ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
ANNUAL REPORT
JUNE 30, 1996
LETTER TO SHAREHOLDERS ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
July 8, 1996
Dear Shareholder:
Throughout 1995, the U.S. bond market enjoyed a sustained, broad-based rally
which lasted into January 1996. Since February, however, domestic bond market
returns have generally been negative. The market has been reacting to
stronger-than-expected data on the U.S. economy and the belief that the Federal
Reserve may raise interest rates to reduce inflationary pressures. Government
and corporate securities both posted negative returns, but as prepayment
expectations stabilized, mortgage-backed issues were able to log a modest gain.
Across all major sectors of the U.S. fixed-income securities market,
shorter-duration securities outperformed longer-duration securities as interest
rates for all maturities increased. Outside the United States, economic
conditions in Europe and gradually improving economies in Latin America helped
support rising debt prices there.
INVESTMENT RESULTS
The following table shows the Corporate Bond Portfolio's investment results
over the six- and twelve-month periods ended June 30, 1996. Also shown for
comparison are the total returns for the U.S. bond market, represented by the
unmanaged Lehman Brothers (LB) Aggregate Bond Index, and for the average of the
Portfolio's Lipper universe of 100 BBB-rated corporate-debt funds. These funds
have investment objectives similar to the Portfolio, although they may have
different investment policies.
The Fund's strong performance can be attributed to security selection among
investment-grade bonds. As spreads narrowed in this sector, the securities in
the Corporate Bond Portfolio performed exceptionally well. In addition, country
selection of the non-U.S. holdings positively influenced performance.
INVESTMENT RESULTS*
PERIODS ENDING JUNE 30, 1996
CUMULATIVE TOTAL RETURN
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE BOND FUND
CORPORATE BOND PORTFOLIO
Class A -.11% 12.14%
Class B -.46% 11.38%
Class C -.46% 11.30%
SEC YIELD
Class A 7.55%
Class B 7.18%
Class C 7.18%
LB AGGREGATE BOND INDEX -1.22% 5.02%
LIPPER CORPORATE DEBT FUNDS
BBB-RATED AVG. -2.30% 4.59%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD
AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS OF 6/30/96. ALL
FEES AND EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT
NO ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE
PURCHASED OR REDEEMED. ALL RETURNS INCLUDE THE REINVESTMENT OF ANY
DISTRIBUTIONS PAID DURING THE PERIOD. THE LB AGGREGATE BOND INDEX IS UNMANAGED
AND DOES NOT REFLECT FEES AND EXPENSES. THE LIPPER CORPORATE DEBT FUNDS
BBB-RATED AVERAGE MEASURES THE PERFORMANCE OF 100 MUTUAL FUNDS WITH GENERALLY
SIMILAR INVESTMENT OBJECTIVES.
SEC YIELDS ARE BASED ON SEC GUIDELINES AND ARE CALCULATED ON THE 30 DAYS
ENDED JUNE 30, 1996.
FOR ADDITIONAL PERFORMANCE INFORMATION, SEE PAGE 3.
ECONOMIC REVIEW
The U.S. economy has rebounded from an inventory-related slowdown during the
second half of 1995. Real growth accelerated to 2.2% during the first quarter
1
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
of 1996, while final demand increased by a healthy 3.3%. The re-strengthening
continued in the second quarter, led by a rapidly improving labor market.
Employment gains averaged 265,000 per month during the second quarter of 1996,
and total hours worked climbed by an annualized 5.6%. Consumer confidence
remained elevated and real household spending continued to grow at a healthy
clip. These factors combined will produce overall gross-domestic-product growth
during the second quarter of 4.2%.
Inflation was boosted this past spring by rising food and energy prices.
However, the less volatile "core" rate of inflation, estimated at 2.7%, hovered
near a 30-year low. Although the Federal Reserve has been in a holding pattern
since January, recent intensification of inflationary pressures has pushed the
central bank closer to a preemptive tightening of the money supply.
INVESTMENT OUTLOOK
We believe the U.S. economy will slow during the second half of 1996 following
fairly robust second-quarter growth. Our forecast calls for
gross-domestic-product growth of 2.0% to 2.5% in the second half of the year.
