ALLIANCE BOND FUND
U.S. GOVERNMENT PORTFOLIO
ANNUAL REPORT
JUNE 30, 1996
LETTER TO SHAREHOLDERS ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
July 8, 1996
Dear Shareholder:
The broad-based rally enjoyed by the U.S. bond market last year came to an end
in January 1996. Stronger-than-expected news on the U.S. economy and the belief
that the Federal Reserve would raise interest rates to reduce inflationary
pressures caused bond prices to retreat. Since February, most sectors of the
domestic bond market, including U.S. Treasury securities, have produced
negative returns. Mortgage obligations proved an exception during the first six
months of 1996, posting modest gains when prepayment expectations stabilized.
INVESTMENT RESULTS
The table on this page shows the Portfolio's investment returns over the six-
and twelve-month periods ended June 30, 1996. The Portfolio underperformed both
the U.S. Treasury market, represented by the unmanaged Lehman Brothers (LB)
Government Bond Index, and the average results of the universe of general U.S.
Government bond mutual funds that Lipper Analytical Services tracks. While the
Portfolio and its Lipper peers have similar investment objectives, they may
pursue different investment policies.
ECONOMIC REVIEW
The U.S. economy rebounded from an inventory-related slowdown during the second
half of 1995. Real growth accelerated to 2.2% during the first quarter of 1996,
while final demand increased by a healthy 3.3%. The re-strengthening of the
economy continued in the second quarter, led by rapidly improving data on labor.
INVESTMENT RESULTS*
PERIODS ENDING JUNE 30, 1996
CUMULATIVE TOTAL RETURN
6 MONTHS 12 MONTHS
--------- ---------
ALLIANCE BOND FUND
U.S. GOVERNMENT PORTFOLIO
Class A -3.72% 1.74%
Class B -4.07% 1.01%
Class C -4.19% 1.01%
SEC 30-DAY YIELD
Class A 6.49%
Class B 6.06%
Class C 6.07%
LB GOVERNMENT BOND INDEX -1.79% 4.51%
LIPPER U.S. GOV'T. FUNDS AVG. -2.62% 3.48%
* 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. RETURNS FOR THE FUND AND ITS COMPARATIVE BENCHMARKS
INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
THE LEHMAN BROTHERS (LB) GOVERNMENT BOND INDEX IS UNMANAGED AND REFLECTS NO
FEES OR EXPENSES. IT IS MADE UP OF THE U.S. TREASURY BOND AND AGENCY BOND
INDICES. THE LIPPER GENERAL U.S. GOVERNMENT FUNDS AVERAGE FOR THE SIX- AND
TWELVE-MONTH PERIODS REFLECTS THE PERFORMANCE OF 176 AND 169 MUTUAL FUNDS,
RESPECTIVELY . THE AVERAGE INCLUDES FEES AND EXPENSES, BUT NO SALES CHARGE.
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.
1
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
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
of 4.2% during the second quarter of 1996. As you may recall, we projected
first-half growth of 2.0%.
Although increases in food and energy prices boosted inflation in the spring,
the less volatile "core" rate of inflation, estimated at 2.7%, hovered near a
30-year low. The Federal Reserve has been in a holding pattern on interest
rates since January, but the recent intensification of inflationary pressures
may push the central bank closer to a preemptive interest-rate increase to rein
in the money supply.
BOND MARKET REVIEW
Since our last report to you, the U.S. bond market has experienced a bumpy
ride. The surge of growth in the U.S. economy during the first half of 1996
depressed the bond market, triggering concern about inflation and the Federal
Reserve's policy going forward. U.S. Treasury securities with relatively long
durations responded negatively as interest rates for all maturities increased.
Across all major sectors of the U.S. fixed-income market, shorter-duration
securities outperformed longer-duration securities.
Mortgage-backed bonds, on the other hand, performed comparatively well due to
their shorter durations. Continuing demand and a lack of supply caused those
with the shortest durations to do particularly well, even while experiencing
higher volatility. As the market continued to trade lower, higher interest
rates provided mortgages with a more stable prepayment environment, and the
refinancing opportunities for a large portion of the market disappeared.
INVESTMENT OUTLOOK
We believe the U.S. economy will slow during the second half of 1996 following
fairly robust growth during the second quarter. Our forecast calls for gross
domestic product growth of 2.0% to 2.5% in the second half of the year. If the
economy does not show consistent signs of the expected slowdown, the Federal
Reserve is likely to tighten monetary policy. Until a clear picture of the U.S.
economy emerges, we expect the fixed-income markets to remain choppy.
