A Perspective on Markets There is no guarantee that any forecasts or opinions in this material will be realized. Information should not be construed as investment advice.

2 Topics Lousy Market Returns Compounded by Poor Investor Decisions Have We Been Here Before? Okay….What Should We Do Now?

3 Nowhere to Hide YTD Returns - August % -43% Technology Growth -30% Small Cap -25% Large Cap Growth -13% Large Cap Value -11% InternationalSmall Cap Value -9% 1% Cash 7% Bonds Past performance is no guarantee of future results. Technology is represented by the Lipper Science & Technology Funds Average, measuring the average performance of funds in the Lipper science & technology category. Large Cap Growth is represented by the Russell 1000 Growth index, which contains those Russell 1000 securities with a greater-than-average growth orientation and higher price-to-book and price-to-earnings ratios. Small Cap Growth is represented by the Russell 2000 Growth Index which measures the performance of those Russell 2000 securities with a greater than average growth orientation. International is represented by the MSCI EAFE index which measures the performance of stock markets in developed countries in Europe, Australasia and the Far East. Large Cap Value is represented by the Russell 1000 Value Index which measures the performance of those Russell 1000 companies with a less-than-average growth orientation and lower price-to-earnings ratios. Cash is represented by the 90-day Treasury Bill. Bonds are represented by the Lehman Brothers Aggregate Index, comprised of all US investment-grade fixed-rate bonds. Small Cap Value is represented by the Russell 2000 Value index which contains those Russell 2000 companies with a less-than-average growth orientation and lower price-to-earnings ratios. All indices mentioned are unmanaged. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund.

4 Nowhere To Hide 15 Weeks ended August 31, 2002 DJIA S&P % All 30 Stocks Are Down NASDAQ % 456/500 Stocks Are Down -28.9% 92/100 Stocks Are Down Past performance is no guarantee of future results. DJIA is the Dow Jones Industrial Average which contains 30 stocks widely held by both individual and institutional investors. These 30 stocks represent approx. one-fifth of the value of all US stocks. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. The Nasdaq 100 Index represents the largest and most active non-financial domestic and international issues listed on the Nasdaq Stock Market based on market capitalization. All indices mentioned are unmanaged. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund.

5 Short Term, Investors Have Suffered - -15% -17% -15% 8% -2% -11% 9% 0% 2% -2% 8% 9% 10% 4% 7% -10% -40% % TechnologyUS Small CapUS Large CapInternationalBonds Long Term, Investors Still Positive -26% 10% 1 Yr 3 Yr 10 Yr Through August 31, Past performance is no guarantee of future results. Technology is represented by the Lipper Science & Technology Funds Average, measuring the average performance of funds in the Lipper science & technology category. US Small Cap is represented by the Russell 2000 Index which is comprised of the smallest 2,000 companies in the broad-market Russell 3000 Index. US Large Cap is represented by the Russell 1000 Index which contains those largest securities in the Russell 3000 Index. International is represented by the MSCI EAFE index which measures the performance of markets in developed regions of Europe, Australasia and the Far East. Bonds are represented by the Lehman Brother s Aggregate, comprised of US investment-grade fixed-rate bonds. All indices mentioned are unmanaged. An investor cannot invest in an index, and its results are not indicative of the performance of any specific investment, including an Alliance mutual fund. 5 Yr -5%

There is no guarantee that any forecasts or opinions in this material will be realized. Information should not be construed as investment advice. Lousy Market Returns Compounded by Poor Investor Decisions

7 - 25% -22% 39% 30% Investors Chase Returns Large Cap Growth * Projected 2002 net mutual fund flows off of May 2002 base, performance as of 8/31/02. Source: Financial Research Corporation. Past performance is no guarantee of future results. Large Cap Growth is represented by the Russell 1000 Growth Index. The unmanaged Russell 1000 Growth Index is comprised of those stocks in the larger Russell 1000 Index with a greater-than-average growth orientation and higher-than average price-to-earnings ratios. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. 33% -20% 23% % (60) (40) (20) $120 Returns Cash Flows ($ billions) 2002* Net Fund Flows

8 16% Investors Chase Returns Large Cap Value 7% -13% 22% 35% -6% % (60) (40) (20) $ Returns Cash Flows ($ billions) 2002* * Projected 2002 net mutual fund flows off of May 2002 base, performance as of 8/31/02. Source: Financial Research Corporation. Past performance is no guarantee of future results. Large Cap Value is represented by the Russell 1000 Value Index. The unmanaged Russell 1000 Value Index is comprised of those stocks in the larger Russell 1000 Index with a less-than-average growth orientation and lower-than average price-to-earnings ratios. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. Net Fund Flows