In our view, such growth would not prompt an increase in interest rates by the
Federal Reserve. However, if the economy does not show consistent signs of the
expected slowdown, the Federal Reserve is likely to intervene.
Investment-grade corporate-bond spreads are at historically narrow levels. As
the yield spread compression has occurred, we have become much more oriented
towards a "bottom-up" approach to security selection. We continue to believe,
however, that the economic environment will support the continuation of balance
sheet improvement.
Outside the United States, we remain optimistic on emerging-market debt
securities. Moderate economic growth in the United States, stable inflation,
and relatively steady bond prices provide a strong, positive environment for
this segment of the fixed-income market. In the developed foreign markets,
continued focus on fiscal and monetary issues by policy makers should support
additional gains in debt prices.
Thank you for your continued interest in Alliance Bond Fund Corporate Bond
Portfolio. We look forward to reporting its progress to you in coming months.
Sincerely,
John D. Carifa
Chairman and President
Wayne D. Lyski
Senior Vice President
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
Alliance Bond Fund Corporate Bond Portfolio seeks primarily to maximize income
over the long term consistent with providing reasonable safety in the value of
each shareholder's investment; secondarily, the Fund will seek capital
appreciation. It invests primarily in a diversified portfolio of corporate
bonds issued by domestic and foreign issuers that give promise of relatively
attractive yields.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 12.14% 7.40%
. Five Years 13.50% 12.51%
. Ten Years 10.75% 10.27%
SEC Yield 7.55%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 11.38% 8.38%
. Since Inception* 10.78% 10.78%
SEC Yield 7.18%
CLASS C SHARES
. One Year 11.30%
. Since Inception* 7.94%
SEC Yield 7.18%
Average annual total returns reflect investment of dividends and/or capital
gain distributions in additional shares, with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3%-Year 1; 2%-Year 2; 1%-Year 3; 0%-Year 4);
Class C shares purchased prior to July 1, 1996, are not subject to front-end or
contingent deferred sales charges. Class C shares purchased on or after July 1,
1996, are subject to a contingent deferred sales charge of 1% on redemptions
made within the first year after purchase. SEC yields are based on SEC
guidelines and are calculated on 30 days ended June 30, 1996.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 1/8/93, Class B; 5/3/93, Class C.
3
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
GROWTH OF A $10,000 INVESTMENT
6/30/86 TO 6/30/96
$27,000
$25,000
$23,000
$21,000
$19,000
$17,000
$15,000
$13,000
$11,000
$9,000
CORPORATE BOND
PORTFOLIO
CLASS A: $26,587
LIPPER CORP.
DEBT FUNDS BBB-RATED AVG.
LB AGGREGATE INDEX
6/30/86 6/30/96
This chart illustrates the total value of an assumed investment in Alliance
Bond Fund Corporate Bond Portfolio Class A shares after deducting the maximum
sales charge, and with dividends and capital gains reinvested. It is a
hypothetical illustration for illustrative purposes only. Performance for Class
B and Class C shares will vary from the results shown due to differences in
expenses and fees charged to those classes. Past performance is not indicative
of future results, and is not representative of future gain or loss in capital
value or dividend income.
The Lehman Brothers Aggregate Index is composed of the Mortgage-Backed
Securities Index, the Asset-Backed Securities Index, and the combination
Government/Corporate Bond Index.
The Lipper Corporate Debt Funds BBB-Rated Average reflects performance of 100
mutual funds, only 18 of which have existed for the full ten-year period. These
funds have generally similar investment objectives to Alliance Bond Fund
Corporate Bond Portfolio, although the investment policies of some funds
included in the average may vary.
When comparing Alliance Bond Fund Corporate Bond Portfolio to the index and
average shown above, you should note that the Fund's performance reflects the
maximum sales charge of 4.25% while no such charges are reflected in the
performance of the index or average.
Corporate Bond Portfolio
LB Index Aggregate Index
Lipper Corp. Debt Funds BBB-Rated Avg.
4
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- ------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-45.1%
FINANCIAL-12.7%
BBB Arkwright CSN Trust
9.625%, 8/15/26 (b) $30,000 $30,972,900
A3 CS First Boston, Inc.
