----

| Item 1. | Financial Statements |
|---------|----------------------|

|                                                                            |   | June 30,2011 |      |   | December 31,2010 |   |
|---------------------------------------------------------------------------------|--------|-------------------|-----------|--------|-----------------------|--------|
|                                                                            |   | (unaudited)       |      |   |                  |   |
|                                                                            |   |              |      |   |                  |   |
| ASSETS                                                                          |   |              |      |   |                  |   |
| Cash and cash equivalents                                                       |   | $                 | 383,295   |   |                  | $      | 650,191 |   |
| Cash and securities segregated, at fair value (cost: $1,015,102 and $1,109,785) |   |              | 1,015,261 |   |                  |   | 1,109,891 |   |
| Receivables, net:                                                               |   |              |      |   |                  |   |   |   |
| Brokers and dealers                                                             |   |              | 276,943   |   |                  |   | 299,314 |   |
| Brokerage clients                                                               |   |              | 733,491   |   |                  |   | 747,049 |   |
| Fees                                                                            |   |              | 310,028   |   |                  |   | 343,473 |   |
| Investments:                                                                    |   |              |      |   |                  |   |   |   |
| Deferred compensation-related                                                   |   |              | 252,529   |   |                  |   | 298,705 |   |
| Other                                                                           |   |              | 670,453   |   |                  |   | 457,850 |   |
| Furniture, equipment and leasehold improvements, net                            |   |              | 282,733   |   |                  |   | 300,442 |   |
| Goodwill                                                                        |   |              | 2,944,840 |   |                  |   | 2,939,170 |   |
| Intangible assets, net                                                          |   |              | 199,892   |   |                  |   | 205,862 |   |
| Deferred sales commissions, net                                                 |   |              | 68,364    |   |                  |   | 76,156 |   |
| Other assets                                                                    |   |              | 175,203   |   |                  |   | 151,284 |   |
| Total assets                                                                    |   | $                 | 7,313,032 |   |                  | $      | 7,579,387 |   |
|                                                                            |   |              |      |   |                  |   |   |   |
| LIABILITIES AND CAPITAL                                                         |   |              |      |   |                  |   |   |   |
| Liabilities:                                                                    |   |              |      |   |                  |   |   |   |
| Payables:                                                                       |   |              |      |   |                  |   |   |   |
| Brokers and dealers                                                             |   | $                 | 203,496   |   |                  | $      | 221,370 |   |
| Securities sold not yet purchased                                               |   |              | 31,957    |   |                  |   | 50,539 |   |
| Brokerage clients                                                               |   |              | 1,420,217 |   |                  |   | 1,750,737 |   |
| AllianceBernstein mutual funds                                                  |   |              | 65,749    |   |                  |   | 77,179 |   |
| Accounts payable and accrued expenses                                           |   |              | 414,261   |   |                  |   | 422,860 |   |
| Accrued compensation and benefits                                               |   |              | 417,996   |   |                  |   | 338,560 |   |
| Debt                                                                            |   |              | 329,996   |   |                  |   | 224,991 |   |
| Total liabilities                                                               |   |              | 2,883,672 |   |                  |   | 3,086,236 |   |
|                                                                            |   |              |      |   |                  |   |   |   |
| Commitments and contingencies (See Note 8)                                      |   |              |      |   |                  |   |   |   |
|                                                                            |   |              |      |   |                  |   |   |   |
| Capital:                                                                        |   |              |      |   |                  |   |   |   |
| General Partner                                                                 |   |              | 48,766    |   |                  |   | 48,964 |   |
| Limited partners: 278,011,850 and 278,115,232 units issued and outstanding      |   |              | 4,886,435 |   |                  |   | 4,902,854 |   |
| Capital contributions receivable from General Partner                           |   |              | (14,653   | )      |                  |   | (15,973 | ) |
| Holding Units held for deferred compensation plans                              |   |              | (554,486  | )      |                  |   | (535,410 | ) |
| Accumulated other comprehensive income (loss)                                   |   |              | (11,101   | )      |                  |   | (31,801 | ) |
| Partners’ capital attributable to AllianceBernstein Unitholders           |   |              | 4,354,961 |   |                  |   | 4,368,634 |   |
| Non-controlling interests in consolidated entities                              |   |              | 74,399    |   |                  |   | 124,517 |   |
| Total capital                                                                   |   |              | 4,429,360 |   |                  |   | 4,493,151 |   |
| Total liabilities and capital                                                   |   | $                 | 7,313,032 |   |                  | $      | 7,579,387 |   |

----

|                                                                        |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|-----------------------------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|                                                                        |   | 2011                             |    |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |
| Revenues:                                                                   |   |                             |    |   |                           |   |   |   |   |   |   |   |
| Investment advisory and services fees                                       |   | $                                | 508,323 |   |                           | $      | 512,788 |   |   | $ | 1,023,315 |   |   | $ | 1,025,040 |   |
| Bernstein research services                                                 |   |                             | 107,609 |   |                           |   | 117,158 |   |   |   | 227,233 |   |   |   | 227,910 |   |
| Distribution revenues                                                       |   |                             | 92,272  |   |                           |   | 83,477 |   |   |   | 181,099 |   |   |   | 163,826 |   |
| Dividend and interest income                                                |   |                             | 4,926   |   |                           |   | 4,911 |   |   |   | 10,018 |   |   |   | 8,822 |   |
| Investment gains (losses)                                                   |   |                             | (13,596 | )      |                           |   | (56,532 | ) |   |   | (12,620 | ) |   |   | (64,552 | ) |
| Other revenues                                                              |   |                             | 29,108  |   |                           |   | 27,735 |   |   |   | 55,963 |   |   |   | 54,297 |   |
| Total revenues                                                              |   |                             | 728,642 |   |                           |   | 689,537 |   |   |   | 1,485,008 |   |   |   | 1,415,343 |   |
| Less: Interest expense                                                      |   |                             | 648     |   |                           |   | 1,194 |   |   |   | 1,624 |   |   |   | 1,914 |   |
| Net revenues                                                                |   |                             | 727,994 |   |                           |   | 688,343 |   |   |   | 1,483,384 |   |   |   | 1,413,429 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                   |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Employee compensation and benefits                                          |   |                             | 326,867 |   |                           |   | 312,813 |   |   |   | 666,368 |   |   |   | 632,238 |   |
| Promotion and servicing:                                                    |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Distribution-related payments                                               |   |                             | 78,557  |   |                           |   | 71,015 |   |   |   | 153,313 |   |   |   | 137,764 |   |
| Amortization of deferred sales commissions                                  |   |                             | 9,871   |   |                           |   | 12,147 |   |   |   | 20,197 |   |   |   | 24,268 |   |
| Other                                                                       |   |                             | 59,319  |   |                           |   | 49,816 |   |   |   | 112,661 |   |   |   | 92,645 |   |
| General and administrative:                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative                                                  |   |                             | 131,821 |   |                           |   | 129,095 |   |   |   | 264,712 |   |   |   | 255,160 |   |
| Real estate charges                                                         |   |                             | 18      |   |                           |   | — |   |   |   | 36 |   |   |   | 11,983 |   |
| Interest on borrowings                                                      |   |                             | 619     |   |                           |   | 430 |   |   |   | 1,305 |   |   |   | 985 |   |
| Amortization of intangible assets                                           |   |                             | 5,296   |   |                           |   | 5,378 |   |   |   | 10,731 |   |   |   | 10,755 |   |
| Total expenses                                                              |   |                             | 612,368 |   |                           |   | 580,694 |   |   |   | 1,229,323 |   |   |   | 1,165,798 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                                            |   |                             | 115,626 |   |                           |   | 107,649 |   |   |   | 254,061 |   |   |   | 247,631 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating income                                                        |   |                             | — |   |                           |   | 2,258 |   |   |   | — |   |   |   | 6,773 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Income before income taxes                                                  |   |                             | 115,626 |   |                           |   | 109,907 |   |   |   | 254,061 |   |   |   | 254,404 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Income taxes                                                                |   |                             | 8,243   |   |                           |   | 13,127 |   |   |   | 18,252 |   |   |   | 26,131 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                  |   |                             | 107,383 |   |                           |   | 96,780 |   |   |   | 235,809 |   |   |   | 228,273 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net loss of consolidated entities attributable to non-controlling interests |   |                             | 6,756   |   |                           |   | 9,339 |   |   |   | 14,802 |   |   |   | 26,112 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to AllianceBernstein Unitholders                    |   | $                                | 114,139 |   |                           | $      | 106,119 |   |   | $ | 250,611 |   |   | $ | 254,385 |   |
|                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net income per AllianceBernstein Unit:                                      |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                       |   | $                                | 0.41    |   |                           | $      | 0.38 |   |   | $ | 0.89 |   |   | $ | 0.92 |   |
| Diluted                                                                     |   | $                                | 0.41    |   |                           | $      | 0.38 |   |   | $ | 0.89 |   |   | $ | 0.91 |   |

