAmerican Energy Holdings Co. 5.875%, 10/01/12 395 422,685 Nisource Finance Corp. 7.875%, 11/15/10 590 700,348 Pacific Gas & Electric Co. 6.05%, 3/01/34 1,105 1,138,071 Public Service Company of Colorado 7.875%, 10/01/12 450 550,833 TXU Australia Holdings Pty, Ltd. (Australia) 6.15%, 11/15/13(a) 290 317,772 Union Electric Co. 5.10%, 10/01/19 290 291,523 Xcel Energy, Inc. 7.00%, 12/01/10 650 741,099 ------------ 9,016,802 - ------------------------------------------------------------------------------- 12 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Public Utilities - Telephone-0.4% BellSouth Corp. 4.20%, 9/15/09 $ 515 $ 519,947 Telecom Italia Capital (Italy) 6.375%, 11/15/33(a) 1,235 1,281,771 ------------ 1,801,718 Savings and Loan-0.5% Washington Mutual Finance Corp. 6.875%, 5/15/11 1,945 2,221,974 Services-0.6% Pershing Road Development Co. LLC 2.19%, 9/01/26(a) 1,545 1,545,000 Waste Management, Inc. 6.875%, 5/15/09 960 1,076,338 ------------ 2,621,338 Supermarket/Drug-0.3% Albertsons, Inc. 7.45%, 8/01/29 625 719,610 Safeway Inc. 4.95%, 8/16/10 740 757,222 ------------ 1,476,832 Technology-0.1% IBM Corp. 4.375%, 6/01/09 285 291,945 Total Corporate Debt Obligations (cost $86,354,889) 90,847,596 COMMERCIAL MORTGAGE BACKED SECURITIES-4.5% Banc America Commercial Mortgage, Inc. Series 2004-1, Class A2 4.037%, 11/10/39 1,495 1,496,719 Series 2004-4, Class A3 4.128%, 7/10/42 1,400 1,406,986 Series 2004-1, Class A4 4.76%, 11/10/39 2,055 2,076,393 Series 2004-3, Class A5 5.306%, 6/10/39 2,210 2,340,920 Bear Stearns Commercial Mortgage Securities, Inc. Series 2004-PWR5, Class A5 4.978%, 7/11/42 2,155 2,201,074 CS First Boston Mortgage Securities Corp. Series 2003-CK2, Class A2 3.861%, 3/15/36 1,215 1,222,472 GE Capital Commercial Mortgage Corp. Series 2004-C3, Class A4 5.189%, 7/10/39 1,545 1,606,553 - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 13 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Greenwich Capital Commercial Funding Corp. Series 2003-C1, Class A4 4.111%, 7/05/35 $ 1,490 $1,446,298 LB-UBS Commercial Mortgage Trust Series 2004-C7, Class A2 3.992%, 10/15/29 1,325 1,330,817 Merrill Lynch Mortgage Trust Series 2004-KEY2, Class A2 4.166%, 8/12/39 1,165 1,173,784 Morgan Stanley Capital I Inc. Series 2004-T13, Class A2 3.94%, 9/13/45 1,400 1,397,368 Series 2003-IQ6, Class A4 4.97%, 12/15/41 1,085 1,113,362 Series 2004-HQ4, Class A7 4.97%, 4/14/40 1,605 1,640,759 Total Commercial Mortgage Backed Securities (cost $20,017,576) 20,453,505 ASSET BACKED SECURITIES-3.5% Ameriquest Mortgage Securities, Inc. Series 2004-R4, Class A2 2.042%, 6/25/34 992 991,682 Centex Home Equity Loan Trust Series 2003-C, Class AV 2.232%, 9/25/33 800 800,665 DLJ Commercial Mortgage Corp. Series 2000-CF1, Class A1B 7.62%, 6/10/33 2,430 2,826,552 Equity One Abs, Inc. Series 2004-3, Class AF1 2.092%, 7/25/34 947 946,438 Ford Credit Floorplan Master Owner Trust Series 2004-1, Class A 1.80%, 7/15/09 1,460 1,459,766 Long Beach Mortgage Loan Trust Series 2004-4, Class 2A2 2.112%, 10/25/34 2,556 2,555,346 Merrill Lynch Mortgage Investors, Inc. Series 2004-SL1, Class A 2.192%, 4/25/35 557 557,384 Residential Asset Mortgage Products, Inc. Series 2004-RS2, Class AI1 2.063%, 1/25/24 574 573,569 Series 2004-RS6, Class AI1 2.082%, 8/25/22 651 649,981 Series 2004-RS7, Class AI1 2.102%, 8/25/22 27 26,609 Series 2004-SP1, Class AI1 2.112%, 6/25/13 607 606,870 - ------------------------------------------------------------------------------- 14 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Residential Asset Securities Corp. Series 2004-KS7, Class AI1 2.082%, 10/25/21 $ 768 $ 767,541 Series 2003-KS3, Class A2 2.232%, 5/25/33 1,247 1,247,866 Series 2002-KS7, Class A2 2.302%, 11/25/32 1,026 1,028,184 Residential Funding Mortgage Securities, Inc. Series 2004-HS2, Class AI1 2.082%, 12/25/18 863 862,401 Total Asset Backed Securities (cost $15,881,310) 15,900,854 SOVEREIGN DEBT SECURITIES-1.1% United Mexican States 4.625%, 10/08/08 2,540 2,581,910 7.50%, 1/14/12 2,075 2,357,200 Total Sovereign Debt Securities (cost $4,735,160) 4,939,110 COLLATERALIZED MORTGAGE OBLIGATIONS-0.6% Countrywide Home Loans Series 2003-49, Class A1 1.642%, 12/19/33 692 689,859 Deutsche Mortgage Securities, Inc. Series 2004-4, Class 1A1 2.142%, 4/25/34 736 736,008 Washington Mutual Finance Corp. Series 2004-AR10, Class A2C 2.192%, 7/25/44 1,240 1,239,668 Total Collateralized Mortgage Obligations (cost $2,666,918) 2,665,535 YANKEE BOND-0.1% British Sky Broadcasting Group plc (United Kingdom) 6.875%, 2/23/09 (cost $537,991) 490 544,356 SHORT-TERM INVESTMENTS-38.1% U.S. Treasury Bill-32.9% Zero coupon, 12/23/04* 149,235 148,894,708 - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 15 Shares or Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Time Deposit-5.2% State Street Euro Dollar 1.10%, 11/01/04 $23,210 $ 23,210,000 Total Short-Term Investments (amortized cost $172,104,708) 172,104,708 Total Investments Before Security Lending Collateral-135.1% (cost $604,362,365) 610,799,576 INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-38.8% Short-Term Investments Concord 1.80%, 11/09/04 11,247 11,235,191 Federal Home Loan Bank 1.27%-1.35%, 4/26/05-4/29/05 17,500 17,500,000 Gotham Funding 1.82-2.26%, 11/01/04-11/15/04 131,800 131,667,257 Morgan Stanley 1.89%, 4/19/04 10,000 10,000,000 Sigma Finance 1.22%, 12/03/04 5,000 5,000,000 UBS Private Money Market Fund, LLC 1.70% 33,976 33,976 Total Investment of Cash Collateral for Securities Loaned (cost $175,436,424) 175,436,424 Total Investments-173.9% (cost $779,798,789) 786,236,000 Other assets less liabilities-(73.9%) (334,109,391) Net Assets-100% $ 452,126,609 * Represents entire or partial securities out on loan. See Note E for securities lending information. (a) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 2004, the aggregate market value of these securities amounted to $14,212,974 or 3.1% of net assets. Glossary of Terms: TBA - (To Be Announced) - Securities are purchased on a forward commitment with an appropriate principal amount (generally +/-1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. See notes to financial statements. - ------------------------------------------------------------------------------- 16 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO STATEMENT OF ASSETS & LIABILITIES October 31, 2004 Assets Investments in securities, at value (cost $779,798,789--including investment of cash collateral for securities loaned of $175,436,424) $ 786,236,000(a) Cash 598 Receivable for investment securities sold 23,758,105 Interest receivable 2,902,756 Receivable for capital stock sold 281,370 Total assets 813,178,829 Liabilities Payable for collateral on securities loaned 175,436,424 Payable for investment securities purchased 184,116,151 Payable for capital stock redeemed 564,050 Dividends payable 448,269 Advisory fee payable 149,331 Transfer Agent fee payable 135,086 Distribution fee payable 87,330 Accrued expenses 115,579 Total liabilities 361,052,220 Net Assets $ 452,126,609 Composition of Net Assets Capital stock, at par $ 43,373 Additional paid-in capital 450,777,056 Distributions in excess of net investment income (2,348,644) Accumulated net realized loss on investment transactions (2,782,387) Net unrealized appreciation of investments 6,437,211 $ 452,126,609 Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ($56,778,246 / 5,444,517 shares of capital stock issued and outstanding) $10.43 Sales charge--4.25% of public offering price .46 Maximum offering price $10.89 Class B Shares Net asset value and offering price per share ($66,634,695 / 6,394,890 shares of capital stock issued and outstanding) $10.42 Class C Shares Net asset value and offering price per share ($19,007,452 / 1,827,100 shares of capital stock issued and outstanding) $10.40 Class R Shares Net asset value, redemption and offering price per share ($15,971 / 1,532 shares of capital stock issued and outstanding) $10.42 Advisor Class Shares Net asset value, redemption and offering price per share ($309,690,245 / 29,704,617 shares of capital stock issued and outstanding) $10.43 (a) Includes securities on loan with a value of $171,279,461 (see Note E). See notes to financial statements. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 17 STATEMENT OF OPERATIONS Year Ended October 31, 2004 Investment Income Interest $13,828,666 Income from dollar rolls 4,775,815 $18,604,481 Expenses Advisory fee 2,379,225 Distribution fee--Class A 178,297 Distribution fee--Class B 783,892 Distribution fee--Class C 214,801 Distribution fee--Class R 66 Transfer agency 1,317,466 Custodian 214,904 Audit and legal 114,905 Administrative 89,000 Registration fees 79,053 Printing 71,622 Directors' fees 20,888 Miscellaneous 21,839 Total expenses 5,485,958 Less: expenses waived and reimbursed by the Adviser (see Note B) (1,283,975) Less: expense offset arrangement (see Note B) (99) Net expenses 4,201,884 Net investment income 14,402,597 Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions Net realized gain (loss) on: Investment transactions 3,269,090 Foreign currency transactions (43,183) Net change in unrealized appreciation/depreciation of investments 2,816,634 Net gain on investment and foreign currency transactions 6,042,541 Net Increase in Net Assets from Operations $20,445,138 See notes to financial statements. - ------------------------------------------------------------------------------- 18 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS July 1, 2003 Year Ended to Year Ended October 31, October 31, June 30, 2004 2003* 2003 ------------ ------------- ----------- Increase (Decrease) in Net Assets from Operations Net investment income $14,402,597 $3,911,867 $11,975,914 Net realized gain (loss) on investment and foreign currency transactions 3,225,907 (3,807,440) 14,959,621 Net change in unrealized appreciation/depreciation of investments 2,816,634 (6,091,822) 8,812,869 Net increase(decrease) in net assets from operations 20,445,138 (5,987,395) 35,748,404 Dividends and Distributions to Shareholders from Net investment income Class A (2,175,102) (896,295) (2,559,355) Class B (2,309,764) (1,015,450) (2,981,723) Class C (633,482) (239,505) (803,086) Class R (450) -0- -0- Advisor Class (11,331,550) (3,303,792) (8,978,394) Net realized gain on investment transactions Class A (1,348,611) -0- -0- Class B (1,909,068) -0- -0- Class C (511,130) -0- -0- Class R (214) -0- -0- Advisor Class (5,670,270) -0- -0- Capital Stock Transactions Net increase (decrease) 8,556,559 (1,912,603) 145,535,331 Total increase (decrease) 3,112,056 (13,355,040) 165,961,177 Net Assets Beginning of period 449,014,553 462,369,593 296,408,416 End of period (including distributions in excess of net investment income of ($2,348,644), ($1,896,258) and ($1,298,018), respectively) $452,126,609 $449,014,553 $462,369,593 * The Portfolio changed its fiscal year end from June 30 to October 31. See notes to financial statements. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 19 NOTES TO FINANCIAL STATEMENTS October 31, 2004 NOTE A Significant Accounting Policies AllianceBernstein Bond Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund, which is a Maryland corporation, operates as a series company currently comprised of three portfolios: the Corporate Bond Portfolio, the Quality Bond Portfolio and the U.S. Government Portfolio. Each series is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the Quality Bond Portfolio. The Quality Bond Portfolio (the "Portfolio") offers Class A, Class B, Class C, Class R and Advisor Class shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 3% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares six years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R shares are sold without an initial or contingent deferred sales charge and are offered to certain group retirement plans. Advisor Class shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. Advisor Class shares are offered to investors participating in fee-based programs and to certain retirement plan accounts. All five classes of shares have identical voting, dividend, liquidation and other rights, except that each class bears different distribution expenses and has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Additional information about some of the items discussed in these Notes to Financial Statements is contained in the Fund's Statement of Additional Information, which is available upon request. The following is a summary of significant accounting policies followed by the Portfolio. 1. Security Valuation Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at "fair value" as determined in accordance with procedures established by and under the general supervision of the Fund's Board of Directors. In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities ex- - ------------------------------------------------------------------------------- 20 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO change or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities not listed on an exchange but traded on The NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market, (OTC) (but excluding securities traded on NASDAQ) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the "Adviser") may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer's financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because, most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. 2. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward exchange currency contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 21 and expenses are translated into U.S. dollars at the rates of exchange prevailing when accrued. Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities. 3. Taxes It is the policy of the Portfolio to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. The fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned. 4. Investment Income and Investment Transactions Interest income is accrued daily. Investment transactions are accounted for on the trade date securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Portfolio accretes discounts as adjustments to interest income. Additionally, the Portfolio amortizes premiums on debt securities for financial statement reporting purposes only. 5. Income and Expenses All income earned and expenses incurred by the Portfolio are borne on a pro rata basis by each settled class of shares, based on proportionate interest in the Portfolio represented by the net assets of such class, except that the Portfolio's Class B and Class C shares bear higher distribution and transfer agent fees than Class A, Class R and Advisor Class shares. Advisor Class shares have no distribution fees. 6. Dividends and Distributions Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined - ------------------------------------------------------------------------------- 22 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. 