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)
Joseph J. Mantineo
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrants telephone number, including area code: (800) 221-5672
Date of fiscal year end: April 30, 2014
Date of reporting period: April 30, 2014
ITEM 1. | REPORTS TO STOCKHOLDERS. |
ANNUAL REPORT
AllianceBernstein Bond Fund Government Reserves Portfolio
April 30, 2014
Annual Report
Investment Products Offered
Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed |
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.alliancebernstein.com or contact your AllianceBernstein Investments representative. Please read the prospectus and/or summary prospectus carefully before investing.
This shareholder report must be preceded or accompanied by the Funds prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Funds 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 AllianceBernsteins website at www.alliancebernstein.com, or go to the Securities and Exchange Commissions (the Commission) website 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 Funds Forms N-Q are available on the Commissions website at www.sec.gov. The Funds Forms N-Q may also be reviewed and copied at the Commissions Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com.
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AllianceBernstein family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the manager of the funds.
AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P.
EXPENSE EXAMPLE
(unaudited)
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 Funds actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Funds 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 Account Value November 1, 2013 |
Ending Account Value April 30, 2014 |
Expenses Paid During Period* |
Annualized Expense Ratio* |
|||||||||||||
Class 1 | ||||||||||||||||
Actual |
$ | 1,000 | $ | 1,000.10 | $ | 0.35 | 0.07 | % | ||||||||
Hypothetical** |
$ | 1,000 | $ | 1,024.45 | $ | 0.35 | 0.07 | % |
* | Expenses are equal to the classess annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
** | Assumes 5% annual return before expenses. |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 1 |
Expense Example
PORTFOLIO OF INVESTMENTS
April 30, 2014
Yield* | Principal Amount (000) |
U.S. $ Value | ||||||||||
|
||||||||||||
SHORT-TERM |
||||||||||||
U.S. Government & Government Sponsored Agency |
||||||||||||
Federal Farm Credit Bank |
||||||||||||
3/04/15(a) |
0.097 | % | $ | 5,000 | $ | 4,999,787 | ||||||
8/06/14(a) |
0.103 | % | 7,500 | 7,500,000 | ||||||||
4/20/15(a) |
0.112 | % | 5,000 | 5,000,296 | ||||||||
5/12/14(a) |
0.113 | % | 1,480 | 1,480,001 | ||||||||
7/25/14(a) |
0.122 | % | 600 | 600,046 | ||||||||
7/16/14(a) |
0.132 | % | 4,000 | 4,000,258 | ||||||||
11/26/14(a) |
0.132 | % | 475 | 475,057 | ||||||||
6/06/14(a) |
0.133 | % | 1,600 | 1,600,049 | ||||||||
9/19/14(a) |
0.140 | % | 11,170 | 11,170,875 | ||||||||
3/26/15(a) |
0.152 | % | 2,140 | 2,140,878 | ||||||||
3/20/15(a) |
0.152 | % | 1,000 | 1,000,484 | ||||||||
8/27/14(a) |
0.162 | % | 1,400 | 1,400,281 | ||||||||
2/27/15(a) |
0.162 | % | 3,000 | 3,001,505 | ||||||||
4/27/15(a) |
0.167 | % | 5,700 | 5,703,466 | ||||||||
4/15/15(a) |
0.172 | % | 5,000 | 5,003,189 | ||||||||
4/23/15(a) |
0.172 | % | 300 | 300,180 | ||||||||
9/29/14(a) |
0.182 | % | 11,115 | 11,119,312 | ||||||||
9/08/14(a) |
0.193 | % | 1,085 | 1,085,353 | ||||||||
1/26/15(a) |
0.230 | % | 4,250 | 4,253,650 | ||||||||
5/05/15(a) |
0.230 | % | 500 | 500,563 | ||||||||
8/28/14 |
0.250 | % | 500 | 500,240 | ||||||||
7/14/14(a) |
0.280 | % | 1,200 | 1,200,371 | ||||||||
9/15/14(a) |
0.310 | % | 1,500 | 1,500,970 | ||||||||
5/19/14(a) |
0.350 | % | 225 | 225,024 | ||||||||
6/13/14(a) |
0.360 | % | 10,100 | 10,103,257 | ||||||||
5/29/14(a) |
0.380 | % | 2,650 | 2,650,553 | ||||||||
6/02/14 |
1.900 | % | 2,525 | 2,528,945 | ||||||||
9/22/14 |
3.000 | % | 500 | 505,579 | ||||||||
9/30/14 |
8.160 | % | 500 | 516,637 | ||||||||
Federal Home Loan Bank |
||||||||||||
8/15/14(a) |
0.067 | % | 4,100 | 4,099,672 | ||||||||
8/22/14(a) |
0.082 | % | 9,200 | 9,199,512 | ||||||||
6/06/14(a) |
0.093 | % | 14,400 | 14,400,093 | ||||||||
8/12/14(a) |
0.098 | % | 15,000 | 15,000,024 | ||||||||
6/11/14 |
0.100 | % | 2,490 | 2,489,984 | ||||||||
7/30/14 |
0.100 | % | 15,000 | 14,999,250 | ||||||||
7/15/14(a) |
0.102 | % | 10,350 | 10,349,994 | ||||||||
7/21/14(a) |
0.103 | % | 15,000 | 15,000,000 | ||||||||
8/19/14(a) |
0.110 | % | 16,800 | 16,800,005 | ||||||||
6/10/14(a) |
0.120 | % | 20,000 | 20,001,068 | ||||||||
6/03/14(a) |
0.121 | % | 20,800 | 20,800,903 | ||||||||
6/17/14(a) |
0.121 | % | 5,000 | 5,000,207 |
2 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Portfolio of Investments
Yield* | Principal Amount (000) |
U.S. $ Value | ||||||||||
|
||||||||||||
5/23/14(a) |
0.122 | % | $ | 13,015 | $ | 13,015,288 | ||||||
6/25/14(a) |
0.132 | % | 24,300 | 24,301,831 | ||||||||
12/09/14(a) |
0.135 | % | 4,000 | 4,000,394 | ||||||||
7/25/14 |
0.190 | % | 940 | 940,192 | ||||||||
6/11/14(a) |
0.240 | % | 3,000 | 3,000,476 | ||||||||
6/04/14(a) |
0.250 | % | 12,170 | 12,171,941 | ||||||||
6/18/15(a) |
0.735 | % | 1,000 | 1,006,722 | ||||||||
5/28/14 |
1.375 | % | 800 | 800,750 | ||||||||
6/13/14 |
2.500 | % | 2,780 | 2,787,885 | ||||||||
6/03/14 |
3.050 | % | 2,000 | 2,005,302 | ||||||||
6/18/14 |
5.250 | % | 2,405 | 2,421,184 | ||||||||
6/13/14 |
5.375 | % | 4,410 | 4,437,559 | ||||||||
Federal Home Loan Bank Discount Notes |
||||||||||||
6/11/14 |
0.050 | % | 4,300 | 4,299,755 | ||||||||
6/11/14 |
0.060 | % | 1,795 | 1,794,888 | ||||||||
5/21/14 |
0.070 | % | 20,500 | 20,499,203 | ||||||||
5/07/14 |
0.080 | % | 12,100 | 12,099,833 | ||||||||
5/07/14 |
0.100 | % | 430 | 429,993 | ||||||||
Federal Home Loan Mortgage Corp. |
||||||||||||
7/30/14 |
1.000 | % | 1,465 | 1,468,221 | ||||||||
7/28/14 |
3.000 | % | 3,165 | 3,187,059 | ||||||||
7/15/14 |
5.000 | % | 4,129 | 4,170,409 | ||||||||
Federal Home Loan Mortgage Corp. Discount Notes |
0.100 | % | 16,667 | 16,666,491 | ||||||||
Federal National Mortgage Association |
||||||||||||
6/20/14(a) |
0.132 | % | 1,900 | 1,900,100 | ||||||||
1/20/15(a) |
0.162 | % | 3,882 | 3,883,536 | ||||||||
6/23/14(a) |
0.360 | % | 1,075 | 1,075,378 | ||||||||
8/25/14(a) |
0.370 | % | 1,500 | 1,501,170 | ||||||||
1/27/15(a) |
0.370 | % | 1,800 | 1,803,239 | ||||||||
11/21/14(a) |
0.490 | % | 945 | 946,915 | ||||||||
12/19/14 |
0.750 | % | 500 | 501,886 | ||||||||
8/28/14 |
0.875 | % | 2,893 | 2,900,313 | ||||||||
5/15/14 |
2.500 | % | 9,384 | 9,392,697 | ||||||||
Federal National Mortgage Association Discount Notes |
0.055 | % | 3,000 | 2,999,716 | ||||||||
U.S. Treasury Notes |
||||||||||||
7/15/14 |
0.625 | % | 20,000 | 20,022,192 | ||||||||
5/15/14 |
1.000 | % | 10,000 | 10,003,460 | ||||||||
8/31/14 |
2.375 | % | 21,100 | 21,259,547 | ||||||||
