Evolution of 529 Plan Investment Options The Role of by izj82566

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									Evolution of 529 Plan Investment Options:
 The Role of Asset Allocation Portfolios
                                              Richard A. Davies
                                           Senior Managing Director


                                                        December 4, 2006


                                            AllianceBernstein Investments is a unit of AllianceBernstein L.P.
                AllianceBernstein® and the AB AllianceBernstein logo are trademarks and service marks owned by AllianceBernstein L.P.
 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
                    Rhode Island CollegeBoundfund® – October 2006
                    Total Assets: $7.3 Billion


                                                                 Individual Funds

                                                     Stable Value                                5%

                                                                                       9%




                                                                                26%                                                   Age-Based
                                                                                                                     60%
                                Risk-Based                                                                                            Portfolios
                                 Portfolios
                             (Fixed Allocation)
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                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.        AllianceBernstein   2
                    Asset Allocation: Two Alternatives
                    Fixed Allocation: How Much Risk?                                                             Aged-Based: When Is Money Needed?
                    Appreciation                  Balanced                   Preservation

                                                                                                                100                           Age-Based Aggressive
                                                                                                                                              Age-Based
                                                                                                                 90

                                                                                                                 80

                                                                                                                 70




                                                                                                     Exposure
                                                                                                     % Equity
                                                                                                                 60

                                                                                                                 50

                                                                                                                 40

                                                                                                                 30

                                                                                                                 20

                                                                                                                 10
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                                                                                                                  0
                                                                                                                 Newborn              10-12               College



                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.             AllianceBernstein    3
                    What’s Involved in a Good College Investment Plan?
                     Understand expected risk, return, correlation of all
                      available investment options

                     Choose appropriate risk level

                     Derive asset allocation strategy

                     Allocate new cash inflows efficiently according to the plan

                     Rebalance with discipline

                     Objectively reassess entire plan regularly
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                                             These steps are difficult and time-consuming

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.   AllianceBernstein   4
                    1.5% Greater Return Can Pay for an Extra Year of College


                                                                               Saving                                                           Spending

                     100,000


                        75,000


                        50,000


                        25,000
                                                                                                    College
                                                                                                    Savings*

                                   0
                                        0               3               6               9             12              15              18              21              24
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                    *Results are simulated. The savings phase simulates a beneficiary receiving a contribution into a 529 plan at the beginning of each year from birth until age 18 and then withdrawing
                    an amount each year thereafter. The contribution amount for the infant is assumed to be $2,500 and college costs are assumed to be $12,000. Contribution inflation rate is assumed
                    to be 3% and college cost inflation rate is assumed to be 5%. The portfolio is assumed to earn a nominal 8% return each year. The "1.5% Greater Return Scenario" assumes the
                    portfolio earns a nominal 9.5% return each year. All dollar amounts are expressed in real purchasing power terms.
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                        AllianceBernstein                5
                    1.5% Greater Return Can Pay for an Extra Year of College


                                                                               Saving                                                           Spending

                     100,000
                                                                                                                                               College Savings
                                                                                                                                           With 1.5% Greater Return
                        75,000


                        50,000


                        25,000
                                                                                                    College
                                                                                                    Savings*

                                   0
                                        0               3               6               9             12              15              18              21              24
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                    *Results are simulated. The savings phase simulates a beneficiary receiving a contribution into a 529 plan at the beginning of each year from birth until age 18 and then withdrawing
                    an amount each year thereafter. The contribution amount for the infant is assumed to be $2,500 and college costs are assumed to be $12,000. Contribution inflation rate is assumed
                    to be 3% and college cost inflation rate is assumed to be 5%. The portfolio is assumed to earn a nominal 8% return each year. The "1.5% Greater Return Scenario" assumes the
                    portfolio earns a nominal 9.5% return each year. All dollar amounts are expressed in real purchasing power terms.
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                        AllianceBernstein                6
                    1.5% Greater Return Can Pay for an Extra Year of College


                                                                               Saving                                                           Spending

                     100,000
                                                                                       Extra Savings:                                          College Savings
                                                                                                                                           With 1.5% Greater Return
                        75,000                                                            $12,400


                        50,000

                                                                                                                                                                 Extra Spending:
                        25,000
                                                                                                    College
                                                                                                                                                                     1+ Years
                                                                                                    Savings*