----

|                                                                                                      |   | Six Months Ended June 30, |     |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------|----------|
|                                                                                                      |   | 2011                           |     |   | 2010 |   |
|                                                                                                      |   |                           |     |
| Cash flows from operating activities:                                                                     |   |                           |     |   |   |   |
| Net income                                                                                                |   | $                              | 235,809  |   |   | $ | 228,273 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                         |   |                           |     |   |   |   |   |   |
| Amortization of deferred sales commissions                                                                |   |                           | 20,197   |   |   |   | 24,268 |   |
| Amortization of non-cash deferred compensation                                                            |   |                           | 83,917   |   |   |   | 53,225 |   |
| Depreciation and other amortization                                                                       |   |                           | 41,762   |   |   |   | 41,373 |   |
| Unrealized (gains) losses on deferred compensation-related investments                                    |   |                           | (12,340  | ) |   |   | 12,980 |   |
| Unrealized loss on consolidated venture capital fund                                                      |   |                           | 15,538   |   |   |   | 28,454 |   |
| Real estate asset write-off charges                                                                       |   |                           | —  |   |   |   | 5,196 |   |
| Other, net                                                                                                |   |                           | 4,426    |   |   |   | 7,815 |   |
| Changes in assets and liabilities:                                                                        |   |                           |     |   |   |   |   |   |
| Decrease in segregated cash and securities                                                                |   |                           | 94,630   |   |   |   | 39,987 |   |
| Decrease (increase) in receivables                                                                        |   |                           | 78,665   |   |   |   | (218,764 | ) |
| (Increase) in investments                                                                                 |   |                           | (172,864 | ) |   |   | (20,676 | ) |
| (Increase) in deferred sales commissions                                                                  |   |                           | (12,405  | ) |   |   | (17,126 | ) |
| (Increase) decrease in other assets                                                                       |   |                           | (23,032  | ) |   |   | 4,114 |   |
| (Decrease) increase in payables                                                                           |   |                           | (386,548 | ) |   |   | 323,830 |   |
| (Decrease) increase in accounts payable and accrued expenses                                              |   |                           | (1,774   | ) |   |   | 34,993 |   |
| Increase in accrued compensation and benefits                                                             |   |                           | 78,146   |   |   |   | 122,853 |   |
| Net cash provided by operating activities                                                                 |   |                           | 44,127   |   |   |   | 670,795 |   |
|                                                                                                      |   |                           |     |   |   |   |   |   |
| Cash flows from investing activities:                                                                     |   |                           |     |   |   |   |   |   |
| Purchases of investments                                                                                  |   |                           | (17      | ) |   |   | (73 | ) |
| Proceeds from sales of investments                                                                        |   |                           | 2,481    |   |   |   | 194 |   |
| Additions to furniture, equipment and leasehold improvements, net                                         |   |                           | (11,598  | ) |   |   | (3,685 | ) |
| Purchase of equity portfolio business                                                                     |   |                           | (5,500   | ) |   |   | — |   |
| Purchase of Australian joint venture                                                                      |   |                           | (21,384  | ) |   |   | — |   |
| Net cash used in investing activities                                                                     |   |                           | (36,018  | ) |   |   | (3,564 | ) |
|                                                                                                      |   |                           |     |   |   |   |   |   |
| Cash flows from financing activities:                                                                     |   |                           |     |   |   |   |   |   |
| Issuance (repayment) of commercial paper, net                                                             |   |                           | 89,699   |   |   |   | (170,155 | ) |
| Proceeds from bank loans                                                                                  |   |                           | 15,000   |   |   |   | — |   |
| (Decrease) in overdrafts payable                                                                          |   |                           | (13,652  | ) |   |   | (55 | ) |
| Distributions to General Partner and unitholders                                                          |   |                           | (270,752 | ) |   |   | (341,862 | ) |
| Distributions to non-controlling interests in consolidated entities                                       |   |                           | (2,925   | ) |   |   | (992 | ) |
| Capital contributions from General Partner                                                                |   |                           | 1,797    |   |   |   | 1,854 |   |
| Additional investment by Holding with proceeds from exercise of compensatory options to buy Holding Units |   |                           | 1,476    |   |   |   | 8,101 |   |
| Purchases of Holding Units to fund deferred compensation plan awards, net                                 |   |                           | (100,828 | ) |   |   | (85,982 | ) |
| Purchases of AllianceBernstein Units                                                                      |   |                           | (4,297   | ) |   |   | — |   |
| Debt issuance costs                                                                                       |   |                           | (69      | ) |   |   | — |   |
| Other                                                                                                     |   |                           | (35      | ) |   |   | (25 | ) |
| Net cash used in financing activities                                                                     |   |                           | (284,586 | ) |   |   | (589,116 | ) |
|                                                                                                      |   |                           |     |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                                              |   |                           | 9,581    |   |   |   | (22,235 | ) |
|                                                                                                      |   |                           |     |   |   |   |   |   |
| Net (decrease) increase in cash and cash equivalents                                                      |   |                           | (266,896 | ) |   |   | 55,880 |   |
| Cash and cash equivalents as of beginning of the period                                                   |   |                           | 650,191  |   |   |   | 614,216 |   |
| Cash and cash equivalents as of end of the period                                                         |   | $                              | 383,295  |   |   | $ | 670,096 |   |

----

| 1. | Business Description and Organization |
|----|---------------------------------------|

|   | • | Institutional Services – servicing our institutional clients, including unaffiliated corporate and public employee pension funds, endowment funds, domestic and foreign institutions and governments, and affiliates such as AXA and certain of its insurance company subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Retail Services – servicing our retail clients, primarily by means of retail mutual funds sponsored by AllianceBernstein or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Private Client Services – servicing our private clients, including high-net-worth individuals, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Bernstein Research Services – servicing institutional investors seeking high-quality research, portfolio analysis and brokerage-related services, and issuers of publicly-traded securities seeking equity capital markets services. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Value equities, generally targeting stocks that are out of favor and considered undervalued; |
|--------|---------|----------------------------------------------------------------------------------------------|

|   | • | Growth equities, generally targeting stocks with under-appreciated growth potential; |
|--------|---------|--------------------------------------------------------------------------------------|

|   | • | Fixed income securities, including taxable and tax-exempt securities; |
|--------|---------|-----------------------------------------------------------------------|

|   | • | Blend strategies, combining style-pure investment components with systematic rebalancing; |
|--------|---------|-------------------------------------------------------------------------------------------|

|   | • | Passive management, including index and enhanced index strategies; |
|--------|---------|--------------------------------------------------------------------|

|   | • | Alternative investments, including hedge funds, fund of funds, currency management strategies and private capital (e.g., direct real estate investing); and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Asset allocation services, by which we offer strategies specifically-tailored for our clients (e.g., customized target-date fund retirement services for defined contribution plan sponsors and Dynamic Asset Allocation, a service which is designed to mitigate the effects of extreme market volatility on a portfolio in order to deliver more consistent returns). |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| AXA and its subsidiaries |   |   | 60.9  | %      |
|--------------------------|--------|--------|-------|--------|
| Holding                  |   |   | 37.5  |   |
| Unaffiliated holders     |   |   | 1.6   |   |
|                     |   |   | 100.0 | %      |

| 2. | Summary of Significant Accounting Policies |
|----|--------------------------------------------|

----

|   | • | net cash provided by operating activities of AllianceBernstein, |
|--------|---------|-----------------------------------------------------------------|

|   | • | proceeds from borrowings and from sales or other dispositions of assets in the ordinary course of business, and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------|

|   | • | income from investments in marketable securities, liquid investments and other financial instruments that are acquired for investment purposes and that have a value that may be readily established, |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | payments in respect of the principal of borrowings, and |
|--------|---------|---------------------------------------------------------|

|   | • | amounts expended for the purchase of assets in the ordinary course of business. |
|--------|---------|---------------------------------------------------------------------------------|

----

----

----

----

----

|                        |   | June 30, 2011 |    |   | December 31, 2010 |    |
|-----------------------------|--------|--------------------|---------|--------|------------------------|---------|
|                        |   | (in thousands)     |    |
|                        |   |               |    |   |                   |    |
| Balance as of January 1,    |   | $                  | 89,793  |   |                   |  $ | — |   |
| Expense incurred            |   |               | — |   |                   |    | 76,177 |   |
| Deferred rent               |   |               | — |   |                   |    | 22,954 |   |
| Payments made               |   |               | (10,099 | )      |                   |    | (9,814 | ) |
| Interest accretion          |   |               | 819     |   |                   |    | 476 |   |
| Balance as of end of period |   | $                  | 80,513  |   |                   |  $ | 89,793 |   |

| 3. | Cash and Securities Segregated Under Federal Regulations and Other Requirements |
|----|---------------------------------------------------------------------------------|

| 4. | Net Income Per Unit |
|----|---------------------|

|                                                         |   | Three Months Ended June 30,        |    |   | Six Months Ended June 30, |   |
|--------------------------------------------------------------|--------|-----------------------------------------|---------|--------|--------------------------------|--------|
|                                                         |   | 2011                                    |    |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                                                         |   | (in thousands, except per unit amounts) |    |
|                                                         |   |                                    |    |   |                           |   |   |   |   |   |   |   |
| Net income attributable to AllianceBernstein Unitholders     |   | $                                       | 114,139 |   |                           | $      | 106,119 |   |   | $ | 250,611 |   |   | $ | 254,385 |   |
|                                                         |   |                                    |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average units outstanding - basic                   |   |                                    | 278,005 |   |                           |   | 275,498 |   |   |   | 278,047 |   |   |   | 275,204 |   |
| Dilutive effect of compensatory options to buy Holding Units |   |                                    | 556     |   |                           |   | 2,026 |   |   |   | 682 |   |   |   | 1,933 |   |
| Weighted average units outstanding – diluted           |   |                                    | 278,561 |   |                           |   | 277,524 |   |   |   | 278,729 |   |   |   | 277,137 |   |
|                                                         |   |                                    |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic net income per AllianceBernstein Unit                  |   | $                                       | 0.41    |   |                           | $      | 0.38 |   |   | $ | 0.89 |   |   | $ | 0.92 |   |
| Diluted net income per AllianceBernstein Unit                |   | $                                       | 0.41    |   |                           | $      | 0.38 |   |   | $ | 0.89 |   |   | $ | 0.91 |   |

----

| 5. | Investments |
|----|-------------|

| Investments consist of:                         |   |               |    |   |
|-------------------------------------------------|--------|--------------------|---------|--------|
|                                            |   | June 30, 2011 |    |   | December 31, 2010 |   |
|                                            |   | (in thousands)     |    |
|                                            |   |               |    |   |   |   |
| Available-for-sale                              |   | $                  | 14,909  |   |   |  $ | 16,588 |   |
| Trading:                                        |   |               |    |   |   |   |   |   |
| Deferred compensation-related                   |   |               | 209,260 |   |   |   | 239,787 |   |
| United States Treasury Bills                    |   |               | 37,994  |   |   |   | 52,975 |   |
| Seed money                                      |   |               | 213,388 |   |   |   | 177,589 |   |
| Other                                           |   |               | 72,458  |   |   |   | 35,259 |   |
| Investments in limited partnership hedge funds: |   |               |    |   |   |   |   |   |
| Deferred compensation-related                   |   |               | 43,269  |   |   |   | 58,918 |   |
| Seed money/other                                |   |               | 213,590 |   |   |   | 47,735 |   |
| Consolidated private equity fund                |   |               | 81,594  |   |   |   | 101,360 |   |
| Private equity                                  |   |               | 28,814  |   |   |   | 17,803 |   |
| Other                                           |   |               | 7,706   |   |   |   | 8,541 |   |
| Total investments                               |   | $                  | 922,982 |   |   |  $ | 756,555 |   |

| 6. | Derivative Instruments |
|----|------------------------|

|                    |   | Notional Value |    |   | Asset Derivatives |   |    | Liability Derivatives |   |
|-------------------------|--------|----------------|---------|--------|-------------------|--------|---------|-----------------------|--------|
|                    |   | (in thousands) |    |
| June 30, 2011:          |   |           |    |   |              |   |    |                  |   |
| Exchange-traded futures |   | $              | 78,518  |   |              | $      | — |                  |   | $ | 2,099 |   |
| Currency forwards       |   |           | 123,848 |   |              |   | 201     |                  |   |   | 721 |   |
| Interest rate swaps     |   |           | 56,660  |   |              |   | 318     |                  |   |   | 389 |   |
| Credit default swaps    |   |           | 45,315  |   |              |   | 448     |                  |   |   | 343 |   |
| Total return swaps      |   |           | 26,326  |   |              |   | 57      |                  |   |   | 768 |   |
| Total derivatives       |   | $              | 330,667 |   |              | $      | 1,024   |                  |   | $ | 4,320 |   |

