EX-99.13 4 j2417_ex99d13.htm EX-99.13 Prepared by MERRILL CORPORATION

EXHIBIT  99.13

 

Alliance Capital

 

Salomon Smith Barney
Global Asset Management Conference

Bruce W. Calvert

Chairman and CEO

November 13, 2001

 


 

Forward-Looking Statements

Certain statements provided by Alliance Capital Management L.P. (“Alliance Capital”) and Alliance Capital Management Holding L.P. (“Alliance Holding”) in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  The most significant of such factors include, but are not limited to, the following:  the performance of financial markets, the investment performance of Alliance Capital’s sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions, and government regulations, including changes in tax rates.  Alliance Capital and Alliance Holding caution readers to carefully consider such factors.  Further, such forward-looking statements speak only as of the date on which such statements are made; Alliance Capital and Alliance Holding undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

 


 

About Alliance Capital – A Brief History

 

 

1962

 

Investment management department of Donaldson, Lufkin & Jenrette (DLJ) is founded to specialize in management of pension fund assets.

 

 

 

1971

 

DLJ’s investment management department is merged with Moody’s Investors Services investment advisory business to form Alliance Capital Management Corporation.

 

 

 

1985

 

Alliance Capital and DLJ are acquired by the Equitable Life Assurance Society of the United States.*

 

 

 

1988

 

Alliance Capital “goes public” as a master limited partnership and is listed on the New York Stock Exchange.

 

 

 

1992

 

Equitable is acquired by AXA and subsequently renamed AXA Financial (1999).

 

 

 

2000

 

Alliance Capital acquires Sanford C. Bernstein & Co. Inc., a premier global value franchise. Provides entry into the private client and institutional research business, and scale and product breadth for international expansion.

 


*    Equitable Companies Incorporated, an indirect parent of The Equitable Life Assurance Society of the United States, changed its name to AXA Financial, Inc. in September 1999

 


 

About Alliance Capital – Ownership Structure

 

Unit Ownership

 

Alliance Capital

Beneficial Ownership

 

 

If all unexercised options are included,
Alliance employee ownership is 19%.

 

 

 

* AXA Financial ownership includes General Partnership interests. Employee ownership percentage includes restricted unit awards.

 


 

About Alliance Capital – Investment Considerations

 

 

Alliance Capital (The Operating Partnership)

 

 

 

 

 

  Assets Under Management:

 

$421 billion

 

 

 

  Value (1):

 

$12.5 billion

 

 

 

 

 

 

Alliance Holding (The Publicly Traded Partnership)

 

 

 

 

 

  NYSE

 

Ticker: AC

 

 

 

  AC: Market Capitalization (public)

 

$3.7 billion

 

 

 

  Current Price:

 

$49.70

 

 

 

  Trailing Twelve Month Yield

 

5.7%

 

 

 

  10 year DPU (2) Growth Rate

 

19%

 

 

 

  5 year DPU (2) Growth Rate

 

22%

 


(1) Value of operating partnership is based upon price of Alliance Holding units as of 11/6/01 and total outstanding Alliance Capital units as of 9/30/01.

(2) Distributions per Unit.

Current price, value, market capitalization, and yield as of 11/6/01.  AUM as of 9/30/01.

 


 

About Alliance Capital – AUM By Investment And Client Orientation

 

 

$421 Billion
at September 30, 2001

 

 

 

Investment Orientation

 

Client Orientation

 

 

Amounts in $ billions.

Equity includes assets from balanced portfolios.

 


 

About Alliance Capital – AUM By Client Orientation

$421 Billion at

September 30, 2001

 

 

(1) Assets are categorized by country domicile of client accounts.
Amounts in $ billions.

 


 

Our Mission

 

 

To be the premier

 

global research and investment management organization

 

through superior performance

 

across a broad range of investment disciplines

 

for a diverse group of clients

 


 

A Global Platform

 

 

 


 

Resourced To Provide Superior Performance

 

 

 

 

 

Fixed

 

 

 

 

 

 

 

Equity

 

Income

 

Other

 

Total

 

Buy-Side Analysts

 

170

 

69

 

 

239

 

 

 

 

 

 

 

 

 

 

 

Sell-Side Analysts

 

87

 

 

 

87

 

 

 

 

 

 

 

 

 

 

 

Portfolio Managers

 

142

 

74

 

3

 

219

 

 

 

 

 

 

 

 

 

 

 

Traders

 

 

 

 

 

 

 

 

 

Buy-Side

 

27

 

10

 

 

37

 

Sell-Side

 

30

 

 

 

30

 

Floor

 

23

 

 

 

23

 

 

 

 

 

 

 

 

 

 

 

Corporate Finance/Other

 

 

 

11

 

11

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

479

 

153

 

14

 

646

 

 

As of September 30, 2001.