10/31/14 |
2.375 | % | 15,000 | 15,170,656 | ||||||||
6/30/14 |
2.625 | % | 3,000 | 3,012,615 | ||||||||
7/31/14 |
2.625 | % | 15,000 | 15,095,215 | ||||||||
|
|
|||||||||||
487,181,529 | ||||||||||||
|
|
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 3 |
Portfolio of Investments
Principal Amount (000) |
U.S. $ Value | |||||||||
|
||||||||||
Repurchase Agreements 2.0% |
||||||||||
Deutsche Bank 0.05% dated 4/30/14 due 5/01/14 in the amount of $10,000,014 (collateralized by $10,198,800 U.S. Treasury Note, 0.25%, due 10/31/15, value $10,000,024) |
$ | 10,000 | $ | 10,000,000 | ||||||
|
|
|||||||||
Total Investments 99.9% |
497,181,529 | |||||||||
Other assets less liabilities 0.1% |
603,588 | |||||||||
|
|
|||||||||
Net Assets 100.0% |
$ | 497,785,117 | ||||||||
|
|
* | Represents annualized yield from date of purchase for discount securities, and stated interest rate for interest-bearing securities. |
(a) | Floating Rate Security. Stated interest rate was in effect at April 30, 2014. |
See notes to financial statements.
4 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Portfolio of Investments
STATEMENT OF ASSETS & LIABILITIES
April 30, 2014
Assets | ||||
Investments in securities, at value (cost $497,181,529) |
$ | 497,181,529 | ||
Cash |
36,859 | |||
Interest receivable |
751,961 | |||
Unamortized offering expense |
608 | |||
|
|
|||
Total assets |
497,970,957 | |||
|
|
|||
Liabilities | ||||
Payable to Advisor |
90,080 | |||
Audit fee payable |
31,017 | |||
Custody fee payable |
19,265 | |||
Legal fee payable |
10,289 | |||
Payable for shares of beneficial interest redeemed |
123 | |||
Accrued expenses |
35,066 | |||
|
|
|||
Total liabilities |
185,840 | |||
|
|
|||
Net Assets |
$ | 497,785,117 | ||
|
|
|||
Composition of Net Assets | ||||
Shares of beneficial interest, at par |
$ | 497,790 | ||
Additional paid-in capital |
497,282,515 | |||
Distributions in excess of net investment income |
(3,740 | ) | ||
Accumulated net realized gain on investment transactions |
8,552 | |||
|
|
|||
$ | 497,785,117 | |||
|
|
Net Asset Value Per Share27 billion shares of beneficial interest authorized, $.001 par value
Class | Net Assets | Shares Outstanding |
Net Asset Value |
|||||||||
|
||||||||||||
1 | $ | 497,785,117 | 497,790,491 | $ | 1.00 | |||||||
|
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 5 |
Statement of Assets & Liabilities
STATEMENT OF OPERATIONS
For the Period May 6, 2013(a) to April 30, 2014
Investment Income | ||||||||
Interest |
$ | 393,849 | ||||||
|
|
|||||||
Expenses | ||||||||
Advisory fee (see Note B) |
$ | 836,295 | ||||||
Distribution feeClass 1 |
418,147 | |||||||
Transfer agencyClass 1 |
25,820 | |||||||
Custodian |
112,854 | |||||||
Amortization of offering expenses |
93,592 | |||||||
Administrative |
76,355 | |||||||
Legal |
37,001 | |||||||
Audit |
36,020 | |||||||
Registration fees |
31,149 | |||||||
Printing |
15,040 | |||||||
Trustees fees |
8,216 | |||||||
Miscellaneous |
29,335 | |||||||
|
|
|||||||
Total expenses |
1,719,824 | |||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) |
(965,646 | ) | ||||||
Less: expenses waived and reimbursed by the Distributor (see Note C) |
(418,147 | ) | ||||||
Less: expenses waived by the Transfer Agent |
(25,820 | ) | ||||||
|
|
|||||||
Net expenses |
310,211 | |||||||
|
|
|||||||
Net investment income |
83,638 | |||||||
|
|
|||||||
Realized Gain on Investment Transactions | ||||||||
Net realized gain on investment transactions |
8,552 | |||||||
|
|
|||||||
Net Increase in Net Assets from Operations |
$ | 92,190 | ||||||
|
|
(a) | Commencement of operations. |
See notes to financial statements.
6 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Statement of Operations
STATEMENT OF CHANGES IN NET ASSETS
May 6, 2013(a) to April 30, 2014 |
||||
Increase in Net Assets from Operations | ||||
Net investment income |
$ | 83,638 | ||
Net realized gain on investment transactions |
8,552 | |||
|
|
|||
Net increase in net assets from operations |
92,190 | |||
Dividends to Shareholders from | ||||
Net investment income |
||||
Class 1 |
(97,564 | ) | ||
Transactions in Shares of Beneficial Interest | ||||
Net increase |
497,790,491 | |||
|
|
|||
Total increase |
497,785,117 | |||
Net Assets | ||||
Beginning of period |
0 | | ||
|
|
|||
End of Period (including distributions in excess of net investment income of ($3,740)) |
$ | 497,785,117 | ||
|
|
(a) | Commencement of operations. |
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 7 |
Statement of Changes in Net Assets
NOTES TO FINANCIAL STATEMENTS
April 30, 2014
NOTE A
Significant Accounting Policies
AllianceBernstein Bond Fund, Inc. (the Fund) is registered under the Investment Company Act of 1940 as an open-end management investment company. The Fund, which is a Maryland corporation, operates as a series company comprised of seven portfolios currently in operation: the Intermediate Bond Portfolio, the Bond Inflation Strategy Portfolio, the Municipal Bond Inflation Strategy Portfolio, the Real Asset Strategy Portfolio, the Limited Duration High Income Portfolio, the Government Reserves Portfolio, and the Tax-Aware Fixed Income Portfolio. They are each diversified portfolios, with the exception of the Limited Duration High Income Portfolio, which is non-diversified. The Government Reserves Portfolio commenced operations on May 6, 2013. The Tax-Aware Fixed Income Portfolio commenced operations on December 11, 2013. Each portfolio is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the Government Reserves Portfolio (the Portfolio). The Portfolio has authorized the issuance of Class A, Class B, Class C, Advisor Class, Class R, Class K, Class I, Class 1 and Class 2 shares. Only Class 1 shares are currently being offered. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) 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
Securities in which the Portfolio invests are traded primarily in the over-the-counter market and are valued at amortized cost, which approximates market value. Under such method a portfolio instrument is valued at cost and any premium or discount is amortized or accreted, respectively, on a constant basis to maturity.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolios own assumptions about the assumptions that market participants would use in pricing the asset or liability based on
8 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Notes to Financial Statements
the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| Level 1quoted prices in active markets for identical investments |
| Level 2other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| Level 3significant unobservable inputs (including the Portfolios own assumptions in determining the fair value of investments) |
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3. In addition, non-agency rated investments are classified as Level 3.
