ALLIANCE BOND FUND
U.S. GOVERNMENT PORTFOLIO
SEMI-ANNUAL REPORT
DECEMBER 31, 1995
LETTER TO SHAREHOLDERS ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
February 12, 1996
Dear Shareholder:
The U.S. bond market continued its impressive, broad-based rally over the past
six months. Despite continued economic growth, the rally strengthened, as
restrained inflationary pressures and a more accommodative monetary policy
buoyed investor confidence. Treasury and mortgage obligations both performed
well, though mortgage returns were tempered by higher prepayment activity.
Across all major sectors of the U.S. fixed income market, longer-duration
securities outperformed shorter-duration securities as interest rates for all
maturities declined.
INVESTMENT RESULTS
The following table shows the U.S. Government Portfolio's investment results
over the six- and twelve-month periods ended December 31, 1995. Also shown for
comparison are the total returns for the U.S. Treasury market, represented by
the unmanaged Lehman Brothers (LB) Government Bond Index, and for the average
of its Lipper universe of 174 general U.S. Government funds. These funds have
generally similar investment objectives to your Fund though some funds included
in the average may have somewhat different investment policies.
Total Returns Through December 31, 1995
Six Months Twelve Months
---------- -------------
ALLIANCE U.S. GOVERNMENT PORTFOLIO
Class A +5.67% +16.55%
Class B +5.30% +15.55%
Class C +5.43% +15.85%
LB GOVERNMENT BOND INDEX +6.41% +18.33%
LIPPER GENERAL U.S. GOV'T FUNDS AVG. +12.93% +17.34%
Total returns are based on the net asset values of each class of shares as of
December 31; additional investment results appear on page 3.
ECONOMIC REVIEW
While the U.S. economy slowed in the first half of 1995, growth reaccelerated
in the third quarter due to larger than expected increases in residential
housing, government spending and business inventories. Fourth quarter economic
growth appears less robust, however. Retail sales remain weak despite
significant discounting during the holiday season. Gains in real disposable
income have slowed and personal debt levels continue to escalate. Growth also
remains sluggish in the manufacturing sector. The National Association of
Purchasing Management (NAPM) Index was steady at 46.0% in December but has
remained below 50% for five consecutive months. (A reading below 50% signals a
slowdown in manufacturing output.)
Inflation data remain very favorable to the bond market. Broad price indices
such as the Consumer Price Index and Producer Price Index have risen very
modestly and labor costs remain under control. The benign inflation outlook and
the chance of a significant federal government deficit reduction package may
allow the Federal Reserve to further cut interest rates in the months ahead.
BOND MARKET REVIEW
Since we last reported, the U.S. bond market continued to post significant
gains across nearly all fixed income sectors. The rally was fueled largely by
the aforementioned economic developments. U.S. Treasuries outperformed
mortgages during the period as mortgage returns were tempered by higher
prepayment activity. Across all major sectors of the U.S. fixed income market,
longer-duration securities outperformed shorter-duration securities as interest
rates for all maturities declined.
During 1995, mortgage rates continued to decline. However, the incentive to
refinance in 1995 differed from the 1993 experience because Treasury bill rates
ended the period higher than they were in 1993. This made adjustable rate
mortgages and other mortgages tied to the front end of the yield curve less
attractive refinancing alternatives than they were in the last rally.
Therefore, in spite of the low levels of rates, prepayments for fixed rate
mortgages did not reach the levels experienced in 1993.
1
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
INVESTMENT OUTLOOK
It is our view that U.S. economic growth will remain modest in the period
ahead. Our forecast calls for a fixed base year GDP growth rate of 2.0% in the
first six months of the year. With few inflationary pressures on the horizon,
we expect the Federal Reserve to cut interest rates further to stimulate
consumer expenditures and investment. If our forecast proves correct, the
result should be further gains in U.S. bond prices.
Thank you for your continued interest and investment in Alliance U.S.
Government Portfolio. As always we look forward to reporting its progress to
you in coming periods.
