Exhibit 99.5
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Alliance Capital Management L.P.
Alliance Capital Management Holding L.P.
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AN OPPORTUNITY
TOO GOOD TO MISS
The Alliance Capital Management
Sanford C. Bernstein Inc. Combination
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TO OUR UNITHOLDERS:
"THIS COMBINATION PUTS
TOGETHER WHAT WE BELIEVE
TO BE THE BEST RESEARCH
AND INVESTMENT MANAGEMENT
ORGANIZATION IN OUR INDUSTRY."
On October 2, 2000, Alliance Capital Management L.P. ("Alliance Capital"), the
operating partnership, completed the acquisition of the business of Sanford C.
Bernstein Inc. that was first announced on June 20th. This special report to
Unitholders offers an overview of the combined organization and a look at the
remarkable promise the Alliance-Bernstein union offers clients, Unitholders, and
our professional staff.
This combination puts together what we believe to be the best research and
investment management organization in our industry. It is not the typical
financial services industry combination with a rationale of cost reduction.
Rather, it is additive and expansive in the most positive sense, and the
opportunities it presents are defined by the richness of resources the combined
firm provides.
The Alliance-Bernstein combination is exciting because of both the differences
and the similarities between the two firms. The differences, of course, are to
be found in markets and investment orientation. Bernstein's style is as a value
manager, while Alliance's investment orientation is growth. Bernstein is a
leading value manager serving institutions, wealthy individuals and families,
and it is a top-tier provider of investment research to institutional investors.
Alliance is a leading growth manager for the institutional investment market --
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[PHOTO OMITTED]
(from left to right) Roger Hertog, Vice Chairman; Alfred Harrison, Vice
Chairman; Lewis A. Sanders, Chief Investment Officer & Vice Chairman; Bruce W.
Calvert, Chief Executive Officer & Vice Chairman; John D. Carifa, President &
Chief Operating Officer; Dave H. Williams, Chairman
pension funds, banks, insurance companies, foundations and endowments -- and is
among the most prominent mutual fund sponsors. Together, the highly
complementary market positions, skills and resources of these two firms add up
to one of the best-positioned firms in the investment management industry by
virtue of our extraordinary breadth of services.
Despite outward differences, the similarities between the two firms run deep and
play a critical role in establishing the right cultural "chemistry" for
Alliance's continued success. The two organizations share a deep commitment to
strong fundamental research, both have solid histories of management continuity
and organizational stability, and both have long and successful track records.
Lastly, we share a common philosophy: find and retain the best talent, maintain
a clear strategic vision, take the long investment view, and put one's clients
first.
We hope the information in the pages that follow will help you better understand
why the management and boards of both firms -- when we started looking into the
possibility of merging our organizations -- quickly concluded that this
combination was an opportunity too good to miss.
"...THIS COMBINATION WAS AN OPPORTUNITY TOO GOOD TO MISS."
/s/ Dave H. Williams /s/ Bruce W. Calvert /s/ John D. Carifa
Dave H. Williams Bruce W. Calvert John D. Carifa
Chairman Chief Executive Officer President
& Vice Chairman & Chief Operating Officer
/s/ Lewis A. Sanders /s/ Alfred Harrison /s/ Roger Hertog
Lewis A. Sanders Alfred Harrison Roger Hertog
Chief Investment Officer Vice Chairman Vice Chairman
& Vice Chairman
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SANFORD C. BERNSTEIN:
A THUMBNAIL SKETCH
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The Bernstein investment management and research unit of Alliance Capital is a
leading value style manager, one of the most respected purveyors of investment
research and one of the premier managers of separate accounts for high-net-worth
individuals and families. Formed in 1967 to manage private accounts, it later
expanded into institutional investment management. On September 30, 2000,
Bernstein had $31 billion in private accounts under management, the product of
15,000 client relationships, and $55 billion in assets managed for 800
institutional clients. It also has over 900 clients to whom it sells research
and offers institutional brokerage services.
