ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
ANNUAL REPORT
JUNE 30, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
August 16, 1999
Dear Shareholder:
This report provides the performance, investment strategy and outlook for the
Alliance Bond Fund U.S. Government Portfolio (the "Fund") over the six-month
period ended June 30, 1999. The Fund is designed for investors who seek high
current income, consistent with prudent investment risk.
INVESTMENT RESULTS
The following table provides the investment results for the Alliance Bond Fund
U.S. Government Portfolio for the six- and twelve-month periods ended June 30,
1999. For comparison, we have included the total returns for the Lehman
Brothers ("LB") Government Bond Index as well as the results for the Lipper
General U.S. Government Funds Average (the "Lipper Average").
During the six-month period under review, your Fund underperformed its
benchmark index and the Lipper Average. Part of this underperformance may be
attributed to the cost of re-balancing the portfolio in order to take advantage
of the Fund's new investment policy guidelines, as discussed in the Fund's
semi-annual report dated December 31, 1998. Additionally, some of the
securities added to the portfolio underperformed U.S. Treasuries as market
volatility rose. Over the longer term, however, we believe that these changes
should add fundamental long-term value to the portfolio.
INVESTMENT RESULTS*
Periods Ended June 30, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE BOND FUND U.S. GOVERNMENT
PORTFOLIO
Class A -2.90% 1.83%
Class B -3.14% 1.22%
Class C -3.14% 1.22%
LEHMAN BROTHERS GOVERNMENT BOND
INDEX -2.27% 3.05%
LIPPER GENERAL U.S. GOVERNMENT FUNDS
AVERAGE -2.67% 1.48%
* THE FUND'S INVESTMENT RESULTS ARE TOTAL RETURNS FOR THE PERIODS AND ARE
BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES. 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. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE UNMANAGED LEHMAN BROTHERS ("LB") GOVERNMENT BOND INDEX IS COMPOSED OF
THE LB U.S. TREASURY BOND AND AGENCY BOND INDICES, THE LB 1-3 YEAR GOVERNMENT
INDEX AND THE LB 20+ YEAR TREASURY INDEX. THE UNMANAGED LIPPER GENERAL U.S.
GOVERNMENT FUNDS AVERAGE ("LIPPER AVERAGE") IS BASED ON THE PERFORMANCE OF A
UNIVERSE OF FUNDS THAT INVEST AT LEAST 65% OF THEIR ASSETS IN U.S. GOVERNMENT
AND AGENCY ISSUES. THESE FUNDS HAVE GENERALLY SIMILAR INVESTMENT OBJECTIVES TO
YOUR FUND, ALTHOUGH INVESTMENT POLICIES FOR THE VARIOUS FUNDS MAY DIFFER. FOR
THE SIX AND TWELVE-MONTH PERIODS ENDED JUNE 30, 1999, THE LIPPER AVERAGE
CONSISTED OF 186 AND 184 FUNDS, RESPECTIVELY. AN INVESTOR CANNOT INVEST
DIRECTLY IN AN INDEX OR AN AVERAGE.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
MARKET OVERVIEW
The outlook for the global economy continued to brighten during the first six
months of 1999. Signs of a strong recovery in East Asia, better-than-expected
growth in Japan, and a quick drop in Brazilian interest rates bolstered
investor confidence. In the United States, private demand growth has
downshifted but remains exceptionally strong, while inflation and unemployment
have remained low. With economic activity remaining strong and global liquidity
concerns abating, the U.S. Federal Reserve adopted a monetary policy tightening
bias in May and increased the Federal Funds rate by 25 basis points, to 5.00%,
in June. For the six months ended June 30, 1999, the U.S. yield curve flattened
as short- and intermediate-term rates rose more than long-term rates. Two-year
U.S. Treasury yields rose from 4.53%, to 5.52%, while thirty-year U.S. Treasury
yields rose from 5.09%, to 5.97%.
During the six-month period ended June 30, 1999, the U.S. bond market, as
represented by the LB Aggregate Bond Index, declined by 1.4% as economic growth
1
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
strengthened and the U.S. Federal Reserve raised interest rates. Among the
traditional sectors of the U.S. bond market, the mortgage sector recorded the
strongest performance, while the U.S. Treasury market recorded the weakest
performance. As credit markets continued to stabilize from the turmoil in 1998,
and the threat of higher interest rates surfaced, investors moved out of U.S.
