alliancebernstein bond fund intermediate bond...

SEM

I-AN

NU

ALR

EPO

RT

AllianceBernstein Bond FundIntermediate Bond Portfolio

April 30, 2013

Semi-Annual Report

Investment Products Offered

• Are Not FDIC Insured• May Lose Value• Are Not Bank Guaranteed

Investors should consider the investment objectives, risks, charges and expenses of theFund carefully before investing. For copies of our prospectus or summary prospectus, whichcontain this and other information, visit us online at www.alliancebernstein.com or contact yourAllianceBernstein Investments representative. Please read the prospectus and/or summaryprospectus carefully before investing.

This shareholder report must be preceded or accompanied by the Fund’s prospectus for individualswho are not current shareholders of the Fund.

You may obtain a description of the Fund’s proxy voting policies and procedures, and informationregarding how the Fund voted proxies relating to portfolio securities during the most recent 12-monthperiod ended June 30, without charge. Simply visit AllianceBernstein’s website atwww.alliancebernstein.com, or go to the Securities and Exchange Commission’s (the “Commission”)website at www.sec.gov, or call AllianceBernstein at (800) 227-4618.

The Fund files its complete schedule of portfolio holdings with the Commission for the first and thirdquarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’swebsite at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at theCommission’s Public Reference Room in Washington, DC; information on the operation of the PublicReference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolioholdings for the Fund monthly at www.alliancebernstein.com.

AllianceBernstein Investments, Inc. (ABI) is the distributor of the AllianceBernstein family ofmutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the manager ofthe funds.

AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permissionof the owner, AllianceBernstein L.P.

June 18, 2013

Semi-Annual ReportThis report provides management’sdiscussion of fund performance forAllianceBernstein Intermediate BondPortfolio (the “Portfolio”) for thesemi-annual reporting period endedApril 30, 2013.

Investment Objective and PoliciesThe Portfolio’s investment objective is togenerate income and price appreciationwithout assuming what AllianceBernsteinL.P. (the “Adviser”) considers undue risk.

The Portfolio invests, under normal cir-cumstances, at least 80% of its net assetsin fixed-income securities. The Portfolioexpects to invest in readily marketablefixed-income securities with a range ofmaturities from short- to long-term andrelatively attractive yields that do notinvolve undue risk of loss of capital. ThePortfolio expects to invest in fixed-income securities with a dollar-weightedaverage maturity of between three to tenyears and an average duration of three tosix years. The Portfolio may invest up to25% of its net assets in below investmentgrade bonds. The Portfolio may useleverage for investment purposes. ThePortfolio may invest without limit inU.S. dollar-denominated foreign fixed-income securities and may invest up to25% of its assets in non-U.S. dollar-denominated foreign fixed-income secu-rities. These investments may include, ineach case, developed and emergingmarket debt securities.

The Portfolio may invest in mortgage-related and other asset-backed securities,loan participations, inflation-protectedsecurities, structured securities, variable,floating, and inverse floating rate

instruments and preferred stock, andmay use other investment techniques.The Portfolio intends, among otherthings, to enter into transactions such asreverse repurchase agreements and dol-lar rolls. The Portfolio may invest,without limit, in derivatives, such asoptions, futures, forwards or swaps.

Investment ResultsThe table on page 6 shows the Portfo-lio’s performance compared with itsbenchmark, the Barclays U.S. AggregateBond Index for the six- and 12-monthperiods ended April 30, 2013.

All share classes of the Portfolio rose inabsolute terms and outperformed thebenchmark for both periods, beforesales charges, with positive sector andsecurity selection driving performance.Within the Portfolio’s sector allocation,an overweight to commercial mortgage-backed securities (“CMBS”) and anunderweight to agency mortgages, aswell as exposure to high yield corpo-rates and non-agency mortgages, con-tributed positively for both periods.Security selection within the Portfolio’sinvestment-grade corporate holdings,particularly within the financial sector,was a notable positive contributor forboth periods. Security selection withinthe Portfolio’s agency mortgage hold-ings tempered performance for bothperiods; CMBS security selection alsodetracted for the six-month period. Forthe 12-month period, an overweight toinvestment-grade corporates and anunderweight to U.S. Treasuries waspositive.

The Portfolio utilized derivatives,including Treasury futures and interest

ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO • 1

rate swaps in order to manage bothduration and yield curve positioningduring both periods. Yield curve posi-tioning, specifically an overweight inthe intermediate area of the yield curve,had a positive impact on performance.As part of the Portfolio’s credit posi-tion, credit default swaps were utilizedas a substitute for corporate bonds,which had no impact on performancefor both periods. Currency forwardswere utilized during both periods forhedging and investment purposes;currency exposure contributed pos-itively, helped by a short position in theJapanese yen.

Market Review and InvestmentStrategyGlobal equity and bond marketsadvanced during the six-month periodended April 30, 2013, largely driven byimproved investor sentiment and thegradual return to riskier assets. Asmeasured by the benchmark, U.S.fixed-income markets posted positivereturns for the six-month period withcredit sectors outperforming govern-ment bonds. U.S. Treasuries returned0.79%, as measured within the bench-mark, as Treasury yields ended theperiod relatively unchanged. Spreads innon-government sectors continued totighten with investment-grade corpo-rates, particularly financials, performingwell. High-yield corporates postedstrong returns as risk aversion ebbedand investors reached for yield.

Investors were relatively unaffected byfresh political and systemic concerns inthe euro area. Policy and politicaldevelopments, rather than an accel-eration of global economic growth,

were the main drivers. The willingnessof political leaders to address thestructural flaws of the euro zone,along with the continued globalmonetary easing cycle led by the U.S.Federal Reserve (the “Fed”) and theEuropean Central Bank (“ECB”),lifted investor confidence for much ofthe period.

In Europe, the threat of a worst-caseoutcome for the euro was reduced.The ECB’s Outright Monetary Trans-actions program and more support forGreece alleviated fears of a eurobreakup. China’s slowdown appearedto have bottomed out; in the view ofthe U.S. Investment Grade CoreFixed-Income Team (the “Team”),housing starts, corporate bond issu-ance and a steady yuan should support7%-8% growth. In Japan, equity mar-kets gained as the yen weakened amidexpectations of a monetary policy shiftfollowing the Liberal DemocraticParty’s victory in the December elec-tions. After appointing a new governorand deputy governor for the Bank ofJapan (“BOJ”), the Japanese govern-ment began to implement PrimeMinister Shinzo Abe’s aggressivestimulatory policies. This led to aweakening of the yen, while expect-ations that the BOJ would includelonger-dated Japanese governmentbonds (“JGBs”) in its asset purchaseprogram caused JGBs to rally.

U.S. financial markets continued torebound, approaching new highs for theequity market late in the reporting peri-od, despite investors’ concerns aboutslowing corporate earnings growth andcontinued political dysfunction. While

2 • ALLIANCEBERNSTEIN BOND FUND INTERMEDIATE BOND PORTFOLIO

the American Taxpayer Relief Act of2012, passed by the Senate and Houseof Representatives in January 2013,averted the most feared outcomes of the“fiscal cliff”, it did not tackle spending ordebt-reduction issues which remainunresolved. Although risks remain,equity and bond markets around theworld moved higher, helped by mone-tary policy actions and improvedperceptions regarding the sovereign debtcrisis in Europe.

In the Team’s view, U.S. monetarypolicy could create additional marketuncertainty in the coming year. TheFederal Funds rate has been reduced to

near zero percent and the Fed has,among other actions taken, purchasedU.S. Treasury and mortgage-backedsecurities. The latter is commonlyreferred to as Quantitative Easing(“QE”). These policies have beenbeneficial to fixed-income securities,including the higher-yielding incomesecurities held in this Portfolio. As themarket perceives that the Fed will beginto reduce the level of accommodation,there may be downward pressure onprices of fixed-income securities,including those held in the Portfolio.These and other risks to the Portfolioare discussed further in this report.


DISCLOSURES AND RISKS

Benchmark DisclosureThe unmanaged Barclays U.S. Aggregate Bond Index does not reflect fees andexpenses associated with the active management of a mutual fund portfolio.The Barclays U.S. Aggregate Bond Index represents the performance of securitieswithin the U.S. investment-grade fixed-rate bond market, with index components forgovernment and corporate securities, mortgage pass-through securities, asset-backedsecurities, and commercial mortgage-backed securities. An investor cannot investdirectly in an index, and its results are not indicative of the performance for anyspecific investment, including the Portfolio.

A Word About RiskMarket Risk: The value of the Portfolio’s assets will fluctuate as the stock or bondmarket fluctuates. The value of its investments may decline, sometimes rapidly andunpredictably, simply because of economic changes or other events that affect largeportions of the market.

Interest Rate Risk: Changes in interest rates will affect the value of investments infixed-income securities. When interest rates rise, the value of investments in fixed-income securities tends to fall and this decrease in value may not be offset by higherincome from new investments. Interest rate risk is generally greater for fixed-incomesecurities with longer maturities or durations.

Duration Risk: Duration is a measure that relates the expected price volatility of afixed-income security to changes in interest rates. The duration of a fixed-incomesecurity may be shorter than or equal to full maturity of a fixed-income security.Fixed-income securities with longer durations have more risk and will decrease inprice as interest rates rise. For example, a fixed-income security with a duration ofthree years will decrease in value by approximately 3% if interest rates increase by 1%.

Credit Risk: An issuer or guarantor of a fixed-income security, or the counterpartyto a derivatives or other contract, may be unable or unwilling to make timely pay-ments of interest or principal, or to otherwise honor its obligations. The issuer orguarantor may default, causing a loss of the full principal amount of a security. Thedegree of risk for a particular security may be reflected in its credit rating. There is thepossibility that the credit rating of a fixed-income security may be downgraded afterpurchase, which may adversely affect the value of the security.

Below Investment Grade Securities: Investments in fixed-income securities withlower ratings (commonly known as “junk bonds”) tend to have a higher probabilitythat an issuer will default or fail to meet its payment obligations. These securities maybe subject to greater price volatility due to such factors as specific corporatedevelopments, interest rate sensitivity, negative perceptions of the junk bond marketgenerally and less secondary market liquidity.

Inflation Risk: This is the risk that the value of assets or income from investmentswill be less in the future as inflation decreases the value of money. As inflationincreases, the value of the Portfolio’s assets can decline as can the value of thePortfolio’s distributions. This risk is significantly greater if the Portfolio invests asignificant portion of its assets in fixed-income securities with longer maturities.

Foreign (Non-U.S.) Risk: Investments in securities of non-U.S. issuers may involvemore risk than those of U.S. issuers. These securities may fluctuate more widely inprice and may be less liquid due to adverse market, economic, political, regulatory orother factors.

Emerging Market Risk: Investments in emerging market countries may have morerisk because the markets are less developed and less liquid as well as being subject toincreased economic, political, regulatory or other uncertainties.(Disclosures, Risks and Note about Historical Performance continued on next page)


Dis

clos

ures

and

Ris

ks

DISCLOSURES AND RISKS(continued from previous page)

Currency Risk: Fluctuations in currency exchange rates may negatively affect thevalue of the Portfolio’s investments or reduce its returns.Prepayment Risk: The value of mortgage-related or asset-backed securities may beparticularly sensitive to changes in prevailing interest rates. Early payments of princi-pal on some mortgage-related securities may occur during periods of falling mortgageinterest rates and expose the Portfolio to a lower rate of return upon reinvestment ofprincipal. Early payments associated with mortgage-related securities cause thesesecurities to experience significantly greater price and yield volatility than is experi-enced by traditional fixed-income securities. During periods of rising interest rates, areduction in prepayments may increase the effective life of mortgage-related secu-rities, subjecting them to greater risk of decline in market value in response to risinginterest rates. If the life of a mortgage-related security is inaccurately predicted, thePortfolio may not be able to realize the rate of return it expected.Leverage Risk: To the extent the Portfolio uses leveraging techniques, its NAV maybe more volatile because leverage tends to exaggerate the effects of changes in inter-est rates and any increase or decrease in the value of the Portfolio’s investments.Derivatives Risk: Investments in derivatives may be illiquid, difficult to price, andleveraged so that small changes may produce disproportionate losses for the Portfolio,and may be subject to counterparty risk to a greater degree than more traditionalinvestments.Management Risk: The Portfolio is subject to management risk because it is anactively managed investment fund. The Adviser will apply its investment techniquesand risk analyses in making investment decisions, but there is no guarantee that itstechniques will produce the intended results.

These risks are fully discussed in the Portfolio’s prospectus.

An Important Note About Historical PerformanceThe investment return and principal value of an investment in the Portfolio willfluctuate, so that shares, when redeemed, may be worth more or less than theiroriginal cost. Performance shown on the following pages represents past per-formance and does not guarantee future results. Current performance may belower or higher than the performance information shown. You may obtainperformance information current to the most recent month-end by visitingwww.alliancebernstein.com.

All fees and expenses related to the operation of the Portfolio have beendeducted. NAV returns do not reflect sales charges; if sales charges werereflected, the Portfolio’s quoted performance would be lower. SEC returnsreflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred salescharge for Class B shares (3% year 1, 2% year 2, 1% year 3); a 1% 1-year con-tingent deferred sales charge for Class C shares. Returns for the different shareclasses will vary due to different expenses associated with each class. Perform-ance assumes reinvestment of distributions and does not account for taxes.


Disclosures

andR

isks

HISTORICAL PERFORMANCE

THE PORTFOLIO VS. ITS BENCHMARKPERIODS ENDED APRIL 30, 2013

NAV Returns

6 Months 12 Months

AllianceBernstein Bond FundIntermediate Bond Portfolio

Class A 1.52% 5.29%

Class B* 1.08% 4.56%

Class C 1.17% 4.57%

Advisor Class† 1.58% 5.61%

Class R† 1.42% 5.08%

Class K† 1.54% 5.34%

Class I† 1.65% 5.67%

Barclays U.S. Aggregate Bond Index 0.90% 3.68%

* Effective January 31, 2009, Class B shares are no longer available for purchase to newinvestors. Please see Note A for additional information.

† Please note that these share classes are for investors purchasing shares through accountsestablished under certain fee-based programs sponsored and maintained by certainbroker-dealers and financial intermediaries, institutional pension plans and/orinvestment advisory clients of, and certain other persons associated with, the Adviserand its affiliates or the Portfolio.

See Disclosures, Risks and Note about Historical Performance on pages 4-5.

(Historical Performance continued on next page)


His

tori

calP

erfo

rman

ce

HISTORICAL PERFORMANCE(continued from previous page)

AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2013

NAV Returns SEC Returns SEC Yields*

Class A Shares 0.97%1 Year 5.29% 0.85%5 Years 6.28% 5.37%10 Years 4.80% 4.34%

Class B Shares 0.30%1 Year 4.56% 1.56%5 Years 5.55% 5.55%10 Years(a) 4.41% 4.41%

Class C Shares 0.32%1 Year 4.57% 3.57%5 Years 5.56% 5.56%10 Years 4.09% 4.09%

Advisor Class Shares** 1.30%1 Year 5.61% 5.61%5 Years 6.60% 6.60%10 Years 5.12% 5.12%

Class R Shares** 0.72%1 Year 5.08% 5.08%5 Years 6.06% 6.06%Since Inception† 4.87% 4.87%

Class K Shares** 1.18%1 Year 5.34% 5.34%5 Years 6.33% 6.33%Since Inception† 5.34% 5.34%

Class I Shares** 1.34%1 Year 5.67% 5.67%5 Years 6.63% 6.63%Since Inception† 5.61% 5.61%

The Portfolio’s prospectus fee table shows the Portfolio’s total annual operatingexpense ratios as 0.99%, 1.74%, 1.70%, 0.69%, 1.29%, 0.99% and 0.66% for Class A,Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively,gross of any fee waivers or expense reimbursements. Contractual fee waivers and/orexpense reimbursements limit the Portfolio’s annual operating expense ratios(exclusive of interest expense) to 0.90%, 1.60%, 1.60%, 0.60%, 1.10%, 0.85% and0.60% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class Ishares, respectively. These waivers/reimbursements extend through January 31,2014 and may be extended by the Adviser for additional one-year terms. Absentreimbursements or waivers, performance would have been lower. The FinancialHighlights section of this report sets forth expense ratio data for the current report-ing period; the expense ratios shown above may differ from the expense ratios in theFinancial Highlights sections since they are based on different time periods.

* SEC yields are calculated based on SEC guidelines for the 30-day period ended April 30, 2013.(a) Assumes conversion of Class B shares into Class A shares after six years.** These share classes are offered at NAV to eligible investors and their SEC returns are the

same as their NAV returns. Please note that these share classes are for investors purchasingshares through accounts established under certain fee-based programs sponsored and main-tained by certain broker-dealers and financial intermediaries, institutional pension plansand/or investment advisory clients of, and certain other persons associated with, theAdviser and its affiliates or the Portfolio.

† Inception dates: 11/3/2003 for Class R shares; 3/1/2005 for Class K and Class I shares.


(Historical Performance continued on next page)


HistoricalPerform

ance

HISTORICAL PERFORMANCE(continued from previous page)

SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2013)

SEC Returns

Class A Shares1 Year 0.79%5 Years 5.11%10 Years 4.34%

Class B Shares1 Year 1.55%5 Years 5.29%10 Years(a) 4.39%

Class C Shares1 Year 3.55%5 Years 5.29%10 Years 4.08%

Advisor Class Shares**1 Year 5.58%5 Years 6.33%10 Years 5.11%

Class R Shares**1 Year 5.05%5 Years 5.80%Since Inception† 4.79%

Class K Shares**1 Year 5.31%5 Years 6.07%Since Inception† 5.25%

Class I Shares**1 Year 5.56%5 Years 6.34%Since Inception† 5.52%

(a) Assumes conversion of Class B shares into Class A shares after six years.** Please note that these share classes are for investors purchasing shares through accounts estab-

lished under certain fee-based programs sponsored and maintained by certain broker-dealersand financial intermediaries, institutional pension plans and/or investment advisory clientsof, and certain other persons associated with, the Adviser and its affiliates or the Portfolio.

† Inception dates: 11/3/2003 for Class R shares; 3/1/2005 for Class K and Class I shares.



His

tori

calP

erfo

rman

ce

EXPENSE EXAMPLE(unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs,including sales charges (loads) on purchase payments, contingent deferred salescharges on redemptions and (2) ongoing costs, including management fees; dis-tribution (12b-1) fees; and other Fund expenses. This example is intended to helpyou understand your ongoing costs (in dollars) of investing in the Fund and tocompare these costs with the ongoing costs of investing in other mutual funds.The Example is based on an investment of $1,000 invested at the beginning of theperiod and held for the entire period as indicated below.

Actual ExpensesThe table below provides information about actual account values and actualexpenses. You may use the information, together with the amount you invested, toestimate the expenses that you paid over the period. Simply divide your account valueby $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), thenmultiply the result by the number under the heading entitled “Expenses Paid DuringPeriod” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison PurposesThe table below also provides information about hypothetical account values andhypothetical expenses based on the Fund’s actual expense ratio and an assumedannual rate of return of 5% before expenses, which is not the Fund’s actual return.The hypothetical account values and expenses may not be used to estimate the actualending account balance or expenses you paid for the period. You may use thisinformation to compare the ongoing costs of investing in the Fund and other fundsby comparing this 5% hypothetical example with the 5% hypothetical examples thatappear in the shareholder reports of other funds.Please note that the expenses shown in the table are meant to highlight your ongoingcosts only and do not reflect any transactional costs, such as sales charges (loads), orcontingent deferred sales charges on redemptions. Therefore, the hypothetical exam-ple is useful in comparing ongoing costs only, and will not help you determine therelative total costs of owning different funds. In addition, if these transactional costswere included, your costs would have been higher.

BeginningAccount Value

November 1, 2012

EndingAccount ValueApril 30, 2013

Expenses PaidDuring Period*

AnnualizedExpense Ratio*

Class AActual $ 1,000 $ 1,015.20 $ 4.35 0.87%Hypothetical** $ 1,000 $ 1,020.48 $ 4.36 0.87%Class BActual $ 1,000 $ 1,010.80 $ 7.83 1.57%Hypothetical** $ 1,000 $ 1,017.01 $ 7.85 1.57%Class CActual $ 1,000 $ 1,011.70 $ 7.83 1.57%Hypothetical** $ 1,000 $ 1,017.01 $ 7.85 1.57%Advisor ClassActual $ 1,000 $ 1,015.80 $ 2.85 0.57%Hypothetical** $ 1,000 $ 1,021.97 $ 2.86 0.57%Class RActual $ 1,000 $ 1,014.20 $ 5.39 1.08%Hypothetical** $ 1,000 $ 1,019.44 $ 5.41 1.08%Class KActual $ 1,000 $ 1,015.40 $ 4.10 0.82%Hypothetical** $ 1,000 $ 1,020.73 $ 4.11 0.82%Class IActual $ 1,000 $ 1,016.50 $ 2.75 0.55%Hypothetical** $ 1,000 $ 1,022.07 $ 2.76 0.55%* Expenses are equal to the classes’ annualized expense ratios multiplied by the average

account value over the period, multiplied by 181/365 (to reflect the one-half year period).** Assumes 5% annual return before expenses.