Other fixed income investments, including non-U.S. government and corporate debt, are generally valued using quoted market prices, if available, which are typically impacted by current interest rates, maturity dates and any perceived credit risk of the issuer. Additionally, in the absence of quoted market prices, these inputs are used by pricing vendors to derive a valuation based upon industry or proprietary models which incorporate issuer specific data with relevant yield/spread comparisons with more widely quoted bonds with similar key characteristics. Those investments for which there are observable inputs are classified as Level 2. Where the inputs are not observable, the investments are classified as Level 3.
The following table summarizes the valuation of the Portfolios investments by the above fair value hierarchy levels as of April 30, 2014:
Investments in |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: |
||||||||||||||||
U.S. Government & Government Sponsored Agency Obligations |
$ | 0 | | $ | 487,181,529 | $ | 0 | | $ | 487,181,529 | ||||||
Repurchase Agreement |
0 | | 10,000,000 | 0 | | 10,000,000 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total^ |
$ | 0 | | $ | 497,181,529 | $ | 0 | | $ | 497,181,529 | ||||||
|
|
|
|
|
|
|
|
^ | There were no transfers between any levels during the reporting period. |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 9 |
Notes to Financial Statements
The Portfolio recognizes all transfers between levels of the fair value hierarchy assuming the financial instruments were transferred at the beginning of the reporting period.
AllianceBernstein L.P. (the Adviser) has established a Valuation Committee (the Committee) which is responsible for overseeing the pricing and valuation of all securities held in the Portfolio. The Committee operates under pricing and valuation policies and procedures established by the Adviser and approved by the Board of Directors, including pricing policies which set forth the mechanisms and processes to be employed on a daily basis to implement these policies and procedures. In particular, the pricing policies describe how to determine market quotations for securities and other instruments. The Committees responsibilities include: 1) fair value and liquidity determinations (and oversight of any third parties to whom any responsibility for fair value and liquidity determinations is delegated), and 2) regular monitoring of the Advisers pricing and valuation policies and procedures and modification or enhancement of these policies and procedures (or recommendation of the modification of these policies and procedures) as the Committee believes appropriate.
The Committee is also responsible for monitoring the implementation of the pricing policies by the Advisers Pricing Group (the Pricing Group) and a third party which performs certain pricing functions in accordance with the pricing policies. The Pricing Group is responsible for the oversight of the third party on a day-to-day basis. The Committee and the Pricing Group perform a series of activities to provide reasonable assurance of the accuracy of prices including: 1) periodic vendor due diligence meetings, review of methodologies, new developments and processes at vendors, 2) daily comparison of security valuation versus prior day for all securities that exceeded established thresholds, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed by senior management and the Committee.
In addition, several processes outside of the pricing process are used to monitor valuation issues including: 1) performance and performance attribution reports are monitored for anomalous impacts based upon benchmark performance, and 2) portfolio managers review all portfolios for performance and analytics (which are generated using the Advisers prices).
3. Taxes
It is the Portfolios policy 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.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolios tax positions taken or expected to be taken on federal and state income tax returns for the current tax year and has concluded that no provision for income tax is required in the Portfolios financial statements.
10 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Notes to Financial Statements
4. Investment Income and Investment Transactions
Interest income is accrued daily and includes amortization of premiums and accretions of discounts as adjustments to interest income. Investment transactions are accounted for on the date the securities are purchased or sold.
5. Dividends and Distributions
The Portfolio declares dividends daily from net investment income and is paid monthly. Net realized gains distributions, if any, will be made at least annually. Income dividends and capital gains distributions to shareholders are recorded on the ex-dividend date.
6. Repurchase Agreements
It is the Portfolios policy that its custodian or designated subcustodian take control of securities as collateral under repurchase agreements and to determine on a daily basis that the value of such securities are sufficient to cover the value of the repurchase agreements. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of collateral by the Portfolio may be delayed or limited.
7. Offering Expenses
Offering expenses of $94,200 have been deferred and are being amortized on a straight line basis over a one year period starting from May 6, 2013 (commencement of the Portfolios operations).
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 0.20% of the Portfolios average daily net assets. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis to 0.19% of daily average net assets for Class 1. This fee waiver and/or expense reimbursement agreement will remain in effect until May 1, 2014 and will be automatically extended for one-year periods thereafter unless terminated by the Adviser upon 60 days notice to the Portfolio prior to that date. For the period ended April 30, 2014, the Adviser waived a portion of such fees in the amount of $836,295. Such amount is subject to repayment, not to exceed the amount of offering expenses. To prevent the Portfolios expenses from exceeding its total income on a daily basis, the Adviser voluntarily reimbursed the Portfolio an additional amount of $52,996.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the period ended April 30, 2014, the Adviser voluntarily agreed to waive such fees in the amount of $76,355.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (ABIS), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 11 |
Notes to Financial Statements
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. During the period ended April 30, 2014, there was no reimbursement paid to ABIS.
For the period ended April 30, 2014, the Transfer Agent has voluntarily agreed to waive all transfer agency fees in the amount of $25,820 for Class 1.
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 for Class 1. Under the Agreement, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the Distributor) at an annual rate of 0.10% of the Portfolios average daily net assets attributable to Class 1 shares. The fees are accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. For the period ended April 30, 2014, the Distributor has voluntarily agreed to waive all of the distribution fees in the amount of $418,147 for Class 1 shares, limiting the effective annual rate to 0.00%.
NOTE D
Investment Transactions, Income Taxes and Distributions to Shareholders
At April 30, 2014, the cost of investments for federal income tax purposes was the same as the cost for financial reporting purposes.
The tax character of distributions paid during the fiscal period ended April 30, 2014 were as follows:
2014 | ||||
Distributions paid from: |
||||
Ordinary income |
$ | 97,564 | ||
|
|
|||
Total taxable distributions |
97,564 | |||
|
|
|||
Total distributions paid |
$ | 97,564 | ||
|
|
As of April 30, 2014, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed ordinary income |
$ | 30,937 | ||
|
|
|||
Total accumulated earnings/(deficit) |
$ | 30,937 | (a) | |
|
|
(a) | The difference between book-basis and tax-basis components of accumulated earnings/(deficit) is attributable primarily to the amortization of offering costs. |
For tax purposes, net capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses incurred in taxable
12 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Notes to Financial Statements
years beginning after December 22, 2010 for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of April 30, 2014, the Portfolio did not have any capital loss carryforwards.