----

|                    |   | Notional Value |    |   | Asset Derivatives |   |    | Liability Derivatives |   |
|-------------------------|--------|----------------|---------|--------|-------------------|--------|---------|-----------------------|--------|
|                    |   | (in thousands) |    |
| December 31, 2010:      |   |           |    |   |              |   |    |                  |   |
| Exchange-traded futures |   | $              | 16,973  |   |              | $      | 16      |                  |   | $ | 318 |   |
| Currency forwards       |   |           | 133,471 |   |              |   | 249     |                  |   |   | 1,000 |   |
| Interest rate swaps     |   |           | 43,210  |   |              |   | 1,197   |                  |   |   | 239 |   |
| Credit default swaps    |   |           | 74,915  |   |              |   | 182     |                  |   |   | 1,036 |   |
| Total return swaps      |   |           | 28,975  |   |              |   | — |                  |   |   | 960 |   |
| Total derivatives       |   | $              | 297,544 |   |              | $      | 1,644   |                  |   | $ | 3,553 |   |

|                        |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|-----------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                        |   | 2011                             |   |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                        |   | (in thousands)                   |   |
|                        |   |                             |   |   |                           |   |   |   |   |   |   |   |
| Exchange-traded futures     |   | $                                | 431    |   |                           | $      | 1,120 |   |   | $ | (353 | ) |   | $ | (180 | ) |
| Currency forwards           |   |                             | (355   | )      |                           |   | (579 | ) |   |   | (203 | ) |   |   | (850 | ) |
| Interest rate swaps         |   |                             | (838   | )      |                           |   | (2,028 | ) |   |   | (710 | ) |   |   | (2,409 | ) |
| Credit default swaps        |   |                             | (322   | )      |                           |   | 360 |   |   |   | (204 | ) |   |   | 202 |   |
| Total return swaps          |   |                             | (749   | )      |                           |   | 936 |   |   |   | (1,123 | ) |   |   | 936 |   |
| Balance as of end of period |   | $                                | (1,833 | )      |                           | $      | (191 | ) |   | $ | (2,593 | ) |   | $ | (2,301 | ) |

----

| 7. | Fair Value |
|----|------------|

|   | • | Level 1  –  Quoted prices in active markets are available for identical assets or liabilities as of the reported date. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 2  –  Quoted prices in markets that are not active or other pricing inputs that are either directly or indirectly observable as of the reported date. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 3 – Prices or valuation techniques that are both significant to the fair value measurement and unobservable as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     |   | Level 1        |    |   | Level 2 |   |      | Level 3 |   |   | Total   |   |
|------------------------------------------|--------|----------------|---------|--------|---------|--------|-----------|---------|--------|--------|---------|--------|
|                                     |   | (in thousands) |
| June 30, 2011:                           |   |           |
| Money markets                            |   | $              | 91,191  |   |    | $      | —   |    |   | $      | — |   |   | $ | 91,191 |   |
| U.S. Treasury bills                      |   |           | — |   |    |   | 1,037,887 |    |   |   | — |   |   |   | 1,037,887 |   |
| U.K. Treasury bills                      |   |           | — |   |    |   | 8,134     |    |   |   | — |   |   |   | 8,134 |   |
| Equity securities                        |   |           |    |   |    |   |      |    |   |   |    |   |   |   |   |   |
| Growth                                   |   |           | 103,919 |   |    |   | 9         |    |   |   | — |   |   |   | 103,928 |   |
| Value                                    |   |           | 80,382  |   |    |   | —   |    |   |   | — |   |   |   | 80,382 |   |
| Blend                                    |   |           | 111,555 |   |    |   | —   |    |   |   | — |   |   |   | 111,555 |   |
| Other(1)                                 |   |           | 65,956  |   |    |   | 5,158     |    |   |   | — |   |   |   | 71,114 |   |
| Fixed Income securities                  |   |           |    |   |    |   |      |    |   |   |    |   |   |   |   |   |
| Taxable(2)                               |   |           | 96,418  |   |    |   | 22,398    |    |   |   | — |   |   |   | 118,816 |   |
| Tax-exempt(3)                            |   |           | 15,002  |   |    |   | 638       |    |   |   | — |   |   |   | 15,640 |   |
| Other                                    |   |           | 18      |   |    |   | —   |    |   |   | — |   |   |   | 18 |   |
| Derivatives                              |   |           | — |   |    |   | 1,024     |    |   |   | — |   |   |   | 1,024 |   |
| Long exchange-traded options             |   |           | 8,563   |   |    |   | —   |    |   |   | — |   |   |   | 8,563 |   |
| Private equity                           |   |           | 31,069  |   |    |   | 4,205     |    |   |   | 59,524  |   |   |   | 94,798 |   |
| Total assets measured at fair value      |   | $              | 604,073 |   |    | $      | 1,079,453 |    |   | $      | 59,524  |   |   | $ | 1,743,050 |   |
|                                     |   |           |    |   |    |   |      |    |   |   |    |   |   |   |   |   |
| Securities sold not yet purchased        |   |           |    |   |    |   |      |    |   |   |    |   |   |   |   |   |
| Short equities – corporate         |   | $              | 21,749  |   |    | $      | —   |    |   | $      | — |   |   | $ | 21,749 |   |
| Short exchange-traded options            |   |           | 10,208  |   |    |   | —   |    |   |   | — |   |   |   | 10,208 |   |
| Derivatives                              |   |           | 2,099   |   |    |   | 2,221     |    |   |   | — |   |   |   | 4,320 |   |
| Total liabilities measured at fair value |   | $              | 34,056  |   |    | $      | 2,221     |    |   | $      | — |   |   | $ | 36,277 |   |

----

|                                     |   | Level 1        |    |   | Level 2 |   |      | Level 3 |   |   | Total   |   |
|------------------------------------------|--------|----------------|---------|--------|---------|--------|-----------|---------|--------|--------|---------|--------|
|                                     |   | (in thousands) |
| December 31, 2010:                       |   |           |
| Money markets                            |   | $              | 323,104 |   |    | $      | —   |    |   | $      | — |   |   | $ | 323,104 |   |
| U.S. Treasury bills                      |   |           | — |   |    |   | 1,137,578 |    |   |   | — |   |   |   | 1,137,578 |   |
| U.K. Treasury bills                      |   |           | — |   |    |   | 7,911     |    |   |   | — |   |   |   | 7,911 |   |
| Equity securities                        |   |           |    |   |    |   |      |    |   |   |    |   |   |   |   |   |
| Growth                                   |   |           | 97,161  |   |    |   | 188       |    |   |   | 69      |   |   |   | 97,418 |   |
| Value                                    |   |           | 73,579  |   |    |   | —   |    |   |   | — |   |   |   | 73,579 |   |
| Blend                                    |   |           | 93,590  |   |    |   | —   |    |   |   | — |   |   |   | 93,590 |   |
| Other(1)                                 |   |           | 28,868  |   |    |   | 5,051     |    |   |   | — |   |   |   | 33,919 |   |
| Fixed Income securities                  |   |           |    |   |    |   |      |    |   |   |    |   |   |   |   |   |
| Taxable(2)                               |   |           | 130,122 |   |    |   | 21,491    |    |   |   | — |   |   |   | 151,613 |   |
| Tax-exempt(3)                            |   |           | 9,310   |   |    |   | 750       |    |   |   | — |   |   |   | 10,060 |   |
| Other                                    |   |           | 17      |   |    |   | —   |    |   |   | — |   |   |   | 17 |   |
| Derivatives                              |   |           | 16      |   |    |   | 1,628     |    |   |   | — |   |   |   | 1,644 |   |
| Long exchange-traded options             |   |           | 9,027   |   |    |   | —   |    |   |   | — |   |   |   | 9,027 |   |
| Private equity                           |   |           | 24,432  |   |    |   | 23,811    |    |   |   | 59,345  |   |   |   | 107,588 |   |
| Total assets measured at fair value      |   | $              | 789,226 |   |    | $      | 1,198,408 |    |   | $      | 59,414  |   |   | $ | 2,047,048 |   |
|                                     |   |           |    |   |    |   |      |    |   |   |    |   |   |   |   |   |
| Securities sold not yet purchased        |   |           |    |   |    |   |      |    |   |   |    |   |   |   |   |   |
| Short equities – corporate         |   | $              | 42,914  |   |    | $      | —   |    |   | $      | — |   |   | $ | 42,914 |   |
| Short exchange-traded options            |   |           | 7,622   |   |    |   | —   |    |   |   | — |   |   |   | 7,622 |   |
| Other                                    |   |           | 3       |   |    |   | —   |    |   |   | — |   |   |   | 3 |   |
| Derivatives                              |   |           | 318     |   |    |   | 3,235     |    |   |   | — |   |   |   | 3,553 |   |
| Total liabilities measured at fair value |   | $              | 50,857  |   |    | $      | 3,235     |    |   | $      | — |   |   | $ | 54,092 |   |

|   | (1) | Primarily long positions in corporate equities traded through our options desk. |
|--------|-----|---------------------------------------------------------------------------------|

|   | (2) | Primarily corporate and government securities. |
|--------|-----|------------------------------------------------|

|   | (3) | Primarily municipal bonds. |
|--------|-----|----------------------------|

|   | • | Money markets: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are included in Level 1 of the valuation hierarchy. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Treasury bills: We hold United States Treasury Bills, which are segregated in a special reserve bank custody account as required by Rule 15c3-3 of the Exchange Act. We also hold United Kingdom Treasury Bills. These securities are valued based on quoted yields in secondary markets and are included in Level 2 of the valuation hierarchy. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Equity and fixed income securities: Our equity and fixed income securities consist principally of company-sponsored mutual funds with exchange listed net asset values and various separately-managed portfolios consisting primarily of equity and fixed income securities with quoted prices in active markets, which are included in Level 1 of the valuation hierarchy. In addition, some securities are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy. Also, as of December 31, 2010 an insignificant amount of securities are included in Level 3 of the valuation hierarchy. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Derivatives: We hold exchange-traded futures with counterparties that are included in Level 1 of the valuation hierarchy.  In addition, we also hold currency forward contracts, interest rate swaps, credit default swaps and total return swaps with counterparties that are included in Level 2 of the valuation hierarchy. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •  | Options: We hold long exchange-traded options that are included in Level 1 of the valuation hierarchy. |
|--------|---------------|--------------------------------------------------------------------------------------------------------|

|   | • | Private equity: The valuation of non-public private equity investments owned by our consolidated venture capital fund requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such investments. Private equity investments are valued initially at cost. The carrying values of private equity investments are adjusted either up or down from cost to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through ongoing review in accordance with our valuation policies and procedures. A variety of factors are reviewed and monitored to assess positive and negative changes in valuation including, but not limited to, current operating performance and future expectations of investee companies, industry valuations of comparable public companies, changes in market outlooks and the third party financing environment over time. In determining valuation adjustments resulting from the investment review process, particular emphasis is placed on current company performance and market conditions. Non-public equity investments are included in Level 3 of the valuation hierarchy because they trade infrequently and, therefore, their fair value is unobservable. Publicly-traded equity investments owned by our consolidated venture capital fund are included in Level 1 of the valuation hierarchy. If they contain trading restrictions, publicly-traded equity investments are included in Level 2 of the valuation hierarchy. One of our private securities went public in the first quarter of 2011 and due to a trading restriction period $3.6 million was transferred from a Level 3 classification to a Level 2 classification. During the second quarter of 2011, the trading restriction period for one of our public securities lapsed, and as a result $20.6 million was transferred from a Level 2 classification to a Level 1 classification. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | Securities sold not yet purchased: Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options, are included in Level 1 of the valuation hierarchy. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|-----------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|                              |   | 2011                             |    |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                              |   | (in thousands)                   |    |
|                              |   |                             |    |   |                           |   |   |   |   |   |   |   |
| Balance as of beginning of period |   | $                                | 60,188  |   |                           | $      | 102,256 |   |   | $ | 59,414 |   |   | $ | 98,559 |   |
|                              |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Transfer (out) in, net            |   |                             | — |   |                           |   | (82 | ) |   |   | (3,588 | ) |   |   | (163 | ) |
| Purchases                         |   |                             | 2,769   |   |                           |   | 3,089 |   |   |   | 7,416 |   |   |   | 5,811 |   |
| Sales                             |   |                             | — |   |                           |   | (4,497 | ) |   |   | (213 | ) |   |   | (4,872 | ) |
| Realized gains (losses), net      |   |                             | — |   |                           |   | (2,481 | ) |   |   | (2,860 | ) |   |   | (2,429 | ) |
| Unrealized gains (losses), net    |   |                             | (3,433  | )      |                           |   | 4,436 |   |   |   | (645 | ) |   |   | 5,815 |   |
| Balance as of end of period       |   | $                                | 59,524  |   |                           | $      | 102,721 |   |   | $ | 59,524 |   |   | $ | 102,721 |   |