Sincerely,
John D. Carifa
Chairman and President
Paul J. DeNoon
Vice President
2
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
Alliance Bond Fund U.S. Government Portfolio seeks as high a level of current
income as is consistent with safety of principal. The Fund invests solely in a
diversified portfolio of U.S. Government securities backed by the full faith
and credit of the U.S. Government.
INVESTMENT RESULTS
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year +16.55% +11.66%
. Five Years +8.46% +7.52%
. Since Inception* +8.24% +7.77%
SEC Yield 5.79%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year +15.55% +12.55%
. Since Inception* +7.16% +7.16%
SEC Yield 5.34%
CLASS C SHARES
. One Year +15.85%
. Since Inception* +5.32%
SEC Yield 5.34%
The average annual total returns reflect investment of dividends and/or capital
gains 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 are not subject to front-end or contingent deferred sales
charges. 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. Yields are for the 30 days
ended December 31, 1995.
* Inception: 12/2/85, Class A; 9/30/91, Class B; 5/3/93, Class C.
3
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED) ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- ------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS-99.1%
U.S. TREASURY SECURITIES-70.6%
U.S. TREASURY BONDS-38.1%
6.875%, 8/15/25 $ 20,000 $ 22,556,200
7.625%, 2/15/25 15,000 18,342,150
12.375%, 5/15/04 35,000 50,673,350
12.50%, 8/15/14 124,900 201,616,078
14.00%, 11/15/11 142,300 236,017,357
-----------
529,205,135
U.S. TREASURY NOTES-26.3%
7.75%, 12/31/99-1/31/00 156,600 169,979,220
8.875%, 2/15/99 133,000 146,632,500
9.375%, 4/15/96 49,000 49,559,090
-----------
366,170,810
U.S. TREASURY STRIP-6.2%
Zero coupon, 5/15/14 264,000 85,929,360
Total U.S. Treasury Securities
(cost $955,014,889) 981,305,305
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-20.3%
Mobile Homes
8.25%, 8/15/12 1,826 1,910,212
8.50%, 5/15/08 1,304 1,366,676
8.75%, 4/15/10 5,544 5,842,557
9.00%, 10/15/11 1,663 1,769,137
9.75%, 1/15/02 9,131 9,758,633
10.25%, 6/15/13 8,230 8,832,178
11.25%, 5/15/98 47 50,984
-----------
29,530,377
Project Loans
7.00%, 4/15/97 17,930 18,120,416
7.30%, 1/15/31 7,667 7,887,426
8.00%, 4/15/23-2/15/34 23,730 24,842,310
8.375%, 7/15/32 15,570 16,198,133
8.50%, 11/15/12-7/15/32 47,506 49,732,800
8.75%, 1/15/33 2,513 2,663,445
9.00%, 4/15/29-5/15/35 8,150 8,674,177
9.25%, 4/15/32 6,980 7,275,189
9.50%, 8/15/31 10,315 11,043,065
10.50%, 8/15/29 5,796 6,447,833
10.75%, 5/15/28 4,999 5,587,403
-----------
158,472,197
Single Family Homes
7.00%, 3/15/35-5/15/35 7,862 7,945,269
7.05%, 9/15/25 7,081 7,156,384
7.50%, 2/15/23-1/15/35 10,191 10,534,768
7.80%, 11/15/34 15,115 15,724,016
8.125%, 10/15/29 27,378 28,661,031
8.25%, 5/15/10 1,819 1,903,098
8.43%, 7/15/27 4,934 5,165,522
9.00%, 9/20/24 16,812 17,893,980
-----------
94,984,068
Total Government National Mortgage Association
(cost $276,300,487) 282,986,642
FEDERAL AGENCY SECURITIES-7.7%
Federal Housing Authority
11.93%, 1/01/29 7,928 8,126,381
Financial Assistance Corp.
