Thank you for standing by and welcome to the AllianceBernstein Third Quarter 2007 Earnings Review. At this time, all participants are in a listen-only mode. After the formal remarks, there will be a question-and-answer session and I will give you instructions on how to ask questions at that time. As a reminder, this conference is being recorded and will be replayed for one week. I would now like to turn the conference over to the host for this call, the Director of Investor Relations for AllianceBernstein, Mr. Philip Talamo. Please go ahead.

Thank you, Henry. Good afternoon everyone and welcome to our third quarter 2007 earning review. As a reminder, this conference call is being webcast in the support of a slide presentation that could be found in the investor relation section of our website at www.alliancebernstein.com\Investor Relations. Presenting our results today is our President and Chief Operating Officer, Gerry Lieberman; Lewis Sanders, our Chairman and Chief Executive Officer; and Bob Joseph, our CFO who will also be available to answer questions at the end of our formal remarks. I would like to take this opportunity to note that some of the information we present today is forward-looking in nature and is such, is subject to certain SEC rules and regulations regarding discloser. Our discloser regarding forward-looking statements can be found on page 2 of our presentation as well as in the risk factor section of our 2006 10-K. In light of the SEC's regulation update, management has limited to responding to increase from investors and analysts in a non-public form. Therefore, we encourage you ask all questions of a material nature on this call. At this time, I'd like to turn the call over to Gerry Lieberman.

Thank you, Phil, and good afternoon to everyone on the call. Let's begin with a brief recap, our capital market performance for our third quarter of 2007. Display 3 shows despite a significant market turbulence throughout most of the quarter, a strong September enabled the S&P 500 and Russell 1000 Growth indices to post solid or better returns. Also, as you can see, the Russell 1000 Growth index outperformed both the S&P 500 and the Russell 1000 Value index for the second consecutive quarter with the Russell 1000 Value index posting a negative return for the first time since the first quarter of 2003. In fact, 12 months trailing returns for the Russell 1000 Growth were better than its Value counterpart for the first time in four years. Finally, despite the crises that rolled much of the fix income markets during July and August, the Lehman Aggregate index reflects the strong return of 2.8% for the quarter. Turning to non-U.S. capital markets on display 4, you can see that all three equity indices also posted weaker returns in the third quarter than in the second quarter. While the MSCI World and MSCI EAFE indices once again performed roughly in line with the S&P 500, the MSCI Emerging Markets index far outpaced all other indices shown on these two slides posting 14.4% return. Highlights of our relative investor returns are summarized on display 5. As I have mentioned before, relative performance of our growth services have typically been very strong during periods where growth equities outperformed value equities, and this quarter was certainly no exception. More specifically, all but one of the growth services that we track in the appendix exceeded its benchmark in the third quarter. There are many cases. Relative out performance was quite significant ranging from 200 to…

Thank you. [Operator Instructions]. Thank you. Our first question is coming from Bill Katz from Buckingham Research. Please go ahead.

Okay. Thank you and good afternoon. I was just wondering if you could talk a little bit about flows and sort of the question... first question is on the institutional side. If you look more broadly than just this one quarter, it seems like the organic growth rate in the absolute level of flows continues to decelerate. And I'm sort of curious, how much of that reflects to sort of the macro backdrop verses perhaps starting to reach an upper limit under the client benefit business? That's my first question.

Hi, Bill. It's Lou Sanders.

Hello.

I think both are contributed. It's very difficult to do an accurate attribution when you try to decompose flows. The changes that you cite are evident, but they're fairly subtle, and I think if there was any noteworthy feature of the marketplace certainly in the U.S., it is... the shift in assets is from DB to DC and as you know we have a comprehensive effort to build our presence in the DC arena and we are enthusiastic about our prospects. And noted in Gerry's remarks as well as mine in the press release that we are gaining traction and we do anticipate that it will begin to reflect itself more meaningfully inflows in 2008.