Includes investment professionals and analysts from joint venture affiliates and non-key investment locations.

 


 

Across A Broad Range Of Active, Research-Based Disciplines

 

 

 


 

For A Diverse Group Of Clients

 

 

 


 

For The Purpose Of Delivering Superior Returns To Investors

 

 

 

 


*As of 9/30/01. AC and S&P returns include reinvestment of cash distributions and dividends, respectively.

**Since IPO 4/88.

 


 

Through A Steady Flow of Cash Distributions

 

 

 


Distributions per Unit are adjusted for two-for-one Unit split in 1998.

*Based on LTM distributions for periods from3Q96 through 3Q01.

 


 

Third Quarter Highlights

All information compared to Second Quarter 2001

·         AUM declined $44 billion, or 9%, to $421 billion

·            Market depreciation of $50 billion

·            Net flows of $6 billion

·         Average AUM down 1% to $449 billion

·         Relative performance remains competitive

·         Net new business positive in all three major channels – retail, institutional investment management and private client

·         Wrap business –on hold in most programs; net outflows of $2.1 billion

·         Revenues down 5%

·         Market depreciation and mix change to lower fee products contributed to the decline

·         Cost-reduction activities partially offset decrease in revenue

 


 

Market Environment Remains Difficult

 

 

 

3Q

 

YTD

 

S&P 500

 

(14.7)%

 

(20.4)%

 

 

 

 

 

 

 

Russell 1000 Growth

 

(19.4)  

 

(30.9)  

 

 

 

 

 

 

 

Russell 1000 Value

 

(11.0)  

 

(12.1)  

 

 

 

 

 

 

 

Lehman Aggregate Bond

 

4.6 

 

8.4 

 

 


 

Market Depreciation Causes AUM Decline

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Institutional

 

Private

 

 

 

 

 

Retail

 

Inv Mgmt

 

Client

 

Total

 

  June 2001 AUM*

 

$

164

 

$

262

 

$

39

 

$

465

 

 

 

 

 

 

 

 

 

 

 

  Net New Business**

 

1

 

3

 

1

 

4

 

 

 

 

 

 

 

 

 

 

 

  Wrap Net Redemptions

 

(2

)

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

  Cash Management

 

2

 

2

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

  Market Depreciation

 

(19

)

(29

)

(2

)

(50

)

 

 

 

 

 

 

 

 

 

 

 

 

  Sept 2001 AUM

 

$

146

 

$

238

 

$

37

 

$

421

 

 

 

 

Net New Business in Every Major Distribution Channel for Third Consecutive Quarter

 


* June 30, 2001 assets under management have been reclassified.

** Excluding wrap and cash management.

In $ billions. Note: table may not add due to rounding.

 


 

Net New Business Strengthened by Product Diversity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth

 

Value

 

Fixed

 

 

 

 

 

 

 

Equity

 

Equity

 

Income

 

Passive

 

Total

 

•  June 2001 AUM*

 

$

195

 

$

96

 

$

141

 

$

33

 

$

465

 

 

 

 

 

 

 

 

 

 

 

 

 

•  Net New Business

 

(2

)

2

 

6

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

•  Market Apprec/(Deprec)

 

(36

)

(10

)

1

 

(5

)

(50

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

•  Sept 2001 AUM

 

$

157

 

$

88

 

$

148

 

$

28

 

$

421

 

 

 


* June 30, 2001 assets under management have been reclassified.

In $ billions

 


 

Return Premium (1) – Institutional Inv Mgmt Services

Institutional Equity Composites vs. Benchmarks

 

 

Growth Oriented Services

 

 

 

Large Cap

 

Disciplined

 

Multi Cap

 

Small Cap

 

Intl Lg Cap

 

Emerging Market

 

 

 

Growth (2)

 

Growth(2)

 

Growth(3)

 

Growth(4)

 

Growth(5)

 

Growth(6)

 

QTR

 

+2.0

 

-2.0

 

-2.6

 

 +0.4

 

+1.1

 

-2.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

+3.8

 

-0.4

 

-3.1

 

 -0.7

 

+2.6

 

-5.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1yr

 

+8.2

 

+3.4

 

+1.1

 

 +3.2

 

+4.0

 

-6.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3yr

 

+4.5

 

+1.4

 

+2.2

 

+10.6

 

+7.2

 

+4.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5yr

 

+6.2

 

+2.0

 

+1.5

 

 +7.3

 

+4.8

 

+3.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10yr

 

+3.3

 

+0.9

 

+0.9

 

 +6.5

 

+3.8

 

+1.6

 

 


(1) Investment performance of composites are after investment management fees.