Bernstein, whose name is being preserved in certain business units and products,
serves private clients through a network of 130 financial consultants in eight
offices across the United States. All client portfolios are centrally managed,
offering clients the benefit of proprietary asset allocation optimization
software, as well as the estate planning services of the Family Wealth Group. On
the institutional side, Bernstein targets both large and middle market pension
plan sponsors and other tax-exempt investors. Its research staff of 140
analysts, mathematicians and economists produces some of the most highly
regarded independent research in the investment research business.
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As the combined firm profile shows, with superior investment capabilities, an
expanded talent pool and over $400 billion under management, Alliance is now one
of the world's leading buy-side research organizations, one that can compete for
virtually any portfolio assignment in any developed capital market, U.S. or
international. We are, according to Pensions & Investments magazine data, the
largest institutional manager in both the active equity growth and value
styles(1). Our more than 1,900 institutional clients worldwide include pension
plans from 38 of the Fortune 100 and public fund clients in 35 states.
Alliance Capital's 260-person research staff is one of the largest, and the
firm's reach is global with portfolio management or research operations in New
York, Cleveland, Chicago, Minneapolis, San Francisco, London, Tokyo, Mumbai,
Singapore, Hong Kong, Sydney, Johannesburg, Sao Paulo, Cairo, Istanbul and
Vienna.
With this broader, richer organization, Alliance has significantly expanded its
ability to grow -- particularly in global markets -- and meaningfully extended
its product range. We have also strengthened our marketing and client servicing
capabilities. All of this translates directly into immediate as well as
longer-term benefits for clients.
Today, Alliance can deliver to clients anywhere in the world the full spectrum
of U.S. and international investment portfolios in the two major equity
investment styles, as well as bond management in the United States and overseas.
Bernstein private clients now have access to growth stock accounts modeled after
Alliance Capital's Large Cap Growth portfolio through the newly created Alliance
Strategic Growth discipline. Similarly, Alliance's mutual fund clients soon will
have access to a range of Bernstein-generated value-style portfolios.
Looking farther ahead, we plan to expand the portfolio offerings to Bernstein's
high-net-worth clients to include such Alliance capabilities as cash management,
high yield bonds, and real estate investment trusts. We expect that our expanded
institutional clientele will discover attractive new portfolio services from the
combined firms.
(1) Pensions & Investments: May 1, 2000
PROFILE OF ALLIANCE CAPITAL(1)
Assets under management(2) $454 Billion
Institutional clients 1,900
Private client relationships 15,000
Worldwide mutual fund accounts 6.3 million
Total staff 4,000
Professional staff 1,500
Research team 260
(1) All data as of October 2, 2000, unless otherwise noted
(2) Approximate as of December 31, 2000
RESOURCES,
THE EXPANDED
ORGANIZATION
RESOURCES,
RESOURCES.
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A STRONGER
PERFORMANCE
OUTLOOK
Alliance Capital's future long-term financial performance, compared to what
Alliance Capital's financial performance would have been on a stand-alone basis,
should be better as a result of the combination.
However, as always -- and as we have commented frequently -- financial
performance is influenced by the behavior of the capital markets. Because
Alliance earns the large majority of its revenues through a small percentage of
client assets under management, changes in the value of these assets, due to
capital markets fluctuations, up or down, can affect Alliance's profits, for
better or worse.
Since the announcement of the transaction in late June, both Alliance and
Bernstein have continued to win new institutional mandates. These competitions
usually involve pension or asset management consultants, and we are encouraged,
because so many consultants have implicitly endorsed our combination.
We anticipate benefits from our association with Alliance Capital's general
partner and majority owner, AXA Financial. Our Bernstein unit's high-net-worth
clients have needs for insurance, and AXA Advisors' sales force should be a
source of new high-net-worth clients for us.
SINCE THE ANNOUNCEMENT
OF THE TRANSACTION IN LATE JUNE,
BOTH ALLIANCE AND BERNSTEIN
HAVE CONTINUED TO WIN
NEW INSTITUTIONAL MANDATES.