                                   0
                                        0               3               6               9             12              15              18              21              24
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                    *Results are simulated. The savings phase simulates a beneficiary receiving a contribution into a 529 plan at the beginning of each year from birth until age 18 and then withdrawing
                    an amount each year thereafter. The contribution amount for the infant is assumed to be $2,500 and college costs are assumed to be $12,000. Contribution inflation rate is assumed
                    to be 3% and college cost inflation rate is assumed to be 5%. The portfolio is assumed to earn a nominal 8% return each year. The "1.5% Greater Return Scenario" assumes the
                    portfolio earns a nominal 9.5% return each year. All dollar amounts are expressed in real purchasing power terms.
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                        AllianceBernstein                7
                    CollegeBoundfund® Contribution Analysis



                     Analyzed savings contributions from Oct 2000 to Dec 2003


                     Focused on savings patterns in Age-Based options


                     2.4 million contribution transactions totaling $1.8B
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                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.   AllianceBernstein   8
                    Few Beneficiaries Received Large Initial Contributions

                                        % of Beneficiaries
                            Based on Initial Contribution Amount                                                                         % of Initial Dollars
                                                                                                                           Based on Initial Contribution Amount


                                         90%


                                                                                                                                                                        58%
                                                                                                                                        42%


                                                                         10%


                             ―Lower-Funded‖                      ―Higher-Funded‖                                           ―Lightly Funded‖                     ―Well-Funded‖
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                               (Under $20k)                       ($20k or More)                                             (Under $20k)                       ($20k or More)
                    Results based on roughly 2.4 million transactions accounting for $1.8B of contributions into CollegeBoundfund Age-Based options from October 2000 to December 2003 (dollar
                    amounts are expressed in purchasing power as of December 2003).
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                    AllianceBernstein         9
                    “Higher-Funded” Received Majority of Initial Dollars…

                                        % of Beneficiaries                                                                            % of Initial Dollars
                            Based on Initial Contribution Amount                                                          Based on Initial Contribution Amount

                                                                                      Average:                                        $3,000                       $39,000


                                         90%


                                                                                                                                                                        58%
                                                                                                                                        42%


                                                                         10%


                             ―Lower-Funded‖                      ―Higher-Funded‖                                            ―Lower-Funded‖                     ―Higher-Funded‖
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                               (Under $20k)                       ($20k or More)                                              (Under $20k)                      ($20k or More)
                    Results based on roughly 2.4 million transactions accounting for $1.8B of contributions into CollegeBoundfund Age-Based options from October 2000 to December 2003 (dollar
                    amounts are expressed in purchasing power as of December 2003).
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                    AllianceBernstein         10
                    …While the “Lower-Funded” Received the Most Later

                                        % of Beneficiaries                                                                  % of Subsequent Dollars
                            Based on Initial Contribution Amount                                                         Based on Subsequent Contributions

                                                                                      Yearly Average:                                 $1,800                         $3,400
                                                                                      Yearly Median:                                   $600                              $0

                                         90%                                                                                            86%




                                                                         10%                                                                                            14%


                             ―Lower-Funded‖                      ―Higher-Funded‖                                            ―Lower-Funded‖                     ―Higher-Funded‖
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                               (Under $20k)                       ($20k or More)                                              (Under $20k)                      ($20k or More)
                    Results based on roughly 2.4 million transactions accounting for $1.8B of contributions into CollegeBoundfund Age-Based options from October 2000 to December 2003 (dollar
                    amounts are expressed in purchasing power as of December 2003).
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                    AllianceBernstein         11
                    The “Lower-Funded” Started Saving Early…
                                      % of Beneficiaries by Age Group (Initial Contributions)
                                                   ―Lower-Funded‖ Beneficiaries



                                                   50%


                                                                                                         35%


                                                                                                                                                               15%


                                                                          0%                                                    0%                                                    0%
                                                ―Tots‖                                             ―’Tweens‖                                               ―Teens‖
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                                              (Ages 0-6)                                          (Ages 7-12)                                            (Ages 13+)
                    Results based on roughly 2.4 million transactions accounting for $1.8B of contributions into CollegeBoundfund Age-Based options from October 2000 to December 2003 (dollar
                    amounts are expressed in purchasing power as of December 2003). ―Lower-Funded‖ beneficiaries received initial contributions of less that $20,000; ―Higher-Funded‖ beneficiaries
                    received initial contributions greater than $20,000.
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                       AllianceBernstein           12
                    …While the “Higher-Funded” Got Started Later
                                      % of Beneficiaries by Age Group (Initial Contributions)



