-----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, KboX4JyuH7HdlvVVn7HVIIBye2LuD+0Uj/Ylnxb4fvjdsNG5sLp4E1Ws0rv1j8BP 524jDjkBdb8hnMb6RDncug== 0000936772-07-000013.txt : 20070108 0000936772-07-000013.hdr.sgml : 20070108 20070108171343 ACCESSION NUMBER: 0000936772-07-000013 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20061031 FILED AS OF DATE: 20070108 DATE AS OF CHANGE: 20070108 EFFECTIVENESS DATE: 20070108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCEBERNSTEIN BOND FUND INC CENTRAL INDEX KEY: 0000003794 IRS NUMBER: 132754393 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02383 FILM NUMBER: 07518270 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 0000003794 S000010305 AllianceBernstein Intermediate Bond Portfolio C000028493 Class A ABQUX C000028494 Class B ABQBX C000028495 Class C ABQCX C000028496 Advisor Class ABQYX C000028497 Class R ABQRX C000028498 Class K ABQKX C000028499 Class I ABQIX N-CSR 1 edg12097_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 AllianceBernstein 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, 2006 Date of reporting period: October 31, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. - ------------------------------------------------------------------------------- ANNUAL REPORT - ------------------------------------------------------------------------------- AllianceBernstein Bond Fund Intermediate Bond Portfolio Annual Report October 31, 2006 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS 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(R) 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 Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the AllianceBernstein funds, and is a member of the NASD. AllianceBernstein(R) and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P. December 22, 2006 Annual Report This report provides management's discussion of fund performance for AllianceBernstein Bond Fund Intermediate Bond Portfolio (the "Portfolio") for the annual reporting period ended October 31, 2006. Prior to February 1, 2006, the Portfolio was named AllianceBernstein Bond Fund Quality Bond Portfolio. Investment Objective and Policies This open-end fund's investment objective is to generate income and price appreciation without assuming what AllianceBernstein considers undue risk. The Portfolio invests, under normal circumstances, at least 80% of its net assets in investment-grade fixed-income securities. The Portfolio expects to invest in readily marketable fixed-income securities with a range of maturities from short to long term, and relatively attractive yields that do not involve undue risk of loss of capital. The Adviser expects that the average duration of the Portfolio's investments will be in the range of three to six years. The Portfolio may invest up to 20% of its net assets in below-investment-grade bonds. The Portfolio may invest without limit in U.S. dollar-denominated foreign fixed-income securities and may invest up to 25% of its assets in non-U.S. dollar-denominated fixed-income securities whose currency risk will be fully hedged at the time of investment. These investments may include, in each case, developed and emerging market debt securities. Investment Results The table on page 5 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, 2006. The Portfolio underperformed its benchmark for the six- and 12-month periods ended October 31, 2006. The Portfolio's defensive shorter duration positioning during the latter part of the 12-month period, as U.S. interest rates fell sharply in the third quarter and bond market returns rallied, detracted from performance for both the six- and 12-month periods. The Portfolio's underweight to long corporates and the Portfolio's corporate security selection also detracted from Portfolio performance for the six- and 12-month periods. Exposure to hedged non-U.S. government holdings was a positive contributor for the annual period, as was the modest exposure to high yield and emerging market debt. Additionally, the Portfolio's overweight to mortgages and commercial mortgage-backed securities (CMBS) contributed positively to performance for both periods under review. The Portfolio's defensive shorter-duration positioning detracted from performance during the latter half of the six-month period ended October 31, 2006, as both U.S. interest rates fell sharply and bond market returns rallied in the third quarter of 2006. During the six-month period ended October 31, 2006, both the Portfolio's underweight to long corporate bonds and corporate security selection also detracted from performance. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 1 Market Review and Investment Strategy U.S. fixed-income returns were generally weak in the first three quarters of the annual period ended October 31, 2006, buffeted by higher interest rates and continued U.S. Federal Reserve (the "Fed") rate increases. The final three months of the period, however, saw a broad-based rally in both the fixed-income and equity markets as the economy slowed, oil prices declined and the Fed ended its interest rate hike cycle. The Fed raised official rates 150 basis points in quarter-point increments to 5.25% in the annual period ended October 31, 2006. Yields across the maturity spectrum rose as the Fed raised rates, with the 10-year yield gaining five basis points, ending the period at 4.63%. The Treasury yield curve remained flat with the yield spread between the two-year yield and the 30-year yield at only one basis point. By index sector, mortgages and CMBS securities led, with each posting returns of 5.68% and 5.53% respectively, according to Lehman Brothers. Mortgages benefited from relatively low volatility and muted prepayment risk while CMBS securities were helped by improving delinquency trends and strong demand. Investment-grade corporate bonds posted a return of 5.40%, as healthy corporate fundamentals outweighed increasing event risk. Non-U.S. government bonds matched U.S. Treasuries, with Global Treasuries (ex-U.S. hedged into the U.S. dollar) posting an average return of 4.41%, and U.S. Treasuries returning 4.43% for the annual period ended October 31, 2006. Most central banks outside of the U.S. held off raising interest rates through much of the period. Non-U.S. holdings in the Portfolio included Japan, returning 5.20%, Sweden, returning 3.66%, Mexico, returning 10.54% and Poland, returning 6.26%, most of which substantially outperformed U.S. Treasuries on a hedged basis, according to Lehman Brothers. During the annual reporting period ended October 31, 2006, the Portfolio held a shorter-than-benchmark duration and an underweight position in U.S. government bonds. The Portfolio was also overweighted in both mortgages and CMBS, which had been projected as sources of high-quality incremental yield. Additionally, the Portfolio reduced corporate exposure to a below-benchmark position due to historically tight spreads, a flat yield curve and increased event risk. The Portfolio also maintained an underweight in longer-maturity corporate bonds, which are inherently more vulnerable to event risk. As U.S. interest rates trended higher, the Portfolio employed hedged non-U.S. government bonds, which offered an attractive yield over domestic bonds. As such, the Portfolio held positions in several countries including Japan, Mexico, Poland, Sweden and Norway. 2 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE 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 website at www.alliancebernstein.com or call your financial advisor or AllianceBernstein Investments at 800.227.4618. You should read the prospectus carefully before you invest. 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 the different share classes will vary due to different expenses associated with each class. 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 Intermediate Bond Portfolio expenses on an annual basis to 0.98%, N/A, 1.68%, 0.68%, 1.18%, 0.93% and 0.68% of the average daily net assets of Class A, Class, B, Class C, Advisor Class, Class R, Class K and Class I 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. (Historical Performance continued on next page) ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 3 HISTORICAL PERFORMANCE (continued from previous page) A Word About Risk 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 in mortgage-related and other asset-backed securities which are subject to prepayment risk; the risk that early payments on principal on some mortgage-related securities may occur during periods of falling mortgage rates and expose the Portfolio to a lower rate of return upon reinvestment of principal. 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. Please note, as interest rates rise, existing bond prices fall and can cause the value of your investment in the Fund to decline. Investments in the Portfolio are not guaranteed because of fluctuation in the net asset value of the underlying fixed-income related investments. Similar to direct bond ownership, bond funds have the same interest rate, inflation and credit risks that are associated with the underlying bonds owned by the Portfolio. Portfolio purchasers should understand that, in contrast to owning individual bonds, there are ongoing fees and expenses associated with owning shares of bond funds. The Portfolio may invest in high yield bonds (i.e., junk bonds) which involves a greater risk of default and price volatility than other bonds. Investing in non-investment grade presents special risks, including credit risk. The Portfolio is also subject to leverage risk. When a fund borrows money or otherwise leverages its portfolio, it may be volatile because leverage tends to exaggerate the effect of any increase or decrease in the value of a fund's investments. A fund may create leverage through the use of reverse repurchase agreements, forward contracts or dollar rolls or by borrowing money. 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 Portfolio's prospectus. (Historical Performance continued on next page) 4 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO HISTORICAL PERFORMANCE (continued from previous page) THE PORTFOLIO VS. ITS BENCHMARK PERIODS ENDED OCTOBER 31, 2006 Returns -------------------------- 6 Months 12 Months - -------------------------------------------------------------------------- AllianceBernstein Bond Fund Intermediate Bond Portfolio Class A 4.03% 4.51% Class B 4.12% 4.20% Class C 3.78% 3.80% Advisor Class* 4.18% 4.83% Class R* 4.03% 4.31% Class K* 4.14% 4.54% Class I* 4.18% 4.71% Lehman Brothers U.S. Aggregate Index 4.60% 5.19% * Please note that these share classes are for investors purchasing shares through institutional pension plans and investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. GROWTH OF A $10,000 INVESTMENT IN THE PORTFOLIO 7/1/99* TO 10/31/06 AllianceBernstein Bond Fund Intermediate Bond Portfolio Class A: $14,008 LB U.S. Aggregate Index: $15,515 [THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] AllianceBernstein Bond Fund Intermediate LB U.S. Bond Portfolio Aggregate Class A Index - ------------------------------------------------------------ 7/1/99 $ 9,575 $10,000 10/31/99 $ 9,682 $10,122 10/31/00 $10,325 $10,861 10/31/01 $11,723 $12,442 10/31/02 $12,136 $13,175 10/31/03 $12,687 $13,821 10/31/04 $13,278 $14,585 10/31/05 $13,397 $14,750 10/31/06 $14,008 $15,515 * 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 Intermediate Bond Portfolio Class A shares (from 7/1/99 to 10/31/06) as compared to the performance of its benchmark, the Lehman Brothers U.S. Aggregate Index. The chart reflects the deduction of the maximum 4.25% sales charge from the initial $10,000 investment in the Fund and assumes the reinvestment of dividends and capital gains distributions. See Historical Performance and Benchmark disclosures on pages 3-4. (Historical Performance continued on next page) ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 5 HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF OCTOBER 31, 2006 NAV Returns SEC Returns - ------------------------------------------------------------------------------- Class A Shares 1 Year 4.51% 0.07% 5 Years 3.62% 2.73% Since Inception* 5.32% 4.70% SEC Yields** 3.78% Class B Shares 1 Year 4.20% 1.20% 5 Years 3.00% 3.00% Since Inception* 4.72% 4.72% SEC Yields** 4.64% Class C Shares 1 Year 3.80% 2.80% 5 Years 2.93% 2.93% Since Inception* 4.57% 4.57% SEC Yields** 3.23% Advisor Class Shares+ 1 Year 4.83% 4.83% 5 Years 3.95% 3.95% Since Inception* 5.55% 5.55% SEC Yields** 4.25% Class R Shares+ 1 Year 4.31% 4.31% Since Inception* 3.24% 3.24% SEC Yields** 3.74% Class K Shares+ 1 Year 4.54% 4.54% Since Inception* 3.20% 3.20% SEC Yields** 3.99% Class I Shares+ 1 Year 4.71% 4.71% Since Inception* 3.40% 3.40% SEC Yields** 4.24% * Inception dates: 7/1/99 for Class A, Class B and Class C shares; 10/10/00 for Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares. ** SEC yields are calculated based on SEC guidelines for the 30-day period ended October 31, 2006. + These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through institutional pension plans and investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above. See Historical Performance disclosures on page 3-4. (Historical Performance continued on next page) 6 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (SEPTEMBER 30, 2006) SEC Returns - ------------------------------------------------------------------------------- Class A Shares 1 Year -1.44% 5 Years 2.97% Since Inception* 4.67% Class B Shares 1 Year -0.41% 5 Years 3.21% Since Inception* 4.68% Class C Shares 1 Year 1.29% 5 Years 3.18% Since Inception* 4.55% Advisor Class Shares+ 1 Year 3.29% 5 Years 4.21% Since Inception* 5.51% Class R Shares+ 1 Year 2.77% Since Inception* 3.12% Class K Shares+ 1 Year 3.01% Since Inception* 2.96% Class I Shares+ 1 Year 3.18% Since Inception* 3.16% * Inception dates: 7/1/99 for Class A, Class B and Class C shares; 10/10/00 for Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares. + Please note that these share classes are for investors purchasing shares through institutional pension plans and investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above. See Historical Performance disclosures on page 3-4. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 7 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 table below provides information about actual account values and actual expenses. You may use the information, 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 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 table below also 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 hypothetical example 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, 2006 October 31, 2006 During Period* ----------------------- --------------------------- ---------------------- Actual Hypothetical Actual Hypothetical** Actual Hypothetical ------ ------------ --------- -------------- ------ ------------ Class A $1,000 $1,000 $1,040.26 $1,020.27 $ 5.04 $ 4.99 Class B $1,000 $1,000 $1,041.22 $1,020.01 $ 5.30 $ 5.24 Class C $1,000 $1,000 $1,037.79 $1,016.74 $ 8.63 $ 8.54 Advisor Class $1,000 $1,000 $1,041.82 $1,021.78 $ 3.50 $ 3.47 Class R $1,000 $1,000 $1,040.28 $1,019.26 $ 6.07 $ 6.01 Class K $1,000 $1,000 $1,041.38 $1,020.52 $ 4.79 $ 4.74 Class I $1,000 $1,000 $1,041.81 $1,021.78 $ 3.50 $ 3.47