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A FEW WORDS
ABOUT COMPETING
INVESTMENT STYLES
COMBINING THE TWO INVESTMENT
APPROACHES SHOULD REDUCE
VOLATILITY WHILE PRESERVING
HIGH RETURNS, RELATIVE TO
INDUSTRY BENCHMARKS.
Offering two distinct and competitive investment approaches that clients may use
either singly or in tandem should reduce volatility while preserving high
returns, relative to industry benchmarks.
While growth and value investing, as the first chart on the right shows, go in
and out of favor over longer-term investment cycles, a hybrid portfolio could
have outperformed either discipline used alone.
To demonstrate this, we simulated and tested a combined portfolio -- half its
dollar value modeled on the Bernstein Strategic Value portfolio and half on
Alliance's Large Cap Growth -- and the whole added up to more than the sum of
its parts. On their own, the track records of each are markedly different. When
the performance of one is sub-par, the other is usually very good. But this does
not mean they cancel each other out. In four of the six years in the 1990s when
growth and value returns diverged most sharply, the simulated account
outperformed the average U.S. stock fund dramatically, and the combined account
beat the market handily on a cumulative basis over the six-year period.
Over a more extended period, we found that the longer one stayed with the hybrid
portfolio, the better the returns. The simulation outperformed the Lipper U.S.
Stock Fund Composite (1979-99) in three-quarters of all the year-long periods,
in 80% of all the five-year periods and in all 12 of the ten-year periods.
BONDS, TOO
While Alliance and Bernstein are best known for equity research and management,
both are also substantial investors in fixed-income securities. A large portion
of the new business "wins" noted previously were fixed-income mandates,
including both U.S. and foreign securities. Our combined credit analysis,
economic, and quantitative research groups devoted to fixed-income securities
put us in the top ranks of bond managers.
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WE FOUND THAT THE LONGER
ONE STAYED WITH
THE HYBRID PORTFOLIO,
THE BETTER THE RETURNS.
RELATIVE GROWTH AND VALUE PERFORMANCE
ROTATE THROUGH MARKET CYCLES
[GRAPHIC]
[The following table was depicted as a line graph in the printed material.]
Growth v. Value Differential
Rolling 5 Years Annual Return
Value
Value Outperforms
Value Outperforms Growth Growth Outperforms Value Outperforms Growth Growth
----------------------------------------------- ------------------------------ --------------------- -----------
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99
Growth -2.05 -5.02 -7.42 -5.52 -4.36 -4.34 -0.04 1.57 5.4 2.55 1.69 0.81 -1.25 -3.85 -2.96 4.83 9.34
Source: Frank Russell Company
Performance of broad based growth indices and broad based value indices through
various market cycles. Past performance is not indicative of future results.
WHEN ONE AND ONE MAKE THREE
[GRAPHIC]
[The following table was depicted as a line graph in the printed material.]
Alliance/Bernstein
50/50 Simulation* S&P Barra Growth S&P 500 S&P Barra Value US Stock Funds
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(AFTER FEES)
$100,000 $100,000 $100,000 $100,000 $100,000
1979:1 $108,614 $105,010 $107,135 $109,207 $108,040
2 $113,678 $106,421 $110,127 $113,811 $112,869
3 $125,317 $113,797 $118,482 $123,196 $123,095
4 $129,293 $115,718 $118,655 $121,164 $127,305
1980:1 $125,584 $111,769 $113,806 $115,375 $119,069
2 $143,388 $125,441 $128,959 $132,180 $136,012