                                                                    "Lower-Funded"                                               "Higher-Funded"
                                      50%
                                                                                                                      41%
                                                                                               35%
                                                                                                                                                                               32%
                                                             27%

                                                                                                                                                        15%



                                                ―Tots‖                                              ―’Tweens‖                                                  ―Teens‖
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                                              (Ages 0-6)                                           (Ages 7-12)                                               (Ages 13+)
                    Results based on roughly 2.4 million transactions accounting for $1.8B of contributions into CollegeBoundfund Age-Based options from October 2000 to December 2003 (dollar
                    amounts are expressed in purchasing power as of December 2003). ―Lower-Funded‖ beneficiaries received initial contributions of less that $20,000; ―Higher-Funded‖ beneficiaries
                    received initial contributions greater than $20,000.
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                       AllianceBernstein           13
                    CollegeBoundfund® Contribution Analysis: Summary

                     ―Lower-Funded‖ Beneficiaries (90%)
                              Relatively modest initial contributions
                              Most start saving early
                              Tend to receive subsequent contributions


                     ―Higher-Funded‖ Beneficiaries (10%)
                              Relatively large initial contributions
                              Contributions tend to be made to older beneficiaries
                              Tend not to receive subsequent contributions
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                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.   AllianceBernstein   14
                    Circumstances Determine Appropriate Equity Allocation

                                                100

                                                    80
                                          Percent



                                                    60

                                                    40

                                                    20

                                                    0
                                                         0   1     2    3    4      5    6    7    8     9    10      11   12    13    14    15   16    17   18   19   20   21     22

                     Life Stage:                                 Tot                              Tween                               Teen                        College
                     Circumstances:                   Long investment horizon           Moderate time horizon             Short time horizon                Rapid spending

                                                      Many receiving                    Most dollars collected at         Highest savings level             Few contributions
                                                       contributions                      this stage
                                                                                                                            Still receiving catch-up
                                                      Not well funded                                                       contributions




                     Investment                       Maximize returns                  Seek strong growth                Generate moderate returns         Preserve real
                     Objectives:                                                                                                                                spending power
                                                      Diversify to reduce risk          Reduce risk over time             Move to conservative
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                                                       without sacrificing return                                            portfolio positioning             Protect against
                                                                                                                                                                significant loss



                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                           AllianceBernstein         15
                    Factors To Consider In Evaluating Age-Based Funds

                          Overall Asset Allocation Glide Path
                                  Equities: Large Cap vs. SMID vs. International
                                  Bonds: Duration and Credit Quality

                          Active vs. Passive Management

                          Strategic vs. Tactical Allocation and Rebalancing

                          Diversification: Enough vs. Too Much

                          ―Specialty‖ Asset Classes
                                  REITs
                                  TIPS
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                                  High Yield

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.   AllianceBernstein   16
                    Broadening Array of Asset Classes Offers Diversification

                                                                          Correlation to US Stock Market, 1984–2005

                                                        High Correlation 1.0                                               US Growth Equities
                                                                                                                           US Value Equities
                                                                                                                           US Small-Cap Equities



                                                                                                                           International Equities
                                                                                                                           High Yield Bonds
                                                                                                                           REITs




                                                              No Correlation 0
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                    Past performance does not guarantee future results.
                    Correlation with the stock market is a measure of the standard deviation of various benchmarks to the Russell 3000, a common measure of the performance of the broad U.S. stock
                    market. The indexes used to represent each asset class were: U.S. Growth Stocks: Russell 3000 Growth Index; U.S. Value Stocks: Russell 3000 Value Index; U.S. Small-Cap
                    Stocks: Russell 2000 Index; International Stocks: MSCI EAFE Index; REITs: National Association of Real Estate Investment Trusts (NAREIT) Index; Intermediate Bonds: Lehman
                    Brothers Aggregate Bond Index; Short-Term Bonds: Merrill Lynch 1-3 Year Treasury Index. Cash: Lehman 3-Month Treasury-Bill. T-Bills provide fixed rates of return as well as
                    principal guarantees if held to maturity.
                    Source: Lehman Brothers, Merrill Lynch, MSCI, NAREIT, Russell Investment Group, and AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                    AllianceBernstein              17
                    Power of Full Diversification

