ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
SEMI-ANNUAL REPORT
DECEMBER 31, 1996
LETTER TO SHAREHOLDERS
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
February 11, 1997
Dear Shareholder:
U.S. bond market returns were subdued throughout 1996. Stronger-than-expected
job growth and uncertainty about whether the Federal Reserve would raise
interest rates to slow economic growth kept bond market returns negative for
most of the year. Across all major sectors of the bond market, shorter-duration
securities outperformed longer-duration securities while interest rates for all
maturities increased. Mortgage-backed securities were the best performing
sector of the domestic investment grade bond market as higher interest rates
slowed mortgage prepayment expectations.
INVESTMENT RESULTS
The following table shows the U.S. Government Portfolio's investment results
over the 6 and 12 month periods ended December 31, 1996. 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 the average
results of the Lipper universe of general U.S. Government Funds. These funds
have similar investment objectives to your Fund, though some funds included in
the average may have somewhat different investment policies. Rising interest
rates in the first half of 1996 resulted in poor relative performance. As the
table shows, the Fund's performance improved during the most recent period,
modestly underperforming its benchmark.
INVESTMENT RESULTS*
Period Ended December 31, 1996
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
Class A 4.21% 0.33%
Class B 3.82% -0.40%
Class C 3.82% -0.53%
LEHMAN BROTHERS GOVERNMENT BOND INDEX 4.65% 2.77%
LIPPER U.S. GOVERNMENT FUNDS AVERAGE 4.45% 1.72%
* 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 DECEMBER 31,
1996. 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 6 AND 12
MONTH PERIODS REFLECTS THE PERFORMANCE OF 176 AND 169 MUTUAL FUNDS,
RESPECTIVELY. THE AVERAGE INCLUDES FEES AND EXPENSES, BUT NO SALES CHARGES.
ADDITIONAL INVESTMENT RESULTS CAN BE FOUND ON PAGE 3.
ECONOMIC REVIEW
The U.S. economy finished 1996 on a strong note. After moderating in the third
quarter, the economy picked up speed in the fourth quarter, led by a rebound in
consumer spending. The annualized gain in retail sales of merchandise jumped to
4.8% in the fourth quarter, up from only 0.9% in the third quarter. Exports
surged by an annualized 32.7% in October and November and unexpectedly added to
year-end growth. The production side of the economy also showed strength.
Industrial production grew at an annualized pace of 6% and payroll growth
increased to 217,000 per month, up from the third quarter's average of 171,000
per month. In all, growth in aggregate output (GDP), which dipped to 2.1% in
the third quarter, accelerated to 4.7% during the final three months of 1996.
1
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
Broad inflation measures were slightly higher at the end of 1996 as consumer
prices increased 3.3% year-over-year and producer prices were up 2.8%. However,
excluding the volatile food and energy sectors, inflation remained very
well-behaved with year-over-year consumer and producer prices up only 2.6% and
0.6% respectively.
BOND MARKET REVIEW
Since our last report, the U.S. bond market posted modest gains. The market
rallied during the second half of the year, pushing year-to-date returns into
positive territory for the first time since January. Data released during the
period eased investors' concerns about accelerating economic growth and
interest rates on all maturities fell. However, continued concerns about
inflation kept bond yields trading in a narrow range and held price gains down.
With the market settled into a range-bound trading environment, corporates and
mortgages posted the best returns as investor demand for yield-oriented
securities increased.
INVESTMENT OUTLOOK
Our outlook for the U.S. economy assumes that while economic growth accelerated
at the end of 1996, it will moderate again during the first half of 1997. As
this occurs, current upward pressures on inflation should dissipate. Until
clear signs of a slowing economy emerge, concerns about inflation will keep
U.S. interest rates within their recent ranges. The Fed remains on hold with
its neutral-to-slightly-restrictive policy. Given justified concerns about the
economic outlook, further near-term weakness in bond prices and higher bond
yields cannot be ruled out. However, such developments would only facilitate
the economic slowing we predict later in 1997.
Your Fund is now being co-managed by Patricia Young and Jeffrey Phlegar who
joined Alliance in 1992 and 1993, respectively. Each has substantial prior
experience in the financial services industry including the management of
portfolios like that of the Fund. Your former portfolio manager, Paul DeNoon,
has taken on additional responsibilities in the fixed-income hedge fund area.
Thank you for your continued interest and investment in Alliance U.S.
Government Portfolio. We look forward to reporting the Portfolio's progress to
you in the coming months.