* Expenses are equal to the classes' annualized expense ratios of 0.98%, 1.03%, 1.68%, 0.68%, 1.18%, 0.93% and 0.68%, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). ** Assumes 5% return before expenses. 8 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO PORTFOLIO SUMMARY October 31, 2006 PORTFOLIO STATISTICS Net Assets ($mil): $120.3 SECURITY TYPE BREAKDOWN* [ ] 38.3% U.S. Government & Government [PIE CHART OMITTED] Sponsored Agency Obligations [ ] 14.4% Non U.S. Dollar Sovereign Debt [ ] 13.6% Corporate Debt Obligations [ ] 8.9% Commercial Mortgage Backed Securities [ ] 4.1% U.S. Dollar Sovereign Debt [ ] 3.4% Asset Backed Securities [ ] 3.4% Collateralized Mortgage Obligations [ ] 13.9% Short-Term * All data are as of October 31, 2006. 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 INTERMEDIATE BOND PORTFOLIO o 9 PORTFOLIO OF INVESTMENTS October 31, 2006 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- U.S. GOVERNMENT & GOVERNMENT SPONSORED AGENCY OBLIGATIONS-44.3% Mortgage Pass Thru's-41.3% Federal Home Loan Mortgage Corp. 3.869%, 10/01/34(a)(b) $ 389 $ 385,096 4.50%, 8/01/35-11/01/35(a) 2,411 2,263,673 5.00%, 4/01/21(a) 953 938,696 Federal National Mortgage Association 4.116%, 12/01/34(a)(b) 438 437,700 4.125%, 11/01/34(a)(b) 590 590,252 4.50%, 4/01/20-1/01/21(a) 3,790 3,665,918 4.646%, 7/01/35(a)(b) 536 532,815 5.00%, 4/01/19-2/01/36(a) 5,999 5,850,121 5.49%, 5/01/36(a)(b) 184 184,469 5.50%, 4/01/33-2/01/35(a) 9,047 8,964,456 5.50%, TBA 10,205 10,083,816 5.808%, 3/01/36(a)(b) 658 665,113 5.941%, 6/01/36(a)(b) 472 475,212 6.00%, TBA 4,885 4,914,007 6.50%, 1/01/36(a) 480 490,201 6.50%, TBA 3,670 3,739,958 Government National Mortgage Association 6.00%, 3/15/36(a) 2,317 2,349,330 6.00%, TBA 3,115 3,152,612 ------------ 49,683,445 U.S. Treasury Bonds-2.0% United States Treasury Bonds 4.50%, 2/15/36(a)* 2,480 2,393,587 Federal Agency - Collateralized Mortgage Obligations-1.0% Fannie Mae Grantor Trust Series 2004-T5 Class AB4 5.60%, 5/28/35(a)(b) 210 209,935 Federal Home Loan Mortgage Corp. Series R007 Class AC 5.875%, 5/15/16(a) 1,021 1,027,517 ------------ 1,237,452 Total U.S. Government & Government Sponsored Agency Obligations (cost $53,175,262) 53,314,484 NON U.S. DOLLAR SOVEREIGN DEBT-16.7% Japan (Government of) 0.70%, 6/20/10(a) JPY 857,050 7,252,107 0.80%, 9/10/15(a) 302,806 2,527,979 10 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Norway (Kingdom of) 6.00%, 5/16/11(a) NOK 6,050 $ 996,217 Poland (Government of) 6.00%, 11/24/10(a) PLN 1,865 635,745 6.25%, 10/24/15(a) 3,890 1,371,733 Sweden (Kingdom of) 5.00%, 1/28/09(a) SEK 8,505 1,215,269 5.25%, 3/15/11(a) 19,170 2,827,299 United Mexican States 8.00%, 12/24/08-12/19/13(a) MXN 27,920 2,615,360 9.00%, 12/20/12(a) 6,445 630,723 Total Non U.S. Dollar Sovereign Debt (cost $19,834,216) 20,072,432 CORPORATE DEBT OBLIGATIONS-15.8% Financial Institutions-3.8% Banking-2.7% Barclays Bank PLC 8.55%, 6/15/49(a)(c) $ 339 382,008 BOI Capital Funding Number 2 5.571%, 2/01/49(a)(c) 115 112,264 Mitsubishi UFG Capital Finance 1, Ltd. 6.346%, 7/29/49(a)(b) 115 116,138 RBS Capital Trust III 5.512%, 9/29/49(a)(b) 358 352,224 Resona Preferred Global Securities 7.191%, 12/29/49(a)(c) 176 184,539 Sanwa Bank, Ltd. 7.40%, 6/15/11(a) 100 108,042 Sumitomo Mitsui Banking Corp. 5.625%, 7/29/49(a)(c) 107 104,697 The Huntington National Bank 4.375%, 1/15/10(a) 183 178,078 UBS Preferred Funding Trust I 8.622%, 10/29/49(a)(b) 230 255,728 UFJ Finance Aruba AEC 6.75%, 7/15/13(a) 172 184,281 Wachovia Capital Trust III 5.80%, 8/29/49(a)(b) 235 237,070 Washington Mutual, Inc. 4.00%, 1/15/09(a)* 400 390,436 Wells Fargo & Co. 4.20%, 1/15/10(a) 457 444,466 Zions Bancorporation 5.50%, 11/16/15(a) 170 168,293 ------------ 3,218,264 ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 11 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Finance Companies-0.6% American General Finance Corp. 4.625%, 5/15/09(a) $ 530 $ 521,308 General Electric Capital Corp. 6.75%, 3/15/32(a) 76 87,755 iStar Financial, Inc. 5.15%, 3/01/12(a) 146 142,648 ------------ 751,711 Insurance-0.5% Assurant, Inc. 5.625%, 2/15/14(a) 172 172,550 Humana, Inc. 6.30%, 8/01/18(a) 166 168,041 Liberty Mutual Group 5.75%, 3/15/14(a)(c) 167 168,571 WellPoint, Inc. 3.75%, 12/14/07(a) 73 71,717 ------------ 580,879 ------------ 4,550,854 Industrial-9.3% Basic Industry-0.9% International Paper Co. 5.30%, 4/01/15(a) 235 227,404 Ispat Inland ULC 9.75%, 4/01/14(a) 118 132,160 Lubrizol Corp. 4.625%, 10/01/09(a) 150 147,256 Packaging Corp. of America 5.75%, 8/01/13(a) 196 192,523 Rhodia, SA 10.25%, 6/01/10(a) 85 96,263 Westvaco Corp. 8.20%, 1/15/30(a) 85 95,313 Weyerhaeuser Co. 5.95%, 11/01/08(a) 202 203,920 ------------ 1,094,839 Capital Goods-0.7% Hutchison Whampoa International, Ltd. 7.45%, 11/24/33(a)(c) 216 248,366 Textron Financial Corp. 4.125%, 3/03/08(a) 160 157,442 Tyco International Group, SA 6.00%, 11/15/13(a) 195 202,445 Waste Management, Inc. 6.875%, 5/15/09(a) 250 259,541 ------------ 867,794 Communications-5.4% AT&T Broadband Corp. 9.455%, 11/15/22(a) 174 227,218 12 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- AT&T Corp. 8.00%, 11/15/31(a) $ 80 $ 100,226 AT&T Wireless Services, Inc. 8.75%, 3/01/31(a) 181 237,173 British Sky Broadcasting Group PLC 6.875%, 2/23/09(a) 86 88,778 British Telecommunications PLC 8.375%, 12/15/10(a) 524 588,522 BSKYB Finance United Kingdom PLC 5.625%, 10/15/15(a)(c) 270 266,210 CenturyTel, Inc. Series G 6.875%, 1/15/28(a) 195 188,751 Cingular Wireless LLC 5.625%, 12/15/06(a) 316 316,003 Clear Channel Communications, Inc. 5.50%, 9/15/14(a) 275 232,996 Comcast Cable Communication, Inc. 6.875%, 6/15/09(a) 287 298,370 Comcast Corp. 5.50%, 3/15/11(a) 313 315,051 Embarq Corp. 6.738%, 6/01/13(a) 25 25,695 New Cingular Wireless Services, Inc. 7.875%, 3/01/11(a) 575 630,413 News America, Inc. 6.55%, 3/15/33(a) 142 143,414 R.R. Donnelley & Sons Co. 4.95%, 4/01/14(a) 85 76,543 Sprint Capital Corp. 8.375%, 3/15/12(a) 626 704,021 Telecom Italia Capital 4.00%, 11/15/08-1/15/10(a) 745 713,055 6.375%, 11/15/33(a) 110 104,639 Time Warner Entertainment Co. 8.375%, 3/15/23(a) 325 383,612 Verizon Global Funding Corp. 4.90%, 9/15/15(a) 180 171,788 Verizon New Jersey, Inc. 5.875%, 1/17/12(a) 220 223,690 Vodafone Group PLC 5.50%, 6/15/11(a) 295 297,033 WPP Finance Corp. 5.875%, 6/15/14(a) 149 149,659 ------------ 6,482,860 Consumer Cyclical-0.8% Centex Corp. 5.45%, 8/15/12(a) 179 176,164 DaimlerChrysler North America Corp. 4.875%, 6/15/10(a) 137 133,758 ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 13 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Starwood Hotels & Resorts Worldwide, Inc. 7.375%, 11/15/15(a) $ 206 $ 208,060 7.875%, 5/01/12(a) 235 246,456 Toll Brothers Finance Corp. 6.875%, 11/15/12(a) 120 122,804 ------------ 887,242 Consumer Non Cyclical-0.9% Altria Group, Inc. 7.75%, 1/15/27(a) 220 269,904 ConAgra Foods, Inc. 6.75%, 9/15/11(a) 56 59,218 7.875%, 9/15/10(a) 120 130,555 Safeway, Inc. 4.125%, 11/01/08(a) 96 93,625 6.50%, 3/01/11(a) 82 84,889 Tyson Foods, Inc. 8.25%, 10/01/11(a) 225 241,329 Wyeth 5.50%, 2/01/14(a) 233 234,393 ------------ 1,113,913 Energy-0.2% Amerada Hess Corp. 7.875%, 10/01/29(a) 222 263,776 Technology-0.4% Cisco Systems, Inc. 5.25%, 2/22/11(a) 120 120,724 International Business Machines Corp. 4.375%, 6/01/09(a) 75 73,812 Motorola, Inc. 7.625%, 11/15/10(a) 28 30,380 Oracle Corp. 5.25%, 1/15/16(a) 280 276,165 ------------ 501,081 ------------ 11,211,505 Utilities-2.7% Electric-2.3% Carolina Power & Light Co. 6.50%, 7/15/12(a) 345 365,313 Consumers Energy Co. 4.25%, 4/15/08(a) 116 114,102 Duke Capital LLC Senior Note 8.00%, 10/01/19(a) 311 365,289 Exelon Corp. 6.75%, 5/01/11(a) 280 293,679 FirstEnergy Corp. 7.375%, 11/15/31(a) 279 326,351 MidAmerican Energy Holdings Co. 5.875%, 10/01/12(a) 162 165,775 14 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- NiSource Finance Corp. 7.875%, 11/15/10(a) $ 154 $ 166,490 Progress Energy, Inc. 7.10%, 3/01/11(a) 233 249,490 Public Service Co. of Colorado 7.875%, 10/01/12(a) 176 198,749 SPI Electricity & Gas Australia Holdings Pty Ltd. 6.15%, 11/15/13(a)(c) 283 294,305 Xcel Energy, Inc. 7.00%, 12/01/10(a) 170 180,349 ------------ 2,719,892 Natural Gas-0.4% Duke Energy Field Services Corp. 7.875%, 8/16/10(a) 94 101,799 Enterprise Products Operating LP Series B 5.60%, 10/15/14(a) 157 154,933 Kinder Morgan Finance Corp. 5.35%, 1/05/11(a) 221 215,842 ------------ 472,574 ------------ 3,192,466 Total Corporate Debt Obligations (cost $19,189,486) 18,954,825 COMMERCIAL MORTGAGE BACKED SECURITIES-10.3% Banc America Commercial Mortgage, Inc. Series 2001-PB1 Class A2 5.787%, 5/11/35(a) 309 315,966 Series 2004-4 Class A3 4.128%, 7/10/42(a) 365 355,326 Series 2004-6 Class A2 4.161%, 12/10/42(a) 480 466,817 Bear Stearns Commercial Mortgage Securities, Inc. Series 2005-T18 Class A4 4.933%, 2/13/42(a)(b) 610 595,516 Citigroup Commercial Mortgage Trust Series 2004-C1 Class A4 5.356%, 4/15/40(a)(b) 560 566,602 Credit Suisse Mortgage Capital Certificates Series 2006-C3 Class A3 5.828%, 6/15/38(a)(b) 555 578,404 CS First Boston Mortgage Securities Corp. Series 2003-CK2 Class A2 3.861%, 3/15/36(a) 316 308,688 Series 2004-C1 Class A4 4.75%, 1/15/37(a) 180 174,477 Series 2005-C1 Class A4 5.014%, 2/15/38(a)(b) 534 524,096 ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 15 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- GE Capital Commercial Mortgage Corp. Series 2005-C3 Class A3FX 4.863%, 7/10/45(a) $ 585 $ 579,688 Greenwich Capital Commercial Funding Corp. Series 2003-C1 Class A4 4.111%, 7/05/35(a) 388 364,673 Series 2005-GG3 Class A2 4.305%, 8/10/42(a) 642 626,607 GS Mortgage Securities Corp. II Series 2004-GG2 Class A6 5.396%, 8/10/38(a)(b) 375 377,468 JPMorgan Chase Commercial Mortgage Securities Series 2005-LDP1 Class A4 5.038%, 3/15/46(a)(b) 649 637,402 Series 2005-LDP3 Class A2 4.851%, 8/15/42(a) 515 509,203 Series 2005-LDP4 Class A2 4.79%, 10/15/42(a) 365 360,159 Series 2006-CB14 Class A4 5.481%, 12/12/44(a)(b) 250 253,229 Series 2006-CB15 Class A4 5.814%, 6/12/43(a)(b) 375 388,564 LB-UBS Commercial Mortgage Trust Series 2003-C3 Class A4 4.166%, 5/15/32(a) 555 522,249 Series 2004-C4 Class A4 5.134%, 6/15/29(a)(b) 195 197,307 Series 2004-C8 Class A2 4.201%, 12/15/29(a) 381 370,948 Series 2005-C1 Class A4 4.742%, 2/15/30(a) 426 411,493 Series 2005-C7 Class A4 5.197%, 11/15/30(a)(b) 435 432,347 Merrill Lynch Mortgage Trust Series 2005-CKI1 Class A6 5.244%, 11/12/37(a)(b) 360 360,557 Series 2005-MKB2 Class A2 4.806%, 9/12/42(a) 785 776,686 Merrill Lynch/Countrywide Commercial Mortgage Trust Series 2006-2 Class A4 5.91%, 6/12/46(a)(b) 370 388,219 Morgan Stanley Capital I Series 2005-HQ5 Class A4 5.168%, 1/14/42(a) 944 936,363 Total Commercial Mortgage Backed Securities (cost $12,442,111) 12,379,054 16 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- U.S. DOLLAR SOVEREIGN DEBT-4.7% Brazil (Republic of) 8.25%, 1/20/34(a) $ 1,225 $ 1,430,187 Peru (Republic of) 7.35%, 7/21/25(a) 665 726,513 Russian Federation 5.00%, 3/31/30(a)(b) 2,264 2,535,680 United Mexican States 5.625%, 1/15/17(a) 1,016 1,008,380 Total U.S. Dollar Sovereign Debt (cost $5,457,218) 5,700,760 ASSET-BACKED SECURITIES-4.0% Asset Backed Funding Certificates Series 2003-WF1 Class A2 6.08%, 12/25/32(a)(b) 169 169,701 Bear Stearns Asset Backed Securities, Inc. Series 2005-SD1 Class 1A1 5.47%, 4/25/22(a)(b) 110 110,373 Capital Auto Receivables Asset Trust Series 2005-SN1A Class A3A 4.10%, 6/15/08(a) 549 547,093 Capital One Prime Auto Receivables Trust Series 2005-1 Class A3 4.32%, 8/15/09(a) 640 635,413 Citifinancial Mortgage Securities, Inc. Series 2003-1 Class AFPT 3.36%, 1/25/33(a)(b) 150 135,516 Credit-Based Asset Servicing & Securities Trust Series 2005-CB7 Class AF2 5.147%, 11/25/35(a)(b) 330 327,483 Credit-Based Asset Servicing & Securities, Inc. Series 2003-CB1 Class AF 3.45%, 1/25/33(a)(b) 316 301,035 DB Master Finance, LLC Series 2006-1 Class A2 5.779%, 6/20/31(a)(c) 100 101,580 GE-WMC Mortgage Securities LLC Series 2005-2 Class A2B 5.49%, 12/25/35(a)(b) 365 365,153 Home Equity Mortgage Trust Series 2005-2 Class A1 5.50%, 7/25/35(a)(b) 58 58,034 Series 2006-1 Class A2 5.30%, 5/25/36(a)(b) 160 159,698 Household Home Equity Loan Trust Series 2005-3 Class A1 5.58%, 1/20/35(a)(b) 314 314,922 HSI Asset Securitization Corp. Trust Series 2006-OPT2 Class 2A1 5.40%, 1/25/36(a)(b) 222 221,653 ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 17 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- RAAC Series Series 2006-SP3 Class A1 5.41%, 8/25/36(a)(b) $ 284 $ 283,686 Residential Asset Mortgage Products, Inc. Series 2005-RS3 Class AIA2 5.49%, 3/25/35(a)(b) 368 368,761 Residential Asset Securities Corp. Series 2002-KS7 Class A2 5.69%, 11/25/32(a)(b) 55 55,277 Residential Funding Mortgage Securities II Series 2005-HI2 Class A3 4.46%, 5/25/35(a) 285 280,956 Saxon Asset Securities Trust Series 2005-4 Class A2B 5.50%, 11/25/37(a)(b) 375 375,352 Total Asset-Backed Securities (cost $4,836,888) 4,811,686 COLLATERALIZED MORTGAGE OBLIGATIONS-3.9% Bear Stearns Alt-A Trust Series 2005-10 Class 24A1 5.954%, 1/25/36(a)(b) 490 494,399 Citigroup Mortgage Loan Trust, Inc. Series 2005-2 Class 1A4 5.114%, 5/25/35(a)(b) 679 672,239 Series 2006-AR1, Class 3A1 5.50%, 3/25/36(a)(b) 851 846,127 Countrywide Alternative Loan Trust Series 2005-62 Class 2A1 5.563%, 12/25/35(a)(b) 385 385,734 IndyMac Index Mortgage Loan Trust Series 2006-AR7 Class 4A1 6.261%, 5/25/36(a)(b) 364 369,059 Merrill Lynch Mortgage Investors, Inc. Series 2006-A1 Class 2A1 6.203%, 3/25/36(a)(b) 561 566,953 Morgan Stanley Mortgage Loan Trust Series 2006-11 Class 1A2 6.354%, 8/25/36(a)(b) 375 379,298 Residential Funding Mortgage Securities I, Inc. Series 2005-SA3 Class 3A 5.241%, 8/25/35(a)(b) 440 436,002 Structured Adjustable Rate Mortgage Loan Trust Series 2006-3 Class 2A1 6.007%, 4/25/36(a)(b) 439 441,929 Washington Mutual, Inc. Series 2005-AR2 Class 2A22 5.54%, 1/25/45(a)(b) 158 157,984 Total Collateralized Mortgage Obligations (cost $4,737,624) 4,749,724 18 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Shares or Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS-16.1% U.S. Government & Government Sponsored Agency Obligations-11.5% Federal Home Loan Bank Zero coupon, 11/13/06 $ 5,915 $ 5,905,036 Federal Home Loan Mortgage Corp. Zero coupon, 12/11/06 3,765 3,743,874 Federal National Mortgage Association Zero coupon, 11/07/06 4,220 4,216,385 ------------ 13,865,295 Time Deposit-4.6% State Street Euro Dollar 4.60%, 11/01/06 5,471 5,471,000 Total Short-Term Investments (cost $19,336,295) 19,336,295 Total Investments Before Security Lending Collateral-115.8% (cost $139,009,100) 139,319,260 INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-2.0% Short-Term Investment UBS Private Money Market Fund, LLC (cost $2,458,577) 2,458,577 2,458,577 Total Investments-117.8% (cost $141,467,677) 141,777,837 Other assets less liabilities-(17.8)% (21,438,939) Net Assets-100% $120,338,898 INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type --------------------------- Payments Payments Notional Made Received Swap Amount Termination by the by the Unrealized Counterparty (000) Date Portfolio Portfolio Appreciation - ---------------------------------------------------------------------------------------------- Lehman Brothers $4,000 1/23/08 3 Month LIBOR+ 4.778% $ 15,256