                                                                                              1979–2005
                                                                                                                                                                         55% Stocks
                                                       US                     US                     Foreign                                                             35% Bonds
                                                      Value                  Growth                  Stocks                   REITs                    Bonds             10% REITs


                                                      14.3%                                                                    14.1%
                                                                              12.0%                   10.9%                                                                    11.9%
                       Compound                                                                                                                         9.0%
                    Annual Returns


                                      Worst
                                       Loss                                                                                                            (2.9)%
                                                                                                                                                                               (7.6)%

                                                     (15.5)%
                                                                                                                              (17.5)%
                                                                                                      (23.4)%
                                                                              (27.9)%
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                    Past performance does not guarantee future results. An investor cannot invest directly in an index. The indexes used to represent each asset class were: U.S. Growth Stocks:
                    Russell 1000 Growth Index; U.S. Value Stocks: Russell 1000 Value Index; International Stocks: MSCI EAFE Index; REITs: National Association of Real Estate Investment Trusts
                    (NAREIT) Index; Intermediate Bonds: Lehman Brothers Aggregate Bond Index.
                    Source: Frank Russell, Lehman Brothers, MSCI, NAREIT and AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                     AllianceBernstein          18
                       Age-Based Aggressive Portfolio
                       A historical index simulation of the Age-Based Aggressive Portfolio between 1970 – 2004.