(2) vs. Russell 1000 Growth (3) vs. Russell 3000 Growth (4) vs. Russell 2000 Growth

(5) vs. MSCI EAFE Growth (6) vs. MSCI Emerging Markets Free

Composite and benchmark data through 9/30/01.

See Performance Disclosure

 


 

Return Premium (1) – Institutional Inv Mgmt Services

Institutional Equity Composites vs. Benchmarks

 

Value Oriented Services

 

 

 

Strategic

 

Diversified

 

Relative

 

Small Cap

 

International

 

Emerging Market

 

 

 

Value(2)

 

Value(3)

 

Value(2)

 

Value(4)

 

Value(5)

 

Value(6)

 

QTR

 

 +2.8

 

 +5.6

 

-3.5

 

+1.3

 

-1.9

 

+3.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

+10.2

 

+13.7

 

-0.1

 

+1.1

 

+5.4

 

+7.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1yr

 

+22.0

 

+23.6

 

-1.1

 

-1.1

 

+4.8

 

+9.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3yr

 

 +1.3

 

 +5.2

 

+5.9

 

+0.8

 

-0.3

 

+7.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5yr

 

 -0.7

 

 +1.8

 

+2.5

 

  0.0

 

+2.6

 

+2.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10yr

 

 +1.7

 

 +1.5

 

 

-1.1

 

 

 

 


(1) Investment performance of composites are after investment management fees.

(2) vs. Russell 1000 Value (3) vs. S&P 500 (4) vs. Russell 2000 Value (5) vs. MSCI EAFE Value

(6) vs. MSCI Emerging Markets Free

Composite and benchmark data through 9/30/01.

See Performance Disclosure

 


 

Return Premium – Retail Services

Retail Mutual Funds vs. Lipper Averages

 

 

 

Premier

 

 

 

Growth &

 

AB Disc

 

Global Growth

 

North Amer

 

 

 

Growth(1)

 

Technology(2)

 

Income(3)

 

Value(3)

 

Trends(4)

 

Govt Trust(5)

 

QTR

 

+0.3

 

+3.6

 

-1.4

 

-4.8

 

 +8.1

 

 -4.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

+1.4

 

+8.9

 

-0.2

 

+6.3

 

 +2.0

 

 +1.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1yr

 

+1.6

 

+9.6

 

-2.3

 

+7.7

 

 +0.9

 

 +3.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3yr

 

-1.5

 

-0.6

 

+4.1

 

     –

 

+11.8

 

+10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5yr

 

+3.7

 

+0.9

 

+4.7

 

     –

 

 +7.4

 

 +8.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10yr

 

     –

 

+1.2

 

+1.0

 

     –

 

     –

 

     –

 

 


(1) vs. Large Cap Growth average  (2) vs. Science and Technology average  (3) vs. Multi-Cap Value average 

(4) vs. Global Growth average (5) vs. Global Income average

Mutual fund performance and Lipper data through 9/30/01.

 


 

Expenses Decline 4.5% from Second Quarter

 

      Staff increases limited to strategic initiatives

 

      Lower incentive compensation and other benefits in line with lower earnings

 

      Expense management resulted in 5.3% decline in non-compensation related categories

 

      Excluding additional costs associated with the acquisition of Bernstein, future expenses are expected to rise in line with organic business growth

 


 

Operating Partnership Financial Highlights

 

 

 

 

3Q01

 

2Q01

 

% chg

 

  Revenues:

 

 

 

 

 

 

 

Base Fee & Other

 

$

716

 

$

744

 

-4

%

Performance Fee

 

9

 

16

 

-44

 

 

 

725

 

760

 

-5

 

 

 

 

 

 

 

 

 

  Expenses

 

(531

)

(556

)

-5

 

 

 

 

 

 

 

 

 

  Net Operating Earnings

 

$

194

 

$

204

 

-5

%

 

 

 

 

 

 

 

 

  Base Fee Earnings

 

$

187

 

$

192

 

-2

%

 

 

 