We appreciate your continued interest and investment in Alliance Bond Fund U.S.
Government Portfolio. We look forward to reporting to you again on market
activity and the Fund's investment results in coming periods.
Sincerely,
John D. Carifa
Chairman and President
Paul J. DeNoon
Senior Vice President
2
INVESTMENT OBJECTIVE AND POLICIES
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 is a diversified,
open-end investment company that invests solely in U.S. Government securities
that are backed by the full faith and credit of the U.S. Government.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF JUNE 30, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 1.74% -2.54%
. Five Years 7.01% 6.07%
. Ten Years 7.42% 6.95%
SEC Yield 6.49%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 1.01% -1.82%
. Since Inception* 5.46% 5.46%
SEC Yield 6.06%
CLASS C SHARES
. One Year 1.01%
. Since Inception* 3.06%
SEC Yield 6.07%
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: 9/30/91, Class B; 5/3/93, Class C.
3
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
GROWTH OF A $10,000 INVESTMENT
6/30/86 TO 6/30/96
$23,000
$21,000
$19,000
$17,000
$15,000
$13,000
$11,000
$9,000
U.S. GOVERNMENT PORTFOLIO
CLASS A: $19,587
LIPPER GENERAL
U.S. GOV'T FUNDS
AVERAGE
LB GOV'T BOND INDEX
6/30/86 6/30/96
This chart illustrates the total value of an assumed investment in Alliance
Bond Fund U.S. Government 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 (LB) Government Bond Index is composed of the Treasury Bond
and Agency Bond Indices.
The Lipper General U.S. Government Funds Average reflects performance of 178
mutual funds, only 38 of which have existed for the full ten-year period. These
funds have generally similar investment objectives to Alliance Bond Fund U.S.
Government Portfolio, although the investment policies of some funds included
in the average may vary.
When comparing Alliance Bond Fund U.S. Government 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.
U.S. Government Portfolio
LB Government Bond Index
Lipper General U.S. Government Funds Average
4
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- ------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS-101.5%
U.S. TREASURY SECURITIES-61.9%
U.S. TREASURY NOTES-30.3%
6.00%, 5/31/98 $ 4,600 $ 4,589,834
8.50%, 7/15/97 11,400 11,705,520
8.75%, 10/15/97 247,000 255,575,840
9.00%, 5/15/98 85,000 89,318,850
--------------
361,190,044
U.S. TREASURY BOND-21.3%
14.00%, 11/15/11 166,400 254,004,608
U.S. TREASURY STRIP-10.3%
Zero coupon, 2/15/09 155,600 65,529,384
Zero coupon, 11/15/09 144,300 57,428,514
--------------
122,957,898
Total U.S. Treasury Securities
(cost $748,197,114) 738,152,550
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-33.0%
Mobile Homes
8.25%, 6/15/05-3/15/16 5,838 6,042,598
8.50%, 5/15/08-1/15/12 1,232 1,284,050
8.75%, 11/15/00-1/15/12 4,928 5,171,805
9.00%, 10/15/11-1/15/12 1,508 1,581,220
9.75%, 5/15/99-1/15/13 8,406 9,025,684
10.25%, 4/15/98-6/15/13 7,742 8,305,727
11.25%, 3/15/98-5/15/98 35 37,527
--------------
31,448,611
Project Loans
7.00%, 4/15/97-5/15/35 26,350 25,860,423
7.05%, 9/15/25 7,050 6,783,289
7.30%, 1/15/31 7,712 7,524,016
7.50%, 2/15/23-1/15/35 10,164 10,023,859
7.80%, 11/15/34 15,086 15,076,149
8.00%, 4/15/23-2/15/34 23,651 23,843,504
8.125%, 10/15/29 27,304 27,653,942
8.375%, 1/15/30-7/15/32 15,534 15,873,918
8.43%, 7/15/27 4,919 5,037,654
8.50%, 11/15/12-7/15/32 47,318 48,574,324
8.75%, 1/15/33 2,508 2,589,839
9.00%, 4/15/29-5/15/35 8,136 8,450,918
9.25%, 4/15/32 6,969 7,289,485
9.50%, 8/15/31 10,298 10,845,188
10.50%, 8/15/29 5,787 6,287,796
--------------
221,714,304
Single Family Homes
7.50%, 1/15/99-4/15/26 129,311 127,518,280
9.00%, 7/20/24-9/20/24 12,733 13,242,271
--------------
140,760,551
Total Government National Mortgage Association
(cost $395,910,160) 393,923,466
FEDERAL AGENCY SECURITIES-6.6%
Federal Housing Authority
11.93%, 1/01/29 7,919 8,076,975
Financial Assistance Corp.