+ LIBOR (London Interbank Offered Rate) ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 19 FINANCIAL FUTURES CONTRACTS (see Note D)
Value at Number of Expiration Original October 31, Unrealized Type Contracts Month Value 2006 Appreciation - -------------------------------------------------------------------------------------------------------- Purchased U.S. T-Bond Future 19 December 2006 $2,111,540 $2,140,469 $ 28,929 U.S. T-Note 10 Yr Future 20 December 2006 2,141,683 2,164,375 22,692 Sold Japan Government Bonds 10 Yr Future 3 December 2006 3,453,224 3,449,532 3,692 -------- $ 55,313
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
U.S. $ Contract Value on U.S. $ Unrealized Amount Origination Current Appreciation/ (000) Date Value (Depreciation) - ------------------------------------------------------------------------------------ Sale Contracts: Japanese Yen Settling 11/20/06 1,143,811 $9,635,823 $9,808,564 $(172,741) Mexican Peso Settling 11/06/06 21,680 1,959,551 2,015,268 (55,717) Mexican Peso Settling 11/21/06 779 72,245 72,356 (111) Settling 11/21/06 13,454 1,240,042 1,249,702 (9,660) Norwegian Krone Settling 11/08/06 6,626 1,024,648 1,014,066 10,582 Polish Zloty Settling 11/16/06 6,326 2,039,457 2,088,568 (49,111) Swedish Krona Settling 11/15/06 29,831 4,099,696 4,134,977 (35,281)
* Represents entire or partial securities out on loan. See Note E for securities lending information. (a) Positions, or portion thereof, with an aggregate market value of $98,092,572 have been segregated to collateralize open forward exchange currency contracts. (b) Variable rate coupon, rate shown as of October 31, 2006. (c) 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, 2006, the aggregate market value of these securities amounted to $4,398,220 or 3.7% of net assets. Currency Abbreviations JPY - Japanese Yen MXN - Mexican Peso NOK - Norwegian Krone PLN - Polish Zloty SEK - Swedish Krona Glossary: TBA-To Be Announced See notes to financial statements. 20 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO STATEMENT OF ASSETS & LIABILITIES October 31, 2006 Assets Investments in securities, at value (cost $141,467,677- including investment of cash collateral for securities loaned of $2,458,577) $141,777,837(a) Foreign cash, at value (cost $62,922) 64,178 Cash 53,350(b) Receivable for investment securities sold 4,253,306 Interest receivable 1,008,201 Receivable for capital stock sold 401,329 Receivable for variation margin on futures contracts 19,295 Unrealized appreciation of swap agreements 15,256 Unrealized appreciation of forward currency exchange contracts 10,582 Total assets 147,603,334 Liabilities Payable for investment securities purchased and foreign currency transactions 22,975,832 Payable for collateral received on securities loaned 2,458,577 Payable for capital stock redeemed 1,144,329 Unrealized depreciation of forward currency exchange contracts 322,621 Dividends payable 137,111 Advisory fee payable 97,563 Distribution fee payable 29,258 Transfer Agent fee payable 15,686 Accrued expenses 83,459 Total liabilities 27,264,436 Net Assets $120,338,898 Composition of Net Assets Capital stock, at par $ 11,822 Additional paid-in capital 129,616,594 Undistributed net investment income 185,856 Accumulated net realized loss on investments and foreign currency transactions (9,550,436) Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 75,062 ------------- $120,338,898 (a) Includes securities on loan with a value of $2,388,722 (See Note E). (b) An amount of $52,900 has been segregated as collateral for the financial futures contracts outstanding at October 31, 2006. See notes to financial statements. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 21 Net Asset Value Per Share--21 billion shares of capital stock authorized, $.001 par value Shares Net Asset Class Net Assets Outstanding Value - ------------------------------------------------------------------- A $ 44,408,858 4,361,104 $ 10.18* B $ 30,154,123 2,963,461 $ 10.18 C $ 9,873,952 971,986 $ 10.16 Advisor $ 29,966,205 2,943,037 $ 10.18 R $ 12,989 1,276 $ 10.18 K $ 9,954 977 $ 10.19 I $ 5,912,817 580,578 $ 10.18 * The maximum offering price per share for Class A shares was $10.63 which reflects a sales charge of 4.25%. See notes to financial statements. 22 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO STATEMENT OF OPERATIONS Year Ended October 31, 2006 Investment Income Interest $ 6,649,770 Expenses Advisory fee $ 590,341 Distribution fee-Class A 142,224 Distribution fee-Class B 371,035 Distribution fee-Class C 147,277 Distribution fee-Class R 64 Distribution fee-Class K 24 Transfer agency-Class A 98,814 Transfer agency-Class B 94,645 Transfer agency-Class C 34,021 Transfer agency-Advisor Class 55,391 Transfer agency-Class R 28 Transfer agency-Class K 19 Transfer agency-Class I 3,823 Custodian 167,111 Administrative 96,000 Registration fees 82,646 Audit 58,373 Legal 45,494 Directors' fees and expenses 31,883 Printing 22,272 Miscellaneous 10,300 Total expenses 2,051,785 Less: expenses waived and reimbursed by the Adviser and Distributor (see Notes B and C) (621,359) Less: expense offset arrangement (see Note B) (8,817) Net expenses 1,421,609 Net investment income 5,228,161 Realized and Unrealized Gain (Loss) on Investment Transactions Net realized gain (loss) on: Investment transactions (2,268,139) Futures contracts (26,643) Swap contracts 35,124 Foreign currency transactions 407,626 Net change in unrealized appreciation/depreciation of: Investments 2,335,512 Futures contracts 76,297 Swap contracts (25,449) Foreign currency denominated assets and liabilities (287,869) Net gain on investment transactions 246,459 Net Increase in Net Assets from Operations $ 5,474,620 See notes to financial statements. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 23 STATEMENT OF CHANGES IN NET ASSETS Year Ended Year Ended October 31, October 31, 2006 2005 -------------- -------------- Increase (Decrease) in Net Assets from Operations Net investment income $ 5,228,161 $ 16,140,471 Net realized loss on investment and foreign currency transactions (1,852,032) (1,157,769) Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities 2,098,491 (8,460,640) Net increase in net assets from operations 5,474,620 6,522,062 Dividends to Shareholders from Net investment income Class A (1,956,143) (2,047,448) Class B (1,406,469) (1,615,912) Class C (506,478) (514,975) Advisor Class (1,279,752) (12,338,990) Class R (503) (491) Class K (411) (260) Class I (133,302) (272) Capital Stock Transactions Net decrease (22,524,934) (299,458,053) Total decrease (22,333,372) (309,454,339) Net Assets Beginning of period 142,672,270 452,126,609 End of period (including undistributed net investment income of $185,856 and distributions in excess of net investment income of ($22,888), respectively) $120,338,898 $142,672,270 See notes to financial statements. 24 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO NOTES TO FINANCIAL STATEMENTS October 31, 2006 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 Intermediate Bond Portfolio, (formerly 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 Intermediate Bond Portfolio. The Intermediate Bond Portfolio (the "Portfolio") offers Class A, Class B, Class C, Advisor Class, Class R, Class K, and Class I 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 and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, except that the classes bear different distribution and transfer agency expenses. Each class 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. The following is a summary of significant accounting policies followed by the Portfolio. 1. Security Valuation Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at "fair value" as determined in accordance with procedures established by and under the general supervision of the Fund's Board of Directors. In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities exchange or on a foreign securities exchange are valued at the last sale price at the close of the exchange (other than securities listed on the NASDAQ Stock Market, Inc. ("NASDAQ")) or foreign securities exchange. If there has been no ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 25 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 listed only on 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") 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, AllianceBernstein L.P. (prior to February 24, 2006 known as 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 Portfolio 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 currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at the rates of exchange prevailing when accrued. 26 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO 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 Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or 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 amortizes premiums and accretes discounts as adjustments to interest income. 5. Class Allocations 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged to each Portfolio in proportion to net assets. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets. 6. Dividends and Distributions Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with 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. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 27 NOTE B Advisory Fee and Other Transactions with Affiliates Under the terms of the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at 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. Prior to September 7, 2004, the Portfolio paid the Adviser an advisory fee at an annual rate of .55% 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%, .68%, 1.18%, .93% and .68% of the daily average net assets for the Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively. For the year ended October 31, 2006, such waiver amounted to $265,636. 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, 2006, the Adviser voluntarily agreed to waive its fees for services. Such waiver amounted to $96,000. The Portfolio compensates AllianceBernstein Investor Services, Inc. (prior to February 24, 2006 known as Alliance Global Investor Services, Inc.) ("ABIS"), 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. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $190,459 for the year ended October 31, 2006. For the year ended October 31, 2006, the Portfolio's expenses were reduced by $8,817 under an expense offset arrangement with ABIS. AllianceBernstein Investments, Inc. (prior to February 24, 2006 known as AllianceBernstein Investment Research and Management, Inc.) (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Portfolio's shares. The Distributor has advised the Portfolio that it has retained front-end sales charges of $3,334 from the sale of Class A shares and received $1,943, $18,006 and $1,356, 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, 2006. 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 28 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO at an annual rate of up to .30% of the Portfolio's average daily net assets attributable to Class A shares, 1% of the average daily net assets attributable to both Class B and Class C shares, .50% of the Portfolio's average daily net assets attributable to Class R shares, and .25% of the Portfolio's average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. As of November 1, 2005, with respect to Class B shares, payments to the Distributor are voluntarily being limited to .30% of the average daily net assets attributable to Class B shares. The fees are accrued daily and paid monthly. For the year ended October 31, 2006, such waiver amounted to $259,723. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has incurred expenses in excess of the distribution costs reimbursed by the Portfolio in the amount of $192,050, $438,602, $286 and $29 for Class B, Class C, Class R and Class K 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 year ended October 31, 2006, were as follows: Purchases Sales ------------- ------------- Investment securities (excluding U.S. government securities) $ 70,898,677 $ 59,936,522 U.S. government securities 391,332,382 409,142,304 The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation (excluding swaps, futures and foreign currency transactions) are as follows: Cost $ 141,486,659 Gross unrealized appreciation $ 1,203,273 Gross unrealized depreciation (912,095) Net unrealized appreciation $ 291,178 1. Forward Currency Exchange Contracts The Portfolio may enter into forward currency exchange 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 currency exchange contract is a commitment to purchase or sell a foreign currency ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 29 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 currency exchange 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 currency exchange 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. For the year ended October 31, 2006, the Portfolio earned drop income of $240,886 which is included in interest income in the accompanying statement of operations. 3. Swap Agreements The Portfolio may enter into swaps to hedge its exposure to interest rates and credit risk or for investment purposes. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the net interim payment to be received by the Portfolio, and/or the termination value at the end of the contract. 30 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Therefore, the Portfolio considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying securities. The Portfolio accrues for the interim payments on swap contracts on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain/loss on swaps, in addition to realized gain/loss recorded upon the termination of swap contracts on the statement of operations. Fluctuations in the value of swap contracts are recorded as a component of net change in unrealized appreciation/ depreciation of investments. The Portfolio may enter into credit default swaps. The Portfolio may purchase credit protection on the referenced obligation of the credit default swap ("Buy Contract") or provide credit protection on the referenced obligation of the credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap provides upon the occurrence of a credit event, as defined in the swap agreement, for the Portfolio to buy/(sell) from/(to) the counterparty at the notional amount (the "Notional Amount") and receive/(deliver) the principal amount of the referenced obligation. If a credit event occurs, the maximum payout amount for a Sale Contract is limited to the Notional Amount of the swap contract ("Maximum Payout Amount"). During the term of the swap agreement, the Portfolio receives/(pays) semi-annual fixed payments from/(to) the respective counterparty, calculated at the agreed upon interest rate applied to the Notional Amount. These interim payments are recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Credit default swaps may involve greater risks than if a Portfolio had invested in the referenced obligation directly. Credit default swaps are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Portfolio is a buyer and no credit event occurs, it will lose its investment. In addition, if the Portfolio is a seller and a credit event occurs, the value of the referenced obligation received by the Portfolio coupled with the periodic payments previously received, may be less than the Maximum Payout Amount it pays to the buyer, resulting in a loss to the Portfolio. In certain circumstances, the Portfolio may hold Sale Contracts on the same referenced obligation and with the same counterparty it has purchased credit protection, which may reduce its obligation to make payments on Sale Contracts, if a credit event occurs. 