Okay. And the other question also said as outflows for now and then I'll hop back in the queue perhaps. On the private client's side, it has been... one area where there's been tremendous growth has been in the alternative product line. Just sort of curious if the recent volatility and performance here dense that growth on a go-forward basis?

Bill, you know, possibly but I think that you need to understand, I think you do, but let me reiterate that. Our private client offering is rarely a point product relationship with the client. It can take that form but that would be unusual. Instead, the alternatives are part of many services that clients engage with us for as part of a broad plan, the alternatives tend not to be a major part of that plan just because of their very character, and as a result, I wouldn't anticipate a very significant reduction in flows related to a one quarter of motivation and return. There'll be some slowing is certainly possible, but I think if you see it in this broader context, you will find it appropriate.

Okay, thanks. I'll hop back in the queue.

Thank you. Our next question is coming from Cynthia Mayer of Merrill Lynch. Please go ahead.

Hi, good afternoon. I was interested in the retail dynamics. It sounded like the non-U.S. clients took out money and I am wondering if you have seen that dynamic before or if you are seeing it come back at all?

Cynthia, we are particularly strong outside the U.S. in our fixed income services and with all those turmoil that took place in the quarter, the gross flows were impacted by that as well as in that flows. We don't expect that to be a long time... a long time at all. We expect that to come back as soon as it will, a little less uncertainty overseas in this arena.

Although the timing of course of that recovery is unpredictable, Cynthia. What gives us some confidence is that our global fixed income services are actually performing quite well.

And I guess can you give us any sense of what you are seeing in this quarter because it sounds like in terms of you are guiding, it sounds like you are assuming basically no flows in 4Q?

That is the assumption. We will see how the quarter unfolds.

Thank you. Our next question is coming from Marc Irizarry of Goldman Sachs. Please go ahead.

Oh, great. Thanks. Lewis, this is a question for you on hedge funds just in terms of having multiple uncorrelated strategies. It obviously looks like the diverse fund strategy may be proved to be less so during the quarter. Now when you are going... I guess it's a twofold question. One, can you just dig into a little more what happened and then also your plans to market that performance to institutions, where do those stand? Thanks.

Well, I think you are aware by the way you posed the question that alpha sources that have a history of low and no correlation actually were in many cases highly correlated in the third quarter. And there was some of that in our return profile as well. On part b, we are indeed active in building presence institutionally with the services and the main optimistic about our potential third quarter results not withstanding by comparison to the fund community more broadly and within the context of the history of these services, third quarter is in our judgment unlikely to pose a very serious impediment to our success institutional.

Thank you. Moving on to the next question. It's coming from Craig Siegenthaler of Credit Suisse. Please go ahead.

Hi, thanks. Just a question here on target date funds, wondering when you pointed that out on slide 11, how this business is directing in a benefit from the recently rolling from the department of labor. How you think this could trend in the next few years?

Yes, it's a tremendous benefit. It creates a safe haven for companies to do what's right for, for their employees, and we think it's going to create real opportunities for us. The one that here to four [ph] was hard for us to take advantage of, so the time is right for us. We came up with what we think are great target date services. I think we have a great story to tell in regards to how the help funds improve quite frankly, therefore our 1-K programs and we think this is of a great benefit for our clients, for their employees and for us.

Got it. And then on the 40, the roughly $0.40 revision to guidance all that coming from hedge funds performance fees, I am just wondering can you give us a target of how much EPS in '07 is roughly coming from performance fees, so we can kind of estimate how that should trend in '08 and kind of see what a core number is on that basis?

We don't have that number on our fingertips, but it's easy for you to compute.

How's that?

Well, the numbers are completely disclosed for last year and we've given you enough color about this year for you to judge what our expectations actually are. As uncertain as they remain, I must empathize given that the year is not yet over and as Gerry noted and as the press release stresses, the earnings still remain sensitive to capital market returns and our performance relative to there too.

Got it. Thanks a lot.