ExpenseExam

ple

PORTFOLIO SUMMARYApril 30, 2013 (unaudited)

PORTFOLIO STATISTICSNet Assets ($mil): $510.2

SECURITY TYPE BREAKDOWN*28.2% Corporates -

Investment Grades

0.4% Governments -

0.3% Local Governments -

1.2% Quasi-Sovereigns0.8% Collateralized

Sovereign Bonds

Municipal Bonds

Non-Investment Grades

Mortgage Obligations

18.3% Governments - Treasuries16.8% Mortgage Pass-Throughs12.2% Asset-Backed Securities

3.7% AgenciesBacked Securities

7.3% Commercial Mortgage-

1.4% Corporates -

9.2% Short-Term

0.2% Emerging Markets - Sovereigns

* All data are as of April 30, 2013. The Portfolio’s security type breakdown is expressed as apercentage of total investments and may vary over time. The Portfolio also enters intoderivative transactions, which may be used for hedging or investment purposes (see“Portfolio of Investments” section of the report for additional details).


Port

folio

Sum

mar

y

PORTFOLIO OF INVESTMENTSApril 30, 2013 (unaudited)

PrincipalAmount

(000) U.S. $ Value

CORPORATES – INVESTMENTGRADES – 29.4%

Industrial – 13.5%Basic – 1.7%AngloGold Ashanti Holdings PLC

5.375%, 4/15/20 ............................... U.S.$ 855 $ 896,345Basell Finance Co. BV

8.10%, 3/15/27(a) ............................... 405 557,888Cia Minera Milpo SAA

4.625%, 3/28/23(a) ............................. 598 604,288Dow Chemical Co. (The)

4.125%, 11/15/21.............................. 360 392,1355.25%, 11/15/41 ............................... 350 395,6898.55%, 5/15/19 ................................. 490 660,678

Gerdau Trade, Inc.4.75%, 4/15/23(a) ............................... 850 841,0215.75%, 1/30/21(a) ............................... 107 115,239

International Paper Co.4.75%, 2/15/22 ................................. 235 267,5597.95%, 6/15/18 ................................. 830 1,070,054

LyondellBasell Industries NV5.75%, 4/15/24 ................................. 766 922,915

Sociedad Quimica y Minera deChile SA3.625%, 4/03/23(a) ............................. 562 564,894

Vale SA5.625%, 9/11/42 ............................... 1,370 1,431,205

8,719,910Capital Goods – 0.7%Embraer SA

5.15%, 6/15/22 ................................. 369 402,652Odebrecht Finance Ltd.

5.125%, 6/26/22(a) ............................. 490 524,300Owens Corning

6.50%, 12/01/16(b) ............................. 955 1,080,108Republic Services, Inc.

5.25%, 11/15/21 ............................... 508 600,8275.50%, 9/15/19 ................................. 753 893,555

3,501,442Communications - Media – 2.7%CBS Corp.

5.75%, 4/15/20 ................................. 710 849,6028.875%, 5/15/19 ............................... 530 709,052

Comcast Cable CommunicationsHoldings, Inc.9.455%, 11/15/22.............................. 1,439 2,222,055


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

DirecTV Holdings LLC/DirecTVFinancing Co., Inc.3.80%, 3/15/22 ................................. U.S.$ 715 $ 750,9724.60%, 2/15/21 ................................. 565 629,5954.75%, 10/01/14 ............................... 525 553,572

Globo Comunicacao e Participacoes SA5.307%, 5/11/22(a)(c) ........................... 431 471,945

NBCUniversal Enterprise, Inc.5.25%, 3/19/21(a) ............................... 604 609,766

News America, Inc.6.15%, 3/01/37-2/15/41 ..................... 893 1,107,5856.55%, 3/15/33 ................................. 142 172,306

Omnicom Group, Inc.3.625%, 5/01/22 ............................... 460 477,912

Reed Elsevier Capital, Inc.8.625%, 1/15/19 ............................... 1,193 1,550,976

Time Warner Cable, Inc.5.00%, 2/01/20 ................................. 740 854,3867.50%, 4/01/14 ................................. 1,055 1,121,428

Time Warner Entertainment Co. LP8.375%, 3/15/23 ............................... 325 451,746

WPP Finance UK8.00%, 9/15/14 ................................. 1,185 1,288,590

13,821,488Communications -

Telecommunications – 1.3%American Tower Corp.

5.05%, 9/01/20 ................................. 1,185 1,337,455AT&T, Inc.

4.45%, 5/15/21 ................................. 646 745,5475.35%, 9/01/40 ................................. 233 263,077

British Telecommunications PLC2.00%, 6/22/15 ................................. 576 591,7595.95%, 1/15/18 ................................. 193 230,847

Deutsche Telekom InternationalFinance BV4.875%, 3/06/42(a) ............................. 1,170 1,249,877

Rogers Communications, Inc.4.00%, 6/06/22 ................................. CAD 130 138,068

Telecom Italia Capital SA7.175%, 6/18/19 ............................... U.S.$ 515 609,833

Telefonica Emisiones SAU5.462%, 2/16/21 ............................... 520 573,141

United States Cellular Corp.6.70%, 12/15/33 ............................... 775 841,324

6,580,928


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

Consumer Cyclical -Automotive – 0.7%

Ford Motor Credit Co. LLC5.00%, 5/15/18 ................................. U.S.$ 2,155 $ 2,403,116

Harley-Davidson Funding Corp.5.75%, 12/15/14(a) ............................. 1,010 1,087,735

3,490,851Consumer Cyclical -

Entertainment – 0.5%Time Warner, Inc.

4.70%, 1/15/21 ................................. 600 691,6887.625%, 4/15/31 ............................... 1,285 1,815,196

Viacom, Inc.5.625%, 9/15/19 ............................... 240 287,663

2,794,547Consumer Cyclical - Other – 0.1%Host Hotels & Resorts LP

5.25%, 3/15/22 ................................. 545 607,675

Consumer Cyclical -Retailers – 0.3%

Dollar General Corp.4.125%, 7/15/17 ............................... 228 249,559

Macy’s Retail Holdings, Inc.3.875%, 1/15/22 ............................... 1,315 1,407,922

1,657,481Consumer Non-Cyclical – 1.4%Actavis, Inc.

3.25%, 10/01/22 ............................... 487 485,230Ahold Finance USA LLC

6.875%, 5/01/29 ............................... 1,275 1,686,705Bunge Ltd. Finance Corp.

5.10%, 7/15/15 ................................. 130 140,1445.875%, 5/15/13 ............................... 965 966,725

Cadbury Schweppes US Finance LLC5.125%, 10/01/13(a) ............................ 310 315,138

ConAgra Foods, Inc.3.20%, 1/25/23 ................................. 400 409,045

Kroger Co. (The)3.40%, 4/15/22 ................................. 966 1,020,051

Reynolds American, Inc.3.25%, 11/01/22 ............................... 616 620,264

Tyson Foods, Inc.4.50%, 6/15/22 ................................. 1,370 1,512,672

7,155,974Energy – 2.5%Anadarko Petroleum Corp.

6.45%, 9/15/36 ................................. 401 512,489


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

Encana Corp.3.90%, 11/15/21 ............................... U.S.$ 1,625 $ 1,750,234

Marathon Petroleum Corp.3.50%, 3/01/16 ................................. 180 192,4725.125%, 3/01/21 ............................... 439 518,570

Nabors Industries, Inc.9.25%, 1/15/19 ................................. 1,013 1,300,771

Noble Energy, Inc.8.25%, 3/01/19 ................................. 1,232 1,619,527

Noble Holding International Ltd.4.90%, 8/01/20 ................................. 108 121,305

Phillips 664.30%, 4/01/22 ................................. 1,840 2,053,987

Reliance Holdings USA, Inc.5.40%, 2/14/22(a) ............................... 1,375 1,545,413

Transocean, Inc.2.50%, 10/15/17 ............................... 604 615,294

Valero Energy Corp.6.125%, 2/01/20 ............................... 770 942,484

Weatherford International Ltd./Bermuda5.125%, 9/15/20 ............................... 630 701,3536.00%, 3/15/18 ................................. 91 104,0349.625%, 3/01/19 ............................... 605 799,975

12,777,908Technology – 0.8%Agilent Technologies, Inc.

5.00%, 7/15/20 ................................. 217 247,850Baidu, Inc.

2.25%, 11/28/17 ............................... 363 368,246Hewlett-Packard Co.

4.65%, 12/09/21 ............................... 616 637,387Intel Corp.

4.80%, 10/01/41 ............................... 490 528,092Motorola Solutions, Inc.

3.50%, 3/01/23 ................................. 794 808,8817.50%, 5/15/25 ................................. 30 40,036

Telefonaktiebolaget LM Ericsson4.125%, 5/15/22 ............................... 1,365 1,447,582

4,078,074Transportation - Airlines – 0.3%Southwest Airlines Co.

5.25%, 10/01/14 ............................... 730 770,5935.75%, 12/15/16 ............................... 490 552,729

1,323,322Transportation - Services – 0.5%Asciano Finance Ltd.

3.125%, 9/23/15(a) ............................. 1,490 1,536,262


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

Con-way, Inc.6.70%, 5/01/34 ................................. U.S.$ 133 $ 143,498

Ryder System, Inc.5.85%, 11/01/16 ............................... 383 435,8927.20%, 9/01/15 ................................. 369 417,738

2,533,39069,042,990

Financial Institutions – 12.3%Banking – 7.8%Bank of America Corp.

3.30%, 1/11/23 ................................. 255 258,2715.875%, 2/07/42 ............................... 1,012 1,265,3517.375%, 5/15/14 ............................... 1,050 1,119,7567.625%, 6/01/19 ............................... 1,035 1,325,077Series L5.65%, 5/01/18 ................................. 390 452,749

Barclays Bank PLC6.625%, 3/30/22(a) ............................. EUR 860 1,381,1337.625%, 11/21/22.............................. U.S.$ 810 826,200

Bear Stearns Cos. LLC (The)5.70%, 11/15/14 ............................... 1,655 1,779,895

Citigroup, Inc.5.375%, 8/09/20 ............................... 443 528,2698.50%, 5/22/19 ................................. 1,495 2,011,091

Compass Bank5.50%, 4/01/20 ................................. 1,339 1,390,724

Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands3.95%, 11/09/22 ............................... 623 642,210

Countrywide Financial Corp.6.25%, 5/15/16 ................................. 62 69,178

Danske Bank A/S5.684%, 2/15/17 ............................... GBP 528 807,948

DNB Bank ASA3.20%, 4/03/17(a) ............................... U.S.$ 1,365 1,456,806

Fifth Third Bancorp3.50%, 3/15/22 ................................. 525 557,009

Goldman Sachs Group, Inc. (The)5.75%, 1/24/22 ................................. 630 752,2196.00%, 6/15/20 ................................. 1,430 1,722,847Series G7.50%, 2/15/19 ................................. 990 1,248,375

HSBC Holdings PLC4.00%, 3/30/22 ................................. 1,430 1,584,0585.10%, 4/05/21 ................................. 839 995,213

ING Bank NV2.00%, 9/25/15(a) ............................... 1,360 1,385,304


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

JPMorgan Chase & Co.4.40%, 7/22/20 ................................. U.S.$ 1,165 $ 1,319,8054.50%, 1/24/22 ................................. 520 587,346Series Q5.15%, 5/01/23 ................................. 397 403,451

Macquarie Bank Ltd.5.00%, 2/22/17(a) ............................... 282 314,379

Macquarie Group Ltd.4.875%, 8/10/17(a) ............................. 668 736,516

Morgan StanleySeries G5.50%, 7/24/20-7/28/21 ..................... 1,888 2,208,5206.625%, 4/01/18 ............................... 995 1,192,818

Murray Street Investment Trust I4.647%, 3/09/17 ............................... 125 136,921

National Capital Trust II5.486%, 3/23/15(a) ............................. 372 380,370

Nationwide Building Society6.25%, 2/25/20(a) ............................... 1,415 1,707,764

Royal Bank of Scotland PLC (The)9.50%, 3/16/22(a) ............................... 346 410,010

Santander US Debt SAU2.991%, 10/07/13(a) ............................ 1,500 1,508,760

Societe Generale SA2.50%, 1/15/14(a) ............................... 695 701,813

SouthTrust Corp.5.80%, 6/15/14 ................................. 1,470 1,534,499

Standard Chartered PLC4.00%, 7/12/22(a) ............................... 1,310 1,370,522

UBS AG/Stamford CT7.625%, 8/17/22 ............................... 620 718,917

UFJ Finance Aruba AEC6.75%, 7/15/13 ................................. 172 174,191

Unicredit Luxembourg Finance SA6.00%, 10/31/17(a) ............................. 563 582,927

Vesey Street Investment Trust I4.404%, 9/01/16 ............................... 335 364,316

39,913,528Brokerage – 0.2%Nomura Holdings, Inc.

2.00%, 9/13/16 ................................. 1,240 1,246,508

Finance – 0.5%General Electric Capital Corp.

4.65%, 10/17/21 ............................... 544 621,721SLM Corp.

7.25%, 1/25/22 ................................. 825 917,812Series A5.375%, 5/15/14 ............................... 710 737,726

2,277,259


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

Insurance – 2.9%Allied World Assurance Co., Ltd.

7.50%, 8/01/16 ................................. U.S.$ 650 $ 771,255Allstate Corp. (The)

6.125%, 5/15/37 ............................... 905 970,703American International Group, Inc.

4.875%, 6/01/22 ............................... 755 869,6656.40%, 12/15/20 ............................... 680 850,815

Coventry Health Care, Inc.5.95%, 3/15/17 ................................. 295 341,9846.125%, 1/15/15 ............................... 115 124,0726.30%, 8/15/14 ................................. 900 958,965

Guardian Life Insurance Co. of America7.375%, 9/30/39(a) ............................. 542 754,583

Hartford Financial Services Group, Inc.4.00%, 3/30/15 ................................. 280 296,3245.125%, 4/15/22 ............................... 435 515,5175.50%, 3/30/20 ................................. 726 867,706

Humana, Inc.6.45%, 6/01/16 ................................. 130 149,6737.20%, 6/15/18 ................................. 825 1,010,651

Lincoln National Corp.8.75%, 7/01/19 ................................. 361 491,840

Massachusetts Mutual Life Insurance Co.8.875%, 6/01/39(a) ............................. 300 486,991

MetLife Capital Trust IV7.875%, 12/15/37(a) ............................ 590 740,450

MetLife, Inc.7.717%, 2/15/19 ............................... 358 470,428

Nationwide Mutual Insurance Co.9.375%, 8/15/39(a) ............................. 1,190 1,792,523

Prudential Financial, Inc.5.625%, 6/15/43 ............................... 920 966,000

WellPoint, Inc.3.30%, 1/15/23 ................................. 486 501,249

XL Group PLC5.25%, 9/15/14 ................................. 824 870,120

14,801,514Other Finance – 0.2%ORIX Corp.

4.71%, 4/27/15 ................................. 998 1,059,541

REITS – 0.7%HCP, Inc.

5.375%, 2/01/21 ............................... 1,410 1,672,476Health Care REIT, Inc.

5.25%, 1/15/22 ................................. 1,410 1,636,6363,309,112

62,607,462


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

Utility – 3.4%Electric – 1.2%CMS Energy Corp.

5.05%, 3/15/22 ................................. U.S.$ 440 $ 514,412Constellation Energy Group, Inc.

5.15%, 12/01/20 ............................... 260 300,971FirstEnergy Corp.

Series B4.25%, 3/15/23 ................................. 65 67,141Series C7.375%, 11/15/31.............................. 215 257,206

MidAmerican Energy Holdings Co.6.125%, 4/01/36 ............................... 1,115 1,438,135

Nisource Finance Corp.6.80%, 1/15/19 ................................. 1,465 1,803,960

Pacific Gas & Electric Co.4.50%, 12/15/41 ............................... 530 574,710

SPI Electricity & Gas AustraliaHoldings Pty Ltd.6.15%, 11/15/13(a) ............................. 283 288,987

TECO Finance, Inc.4.00%, 3/15/16 ................................. 310 334,3115.15%, 3/15/20 ................................. 380 444,340

Union Electric Co.6.70%, 2/01/19 ................................. 140 176,593

Wisconsin Energy Corp.6.25%, 5/15/67 ................................. 140 152,600

6,353,366Natural Gas – 2.2%DCP Midstream LLC

5.35%, 3/15/20(a) ............................... 396 442,277Energy Transfer Partners LP

6.70%, 7/01/18 ................................. 411 501,2477.50%, 7/01/38 ................................. 909 1,184,736

Enterprise Products Operating LLC5.20%, 9/01/20 ................................. 235 280,097

Kinder Morgan Energy Partners LP3.95%, 9/01/22 ................................. 1,460 1,582,1834.15%, 3/01/22 ................................. 339 369,439

ONEOK, Inc.4.25%, 2/01/22 ................................. 1,345 1,449,263

Talent Yield Investments Ltd.4.50%, 4/25/22(a) ............................... 1,365 1,488,598

TransCanada PipeLines Ltd.6.35%, 5/15/67 ................................. 1,670 1,782,892

Williams Cos., Inc. (The)3.70%, 1/15/23 ................................. 1,209 1,221,224

Williams Partners LP5.25%, 3/15/20 ................................. 733 850,660

11,152,61617,505,982


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

Non Corporate Sectors – 0.2%Agencies - Not Government

Guaranteed – 0.2%Gazprom OAO Via Gaz Capital SA

6.212%, 11/22/16(a) ............................ U.S.$ 977 $ 1,097,268

Total Corporates – Investment Grades(cost $134,181,998) ........................... 150,253,702

GOVERNMENTS – TREASURIES – 19.1%United States – 19.1%U.S. Treasury Bonds

2.75%, 8/15/42 ................................. 805 781,7313.00%, 5/15/42 ................................. 1,210 1,238,9263.125%, 2/15/42 ............................... 1,120 1,176,7004.50%, 2/15/36 ................................. 5,849 7,698,4834.625%, 2/15/40 ............................... 9,825 13,297,528

U.S. Treasury Notes0.50%, 7/31/17 ................................. 3,340 3,334,5190.625%, 8/31/17-11/30/17 .................. 4,405 4,415,3540.75%, 6/30/17-2/28/18 ..................... 9,635 9,694,7260.875%, 11/30/16-1/31/17 .................. 6,300 6,400,5881.00%, 8/31/16 ................................. 20,405 20,827,4451.50%, 6/30/16 ................................. 10,090 10,457,3371.75%, 5/15/22 ................................. 595 605,6452.00%, 11/15/21-2/15/23.................... 16,926 17,546,430

Total Governments – Treasuries(cost $92,125,062) ............................. 97,475,412

MORTGAGE PASS-THROUGHS – 17.5%Agency Fixed Rate 30-Year – 15.2%Federal Home Loan Mortgage Corp. Gold

4.50%, 12/01/39 ............................... 8,342 8,933,1855.50%, 4/01/38 ................................. 1,446 1,561,905Series 20055.50%, 1/01/35 ................................. 807 877,233Series 20075.50%, 7/01/35 ................................. 112 121,699

Federal National Mortgage Association3.00%, TBA ...................................... 12,810 13,398,4593.50%, TBA ...................................... 15,840 16,877,0264.00%, TBA ...................................... 9,650 10,328,5164.50%, TBA ...................................... 7,750 8,355,4695.50%, 1/01/35-6/01/38 ..................... 5,897 6,445,949Series 20035.00%, 11/01/33 ............................... 105 113,8865.50%, 4/01/33-7/01/33 ..................... 826 908,012Series 20045.50%, 4/01/34-11/01/34.................... 473 520,277


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

Series 20054.50%, 8/01/35 ................................. U.S.$ 297 $ 320,8085.50%, 2/01/35 ................................. 356 390,565Series 20065.00%, 2/01/36 ................................. 280 304,0345.50%, 4/01/36 ................................. 770 842,803Series 20074.50%, 9/01/35 ................................. 266 287,8185.00%, 11/01/35-7/01/36.................... 3,406 3,702,0285.50%, 8/01/37 ................................. 3,055 3,353,432

Government National Mortgage AssociationSeries 19909.00%, 12/15/19 ............................... – 0 –* 78Series 19998.15%, 9/15/20 ................................. 114 122,970

77,766,152Agency ARMs – 1.2%Federal Home Loan Mortgage Corp.

