first quarter 2009 current strategy review - lewishamcouncilmeetings.lewisham.gov.uk/data/pensions...

London Borough of Lewisham First Quarter 2009 Current Strategy Review

June 16, 2009

This presentation is provided by AllianceBernstein Limited.Bernstein Value Equities (referred to as Bernstein herein) is a unit of AllianceBernstein Limited.

This presentation booklet has been provided to you for use in a private and confidential meeting to discuss a potential or existing investment advisory relationship.This presentation is not an advertisement and is not intended for public use or distribution beyond our private meeting.

This document is directed at Professional Clients (as defined in FSA rules) and the products and services described are only available to such clients.This document is not directed at Retail Clients and no reliance should be placed on its contents by Retail Clients.

Issued by AllianceBernstein Limited, Devonshire House, One Mayfair Place, London W1J 8AJ. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Services Authority.

Nicholas DavidsonSenior Portfolio Manager

George BlundenDirector – Client RelationsInstitutional Investments

GV CS 1Q09 1

Your Agenda

Your Mandate

Performance Review

Portfolio Positioning

Nicholas Davidson

Senior Portfolio Manager

Member of UK/European Investment Policy Group

22 years’ industry experience

George Blunden

Bernstein Value Equities

Senior Vice President

Senior Investment Advisor

29 years’ industry experience

GV CS 1Q09 2

Your Mandate

Mandate Size: Inception £133 millionMay 31, 2009 £144 million

Benchmark: Inception to March 31, 2008 34% FTSE World Europe ex UK Index12% FT/S&P AW Japan Index10% FT/S&P AW Dev Asia Pacific ex Japan34% FTSE World North America10% MSCI Emerging Markets Index

From April 1, 2008 onwards MSCI All Country Index, 50% hedged to GBP

Premium Target: 1.5% above the benchmark (net)

Risk Target: 3-5% tracking error

Your Team: Nicholas Davidson, George Blunden and Dawn Williams


GV CS 1Q09 3

Performance SummaryIn Pounds


Inception—November 1, 2004Based on London Borough of Lewisham Global Diversified Value account vs. MSCI ACWI Half Hedged to GBP from April 2008 onwards and the custom benchmark prior to this dateSource: FTSE, MSCI and Bernstein

Apr-May2009

1Q2009 2008 2007 2006 2005 2004

SinceInception

(to May 09)

London Borough of Lewisham 14.7%

12.9%

+1.8%

(9.4)% (37.5)% 6.4% 13.1% 30.0% 7.4% 1.9%

Benchmark (9.6)% (28.6)% 13.2% 9.7% 27.6% 5.9% 4.5%

Relative Performance +0.2% (8.9)% (6.8)% +3.4% +2.4% +1.5% (2.6)%

GV CS 1Q09 4

Diverse Holdings Drove Improving Performance in First Quarter


After a weak start to the year, markets staged a partial recovery late in the quarter, and your portfolio outperformed in March

Select energy, medical and financial holdings did well

Other financial stocks did poorly, along with some cyclical holdings

GDV and FTSE All World Performance

Contributors

Detractors

(7.9)% (8.6)%

8.7%

(8.0)% (9.3)%

7.4%

Jan 09 Feb 09 Mar 09

Lewisham MSCI ACWI Half Hedged to GBP

As of March 31, 2009Based on London Borough of Lewisham Global Diversified Value account vs MSCI ACWI Half Hedged to GBPData are preliminary. 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 US$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: MSCI and Bernstein; see Performance Disclosure and Disclosures and Important Information.

FinancialsMetlifeFifth Third BancorpAllstate

MedicalPfizer

Consumer CyclicalsCBS

EnergyPetro Canada

FinancialsCredit SuisseWells Fargo

MedicalSchering-PloughWyeth

GV CS 1Q09 5

High but Falling PeakingHigh and RisingRiskAbove AveragePeakingRisingOpportunity

Is the Worst Over for Value?