3 $163,020 $142,795 $143,523 $142,668 $154,673
4 $178,833 $161,315 $157,109 $149,745 $167,820
1981:1 $191,754 $159,703 $159,096 $155,185 $173,576
2 $195,762 $151,112 $155,329 $156,190 $173,316
3 $175,825 $135,059 $139,339 $141,277 $154,684
4 $188,865 $145,488 $148,861 $149,778 $166,518
1982:1 $179,792 $131,778 $137,978 $142,318 $156,976
2 $176,504 $132,562 $137,189 $140,206 $157,071
3 $198,944 $148,463 $153,022 $155,343 $174,694
4 $249,251 $177,540 $180,928 $181,287 $208,130
1983:1 $277,608 $193,095 $199,084 $201,470 $230,317
2 $317,463 $215,494 $221,201 $222,449 $256,803
3 $312,418 $208,642 $220,906 $229,177 $254,184
4 $307,360 $206,366 $221,776 $233,653 $252,608
1984:1 $289,252 $195,289 $216,459 $236,141 $240,306
2 $282,219 $192,165 $210,922 $227,854 $234,034
3 $311,328 $207,397 $231,383 $253,946 $251,329
4 $320,760 $211,178 $235,751 $258,222 $256,280
1985:1 $345,601 $230,897 $257,412 $281,627 $277,680
2 $369,722 $246,635 $276,312 $303,360 $296,729
3 $349,967 $233,794 $264,992 $293,802 $285,364
4 $421,905 $281,530 $310,668 $334,854 $328,511
1986:1 $499,033 $319,270 $354,483 $383,497 $375,587
2 $504,171 $343,258 $375,419 $399,229 $393,765
3 $471,397 $301,780 $349,197 $392,029 $365,926
4 $487,111 $322,338 $368,651 $407,409 $380,160
1987:1 $620,366 $399,716 $447,416 $483,059 $451,326
2 $656,155 $419,675 $469,900 $508,216 $462,790
3 $713,164 $449,231 $500,906 $539,156 $487,966
4 $534,344 $343,282 $388,038 $422,392 $389,445
1988:1 $565,795 $352,441 $410,141 $461,130 $418,849
2 $615,706 $373,966 $437,501 $492,913 $442,932
3 $606,200 $373,761 $438,956 $497,312 $442,977
4 $616,324 $384,290 $452,490 $513,946 $451,039
1989:1 $669,747 $409,224 $484,508 $553,951 $482,115
2 $726,832 $446,626 $527,272 $600,374 $519,190
3 $808,825 $504,003 $583,749 $648,901 $567,942
4 $788,594 $524,168 $595,803 $648,228 $565,841
1990:1 $761,131 $507,290 $577,878 $629,972 $552,317
2 $810,264 $557,400 $614,228 $644,577 $584,959
3 $631,226 $476,874 $529,810 $560,693 $500,198
4 $680,649 $525,202 $577,301 $603,827 $539,214
1991:1 $832,944 $611,727 $661,164 $679,750 $625,111
2 $812,958 $607,158 $659,652 $682,126 $621,923
3 $862,237 $645,778 $694,930 $711,935 $663,156
4 $919,141 $726,740 $753,197 $740,063 $716,209
1992:1 $962,184 $689,004 $734,174 $743,232 $713,272
2 $971,715 $687,213 $748,132 $775,274 $707,352
3 $974,873 $718,324 $771,716 $788,547 $727,512
4 $1,088,152 $763,517 $810,571 $817,954 $781,347
1993:1 $1,164,528 $759,777 $845,969 $893,527 $811,507
2 $1,173,288 $744,134 $850,088 $918,544 $818,730
3 $1,232,949 $743,849 $872,053 $966,048 $854,345
4 $1,279,480 $776,339 $892,272 $970,153 $873,396
1994:1 $1,225,288 $742,841 $858,436 $938,394 $845,535
2 $1,243,837 $742,171 $862,049 $947,073 $834,036
3 $1,282,192 $795,213 $904,202 $971,332 $874,820
4 $1,255,937 $800,677 $904,051 $963,957 $861,610
1995:1 $1,377,861 $879,304 $992,074 $1,056,840 $927,696
2 $1,535,123 $970,197 $1,086,785 $1,148,852 $1,008,405
3 $1,681,300 $1,047,208 $1,173,143 $1,240,266 $1,088,775
4 $1,724,991 $1,105,988 $1,243,774 $1,320,564 $1,128,951
1996:1 $1,818,444 $1,153,832 $1,310,535 $1,404,998 $1,190,705
2 $1,861,445 $1,234,709 $1,369,346 $1,433,731 $1,236,904
3 $1,893,950 $1,278,181 $1,411,668 $1,471,597 $1,272,774
4 $2,104,470 $1,371,086 $1,529,351 $1,611,115 $1,353,723
1997:1 $2,128,729 $1,420,019 $1,570,353 $1,639,513 $1,353,601
2 $2,488,066 $1,707,937 $1,844,504 $1,876,735 $1,554,746
3 $2,783,704 $1,808,225 $1,982,673 $2,048,745 $1,708,137
4 $2,760,858 $1,871,865 $2,039,592 $2,094,163 $1,706,088
1998:1 $3,157,897 $2,176,226 $2,324,091 $2,336,108 $1,910,557