During the current fiscal period, permanent differences primarily due to the tax treatment of offering costs resulted in a net decrease in distributions in excess of net investment income and a net decrease in additional paid-in capital. This reclassification had no effect on net assets.
NOTE E
Transactions in Shares of Beneficial Interest
Transactions, all at $1.00 per share, were as follows:
Shares | ||||||
May 6, April 30, 2014 |
||||||
|
|
|||||
Class 1 | ||||||
Shares sold |
1,820,339,791 | |||||
Shares issued in reinvestment of dividends |
97,564 | |||||
Shares redeemed |
(1,322,646,864 | ) | ||||
|
||||||
Net increase |
497,790,491 | |||||
|
(a) | Commencement of operations. |
NOTE F
Risks Involved in Investing in the Portfolio
Money Market Fund RiskMoney market funds are sometimes unable to maintain a net asset value (NAV) at $1.00 per share and, as it is generally referred to, break the buck. In that event, an investor in a money market fund would, upon redemption, receive less than $1.00 per share. The Portfolios shareholders should not rely on or expect an affiliate of the Portfolio to purchase distressed assets from the Portfolio, make capital infusions, enter into credit support agreements or take other actions to prevent the Portfolio from breaking the buck. In addition, you should be aware that significant redemptions by large investors in the Portfolio could have a material adverse effect on the Portfolios other shareholders. The Portfolios NAV could be affected by forced selling during periods of high redemption pressures and/or illiquid markets. Money market funds are also subject to regulatory risk. The Commission continues to evaluate the rules governing money market funds, including Rule 2a-7. It is possible that changes to Rule 2a-7 could significantly impact the money market fund industry generally and, therefore, could affect the operation or performance of the Portfolio.
Interest Rate Risk and Credit RiskThe Portfolios primary risks are interest rate risk and credit risk. Because the Portfolio invests in short-term securities, a
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 13 |
Notes to Financial Statements
decline in interest rates will affect the Portfolios yield as the securities mature or are sold and the Portfolio purchases new short-term securities with a lower yield. Generally, an increase in interest rates causes the value of a debt instrument to decrease. The change in value for shorter-term securities is usually smaller than for securities with longer maturities. In addition, if interest rates remain low for an extended period of time, the Portfolio may have difficulties in maintaining a positive yield, paying expenses out of the Portfolios assets, or maintaining a stable $1.00 NAV.
Credit risk is the possibility that a securitys credit rating will be downgraded or that the issuer of the security will default (fail to make scheduled interest and principal payments or to fulfill its repurchase obligations). The Portfolio invests in highly-rated securities to minimize credit risk.
Liquidity RiskLiquidity risk exists when particular investments are difficult to purchase or sell, which may prevent the Portfolio from selling out of these securities at an advantageous time or price.
Indemnification RiskIn the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolios 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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
NOTE G
Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolios financial statements through this date.
14 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Notes to Financial Statements
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Class 1 | ||||
May 6, 2013(a) to April 30, 2014 |
||||
Net asset value, beginning of period |
$ 1.00 | |||
|
|
|||
Income From Investment Operations |
||||
Net investment income(b)(c) |
.0002 | |||
Net realized and unrealized gain on investment transactions(d) |
.0000 | |||
|
|
|||
Net increase in net asset value from operations |
.0002 | |||
|
|
|||
Less: Dividends |
||||
Dividends from net investment income |
(.0002 | ) | ||
|
|
|||
Net asset value, end of period |
$ 1.00 | |||
|
|
|||
Total Return |
||||
Total investment return based on net asset value(e) |
.02 | % | ||
Ratios/Supplemental Data |
||||
Net assets, end of period (000s omitted) |
$497,785 | |||
Ratio to average net assets of: |
||||
Expenses, net of waivers/reimbursements |
.07 | %^ | ||
Expenses, before waivers/reimbursements |
.41 | %^ | ||
Net investment income(a) |
.02 | %^ |
(a) | Commencement of operations. |
(b) | Net of fees and expenses waived/reimbursed by the Adviser. |
(c) | Based on average shares outstanding. |
(d) | Amount is less than $0.00005. |
(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 return does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Total investment return calculated for a period of less than one year is not annualized. |
^ | Annualized. |
See notes to financial statements.
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 15 |
Financial Highlights
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors of AllianceBernstein Bond Fund, Inc. and the Shareholders of Government Reserves Portfolio:
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Government Reserves Portfolio (the Portfolio) (one of the portfolios constituting AllianceBernstein Bond Fund, Inc.) as of April 30, 2014, and the related statement of operations, statement of changes in net assets, and the financial highlights for the period May 6, 2013 (commencement of operations) to April 30, 2014. These financial statements and financial highlights are the responsibility of the Portfolios management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit 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 Portfolios internal control over financial reporting. Our audit 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 Portfolios 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 April 30, 2014, by correspondence with the custodian and others. We believe that our audit provides 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 Government Reserves Portfolio of AllianceBernstein Bond Fund, Inc. at April 30, 2014, and the results of its operations, the changes in its net assets, and the financial highlights for the period May 6, 2013 (commencement of operations) to April 30, 2014, in conformity with U.S. generally accepted accounting principles.
New York, New York
June 26, 2014
16 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Report of Independent Registered Public Accounting Firm
TAX INFORMATION
(unaudited)
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during the taxable period ended April 30, 2014. For foreign shareholders, 97.81% of ordinary dividends paid may be considered to be qualifying to be taxed as interest-related dividends.
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 17 |
Tax Information
BOARD OF DIRECTORS
Marshall C. Turner, Jr.(1), Chairman John H. Dobkin(1) Michael J. Downey(1) William H. Foulk, Jr.,(1) D. James Guzy(1) |
Nancy P. Jacklin(1) Robert M. Keith, President and Chief Executive Officer Garry L. Moody(1) Earl D. Weiner(1) |
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Raymond J. Papera, Vice President Maria R. Cona, Vice President Edward Dombrowski, Vice President |
Lucas Krupa, Vice President Phyllis J. Clarke, Controller Emilie D. Wrapp, Secretary Joseph J. Mantineo, Treasurer and Chief Financial Officer Vincent S. Noto, Chief Compliance Officer |
Custodian and Accounting Agent State Street Bank and 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. Mr. Foulk is the sole member of the Fair Value Pricing Committee. |
18 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Board of Directors
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 Funds Directors is set forth below.