7.75%, 5/15/06 (b)(c) 30,000 30,015,900
B- Home Holdings, Inc.
8.625%, 12/15/03 43,165 28,057,250
-----------
89,046,050
INSURANCE-10.5%
A2 Farmers Insurance Exchange
8.625%, 5/01/24 (b)(c) 18,725 17,753,584
A Mutual Life Insurance Co. of New York
11.25%, 8/15/24 (b)(g) 25,000 22,475,000
A2 Prudential Insurance Co.
8.30%, 7/01/25 (b)(c) 33,000 33,071,775
-----------
73,300,359
INDUSTRIAL-10.3%
BB+ Digital Equipment Corp.
7.75%, 4/01/23 5,000 4,515,335
8.625%, 11/01/12 5,860 5,871,521
Baa3 USX Marathon Group
8.50%, 3/01/23 (c) 29,400 29,659,190
BB+ Viacom, Inc.
7.625%, 1/15/16 35,505 32,157,660
-----------
72,203,706
MEDIA-4.7%
BBB News America Holdings, Inc.
7.75%, 12/01/45 36,700 32,818,718
ELECTRIC UTILITIES-2.6%
BBB Connecticut Light & Power Co.
7.875%, 6/01/01 18,000 18,234,000
RETAIL-2.5%
Ba3 K-Mart Corp.
7.95%, 2/01/23 (c) 19,500 14,917,500
8.25%, 1/01/22 (c) 3,000 2,310,000
-----------
17,227,500
TELECOMMUNICATION EQUIPMENT-1.8%
B- Arch Communications Group, Inc.
10.875%, 3/15/08 (g) 24,000 12,480,000
Total Corporate Debt Obligations
(cost $323,985,466) 315,310,333
YANKEES-19.6%
INDUSTRIAL-11.9%
BB Grupo Televisa, S.A.
13.25%, 5/15/08 (b)(g) 34,000 18,275,000
Baa3 Reliance Industries, Ltd.
9.375%, 6/24/26 (b)(c) 35,000 35,288,750
BBB- TransGas de Occidente, S.A.
9.79%, 11/01/10 (b) 30,000 29,218,200
-----------
82,781,950
CORPORATE-3.6%
NR Grupo Dina/ MCII Holdings USA
12.00%, 11/15/02 (b)(g) 14,170 11,052,600
B3 Grupo Mexicano de Desarrollo, S.A.
8.25%, 2/17/01 (c) 27,200 14,280,000
-----------
25,332,600
FINANCIAL-2.6%
BBB MC Cuernavaca Trust
9.25%, 7/25/01 (b) 26,375 18,133,022
TELEPHONE-1.5%
B- Millicom International Cellular, S.A.
13.50%, 6/01/06 (b)(g) 20,000 10,750,000
Total Yankees (cost $150,780,004) 136,997,572
SOVEREIGN DEBT OBLIGATIONS-17.6%
ARGENTINA-2.7%
NR Repackaged Argentina
Domestic Security Trust
14.75%, 9/01/02 (b) 18,000 18,877,500
BRAZIL-2.0%
B+ Republic of Brazil C-Bonds
8.00%, 4/15/14 (d) 22,731 14,107,309
BULGARIA-5.2%
NR Bulgaria (Republic of) FRN
6.25%, 7/28/24 (e) 70,000 36,312,500
COLOMBIA-2.8%
BBB- Republic of Colombia
8.70%, 2/15/16 21,500 19,748,825
5
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
SHARES OR
STANDARD & PRINCIPAL
POOR'S AMOUNT
RATINGS(A) (000) VALUE
- ------------------------------------------------------------------------
POLAND-4.9%
Baa3 Republic of Poland PDI
3.75%, 10/27/14 (c)(f) $ 44,000 $ 33,880,000
Total Sovereign Debt Obligations
(cost $123,257,567) 122,926,134
PREFERRED STOCK-13.9%
FINANCIAL SERVICES-12.7%
Baa3 Credit Lyonnais Capital ADR pfd.