Anxiety andRisk Aversion

Actual Earningsand Stock Price

Long-TermEarnings Powerand Stock Price

The Value Cycle

Confidence andRisk Appetite

Phase 3Phase 2Phase 1

GV CS 1Q09 6

10

20

30

40

50

71 74 78 82 86 90 93 97 01 05 09

Value Opportunity Is Elevated


Long-term measures of value opportunity are elevated

Discount to Fair Value*

Per

cent

InternetEuphoria

Japan AssetBubble

Oil Shock

At the individual stock level, valuation spreads are high across most sectors

Through March 31, 2009*Data represent Bernstein’s estimate of the amount by which the most attractively priced large-cap global stocks sell below overall market valuations. The proportion of Bernstein investments in stocks from this group will vary over time but will typically be high. Bernstein’s estimates of the fair value of these stocks may not be realized for a variety of reasons. Data for March 2009 are preliminary. **The ratio of the highest price/book quinti le to the lowest price/book quintile in the Bernstein global large-cap developed universe; Cyclicals includes capital equipment, construction, consumer cyclicals, technology/electronics and transportation; Defensives includes consumer staples, medical, telecom and utilities; Resources includes energy and industrial commodities.Source: Center for Research in Security Prices (CRSP), FactSet, MSCI, S&P Compustat, Thomson, Worldscope and Bernstein

Range of Price/Book Valuation Spread Ratios: 1971–2009

6.5

4.6

7.08.3

0

2

4

6

8

10

Cyclicals Defensives Financials Resources

95th Percentile

5th Percentile

Current Value Long-Term Average

**

Rat

io (×

)

GV CS 1Q09 7

(2)

0

2

4

6

94 97 00 03 06 09

Average

Investor Anxiety Remains High

Investor risk aversion, while down from recent peaks, remains unusually elevated

Market volatility is high and likely to remain so for some time

Global Risk Aversion Indicator*

MSCI World 20-Day Rolling Equity Volatility**

Sta

ndar

d D

evia

tion

Per

cent


Through March 31, 2009*Incorporates equity index implied volatil ities, bond spreads, currency implied volatilities and equity mutual fund flow**MSCI World using net local returns to exclude currency effectSource: Bloomberg, Investment Company Institute, MSCI and Bernstein

0

25

50

75

1999 2001 2003 2005 2007 2009

GV CS 1Q09 8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1978 1983 1988 1993 1998 2003 2008

Rat

io (×

)

GDV

MSCI World

0.8×

1.6×

1.5×

2.2×

1.5×

2.5×

0.7×

0.9×

1.1×

1.2×

1.3×

2.4×

Financials

Consumer Cyclicals

Telecom

Technology

Energy

Medical


The Portfolio Includes Attractively Valued Stocks in All Sectors

Portfolio Sector Valuations: Price/Book

As of or through March 31, 2009Based on a representative Global Diversified Value accountSource: MSCI and Bernstein

MSCI World Global Diversified Value

Price/Book

1.0×

1.4×

GV CS 1Q09 9

Our Research Is Adapting to the Uncertain Environment


Fundamental Research

Exercise greater caution when signals disagree

Understand the bear case

Broaden analysis of other stakeholder behavior

Broadenperspective

Supplement return model with additional metrics: net equity issuance, change in short interest, sell-side earnings revisions

Explore broader set of risk and return factors

Explore more adaptive risk models

Quantitative Research

Stress test balance sheets for extreme outcomes

Scrutinize debt covenants, maturity patterns and sources of funding

Identify vulnerabilities to noneconomicforces

Deependownside risk analysis

Use scenario analysis in our risk model to stress test volatility assumptions

Use refinancing tool to identify at-risk companies

Extend use of external risk models

GV CS 1Q09 10

Renault and Nissan Should Be Resilient Through Crisis


Liquidity vs. Cash Burn (EUR Billions)

Net Liabilities/EBITDA*** Price/Book

0.2×0.5×

0.8×

Renault Nissan MSCIWorld

Automakers

0.4×3.3×

8.7×

Nissan Renault GM

As of March 31, 2009*Industrial business only**Includes operational cash requirements and debt repayments***Includes financial liabilities (excluding sales financing), pension and other employee related liabilities and cash and equivalents, as of 4Q 2008Source: ACEA (European Automobile Manufacturers’ Association), MSCI, company reports and Bernstein; see Disclosures and Important Information.