Thank you. Our next question is coming from Robert Lee of KBW. Please go ahead. Robert Lee - Keefe, Bruyette & Woods: Thank you. Good afternoon. First question is on the margin. As you noted, you know, a pretty substantial margin improvement. Is there any reason that we shouldn't expect this a sustainable rate going forward, and how do you feel about your ability to even improve margins assuming you have some descent top-line growth going into 2008?

Well, we work hard to manage the margins in a thoughtful way, Bob, as you know. We certainly aren't anticipating an increase in margin going forward like we are showing right now. But we worked hard on the G&A line. That helps a little bit. Growing the revenue obviously helps a little bit. So I think we can sustain where we are in improvement. I think I've mentioned on this call before, we don't look for our firm to end up with a ford [ph] bigger than these margins numbers. We are not heading in that direction, and we don't manage to get there. Robert Lee - Keefe, Bruyette & Woods: Okay.

Does that help. Robert Lee - Keefe, Bruyette & Woods: Yes, it does. And second question is on the fixed income business. You noted that, I guess, year-to-date that business seems to have picked up and I think you mentioned you had some pretty good numbers in your global fixed income strategies. Can you give us some more color on how you see that business progressing? Inflows, they were a little below where they had been running. Do you see... are you pretty optimistic about that heading into 2008?

Yes, we remain optimistic for the reasons that you cited.

Bob, the third quarter had the negative numbers in our retail channel for fixed income, all right. And we liked the performance numbers. We liked what we have done in these investment services. We liked the reception that we've seen in clients in this space. So we are optimistic about our fixed income services.

And you have to see the institutional fixed income businesses as having evolved from performance against the benchmark to relationships that are fabricated on meeting unique client objectives, often in using cash as well as emphatics and mandate designs that aren't standardized. And so our success in this domain rest as well on our capabilities to actually compete well for mandates of that character was increasingly characterized the comparative settings especially outside the United States. Robert Lee - Keefe, Bruyette & Woods: Okay. Thank you.

Thank you. Our next question is a follow-up from Bill Katz from Buckingham Research. Please go ahead.

Thanks again. Gerry just go back where you were you talking about higher watermark issue. I just want to make sure I understand that. As you look out to next year, is it a reset to the calendar date or is it based on rolling terms, trying to get a better hand on sort of the leverage into next year?

Gerry's point was to stress that as things now stand, they are not material high watermarks to have to overcome, before the diversified services would be in a position to earn performance fees. There are some but they are not really material, and it's not calendar date base. It's a rolling schema. You should also understand that there are hedge funds in the line that are fairly strong like positive returns here to-date, and are earning meaningful performances.

And the other question, in terms of the operating leverage, if I recall correctly, you were accruing [ph] compensation against a certain level of, I guess, anticipate performance fees. How much if any of the operating leverage this quarter reflected any kind of reversal of those compensation accruals?

There some in there Bill, and you can figure this out yourself by looking at the, what we've now put into comp for the nine months versus the compensation versus where we were before, and there was indeed a year-to-date update on that number in the quarter. So that's a good catch.

And then if I can ask just one more since I have here, just sort of curious. Given the robust growth in value and what seems to be a more decisive shift to growth in the industry, I'm so surprised you are not seeing a more robust shift into growth as some of your competitors are? And do you think that the ultimate outcome here is a flattening of flows given a slowdown in value offset by increasing growth?

Look. This is actually a fairly immature phenomenon Bill that is growth outperformed value. It's really less than two quarters. And so if one were to extrapolate these conditions, I think you could make a prediction that value flows would slow some, growth flows would accelerate. And we would anticipate participating on both parts of that equation. Remember too however that it would be muted in our case because of style blend, which is a growing part of the mix and where this has moved indeed that's its principle attribute.

Okay. Thank you.

Thank you.

Just to explain a little bit on the last comment, it's principle attribute. This will further sell show client, why that is a great solution and the coming year of the firms and the coming year of our... of these services represents a great solution for our clients.

Thank you. Our next question is a follow-up from Cynthia Mayer of Merrill Lynch. Please go ahead.

Hi, just a follow-up on the high watermark issue. Can you give us a sense of this historic return of the diversified services, so we can get a sense of how easy it would be to overcome a mid-single digit deficit?

