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AllianceBernstein: Investment Capabilities in Japan International Investment – Italian Forum 2007 November 2007 Stephen Tong President and CEO, AllianceBernstein Japan Team Leader, Japan Growth Equities The sale of shares in AllianceBernstein funds may be restricted in certain jurisdictions. In particular, no shares may be acquired by persons in the U.K. except in certain circumstances and shares may not be offered or sold, directly or indirectly, in the United States or to U.S. Persons, as described in the Fund’s prospectus. Further details may be obtained from the Distributor. AllianceBernstein investment portfolios are part of ACMBernstein, a mutual investment fund (fonds commun de placement) or ACMBernstein SICAV (société d'investissement à capital variable), an open-ended investment company organized under the laws of Luxembourg, which conducts business outside of Germany, Austria and Switzerland under the name AllianceBernstein. There is no guarantee that any forecasts or opinions in this material will be realized. Information should not be construed as investment advice. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein: Unwavering Focus on Investment Excellence Number of Buy-Side Analysts Research-Driven Culture: One of the industry’s largest commitments to superior and innovative research Growth Value Fixed Income MultiAsset* Total Fundamental 73 66 43 19 201 Quantitative 8 22 10 27 67 Economists 0 0 8 0 8 81 88 61 46 276 Total Analysts Proven Investment Processes: Highly experienced teams with distinct investment philosophies and consistently applied processes Global Orientation Service US 41% Client Domicile Non-US 59% US 62% Non-US 38% Global Scope: Expertise with both global and local mandates in markets around the world Assets Under Management ($ Billions)** Ongoing Investment: Diversification that allows continuous investment across the firm, even when a particular asset or style may be out of favor By Client Group Institutional Retail Private Client Total $501 185 107 $793 By Investment Discipline Growth $114 Value 312 Blend/Alternative Strategies 184 Fixed Income 183 Total $793 As of 30 June 2007 *Includes 3 Blend Strategies, 3 Product Development, 9 Portfolio Analytics, 12 Wealth Management, 3 Strategic Change, 6 China Research and 10 Early Stage Growth analysts **Total assets under management by AllianceBernstein L.P. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 1 AllianceBernstein in Japan Long-standing commitment to Japan, with an office opened in Tokyo in 1987 Full-service office with research, portfolio management, legal and administration capabilities Growing business profile: ¥4,593 billion for 153 domestic contracts ¥1,072 billion for public pension ¥1,084 billion for private pension ¥738 billion for pension commingled funds ¥609 billion for mutual funds Representative Clients in Japan Aioi Insurance Pension Fund All Japan Surveying Enterprises Multi Employers Pension Fund Aozora Bank Pension Fund Asahi Glass Pension Fund East Japan Stationery Sales Pension Fund Hitachi Investment Management, Ltd. Japan Airlines Pension Fund Kyushu Electric Power Mitsubishi Electric Pension Fund Mitsui Chemicals Inc. Mitsui Sumitomo Insurance National Bakery Pension Fund National Construction Pension Fund Pension Fund Association for Local Government Officials Pfizer Pension Fund Publication Pension Fund Sanwa Shutter Pension Fund Shin-Daiwa Pension Fund Sumitomo Trust & Banking Teijin Group Pension Fund The Pension Fund of Mizuho The Promotion and Mutual Aid Corp. for Private Schools of Japan Tokyo Architect Society Pension Fund Tokyoto Densetsu Kogyo Pension Fund Tokyo Taxi Companies Employees Pension Fund Tokyo Truck Pension Fund Tyco Electrics AMP As of 30 June 2007 The clients identified in the list set forth herein were selected based on a variety of factors, including name recognition, industry, geographic region and investment mandate. The investment performance of the accounts managed by AllianceBernstein, including those identified on this list, was not considered. The list is neither a statement of a client’s experience with, nor an endorsement of, AllianceBernstein by the clients identified in the list. It is not known whether the clients identified in the list approve or disapprove of AllianceBernstein’s advisory services. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 2 AllianceBernstein─Japan Equity Portfolios Alliance Bernstein─J apan Strategic Value 50% Japan Strategic Value 50% AllianceBernstein─ Japan Equity Blend Japan Equity Blend Alliance Bernstein─ Japan Growth Japan Growth High-alpha Value strategy High-alpha Core strategy High-alpha Growth strategy Invests in companies that are valued at a discount relative to their long-term earnings power Initial combination of 50% Growth and 50% Value strategies Invests in the “Dynamic Gap”: Growth companies that are set to deliver earning growth that is higher than market expectations High-conviction portfolio of 30-50 stocks Maintains high-conviction stockpicking of style-based strategies High information ratio as premium of the Value strategy is not correlated with that of the Growth strategy, and therefore mitigates style risk High-conviction portfolio of 40-50 stocks Systematic rebalancing when mix reaches 55%/45% As of 30 September 2007 High-conviction portfolio of 55-85 stocks Investment policies apply under normal market conditions. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 3 AllianceBernstein: Two Clear Investment Philosophies Growth Investing Goal: Find underappreciated growth potential Long-Term Earnings Power Research question: Will growth outpace expectations? Earnings Growth Accelerates Earnings Growth Decelerates Corrective Strategies Profits & Stock Decline Value Investing Goal: Buy out of favor bargains Research question: Will depressed earnings recover? Investment policies apply under normal market conditions. Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 4 Independent Growth and Value Research Buy-Side Fundamental Research Analysts Bernstein Value Equities Research Teams Commodities Consumer Financials Industrials Multi-Industry Technology/Telecom Total 14 14 10 14 6 8 66 Consumer Energy/Natural Resources Finance Healthcare Infrastructure Mid-Cap Generalists Technology/Telecom Total 15 10 12 6 7 5 18 73 London Minneapolis Chicago Alliance Growth Equities Research Teams New York Tokyo Madrid Hong Kong Shanghai Taipei Mumbai Singapore São Paulo Sydney Cape Town AllianceBernstein locations Wellington Joint-venture locations As of 30 June 2007 Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 5 Japan Growth: Investment Process Overview Investable Universe Approximately 600 Stocks Fundamental Research Alliance Growth Research Recommended Stocks Investment Review Portfolio Candidates Portfolio Construction Japan Growth Portfolio 40 to 50 Stocks Investment policies apply under normal market conditions. As of 30 September 2007 Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 6 Japan Growth: Nickel Price Forecasts Nickel Price (Left Scale) 2,500 LME Inventories 2,000 (Right Scale) 1,500 1,000 500 0 89 92 95 160 120 80 40 1,000 Tonnes Nickel prices have surged to record highs on supply constraints, falling inventories and strong demand for stainless steel, which consumes some 65% of the world’s nickel USc/lb Nickel Price vs. LME Inventory 0 98 01 04 07 08 China’s Role in World Nickel Demand 2004 Others 27% While there are concerns that de-stocking of stainless steel inventories in the US may start pressuring nickel prices, we believe growing nickel demand from China continue to underpin the market 2007 North America 11% China 12% Europe 36% North America 11% Others 24% China 21% Japan 14% Europe 32% Japan 12% Nickel Price Forecast Longer-term, sustained difficulties in developing greenfield nickel projects are likely to keep prices supported for longer than widely assumed US$/lb Nickel LME 2,650 2,150 1,650 1,150 650 150 Spot/Forward Curve Alliance Growth Equities Estimates Consensus Current analysis and estimates do not guarantee future results. 88 90 92 94 96 98 00 02 04 06 For illustrative purposes; the stock example above is intended only to illustrate the application of our investment philosophy, and this particular security may or may not be held in the current Japan Growth portfolio. The reader should not assume that this was, or will be, a profitable investment. Please read Disclosure on Stock Examples. As of March 2007 Source: Bloomberg, LME, Morgan Stanley and AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 7 Japan Growth: Investment Opportunity Pacific Metals, Sumitomo Metal Mining Our EPS Estimates vs. Consensus: Pacific Metals Pacific Metals, Japan’s largest ferronickel producer, is likely to benefit most from strong nickel prices and sustained revisions in consensus expectations 207 175 151 153 Mar 07E Alliance Forecasts Mar 08E Consensus Forecasts World Nickel Reserve Potential by Ore Type 120 100 