Treasuries and back into higher-yielding sectors in search of higher returns.
The mortgage sector was the main beneficiary of this change in interest-rate
expectations. When interest rates rose, mortgage refinancing slowed and
mortgage prepayments fell, making mortgage-backed securities more attractive.
INVESTMENT STRATEGY
The shareholder-approved changes in the Fund's investment guidelines went into
effect in the beginning of the second quarter of 1999. These changes allow the
Fund to diversify some of its holdings into investment-grade fixed-income
securities. We decreased our allocation to U.S. Treasury securities as interest
rates rose. We maintained our allocation to mortgage-backed securities, which
performed well in the rising interest rate environment. Slowing mortgage
prepayments made the mortgage-backed sector the best performing domestic
fixed-income sector for the period. By the end of the second quarter,
approximately one-third of the portfolio was invested in non-Treasury and
non-agency securities, with an average rating of AAA. Less than seven percent
of the Fund's portfolio is invested in securities rated less than AAA. These
securities provide additional yield enhancement to the portfolio. The Fund's
largest single asset class outside of U.S. Treasuries is commercial
mortgage-backed securities ("CMBS"), which serve as a surrogate for U.S.
government agency debentures. AAA-rated CMBS earn approximately sixty basis
points more in yield than agency debentures. Going forward, the Fund will
continue to utilize investment-grade securities opportunistically to augment
the performance of its U.S. government securities portfolio.
OUTLOOK
Globally, growth prospects are improving and inflation pressures remain
subdued. While the U.S. economy appears to be moderating somewhat from the
robust level of the first quarter, we still estimate that growth for calendar
1999 will be close to the 3.9% pace of 1998. We believe the risks remain toward
somewhat tighter monetary policy and higher interest rates. While the
non-Treasury sectors of the market appear to be cheap by historical standards,
the upward pressure on rates, and liquidity concerns related to this year-end
are likely to keep yield premiums wide in the near term. In this environment,
security selection will remain focused on longer-term fundamentals, recognizing
that near-term liquidity will be limited.
We are cautious in our outlook for high-grade securities at this point. This
view is based primarily on the amount of new issue supply that we see coming to
market over the next quarter. Furthermore, concerns about liquidity caused by
the effects of Y2K are playing an increasing role in determining investor
psychology.
Thank you for your continued interest and investment in the Alliance Bond Fund
U.S. Government Portfolio. We look forward to reporting its progress to you in
the coming months.
Sincerely,
John D. Carifa
Chairman and President
Jeffrey S. Phlegar
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 that is consistent with prudent investment risk. The Fund invests
primarily in U.S. government securities, including mortgage-related securities,
repurchase agreements and forward contracts relating to the U.S. government
securities. The Fund may also invest in non-U.S. government mortgage-related
and asset-backed securities. The average weighted maturity of the Fund's
investments varies between one year or less and thirty years.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF JUNE 30, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 1.83% -2.54%
Five years 6.02% 5.10%
10 Years 6.81% 6.35%
SEC Yield** 5.99%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 1.22% -1.64%
Five years 5.26% 5.26%
Since Inception* (a) 5.56% 5.56%
SEC Yield** 5.53%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 1.22% 0.27%
Five years 5.29% 5.29%
Since Inception* 4.16% 4.16%
SEC Yield** 5.54%
The Fund's investment results represent Average Annual Total Returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) 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);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1-year 1% contingent deferred sales charge for accounts
over $1,000,000.
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
June 30, 1999.
(a) Assumes conversion of Class B shares into Class A shares after six years.
3
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
GROWTH OF A $10,000 INVESTMENT 6/30/89 TO 6/30/99
$24,000
$20,000
$16,000
$12,000
$10,000
$8,000
Lehman Brothers Government Bond Index: $21,516
Lipper General U.S. Gov't Funds Average: $19,886
U.S. Government Portfolio Class A: $18,504
6/30/89 6/30/90 6/30/91 6/30/92 6/30/93 6/30/94 6/30/95 6/30/96
6/30/97 6/30/98 6/30/99
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Bond Fund U.S. Government Portfolio Class A shares (from 6/30/89 to
6/30/99) as compared to the performance of an appropriate broad-based index, as
well as a comparative Lipper Average. The chart reflects the deduction of the
maximum 4.25% sales charge from the initial $10,000 investment in the Fund and
assumes the reinvestment of dividends and capital gains. Performance for Class
B and Class C shares will vary from the results shown above due to differences
in expenses 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 unmanaged Lehman Brothers (LB) Government Bond Index is composed of the LB
Treasury Bond and LB Agency Bond indices.