                                    From Beginning of

                                  1970   1971   1972   1973    1974    1975   1976   1977   1978   1979   1980   1981   1982   1983   1984   1985   1986   1987   1988   1989   1990    1991   1992   1993   1994   1995   1996   1997    1998   1999   2000    2001    2002    2003   2004
To End of                  2004   10.0   10.4   10.3   10.0    11.0    12.6   11.9   11.7   12.2   12.2   12.1   11.6   12.4   12.5   12.0   12.3   11.1   10.2   10.5   10.0   9.3     11.0   9.9    10.5   9.9    10.6   8.8    7.5     5.4    3.3    0.5     2.7     8.7     25.0   16.6
                           2003   10.0   10.5   10.3   10.1    11.1    12.7   12.0   11.8   12.3   12.4   12.2   11.7   12.6   12.6   12.2   12.5   11.3   10.3   10.5   9.9    9.2     11.0   9.7    10.2   9.5    10.3   8.2    6.5     3.8    1.0    -3.1    -1.5    5.0     34.0
                           2002   9.9    10.3   10.1   9.9     10.9    12.5   11.9   11.7   12.2   12.2   12.0   11.5   12.4   12.5   12.0   12.3   10.9   9.8    9.9    9.2    8.2     9.9    8.4    8.7    7.7    8.2    5.5    3.0     -0.9   -5.5   -12.8   -15.6   -17.8
                           2001   10.3   10.7   10.6   10.3    11.4    13.2   12.5   12.3   12.8   12.9   12.8   12.2   13.2   13.3   12.9   13.3   12.0   10.9   11.3   10.7   9.9     12.0   10.6   11.4   10.7   11.8   9.3    7.2     3.4    -1.2   -10.3   -13.3
                           2000   10.6   11.1   11.0   10.7    11.9    13.7   13.0   12.9   13.4   13.6   13.4   12.9   14.0   14.1   13.8   14.4   13.1   12.2   12.7   12.3   11.6    14.3   13.0   14.3   14.1   16.2   14.1   12.8    9.6    5.5    -7.1
                           1999   11.0   11.5   11.4   11.1    12.3    14.2   13.5   13.4   14.0   14.1   14.1   13.5   14.7   14.9   14.6   15.4   14.2   13.3   14.0   13.7   13.2    16.5   15.4   17.3   17.6   21.1   19.8   20.2    19.1   19.8
                           1998   11.0   11.5   11.4   11.1    12.4    14.4   13.7   13.5   14.2   14.4   14.3   13.7   15.0   15.2   14.9   15.6   14.3   13.2   14.0   13.6   12.9    16.5   15.1   17.3   17.5   21.8   19.9   20.4    18.5
                           1997   11.0   11.5   11.4   11.1    12.4    14.5   13.8   13.6   14.3   14.5   14.4   13.8   15.1   15.3   14.9   15.7   14.3   13.0   13.8   13.3   12.4    16.4   14.8   17.3   17.5   22.9   20.6   22.4
                           1996   10.9   11.4   11.3   11.0    12.4    14.6   13.8   13.6   14.4   14.5   14.4   13.7   15.0   15.2   14.7   15.5   13.9   12.5   13.2   12.5   11.4    15.7   13.6   16.2   15.9   23.2   18.9
                           1995   10.9   11.4   11.3   11.0    12.5    14.8   13.9   13.7   14.6   14.7   14.6   13.8   15.2   15.3   14.7   15.6   13.7   12.1   12.9   11.9   10.4    15.3   12.5   15.4   14.4   27.7
                           1994   10.5   11.1   11.0   10.6    12.1    14.5   13.6   13.4   14.2   14.4   14.1   13.2   14.6   14.7   13.9   14.7   12.6   10.6   11.2   9.8    7.5     12.6   7.9    9.7    2.5
                           1993   11.0   11.6   11.5   11.1    12.7    15.3   14.4   14.2   15.1   15.3   15.1   14.2   15.8   15.9   15.2   16.3   14.0   11.9   12.7   11.3   8.8     16.2   10.6   17.4
                           1992   10.9   11.6   11.5   11.1    12.8    15.5   14.6   14.3   15.3   15.4   15.2   14.1   15.8   16.0   15.2   16.3   13.7   11.1   11.9   9.9    6.1     15.6   4.2
                           1991   11.1   11.8   11.7   11.3    13.1    16.1   15.1   14.9   16.0   16.2   16.1   15.0   17.0   17.4   16.6   18.1   15.3   12.6   14.0   12.0   7.1     28.3
                           1990   10.7   11.4   11.2   10.8    12.7    15.7   14.6   14.3   15.4   15.5   15.3   14.0   16.1   16.4   15.3   16.8   13.1   9.1    9.6    4.6    -10.6
                           1989   11.2   12.0   11.9   11.5    13.6    17.0   16.0   15.9   17.3   17.7   17.7   16.6   19.5   20.3   19.9   22.8   19.6   16.5   21.3   22.3
                           1988   11.0   11.8   11.6   11.2    13.4    16.9   15.8   15.6   17.1   17.5   17.4   16.1   19.3   20.2   19.6   23.1   18.8   13.7   20.3
                           1987   10.9   11.7   11.5   11.0    13.2    17.0   15.8   15.5   17.1   17.5   17.4   15.8   19.4   20.4   19.5   24.0   18.0   7.4
                           1986   11.1   12.0   11.8   11.2    13.7    17.8   16.5   16.3   18.1   18.7   18.7   17.1   21.7   23.7   23.6   33.3   29.8
                           1985   10.5   11.4   11.0   10.3    12.8    17.2   15.6   15.2   17.0   17.5   17.2   14.9   19.9   21.7   20.7   36.9
                           1984   9.4    10.2   9.7    8.8     11.2    15.8   13.8   13.1   14.8   14.8   13.9   10.2   14.8   14.8   6.3
                           1983   9.4    10.3   9.7    8.8     11.5    16.6   14.6   13.9   16.0   16.4   15.7   11.5   19.3   23.9
                           1982   8.8    9.6    8.9    7.7     10.5    16.1   13.6   12.5   14.7   14.8   13.1   5.8    14.9
                           1981   8.0    8.8    8.0    6.7     9.8     16.0   13.2   12.0   14.6   14.8   12.3   -2.6
                           1980   8.7    9.7    9.0    7.6     11.4    19.2   16.4   15.7   20.9   24.6   29.4
                           1979   7.3    8.2    7.1    5.2     9.0     17.6   13.7   11.6   16.9   20.0
                           1978   6.3    7.1    5.7    3.2     7.2     17.1   11.7   7.7    13.9
                           1977   5.6    6.4    4.5    1.3     5.6     18.3   10.7   1.8                                                                            Average Annual 18-Year Returns:                                                      13.0%
                           1976   6.1    7.0    5.0    1.1     6.9     27.5   20.3
                           1975
                           1974
                                  4.0
                                  -1.0
                                         4.6
                                         -1.7
                                                1.5
                                                -7.7
                                                       -4.6
                                                       -19.8
                                                               0.8
                                                               -24.8
                                                                       35.2
                                                                                                                                                                    Average Annual Returns:                                                              10.0%
                           1973   5.5    7.3    2.3    -14.6
                           1972   13.1   20.3   22.4                                                                                                                Periods with Positive Returns:                                                       97%
                           1971   8.7    18.3
   Presentation Code




                           1970   -0.1
                                                                                                                                                                    Periods with Negative Returns:                                                       3%



                       Returns above do not represent the performance of any AllianceBernstein portfolio; see Notes on Index Simulations.