4. Financial Futures Contracts The Portfolio may buy or sell financial futures contracts for the purpose of hedging its portfolio against adverse effects of anticipated movements in the ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 31 market. The Portfolio bears the market risk that arises from changes in the value of these financial instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. At the time the Portfolio enters into a futures contract, the Portfolio deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Portfolio as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of the contract. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed. NOTE E Securities Lending The Portfolio has entered into a securities lending agreement with AG Edwards & Sons, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent, on behalf of the Portfolio, administers the lending of portfolio securities to certain broker-dealers. In return, the Portfolio receives fee income from the lending transactions or it retains a portion of interest on the investment of any cash received as collateral. The Portfolio also continues to receive dividends or interest on the securities loaned. Unrealized gain or loss on the value of the securities loaned that may occur during the term of the loan will be reflected in the accounts of the Portfolio. All loans are continuously secured by collateral exceeding the value of the securities loaned. All collateral consists of either cash or U.S. government securities. The Lending Agent may invest the cash collateral received in accordance with the investment restrictions of the Portfolio in one or more of the following investments: U.S. government or U.S. government agency obligations, bank obligations, corporate debt obligations, asset-backed securities, investment funds, structured products, repurchase agreements and an eligible money market fund. The Lending Agent will indemnify the Portfolio for any loss resulting from a borrower's failure to return a loaned security when due. As of October 31, 2006, the Portfolio had loaned securities with a value of $2,388,722 and received cash collateral which was invested in short-term securities valued at $2,458,577 as included in the accompanying portfolio of investments. For the year ended October 31, 2006, the Portfolio earned fee income of $30,914 which is included in the accompanying statement of operations. 32 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO NOTE F Capital Stock Each class consists of 3,000,000,000 authorized shares. Transactions in capital shares for each class were as follows: Shares Amount --------------------------- ------------------------------ Year Ended Year Ended Year Ended Year Ended October 31, October 31, October 31, October 31, 2006 2005 2006 2005 ------------ ------------ -------------- -------------- Class A Shares sold 1,129,468 1,297,569 $ 11,391,299 $ 13,541,985 Shares issued in reinvestment of dividends 173,344 177,782 1,748,384 1,837,212 Shares converted from Class B 330,816 370,102 3,337,159 3,697,915 Shares redeemed (2,436,484) (2,126,010) (24,510,901) (21,966,635) Net decrease (802,856) (280,557) $ (8,034,059) $ (2,889,523) Class B Shares sold 246,163 509,815 $ 2,477,033 $ 5,271,866 Shares issued in reinvestment of dividends 114,155 120,884 1,150,003 1,248,546 Shares converted to Class A (330,844) (370,414) (3,337,159) (3,697,915) Shares redeemed (1,495,859) (2,225,329) (15,047,953) (23,115,708) Net decrease (1,466,385) (1,965,044) $(14,758,076) $ (20,293,211) Class C Shares sold 274,371 168,252 $ 2,749,577 $ 1,735,347 Shares issued in reinvestment of dividends 22,799 22,443 229,319 231,389 Shares redeemed (874,231) (468,748) (8,794,276) (4,830,131) Net decrease (577,061) (278,053) $ (5,815,380) $ (2,863,395) Advisor Class Shares sold 314,494 14,738,340 $ 3,167,310 $ 152,659,635 Shares issued in reinvestment of dividends 127,711 1,155,430 1,287,059 11,958,110 Shares redeemed (412,435) (42,685,120) (4,157,384) (438,046,997) Net increase (decrease) 29,770 (26,791,350) $ 296,985 $(273,429,252) ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 33 Shares Amount --------------------------- ------------------------------ Year Ended Year Ended Year Ended Year Ended October 31, October 31, October 31, October 31, 2006 2005 2006 2005 ------------ ------------ -------------- -------------- Class R Shares sold 7 26 $ 75 $ 267 Shares issued in reinvestment of dividends 12 15 127 152 Shares redeemed (7) (309) (75) (3,191) Net increase (decrease) 12 (268) $ 127 $ (2,772) March 1, March 1, Year Ended 2005(a) to Year Ended 2005(a) to October 31, October 31, October 31, October 31, 2006 2005 2006 2005 ------------ ------------ -------------- -------------- Class K Shares sold -0- 977 $ -0- $ 10,100 Shares issued in reinvestment of dividends -0-(b) -0- 3 -0- Net increase -0-(b) 977 $ 3 $ 10,100 Class I Shares sold 577,257 967 $ 5,761,626 $ 10,000 Shares issued in reinvestment of dividends 12,658 -0- 126,933 -0- Shares redeemed (10,304) -0- (103,093) -0- Net increase 579,611 967 $ 5,785,466 $ 10,000 (a) Commencement of distributions. (b) Share amount is less than one full share. 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 Portfolio's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities 34 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. Foreign Securities Risk--Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign exchange rates and the possibility of the future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies or of the U.S. government. 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 $250 million revolving credit facility (the "Facility") intended to provide short-term financing if necessary, subject to certain restrictions, 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, 2006. NOTE I Distributions to Shareholders The tax character of distributions paid during the fiscal years ended October 31, 2006 and October 31, 2005 were as follows: 2006 2005 -------------- -------------- Distributions paid from: Ordinary income $ 5,283,058 $ 16,518,348 Net long-term capital gains -0- -0- Total taxable distributions 5,283,058 16,518,348 Total distributions paid $ 5,283,058 $ 16,518,348 ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 35 As of October 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed Ordinary Income $ 105,121 Accumulated capital and other losses (9,663,944)(a) Unrealized appreciation/(depreciation) 269,306(b) Total accumulated earnings/(deficit) $ (9,289,517) (a) On October 31, 2006, the Fund had a net capital loss carryforward for federal income tax purposes of $9,495,811 of which $2,545,113 expires in the year 2011, $4,798,199 expires in the year 2013 and $2,152,499 expires in the year 2014. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. For the year ended October 31, 2006, the Portfolio deferred losses on straddles of $168,133. (b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales, the tax treatment of swap income, the difference between book and tax amortization methods for premium, and the realization for tax purposes of gains/losses on certain derivative instruments. During the current fiscal year, permanent differences primarily due to the tax treatment of swap income, paydown reclassification, foreign currency reclassification, and the tax treatment of premium amortization resulted in a net decrease in distributions in excess of net investment income, and a net increase in accumulated net realized loss on investment transactions and foreign currency transactions. This reclassification had no effect on net assets. NOTE J Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of New York Attorney General ("NYAG") have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that 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 Assurance 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 Reim- 36 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO bursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds until December 31, 2008; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order and the NYAG Order contemplate that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation of the NYAG Order and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. On September 7, 2004, the Fund's investment advisory agreement was amended to reflect the reduced advisory fee. For more information on this waiver and amendment to the Fund's investment advisory agreement, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, directed and oversaw 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 conducted an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. On October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P. ("Alliance Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the AllianceBernstein Funds, certain officers of the Adviser ("Alliance defendants"), and certain other defendants not affiliated with the Adviser, as well as unnamed Doe defendants. 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 Funds. The Hindo Complaint alleges that certain of the Alliance 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 compen- ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 37 satory 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, 43 additional lawsuits making factual allegations generally similar to those in the Hindo Complaint were filed in various federal and state courts against the Adviser and certain other defendants. The plaintiffs in such lawsuits have asserted a variety of theories for recovery including, but not limited to, violations of the Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), certain state securities laws and common law. All state court actions against the Adviser either were voluntarily dismissed or removed to federal court. On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred all actions to the United States District Court for the District of Maryland (the "Mutual Fund MDL"). On September 29, 2004, plaintiffs filed consolidated amended complaints with respect to four claim types: mutual fund shareholder claims; mutual fund derivative claims; derivative claims brought on behalf of Alliance Holding; and claims brought under ERISA by participants in the Profit Sharing Plan for Employees of the Adviser. All four complaints include substantially identical factual allegations, which appear to be based in large part on the SEC Order and the NYAG Order. On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims entered into a confidential memorandum of understanding ("MOU") containing their agreement to settle these claims. The agreement will be documented by a stipulation of settlement and will be submitted for court approval at a later date. The derivative claims brought on behalf of Alliance Holding remain pending. On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the Office of the Attorney General of the State of West Virginia and (ii) a request for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commissioner") (together, the "Information Requests"). Both Information Requests require the Adviser to produce documents concerning, among other things, any market timing or late trading in the Adviser's sponsored mutual funds. The Adviser responded to the Information Requests and has been cooperating fully with the investigation. On April 11, 2005, a complaint entitled The Attorney General of the State of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed against the Adviser, Alliance Holding, and various other defendants not affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia by the Attorney General of the State of West Virginia. The 38 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO WVAG Complaint makes factual allegations generally similar to those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL. On August 30, 2005, the West Virginia Securities Commissioner signed a Summary Order to Cease and Desist, and Notice of Right to Hearing addressed to the Adviser and Alliance Holding. The Summary Order claims that the Adviser and Alliance Holding violated the West Virginia Uniform Securities Act, and makes factual allegations generally similar to those in the Commission Order and the NYAGOrder. On January 26, 2006, the Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition for Writ of Prohibition and Order Suspending Proceedings in West Virginia state court seeking to vacate the Summary Order and for other relief. The court denied the writ and in September 2006 the Supreme Court of Appeals declined the defendants' petition for appeal. On September 22, 2006, Alliance and Alliance Holding filed an answer and motion to dismiss the Summary Order with the Securities Commissioner. 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 Holding, 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 alleged shareholders 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. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 39 Since June 22, 2004, nine additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants. All nine of the lawsuits (i) were brought as class actions filed in the United States District Court for the Southern District of New York, (ii) assert claims substantially identical to the Aucoin Complaint, and (iii) are brought on behalf of shareholders of the Funds. On February 2, 2005, plaintiffs filed a consolidated amended class action complaint ("Aucoin Consolidated Amended Complaint") that asserts claims substantially similar to the Aucoin Complaint and the nine additional lawsuits referenced above. On October 19, 2005, the District Court dismissed each of the claims set forth in the Aucoin Consolidated Amended Complaint, except for plaintiffs' claim under Section 36(b) of the Investment Company Act. On January 11, 2006, the District Court granted defendants' motion for reconsideration and dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court denied plaintiffs' motion for leave to file an amended complaint. On July 5, 2006, plaintiffs filed a notice of appeal. On October 4, 2006 the appeal was withdrawn by stipulation, with plaintiffs reserving the right to reinstate it at a later date. