UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-08188
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: October 31, 2004
Date of reporting period: October 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
AllianceBernstein Emerging Market
Debt Fund
Emerging Market Fixed Income
Annual Report--October 31, 2004
Investment Products Offered
.. Are Not FDIC Insured
.. May Lose Value
.. Are Not Bank Guaranteed
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
This shareholder report must be preceded or accompanied by the Fund's
prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site 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 third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investment Research and Management, Inc., is an affiliate of
Alliance Capital Management L.P., the manager of the funds, and is a member of
the NASD.
December 21, 2004
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Emerging Market Debt Fund (the "Fund") for the annual
reporting period ended October 31, 2004.
Investment Objectives and Policies
This open-end fund is designed to provide investors with a high level of
current income and, secondarily, capital appreciation. To achieve its
objectives, the Fund invests primarily in a non-diversified portfolio of
sovereign debt obligations and in U.S. and non-U.S. corporate fixed-income
securities. The Fund invests substantially all of its assets in lower-rated
securities.
Investment Results
The table on page 5 shows the Fund's performance compared to its benchmark, the
J.P. Morgan Emerging Markets Bond Index Plus (JPM EMBI+), a broad measure of
the performance of a basket of emerging market debt securities, for the six-
and 12-month periods ended October 31, 2004. The Fund posted strong absolute
gains but underperformed the benchmark for both the six- and 12-month periods
ended October 31, 2004.
For the six- and 12-month periods ended October 31, 2004, the Fund's overall
individual country weightings contributed positively to performance. The
Fund's security selection, however, was too defensive relative to U.S. interest
rates, which resulted in the Fund's underperformance. The Fund's duration was
shortened during the spring and summer as interest rates were expected to rise
and dampen overall emerging market returns. However, lower consumer confidence
and sluggish employment growth in the U.S. delayed rate hikes by the Federal
Reserve and kept interest rates relatively low, providing a continued favorable
environment for emerging market debt. Emerging market debt has recently become
more correlated to movements in U.S. Treasury rates.
Market Review and Investment Strategy
The emerging market debt class, as represented by the JPM EMBI+, returned a
strong 12.94% for the annual period ended October 31, 2004. All emerging
market countries represented within the index posted positive returns. The
emerging debt markets benefited throughout the annual period from lower global
interest rates, higher commodity prices and improving emerging country
fundamentals.
Emerging markets experienced some volatility in the spring of 2004, however.
After posting very strong gains in 2003 and the beginning of 2004, emerging
debt markets sold off dramatically in April in response to a surprisingly
strong gain in reported March 2004 U.S. payroll employment. Worries surfaced
that the U.S. Federal Reserve would begin tightening interest rates sooner than
had been expected. In April and May, emerging market debt returns fell by a
total of 7.37%.
Later in the annual reporting period ended October 31, 2004, soft consumer
confidence readings, weak inflation data and lower payroll numbers allowed
emerging market debt to re-
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 1
bound as the U.S. economy hit a mid-year slowdown. The prospects of slower,
more measured U.S. Federal Reserve tightenings moved emerging market debt
returns back into positive territory.
For the annual reporting period, the Latin region gained 15.04% and outpaced
non-Latin markets which gained 9.87%, as Latin countries benefited from export
demand and strong commodity prices, particularly oil. Sustained growth in the
Latin region and a resulting decline in fiscal deficits improved their
macroeconomic fundamentals. Countries within the JPM EMBI+ that outperformed
for the annual period included oil-producing countries Ecuador, Venezuela and
Brazil. During the 12-month period ended October 31, 2004, Ecuador returned
33.40%, Venezuela returned 30.30% and Brazil, which was upgraded by both
Moody's Investors Service and Standard & Poor's rating agencies, returned
17.97%. Countries within the JPM EMBI+ that underperformed during the
12-month period ended October 31, 2004 were Morocco, which returned 4.23%,
Malaysia at 6.19% and Peru at 6.61%.
During the annual reporting period, the Fund maintained allocations to its core
emerging market countries (Brazil, Russia, Colombia, Mexico, Peru, Turkey,
Venezuela and the Ukraine); however, the Fund's interest rate duration exposure
was reduced later in the reporting period as global liquidity tightened and
interest rates were poised to move higher.
The Fund generally maintained an overweighted position in Russian debt early in
the period as credit statistics continued to improve and Russia benefited from
higher oil prices. In July, however, the Fund's Russian holdings were reduced
as positive economic fundamentals were offset by administrative paralysis and
the Yukos affair. Russia's Justice Ministry had seized the assets of Yukos,
the country's largest oil producer, and was preparing to sell its main
oil-producing unit in Siberia to recover payment of back taxes. Furthermore,
there was a significant negative change in Russia's sovereign supply and demand
technicals.
The Fund's exposure in Brazil was reduced as concerns surfaced that political
scandal and the Central Bank's inability to lower interest rates would hurt
economic growth. Those concerns proved to be misplaced, however, so Brazilian
holdings have subsequently begun to be added back to the Fund's investment
portfolio. Furthermore, gross domestic product in Brazil has remained high,
easing worries about debt sustainability. Brazil's stronger economy led to
statements released by their Central Bank President, that a renewal of their
funding agreement with the IMF (International Monetary Fund) may not be needed.
Public debt in Brazil has fallen to less than 54% of gross domestic product,
with a decreased amount of debt linked to the dollar, allowing Brazil to be
less exposed to international volatility. With improving fundamentals, Brazil
should continue to benefit.
2 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
The Fund's position in the Ukraine was increased during the period due to
strong economic growth and prospects for rating upgrades. Toward the end of
the annual reporting period, the Fund's Argentinean debt was also increased due
to significant indications that a new, final restructuring offer would benefit
investors.
In Memory
It is with sadness that we announce the passing of Clifford L. Michel, a member
of the Board of Directors of AllianceBernstein Emerging Market Debt Fund. Mr.
Michel served the interests of the Fund's shareholders for the last 10 years.
His hard work, dedication and contributions to the Fund will be greatly missed.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 3
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein at (800) 227-4618. You should read the prospectus carefully
before you invest.
Returns are annualized for periods longer than one year. All fees and expenses
related to the operation of the Fund have been deducted. NAV returns do not
reflect sales charges; if sales charges were reflected, the Fund's quoted
performance would be lower. SEC returns reflect the applicable sales charges
for each share class: a 4.25% maximum front-end sales charge for Class A
shares; the applicable contingent deferred sales charge for Class B shares (3%
year 1, 2% year 2, 1% year 3, 0% year 4); a 1% 1 year contingent deferred sales
charge for Class C shares. Performance assumes reinvestment of distributions
and does not account for taxes.
Benchmark Disclosure
The unmanaged J.P. Morgan Emerging Markets Bond Index Plus (JPM EMBI+) does not
reflect fees and expenses associated with the active management of a mutual
fund portfolio. The Index is comprised of dollar-denominated restructured
sovereign bonds; a large percentage of the Index is made up of Brady bonds.
Investors cannot invest directly in an index, and its results are not
indicative of the performance for any specific investment, including the Fund.
A Word About Risk
The Fund invests a significant amount of its assets in foreign securities,
which may magnify fluctuations and can invest a significant portion of its
assets in the securities of a single issuer, which may present greater risk
than a more diversified portfolio. Price fluctuation in the Fund's portfolio
securities may be caused by changes in interest rates or bond credit quality
ratings. Changes in interest rates have a greater effect on bonds with longer
maturities than on those with shorter maturities. While the Fund invests
principally in bonds and other fixed-income securities, in order to achieve its
investment objectives, the Fund may at times use certain types of investment
derivatives, such as options, futures, forwards and swaps. These instruments
involve risks different from, and in certain cases, greater than the risks
presented by more traditional investments. These risks are fully discussed in
the Fund's prospectus.