9.45%, 11/21/03 26,000 27,664,780
9.50%, 4/16/04 31,506 33,823,897
Overseas Private Investment Corporation
Series 94-195
6.08%, 8/15/04 9,000 8,586,810
Total Federal Agency Securities
(cost $85,048,622) 78,152,462
TOTAL INVESTMENTS-101.5%
(cost $1,229,155,896) 1,210,228,478
Other assets less liabilities-(1.5%) (17,631,009)
NET ASSETS-100% $1,192,597,469
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $1,229,155,896) $1,210,228,478
Cash 639,843
Interest receivable 12,540,424
Receivable for capital stock sold 2,100,606
Other receivables 103,772
Total assets 1,225,613,123
LIABILITIES
Payable for investment securities purchased 23,960,176
Payable for capital stock redeemed 4,341,423
Dividends payable 2,402,549
Advisory fee payable 1,615,747
Distribution fee payable 149,871
Accrued expenses 545,888
Total liabilities 33,015,654
NET ASSETS $1,192,597,469
COMPOSITION OF NET ASSETS
Capital stock, at par $ 158,561
Additional paid-in capital 1,430,102,882
Distributions in excess of net investment income (2,402,549)
Accumulated net realized loss (216,334,254)
Net unrealized depreciation of investments and other assets (18,927,171)
$1,192,597,469
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($397,894,221/
52,902,109 shares of capital stock issued and outstanding) $7.52
Sales charge-4.25% of public offering price .33
Maximum offering price $7.85
CLASS B SHARES
Net asset value and offering price per share ($628,628,059/
83,578,767 shares of capital stock issued and outstanding) $7.52
CLASS C SHARES
Net asset value, redemption and offering price per share($166,075,189
/22,080,415 shares of capital stock issued and outstanding) $7.52
See notes to financial statements.
6
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $112,315,976
EXPENSES
Advisory fee $7,041,367
Distribution fee - Class A 1,309,625
Distribution fee - Class B 7,264,663
Distribution fee - Class C 1,750,258
Transfer agency 1,625,622
Custodian 214,225
Taxes 160,299
Printing 149,831
Administrative 135,982
Audit and legal 133,864
Registration 97,842
Directors' fees 11,723
Miscellaneous 45,735
Total expenses 19,941,036
Net investment income 92,374,940
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investments (47,116,946)
Net change in unrealized appreciation of investments (26,134,142)
Net loss on investments (73,251,088)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 19,123,852
See notes to financial statements.
7
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30,1996 JUNE 30,1995
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 92,374,940 $ 108,632,124
Net realized loss on investments (47,116,946) (64,741,614)
Net change in unrealized (depreciation)
appreciation of investments and other assets (26,134,142) 87,484,438
Net increase in net assets from operations 19,123,852 131,374,948
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (32,265,939) (38,253,548)
Class B (48,490,547) (56,201,323)
Class C (11,692,283) (15,168,018)
CAPITAL STOCK TRANSACTIONS
Net decrease (153,783,285) (72,782,075)
Total decrease (227,108,202) (51,030,016)
NET ASSETS
Beginning of year 1,419,705,671 1,470,735,687
End of year $1,192,597,469 $1,419,705,671
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 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 currently 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 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 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 discount as an
adjustment 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
year ended June 30, 1996. Pursuant to the advisory agreement the Portfolio paid
$135,982 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 $1,099,331 for the year ended June 30, 1996.
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 $26,128 from the sale of Class A shares and
$1,113,832 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 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 $10,771,067, and $2,913,843
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
At June 30, 1996, the cost of securities for federal income tax purposes was
$1,230,825,536. Accordingly, gross unrealized appreciation of investments was
$3,489,894 and gross unrealized depreciation of investments was $24,086,952,
resulting in net unrealized depreciation of $20,597,058. For federal income tax
purposes, the Portfolio had a capital loss carryforward at June 30, 1996 of
approximately $172,663,428 of which $19,845,081 expires in 1998; $8,257,319 in
1999; $83,016,947 in 2003; and $61,544,081 in 2004.