9.45%, 11/21/03 26,000 28,567,500
9.50%, 4/16/04 31,506 35,257,104
Overseas Private Investment Corporation
Series 94-195 FRN
6.08%, 8/15/04 9,000 9,115,020
4
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- ------------------------------------------------------------------------
Small Business Administration
BS93-2A (I/O) FRN
8.40%, 3/15/18 (a)(b) $14,356 $ 15,385,340
BS93-5A (I/O) FRN
7.00%, 6/15/18 (a)(b) 11,708 11,038,746
Total Federal Agency Securities
(cost $111,122,773) 107,490,091
COLLATERALIZED MORTGAGE OBLIGATION-0.5%
Vendee Mortgage Trust
1993-2 FRN (I/O)
9.50%, 6/15/23 (a)
(cost $ 7,972,529) 7,973 6,351,035
TOTAL INVESTMENTS-99.1%
(cost $1,350,410,678) 1,378,133,073
Other assets less liabilities-0.9% 12,031,877
NET ASSETS-100% $1,390,164,950
(a) Interest rate represents yield to maturity, and principal amount
represents amortized cost.
(b) Illiquid security (see Notes A & F).
Glossary of Terms:
FRN - Floating rate note.
I/O - Interest Only.
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED) ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $1,350,410,678) $1,378,133,073
Cash 2,654,901
Interest receivable 24,377,451
Receivable for capital stock sold 962,404
Prepaid expenses and other assets 98,893
Total assets 1,406,226,722
LIABILITIES
Payable for investment securities purchased 7,804,766
Dividends payable 4,701,803
Advisory fee payable 1,861,935
Payable for capital stock redeemed 1,042,262
Distribution fee payable 175,411
Accrued expenses 475,595
Total liabilities 16,061,772
NET ASSETS $1,390,164,950
COMPOSITION OF NET ASSETS
Capital stock, at par $ 171,320
Additional paid-in capital 1,526,892,435
Distributions in excess of net investment income (823,478)
Accumulated net realized loss (163,797,722)
Net unrealized appreciation of investments 27,722,395
---------------
$1,390,164,950
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($455,168,302/
56,092,740 shares of capital stock issued and outstanding) $8.11
Sales charge-4.25% of public offering price .36
Maximum offering price $8.47
CLASS B SHARES
Net asset value and offering price per share($754,402,296/
92,973, 878 shares of capital stock issued and outstanding) $8.11
CLASS C SHARES
Net asset value, redemption and offering price per share($180,594,352/
22,253,127 shares of capital stock issued and outstanding) $8.12
See notes to financial statements.
6
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $58,180,025
EXPENSES
Advisory fee $3,700,998
Distribution fee - Class A 684,915
Distribution fee - Class B 3,808,436
Distribution fee - Class C 895,449
Transfer agency 866,504
Custodian 90,516
Printing 86,369
Taxes 72,378
Administrative 71,822
Audit and legal 65,579
Registration 27,768
Directors' fees 5,336
Miscellaneous 22,430
Total expenses 10,398,500
Net investment income 47,781,525
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 5,419,586
Net change in unrealized appreciation of investments 20,515,424
Net gain on investments 25,935,010
NET INCREASE IN NET ASSETS FROM OPERATIONS $73,716,535
See notes to financial statements.
7
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
SIX MONTHS ENDED
DECEMBER 31,1995 YEAR ENDED
(UNAUDITED) JUNE 30,1995
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 47,781,525 $ 108,632,124
Net realized gain (loss) on investments 5,419,586 (64,741,614)
Net change in unrealized appreciation of
investments 20,515,424 87,484,438
Net increase in net assets from operations 73,716,535 131,374,948
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (16,607,049) (38,253,548)
Class B (25,026,814) (56,201,323)
Class C (5,883,195) (15,168,018)
CAPITAL STOCK TRANSACTIONS
Net decrease (55,740,198) (72,782,075)
Total decrease (29,540,721) (51,030,016)
NET ASSETS
Beginning of period 1,419,705,671 1,470,735,687
End of period $1,390,164,950 $1,419,705,671
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 (UNAUDITED) ALLIANCE BOND FUND U.S. GOVERNMENT 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: Corporate Bond Portfolio and 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 U.S. Government Portfolio (the 'Portfo1io') only.