(Historical Performance continued on next page)
4 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
HISTORICAL PERFORMANCE
(continued from previous page)
Historical Performance
THE FUND VS. ITS BENCHMARK Returns
PERIODS ENDED OCTOBER 31, 2004
6 Months 12 Months
- -------------------------------------------------------------------------------
AllianceBernstein
Emerging Market Debt Fund
Class A 10.49% 12.82%
Class B 10.05% 12.02%
Class C 10.16% 12.00%
JPM EMBI+ 11.29% 12.94%
GROWTH OF A $10,000 INVESTMENT IN THE FUND
10/31/94 TO 10/31/04
JPM EMBI+: $36,737
AllianceBernstein
Emerging Market Debt
Fund Class A: $35,149
[THE FOLLOWING TABLE WAS DEPICTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
AllianceBernstein
Emerging Market
Debt Fund
Class A JPM EMBI+
- -------------------------------------------------------------------------------
10/31/94 $ 9,575 $10,000
10/31/95 $10,000 $10,747
10/31/96 $14,604 $15,529
10/31/97 $15,039 $17,208
10/31/98 $12,442 $15,470
10/31/99 $14,832 $18,561
10/31/00 $18,386 $22,364
10/31/01 $18,518 $23,149
10/31/02 $21,926 $24,792
10/31/03 $31,119 $32,528
10/31/04 $35,149 $36,737
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Emerging Market Debt Fund Class A shares (from 10/31/94 to
10/31/04) as compared to the performance of the Fund's benchmark. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains.
See Historical Performance and Benchmark disclosures on previous page.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 5
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF OCTOBER 31, 2004
- -------------------------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 12.82% 7.96%
5 Years 19.17% 18.15%
10 Years 14.04% 13.54%
SEC Yield* 6.37%
Class B Shares
1 Year 12.02% 9.02%
5 Years 18.17% 18.17%
10 Years(a) 13.47% 13.47%
SEC Yield* 5.86%
Class C Shares
1 Year 12.00% 11.00%
5 Years 18.17% 18.17%
10 Years 13.14% 13.14%
SEC Yield* 5.86%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (SEPTEMBER 30, 2004)
- -------------------------------------------------------------------------------
Class A Shares
1 Year 7.98%
5 Years 18.78%
10 Years 12.92%
Class B Shares
1 Year 8.81%
5 Years 18.85%
10 Years(a) 12.86%
Class C Shares
1 Year 10.79%
5 Years 18.82%
10 Years 12.50%
(a) Assumes conversion of Class B shares into Class A shares after six years.
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended October 31, 2004.
See Historical Performance disclosures on page 4.
6 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare 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
the period and held for the entire period as indicated below.
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed annual 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 actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds by comparing this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
May 1, 2004 October 31, 2004 During Period*
- -------------------------------------------------------------------------------
Class A
Actual $ 1,000 $ 1,104.87 $ 6.45
Hypothetical
(5% return before expenses) $ 1,000 $ 1,019.00 $ 6.19
Class B
Actual $ 1,000 $ 1,100.45 $ 10.14
Hypothetical
(5% return before expenses) $ 1,000 $ 1,015.48 $ 9.73
Class C
Actual $ 1,000 $ 1,101.61 $ 10.04
Hypothetical
(5% return before expenses) $ 1,000 $ 1,015.58 $ 9.63
*Expenses are equal to the classes' annualized expense ratios of 1.22%, 1.92%
and 1.90%, respectively, multiplied by the average account value over the
period, multiplied by the number of days in the most recent fiscal
half-year/366 (to reflect the one-half year period).
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 7
PORTFOLIO SUMMARY
October 31, 2004
PORTFOLIO STATISTICS
Net Assets ($mil): $301.1
SECURITY TYPE BREAKDOWN*
[Pie Chart omitted]
85.4% Sovereign Debt Obligations
7.5% Corporate Debt Obligations
7.1% Short-Term
* All data are as of October 31, 2004. The Fund's security type breakdown is
expressed as a percentage of total investments and may vary over time.
8 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
PORTFOLIO OF INVESTMENTS
October 31, 2004
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-83.7%
Argentina-4.2%
Republic of Argentina
1.98%, 8/03/12 FRN $ 8,556 $ 6,523,950
11.375%, 3/15/10(a) 450 138,375
11.75%, 6/15/15(a) 1,275 395,250
12.00%, 6/19/31(a) 2,968 884,464
12.25%, 6/19/18(a) 7,721 2,343,200
15.50%, 12/19/08(a) 7,365 2,246,325
Series BGL5
11.375%, 1/30/17(a) 650 208,000
------------
12,739,564
Brazil-16.0%
Federal Republic of Brazil
7.72%, 6/29/09 FRN 1,598 1,747,413
8.25%, 1/20/34 925 833,425
9.25%, 10/22/10 425 455,387
10.125%, 5/15/27 1,375 1,460,938
10.50%, 7/14/14 4,032 4,517,856
11.00%, 8/17/40 13,316 15,000,474
12.00%, 4/15/10 2,675 3,181,912
12.75%, 1/15/20 4,700 5,875,000
C-Bonds
8.00%, 4/15/14 11,203 11,125,280
DCB FRN
Series L
3.125%, 4/15/12 4,478 4,105,857
------------
48,303,542
Bulgaria-1.0%
Republic of Bulgaria
8.25%, 1/15/15(b) 2,365 2,956,250
Colombia-2.7%
Republic of Colombia
8.25%, 12/22/14 1,820 1,822,184
10.75%, 1/15/13 1,000 1,157,500
11.75%, 2/25/20 4,275 5,226,188
------------
8,205,872
Ecuador-3.1%
Republic of Ecuador
0.00%, 10/11/05 2,235 2,099,648
8.00%, 8/15/30(b)(c) 8,666 7,322,770
------------
9,422,418
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 9
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
El Salvador-0.7%
Republic of El Salvador
7.625%, 9/21/34(b) $ 872 $ 893,800
8.50%, 7/25/11(b) 1,000 1,117,500
------------
2,011,300
Indonesia-0.9%
Republic of Indonesia
6.75%, 3/10/14(b) 2,645 2,582,181
Jamaica-0.6%
Government of Jamaica
11.75%, 5/15/11(b) 1,180 1,383,550
12.75%, 9/01/07(b) 365 421,210
------------
1,804,760
Mexico-14.8%
United Mexican States
8.125%, 12/30/19 10,750 12,593,625
11.375%, 9/15/16(d) 4,401 6,546,488
Series A
6.375%, 1/16/13 882 937,125
8.00%, 9/24/22(d) 13,015 14,954,235
9.875%, 2/01/10 7,600 9,424,000
------------
44,455,473
Morocco-0.4%
Kingdom of Morocco Loan Participation FRN
Series A
2.781%, 1/01/09 1,123 1,104,980
Panama-1.8%
Republic of Panama
8.875%, 9/30/27 500 518,750
9.375%, 4/01/29 890 1,016,825
9.625%, 2/08/11 1,695 1,928,063
10.75%, 5/15/20 1,550 1,852,250
------------
5,315,888
Peru-2.5%
Republic of Peru
8.375%, 5/03/16 2,725 2,847,625
8.75%, 11/21/33 450 451,125
9.125%, 2/21/12 1,353 1,515,360
9.875%, 2/06/15 2,391 2,761,605
------------
7,575,715
Philippines-3.7%
Republic of Philippines
9.00%, 2/15/13 2,300 2,317,250
9.875%, 1/15/19 1,850 1,862,025
10.625%, 3/16/25 6,718 7,030,387
------------
11,209,662
10 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Russia-13.4%
Russian Federation
5.00%, 3/31/30(b)(c) $26,488 $26,521,110
Russian Ministry of Finance
Series V
3.00%, 5/14/08 8,325 7,700,625
Series VII
3.00%, 5/14/11 7,550 6,238,565
------------
40,460,300
South Africa-1.4%
Republic of South Africa
7.375%, 4/25/12 3,818 4,362,065
Turkey-6.3%
Republic of Turkey
11.00%, 1/14/13 4,130 5,096,420
11.50%, 1/23/12 7,710 9,676,050
11.75%, 6/15/10 1,970 2,447,725
12.375%, 6/15/09 1,455 1,807,838
------------
19,028,033
Ukraine-4.1%
Government of Ukraine
6.875%, 3/04/11(b) 2,525 2,540,782
7.65%, 6/11/13(b) 5,104 5,237,980
11.00%, 3/15/07(b) 4,102 4,459,001
------------
12,237,763
Uruguay-1.0%
Republic of Uruguay
7.875%, 1/15/33(e) 3,632 2,951,089
Venezuela-5.1%
Republic of Venezuela
3.09%, 4/20/11 FRN 3,300 2,871,000
5.375%, 8/07/10 2,525 2,309,113
8.50%, 10/08/14 950 964,250
9.25%, 9/15/27 9,016 9,223,368
------------
15,367,731
Total Sovereign Debt Obligations
(cost $225,921,227) 252,094,586
CORPORATE DEBT OBLIGATIONS-7.4%
Brazil-0.8%
PF Export Receivables Master Trust
6.436%, 6/01/15(b) 2,444 2,461,255
Indonesia-0.6%
Freeport-McMoRan Copper & Gold
10.125%, 2/01/10 1,550 1,739,875
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 11
Contracts(f)
or Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Kazakhstan-0.9%
Hurricane Finance
9.625%, 2/12/10(b) $ 900 $ 994,500
Kazkommerts International BV
8.50%, 4/16/13(b) 650 677,625
Turanalem Finance BV
10.00%, 5/29/07(b) 1,000 1,084,000
------------
2,756,125
Mexico-2.5%
Innova S de. R.L., SA
9.375%, 9/19/13 3,180 3,537,750
12.875%, 4/01/07 1,115 1,120,240
Monterrey Power SA De C. V.