3.1

3.4 3.3 10.4

7.2

3.7*

3.6

0.4

5.2

2.6

Total Available Liquidity

Est. 2009 Cash Needs**

Total Available Liquidity

Est. 2009 Cash Needs**

Total UnusedCredit Lines*GovernmentLoans/CashPotential Valueof Equity Stakes

Ren

ault

Nis

san

Renault and Nissan face short-term funding concerns. Our research suggests that both companies have access to ample liquidity to see them through the crisis

Both companies are well positioned to meet their long-term financial liabilities and their shares trade at attractive valuations, suggesting they could recover strongly as the downturn eases

Total EU-15 Auto Sales: Cars and Light Commercial Vehicles

16.2 17.0

1012141618

2000 2002 2004 2006 2008 2010 2012

Mill

ions

EstimateCar sales have fallen dramatically and will take some time to recover

GV CS 1Q09 11

Energy: The Portfolio Is Sensitive to Rising Oil Prices


As of or through March 31, 2009*Depletion after maintenance capex and satellite extensions but before new projects**From 1985–2008 ***Spot prices for West Texas Intermediate crudeSource: Bloomberg, MSCI, company reports and Bernstein; see Disclosures and Important Information.

OPEC manages its output to support prices and maximize profit

The economic downturn caused the sharpest dropin oil demand in 25 years

Global Oil Supply/Demand Metrics

Oil: OPEC Production vs. Prices***

Price/Forward Earnings 2010E

(8)%(4)%

1.5%

(2.0)%

2008–09E

LT Annual Growth**

Natural Depletion

With Capex*

Demand Growth

2224262830

01 02 03 04 05 06 07 08 09 100306090120150

$/Barrel

Oil PriceOPEC Production (Left Scale)

Mil.

Bar

rels

/Day Normal

$75

7.2× 7.0× 6.5×9.4× 10.1×

RoyalDutch Shell

Conoco-Phillips

Petro-Canada

WorldEnergy

MSCI World

Our energy holdings are attractively valued and have the potential to do well as oil prices normalize

GV CS 1Q09 12

Maintaining Portfolio Exposure to Financials

As of March 31, 2009Based on a representative Global Diversified Value account; numbers may not sum due to rounding.*Recent ROE from 2003–2007. For ING, recent ROE is from 2004–2007, due to accounting changes. Sumitomo recent ROE is average of 2007–2008, due to large losses in previous years. Sumitomo forecast normal ROE is for year ending March 2013. Source: MSCI and Bernstein; see Disclosures and Important Information.

Global Diversified Value: Financial Holdings

Portfolio Weight Representative HoldingsRecent*

ROEForecast

ROE (2013)

Price/Normalized Earnings

Insurance INGMetLifeAllianzMunich Re

23%111210

16%161313

Price/Book

MSCI World FinancialsMSCI World

0.8×1.4

2×566

Banks & Financial Services

Credit SuisseHSBCSumitomo Mitsui Financial GroupDeutsche Bank

13%109

10

8×557

13%16101013%

7%

Total 20%Total


GV CS 1Q09 13

Telecoms: Strong Cash Flows, Even in a Downturn

Concern is growing that a significant downturn in consumer and enterprise spending will undermine strong cash flows at telecom companies and threaten dividend payments

Telecom stocks in our portfolio are attractively valued compared with the benchmark and trade at deep discounts to historical valuation levels

Operating Free Cash Flow*


Our research suggests that discretionary capex on new services and capacity expansion can be easily cut to alleviate pressure on cash flows

Telefónica (EUR Bil.)Vodafone (GBP Bil.)15.0 15.7

6.35.6

2009E 2010E

Capex**

10.0 10.3

4.64.2

2009E 2010E

Price/Forward Earnings (2010E)

Free Cash Flow Dividend

Essential25%

Capacity (Market Driven)50%

New Services(Discretionary)

25%

C$1.5 C$0.7BCE €3.7€1.9Telefónica£2.9 Bil.£1.4 Bil.Vodafone

Market DrivenDiscretionary

Potential Cash Flowfrom Capex Reduction(2009–2010 Average)

Capex by Type

7.8× 7.8× 10.3× 10.8×17.3×

Vodafone Telefónica BCE MSCIWorld (ex

Financials)

WorldTelecom

(5-Yr. Avg.)As of March 31, 2009*Bernstein estimates, EBITDA minus capex**Bernstein estimatesSource: MSCI, company reports and Bernstein; see Disclosures and Important Information.