| 8. | Commitments and Contingencies |
|----|-------------------------------|

----

| 9. | Qualified Employee Benefit Plans |
|----|----------------------------------|

|                                           |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                           |   | 2011                             |   |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                                           |   | (in thousands)                   |   |
|                                           |   |                             |   |   |                           |   |   |   |   |   |   |   |
| Interest cost on projected benefit obligations |   | $                                | 1,180  |   |                           | $      | 1,139 |   |   | $ | 2,360 |   |   | $ | 2,278 |   |
| Expected return on plan assets                 |   |                             | (1,294 | )      |                           |   | (1,129 | ) |   |   | (2,588 | ) |   |   | (2,258 | ) |
| Recognized actuarial loss                      |   |                             | 108    |   |                           |   | 56 |   |   |   | 216 |   |   |   | 112 |   |
| Amortization of transition asset               |   |                             | (36    | )      |                           |   | (36 | ) |   |   | (72 | ) |   |   | (72 | ) |
| Net pension (benefit) charge                   |   | $                                | (42    | )      |                           | $      | 30 |   |   | $ | (84 | ) |   | $ | 60 |   |

----

| 10. | Units Outstanding |
|-----|-------------------|

| Outstanding as of December 31, 2010 |   |   | 278,115,232 |   |
|-------------------------------------|--------|--------|-------------|--------|
| Options exercised                   |   |   | 86,543      |   |
| Units issued                        |   |   | —     |   |
| Units retired                       |   |   | (189,925    | )      |
| Units forfeited                     |   |   | —     |   |
| Outstanding as of June 30, 2011     |   |   | 278,011,850 |   |

| 11. | Income Taxes |
|-----|--------------|

| 12. | Debt |
|-----|------|

----

| 13. | Comprehensive Income |
|-----|----------------------|

|                                                                                  |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|---------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                  |   | 2011                             |    |   | 2010                                |   |   | 2011 |   |   | 2010 |   |
|                                                                                  |   | (in thousands)                   |    |
|                                                                                  |   |                             |    |   |                                |   |   |   |   |   |   |   |
| Net income                                                                            |   | $                                | 107,383 |   |                                | $      | 96,780 |   |   | $ | 235,809 |   |   | $ | 228,273 |   |
| Other comprehensive income (loss), net of tax:                                        |   |                             |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gains (losses) on investments                                              |   |                             | 141     |   |                                |   | (1,260 | ) |   |   | 527 |   |   |   | (902 | ) |
| Foreign currency translation adjustment                                               |   |                             | 6,674   |   |                                |   | (11,749 | ) |   |   | 12,803 |   |   |   | (29,965 | ) |
| Changes in retirement plan related items                                              |   |                             | 107     |   |                                |   | 20 |   |   |   | 66 |   |   |   | 40 |   |
| Comprehensive income                                                                  |   |                             | 114,305 |   |                                |   | 83,791 |   |   |   | 249,205 |   |   |   | 197,446 |   |
| Comprehensive loss in consolidated entities attributable to non-controlling interests |   |                             | 6,760   |   |                                |   | 10,897 |   |   |   | 15,089 |   |   |   | 27,043 |   |
| Comprehensive income attributable to AllianceBernstein Unitholders                    |   | $                                | 121,065 |   |                                | $      | 94,688 |   |   | $ | 264,294 |   |   | $ | 224,489 |   |

----

| 14. | Changes in Capital |
|-----|--------------------|

|                                                  |   | Partners’ Capital Attributable to AllianceBernstein Unitholders |      |   | Non-Controlling Interests In Consolidated Entities |   |    | Total Capital |   |
|-------------------------------------------------------|--------|-----------------------------------------------------------------------|-----------|--------|----------------------------------------------------|--------|---------|---------------|--------|
|                                                  |   | (in thousands)                                                        |      |
|                                                  |   |                                                                  |      |   |                                               |   |    |          |   |
| Balance as of  December 31, 2010            |   | $                                                                     | 4,368,634 |   |                                               | $      | 124,517 |          |   | $ | 4,493,151 |   |
| Comprehensive income (loss):                          |   |                                                                  |      |   |                                               |   |    |          |   |   |   |   |
| Net income (loss)                                     |   |                                                                  | 250,611   |   |                                               |   | (14,802 | )             |   |   | 235,809 |   |
| Other comprehensive income (loss), net of tax:        |   |                                                                  |      |   |                                               |   |    |          |   |   |   |   |
| Unrealized gains on investments                       |   |                                                                  | 494       |   |                                               |   | 33      |          |   |   | 527 |   |
| Foreign currency translation adjustment               |   |                                                                  | 13,123    |   |                                               |   | (320    | )             |   |   | 12,803 |   |
| Changes in employee benefit related items             |   |                                                                  | 66        |   |                                               |   | — |          |   |   | 66 |   |
| Comprehensive income (loss)                           |   |                                                                  | 264,294   |   |                                               |   | (15,089 | )             |   |   | 249,205 |   |
|                                                  |   |                                                                  |      |   |                                               |   |    |          |   |   |   |   |
| Cash distributions to General Partner and unitholders |   |                                                                  | (270,752  | )      |                                               |   | — |          |   |   | (270,752 | ) |
| Capital contributions (distributions)                 |   |                                                                  | 1,797     |   |                                               |   | (2,925  | )             |   |   | (1,128 | ) |
| Purchase of Australian joint venture                  |   |                                                                  | 10,720    |   |                                               |   | (32,104 | )             |   |   | (21,384 | ) |
| Purchase of AllianceBernstein Units                   |   |                                                                  | (4,297    | )      |                                               |   | — |          |   |   | (4,297 | ) |
| Compensation-related transactions                     |   |                                                                  | (15,435   | )      |                                               |   | — |          |   |   | (15,435 | ) |
| Balance as of June 30, 2011                           |   | $                                                                     | 4,354,961 |   |                                               | $      | 74,399  |          |   | $ | 4,429,360 |   |

|                                                  |   | Partners’ Capital Attributable to AllianceBernstein Unitholders |      |   | Non-Controlling Interests In Consolidated Entities |   |    | Total Capital |   |
|-------------------------------------------------------|--------|-----------------------------------------------------------------------|-----------|--------|----------------------------------------------------|--------|---------|---------------|--------|
|                                                  |   | (in thousands)                                                        |      |
|                                                  |   |                                                                  |      |   |                                               |   |    |          |   |
| Balance as of  December 31, 2009            |   | $                                                                     | 4,530,362 |   |                                               | $      | 171,593 |          |   | $ | 4,701,955 |   |
| Comprehensive income (loss):                          |   |                                                                  |      |   |                                               |   |    |          |   |   |   |   |
| Net income (loss)                                     |   |                                                                  | 254,385   |   |                                               |   | (26,112 | )             |   |   | 228,273 |   |
| Other comprehensive income (loss), net of tax:        |   |                                                                  |      |   |                                               |   |    |          |   |   |   |   |
| Unrealized (losses) gains on investments              |   |                                                                  | (1,137    | )      |                                               |   | 235     |          |   |   | (902 | ) |
| Foreign currency translation adjustment               |   |                                                                  | (28,799   | )      |                                               |   | (1,166  | )             |   |   | (29,965 | ) |
| Changes in employee benefit related items             |   |                                                                  | 40        |   |                                               |   | — |          |   |   | 40 |   |
| Comprehensive income (loss)                           |   |                                                                  | 224,489   |   |                                               |   | (27,043 | )             |   |   | 197,446 |   |
|                                                  |   |                                                                  |      |   |                                               |   |    |          |   |   |   |   |
| Cash distributions to General Partner and unitholders |   |                                                                  | (341,862  | )      |                                               |   | — |          |   |   | (341,862 | ) |
| Capital contributions (distributions)                 |   |                                                                  | 1,854     |   |                                               |   | (992    | )             |   |   | 862 |   |
| Compensation-related transactions                     |   |                                                                  | (24,655   | )      |                                               |   | — |          |   |   | (24,655 | ) |
| Balance as of June 30, 2010                           |   | $                                                                     | 4,390,188 |   |                                               | $      | 143,558 |          |   | $ | 4,533,746 |   |

| 15. | Acquisitions |
|-----|--------------|

----

| 16. | Accounting Pronouncements |
|-----|---------------------------|

----

| /s/ PricewaterhouseCoopers LLP |   |
|--------------------------------|--------|
| New York, New York             |
| July 29, 2011                  |

----

| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|---------|---------------------------------------------------------------------------------------------|

----

|            |   | As of June 30, |   |   |   |   |   |     |   |
|-----------------|--------|---------------------|--------|--------|--------|--------|--------|----------|--------|
|            |   | 2011                |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|            |   | (in billions)       |   |   |   |   |
|            |   |                |   |   |   |   |   |     |   |   |   |   |
| Institutions(1) |   | $                   | 254.5  |   |   | $      | 261.1  |     |   | $ | (6.6 | ) |   |   | (2.5 | )% |
| Retail          |   |                | 129.4  |   |   |   | 116.2  |     |   |   | 13.2 |   |   |   | 11.4 |   |
| Private Client  |   |                | 77.1   |   |   |   | 70.9   |     |   |   | 6.2 |   |   |   | 8.6 |   |
| Total           |   | $                   | 461.0  |   |   | $      | 448.2  |     |   | $ | 12.8 |   |   |   | 2.9 |   |