9.625%, 11/15/09(b) 587 692,842
Vitro Envases NA
10.75%, 7/23/11(b) 2,200 2,178,000
------------
7,528,832
Poland-0.7%
PTC International Finance II, SA
11.25%, 12/01/09 2,000 2,120,000
Romania-0.5%
MobiFon Holdings BV
12.50%, 7/31/10 1,100 1,303,500
Russia-1.2%
Gazprom Oao
9.625%, 3/01/13(b) 870 1,000,500
Mobile Telesystems Finance
9.75%, 1/30/08(b) 1,500 1,625,625
10.95%, 12/21/04 730 737,300
Tyumen Oil
11.00%, 11/06/07(b) 280 318,500
------------
3,681,925
Ukraine-0.2%
Kyivstar
10.375%, 8/17/09(b) 600 663,000
Total Corporate Debt Obligations
(cost $20,465,884) 22,254,512
CALL OPTIONS PURCHASED(g)-0.0%
Brazil-0.0%
Federal Republic of Brazil
11.00%, 8/17/40
expiring Nov '04 @ 110.85
(cost $40,500) 1,800,000 48,600
12 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
Shares or
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
WARRANTS(g)-0.0%
Central Bank of Nigeria
Warrants, expiring 11/15/20 3,250 $ -0-
Republic of Venezuela
Warrants, expiring 4/15/20 48,195 -0-
Total Warrants
(cost $0) -0-
SHORT-TERM INVESTMENT-7.0%
Time Deposit-7.0%
Societe Generale
1.844%, 11/01/04
(cost $21,000,000) $21,000 21,000,000
Total Investments-98.1%
(cost $267,427,611) 295,397,698
Other assets less liabilities-1.9% 5,662,007
Net Assets-100% $301,059,705
CREDIT DEFAULT SWAP CONTRACTS (see Note D)
Notional Unrealized
Swap Counterparty & Amount Interest Termination Appreciation /
Referenced Obligation (000's) Rate Date (Depreciation)
- --------------------------------------------------------------------------------------------
<c> <c> <c> <c>
Buy Contracts:
Citigroup Global Markets, Inc.
Republic of Hungary
4.50%, 2/06/13 900 0.50% 11/26/13 $(19,240)
Citigroup Global Markets, Inc.
Republic of Philippines
10.625%, 3/16/25 1,410 5.60 3/20/14 (3,699)
Sale Contracts:
Citigroup Global Markets, Inc.
Federal Republic of Brazil
12.25%, 3/06/30 3,300 6.35 8/20/05 195,612
Citigroup Global Markets, Inc.
Federal Republic of Brazil
12.25%, 3/06/30 2,450 4.40 5/20/06 168,587
Citigroup Global Markets, Inc.
Republic of Columbia
9.75%, 4/23/09 10,000 5.70 1/30/05 284,833
Citigroup Global Markets, Inc.
Republic of Philippines
10.625%, 3/16/25 1,410 4.95 3/20/09 26,699
CS First Boston
Federal Republic of Brazil
12.25%, 3/06/30 1,900 6.90 6/20/07 249,929
Morgan Stanley
Federal Republic of Brazil
12.25%, 3/06/30 1,620 3.80 8/20/06 57,168
Morgan Stanley
Federal Republic of Brazil
10.125%, 5/15/27 2,000 17.75 2/13/08 898,889
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 13
REVERSE REPURCHASE AGREEMENTS (see Note D)
Broker Interest Rate Maturity Amount
- -------------------------------------------------------------------------------
JPMorgan Chase 0.75% 12/30/05 $ 4,399,867
Merrill Lynch 1.30 12/30/05 5,628,313
$ 10,028,180
(a) Security is in default and is non-income producing.
(b) Securities are 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 registration, normally to qualified institutional
buyers. At October 31, 2004, the aggregate market value of these securities
amounted to $67,131,981 or 22.3% of net assets.
(c) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at October 31, 2004.
(d) Position, or portion thereof, with an aggregate market value of
$10,294,275 has been segregated to collateralize reverse repurchase agreements.
(e) Pay-In-Kind Payments (PIK).
(f) One contract relates to principal amount of $1.00.
(g) Non-income producing security.
Glossary of Terms:
DCB-Debt Conversion Bonds
FRN-Floating Rate Note
See notes to financial statements.
14 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
STATEMENT OF ASSETS & LIABILITIES
October 31, 2004
Assets
Investments in securities, at value (cost $267,427,611) $ 295,397,698
Cash 482,284
Unrealized appreciation on credit default swap contracts 1,881,717
Receivable for investment securities sold 10,159,917
Interest receivable 4,348,881
Receivable for capital stock sold 2,545,887
Total assets 314,816,384
Liabilities
Unrealized depreciation on credit default swap contracts 22,939
Reverse repurchase agreements 10,028,180
Payable for capital stock redeemed 2,294,440
Dividends payable 583,617
Payable for investment securities purchased 334,997
Distribution fee payable 161,535
Advisory fee payable 125,802
Transfer agent fee payable 16,335
Administrative fee payable 8,034
Accrued expenses 180,800
Total liabilities 13,756,679
Net Assets $ 301,059,705
Composition of Net Assets
Capital stock, at par $ 35,751
Additional paid-in capital 284,331,248
Distributions in excess of net investment income (1,360,572)
Accumulated net realized loss on investment transactions (11,775,587)
Net unrealized appreciation of investments 29,828,865
$ 301,059,705
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($156,468,611/18,665,886 shares of capital
stock issued and outstanding) $8.38
Sales charge--4.25% of public offering price .37
Maximum offering price $8.75
Class B Shares
Net asset value and offering price per share
($61,715,176/7,300,766 shares of capital
stock issued and outstanding) $8.45
Class C Shares
Net asset value and offering price per share
($82,875,918/9,784,608 shares of capital
stock issued and outstanding) $8.47
See notes to financial statements.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 15
STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income
Interest $ 23,915,350
Expenses
Advisory fee $ 2,167,477
Distribution fee--Class A 435,075
Distribution fee--Class B 764,133
Distribution fee--Class C 823,407
Transfer agency 384,602
Custodian 232,357
Audit and legal 155,196
Printing 140,186
Administrative 98,100
Registration 61,560
Directors' fees 22,977
Miscellaneous 15,826
Total expenses before interest 5,300,896
Interest expense 53,716
Total expenses 5,354,612
Less: expense waived by the Adviser and
the Transfer Agent (see Note B) (517,759)
Less: expense offset arrangement
(see Note B) (29)
Net expenses 4,836,824
Net investment income 19,078,526
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain on:
Investment transactions 26,687,606
Written options 674,898
Swap contracts 6,471,892
Net change in unrealized
appreciation/depreciation of:
Investments (16,665,296)
Swap contracts (2,740,122)
Written options (23,400)
Net gain on investment transactions 14,405,578
Net Increase in Net Assets
from Operations $ 33,484,104
See notes to financial statements.