The Lipper General U.S. Government Funds Average reflects performance of 50
funds (based on the number of funds in the average from 6/30/89 to 6/30/99).
These funds have 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 shown
above, you should note that no charges or expenses are reflected in the
performance of the index. Lipper results include fees and expenses.
Alliance Bond Fund U.S. Government Portfolio
Lipper General U.S. Government Funds Average
Lehman Brothers Government Bond Index
4
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999 ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- -------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS-73.7%
U.S. TREASURY SECURITIES-43.2%
U.S. TREASURY BONDS-39.9%
5.25%, 11/15/28 (a) $ 16,000 $ 14,182,560
8.125%, 5/15/21 (a) 49,100 59,794,471
8.875%, 8/15/17 24,000 30,660,000
12.50%, 8/15/14 65,150 95,922,951
14.00%, 11/15/11 110,900 162,225,629
------------
362,785,611
U.S. TREASURY NOTES-3.3%
5.25%, 5/15/04 (a) 25,000 24,566,500
5.50%, 5/15/09 (a) 5,000 4,884,350
29,450,850
------------
392,236,461
FEDERAL NATIONAL MORTGAGE ASSOCIATION-12.9%
Zero coupon, 2/15/08 22,130 12,767,925
6.00%, 11/01/13-5/01/14 92,209 89,067,128
6.50%, 12/01/99 15,000 14,779,650
7.00%, 5/01/29 643 635,937
------------
117,250,640
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-10.0%
Single Family Homes
7.00%, 12/15/28 45,267 44,658,363
8.00%, 3/15/12 35,499 36,596,702
8.15%, 9/15/20 6,269 6,518,629
9.00%, 7/20/24-9/20/24 3,259 3,447,957
------------
91,221,651
COLLATERALIZED MORTGAGE OBLIGATIONS-6.5%
Federal Home Loan Mortgage Corp.
Series 1955 Cl.K
7.50%, 2/20/24 5,000 5,062,500
Series 1748 Cl.B
8.00%, 6/15/23 13,400 13,835,500
Federal National Mortgage Association
Series 1997-44 Cl.PE
7.00%, 6/18/21 23,884 24,055,487
Government National Mortgage Association
Series 1997-8 Cl.PI
7.00%, 9/16/21 16,000 16,060,000
------------
59,013,487
FEDERAL AGENCY SECURITY-1.1%
Tennessee Valley Authority
Series 1993-1 Cl.G
zero coupon, 11/15/29 10,000 10,347,900
Total U.S. Government & Agency Obligations
(cost $690,964,424) 670,070,139
COMMERCIAL MORTGAGE BACKED SECURITIES-23.3%
BTC Mortgage Investors Trust
Series 1997-Cl.D
6.95%, 12/31/09 (b) 6,846 6,809,648
BTR 2 Trust
Series 1999-S1 Cl.C
5.9175%, 2/28/04 (b) 5,000 4,999,200
Credit Suisse First Boston Mortgage
Series 1997-C1 Cl.A1C
7.24%, 4/20/07 10,000 10,071,100
Series 1997-Cl.B
7.28%, 6/20/07 (b) 15,000 14,972,100
First Union Lehman Brothers
Series 1997-Cl.A2
6.60%, 5/18/07 19,165 18,858,061
Forum Finance Corp. Cl.A
7.125%, 5/15/04 (b) 6,875 7,072,450
5
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- -------------------------------------------------------------------------------
Government Lease Trust
Series 1999-C1
4.00%, 5/18/11 (b) $ 8,725 $ 6,685,531
Kidder Peabody Acceptance Corp.