| (1) | Previously reported AUM for June 30, 2010 have been adjusted by removing an affiliated account for which we serve in an advisory capacity and do not have discretionary trading authority. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       |   | As of June 30, |   |   |   |   |   |     |   |
|----------------------------|--------|---------------------|--------|--------|--------|--------|--------|----------|--------|
|                       |   | 2011                |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|                       |   | (in billions)       |   |   |   |   |
| Equity                     |   |                |   |   |   |   |   |     |   |   |   |   |
| Value:                     |   |                |   |   |   |   |   |     |   |   |   |   |
| U.S.                       |   | $                   | 33.6   |   |   | $      | 36.4   |     |   | $ | (2.8 | ) |   |   | (7.7 | )% |
| Global & international |   |                | 87.8   |   |   |   | 102.8  |     |   |   | (15.0 | ) |   |   | (14.6 | ) |
|                       |   |                | 121.4  |   |   |   | 139.2  |     |   |   | (17.8 | ) |   |   | (12.8 | ) |
| Growth:                    |   |                |   |   |   |   |   |     |   |   |   |   |   |   |   |   |
| U.S.                       |   |                | 28.5   |   |   |   | 30.8   |     |   |   | (2.3 | ) |   |   | (7.4 | ) |
| Global & international |   |                | 34.1   |   |   |   | 43.7   |     |   |   | (9.6 | ) |   |   | (21.8 | ) |
|                       |   |                | 62.6   |   |   |   | 74.5   |     |   |   | (11.9 | ) |   |   | (15.8 | ) |
| Total Equity               |   |                | 184.0  |   |   |   | 213.7  |     |   |   | (29.7 | ) |   |   | (13.9 | ) |
| Fixed Income:              |   |                |   |   |   |   |   |     |   |   |   |   |   |   |   |   |
| U.S.                       |   |                | 121.5  |   |   |   | 118.8  |     |   |   | 2.7 |   |   |   | 2.3 |   |
| Global & international |   |                | 94.3   |   |   |   | 79.7   |     |   |   | 14.6 |   |   |   | 18.3 |   |
|                       |   |                | 215.8  |   |   |   | 198.5  |     |   |   | 17.3 |   |   |   | 8.7 |   |
| Other(1)(2):               |   |                |   |   |   |   |   |     |   |   |   |   |   |   |   |   |
| U.S.                       |   |                | 29.8   |   |   |   | 23.5   |     |   |   | 6.3 |   |   |   | 26.9 |   |
| Global & international |   |                | 31.4   |   |   |   | 12.5   |     |   |   | 18.9 |   |   |   | 151.3 |   |
|                       |   |                | 61.2   |   |   |   | 36.0   |     |   |   | 25.2 |   |   |   | 70.0 |   |
| Total:                     |   |                |   |   |   |   |   |     |   |   |   |   |   |   |   |   |
| U.S.                       |   |                | 213.4  |   |   |   | 209.5  |     |   |   | 3.9 |   |   |   | 1.9 |   |
| Global & international |   |                | 247.6  |   |   |   | 238.7  |     |   |   | 8.9 |   |   |   | 3.7 |   |
| Total                      |   | $                   | 461.0  |   |   | $      | 448.2  |     |   | $ | 12.8 |   |   |   | 2.9 |   |

| (1) | Previously reported AUM for June 30, 2010 have been adjusted by removing an affiliated account for which we serve in an advisory capacity and do not have discretionary trading authority. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes index, structured, asset allocation services and certain other alternative investments. |
|-----|--------------------------------------------------------------------------------------------------|

----

|                               |   | Distribution Channel |   |   | Investment Service |   |
|------------------------------------|--------|----------------------|--------|--------|--------------------|--------|
|                               |   | Institutions         |   |   | Retail             |   |   | PrivateClient |   |   | Total |   |   | ValueEquity |   |   | GrowthEquity |   |   | FixedIncome |   |   | Other(2) |   |   | Total |   |
|                               |   | (in billions)        |   |
|                               |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of March 31, 2011       |   | $                    | 266.8  |   |               | $      | 131.0 |   |   | $ | 79.5 |   |   | $ | 477.3 |   |   | $ | 137.4 |   |   | $ | 71.4 |   |   | $ | 210.0 |   |   | $ | 58.5 |   |   | $ | 477.3 |   |
| Long-term flows:                   |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales/new accounts                 |   |                 | 3.7    |   |               |   | 8.5 |   |   |   | 1.5 |   |   |   | 13.7 |   |   |   | 1.4 |   |   |   | 1.2 |   |   |   | 8.0 |   |   |   | 3.1 |   |   |   | 13.7 |   |
| Redemptions/terminations           |   |                 | (15.3  | )      |               |   | (8.6 | ) |   |   | (1.4 | ) |   |   | (25.3 | ) |   |   | (11.9 | ) |   |   | (7.9 | ) |   |   | (5.3 | ) |   |   | (0.2 | ) |   |   | (25.3 | ) |
| Cash flow/unreinvested dividends   |   |                 | (3.3   | )      |               |   | (1.9 | ) |   |   | (2.7 | ) |   |   | (7.9 | ) |   |   | (4.1 | ) |   |   | (2.2 | ) |   |   | (1.2 | ) |   |   | (0.4 | ) |   |   | (7.9 | ) |
| Net long-term (outflows) inflows   |   |                 | (14.9  | )      |               |   | (2.0 | ) |   |   | (2.6 | ) |   |   | (19.5 | ) |   |   | (14.6 | ) |   |   | (8.9 | ) |   |   | 1.5 |   |   |   | 2.5 |   |   |   | (19.5 | ) |
| Acquisitions                       |   |                 | 1.1    |   |               |   | — |   |   |   | 0.1 |   |   |   | 1.2 |   |   |   | — |   |   |   | 1.2 |   |   |   | — |   |   |   | — |   |   |   | 1.2 |   |
| Market appreciation (depreciation) |   |                 | 1.5    |   |               |   | 0.4 |   |   |   | 0.1 |   |   |   | 2.0 |   |   |   | (1.4 | ) |   |   | (1.1 | ) |   |   | 4.3 |   |   |   | 0.2 |   |   |   | 2.0 |   |
| Net change                         |   |                 | (12.3  | )      |               |   | (1.6 | ) |   |   | (2.4 | ) |   |   | (16.3 | ) |   |   | (16.0 | ) |   |   | (8.8 | ) |   |   | 5.8 |   |   |   | 2.7 |   |   |   | (16.3 | ) |
| Balance as of June 30, 2011        |   | $                    | 254.5  |   |               | $      | 129.4 |   |   | $ | 77.1 |   |   | $ | 461.0 |   |   | $ | 121.4 |   |   | $ | 62.6 |   |   | $ | 215.8 |   |   | $ | 61.2 |   |   | $ | 461.0 |   |

|                             |   | Distribution Channel |   |   | Investment Service |   |
|----------------------------------|--------|----------------------|--------|--------|--------------------|--------|
|                             |   | Institutions         |   |   | Retail             |   |   | PrivateClient |   |   | Total |   |   | ValueEquity |   |   | GrowthEquity |   |   | FixedIncome |   |   | Other(2) |   |   | Total |   |
|                             |   | (in billions)        |   |
|                             |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2010  |   | $                    | 272.9  |   |               | $      | 127.0 |   |   | $ | 78.1 |   |   | $ | 478.0 |   |   | $ | 144.3 |   |   | $ | 74.3 |   |   | $ | 206.2 |   |   | $ | 53.2 |   |   | $ | 478.0 |   |
| Long-term flows:                 |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales/new accounts               |   |                 | 8.9    |   |               |   | 16.7 |   |   |   | 3.8 |   |   |   | 29.4 |   |   |   | 3.8 |   |   |   | 2.8 |   |   |   | 16.8 |   |   |   | 6.0 |   |   |   | 29.4 |   |
| Redemptions/terminations         |   |                 | (29.3  | )      |               |   | (16.3 | ) |   |   | (3.1 | ) |   |   | (48.7 | ) |   |   | (23.0 | ) |   |   | (14.1 | ) |   |   | (11.1 | ) |   |   | (0.5 | ) |   |   | (48.7 | ) |
| Cash flow/unreinvested dividends |   |                 | (7.5   | )      |               |   | (3.2 | ) |   |   | (3.9 | ) |   |   | (14.6 | ) |   |   | (8.2 | ) |   |   | (3.8 | ) |   |   | (2.6 | ) |   |   | — |   |   |   | (14.6 | ) |
| Net long-term (outflows) inflows |   |                 | (27.9  | )      |               |   | (2.8 | ) |   |   | (3.2 | ) |   |   | (33.9 | ) |   |   | (27.4 | ) |   |   | (15.1 | ) |   |   | 3.1 |   |   |   | 5.5 |   |   |   | (33.9 | ) |
| Acquisitions                     |   |                 | 1.1    |   |               |   | — |   |   |   | 0.1 |   |   |   | 1.2 |   |   |   | — |   |   |   | 1.2 |   |   |   | — |   |   |   | — |   |   |   | 1.2 |   |
| Market appreciation              |   |                 | 8.4    |   |               |   | 5.2 |   |   |   | 2.1 |   |   |   | 15.7 |   |   |   | 4.5 |   |   |   | 2.2 |   |   |   | 6.5 |   |   |   | 2.5 |   |   |   | 15.7 |   |
| Net change                       |   |                 | (18.4  | )      |               |   | 2.4 |   |   |   | (1.0 | ) |   |   | (17.0 | ) |   |   | (22.9 | ) |   |   | (11.7 | ) |   |   | 9.6 |   |   |   | 8.0 |   |   |   | (17.0 | ) |
| Balance as of June 30, 2011      |   | $                    | 254.5  |   |               | $      | 129.4 |   |   | $ | 77.1 |   |   | $ | 461.0 |   |   | $ | 121.4 |   |   | $ | 62.6 |   |   | $ | 215.8 |   |   | $ | 61.2 |   |   | $ | 461.0 |   |

|                                   |   | Distribution Channel |   |   | Investment Service |   |
|----------------------------------------|--------|----------------------|--------|--------|--------------------|--------|
|                                   |   |                 |   |   |               |   |   | Private |   |   |   |   |   | Value |   |   | Growth |   |   | Fixed |   |   |   |   |   |   |   |
|                                   |   | Institutions(1)      |   |   | Retail             |   |   | Client |   |   | Total |   |   | Equity |   |   | Equity |   |   | Income |   |   | Other(1)(2) |   |   | Total |   |
|                                   |   | (in billions)        |   |
|                                   |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of  June 30, 2010 |   | $                    | 261.1  |   |               | $      | 116.2 |   |   | $ | 70.9 |   |   | $ | 448.2 |   |   | $ | 139.2 |   |   | $ | 74.5 |   |   | $ | 198.5 |   |   | $ | 36.0 |   |   | $ | 448.2 |   |
| Long-term flows:                       |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales/new accounts                     |   |                 | 16.6   |   |               |   | 30.6 |   |   |   | 7.4 |   |   |   | 54.6 |   |   |   | 8.0 |   |   |   | 4.6 |   |   |   | 33.8 |   |   |   | 8.2 |   |   |   | 54.6 |   |
| Redemptions/terminations               |   |                 | (64.1  | )      |               |   | (35.9 | ) |   |   | (6.1 | ) |   |   | (106.1 | ) |   |   | (48.8 | ) |   |   | (30.3 | ) |   |   | (25.0 | ) |   |   | (2.0 | ) |   |   | (106.1 | ) |
| Cash flow/unreinvested dividends       |   |                 | (14.6  | )      |               |   | (6.7 | ) |   |   | (5.9 | ) |   |   | (27.2 | ) |   |   | (13.8 | ) |   |   | (7.3 | ) |   |   | (6.9 | ) |   |   | 0.8 |   |   |   | (27.2 | ) |
| Net long-term (outflows) inflows       |   |                 | (62.1  | )      |               |   | (12.0 | ) |   |   | (4.6 | ) |   |   | (78.7 | ) |   |   | (54.6 | ) |   |   | (33.0 | ) |   |   | 1.9 |   |   |   | 7.0 |   |   |   | (78.7 | ) |
| Acquisition                            |   |                 | 9.0    |   |               |   | — |   |   |   | 0.1 |   |   |   | 9.1 |   |   |   | — |   |   |   | 1.2 |   |   |   | — |   |   |   | 7.9 |   |   |   | 9.1 |   |
| Market appreciation                    |   |                 | 46.5   |   |               |   | 25.2 |   |   |   | 10.7 |   |   |   | 82.4 |   |   |   | 36.8 |   |   |   | 19.9 |   |   |   | 15.4 |   |   |   | 10.3 |   |   |   | 82.4 |   |
| Net change                             |   |                 | (6.6   | )      |               |   | 13.2 |   |   |   | 6.2 |   |   |   | 12.8 |   |   |   | (17.8 | ) |   |   | (11.9 | ) |   |   | 17.3 |   |   |   | 25.2 |   |   |   | 12.8 |   |
| Balance as of June 30, 2011            |   | $                    | 254.5  |   |               | $      | 129.4 |   |   | $ | 77.1 |   |   | $ | 461.0 |   |   | $ | 121.4 |   |   | $ | 62.6 |   |   | $ | 215.8 |   |   | $ | 61.2 |   |   | $ | 461.0 |   |

| (1) | Previously reported AUM for June 30, 2010 have been adjusted by removing an affiliated account for which we serve in an advisory capacity and do not have discretionary trading authority. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes index, structured, asset allocation services and certain other alternative investments. |
|-----|--------------------------------------------------------------------------------------------------|