16 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
STATEMENT OF CHANGES IN NET ASSETS
September 1,
Year Ended 2003 to Year Ended
October 31, October 31, August 31,
2004 2003* 2003
- -------------------------------------------------------------------------------
Increase (Decrease) in Net
Assets from Operations
Net investment income $ 19,078,526 $ 3,688,269 $ 23,418,959
Net realized gain on
investment transactions 33,834,396 5,180,958 30,010,826
Net change in unrealized
appreciation/
depreciation
of investments (19,428,818) 5,198,747 31,800,387
Net increase in net assets
from operations 33,484,104 14,067,974 85,230,172
Dividends to
Shareholders from
Net investment income
Class A (10,832,969) (1,851,590) (10,200,153)
Class B (5,187,126) (1,219,376) (8,446,512)
Class C (5,567,827) (1,034,345) (5,499,918)
Capital Stock Transactions
Net increase (decrease) (16,645,832) 14,129,599 18,645,018
Total increase (decrease) (4,749,650) 24,092,262 79,728,607
Net Assets
Beginning of period 305,809,355 281,717,093 201,988,486
End of period (including
distributions in excess
of net investment income
of ($1,360,572), ($1,144,869)
and ($1,003,454),
respectively) $ 301,059,705 $ 305,809,355 $ 281,717,093
* The Fund changed its fiscal year end from August 31 to October 31.
See notes to financial statements.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 17
NOTES TO FINANCIAL STATEMENTS
October 31, 2004
NOTE A
Significant Accounting Policies
AllianceBernstein Emerging Market Debt Fund, Inc. (the "Fund") was incorporated
in the state of Maryland on December 2, 1993, as a non-diversified, open-end
management investment company. The Fund offers Class A, Class B and Class C
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to
a contingent deferred sales charge of 1%. Class B shares are currently sold
with a contingent deferred sales charge which declines from 3% to zero
depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares six years after the end of the calendar
month of purchase. Class C shares are subject to a contingent deferred sales
charge of 1% on redemptions made within the first year after purchase. All
three classes of shares have identical voting, dividend, liquidation and other
rights, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. The financial
statements have been prepared in conformity with U.S. generally accepted
accounting principles, which require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. Additional
information about some of the items discussed in these Notes to Financial
Statements is contained in the Fund's Statement of Additional Information,
which is available upon request. The following is a summary of significant
accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities not listed on an exchange but traded on The
NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ
Official Closing Price; listed put or call options are valued at the last sale
price. If there has been no sale on that day, such securities will be valued at
the closing bid prices on that day; open futures contracts and options thereon
are valued using the closing settlement price or, in the absence of such a
price, the most recent quoted bid price. If there are no quotations available
for the day of valuation, the last available closing settlement price is used;
securities traded in the over-the-counter market, ("OTC") (but exclud-
18 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
ing securities traded on NASDAQ) are valued at the mean of the current bid and
asked prices as reported by the National Quotation Bureau or other comparable
sources; U.S. Government securities and other debt instruments having 60 days
or less remaining until maturity are valued at amortized cost if their original
maturity was 60 days or less; or by amortizing their fair value as of the 61st
day prior to maturity if their original term to maturity exceeded 60 days;
fixed-income securities, including mortgage backed and asset backed securities,
may be valued on the basis of prices provided by a pricing service or at a
price obtained from one or more of the major broker/dealers. In cases where
broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the
"Adviser") may establish procedures whereby changes in market yields or spreads
are used to adjust, on a daily basis, a recently obtained quoted price on a
security; and OTC and other derivatives are valued on the basis of a quoted bid
price or spread from a major broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The Fund may be subject to taxes imposed by countries in which it
invests.Such taxes are generally based on income and/or capital gains earned or
repatriated.Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund accretes discounts as
adjustments to interest income. Additionally, the Fund amortizes premium on
debt securities for financial statement reporting purposes only.
4. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the shares of such class, except that the Fund's Class
B and Class C shares bear higher distribution and transfer agent fees than
Class A shares.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 19
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
U.S. generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences do not require such
reclassification.
6. Change of Fiscal Year End
During 2003, the Fund changed its fiscal year end from August 31 to October 31.
Accordingly, the statement of changes in net assets and financial highlights
include the period from September 1, 2003 to October 31, 2003.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Until September 6, 2004, under the terms of an investment advisory agreement,
the Fund paid the Adviser an advisory fee at an annual rate of .75% of the
Fund's average daily net assets. Effective September 7, 2004, the terms of the
investment advisory agreement were amended so that the advisory fee was reduced
to an annual rate of .50% of the first $2.5 billion, .45% of the next $2.5
billion and .40% in excess of $5 billion, of the Fund's average daily net
assets. The fee is accrued daily and paid monthly.
Effective January 1, 2004 through September 6, 2004, in contemplation of the
final agreement the Office of New York Attorney General ("NYAG"), the Adviser
began waiving a portion of its advisory fee so as to charge the Fund at the
reduced annual rate discussed above. Through September 6, 2004, such waiver
amounted to $516,634. For a more complete discussion of the Adviser's
settlement with the NYAG, please see "Legal Proceedings" below.
For the year ended October 31, 2004, the Adviser voluntarily agreed to
reimburse a portion of certain audit fees related to the investigations
described under "Legal Proceedings" below in the amount of $1,125.
Pursuant to the advisory agreement, the Adviser provides certain legal and
accounting services to the Fund. For the year ended October 31, 2004 such fees
amounted to $98,100.
The Fund compensates Alliance Global Investor Services, Inc. (AGIS), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. Such compensation amounted to $215,871 for the year ended October 31,
2004.
For the year ended October 31, 2004 the Fund's expenses were reduced by $29
under an expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc. (the "Distributor"),
a wholly-owned subsidiary of the Adviser, serves as the distributor of
20 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
the Fund's shares. The Distributor has advised the Fund that it has retained
front-end sales charges of $29,130 from the sale of Class A shares and received
$801, $13,703, and $4,922 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the year ended October 31, 2004.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement the Fund pays a distribution fee to the Distributor at an annual rate
of up to .30% of the average daily net assets attributable to Class A shares
and 1% of the average daily net assets attributable to Class B and Class C
shares. The fees are accrued daily and paid monthly. The Agreement provides
that the Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has advised the Fund
that it has incurred expenses in excess of the distribution costs reimbursed by
the Fund in the amount of $4,526,194 and $2,555,029 for Class B and Class C
shares, respectively; such costs may be recovered from the Fund in future
periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs, incurred by the Distributor, beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended October 31, 2004, were as follows:
Purchases Sales
- -------------------------------------------------------------------------------
Investment securities (excluding
U.S. government securities) $ 484,009,864 $ 501,982,284
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding swap contracts) are as
follows:
Cost $268,750,159
Gross unrealized appreciation $ 27,955,805
Gross unrealized depreciation (1,308,266)
Net unrealized appreciation $ 26,647,539
1. Option Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) put
and call options on U.S. and foreign government securities and foreign
currencies that are traded on U.S. and foreign securities exchanges and
over-the-counter markets.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 21
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of premium and change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from options
written. The difference between the premium received and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a realized loss. If a
written call option is exercised, the premium received is added to the proceeds
from the sale of the underlying security or currency in determining whether the
Fund has realized a gain or loss. If a written put option is exercised, the
premium received reduces the cost basis of the security or currency purchased
by the Fund. In writing an option, the Fund bears the market risk of an
unfavorable change in the price of the security or currency underlying the
written option. Exercise of an option written by the Fund could result in the
Fund selling or buying a security or currency at a price different from the
current market value.