Series 1994-C
7.00%, 2/01/06 7,000 7,040,460
LB Commercial Conduit Mortgage Trust
Series 1998-C4 Cl.D
6.50%, 12/15/08 17,035 15,730,800
Series 1999-Cl.A2
6.78%, 4/15/09 28,000 27,772,640
Morgan Stanley Capital I
Series 1998 Cl.XL2
6.17%, 10/03/08 14,360 13,561,728
Nationslink Funding Corp.
Series 1999-S1L Cl.A1
5.805%, 2/10/01 4,709 4,692,082
Prudential Securities Secured
Financing Corp.
Series 1999
6.48%, 1/15/09 50,000 48,468,500
Starwood Commercial Mortgage Trust
Series 1999 Cl.A2
6.92%, 2/03/09 (b) 25,375 25,004,271
Total Commercial Mortgage Backed
Securities
(cost $215,859,410) 211,738,571
ASSET BACKED SECURITIES-5.8%
ARG Funding Corp.
Series 1999-3 Cl.A
5.273%, 8/22/05 (b) 8,500 8,500,000
Blue Stripe, Ltd.
Series 1999-Cl.A1
5.4675%, 6/15/04 (b) 7,200 7,200,000
Contimortgage Home Equity Loan
Series 1997-2 Cl.M2F
7.56%, 4/15/28 17,187 16,821,776
Option One Mortgage Securities Corp.
Series 1999-2
9.66%, 6/25/29 (b) 1,991 1,987,035
Peco Energy Transition Trust
Series 1999-A Cl.A5
5.264%, 3/01/09 10,000 9,978,100
Structured Asset Securities Corp.
Series 1999 Cl.M1
5.67%, 5/25/29 8,100 8,089,875
Total Asset Backed Securities
(cost $52,885,180) 52,576,786
STRIPPED MORTGAGE BACKED SECURITIES-4.4%
LB Commercial Conduit Mortgage Trust
Series 1999-C1 Cl.X
0.693%, 7/15/23 259,500 11,516,610
Prudential Securities Secured
Financing Corp.
Series 1999-NRFI Cl.AEC
0.87%, 10/15/18 (b) 375,198 19,990,527
Salomon Brothers Mortgage Securities, Inc.
Series 1999-5
2.80%, 6/25/29 154,328 8,102,241
Total Stripped Mortgage Backed Securities
(cost $39,721,992) 39,609,378
6
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- -------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS-3.4%
BA Mortgage Securities, Inc. Cl.A
7.10%, 7/25/26 $ 6,283 $ 6,300,947
Prudential Home Mortgage Securities Co.
Series 1992-33 Cl.A2
7.50%, 11/25/22 14,127 14,250,967
Residential Funding Mortgage Corp.
Series 1995-S18 Cl.A4
7.00%, 11/25/10 4,578 4,569,216
Securitized Asset Sales, Inc.
Series 1993-J Cl.B1
6.81%, 11/28/23 5,550 5,501,377
Total Collateralized Mortgage Obiligations
(cost $30,898,588) 30,622,507
REPURCHASE AGREEMENT-0.1%
State Street Bank and Trust Co.
4.90%, dated 6/30/99,
due 7/01/99 in the
amount of $1,100,150
(collateralized by $1,125,000
FFCB 31331R,
5.39%, 4/19/01,
value $1,124,411)
(cost $1,100,000) 1,100 $ 1,100,000
TOTAL INVESTMENTS-110.7%
(cost $1,031,429,594) 1,005,717,381
Other assets less liabilities-(10.7%) (97,095,968)
NET ASSETS-100% $ 908,621,413
(a) Securities, or portions thereof, with an aggregate market value of
$66,771,800 have been segregated to collateralize reverse repurchase agreements.
(b) Securities issued in reliance on section 4(2) or Rule 144A of the
Securities and Exchange Act of 1933. Rule 144A securities may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At June 30, 1999, these securities amounted to $103,220,762
representing 11.4% of net assets.