Sincerely,
John D. Carifa
Chairman and President
Wayne D. Lyski
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
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 DECEMBER 31, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 0.33% -3.93%
Five Years 5.40% 4.50%
Ten Years 7.27% 6.81%
SEC Yield** 6.27%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -0.40% -3.19%
Five Years 4.66% 4.66%
Since Inception* 5.66% 5.66%
SEC Yield** 5.83%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -0.53% -1.46%
Since Inception* 3.69% 3.69%
SEC Yield** 5.84%
Average annual total returns reflect reinvestment 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 A (1%-Year 1 for purchases exceeding
$1,000,000); for Class B (3%-Year 1; 2%-Year 2; 1%-Year 3; 0%-Year 4); Class C
(1%-Year 1).
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.
** SEC Yields are based on SEC guidelines and are calculated on 30 days ended
December 31, 1996.
3
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED)
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS-99.6%
U.S. TREASURY SECURITIES-80.9%
U.S. TREASURY BONDS-36.8%
6.50%, 11/15/26 $ 4,750 $ 4,663,598
10.375%, 11/15/12 84,700 109,213,027
12.50%, 8/15/14 72,250 108,036,870
14.00%, 11/15/11 110,900 170,668,446
-------------
392,581,941
U.S. TREASURY NOTES-33.6%
5.875%, 11/15/99 25,000 24,916,500
6.00%, 9/30/98 57,500 57,681,700
6.25%, 10/31/01 4,300 4,304,816
7.75%, 11/30/99 84,000 87,797,640
7.875%, 8/15/01 39,000 41,601,300
8.25%, 7/15/98 30,400 31,487,408
8.875%, 5/15/00 16,500 17,894,415
9.00%, 5/15/98 85,000 88,600,600
9.25%, 8/15/98 3,800 3,998,816
-------------
358,283,195
U.S. TREASURY STRIP-10.5%
Zero coupon, 11/15/09 100,000 42,662,000
Zero coupon, 2/15/09 155,600 70,088,464
-------------
112,750,464
Total U.S. Treasury Securities
(cost $870,166,301) 863,615,600
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-11.1%
Mobile Homes
8.00%, 8/15/16 748 770,985
8.25%, 6/15/05-3/15/16 5,358 5,581,982
8.50%, 5/15/08-1/15/12 1,094 1,145,107
8.75%, 11/15/00-1/15/12 4,367 4,605,320
9.00%, 10/15/11-1/15/12 1,427 1,503,379
9.75%, 5/15/99-1/15/13 7,449 8,014,074
10.25%, 4/15/98-6/15/13 6,690 7,187,784
11.25%, 3/15/98-5/15/98 23 24,585
-------------
28,833,216
Project Loans
7.00%, 3/15/35-5/15/35 7,825 7,617,524
7.05%, 9/15/26 7,017 6,846,332
7.30%, 1/15/31 7,688 7,587,431
7.50%, 1/15/35 6,943 6,915,085
7.80%, 11/15/34 15,055 15,172,645
8.00%, 2/15/28-1/15/29 5,229 5,311,933
8.50%, 11/15/12-11/15/31 14,745 15,201,712
8.75%, 1/15/33 2,504 2,598,453
9.00%, 4/15/29 3,675 3,840,176
10.50%, 8/15/29 5,777 6,295,653
-------------
77,386,944
Single Family Homes
9.00%, 7/20/24-9/20/24 11,182 11,699,218
Total Government National Mortgage Association
(cost $118,404,638) 117,919,378
4
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- -------------------------------------------------------------------------
FEDERAL AGENCY SECURITIES-7.6%
Federal Housing Authority
11.93%, 1/01/29 $ 7,908 $ 8,195,122
Financial Assistance Corp.
9.45%, 11/21/03 26,000 27,461,720
9.50%, 4/16/04 31,506 33,583,821
Overseas Private Investment Corporation
Series 94-195
6.08%, 8/15/04 12,000 11,781,720
Total Federal Agency Securities
(cost $87,951,173) 81,022,383
TOTAL INVESTMENTS-99.6%
(cost $1,076,522,112) $1,062,557,361
Other assets less liabilities-0.4% 4,270,270
NET ASSETS-100% $1,066,827,631
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996 (UNAUDITED)
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $1,076,522,112) $1,062,557,361
Cash 51,101
Interest receivable 13,785,520
Receivable for capital stock sold 347,466
Total assets 1,076,741,448
LIABILITIES
Payable for capital stock redeemed 5,409,213
Dividends payable 2,292,499
Advisory fee payable 1,470,939
Distribution fee payable 288,997
Accrued expenses 452,169
Total liabilities 9,913,817
NET ASSETS $1,066,827,631
COMPOSITION OF NET ASSETS
Capital stock, at par $ 141,538
Additional paid-in capital 1,301,830,770
Distributions in excess of net investment income (2,128,141)
Accumulated net realized loss (219,049,584)
Net unrealized depreciation of investments and other assets (13,966,952)
$1,066,827,631
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($377,625,338/
50,107,066 shares of capital stock issued and outstanding) $7.54
Sales charge--4.25% of public offering price .33
Maximum offering price $7.87
CLASS B SHARES
Net asset value and offering price per share ($558,475,287/
74,088,472 shares of capital stock issued and outstanding) $7.54
CLASS C SHARES
Net asset value and offering price per share ($130,727,006/
17,342,892 shares of capital stock issued and outstanding) $7.54
See notes to financial statements.