2.384%, 11/01/35(b)............................ 1,577 1,679,8442.749%, 5/01/38(d) ............................. 797 859,527Series 20062.388%, 3/01/34(d) ............................. 354 375,4632.986%, 1/01/37(b) ............................. 88 95,172Series 20073.055%, 3/01/37(b) ............................. 1,201 1,285,162

Federal National Mortgage AssociationSeries 20072.38%, 3/01/34(d) ............................... 1,207 1,292,3172.973%, 8/01/37(d) ............................. 448 481,452

6,068,937Agency Fixed Rate 15-Year – 1.1%Federal National Mortgage Association

3.00%, 4/01/21-10/01/27.................... 5,310 5,615,121Government National Mortgage Association

Series 20017.50%, 12/15/14 ............................... 36 36,358

5,651,479

Total Mortgage Pass-Throughs(cost $87,257,345) ............................. 89,486,568

ASSET-BACKED SECURITIES – 12.7%Autos - Fixed Rate – 7.3%Ally Auto Receivables Trust

Series 2012-1, Class A20.71%, 9/15/14 ................................. 390 390,400

Ally Master Owner TrustSeries 2013-1, Class A21.00%, 2/15/18 ................................. 1,300 1,304,586


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

AmeriCredit Automobile Receivables TrustSeries 2011-5, Class A21.19%, 8/08/15 ................................. U.S.$ 206 $ 206,614Series 2012-4, Class A20.49%, 4/08/16 ................................. 1,848 1,848,554Series 2013-1, Class A20.49%, 6/08/16 ................................. 1,161 1,161,771

ARI Fleet Lease TrustSeries 2013-A, Class A20.70%, 12/15/15(a) ............................. 1,150 1,151,061

Avis Budget Rental Car FundingAESOP LLCSeries 2012-3A, Class A2.10%, 3/20/19(a) ............................... 1,005 1,033,322

Bank of America Auto TrustSeries 2012-1, Class A41.03%, 12/15/16 ............................... 930 939,547

Capital Auto Receivables Asset TrustSeries 2013-1, Class A20.62%, 7/20/16 ................................. 999 999,999

CarMax Auto Owner TrustSeries 2012-1, Class A30.89%, 9/15/16 ................................. 715 718,971

Exeter Automobile Receivables TrustSeries 2012-2A, Class A1.30%, 6/15/17(a) ............................... 967 973,032

Fifth Third Auto TrustSeries 2013-A, Class A30.61%, 9/15/17 ................................. 1,013 1,014,993

Flagship Credit Auto TrustSeries 2013-1, Class A1.32%, 4/16/18(a) ............................... 590 593,982

Ford Auto Securitization TrustSeries 2011-R3A, Class A21.96%, 7/15/15(a) ............................... CAD 1,350 1,344,295Series 2013-R1A, Class A21.676%, 9/15/16(a) ............................. 873 868,277

Ford Credit Auto Lease TrustSeries 2012-B, Class A20.54%, 11/15/14 ............................... U.S.$ 1,521 1,521,840

Ford Credit Auto Owner TrustSeries 2012-B, Class A41.00%, 9/15/17 ................................. 895 904,474Series 2012-D, Class B1.01%, 5/15/18 ................................. 440 440,764

Ford Credit Floorplan Master Owner TrustSeries 2012-4, Class A10.74%, 9/15/16 ................................. 1,730 1,736,175


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

Series 2013-1, Class A10.85%, 1/15/18 ................................. U.S.$ 1,237 $ 1,238,877

Hertz Vehicle Financing LLCSeries 2013-1A, Class A11.12%, 8/25/17(a) ............................... 880 883,776Series 2013-1A, Class A21.83%, 8/25/19(a) ............................... 2,370 2,384,330

Hyundai Auto Lease Securitization TrustSeries 2013-A, Class A30.66%, 6/15/16(a) ............................... 1,375 1,376,696

Mercedes-Benz Auto Lease TrustSeries 2013-A, Class A30.59%, 2/15/16 ................................. 868 867,947

Mercedes-Benz Master Owner TrustSeries 2012-AA, Class A0.79%, 11/15/17(a) ............................. 2,148 2,152,524

Navistar Financial Corp. Owner TrustSeries 2012-A, Class A20.85%, 3/18/15(a) ............................... 1,466 1,468,216

Nissan Auto Lease TrustSeries 2012-A, Class A2A0.68%, 7/15/14 ................................. 844 845,659Series 2012-B, Class A2A0.45%, 6/15/15 ................................. 685 684,947

Porsche Innovative Lease Owner TrustSeries 2011-1, Class A31.09%, 9/22/14(a) ............................... 1,522 1,525,145

Santander Drive Auto Receivables TrustSeries 2012-3, Class A31.08%, 4/15/16 ................................. 1,470 1,476,037Series 2012-6, Class A20.47%, 9/15/15 ................................. 600 600,051

SMART Trust/AustraliaSeries 2012-4US, Class A2A0.67%, 6/14/15 ................................. 910 911,326

World Omni Automobile LeaseSecuritization TrustSeries 2012-A, Class A30.93%, 11/16/15 ............................... 1,631 1,638,835

37,207,023Credit Cards - Fixed Rate – 3.4%American Express Credit Account

Master TrustSeries 2012-2, Class A0.68%, 3/15/18 ................................. 2,910 2,922,733Series 2012-5, Class A0.59%, 5/15/18 ................................. 1,580 1,582,973


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

Cabela’s Master Credit Card TrustSeries 2013-1A, Class A2.71%, 2/17/26(a) ............................... U.S.$ 1,275 $ 1,292,282

Chase Issuance TrustSeries 2013-A1, Class A11.30%, 2/18/20 ................................. 1,295 1,309,995

Citibank Credit Card Issuance TrustSeries 2012-A1, Class A10.55%, 10/10/17 ............................... 1,585 1,586,110

Discover Card Master TrustSeries 2012-A1, Class A10.81%, 8/15/17 ................................. 791 795,973Series 2012-A3, Class A30.86%, 11/15/17 ............................... 891 897,204

Dryrock Issuance TrustSeries 2012-2, Class A0.64%, 8/15/18 ................................. 1,570 1,571,813

GE Capital Credit Card Master Note TrustSeries 2012-6, Class A1.36%, 8/17/20 ................................. 1,445 1,465,502Series 2012-7, Class A1.76%, 9/15/22 ................................. 1,245 1,249,340Series 2013-1, Class A1.35%, 3/15/21 ................................. 1,185 1,193,003

World Financial Network Credit CardMaster TrustSeries 2012-B, Class A1.76%, 5/17/21 ................................. 890 909,881Series 2013-A, Class A1.61%, 12/15/21 ............................... 570 576,856

17,353,665Autos - Floating Rate – 0.7%BMW Floorplan Master Owner Trust

Series 2012-1A, Class A0.599%, 9/15/17(a)(b) ........................... 870 872,451

GE Dealer Floorplan Master Note TrustSeries 2012-3, Class A0.689%, 6/20/17(b) ............................. 2,895 2,907,524

3,779,975Credit Cards - Floating Rate – 0.6%Gracechurch Card Funding PLC

Series 2012-1A, Class A20.919%, 2/15/17(a)(b) ........................... EUR 1,235 1,640,016

Penarth Master Issuer PLCSeries 2012-1A, Class A10.77%, 3/18/14(a)(b) ............................. U.S.$ 1,571 1,574,703

3,214,719


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

Other ABS - Fixed Rate – 0.6%CIT Canada Equipment Receivables Trust

Series 2012-1A, Class A11.705%, 7/22/13(a) ............................. CAD 20 $ 19,484

CIT Equipment CollateralSeries 2012-VT1, Class A31.10%, 8/22/16(a) ............................... U.S.$ 773 776,197

CNH Equipment TrustSeries 2010-C, Class A31.17%, 5/15/15 ................................. 205 205,279Series 2012-A, Class A30.94%, 5/15/17 ................................. 1,061 1,065,180

GE Equipment Midticket LLCSeries 2011-1, Class A31.00%, 8/24/15 ................................. 567 568,312

GE Equipment Small Ticket LLCSeries 2011-2A, Class A21.14%, 6/23/14(a) ............................... 385 385,781

3,020,233Home Equity Loans - Fixed Rate – 0.1%Citifinancial Mortgage Securities, Inc.

Series 2003-1, Class AFPT3.86%, 1/25/33 ................................. 70 71,241

Credit-Based Asset Servicing andSecuritization LLCSeries 2003-CB1, Class AF3.95%, 1/25/33.................................. 153 151,860

Nationstar NIM TrustSeries 2007-A, Class A9.79%, 3/25/37(e)(f) .............................. 18 – 0 –

223,101Home Equity Loans - Floating Rate – 0.0%Asset Backed Funding Certificates

Series 2003-WF1, Class A21.325%, 12/25/32(b)............................ 76 74,008

HSBC Home Equity Loan TrustSeries 2005-3, Class A10.459%, 1/20/35(b) ............................. 96 95,167

169,175

Total Asset-Backed Securities(cost $64,719,020) ............................. 64,967,891

COMMERCIAL MORTGAGE-BACKEDSECURITIES – 7.6%

Non-Agency Fixed Rate CMBS – 7.1%Banc of America Commercial Mortgage, Inc.

Series 2007-5, Class AM5.772%, 2/10/51 ................................ 411 463,331


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

Bear Stearns CommercialMortgage SecuritiesSeries 2006-T24, Class AJ5.598%, 10/12/41.............................. U.S.$ 545 $ 532,649

CGRBS Commercial Mortgage TrustSeries 2013-VN053.369%, 3/13/23(a) ............................. 1,305 1,349,963

Commercial Mortgage PassThrough CertificatesSeries 2006-C8, Class A45.306%, 12/10/46.............................. 2,130 2,415,648Series 2013-SFS, Class A11.873%, 4/12/35(a) ............................. 669 671,275

Commercial Mortgage Pass-ThroughCertificatesSeries 2006-C3, Class AJ5.989%, 6/15/38 ............................... 515 521,072

Credit Suisse Mortgage Capital CertificatesSeries 2006-C3, Class A35.989%, 6/15/38 ............................... 2,849 3,195,636

CW Capital Cobalt Ltd.Series 2007-C3, Class A45.985%, 5/15/46 ............................... 1,200 1,408,111

Extended Stay America TrustSeries 2013-ESH7, Class A172.295%, 12/05/31(a) ............................ 890 886,416

Greenwich Capital CommercialFunding Corp.Series 2005-GG5, Class AJ5.415%, 4/10/37 ............................... 775 649,569Series 2007-GG9, Class A45.444%, 3/10/39 ............................... 2,495 2,851,628Series 2007-GG9, Class AM5.475%, 3/10/39 ............................... 475 534,788

GS Mortgage Securities Corp. IISeries 2012-GCJ7, Class A43.377%, 5/10/45 ............................... 2,680 2,880,684Series 2012-GCJ9, Class A32.773%, 11/10/45.............................. 802 815,084

GS Mortgage Securities TrustSeries 2013-KING, Class A2.706%, 12/10/27(a) ............................ 1,392 1,444,118

JP Morgan Chase Commercial MortgageSecurities Corp.Series 2006-CB15, Class A45.814%, 6/12/43 ............................... 2,335 2,618,035Series 2007-CB19, Class AM5.91%, 2/12/49 ................................. 470 529,990


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

Series 2007-LD11, Class A46.002%, 6/15/49 ............................... U.S.$ 710 $ 821,646Series 2007-LD12, Class AM6.198%, 2/15/51 ............................... 795 922,695Series 2010-C2, Class A12.749%, 11/15/43(a) ............................ 1,053 1,098,664

Merrill Lynch Mortgage TrustSeries 2005-CIP1, Class A24.96%, 7/12/38 ................................. 911 923,769

Merrill Lynch/Countrywide CommercialMortgage TrustSeries 2007-9, Class A45.70%, 9/12/49 ................................. 2,940 3,409,947

Motel 6 TrustSeries 2012-MTL6, Class A21.948%, 10/05/25(a) ............................ 1,047 1,057,387

Prudential Securities SecuredFinancing Corp.Series 1999-NRF1, Class AEC1.455%, 11/01/31(a)(g)(h) ........................ 5,916 59,535

UBS-Barclays Commercial Mortgage TrustSeries 2012-C3, Class A43.091%, 8/10/49 ............................... 552 577,635Series 2012-C4, Class A52.85%, 12/10/45 ............................... 1,098 1,117,095Series 2013-C5, Class A43.185%, 3/10/46 ............................... 2,186 2,288,324

36,044,694Non-Agency Floating Rate CMBS – 0.5%Extended Stay America Trust

Series 2013-ESFL, Class A2FL0.902%, 12/05/31(a)(b).......................... 685 685,615

GS Mortgage Securities Corp. IISeries 2013-KYO, Class A1.051%, 11/08/29(a)(b).......................... 1,360 1,363,467

GS Mortgage Securities TrustSeries 2013-G1, Class A23.557%, 4/10/31(a)(d) ........................... 766 799,836

2,848,918Agency CMBS – 0.0%Government National Mortgage Association

Series 2006-390.143%, 7/16/46(d)(g) ........................... 3,821 37,373

Total Commercial Mortgage-Backed Securities(cost $36,858,378) ....................................... 38,930,985


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

AGENCIES – 3.9%Agency Debentures – 3.9%Federal National Mortgage Association

6.25%, 5/15/29 ................................. U.S.$ 8,610 $ 12,447,847Residual Funding Corp. Principal Strip

Zero Coupon, 7/15/20 ........................ 8,407 7,580,365

Total Agencies(cost $17,132,502) ............................. 20,028,212

CORPORATES – NON-INVESTMENTGRADES – 1.4%

Financial Institutions – 0.7%Banking – 0.6%ABN Amro Bank NV

4.31%, 3/10/16 ................................. EUR 340 422,017Citigroup, Inc.

5.95%, 1/30/23 ................................. U.S.$ 1,335 1,398,412LBG Capital No.1 PLC

8.00%, 6/15/20(a) ............................... 635 678,315LBG Capital No.2 PLC

Series 2215.00%, 12/21/19.............................. EUR 385 740,258

3,239,002Other Finance – 0.1%Aviation Capital Group Corp.

7.125%, 10/15/20(a) ............................ U.S.$ 552 632,4983,871,500

Industrial – 0.7%Basic – 0.0%Eagle Spinco, Inc.

4.625%, 2/15/21(a) ............................. 107 112,350

Capital Goods – 0.4%B/E Aerospace, Inc.

5.25%, 4/01/22 ................................. 825 878,625Ball Corp.

5.00%, 3/15/22 ................................. 820 871,2501,749,875

Consumer Cyclical - Other – 0.2%Wynn Las Vegas LLC/Wynn Las Vegas

Capital Corp.5.375%, 3/15/22 ............................... 825 895,125

Energy – 0.1%Cimarex Energy Co.

5.875%, 5/01/22 ............................... 395 430,550Pacific Rubiales Energy Corp.

5.125%, 3/28/23(a) ............................. 281 285,861716,411

3,473,761

Total Corporates – Non-Investment Grades(cost $6,209,948) ............................... 7,345,261


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

QUASI-SOVEREIGNS – 1.3%Quasi-Sovereign Bonds – 1.3%Indonesia – 0.2%Perusahaan Listrik Negara PT

5.50%, 11/22/21(a) ............................. U.S.$ 839 $ 931,290

Kazakhstan – 0.2%KazMunayGas National Co. JSC

7.00%, 5/05/20(a) ............................... 790 951,950

Malaysia – 0.3%Petronas Capital Ltd.

5.25%, 8/12/19(a) ............................... 1,385 1,633,235

South Korea – 0.3%Korea National Oil Corp.

3.125%, 4/03/17(a) ............................. 1,365 1,428,972

United Arab Emirates – 0.3%IPIC GMTN Ltd.

3.75%, 3/01/17(a) ............................... 1,365 1,462,256

Total Quasi-Sovereigns(cost $5,729,032) ............................... 6,407,703

COLLATERALIZED MORTGAGEOBLIGATIONS – 0.8%

Non-Agency Fixed Rate – 0.6%Citigroup Mortgage Loan Trust, Inc.

Series 2005-2, Class 1A42.709%, 5/25/35 ............................... 1,020 1,004,220

JP Morgan Alternative Loan TrustSeries 2006-A3, Class 2A12.821%, 7/25/36 ............................... 1,254 944,090

Structured Asset Securities Corp.Series 2002-3, Class B36.50%, 3/25/32 ................................. 1,141 1,014,808

2,963,118Non-Agency Floating Rate – 0.2%Washington Mutual Alternative Mortgage

Pass-Through CertificatesSeries 2007-OA1, Class A1A0.877%, 2/25/47(b) ............................. 1,521 1,201,868

Agency Fixed Rate – 0.0%Fannie Mae Grantor Trust

Series 2004-T5, Class AB40.769%, 5/28/35 ............................... 65 56,530

Total Collateralized Mortgage Obligations(cost $5,006,844) ............................... 4,221,516


Port

folio

ofIn

vest

men

ts

PrincipalAmount

(000) U.S. $ Value

GOVERNMENTS – SOVEREIGNBONDS – 0.5%

Indonesia – 0.2%Indonesia Government International Bond

3.375%, 4/15/23(a) ............................. U.S.$ 750 $ 765,937Republic of Indonesia

5.25%, 1/17/42(a) ............................... 294 332,2201,098,157

Qatar – 0.3%Qatar Government International Bond

4.50%, 1/20/22(a) ............................... 1,108 1,263,120

Total Governments – Sovereign Bonds(cost $2,128,518)............................... 2,361,277

LOCAL GOVERNMENTS – MUNICIPALBONDS – 0.3%

United States – 0.3%California GO

7.625%, 3/01/40(cost $985,975) ................................. 970 1,452,206

EMERGING MARKETS –SOVEREIGNS – 0.2%

Turkey – 0.2%Turkey Government International Bond

4.875%, 4/16/43(cost $892,478) ................................. 903 923,318

EMERGING MARKETS – CORPORATEBONDS – 0.1%

Industrial – 0.1%Communications -

Telecommunications – 0.1%VimpelCom Holdings BV

5.20%, 2/13/19(a)

(cost $295,000) ................................. 295 296,764

SharesSHORT-TERM INVESTMENTS – 9.7%Investment Companies – 6.7%AllianceBernstein Fixed-Income

Shares, Inc. – Government STIFPortfolio, 0.09%(i)

(cost $34,180,654) ............................. 34,180,654 34,180,654


PortfolioofInvestm

ents

PrincipalAmount

(000) U.S. $ Value

Governments - Treasuries – 3.0%Japan Treasury Discount Bill

Series 348Zero Coupon, 6/03/13(cost $14,806,151) ............................... JPY 1,470,000 $ 15,078,018

Total Short-Term Investments(cost $48,986,805) ............................... 49,258,672

Total Investments – 104.5%(cost $502,508,905) ............................. 533,409,487

Other assets less liabilities – (4.5)%.............. (23,208,267)

Net Assets – 100.0% ............................. $ 510,201,220

FUTURES CONTRACTS (see Note D)

TypeNumber ofContracts

ExpirationMonth

OriginalValue

Value atApril 30,

2013

UnrealizedAppreciation/(Depreciation)

Sold ContractsU.S. Note

2 Yr (CBT) Futures 14 June 2013 $ 3,086,528 $ 3,088,750 $ (2,222)

FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)

Counterparty

Contracts toDeliver(000)

In ExchangeFor

(000)Settlement

Date


BNP Paribas SA EUR 3,816 USD 4,980 5/16/13 $ (46,129)Deutsche Bank AG London USD 462 GBP 297 5/16/13 (757)Goldman Sachs Capital

Markets LP JPY 1,470,000 USD 14,818 6/03/13 (263,244)JPMorgan Chase Bank, NA JPY 745,318 USD 7,474 5/31/13 (172,016)Royal Bank of Scotland PLC GBP 5,746 USD 8,796 5/16/13 (129,493)Royal Bank of Scotland PLC CAD 8,046 USD 7,827 6/07/13 (152,894)

$ (764,533)

INTEREST RATE SWAP CONTRACTS (see Note D)Rate Type

SwapCounterparty

NotionalAmount

(000)Termination

Date

Paymentsmadeby theFund

Paymentsreceived

by theFund


JPMorgan ChaseBank, NA $ 5,590 1/30/17 1.059% 3 Month LIBOR $ (115,188)

JPMorgan ChaseBank, NA 6,230 2/07/22 2.043% 3 Month LIBOR (231,182)

$ (346,370)


Port

folio

ofIn

vest

men

ts

CREDIT DEFAULT SWAP CONTRACTS (see Note D)

Swap Counterparty &Referenced Obligation

FixedRate(Pay)

Receive

ImpliedCredit

Spread atApril 30,

2013

NotionalAmount

(000)MarketValue

UpfrontPremiums

Paid(Received)


Sale ContractsCredit Suisse

International:Anadarko Petroleum

Corp., 5.95%9/15/16, 9/20/17* 1.00% 0.85% $ 1,360 $ 9,242 $ (42,017) $ 51,259

* Termination date

CROSS CURRENCY SWAP CONTRACTS (see Note D)

CounterpartyExpiration

DatePay

CurrencyPayRate

ReceiveCurrency

ReceiveRate


Barclays Bank PLC

2/15/15 EUR

1 MonthEURIBOR

Plus aSpecifiedSpread USD

1 MonthLIBORPlus a

SpecifiedSpread $ 14,192

* Principal amount less than 500.(a) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These

securities are considered liquid and may be resold in transactions exempt from registra-tion, normally to qualified institutional buyers. At April 30, 2013, the aggregate marketvalue of these securities amounted to $71,558,361 or 14.0% of net assets.

(b) Floating Rate Security. Stated interest rate was in effect at April 30, 2013.(c) Coupon rate adjusts periodically based upon a predetermined schedule. Stated interest rate

in effect at April 30, 2013.(d) Variable rate coupon, rate shown as of April 30, 2013.(e) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These

securities, which represent 0.00% of net assets as of April 30, 2013, are considered illiquidand restricted.

Restricted SecuritiesAcquisition

Date CostMarketValue

Percentage ofNet Assets

Nationstar NIM TrustSeries 2007-A, Class A9.79%, 3/25/37 4/04/07 $ 17,607 $ – 0 – 0.00%

(f) Fair valued by the Adviser.(g) IO – Interest Only(h) Illiquid security.(i) Investment in affiliated money market mutual fund. The rate shown represents the 7-day

yield as of period end.


PortfolioofInvestm

ents

Currency Abbreviations:CAD – Canadian DollarEUR – EuroGBP – Great British PoundJPY – Japanese YenUSD – United States DollarGlossary:ABS – Asset-Backed SecuritiesARMs – Adjustable Rate MortgagesCBT – Chicago Board of TradeCMBS – Commercial Mortgage-Backed SecuritiesEURIBOR – Euro Interbank Offered RateGO – General ObligationLIBOR – London Interbank Offered RatesREIT – Real Estate Investment TrustTBA – To Be Announced

See notes to financial statements.