 

 

 

 

 

  Performance Fee Earnings

 

7

 

12

 

-43

 

 

 

 

 

 

 

 

 

  Net Operating Earnings

 

$

194

 

$

204

 

-5

%

 

In $ millions

 


 

Alliance Holding Per Unit Financial Highlights

 

 

 

3Q01

 

2Q01

 

% chg

 

  Diluted Net Income

 

$0.51

 

$0.56

 

-9

%

  Amortization of Intangible Assets

 

0.17

 

0.16

 

+ 6

 

 

 

 

 

 

 

 

 

  Net Operating Earnings

 

$0.68

 

$0.72

 

-6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Base Fee Earnings

 

$0.66

 

$0.68

 

-3

%

  Performance Fee Earnings

 

0.02

 

0.04

 

-50

 

  Net Operating Earnings

 

$0.68

 

$0.72

 

-6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Distribution

 

$0.67

 

$0.71

 

-6

%

 

Per Unit amounts

 


 

Retail Highlights

 

 

AUM down 11% from June 30

 

 

Revenues down 5% from 2Q

 

 

 

Mix shift to lower fee equity, fixed income and cash management products

 

 

Total net sales $1.6 billion, down 6% from 2Q

 

 

 

Net U.S. long-term fund sales: $1.1 billion, compared to $1.7 billion in 2Q

 

 

 

 

CollegeBoundfund –currently AUM exceeds $1 billion; $445 million net sales in 3Q

 

 

 

 

Improving market share on a gross and net basis*

 

 

 

Net non-U.S. long-term fund sales: $0.7 billion, up 16% from 2Q

 

 

 

Cash management net sales of $1.8 billion

 

 

 

Wrap –$2.1 billion in net redemptions

 

 

AllianceBernstein value funds – $545 million in AUM and $194 million in 3Q net sales

 

 

Continuing investment in e-wholesaling and client relationship management tools to increase productivity

 


* Based on U.S. long-term sales in non-proprietary channel.

 


 

Changes in Retail AUM by Product

 

 

 

U.S.

 

Non-U.S.

 

Variable

 

 

 

 

 

 

 

Funds

 

Funds

 

Annuity

 

Wrap

 

Total

 

  June 2001 AUM*

 

$

86

 

$

24

 

$

39

 

$

15

 

$

164

 

 

 

 

 

 

 

 

 

 

 

 

 

  Long-Term Product Net Sales

 

1

 

1

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cash Management Net Sales

 

2

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cash Flow/Unreinvested Dividends

 

(1

)

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

  Net New Business

 

2

 

1

 

 

(2

)

1

 

 

 

 

 

 

 

 

 

 

 

 

 

  Market Depreciation

 

(9

)

(2

)

(6

)

(2

)

(19

)

 

 

 

 

 

 

 

 

 

 

 

 

  Sept 2001 AUM

 

$

79

 

$

23

 

$

33

 

$

11

 

$

146

 

 


* June 30, 2001 assets under management have been reclassified.

Assets reflect 100% of the assets managed by the Joint Venture companies.

Amounts in $ billions.

 


 

Changes in Retail AUM by Investment Orientation

 

 

 

Growth

 

Value

 

Fixed

 

Cash

 

 

 

 

 

Equity

 

Equity

 

Income

 

Mgmt.

 

Total

 

  June 2001 AUM*

 

$

90

 

$

16

 

$

28

 

$

30

 

$

164

 

 

 

 

 

 

 

 

 

 

 

 

 

  Long-Term Product Net Sales

 

(3

)

1

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cash Management Net Sales

 

 

 

 

2

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cash Flow/Unreinvested Dividends

 

(1

)

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

  Net New Business

 

(4

)

1

 

2

 

2

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

  Market Depreciation

 

(18

)

(1

)

 

 

(19

)

 

 

 

 

 

 

 

 

 

 

 

 

  Sept 2001 AUM

 

$

68

 

$

16

 

$

30

 

$

32

 

$

146

 

 


* June 30, 2001 assets under management have been reclassified.
Assets reflect 100% of the assets managed by the Joint Venture companies.
Amounts in $ billions.

 


 

Average Global Daily Gross Sales

 

 

 

Amounts in $ millions.