----

|                  |   | Three Months Ended |   |   |    |   |   |     |   |   | Six Months Ended |   |   |    |   |   |    |   |
|-----------------------|--------|--------------------|--------|--------|---------|--------|--------|----------|--------|--------|------------------|--------|--------|---------|--------|--------|---------|--------|
|                  |   | 6/30/11            |   |   | 6/30/10 |   |   | $ Change |   |   | % Change         |   |   | 6/30/11 |   |   | 6/30/10 |   |   | $ Change |   |   | % Change |   |
|                  |   | (in billions)      |   |
| Distribution Channel: |   |               |   |   |    |   |   |     |   |   |             |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Institutions(1)       |   | $                  | 264.0  |   |    | $      | 275.4  |     |   | $      | (11.4            | )      |   |    | (4.1   | )%     |    | $      | 268.5 |   |   | $ | 278.9 |   |   | $ | (10.4 | ) |   |   | (3.7 | )% |
| Retail                |   |               | 131.2  |   |    |   | 122.7  |     |   |   | 8.5              |   |   |    | 6.9    |   |    |   | 130.2 |   |   |   | 121.3 |   |   |   | 8.9 |   |   |   | 7.4 |   |
| Private Client        |   |               | 78.8   |   |    |   | 74.0   |     |   |   | 4.8              |   |   |    | 6.5    |   |    |   | 78.9 |   |   |   | 73.9 |   |   |   | 5.0 |   |   |   | 6.7 |   |
| Total                 |   | $                  | 474.0  |   |    | $      | 472.1  |     |   | $      | 1.9              |   |   |    | 0.4    |   |    | $      | 477.6 |   |   | $ | 474.1 |   |   | $ | 3.5 |   |   |   | 0.7 |   |
|                  |   |               |   |   |    |   |   |     |   |   |             |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment Service:   |   |               |   |   |    |   |   |     |   |   |             |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Value Equity          |   | $                  | 131.4  |   |    | $      | 155.3  |     |   | $      | (23.9            | )      |   |    | (15.4  | )%     |    | $      | 137.1 |   |   | $ | 159.0 |   |   | $ | (21.9 | ) |   |   | (13.8 | )% |
| Growth Equity         |   |               | 68.2   |   |    |   | 83.1   |     |   |   | (14.9            | )      |   |    | (17.9  | )      |    |   | 70.7 |   |   |   | 85.7 |   |   |   | (15.0 | ) |   |   | (17.5 | ) |
| Fixed Income          |   |               | 213.7  |   |    |   | 195.4  |     |   |   | 18.3             |   |   |    | 9.4    |   |    |   | 211.2 |   |   |   | 191.9 |   |   |   | 19.3 |   |   |   | 10.1 |   |
| Other (1)(2)          |   |               | 60.7   |   |    |   | 38.3   |     |   |   | 22.4             |   |   |    | 58.5   |   |    |   | 58.6 |   |   |   | 37.5 |   |   |   | 21.1 |   |   |   | 55.9 |   |
| Total                 |   | $                  | 474.0  |   |    | $      | 472.1  |     |   | $      | 1.9              |   |   |    | 0.4    |   |    | $      | 477.6 |   |   | $ | 474.1 |   |   | $ | 3.5 |   |   |   | 0.7 |   |

| (1) | Previously reported AUM for June 30, 2010 have been adjusted by removing an affiliated account for which we serve in an advisory capacity and do not have discretionary trading authority. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes index, structured, asset allocation services and certain other alternative investments. |
|-----|--------------------------------------------------------------------------------------------------|

----

|                                               |   | Three months ended June 30, 2011 |   |   | Six months ended June 30, 2011 |   |
|----------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                               |   |                                  |   |   |                                |   |
| Global Value                                       |   |                                  |   |   |                                |   |
| Absolute return                                    |   |                                  | (2.1   | )%     |                                |   | 2.3 | % |
| Relative return (vs. MSCI World Index – net) |   |                                  | (2.6   | )      |                                |   | (3.0 | ) |
| International Value                                |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (0.1   | )      |                                |   | 2.2 |   |
| Relative return (vs. MSCI EAFE Index – net)  |   |                                  | (1.7   | )      |                                |   | (2.8 | ) |
| Japan Value                                        |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (2.2   | )      |                                |   | (5.2 | ) |
| Relative return (vs. TOPIX)                        |   |                                  | 0.0    |   |                                |   | (0.8 | ) |
| U.S. Diversified Value                             |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (1.2   | )      |                                |   | 5.2 |   |
| Relative return (vs. Russell 1000 Value Index)     |   |                                  | (0.7   | )      |                                |   | (0.7 | ) |
| Global Research Growth                             |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (1.6   | )      |                                |   | 1.9 |   |
| Relative return (vs. MSCI World Index – net) |   |                                  | (2.0   | )      |                                |   | (3.4 | ) |
| Global Thematic Research                           |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (3.9   | )      |                                |   | (1.5 | ) |
| Relative return (vs. MCSI ACWI – net)        |   |                                  | (4.1   | )      |                                |   | (6.2 | ) |
| International Large Cap Growth                     |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (0.8   | )      |                                |   | (2.0 | ) |
| Relative return (vs. MSCI EAFE Index – net)  |   |                                  | (2.4   | )      |                                |   | (7.0 | ) |
| U.S. Large Cap Growth                              |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (2.7   | )      |                                |   | 4.0 |   |
| Relative return (vs. Russell 1000 Growth Index)    |   |                                  | (3.4   | )      |                                |   | (2.8 | ) |
| Global Blend                                       |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (1.7   | )      |                                |   | 2.3 |   |
| Relative return (vs. MSCI World Index – net) |   |                                  | (2.2   | )      |                                |   | (3.0 | ) |
| International Blend                                |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (0.6   | )      |                                |   | 0.2 |   |
| Relative return (vs. MSCI EAFE Index – net)  |   |                                  | (2.2   | )      |                                |   | (4.8 | ) |
| Emerging Market Blend                              |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | (3.0   | )      |                                |   | (0.9 | ) |
| Relative return (vs. MSCI EM Index – net)    |   |                                  | (1.8   | )      |                                |   | (1.8 | ) |
| Strategic Core Plus (fixed income)                 |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | 2.1    |   |                                |   | 3.2 |   |
| Relative return (vs. Barclays US Aggregate)        |   |                                  | (0.2   | )      |                                |   | 0.4 |   |
| Global Plus (fixed income)                         |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | 3.3    |   |                                |   | 4.9 |   |
| Relative return (vs. Barclays Global Aggregate)    |   |                                  | 0.2    |   |                                |   | 0.5 |   |
| Emerging Market Debt (fixed income)                |   |                                  |   |   |                                |   |   |   |
| Absolute return                                    |   |                                  | 4.0    |   |                                |   | 5.1 |   |
| Relative return (vs. JMP EMBI Global)              |   |                                  | 0.0    |   |                                |   | 0.0 |   |

----

|                                                                        |   | Three Months Ended                     |    |   |    |   |   |     |   |   | Six Months Ended |   |   |    |   |   |    |   |
|-----------------------------------------------------------------------------|--------|----------------------------------------|---------|--------|---------|--------|--------|----------|--------|--------|------------------|--------|--------|---------|--------|--------|---------|--------|
|                                                                        |   | 6/30/11                                |    |   | 6/30/10 |   |   | $ Change |   |   | % Change         |   |   | 6/30/11 |   |   | 6/30/10 |   |   | $ Change |   |   | % Change |   |
|                                                                        |   | (in millions, except per unit amounts) |    |
|                                                                        |   |                                   |    |   |    |   |   |     |   |   |             |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Net revenues                                                                |   | $                                      | 728.0   |   |    | $      | 688.3  |     |   | $      | 39.7             |   |   |    | 5.8    | %      |    | $      | 1,483.4 |   |   | $ | 1,413.4 |   |   | $ | 70.0 |   |   |   | 4.9 | % |
| Expenses                                                                    |   |                                   | 612.4   |   |    |   | 580.7  |     |   |   | 31.7             |   |   |    | 5.5    |   |    |   | 1,229.3 |   |   |   | 1,165.8 |   |   |   | 63.5 |   |   |   | 5.4 |   |
| Operating income                                                            |   |                                   | 115.6   |   |    |   | 107.6  |     |   |   | 8.0              |   |   |    | 7.4    |   |    |   | 254.1 |   |   |   | 247.6 |   |   |   | 6.5 |   |   |   | 2.6 |   |
| Non-operating income                                                        |   |                                   | — |   |    |   | 2.3    |     |   |   | (2.3             | )      |   |    | (100.0 | )      |    |   | — |   |   |   | 6.8 |   |   |   | (6.8 | ) |   |   | (100.0 | ) |
| Income before income taxes                                                  |   |                                   | 115.6   |   |    |   | 109.9  |     |   |   | 5.7              |   |   |    | 5.2    |   |    |   | 254.1 |   |   |   | 254.4 |   |   |   | (0.3 | ) |   |   | (0.1 | ) |
| Income taxes                                                                |   |                                   | 8.2     |   |    |   | 13.1   |     |   |   | (4.9             | )      |   |    | (37.2  | )      |    |   | 18.3 |   |   |   | 26.1 |   |   |   | (7.8 | ) |   |   | (30.2 | ) |
| Net income                                                                  |   |                                   | 107.4   |   |    |   | 96.8   |     |   |   | 10.6             |   |   |    | 11.0   |   |    |   | 235.8 |   |   |   | 228.3 |   |   |   | 7.5 |   |   |   | 3.3 |   |
| Net loss of consolidated entities attributable to non-controlling interests |   |                                   | 6.7     |   |    |   | 9.3    |     |   |   | (2.6             | )      |   |    | (27.7  | )      |    |   | 14.8 |   |   |   | 26.1 |   |   |   | (11.3 | ) |   |   | (43.3 | ) |
| Net income attributable to AllianceBernstein Unitholders                    |   | $                                      | 114.1   |   |    | $      | 106.1  |     |   | $      | 8.0              |   |   |    | 7.6    |   |    | $      | 250.6 |   |   | $ | 254.4 |   |   | $ | (3.8 | ) |   |   | (1.5 | ) |
|                                                                        |   |                                   |    |   |    |   |   |     |   |   |             |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted net income per AllianceBernstein Unit                               |   | $                                      | 0.41    |   |    | $      | 0.38   |     |   | $      | 0.03             |   |   |    | 7.9    |   |    | $      | 0.89 |   |   | $ | 0.91 |   |   | $ | (0.02 | ) |   |   | (2.2 | ) |
|                                                                        |   |                                   |    |   |    |   |   |     |   |   |             |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Distributions per AllianceBernstein Unit                                    |   | $                                      | 0.41    |   |    | $      | 0.38   |     |   | $      | 0.03             |   |   |    | 7.9    |   |    | $      | 0.89 |   |   | $ | 0.91 |   |   | $ | (0.02 | ) |   |   | (2.2 | ) |
|                                                                        |   |                                   |    |   |    |   |   |     |   |   |             |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating margin (1)                                                        |   |                                   | 16.8    | %      |    |   | 17.0   | %        |   |   |             |   |   |    |   |   |    |   | 18.1 | % |   |   | 19.4 | % |   |   |   |   |   |   |   |   |