Port

folio

ofIn

vest

men

ts

STATEMENT OF ASSETS & LIABILITIESApril 30, 2013 (unaudited)

AssetsInvestments in securities, at value .........................................

Unaffiliated issuers (cost $468,328,251) .............................. $ 499,228,833Affiliated issuers (cost $34,180,654) ................................... 34,180,654(a)

Cash .............................................................................. 7,364(b)

Receivable for investment securities sold ................................ 26,295,653Interest and dividends receivable .......................................... 3,660,352Receivable for capital stock sold ........................................... 150,159Unrealized appreciation on credit default swap contracts ........... 51,259Unrealized appreciation on cross currency swap contracts ......... 14,192Total assets ..................................................................... 563,588,466LiabilitiesPayable for investment securities purchased ........................... 50,395,311Unrealized depreciation of forward currency exchange contracts ... 764,533Payable for capital stock redeemed ....................................... 714,076Collateral received from broker ............................................. 510,000Unrealized depreciation on interest rate swap contracts ............. 346,370Dividends payable ............................................................. 171,104Distribution fee payable....................................................... 140,420Advisory fee payable .......................................................... 133,570Transfer Agent fee payable .................................................. 64,652Premium received on credit default swap contracts .................. 42,017Administrative fee payable ................................................... 19,104Accrued expenses............................................................. 86,089Total liabilities ................................................................... 53,387,246Net Assets ....................................................................... $ 510,201,220Composition of Net AssetsCapital stock, at par ........................................................... $ 44,723Additional paid-in capital ..................................................... 520,141,122Distributions in excess of net investment income ...................... (1,393,428)Accumulated net realized loss on investment and foreign

currency transactions ...................................................... (38,444,466)Net unrealized appreciation on investments and foreign currency

denominated assets and liabilities ...................................... 29,853,269$ 510,201,220

Net Asset Value Per Share—21 billion shares of capital stock authorized,$.001 par value

Class Net AssetsShares

OutstandingNet Asset

Value

A $ 346,147,774 30,339,033 $ 11.41*B $ 7,667,582 671,782 $ 11.41C $ 56,342,255 4,947,668 $ 11.39Advisor $ 93,908,398 8,227,158 $ 11.41R $ 2,453,787 215,070 $ 11.41K $ 3,670,632 321,478 $ 11.42I $ 10,792 944.50 $ 11.43

(a) Includes investment of cash collateral of $510,000 received from broker for OTCderivatives outstanding at April 30, 2013.

(b) An amount of $3,150 has been segregated to collateralize margin requirements for openfutures contracts outstanding at April 30, 2013.

* The maximum offering price per share for Class A shares was $11.92 which reflects a salescharge of 4.25%.



Statement

ofAssets&

Liabilities

STATEMENT OF OPERATIONSSix Months Ended April 30, 2013 (unaudited)

Investment IncomeInterest ......................................................... $ 7,668,653Dividends—Affiliated issuers.............................. 21,948 $ 7,690,601ExpensesAdvisory fee (see Note B) ................................. 1,171,220Distribution fee—Class A .................................. 531,615Distribution fee—Class B.................................. 41,626Distribution fee—Class C.................................. 289,537Distribution fee—Class R.................................. 5,999Distribution fee—Class K .................................. 4,712Transfer agency—Class A ................................ 276,824Transfer agency—Class B ................................ 7,202Transfer agency—Class C ................................ 46,548Transfer agency—Advisor Class ........................ 73,160Transfer agency—Class R ................................ 3,120Transfer agency—Class K ................................ 2,835Transfer agency—Class I.................................. 95Custodian ..................................................... 104,388Registration fees............................................. 49,984Printing......................................................... 35,640Audit ............................................................ 27,966Administrative ................................................ 23,617Legal ........................................................... 21,249Directors’ fees................................................ 5,795Miscellaneous ................................................ 12,018Total expenses............................................... 2,735,150Less: expenses waived and reimbursed by the

Adviser (see Note B)..................................... (367,280)Net expenses ................................................ 2,367,870Net investment income .................................... 5,322,731Realized and Unrealized Gain (Loss) onInvestment and Foreign CurrencyTransactionsNet realized gain (loss) on:

Investment transactions ................................ 4,362,130Futures contracts ........................................ (27,494)Swap contracts........................................... (19,338)Foreign currency transactions......................... 1,999,532

Net change in unrealized appreciation/depreciation of:Investments................................................ (2,770,035)Futures contracts ........................................ (3,593)Swap contracts........................................... 20,658Foreign currency denominated assets and

liabilities and other assets ........................... (1,273,047)Net gain on investment and foreign currency

transactions ............................................... 2,288,813Net Increase in Net Assets from Operations .. $ 7,611,544



Stat

emen

tof

Ope

ratio

ns

STATEMENT OF CHANGES IN NET ASSETS

Six Months EndedApril 30, 2013(unaudited)

Year EndedOctober 31,

2012

Increase (Decrease) in Net Assetsfrom OperationsNet investment income......................... $ 5,322,731 $ 12,291,935Net realized gain on investment and

foreign currency transactions .............. 6,314,830 2,918,656Net change in unrealized appreciation/

depreciation of investments and foreigncurrency denominated assets andliabilities and other assets .................. (4,026,017) 17,777,852

Net increase in net assets fromoperations ...................................... 7,611,544 32,988,443

Dividends to Shareholders fromNet investment income

Class A.......................................... (5,097,542) (10,803,343)Class B.......................................... (91,413) (223,298)Class C ......................................... (633,656) (1,357,337)Advisor Class .................................. (1,480,799) (2,944,926)Class R.......................................... (33,214) (39,970)Class K.......................................... (55,124) (96,136)Class I ........................................... (2,108) (24,064)

Capital Stock TransactionsNet decrease ..................................... (31,790,670) (23,730,835)Capital ContributionsProceeds from third party regulatory

settlement (see Note E) ..................... – 0 – 23,591Total decrease ................................... (31,572,982) (6,207,875)Net AssetsBeginning of period ............................. 541,774,202 547,982,077End of period (including distributions in

excess of net investment income of($1,393,428) and undistributed netinvestment income of $677,697,respectively).................................... $ 510,201,220 $ 541,774,202



Statement

ofChanges

inN

etAssets

NOTES TO FINANCIAL STATEMENTSApril 30, 2013 (unaudited)

NOTE ASignificant Accounting PoliciesAllianceBernstein Bond Fund, Inc. (the “Fund”) is registered under the InvestmentCompany Act of 1940 as an open-end management investment company. TheFund, which is a Maryland corporation, operates as a series company currentlycomprised of five portfolios: the Intermediate Bond Portfolio, the Bond InflationStrategy Portfolio, the Municipal Bond Inflation Strategy Portfolio, the Real AssetStrategy Portfolio and the Limited Duration High Income Portfolio. They are eachdiversified Portfolios, with the exception of the Limited Duration High IncomePortfolio, which is non-diversified. The Limited Duration High Income Portfoliocommenced operations on December 7, 2011. Each Portfolio is considered to be aseparate entity for financial reporting and tax purposes. This report relates only tothe Intermediate Bond Portfolio. The Intermediate Bond Portfolio (the“Portfolio”) offers Class A, Class B, Class C, Advisor Class, Class R, Class K, andClass I 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 $1,000,000or more, Class A shares redeemed within one year of purchase may be subject to acontingent deferred sales charge of 1%. Class B shares are currently sold with a con-tingent deferred sales charge which declines from 3% to zero depending on theperiod of time the shares are held. Effective January 31, 2009, sales of Class Bshares of the Portfolio to new investors were suspended. Class B shares will only beissued (i) upon the exchange of Class B shares from another AllianceBernsteinMutual Fund, (ii) for purposes of dividend reinvestment, (iii) through the Portfo-lio’s Automatic Investment Program (the “Program”) for accounts that establishedthe Program prior to January 31, 2009, and (iv) for purchases of additional sharesby Class B shareholders as of January 31, 2009. The ability to establish a new Pro-gram for accounts containing Class B shares was suspended as of January 31, 2009.Class B shares will automatically convert to Class A shares six years after the end ofthe calendar month of purchase. Class C shares are subject to a contingent deferredsales charge of 1% on redemptions made within the first year after purchase. Class Rand Class K shares are sold without an initial or contingent deferred sales charge.Advisor Class and Class I shares are sold without an initial or contingent deferredsales charge and are not subject to ongoing distribution expenses. All seven classesof shares have identical voting, dividend, liquidation and other rights, except thatthe classes bear different distribution and transfer agency expenses. Each class hasexclusive voting rights with respect to its distribution plan. The financial statementshave been prepared in conformity with U.S. generally accepted accounting princi-ples (“U.S. GAAP”) which require management to make certain estimates andassumptions that affect the reported amounts of assets and liabilities in the financialstatements and amounts of income and expenses during the reporting period.Actual results could differ from those estimates. The following is a summary of sig-nificant accounting policies followed by the Portfolio.

1. Security ValuationPortfolio securities are valued at their current market value determined on thebasis of market quotations or, if market quotations are not readily available or


Not

esto

Fina

ncia

lSta

tem

ents

are deemed unreliable, at “fair value” as determined in accordance with proce-dures established by and under the general supervision of the Fund’s Board ofDirectors (the “Board”).

In general, the market value of securities which are readily available and deemedreliable are determined as follows: Securities listed on a national securitiesexchange (other than securities listed on the NASDAQ Stock Market, Inc.(“NASDAQ”)) or on a foreign securities exchange are valued at the last saleprice at the close of the exchange or foreign securities exchange. If there hasbeen no sale on such day, the securities are valued at the last traded price fromthe previous day. Securities listed on more than one exchange are valued byreference to the principal exchange on which the securities are traded; securitieslisted only on NASDAQ are valued in accordance with the NASDAQ OfficialClosing Price; listed or over the counter (“OTC”) market put or call options arevalued at the mid level between the current bid and ask prices. If either a currentbid or current ask price is unavailable, AllianceBernstein L.P. (the “Adviser”) willhave discretion to determine the best valuation (e.g. last trade price in the case oflisted options); open futures contracts are valued using the closing settlementprice or, in the absence of such a price, the most recent quoted bid price. If thereare no quotations available for the day of valuation, the last available closing set-tlement price is used; U.S. government securities and other debt instrumentshaving 60 days or less remaining until maturity are valued at amortized cost iftheir original maturity was 60 days or less; or by amortizing their fair value as ofthe 61st day prior to maturity if their original term to maturity exceeded 60days; fixed-income securities, including mortgage backed and asset backed secu-rities, may be valued on the basis of prices provided by a pricing service or at aprice obtained from one or more of the major broker/dealers. In cases wherebroker/dealer quotes are obtained, the Adviser may establish procedureswhereby changes in market yields or spreads are used to adjust, on a daily basis, arecently obtained quoted price on a security. Swaps and other derivatives arevalued daily, primarily using independent pricing services, independent pricingmodels using market inputs, as well as third party broker-dealers or counter-parties. Investments in money market funds are valued at their net asset valueeach day.

Securities for which market quotations are not readily available (includingrestricted securities) or are deemed unreliable are valued at fair value. Factorsconsidered in making this determination may include, but are not limited to,information obtained by contacting the issuer, analysts, analysis of the issuer’sfinancial statements or other available documents. In addition, the Portfolio mayuse fair value pricing for securities primarily traded in non-U.S. markets becausemost foreign markets close well before the Portfolio values its securities at4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise tothe possibility that significant events, including broad market moves, may haveoccurred in the interim and may materially affect the value of those securities.


Notes

toFinancialStatem

ents

2. Fair Value MeasurementsIn accordance with U.S. GAAP regarding fair value measurements, fair value isdefined as the price that the Portfolio would receive to sell an asset or pay totransfer a liability in an orderly transaction between market participants at themeasurement date. U.S. GAAP establishes a framework for measuring fair value,and a three-level hierarchy for fair value measurements based upon the trans-parency of inputs to the valuation of an asset or liability (including those valuedbased on their market values as described in Note 1 above). Inputs may beobservable or unobservable and refer broadly to the assumptions that marketparticipants would use in pricing the asset or liability. Observable inputs reflectthe assumptions market participants would use in pricing the asset or liabilitybased on market data obtained from sources independent of the Portfolio.Unobservable inputs reflect the Portfolio’s own assumptions about the assump-tions that market participants would use in pricing the asset or liability based onthe best information available in the circumstances. Each investment is assigned alevel based upon the observability of the inputs which are significant to theoverall valuation. The three-tier hierarchy of inputs is summarized below.

• Level 1—quoted prices in active markets for identical investments• Level 2—other significant observable inputs (including quoted prices for

similar investments, interest rates, prepayment speeds, credit risk, etc.)• Level 3—significant unobservable inputs (including the Portfolio’s own

assumptions in determining the fair value of investments)

The fair value of debt instruments, such as bonds, and over-the-counterderivatives is generally based on market price quotations, recently executed mar-ket transactions (where observable) or industry recognized modeling techniquesand are generally classified as Level 2. Pricing vendor inputs to Level 2 valuationsmay include quoted prices for similar investments in active markets, interest rates,coupon rates, yield curves, option adjusted spreads, default rates, credit spreadsand other unique security features in order to estimate the relevant cash flowswhich is then discounted to calculate fair values. If these inputs are unobservableand significant to the fair value, these investments will be classified as Level 3. Inaddition, non-agency rated investments are classified as Level 3.

Valuations of mortgage-backed or other asset backed securities, by pricing ven-dors, are based on both proprietary and industry recognized models and dis-counted cash flow techniques. Significant inputs to the valuation of theseinstruments are value of the collateral, the rates and timing of delinquencies, therates and timing of prepayments, and default and loss expectations, which aredriven in part by housing prices for residential mortgages. Significant inputs aredetermined based on relative value analyses, which incorporate comparisons toinstruments with similar collateral and risk profiles, including relevant indices.Mortgage and asset backed securities for which management has collected cur-rent observable data through brokers or pricing services are generally categorizedwithin Level 2. Those investments for which current data has not been providedare classified as Level 3.


Not

esto

Fina

ncia

lSta

tem

ents

Other fixed income investments, including non-U.S. government and corporatedebt, are generally valued using quoted market prices, if available, which are typi-cally impacted by current interest rates, maturity dates and any perceived credit riskof the issuer. Additionally, in the absence of quoted market prices, these inputs areused by pricing vendors to derive a valuation based upon industry or proprietarymodels which incorporate issuer specific data with relevant yield/spread compar-isons with more widely quoted bonds with similar key characteristics. Thoseinvestments for which there are observable inputs are classified as Level 2. Wherethe inputs are not observable, the investments are classified as Level 3.

The following table summarizes the valuation of the Portfolio’s investments bythe above fair value hierarchy levels as of April 30, 2013:

Investments inSecurities: Level 1 Level 2 Level 3 TotalAssets:Corporates – Investment

Grades......................... $ – 0 – $ 150,253,702 $ – 0 – $ 150,253,702Governments – Treasuries ... – 0 – 97,475,412 – 0 – 97,475,412Mortgage Pass-Throughs.... – 0 – 89,486,568 – 0 – 89,486,568Asset-Backed Securities ..... – 0 – 61,555,382 3,412,509 64,967,891Commercial Mortgage-

Backed Securities .......... – 0 – 33,895,710 5,035,275 38,930,985Agencies ......................... – 0 – 20,028,212 – 0 – 20,028,212Corporates – Non-

Investment Grades ......... – 0 – 7,345,261 – 0 – 7,345,261Quasi-Sovereigns .............. – 0 – 6,407,703 – 0 – 6,407,703Collateralized Mortgage

Obligations ................... – 0 – 56,530 4,164,986 4,221,516Governments – Sovereign

Bonds.......................... – 0 – 2,361,277 – 0 – 2,361,277Local Governments –

Municipal Bonds ............ – 0 – 1,452,206 – 0 – 1,452,206Emerging Markets –

Sovereigns.................... – 0 – 923,318 – 0 – 923,318Emerging Markets –

Corporate Bonds ........... – 0 – 296,764 – 0 – 296,764Short-Term Investments:

Investment Companies .... 34,180,654 – 0 – – 0 – 34,180,654Governments –

Treasuries.................. – 0 – 15,078,018 – 0 – 15,078,018Total Investments in

Securities ..................... 34,180,654 486,616,063 12,612,770 533,409,487Other Financial

Instruments*:Assets:

Credit Default SwapContracts .................. – 0 – 51,259 – 0 – 51,259

Cross Currency SwapContracts .................. – 0 – – 0 – 14,192 14,192

Liabilities:Futures Contracts........... (2,222) – 0 – – 0 – (2,222)#Forward Currency

Exchange Contracts .... – 0 – (764,533) – 0 – (764,533)Interest Rate Swap

Contracts .................. – 0 – (346,370) – 0 – (346,370)Total^ ............................ $ 34,178,432 $ 485,556,419 $ 12,626,962 $ 532,361,813


Notes

toFinancialStatem

ents

* Other financial instruments are derivative instruments, such as futures, forwards andswap contracts, which are valued at the unrealized appreciation/depreciation on theinstrument.

# Only variation margin receivable/payable at period end is reported within the statementof assets and liabilities. This amount reflects cumulative appreciation/(depreciation) offutures contracts as reported in the portfolio of investments.

^ There were no transfers between Level 1 and Level 2 during the reporting period.

The Portfolio recognizes all transfers between levels of the fair value hierarchyassuming the financial instruments were transferred at the beginning of thereporting period.

The following is a reconciliation of investments in which significantunobservable inputs (Level 3) were used in determining fair value.

Asset-BackedSecurities

CommercialMortgage-

BackedSecurities

CollateralizedMortgage

Obligations

Balance as of 10/31/12 ............. $ 4,604,472 $ 4,520,594 $ 4,103,727Accrued discounts/(premiums) ...... 95 3,304 90Realized gain (loss) ..................... 5,220 121,207 (651,625)Change in unrealized appreciation/

depreciation ........................... (10,746) 430,015 959,401Purchases ................................ – 0 – 2,078,231 – 0 –Sales ....................................... (1,186,532) (2,118,076) (246,607)Transfers in to Level 3 ................. – 0 – – 0 – – 0 –Transfers out of Level 3................ – 0 – – 0 – – 0 –Balance as of 4/30/13 ............... $ 3,412,509 $ 5,035,275 $ 4,164,986

Net change in unrealizedappreciation/depreciation fromInvestments held as of4/30/13* ............................... $ (10,746) $ 430,015 $ 424,042

Cross CurrencySwap Contracts Total

Balance as of 10/31/12 ............. $ 42,874 $ 13,271,667Accrued discounts/(premiums) ...... – 0 – 3,489Realized gain (loss) ..................... – 0 – (525,198)Change in unrealized appreciation/

depreciation ........................... (28,682) 1,349,988Purchases ................................ – 0 – 2,078,231Sales ....................................... – 0 – (3,551,215)Transfers in to Level 3 ................. – 0 – – 0 –Transfers out of Level 3................ – 0 – – 0 –Balance as of 4/30/13 ............... $ 14,192 $ 12,626,962

Net change in unrealizedappreciation/depreciation fromInvestments held as of4/30/13* ............................... $ (28,682) $ 814,629

* The unrealized appreciation/depreciation is included in net change in unrealized apprecia-tion/depreciation of investments in the accompanying statement of operations.


Not

esto

Fina

ncia

lSta

tem

ents

The following presents information about significant unobservable inputs relatedto the Portfolio with material categories of Level 3 investments at April 30, 2013:

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at4/30/13

ValuationTechnique

UnobservableInput

Range/WeightedAverage

Asset-BackedSecurities .......... $ 3,412,509

Third PartyVendor Evaluated Quotes $96.90-$102.30/

$100.18Commercial

Mortgage-BackedSecurities .......... $ 5,035,275

Third PartyVendor Evaluated Quotes $1.01-$116.06/

$105.99Collateralized

MortgageObligations ........ $ 4,164,986

Third PartyVendor

Evaluated Quotes$75.29-$98.44/

$85.27Cross Currency

SwapContracts .......... $ 14,192

BloombergVendor Model

BloombergCurrency Swap

Curves N/A

The Adviser has established a Valuation Committee (the “Committee”) which isresponsible for overseeing the pricing and valuation of all securities held in thePortfolio. The Committee operates under pricing and valuation policies andprocedures established by the Adviser and approved by the Board, including pric-ing policies which set forth the mechanisms and processes to be employed on adaily basis to implement these policies and procedures. In particular, the pricingpolicies describe how to determine market quotations for securities and otherinstruments. The Committee’s responsibilities include: 1) fair value and liquiditydeterminations (and oversight of any third parties to whom any responsibility forfair value and liquidity determinations is delegated), and 2) regular monitoring ofthe Adviser’s pricing and valuation policies and procedures and modification orenhancement of these policies and procedures (or recommendation of the mod-ification of these policies and procedures) as the Committee believes appropriate.

The Committee is also responsible for monitoring the implementation of thepricing policies by the Adviser’s Pricing Group (the “Pricing Group”) and athird party which performs certain pricing functions in accordance with the pric-ing policies. The Pricing Group is responsible for the oversight of the third partyon a day-to-day basis. The Committee and the Pricing Group perform a series ofactivities to provide reasonable assurance of the accuracy of prices including: 1)periodic vendor due diligence meetings, review of methodologies, newdevelopments and process at vendors, 2) daily compare of security valuationversus prior day for all securities that exceeded established thresholds, and 3)daily review of unpriced, stale, and variance reports with exceptions reviewed bysenior management and the Committee.