7. Change of Fiscal Year End During 2003, the Portfolio changed its fiscal year end from June 30 to October 31. Accordingly, the statement of changes in net assets and financial highlights include the period from July 1, 2003 to October 31, 2003. NOTE B Advisory Fee and Other Transactions with Affiliates Until September 6, 2004, under the terms of an investment advisory agreement, the Fund paid the Adviser an advisory fee at an annual rate of .55% of the Portfolio's average daily net assets. Effective September 7, 2004, the terms of the investment advisory agreement were amended so that the advisory fee was reduced to an annual rate of .45% of the first $2.5 billion, .40% of the next $2.5 billion and .35% in excess of $5 billion, of the Portfolio's average daily net assets. The fee is accrued daily and paid monthly. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis .98%, 1.68%, 1.68%, 1.18% and .68% of the daily average net assets for the Class A, Class B, Class C, Class R and Advisor Class shares, respectively. For the year ended October 31, 2004, such waiver amounted to $891,919. Effective January 1, 2004 through September 6, 2004, in contemplation of the final agreement with the Office of New York Attorney General ("NYAG"), the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate discussed above. Through September 6, 2004 such waiver amounted to $303,056. For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended October 31, 2004, the Adviser voluntarily agreed to waive its fees for services. Such waiver amounted to $89,000. The Portfolio compensates Alliance Global Investor Services, Inc. (AGIS), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Portfolio. Such compensation amounted to $1,082,788 for the year ended October 31, 2004. For the year ended October 31, 2004, the Portfolio's expenses were reduced by $99 under an expense offset arrangement with AGIS. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 23 AllianceBernstein Investment Research and Management, Inc., a wholly-owned subsidiary of the Adviser, serves as the distributor of the Portfolio's shares. The Distributor has advised the Portfolio that it has retained front-end sales charges of $4,297 from the sale of Class A shares and received $3,565, $171,225 and $3,406, in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the year ended October 31, 2004. NOTE C Distribution Services Agreement The Portfolio has adopted a Distribution Services Agreement (the "Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Portfolio pays distribution and servicing fees to the Distributor at an annual rate of up to .30 of 1% of the Portfolio's average daily net assets attributable to Class A shares, .50 of 1% of the Portfolio's average daily net assets attributable to Class R shares, and 1% of the average daily net assets attributable to both Class B and Class C shares. There are no distribution and servicing fees on the Advisor Class shares. The fees are accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has advised the Portfolio that it has incurred expenses in excess of the distribution costs reimbursed by the Portfolio in the amount of $446,001 and $374,638 for Class B and Class C shares, respectively. Such costs may be recovered from the Portfolio in future periods so long as the Agreement is in effect. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of the Portfolio's shares. NOTE D Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the period ended October 31, 2004, were as follows: Purchases Sales --------------- -------------- Investment securities (excluding U.S. government securities) $ 164,219,214 $ 228,971,814 U.S. government securities 2,622,209,636 2,560,202,150 The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows: Cost $ 781,936,438 Gross unrealized appreciation $ 6,187,639 Gross unrealized depreciation (1,888,077) Net unrealized appreciation $ 4,299,562 - ------------------------------------------------------------------------------- 24 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO 1. Forward Exchange Currency Contracts The Portfolio may enter into forward exchange currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to hedge certain firm purchase and sale commitments denominated in foreign currencies and for investment purposes. A forward exchange currency contract is a commitment to purchase or sell a foreign currency on a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as net unrealized appreciation and depreciation by the Portfolio. The Portfolio's custodian will place and maintain cash not available for investment or other liquid assets in a separate account of the Portfolio having a value at least equal to the aggregate amount of the Portfolio's commitments under forward exchange currency contracts entered into with respect to position hedges. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars, reflects the total exposure the Portfolio has in that particular currency contract. 2. Dollar Rolls The Portfolio may enter into dollar rolls. Dollar rolls involve sales by the Portfolio of securities for delivery in the current month and the Portfolio's simultaneously contracting to repurchase substantially similar (same type and coupon) securities on a specified future date. During the roll period, the Portfolio forgoes principal and interest paid on the securities. The Portfolio is compensated by the difference between the current sales price and the lower forward price for the future purchase (often referred to as the "drop") as well as by the interest earned on the cash proceeds of the initial sale. Dollar rolls involve the risk that the market value of the securities the Portfolio is obligated to repurchase under the agreement may decline below the repurchase price. Dollar rolls are speculative techniques and may be considered to be borrowings by the Portfolio. NOTE E Securities Lending The Portfolio has entered into a securities lending agreement with AG Edwards & Sons, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent, on behalf of the Portfolio, administers the lending of portfolio securities to certain broker-dealers. In return, the Portfolio receives fee income from the lending transactions or it retains a portion of interest on the investment of any cash received as collateral. The Portfolio also continues to receive dividends or interest on the securities loaned. Unrealized gain or loss on the value of the securities loaned that may occur during the term of the loan will be reflected - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 25 in the accounts of the Portfolio. All loans are continuously secured by collateral exceeding the value of the securities loaned. All collateral consists of either cash or U.S. government securities. The Lending Agent may invest the cash collateral received in