                       For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                                                                                   AllianceBernstein                             19
                    Expected Savings Increases with Regular Contributions
                                                        Expected Savings Ranges by Beginning of College
                                                        $2,500 Yearly Contribution from Infancy ($45,000 total)
                             175,000
                                                            161,000
                             150,000

                             125,000                                                                                                           122,000
                                                                                       115,000                                                                                                   Percentile
                                                                                                                                                                          108,000                 Result
                             100,000                                                                                                                                                                      95th
                                                                                                                   86,000
                                                               81,000                                                                                                                                       75th
                               75,000                                                    72,000                                                  75,000                       71,000
                                                                                                                     63,000                                                                                 50th
                               50,000                                                  45,000                      46,000                      46,000                     47,000
                                                            43,000                                                                                                                                          25th
                                                                                                                                                                                                                5th
                               25,000

                                        0
                                                Appreciation                  Balanced                 Preservation                 Age-Based                   Age-Based
                                                                                                                                    Aggressive
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                    Results are simulated and show expected savings outcomes after 18 years of contributing $2,500 per year and earning investment returns based on five different asset allocation
                    plans. All amounts are in present-day dollars. Reflects Bernstein Capital Markets Assumptions as of 3/31/2005. See Notes on Monte Carlo Simulation. There is no guarantee that
                    any forecasts or opinions herein will be realized. This material is intended for informational purposes only. It does not constitute investment advice, a recommendation or an offer or
                    solicitation, and is not the basis for any contract to purchase or sell any security or other instrument. No representation is being made that any account will, or is likely to, achieve
                    profits or losses similar to those described herein.
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                             AllianceBernstein                     20
                     Aggressive Portfolios Accompanied with Higher Risk
                                                         Expected Savings Ranges by Beginning of College
                                                         $2,500 Yearly Contribution from Infancy ($45,000 total)
                              175,000
                                                             161,000
                              150,000

                              125,000                                                                                                           122,000
                                                                                        115,000                                                                                                   Percentile
                                                                                                                                                                           108,000                 Result
                              100,000                                                                                                                                                                      95th
                                                                                                                    86,000
                                                                81,000                                                                                                                                       75th
                                75,000                                                    72,000                                                  75,000                       71,000
                                                                                                                      63,000                                                                                 50th
                                50,000                                                  45,000                      46,000                      46,000                     47,000
                                                             43,000                                                                                                                                          25th
                                                                                                                                                                                                                 5th
                                25,000

                                         0
                                                 Appreciation                  Balanced                 Preservation                 Age-Based                   Age-Based
                         Expect to                                                                                                   Aggressive
                     Experience a
                    Yearly Loss of:                 (20.1)                      (12.3)                        (6.5)                     (16.7)                      (14.1)
Presentation Code




                     Results are simulated and show expected savings outcomes after 18 years of contributing $2,500 per year and earning investment returns based on five different asset allocation
                     plans. All amounts are in present-day dollars. Reflects Bernstein Capital Markets Assumptions as of 3/31/2005. See Notes on Monte Carlo Simulation. There is no guarantee that
                     any forecasts or opinions herein will be realized. This material is intended for informational purposes only. It does not constitute investment advice, a recommendation or an offer or
                     solicitation, and is not the basis for any contract to purchase or sell any security or other instrument. No representation is being made that any account will, or is likely to, achieve
                     profits or losses similar to those described herein.
                     Source: AllianceBernstein

                     For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                             AllianceBernstein                     21
                    Asset Allocation Portfolios: Summary

                     Age-Based
                              Designed to be suitable for most beneficiaries
                              Automatically adjust risk; move to preservation at college