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the AllianceBernstein Mutual Funds' shares or other adverse consequences to the AllianceBernstein Mutual Funds. 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. 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 AllianceBernstein Mutual Funds. NOTE K Recent Accounting Pronouncements On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Portfolio's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded in the current period. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact on the financial statements has not yet been determined. 40 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 41 FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A ---------------------------------------------------------------------------- July 1, Year Ended October 31, 2003 to Year Ended June 30, ------------------------------------- October 31, ------------------------ 2006 2005 2004 2003(a) 2003 2002(b) ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.15 $10.43 $10.56 $10.82 $10.25 $10.22 Income From Investment Operations Net investment income(c)(d) .41 .37 .33 .12 .33 .46 Net realized and unrealized gain (loss) on investment and foreign currency transactions .04 (.28) .15 (.25) .66 .17 Net increase (decrease) in net asset value from operations .45 .09 .48 (.13) .99 .63 Less: Dividends and Distributions Dividends from net investment income (.42) (.37) (.38) (.13) (.42) (.46) Distributions in excess of net investment income -0- -0- -0- -0- -0- (.10) Distributions from net realized gain on investment transactions -0- -0- (.23) -0- -0- (.01) Distributions in excess of net realized gain on investment transactions -0- -0- -0- -0- -0- (.03) Total dividends and distributions (.42) (.37) (.61) (.13) (.42) (.60) Net asset value, end of period $10.18 $10.15 $10.43 $10.56 $10.82 $10.25 Total Return Total investment return based on net asset value(e) 4.51% .90% 4.66% (1.20)% 9.87% 6.23% Ratios/Supplemental Data Net assets, end of period (000's omitted) $44,409 $52,430 $56,778 $68,213 $76,565 $44,852 Ratio to average net assets of: Expenses, net of waivers/ reimbursements .98%(f) .98% .98% .98%(g) .98% .98% Expenses, before waivers/ reimbursements 1.34%(f) 1.31% 1.26% 1.33%(g) 1.32% 1.48% Net investment income(d) 4.08%(f) 3.53% 3.21% 2.60%(g) 3.08% 4.39% Portfolio turnover rate 446% 935% 658% 199% 867% 573%
See footnote summary on page 48. 42 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B ---------------------------------------------------------------------------- July 1, Year Ended October 31, 2003 to Year Ended June 30, ---------------------------------------- October 31, ------------------------ 2006 2005 2004 2003(a) 2003 2002(b) ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.15 $10.42 $10.55 $10.81 $10.24 $10.21 Income From Investment Operations Net investment income(c)(d) .38(h) .29 .27 .09 .26 .38 Net realized and unrealized gain (loss) on investment and foreign currency transactions .04 (.25) .14 (.25) .66 .16 Net increase (decrease) in net asset value from operations .42 .04 .41 (.16) .92 .54 Less: Dividends and Distributions Dividends from net investment income (.39) (.31) (.31) (.10) (.35) (.38) Distributions in excess of net investment income -0- -0- -0- -0- -0- (.09) Distributions from net realized gain on investment transactions -0- -0- (.23) -0- -0- (.01) Distributions in excess of net realized gain on investment transactions -0- -0- -0- -0- -0- (.03) Total dividends and distributions (.39) (.31) (.54) (.10) (.35) (.51) Net asset value, end of period $10.18 $10.15 $10.42 $10.55 $10.81 $10.24 Total Return Total investment return based on net asset value(e) 4.20% .30% 3.93% (1.44)% 9.12% 5.52% Ratios/Supplemental Data Net assets, end of period (000's omitted) $30,154 $44,944 $66,635 $96,033 $113,233 $50,354 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.33%(f) 1.68% 1.68% 1.68%(g) 1.68% 1.68% Expenses, before waivers/ reimbursements 2.10%(f) 2.02% 2.00% 2.06%(g) 2.05% 2.19% Net investment income(d) 3.75%(f)(h) 2.82% 2.59% 2.01%(g) 2.41% 3.70% Portfolio turnover rate 446% 935% 658% 199% 867% 573%
See footnote summary on page 48. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 43 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C ---------------------------------------------------------------------------- July 1, Year Ended October 31, 2003 to Year Ended June 30, ------------------------------------- October 31, ------------------------ 2006 2005 2004 2003(a) 2003 2002(b) ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.13 $10.40 $10.53 $10.79 $10.23 $10.19 Income From Investment Operations Net investment income(c)(d) .34 .29 .27 .09 .26 .38 Net realized and unrealized gain (loss) on investment and foreign currency transactions .04 (.26) .14 (.25) .65 .17 Net increase (decrease) in net asset value from operations .38 .03 .41 (.16) .91 .55 Less: Dividends and Distributions Dividends from net investment income (.35) (.30) (.31) (.10) (.35) (.38) Distributions in excess of net investment income -0- -0- -0- -0- -0- (.09) Distributions from net realized gain on investment transactions -0- -0- (.23) -0- -0- (.01) Distributions in excess of net realized gain on investment transactions -0- -0- -0- -0- -0- (.03) Total dividends and distributions (.35) (.30) (.54) (.10) (.35) (.51) Net asset value, end of period $10.16 $10.13 $10.40 $10.53 $10.79 $10.23 Total Return Total investment return based on net asset value(e) 3.80% .30% 3.93% (1.44)% 9.03% 5.63% Ratios/Supplemental Data Net assets, end of period (000's omitted) $9,874 $15,689 $19,008 $26,021 $26,445 $16,131 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.68%(f) 1.68% 1.68% 1.68%(g) 1.68% 1.68% Expenses, before waivers/ reimbursements 2.07%(f) 2.03% 1.99% 2.06%(g) 2.03% 2.19% Net investment income(d) 3.40%(f) 2.84% 2.60% 2.03%(g) 2.41% 3.71% Portfolio turnover rate 446% 935% 658% 199% 867% 573%
See footnote summary on page 48. 44 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class ---------------------------------------------------------------------------- July 1, Year Ended October 31, 2003 to Year Ended June 30, ------------------------------------- October 31, ------------------------ 2006 2005 2004 2003(a) 2003 2002(b) ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.15 $10.43 $10.55 $10.82 $10.25 $10.22 Income From Investment Operations Net investment income(c)(d) .44 .39 .36 .13 .36 .48 Net realized and unrealized gain (loss) on investment and foreign currency transactions .04 (.26) .16 (.26) .66 .18 Net increase (decrease) in net asset value from operations .48 .13 .52 (.13) 1.02 .66 Less: Dividends and Distributions Dividends from net investment income (.45) (.41) (.41) (.14) (.45) (.48) Distributions in excess of net investment income -0- -0- -0- -0- -0- (.11) Distributions from net realized gain on investment transactions -0- -0- (.23) -0- -0- (.01) Distributions in excess of net realized gain on investment transactions -0- -0- -0- -0- -0- (.03) Total dividends and distributions (.45) (.41) (.64) (.14) (.45) (.63) Net asset value, end of period $10.18 $10.15 $10.43 $10.55 $10.82 $10.25 Total Return Total investment return based on net asset value(e) 4.83% 1.20% 5.08% (1.19)% 10.20% 6.57% Ratios/Supplemental Data Net assets, end of period (000's omitted) $29,966 $29,576 $309,690 $258,747 $246,127 $185,071 Ratio to average net assets of: Expenses, net of waivers/ reimbursements .68%(f) .68% .68% .68%(g) .68% .68% Expenses, before waivers/ reimbursements 1.02%(f) .84% .96% 1.03%(g) 1.20% 1.20% Net investment income(d) 4.38%(f) 3.72% 3.47% 2.87%(g) 3.39% 4.69% Portfolio turnover rate 446% 935% 658% 199% 867% 573%
See footnote summary on page 48. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 45 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class R ------------------------------------- November 3, Year Ended 2003(i) October 31, to ------------------------ October 31, 2006 2005 2004 ----------- ----------- ----------- Net asset value, beginning of period $10.15 $10.42 $10.53 Income From Investment Operations Net investment income(c)(d) .39 .34 .33 Net realized and unrealized gain (loss) on investment transactions .04 (.26) .15 Net increase in net asset value from operations .43 .08 .48 Less: Dividends and Distributions Dividends from net investment income (.40) (.35) (.36) Distributions from net realized gain on investment transactions -0- -0- (.23) Total dividends and distributions (.40) (.35) (.59) Net asset value, end of period $10.18 $10.15 $10.42 Total Return Total investment return based on net asset value(e) 4.31% .81% 4.63% Ratios/Supplemental Data Net assets, end of period (000's omitted) $13 $13 $16 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.18%(f) 1.18% 1.18%(g) Expenses, before waivers/reimbursements 1.57%(f) 1.40% 1.45%(g) Net investment income(d) 3.89%(f) 3.31% 2.98%(g) Portfolio turnover rate 446% 935% 658%
See footnote summary on page 48. 46 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class K --------------------------- March 1, Year Ended 2005(i) to October 31 October 31, 2006 2005 ------------ ------------ Net asset value, beginning of period $10.16 $10.34 Income From Investment Operations Net investment income(c)(d) .42 .26 Net realized and unrealized gain (loss) on investment transactions .03 (.17) Net increase in net asset value from operations .45 .09 Less: Dividends Dividends from net investment income (.42) (.27) Net asset value, end of period $10.19 $10.16 Total Return Total investment return based on net asset value(e) 4.54% .82% Ratios/Supplemental Data Net assets, end of period (000's omitted) $10 $10 Ratio to average net assets of: Expenses, net of waivers/reimbursements .93%(f) .93%(g) Expenses, before waivers/reimbursements 1.27%(f) 1.15%(g) Net investment income(d) 4.13%(f) 3.76%(g) Portfolio turnover rate 446% 935% See footnote summary on page 48. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 47 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class I --------------------------- March 1, Year Ended 2005(i) to October 31 October 31, 2006 2005 ------------ ------------ Net asset value, beginning of period $10.16 $10.34 Income From Investment Operations Net investment income(c)(d) .44 .27 Net realized and unrealized loss on investment transactions .03 (.17) Net increase in net asset value from operations .47 .10 Less: Dividends Dividends from net investment income (.45) (.28) Net asset value, end of period $10.18 $10.16 Total Return Total investment return based on net asset value(e) 4.71% .97% Ratios/Supplemental Data Net assets, end of period (000's omitted) $5,913 $10 Ratio to average net assets of: Expenses, net of waivers/reimbursements .68%(f) .68%(g) Expenses, before waivers/reimbursements .88%(f) .89%(g) Net investment income(d) 4.37%(f) 3.98%(g) Portfolio turnover rate 446% 935% (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. (c) Based on average shares outstanding. (d) Net of fees waived and expenses reimbursed by the Adviser. (e) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total investment return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. (f) The ratio includes expenses attributable to costs of proxy solicitation. (g) Annualized. (h) Net of fees and expenses waived by the Distributor. (i) Commencement of distribution. 48 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of AllianceBernstein Bond Fund, Inc. Intermediate Bond Portfolio We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Intermediate Bond Portfolio, formerly the Quality Bond Portfolio (the "Portfolio") one of the portfolios constituting the AllianceBernstein Bond Fund, Inc., as of October 31, 2006, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended 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 the standards of the Public Company Accounting 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. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2006 by correspondence with the custodian and others, or by other appropriate auditing procedures where replies from others were not received. 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 Intermediate Bond Portfolio of the AllianceBernstein Bond Fund, Inc. at October 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended 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 19, 2006 ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 49 TAX INFORMATION (unaudited) For foreign shareholders, the Portfolio designates 82.6% of its ordinary dividends as qualified interest income. 50 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO BOARD OF DIRECTORS William H. Foulk, Jr.(1), Chairman Marc O. Mayer, President Ruth Block(1) David H. Dievler(1) John H. Dobkin(1) Michael J. Downey(1) D. James Guzy(1) Nancy P. Jacklin(1) Marshall C. Turner(1) OFFICERS(2) Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Alison Martier, Vice President Jeffrey S. Phlegar, Vice President Shawn Keegan, Vice President Joran Laird, Vice President Greg Wilensky, Vice President Emilie D. Wrapp, Secretary Joseph J. Mantineo, Treasurer and Chief Financial Officer Vincent S. Noto, Controller Custodian State Street Bank & Trust Company One Lincoln Street Boston, MA 02111 Principal Underwriter AllianceBernstein Investments, Inc. 1345 Avenue of the Americas New York, NY 10105 Transfer Agent AllianceBernstein 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, the Governance and Nominating Committee, and the Independent Directors Committee. (2) The day-to-day management of and investment decisions for the Fund's portfolio are made by the U.S. Investment Grade: Core Fixed Income Investment Team. Mr. Greg Wilensky, Mr. Shawn Keegan, Mr. Joran Laird, Mr. Jeffrey S. Phlegar and Ms. Alison Martier are the investment professionals with the most significant responsibility for the day-to-day mangement of the Fund's portfolio. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 51 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 AGE 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 P.O. Box 5060 independent consultant. He Greenwich, CT 06831 was formerly Senior Manager Chairman of the Board of Barrett Associates, Inc., a 74 registered investment adviser, (1998) with which he had been associ- ated since prior to 2001. 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 100 None 500 SE Mizner Blvd. President and Chief Insurance Boca Raton, FL 33432 Officer of The Equitable Life 76 Assurance Society of the United (1987) States; Chairman and Chief Executive Officer of Evlico, (insurance) 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 112 None P.O. Box 167 December 1994 he was Senior Spring Lake, NJ 07762 Vice President of AllianceBernstein 77 Corporation ("AB Corp") (formerly (1987) Alliance Capital Management Corporation) responsible for mutual fund administration. Prior to joining AB Corp 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.