Notes

toFinancialStatem

ents

In addition, several processes outside of the pricing process are used to monitorvaluation issues including: 1) performance and performance attribution reportsare monitored for anomalous impacts based upon benchmark performance, and2) portfolio managers review all portfolios for performance and analytics (whichare generated using the Adviser’s prices).

3. Currency TranslationAssets and liabilities denominated in foreign currencies and commitments underforward currency exchange contracts are translated into U.S. dollars at the meanof the quoted bid and ask prices of such currencies against the U.S. dollar. Pur-chases and sales of portfolio securities are translated into U.S. dollars at the ratesof exchange prevailing when such securities were acquired or sold. Income andexpenses are translated into U.S. dollars at rates of exchange prevailing whenaccrued.

Net realized gain or loss on foreign currency transactions represents foreignexchange gains and losses from sales and maturities of foreign fixed incomeinvestments, foreign currency exchange contracts, holding of foreign currencies,currency gains or losses realized between the trade and settlement dates on foreigninvestment transactions, and the difference between the amounts of dividends,interest and foreign withholding taxes recorded on the Portfolio’s books and theU.S. dollar equivalent amounts actually received or paid. Net unrealized currencygains and losses from valuing foreign currency denominated assets and liabilities atperiod end exchange rates are reflected as a component of net unrealized apprecia-tion or depreciation of foreign currency denominated assets and liabilities.

4. TaxesIt is the Portfolio’s policy to meet the requirements of the Internal Revenue Codeapplicable to regulated investment companies and to distribute all of its investmentcompany taxable income and net realized gains, if any, to shareholders. Therefore,no provisions for federal income or excise taxes are required. The Portfolio may besubject to taxes imposed by countries in which it invests. Such taxes are generallybased on income and/or capital gains earned or repatriated. Taxes are accrued andapplied to net investment income, net realized gains and net unrealized apprecia-tion/depreciation as such income and/or gains are earned.

In accordance with U.S. GAAP requirements regarding accounting foruncertainties in income taxes, management has analyzed the Portfolio’s tax posi-tions taken or expected to be taken on federal and state income tax returns for allopen tax years (the current and the prior three tax years) and has concluded thatno provision for income tax is required in the Portfolio’s financial statements.

5. Investment Income and Investment TransactionsDividend income is recorded on the ex-dividend date or as soon as the Portfolio isinformed of the dividend. Interest income is accrued daily. Investment trans-actions are accounted for on the date the securities are purchased or sold. Invest-ment gains or losses are determined on the identified cost basis. The Portfolioamortizes premiums and accretes discounts as adjustments to interest income.


Not

esto

Fina

ncia

lSta

tem

ents

6. Class AllocationsAll income earned and expenses incurred by the Portfolio are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interestin the Portfolio represented by the net assets of such class, except for classspecific expenses which are allocated to the respective class. Realized and unreal-ized gains and losses are allocated among the various share classes based onrespective net assets.

7. Dividends and DistributionsDividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determinedin accordance with federal tax regulations and may differ from those determinedin accordance with U.S. GAAP. To the extent these differences are permanent,such amounts are reclassified within the capital accounts based on their federaltax basis treatment; temporary differences do not require such reclassification.

NOTE BAdvisory Fee and Other Transactions with AffiliatesUnder the terms of the investment advisory agreement, the Portfolio pays theAdviser an advisory fee at an annual rate of .45% of the first $2.5 billion, .40% ofthe next $2.5 billion and .35% in excess of $5 billion, of the Portfolio’s averagedaily net assets. Effective February 1, 2013, the Adviser has agreed to waive itsfees and bear certain expenses to the extent necessary to limit total operatingexpenses on an annual basis (the “Expense Caps”) to .90%, 1.60%, 1.60%, .60%,1.10%, .85% and .60% of the daily average net assets for the Class A, Class B,Class C, Advisor Class, Class R, Class K and Class I shares, respectively. Prior toFebruary 1, 2013, the Expense Caps were 85%, 1.55%, 1.55%, .55%, 1.05%,.80% and .55% of the daily average net assets for the Class A, Class B, Class C,Advisor Class, Class R, Class K and Class I shares, respectively. This waiverextends through January 31, 2014 and then may be extended by the Adviser foradditional one year terms. For the six months ended April 30, 2013, suchreimbursement waivers amounted to $367,280.

Pursuant to the investment advisory agreement, the Portfolio may reimburse theAdviser for certain legal and accounting services provided to the Portfolio by theAdviser. For the six months ended April 30, 2013, the reimbursement for suchservices amounted to $23,617.

The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), awholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement forproviding personnel and facilities to perform transfer agency services for thePortfolio. ABIS may make payments to intermediaries that provide omnibusaccount services, sub-accounting services and/or networking services. Suchcompensation retained by ABIS amounted to $211,809 for the six monthsended April 30, 2013.

AllianceBernstein Investments, Inc. (the “Distributor”), a wholly-owned subsidiaryof the Adviser, serves as the distributor of the Portfolio’s shares. The Distributor


Notes

toFinancialStatem

ents

has advised the Portfolio that it has retained front-end sales charges of $5,608from the sale of Class A shares and received $3,697, $818 and $4,860 in con-tingent deferred sales charges imposed upon redemptions by shareholders ofClass A, Class B and Class C shares, respectively, for the six months endedApril 30, 2013.

The Portfolio may invest in the AllianceBernstein Fixed-Income Shares, Inc. –Government STIF Portfolio (“Government STIF Portfolio”), an open-endmanagement investment company managed by the Adviser. The GovernmentSTIF Portfolio is offered as a cash management option to mutual funds andother institutional accounts of the Adviser, and is not available for direct pur-chase by members of the public. The Government STIF Portfolio pays noinvestment management fees but does bear its own expenses. A summary of thePortfolio’s transactions in shares of the Government STIF Portfolio for the sixmonths ended April 30, 2013 is as follows:

Market ValueOctober 31, 2012

(000)

Purchasesat Cost

(000)

SalesProceeds

(000)

Market ValueApril 30, 2013

(000)

DividendIncome

(000)

$ 28,304 $ 152,217 $ 146,340 $ 34,181 $ 22

Brokerage commissions paid on investment transactions for the six monthsended April 30, 2013 amounted to $241, of which $0 and $0, respectively, waspaid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited,affiliates of the Adviser.

Prior to September 15, 2008, the Portfolio had swap counterparty exposure toLehman Brothers Holdings Inc. (“Lehman Brothers”), as a guarantor forLehman Brothers Special Financing Inc. (“LBSF”), which filed for bankruptcyon September 15, 2008. As a result, on September 15, 2008, the Portfolioterminated all outstanding swap contracts with LBSF prior to their scheduledmaturity dates in accordance with the terms of the swap agreements. Upon thetermination of the swap contracts, Lehman Brothers’ obligations to the Portfolioamounted to $743,058. The Portfolio’s claim to these obligations is subject tothe pending bankruptcy proceeding against the Lehman Brothers estate (the“Bankruptcy Claim”). In accordance with its error correction policy, the Adviserhas agreed to make the Portfolio whole in respect of the amount of the recoverythat would be paid on the Bankruptcy Claim in the event the Bankruptcy Claimis not honored by the Lehman Brothers estate, or with respect to any diminu-tion in value upon the sale of the Bankruptcy Claim, in either case resulting fromthe manner in which the Bankruptcy Claim was processed by the Adviser. OnApril 9, 2012, the portfolio management team determined to dispose of theposition held by the Portfolio that reflects the Bankruptcy Claim (thereby realiz-ing upon the corresponding undertaking of the Adviser to make payment inrespect of said Claim to make the Portfolio whole). On that date, the Bank-ruptcy Claim was being valued at $369,671 (49.75% of the Bankruptcy Claim),based upon the estimated recovery value. Accordingly, on April 13, 2012, theAdviser reimbursed the Portfolio in an amount equal to $369,671.


Not

esto

Fina

ncia

lSta

tem

ents

NOTE CDistribution Services AgreementThe Portfolio has adopted a Distribution Services Agreement (the “Agreement”)pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under theAgreement, the Portfolio pays distribution and servicing fees to the Distributor atan annual rate of up to .30% of the Portfolio’s average daily net assets attributableto Class A shares, 1% of the Portfolio’s average daily net assets attributable to bothClass B and Class C shares, .50% of the Portfolio’s average daily net assetsattributable to Class R shares and .25% of the Portfolio’s average daily net assetsattributable to Class K shares. There are no distribution and servicing fees on theAdvisor Class and Class I shares. The fees are accrued daily and paid monthly. TheAgreement provides that the Distributor will use such payments in their entiretyfor distribution assistance and promotional activities. Since the commencement ofthe Portfolio’s operations, the Distributor has incurred expenses in excess of thedistribution costs reimbursed by the Portfolio in the amounts of $0, $949,662,$114,602 and $43,304 for Class B, Class C, Class R and Class K shares,respectively. While such costs may be recovered from the Portfolio in future peri-ods so long as the Agreement is in effect, the rate of the distribution and servicingfees payable under the Agreement may not be increased without a shareholdervote. In accordance with the Agreement, there is no provision for recovery ofunreimbursed distribution costs incurred by the Distributor beyond the currentfiscal year for Class A shares. The Agreement also provides that the Adviser mayuse its own resources to finance the distribution of the Portfolio’s shares.

NOTE DInvestment TransactionsPurchases and sales of investment securities (excluding short-term investments)for the six months ended April 30, 2013 were as follows:

Purchases Sales

Investment securities (excludingU.S. government securities) ........................ $ 64,478,087 $ 43,783,201

U.S. government securities ............................ 307,797,931 349,625,323

The cost of investments for federal income tax purposes was substantially thesame as the cost for financial reporting purposes. Accordingly, gross unrealizedappreciation and unrealized depreciation (excluding futures, foreign currencyand swap transactions) are as follows:

Gross unrealized appreciation ................................................ $ 31,821,474Gross unrealized depreciation ................................................ (920,892)Net unrealized appreciation ................................................... $ 30,900,582

1. Derivative Financial InstrumentsThe Portfolio may use derivatives in an effort to earn income and enhancereturns, to replace more traditional direct investments, to obtain exposure tootherwise inaccessible markets (collectively, “investment purposes”), or to hedgeor adjust the risk profile of its portfolio.


Notes

toFinancialStatem

ents

The principal types of derivatives utilized by the Portfolio, as well as the methodsin which they may be used are:

• Futures ContractsThe Portfolio may buy or sell futures contracts for investment purposes or forthe purpose of hedging its portfolio against adverse effects of potentialmovements in the market. The Portfolio bears the market risk that arises fromchanges in the value of these instruments and the imperfect correlationbetween movements in the price of the futures contracts and movements inthe price of the assets, reference rates or indices which they are designed totrack. Among other things, the Portfolio may purchase or sell futures contractsfor foreign currencies or options thereon for non-hedging purposes as a meansof making direct investment in foreign currencies, as described below under“Currency Transactions”.

At the time the Portfolio enters into a futures contract, the Portfolio depositsand maintains as collateral an initial margin with the broker, as required by theexchange on which the transaction is effected. Pursuant to the contract, thePortfolio agrees to receive from or pay to the broker an amount of cash equalto the daily fluctuation in the value of the contract. Such receipts or paymentsare known as variation margin and are recorded by the Portfolio as unrealizedgains or losses. Risks may arise from the potential inability of a counterparty tomeet the terms of the contract. The credit/counterparty risk for exchange-traded futures contracts is generally less than privately negotiated futurescontracts, since the clearinghouse, which is the issuer or counterparty to eachexchange-traded future, provides a guarantee of performance. This guaranteeis supported by a daily payment system (i.e., margin requirements). When thecontract is closed, the Portfolio records a realized gain or loss equal to thedifference between the value of the contract at the time it was opened and thetime it was closed.

Use of long futures contracts subjects the Portfolio to risk of loss in excess ofthe amounts shown on the statement of assets and liabilities, up to thenotional value of the futures contracts. Use of short futures contracts subjectsthe Portfolio to unlimited risk of loss. Under some circumstances, futuresexchanges may establish daily limits on the amount that the price of a futurescontract can vary from the previous day’s settlement price, which couldeffectively prevent liquidation of unfavorable positions.

During the six months ended April 30, 2013, the Portfolio held futurescontracts for hedging purposes.

• Forward Currency Exchange ContractsThe Portfolio may enter into forward currency exchange contracts in order tohedge its exposure to changes in foreign currency exchange rates on its foreignportfolio holdings, to hedge certain firm purchase and sale commitmentsdenominated in foreign currencies and for non-hedging purposes as a means ofmaking direct investments in foreign currencies, as described below under“Currency Transactions”.


Not

esto

Fina

ncia

lSta

tem

ents

A forward currency exchange contract is a commitment to purchase or sella foreign currency at a future date at a negotiated forward rate. The gain orloss arising from the difference between the original contract and theclosing of such contract would be included in net realized gain or loss onforeign currency transactions. Fluctuations in the value of open forwardcurrency exchange contracts are recorded for financial reporting purposesas unrealized appreciation and/or depreciation by the Portfolio. Risks mayarise from the potential inability of a counterparty to meet the terms of acontract and from unanticipated movements in the value of a foreigncurrency relative to the U.S. dollar.

During the six months ended April 30, 2013, the Portfolio held forwardcurrency exchange contracts for hedging and non-hedging purposes.

• Swap AgreementsThe Portfolio may enter into swaps to hedge its exposure to interest rates,credit risk, or currencies. The Portfolio may also enter into swaps for non-hedging purposes as a means of gaining market exposures, including bymaking direct investments in foreign currencies, as described below under“Currency Transactions”. A swap is an agreement that obligates twoparties to exchange a series of cash flows at specified intervals based uponor calculated by reference to changes in specified prices or rates for aspecified amount of an underlying asset. The payment flows are usuallynetted against each other, with the difference being paid by one party tothe other. In addition, collateral may be pledged or received by thePortfolio in accordance with the terms of the respective swap agreementsto provide value and recourse to the Portfolio or its counterparties in theevent of default, bankruptcy or insolvency by one of the parties to the swapagreement.

Risks may arise as a result of the failure of the counterparty to the swapcontract to comply with the terms of the swap contract. The loss incurredby the failure of a counterparty is generally limited to the net interimpayment to be received by the Portfolio, and/or the termination value atthe end of the contract. Therefore, the Portfolio considers thecreditworthiness of each counterparty to a swap contract in evaluatingpotential counterparty risk. This risk is mitigated by having a nettingarrangement between the Portfolio and the counterparty and by the postingof collateral by the counterparty to the Portfolio to cover the Portfolio’sexposure to the counterparty. Additionally, risks may arise fromunanticipated movements in interest rates or in the value of the underlyingsecurities. The Portfolio accrues for the interim payments on swap contractson a daily basis, with the net amount recorded within unrealizedappreciation/depreciation of swap contracts on the statement of assets andliabilities, where applicable. Once the interim payments are settled in cash,the net amount is recorded as realized gain/(loss) on swaps on the


Notes

toFinancialStatem

ents

statement of operations, in addition to any realized gain/(loss) recordedupon the termination of swap contracts. Upfront premiums paid or receivedare recognized as cost or proceeds on the statement of assets and liabilitiesand are amortized on a straight line basis over the life of the contract.Amortized upfront premiums are included in net realized gain/(loss) fromswaps on the statement of operations. Fluctuations in the value of swapcontracts are recorded as a component of net change in unrealizedappreciation/depreciation of swap contracts on the statement of operations.

Interest Rate Swaps:The Portfolio is subject to interest rate risk exposure in the normal courseof pursuing its investment objectives. Because the Portfolio holds fixed ratebonds, the value of these bonds may decrease if interest rates rise. To helphedge against this risk and to maintain its ability to generate income atprevailing market rates, the Portfolio may enter into interest rate swapcontracts. Interest rate swaps are agreements between two parties toexchange cash flows based on a notional amount. The Portfolio may electto pay a fixed rate and receive a floating rate, or, receive a fixed rate andpay a floating rate on a notional amount.

In addition, the Portfolio may also enter into interest rate swaptransactions to preserve a return or spread on a particular investment orportion of its portfolio, or protecting against an increase in the price ofsecurities the Portfolio anticipates purchasing at a later date. Interest rateswaps involve the exchange by a Portfolio with another party of theirrespective commitments to pay or receive interest (e.g., an exchange offloating rate payments for fixed rate payments) computed based on acontractually-based principal (or “notional”) amount. Interest rate swapsare entered into on a net basis (i.e., the two payment streams are nettedout, with the Portfolio receiving or paying, as the case may be, only the netamount of the two payments).

During the six months ended April 30, 2013, the Portfolio held interestrate swaps for hedging purposes.

Currency Swaps:The Portfolio may invest in currency swaps for hedging purposes toprotect against adverse changes in exchange rates between the U.S. Dollarand other currencies or for non-hedging purposes as a means of makingdirect investments in foreign currencies, as described below under“Currency Transactions”. Currency swaps involve the individuallynegotiated exchange by a Portfolio with another party of a series ofpayments in specified currencies. Actual principal amounts of currenciesmay be exchanged by the counterparties at the initiation, and again uponthe termination, of the transaction. Therefore, the entire principal value ofa currency swap is subject to the risk that the swap counterparty willdefault on its contractual delivery obligations.


Not

esto

Fina

ncia

lSta

tem

ents

During the six months ended April 30, 2013, the Portfolio held currencyswaps for hedging and non-hedging purposes.

Credit Default Swaps:The Portfolio may enter into credit default swaps, including to manage itsexposure to the market or certain sectors of the market, to reduce its riskexposure to defaults by corporate and sovereign issuers held by thePortfolio, or to create exposure to corporate or sovereign issuers to whichit is not otherwise exposed. The Portfolio may purchase credit protection(“Buy Contract”) or provide credit protection (“Sale Contract”) on thereferenced obligation of the credit default swap. During the term of theswap agreement, the Portfolio receives/(pays) fixed payments from/(to)the respective counterparty, calculated at the agreed upon rate applied tothe notional amount. If the Portfolio is a buyer/(seller) of protection and acredit event occurs, as defined under the terms of the swap agreement, thePortfolio will either (i) receive from the seller/(pay to the buyer) ofprotection an amount equal to the notional amount of the swap contract(the “Maximum Payout Amount”) and deliver/(take delivery of) thereferenced obligation or (ii) receive/(pay) a net settlement amount in theform of cash or securities equal to the notional amount of the swap less therecovery value of the referenced obligation.

Credit default swaps may involve greater risks than if a Portfolio hadinvested in the referenced obligation directly. Credit default swaps aresubject to general market risk, liquidity risk, counterparty risk and creditrisk. If the Portfolio is a buyer of protection and no credit event occurs, itwill lose the payments it made to its counterparty. If the Portfolio is a sellerof protection and a credit event occurs, the value of the referencedobligation received by the Portfolio coupled with the periodic paymentspreviously received, may be less than the Maximum Payout Amount it paysto the buyer, resulting in a net loss to the Portfolio.

During the six months ended April 30, 2013, the Portfolio held creditdefault swaps for non-hedging purposes.

Implied credit spreads utilized in determining the market value of creditdefault swaps on issuers as of period end are disclosed in the portfolio ofinvestments. The implied spreads serve as an indicator of the current statusof the payment/performance risk and typically reflect the likelihood ofdefault by the issuer of the referenced obligation. The implied creditspread of a particular reference obligation also reflects the cost of buying/selling protection and may reflect upfront payments required to be madeto enter into the agreement. Widening credit spreads typically represent adeterioration of the referenced obligation’s credit soundness and greaterlikelihood of default or other credit event occurring as defined under theterms of the agreement. A credit spread identified as “Defaulted” indicatesa credit event has occurred for the referenced obligation.


Notes

toFinancialStatem

ents

At April 30, 2013, the Portfolio had a Sale Contract outstanding with aMaximum Payout Amount of $1,360,000, with net unrealizedappreciation of $51,259, and a term of less than five years, as reflected inthe portfolio of investments.In certain circumstances Maximum Payout Amounts may be partially offset byrecovery values of the respective referenced obligations, upfront premiumreceived upon entering into the agreement, or net amounts received fromsettlement of buy protection credit default swap agreements entered into bythe Portfolio for the same reference obligation with the same counterparty.Documentation governing the Portfolio’s OTC derivatives may containprovisions for early termination of such transaction in the event the netassets of the Portfolio decline below specific levels set forth in thedocumentation (“net asset contingent features”). If these levels aretriggered, the Portfolio’s counterparty has the right to terminate suchtransaction and require the Portfolio to pay or receive a settlement amountin connection with the terminated transaction. As of April 30, 2013, thePortfolio had OTC derivatives with contingent features in net liabilitypositions in the amount of $1,110,903. If a trigger event had occurred atApril 30, 2013, for those derivatives in a net liability position, an amountof $1,110,903 would be required to be posted by the Portfolio.

At April 30, 2013, the Portfolio had entered into the following derivatives:

Asset Derivatives Liability Derivatives

Derivative Type

Statement ofAssets andLiabilitiesLocation Fair Value

Statement ofAssets andLiabilitiesLocation Fair Value

Foreign exchangecontracts .................... Unrealized

depreciation offorward currencyexchange contracts

$ 764,533

Foreign exchangecontracts .................... Unrealized

appreciation oncross currencyswap contracts

$ 14,192

Interest rate contracts........ Receivable/Payablefor variation marginon futures contracts

2,222*

Interest rate contracts........ Unrealizeddepreciation oninterest rate swapcontracts

346,370

Credit contracts ............... Unrealizedappreciationon creditdefault swapcontracts

51,259

Total ............................. $ 65,451 $ 1,113,125

* Only variation margin receivable/payable at period end is reported within the statementof assets and liabilities. This amount reflects cumulative appreciation/(depreciation) offutures contracts as reported in the portfolio of investments.