                     Fixed-Allocation
                              Allow broader expression of risk tolerance
                              Suitable for specific needs
                              Requires ongoing reassessment of circumstances
Presentation Code




                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.   AllianceBernstein   22
                    The AllianceBernstein Portfolio Construction Platform

                                 Asset
                               Allocation                                                Geographic Mix                               Style Blend

                                                                                                                                          US

                                                                                                                                                     50% Value
                                                                                                 70% US
                                                                                                                                                     50% Growth
                        40%                     60%
                       Bonds                   Stocks
                                                                                                                                          Int'l

                                                                                                                                                     50% Value

                                                                                                   30% Int'l                                         50% Growth
Presentation Code




                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                 AllianceBernstein   24
                    Which Asset Classes Do You Need To Build A Portfolio?

                                                Equity                                                                                  Bonds


                         U.S. Large                            U.S. Large                                                                Short
                         Cap Value                            Cap Growth                                                                Duration


                         U.S. SMID                               U.S. SMID                                                            Intermediate
                           Value                                  Growth                                                                Duration


                      International                          International                                                              Inflation
                          Value                                 Growth                                                                 Protected
                                                                                                                                       Securities

                                       Global REITs                                                                                    High Yield
Presentation Code




                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                  AllianceBernstein   25
                    Actual Asset Allocation


                                                                                            % Invested in Each Asset Class by Age Cohort
                             Age-Based Aggressive                              0-3          4-6           7-9           10-12         13-15   16-18     College
                             US Large Cap Growth                               24           24            22             20            17      15         11
                             US Large Cap Value                                24           24            22             20            17      15         11
                    Equity




                             US SMID Growth                                     8            8             6              5             5       3          2
                             US SMID Value                                      8            8             6              5             5       3          2
                             International Growth                              13           13            12             11             9       7          5
                             International Value                               13           13            12             11             9       7          5
                             Global REIT                                        10           10            10              8           8       5            4
                             High Yield Bond                                    —            —             —               —           3       5            6
                             Intermediate Bond                                  —            —             4               5           7       8           10
                     Bonds




                             Inflation Protected Securities                     —            —             —               5           7       10          13
                             Short Duration Bond                                —            —             6               10          13      19          26
                             Cash                                               —            —             —               —           —       3            5
Presentation Code




                    Source: AllianceBernstein




                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.              AllianceBernstein   26
                    Planning for Uncertainty
                    Bernstein Wealth Forecasting Analysis

                                                                                                                                                         Probability
                                   Investor Profile                                   Capital Markets Engine                                             Distribution




                                                                                                                                       10,000 Outcomes
                              Financial Goals
                              Current Savings                                                     Simulated
                                                                                                                                                         What are the
                                                                                                market paths
                              Savings Expectations                                                                                                       chances of
                                                                        Input                   and resulting
                              Spending Expectations                                                                                                       meeting
                                                                                                 investment
                                                                                                                                                           goals?




                                                                                                                                      Distribution of
                              Time Horizon                                                        outcomes
                              Investment Strategies




                                       Realistic Return Modeling:
                                       Integrates current economic conditions and Bernstein capital market expectations
                                       Models fundamental drivers of capital appreciation and income
Presentation Code




                                       Creates logically consistent asset class returns over time



                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                       AllianceBernstein   27
                    Investments Must Be Chosen Carefully In College Years
                                    18 Year-Old with $60k Savings, College Costs of $15k Per Year
                                       Difference in Number of College Years Paid from Expectation


                                                                        95th Percentile                                      5th Percentile
                                 1.8

                                                                   1.1
                                                                                                     0.6                               0.7                               0.6




                                                                                                                  (0.3)                            (0.3)                              (0.3)
                                                                               (0.5)
                                             (0.7)

                              Appreciation                          Balanced                        Preservation                       Age-Based                         Age-Based
                                                                                                                                       Aggressive
Presentation Code




                    Results are simulated and show the difference between the number of years of college that $60,000 is expected to fund (assuming college costs of $15,000 per year) if savings were
                    to grow at the rate of college inflation and the expected number of years of college paid by earning investment returns based on five different asset allocation plans. College costs are
                    assumed to grow at a yearly rate of 2% in excess of regular inflation. All amounts are in present-day dollars. Reflects Bernstein Capital Markets Assumptions as of 3/31/2005. See
                    Notes on Monte Carlo Simulation. There is no guarantee that any forecasts or opinions herein will be realized. This material is intended for informational purposes only. It does not
                    constitute investment advice, a recommendation or an offer or solicitation, and is not the basis for any contract to purchase or sell any security or other instrument. No representation
                    is being made that any account will, or is likely to, achieve profits or losses similar to those described herein.
                    Source: AllianceBernstein