52 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO
PORTFOLIOS IN FUND OTHER NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS AGE OCCUPATION(S) OVERSEEN BY HELD BY (YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR - ---------------------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) John H. Dobkin, # Consultant. Formerly President 111 None P.O. Box 12 of Save Venice, Inc. (preservation Annandale, NY 12504 organization) from 2001-2002, 64 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, Director and Chairman of the Audit Committee of AB Corp. (formerly Alliance Capital Management Corporation). Michael J. Downey, # Consultant since 2004. Formerly 111 Asia Pacific c/o AllianceBernstein L.P. managing partner of Lexington Fund, Inc. 1345 Avenue of the Capital, LLC (investment advisory and The Americas firm) from December 1997 until Merger Fund New York, NY 10105 December 2003. Prior thereto, Attn: Phillip L. Kirstein Chairman and CEO of Prudential 62 Mutual Fund Management (2005) from 1987 to 1993. D. James Guzy, # Chairman of the Board of PLX 111 Intel Corporation P.O. Box 128 Technology (semi-conductors) (semi-conductors), Glenbrook, NV 89413 and of SRC Computers, Inc., Cirrus Logic 70 with which he has been associated Corporation (2005) since prior to 2001. He is also (semi-conductors), President of the Arbor Company and the (private family investments). Davis Selected Advisers Group of Mutual Funds. Nancy P. Jacklin, # Formerly U.S. Executive Director 111 None 4046 Chancery Court, of the International Monetary Fund NW (December 2002-May 2006); partner, Washington, DC 20007 Clifford Chance (1992-2002); Senior 58 Counsel, International Banking and (2006) Finance, and Associate General Counsel, Citicorp (1985-1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982-1985); and Attorney Advisor, U.S. Department of the Treasury (1973-1982). Member of the Bar of the District of Columbia and of New York; member of the Council on Foreign Relations.
ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 53
PORTFOLIOS IN FUND OTHER NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS AGE OCCUPATION(S) OVERSEEN BY HELD BY (YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR - ---------------------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) Marshall C. Turner, # Principal of Turner Venture 111 The George 220 Montgomery Street Associates (venture capital and Lucas Penthouse 10 consulting) since prior to 2001. Educational San Francisco, From 2003 until May 31, 2006, and National CA 94104 he was CEO of Toppan Photomasks, Datacast, Inc. 65 Inc. (semi-conductor manufacturing (2005) services) Austin, Texas. INTERESTED DIRECTOR Marc O. Mayer, + Executive Vice President of the 111 SCB Partners, 1345 Avenue of the Adviser since 2001, and Executive Inc. and Americas Managing Director of AllianceBernstein SCB, Inc. New York, NY 10105 Investments, Inc. ("ABI") since 2003; 49 prior thereto, he was head of (2003) AllianceBernstein Institutional Investments, a unit of the Adviser from 2001-2003. Prior thereto, Chief Executive Officer of Sanford C. Bernstein & Co., LLC (institutional research and brokerage arm of Bernstein & Co. LLC) ("SCB & Co.") and its predecessor since prior to 2001.
* There is no stated term of office for the Fund's Directors. ** Ms. Block was an "interested person", as defined in the 1940 Act, from July 22, 1992 until October 21, 2004 by reason of her ownership of securities of a control person of the Adviser. Ms. Block received shares of The Equitable Companies Incorporated ("Equitable") as part of the demutualization of The Equitable Life Assurance Society of the United States in 1992. Ms. Block's Equitable shares were subsequently converted through a corporate action into American Depositary Shares of AXA, which were sold for approximately $2,400 on October 21, 2004. Equitable and AXA are control persons of the Adviser. # Member of the Audit Committee, Governance and Nominating Committee, and the Independent Directors Committee. + Mr. Mayer is an "interested person", as defined in the 1940 Act, due to his position as Executive Vice President of the Adviser. 54 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Officer Information Certain information concerning the Fund's Officers is set forth below.
NAME, ADDRESS* PRINCIPAL POSITION(S) PRINCIPAL OCCUPATION AND AGE HELD WITH FUND DURING PAST 5 YEARS - ------------------------------------------------------------------------------------------------------ Marc O. Mayer President and Chief See biography above. 49 Executive Officer Philip L. Kirstein Senior Vice President Senior Vice President and 61 and Independent Independent Compliance Officer of the Compliance Officer AllianceBernstein Funds, with which he has been associated since October 2004. Prior thereto, he was Of Counsel to Kirkpatrick & Lockhart, LLP from October 2003 to October 2004, and General Counsel of Merrill Lynch Investment Managers, L.P. since prior to 2001 until March 2003. Shawn Keegan Vice President Vice President of the Adviser**, with 35 which he has been associated since prior to 2001. Joran Laird Vice President Vice President of the Adviser**, with 31 which he has been associated since prior to 2001. Alison Martier Vice President Senior Vice President of the Adviser**, 49 with which she has been associated since prior to 2001. Jeffrey S. Phlegar Vice President Executive Vice President of the 40 Adviser**, with which he has been associated since prior to 2001. Greg Wilensky Vice President Vice President of the Adviser**, with 39 which he has been associated since prior to 2001, and Director of Stable Value Investments. Emilie D. Wrapp Secretary Senior Vice President, Assistant 51 General Counsel and Assistant Secretary of AllianceBernstein Investments, Inc.**, with which she has been associated since prior to 2001. Joseph J. Mantineo Treasurer and Chief Senior Vice President of ABIS**, with 47 Financial Officer which he has been associated since prior to 2001. Vincent S. Noto Controller Vice President of ABIS**, with which 42 he has been associated since prior to 2001.
* The address for each of the Fund's officers is 1345 Avenue of the Americas, New York, NY 10105. ** The Adviser, AllianceBernstein Investments, Inc., ABIS and SCB & Co. 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 AllianceBernstein at 1-800-227-4618 for a free prospectus or SAI. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 55 Information Regarding the Review and Approval of the Fund's Investment Advisory Contract In this disclosure, the term "Fund" refers to AllianceBernstein Bond Fund, Inc., and the term "Portfolio" refers to Intermediate Bond Portfolio. The Fund's disinterested directors (the "directors") unanimously approved the continuance of the Investment Advisory Contract (the "Advisory Agreement") between the Fund and the Adviser in respect of the Portfolio at a meeting held on June 14, 2006. In preparation for the meeting, the directors had requested from the Adviser and received and evaluated extensive materials, including performance and expense information for other investment companies with similar investment objectives as the Fund derived from data compiled by Lipper Inc. ("Lipper"), which is not affiliated with the Adviser. The directors also reviewed an independent evaluation from the Fund's Senior Officer (who is also the Fund's Independent Compliance Officer) of the reasonableness of the advisory fees in the Advisory Agreement in respect of the Portfolio (as contemplated by the September 2004 Assurance of Discontinuance between the Adviser and the New York Attorney General) wherein the Senior Officer concluded that such fees were reasonable. In addition, the directors received a presentation from the Adviser and had an opportunity to ask representatives of the Adviser various questions relevant to the proposed approval. The directors noted that the Senior Officer's evaluation considered the following factors: management fees charged to institutional and other clients of the Adviser for like services; management fees charged by other mutual fund companies for like services; cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreement, excluding any intra-corporate profit; profit margins of the Adviser and its affiliates from supplying such services; possible economies of scale as the Portfolio grows larger; and nature and quality of the Adviser's services including the performance of the Portfolio. Prior to voting, the directors reviewed the proposed continuance of the Advisory Agreement in respect of the Portfolio with management and with experienced counsel who are independent of the Adviser and received a memorandum from such counsel discussing the legal standards for their consideration of the proposed continuance. The directors also discussed the proposed continuance in two private sessions at which only the directors, their independent counsel and the Fund's Independent Compliance Officer were present. In reaching their determinations relating to continuance of the Advisory Agreement in respect of the Portfolio, the directors considered all factors they believed relevant, including the following: 1. information comparing the performance of the Portfolio to other investment companies with similar investment objectives and to an index; 56 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO 2. the nature, extent and quality of investment, compliance, administrative and other services rendered by the Adviser; 3. payments received by the Adviser from all sources in respect of the Portfolio and all investment companies in the AllianceBernstein Funds complex; 4. the costs borne by, and profitability of, the Adviser and its affiliates in providing services to the Portfolio and to all investment companies in the AllianceBernstein Funds complex; 5. comparative fee and expense data for the Portfolio and other investment companies with similar investment objectives; 6. the extent to which economies of scale would be realized to the extent the Portfolio grows and whether fee levels reflect any economies of scale for the benefit of investors; 7. the Adviser's policies and practices regarding allocation of portfolio transactions of the Portfolio; 8. information about "revenue sharing" arrangements that the Adviser has entered into in respect of the Portfolio; 9. portfolio turnover rates for the Portfolio compared to other investment companies with similar investment objectives; 10. fall-out benefits that the Adviser and its affiliates receive from their relationships with the Portfolio; 11. information about fees charged by the Adviser to other clients with a substantially similar style as the Fund; 12. the Senior Officer's evaluation of the reasonableness of the fee payable to the Adviser in the Advisory Agreement; 13. the professional experience and qualifications of the Portfolio's portfolio management team and other senior personnel of the Adviser; and 14. the terms of the Advisory Agreement. The directors also considered their knowledge of the nature and quality of the services provided by the Adviser to the Portfolio gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser's integrity and competence ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 57 they have gained from that experience and the Adviser's responsiveness to concerns raised by them in the past, including the Adviser's willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. In their deliberations, the directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the overall arrangements between the Portfolio and the Adviser, as provided in the Advisory Agreement, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors reaching their determinations to approve the continuance of the Advisory Agreement in respect of the Portfolio (including their determinations that the Adviser should continue to be the investment adviser for the Portfolio, and that the fees payable to the Adviser pursuant to the Advisory Agreement are appropriate) were separately discussed by the directors. Nature, Extent and Quality of Services Provided by the Adviser The directors noted that, under the Advisory Agreement, the Adviser, subject to the oversight of the directors, administers the Portfolio's business and other affairs. The Adviser manages the investment of the assets of the Portfolio, including making purchases and sales of portfolio securities consistent with the Portfolio's investment objective and policies. Under the Advisory Agreement, the Adviser also provides the Portfolio with such office space, administrative and other services (exclusive of, and in addition to, any such services provided by any others retained by the Portfolio) and executive and other personnel as are necessary for the Portfolio's operations. The Adviser pays all of the compensation of directors of the Fund who are affiliated persons of the Adviser and of the officers of the Portfolio. The directors also considered that the Advisory Agreement provides that the Portfolio will reimburse the Adviser for the cost of certain clerical, accounting, administrative and other services provided at the Portfolio's request by employees of the Adviser or its affiliates. Requests for these "at no more than cost" reimbursements are approved by the directors on a quarterly basis and (to the extent requested and paid) result in a higher rate of total compensation from the Portfolio to the Adviser than the fee rates stated in the Portfolio's Advisory Agreement. The directors noted that the Adviser had waived reimbursement payments in recent periods from the Portfolio in light of the expense caps currently in effect for the Portfolio. 58 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement and noted that the scope of services provided by advisers of funds had expanded over time as a result of regulatory and other developments. The directors noted, for example, that the Adviser is responsible for maintaining and monitoring its own and, to varying degrees, the Portfolio's compliance programs, and that these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The directors considered the quality of the in-house investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Portfolio. The quality of administrative and other services, including the Adviser's role in coordinating the activities of the Portfolio's other service providers, also were considered. The directors also considered the Adviser's response to recent regulatory compliance issues affecting a number of the investment companies in the AllianceBernstein Funds complex. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Portfolio under the Advisory Agreement. Costs of Services Provided and Profitability to the Adviser The directors reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Portfolio to the Adviser for calendar years 2004 and 2005 that had been prepared with an updated expense allocation methodology. The directors noted that the updated methodology differed in various respects from the methodology used in prior years. The directors reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data, and noted the Adviser's representation to them that it believed that the methods of allocation used in preparing the profitability information were reasonable and appropriate and that the Adviser had previously discussed with the directors that there is no generally accepted allocation methodology for information of this type. The directors recognized that it is difficult to make comparisons of profitability from fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser's capital structure and cost of capital. In considering profitability information, the directors considered the effect of fall-out benefits on the Adviser's expenses, as well as the "revenue sharing" arrangements the Adviser has entered into with certain entities that distribute shares of the Portfolio. The directors focused on the profitability of the Adviser's relationship with the Portfolio before taxes and distribution expenses. The directors recognized that the Adviser should generally be entitled to earn a reasonable level of profits for the services it provides to the Portfolio and, based on their review, concluded that they were satisfied that the Adviser's level of profitability from its relationship with the Portfolio was not excessive. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 59 Fall-Out Benefits The directors considered that the Adviser benefits from soft dollar arrangements whereby it receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis. The directors noted that since the Portfolio does not engage in brokerage transactions, the Adviser does not receive soft dollar benefits in respect of portfolio transactions of the Portfolio. The directors also considered that the Distributor, which is a wholly-owned subsidiary of the Adviser, receives 12b-1 fees from the Portfolio in respect of classes of shares of the Portfolio that are subject to the Fund's 12b-1 plan and retains a portion of such 12b-1 fees, and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The directors also noted that certain affiliates of the Adviser distribute shares of the Portfolio and receive compensation in that connection and that a subsidiary of the Adviser provides transfer agency services to the Portfolio and receives compensation from the Portfolio for such services. The directors recognized that the Adviser's profitability would be somewhat lower if the Adviser's affiliates did not receive the benefits described above. The directors also believe that the Adviser derives reputational and other benefits from its association with the Portfolio. Investment Results In addition to the information reviewed by the directors in connection with the meeting, the directors receive detailed comparative performance information for the Portfolio at each regular Board meeting during the year. At the meeting, the directors reviewed information provided by the Fund's Senior Officer based on information obtained from a Lipper database showing performance for Class A shares of the Portfolio as compared to a group of 10 funds in its Lipper category selected by Lipper (the "Performance Group") and as compared to a universe of 69 to 45 funds (depending on the year) in its Lipper category selected by Lipper (the "Performance Universe") for periods ended April 30, 2006 over the 1-, 3- and 5-year periods. The directors also reviewed information prepared by the Adviser showing performance of the Class A Shares of the Portfolio as compared to the Lehman Brothers Aggregate Bond Index (the "Index") for periods ended April 30, 2006 over the 1-, 3-, 5-year and since inception periods (July 1999 inception). The directors noted that in the Performance Group comparison the Portfolio was in the 4th quintile in the 1-year period and 5th quintile in the 3- and 5-year periods, and in the Performance Universe comparison the Portfolio was in the 2nd quintile in the 1-year period and 4th quintile in the 3- and 5-year periods. The comparative information showed that the Portfolio underperformed the Index in all periods reviewed. Based on their review and their discussion of the reasons for the Portfolio's underperformance with the Adviser, and steps that had been taken by the Adviser in an effort to address such underper- 60 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO formance, the directors retained confidence in the Adviser's ability to continue to advise the Portfolio and concluded that the Portfolio's investment performance was understandable. The directors informed the Adviser that they planned to closely monitor the Portfolio's performance. Advisory Fees and Other Expenses The directors considered information provided by the Fund's Senior Officer based on information obtained from a Lipper database showing the actual advisory fee rate paid by the Portfolio to the Adviser and the fee rates paid by the other funds in the same Lipper category as the Portfolio. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors also considered the fees the Adviser charges other clients with a substantially similar investment style as the Portfolio. For this purpose, they reviewed information in the Adviser's Form ADV and a chart prepared by the Adviser disclosing the institutional fee schedule for institutional products managed by it that have a substantially similar investment style as the Portfolio. They had previously received an oral presentation from the Adviser that supplemented such information. The directors noted that the institutional fee schedule for clients with a substantially similar investment style as the Portfolio had breakpoints at much lower asset levels than those in the fee schedule applicable to the Portfolio and that the application of such fee schedule to the level of assets of the Portfolio would result in a fee rate that would be significantly lower than that in the Portfolio's Advisory Agreement. The directors noted that the Adviser may, in some cases, negotiate fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such negotiated arrangements. The directors also reviewed information that indicated that the Adviser sub-advises another registered investment company with similar investment strategies as the Portfolio at a lower fee rate than the Portfolio. The Adviser reviewed with the directors the significant differences in the scope of services it provides to institutional clients and sub-advised funds and to the Portfolio. For example, the Advisory Agreement requires the Adviser to provide, in addition to investment advice, office facilities and officers (including officers to provide required certifications). The Adviser also coordinates the provision of services to the Portfolio by non-affiliated service providers and is responsible for the compensation of the Fund's Independent Compliance Officer and certain related expenses. The provision of these non-advisory services involves costs and exposure to liability. The Adviser explained that many of these services normally are not provided to non-investment company clients or to investment company clients when the Adviser acts in a pure sub-advisory capacity, and that fees charged to the Portfolio reflect the costs and risks of the additional obligations. The Adviser also noted that since the Portfolio is constantly issuing and ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 61 redeeming its shares, it is more difficult to manage than an institutional account, where the assets are relatively stable. In light of these facts, the directors did not place significant weight on these fee comparisons. The directors also considered the total expense ratio of the Class A shares of the Portfolio in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of comparable funds and an Expense Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the Portfolio. The Class A expense ratio of the Portfolio was based on the Portfolio's latest fiscal year expense ratio. The directors recognized that the expense ratio information for the Portfolio potentially reflected on the Adviser's provision of services, as the Adviser is responsible for coordinating services provided to the Portfolio by others. The directors noted that it was likely that the expense ratios of some funds in the Portfolio's Lipper category also were lowered by waivers or reimbursements by those funds' investment advisers, which in some cases were voluntary and perhaps temporary. The directors noted that the Portfolio's actual advisory fee rate of 45 basis points was significantly lower than the Expense Group median. The directors noted that in the Portfolio's latest fiscal year the administrative expense reimbursement by the Portfolio pursuant to the Advisory Agreement of two basis points had been waived by the Adviser. The directors further noted that the Portfolio's total expense ratio, which benefits from a cap implemented by the Adviser, was slightly lower than the Expense Group median, and somewhat higher than the Expense Universe median. The directors noted that the Adviser had recently reviewed with them steps being taken that are intended to reduce expenses of the AllianceBernstein Funds. The directors concluded that the Fund's expense ratio was acceptable. Economies of Scale The directors noted that the advisory fee schedule for the Portfolio contains breakpoints so that, if assets were to increase over the breakpoint levels, the fee rates would be reduced on the incremental assets. The directors also considered a presentation by an independent consultant discussing economies of scale issues in the mutual fund industry. The directors believe that economies of scale are realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no uniform methodology for establishing breakpoints that give effect to fund-specific services provided by the Adviser and to the economies of scale that the Adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect the Portfolio's operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Portfolio, there is no uniformity or pattern in the fees and asset levels at which 62 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO breakpoints (if any) apply. Depending on the age and size of a particular fund and its adviser's cost structure, different conclusions can be drawn as to whether there are economies of scale to be realized at any particular level of assets, notwithstanding the intuitive conclusion that such economies exist, or will be realized at some level of total assets. Moreover, because different advisers have different cost structures and service models, it is difficult to draw meaningful conclusions from the comparison of a fund's advisory fee breakpoints with those of comparable funds. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Portfolio's breakpoint arrangements would result in a sharing of economies of scale in the event of a very significant increase in the Portfolio's net assets. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 63 THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1) The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the "Adviser") and AllianceBernstein Bond Fund, Inc. (the "Fund") in respect of AllianceBernstein Intermediate Bond Portfolio (the "Portfolio").(2) The evaluation of the Investment Advisory Agreement was prepared by Philip L. Kirstein, the Senior Officer of the Fund, for the Directors of the Fund, as required by an August 2004 agreement between the Adviser and the New York State Attorney General (the "NYAG"). The Senior Officer's evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Directors of the Fund to perform its duties pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees proposed to be paid by the Portfolio which was provided to the Directors in connection with their review of the proposed approval of the continuance of the Investment Advisory Agreement. The Senior Officer's evaluation considered the following factors: 1. Advisory fees charged to institutional and other clients of the Adviser for like services; 2. Advisory fees charged by other mutual fund companies for like services; 3. Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit; 4. Profit margins of the Adviser and its affiliates from supplying such services; 5. Possible economies of scale as the Portfolio grows larger; and 6. Nature and quality of the Adviser's services including the performance of the Portfolio. PORTFOLIO ADVISORY FEES, EXPENSE CAPS, REIMBURSEMENTS & RATIOS The Adviser proposed that the Portfolio pay the advisory fee set forth in the table below for receiving the services to be provided pursuant to the Investment Advisory Agreement. The fee schedule below, implemented in January 2004 in (1) It should be noted that the information in the fee summary was completed on October 23, 2006 and presented to the Board of Directors on October 31-November 2, 2006. (2) Future references to the Portfolio do not include "AllianceBernstein." References in the fee summary pertaining to performance and expense ratios refer to the Class A shares of the Portfolio. 64 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO connection with the Adviser's settlement with the NYAG in December 2003, is based on a master schedule that contemplates eight categories of funds with almost all funds in each category having the same advisory fee schedule.(3) Net Assets 09/30/06 Category (million) Advisory Fee Portfolio - ------------------------------------------------------------------------------- Low Risk $126.5 45 bp on 1st $2.5 billion Intermediate Bond Income 40 bp on next $2.5 billion Portfolio 35 bp on the balance The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Portfolio. During the Portfolio's most recently completed fiscal year, the Adviser waived $89,000 (0.02% of the Portfolio's average daily net assets) that it would have received for such services. The Adviser agreed to waive that portion of its advisory fees and/or reimburse the Portfolio for that portion of the Portfolio's total operating expenses to the degree necessary to limit the Portfolio's expense ratios to the amounts set forth below for the Portfolio's current fiscal year. The waiver is terminable by the Adviser at the end of the Portfolio's fiscal year upon at least 60 days written notice. In addition, set forth below are the Portfolio's gross expense ratios as of the Portfolio's most recent semi-annual period: Expense Cap Pursuant to Gross Expense Limitation Expense Fiscal Portfolio Undertaking Ratio(4) Year End - ---------------------------------------------------------------------------- Intermediate Bond Advisor 0.68% 1.31% October 31 Portfolio Class A 0.98% 1.61% Class B 1.68% 2.35% Class C 1.68% 2.34% Class R 1.18% 1.70% Class K 0.93% 1.36% Class I 0.68% 1.12% (3) Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser's settlement with the NYAG. (4) Annualized. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 65 I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS The advisory fees charged to investment companies which the Adviser manages and sponsors are normally higher than those charged to similar sized institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Portfolio that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers, who among other responsibilities make the certifications required under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the Portfolio's third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative, legal and compliance requirements for the Portfolio are more costly than those for institutional assets due to the greater complexities and time required for investment companies.(5) Also, retail mutual funds managed by the Adviser are widely held. Servicing the Portfolio's investors is more time consuming and labor intensive compared to institutional clients since the Adviser needs to communicate with a more extensive network of financial intermediaries and shareholders. In addition, managing the cash flow of an investment company may be more difficult than that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly if the Portfolio is in net redemption and the Adviser is frequently forced to sell securities to raise cash for redemptions. However, managing a fund with positive cash flow may be easier at times than managing a stable pool of assets. Finally, in recent years, investment advisers have been sued by institutional clients and have suffered reputational damage both by the attendant publicity and outcomes other than complete victories. Accordingly, the legal and reputational risks associated with institutional accounts are greater than previously thought, although still not equal to those related to the mutual fund industry. Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, it is worth considering information regarding the advisory fees charged to institutional accounts with a substantially similar investment style as the Portfolio.(6) In addition to the AllianceBernstein Institutional fee schedule, set forth below is what would have been the effective advisory fee of the Portfolio (5) It should be noted that a portion of the Adviser's expenses for certain accounting, administrative, legal and compliance are reimbursed by the Portfolio to the Adviser, although during the most recently completed fiscal year, the Adviser waived the reimbursement amount in its entirety. (6) The Adviser has indicated that with respect to institutional accounts with assets greater than $300 million, it will negotiate a fee schedule, although it should be noted that there were no such institutional accounts that are similar in investment style as the Portfolio, which opened in the last three years. Discounts that are negotiated vary based upon each client relationship. 66 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO had the AllianceBernstein Institutional fee schedule been applicable to the Portfolio versus the Portfolio's advisory fees based on September 30, 2006 net assets.