Not

esto

Fina

ncia

lSta

tem

ents

The effect of derivative instruments on the statement of operations for the sixmonths ended April 30, 2013:

Derivative Type

Location of Gainor (Loss) onDerivatives

Realized Gainor (Loss) onDerivatives

Change inUnrealized

Appreciation or(Depreciation)

Foreign exchange contracts .... Net realized gain (loss)on foreign currencytransactions; Netchange in unrealizedappreciation/depreciation of foreigncurrency denominatedassets and liabilities

$ 298,187 $ (1,272,025)

Foreign exchange contracts .... Net realized gain (loss)on swap contracts; Netchange in unrealizedappreciation/depreciation of swapcontracts

3,661 (28,682)

Interest rate contracts............ Net realized gain (loss)on futures contracts;Net change inunrealized appreciation/depreciation of futurescontracts

(27,494) (3,593)

Interest rate contracts............ Net realized gain (loss)on swap contracts; Netchange in unrealizedappreciation/depreciation of swapcontracts

(1,201) 9,030

Credit contracts ................... Net realized gain (loss)on swap contracts; Netchange in unrealizedappreciation/depreciation of swapcontracts

(21,798) 40,310

Total ................................. $ 251,355 $ (1,254,960)

The following table represents the volume of the Portfolio’s derivative trans-actions during the six months ended April 30, 2013:

Forward Currency Exchange Contracts:Average principal amount of buy contracts .............................. $ 5,693,704Average principal amount of sale contracts ............................. $ 38,719,919

Cross Currency Swap Contracts:Average notional amount..................................................... $ 1,637,610

Futures Contracts:Average original value of buy contracts................................... $ 3,737,669(a)

Average original value of sale contracts .................................. $ 3,400,910


Notes

toFinancialStatem

ents

Interest Rate Swap Contracts:Average notional amount..................................................... $ 14,770,220

Credit Default Swap Contracts:Average notional amount of sale contracts .............................. $ 1,360,000

(a) Positions were open for one month during the period.

2. Currency TransactionsThe Portfolio may invest in non-U.S. Dollar securities on a currency hedged orunhedged basis. The Portfolio may seek investment opportunities by taking longor short positions in currencies through the use of currency-related derivatives,including forward currency exchange contracts, futures and options on futures,swaps, and other options. The Portfolio may enter into transactions for invest-ment opportunities when it anticipates that a foreign currency will appreciate ordepreciate in value but securities denominated in that currency are not held bythe Portfolio and do not present attractive investment opportunities. Such trans-actions may also be used when the Adviser believes that it may be more efficientthan a direct investment in a foreign currency-denominated security. The Portfo-lio may also conduct currency exchange contracts on a spot basis (i.e., for cash atthe spot rate prevailing in the currency exchange market for buying or sellingcurrencies).

3. Dollar RollsThe Portfolio may enter into dollar rolls. Dollar rolls involve sales by the Portfo-lio of securities for delivery in the current month and the Portfolio’s simulta-neously contracting to repurchase substantially similar (same type and coupon)securities on a specified future date. During the roll period, the Portfolio for-goes principal and interest paid on the securities. The Portfolio is compensatedby the difference between the current sales price and the lower forward price forthe future purchase (often referred to as the “drop”) as well as by the interestearned on the cash proceeds of the initial sale. Dollar rolls involve the risk thatthe market value of the securities the Portfolio is obligated to repurchase underthe agreement may decline below the repurchase price. Dollar rolls are spec-ulative techniques and may be considered to be borrowings by the Portfolio.For the six months ended April 30, 2013, the Portfolio earned drop income of$360,147 which is included in interest income in the accompanying statementof operations.

4. Reverse Repurchase AgreementsUnder a reverse repurchase agreement, the Portfolio sells securities and agrees torepurchase them at a mutually agreed upon date and price. At the time the Port-folio enters into a reverse repurchase agreement, it will establish a segregatedaccount with the custodian containing liquid assets having a value at least equalto the repurchase price. For the six months ended April 30, 2013, the Portfoliohad no transactions in reverse repurchase agreements.


Not

esto

Fina

ncia

lSta

tem

ents

NOTE ECapital StockEach class consists of 3,000,000,000 authorized shares. Transactions in capitalshares for each class were as follows:

Shares AmountSix Months Ended

April 30, 2013(unaudited)


2012

Six Months EndedApril 30, 2013

(unaudited)


2012

Class AShares sold 1,001,960 3,180,705 $ 11,095,207 $ 35,397,916Shares issued in

reinvestment ofdividends 332,759 704,877 3,768,887 7,848,590

Shares convertedfrom Class B 41,776 235,920 726,865 2,636,047

Shares redeemed (3,552,183) (6,168,866) (40,257,957) (68,770,065)Net decrease (2,175,688) (2,047,364) $ (24,666,998) $ (22,887,512)

Class BShares sold 43,205 191,893 $ 489,914 $ 2,141,659Shares issued in

reinvestment ofdividends 7,198 18,144 81,588 202,217

Shares convertedto Class A (45,479) (235,838) (726,865) (2,636,047)

Shares redeemed (130,085) (182,557) (1,261,994) (2,036,753)Net decrease (125,161) (208,358) $ (1,417,357) $ (2,328,924)

Class CShares sold 228,786 809,250 $ 2,587,387 $ 8,991,383Shares issued in

reinvestment ofdividends 43,505 93,922 491,873 1,043,401

Shares redeemed (705,264) (1,162,243) (7,970,561) (12,939,160)Net decrease (432,973) (259,071) $ (4,891,301) $ (2,904,376)

Advisor ClassShares sold 737,408 1,672,705 $ 8,372,131 $ 18,639,976Shares issued in

reinvestment ofdividends 126,679 247,338 1,435,757 2,756,938

Shares redeemed (930,113) (1,630,630) (10,554,503) (18,267,023)Net increase

(decrease) (66,026) 289,413 $ (746,615) $ 3,129,891

Class RShares sold 143,101 191,972 $ 1,628,834 $ 2,139,063Shares issued in


Shares redeemed (68,523) (163,801) (774,376) (1,833,909)Net increase 77,547 31,696 $ 888,071 $ 344,509


Notes

toFinancialStatem

ents

Shares AmountSix Months Ended

April 30, 2013(unaudited)


2012

Six Months EndedApril 30, 2013

(unaudited)


2012

Class KShares sold 25,028 98,325 $ 284,402 $ 1,096,546Shares issued in


Shares redeemed (43,677) (31,478) (495,103) (350,698)Net increase

(decrease) (13,582) 75,416 $ (153,270) $ 841,451

Class IShares sold 1,146 6,737 $ 13,067 $ 75,167Shares issued in

reinvestment ofdividends 152 2,153 1,727 24,026

Shares redeemed (71,691) (2,255) (817,994) (25,067)Net increase

(decrease) (70,393) 6,635 $ (803,200) $ 74,126

For the year ended October 31, 2012, the Portfolio received $23,591 relatedto a third-party’s settlement of regulatory proceedings involving allegations ofimproper trading. This amount is presented in the Portfolio’s statement ofchanges in net assets. Neither the Portfolio nor its affiliates were involved in theproceedings or the calculation of the payment.

NOTE FRisks Involved in Investing in the PortfolioInterest Rate Risk and Credit Risk—Interest rate risk is the risk that changes ininterest rates will affect the value of the Portfolio’s investments in fixed-incomedebt securities such as bonds or notes. Increases in interest rates may cause thevalue of the Portfolio’s investments to decline. Credit risk is the risk that theissuer or guarantor of a debt security, or the counterparty to a derivativecontract, will be unable or unwilling to make timely principal and/or interestpayments, or to otherwise honor its obligations. The degree of risk for aparticular security may be reflected in its credit risk rating. Credit risk is greaterfor medium quality and lower-rated securities. Lower-rated debt securities andsimilar unrated securities (commonly known as “junk bonds”) have speculativeelements or are predominantly speculative risks.

Foreign Securities Risk—Investing in securities of foreign companies or foreigngovernments involves special risks which include changes in foreign currencyexchange rates and the possibility of future political and economicdevelopments which could adversely affect the value of such securities.Moreover, securities of many foreign companies or foreign governments andtheir markets may be less liquid and their prices more volatile than those ofcomparable U.S. companies or of the U.S. government.


Not

esto

Fina

ncia

lSta

tem

ents

Emerging Market Risk—Investments in emerging market countries may havemore risk because the markets are less developed and less liquid, and becausethese investments may be subject to increased economic, political, regulatoryand other uncertainties.

Inflation Risk—This is the risk that the value of assets or income frominvestments will be less in the future as inflation decreases the value of money.As inflation increases, the real value of the Portfolio’s assets can decline as canthe real value of the Portfolio’s distributions.

Currency Risk—This is the risk that changes in foreign currency exchange ratesmay negatively affect the value of the Portfolio’s investments or reduce thereturns of the Portfolio. For example, the value of the Portfolio’s investments inforeign currency-denominated securities or currencies may decrease if theU.S. Dollar is strong (i.e., gaining value relative to other currencies) and othercurrencies are weak (i.e., losing value relative to the U.S. Dollar). Currencymarkets are generally not as regulated as securities markets. Independent of thePortfolio’s investments denominated in foreign currencies, the Portfolio’spositions in various foreign currencies may cause the Portfolio to experienceinvestment losses due to the changes in exchange rates and interest rates.

Derivatives Risk—The Portfolio may enter into derivative transactions such asforwards, options, futures and swaps. Derivatives may be illiquid, difficult toprice, and leveraged so that small changes may produce disproportionate lossesfor the Portfolio, and subject to counterparty risk to a greater degree than moretraditional investments. Derivatives may result in significant losses, includinglosses that are far greater than the value of the derivatives reflected in thestatement of assets and liabilities.

Leverage Risk—When the Portfolio borrows money or otherwise leverages itsportfolio, it may be volatile because leverage tends to exaggerate the effect ofany increase or decrease in the value of the Portfolio’s investments. ThePortfolio may create leverage through the use of reverse repurchasearrangements, forward currency exchange contracts, forward commitments,dollar rolls or futures contracts or by borrowing money. The use of derivativeinstruments by the Portfolio, such as forwards, futures, options and swaps, mayalso result in a form of leverage. Leverage may result in higher returns to thePortfolio than if the Portfolio were not leveraged, but may also adversely affectreturns, particularly if the market is declining.

Indemnification Risk—In the ordinary course of business, the Portfolio entersinto contracts that contain a variety of indemnifications. The Portfolio’s max-imum exposure under these arrangements is unknown. However, the Portfoliohas not had prior claims or losses pursuant to these indemnification provisionsand expects the risk of loss thereunder to be remote. Therefore, the Portfolio hasnot accrued any liability in connection with these indemnification provisions.


Notes

toFinancialStatem

ents

NOTE GJoint Credit FacilityA number of open-end mutual funds managed by the Adviser, including thePortfolio, participate in a $140 million revolving credit facility (the “Facility”)intended to provide short-term financing, if necessary, subject to certainrestrictions in connection with abnormal redemption activity. Commitment feesrelated to the Facility are paid by the participating funds and are included inmiscellaneous expenses in the statement of operations. The Portfolio did notutilize the Facility during the six months ended April 30, 2013.

NOTE HDistributions to ShareholdersThe tax character of distributions to be paid for the year ending October 31,2013 will be determined at the end of the current fiscal year. The tax characterof distributions paid during the fiscal years ended October 31, 2012 andOctober 31, 2011 were as follows:

2012 2011

Distributions paid from:Ordinary income ...................................... $ 15,489,074 $ 18,993,473

Total taxable distributions paid ....................... $ 15,489,074 $ 18,993,473

As of October 31, 2012, the components of accumulated earnings/(deficit) on atax basis were as follows:

Undistributed ordinary income ................................................ $ 1,455,265Accumulated capital and other losses....................................... (44,665,589)(a)

Unrealized appreciation/(depreciation)....................................... 33,339,150(b)

Total accumulated earnings/(deficit) ......................................... $ (9,871,174)(c)

(a) On October 31, 2012, the Portfolio had a net capital loss carryforward of $44,586,760.During the fiscal year, the Portfolio utilized $3,336,287 of capital loss carryforwards tooffset current year net realized gains. The Portfolio also had $14,257,475 of capital losscarryforwards expire during the fiscal year. As of October 31, 2012, the cumulativedeferred loss on straddles was $78,829.

(b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation)are attributable primarily to the tax deferral of losses on wash sales, the difference betweenbook and tax amortization methods for premium, the tax treatment of swaps, and therealization for tax purposes of gains/losses on certain derivative instruments.

(c) The difference between book-basis and tax-basis components of accumulated earnings/(deficit) is attributable primarily to dividends payable.

For tax purposes, net capital losses may be carried over to offset future capitalgains, if any. Under the Regulated Investment Company Modernization Act of2010, funds are permitted to carry forward capital losses incurred in taxableyears beginning after December 22, 2010 for an indefinite period. These post-enactment capital losses must be utilized prior to the pre-enactment capitallosses, which are subject to expiration. Post-enactment capital losscarryforwards will retain their character as either short-term or long-term capitallosses rather than being considered short-term as under previous regulation.


Not

esto

Fina

ncia

lSta

tem

ents

As of October 31, 2012, the Portfolio had a net capital loss carryforward of$44,586,760 which will expire as follows:

Short-TermAmount

Long-TermAmount Expiration

$ 12,682,229 n/a 201319,419,566 n/a 201412,484,965 n/a 2015

NOTE IRecent Accounting PronouncementsIn December 2011, the Financial Accounting Standards Board (“FASB”)issued an Accounting Standards Update (“ASU”) related to disclosures aboutoffsetting assets and liabilities in financial statements. The amendments in thisupdate require an entity to disclose both gross and net information forderivatives and other financial instruments that are either offset in the statementof assets and liabilities or subject to an enforceable master netting arrangementor similar agreement. In January 2013, the FASB issued an ASU to clarify thescope of disclosures about offsetting assets and liabilities. The ASU limits thescope of the new balance sheet offsetting disclosures to derivatives, repurchaseagreements and securities lending transactions. The ASU is effective duringinterim or annual reporting periods beginning on or after January 1, 2013. Atthis time, management is evaluating the implication of this ASU and its impacton the financial statements has not been determined.

NOTE JSubsequent EventsManagement has evaluated subsequent events for possible recognition ordisclosure in the financial statements through the date the financial statementsare issued. Management has determined that there are no material events thatwould require disclosure in the Portfolio’s financial statements through this date.


Notes

toFinancialStatem

ents

FINANCIAL HIGHLIGHTSSelected Data For A Share Of Capital Stock Outstanding Throughout Each Period

Class ASix Months

EndedApril 30,

2013(unaudited)

Year Ended October 31,2012 2011 2010 2009 2008

Net asset value, beginningof period ..................... $ 11.40 $ 11.04 $ 10.98 $ 10.28 $ 8.77 $ 10.24

Income From InvestmentOperations

Net investment income(a)(b) ... .12 .26 .37 .42 .44 .50Net realized and unrealized

gain (loss) on investmentand foreign currencytransactions................. .05 .42 .07 .70 1.53 (1.49)

Contributions from Adviser .. – 0 – – 0 – – 0 – – 0 – – 0 – .00(c)

Net increase (decrease) innet asset value fromoperations................... .17 .68 .44 1.12 1.97 (.99)

Less: DividendsDividends from net

investment income ........ (.16) (.32) (.38) (.42) (.46) (.48)Net asset value, end

of period ..................... $ 11.41 $ 11.40 $ 11.04 $ 10.98 $ 10.28 $ 8.77Total ReturnTotal investment return based

on net asset value(d) ....... 1.52 % 6.27 %† 4.11 % 11.17 %* 23.01 %* (10.15)%*Ratios/Supplemental DataNet assets, end of period

(000’s omitted) ............. $346,147 $370,672 $381,577 $418,023 $419,319 $360,606Ratio to average net

assets of:Expenses, net of waivers/

reimbursements(e) ...... .87 %(f) .85 % .85 % .91 %(g) .89 % .85 %Expenses, before waivers/

reimbursements(e) ...... 1.01 %(f) .99 % 1.00 % 1.11 %(g) 1.11 % 1.09 %Net investment

income(b) .................. 2.08 %(f) 2.29 % 3.42 % 3.98 %(g) 4.71 % 4.68 %Portfolio turnover rate ........ 72 % 110 % 115 % 99 % 95 % 184 %

See footnote summary on page 65.


Fina

ncia

lHig

hlig

hts

Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period

Class BSix Months

EndedApril 30,

2013(unaudited)


Net asset value, beginningof period...................... $ 11.41 $ 11.05 $ 10.98 $ 10.28 $ 8.77 $ 10.23



gain (loss) on investmentand foreign currencytransactions ................. .04 .43 .08 .70 1.52 (1.47)

Contributions from Adviser ... – 0 – – 0 – – 0 – – 0 – – 0 – .00(c)

Net increase (decrease) innet asset value fromoperations ................... .12 .61 .38 1.05 1.90 (1.05)


investment income ......... (.12) (.25) (.31) (.35) (.39) (.41)Net asset value, end

of period...................... $ 11.41 $ 11.41 $ 11.05 $ 10.98 $ 10.28 $ 8.77

Total ReturnTotal investment return based

on net asset value(d) ........ 1.08 % 5.56 %† 3.50 % 10.40 %* 22.17 %* (10.69)%*Ratios/Supplemental DataNet assets, end of period

(000’s omitted) .............. $7,668 $9,089 $11,104 $16,048 $21,830 $31,207Ratio to average net

asset of:Expenses, net of waivers/

reimbursements(e) ....... 1.57 %(f) 1.55 % 1.55 % 1.62 %(g) 1.58 % 1.55 %Expenses, before waivers/

reimbursements(e) ....... 1.73 %(f) 1.74 % 1.75 % 1.88 %(g) 1.87 % 1.83 %Net investment income(b)... 1.38 %(f) 1.59 % 2.73 % 3.35 %(g) 4.07 % 3.95 %

Portfolio turnover rate ........... 72 % 110 % 115 % 99 % 95 % 184 %



FinancialHighlights


Class CSix Months

EndedApril 30,

2013(unaudited)




Net investment income(a)(b) .... .08 .18 .29 .35 .38 .43Net realized and unrealized


Contributions from Adviser ..... – 0 – – 0 – – 0 – – 0 – – 0 – .00(c)




of period...................... $ 11.39 $ 11.38 $ 11.02 $ 10.96 $ 10.26 $ 8.75







Portfolio turnover rate ........... 72 % 110 % 115 % 99 % 95 % 184 %



Fina

ncia

lHig

hlig

hts


Advisor ClassSix Months

EndedApril 30,

2013(unaudited)







Net increase (decrease) innet asset value fromoperations ................... .18 .71 .47 1.17 1.98 (.95)



of period...................... $ 11.41 $ 11.41 $ 11.05 $ 10.99 $ 10.28 $ 8.78





reimbursements(e) ....... .57 %(f) .55 % .55 % .60 %(g) .60 % .55 %Expenses, before waivers/

reimbursements(e) ....... .71 %(f) .69 % .70 % .80 %(g) .80 % .80 %Net investment income(b)... 2.38 %(f) 2.59 % 3.70 % 4.19 %(g) 4.95 % 4.98 %

Portfolio turnover rate ......... 72 % 110 % 115 % 99 % 95 % 184 %



FinancialHighlights


Class RSix Months

EndedApril 30,

2013(unaudited)










of period...................... $ 11.41 $ 11.40 $ 11.04 $ 10.98 $ 10.28 $ 8.77


on net asset value(d) ......... 1.42 % 6.05 %† 3.91 % 10.94 %* 22.74 %* (10.33)%*Ratios/Supplemental DataNet assets, end of period

(000’s omitted) .............. $2,454 $1,568 $1,168 $759 $156 $73Ratio to average net







Fina

ncia

lHig

hlig

hts


Class KSix Months

EndedApril 30,

2013(unaudited)










of period...................... $ 11.42 $ 11.41 $ 11.05 $ 10.99 $ 10.29 $ 8.78






reimbursements(e) ....... .96 %(f) .99 % 1.01 % 1.09 %(g) 1.05 % 1.02 %Net investment income(b)... 2.13 %(f) 2.34 % 3.49 % 4.02 %(g) 4.76 % 4.69 %




FinancialHighlights


Class ISix Months

EndedApril 30,

2013(unaudited)










of period...................... $ 11.43 $ 11.42 $ 11.06 $ 11.00 $ 10.29 $ 8.78



(000’s omitted) .............. $11 $814 $715 $1,348 $5,095 $5,115Ratio to average net



reimbursements(e) ....... .67 %(f) .66 % .68 % .81 %(g) .72 % .64 %Net investment income(b)... 2.41 %(f) 2.59 % 3.76 % 4.60 %(g) 5.02 % 4.98 %




Fina

ncia

lHig

hlig

hts

(a) Based on average shares outstanding.

(b) Net of fees waived and expenses reimbursed by the Adviser.

(c) Amount is less than $.005.

(d) Total investment return is calculated assuming an initial investment made at the netasset value at the beginning of the period, reinvestment of all dividends and distributionsat net asset value during the period, and redemption on the last day of the period. Initialsales charges or contingent deferred sales charges are not reflected in the calculation of totalinvestment return. Total return does not reflect the deduction of taxes that a shareholderwould pay on portfolio distributions or the redemption of portfolio shares. Total investmentreturn calculated for a period of less than one year is not annualized.