                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.                                            AllianceBernstein                28
                    Notes on Index Simulation
                     Past performance is no guarantee of future results. This chart consists of a hypothetical
                     portfolio of investments that match the target asset allocation of an Education Strategy,
                     using asset-class index returns from 1970 to 2004 for components of the Strategy. This is a
                     hypothetical index illustration. These returns are for illustrative purposes only and do not
                     reflect actual fund performance. For current performance of the actual fund, please visit
                     www.alliancebernstein.com. The Fund’s benchmark returns were calculated by weighting the
                     monthly benchmark returns for each asset class by the Fund’s monthly target allocation for each
                     asset class. Target allocations assume initial investment for a newborn and adjust quarterly in
                     accordance with the Age-Based Education Strategy’s glide path. Asset class indexes used in this
                     composite are represented by the following: U.S. Stocks: Russell 3000 Index (1979–2004), S&P
                     500 (1970–1978); REITS: FTSE EPRA/NAREIT Global REIT Index (2000–2004), U.S. NAREIT
                     Index (1972–1999), S&P 500 (1970–1971); International Stocks: MSCI EAFE Index (1970–2004);
                     Intermediate Bonds: Lehman Aggregate Bond Index (1976–2004), Lehman Gov’t/Corporate Index
                     (1973–1975), CRSP/TPA 5-Year Treasury Index (1970–1972); High Yield: Lehman High Yield
                     Constrained Index (1993–2004), Lehman High Yield Index (1983–1992), Intermediate Bonds prior
                     to 1983.
Presentation Code




                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.   AllianceBernstein   29
                     A Word About Risk

                    You should consider the investment objectives, risks, charges and expenses of the
                    CollegeBoundfund carefully before investing. For a free copy of the Program Description, which
                    contains this and other information, visit our website at www.alliancebernstein.com,or call your
                    financial representative or AllianceBernstein at (888) 324-5057. Please read the Program
                    Description carefully before you invest.

                    If you are not a Rhode Island resident or if you have taxable income in another state, consider
                    whether that other state offers a similar plan with favorable state income tax or other benefits not
                    available if you invest in the CollegeBoundfund. Statements in this material concerning taxation
                    are not offered as individual tax advice. Investors should consult with their tax advisor or contact
                    their state tax division for more information before investing.

                    The investments in CollegeBoundfund are not guaranteed by the State of Rhode Island, the Rhode Island
                    Higher Education Assistance Authority (which established and implemented CollegeBoundfund and makes
                    rules and regulations governing the program), the Rhode Island State Investment Commission (which
                    oversees the investments of the assets of CollegeBoundfund), the Federal Deposit Insurance Corporation
                    (FDIC) or any instrumentality thereof. CollegeBoundfund is managed by Alliance Capital Management L.P.
                    and distributed by AllianceBernstein Investment Research and Management, Inc., member NASD.
Presentation Code




                     For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.   AllianceBernstein   30
                    Notes on Monte Carlo Simulation

                    Expected savings and spending results are simulated using the Bernstein Wealth Forecasting Analysis
                    system and are based on Bernstein’s estimates of asset class returns in 1,000 potential future capital
                    markets scenarios that may or may not occur. Investment performance of five different investment
                    strategies was modeled with asset allocations consistent with the five AllianceBernstein Education
                    Strategies: Age-Based Aggressive, Age-Based, Appreciation, Balanced, and Preservation.

                    The results portrayed reflect hypothetical rather than actual results, based on investment
                    criteria used in its present form, and therefore have certain inherent limitations. For example,
                    the results do not represent actual trading and do not reflect the impact that material economic
                    and market factors, including potential for changes in tax rates and regulations, might have on
                    Alliance Capital’s decision-making if Alliance Capital were actually managing client’s money.
                    The results assume 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.
Presentation Code




                    For Financial Representative Use Only. Not for Inspection by, Distribution or Quotation to, the General Public.   AllianceBernstein   31

								
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