Glossary:
FFCB - Federal Farm Credit Bank.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value
(cost $1,031,429,594) $1,005,717,381
Cash 202,082
Receivable for investments sold 68,388,455
Receivable for capital stock sold 14,983,960
Interest receivable 10,286,943
Total assets 1,099,578,821
LIABILITIES
Payable for investment securities purchased 104,339,413
Reverse repurchase agreement 66,305,595
Payable for capital stock redeemed 16,898,675
Dividends payable 1,729,122
Advisory fee payable 1,257,843
Distribution fee payable 118,127
Accrued expenses 308,633
Total liabilities 190,957,408
NET ASSETS $ 908,621,413
COMPOSITION OF NET ASSETS
Capital stock, at par $ 126,271
Additional paid-in capital 1,166,093,045
Distributions in excess of net investment income (1,729,122)
Accumulated net realized loss on investment transactions (230,151,406)
Net unrealized depreciation of investments and other assets (25,717,375)
$ 908,621,413
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($426,166,659 / 59,248,367 shares of capital stock
issued and outstanding) $7.19
Sales charge--4.25% of public offering price .32
Maximum offering price $7.51
CLASS B SHARES
Net asset value and offering price per share
($338,309,926 / 46,999,325 shares of capital stock
issued and outstanding) $7.20
CLASS C SHARES
Net asset value and offering price per share
($144,144,828 / 20,023,142 shares of capital stock
issued and outstanding) $7.20
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1999 ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 74,725,876
EXPENSES
Advisory fee $ 5,230,595
Distribution fee - Class A 1,176,338
Distribution fee - Class B 4,017,756
Distribution fee - Class C 1,388,522
Transfer agency 1,242,009
Printing 218,815
Custodian 210,467
Administrative 114,411
Audit and legal 102,799
Registration 83,347
Taxes 55,938
Directors' fees 13,512
Miscellaneous 41,619
Total expenses before interest 13,896,128
Interest expense 790,800
Net expenses 14,686,928
Net investment income 60,038,948
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions (20,418,077)
Net change in unrealized appreciation of
investments and other assets (28,567,511)
Net loss on investment transactions (48,985,588)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 11,053,360
See notes to financial statements.
9
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 60,038,948 $ 59,960,724
Net realized gain (loss) on investment
transactions (20,418,077) 4,547,564
Net change in unrealized appreciation
(depreciation) of investments and
other assets (28,567,511) 17,676,067
Net increase in net assets from
operations 11,053,360 82,184,355
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (26,892,164) (25,072,563)
Class B (24,633,071) (27,489,182)
Class C (8,513,713) (7,398,979)
Distributions in excess of net
investment income
Class A (505,653) -0-
Class B (277,687) -0-
Class C (116,468) -0-
Tax return of capital
Class A -0- (1,242,637)
Class B -0- (1,362,408)
Class C -0- (366,705)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 101,112,314 (104,135,594)
Total increase (decrease) 51,226,918 (84,883,713)
NET ASSETS
Beginning of year 857,394,495 942,278,208
End of year $908,621,413 $857,394,495
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 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 three portfolios: the Corporate Bond Portfolio, the
Quality Bond Portfolio and the U.S. Government Portfolio. The Quality Bond
Portfolio had not commenced operations as of June 30, 1999, but will be
commencing operations on July 1, 1999. Each series is considered to be a
separate entity for financial reporting and tax purposes. The accompanying
financial statements and notes include the operations of the U.S. Government
Portfolio (the "Portfolio") only. The Portfolio offers 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 may 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%
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 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
financial statements have been prepared in conformity with generally accepted
accounting principles which require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Portfolio.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are valued at the
last reported sale price on such exchange on the day of valuation or, if there
was no sale on such day, the last bid price quoted on such day. If no bid
prices are quoted, then the security is valued at the mean of the bid and asked
prices as obtained on that day from one or more dealers regularly making a
market in that security. Securities traded on the over-the-counter market are
valued at the mean of the closing bid and asked prices provided by two or more
dealers regularly making a market in such securities. U.S. government
securities and other debt securities which mature in 60 days or less are valued
at amortized cost unless this method does not represent fair value. Securities
for which market quotations are not readily available are valued at fair value
as determined in good faith by, or in accordance with procedures approved by,
the Board of Directors. Fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. Mortgage backed and asset backed
securities may be valued at prices obtained from a bond pricing service or at a
price obtained from one or more of the major broker/dealers in such securities.
In cases where broker/dealer quotes are obtained, the Adviser may establish
procedures whereby changes in market yields or spreads are used to adjust, on a
daily basis, a recently obtained quoted bid price on a security.