Investors Chase Returns Large Growth & Large Value % (60) (40) (20) $ Returns Cash Flows ($ billions) * * Projected 2002 net mutual fund flows off of May 2002 base, performance as of 8/31/02. Source: Financial Research Corporation. Past performance is no guarantee of future results. Large Cap Value is represented by the Russell 1000 Value Index. The Russell 1000 Value Index is comprised of those stocks in the larger Russell 1000 Index with a less-than-average growth orientation and lower-than average price-to-earnings ratios. Large Cap Growth is represented by the Russell 1000 Growth Index. The Russell 1000 Growth Index is comprised of those stocks in the larger Russell 1000 Index with a greater-than-average growth orientation and higher-than average price-to-earnings ratios. Both indices are unmanaged. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund.

10 4% Investors Chase Returns Fixed Income 12% 7% -1% 9% 10% 8% % (60) (40) (20) $ Returns Cash Flows ($ billions) 2002* * Projected 2002 net mutual fund flows off of May 2002 base, performance as of 8/31/02. Source: Financial Research Corporation. Past performance is no guarantee of future results. Fixed Income is represented by the Lehman Brothers Aggregate Index. This unmanaged Index is comprised of US investment grade fixed-rate bonds and Is an indicator of the performance of the overall US bond market. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. Net Fund Flows

11 Investors Continue To Chase Returns... 76% of June 2002 Net Mutual Fund Flows Went To Fixed Income Source: Financial Research Corporation. 1Intermediate-Term Bond$4,538 2Intermediate-Term Government$2,454 3 Foreign Stock$2,068 4 Short-Term Bond$1,553 5Ultrashort Bond$1,378 6 Short-Term Government$1,023 7 Muni Short$994 8 Specialty Real Estate$718 9 Domestic Hybrid$ International Hybrid$333 CategoryRankJune % International Equity 9% U.S. Equity 76% Fixed Income

12 The Bottom Line... Bad Markets Bad Decisions

There is no guarantee that any forecasts or opinions in this material will be realized. Information should not be construed as investment advice. Lousy Markets Have Happened Before (Maybe We’ll Learn Something?)

14 August 31, $ Internet Bubble - What’s Next? $10,000 Invested in S&P 500 Index - December 1999 ? Past performance is no guarantee of future results. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund.

15 Historical Points of Reference Only 3 Other Times When the S&P 500 Has Been Down 2 or More Years in A Row Duration Context 4 YearsThe Great Depression 3 YearsWorld War II 2 YearsRecession - Oil Crisis 2+ Years?Internet Bubble Years Past performance is no guarantee of future results.

16 Historically, Patience Paid Off $10,000 Invested in S&P 500 Index The Great Depression Past performance is no guarantee of future results. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. Market Bottom June 1, 1932 $

17 Investor Experience - The Great Depression ( ) Did Nothing Recovered in 4 Yrs 4 mos Bought More Recovered in 3 Months ($10,000 additional investment) Sold Out Realized 78% Loss 1-Yr Recovery From Bottom % Market Bottom - June 1, 1932 Past performance is no guarantee of future results.

18 Historically, Patience Paid Off $10,000 Invested in S&P 500 Index World War II Past performance is no guarantee of future results. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. Market Bottom April 28, 1942 $

19 Investor Experience - World War II ( ) Did Nothing Recovered in 9 months Bought More Recovered in 4 Months ($10,000 additional investment) Sold Out Realized 31% Loss 1-Yr Recovery From Bottom % Market Bottom - April 28, 1942 Past performance is no guarantee of future results.

20 Historically, Patience Paid Off $10,000 Invested in S&P 500 Index Recession - Oil Crisis Market Bottom October 3, 1974 Past performance is no guarantee of future results. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. $

21 Investor Experience - Oil Crisis ( ) Did Nothing Recovered in 1 yr 8 mos Bought More Recovered in 5 Months ($10,000 additional investment) Sold Out Realized 44% Loss 1-Yr Recovery From Bottom % Market Bottom - October 3, 1974 Past performance is no guarantee of future results.

22 Investors Who Time Months After The Bottom June 1933 April 1942 October 1975 One Year Return 137.6% 64.3% 44.4% Miss The Recovery Past performance is no guarantee of future results.