9.50%, (b)(c) 698,000 16,141,250
A2 MCI Capital I pfd.
8.00% (c) 1,470,000 35,647,500
A2 Santander Finance Ltd. Series C pfd.
8.125% (c) 698,000 16,584,625
Baa2 SI Financing Trust I pfd.
9.50% (c) 818,000 20,437,500
-----------
88,810,875
INDUSTRIAL-1.2%
BB- Digital Equipment Corp. Series A pfd.
8.875% 325,000 8,125,000
Total Preferred Stock
(cost $96,906,562) 96,935,875
U.S. GOVERNMENT/AGENCY OBLIGATION-2.0%
AAA Federal National Mortgage Assn.
Zero coupon, 10/09/19
(cost $13,406,218) 75,800 13,762,248
SHORT-TERM INVESTMENT-0.1%
COMMERCIAL PAPER-0.1%
A1+ General Electric Credit Corp.
5.20%, 7/01/96 (c)
(amortized cost $494,000) 494 494,000
TOTAL INVESTMENTS-98.3%
(cost $708,829,817) 686,426,162
Other assets less liabilities-1.7% 12,189,623
NET ASSETS-100% $698,615,785
(a) Unaudited.
(b) Securities exempt from Registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified buyers. At June 30, 1996, the aggregate
market value of these securities amounted to $292,025,481 representing 41.8% of
net assets.
(c) Moody rating.
(d) Coupon consists of 4.50% cash payment and 3.50% paid in kind.
(e) Coupon will fluctuate based on six month LIBOR plus 0.8125.
(f) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at June 30, 1996.
(g) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective.
Glossary of Terms:
ADR - American Depository Receipt.
FRN - Floating Rate Note.
NR - Not Rated.
PDI - Past Due Interest.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value(cost $708,829,817) $686,426,162
Receivable for investment securities sold 45,836,384
Interest receivable 12,023,088
Receivable for capital stock sold 4,939,800
Dividends receivable 1,202,448
Total assets 750,427,882
LIABILITIES
Payable for investment securities purchased 48,107,198
Dividends payable 1,691,443
Payable for capital stock redeemed 774,776
Distribution fee payable 404,614
Advisory fee payable 331,360
Accrued expenses 502,706
Total liabilities 51,812,097
NET ASSETS $698,615,785
COMPOSITION OF NET ASSETS
Capital stock, at par $ 52,578
Additional paid-in capital 845,084,602
Undistributed net investment income 5,680,591
Accumulated net realized loss on investments,
options and other assets (129,798,331)
Net unrealized depreciation of investments (22,403,655)
$698,615,785
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($277,369,346/
20,874,707 shares of capital stock issued and outstanding) $13.29
Sales charge-4.25% of public offering price .59
Maximum offering price $13.88
CLASS B SHARES
Net asset value and offering price per share ($338,151,797/
25,449,141 shares of capital stock issued and outstanding) $13.29
CLASS C SHARES
Net asset value, redemption and offering price per share($83,094,642
/6,253,683 shares of capital stock issued and outstanding) $13.29
See notes to financial statements.
7
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $61,988,404
Dividends 3,042,290 $65,030,694
EXPENSES
Advisory fee 3,676,819
Distribution fee - Class A 762,635
Distribution fee - Class B 2,917,088
Distribution fee - Class C 644,433
Transfer agency 1,062,004
Custodian 205,272
Administrative 134,873
Registration 117,276
Printing 112,822
Audit and legal 93,465
Taxes 46,655
Directors' fees 15,192
Miscellaneous 27,187
Total expenses 9,815,721
Net investment income 55,214,973
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions 9,127,977
Net realized gain on options written 282,000
Net change in unrealized appreciation (depreciation) of:
Investments (1,027,200)
Options written (419,664)
Net gain on investments 7,963,113
NET INCREASE IN NET ASSETS FROM OPERATIONS $63,178,086
See notes to financial statements.