|   | (1) | Operating income excluding net loss attributable to non-controlling interests as a percentage of net revenues. |
|--------|-----|----------------------------------------------------------------------------------------------------------------|

| $      | 35.2  |   | Lower deferred compensation-related losses     |
|--------|-------|--------|------------------------------------------------|
|   | 12.4  |   | Lower cash incentive compensation              |
|   | 5.2   |   | Lower severance                                |
|   | 4.4   |   | Lower seed capital and other investment losses |
|   | 3.5   |   | Higher net distribution revenues               |
|   | (19.9 | )      | Higher deferred compensation vesting expense   |
|   | (11.9 | )      | Higher salaries                                |
|   | (9.6  | )      | Lower Bernstein revenues                       |
|   | (9.5  | )      | Higher other promotion and servicing           |
|   | (5.2  | )      | Lower investment advisory base fees            |
|   | 3.4   |   | Other                                          |
| $      | 8.0   |   |                                           |

----

| $      | 33.7  |   | Higher deferred compensation-related gains    |
|--------|-------|--------|-----------------------------------------------|
|   | 16.9  |   | Lower cash incentive compensation             |
|   | 12.0  |   | Lower real estate charges                     |
|   | 7.8   |   | Lower income taxes                            |
|   | 5.9   |   | Higher net distribution revenues              |
|   | 5.5   |   | Lower severance                               |
|   | 4.4   |   | Higher seed money gains                       |
|   | (28.2 | )      | Higher deferred compensation vesting expenses |
|   | (24.3 | )      | Higher salaries                               |
|   | (20.1 | )      | Higher other promotion and servicing          |
|   | (7.0  | )      | Higher commissions                            |
|   | (6.8  | )      | Lower non-operating income                    |
|   | (5.4  | )      | Higher professional fees                      |
|   | (4.7  | )      | Higher portfolio services                     |
|   | 6.5   |   | Other                                         |
| $      | (3.8  | )      |                                          |

----

|                                                                                 |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|--------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|                                                                                 |   | 2011                             |    |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                                                                                 |   | (in thousands)                   |    |
|                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |
| Net revenues, GAAP basis                                                             |   | $                                | 727,994 |   |                           | $      | 688,343 |   |   | $ | 1,483,384 |   |   | $ | 1,413,429 |   |
| Exclude:                                                                             |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Deferred compensation-related investment (gains) losses                              |   |                             | 1,588   |   |                           |   | 36,797 |   |   |   | (8,152 | ) |   |   | 25,638 |   |
| Deferred compensation-related dividends and interest                                 |   |                             | (524    | )      |                           |   | (920 | ) |   |   | (1,156 | ) |   |   | (1,720 | ) |
| 90% of consolidated venture capital fund investment (gains) losses                   |   |                             | 6,302   |   |                           |   | 9,304 |   |   |   | 14,356 |   |   |   | 26,153 |   |
| Distribution-related payments                                                        |   |                             | (78,557 | )      |                           |   | (71,015 | ) |   |   | (153,313 | ) |   |   | (137,764 | ) |
| Amortization of deferred sales commissions                                           |   |                             | (9,871  | )      |                           |   | (12,147 | ) |   |   | (20,197 | ) |   |   | (24,268 | ) |
| Pass-through fees and expenses                                                       |   |                             | (9,987  | )      |                           |   | (7,274 | ) |   |   | (18,611 | ) |   |   | (13,988 | ) |
| Adjusted net revenues                                                                |   | $                                | 636,945 |   |                           | $      | 643,088 |   |   | $ | 1,296,311 |   |   | $ | 1,287,480 |   |
|                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Operating income, GAAP basis                                                         |   | $                                | 115,626 |   |                           | $      | 107,649 |   |   | $ | 254,061 |   |   | $ | 247,631 |   |
| Exclude:                                                                             |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Deferred compensation-related investment (gains) losses                              |   |                             | 1,588   |   |                           |   | 36,797 |   |   |   | (8,152 | ) |   |   | 25,638 |   |
| Deferred compensation-related dividends and interest                                 |   |                             | (524    | )      |                           |   | (920 | ) |   |   | (1,156 | ) |   |   | (1,720 | ) |
| Deferred compensation-related mark-to-market vesting (credit) expense                |   |                             | 908     |   |                           |   | (19,082 | ) |   |   | 7,802 |   |   |   | (18,725 | ) |
| Deferred compensation-related dividends and interest expense                         |   |                             | 1,196   |   |                           |   | 810 |   |   |   | 2,676 |   |   |   | 1,492 |   |
| Net impact of deferred compensation-related investments                              |   |                             | 3,168   |   |                           |   | 17,605 |   |   |   | 1,170 |   |   |   | 6,685 |   |
| Real estate charges                                                                  |   |                             | 18      |   |                           |   | — |   |   |   | 36 |   |   |   | 11,983 |   |
| Net loss (income) of consolidated entities attributable to non-controlling interests |   |                             | 6,756   |   |                           |   | 9,339 |   |   |   | 14,802 |   |   |   | 26,112 |   |
| Adjusted operating income                                                            |   | $                                | 125,568 |   |                           | $      | 134,593 |   |   | $ | 270,069 |   |   | $ | 292,411 |   |
|                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted operating margin                                                            |   |                             | 19.7    | %      |                           |   | 20.9 | % |   |   | 20.8 | % |   |   | 22.7 | % |

----

----

|                                   |   | Three Months Ended |    |   |    |   |    |     |   |   | Six Months Ended |   |   |    |    |   |    |   |
|----------------------------------------|--------|--------------------|---------|--------|---------|--------|---------|----------|--------|--------|------------------|--------|--------|---------|---------|--------|---------|--------|
|                                   |   | 6/30/11            |    |   | 6/30/10 |   |    | $ Change |   |   | % Change         |   |   | 6/30/11 |    |   | 6/30/10 |   |   | $ Change |   |   | % Change |   |
|                                   |   | (in millions)      |    |
| Investment advisory and services fees: |   |               |    |   |    |   |    |     |   |   |             |   |   |    |    |   |    |   |   |   |   |   |   |   |
| Institutions:                          |   |               |    |   |    |   |    |     |   |   |             |   |   |    |    |   |    |   |   |   |   |   |   |   |
| Base fees                              |   | $                  | 161.8   |   |    | $      | 185.7   |     |   | $      | (23.9            | )      |   |    | (12.9   | )%     |    | $      | 335.0 |   |   | $ | 382.4 |   |   | $ | (47.4 | ) |   |   | (12.4 | )% |
| Performance-based fees                 |   |               | 3.6     |   |    |   | 2.9     |     |   |   | 0.7              |   |   |    | 25.4    |   |    |   | 8.4 |   |   |   | 5.6 |   |   |   | 2.8 |   |   |   | 50.5 |   |
|                                   |   |               | 165.4   |   |    |   | 188.6   |     |   |   | (23.2            | )      |   |    | (12.3   | )      |    |   | 343.4 |   |   |   | 388.0 |   |   |   | (44.6 | ) |   |   | (11.5 | ) |
| Retail:                                |   |               |    |   |    |   |    |     |   |   |             |   |   |    |    |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Base fees                              |   |               | 171.3   |   |    |   | 158.3   |     |   |   | 13.0             |   |   |    | 8.2     |   |    |   | 337.2 |   |   |   | 310.1 |   |   |   | 27.1 |   |   |   | 8.7 |   |
| Performance-based fees                 |   |               | — |   |    |   | — |     |   |   | —          |   |   |    | — |   |    |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|                                   |   |               | 171.3   |   |    |   | 158.3   |     |   |   | 13.0             |   |   |    | 8.2     |   |    |   | 337.2 |   |   |   | 310.1 |   |   |   | 27.1 |   |   |   | 8.7 |   |
| Private Client:                        |   |               |    |   |    |   |    |     |   |   |             |   |   |    |    |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Base fees                              |   |               | 171.4   |   |    |   | 165.7   |     |   |   | 5.7              |   |   |    | 3.4     |   |    |   | 342.2 |   |   |   | 326.8 |   |   |   | 15.4 |   |   |   | 4.7 |   |
| Performance-based fees                 |   |               | 0.2     |   |    |   | 0.1     |     |   |   | 0.1              |   |   |    | 73.3    |   |    |   | 0.5 |   |   |   | 0.1 |   |   |   | 0.4 |   |   |   | 527.7 |   |
|                                   |   |               | 171.6   |   |    |   | 165.8   |     |   |   | 5.8              |   |   |    | 3.5     |   |    |   | 342.7 |   |   |   | 326.9 |   |   |   | 15.8 |   |   |   | 4.8 |   |
| Total:                                 |   |               |    |   |    |   |    |     |   |   |             |   |   |    |    |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Base fees                              |   |               | 504.5   |   |    |   | 509.7   |     |   |   | (5.2             | )      |   |    | (1.0    | )      |    |   | 1,014.4 |   |   |   | 1,019.3 |   |   |   | (4.9 | ) |   |   | (0.5 | ) |
| Performance-based fees                 |   |               | 3.8     |   |    |   | 3.0     |     |   |   | 0.8              |   |   |    | 26.8    |   |    |   | 8.9 |   |   |   | 5.7 |   |   |   | 3.2 |   |   |   | 57.5 |   |
|                                   |   |               | 508.3   |   |    |   | 512.7   |     |   |   | (4.4             | )      |   |    | (0.9    | )      |    |   | 1,023.3 |   |   |   | 1,025.0 |   |   |   | (1.7 | ) |   |   | (0.2 | ) |
|                                   |   |               |    |   |    |   |    |     |   |   |             |   |   |    |    |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bernstein research services            |   |               | 107.6   |   |    |   | 117.2   |     |   |   | (9.6             | )      |   |    | (8.2    | )      |    |   | 227.2 |   |   |   | 227.9 |   |   |   | (0.7 | ) |   |   | (0.3 | ) |
| Distribution revenues                  |   |               | 92.3    |   |    |   | 83.5    |     |   |   | 8.8              |   |   |    | 10.5    |   |    |   | 181.1 |   |   |   | 163.8 |   |   |   | 17.3 |   |   |   | 10.5 |   |
| Dividend and interest income           |   |               | 4.9     |   |    |   | 4.9     |     |   |   | —          |   |   |    | — |   |    |   | 10.0 |   |   |   | 8.8 |   |   |   | 1.2 |   |   |   | 13.6 |   |
| Investment gains (losses)              |   |               | (13.6   | )      |    |   | (56.5   | )        |   |   | 42.9             |   |   |    | (75.9   | )      |    |   | (12.6 | ) |   |   | (64.5 | ) |   |   | 51.9 |   |   |   | (80.4 | ) |
| Other revenues                         |   |               | 29.1    |   |    |   | 27.7    |     |   |   | 1.4              |   |   |    | 5.0     |   |    |   | 56.0 |   |   |   | 54.3 |   |   |   | 1.7 |   |   |   | 3.1 |   |
| Total revenues                         |   |               | 728.6   |   |    |   | 689.5   |     |   |   | 39.1             |   |   |    | 5.7     |   |    |   | 1,485.0 |   |   |   | 1,415.3 |   |   |   | 69.7 |   |   |   | 4.9 |   |
| Less: interest expense                 |   |               | 0.6     |   |    |   | 1.2     |     |   |   | (0.6             | )      |   |    | (45.7   | )      |    |   | 1.6 |   |   |   | 1.9 |   |   |   | (0.3 | ) |   |   | (15.2 | ) |
| Net revenues                           |   | $                  | 728.0   |   |    | $      | 688.3   |     |   | $      | 39.7             |   |   |    | 5.8     |   |    | $      | 1,483.4 |   |   | $ | 1,413.4 |   |   | $ | 70.0 |   |   |   | 4.9 |   |

