NOTES TO FINANCIALS STATEMENTS
7. Change in Accounting Principle
In November 2000, the American Institute of Certified Public Accountants (AICPA) issued a revised version of
its Audit and Accounting Guide for Investment Companies (the "Guide"), which is effective for fiscal years
beginning after December 15, 2000. The Guide will require the Portfolio to amortize premiums and discounts on
fixed income securities. Upon adoption, the Portfolio will be required to record a cumulative effect adjustment to
reflect the amortization of premiums. The adjustment will reduce net investment income and increase unrealized
appreciation on securities by the same amount, and therefore will not impact total net assets. At this time, the
analysis of the adjustment has not been completed. Although this adjustment affects the financial statements,
adoption of this principle will not effect the amount of distributions paid to shareholders, because the Portfolio
determines its required distributions under Federal income tax laws.
Advisory Fee and Other Transactions with Affiliates
Under the terms of an investment advisory agreement, the Portfolio pays Alliance Capital Management L.P. (the
"Adviser"), an advisory fee at an annual rate of .55 of 1% of the Portfolio's average daily net assets. The fee is
accrued daily and paid monthly. The adviser has agreed to waive its fees and bear certain expenses to the extent
necessary to limit total operating expenses on an annual basis to .98%, 1.68%, 1.68% and .68% of the daily
average net assets for Class A, Class B, Class C shares and Advisor Class, respectively. For the six months
ended December 31, 2000, such reimbursement amounted to $156,969.
Pursuant to the advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting
services provided to the Portfolio by the Adviser. For the six months ended December 31, 2000, the Adviser
agreed to waive its fees for such services. Such waiver amounted to $60,000.
The Portfolio compensate