8
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1996 JUNE 30,1995
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 55,214,973 $ 44,706,035
Net realized gain (loss) on investments and
options written 9,409,977 (7,853,164)
Net change in unrealized (depreciation)
appreciation of investments and options written (1,446,864) 22,302,973
Net increase in net assets from operations 63,178,086 59,155,844
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (22,018,218) (20,387,693)
Class B (23,308,105) (17,840,438)
Class C (5,153,555) (4,314,460)
CAPITAL STOCK TRANSACTIONS
Net increase 162,746,223 52,386,982
Total increase 175,444,431 69,000,235
NET ASSETS
Beginning of year 523,171,354 454,171,119
End of year (including undistributed net
investment income of $5,680,591 and
$945,496, respectively.) $698,615,785 $523,171,354
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Bond Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a diversified open-end management investment company.
The Fund, which is a Maryland corporation operates as a series company
currently comprised of two portfolios: the Corporate Bond Portfolio and the
U.S. Government Portfolio. Each series is considered to be a separate entity
for financial reporting and tax purposes. The financial statements and notes
include the operations of the Corporate Bond Portfolio (the "Portfolio") only.
The Portfolio offers three classes of shares: Class A, Class B and Class C
shares. Class A shares are currently sold with a front-end sales charge of up
to 4.25%. Class B shares are sold with a contingent deferred sales charge which
declines from 3% to zero depending on the period of time the shares are held.
Class B shares will automatically convert to Class A shares six years after the
end of the calendar month of purchase. Class C shares were sold without an
initial or contingent deferred sales charge. However, Class C shares purchased
on or after July 1, 1996, are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. All three classes
of shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The following is a summary of the
significant accounting policies followed by the Portfolio.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are valued at the
last reported sales price on such exchange. Listed securities not traded and
securities traded in the over-the-counter market, including listed debt
securities whose primary market is believed to be over-the-counter, are valued
at the mean of the closing bid and asked price as obtained from a recognized
pricing service and brokers. Securities for which bid and asked price
quotations are not readily available or restricted securities are valued in
good faith at fair value using methods determined by the Board of Directors. In
determining fair value, consideration is given to cost, operating and other
financial data. Securities which mature in 60 days or less are valued at
amortized cost, which approximates market value.
2. TAXES
It is the Portfolio's 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 or net realized gains, if applicable, to its
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on ex-dividend
date. Security transactions are accounted for on the date the securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis. The Portfolio accretes discount as an adjustment to interest income.
4. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
5. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
During the year, the Fund reclassified certain components of net assets. The
reclassification resulted in a net decrease to accumulated net realized loss on
investments, options, and other assets and a corresponding increase to
additional paid-in capital of $133,858,099. This reclassification was the
result of capital loss carryforwards in conjunction with the Fund merger that
occurred in 1993. Net assets were not affected by the reclassification.
10
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Portfolio pays
Alliance Capital Management L.P., (the "Adviser"), an advisory fee at a annual
rate of .625 of 1% of the first $500 million and .50 of 1% in excess of $500
million of the Portfolio's average daily net assets. Such fee is accrued daily
and paid monthly. The Adviser has agreed to reimburse the Portfolio pursuant to
the securities laws of certain states to the extent its aggregate annual
expenses (exclusive of interest, taxes, brokerage, distribution fees and
extraordinary expenses) exceed 2.5% of the first $30 million of its average
daily net assets, 2% of the next $70 million of its average daily net assets
and 1.5% of its average daily net assets in excess of $100 million. No such
reimbursement was required for the year ended June 30, 1996.
Pursuant to the advisory agreement, the Portfolio paid $134,873 to the Adviser
representing the cost of certain legal and accounting services provided to the
Portfolio by the Adviser for the year ended June 30, 1996.
The Portfolio compensates Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) under a Transfer Agency Agreement for providing
personnel and facilities to perform transfer agency services for the Portfolio.