BCE (CAD Bil.)4.3 4.3

1.21.2

2009E 2010E

GV CS 1Q09 14Bernstein Value Equities

As of May 31, 2009Based on London Borough of Lewisham Global Diversified Value account*Based on PB/PESource: MSCI, Thomson I/B/E/S and Bernstein

Portfolio Characteristics: High Yields at Attractive Valuations

3.7%

3.1%

LewishamGDV

MSCIWorld

Dividend Yield

10.9%11.7%

LewishamGDV

MSCIWorld

1.3×

1.6×

LewishamGDV

MSCIWorld

13.4×

15.4×

LewishamGDV

MSCIWorld

Price/Earnings2009E

Price/Book Return on EquityNext 12 Months*

GV CS 1Q09 15

We Have a History of Exploiting Anxiety and Opportunity

(1.6)

3.4

(1.1)

(12.0)

(19.6)

17.7

9.0

3.7 4.8 5.38.3

(6.4)(10.3)

15.2

Oct

–Dec

199

5

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

(25)

(20)

(15)

(10)

(5)

0

5

10

1998 1999 2000 2001 2002 2003

Global Value Annual Net PerformanceRelative to MSCI World (%)

Annualized Relative Net Returns for an Investment Starting in March 1998

Past performance is no guarantee of future results. Periods of more than one year are annualized. The returns presented above are Global Value composite returns net of fees relative to MSCI World (net), in US dollars. Source: MSCI and Bernstein; see Performance Disclosure.

Feb 00(19.5)%

24 monthsPerc

ent

Feb 023.0%

In US Dollars


GV CS 1Q09 16

Appendix


GV CS 1Q09 17

As of May 31, 2009Based on London Borough of Lewisham Global Diversified Value account versus the MSCI ACWI Half Hedged to GBPSource: MSCI and Bernstein; see Disclosures and Important Information.

Bernstein Global Diversified Value: Largest Active Weights


10 Largest Overweights 10 Largest Underweights

Royal Dutch Shell +2.0%

Credit Suisse Group +0.9%

Eni Spa +0.9%

Sanofi-Aventis +0.9%

Merck +0.9%

BASF +0.9%

BNP Paribas +0.9%

Mitsubishi Chemical Holdings +0.9%

Petro Canada +0.8%

Nissan Motor +0.8%

General Electric (0.7)%

Nestlé (0.7)

Apple (0.6)

Wells Fargo (0.6)

Toyota (0.6)

Coca-Cola (0.5)

Google (0.5)

Roche (0.5)

Novartis (0.5)

Exxon (0.5)

GV CS 1Q09 18

As of May 31, 2009Based on London Borough of Lewisham Global Diversified Value account versus the MSCI ACWI Half Hedged to GBP Source: MSCI and Bernstein

Bernstein Global Diversified Value: Sector and Country Weights

Energy +3.0%

Financials +2.2

Telecommunications +1.2

Technology +0.8

Utilities (0.8)

Industrial Commodities (1.0)

Transportation (1.3)

Consumer Cyclicals (2.3)

Construction & Housing (2.3)

Capital Equipment (3.3)

Germany +3.6%

France +1.9

Sweden +1.0

Netherlands +0.9

Korea +0.9

Australia (1.0)

Spain (1.3)

Switzerland (2.0)

Japan (3.1)

US (6.8)

Largest Sector Overweights & Underweights Largest Country Overweights & Underweights


GV CS 1Q09 19

As of or through March 31, 2009*Discount of MSCI EM to MSCI World**These data represent Bernstein’s estimate of the amount by which the most attractively priced emerging-market and large-cap global stocks sell below overall market valuations. The proportion of Bernstein investments in stocks from this group will vary over time but will typically be high. Bernstein’s estimates of the fair value of these stocks may not be realized for a variety of reasons. Data for March 2009 are preliminary. Source: Compustat, DRI, FactSet, MSCI, Thomson Datastream, Thomson I/B/E/S and Bernstein; see Disclosures and Important Information.