Transactions in written options for the year ended October 31, 2004, were as
follows:
Number of Premiums
Contracts Received
- -------------------------------------------------------------------------------
Options outstanding at
October 31, 2003 1,800,000 $ 32,400
Options written 35,083,176 642,623
Options terminated in closing
purchase transactions (12,730,000) (226,306)
Options expired (24,153,176) (448,717)
Options outstanding at
October 31, 2004 -0- $ -0-
2. Swap Agreements
The Fund may enter into swaps on sovereign debt obligations to protect itself
from interest rate fluctuations on the underlying debt instruments and for
investment purposes. A swap is an agreement that obligates two parties to
exchange a series of cash flows at specified intervals based upon or calculated
by reference to changes in specified prices or rates for a specified amount of
an underlying asset. The payment flows are usually netted against each other,
with the difference being paid by one party to the other.
22 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net interim payment
to be received by the Fund, and/or the termination value at the end of the
contract. Therefore, the Fund considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the underlying value of the securities.
As of November 1, 2003, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. The Fund accrues for the interim payments on
swap contracts on a daily basis, with the net amount recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities. Once the interim payments are settled in cash, the net amount is
recorded as realized gain/loss on swaps, in addition to realized gain/loss
recorded upon the termination of swaps contracts on the statements of
operations. Prior to November 1, 2003, these interim payments were reflected
within interest income/expense in the statement of operations. Fluctuations in
the value of swap contracts are recorded as a component of net change in
unrealized appreciation/depreciation of investments.
The Fund may enter into credit default swaps. The Fund may purchase credit
protection on the referenced obligation of the credit default swap ("Buy
Contract") or provide credit protection on the referenced obligation of the
credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap
provides upon the occurrence of a credit event, as defined in the swap
agreement, for the Fund to buy/(sell) from/(to) the counterparty at the
notional amount (the "Notional Amount") and receive/(deliver) the principal
amount of the referenced obligation. If a credit event occurs, the maximum
payout amount for a Sale Contract is limited to the Notional Amount of the swap
contract ("Maximum Payout Amount"). During the term of the swap agreement, the
Fund receives/(pays) semi-annual fixed payments from/(to) the respective
counterparty, calculated at the agreed upon interest rate applied to the
Notional Amount. These interim payments are recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities.
Credit default swaps may involve greater risks than if a Fund had invested in
the referenced obligation directly. Credit default swaps are subject to general
market risk, liquidity risk, counterparty risk and credit risk. If the Fund is
a buyer and no credit event occurs, it will lose its investment. In addition,
if the Fund is a seller and a credit event occurs, the value of the referenced
obligation received by the Fund coupled with the periodic payments previously
received, may be less than the Maximum Payout Amount it pays to the buyer,
resulting in a loss to the Fund.
At October 31, 2004, the Fund had Sale Contracts outstanding with Maximum
Payout Amounts aggregating $22,680,000, with net unrealized appreciation of
$1,881,717 and terms ranging from 1 to 10 years, as reflected in the portfolio
of investments.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 23
In certain circumstances, the Fund may hold Sale Contracts on the same
referenced obligation and with the same counterparty it has purchased credit
protection, which may reduce its obligation to make payments on Sale Contracts,
if a credit event occurs. The Fund had Buy Contracts outstanding with a
Notional Amount of $1,410,000 with respect to the same referenced obligations
and same counterparties of certain Sale Contracts outstanding, which reduced
its obligation to make payments on Sale Contracts to $21,270,000 as of October
31, 2004.
3. Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account with the custodian containing liquid assets having a value at least
equal to the repurchase price.
For the year ended October 31, 2004, the average amount of reverse repurchase
agreements outstanding was $14,118,645 and the daily weighted average interest
rate was .43%.
NOTE E
Capital Stock
There are 9,000,000,000 shares of $.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Each class consists of 3,000,000,000 authorized shares. Transactions in capital
stock were as follows:
Shares
- -------------------------------------------------------------------------------
September 1,
Year Ended 2003 to Year Ended
October 31, October 31, August 31,
2004 2003* 2003
- -------------------------------------------------------------------------------
Class A
Shares sold 7,343,810 2,625,192 15,805,963
Shares issued in reinvestment of
dividends and distributions 792,420 130,057 767,001
Shares converted from Class B 2,824,893 108,120 1,081,814
Shares redeemed (9,517,206) (1,005,137) (14,979,291)
Net increase 1,443,917 1,858,232 2,675,487
Class B
Shares sold 2,061,321 461,773 4,004,147
Shares issued in reinvestment of
dividends and distributions 368,402 78,242 517,733
Shares converted to Class A (2,809,287) (109,203) (1,070,593)
Shares redeemed (3,521,227) (709,323) (5,118,893)
Net decrease (3,900,791) (278,511) (1,667,606)
* The Fund changed its fiscal year end from August 31 to October 31.
24 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
Notes to Financial Statements
Shares
- -------------------------------------------------------------------------------
September 1,
Year Ended 2003 to Year Ended
October 31, October 31, August 31,
2004 2003* 2003
- -------------------------------------------------------------------------------
Class C
Shares sold 3,460,960 617,045 4,327,340
Shares issued in reinvestment of
dividends and distributions 391,534 62,481 355,635
Shares redeemed (3,669,381) (477,362) (2,747,810)
Net increase 183,113 202,164 1,935,165
* The Fund changed its fiscal year end from August 31 to October 31.
Amount
- -------------------------------------------------------------------------------
September 1,
Year Ended 2003 to Year Ended
October 31, October 31, August 31,
2004 2003* 2003
- -------------------------------------------------------------------------------
Class A
Shares sold $ 60,310,728 $ 20,797,068 $ 109,920,861
Shares issued in reinvestment of
dividends and distributions 6,461,218 1,041,833 5,359,919
Shares converted from Class B 23,286,830 872,532 7,661,897
Shares redeemed (77,151,613) (7,987,376) (106,021,261)
Net increase $ 12,907,163 $ 14,724,057 $ 16,921,416
Class B
Shares sold $ 17,175,862 $ 3,715,085 $ 28,604,474
Shares issued in reinvestment of
dividends and distributions 3,031,744 632,968 3,639,603
Shares converted to Class A (23,286,830) (872,532) (7,661,897)
Shares redeemed (28,752,842) (5,701,215) (36,999,728)
Net decrease $(31,832,066) $ (2,225,694) $ (12,417,548)
Class C
Shares sold $ 28,938,238 $ 4,968,163 $ 31,650,442
Shares issued in reinvestment of
dividends and distributions 3,224,389 506,101 2,514,505
Shares redeemed (29,883,556) (3,843,028) (20,023,797)
Net increase $ 2,279,071 $ 1,631,236 $ 14,141,150
* The Fund changed its fiscal year end from August 31 to October 31.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 25
NOTE F
Risks Involved in Investing in the Fund
Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes
in interest rates will affect the value of the Fund's investments in
fixed-income debt securities such as bonds or notes. Increases in interest
rates may cause the value of the Fund's investments to decline. Credit risk is
the risk that the issuer or guarantor of a debt security, or the counterparty
to a derivative contract, will be unable or unwilling to make timely principal
and/or interest payments, or to otherwise honor its obligations. The degree of
risk for a particular security may be reflected in its credit risk rating.