Such compensation amounted to $731,969 for the year ended June 30, 1996.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Portfolio's shares. The Distributor received
front-end sales charges of $66,987 from the sale of Class A shares and $396,376
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the year ended June 30, 1996.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Portfolio pays a distribution fee to the Distributor at an
annual rate of up to .30 of 1% of the Portfolio's average daily net assets
attributable to Class A shares and 1% of the Portfolio's average daily net
assets attributable to the Class B and Class C shares. Such fee is accrued
daily and paid monthly. The Agreement provides that the Distributor will use
such payments in their entirety for distribution assistance and promotional
activities. The Distributor has incurred expenses in excess of the distribution
costs reimbursed by the Portfolio in the amount of $6,818,208 and $895,197, for
Class B and Class C shares, respectively; such costs may be recovered from the
Portfolio in future periods so long as the Agreement is in effect. In
accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs, incurred by the Distributor, beyond the
current fiscal year for Class A shares. The Agreement also provides that the
Adviser may use its own resources to finance the distribution of the
Portfolio's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. Government obligations) aggregated $2,070,696,447 and $1,910,714,045,
respectively, for the year ended June 30, 1996. At June 30, 1996, the cost of
securities for federal income tax purposes was $712,340,690. Accordingly, gross
unrealized appreciation of investments was $7,176,093 and gross unrealized
depreciation of investments was $33,090,621, resulting in net unrealized
depreciation of $25,914,528. At June 30, 1996, the Portfolio had a capital loss
carryforward for federal income tax purposes of approximately $126,287,458 of
which $93,188,575 expires in 1997; $14,295,126 in 1998; $258,361 in 2000;
$15,028,057 in 2003 and $3,517,339 in 2004.
11
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
NOTEE: DERIVATIVES
1. OPTIONS TRANSACTIONS
For hedging purposes, the Fund purchases and writes (sells) put and call
options on debt securities that are traded on U.S. and foreign securities
exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of premium and change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether the Fund has realized a gain or loss. If a put
option is exercised, the premium reduces the cost basis of the security
purchased by the Fund. In writing an option, the Fund bears the market risk of
an unfavorable change in the price of the security or currency underlying the
written option. Exercise of an option written by the Fund could result in the
Fund selling or buying a security at a price different from the current market
value.
Transactions in options written for the year ended June 30, 1996 were as
follows:
NUMBER OF
CONTRACTS PREMIUMS
--------- ------------
Options outstanding at beginning of year 1 $ 2,354,400
Options written -0- -0-
Options terminated in closing purchase transactions (1) (2,354,400)
Options expired -0- -0-
Options outstanding at June 30, 1996 -0- $ -0-
12
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
NOTE F: CAPITAL STOCK
There are 350,000,000 shares of $.001 par value capital stock authorized for
the Portfolio, of which 250,000,000 shares are designated as Class A and
50,000,000 each for Class B and Class C shares. Transactions in capital stock
were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
------------ ------------ -------------- --------------
CLASS A
Shares sold 5,346,878 4,080,977 $ 71,873,295 $ 50,484,798
Shares issued in
reinvestment of
dividends 863,496 793,256 11,552,038 9,725,083
Shares converted from
Class B to Class A 290,778 -0- 3,878,519 -0-
Shares redeemed (3,486,540) (4,535,928) (46,736,968) (55,998,676)
Net increase 3,014,612 338,305 $ 40,566,884 $ 4,211,205
CLASS B
Shares sold 10,495,172 8,208,751 $141,176,345 $100,252,498
Shares issued in
reinvestment of
dividends 729,705 613,407 9,764,021 7,530,010
Shares converted from
Class B to Class A (290,799) -0- (3,878,519) -0-
Shares redeemed (4,169,007) (4,864,645) (56,009,933) (58,632,382)
Net increase 6,765,071 3,957,513 $ 91,051,914 $ 49,150,126
CLASS C
Shares sold 3,778,824 2,047,757 $ 50,939,949 $ 25,280,601
Shares issued in
reinvestment of
dividends 151,683 168,260 2,030,186 2,081,504
Shares redeemed (1,624,777) (2,335,384) (21,842,710) (28,336,454)
Net increase(decrease) 2,305,730 (119,367) $ 31,127,425 $ (974,349)
13
FINANCIAL HIGHLIGHTS ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.92 $12.51 $14.15 $12.01 $11.21
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.26 1.19 1.11 1.25 1.06
Net realized and unrealized gain (loss)
on investments .27 .36 (1.36) 2.13 .82
Net increase (decrease) in net asset
value from operations 1.53 1.55 (.25) 3.38 1.88
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (1.16) (1.14) (1.11) (1.24) (1.08)
Dividends in excess of net investment income -0- -0- (.03) -0- -0-
Distributions from net realized gains -0- -0- (.25) -0- -0-
Total dividends and distributions (1.16) (1.14) (1.39) (1.24) (1.08)
Net asset value, end of year $13.29 $12.92 $12.51 $14.15 $12.01
TOTAL RETURN
Total investment return based on net
asset value (a) 12.14% 13.26% (2.58)% 29.62% 17.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $277,369 $230,750 $219,182 $216,171 $60,356
Ratio of expenses to average net assets 1.20% 1.24% 1.30% 1.39% 1.48%
Ratio of net investment income to
average net assets 9.46% 9.70% 7.76% 9.29% 8.98%
Portfolio turnover rate 389% 387% 372% 579% 610%
</TABLE>
See footnote summary on page 16.