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 any, 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 securities are purchased or sold. The Portfolio amortizes premiums and
accretes discounts as adjustments to interest income. Investment gains and
losses are determined on the identified cost basis.
4. INCOME AND EXPENSES
All income earned and expenses incurred by the Portfolio are borne on a
pro-rata basis by each settled class of shares, based on the proportionate
interest in the Portfolio represented by the net assets of such class, except
that the Portfolio's Class B and Class C shares bear higher distribution and
transfer agent fees than Class A shares.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gains distributions are determined in
accordance with federal tax regulations and may differ from those determined in
accordance with generally accepted accounting principles. To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences do
not require such reclassification.
During the current fiscal year, permanent differences, primarily due to
distributions in excess of investment company taxable income, resulted in a net
decrease in distributions in excess of net investment income, a net decrease in
accumulated net loss on investments and a corresponding decrease in additional
paid in capital. This reclassification had no effect on net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Portfolio pays
Alliance Capital Management L.P. (the "Adviser") an advisory fee at a quarterly
rate of .15 of 1% (approximately .60 of 1% on an annual basis) of the first
$500 million of the Portfolio'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 $114,411 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, 1999.
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 $920,544 for the year ended June 30, 1999.
For the year ended June 30, 1999, the Portfolio's expenses were reduced by
$65,217 under an expense offset arrangement with Alliance Fund Services.
Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of the Adviser, serves as the Distributor of the Portfolio's shares. The
Distributor has advised the Fund that it has received front-end sales charges
of $116,944 from the sale of Class A shares and $8,849, $370,767 and $78,615 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class A, Class B and Class C shares, respectively, for the year ended June 30,
1999.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Portfolio pays a distribution fee to the Distributor at an
annual rate of up to .30 of 1% of the Portfolio's average daily net assets
attributable to Class A shares and 1% of the average daily net assets
attributable to both Class B and Class C shares. The fees are accrued daily and
paid monthly. The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and promotional
activities. The Distributor has advised the Fund that it has incurred expenses
in excess of the distribution costs reimbursed by the Portfolio in the amount
of $7,941,217, and $4,847,754 for Class B and Class C shares, respectively;
such costs may be recovered from the Portfolio in future periods as long as the
Agreement is in effect. In accordance with the Agreement, there is no provision
for recovery of unreimbursed distribution costs incurred by the Distributor
beyond the current fiscal year for Class A shares. The Agreement also provides
that the Adviser may use its own resources to finance the distribution of the
Portfolio's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $478,812,517 and $148,661,320,
respectively, for the year ended June 30, 1999. There were purchases of
$3,073,124,774 and sales of $3,089,570,612
12
of U.S. government and government agency obligations for the year ended June
30, 1999.
At June 30, 1999, the cost of investments for federal income tax purposes was
$1,033,451,553. Accordingly, gross unrealized appreciation of investments was
$1,044,656 and gross unrealized depreciation of investments was $28,778,828,
resulting in net unrealized depreciation of $27,734,172.
At June 30, 1999, the Portfolio had a capital loss carry-forward for federal
income tax purposes of $200,126,928, of which $83,016,947 expires in the year
2003; $61,544,081 expires in the year 2004; $51,829,521 expires in the year
2005 and $3,736,379 expires in the year 2006. During the tax year ended June
30, 1999, $114,601 of the capital loss carryforward expired unutilized.
1. FINANCIAL FUTURES CONTRACTS
The Portfolio may buy or sell financial futures contracts for the purpose of
hedging its portfolio against adverse affects of anticipated movements in the
market. The Portfolio bears the market risk that arises from changes in the
value of these financial instruments.
At the time the Portfolio enters into a futures contract, the Portfolio
deposits and maintains as collateral an initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Portfolio agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in the value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Portfolio as
unrealized gains or losses. When the contract is closed, the Portfolio records
a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the time it was closed. At June 30,
1999, the Portfolio had no outstanding futures contracts.
2. OPTIONS TRANSACTIONS
For hedging and investment purposes, the Portfolio purchases and writes (sells)
put and call options on debt securities that are traded on U.S. and foreign
securities exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Portfolio pays a
premium whether or not the option is exercised. Additionally, the Portfolio
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of
securities acquired through the exercise of call options is increased by
premiums paid. The proceeds from securities sold through the exercise of put
options are decreased by the premiums paid.