 

 


 

AllianceBernstein Institutional Investment Mgmt Highlights

 

 

AUM down 9% from June 30

 

 

Revenues down 4% from 2Q

 

 

58 new separate account wins totaled $4.2 billion in AUM;
year-to-date account wins totaled $27.2 billion

 

 

Net new inflows were $4.6 billion, $3.7 billion over 2Q
(excluding Vanguard mandate of $12.5 billion)

 

 

Selective expansion of UK/Europe sales force

 

 

Continued focus on cross-selling initiatives

 

 


 

Changes in Institutional Investment Management AUM

by Investment Orientation

 

 

 

 

Growth

 

Value

 

Fixed

 

 

 

 

 

 

 

Equity

 

Equity

 

Income

 

Passive

 

Total

 

•  June 2001 AUM*

 

$105

 

$54

 

$74

 

$29

 

$262

 

 

 

 

 

 

 

 

 

 

 

 

 

•  Long-Term Net Sales

 

2

 

1

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

•  Cash Management Net Sales

 

 

 

2

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

•  Net New Business

 

2

 

1

 

2

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

  Market Depreciation

 

(19

)

(6

)

 

(4

)

(29

)

 

 

 

 

 

 

 

 

 

 

 

 

  Sept 2001 AUM

 

$88

 

$49

 

$76

 

$25

 

$238

 

 


* June 30, 2001 assets under management have been reclassified.

Assets reflect 100% of the assets managed by the Joint Venture companies.  Amounts in $ billions.

 

 


 

Balanced Mix of Separately Managed Account Wins

58 New Accounts
$4.2 Billion in AUM
21 Investment Disciplines

 

 

 

 

New

Accounts

 

 

 

New

Accounts

Growth Equity Products

 

 

Fixed Income Products

 

Large Cap Growth

 

15

 

Insurance

 

  2

Disciplined Growth

 

  2

 

Mortgage

 

  2

Small Cap Growth

 

  2

 

Canadian Fixed Income

 

  1

Global Large Cap Growth

 

  2

 

Intermediate Duration

 

  1

European Growth

 

  1

 

High Yield

 

  1

Japan Growth

 

  1

 

Global High Yield

 

  1

Emerging Markets Growth

 

  1

 

Other

 

  2

 

 

24

 

 

 

10

 

 

 

 

 

 

 

Value Equity Products

 

 

 

Passive

 

  1

Diversified Value

 

  7

 

 

 

 

Strategic Value

 

  5

 

 

 

 

International Value

 

  4

 

 

 

 

Relative Value

 

  3

 

 

 

 

Global Value

 

  2

 

 

 

 

Canadian Value

 

  2

 

 

 

 

 

 

23

 

 

 

 

 

 


 

Private Client Highlights

Bernstein Investment Research & Management

 

 

 

AUM down 4% from June 30

 

 

Revenues up 2% from 2Q

 

Net new flows of $846 million

 

 

 

    •     Positive inflows every month this year

 

 

Established office in Minneapolis in 3Q; Miami and Houston offices scheduled to open in early 2002

 

 

Increased number of financial advisors 20% through September 2001; plan to maintain current financial advisor level through 2002

 

 

 

 


 

Institutional Research Services Highlights

Revenues down 11% from 2Q

 

 

 

    •     Down 1% excluding 2Q one-time syndication  

 

       revenues

 

 

 

    •     Three consecutive quarters of NYSE market

 

        share growth

 

 

Leverage well-positioned institutional research services

 

 

 

    •     8 new product launches year-to-date; additional

 

           product launches planned in 2002

 

 

London trading operation to open in December; expansion of research product and client base

 

 

 

 

 


 

 

Positioned For Growth

      Worldwide research and investment capabilities

      Unique with strengths in both growth and value investing

      Broad array of fixed income services

      Highly regarded marketing and client service teams

      Well-positioned in retail, institutional and private client channels

      Continued underlying business strength

      Strong financials

      Cogent strategy


 


 

Performance Disclosure
Alliance Capital Management L.P.

 

Alliance Capital Management L.P. (“ACMLP”), is a registered investment advisor.  ACMLP had $421 billion in assets under management as of September 30, 2001.  Performance figures in this report have been presented net of investment management fees.  Net performance figures have been calculated by deducting the highest fee charged to an account in a composite from inception of the composite to December 2000.  The annual fees used were: 1.00% for Small Cap Growth, 0.90% for Large Cap Growth and Disciplined Growth from 1/1/00 to 12/31/00 and 0.75% from 1/1/78 to 12/31/99, 0.75% for International Large Cap Growth, Relative Value, and Multi-Cap Growth.  From January 2001 forward, the composite’s net of fee return is based upon a weighted average of the actual fee rates charged to each account in the composite.  The average fees applied were: 0.88% for Small Cap Growth, 0.32% for Large Cap Growth, 0.34% for Disciplined Growth, 0.30% for International Large Cap Growth, 0.21% for Relative Value, 0.63% for Multi-Cap Growth.  Both fee structures exclude accounts with performance based fee arrangements. Net of fee performance figures reflect the compounding effect of such fees.