14
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------
JANUARY 8,
1993(B)
YEAR ENDED JUNE 30, TO
------------------------------------- JUNE 30,
1996 1995 1994 1993
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.92 $12.50 $14.15 $12.47
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.15 1.11 1.02 .49
Net realized and unrealized gain (loss)
on investments .29 .36 (1.37) 1.69
Net increase (decrease) in net asset
value from operations 1.44 1.47 (.35) 2.18
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (1.07) (1.05) (1.04) (.50)
Dividends in excess of net investment income -0- -0- (.01) -0-
Distribution from net realized gains -0- -0- (.25) -0-
Total dividends and distributions (1.07) (1.05) (1.30) (.50)
Net asset value, end of period $13.29 $12.92 $12.50 $14.15
TOTAL RETURN
Total investment return based on net
asset value (a) 11.38% 12.54% (3.27)% 17.75%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $338,152 $241,393 $184,129 $55,508
Ratio of expenses to average net assets 1.90% 1.99% 2.00% 2.10%(c)
Ratio of net investment income to
average net assets 8.75% 9.07% 7.03% 7.18%(c)
Portfolio turnover rate 389% 387% 372% 579%
</TABLE>
See footnote summary on page 16.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------
MAY 3,
1993(B)
YEAR ENDED JUNE 30, TO
------------------------------------- JUNE 30,
1996 1995 1994 1993
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.93 $12.50 $14.15 $13.63
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.14 1.10 1.02 .16
Net realized and unrealized gain (loss)
on investments .29 .38 (1.37) .53
Net increase (decrease) in net asset
value from operations 1.43 1.48 (.35) .69
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (1.07) (1.05) (1.05) (.17)
Distribution from net realized gains -0- -0- (.25) -0-
Total dividends and distributions (1.07) (1.05) (1.30) (.17)
Net asset value, end of period $13.29 $12.93 $12.50 $14.15
TOTAL RETURN
Total investment return based on net
asset value (a) 11.30% 12.62% (3.27)% 5.08%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $83,095 $51,028 50,860 $5,115
Ratio of expenses to average net assets 1.90% 1.84% 1.99% 2.05%(c)
Ratio of net investment income to
average net assets 8.74% 8.95% 6.98% 5.51%(c)
Portfolio turnover rate 389% 387% 372% 579%
</TABLE>
(a) 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 charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period less than one year is
not annualized.
(b) Commencement of distribution.
(c) Annualized.
16
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
We have audited the accompanying statement of assets and liabilities of
Alliance Bond Fund Corporate Bond Portfolio (one of the portfolios comprising
the Alliance Bond Fund, Inc.), including the portfolio of investments, as of
June 30, 1996, and the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Bond Fund Corporate Bond Portfolio at June 30, 1996, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the indicated periods, in conformity with generally accepted accounting
principles.
New York, New York
July 31, 1996
17
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JAMES R. GREENE (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
EUGENE F. O'NEIL (1)
ROBERT C. WHITE (1)
OFFICERS
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
PAUL J. DENOON, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JUAN J. RODRIGUEZ, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
18
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
19
ALLIANCE BOND FUND CORPORATE BOND PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
INVESTING WITHOUT THE MYSTERY.
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
CBPAR