Mt Sumitomo Metal Mining’s innovative technologies* in processing nickel from low-grade laterite ore will enable aggressive production growth; The firm aims to double annual nickel production to 100,000 tonnes by 2013, with more upside potential 80 Laterite Ore (Low grade) 60 40 Sulfide Ore (High grade) 20 0 Existing Mines Undeveloped Mines Current analysis and estimates do not guarantee future results. For illustrative purposes; the stock example above is intended only to illustrate the application of our investment philosophy, and this particular security may or may not be held in the current Japan Growth portfolio. The reader should not assume that this was, or will be, a profitable investment. Please read Disclosure on Stock Examples. *Some of those technologies include the Matte Chlorine Leach Electrowinning (MCLE) method, which enables more efficient leaching of nickel using less energy, and the High Pressure Acid Leach (HPAL) technology, which facilitates nickel extraction from low-grade laterite ore As of March 2007 Source: Commonwealth Scientific Industrial Research Organization, BEST, JOGMEC and AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 8 Japan Strategic Value: Philosophy Long-Term Earnings Power Investment Controversy Profits & Stock Price Decline Which? Research Conclusion Based on enduring patterns of human behavior... Loss aversion Overreaction to short-term events …and economic behavior Mean reversion of returns Cash flow ultimately determines value Investment policies apply under normal market conditions. As of 30 September 2007 Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 9 Japan Strategic Value: Investment Process Overview Explicit Marriage of Fundamental and Quantitative Research Fundamental Research Quantitative Research Investment Universe Identify Value Opportunities Select Best Ideas Build Portfolio Investment policies apply under normal market conditions. As of 30 September 2007 Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 10 Japan Strategic Value: Quantitative Return Model Helps Identify Attractive Opportunities Sharp Corporation's Expected Return Calculation Industry Approach Global Sector vs. Globe Price/Forward Earnings Price Momentum Global Ind. vs. Global Sector Price/Book Price/Earnings Price/Forward Earnings Price Momentum Regional Ind. vs. Global Ind. Price/Cash Earnings Price/Forward Cash Earnings 10-Year Bond Yield Return on Equity Price Momentum Price/Sales Company vs. Regional Ind. Price/Book Price/Forward Cash Earnings Return on Equity Price Momentum Balance Sheet Accruals Return on Assets Price/Sales Total Country Approach Market vs. Globe Price/Book Price/Earnings Price/Forward Cash Earnings 10-Year Bond Yield Currency Momentum Price Momentum Market Sector vs. Market Price/Earnings Price/Forward Earnings Price Momentum Balance Sheet Accruals Market Ind. vs. Market Sector Price/Book Price/Cash Earnings Price/Forward Cash Earnings Price Momentum Balance Sheet Accruals Company vs. Market Ind. Price/Book Price/Forward Cash Earnings Return on Equity Price Momentum Balance Sheet Accruals Return on Assets Price/Sales Total Comparison Data Global Sector 19.5 18.6% Global Ind. 3.2 26.5 19.6 13.5% Regional Ind. 14.6 12.1 1.8% 9.5% 27.9% 1.9 Company 2.1 7.7 8.1% 27.5% 0.0% 3.5% 0.8 Globe 15.6 23.3% Global Sector 4.2 26.4 19.5 18.6% Global Ind. 14.5 12.1 4.0% 14.9% 13.5% 2.5 Regional Ind. 2.6 12.1 9.5% 27.9% 0.0% 6.5% 1.9 Comparison Data Market 2.2 23.1 11.1 1.8% -0.2% 27.5% Market Sector 32.0 23.0 31.9% 0.0% Market Ind. 2.6 14.6 12.1 27.9% 0.0% Company 2.1 7.7 8.1% 27.5% 0.0% 3.5% 0.8 Globe 3.0 18.8 11.2 4.3% -0.3% 23.3% Market 23.1 19.0 27.5% 0.0% Market Sector 2.8 13.9 12.0 31.9% 0.0% Market Ind. 2.6 12.1 9.5% 27.9% 0.0% 6.5% 1.9 Contribution to Excess Return -0.67% -0.14% 0.52% 0.00% 0.00% -0.11% Most Attractive -0.01% 0.00% 0.56% -0.60% 0.17% 0.39% 0.36% 0.51% -0.04% -0.01% 0.00% -0.39% 0.88% 1.43% Highest Expected Return Sharp Corporation Research Focus 60% Contribution to Excess Return 0.18% -0.21% 0.03% 0.25% 0.00% 0.10% 40% -0.17% -0.18% 0.03% 0.00% 0.06% -0.02% 0.00% -0.05% 0.00% 0.22% 0.29% -0.03% 0.00% 0.00% -0.25% 0.54% 0.77% Lowest Expected Return Least Attractive For illustrative purposes only. Source: Compustat, Factset, I/B/E/S, MSCI, Worldscope and Bernstein; see Disclosure on Stock Examples. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 11 Japan Strategic Value: Investment Opportunity Sharp Corporation LCD TV Penetration Driving Market Growth 60 Total LCD Demand (Left Scale) 600 40 400 LCD TV Penetration (Right Scale) 200 20 0 Percent Penetration of LCD TVs is likely to surge as prices drop to mass-market affordability levels Millions* 800 0 01 02 03 04 05 06 07E 08E 09E Utilization Rate** (Left Scale) 100 98 96 94 92 90 70 YoY Capacity Growth (Right Scale) 60 50 40 Percent Rising industry capacity is a worry but capital spending is likely to slow, raising the utilization rate. Sharp also has a competitive edge in the high-end market Percent Overcapacity Concerns Should Recede 30 02 03 04 05 06E 07E Valuation Is Attractive Valuation is at 23% discount to other Japanese technology stocks Current analysis and estimates do not guarantee future results. Through September 2006 *15-inch panel equivalents **Average demand-to-capacity ratio Source: Display Search, I/B/E/S, MSCI, company reports and Bernstein; see Disclosure on Stock Examples For financial representative use only. Not for inspection by, distribution or quotation to, the general public. Price to 2009 Earnings 24.3× 18.6× Sharp Japanese Technology AllianceBernstein 12 AllianceBernstein Japan Equity Blend: Active Core Strategy Alliance Bernstein Japan Strategic Value 50% 30 to 50 Stocks 50% AllianceBernstein Japan Equity Blend Alliance Bernstein Japan Growth 55 to 85 Stocks 40 to 50 Stocks Objective: 3% premium to benchmark, before fees Combines two portfolios with strong records Mitigates style risk through uncorrelated premiums Investment policies apply under normal market conditions. As of 30 September 2007 Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 13 Japan Equity Blend: Combining Two Outstanding Track Records In Japanese Yen Alliance Japan Growth Oct 1991–Jun 2007 Correlation of Japan Strategic Value* and Japan Growth Premiums (Jul 1992–Jun 2007) 5.0% Bernstein Japan Strategic Value Apr 2002–Jun 2007 20.2% Perfect Correlation 1.0 11.3% 0.0 0.05 No Correlation 0.7% (1.0) Composite TOPIX Perfect Inverse Correlation Composite TOPIX *Based on simulated Japan Strategic Value returns. Inception dates: Japan Growth—October 1, 1992; Japan Strategic Value—April 1, 2002 Periods of more than one year are annualized. Past performance is no guarantee of future results. The returns presented above are gross of fees. The results do not reflect the deduction of investment-management fees; the client’s return will be reduced by the management fees and any other expenses incurred in the management of its account. Source: Tokyo Stock Exchange and AllianceBernstein; see Performance Disclosures and Notes on Japan Strategic Value Simulation. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 14 Japan Equity Blend: Future Style Leadership Not Clear Relative Style Index Valuation Ratio of MSCI Japan Growth P/B to MSCI Japan Value P/B 3.0 2.5 2.0 1.5 1.0 89 91 94 97 00 03 06 Current analysis, estimates and valuations do not guarantee future results. As of August 2007 Source: FactSet, I/B/E/S and MSCI For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 15 Japan Equity Blend: Value Opportunity Is at a Low Discount to Fair Value* 60 50 Percent 40 30 20 10 0 71 73 76 79 82 85 88 91 94 97 00 03 06 Current analysis, estimates and valuations do not guarantee future results. Discount to Fair Value = As of 1 January 2007; P/E, P/B = As of 31 May 2007 *Chart represents the amount by which the most attractively priced quintiles of Japanese stocks sell below overall market valuations. The proportion of AllianceBernstein investments in stocks from this group will vary over time but will typically be high. Bernstein’s estimates of fair value of these stocks may not be realized for variety of reasons. Source: Compustat, DataStream, DRI, FactSet, I/B/E/S, MSCI and AllianceBernstein estimates For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 16 Japan Equity Blend: Market Valuations Have Normalized P/E 80 MSCI Japan MSCI North America MSCI Europe MSCI Pacific ex JP Percent 60 40 20 0 87 90 93 96 99 02 05 Current analysis does not guarantee future results. As of August 2007 P/E is based on I/B/E/S 12-month forecast. Source: I/B/E/S, MSCI and Morgan Stanley Research For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 17 Japan Equity Blend: Style Index Composition Constantly Changing MSCI Growth Index MSCI Value Index 100% 100% 90% 80% 80% 70% 60% 60% 50% 40% 40% 30% 20% 20% 10% 0% 0% 97 98 99 00 01 02 03 04 05 06 07 Consumer Discretionary Health Care Telecommunication Services Consumer Staples Industrials Utilities 97 98 99 00 01 02 03 04 05 06 07 Energy Information