accordance with the investment restrictions of the Portfolio in one or more of the following investments: U.S. government or U.S. government agency obligations, bank obligations, corporate debt obligations, asset-backed securities, investment funds, structured products, repurchase agreements and an eligible money market fund. The Lending Agent will indemnify the Portfolio for any loss resulting from a borrower's failure to return a loaned security when due. As of October 31, 2004, the Portfolio had loaned securities with a value of $171,279,461 and received cash collateral which was invested in short-term securities valued at $175,436,424 as included in the accompanying portfolio of investments. For the year ended October 31, 2004, the Portfolio earned fee income of $134,853 which is included in the accompanying statement of operations. NOTE F Capital Stock There are 15,000,000,000 shares of $.001 par value capital stock authorized, divided into five classes, designated Class A, Class B, Class C, Class R and Advisor Class shares. Each class consists of 3,000,000,000 authorized shares. Transactions in capital stock were as follows: Shares ------------------------------------------ Year Ended July 1, 2003 to Year Ended October 31, October 31, June 30, 2004 2003(a) 2003 ------------------------------------------ Class A Shares sold 1,375,400 1,188,424 7,320,478 Shares issued in reinvestment of dividends and distributions 296,232 69,498 188,816 Shares converted from Class B 253,309 72,114 183,885 Shares redeemed (2,942,203) (1,944,017) (4,991,928) Net increase (decrease) (1,017,262) (613,981) 2,701,251 Class B Shares sold 1,030,452 900,731 10,491,815 Shares issued in reinvestment of dividends and distributions 294,602 65,907 187,182 Shares converted to Class A (253,544) (73,115) (183,857) Shares redeemed (3,782,457) (2,261,947) (4,937,099) Net increase (decrease) (2,710,947) (1,368,424) 5,558,041 Class C Shares sold 274,647 748,714 3,020,966 Shares issued in reinvestment of dividends and distributions 51,557 12,921 40,953 Shares redeemed (970,702) (740,569) (2,189,012) Net increase (decrease) (644,498) 21,066 872,907 - ------------------------------------------------------------------------------- 26 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Shares ------------------------------------------ Year Ended July 1, 2003 to Year Ended October 31, October 31, June 30, 2004 2003(a) 2003 ------------------------------------------ Advisor Class Shares sold 4,711,221 1,716,510 6,206,900 Shares issued in reinvestment of dividends and distributions 1,632,750 305,930 854,656 Shares redeemed (1,157,388) (257,118) (2,365,708) Net increase 5,186,583 1,765,322 4,695,848 \ November 3, 2003(b) to October 31, 2004 ------------ Class R Shares sold 1,522 Shares issued in reinvestment of dividends and distributions 10 Net increase 1,532 (a) The portfolio changed its fiscal year end from June 30 to October 31. (b) Commencement of distributions. Amount ------------------------------------------ Year Ended July 1, 2003 to Year Ended October 31, October 31, June 30, 2004 2003(a) 2003 ------------------------------------------ Class A Shares sold $ 14,301,333 $ 12,601,915 $ 77,100,650 Shares issued in reinvestment of dividends and distributions 3,081,949 733,739 1,997,352 Shares converted from Class B 2,633,099 771,300 1,956,325 Shares redeemed (30,605,160) (20,507,158) (52,684,749) Net increase (decrease) $(10,588,779) $ (6,400,204) $ 28,369,578 Class B Shares sold $ 10,726,082 $ 9,506,335 $110,463,465 Shares issued in reinvestment of dividends and distributions 3,062,146 695,223 1,979,554 Shares converted to Class A (2,633,099) (771,300) (1,956,325) Shares redeemed (39,315,080) (23,810,699) (52,323,161) Net increase (decrease) $(28,159,951) $(14,380,441) $ 58,163,533 Class C Shares sold $ 2,862,489 $ 7,877,594 $ 31,610,879 Shares issued in reinvestment of dividends and distributions 534,916 136,077 431,766 Shares redeemed (10,085,462) (7,783,898) (22,969,541) Net increase (decrease) $ (6,688,057) $ 229,773 $ 9,073,104 - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 27 Amount ------------------------------------------ Year Ended July 1, 2003 to Year Ended October 31, October 31, June 30, 2004 2003(a) 2003 ------------------------------------------ Advisor Class Shares sold $49,011,188 $18,114,331 $65,432,463 Shares issued in reinvestment of dividends and distributions 16,972,727 3,228,730 9,029,421 Shares redeemed (12,006,589) (2,704,792) (24,532,768) Net increase $53,977,326 $18,638,269 $49,929,116 November 3, 2003(b) to October 31, 2004 ------------ Class R Shares sold $15,915 Shares issued in reinvestment of dividends and distributions 105 Net increase $16,020 (a) The portfolio changed its fiscal year end from June 30 to October 31. (b) Commencement of distributions. NOTE G Risks Involved in Investing in the Portfolio Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes in interest rates will affect the value of the Fund's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Fund's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. Indemnification Risk--In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 million revolving credit facility (the "Facility") - ------------------------------------------------------------------------------- 28 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO intended to provide short-term financing if necessary, in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended October 31, 2004. NOTE I Distributions to Shareholders The tax character of distributions paid during the fiscal years ended October 31, 2004, October 31, 2003, and June 30, 2003 were as follows: Year Ended July 1, 2003 to Year Ended October 31, October 31, June 30, 2004 2003* 2003 ------------------------------------------ Distributions paid from: Ordinary income $23,211,211 $5,455,042 $15,322,558 Net long-term capital gains 2,678,430 -0- -0- Total taxable distributions 25,889,641 5,455,042 15,322,558 Total distributions paid $25,889,641 $5,455,042 $15,322,558 As of October 31, 2004, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses (2,545,113)(a) Unrealized appreciation/(depreciation) 4,299,562(b) Total accumulated earnings/(deficit) $ 1,754,449(c) (a) On October 31, 2004, the Fund had a net capital loss carryforward for federal income tax purposes of $2,545,113 all of which expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the year ended October 31, 2004, the Fund utilized $1,695,749 in carryforward losses. (b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between book and tax amortization methods for premium and market discount. (c) The difference between book-basis and tax-basis components of accumulated earnings/(deficit) is attributable primarily to dividends payable. * The Portfolio changed its fiscal year end from June to October 31. During the current fiscal year, permanent differences, primarily due to distributions in excess of net investment income, the tax treatment of foreign currency gains and losses, tax character of distributions, tax character of paydown losses and the tax treatment of bond premium, resulted in a net decrease in distributions in excess of net investment income and a net increase in accumulated net realized gain on investment and foreign currency transactions and a decrease in additional paid in capital. This reclassification had no effect on net assets. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 29 NOTE J Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized in an Assurrance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds until December 31, 2008; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order and the NYAG Order contemplate that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation of the NYAG Order and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. On September 7, 2004, the Fund's investment advisory agreement was amended to reflect the reduced advisory fee. For more information on this waiver and amendment to the Fund's investment advisory agreement, please see "Advisory Fee and Other Transactions with Affiliates" above. - ------------------------------------------------------------------------------- 30 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. The lawsuits are now pending in the United States District Court for the District of Maryland pursuant to a ruling by the Judicial Panel on Multidistrict Litigation transferring and centralizing all of the mutual fund cases involving market and late trading in the District of Maryland. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 31 The Adviser and approximately twelve other investment management firms were publicly mentioned in connection with the settlement by the SEC of charges that an unaffiliated broker/dealer violated federal securities laws relating to its receipt of compensation for selling specific mutual funds and the disclosure of such compensation. The SEC has indicated publicly that, among other things, it is considering enforcement action in connection with mutual funds' disclosure of such arrangements and in connection with the practice of considering mutual fund sales in the direction of brokerage commissions from fund portfolio transactions. The SEC has issued subpoenas to the Adviser in connection with this matter and the Adviser has provided documents and other information to the SEC and is cooperating fully with its investigation. On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P., Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by an alleged shareholder of an AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages and punitive damages, rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. Since June 22, 2004, numerous additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants, and others may be filed. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the Fund's shares or other adverse consequences to the Fund. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to the Fund. - ------------------------------------------------------------------------------- 32 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A ------------------------------------------------------------------------------ Year July 1, July 1, Ended 2003 to Year Ended June 30, 1999(c) to October 31, October 31, ------------------------------------ June 30, 2004 2003(a) 2003 2002(b) 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.56 $10.82 $10.25 $10.22 $9.85 $10.00 Income From Investment Operations Net investment income(d)(e) .33 .12 .33 .46 .55 .60 Net realized and unrealized gain (loss) on investment and foreign currency transactions .15 (.25) .66 .17 .42 (.21) Net increase (decrease) in net asset value from operations .48 (.13) .99 .63 .97 .39 Less: Dividends and Distributions Dividends from net investment income (.38) (.13) (.42) (.46) (.55) (.54) Distributions in excess of net investment income -0- -0- -0- (.10) (.04) -0- Distributions from net realized gain on investment transactions (.23) -0- -0- (.01) (.01) -0- Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.03) -0- -0- Total dividends and distributions (.61) (.13) (.42) (.60) (.60) (.54) Net asset value, end of period $10.43 $10.56 $10.82 $10.25 $10.22 $9.85 Total Return Total investment return based on net asset value(f) 4.66% (1.20)% 9.87% 6.23% 10.09% 4.40% Ratios/Supplemental Data Net assets, end of period (000's omitted) $56,778 $68,213 $76,565 $44,852 $20,068 $5,071 Ratio to average net assets of: Expenses, net of waivers/ reimbursements .98% .98%(g) .98% .98% .98% .98%(g) Expenses, before waivers/ reimbursements 1.26% 1.33%(g) 1.32% 1.48% 2.85% 13.10%(g) Net investment income(e) 3.21% 2.60%(g) 3.08% 4.39% 5.49% 5.96%(g) Portfolio turnover rate 658% 199% 867% 573% 385% 215%
See footnote summary on page 38. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 33 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B ------------------------------------------------------------------------------ Year July 1, July 1, Ended 2003 to Year Ended June 30, 1999(c) to October 31, October 31, ------------------------------------ June 30, 2004 2003(a) 2003 2002(b) 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.55 $10.81 $10.24 $10.21 $9.84 $10.00 Income From Investment Operations Net investment income(d)(e) .27 .09 .26 .38 .47 .50 Net realized and unrealized gain (loss) on investment and foreign currency transactions .14 (.25) .66 .16 .43 (.18) Net increase (decrease) in net asset value from operations .41 (.16) .92 .54 .90 .32 Less: Dividends and Distributions Dividends from net investment income (.31) (.10) (.35) (.38) (.47) (.48) Distributions in excess of net investment income -0- -0- -0- (.09) (.05) -0- Distributions from net realized gain on investment transactions (.23) -0- -0- (.01) (.01) -0- Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.03) -0- -0- Total dividends and distributions (.54) (.10) (.35) (.51) (.53) (.48) Net asset value, end of period $10.42 $10.55 $10.81 $10.24 $10.21 $9.84 Total Return Total investment return based on net asset value(f) 3.93% (1.44)% 9.12% 5.52% 9.34% 3.56% Ratios/Supplemental Data Net assets, end of period (000's omitted) $66,635 $96,033 $113,233 $50,354 $13,960 $1,007 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.68% 1.68%(g) 1.68% 1.68% 1.68% 1.68%(g) Expenses, before waivers/ reimbursements 2.00% 2.06%(g) 2.05% 2.19% 3.36% 11.29%(g) Net investment income(e) 2.59% 2.01%(g) 2.41% 3.70% 4.82% 5.32%(g) Portfolio turnover rate 658% 199% 867% 573% 385% 215%
See footnote summary on page 38. - ------------------------------------------------------------------------------- 34 o ALLIANCEBERNSTEIN Bond Fund Quality Bond Portfolio Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C ------------------------------------------------------------------------------ Year July 1, July 1, Ended 2003 to Year Ended June 30, 1999(c) to October 31, October 31, ------------------------------------- June 30, 2004 2003(a) 2003 2002(b) 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.53 $10.79 $10.23 $10.19 $9.83 $10.00 Income From Investment Operations Net investment income(d)(e) .27 .09 .26 .38 .48 .51 Net realized and unrealized gain (loss) on investment and foreign currency transactions .14 (.25) .65 .17 .41 (.20) Net increase (decrease) in net asset value from operations .41 (.16) .91 .55 .89 .31 Less: Dividends and Distributions Dividends from net investment income (.31) (.10) (.35) (.38) (.48) (.48) Distributions in excess of net investment income -0- -0- -0- (.09) (.04) -0- Distributions from net realized gain on investment transactions (.23) -0- -0- (.01) (.01) -0- Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.03) -0- -0- Total dividends and distributions (.54) (.10) (.35) (.51) (.53) (.48) Net asset value, end of period $10.40 $10.53 $10.79 $10.23 $10.19 $9.83 Total Return Total investment return based on net asset value(f) 3.93% (1.44)% 9.03% 5.63% 9.25% 3.47% Ratios/Supplemental Data Net assets, end of period (000's omitted) $19,008 $26,021 $26,445 $16,131 $4,315 $514 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.68% 1.68%(g) 1.68% 1.68% 1.68% 1.68%(g) Expenses, before waivers/ reimbursements 1.99% 2.06%(g) 2.03% 2.19% 3.42% 11.75%(g) Net investment income(e) 2.60% 2.03%(g) 2.41% 3.71% 4.88% 5.35%(g) Portfolio turnover rate 658% 199% 867% 573% 385% 215%