(e) The expense ratios presented below exclude interest expense and term asset-backed securitiesloan facility administration fees, where applicable:

Six MonthsEnded

April 30,2013

(unaudited)Year Ended October 31,

2012 2011 2010 2009 2008Class A

Net of waivers/reimbursements ........ .87 %(f) .85 % .85 % .85 %(g) .85 % .85 %

Before waivers/reimbursements ........ 1.01 %(f) .99 % 1.00 % 1.05 %(g) 1.07 % 1.09 %

Class B

Net of waivers/reimbursements ........ 1.57 %(f) 1.55 % 1.55 % 1.55 %(g) 1.55 % 1.55 %

Before waivers/reimbursements ........ 1.73 %(f) 1.74 % 1.75 % 1.81 %(g) 1.84 % 1.83 %

Class C



Advisor Class

Net of waivers/reimbursements ...... .57 %(f) .55 % .55 % .55 %(g) .55 % .55 %

Before waivers/reimbursements ...... .71 %(f) .69 % .70 % .75 %(g) .76 % .80 %

Class R



Class K


Before waivers/reimbursements ........ .96 %(f) .99 % 1.01 % 1.03 %(g) 1.01 % 1.02 %

Class I


Before waivers/reimbursements ........ .67 %(f) .66 % .68 % .69 %(g) .68 % .64 %

(f) Annualized.


FinancialHighlights

(g) The ratio includes expenses attributable to costs of proxy solicitation.

* Includes the impact of proceeds received and credited to the Portfolio resulting from classaction settlements, which enhanced the Portfolio’s performance for the years endedOctober 31, 2010, October 31, 2009 and October 31, 2008 by 0.01%, 0.01% and 0.21%,respectively.

† Includes the Adviser’s reimbursement in respect of the Lehman Bankruptcy Claim whichcontributed to the Portfolio’s performance by 0.07% for the year-ended October 31, 2012,(see note B).



Fina

ncia

lHig

hlig

hts

BOARD OF DIRECTORS

William H. Foulk, Jr.(1), Chairman

John H. Dobkin(1)

Michael J. Downey(1)

D. James Guzy(1)

Nancy P. Jacklin(1)

Robert M. Keith, President and

Chief Executive Officer

Garry L. Moody(1)

Marshall C. Turner, Jr.(1)

Earl D. Weiner(1)

OFFICERSPhilip L. Kirstein,Senior Vice President and IndependentCompliance OfficerPaul J. DeNoon(2), Vice PresidentShawn E. Keegan(2), Vice PresidentAlison M. Martier(2), Vice PresidentDouglas J. Peebles(2), Vice President

Greg J. Wilensky(2), Vice PresidentEmilie D. Wrapp, SecretaryJoseph J. Mantineo, Treasurer andChief Financial OfficerPhyllis J. Clarke, Controller

Custodian and Accounting AgentState Street Bank and Trust CompanyOne Lincoln StreetBoston, MA 02111

Principal UnderwriterAllianceBernstein Investments, Inc.1345 Avenue of the AmericasNew York, NY 10105

Transfer AgentAllianceBernstein Investor Services, Inc.P.O. Box 786003San Antonio, TX 78278-6003Toll-Free (800) 221-5672

Independent Registered PublicAccounting FirmErnst & Young LLP5 Times SquareNew York, NY 10036

Legal CounselSeward & Kissel LLPOne Battery Park PlazaNew York, NY 10004

(1) Member of the Audit Committee, the Governance and Nominating Committee, and theIndependent Directors Committee. Mr. Foulk is the sole member of the Fair Value PricingCommittee.

(2) The day-to-day management of, and investment decisions for, the Fund’s portfolio aremade by the Adviser’s U.S. Investment Grade Core Fixed Income Team. Mr. PaulJ. DeNoon, Mr. Shawn E. Keegan, Ms. Alison M. Martier, Mr. Douglas J. Peebles andMr. Greg J. Wilensky are the investment professionals with the most significantresponsibility for the day-to-day management of the Fund’s portfolio.


Board

ofDirectors

Information Regarding the Review and Approval of the Portfolio’sInvestment Advisory ContractThe disinterested directors (the “directors”) of AllianceBernstein Bond Fund,Inc. (the “Fund”) unanimously approved the continuance of the Fund’sInvestment Advisory Contract (the “Advisory Agreement”) with the Adviser inrespect of AllianceBernstein Intermediate Bond Portfolio (the “Portfolio”) at ameeting held on November 6-8, 2012.

Prior to approval of the continuance of the Advisory Agreement in respect of thePortfolio, the directors had requested from the Adviser, and received and evaluated,extensive materials. They reviewed the proposed continuance of the AdvisoryAgreement with the Adviser and with experienced counsel who are independent ofthe Adviser, who advised on the relevant legal standards. The directors alsoreviewed an independent evaluation prepared by the Fund’s Senior Officer (who isalso the Fund’s Independent Compliance Officer) of the reasonableness of theadvisory fee, in which the Senior Officer concluded that the contractual fee for thePortfolio was reasonable. The directors also discussed the proposed continuance inprivate sessions with counsel and the Fund’s Senior Officer.

The directors considered their knowledge of the nature and quality of the serv-ices provided by the Adviser to the Portfolio gained from their experience asdirectors or trustees of most of the registered investment companies advised bythe Adviser, their overall confidence in the Adviser’s integrity and competencethey have gained from that experience, the Adviser’s initiative in identifying andraising potential issues with the directors and its responsiveness, frankness andattention to concerns raised by the directors in the past, including the Adviser’swillingness to consider and implement organizational and operational changesdesigned to improve investment results and the services provided to theAllianceBernstein Funds. The directors noted that they have four regular meet-ings each year, at each of which they receive presentations from the Adviser onthe investment results of the Portfolio and review extensive materials andinformation presented by the Adviser.

The directors also considered all other factors they believed relevant, includingthe specific matters discussed below. In their deliberations, the directors did notidentify any particular information that was all-important or controlling, anddifferent directors may have attributed different weights to the various factors.The directors determined that the selection of the Adviser to manage the Portfo-lio and the overall arrangements between the Portfolio and the Adviser, as pro-vided in the Advisory Agreement, including the advisory fee, were fair andreasonable in light of the services performed, expenses incurred and such othermatters as the directors considered relevant in the exercise of their businessjudgment. The material factors and conclusions that formed the basis for thedirectors’ determinations included the following:

Nature, Extent and Quality of Services ProvidedThe directors considered the scope and quality of services provided by theAdviser under the Advisory Agreement, including the quality of the investment


research capabilities of the Adviser and the other resources it has dedicated toperforming services for the Portfolio. They noted the professional experienceand qualifications of the Portfolio’s portfolio management team and other seniorpersonnel of the Adviser. The directors also considered that the AdvisoryAgreement provides that the Portfolio will reimburse the Adviser for the cost toit of providing certain clerical, accounting, administrative and other services tothe Portfolio by employees of the Adviser or its affiliates. Requests for thesereimbursements are made on a quarterly basis and subject to approval by thedirectors and, to the extent requested and paid, will result in a higher rate oftotal compensation from the Portfolio to the Adviser than the fee rate stated inthe Portfolio’s Advisory Agreement. The directors noted that the methodologyused to determine the reimbursement amounts had been reviewed by anindependent consultant retained by the Fund’s Senior Officer. The quality ofadministrative and other services, including the Adviser’s role in coordinating theactivities of the Portfolio’s other service providers, also were considered. Thedirectors concluded that, overall, they were satisfied with the nature, extent andquality of services provided to the Portfolio under the Advisory Agreement.

Costs of Services Provided and ProfitabilityThe directors reviewed a schedule of the revenues, expenses and related notesindicating the profitability of the Portfolio to the Adviser for calendar years 2010and 2011 that had been prepared with an expense allocation methodologyarrived at in consultation with an independent consultant retained by the Fund’sSenior Officer. The directors reviewed the assumptions and methods of alloca-tion used by the Adviser in preparing fund-specific profitability data and notedthat there are a number of potentially acceptable allocation methodologies forinformation of this type. The directors noted that the profitability informationreflected all revenues and expenses of the Adviser’s relationship with the Portfo-lio, including those relating to its subsidiaries that provide transfer agency anddistribution services to the Portfolio. The directors recognized that it is difficultto make comparisons of the profitability of the Advisory Agreement with theprofitability of advisory contracts for unaffiliated funds because comparativeinformation is not generally publicly available and is affected by numerous fac-tors. The directors focused on the profitability of the Adviser’s relationship withthe Portfolio before taxes and distribution expenses. The directors were satisfiedthat the Adviser’s level of profitability from its relationship with the Portfolio wasnot unreasonable.

Fall-Out BenefitsThe directors considered the other benefits to the Adviser and its affiliates fromtheir relationships with the Portfolio, including but not limited to, benefits relat-ing to 12b-1 fees and sales charges received by the Fund’s principal underwriter(which is a wholly owned subsidiary of the Adviser) in respect of certain classesof the Portfolio’s shares and transfer agency fees paid by the Portfolio to awholly owned subsidiary of the Adviser. The directors recognized that the


Adviser’s profitability would be lower without these benefits. The directorsunderstood that the Adviser also might derive reputational and other benefitsfrom its association with the Portfolio.

Investment ResultsIn addition to the information reviewed by the directors in connection with themeeting, the directors receive detailed performance information for the Portfolioat each regular Board meeting during the year. At the November 2012 meeting,the directors reviewed information prepared by Lipper showing the performanceof the Class A Shares of the Portfolio as compared with that of a group of similarfunds selected by Lipper (the “Performance Group”) and as compared with thatof a broader array of funds selected by Lipper (the “Performance Universe”) forvarious periods ended July 31, 2012, and information prepared by the Advisershowing performance of the Class A Shares as compared with the Barclays Capi-tal U.S. Aggregate Bond Index (the “Index”), for the 1-, 3-, 5- and 10-yearperiods ended September 30, 2012 and the period since inception (July 1999inception). The directors noted that the Portfolio was in the 5th quintile of thePerformance Group and the Performance Universe for the 1-year period, in the3rd quintile of the Performance Group and 2nd quintile of the PerformanceUniverse for the 3-year period, in the 4th quintile of the Performance Groupand 3rd quintile of the Performance Universe for the 5-year period, and in the4th quintile of the Performance Group and the Performance Universe for the10-year period. The Portfolio outperformed the Index in the 3-year period butlagged the Index in the 1-, 5- and 10-year periods and the period sinceinception. Based on their review and their discussion with the Adviser of thereasons for the Portfolio’s performance in the 1-year period, the directors con-cluded that the Portfolio’s performance was acceptable.

Advisory Fees and Other ExpensesThe directors considered the advisory fee rate paid by the Portfolio to theAdviser and information prepared by Lipper concerning advisory fee rates paidby other funds in the same Lipper category as the Portfolio at a common assetlevel. The directors recognized that it is difficult to make comparisons of advi-sory fees because there are variations in the services that are included in the feespaid by other funds.

The directors also considered the advisory fees the Adviser charges non-fundclients pursuing a similar investment style. For this purpose, they reviewed therelevant advisory fee information from the Adviser’s Form ADV and the evalua-tion from the Fund’s Senior Officer. The directors noted that the institutionalfee schedule started at a higher rate than the Portfolio’s starting fee rate, but hadbreakpoints at lower asset levels than those in the fee schedule applicable to thePortfolio. As a result, the application of the institutional fee schedule to the levelof assets of the Portfolio would result in a fee rate lower than the rate being paidby the Portfolio. The directors noted that the Adviser may, in some cases, agree


to fee rates with large institutional clients that are lower than those reviewed bythe directors and that they had previously discussed with the Adviser its policiesin respect of such arrangements. The directors also reviewed information thatindicated that the Portfolio’s fee rate is higher than the sub-advisory fee rateearned by the Adviser for sub-advising another registered investment companywith a similar investment style. The directors also noted that the Adviser advisesa portfolio of another AllianceBernstein fund with a substantially similar invest-ment style for the same fee schedule as the Portfolio.

The Adviser reviewed with the directors the significantly greater scope of the serv-ices it provides to the Portfolio relative to institutional clients and sub-advisedfunds. The Adviser also noted that because mutual funds are constantly issuing andredeeming shares, they are more difficult to manage than an institutional account,where the assets tend to be relatively stable. In light of the substantial differences inservices rendered by the Adviser to institutional clients as compared to funds suchas the Portfolio, the directors considered these fee comparisons inapt and did notplace significant weight on them in their deliberations.

The directors also considered the total expense ratio of the Class A shares of thePortfolio in comparison to the fees and expenses of funds within two comparisongroups created by Lipper: an Expense Group and an Expense Universe. Lipperdescribed an Expense Group as a representative sample of funds similar to thePortfolio and an Expense Universe as a broader group, consisting of all funds inthe investment classification/objective with a similar load type as the Portfolio.The Class A expense ratio of the Portfolio was based on the Portfolio’s latestfiscal year and reflected fee waivers and/or expense reimbursements as a result ofthe current undertaking by the Adviser. The information included the pro formaexpense ratio to reflect the Adviser’s modification of the expense cap level of theClass A Shares from 85 basis points to 90 basis points effective February 1,2013. The directors noted that it was likely that the expense ratios of some ofthe other funds in the Portfolio’s Lipper category were lowered by waivers orreimbursements by those funds’ investment advisers, which in some cases mightbe voluntary or temporary. The directors view the expense ratio information asrelevant to their evaluation of the Adviser’s services because the Adviser isresponsible for coordinating services provided to the Portfolio by others.

The directors noted that, at the Portfolio’s current size, its contractual effectiveadvisory fee rate of 45 basis points, plus the 1 basis point impact of the admin-istrative expense reimbursement in the latest fiscal year, was lower than theExpense Group median. The directors also noted that the Portfolio’s total expenseratio, which reflected a cap by the Adviser, was lower than the Expense Groupmedian and essentially the same as the Expense Universe median. The Portfolio’spro forma expense ratio, which reflected the increase in the expense cap level thatwould become effective on February 1, 2013, was higher than the Expense Groupand the Expense Universe medians. The directors concluded that the Portfolio’sexpense ratio was satisfactory and that its pro forma expense ratio was acceptable.


Economies of ScaleThe directors noted that the advisory fee schedule for the Portfolio containsbreakpoints that reduce the fee rates on assets above specified levels. The direc-tors took into consideration prior presentations by an independent consultant oneconomies of scale in the mutual fund industry and for the AllianceBernsteinFunds, and by the Adviser concerning certain of its views on economies of scale.The directors also had requested and received from the Adviser certain updateson economies of scale at the May 2012 meetings. The directors believe thateconomies of scale may be realized (if at all) by the Adviser across a variety ofproducts and services, and not only in respect of a single fund. The directorsnoted that there is no established methodology for setting breakpoints that giveeffect to fund-specific services provided by a fund’s adviser and to the economiesof scale that an adviser may realize in its overall mutual fund business or thosecomponents of it which directly or indirectly affect a fund’s operations. Thedirectors observed that in the mutual fund industry as a whole, as well as amongfunds similar to the Portfolio, there is no uniformity or pattern in the fees andasset levels at which breakpoints (if any) apply. The directors also noted that theadvisory agreements for many funds do not have breakpoints at all. Having takenthese factors into account, the directors concluded that the Portfolio’s share-holders would benefit from a sharing of economies of scale in the event thePortfolio’s net assets exceed a breakpoint in the future.


THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THEFINANCIAL STATEMENTS

SUMMARY OF SENIOR OFFICER’S EVALUATION OF INVESTMENTADVISORY AGREEMENT1

The following is a summary of the evaluation of the Investment Advisory Agree-ment between AllianceBernstein L.P. (the “Adviser”) and AllianceBernsteinBond Fund, Inc. (the “Fund”) with respect to AllianceBernstein IntermediateBond Portfolio (the “Portfolio”).2 The evaluation of the Investment AdvisoryAgreement was prepared by Philip L. Kirstein, the Senior Officer of the Fund,for the Directors of the Fund, as required by the September 1, 2004 Assuranceof Discontinuance (“AoD”) between the Adviser and the New York StateAttorney General (the “NYAG”). The Senior Officer’s evaluation of theInvestment Advisory Agreement is not meant to diminish the responsibility orauthority of the Board of Directors of the Fund to perform its duties pursuantto Section 15 of the Investment Company Act of 1940 (the “40 Act”) andapplicable state law. The purpose of the summary is to provide shareholderswith a synopsis of the independent evaluation of the reasonableness of the advi-sory fees proposed to be paid by the Portfolio which was provided to the Direc-tors in connection with their review of the proposed approval of thecontinuance of the Investment Advisory Agreement. The Senior Officer’sevaluation considered the following factors:

1. Advisory fees charged to institutional and other clients of the Adviserfor like services;

2. Advisory fees charged by other mutual fund companies for likeservices;

3. Costs to the Adviser and its affiliates of supplying services pursuant tothe advisory agreement, excluding any intra-corporate profit;

4. Profit margins of the Adviser and its affiliates from supplying suchservices;

5. Possible economies of scale as the Portfolio grows larger; and6. Nature and quality of the Adviser’s services including the performance

of the Portfolio.

These factors, with the exception of the first factor, are generally referred to asthe “Gartenberg factors,” which were articulated by the United States Court ofAppeals for the Second Circuit in 1982. Gartenberg v. Merrill Lynch AssetManagement, Inc., 694 F. 2d 923 (2d Cir. 1982). On March 30, 2010, theSupreme Court held the Gartenberg decision was correct in its basic formulationof what §36(b) requires: to face liability under §36(b), “an investment advisermust charge a fee that is so disproportionately large that it bears no reasonable

1 The Senior Officer’s fee evaluation was completed on October 25, 2012 and discussed withthe Board of Directors on November 6-8, 2012.

2 Future references to the Portfolio do not include “AllianceBernstein.” References in the feesummary pertaining to performance and expense ratios refer to the Class A shares of thePortfolio.


relationship to the services rendered and could not have been the product ofarm’s length bargaining.” Jones v. Harris Associates L.P., 130 S. Ct. 1418(2010). In Jones, the Court stated the Gartenberg approach fully incorporatesthe correct understanding of fiduciary duty within the context of section 36(b)and noted with approval that “Gartenberg insists that all relevant circumstancesbe taken into account” and “uses the range of fees that might result from arm’slength bargaining as the benchmark for reviewing challenged fees.”3

PORTFOLIO ADVISORY FEES, EXPENSE CAPS, REIMBURSEMENTS & RATIOSThe Adviser proposed that the Portfolio pay the advisory fee set forth in thetable below for receiving the services to be provided pursuant to the InvestmentAdvisory Agreement. The fee schedule below, implemented in January 2004 inconnection with the Adviser’s settlement with the NYAG in December 2003, isbased on a master schedule that contemplates eight categories of funds withalmost all funds in each category having the same advisory fee schedule.4

Portfolio CategoryAdvisory Fee Based on % of

Average Daily Net Assets

Net Assets09/30/12($MM)

Intermediate Bond Portfolio Low RiskIncome

45 bp on 1st $2.5 billion40 bp on next $2.5 billion35 bp on the balance

$ 546.0

The Adviser is reimbursed as specified in the Investment Advisory Agreement forcertain clerical, legal, accounting, administrative and other services provided tothe Portfolio. During the Portfolio’s most recently completed fiscal year, theAdviser received $66,498 (0.01% of the Portfolio’s average daily net assets) forsuch services.

The Adviser agreed to waive that portion of its advisory fees and/or reimbursethe Portfolio for that portion of the Portfolio’s total operating expenses to thedegree necessary to limit the Portfolio’s expense ratios to the amounts set forthbelow for the Portfolio’s current fiscal year. The waiver is terminable by theAdviser at the end of the Portfolio’s fiscal year upon at least 60 days writtennotice. In addition, set forth below are the Portfolio’s gross expense ratios,annualized for the most recent semi-annual period:

The Adviser provided notice to the Directors of its intention to modify theexpense limitation undertaking expense levels for the Portfolio to be effectivewith the Portfolio’s prospectus updates on February 1, 2013. In this regard, theAdviser will raise the cap levels for the Portfolio.

3 Jones v. Harris at 1427.4 Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected

by the Adviser’s settlement with the NYAG.