Picking the Bottom is Hard! Close is Good Enough! 23

24 Investing Near the Bottom -- Short-Term Recovery S&P Cumulative Returns From Market Bottom Past performance is no guarantee of future results. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. The Great Depression 12/31 - 6/33 6/32 - 6/33 12/32 - 6/33 48%50% 138% 1 Yr Return From Bottom Return From 6 Months Before Bottom Return From 6 Months After Bottom World War II 10/41 - 4/43 4/42 - 4/43 10/42 - 4/43 43% 27% 64% Oil Crisis 4/ /75 10/ /75 4/ /75 16% 8% 44%

25 World War II 10/41 - 4/47 4/42 - 4/47 10/42 - 4/47 98% 91% 148% Investing Near the Bottom -- Long-Term Recovery S&P Cumulative Returns From Market Bottom Past performance is no guarantee of future results. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. The Great Depression 12/31 - 6/37 6/32 - 6/37 12/32 - 6/37 127%192% 364% 5 Yr Return From Market Bottom Return From 6 Months Before Bottom Return From 6 Months After Bottom Oil Crisis 4/ /79 10/ /79 4/ /79 51%66% 123%

There is no guarantee that any forecasts or opinions in this material will be realized. Information should not be construed as investment advice. Okay…What Should We Do?

27 What Should We Do? Establish a Plan Suited to Your Needs Stick With It Systematically Invest and Rebalance

28 Professional Advice and Asset Allocation Case Study: Typical Investor Allocation 1997 The following study is hypothetical and does not necessarily represent the actual experience of any investor.

29 Case Study: $100,000 Initial Investment & $10,000 Annual Contribution Investor A: Rebalanced... $179,059 Investor B: Chased Returns... $153,569 Capital Invested $150,000 Aug , , , Source: Financial Research Corporation & Lipper, Inc. This case study is hypothetical and doesn’t necessarily represent the experience of any investor. This example assumes the following: Investor A invested $100,000 on January 1, 1997, $10,000 at the beginning of each of the next five years, and annually rebalanced according the following asset allocation: 10% Technology Equity, 20% Bonds, 10% International Equity, 25% Large Cap Value Equity, 10% Small Cap Equity, and 25% Large Cap Growth Equity. Investor B invested $100,000 on January 1, 1997, according to the following asset allocation: 10% Technology Equity, 20% Bonds, 10% International Equity, 25% Large Cap Value Equity, 10% Small Cap Equity, and 25% Large Cap Growth Equity. At the beginning of each of the next five years, Investor B invested $10,000 per year and annually rebalanced based on the percentage of mutual fund net flows into each category. Technology is represented by the Morningstar Category Specialty Technology Average; Bonds are represented by the Lehman Brothers Aggregate Index; International Equity is represented by the MSCI EAFE; Large Cap Value is represented by the Russell 1000 Value Index; Small Cap Equity is represented by the Russell 2000 Index; Large Cap Growth is represented by the Russell 1000 Growth Index. An investor cannot invest in an index and its results are not indicative of any specific investment, including an Alliance mutual fund.

30 Lessons Learned Asset Allocation Matters Investing is a Long Term Proposition Chasing Returns is a Losers Game A Paper Loss is a Paper Loss Stocks Have Outperformed Bonds, Cash and Inflation Over Long Periods of Time Recoveries are Hard to Time Miss the Recovery and You Miss the Boat

31 ? Have We Been Here Before? S&P 500 Peak and Troughs- 1970’s and 1990’s Past performance is no guarantee of future results. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund.

32 Are The Fundamentals Intact? Economic Indicators at Bottom in 1970’s and Today Fed Funds Rate Federal Funds Rate Source: National Bureau Economic Research Oct ‘ % 1.7% Jul ‘02 Oil Prices Real Crude Oil Prices (WTI SPOT) in US. $ 2001 Source: Merrill Lynch $43.6 $23.7 Oct ‘74July ‘02 Unemployment Civilian Unemployment Rate Source: National Bureau Economic Research 6.0% 5.9% Oct ‘74Jul ‘02 Inflation Consumer Price Index Source: National Bureau Economic Research & Alliance Capital 11.9% Oct ‘74July ‘02 2.5%

33 What To Advise Clients To Do? Do Nothing Move To Cash Buy More…Asset Allocate

Have We Been Here Before? S&P 500 Peak and Troughs- 1970’s and 1990’s Past performance is no guarantee of future results. The S&P 500 stock index is comprised of 500 US stocks and is an indicator of the performance of the overall US stock market. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment, including an Alliance mutual fund. ?

35 The Wall Street Journal August 8 th, 2002

36 There is no guarantee that any forecasts or opinions contained in this material will be realized. This information should not be construed as investment advice. A Word About Risk Investment Products Offered: Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed Alliance Fund Distributors, Inc., the principal underwriter of Alliance mutual funds and an affiliate of Alliance Capital Management, L.P., the manager of the funds, is a member of the NASD.

Alliance Capital