Emerging Markets: Bottom-Up Stock Selection Yields Opportunities

Our estimate of the value opportunity in emerging markets is broadly in line with the developed world

We continue to find compelling opportunities across a variety of sectors

After rebounding in March, emerging markets are priced at a small discount to developed-market equities on a forward-earnings basis, despite higher expected profitability

Relative Valuations:* Emerging vs. Developed Markets


Discount to Fair Value of Most Attractive Stocks**

(75)

(50)

(25)

0

25

92 94 96 98 00 02 04 06 08

Perc

ent

Price/ForwardEarnings

Price/Book

20

30

40

50

92 94 96 98 00 02 04 06 08

Perc

ent MSCI EM

MSCI World

Holding Industry Country Price to BookNorilsk Nickel Metals Russia 0.5×

AU Optronics Technology Taiwan 0.7

LUKOIL Energy Russia 0.8

Samsung Electronics Technology S. Korea 1.5

Select Emerging-Market Opportunities

GV CS 1Q09 20

UK Banks: Lloyds Has strong Market Position with Limited Downside

As of March 31, 2009*Excludes assets upon which banks do not bear any risk including policyholder assets, insurance, intangibles and goodwill**Insured under Government Asset Protection Scheme (GAPS)Source: Company reports and Bernstein


Risk Assets*: Insured vs. Uninsured

Royal Bank of Scotland: Earnings Forecast

After RBS revealed heavy losses in January, our research suggested that the risk of further losses and full nationalization had increased dramatically

Lloyds Banking Group: UK Market Share

In contrast, Lloyds is well protected under the Government Asset Protection Scheme. Most of its uninsured assets are relatively low-risk mortgages and loans

Lloyds’ takeover of HBOS gives it a leading market share in the UK banking market and the potential to recover strongly when conditions stabilize

(40)

0

40

80

07 08E 09E 10E 11E 12E

Penc

e pe

r Sha

re

As of Dec 31, 2008

After January losses

Lloyds Banking Total: £962 Bil.

Govt.Insured**

26%

Uninsured74%

7642Buy-to-let mortgages8015Leveraged finance

10097Real estate, homebuilders10018Unsecured personal loans100%33Specialist mortgages

InsuredTotal£ Bil.Riskiest Assets

30%

24%

20%

>20%

Current Accounts

SMEs

Mid-Large Corporate

Position1

1

2

3

Savings; Credit Cards; Mortgages; Personal Loans

GV CS 1Q09 21

(20)

0

20

40

60

1972 1978 1984 1990 1996 2002 2009

The Portfolio Is Well Positioned to Recover Its Performance Premium

Value investing’s success is powerful and sustained

Value Premium of Stocks to MSCI World**

Global Nonfinancials vs. Portfolio*

55% 61%

GDV MSCI World

Net Debt/Book Value EBITDA/Net Debt

0.7×0.6×

GDV MSCI World

As of March 31, 2009*Based on a representative Global Diversified Value account; individual accounts may vary.**Hedged relative returns in USD, based on the MSCI World, measuring the difference in 12-month rolling returns of the most attractive 20% of stocks, based on average of book/price and trailing earnings/price factors, versus the indexSource: Compustat, MSCI, Worldscope, company reports and Bernstein


Value Beats Index 80% of All Months

Perc

ent

Average Annualized Premium

6.4%

We believe our portfolios should be resilient through near-term uncertainty and are well positioned to recover their performance premium over time

GV CS 1Q09 22

Bernstein Global Value Equities: Investment Policy Group


As of April 30, 2009*Until June 30, 2009

Portfolio Management

Compliance

Trading

Account Management

Performance Reporting

Portfolio Administration

Cross-Border Team

Average Experience in Industry: 20 Years

Average Tenure with Bernstein: 14 Years

Andrew Chin

Giulio Martini

Gregory Powell

Jeff Singer*

Portfolio Specialists

UK & EuropeAvi Lavi

Tawhid Ali

JapanKatsuaki Ogata

Takeo Aso

Pacific BasinStuart Rae

Roy Maslen

Local ExpertsNorth AmericaJohn MahedyDavid Yuen

James MacGregorPeter Frith

Emerging MarketsSammy Suzuki

Matthew Kennedy

Sharon FayChief Investment Officer—

Global Value Equities

Henry D’AuriaChief Investment Officer—Emerging

Markets Value Equities

Kevin SimmsDirector of Research—Global Value Equities

Gerry PaulGlobal Head of Diversified Value Nicholas Davidson

Senior Portfolio Manager

GV CS 1Q09 23

Disclosures


GV CS 1Q09 24

Disclosures and Important Information


Disclosure on Security ExamplesReferences 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.