NAME, ADDRESS* AND AGE (YEAR FIRST ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
INTERESTED DIRECTOR | ||||||||
Robert M. Keith, + 1345 Avenue of the Americas New York, NY 10105 54 (2010) |
Senior Vice President of AllianceBernstein L.P. (the Adviser) and the head of AllianceBernstein Investments, Inc. (ABI) since July 2008; Director of ABI and President of the AllianceBernstein Mutual Funds. Previously, he served as Executive Managing Director of ABI from December 2006 to June 2008. Prior to joining ABI in 2006, Executive Managing Director of Bernstein Global Wealth Management, and prior thereto, Senior Managing Director and Global Head of Client Service and Sales of the Advisers institutional investment management business since 2004. Prior thereto, he was Managing Director and Head of North American Client Service and Sales in the Advisers institutional investment management business, with which he had been associated since prior to 2004. | 103 | None |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 19 |
Management of the Fund
NAME, ADDRESS* AND AGE (YEAR FIRST ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
DISINTERESTED DIRECTORS | ||||||||
Marshall C. Turner, Jr., ## Chairman of the Board 72 (2005) |
Private Investor since prior to 2009. Former CEO of Dupont Photomasks, Inc. (components of semi-conductor manufacturing), 2003-2006, and interim CEO 1999-2000. Interim CEO of MEMC Electronic Materials, Inc. (semi-conductor and solar cell substrates) from November 2008 until March 2009. He has extensive operating and early-stage investment experience, including prior service as general partner of three institutional venture capital partnerships, and serves on the boards of three education and science-related non-profit organizations. He has served as a director of one AllianceBernstein fund since 1992, and director or trustee of multiple AllianceBernstein funds since 2005. He is Chairman of the AllianceBernstein Funds since January 2014, and the Chairman of the Independent Directors Committee of such Funds since February 2014. |
103 | Xilinx, Inc. (programmable logic semi-conductors) and SunEdison, Inc. (semi-conductor substrates, solar materials and solar power plants) since prior to 2009 | |||||
John H. Dobkin, ## 72 (1998) |
Independent Consultant since prior to 2009. Formerly, President of Save Venice, Inc. (preservation organization) from 2001-2002; Senior Advisor from June 1999 June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989 May 1999. Previously, Director of the National Academy of Design. He has served as a director or trustee of various AllianceBernstein Funds since 1992, and as Chairman of the Audit Committees of a number of such Funds from 2001-2008. | 103 | None |
20 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Management of the Fund
NAME, ADDRESS* AND AGE (YEAR FIRST ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
DISINTERESTED DIRECTORS (continued) |
||||||||
Michael J. Downey, ## 70 (2005) |
Private Investor since prior to 2009. Formerly, managing partner of Lexington Capital, LLC (investment advisory firm) from December 1997 until December 2003. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities Inc. He has served as a director or trustee of the AllianceBernstein Funds since 2005 and is a director and Chairman of one other registered investment company. | 103 | Asia Pacific Fund, Inc. since prior to 2009, Prospect Acquisition Corp. (financial services) from 2007 until 2009 and The Merger Fund since prior to 2009 until 2013 | |||||
William H. Foulk, Jr., #, ## 81 (1998) |
Investment Adviser and an Independent Consultant since prior to 2009. Previously, he was Senior Manager of Barrett Associates, Inc., a registered investment adviser. 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. He has served as a director or trustee of various AllianceBernstein Funds since 1983, and has been Chairman of the Independent Directors Committee of the AllianceBernstein Funds since 2003 until early February 2014. He served as Chairman of such Funds from 2003 through December 2013. He is also active in a number of mutual fund related organizations and committees. |
103 | None |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 21 |
Management of the Fund
NAME, ADDRESS* AND AGE (YEAR FIRST ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
DISINTERESTED DIRECTORS (continued) |
||||||||
D. James Guzy, ## 78 (2005) |
Chairman of the Board of SRC Computers Inc. (semi-conductors), with which he has been associated since prior to 2009. He served as Chairman of the Board of PLX Technology (semi-conductors) since prior to 2009 until February 2014. He was a director of Intel Corporation (semi-conductors) from 1969 until 2008, and served as Chairman of the Finance Committee of such company for several years until May 2008. He was a Director of Cirrus Logic Corporation (semi-conductors) from 1984 until July 2011. He has served as a director or trustee of one or more of the AllianceBernstein Funds since 1982. |
103 | PLX Technology (semi-conductors) since prior to 2009 until February 2014, and Cirrus Logic Corporation (semi-conductors) since prior to 2009 until July 2011 | |||||
Nancy P. Jacklin, ## 66 (2006) |
Professorial Lecturer at the Johns Hopkins School of Advanced International Studies since 2008. Formerly, U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002 May 2006); Partner, Clifford Chance (1992-2002); Sector Counsel, International Banking and 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; and member of the Council on Foreign Relations. She has served as a director or trustee of the AllianceBernstein Funds since 2006. | 103 | None |
22 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Management of the Fund
NAME, ADDRESS* AND AGE (YEAR FIRST ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
Garry L. Moody, ## 62 (2008) |
Independent Consultant. Formerly, Partner, Deloitte & Touche LLP (1995-2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993-1995); and Partner, Ernst & Young LLP (1975-1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He is a member of both the Governing Council of the Independent Directors Council (IDC), an organization of independent directors of mutual funds, and the Trustee Advisory Board of Board IQ, a biweekly publication focused on issues and news affecting directors of mutual funds. He has served as a director or trustee, and as Chairman of the Audit Committee, of the AllianceBernstein Funds since 2008. | 103 | None |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 23 |
Management of the Fund
NAME, ADDRESS* AND AGE (YEAR FIRST ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
DISINTERESTED DIRECTORS (continued) |
||||||||
Earl D. Weiner, ## 74 (2007) |
Of Counsel, and Partner prior to January 2007, of the law firm Sullivan & Cromwell LLP and member of ABA Federal Regulation of Securities Committee Task Force to draft editions of the Fund Directors Guidebook. He also serves as a director or trustee of various non-profit organizations and has served as Chairman or Vice Chairman of a number of them. He has served as a director or trustee of the AllianceBernstein Funds since 2007 and is Chairman of the Governance and Nominating Committees of the Funds. | 103 | None |
* | The address for each of the Funds Directors is c/o AllianceBernstein L.P., Attention: Philip L. Kirstein, 1345 Avenue of the Americas, New York, NY 10105. |
** | There is no stated term of office for the Funds Directors. |
*** | The information above includes each Directors principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Directors qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
+ | Mr. Keith is an interested person of the Fund, as defined in the 1940 Act, due to his position as a Senior Vice President of the Adviser. |
# | Member of the Fair Value Pricing Committee. |
## | Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. |
24 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
Management of the Fund
Officer Information
Certain information concerning the Funds officers is set forth below.
NAME, ADDRESS* AND AGE |
POSITION(S) HELD WITH FUND |
PRINCIPAL OCCUPATION DURING PAST FIVE YEARS | ||
Robert M. Keith 54 |
President and Chief Executive Officer | See biography above. | ||
Philip L. Kirstein 69 |
Senior Vice President and Independent Compliance Officer | Senior Vice President and Independent Compliance Officer of the 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 March 2003. | ||
Raymond J. Papera 58 |
Senior Vice President | Senior Vice President of the Adviser,** with which he has been associated since prior to 2009. | ||
Maria R. Cona 59 |
Vice President | Vice President of the Adviser,** with which she has been associated since prior to 2009. | ||
Edward J. Dombrowski |
Vice President | Vice President of the Adviser,** with which he has been associated since prior to 2009. | ||
Lucas Krupa 27 |
Vice President | Associate Officer of the Adviser** and Money Markets Associate on the Fixed Income Cash Management team with which he has been associated since June 2010. Prior thereto, he was associated with Omnicom Capital Inc. since prior to 2009. | ||
Emilie D. Wrapp 58 |
Secretary | Senior Vice President, Assistant General Counsel and Assistant Secretary of ABI,** with which she has been associated since prior to 2009. | ||
Joseph J. Mantineo 55 |
Treasurer and Chief Financial Officer | Senior Vice President of AllianceBernstein Investor Services, Inc. (ABIS),** with which he has been associated since prior to 2009. | ||
Phyllis J. Clarke 53 |
Controller | Vice President of ABIS,** with which she has been associated since prior to 2009. | ||
Vincent S. Noto 49 |
Chief Compliance Officer | Vice President and Mutual Fund Chief Compliance Officer of the Adviser** since 2014. Prior thereto, he was Vice President and Director of Mutual Fund Compliance of the Adviser** since 2009. |
* | The address for each of the Funds Officers is 1345 Avenue of the Americas, New York, NY 10105. |
** | The Adviser, ABI and ABIS are affiliates of the Fund. |
The Funds Statement of Additional Information (SAI) has additional information about the Funds 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 GOVERNMENT RESERVES PORTFOLIO | 25 |
Management of the Fund
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
SUMMARY OF SENIOR OFFICERS EVALUATION OF INVESTMENT ADVISORY AGREEMENT1
The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the Adviser) and The AllianceBernstein Bond Fund, Inc. (the Fund), in respect of AllianceBernstein Government Reserves Portfolio (the Portfolio),2 prepared by Philip L. Kirstein, the Senior Officer of the Fund for the Directors of the Fund, as required by the August 2004 agreement between the Adviser and the New York State Attorney General (the NYAG). The Senior Officers 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 initial approval of the Investment Advisory Agreement.