Technology Financials Materials Current analysis does not guarantee future results. As of April 2007 Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 18 Japan Equity Blend: Complementary Sector Exposure Active Weights* Percent Value Industrials Growth (4.2) 5.6 Materials Energy Healthcare (2.4) Utilities Consumer Staples (0.0) 0.4 1.3 (0.2) 0.6 (0.5) (1.3) (1.7) (4.1) (2.7) (3.1) 1.3 (1.3) (0.4) (2.3) 1.8 (0.5) 3.7 Information Technology 1.8 (2.1) 4.1 Telecommunication Services 1.9 8.2 Consumer Discretionary Financials Blend (0.9) (2.2) (1.8) (2.6) Sector allocations will vary over time. As of 30 June 2007 Based on a representative Japan Style Blend account; excludes cash; columns may not sum due to rounding. *Versus TOPIX Source: Tokyo Stock Exchange and AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 19 Japan Equity Blend: Disciplined Rebalancing to Control Risk As value/growth outperforms, trim investment Sell Upper Trigger +5% Outperform Rebalance Halfway 50/50 Strategic Target Rebalance Halfway Underperform Lower Trigger -5% Buy As value/growth underperforms, add to investment Investment policies apply under normal market conditions. Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 20 Japan Equity Blend: High Premiums with Moderate Risk Performance Relative to TOPIX July 1992–June 2007 Premium Tracking Error Bernstein Japan Strategic Value (Simulated) Alliance Japan Growth AllianceBernstein Japan Style Blend (Simulated) +3.9% +3.2% +3.9% 6.8% 8.0% 5.4% Information Ratio 0.72 0.57 0.41 In Japanese Yen Periods of more than one year are annualized. Past performance is no guarantee of future results. The returns presented above are gross of fees. The results do not reflect the deduction of investment-management fees; the client’s return will be reduced by the management fees and any other expenses incurred in the management of its account. For example, a USD 100 million account, paying a 0.50% annual fee, with a given rate of 10% compounded over a 10-year period would result in a net-of-fee return of 9.5%. Investment advisory fees are described in Part II of AllianceBernstein’s Form ADV. Source: Tokyo Stock Exchange and AllianceBernstein; see Performance Disclosures and Notes on Japan Style Blend Simulation. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 21 AllianceBernstein: Investment Capabilities in a Changing Japan Through their fundamental research, the AllianceBernstein Japan Growth investment team and the AllianceBernstein Japan Strategic Value investment team are both finding compelling investment opportunities. Japan Equity Blend is an “active core” strategy that combines two successful style strategies and manages style risk from the bottom up. Current analysis does not guarantee future results. As of October 2007 Source: AllianceBernstein For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 22 Appendix For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 23 Japan Equity Blend: Disciplined Rebalancing Process $ The benefit of rebalancing rises geometrically... Rebalancing Benefit = Tracking Error2× 2 2K 4× 1× $ ...while the costs are linear 1× 2× 1× 2× % off Target % off Target 1× 2× Rebalancing Cost = C × Net Benefit = Benefit – Costs $ When a style component exceeds a 55% weight or more, we trim it back to 52.5% Trigger Point 5% Rebalance to 2.5% Slope = 0, so Marginal Benefit = Marginal Cost For illustrative purposes only. Source: Seth J. Masters, “Is There a Better Way to Rebalance?”, AllianceBernstein 2003 For financial representative use only. Not for inspection by, distribution or quotation to, the general public. % off Target Zone Where Marginal Rebalancing Benefit Exceeds Costs AllianceBernstein 24 Japan Equity Blend: Rebalancing Can Add Value Rebalancing Requires Discipline (Simulated) Return Premium to TOPIX* (Simulated): July 1992–June 2007 60 +3.85% Percent in Value Style Added to Growth 55 +3.57% Rebalance +28 b.p. 50 45 Added to Value 40 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 Unrebalanced Blend Our Rebalancing Method *Simulated 50/50 blends of Japan Strategic Value and Japan Growth before fees Rebalancing method assumes transactions cost of 100 basis points. Periods of more than one year are annualized. Numbers may not sum due to rounding. Past performance is no guarantee of future results. The returns presented above are gross of fees. The results do not reflect the deduction of investment-management fees; the client’s return will be reduced by the management fees and any other expenses incurred in the management of its account. For example, a USD 100 million account, paying a 0.50% annual fee, with a given rate of 10% compounded over a 10-year period would result in a net-of-fee return of 9.5%. Investment advisory fees are described in Part II of AllianceBernstein’s Form ADV. Source: Tokyo Stock Exchange and AllianceBernstein; see Notes on Japan Style Blend Simulation. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 25 Disclosure on Stock Examples References to specific securities are presented to illustrate the application of our investment philosophy only and are not to be considered recommendations by AllianceBernstein. The specific securities identified and described in this presentation do not represent all of the securities purchased, sold or recommended for the portfolio, and it should not be assumed that investments in the securities identified were or will be profitable. Upon request, we will furnish a listing of all investments made during the prior one-year period. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 26 Notes on Japan Equity Blend Simulation The Japan Style Blend Simulation reflects simulated performance results that were calculated by value-weighting the composite returns of Alliance Japan Growth and the simulated returns of Bernstein Japan Strategic Value (see Notes on Japan Strategic Value Simulation), starting at a 50/50 percentage ratio. Both the Japan Strategic Value and Japan Growth portions were then allowed to compound until either portion made up more than 55% of the combined total. At this point, the portions were rebalanced so that the larger part represented 52.5% of the combined total and the smaller portion represented 47.5%. Upon rebalancing, transaction costs of 75 basis points were applied to the rebalanced portions of the portfolio and this total transaction cost was deducted from the total return. The results portrayed reflect hypothetical rather than actual results, based on investment criteria used in their present form. The results do not represent actual trading and do not reflect the impact that material economic and market factors might have had on AllianceBernstein’s decision making if AllianceBernstein were actually managing client money. The results assume a continuous investment for the entire period and that the investor reinvested dividends and other earnings. Past performance is no guarantee of future results. Accounts managed in this style may incur losses as well as gains. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 27 Notes on Japan Strategic Value Simulation The following standards were used in compiling the performance data for the Japan Strategic Value Simulation used in this presentation: 1) Performance Statistics Are Not Financial Statements—There are various methods of compiling or reporting performance statistics. The standards of performance measurement used by AllianceBernstein in compiling these data and model results 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. 2) Total Return—Performance results of the accounts and comparisons in the simulated portfolio are made on a total-return basis which includes all dividends and accrued 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 the deduction of all transaction charges and before fees. 3) Rate of Return—Investment results of the simulation are computed on a daily “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. 4) Preparation of Data—The simulation performance results are the combination of returns from two distinct periods: July 1992–March 2002 and April 2002 to June 2007. 4.a) For the first period (July 1992–March 2002), the simulation performance is based on the actual results of the Japan only equity portion of the Tax-Managed International Value Portfolio of the Sanford C. Bernstein Fund, Inc. The equity-only returns are then combined with 3-month JPY LIBOR rates, with a constant 2% allocation to cash throughout the period. Ways in which the simulation conditions may differ from actual practice include the facts that: (i) simulation results are based on a portfolio that has a constant 2% allocation to cash; actual cash balances would fluctuate over time; (ii) simulation results represent a Japan portion of a portfolio invested in multiple countries; actual performance would reflect a portfolio not invested in any country but Japan, with more securities than those offered in the model portfolio; (iii) actual portfolios may have actively managed currency; (iv) actual returns would be time-weighted on a monthly basis instead of computed on a daily basis; (v) product offerings to clients are typically tailored to their individual specifications and may differ from the product definition of the model portfolio. 