Credit risk is greater for medium quality and lower-rated securities.
Lower-rated debt securities and similar unrated securities (commonly known as
"junk bonds") have speculative elements or are predominantly speculative risks.
Concentration of Risk--Investing in securities of foreign companies and foreign
governments involves special risks which include the possibility of future
political and economic developments which could adversely affect the value of
such securities. Moreover, securities of many foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of comparable U.S. companies and the United States government. The
Fund invests in the Sovereign Debt Obligations of countries that are considered
emerging market countries at the time of purchase. Therefore, the Fund is
susceptible to governmental factors and economic and debt restructuring
developments adversely affecting the economies of these emerging market
countries. In addition, these debt obligations may be less liquid and subject
to greater volatility than debt obligations of more developed countries.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $500 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended October 31, 2004.
26 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
NOTE H
Distributions to Shareholders
The tax character of distributions paid during the fiscal year ended October
31, 2004, the period ended October 31, 2003, and fiscal year ended August 31,
2003 were as follows:
Year Ended September 1, 2003 Year Ended
October 31, to October 31, August 31,
2004 2003 2003
- ------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 21,587,922 $ 4,105,311 $ 24,146,583
Total taxable
distributions 21,587,922 4,105,311 24,146,583
Tax return of capital -0- -0- -0-
Total distributions
paid $ 21,587,922 $ 4,105,311 $ 24,146,583
As of October 31, 2004, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $ (10,834,708)(a)
Unrealized appreciation/(depreciation) 28,111,031(b)
Total accumulated earnings/(deficit) $ 17,276,323(c)
(a) On October 31, 2004, the Fund had a net capital loss carryforward for
federal income tax purposes of $10,834,708 which expires in the year 2009. To
the extent future capital gains are offset by capital loss carryforwards, such
gains will not be distributed. During the fiscal year, the Fund utilized
capital loss carryforwards of $31,257,982.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales and the difference between book and tax amortization
methods for premium.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
During the current fiscal year, permanent differences, primarily dues to
distributions in excess of net investment income, the tax treatment of bond
premium and the tax treatment of swap income, resulted in a net decrease in
distributions in excess of net investment income, a net increase in accumulated
net realized loss on investment transactions and a net decrease in additional
paid-in capital. This reclassification had no effect on net assets.
NOTE I
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the NYAG have been investigating practices in the mutual
fund industry identified as "market timing" and "late trading" of mutual fund
shares. Certain other regulatory authorities have also been conducting
investigations into these practices within the industry and have requested that
the Adviser provide information to them. The Adviser has been cooperating and
will continue to cooperate with all of these authorities.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 27
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurrance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order and the NYAG Order
contemplate that the Adviser's registered investment company clients, including
the Fund, will introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendmend to the Fund's investment advisor agreement; please see "Advisory Fee
and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, is continuing to direct and oversee an internal
investigation and a comprehensive review of the facts and circumstances
relevant to the SEC's and the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent
Directors") have initiated an investigation of the above-mentioned matters with
the advice of an independent economic consultant and independent counsel. The
Independent Directors have formed a special committee to supervise the
investigation.
28 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
On October 2, 2003, a putative class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed
against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital
Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein
Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran
(collectively, the "Alliance Capital defendants"); and certain other defendants
not affiliated with the Adviser. The Hindo Complaint was filed in the United
States District Court for the Southern District of New York by alleged
shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint
alleges that certain of the Alliance Capital defendants failed to disclose that
they improperly allowed certain hedge funds and other unidentified parties to
engage in late trading and market timing of AllianceBernstein Fund securities,
violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of
the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek
an unspecified amount of compensatory damages and rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, numerous additional lawsuits making factual allegations
similar to those in the Hindo Complaint were filed against the Adviser and
certain other defendants, some of which name the Fund as a defendant. All of
these lawsuits seek an unspecified amount of damages. The lawsuits are now
pending in the United States District Court for the District of Maryland
pursuant to a ruling by the Judicial Panel on Multidistrict Litigation
transferring and centralizing all of the mutual fund cases involving market and
late trading in the District of Maryland.
As a result of the matters discussed above, investors in the AllianceBernstein
Mutual Funds may choose to redeem their investments. This may require the
AllianceBernstein Mutual Funds to sell investments held by those funds to
provide for sufficient liquidity and could also have an adverse effect on the
investment performance of the AllianceBernstein Mutual Funds.
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
an unaffiliated broker/dealer violated federal securities laws relating to its
receipt of compensation for selling specific mutual funds and the disclosure of
such compensation. The SEC has indicated publicly that, among other things, it
is considering enforcement action in connection with mutual funds' disclosure
of such arrangements and in connection with the practice of considering mutual
fund sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC has issued subpoenas to the Adviser in connection with
this matter and the Adviser has provided documents and other information to the
SEC and is cooperating fully with its investigation.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 29
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Aucoin Complaint was filed in the United States District Court
for the Southern District of New York by an alleged shareholder of an
AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other
things, (i) that certain of the defendants improperly authorized the payment of
excessive commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain of the
defendants misrepresented and omitted from registration statements and other
reports material facts concerning such payments, and (iii) that certain
defendants caused such conduct as control persons of other defendants. The
Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and
48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act,
breach of common law fiduciary duties, and aiding and abetting breaches of
common law fiduciary duties. Plaintiffs seek an unspecified amount of
compensatory damages and punitive damages, rescission of their contracts with
the Adviser, including recovery of all fees paid to the Adviser pursuant to
such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the Fund's shares or
other adverse consequences to the Fund. However, the Adviser believes that
these matters are not likely to have a material adverse effect on its ability
to perform advisory services relating to the Fund.