The Portfolio is a money market fund subject to Rule 2a-7 under the 1940 Act. The Portfolios investment objective is to maximize current income to the extent consistent with safety of principal and liquidity. The Portfolio invests at least 80%, and normally substantially all, of its net assets in marketable obligations issued or guaranteed by the U.S. government or its agencies or instrumentalities.3 The Portfolios weighted maturity and weighted average life will not exceed 60 and 120 days, respectively. The remaining maturity of each of the Portfolios investments will not exceed 397 days unless otherwise permitted by Rule 2a-7. The Adviser proposed the Barclays Capital 1-3 Month U. S. Treasury Index to be the primary benchmark for the Portfolio. The Adviser expects Lipper, Inc. (Lipper) to place the Portfolio in its Institutional U.S. Government Money Market Funds category and Morningstar to place the Portfolio in its Taxable Money Market category.
The Fund has adopted a multi-class plan under Rule 18f-3 under the 1940 Act. Pursuant to the plan, at present, the Funds series are authorized to issue nine classes of shares. Accordingly, the Adviser proposes that the 18f-3 Plan authorize all nine classes of shares, notwithstanding the Portfolio is intended as a vehicle for Private and Institutional Clients, so only Class 1 shares of the Portfolio, which are available only to such clients, will initially be offered. The offering of Class 2 shares, which are normally intended for Private Clients with larger accounts, is not expected to be offered for at least one year after launch.
1 | The information in the fee evaluation was completed on January 24, 2013 and discussed with the Board of Directors on February 5-6, 2013. |
2 | Future references to the Portfolio do not include AllianceBernstein. |
3 | Repurchase agreements relating to government securities and other commitments are considered government securities for the purposes of the 80% requirement. |
26 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
The Senior Officers 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 Advisers services including the performance of the Portfolio. |
These factors, with the exception of the first factor, are generally referred to as the Gartenberg factors, which were articulated by the United States Court of Appeals for the Second Circuit in 1982. Gartenberg v. Merrill Lynch Asset Management, Inc., 694 F. 2d 923 (2d Cir. 1982). On March 30, 2010, the Supreme Court held the Gartenberg decision was correct in its basic formulation of what §36(b) requires: to face liability under §36(b), an investment adviser must charge a fee that is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product of arms length bargaining. Jones v. Harris Associates L.P., 130 S. Ct. 1418 (2010). In the Jones decision, the Court stated the Gartenberg approach fully incorporates the correct understanding of fiduciary duty within the context of section 36(b) and noted with approval that Gartenberg insists that all relevant circumstances be taken into account and uses the range of fees that might result from arms length bargaining as the benchmark for reviewing challenged fees.4
ADVISORY FEES, NET ASSETS, & EXPENSE RATIOS
The Adviser proposed that the Portfolio pays the advisory fee set forth below for receiving the services to be provided pursuant to the Investment Advisory Agreement.
Portfolio | Advisory Fee | |
Government Reserves Portfolio5 | 0.20% of average daily net assets |
In addition to paying the advisory fee, the Investment Advisory Agreement provides for the Adviser to be reimbursed for providing administrative and accounting services.
4 | Jones v. Harris at 1427. |
5 | The advisory fee schedule for the Portfolio has a lower effective fee rate than the advisory fee schedule of the Low Risk category, in which the Portfolio would have been categorized had the Adviser proposed to implement the NYAG related fee schedule. The advisory fee schedule for the Low Risk category is as follows: 0.45% on the first $2.5 billion, 0.40% on the next $2.5 billion and 0.35% on the balance. |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 27 |
The Portfolios Expense Limitation Agreement calls for the Adviser to establish an expense cap of 0.19% for the Portfolios Class 1 shares for an initial one year period after the Portfolio commences operations. Under the Expense Limitation Agreement, the Adviser may be able to recoup all or a portion of the Portfolios offering expenses for a three year period after the Portfolio commences operations to the extent that the reimbursement does not cause the expense ratio of the Portfolio to exceed its expense cap or cause the Portfolio to have a negative yield.6
Portfolio | Expense Cap Pursuant to Expense Limitation Undertaking |
Estimated Gross Expense Ratio7 |
||||||||
Government Reserves Portfolio | Class 1 | 0.19 | % | 0.42 | % |
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 to be provided by the Adviser to the Portfolio that are not provided to non-investment company clients and sub-advised investment companies include providing office space and personnel to serve as Fund Officers, who among other responsibilities, make the certifications required under the SarbanesOxley Act of 2002, and coordinating with and monitoring the Portfolios 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 will be more costly than those for institutional assets due to the greater complexities and time required for investment companies, although the Adviser will be reimbursed for providing some of these services. Also, retail mutual funds managed by the Adviser are widely held. Servicing the Portfolios investors will be 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. The Adviser also believes that it incurs substantial entrepreneurial risk when offering a new mutual fund since establishing a new mutual fund requires a large upfront investment and it may take a long time for the fund to achieve profitability since the fund must be priced to scale from inception in order to be competitive and assets are acquired one account at a time. In addition, managing the cash flow of an investment company may be more difficult than managing that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if a fund is in net redemption and the Adviser is frequently forced to sell securities to
6 | Offering expenses consist principally of the legal, accounting and federal and states securities registration fees paid by the Portfolio. |
7 | The Portfolios estimated gross expense ratios are based on an initial estimate of the Portfolios net assets at $500 million. |
28 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
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 Advisers view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, the Supreme Court has indicated consideration should be given to the advisory fees charged to institutional accounts with a similar investment style as the Portfolio.8 In addition to the AllianceBernstein Institutional fee schedule, set forth below are the Portfolios projected advisory fee and what would have been the effective advisory fee of the Portfolio had the AllianceBernstein Institutional fee schedule been applicable to the Portfolio based on the initial estimate of the Portfolios net assets at $500 million.9
Portfolio | Projected Net Assets ($MM) |
AllianceBernstein Institutional Fee Schedule |
Effective AB Inst. Adv. Fee (%) |
Portfolio Advisory Fee (%) |
Difference | |||||||||||
Government Reserves Portfolio | $500.0 | Fixed Income Money Market Schedule 0.10% Minimum Account Size: $100 million |
0.100% | 0.200% | 0.100% |
8 | The Supreme Court stated that courts may give such comparisons the weight that they merit in light of the similarities and differences between the services that the clients in question require, but the courts must be wary of inapt comparisons. Among the significant differences the Supreme Court noted that may exist between services provided to mutual funds and institutional accounts are higher marketing costs. Jones v. Harris at 1428. |
9 | The Adviser has indicated that with respect to institutional accounts with assets greater than $300 million, it will negotiate a fee schedule. Discounts that are negotiated vary based upon each client relationship. |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 29 |
The Adviser manages Exchange Reserves and Government STIF Portfolio, which have a similar investment style as the Portfolio, and their advisory fee schedules are set forth in the table below. Also set forth are what would have been the effective advisory fees of the Portfolio had the advisory fee schedules for Exchange Reserves and Government STIF Portfolio been applicable to the Portfolio based on the initial estimate of the Portfolio net assets at $500 million:
Portfolio | ABMF Fund |
ABMF Fee Schedule |
ABMF Effective |
Portfolio Advisory Fee (%) |
Difference (%) |
|||||||||||
Government Reserves Portfolio |
Exchange Reserves | 0.25% on the first 1.25 billion 0.24% on the next $250 million 0.23% on the next $250 million 0.22% on the next $250 million 0.21% on the next $1.0 billion 0.20% on the balance |
0.250% | 0.200% | -0.050% | |||||||||||
Government STIF Portfolio10 | Zero fee | 0.000% | 0.200% | 0.200% |
The Adviser has represented that it does not provide sub-advisory investment services to other investment companies that have a substantially similar investment style as the Portfolio.
II. | MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. |
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 offered by other investment advisers.11 Lippers analysis included the comparison of the Portfolios contractual management fee, estimated at an initial
10 | Government STIF Portfolio is not charged an advisory fee although the funds investment advisory agreement provides for the Adviser to be reimbursed for providing certain non-advisory services. The fund is intended to provide an investment option to institutional clients of the Adviser, including all of the AllianceBernstein Mutual Funds with the exception of Exchange Reserves, for short-term investment of uninvested cash. The fund is intended to offer clients competitive short-term returns and enable the Adviser to deliver more consistent and predictable returns while reducing expenses for clients. The Adviser will be compensated for its services to the fund by compensation the Adviser receives from institutional clients that invest in the fund. |
11 | The Supreme Court cautioned against accepting mutual fund fee comparisons without careful scrutiny since these comparisons are problematic because these fees, like those challenged, may not be the product of negotiations conducted at arms length. Jones v. Harris at 1429. |
30 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
asset level of $500 million, to the median of the Portfolios Lipper Expense Group (EG)12 and the Portfolios contractual management fee ranking.13
Lipper describes an EG as a representative sample of comparable funds. Lippers 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, expense components and attributes. An EG will typically consist of seven to twenty funds.
Portfolio | Contractual Management Fee (%)14 |
Lipper Exp. Median (%) |
Rank | |||||||||
Government Reserves Portfolio | 0.200 | 0.255 | 4/8 |
Lipper also compared the Portfolios projected total expense ratio to the medians of the Portfolios EG and Lipper Expense Universe (EU). The EU is a broader group compared to the EG, consisting of all funds that have the same investment classification/objective and load type as the subject Portfolio.15 The Portfolios total expense ratio rankings are also shown in the table below. It should be noted that many of the Portfolios peers investment advisers are waiving advisory fees and/or reimbursing expenses as a result of the current interest rate environment, resulting in low total expenses. To show the effect of these advisory fee waivers and/or expense reimbursements, gross Lipper expense ratio information is also provided.
Portfolio | Expense Ratio |
Lipper Exp. Group Median (%) |
Lipper Group Rank |
Lipper Exp. Median (%) |
Lipper Rank |
|||||||||||||||
Government Reserves Portfolio | ||||||||||||||||||||
Net |
0.190 | 0.129 | 7/8 | 0.129 | 148/161 | |||||||||||||||
Gross17 |
0.320 | 0.337 | 2/8 | 0.264 | 101/161 |
12 | 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. There are limitations to Lipper expense category data because different funds categorize expenses differently. |
13 | The contractual management fee is calculated by Lipper using the Portfolios 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. Lippers total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of 1 would mean that Fund had the lowest effective fee rate in the Lipper peer group. |
14 | The contractual management fee does not reflect any expense reimbursements made by the Portfolio to the Adviser for certain clerical, legal, accounting, administrative, and other services. In addition, the contractual management fee does not reflect any advisory fee waivers for expense caps. |
15 | Except for asset (size) comparability, Lipper uses the same criteria for selecting an EG peer when selecting an EU peer. Unlike the EG, the EU allows for the same adviser to be represented by more than just one fund. |
16 | Projected total expense ratio information pertains to the Portfolios Class 1 shares. |
17 | Gross expense ratios exclude 12b-1/non-12b-1 service fees. |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 31 |
III. | COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. |
The Adviser utilizes two profitability reporting systems, which operate independently but are aligned with each other, to estimate the Advisers profitability in connection with investment advisory services provided to the Portfolio. The Senior Officer has retained a consultant to provide independent advice regarding the alignment of the two profitability systems as well as the methodologies and allocations utilized by both profitability systems. See Section IV for additional discussion.
IV. | PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. |
The Portfolio has not yet commenced operations. Therefore, there is no historic profitability data with respect to the Advisers investment services to the Portfolio.
In addition to the Advisers direct profits from managing the Portfolio, certain of the Advisers 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 Advisers affiliates from earning a reasonable profit on this type of relationship provided the affiliates charges and services are competitive and the relationship otherwise complies with the 40 Act restrictions. These affiliates will provide transfer agent, distribution and brokerage related services to the Portfolio and will 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 Funds principal underwriter. ABI and the Adviser have disclosed in the Portfolios prospectus that they may make revenue sharing payments from their own resources, in addition to resources derived from sales loads and Rule 12b-1 fees, to firms that sell shares of the Portfolio. In 2011, ABI paid approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $17 million for distribution services and educational support (revenue sharing payments).
AllianceBernstein Investor Services, Inc. (ABIS), the affiliated transfer agent of the Adviser, will charge a fee of $20 per account of Class 1 and 2 shares or, if higher, a minimum fee of $1,500 per month for providing transfer agency services to the Portfolio. In addition, the Adviser will pay ABIS amounts for out of pocket expenses incurred in providing services to the Portfolio. To the extent retail share classes are offered in the future, the ABIS fee schedule for those classes of the AllianceBernstein Mutual Funds will be used.
32 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
V. | POSSIBLE ECONOMIES OF SCALE |
The Adviser has indicated that economies of scale are being shared with shareholders through pricing to scale, breakpoints, fee reductions/waivers and enhancement to services.
An independent consultant, retained by the Senior Officer, provided the Board of Directors information on the Advisers firm-wide average costs from 2005 through 2011 and the potential economies of scale. The independent consultant noted that from 2005 through 2007 the Adviser experienced significant growth in assets under management (AUM). During this period, operating expenses increased, in part to keep up with growth, and in part reflecting market returns. However, from 2008 through the first quarter of 2009, AUM rapidly and significantly decreased due to declines in market value and client withdrawals. When AUM rapidly decreased, some operating expenses categories, including base compensation and office space, adjusted more slowly during this period, resulting in an increase in average costs. Since 2009, AUM has experienced less significant changes. The independent consultant noted that changes in operating expenses reflect changes in business composition and business practices in response to changes in financial markets. Finally, the independent consultant concluded that the increase in average cost and the decline in net operating margin across the Adviser since late 2008 are inconsistent with the view that there are currently reductions in average costs due to economies of scale that can be shared with the AllianceBernstein Mutual Funds managed by the Adviser through lower fees.