4.b) For the second period (April 2002–June 2007), actual Japan Strategic Value composite performance data is used. Please see Performance Disclosure– Bernstein Japan Strategic Value. Simulated results do not represent any predicted or actual results, returns or performances. For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 28 Performance Disclosures Bernstein Japan Strategic Value (In Japanese Yen) Composite Assets (JPY Millions) 470,148.1 141,113.1 14,255.1 8,524.1 224.4 Composite Accounts at End ofPeriod 25 7 3 2 1 Gross Return Composite Firm Assets Period (%) Net Return (%) Dispersion (%) (USD Billions) 2006 10.78 10.06 0.35 622.0 2005 55.83 54.82 0.07 494.5 2004 24.84 23.91 NM 465.8 2003 27.84 26.88 NM 420.0 3/31–12/31/02 (12.06) (12.55) NM 346.9 3 Years* 29.17 28.29 Since Inception* (3/31/02) 20.47 19.62 NM = not meaningful, fewer than five accounts were included in the composite for this full period Alliance Japan Growth (In Japanese Yen) TOPIX Index Return (%) 3.02 45.23 11.34 25.19 (20.09) 18.54 11.35 *Annualized through most recent year-end 1) PRESENTATION OF THE FIRM—AllianceBernstein L.P. (“ABLP”) is a registered investment advisor. AllianceBernstein Institutional Investments and AllianceBernstein Investments (collectively, the “Firm”) is the institutional and retail sales, marketing and client service unit of ABLP. The Firm has prepared and presented this report in compliance with the Global ® Investment Performance Standards (GIPS ). Prior to the merger of Alliance Capital Management L.P. (“ACMLP”) and Sanford C. Bernstein & Co., Inc. (“Bernstein”) in October 2000, the firms were reporting under their respective names. In February 2006, ACMLP changed its name to ABLP. 2) COMPOSITE STRUCTURE—The performance results displayed herein represent the investment performance record for the institutional Japan Strategic Value Composite (the “Composite”). The Composite includes all fee-paying institutional discretionary accounts. The composite consists of accounts which invest in 35 to 45 Japanese value stocks and seeks a longterm premium relative to their benchmark with moderate sensitivity to risk. The Composite was created in December 2002 with an inception date of March 31, 2002. 3) A complete list of all composites with descriptions managed by the firm and/or additional information regarding policies for calculating and reporting returns is available upon request via email to: [email protected]. 4) TOTAL RETURN METHODOLOGY AND FEE STRUCTURE—Performance figures in this report have been presented gross and net of investment-management fees. Net performance figures have been calculated by deducting the highest fee payable by an account of this type; 0.75% of assets, annually, through 2004, 0.65% of assets, annually, thereafter. Net -of-fee performance figures reflect the compounding effect of such fees. The investment advisory fee schedule is disclosed in Part II of ABLP’s Form ADV. 5) RATE OF RETURN—No representation is made that the performance shown in this presentation is indicative of future performance. An account could incur losses as well as gains. Performance returns for each account are calculated monthly using trade-date accounting. Performance results are reported on a total-return basis, which includes all income from dividends and interest, and realized and unrealized gains or losses. All cash flows are daily weighted using the Modified Dietz Method. The monthly Composite returns are calculated by weighting each account’s monthly return by its beginning market value as a percent of the total Composite’s beginning market value. These monthly performance figures are geometrically linked to calculate cumulative and/or annualized “time-weighted” rates of return for various time periods. The Composite contains accounts of clients denominated in foreign currencies. To calculate Composite performance, each account’s monthly returns are converted to Japanese yen using WM Reuters month-end exchange rates. 6) DISPERSION—The dispersion of annual returns is calculated based on the asset-weighted standard deviation. 