u.s. economic

This presentation is provided by AllianceBernstein L.P.

May 3, 2007

US Economic and Capital Markets Outlook

Eric FrancoSenior Portfolio Manager

Global Value Equities

NFSA 2007 Annual Seminar

3AllianceBernsteinUS Economic and CMO

3.7%

0.8%

1.6%

2.7%

4.2%

3.6%3.4%

2.3%

2000 2001 2002 2003 2004 2005 2006 2007E

US GDP Growth

As of December 31, 2006Source: Consensus Economics, Datastream, EIU, IFO Institute, IMF, World Bank, and Bernstein


400

600

800

1,000

1,200

1,400

95 98 01 04

US Housing Demand Turning Down

New Home SalesExisting Home Sales

06

-25%

3,000

4,000

5,000

6,000

7,000

8,000

95 98 01 04 06

-16%

(000)(000)

Through August 31, 2006Source: National Association of Realtors and US Census Bureau


US Home Price Boom Comes to an End

(4)

(2)

0

2

4

6

8

10

12

14

95 96 97 98 99 00 01 02 03 04 05 06

(%)

Through September 30, 20061995–2005: trailing 12-month average; 2006: year-over-yearSource: National Association of Realtors

Percent Increase in Median Home Price


Housing Boom Has Accounted for20% of Total Employment Gains

Job Growth3 Years Ending August 2006

Total Housing-Related

Source: Bureau of Labor Statistics and AllianceBernstein estimates

5.5 Mil.

1.1 Mil.


Equity Extraction from Housing Was Huge in the US in 2005

($ Billions)

NewHousing

Investment

NetIncrease in

Mortgage Debt

$664

$1,080 $416

Equity Extracted

Source: Bureau of Labor Statistics and AllianceBernstein estimates


Office Vacancies

As of December 31, 2006Source: CB Richard Ellis and Haver Analytics

National Office Vacancy Rate: Metropolitan Area

7

9

11

13

15

17

19

21

23

86 87 89 90 92 93 95 96 98 99 01 02 04 05 07E


Nonresidential Construction

As of February 28, 2007Source: Census Bureau and Haver Analytics

Private Construction: Nonresidential

120

170

220

270

320

370

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

($ Billions)

E


Total Domestic Sprinklers Shipped 1980–2006

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

80 82 84 86 88 90 92 94 96 98 00 02 04 06

Through December 31, 2006Source: National Fire Sprinkler Association


US Employment Growth Solid

Change in Private Sector Employment thousands, 3 month moving average

(400)

(300)

(200)

(100)

0

100

200

300

400

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

Through December 31, 2006Source: Bloomberg


Consumer Spending Rebounds

As of February 2, 2007*Annualized percent change from preceding periodSource: US Department of Commerce-Bureau of Economics Analysis

0

1

2

3

4

5

6%

2005 2006 2005Q3

2005Q4

2006Q1

2006Q2

2006Q3

2006Q4

Real Consumer Spending Growth (%)*


As US Economic Growth Moderates, Other Regions Are Holding Up

Real GDP Growth (%)

Through September 30, 2006Source: Consensus Economics, Datastream, EIU, IFO Institute, IMF, MSCI, S&P, World Bank and Bernstein

0

1

2

3

4

5

6

7%

US Europe Japan Emerging

2005 2006E 2007E


IFO Business Climate Survey*

Through December 15, 2006*Pan-Germany, seasonally adjusted, 2000=100Source: Consensus Economics, Datastream, EIU, IFO Institute, IMF, MSCI, S&P, World Bank and Bernstein

80

90

100

110

120

91 94 97 00 03 06

Ind

ex


Profitability Above Average in Every Region…

Based on trailing 12-month ROE. Regional numbers are from 1976 through December 2006, except Emerging Markets which is September 1996 through December 2006. Sectoral numbers are from 1970 through December 2006. Source: FactSet, MSCI and Bernstein

-5

0

5

10

15

20

25%

US Europe EmergingMarkets

Japan

Average

Current

Highest

Return on Equity by Region (%)