In February 2008, the independent consultant provided the Board of Directors an update of the Deli18 study on advisory fees and various fund characteristics.19 The independent consultant first reiterated the results of his previous two dimensional comparison analysis (fund size and family size) with the Board of Directors.20 The independent consultant then discussed the results of the regression model that was utilized to study the effects of various factors on advisory fees. The regression model output indicated that the bulk of the variation in fees predicted were explained by various factors, but substantially by fund AUM, family AUM, index fund indicator and investment style. The independent consultant also compared the advisory fees of the AllianceBernstein Mutual Funds to similar funds managed by 19 other large asset managers, regardless of the fund size and each Advisers proportion of mutual fund assets to non-mutual fund assets.
18 | The Deli study, originally published in 2002 based on 1997 data and updated for the February 2008 Presentation, may be of diminished value due to the age of the data used in the presentation and the changes experienced in the industry over the last four years. |
19 | As mentioned previously, the Supreme Court cautioned against accepting mutual fund fee comparisons without careful scrutiny since the fees may not be the product of negotiations conducted at arms length. See Jones V. Harris at 1429. |
20 | The two dimensional analysis showed patterns of lower advisory fees for funds with larger asset sizes and funds from larger family sizes compared to funds with smaller asset sizes and funds from smaller family sizes, which according to the independent consultant is indicative of a sharing of economies of scale and scope. However, in less liquid and active markets, such is not the case, as the empirical analysis showed potential for diseconomies of scale in those markets. The empirical analysis also showed diminishing economies of scale and scope as funds surpassed a certain high level of assets. |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 33 |
VI. | NATURE AND QUALITY OF THE ADVISERS SERVICES, INCLUDING THE PERFORMANCE OF THE FUND |
With assets under management of approximately $430 billion as of December 31, 2012, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Portfolio.
Since the Portfolio has not yet commenced operations, the Portfolio has no performance history. The Adviser does manage Exchange Reserves and Government STIF Portfolio which have a similar investment style as the Portfolio. Set forth in the table below are the 1, 3, 5, 10 year and since inception performance returns of these retail mutual funds against their benchmarks as of December 31, 2012:
Periods Ending December 31, 2012 Annualized Net Performance (%) |
||||||||||||||||||||
1 Year (%) |
3 Year (%) |
5 Year (%) |
10 Year (%) |
Since Inception (%) |
||||||||||||||||
Exchange Reserves | 0.19 | 0.08 | 0.50 | 1.38 | 2.52 | |||||||||||||||
Lipper Money Market Funds Average21 | 0.02 | 0.02 | 0.47 | 1.45 | 2.87 | |||||||||||||||
Barclays Capital U.S. Treasury Bills Index | 0.12 | 0.16 | 0.64 | 1.83 | 3.26 | |||||||||||||||
Inception Date: March 25, 1994 | ||||||||||||||||||||
Government STIF Portfolio | 0.13 | 0.13 | 0.60 | N/A | 1.38 | |||||||||||||||
Lipper Money Market Funds Average21 | 0.02 | 0.02 | 0.47 | N/A | 1.17 | |||||||||||||||
Inception Date: December 13, 2006 |
CONCLUSION:
Based on the factors discussed above, the Senior Officers conclusion is that the Investment Advisory Agreement 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. However, the Portfolios advisory fee schedule, which has no breakpoints, lacks the potential for sharing economies of scale through breakpoints. The Senior Officer recommended that the Directors monitor the Portfolios effective advisory fee to ensure the reasonableness of the fee in comparison to the Portfolios Lipper peers as the Portfolio grows in asset size. This conclusion in respect of the Portfolio is based on an evaluation of all of these factors and no single factor was dispositive.
Dated: March 5, 2013
21 | Benchmark inception is the nearest month end after the mutual funds actual inception date. |
34 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
We also offer Exchange Reserves, which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. An investment in Exchange Reserves 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.
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.alliancebernstein.com or contact your AllianceBernstein investments representative. Please read the prospectus and/or summary prospectus carefully before investing.
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO | 35 |
AllianceBernstein Family of Funds
NOTES
36 | ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO |
ALLIANCEBERNSTEIN BOND FUND GOVERNMENT RESERVES PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
800.221.5672
GR-0151-0414 |
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 registrants 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 registrants Board of Directors has determined that independent directors Garry L. Moody 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 Funds last two fiscal years for professional services rendered for: (i) the audit of the Funds annual financial statements included in the Funds annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Funds 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 Fees | Audit-Related Fees |
Tax Fees | ||||||||||||||
AB Government Reserves |
2013 | $ | | $ | | $ | | |||||||||
2014 | $ | 20,375 | $ | | $ | 11,645 |
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Funds Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Funds independent registered public accounting firm. The Funds 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 Funds Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to the Fund, the Funds Adviser and entities that control, are controlled by or under common control with the Adviser that provide ongoing services to the Fund:
All Fees for Non-Audit Services Provided to the Portfolio, the Adviser and Service Affiliates |
Total Amount of Foregoing Column Pre- approved by the Audit Committee (Portion Comprised of Audit Related Fees) (Portion Comprised of Tax Fees) |
|||||||||||
AB Government Reserves |
2013 | $ | | $ | | |||||||
$ | | |||||||||||
$ | | |||||||||||
2014 | $ | 305,175 | $ | 11,645 | ||||||||
$ | | |||||||||||
$ | (11,645 | ) |
(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 Funds independent registered public accounting firm to the Adviser and Service Affiliates is compatible with maintaining the auditors 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 Funds Board of Directors since the Fund last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrants principal executive officer and principal financial officer have concluded that the registrants 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 registrants 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 registrants internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT |
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/ Robert M. Keith | |
Robert M. Keith | ||
President |
Date: June 23, 2014
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/ Robert M. Keith | |
Robert M. Keith | ||
President |
Date: June 23, 2014
By: | /s/ Joseph J. Mantineo | |
Joseph J. Mantineo | ||
Treasurer and Chief Financial Officer |
Date: June 23, 2014
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 Complexs 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 Officers 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 Officers 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 Companys and the investment advisers 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 Companys 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; |
2
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 Companys 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 Officers 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 |
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| 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 Companys 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. |
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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 Companys 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 Companys and its investment advisers 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
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Exhibit A
Persons Covered by this Code of Ethics
Principal Executive Officer
Principal Financial and Accounting Officer
Controller
6
Exhibit 12(b)(1)
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Robert M. Keith, 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 registrants 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 registrants 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 registrants 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 registrants internal control over financial reporting; and |
5. The registrants other certifying officers and I have disclosed to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting.
Date: June 23, 2014
/s/ Robert M. Keith |
Robert M. Keith |
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 registrants 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 registrants 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 registrants 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 registrants internal control over financial reporting; and |
5. The registrants other certifying officers and I have disclosed to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting.
Date: June 23, 2014
/s/ Joseph J. Mantineo |
Joseph J. Mantineo |
Treasurer and Chief Financial Officer |
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 Registrants report on Form N-CSR for the period ended April 30, 2014 (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: June 23, 2014
By: | /s/ Robert M. Keith | |
Robert M. Keith | ||
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.
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