Past performance is not a guide to future performance.

Additional InformationThe value of investments and the income from them can fall as well as rise and you may not get back the original amount invested.

The value of non-domestic securities may be subject to exchange-rate fluctuations.

The views and opinions expressed in this presentation are based on AllianceBernstein’s internal forecasts and should not be relied upon as an indication of future market performance or any guarantee of return from an investment in any AllianceBernstein services.

Performance Notes


GV CS 1Q09 26

Period

Composite Assets (GBP Millions) # of Accounts Gross Return (%) Net Return (%)

Composite Dispersion (%)

Firm Assets (USD Billions)

MSCI World Index Return (%)

2008 527.9 7 (29.05) (29.54) 0.94 389.1 (17.92) 2007 676.9 7 0.64 (0.07) 0.68 689.9 7.20 2006 1,324.4 12 12.04 11.25 1.50 622.0 5.32 2005 1,601.3 12 24.14 23.28 0.89 494.5 22.44 2004 1,209.8 12 9.68 8.97 0.39 465.8 6.97 2003 833.4 11 20.43 19.65 1.66 420.0 19.70 2002 554.3 11 (20.02) (20.54) 0.79 346.9 (27.57) 2001 562.2 9 (3.61) (4.24) 0.58 412.2 (14.63) 2000 70.9 2 8.70 8.00 NM 58.7 (6.33) 1999 43.6 2 15.43 14.68 NM 56.0 28.97 3 Years* (7.17) (7.82) (2.50) 5 Years* 1.73 1.03 3.95 10 Years* 2.41 1.73 0.82 NM = not meaningful, fewer than five accounts were included in the composite for the full period *Annualized through most recent year-end 1) PRESENTATION OF THE FIRM—AllianceBernstein L.P. (“ABLP”) is a registered investment adviser. 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 compl iance wi th the Global Investment Performance Standards (GIPS®). In October 2000 the Firm was redefined when Alliance Capital Management L.P. (“ACMLP”) and Sanford C. Bernstein & Co., Inc. (“Bernstein”) merged. The investment adviser continued to operate as ACMLP. Prior to the merger the firms were reporting under thei r respective names. In February 2006, ACMLP changed its name to ABLP. The Firm has been verified by an independent verifier on an annual basis from 1993 through 2007. 2) COMPOSITE STRUCTURE—The performance results displayed herein represents the investment performance record for the institutional Global Diversified Value Composite (the “Composite”). The Composite consists of accounts which invest in stocks based in both developed and emerging markets and seeks a long-term premium relative to thei r benchmark while taking limited benchmark risk. The Composite includes all fee-paying institutional discretionary accounts. The Composite was created in March 2002 with an inception date of March 31, 1998. 3) A complete list of all composites with descrip tions managed by the Firm and/or additional information regarding policies for calculating and reporting returns is available upon request via email to: CompositeRequests@All ianceBernstein.com. 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; 0.65% of assets, annually, through 2004, 0.70% 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. Per formance results are reported on a total-return basis, which includes all income from dividends and interest, and realized and unrealized gains or losses. Account returns are net of foreign withholding taxes. The benchmark returns are net of withholding taxes from a Luxembourg tax perspective. Prior to 2001, if an account’s net monthly cash flows were equal to or exceeded 10% of its beginning market value, the Modified Dietz Method was used to daily weight the cash flows. When an account’s net monthly cash flows were less than 10% of its beginning market value, the cash flows were assumed to have occurred on the last day of the month. Beginning 2001, 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 Composi te’s beginning market value. These monthly performance figures are geometrically linked to calculate cumulative and/or annualized “time-weighted” ra tes 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 US dollars using WM Reuters month-end exchange rates. The US dollar composite returns are then converted to British pounds using these rates. 6) DISPERSION—Internal dispersion is calculated using the asset-weighted standard deviation of all accounts that were included in the Composite for the entire period. 7) The benchmark, which is not covered by the report of independent accountants, is the MSCI World Index. The index is designed to measure global developed market equity performance.

Performance DisclosureBernstein Global Diversified Value (In Pounds)

As of December 31, 2008


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