Well, Cynthia naturally, we can't do that easily by a telephone call, but let me summarizes by saying that the return profile for those services in the third quarter was not statistically provocative, which is to say that within the range of predications one would make given the character of those services and outcome like the third quarter, which was negative, would not have been highly unusual. It wouldn't have great frequency, but it would not be highly unusual. There is a rough cemetery to the distribution of returns. So that quarters that proved as hostile as third quarter have corresponding quarters that are highly favorable but unpredictable in their appearance. So therefore, when during the forecast as to... when they might be recovery and will it have similar magnitude isn't really possible. The message I am trying to leave is there isn't anything about the third quarter return that will make you feel their expectations for returns in the services need to be adjusted.

Okay. And since it sounds like the hedge funds a lot of them reside in private client and some of the hedge funds are doing well, would you expect rather than outflows across the hedge funds as a group to see money transfer from one to the other?

No, I wouldn't anticipate that at all. I mean you know again, I want to stress that the hedge funds and private client for the most part, there are exceptions to this, but for the most part... a part of a well-crafted investment plan, which employs multiple strategies, not just hedge funds. The ones that are selected are selected because they sit well given the other asset exposure those clients have with us and perhaps even outside of us. And disturbing those allocations because of three months period of disappointing returns would be inappropriate to say the least. So I don't think you should anticipate anything like that. You just have to see this in the context in which it resides. It's different than hedge funds that are standalones and point product solutions from the perspective of their client.

Okay.

Cynthia, so thinking about our flows going forward and the assumption that we made, there's nothing in there for significant outflows and hedge funds.

We don't anticipate that. It's conceivable that as I mentioned earlier that the flows could slow somewhat in the immediate period, it's possible. It's also possible that our progress institutionally, we've restrained a bit. It wouldn't be surprising. But I don't think that you should judge that our interest in success in this area is going to be substantially changed as a function of this one quarter result. I want to stress again these funds, the weakest of them is down mid single-digits. And many... a number of us actually to pretty substantially, so you have to keep this in context.

Okay. Can I ask one more question?

Sure.

It sounds like you're a little bit cautious on DB for next year and hopeful on DC, and I'm just wondering if you're thinking in terms of the dimensions of those two as one being a large enough as DC making up for a slow down in DB in terms of either dollars of AUM or the earnings they bring to the firm. You expect it to be enough to replace a slowdown in DB?

Well, first of all, I don't want to leave you with a forecast that we're anticipating a slowdown in DB. We actually didn't provide any such forecast. We simply noted that in response I think was to Bill's question that the slowdown that's occurred could be explained by the setting in the DB marketplace in the U.S., and the emerging vibrancy of the DC arena, which is actually a new phenomenon for this firm. But I don't want to leave you with the impression that we think our global DB business in '08 is going to slow. We are not offering that forecast one way or the other.

Okay.

All right. So slowing of the DB in the U.S. offsetting increasing performance in regards to us collecting funds on the DC in the U.S. and nothing, if anything surprises were made up in all this [ph] outside the U.S.

Okay.

So actually, when you think about institutional flows, remember that we are talking about many kinds of relationships that are outside of the pension arena. You have the emerging Simon [ph] wealth funds, you have any number of government sponsored funds, some of retirement based actually many are. The DC encroachment isn't initial at all. If you look at our institutional business, you will note that 50% of the excess of clients' domicile is outside the United States, which is why I don't think you should... it's simple to draw conclusion about slows as you say, well, gee the DB U.S. marketplace is migrating rapidly to DC and doesn't that therefore mean your gross rate will slow.

Right. I understand. DB is a pocket within a large institutional channel.

Well put. More succinct than I.

Thank you. There appears to be no further questions at this time. And I'll turn the floor back over to Phil Talamo for any closing remarks.

I want to thank everyone for participating on our call. As always feel free to call the Investor Relations team with any further questions. Enjoy the rest of your evening.

Thank you. This concludes today's conference. You may now disconnect.