See footnote summary on page 38. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 35 Selected Data For A Share Of Capital Stock Outstanding Throughout The Period Class R ------------- November 3, 2003(h) to October 31, 2004 ------------- Net asset value, beginning of period $10.53 Income From Investment Operations Net investment income(d)(e) .33 Net realized and unrealized gain on investment transactions .15 Net increase in net asset value from operations .48 Less: Dividends and Distributions Dividends from net investment income (.36) Distributions from net realized gain on investment transactions (.23) Total dividends and distributions (.59) Net asset value, end of period $10.42 Total Return Total investment return based based on net asset value(f) 4.63% Ratios/Supplemental Data Net assets, end of period (000's omitted) $16 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.18%(g) Expenses, before waivers/reimbursements 1.45%(g) Net investment income 2.98%(e)(g) Portfolio turnover rate 658% See footnote summary on page 38. - ------------------------------------------------------------------------------- 36 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class --------------------------------------------------------------- Year July 1, July 1, Ended 2003 to Year Ended June 30, 1999(c) to October 31, October 31, ----------------------- June 30, 2004 2003(a) 2003 2002(b) 2001 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.55 $10.82 $10.25 $10.22 $9.97 Income From Investment Operations Net investment income(d)(e) .36 .13 .36 .48 .42 Net realized and unrealized gain (loss) on investment and foreign currency transactions .16 (.26) .66 .18 .30 Net increase (decrease) in net asset value from operations .52 (.13) 1.02 .66 .72 Less: Dividends and Distributions Dividends from net investment income (.41) (.14) (.45) (.48) (.42) Distributions in excess of net investment income -0- -0- -0- (.11) (.04) Distributions from net realized gain on investment transactions (.23) -0- -0- (.01) (.01) Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.03) -0- Total dividends and distributions (.64) (.14) (.45) (.63) (.47) Net asset value, end of period $10.43 $10.55 $10.82 $10.25 $10.22 Total Return Total investment return based on net asset value(f) 5.08% (1.19)% 10.20% 6.57% 7.28% Ratios/Supplemental Data Net assets, end of period (000's omitted) $309,690 $258,747 $246,127 $185,071 $27,420 Ratio to average net assets of: Expenses, net of waivers/ reimbursements .68% .68%(g) .68% .68% .68%(g) Expenses, before waivers/ reimbursements .96% 1.03%(g) 1.20% 1.20% 2.29%(g) Net investment income(e) 3.47% 2.87%(g) 3.39% 4.69% 5.89%(g) Portfolio turnover rate 658% 199% 867% 573% 385%
See footnote summary on page 38. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 37 (a) The Portfolio changed its fiscal year end from June 30 to October 31. (b) As required, effective July 1, 2001, the Portfolio has adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing premium on debt securities for financial statement reporting purposes only. The effect of this change for the year ended June 30, 2002 was to decrease net investment income per share by $.05, increase net realized and unrealized gain on investments per share by $.05 for Class A, B and C, respectively, and by $.06 for the Advisor Class, and decrease the ratio of net investment income to average net assets from 4.93% to 4.39% for Class A, from 4.24% to 3.70% for Class B, from 4.25% to 3.71% for Class C and from 5.24% to 4.69% for Advisor Class. Per share, ratios and supplemental data for periods prior to July 1, 2001 have not been restated to reflect this change in presentation. (c) Commencement of operations. (d) Based on average shares outstanding. (e) Net of fees waived and expenses reimbursed by the Adviser. (f) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total investment return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. (g) Annualized. (h) Commencement of distribution. - ------------------------------------------------------------------------------- 38 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of AllianceBernstein Bond Fund, Inc. Quality Bond Portfolio We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Quality Bond Portfolio (the "Portfolio") one of the portfolios constituting the AllianceBernstein Bond Fund, Inc., as of October 31, 2004, and the related statement of operations for the year then ended, the statement of changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with standards of the Public Company Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2004, by correspondence with the custodian and others. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Quality Bond Portfolio of the AllianceBernstein Bond Fund, Inc. at October 31, 2004, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for each of the periods indicated therein in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP New York, New York December 15, 2004 - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 39 BOARD OF DIRECTORS William H. Foulk, Jr.(1), Chairman Marc O. Mayer, President Ruth Block(1) David H. Dievler(1) John H. Dobkin(1) Donald J. Robinson(1) OFFICERS Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Paul J. DeNoon, Vice President Matthew D.W. Bloom(2), Vice President Jeffrey S. Phlegar, Vice President Mark R. Manley, Secretary Mark D. Gersten, Treasurer and Chief Financial Officer Vincent S. Noto, Controller Custodian State Street Bank & Trust Company 225 Franklin Street Boston, MA 02110 Principal Underwriter AllianceBernstein Investment Research and Management, Inc. 1345 Avenue of the Americas New York, NY 10105 Transfer Agent Alliance Global Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-Free (800) 221-5672 Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York, NY 10036 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 (1) Member of the Audit Committee and Governance and Nominating Committee. (2) Mr. Bloom is the person primarily responsible for the day-to-day management of the Portfolio's investment portfolio. - ------------------------------------------------------------------------------- 40 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO MANAGEMENT OF THE FUND Board of Directors Information The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund's Directors is set forth below.