Expense Cap Pursuant to ExpenseLimitation Undertaking

Portfolio Class CurrentEffective02/01/13

GrossExpense

Ratio5

FiscalYearEnd

IntermediateBond Portfolio

AdvisorClass AClass BClass CClass RClass KClass I

0.55%0.85%1.55%1.55%1.05%0.80%0.55%

0.60%0.90%1.60%1.60%1.10%0.85%0.60%

0.69%0.99%1.74%1.70%1.30%0.98%0.66%

Oct. 31(ratios as of Apr. 30,2012)

I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTSThe advisory fees charged to investment companies which the Adviser managesand sponsors are normally higher than those charged to similar sized institutionalaccounts, including pension plans and sub-advised investment companies. The feedifferential reflects, among other things, different services provided to such clients,and different liabilities assumed. Services provided by the Adviser to the Portfoliothat are not provided to non-investment company clients include providing officespace and personnel to serve as Fund Officers, who among other responsibilitiesmake the certifications required under the Sarbanes–Oxley Act of 2002, and coor-dinating with and monitoring the Portfolio’s third party service providers such asFund counsel, auditors, custodians, transfer agents and pricing services. Theaccounting, administrative, legal and compliance requirements for the Portfolio aremore costly than those for institutional client assets due to the greater complexitiesand time required for investment companies, although as previously noted, theAdviser is reimbursed for providing some of these services. Also, retail mutualfunds managed by the Adviser are widely held and accordingly, servicing the Port-folio’s investors is more time consuming and labor intensive compared to servicinginstitutional clients since the Adviser needs to communicate with a more extensivenetwork of financial intermediaries and shareholders. The Adviser also believes thatit incurs substantial entrepreneurial risk when offering a new mutual fund sinceestablishing a new mutual fund requires a large upfront investment and it may takea long time for the fund to achieve profitability since the fund must be priced toscale from inception in order to be competitive and assets are acquired one accountat a time. In addition, managing the cash flow of an investment company may bemore difficult than that of a stable pool of assets, such as an institutional accountwith little cash movement in either direction, particularly if the Portfolio is in netredemption and the Adviser is frequently forced to sell securities to raise cash forredemptions. However, managing a fund with positive cash flow may be easier attimes than managing a stable pool of assets. Finally, in recent years, investmentadvisers have been sued by institutional clients and have suffered reputationaldamage both by the attendant publicity and outcomes other than complete victo-ries. Accordingly, the legal and reputational risks associated with institutionalaccounts are greater than previously thought, although arguably still not equal tothose related to the mutual fund industry.

5 Annualized.


Notwithstanding the Adviser’s view that managing an investment company isnot comparable to managing other institutional accounts because the servicesprovided are different, the Supreme Court has indicated consideration should begiven to the advisory fees charged to institutional accounts with a similarinvestment style as the Portfolio.6 In addition to the AllianceBernstein Institu-tional fee schedule, set forth below is what would have been the effective advi-sory fee for the Portfolio had the AllianceBernstein Institutional fee schedulebeen applicable to the Portfolio versus the Portfolio’s advisory fees based onSeptember 30, 2012 net assets.7

Portfolio

Net Assets09/30/12($MM)

AllianceBernstein (“AB”)Institutional (“Inst.”)

Fee Schedule

EffectiveAB Inst.Adv. Fee

PortfolioAdvisory

Fee


$546.0 U.S. Strategic Core PlusSchedule50 bp on 1st $30 million20 bp on the balanceMinimum Account Size: $25 m

0.216% 0.450%

The Adviser manages Sanford C. Bernstein Fund, Inc. (“SCB Fund”), an open-end management investment company. The Intermediate Duration Portfolio ofSCB Fund has a similar investment style as the Portfolio. Set forth below isIntermediate Duration Portfolio’s advisory fee schedule and what would havebeen the effective advisory fee of the Portfolio had the fee schedule of Inter-mediate Duration Portfolio been applicable to the Portfolio versus the Portfo-lio’s advisory fees based on September 30, 2012 net assets:

PortfolioSCB FundPortfolio Fee Schedule

SCB FundEffective

Fee

PortfolioAdvisory

Fee

Intermediate BondPortfolio

IntermediateDurationPortfolio

50 bp on 1st $1 billion45 bp on next $2 billion40 bp on next $2 billion35 bp on next $2 billion30 bp thereafter

0.500% 0.450%

The adviser also manages the AllianceBernstein Variable Products Series Fund,Inc. (“AVPS”), which is available through variable annuity and variable life con-tracts offered by other financial institutions and offers policyholders the optionto utilize certain AVPS portfolios as the investment option underlying their

6 The Supreme Court stated that “courts may give such comparisons the weight that they meritin light of the similarities and differences between the services that the clients in questionrequire, but the courts must be wary of inapt comparisons.” Among the significant differ-ences the Supreme Court noted that may exist between services provided to mutual fundsand institutional accounts are “higher marketing costs.” Jones v. Harris at 1428.

7 The Adviser has indicated that with respect to institutional accounts with assets greaterthan $300 million, it will negotiate a fee schedule. Discounts that are negotiated varybased upon each client relationship.


insurance contracts. Set forth below is the fee schedule of the AVPS portfoliothat has a substantially similar investment style as the Portfolio.8 Also shown iswhat would have been the effective advisory fee of the Portfolio had the AVPSfee schedule been applicable to the Portfolio and the Portfolio’s advisory feesbased on September 30, 2012 net assets:

Portfolio AVPS Portfolio Fee Schedule

AVPSEffective

Fee

PortfolioAdvisory

Fee

IntermediateBond Fund


0.45% on first $2.5 billion0.40% on next $2.5 billion0.35% on the balance

0.450% 0.450%

The Adviser provides sub-advisory investment services to certain other invest-ment companies managed by other fund families. The Adviser charges thefollowing fee for the sub-advisory relationship that has a somewhat similarinvestment style as the Portfolio. Also shown is the Portfolio’s advisory fee andwhat would have been the effective advisory fee of the Portfolio had the feeschedule of the sub-advisory relationship been applicable to the Portfolio basedon September 30, 2012 net assets:

PortfolioSub-advised

FundSub-advised Fund

Fee Schedule

Sub-AdvisedManagement

FundEffective Fee

PortfolioAdvisory

Fee


Client #1 0.29% on first $100 million0.20% thereafter

0.216% 0.450%

It is fair to note that the services the Adviser provides pursuant to sub-advisoryagreements are generally confined to the services related to the investment proc-ess; in other words, they are not as comprehensive as the services provided to thePortfolio by the Adviser. In addition to the extent that the sub-advisory relation-ship is with an affiliate of the Adviser, the fee schedule may not reflect arm’s-length bargaining or negotiations.

While it appears that the sub-advisory relationship is paying a lower fee thaninvestment companies managed by the Adviser, it is difficult to evaluate the rele-vance of such fees due to the differences in the services provided, risks involvedand other competitive factors between the investment companies and the sub-advisory relationship. There could be various business reasons why an investmentadviser would be willing to provide a sub-advised relationship investment relatedservices at a different fee level than an investment company it is sponsoringwhere the investment adviser is provided all the services, not just investmentservices, generally required by a registered investment company.

8 It should be noted that the AVPS portfolio was also affected by the settlement between theAdviser and the NYAG. As a result, the Portfolio has the same breakpoints in its advisoryfee schedule as the AVPS portfolio.


II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUNDCOMPANIES FOR LIKE SERVICES.

Lipper, Inc. (“Lipper”), an analytical service that is not affiliated with theAdviser, compared the fees charged to the Portfolio with fees charged to otherinvestment companies for similar services offered by other investment advisers.9Lipper’s analysis included the comparison of the Portfolio’s contractualmanagement fee, estimated at the approximate current asset level of the Portfo-lio, to the median of the Portfolio’s Lipper Expense Group (“EG”)10 and thePortfolio’s contractual management fee ranking.11

Lipper describes an EG as a representative sample of comparable funds. Lipper’sstandard methodology for screening funds to be included in an EG entails theconsideration of several fund criteria, including fund type, investment classi-fication/objective, load type and similar 12b-1/non-12b-1 service fees, asset(size) comparability, expense components and attributes. An EG will typicallyconsist of seven to twenty funds.

Portfolio

ContractualManagement

Fee (%)

Lipper ExpenseGroup

Median (%) Rank

Intermediate Bond Portfolio 0.450 0.490 4/13

Lipper also compared the Portfolio’s total expense ratio to the medians of thePortfolio’s EG and Lipper Expense Universe (“EU”). The EU12 is a broadergroup compared to the EG, consisting of all funds that have the same invest-ment classification/objective and load type as the subject Portfolio.

Portfolio

ExpenseRatio(%)13

Lipper Exp.Group

Median (%)

LipperGroupRank

Lipper Exp.Universe

Median (%)

LipperUniverse

Rank

Intermediate Bond Portfolio 0.851 0.870 6/13 0.854 35/72Pro-forma14 0.900 0.870 9/13 0.854 47/72

9 The Supreme Court cautioned against accepting mutual fund fee comparisons without carefulscrutiny since “these comparisons are problematic because these fees, like those challenged, may notbe the product of negotiations conducted at arm’s length.” Jones v. Harris at 1429.

10 Lipper does not consider average account size when constructing EGs. Funds with relativelysmall average account sizes tend to have higher transfer agent expense ratio than com-parable sized funds that have relatively large average account sizes. There are limitations toLipper expense category data because different funds categorize expenses differently.

11 The contractual management fee is calculated by Lipper using the Portfolio’s contractualmanagement fee rate at a hypothetical asset level. The hypothetical asset level is based on thecombined net assets of all classes of the Portfolio, rounded up to the next $25 million.Lipper’s total expense ratio information is based on the most recent annual report except asotherwise noted. A ranking of “1” would mean that Portfolio had the lowest effective feerate in the Lipper peer group.

12 Except for asset (size) comparability, Lipper uses the same criteria for selecting an EGwhen selecting an EU. Unlike the EG, the EU allows for the same adviser to be representedby more than just one fund.

13 Most recently completed fiscal year Class A share total expense ratio.14 Pro-forma total expense ratio is shown for the Portfolio to reflect the Portfolio’s expense cap

level effective February 1, 2013.


Based on this analysis, the Portfolio has a more favorable ranking on a manage-ment fee basis than on a total expense ratio basis.

III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYINGSERVICES PURSUANT TO THE ADVISORY FEE ARRANGEMENT,EXCLUDING ANY INTRA-CORPORATE PROFIT.

The Adviser utilizes two profitability reporting systems, which operateindependently but are aligned with each other, to estimate the Adviser’s profit-ability in connection with investment advisory services provided to the Portfolio.The Senior Officer has retained an independent consultant to provideindependent advice regarding the alignment of the two profitability systems aswell as the methodologies and allocations utilized by both profitability systems.See Section IV for additional discussion.

IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FORSUPPLYING SUCH SERVICES.

The profitability information for the Portfolio, prepared by the Adviser for theBoard of Directors, was reviewed by the Senior Officer and the independentconsultant. The Adviser’s profitability from providing investment advisory serv-ices to the Portfolio increased during calendar year 2011 relative to 2010.

In addition to the Adviser’s direct profits from managing the Portfolio, certain ofthe Adviser’s affiliates have business relationships with the Portfolio and mayearn a profit from providing other services to the Portfolio. The courts havereferred to this type of business opportunity as “fall-out benefits” to the Adviserand indicated that such benefits should be factored into the evaluation of thetotal relationship between the Portfolio and the Adviser. Neither case law norcommon business practice precludes the Adviser’s affiliates from earning areasonable profit on this type of relationship provided the affiliates’ charges andservices are competitive. These affiliates provide transfer agent and distributionrelated services to the Portfolio and receive transfer agent fees, front-end salesloads, Rule 12b-1 payments and contingent deferred sales charges (“CDSC”).During the Portfolio’s most recently completed fiscal year, ABI received fromthe Portfolio $10,684, $1,919,856 and $19,110 in front-end sales charges,Rule 12b-1 and CDSC fees, respectively.

AllianceBernstein Investments, Inc. (“ABI”), an affiliate of the Adviser, is thePortfolio’s principal underwriter. ABI and the Adviser have disclosed in thePortfolio’s prospectus that they may make revenue sharing payments from theirown resources, in addition to revenues derived from sales loads and Rule 12b-1fees, to firms that sell shares of the Portfolio. In 2011, ABI paid approximately0.04% of the average monthly assets of the AllianceBernstein Mutual Funds orapproximately $17 million for distribution services and educational support(revenue sharing payments).


Fees and reimbursements for out of pocket expenses charged byAllianceBernstein Investor Services, Inc. (“ABIS”), the affiliated transfer agentfor the Portfolio, are charged on a per account basis, based on the level of serviceprovided and the class of share held by the account. ABIS also receives a fee pershareholder sub-account for each account maintained by an intermediary on anomnibus basis. During the Portfolio’s most recently completed fiscal year, ABISreceived $500,201 in fees from the Portfolio.

V. POSSIBLE ECONOMIES OF SCALEThe Adviser has indicated that economies of scale are being shared with share-holders through pricing to scale, breakpoints, fee reductions/waivers andenhancement to services.

An independent consultant, retained by the Senior Officer, provided the Boardof Directors information on the Adviser’s firm-wide average costs from 2005through 2011 and the potential economies of scale. The independent consultantnoted that from 2005 through 2007 the Adviser experienced significant growthin assets under management (“AUM”). During this period, operating expensesincreased, in part to keep up with growth, and in part reflecting marketreturns. However, from 2008 through the first quarter of 2009, AUM rapidlyand significantly decreased due to declines in market value and client with-drawals. When AUM rapidly decreased, some operating expenses categories,including base compensation and office space, adjusted more slowly during thisperiod, resulting in an increase in average costs. Since 2009, AUM has experi-enced less significant changes. The independent consultant noted that changesin operating expenses reflect changes in business composition and businesspractices in response to changes in financial markets. Finally, the independentconsultant concluded that the increase in average cost and the decline in netoperating margin across the Adviser since late 2008 are inconsistent with theview that there are currently reductions in average costs due to economies ofscale that can be shared with the AllianceBernstein Mutual Funds managed bythe Adviser through lower fees.

Previously in February 2008, the independent consultant provided the Board ofDirectors an update of the Deli15 study on advisory fees and various fund charac-teristics.16 The independent consultant first reiterated the results of his previoustwo dimensional comparison analysis (fund size and family size) with the Board

15 The Deli study, originally published in 2002 based on 1997 data and updated for theFebruary 2008 Presentation, may be of diminished value due to the age of the data usedin the presentation and the changes experienced in the industry over the last four years.

16 As mentioned previously, the Supreme Court cautioned against accepting mutual fundfee comparisons without careful scrutiny since the fees may not be the product of negotia-tions conducted at arm’s length. See Jones V. Harris at 1429.


of Directors.17 The independent consultant then discussed the results of theregression model that was utilized to study the effects of various factors on advi-sory fees. The regression model output indicated that the bulk of the variation infees predicted were explained by various factors, but substantially by fund AUM,family AUM, index fund indicator and investment style. The independent con-sultant also compared the advisory fees of the AllianceBernstein Mutual Funds tosimilar funds managed by 19 other large asset managers, regardless of the fund sizeand each Adviser’s proportion of mutual fund assets to non-mutual fund assets.

VI. NATURE AND QUALITY OF THE ADVISER’S SERVICES INCLUDINGTHE PERFORMANCE OF THE PORTFOLIO.

With assets under management of approximately $419 billion as ofSeptember 30, 2012, the Adviser has the investment experience to manage andprovide non-investment services (described in Section I) to the Portfolio.

The information below shows the 1, 3, 5 and 10 year performance returns andrankings of the Portfolio18 relative to its Lipper Performance Group (“PG”) andLipper Performance Universe (“PU”)19 for the periods ended July 31, 2012.20

PortfolioPortfolio

Return (%) PG Median (%) PU Median (%) PG Rank PU Rank

Intermediate Bond Portfolio1 year 6.23 7.78 7.24 13/13 73/883 year 8.65 8.26 7.92 6/13 24/805 year 6.57 7.46 6.70 9/12 38/6910 year 5.27 5.93 5.47 8/10 32/52

17 The two dimensional analysis showed patterns of lower advisory fees for funds with largerasset sizes and funds from larger family sizes compared to funds with smaller asset sizesand funds from smaller family sizes, which according to the independent consultant isindicative of a sharing of economies of scale and scope. However, in less liquid and activemarkets, such is not the case, as the empirical analysis showed potential for diseconomies ofscale in those markets. The empirical analysis also showed diminishing economies of scaleand scope as funds surpassed a certain high level of assets.

18 The performance returns and rankings are for the Class A shares of the Portfolio. The per-formance returns of the Portfolios were provided Lipper.

19 The Portfolio’s PG is identical to the Portfolio’s EG. The Portfolio’s PU is not identical tothe Portfolio’s EU as the criteria for including/excluding a portfolio in/from a PU aresomewhat different from that of an EU.

20 The current Lipper investment classification/objective dictates the PG and PU throughoutthe life of the Portfolio even if the Portfolio may have had a different investment classi-fication/objective at different points in time.


Set forth below are the 1, 3, 5, 10 year and since inception net performancereturns of the Portfolio (in bold)21 versus its benchmark.22 Portfolio andbenchmark volatility and reward-to-variability ratio (“Sharpe Ratio”)information is also shown.23

Periods Ending July 31, 2012Annualized Performance

1 Year(%)

3 Year(%)

5 Year(%)

10 Year(%)

SinceInception

(%)

Annualized RiskPeriod(Year)

Volatility(%)

Sharpe(%)

IntermediateBond Portfolio 6.23 8.65 6.57 5.27 5.68 4.48 0.74 10Barclays CapitalU.S. AggregateBond Index 7.25 6.85 6.91 5.65 6.26 3.62 1.01 10Inception Date:July 1, 1999

CONCLUSION:Based on the factors discussed above the Senior Officer’s conclusion is that theproposed advisory fee for the Portfolio is reasonable and within the range ofwhat would have been negotiated at arm’s-length in light of all the surroundingcircumstances. This conclusion in respect of the Portfolio is based on an evalua-tion of all of these factors and no single factor was dispositive.

Dated: December 3, 2012

21 The performance returns and risk measures shown in the table are for the Class A shares ofthe Portfolio.

22 The Adviser provided Portfolio and benchmark performance return information for theperiods through July 31, 2012.

23 Portfolio and benchmark volatility and Sharpe Ratio information was obtained throughLipper LANA, a database maintained by Lipper. Volatility is a statistical measure of thetendency of a market price or yield to vary over time. A Sharpe Ratio is a risk adjustedmeasure of return that divides a fund’s return in excess of the riskless return by the fund’sstandard deviation. A portfolio with a greater volatility would be viewed as more riskythan a portfolio with equivalent performance but lower volatility; for that reason, a greaterreturn would be demanded for the more risky fund. A portfolio with a higher Sharpe Ratiowould be viewed as better performing than a fund with a lower Sharpe Ratio.


THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THEFINANCIAL STATEMENTS

ALLIANCEBERNSTEIN FAMILY OF FUNDSWealth StrategiesBalanced Wealth StrategyConservative Wealth StrategyWealth Appreciation StrategyTax-Managed Balanced Wealth StrategyTax-Managed Conservative Wealth StrategyTax-Managed Wealth Appreciation Strategy

Asset Allocation/Multi-Asset FundsEmerging Markets Multi-Asset PortfolioInternational PortfolioTax-Managed International Portfolio

Growth FundsDomesticDiscovery Growth Fund**Growth FundLarge Cap Growth FundSelect US Equity PortfolioSmall Cap Growth PortfolioGlobal & InternationalGlobal Thematic Growth FundInternational Discovery Equity PortfolioInternational Growth Fund

Value FundsDomesticCore Opportunities FundDiscovery Value Fund**Equity Income FundGrowth & Income FundValue FundGlobal & InternationalEmerging Markets Equity PortfolioGlobal Value FundInternational Value Fund

Taxable Bond FundsBond Inflation StrategyGlobal Bond FundHigh Income FundIntermediate Bond PortfolioLimited Duration High Income PortfolioShort Duration Portfolio

Municipal Bond FundsArizona PortfolioCalifornia PortfolioHigh Income PortfolioMassachusetts PortfolioMichigan PortfolioMinnesota PortfolioMunicipal Bond

Inflation Strategy

National PortfolioNew Jersey PortfolioNew York PortfolioOhio PortfolioPennsylvania PortfolioVirginia Portfolio

Intermediate Municipal Bond FundsIntermediate California PortfolioIntermediate Diversified PortfolioIntermediate New York Portfolio

Closed-End FundsAlliance California Municipal Income FundAlliance New York Municipal Income FundAllianceBernstein Global High Income FundAllianceBernstein Income FundAllianceBernstein National Municipal Income

Fund

AlternativesDynamic All Market FundGlobal Real Estate Investment FundGlobal Risk Allocation Fund**Market Neutral Strategy-GlobalMarket Neutral Strategy-U.S.Real Asset StrategySelect US Long/Short PortfolioUnconstrained Bond Fund

Retirement Strategies2000 Retirement Strategy 2020 Retirement Strategy 2040 Retirement Strategy2005 Retirement Strategy 2025 Retirement Strategy 2045 Retirement Strategy2010 Retirement Strategy 2030 Retirement Strategy 2050 Retirement Strategy2015 Retirement Strategy 2035 Retirement Strategy 2055 Retirement Strategy

We also offer Exchange Reserves,* which serves as the money market fund exchange vehicle for theAllianceBernstein mutual funds.Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully beforeinvesting. For copies of our prospectus or summary prospectus, which contain this and other information, visitus online at www.alliancebernstein.com or contact your AllianceBernstein investments representative. Pleaseread the prospectus and/or summary prospectus carefully before investing.* An investment in Exchange Reserves is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit

Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your invest-ment at $1.00 per share, it is possible to lose money by investing in the Fund.

**Prior to October 8, 2012, Global Risk Allocation Fund was named Balanced Shares. Prior to November 1,2012, Discovery Growth Fund was named Small/Mid Cap Growth Fund and Discovery Value Fund wasnamed Small/Mid Cap Value Fund.


AllianceBernstein

Family

ofFunds

NOTES


ALLI

ANC

EBER

NST

EIN

BO

ND

FUN

DIN

TER

MED

IATE

BO

ND

POR

TFO

LIO

1345

Aven

ueof

the

Amer

icas

New

York

,NY

1010

580

0.22

1.56

72

IB-0

152-

0413

Prin

ted

on r

ecyc

led

pape

r co

ntai

ning

pos

tco

nsum

er w

aste

.

alliancebernstein bond fund intermediate bond...

Documents