 

No representation is made that the performance of these investment accounts are indicative of future performance.  Performance figures for each account are calculated monthly on a trade-date basis using an internal rate of return calculation.  Monthly market values include income accruals and reflect the daily weighting of cash flows. The composite results are asset-weighted on a monthly basis. Quarterly and annual composite performance figures are computed by linking monthly returns resulting in a time-weighted rate of return.

 

The Composites include discretionary tax-exempt accounts with assets over $10 million which are not subject to significant investment restrictions imposed by clients, except for the European Growth Composite which consists of one taxable account.

 

Composites used for performance reporting purposes represent the following:

 

 

 

 

 

 

 

 

% of Total Firm

 

Strategy

 

Number of Accounts

 

Assets ($mm)

 

Assets

 

Large Cap Growth

 

296

 

27,684

 

7%

 

Disciplined Growth

 

118

 

7,819

 

2

 

Small Cap Growth

 

11

 

499

 

<1

 

Multi Cap Growth

 

12

 

686

 

<1

 

Relative Value

 

11

 

1,786

 

<1

 

International Large Cap Growth

 

5

 

1,792

 

<1

 

Emerging Markets Growth

 

3

 

558

 

<1

 

 

 


 

Alliance Capital Management L.P. – Bernstein Investment Research & Management Unit

Performance Statistics Are Not Financial Statements - There are various methods of compiling or reporting performance statistics.  The standards of performance measurement used in compiling this data are in accordance with the methods set forth by the Notes below.  Past performance statistics may not be indicative of future results and may differ for different time periods.

Total Return - Performance results of accounts and comparisons are made on a total-return basis which includes all dividends, interest and accrued interest, and realized and unrealized gains or losses.  Securities are included in accounts on a trade date basis.  Performance results are after deductions of all transaction charges and fees.

 

Rate of Return - Investment results are computed on a "time-weighted" rate-of-return basis.  Assuming dividends and interest are reinvested, the growth in dollars of an investment in a period can be computed using these rates of return.  In computing the “time-weighted rate of return”, if an account’s net monthly cash flow exceeds 10% of its beginning market value, the cash flows are weighted on a daily basis.  When an account’s net monthly cash flows are less than 10% of its beginning market value, the cash flows are weighted by the “end of the month” assumption. Beginning 2001, all cashflows are daily-weighted using the modified Dietz method.

 

Preparation of Data - Investment results on a quarterly basis for all accounts in the cited category under the discretionary management of Bernstein's Investment Policy Group for the entire quarter were added together and the sum divided by the total number of accounts in each quarter through 1992; beginning in 1993 quarterly performance was for all accounts weighted by their market value.  These quarterly performance figures were then linked to produce a continuous-performance index.  The continuous-performance index from inception was used to create point-to-point comparisons.  Closed accounts are included for each full quarter prior to their closing. From inception, returns for Diversified Value optimized against the Russell 1000 Value Index exclude certain accounts with special restrictions imposed by clients. Strategic Value returns include all accounts offered from 1974-1982 and, from 1983-1999, all Strategic Value accounts with $5 million or more in assets.  Beginning January 1, 2000, results exclude accounts with a client-directed margin balance of 20% or more of market value at any month end. From July 1993 quarterly results were those of GDP-weighted, half-hedged International Value accounts separately managed in US dollars.

 