The Portfolio offers three classes of shares; Class A, Class B and Class C
shares. Class A shares are 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 3.00% to zero depending on the period of time the shares are held. Class B
shares will automatically convert to Class A shares six years after the end of
the calendar month of purchase. Class C shares are sold without an initial or
contingent deferred sales charge. 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 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 and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. 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 original issue
discount as adjustments to 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.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the investment advisory agreement, the Portfolio pays
Alliance Capital Management L.P., (the 'Adviser'), an advisory fee equal to .60
of 1% of the first $500 million, and .50 of 1% in excess of $500 million on an
annualized basis, of its net assets at the end of each quarter. 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
six months ended December 31, 1995. Pursuant to the advisory agreement the
Portfolio paid $71,822 to the Adviser representing the cost of certain legal
and accounting services provided to the Portfolio by the Adviser for the six
months ended December 31, 1995.
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 $561,226 for the six months ended December 31,
1995.
9
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
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 $57,959 from the sale of Class A shares and
$1,477,757 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B shares for the six months ended December 31, 1995.
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 the 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 $12,116,547, and $2,566,713
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), aggregated $1,795,693,579 and $1,855,979,656, respectively, for
the six months ended December 31, 1995. At December 31, 1995, the cost of
securities for federal income tax purposes was $1,351,074,047. Accordingly,
gross unrealized appreciation of investments was $34,285,347 and gross
unrealized depreciation of investments was $7,226,321, resulting in net
unrealized appreciation of $27,059,026. For federal income tax purposes, the
Portfolio had a capital loss carryforward at June 30, 1995 of approximately
$111,119,347 of which $19,845,081 expires in 1998, $8,257,319 in 1999, and
$83,016,947 in 2003.
10
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 600,000,000 shares of $.001 par value capital stock authorized, for
the Portfolio of which 200,000,000 shares are designated for Class A, Class B
and Class C shares, respectively. Transactions in capital stock were as follows:
SHARES AMOUNT
----------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31,1995 JUNE 30, DECEMBER 31,1995 JUNE 30,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------ ------------ ------------- --------------
CLASS A
Shares sold 4,077,418 9,001,368 $ 32,463,890 $ 69,178,564
Shares issued in
reinvestment of
dividends 1,098,371 2,226,877 8,729,016 17,158,946
Shares redeemed (7,330,151) (14,571,760) (58,262,975) (112,341,061)
Net decrease (2,154,362) (3,343,515) $(17,070,069) $ (26,003,551)
CLASS B
Shares sold 6,074,828 25,073,085 $ 48,246,999 $ 192,424,585
Shares issued in
reinvestment of
dividends 1,352,473 2,907,922 10,748,042 22,420,168
Shares redeemed (11,703,464) (27,250,780) (93,004,355) (209,527,642)
Net increase
(decrease) (4,276,163) 730,227 $(34,009,314) $ 5,317,111
CLASS C
Shares sold 3,660,056 6,046,572 $ 29,161,433 $ 46,423,819
Shares issued in
reinvestment of
dividends 217,202 836,828 1,726,609 6,463,373
Shares redeemed (4,480,021) (13,632,303) (35,548,857) (104,982,827)
Net decrease (602,763) (6,748,903) $ (4,660,815) $ (52,095,635)
NOTE F: ILLIQUID SECURITIES
DATE
SECURITY ACQUIRED COST
- -------- -------- -----------
Small Business Administration
BS93-2A (I/O)
8.40%, 3/15/18 FRN 1/28/93 $14,356,384
BS93-5A (I/O)
7.00%, 6/15/18 FRN 1/26/94 11,707,708
-----------
$26,064,092
The securities shown above are illiquid and have been valued at fair value in
accordance with the procedures described in Note A. The value of these
securities at December 31, 1995 aggregated $26,424,086, representing 1.9% of
net assets.