7) The benchmark, which is not covered by the report of independent accountants, is the TOPIX index. The TOPIX, also known as the Tokyo Price Index, is a capitalization-weighted index of all the companies listed on the First Section of the Tokyo Stock Exchange. Period 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 3 Years* 5 Years* 10 Years* Composite Assets (JPY Millions) 186,392.8 116,494.3 76,286.8 126,179.4 94,412.3 88,874.0 70,653.7 52,618.1 2,565.2 9,256.9 # of Accounts 11 7 7 15 15 13 11 8 1 1 MSCI Japan Gross Return Composite Firm Assets Index Return (%) Net Return (%) Dispersion (%) (USD Billions) (%) 5.49 5.15 0.22 622.0 7.26 52.47 51.95 0.16 494.5 44.58 5.35 4.96 0.44 465.8 10.78 21.11 20.65 1.37 420.0 22.74 (17.37) (17.70) 0.63 346.9 (18.76) (17.63) (17.99) 0.57 412.2 (18.98) (23.93) (24.51) 1.87 450.0 (19.85) 66.96 65.78 NM 368.3 46.58 3.95 3.19 NM 286.7 (8.87) 8.58 7.77 NM 218.7 (14.50) 19.22 18.80 19.77 11.14 10.73 11.36 7.19 6.63 2.42 TOPIX Price Return Index (%) 1.90 43.50 10.15 23.76 (18.30) (19.60) (25.46) 58.44 (7.49) (20.12) 17.22 10.25 1.34 *Annualized through most recent year-end NM = not meaningful, fewer than five accounts were included in the composite for the full period 1) PRESENTATION OF THE FIRM—AllianceBernstein L.P. (“ABLP”) is a registered investment advisor. AllianceBernstein Institutional Investments and AllianceBernstein Investments (collectively, the “Firm”) are the institutional and retail sales, marketing and client service unit of ABLP. The Firm has prepared and presented this report in compliance with the Global ® Investment Performance Standards (GIPS ). Prior to the merger of Alliance Capital Management L.P. (“ACMLP”) and Sanford C. Bernstein & Co., Inc. (“Bernstein”) in October 2000, the firms were reporting under their respective names. In February 2006, ACMLP changed its name to ABLP. 2) COMPOSITE STRUCTURE—The Japan Growth Composite (the “Composite”) includes all fee-paying discretionary taxexempt accounts with assets over $10 million in US dollars. The Japan Growth investment team seeks to generate a premium through research-driven stock selection. The investment team uses our locally-based growth analysts' research to build a concentrated portfolio of approximately 40 to 50 companies whose growth potential appears likely to outpace market expectations. Typically, purchase candidates are industry leaders and have mid-to-large market capitalizations. The creation date of this Composite is prior to December 1994. 3) A complete list of all composites with descriptions managed by the Firm and/or additional information regarding policies for calculating and reporting returns is available upon request via email to: [email protected]. 4) TOTAL RETURN METHODOLOGY AND FEE STRUCTURE—Performance figures in this presentation have been presented gross and net of investment-management fees. Prior to January 2001, the Composite’s net-of-fee return was calculated by deducting the highest fee charged to an account in the Composite. From January 2001 forward, the Composite’s net-of-fee return is calculated by deducting a weighted average of the actual fee rates charged to each account in the Composite. Net-of-fee performance figures reflect the compounding effect of such fees. The highest fee payable for a Japan Growth portfolio is 0.65% of assets, annually. The investment advisory fee schedule is disclosed in Part II of ABLP’s Form ADV. 5) RATE OF RETURN—No representation is made that the performance shown in this presentation is indicative of future performance. A portfolio could incur losses as well as gains. Performance figures for each account are calculated monthly on a trade-date basis using a total rate-of-return calculation. Monthly market values include income accruals, realized and unrealized gains and losses and reflect the daily weighting of cash flows. The Composite results are asset-weighted on a monthly basis. Performance results include the reinvestment of dividends and other earnings. Returns for the accounts in the Composite are calculated in US dollars. The US dollar composite returns are then converted to Japanese yen using WM Reuters month-end exchange rates. 6) DISPERSION—The dispersion of annual returns is calculated based on the asset-weighted standard deviation. 7) The benchmark, which is not covered by the report of independent accountants, is the TOPIX Index. The TOPIX, also known as the Tokyo Price Index, is a capitalization-weighted index of all the companies listed on the first section of the Tokyo Stock Exchange. As of December 31, 2006 For financial representative use only. Not for inspection by, distribution or quotation to, the general public. AllianceBernstein 29