Investment Management Performance Statistics and Dispersion - Performance statistics and dispersion are shown after the deduction of investment management fees.  Dispersion, or standard deviation, measures the variability of account returns within a composite.  In a normal distribution, approximately two-thirds of the account returns will fall within the range of one standard deviation above and below the equal-weighted mean return.  Beginning in 1993, performance is weighted by account size, therefore dispersion is calculated from the asset-weighted mean.  Dispersion of performance for accounts under management are: Diversified Value (Russell 1000 Value) - 1999: 1.7%; 2000: 1.9; 2001: N/A; Strategic Value -1974: 29.1; 1975: 26.5; 1976: 17.6; 1977: 8.3; 1978: 11.5; 1979: 9.0; 1980: 8.7; 1981: 5.6; 1982: 5.5; 1983: 2.9; 1984: 1.6; 1985:1.6; 1986: 1.1; 1987: 1.7; 1988: 1.7; 1989: 1.3; 1990: 1.2; 1991: 2.0; 1992: 1.4; 1993: 1.2; 1994: 1.2; 1995: 1.3; 1996: 1.2; 1997: 1.5; 1998: 2.5; 1999: 2.5; 2000: 2.6; 2001: N/A; Small-Cap Value - 1991: 1.3; 1992: 1.3; 1993: 1.5; 1994: 1.6; 1995: 1.6; 1996: 1.2; 1997: 1.0; 1998: 1.8; 1999: 1.6; 2000: 1.7; 2001: N/A; International Value (GDP-Weighted, Half-Hedged) 1993:2H: 0.5; 1994: 0.9; 1995: 1.1; 1996: 1.0; 1997: 1.3; 1998: 1.6; 1999: 1.8; 2000: 1.6; 2001:N/A.


 

Alliance Capital Management L.P. – Bernstein Investment Research & Management Unit

Investment Management Fees and Notice to Financial Consultants - Bernstein has published investment management fee schedules for varying sizes of accounts, which are described in our Form ADV.  The following before-fee and after-fee cumulative annualized rates of return illustrate the cumulative effects of the deduction of fees: Diversified Value (Russell 1000 Value) - 2000: 13.7%, 13.2%; 2 yrs 1999:2Q-2001:1Q: 6.9%, 6.5%; Strategic Value -2000: 10.6%, 10.1%; 5 yrs 1996-00: 14.3%, 13.8%; 27-1/4 yrs 1974-2001:1Q:16.1%, 15.6%; Small-Cap Value - 2000: 20.6%, 19.7%; 5 yrs 1996-2000: 12.2%, 11.4%; 10-1/4 yrs 1991-2001:1Q: 16.9%, 16.1%; International Value (GDP-Weighted, Half-Hedged): 2000: (2.0%), (2.6%); 5 yrs 1996-2000: 12.5%, 11.8%; 8-3/4 yrs 1992:3Q-2001:1Q: 11.5%, 10.7%. The following are the account after-fee annual rates of return: Diversified Value (Russell 1000 Value) –1999:2Q-4Q: 2.0%; 2000: 13.2%; 2001:1Q: (1.8%); Strategic Value - 1983: 26.5%; 1984: 11.9%; 1985: 27.9%; 1986: 8.3%; 1987: 12.7%; 1988: 20.3%; 1989: 20.4%; 1990: (23.3%); 1991: 31.7%; 1992: 26.1%; 1993: 26.8%; 1994: 0.7%; 1995: 37.2%; 1996: 24.0%; 1997: 27.2%; 1998: 9.9%; 1999: (0.2%); 2000:10.1%; 2001:1Q: 0.2%; Small-Cap Value - 1991: 49.7%; 1992: 25.2%; 1993: 11.6%; 1994: 2.0%; 1995: 26.4%; 1996: 15.2%; 1997: 30.5%; 1998: (3.7%); 1999: (1.1%); 2000: 19.7%; 2001:1Q: (0.4%); International Value (GDP-weighted, half-hedged):1992:2H: (5.0%); 1993: 35.9%; 1994: 5.3%; 1995: 8.8%; 1996: 18.2%; 1997: 10.0%; 1998: 13.5%; 1999: 21.6%; 2000: (2.6%); 2001:1Q: (5.9%).

 

Composites used for reporting purposes represent the following:

 

 

Strategy

 

Number of Accounts

 

Assets ($mm)

 

% of Total Firm
Assets

 

Strategic Value (accts. over $5 million)

 

377

 

15,388

 

4%

 

Diversified Value (opt to Russell 1000 Value)

 

37

 

1,017

 

<1

 

Small Cap Value

 

58

 

1,521

 

<1

 

International Value (half-hedged, GDP wtd)

 

58

 

980

 

<1

 

Emerging Markets Value

 

5

 

1,230

 

<1

 

 

 


 

APPENDIX

 

 


 

Alliance Capital (The Operating Partnership)
Consolidated Balance Sheet

 

 

 

 

9/30/01

 

12/31/00

 

Assets

 

 

 

 

 

Cash and investments

 

$

678,316

 

$

556,569

 

Cash and securities

 

1,093,478

 

1,306,334

 

Receivables

 

1,151,856

 

1,906,248

 

Intangible assets, net

 