30 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Class A
---------------------------------------------------------------------------
Year September 1,
Ended 2003 to Year Ended August 31,
October 31, October 31, -------------------------------------------------
2004(a) 2003(b) 2003 2002(c) 2001 2000
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, beginning of period $ 8.00 $ 7.72 $ 6.02 $ 6.37 $ 7.06 $ 5.69
Income From Investment Operations
Net investment income(d) .49(e) .11 .69 .69 .85 .75
Net realized and unrealized
gain (loss) on investment
transactions .50 .28 1.71 (.24) (.76) 1.40
Net increase in net asset
value from operations .99 .39 2.40 .45 .09 2.15
Less: Dividends and
Distributions
Dividends from net investment
income (.61) (.11) (.70) (.74) (.78) (.75)
Tax return of capital -0- -0- -0- (.06) -0- (.03)
Total dividends and distributions (.61) (.11) (.70) (.80) (.78) (.78)
Net asset value, end of period $ 8.38 $ 8.00 $ 7.72 $ 6.02 $ 6.37 $ 7.06
Total Return
Total investment return
based on net asset value(f) 12.82% 5.11% 41.80% 7.38% 1.55% 39.76%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $156,469 $137,709 $118,669 $76,397 $66,750 $66,075
Ratio to average net
assets of:
Expenses, net of waivers/
reimbursements 1.23% 1.75%(g) 1.94% 1.88% 2.20% 1.76%
Expenses, before waivers/
reimbursements 1.40% 1.75%(g) 1.94% 1.88% 2.20% 1.76%
Expenses, excluding
interest expense 1.21% 1.47%(g) 1.46% 1.50% 1.47% 1.51%
Net investment income 6.04%(e) 7.90%(g) 9.73% 11.02% 12.78% 11.59%
Portfolio turnover rate 173% 20% 125% 170% 150% 173%
See footnote summary on page 34.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 31
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
---------------------------------------------------------------------------
Year September 1,
Ended 2003 to Year Ended August 31,
October 31, October 31, -------------------------------------------------
2004(a) 2003(b) 2003 2002(c) 2001 2000
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, beginning of period $ 8.07 $ 7.80 $ 6.09 $ 6.45 $ 7.14 $ 5.74
Income From Investment Operations
Net investment income(d) .62(e) .10 .64 .64 .79 .71
Net realized and unrealized
gain (loss) on investment
transactions .32 .28 1.73 (.24) (.76) 1.40
Net increase in net asset
value from operations .94 .38 2.37 .40 .03 2.11
Less: Dividends and
Distributions
Dividends from net investment
income (.56) (.11) (.66) (.70) (.72) (.68)
Tax return of capital -0- -0- -0- (.06) -0- (.03)
Total dividends and distributions (.56) (.11) (.66) (.76) (.72) (.71)
Net asset value, end of period $ 8.45 $ 8.07 $ 7.80 $ 6.09 $ 6.45 $ 7.14
Total Return
Total investment return based
on net asset value(f) 12.02% 4.84% 40.69% 6.50% .63% 38.41%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $61,715 $90,443 $89,571 $80,064 $83,706 $108,075
Ratio to average net
assets of:
Expenses, net of waivers/
reimbursements 1.94% 2.45%(g) 2.64% 2.58% 2.88% 2.45%
Expenses, before waivers/
reimbursements 2.11% 2.45%(g) 2.64% 2.58% 2.88% 2.45%
Expenses, excluding
interest expense 1.92% 2.17%(g) 2.17% 2.20% 2.17% 2.21%
Net investment income 7.57%(e) 7.11%(g) 9.07% 10.25% 11.80% 10.85%
Portfolio turnover rate 173% 20% 125% 170% 150% 173%
See footnote summary on page 34.
32 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Class C
---------------------------------------------------------------------------
Year September 1,
Ended 2003 to Year Ended August 31,
October 31, October 31, -------------------------------------------------
2004(a) 2003(b) 2003 2002(c) 2001 2000
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, beginning of period $ 8.09 $ 7.82 $ 6.10 $ 6.46 $ 7.15 $ 5.74
Income From Investment Operations
Net investment income(d) .45(e) .10 .63 .64 .79 .71
Net realized and unrealized
gain (loss) on investment
transactions .49 .28 1.75 (.24) (.76) 1.41
Net increase in net asset
value from operations .94 .38 2.38 .40 .03 2.12
Less: Dividends and
Distributions
Dividends from net investment
income (.56) (.11) (.66) (.70) (.72) (.68)
Tax return of capital -0- -0- -0- (.06) -0- (.03)
Total dividends and distributions (.56) (.11) (.66) (.76) (.72) (.71)
Net asset value, end of period $ 8.47 $ 8.09 $ 7.82 $ 6.10 $ 6.46 $ 7.15
Total Return
Total investment return
based on net asset value(f) 12.00% 4.83% 40.80% 6.50% .63% 38.58%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $82,876 $77,657 $73,477 $45,527 $40,667 $48,960
Ratio to average net
assets of:
Expenses, net of waivers/
reimbursements 1.92% 2.43%(g) 2.63% 2.56% 2.87% 2.45%
Expenses, before waivers/
reimbursements 2.09% 2.43%(g) 2.63% 2.56% 2.87% 2.45%
Expenses, excluding interest
expense 1.90% 2.16%(g) 2.16% 2.19% 2.16% 2.20%
Net investment income 5.51%(e) 7.09%(g) 8.91% 10.16% 11.81% 10.78%
Portfolio turnover rate 173% 20% 125% 170% 150% 173%
See footnote summary on page 34.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 33
(a) As of November 1, 2003, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. These interim payments are reflected within
net realized and unrealized gain (loss) on swap contracts, however prior to
November 1, 2003, these interim payments were reflected within interest
income/expense on the statement of operations. The effect of this change for
the year ended October 31, 2004, was to decrease net investment income per
share by $.05, $.04 and $.05 and increase net realized and unrealized gain
(loss) on investment transactions per share by $.05, $.04 and $.05 for Class A,
Class B and Class C, respectively. Consequently, the ratios of net investment
income to average net assets were decreased by 0.56%, 0.57% and 0.55% for Class
A, Class B and Class C, respectively.
(b) The Fund changed its fiscal year end from August 31 to October 31.
(c) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide, Audits of Investment
Companies, and began amortizing premium on debt securities for financial
statement reporting purposes only. For the year ended August 31, 2002, the
effect of this change to Class A, B and C was to decrease net investment income
per share by $.01 and decrease net realized and unrealized loss on investment
transactions per share by $.01. Consequently, the ratio of net investment
income to average net assets was decreased from 11.10% to 11.02% for Class A,
from 10.34% to 10.25% for Class B and from 10.24% to 10.16% for Class C. Per
share, ratios and supplemental data for periods prior to September 1, 2001 have
not been restated to reflect this change in presentation.
(d) Based on average shares outstanding.
(e) Net of expenses waived/reimbursed by the Adviser.
(f) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the year, reinvestment of all
dividends and distributions at net asset value during the year, and redemption
on the last day of the year. Initial sales charge or contingent deferred sales
charge is not reflected in the calculation of total investment return. Total
return does not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of Fund shares. Total investment return
calculated for a period of less than one year is not annualized.
(g) Annualized.
34 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
AllianceBernstein Emerging Market Debt Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
AllianceBernstein Emerging Market Debt Fund, Inc. (the "Fund"), including the
portfolio of investments, as of October 31, 2004, and the related statement of
operations for the year then ended, and the statement of changes in net assets
and the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standard require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of October 31, 2004, by
correspondence with the custodian and others. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
AllianceBernstein Emerging Market Debt Fund, Inc. at October 31, 2004, the
results of its operations for the year then ended, and the changes in its net
assets and the financial highlights for each of the periods indicated therein,
in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
December 15, 2004
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 35
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Donald J. Robinson(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Paul J. DeNoon(2), Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer and Chief Financial Officer
Vincent S. Noto, Controller
Principal Underwriter
AllianceBernstein Investment Research and Management, Inc.
1345 Avenue of the Americas
New York, NY 10105
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Transfer Agent
Alliance Global Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-Free (800) 221-5672
Independent Registered
Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
(1) Member of the Audit Committee and the Governance and Nominating Committee.
(2) Mr. DeNoon is the person primarily responsible for the day-to-day
management of the Fund's investment portfolio.
36 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
DATE OF BIRTH, OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
Marc O. Mayer + Executive Vice President of ACMC 68 None
1345 Avenue of the since 2001; prior thereto, Chief
Americas Executive Officer of Sanford C.
New York, NY 10105 Bernstein & Co., LLC and its
10/2/57 predecessor since prior to 1999.
(2003)
DISINTERESTED DIRECTORS
William H. Foulk, Jr. # Investment adviser and an 116 None
2 Sound View Drive independent consultant. He
Suite 100 was formerly Senior Manager
Greenwich, CT 06830 of Barrett Associates, Inc., a
Chairman of the Board registered investment adviser,
9/7/32 with which he had been associ-
(1994) ated since prior to 1999. He was
formerly Deputy Comptroller and
Chief Investment Officer of the
State of New York and, prior thereto,
Chief Investment Officer of the
New York Bank for Savings.