When the Portfolio writes an option, the premium received by the Portfolio is
recorded as a liability and is subsequently adjusted to the current market
value of the option written. Premiums received from writing options which
expire unexercised are recorded by the Portfolio on the expiration date as
realized gains from option transactions. The difference between the premium
received and the amount paid on effecting a closing purchase transaction,
including brokerage commissions, is also treated as a realized gain, or if the
premium received is less than the amount paid for the closing purchase
transaction, as a realized loss. If a call option is exercised, the premium
received is added to the proceeds from the sale of the underlying security in
determining whether the Portfolio has realized a gain or loss. If a put option
is exercised, the premium received reduces the cost basis of the security
purchased by the Portfolio. The risk involved in writing an option is that, if
the option was exercised the underlying security could then be purchased or
sold by the Portfolio at a disadvantageous price.
There were no written options for the year ended June 30, 1999.
13
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 600,000,000 shares of $.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Each class consists of 200,000,000 authorized shares. Transactions in capital
stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 19,224,210 10,804,046 $ 145,163,835 $ 81,364,926
Shares issued in
reinvestment of
dividends and
distributions 1,728,659 1,651,986 13,009,221 12,448,223
Shares converted
from Class B 11,651,921 2,908,590 86,786,935 21,971,601
Shares redeemed (19,949,212) (16,621,353) (149,785,083) (125,182,615)
Net increase
(decrease) 12,655,578 (1,256,731) $ 95,174,908 $ (9,397,865)
CLASS B
Shares sold 24,468,480 6,931,240 $ 185,888,333 $ 52,278,662
Shares issued in
reinvestment of
dividends and
distributions 1,662,969 1,813,058 12,540,058 13,660,347
Shares converted
to Class A (11,639,868) (2,908,590) (86,786,935) (21,971,601)
Shares redeemed (19,011,200) (17,960,112) (143,440,490) (135,276,839)
Net decrease (4,519,619) (12,124,404) $ (31,799,034) $ (91,309,431)
CLASS C
Shares sold 13,380,912 4,489,582 $ 101,866,687 $ 34,077,964
Shares issued in
reinvestment of
dividends and
distributions 711,129 651,004 5,357,332 4,904,415
Shares redeemed (9,170,674) (5,630,703) (69,487,579) (42,410,677)
Net increase
(decrease) 4,921,367 (490,117) $ 37,736,440 $ (3,428,298)
NOTE F: REVERSE REPURCHASE AGREEMENTS
Under a reverse repurchase agreement, the Portfolio sells securities and agrees
to repurchase them at a mutually agreed upon date and price. At the time the
Portfolio enters into a reverse repurchase agreement, it will establish a
segregated account with the custodian containing liquid assets having a value
at least equal to the repurchase price.
As of June 30, 1999, the Portfolio had entered into the following reverse
repurchase agreements:
AMOUNT BROKER INTEREST RATE MATURITY
------ ------ ------------- --------
$ 4,843,750 Goldman Sachs & Co. 3.38% July 2, 1999
$13,940,000 Morgan Stanley Group, Inc. 3.65% July 2, 1999
$24,437,500 Morgan Stanley Group, Inc. 4.25% July 6, 1999
$23,061,250 Morgan Stanley Group, Inc. 5.05% July 7, 1999
For the year ended June 30, 1999, the maximum amount of reverse repurchase
agreements outstanding was $151,462,500, the average amount outstanding was
approximately $80,474,793, and the daily weighted average interest rate was
2.97%.
14
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
NOTE G: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the
Portfolio, participate in a $750 million revolving credit facility (the
"Facility") to provide short-term financing if necessary, in connection with
abnormal redemption activity. Commitment fees related to the Facility are paid
by the participating funds and are included in the miscellaneous expenses in
the statement of operations. The Portfolio did not utilize the Facility during
the year ended June 30, 1999.