2 $3,261,464 $2,303,682 $2,400,834 $2,348,197 $1,923,136
3 $2,946,376 $2,136,840 $2,162,009 $2,044,939 $1,675,076
4 $3,588,881 $2,660,990 $2,622,438 $2,401,462 $1,999,649
1999:1 $3,716,445 $2,844,136 $2,753,109 $2,469,883 $2,051,005
2 $4,096,056 $2,953,110 $2,947,186 $2,736,633 $2,221,323
3 $3,717,147 $2,849,988 $2,763,164 $2,484,151 $2,074,864
4 $4,141,048 $3,412,632 $3,174,295 $2,707,029 $2,390,036
2000:1 $4,153,579 $3,552,900 $3,247,082 $2,713,344 $2,499,260
2 $3,979,198 $3,500,743 $3,160,839 $2,596,806 $2,432,530
3 $3,978,238 $3,193,185 $3,130,242 $2,825,689 $2,484,343
Alliance/Bernstein 50/50 Simulation*: $3,978,000
S&P Barra Growth: $3,193,000
S&P 500: $3,130,000
S&P Barra Value: $2,826,000
U.S. Stock Funds+: $2,484,000
This chart illustrates the total value of an assumed $100,000 investment in
Alliance/Bernstein 50/50 Simulation (from 1/1/79 to 9/30/00) as compared to the
performance of appropriate broad-based indices.
Through September 30, 2000
* "Growth" and "Value" are represented by Alliance Large Cap Growth
composite and Bernstein Strategic Value composite respectively after fees.
Results were simulated from actual returns of Alliance Large Cap Growth
and Bernstein Strategic Value composites in a 50/50 percentage mix to
create the Alliance/Bernstein 50/50 (the "Simulation"). The Simulation
returns were calculated quarterly by adding the respective percentages of
Bernstein's Strategic Value composite returns and Alliance's Large Cap
Growth composite return. These quarterly performance figures were then
linked to produce a continuous-performance index. The Alliance Large Cap
Growth composite returns will differ from the actual Large Cap Growth
returns of clients of Alliance's Bernstein unit in that the Bernstein unit
offers tax management, uses different risk parameters and relies on a
centralized investment decision-making process. Simulation statistics and
past performance are not indicative of future results: there is always the
potential for loss as well as for profit.
+ Lipper U.S. Stock Fund Composite: Growth & Income, and Equity Income
Source: Lipper, Standard & Poor's, Alliance Capital and Bernstein
Forward-Looking Statements
Certain statements provided by Alliance Capital and 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 undertakes no obligation to update any forward-looking statements to
reflect events or circumstances after the date of such statements.
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The coming together of these two organizations of distinction and complementary
skills is fully in keeping with Alliance Capital's mission: To be the premier
global investment management organization through superior performance across a
broad range of investment disciplines for a diverse group of clients.
With worldwide research and investment capabilities, leadership positions in
many investment disciplines, competitive long-term performance, strong financial
results, and a coherent strategy, Alliance is today among the most competitive
and powerful research and investment forces in the asset management industry.
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POSITIONED
FOR GROWTH
Design: Inc Design, incdesign.com
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Alliance Capital [LOGO](R)
1345 Avenue of the Americas
New York, New York 10105
212-969-1000
Alliance Capital Management Holding L.P.
is listed NYSE: AC
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www.alliancecapital.com
ACSCBCOMBIN0101
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