6
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $49,993,028
EXPENSES
Advisory fee $3,015,715
Distribution fee - Class A 588,808
Distribution fee - Class B 2,997,048
Distribution fee - Class C 774,627
Transfer agency 685,964
Custodian 103,942
Printing 75,342
Administrative 66,936
Audit and legal 44,545
Registration 36,810
Taxes 18,720
Directors' fees 5,569
Miscellaneous 6,312
Total expenses 8,420,338
Net investment income 41,572,690
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (2,715,330)
Net change in unrealized depreciation of
investments and other assets 4,960,219
Net gain on investments 2,244,889
NET INCREASE IN NET ASSETS FROM OPERATIONS $43,817,579
See notes to financial statements.
7
STATEMENT OF CHANGES IN NET ASSETS
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
SIX MONTHS ENDED
DEC. 31,1996 YEAR ENDED
(UNAUDITED) JUNE 30,1996
---------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 41,572,690 $ 92,374,940
Net realized loss on investments (2,715,330) (47,116,946)
Net change in unrealized appreciation
(depreciation) of investments
and other assets 4,960,219 (26,134,142)
Net increase in net assets from operations 43,817,579 19,123,852
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (15,103,082) (32,265,939)
Class B (20,809,262) (48,490,547)
Class C (5,385,938) (11,692,283)
CAPITAL STOCK TRANSACTIONS
Net decrease (128,289,135) (153,783,285)
Total decrease (125,769,838) (227,108,202)
NET ASSETS
Beginning of year 1,192,597,469 1,419,705,671
End of period $1,066,827,631 $1,192,597,469
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (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%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase will be subject to
a contingent deferred sales charge of 1%. Class B shares are currently sold
with a contingent deferred sales charge which declines from 3.00% 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 which mature in 60 days or less are
valued at amortized cost, which approximates market value, unless this method
does not represent fair value. Securities for which market quotations are not
readily available and restricted secutities 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.
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 INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date the securities are purchased or sold. Investment 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 an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at a quarterly rate
equal to .15 of 1% (approximately .60 of 1% on an annual basis) of the first
$500 million of the Fund's net assets and .125 of 1% (approximately .50 of 1%
on an annual basis) of its net assets over $500 million, valued on the last
business day of the previous quarter. Pursuant to the advisory agreement the
Portfolio paid $66,936 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, 1996.
9
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
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 $483,215 for the six months ended December 31,
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 $19,308 from the sale of Class A shares and $282,464
and $1,920 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C, respectively, for the six months ended
December 31, 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 $9,565,109, and $3,302,000
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
Purchase and sales of U.S. Government obligations aggregated $2,363,416,456 and
$2,510,121,794, respectively, for the six months ended December 31, 1996. At
December 31, 1996, the cost of securities for federal income tax purposes was
$1,076,522,112. Accordingly, gross unrealized appreciation of investments was
$1,646,844 and gross unrealized depreciation of investments was $15,611,595,
resulting in net unrealized depreciation of $13,964,751. 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 the year 1998;
$8,257,319 expires in the year 1999; $83,016,947 expires in the year 2003; and
$61,544,081 expires in the year 2004.