Ruth Block # ** Formerly Executive Vice President 96 None
500 SE Mizner Blvd. and Chief Insurance Officer of
Boca Raton, FL 33432 The Equitable Life Assurance
11/7/30 Society of the United States;
(1994) Chairman and Chief Executive
Officer of Evlico; Director of
Avon, BP (oil and gas), Ecolab
Incorporated (specialty chemicals),
Tandem Financial Group and Donaldson,
Lufkin & Jenrette Securities
Corporation; former Governor at
Large National Association of
Securities Dealers, Inc.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 37
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
DATE OF BIRTH, OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
David H. Dievler # Independent consultant. Until 100 None
P.O. Box 167 December 1994, he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
10/23/29 Management Corporation
(1994) ("ACMC") responsible for mutual
fund administration. Prior to joining
ACMC in 1984, he was Chief Financial
Officer of Eberstadt Asset Management
since 1968. Prior to that, he was a
Senior Manager at Price Waterhouse
& Co. Member of American Institute
of Certified Public Accountants
since 1953.
John H. Dobkin # Consultant. Formerly President 98 None
P.O. Box 12 of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002,
2/19/42 a Senior Advisor from June 1999-
(1994) June 2000 and President of
Historic Hudson Valley (historic
preservation) from December 1989-May
1999. Previously, Director of the
National Academy of Design and
during 1988-1992, he was Director
and Chairman of the Audit Committee
of ACMC.
Donald J. Robinson # Senior Counsel to the law firm of 96 None
98 Hell's Peak Road Orrick, Herrington & Sutcliffe LLP
Weston, VT 05161 since prior to 1999. Formerly a
8/24/34 senior partner and a member of
(1996) the Executive Committee of that
firm. Formerly a member and Chairman
of the Municipal Securities Rulemaking
Board and a Trustee of the Museum of
the City of New York.
* There is no stated term of office for the Fund's Directors.
** Ms. Block was an "interested person" as defined in the 1940 Act, until
October 21, 2004 by reason of her ownership of 116 American Depositary Shares
of AXA having a value of approximately $2,396.AXA is a controlling person of
ACMC. Ms.Block received shares of The Equitable Companies Incorporated as part
of the demutualization of The Equitable Life Assurance Society of the United
States, which were subsequently converted through a corporate action into 116
American Depositary Shares of AXA.
# Member of the Audit Committee and the Governance and Nominating Committee.
+ Mr. Mayer is an "interested person", as defined in the 1940 Act, due to his
position as Executive Vice President of ACMC.
38 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
Management of the Fund
Officers of the Fund
Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS**
- -------------------------------------------------------------------------------------------
Marc O. Mayer, President See biography above.
10/2/57
Philip Kirstein, Senior Vice President Senior Vice President, Independent
5/29/45 and Independent Compliance Officer-Mutual Funds of
Compliance Officer ACMC with which he has been associated
since October 2004. Prior thereto, he was
of Counsel to Kirkpatrick & Lockhart, LLP
from 2003 to October 2004, and General
Counsel and First Vice President of
Merrill Lynch Investment Managers, LLP
since prior to 1999.
Paul J. DeNoon, Vice President Senior Vice President of ACMC**, with
4/18/62 which he has been associated since prior
to 1999.
Mark R. Manley, Secretary Senior Vice President, Deputy General
10/23/62 Counsel and Chief Compliance Officer of
ACMC**, with which he has been associated
since prior to 1999.
Mark D. Gersten, Treasurer and Chief Senior Vice President of Alliance Global
10/4/50 Financial Officer Investor Services, Inc. ("AGIS")**, and Vice
President of AllianceBernstein Investment
Research and Management, Inc. ("ABIRM")**,
with which he has been associated since
prior to 1999.
Vincent S. Noto, Controller Vice President of AGIS**, with which
12/14/64 he has been associated since prior to 1999.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM and AGIS are affiliates of the Fund.
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and officers and is available without
charge upon request. Contact your financial representative or Alliance Capital
at (800) 227-4618 for a free prospectus or SAI.
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND . 39
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- ----------------------------------------
Wealth Strategies Funds
- ----------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
- ----------------------------------------
Blended Style Funds
- ----------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- ----------------------------------------
Growth Funds
- ----------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund*
Small Cap Growth Fund
Global & International
All-Asia Investment Fund
Global Health Care Fund*
Global Research Growth Fund
Global Technology Fund*
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
- ----------------------------------------
Value Funds
- ----------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund*
Growth & Income Fund
Real Estate Investment Fund
Small Cap Value Fund**
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
- ----------------------------------------
Taxable Bond Funds
- ----------------------------------------
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
- ----------------------------------------
Municipal Bond Funds
- ----------------------------------------
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
- ----------------------------------------
Intermediate Municipal Bond Funds
- ----------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- ----------------------------------------
Closed-End Funds
- ----------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
We also offer Exchange Reserves,*** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current
prospectus. You should read the prospectus carefully before you invest.
* Prior to December 15, 2004, these Funds were named as follows: Global
Health Care Fund was Health Care Fund; Large Cap Growth Fund was Premier Growth
Fund; Global Technology Fund was Technology Fund; and Focused Growth & Income
Fund was Disciplined Value Fund.
** Effective February 1, 2005, Small Cap Value Fund will be renamed
Small/Mid-Cap Value Fund.
*** An investment in the Fund 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 investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
40 . ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
ALLIANCEBERNSTEIN EMERGING MARKET DEBT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
(SM) This service mark used under license from
the owner, Alliance Capital Management L.P.
GDGAR1004
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer. A copy of the registrant's code of ethics is filed herewith as
Exhibit 11(a)(1).
(b) During the period covered by this report, no material amendments were made
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent auditor Ernst & Young LLP, for the Fund's last two fiscal years for
professional services rendered for: (i) the audit of the Fund's annual
financial statements included in the Fund's annual report to stockholders; (ii)
assurance and related services that are reasonably related to the performance
of the audit of the Fund's financial statements and are not reported under (i),
which include multi-class distribution testing, advice and education on
accounting and auditing issues, and consent letters; and (iii) tax compliance,
tax advice and tax return preparation.
Audit-Related
Audit Fees Fees Tax Fees
AllianceBernstein
Emerging Market
Debt Fund, Inc.
2003* 33,150 1,604 0
2004 54,000 6,423 30,804
* During the course of calendar year 2003, this Fund changed its fiscal year-end
from August 31 to October 31. Fees for 2003 are for the period September 1
through October 31, 2003.
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or
after May 6, 2003, the Fund's Audit Committee policies and procedures require
the pre-approval of all audit and non-audit services provided to the Fund by
the Fund's independent auditors. The Fund's Audit Committee policies and
procedures also require pre-approval of all audit and non-audit services
provided to the Adviser and Service Affiliates to the extent that these
services are directly related to the operations or financial reporting of the
Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) - (c) are for services pre-approved by the Fund's
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to
the Fund, the Fund's Adviser and entities that control, are controlled by or
under common control with the Adviser that provide ongoing services to the
Fund, which include conducting an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
:
Total Amount of
Foregoing Column Pre-
approved by the Audit
All Fees for Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit Related Fees)
Portfolio, the Adviser Portion Comprised of
and Service Affiliates Tax Fees)
- -------------------------------------------------------------------------------
AllianceBernstein
Emerging Market
Debt Fund, Inc. 2003* 388,604 388,604
388,604
0
2004 1,138,959 187,227
156,423
30,804
* During the course of calendar year 2003, this Fund changed its fiscal year-end
from August 31 to October 31. Fees for 2003 are for the period September 1
through October 31, 2003.
(h) The Audit Committee of the Fund has considered whether the provision of any
non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent auditor to the Adviser and Service Affiliates is compatible
with maintaining the auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no significant changes in the registrant's internal controls
that could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
11 (a) (1) Code of ethics that is subject to the disclosure of Item 2
hereof
11 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (c) Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Emerging Market Debt Fund, Inc.
By: /s/ Marc O. Mayer
Marc O. Mayer
President
Date: December 31, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
Marc O. Mayer
President
Date: December 31, 2004
By: /s/ Mark D. Gersten
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: December 31, 2004
00250.0073 #462870v4