Net Assets AllianceBernstein ("AB") Effective Portfolio 09/30/06 Institutional ("Inst.") AB Inst. Advisory Portfolio ($MIL) Fee Schedule Adv. Fee Fee - ------------------------------------------------------------------------------------------- Intermediate Bond $126.5 U.S. Core Schedule 0.263% 0.450% Portfolio 40 bp on 1st $20 million 25 bp on next $80 million 20 bp on next $100 million 15 bp on the balance Minimum Account Size: $20 m
The Adviser manages Sanford C. Bernstein Fund, Inc. ("SCB Fund"), an open-end management investment company. The Intermediate Duration Portfolio of SCB Fund, has a similar investment style as the Portfolio. The following table shows the fee schedule of the Intermediate Duration Portfolio: Portfolio SCB Fund Portfolio Fee Schedule - ------------------------------------------------------------------------------- Intermediate Bond Intermediate Duration Portfolio 50 bp on 1st $1 billion Portfolio 45 bp on next $2 billion 40 bp on next $2 billion 35 bp thereafter The Adviser provides sub-advisory investment services to certain other investment companies managed by other fund families. The Adviser charges the following fees for the following sub-advisory relationship: Portfolio Sub-advised Fund Fee Schedule - ------------------------------------------------------------------------------- Intermediate Bond Client No. 1(7) 0.30% on first $500 million Portfolio 0.25% on first $500 million 0.20% on first $500 million 0.15% on next $1.5 billion 0.12% thereafter It is fair to note that the services the Adviser provides pursuant to sub-advisory agreements are generally confined to the services related to the investment process; in other words, they are not as comprehensive as the services provided to the Portfolio by the Adviser. In addition, to the extent that the sub-advisory relationship are with affiliates of the Adviser, the fee schedule may not reflect arms-length bargaining or negotiations. (7) The client is an affiliate of the Adviser. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 67 II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc. ("Lipper"), an analytical service that is not affiliated with the Adviser, compared the fees charged to the Portfolio with fees charged to other investment companies for similar services by other investment advisers. Lipper's analysis included the Portfolio's ranking with respect to the proposed advisory fee relative to the median of the Portfolio's Lipper Expense Group ("EG") at the approximate current asset level of the Portfolio.(8) Lipper describes an EG as a representative sample of comparable funds. Lipper's standard methodology for screening funds to be included in an EG entails the consideration of several fund criteria, including fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes.(9) An EG will typically consist of seven to twenty funds. Contractual Lipper Management Expense Group Portfolio Fee(10) Median Rank - ------------------------------------------------------------------------------- Intermediate Bond Portfolio 0.450 0.625 2/13 Lipper also compared the Fund's most recently completed fiscal year total expense ratio to the medians of the Fund's EG and Lipper Expense Universe ("EU"). The EU is as a broader group compared to the EG, consisting of all funds that have the same investment classification/objective and load type as the subject Fund.(11) (8) The contractual management fee is calculated by Lipper using the Portfolio's contractual management fee rate at a hypothetical asset level. The hypothetical asset level is based on the combined net assets of all classes of the Portfolio, rounded up to the next $25 million. Lipper's total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of "1" means that the Portfolio has the lowest effective fee rate in the Lipper peer group. (9) Lipper does not consider average account size when constructing EGs. Funds with relatively small average account sizes tend to have higher transfer agent expense ratio than comparable sized funds that have relatively large average account sizes. Note that there are limitations on Lipper expense category data because different funds categorize expense differently. (10) The contractual management fee would not reflect any expense reimbursements made by the Portfolio to the Adviser for certain clerical, legal, accounting, administrative, and other services. As previously noted, the Adviser waived such expense reimbursement. In addition, the contractual management fee does not reflect any advisory fee waivers or expense reimbursements for the expense caps that effectively reduce the actual management fee. (11) Except for asset (size) comparability, Lipper uses the same criteria for selecting a Lipper Expense Group when selecting a Lipper Expense Universe. Unlike the Lipper Expense Group, the Lipper Expense Universe allows for the same adviser to be represented by more than just one fund. 68 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO Lipper Lipper Expense Expense Expense Ratio Group Universe Portfolio (%)(12) Median (%) Rank Median (%) Rank - ------------------------------------------------------------------------------- Intermediate Bond Portfolio 0.980 0.995 6/13 0.980 47/67 Based on this analysis, the Portfolio has a more favorable ranking on a management fee basis than it does on a total expense ratio basis. III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. A consultant was retained by the Senior Officer to work with the Adviser's personnel to align the Adviser's two profitability reporting systems. The alignment, which now has been completed, allows the Adviser's management and the Directors to receive consistent presentations of the financial results and profitability although the two profitability reporting systems operate independently. See Section IV for additional discussion. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The profitability information for the Portfolio prepared by the Adviser for the Board of Directors was reviewed by the Senior Officer and the consultant. The Adviser's profitability from providing investment advisory services to the Portfolio decreased during calendar year 2005 relative to 2004. In addition to the Adviser's direct profits from managing the Portfolio, certain of the Adviser's affiliates have business relationships with the Portfolio and may earn a profit from providing other services to the Portfolio. The courts have referred to this type of business opportunity as "fall-out benefits" to the Adviser and indicated that such benefits should be factored into the evaluation of the total relationship between the Portfolio and the Adviser. Neither case law nor common business practice precludes the Adviser's affiliates from earning a reasonable profit on this type of relationship provided the affiliates' charges and services are competitive. These affiliates provide transfer agent and distribution related services to the Portfolio and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads and contingent deferred sales charges ("CDSC"). AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is the Portfolio's principal underwriter. ABI and the Adviser have disclosed in the Portfolio's prospectus that they may make revenue sharing payments from their own resources, in addition to resources derived from sales loads and Rule 12b-1 (12) Most recently completed fiscal year Class A share total expense ratio. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 69 fees, to firms that sell shares of the Portfolio. In 2005, ABI paid approximately 0.042% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $18.0 million for distribution services and educational support (revenue sharing payments). For 2006, it is anticipated, ABI will pay approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $17.5 million.(13) During the Portfolio's most recently completed fiscal year, ABI received from the Portfolio $3,906, $903,258 and $70,577 in front-end sales charges, Rule 12b-1 and CDSC fees, respectively. Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. ("ABIS"), the affiliated transfer agent for the Portfolio, are charged on a per account basis, based on the level of service provided and the class of share held by the account. ABIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. ABIS' after-tax profitability increased in 2005 in comparison to 2004. During the Portfolio's most recently completed fiscal year, ABIS received $908,572 in fees from the Portfolio.(14) V. POSSIBLE ECONOMIES OF SCALE The Adviser has indicated that the breakpoints in the fee schedule being proposed reflect a sharing of economies of scale to the extent they exist. Based on some of the professional literature that has considered economies of scale in the mutual fund industry it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such investments in their business to provide improved services, there may be a sharing of economies of scale without a reduction in advisory fees. An independent consultant, retained by the Senior Officer, made a presentation to the Board of Directors regarding possible economies of scale or scope in the mutual fund industry. Based on the presentation, it was evident that fund management companies benefit from economies of scale. However, due to lack of (13) ABI currently inserts the "Advance" in quarterly account statements and pays the incremental costs associated with the mailing. The incremental cost is less than what an "independent mailing" would cost. (14) The fees disclosed are net of any expense offsets with ABIS. An expense offset is created by the interest earned on the positive cash balance that occur within the transfer agent account as there is a one day lag with regards to money movement from the shareholder's account to the transfer agent's account and then the transfer agent's account to the Portfolio's account. During the Portfolio's most recently completed fiscal year, the fees paid by the Portfolio to ABIS were reduced by $3,770 under the offset agreement between the Portfolio and ABIS. 70 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO cost data, economists, who have written on this subject, had to infer facts about the costs from the behavior of fund expenses; there was a lack of consensus among economists as to whether economies of scale were being passed on to the shareholders. In the meantime, it is clear that to the extent a fund's assets were to exceed the initial breakpoint its shareholders benefit from a lower fee rate. VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF THE PORTFOLIO. With assets under management of approximately $659 billion as of September 30, 2006, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Portfolio. The information below shows the 1, 3, and 5 year performance returns and rankings of the Portfolio(15) relative to the Portfolio's Lipper Performance Group ("PG") and Lipper Performance Universe ("PU")(16) for the periods ended June 30, 2006.(17) Intermediate Portfolio Bond Portfolio Return PG Median PU Median PG Rank PU Rank - ------------------------------------------------------------------------------- 1 year -0.98 -1.25 -0.98 5/13 43/82 3 year 1.51 1.64 1.78 8/12 46/69 5 year 4.07 4.29 4.39 7/11 34/52 Set forth below are the 1, 3, and 5 year and since inception performance returns of the Portfolio (in bold) versus its benchmark:(18) Periods Ending June 30, 2006 Annualized Performance - ------------------------------------------------------------------------------- 1 3 5 Since Portfolios Year Year Year Inception - ------------------------------------------------------------------------------- Intermediate Bond Portfolio -0.98 1.51 4.07 4.95 Lehman Brothers Aggregate Bond Index -0.81 2.05 4.97 5.92 (15) The performance returns and rankings are for the Class A shares of the Portfolio. It should be noted that the performance returns of the Portfolio that is shown was provided by the Adviser. Lipper maintains its own database that includes the Portfolio's performance returns. However, differences in the distribution price (ex-date versus payable date) and rounding differences may cause the Adviser's own performance returns of the Portfolio to be one or two basis points different from Lipper. To maintain consistency in this evaluation, the performance returns of the Portfolio, as reported by the Adviser, are provided instead of Lipper. (16) The Portfolio's PG is identical to the Portfolio's EG. The Portfolio's PU is not identical to the Portfolio's EU. Outliers and funds with negative management fees are excluded from EUs, but not necessarily from PUs. (17) Note that the current Lipper investment classification/objective dictates the PG and PU throughout the life of the Portfolio even if a Portfolio may have had a different investment classification/objective at different points in time. (18) The Adviser provided Portfolio and benchmark performance return information for periods through June 30, 2006. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 71 CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed advisory fee for the Portfolio is reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of the Portfolio is based on an evaluation of all of these factors and no single factor was dispositive. Dated: December 1, 2006 72 o ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS 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 Portfolio Global & International Global Health Care Fund Global Research Growth Fund Global Technology Fund Greater China '97 Fund International Growth Fund International Research Growth Fund - -------------------------------------------------- Value Funds - -------------------------------------------------- Domestic Balanced Shares Focused Growth & Income Fund Growth & Income Fund Real Estate Investment Fund Small/Mid-Cap Value Fund Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund - -------------------------------------------------- Taxable Bond Funds - -------------------------------------------------- Global Government Income Trust* Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Intermediate Bond Portfolio* Short Duration Portfolio U.S. Government Portfolio - -------------------------------------------------- Municipal Bond Funds - -------------------------------------------------- National Michigan Insured National Minnesota Arizona New Jersey California New York Insured California Ohio Florida Pennsylvania Massachusetts 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 - -------------------------------------------------- Retirement Strategies Funds - -------------------------------------------------- 2000 Retirement Strategy 2005 Retirement Strategy 2010 Retirement Strategy 2015 Retirement Strategy 2020 Retirement Strategy 2025 Retirement Strategy 2030 Retirement Strategy 2035 Retirement Strategy 2040 Retirement Strategy 2045 Retirement Strategy 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 website 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 February 1, 2006, Global Government Income Trust was named Americas Government Income Trust and Intermediate Bond Portfolio was named Quality Bond Portfolio. ** An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO o 73 ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS IB-0152-1006 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 12(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 David H. Dievler and William H. Foulk, Jr. 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 registered public accounting firm 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 advice and education related to accounting and auditing issues and quarterly press release review (for those Funds which issue press releases), and preferred stock maintenance testing (for those Funds that issue preferred stock); and (iii) tax compliance, tax advice and tax return preparation. Audit-Related Audit Fees Fees Tax Fees ---------- ------------- -------- AllianceBernstein Quality 2005 $45,000 $3,872 $9,139 Bond Portfolio 2006 $50,000 $5,406 $12,225 (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 registered public accounting firm. 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, which include preparing an annual internal control report pursuant to Statement on Auditing Standards No. 70 ("Service Affiliates"):
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) ---------------------- --------------------- AllianceBernstein Quality 2005 $892,007 [ $180,714 ] Bond Portfolio ( $171,575 ) ( $9,139 ) 2006 $1,027,519 ($149,146) ($136,921) ($12,225)
(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 registered public accounting firm 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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the registrant. ITEM 10. 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 11. 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-3 (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 changes in the registrant's internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2 hereof 12 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (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 29, 2006 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 By: /s/ Joseph J. Mantineo ----------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer Date: December 29, 2006 EX-99.CODE ETH 2 edg12097_ethics.txt Exhibit 12(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: * honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * 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; * compliance with applicable laws and governmental rules and regulations; * the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and * 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: * 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; * 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; * 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: * service as a director on the board of directors or trustees of any public or private company (other than a not-for-profit organization); * the receipt of any non-nominal gifts; * 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; * 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; * 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 * Each Covered Officer should familiarize himself with the disclosure requirements and disclosure controls and procedures generally applicable to the Company; * 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; * 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 * 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: * 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; * annually thereafter affirm to the General Counsel that he has complied with the requirements of the Code; * complete at least annually a questionnaire relating to affiliations or other relationships that may give rise to conflicts of interest; * 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 * 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: * the General Counsel will take all appropriate action to investigate any potential violations reported to him; * 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; * any matter that the General Counsel believes is a material violation will be reported to the Committee; * 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; * the Committee will be responsible for granting waivers, as appropriate; and * 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 Principal Executive Officer Principal Financial and Accounting Officer Controller EX-99.CERT 3 edg12097_ex302b.txt Exhibit 12(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, President of AllianceBernstein Bond Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of AllianceBernstein Bond Fund, Inc.; 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 registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, 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) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant'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 d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant'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 registrant's internal control over financial reporting. Date: December 29, 2006 /s/ Marc O. Mayer ---------------------- Marc O. Mayer President Exhibit 12(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Joseph J. Mantineo, Treasurer and Chief Financial Officer of AllianceBernstein Bond Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of AllianceBernstein Bond Fund, Inc.; 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 registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, 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) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures 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 d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant'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 registrant's internal control over financial reporting. Date: December 29, 2006 /s/ Joseph J. Mantineo ------------------------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer EX-99.906 CERT 4 edg12097_ex906c.txt EXHIBIT 12(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, 2006 (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 29, 2006 By: /s/ Marc O. Mayer ------------------ Marc O. Mayer President By: /s/ Joseph J. Mantineo ----------------------- Joseph J. Mantineo 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-----