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
DEC. 31,1996 JUNE 30, DEC. 31,1996 JUNE 30,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 3,065,801 8,593,308 $ 23,053,782 $ 67,686,755
Shares issued in
reinvestment of
dividends 934,176 2,069,864 7,040,821 16,232,269
Shares converted
from Class B 1,044,499 1,518,616 7,858,587 11,511,531
Shares redeemed (7,839,519) (17,526,781) (58,986,031) (137,499,410)
Net decrease (2,795,043) (5,344,993) $(21,032,841) $ (42,068,855)
CLASS B
Shares sold 3,308,839 11,077,356 $ 24,909,549 $ 87,210,898
Shares issued in
reinvestment of
dividends 1,072,921 2,551,782 8,087,194 20,013,580
Shares converted
to Class A (1,044,499) (1,518,616) (7,858,587) (11,511,531)
Shares redeemed (12,827,556) (25,781,796) (96,577,462) (201,478,136)
Net decrease (9,490,295) (13,671,274) $(71,439,306) $(105,765,189)
CLASS C
Shares sold 1,843,716 7,342,699 $ 13,892,551 $ 57,646,630
Shares issued in
reinvestment of
dividends 218,832 444,118 1,649,526 3,477,381
Shares redeemed (6,800,071) (8,562,292) (51,359,065) (67,073,252)
Net decrease (4,737,523) (775,475) $(35,816,988) $ (5,949,241)
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,
1996 --------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.52 $7.96 $7.84 $8.64 $8.34 $8.01
INCOME FROM INVESTMENT OPERATIONS
Net investment income .29(a) .58 .64 .65 .69 .70
Net realized and unrealized gain (loss)
on investments .02 (.44) .13 (.80) .29 .35
Net increase (decrease) in net asset
value from operations .31 .14 .77 (.15) .98 1.05
LESS: DIVIDENDS
Dividends from net investment income (.29) (.58) (.65) (.65) (.68) (.72)
Net asset value, end of period $7.54 $7.52 $7.96 $7.84 $8.64 $8.34
TOTAL RETURN
Total investment return based on net
asset value (b) 4.21% 1.74% 10.37% (1.93)% 12.23% 13.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $377,626 $397,894 $463,660 $482,595 $527,968 $492,448
Ratio of expenses to average net assets 1.00%(c) 1.01% 1.01% 1.02% 1.10% 1.12%
Ratio of net investment income to
average net assets 7.72%(c) 7.38% 8.27% 7.76% 8.04% 8.43%
Portfolio turnover rate 195% 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
--------------------------------------------------------------------------------
SIX MONTHS SEPTEMBER 30,
ENDED 1991(D)
DECEMBER 31, YEAR ENDED JUNE 30, TO
1996 -------------------------------------------------- JUNE 30,
(UNAUDITED) 1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.52 $7.96 $7.84 $8.64 $8.34 $8.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income .25(a) .52 .58 .59 .62 .49
Net realized and unrealized gain (loss)
on investments .02 (.44) .13 (.80) .30 .09
Net increase (decrease) in net asset
value from operations .27 .08 .71 (.21) .92 .58
LESS: DIVIDENDS
Dividends from net investment income (.25) (.52) (.59) (.59) (.62) (.49)
Net asset value, end of period $7.54 $7.52 $7.96 $7.84 $8.64 $8.34
TOTAL RETURN
Total investment return based on net
asset value (b) 3.82% 1.01% 9.52% (2.63)% 11.45% 6.95%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $558,475 $628,628 $774,097 $756,282 $552,471 $32,227
Ratio of expenses to average net assets 1.71%(c) 1.72% 1.72% 1.72% 1.81% 1.80%(c)
Ratio of net investment income to
average net assets 7.00%(c) 6.67% 7.57% 7.04% 7.25% 7.40%(c)
Portfolio turnover rate 195% 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
------------------------------------------------------------------
SIX MONTHS MAY 3,
ENDED 1993(D)
DECEMBER 31, YEAR ENDED JUNE 30, TO
1996 ------------------------------------- JUNE 30,
(UNAUDITED) 1996 1995 1994 1993
------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.52 $7.96 $7.83 $8.64 $8.56
INCOME FROM INVESTMENT OPERATIONS
Net investment income .25(a) .52 .58 .59 .10
Net realized and unrealized gain (loss)
on investments .02 (.44) .14 (.81) .08
Net increase (decrease) in net asset
value from operations .27 .08 .72 (.22) .18
LESS: DIVIDENDS
Dividends from net investment income (.25) (.52) (.59) (.59) (.10)
Net asset value, end of period $7.54 $7.52 $7.96 $7.83 $8.64
TOTAL RETURN
Total investment return based on net
asset value (b) 3.82% 1.01% 9.67% (2.75)% 2.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $130,727 $166,075 $181,948 $231,859 $67,757
Ratio of expenses to average net assets 1.70%(c) 1.71% 1.71% 1.70% 1.80%(c)
Ratio of net investment income to
average net assets 7.02%(c) 6.68% 7.59% 6.97% 6.00%(c)
Portfolio turnover rate 195% 334% 190% 188% 386%
</TABLE>
(a) Based on average shares outstanding.
(b) 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.
(c) Annualized.
(d) Commencement of distribution.
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)
DONALD J. ROBINSON (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.
15
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
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.
USGSR