PORTFOLIOS IN FUND OTHER NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY (YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR - --------------------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS William H. Foulk, Jr., #, + Investment adviser and an 113 None 2 Sound View Drive independent consultant. He Suite 100 was formerly Senior Manager Greenwich, CT 06830 of Barrett Associates, Inc., a 9/7/32 registered investment adviser, (1998) with which he had been associ- ated since prior to 1999. He was formerly Deputy Comptroller and Chief Investment Officer of the State of New York and, prior thereto, Chief Investment Officer of the New York Bank for Savings. Ruth Block, #, ** Formerly an Executive Vice 94 None 500 SE Mizner Blvd. President and Chief Insurance Boca Raton, FL 33432 Officer of The Equitable Life 11/7/30 Assurance Society of the United (1987) States; Chairman and Chief Executive Officer of Evlico, Director of Avon, BP (oil and gas), Ecolab Incorporated (specialty chemicals), Tandem Financial Group, and Donaldson, Lufkin & Jenrette Securities Corporation, former Governor at Large National Association of Securities Dealers, Inc. David H. Dievler, #, + Independent Consultant. Until 95 None P.O. Box 167 December 1994 he was Senior Spring Lake, NJ 07762 Vice President of Alliance Capital 10/23/29 Management Corporation (1987) ("ACMC") responsible for mutual fund administration. Prior to joining ACMC in 1984 he was Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that he was Senior Manager at Price Waterhouse & Co. Member of American Institute of Certified Public Accountants since 1953.
- ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 41
PORTFOLIOS IN FUND OTHER NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY (YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR - --------------------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) John H. Dobkin, #, + Consultant. Formerly President 95 None P.O. Box 12 of Save Venice, Inc. (preservation Annandale, NY 12504 organization) from 2001-2002, 2/19/42 Senior Advisor from June 1999 - (1998) June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989-May 1999. Previously, Director of the National Academy of Design and during 1988-1992, he was Director and Chairman of the Audit Committee of ACMC. Donald J. Robinson, #, + Senior Counsel to the law firm of 95 None 98 Hell's Peak Road Orrick, Herrington & Sutcliffe LLP Weston, VT 05161 since prior to 1999. Formerly a 8/24/34 senior partner and a member (1996) of the Executive Committee of that firm. He was also a member and Chairman of the Municipal Securities Rulemaking Board and Trustee of the Museum of the City of New York. INTERESTED DIRECTOR Marc O. Mayer, ++ Executive Vice President of ACMC 66 None 1345 Avenue of the since 2001; prior thereto, Chief Americas Executive Officer of Sanford C. New York, NY 10105 Bernstein & Co., LLC and its 10/2/57 predecessor since prior to 1999. (2003)
* There is no stated term of office for the Fund's Directors. ** Ms. Block was an "interested person," as defined in the 1940 Act, until October 21, 2004 by reason of her ownership of 116 American Depositary Shares of AXA having a value of approximately $2,356. AXA is a controlling person of ACMC. Ms. Block received shares of The Equitable Companies Incorporated as part of the demutualization of The Equitable Life Assurance Society of the United States, which were subsequently converted through a corporate action into 116 American Depositary Shares of AXA. # Member of the Audit Committee and Governance and Nominating Committee. ++ Mr. Mayer is an "interested director", as defined in the 1940 Act, due to his position as Executive Vice President of ACMC, investment adviser. - ------------------------------------------------------------------------------- 42 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO Officer Information Certain information concerning the Fund's Officers is set forth below.
NAME, ADDRESS* PRINCIPAL POSITION(S) PRINCIPAL OCCUPATION AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS - -------------------------------------------------------------------------------------------------------- Marc O. Mayer President and Chief See biography above. 10/2/57 Executive Officer Philip L. Kirstein Senior Vice President Senior Vice President and Independent 5/29/45 and Independent Compliance Officer--Mutual Funds of Compliance Officer ACMC with which he has been associated since October 2004. Prior thereto, he was Of Counsel to Kirkpatrick & Lockhart, LLP from 2003 to October 2004, and General Counsel and First Vice President of Merrill Lynch Investment Managers since prior to 1999. Paul J. DeNoon Vice President Senior Vice President of ACMC,** with 4/18/62 which he has been associated since prior to 1999. Matthew D.W. Bloom Vice President Senior Vice President of ACMC,** with 7/15/56 which he has been associated since prior to 1999. Jeffrey S. Phlegar Vice President Executive Vice President of ACMC,** 6/28/66 with which he has been associated since prior to 1999. Mark R. Manley Secretary Senior Vice President, Deputy General 10/23/62 Counsel and Chief Compliance Officer with which he has been associated since prior to 1999. Mark D. Gersten Treasurer and Senior Vice President of Alliance Global 10/4/50 Chief Financial Officer Investor Services, Inc. ("AGIS") and Vice President of AllianceBernstein Investment Research and Management, Inc. ("ABIRM")**, with which he has been associated since prior to 1999. Vincent S. Noto Controller Vice President of AGIS,** with which 12/4/64 he has been associated since prior to 1999.