----

----

|                                         |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|----------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                         |   | 2011                             |   |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                                         |   | (in millions)                    |   |
| Deferred compensation-related investments    |   |                             |   |   |                           |   |   |   |   |   |   |   |
| Realized gains (losses)                      |   | $                                | (0.9   | )      |                           | $      | — |   |   | $ | (4.2 | ) |   | $ | (12.6 | ) |
| Unrealized gains (losses)                    |   |                             | (0.7   | )      |                           |   | (36.8 | ) |   |   | 12.3 |   |   |   | (13.0 | ) |
| Consolidated private equity fund investments |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Realized gains (losses)                      |   |                             | 1.5    |   |                           |   | (2.5 | ) |   |   | (0.4 | ) |   |   | (0.6 | ) |
| Unrealized gains (losses)                    |   |                             | (8.5   | )      |                           |   | (7.8 | ) |   |   | (15.5 | ) |   |   | (28.5 | ) |
| Seed capital and other investments           |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Realized gains (losses)                      |   |                             | (1.4   | )      |                           |   | (6.0 | ) |   |   | (1.1 | ) |   |   | (8.7 | ) |
| Unrealized gains (losses)                    |   |                             | (3.6   | )      |                           |   | (3.4 | ) |   |   | (3.7 | ) |   |   | (1.1 | ) |
|                                         |   | $                                | (13.6  | )      |                           | $      | (56.5 | ) |   | $ | (12.6 | ) |   | $ | (64.5 | ) |

----

|                                       |   | Three Months Ended |    |   |    |   |    |     |   |   | Six Months Ended |   |   |    |    |   |    |   |
|--------------------------------------------|--------|--------------------|---------|--------|---------|--------|---------|----------|--------|--------|------------------|--------|--------|---------|---------|--------|---------|--------|
|                                       |   | 6/30/11            |    |   | 6/30/10 |   |    | $ Change |   |   | % Change         |   |   | 6/30/11 |    |   | 6/30/10 |   |   | $ Change |   |   | % Change |   |
|                                       |   | (in millions)      |    |
|                                       |   |               |    |
| Employee compensation and benefits         |   | $                  | 326.9   |   |    | $      | 312.8   |     |   | $      | 14.1             |   |   |    | 4.5     | %      |    | $      | 666.4 |   |   | $ | 632.2 |   |   | $ | 34.2 |   |   |   | 5.4 | % |
| Promotion and servicing:                   |   |               |    |   |    |   |    |     |   |   |             |   |   |    |    |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Distribution-related payments              |   |               | 78.6    |   |    |   | 71.0    |     |   |   | 7.6              |   |   |    | 10.6    |   |    |   | 153.3 |   |   |   | 137.8 |   |   |   | 15.5 |   |   |   | 11.3 |   |
| Amortization of deferred sales commissions |   |               | 9.9     |   |    |   | 12.2    |     |   |   | (2.3             | )      |   |    | (18.7   | )      |    |   | 20.2 |   |   |   | 24.3 |   |   |   | (4.1 | ) |   |   | (16.8 | ) |
| Other                                      |   |               | 59.3    |   |    |   | 49.8    |     |   |   | 9.5              |   |   |    | 19.1    |   |    |   | 112.7 |   |   |   | 92.6 |   |   |   | 20.1 |   |   |   | 21.6 |   |
| General and administrative:                |   |               |    |   |    |   |    |     |   |   |             |   |   |    |    |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative                 |   |               | 131.8   |   |    |   | 129.1   |     |   |   | 2.7              |   |   |    | 2.1     |   |    |   | 264.7 |   |   |   | 255.1 |   |   |   | 9.6 |   |   |   | 3.7 |   |
| Real estate charges                        |   |               | — |   |    |   | — |     |   |   | —          |   |   |    | — |   |    |   | — |   |   |   | 12.0 |   |   |   | (12.0 | ) |   |   | (100.0 | ) |
| Interest                                   |   |               | 0.6     |   |    |   | 0.4     |     |   |   | 0.2              |   |   |    | 44.0    |   |    |   | 1.3 |   |   |   | 1.0 |   |   |   | 0.3 |   |   |   | 32.5 |   |
| Amortization of intangible assets          |   |               | 5.3     |   |    |   | 5.4     |     |   |   | (0.1             | )      |   |    | (1.5    | )      |    |   | 10.7 |   |   |   | 10.8 |   |   |   | (0.1 | ) |   |   | (0.2 | ) |
| Total                                      |   | $                  | 612.4   |   |    | $      | 580.7   |     |   | $      | 31.7             |   |   |    | 5.5     |   |    | $      | 1,229.3 |   |   | $ | 1,165.8 |   |   | $ | 63.5 |   |   |   | 5.4 |   |

----

|                                                                                 |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|--------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                                                                 |   | 2011                             |   |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                                                                                 |   | (in millions)                    |   |
|                                                                                 |   |                             |   |   |                           |   |   |   |   |   |   |   |
| Investment gains (losses)                                                            |   | $                                | (1.6   | )      |                           | $      | (36.8 | ) |   | $ | 8.1 |   |   | $ | (25.6 | ) |
|                                                                                 |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of awards notionally invested in company-sponsored investment products: |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Original award                                                                       |   |                             | 18.4   |   |                           |   | 31.2 |   |   |   | 37.5 |   |   |   | 62.8 |   |
| Prior periods mark-to-market                                                         |   |                             | 2.4    |   |                           |   | (2.7 | ) |   |   | 4.4 |   |   |   | (6.3 | ) |
| Current period mark-to-market                                                        |   |                             | (1.5   | )      |                           |   | (16.3 | ) |   |   | 3.4 |   |   |   | (12.4 | ) |
| Total                                                                                |   |                             | 19.3   |   |                           |   | 12.2 |   |   |   | 45.3 |   |   |   | 44.1 |   |
| Net operating income impact                                                          |   | $                                | (20.9  | )      |                           | $      | (49.0 | ) |   | $ | (37.2 | ) |   | $ | (69.7 | ) |

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|   | • | Our belief that the cash flow Holding realizes from its investment in AllianceBernstein will provide Holding with the resources necessary to meet its financial obligations: Holding’s cash flow is dependent on the quarterly cash distributions it receives from AllianceBernstein. Accordingly, Holding’s ability to meet its financial obligations is dependent on AllianceBernstein’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control. |
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|   | • | Our financial condition and ability to issue public and private debt providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to issue public and private debt on reasonable terms, as well as the market for such debt or equity, may be limited by adverse market conditions, our profitability and changes in government regulations, including tax rates and interest rates. |
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|   | • | The possibility that prolonged weakness in the value of client assets under management may result in impairment of goodwill: To the extent that securities valuations are depressed for prolonged periods of time or we experience significant net redemptions, client assets under management and our revenues, profitability and unit price may be adversely affected. As a result, subsequent impairment tests may be based upon different assumptions and future cash flow projections, which may result in an impairment of goodwill. |
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|   | • | The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect certain legal proceedings to have a material adverse effect on our results of operations or financial condition, any settlement or judgment with respect to a legal proceeding could be significant, and could have such an effect. |
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|   | • | Our anticipation that the proposed 12b-1 fee-related rule changes will not have a material effect on us: The impact of this rule change is dependent upon the final rules adopted by the SEC, any phase-in or grandfathering period, and any other changes made with respect to share class distribution arrangements. |
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|   | • | Our intention to continue to engage in open market purchases of Holding Units, from time to time, to help fund anticipated obligations under our incentive compensation award program:  The number of Holding Units needed in future periods to make incentive compensation awards is dependent upon various factors, some of which are beyond our control, including the fluctuation in the price of a Holding Unit (NYSE: AB). |
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|   | • | Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues:  Aggregate employee compensation reflects employee performance and competitive compensation levels.  Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense being higher than 50% of our adjusted net revenues. |
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|   | • | The degree to which the $89.6 million real estate charge we recorded during the third quarter of 2010 will reduce occupancy costs on existing real estate in 2011 and subsequent years:  The charge we recorded during the third quarter of 2010 and our estimates of reduced occupancy costs in future years are based on existing sub-leases, as well as our current assumptions of when we can sub-lease the remaining space and current market rental rates, which are factors largely beyond our control.  If our assumptions prove to be incorrect, we may be forced to take an additional charge and/or our estimated occupancy cost reductions may be less than we currently anticipate. |
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|   | • | The pipeline of new institutional mandates not yet funded: Before they are funded, institutional mandates do not represent legally binding commitments to fund and, accordingly, the possibility exists that not all mandates will be funded in the amounts and at the times currently anticipated. |
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|   | • | Our belief that our long-term strategy is the right one and will ultimately drive stronger performance, flows and operating results:  Changes and volatility in political, economic, capital market or industry conditions can result in changes in demand for our products and services or impact the value of our assets under management, all of which may significantly hinder our ability to execute on our strategy. The actual performance of the capital markets and other factors beyond our control will affect our investment success for clients and asset flows.  Furthermore, improved flows depend on a number of factors, including our ability to deliver consistent, competitive investment performance, which cannot be assured, conditions of financial markets, consultant recommendations, and changes in our clients’ investment preferences, risk tolerances and liquidity needs. |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
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| Item 4. | Controls and Procedures |
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