15
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,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 7.57 $ 7.41 $ 7.52 $ 7.96 $ 7.84
INCOME FROM INVESTMENT OPERATIONS
Net investment income .52(a) .54(a) .57(a) .58 .64
Net realized and unrealized gain (loss)
on investment transactions (.37) .18 (.10) (.44) .13
Net increase in net asset value
from operations .15 .72 .47 .14 .77
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.52) (.54) (.57) (.58) (.65)
Distribution in excess of net
investment income (.01) -0- -0- -0- -0-
Tax return of capital -0- (.02) (.01) -0- -0-
Total dividends and distributions (.53) (.56) (.58) (.58) (.65)
Net asset value, end of year $ 7.19 $ 7.57 $ 7.41 $ 7.52 $ 7.96
TOTAL RETURN
Total investment return based on net
asset value (b) 1.83% 10.02% 6.49% 1.74% 10.37%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $426,167 $352,749 $354,782 $397,894 $463,660
Ratio of expenses to average net assets 1.17% 1.06% 1.02% 1.01% 1.01%
Ratio of expenses to average net assets,
excluding interest expense 1.08% -0- -0- -0- -0-
Ratio of net investment income to average
net assets 6.86% 7.08% 7.66% 7.38% 8.27%
Portfolio turnover rate 320% 153% 330% 334% 190%
</TABLE>
See footnote summary on page 18.
16
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 7.57 $ 7.41 $ 7.52 $ 7.96 $ 7.84
INCOME FROM INVESTMENT OPERATIONS
Net investment income .46(a) .48(a) .52(a) .52 .58
Net realized and unrealized gain (loss)
on investment transactions (.36) .18 (.10) (.44) .13
Net increase in net asset value
from operations .10 .66 .42 .08 .71
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.46) (.48) (.52) (.52) (.59)
Distributions in excess of net
investment income (.01) -0- -0- -0- -0-
Tax return of capital -0- (.02) (.01) -0- -0-
Total dividends and distributions (.47) (.50) (.53) (.52) (.59)
Net asset value, end of year $ 7.20 $ 7.57 $ 7.41 $ 7.52 $ 7.96
TOTAL RETURN
Total investment return based on net
asset value (b) 1.22% 9.20% 5.69% 1.01% 9.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $338,310 $390,253 $471,889 $628,628 $774,097
Ratio of expenses to average net assets 1.87% 1.76% 1.73% 1.72% 1.72%
Ratio of expenses to average net assets,
excluding interest expense 1.79% -0- -0- -0- -0-
Ratio of net investment income to average
net assets 6.13% 6.37% 6.95% 6.67% 7.57%
Portfolio turnover rate 320% 153% 330% 334% 190%
</TABLE>
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED)
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 7.57 $ 7.41 $ 7.52 $ 7.96 $ 7.83
INCOME FROM INVESTMENT OPERATIONS
Net investment income .46(a) .48(a) .52(a) .52 .58
Net realized and unrealized gain (loss)
on investment transactions (.36) .18 (.10) (.44) .14
Net increase in net asset value
from operations .10 .66 .42 .08 .72
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income (.46) (.48) (.52) (.52) (.59)
Distribution in excess of net
investment income (.01) -0- -0- -0- -0-
Tax return of capital -0- (.02) (.01) -0- -0-
Total dividends and distributions (.47) (.50) (.53) (.52) (.59)
Net asset value, end of year $ 7.20 $ 7.57 $ 7.41 $ 7.52 $ 7.96
TOTAL RETURN
Total investment return based on net
asset value (b) 1.22% 9.21% 5.69% 1.01% 9.67%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $144,145 $114,392 $115,607 $166,075 $181,948
Ratio of expenses to average net assets 1.87% 1.76% 1.72% 1.71% 1.71%
Ratio of expenses to average net assets,
excluding interest expense 1.78% -0- -0- -0- -0-
Ratio of net investment income to average
net assets 6.13% 6.38% 6.96% 6.68% 7.59%
Portfolio turnover rate 320% 153% 330% 334% 190%
</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 charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return.
18
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, 1999, 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 and financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1999, by correspondence with the custodian and
others. 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, 1999, 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
August 6, 1999
19
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
JEFFREY S. PHLEGAR, 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 LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
20
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 High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
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 Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
CLOSED-END FUNDS
Alliance All-Market Advantage 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
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
General Municipal Portfolio
Government Portfolio
21
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
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.
USGAR699