11
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
--------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
------------ ------------ -------------- -------------
CLASS A
Shares sold 8,593,308 9,001,368 $ 67,686,755 $ 69,178,564
Shares issued in
reinvestment of
dividends 2,069,864 2,226,877 16,232,269 17,158,946
Shares converted from
Class B to Class A 1,518,616 -0- 11,511,531 -0-
Shares redeemed (17,526,781) (14,571,760) (137,499,410) (112,341,061)
Net decrease (5,344,993) (3,343,515) $ (42,068,855) $(26,003,551)
CLASS B
Shares sold 11,077,356 25,073,085 $ 87,210,898 $192,424,585
Shares issued in
reinvestment of
dividends 2,551,782 2,907,922 20,013,580 22,420,168
Shares converted from
Class B to Class A (1,518,616) -0- (11,511,531) -0-
Shares redeemed (25,781,796) (27,250,780) (201,478,136) (209,527,642)
Net (decrease)
increase (13,671,274) 730,227 $(105,765,189) $ 5,317,111
CLASS C
Shares sold 7,342,699 6,046,572 $ 57,646,630 $ 46,423,819
Shares issued in
reinvestment of
dividends 444,118 836,828 3,477,381 6,463,373
Shares redeemed (8,562,292) (13,632,303) (67,073,252) (104,982,827)
Net decrease (775,475) (6,748,903) $ (5,949,241) $(52,095,635)
11
FINANCIAL HIGHLIGHTS ALLIANCE BOND FUND U.S. GOVERNMENT 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 $7.96 $7.84 $8.64 $8.34 $8.01
INCOME FROM INVESTMENT OPERATIONS
Net investment income .58 .64 .65 .69 .70
Net realized and unrealized (loss)
gain on investments (.44) .13 (.80) .29 .35
Net increase (decrease) in net
asset value from operations .14 .77 (.15) .98 1.05
LESS: DIVIDENDS
Dividends from net investment income (.58) (.65) (.65) (.68) (.72)
Net asset value, end of year $7.52 $7.96 $7.84 $8.64 $8.34
TOTAL RETURN
Total investment return based on net
asset value (a) 1.74% 10.37% (1.93)% 12.23% 13.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $397,894 $463,660 $482,595 $527,968 $492,448
Ratio of expenses to average net assets 1.01% 1.01% 1.02% 1.10% 1.12%
Ratio of net investment income to
average net assets 7.38% 8.27% 7.76% 8.04% 8.43%
Portfolio turnover rate 334% 190% 188% 386% 418%
</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
----------------------------------------------------------------
SEPTEMBER 30,
1991(B)
YEAR ENDED JUNE 30, TO
-------------------------------------------------- JUNE 30,
1996 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 .52 .58 .59 .62 .49
Net realized and unrealized (loss)
gain on investments (.44) .13 (.80) .30 .09
Net increase (decrease) in net asset
value from operations .08 .71 (.21) .92 .58
LESS: DIVIDENDS
Dividends from net investment income (.52) (.59) (.59) (.62) (.49)
Net asset value, end of period $7.52 $7.96 $7.84 $8.64 $8.34
TOTAL RETURN
Total investment return based on net
asset value (a) 1.01% 9.52% (2.63)% 11.45% 6.95%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $628,628 $774,097 $756,282 $552,471 $32,227
Ratio of expenses to average net assets 1.72% 1.72% 1.72% 1.81% 1.80%(c)
Ratio of net investment income to
average net assets 6.67% 7.57% 7.04% 7.25% 7.40%(c)
Portfolio turnover rate 334% 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
---------------------------------------------------
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 $7.96 $7.83 $8.64 $8.56
INCOME FROM INVESTMENT OPERATIONS
Net investment income .52 .58 .59 .10
Net realized and unrealized (loss)
gain on investments (.44) .14 (.81) .08
Net increase (decrease) in net asset
value from operations .08 .72 (.22) .18
LESS: DIVIDENDS
Dividends from net investment income (.52) (.59) (.59) (.10)
Net asset value, end of period $7.52 $7.96 $7.83 $8.64
TOTAL RETURN
Total investment return based on net
asset value (a) 1.01% 9.67% (2.75)% 2.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $166,075 $181,948 $231,859 $67,757
Ratio of expenses to average net assets 1.71% 1.71% 1.70% 1.80%(c)
Ratio of net investment income to
average net assets 6.68% 7.59% 6.97% 6.00%(c)
Portfolio turnover rate 334% 190% 188% 386%
</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.
14
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
We have audited the accompanying statement of assets and liabilities of
Alliance Bond Fund U.S. Government 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 U.S. Government 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
15
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
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
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.
16
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
17
ALLIANCE BOND FUND U.S. GOVERNMENT 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.
USGAR