3,308,626

 

3,430,708

 

Deferred sales commissions, net

 

667,826

 

715,692

 

Other

 

380,058

 

355,211

 

Total Assets

 

$

7,280,160

 

$

8,270,762

 

 

 

 

 

 

 

Liabilities and Partners' Capital

 

 

 

 

 

Liabilites:

 

 

 

 

 

Payables

 

$

2,006,756

 

$

2,798,694

 

Accounts payable and accrued expenses

 

184,845

 

238,640

 

Accrued compensation and benefits

 

482,831

 

313,426

 

Debt

 

577,377

 

782,232

 

Other

 

7,135

 

4,093

 

Total Liabilities

 

3,258,944

 

4,137,085

 

 

 

 

 

 

 

Partners' Capital

 

4,021,216

 

4,133,677

 

Total Liabilities and Partners' Capital

 

$

7,280,160

 

$

8,270,762

 

 

Amounts in $ thousands.  Unaudited

Alliance Capital (The Operating Partnership)
Consolidated Cash Flow

 

 

 

 

Nine Months Ended

 

 

 

9/30/01

 

9/30/00

 

Cash Flows From Operating Activities:

 

 

 

 

 

Net income

 

$

463,832

 

$

520,491

 

Non-cash items:

 

 

 

 

 

Amortization and depreciation

 

334,394

 

189,121

 

Non-recurring item

 

-

 

(23,853

)

Other, net

 

45,632

 

29,118

 

Changes in assets and liabilities

 

162,880

 

40,191

 

Net cash provided from operating activities

 

1,006,738

 

755,068

 

 

 

 

 

 

 

Cash Flows From Investing Activities:

 

 

 

 

 

Purchase of investments, net

 

(164,234

)

(1,770,595

)

Additions to furniture, equipment and leaseholds, net

 

(63,322

)

(44,934

)

Other

 

(6,779

)

-

 

Net cash (used in) investing activities

 

(234,335

)

(1,815,529

)

 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

Increase (decrease) in debt, net

 

(222,621

)

115,657

 

Distributions to partners

 

(597,620

)

(446,672

)

Proceeds from issuance of Units to ELAS and AXF

 

-

 

1,629,525

 

Other

 

8,427

 

(160,112

)

Net cash provided from (used in) financing activities

 

(811,814

)

1,138,398

 

`

 

 

 

 

 

Effect of exchange rate change

 

(433

)

(1,991

)

 

 

 

 

 

 

Net increase (decrease) in cash

 

(39,844

)

75,946

 

Cash at the beginning of period

 

216,251

 

80,185

 

Cash at the end of period

 

$

176,407

 

$

156,131

 

 

Amounts in $ thousands.  Unaudited

Changes in AUM by Client
Three Months Ended September 30, 2001

 

 

 

 

 

 

Institutional

 

 

 

 

 

 

 

 

 

Investment

 

Private

 

 

 

 

 

Retail

 

Management

 

Client

 

Total

 

 

 

 

 

 

 

 

 

 

 

Beginning of Period

 

$

164,258

 

$

262,396

 

$

38,717

 

$

465,371

 

 

 

 

 

 

 

 

 

 

 

Sales/New accounts

 

9,471

 

4,267

 

1,288

 

15,026

 

Redemptions/Terminations

 

(9,752

)

(2,041

)

(510

)

(12,303

)

Net cash management sales

 

1,856

 

1,755

 

91

 

3,702

 

Cash flow

 

(739

)

650

 

20

 

(69

)

Unreinvested dividends

 

(265

)

(9

)

(43

)

(317

)

Net new business

 

571

 

4,622

 

846

 

6,039

 

 

 

 

 

 

 

 

 

 

 

Market depreciation

 

(18,457

)

(29,240

)

(2,311

)

(50,008

)

End of Period

 

$

146,372

 

$

237,778

 

$

37,252

 

$

421,402

 

 

Note: June 30, 2001 assets under management have been reclassified.

Assets reflect 100% of the assets managed by the Joint Ventures.

Amounts in $ millions.

Changes in AUM by Investment Orientation
Three Months Ended September 30, 2001

 

 

 

 

Growth

 

Value

 

Fixed

 

 

 

 

 

 

 

Equity

 

Equity

 

Income

 

Passive

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of Period

 

$

194,820

 

$

96,212

 

$

141,248

 

$

33,091

 

$

465,371

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales/New accounts

 

5,646

 

3,106

 

5,768

 

506

 

15,026