* The address for each of the Fund's officers is 1345 Avenue of the Americas, New York, NY 10105. ** ACMC, ABIRM and AGIS are affiliates of the Fund. The Fund's Statement of Additional Information ("SAI") has additional information about the Fund's Directors and Officers and is available without charge upon request. Contact your financial representative or Alliance Capital at 1-800-227-4618 for a free prospectus or SAI. - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO o 43 ALLIANCEBERNSTEIN FAMILY OF FUNDS Wealth Strategies Funds Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy - ------------------------------------------------------------------------------- Blended Style Funds U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio - ------------------------------------------------------------------------------- Growth Funds Domestic Growth Fund Mid-Cap Growth Fund Large Cap Growth Fund* Small Cap Growth Fund Global & International All-Asia Investment Fund Global Health Care Fund* Global Research Growth Fund Global Technology Fund* Greater China '97 Fund International Premier Growth Fund New Europe Fund Worldwide Privatization Fund - ------------------------------------------------------------------------------- Value Funds Domestic Balanced Shares Focused Growth & Income Fund* Growth & Income Fund Real Estate Investment Fund Small Cap Value Fund** Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund - ------------------------------------------------------------------------------- Taxable Bond Funds Americas Government Income Trust Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Quality Bond Portfolio Short Duration Portfolio U.S. Government Portfolio - ------------------------------------------------------------------------------- Municipal Bond Funds National Insured National Arizona California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Ohio Pennsylvania Virginia - ------------------------------------------------------------------------------- Intermediate Municipal Bond Funds Intermediate California Intermediate Diversified Intermediate New York - ------------------------------------------------------------------------------- Closed-End Funds All-Market Advantage Fund ACM Income Fund ACM Government Opportunity Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II We also offer Exchange Reserves,*** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. For more complete information on any AllianceBernstein mutual fund, including investment objectives and policies, sales charges, expenses, risks and other matters of importance to prospective investors, visit our web site at www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus. You should read the prospectus carefully before you invest. * Prior to December 15, 2004, these Funds were named as follows: Global Health Care Fund was Health Care Fund; Large Cap Growth Fund was Premier Growth Fund; Global Technology Fund was Technology Fund; and Focused Growth & Income Fund was Disciplined Value Fund. ** Effective February 1, 2005, Small Cap Value Fund will be renamed Small/Mid-Cap Value Fund. *** An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. - ------------------------------------------------------------------------------- 44 o ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO ALLIANCEBERNSTEIN BOND FUND QUALITY BOND PORTFOLIO 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN (SM) Investment Research and Management (SM) This service mark used under license from the owner, Alliance Capital Management L.P. QBPAR1004 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant's code of ethics is filed herewith as Exhibit 11(a)(1). (b) During the period covered by this report, no material amendments were made to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors has determined that independent directors William H. Foulk, Jr. and David H. Dievler qualify as audit committee financial experts. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) - (c) The following table sets forth the aggregate fees billed by the independent auditor Ernst & Young LLP, for the Fund's last two fiscal years for professional services rendered for: (i) the audit of the Fund's annual financial statements included in the Fund's annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Fund's financial statements and are not reported under (i), which include multi-class distribution testing, advice and education on accounting and auditing issues, and consent letters; and (iii) tax compliance, tax advice and tax return preparation. Audit-Related Audit Fees Fees Tax Fees ---------- ---- -------- Quality Bond Portfolio** 2003 21,450 751 3,356 2004 42,000 4,970 22,871 ** During the course of calendar year 2003, the Quality Bond Portfolio changed its fiscal year end from June 30 to October 31. Fees for 2003 are for the period July 1, 2003 through October 31, 2003. (d) Not applicable. (e) (1) Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Fund's Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Fund's independent auditors. The Fund's Audit Committee policies and procedures also require pre-approval of all audit and non-audit services provided to the Adviser and Service Affiliates to the extent that these services are directly related to the operations or financial reporting of the Fund. (e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in the table under Item 4 (a) - (c) are for services pre-approved by the Fund's Audit Committee. (f) Not applicable. (g) The following table sets forth the aggregate non-audit services provided to the Fund, the Fund's Adviser and entities that control, are controlled by or under common control with the Adviser that provide ongoing services to the Fund ("Service Affiliates"), which include conducting an annual internal control report pursuant to Statement on Accounting Standards No. 70:
Total Amount of Foregoing Column Pre-approved by the All Fees for Audit Committee Non-Audit Services (Portion Comprised of Provided to the Audit Related Fees) Portfolio, the Adviser (Portion Comprised of and Service Affiliates Tax Fees) ------------------------ ------------------------ Quality Bond Portfolio 2003 134,157 104,107 100,751 3,356 2004 1,129,573 177,841 154,970 22,871
(h) The Audit Committee of the Fund has considered whether the provision of any non-audit services not pre-approved by the Audit Committee provided by the Fund's independent auditor to the Adviser and Service Affiliates is compatible with maintaining the auditor's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. SCHEDULE OF INVESTMENTS. Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the registrant. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund's Board of Directors since the Fund last provided disclosure in response to this item. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no significant changes in the registrant's internal controls that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 11. EXHIBITS. The following exhibits are attached to this Form N-CSR: Exhibit No. DESCRIPTION OF EXHIBIT 11 (a) (1) Code of ethics that is subject to the disclosure of Item 2 hereof 11 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 11 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 11 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): AllianceBernstein Bond Fund, Inc. By: /s/ Marc O. Mayer Marc O. Mayer President Date: December 31, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Marc O. Mayer Marc O. Mayer President Date: December 31, 2004 By: /s/ Mark D. Gersten Mark D. Gersten Treasurer and Chief Financial Officer Date: December 31, 2004 EX-99.CODE ETH 2 edg10541_ethics.txt Exhibit 11(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 Alliance Capital Management L.P.(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, as amended March 17, 2004 Exhibit A Persons Covered by this Code of Ethics Marc O. Mayer, Principal Executive Officer Mark Gersten, Principal Financial and Accounting Officer Vince Noto, Controller EX-99.CERT 3 edg10541_ex11b302.txt Exhibit 11(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: December 31, 2004 /s/ Marc O. Mayer Marc O. Mayer President Exhibit 11(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: December 31, 2004 /s/ Mark D. Gersten Mark D. Gersten Treasurer and Chief Financial Officer EX-99.906 CERT 4 edg10541_ex11c906.txt Exhibit 11(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 October 31, 2004 (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: December 31, 2004 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. -----END PRIVACY-ENHANCED MESSAGE-----