11
FINANCIAL HIGHLIGHTS ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
1995 ------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------ --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.96 $7.84 $8.64 $8.34 $8.01 $8.14
INCOME FROM INVESTMENT OPERATIONS
Net investment income .29(d) .64 .65 .69 .70 .81
Net realized and unrealized gain(loss)
on investments .15 .13 (.80) .29 .35 (.11)
Net increase (decrease) in net asset
value from operations .44 .77 (.15) .98 1.05 .70
LESS: DISTRIBUTIONS
Dividends from net investment income (.29) (.65) (.65) (.68) (.72) (.83)
Net asset value, end of period $8.11 $7.96 $7.84 $8.64 $8.34 $8.01
TOTAL RETURN
Total investment return based on net
asset value (c) 5.67% 10.37% (1.93)% 12.23% 13.52% 8.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $455,168 $463,660 $482,595 $527,968 $492,448 $491,910
Ratio of expenses to average net assets 1.01%(a) 1.01% 1.02% 1.10% 1.12% 1.07%
Ratio of net investment income to
average net assets 7.31%(a) 8.27% 7.76% 8.04% 8.43% 10.02%
Portfolio turnover rate 127% 190% 188% 386% 418% 402%
</TABLE>
See footnote summary on page 14.
12
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------
SIX MONTHS SEPTEMBER 30,
ENDED 1991(B)
DECEMBER 31, YEAR ENDED JUNE 30, TO
1995 --------------------------------- JUNE 30,
(UNAUDITED) 1995 1994 1993 1992
------------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.96 $7.84 $8.64 $8.34 $8.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income .26(d) .58 .59 .62 .49
Net realized and unrealized gain (loss)
on investments .15 .13 (.80) .30 .09
Net increase (decrease) in net asset
value from operations .41 .71 (.21) .92 .58
LESS: DISTRIBUTIONS
Dividends from net investment income (.26) (.59) (.59) (.62) (.49)
Net asset value, end of period $8.11 $7.96 $7.84 $8.64 $8.34
TOTAL RETURN
Total investment return based on net
asset value (c) 5.30% 9.52% (2.63)% 11.45% 6.95%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $754,402 $774,097 $756,282 $552,471 $32,227
Ratio of expenses to average net assets 1.72%(a) 1.72% 1.72% 1.81% 1.80%(a)
Ratio of net investment income to
average net assets 6.61%(a) 7.57% 7.04% 7.25% 7.40%(a)
Portfolio turnover rate 127% 190% 188% 386% 418%
</TABLE>
See footnote summary on page 14.
13
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------
SIX MONTHS MAY 3,
ENDED 1993(B)
DECEMBER 31, YEAR ENDED JUNE 30, TO
1995 --------------------- JUNE 30,
(UNAUDITED) 1995 1994 1993
------------ --------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $7.96 $7.83 $8.64 $8.56
INCOME FROM INVESTMENT OPERATIONS
Net investment income .26(d) .58 .59 .10
Net realized and unrealized gain (loss)
on investments .16 .14 (.81) .08
Net increase (decrease) in net asset
value from operations .42 .72 (.22) .18
LESS: DISTRIBUTIONS
Dividends from net investment income (.26) (.59) (.59) (.10)
Net asset value, end of period $8.12 $7.96 $7.83 $8.64
TOTAL RETURN
Total investment return based on net
asset value (c) 5.43% 9.67% (2.75)% 2.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $180,595 $181,948 $231,859 $67,757
Ratio of expenses to average net assets 1.71%(a) 1.71% 1.70% 1.80%(a)
Ratio of net investment income to
average net assets 6.61%(a) 7.59% 6.97% 6.00%(a)
Portfolio turnover rate 127% 190% 188% 386%
</TABLE>
(a) Annualized.
(b) Commencement of distribution.
(c) 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.
(d) Based on average shares outstanding.
14
ALLIANCE BOND FUND U.S. GOVERNMENT 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
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
PAUL J. DENOON, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, 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
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
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
15
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS 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.
USGSR