Lowest


… and Nearly Every Sector

Based on trailing 12-month ROE. Regional numbers are from 1976 through December 2006, except Emerging Markets which is September 1996 through December 2006. Sectoral numbers are from 1970 through December 2006. Source: FactSet, MSCI and Bernstein

Return on Equity by Sector (%)

(10)

(5)

0

5

10

15

20

25

30

Ca

pit

al

Eq

uip

me

nt

Co

ns

tru

cti

on

&

Ho

us

ing

Co

ns

um

er

Cy

clic

als

Co

ns

um

er

Sta

ple

s

En

erg

y

Fin

an

ce

Ind

us

tria

l C

om

mo

dit

ies

He

alt

hc

are

Te

ch

no

log

y/

Ele

ctr

on

ics

Te

lec

om

mu

nic

ati

on

s

Tra

ns

po

rta

tio

n

Uti

litie

s

%

Average

Current

Lowest

Highest


Interest Rates Remain Low

Euro Area

As of December 31, 2006Source: Compustat

10-Year Bond Yields

0

2

4

6

8

10

12

90 91 93 94 96 97 99 00 02 03 05 06

Per

cent

US

Japan

%


Energy Prices Pose A Risk

As of December 31, 2006*West Texas int. Cushing $/BBLSource: Datastream

Oil Prices*

0

10

20

30

40

50

60

70

80

86 88 90 92 94 96 98 00 02 04 06

($/BBL)


Demand Growth Surged in Recent Years…

Source: International Energy Agency (IEA)

World Oil Consumption Growth(Year over Year)

0.9%

2.2%

0.9% 1.0% 1.0%

1.9%

4.0%

1.2%

98 99 00 01 02 03 04 05

CAGR = 2.4%


...and Producers Are Struggling to Keep Up

Sources: Deutsche Bank, IEA, Organization of Petroleum Exporting Countries (OPEC) and Bernstein

Spare OPEC Capacity as % of Demand

0

2

4

6

8

10

95 97 99 01 03 05

(%)


Supply Will Come from Diverse Geographies…

Next12 Months

+1.9

Through2010E

Non-OPEC Output Accelerating(Million Barrels per Day)

+6.5

Europe

NGLs*

AsiaBrazilCanada

AfricaOther Former Soviet UnionRussia

*OPEC natural gas liquidsSource: Russian Energy Ministry, IEA, and AllianceBernstein estimates

US


Source: IEA, OPEC and AllianceBernstein estimates

…So the Need for OPEC Crude Oil Will Level Off

Demand for OPEC Output(Million Barrels per Day)

26.4 26.7

28.328.9 28.9 29.0 29.1

02 03 04 05 06E 07E 08E


Spare Capacity Set to Recover to Normal by 2008/2009

Sources: Deutsche Bank, IEA, OPEC and Bernstein

Spare OPEC Capacity as % of Demand

0

2

4

6

8

10

95 97 99 01 03 05 07E 09E

(%)


Transportation Fuels Drive Oil Demand

Share of Oil Consumption Growth

Source: Environmental Protection Agency and AllianceBernstein estimates

65%

9%

24%

3%1%

RoadTransport

AirTransport

Rail Transport

IndustrialProduction/

Process

Other

<


Electric Power Far More Efficient than Mechanical Power

14%Energyto Wheels

0%

Loss toIdle

Loss toResistance

14%

Loss toDriveline

6%

Energyto Wheels

Loss toDriveline

6%

Loss toAtmosphere

63%

17%

Loss toIdle

80%

Electric Power6× More Efficient

Loss toAtmosphere

0%

EnergyInput 100%

100%

Excludes accessories which consume 2% of power inputSource: EPA and AllianceBernstein estimates

EnergyInput


Accelerate with motor

Cruise with engine

Shut down at idle

Motor Generator

during deceleration

Sources of Hybrid Power Efficiency

Current Hybrid

High-energy density battery

Access electric power grid off peak

Extend electric-mode range

from 2 miles to 30 miles

Shift 2/3 of miles driven

to electricity

Plug-In Hybrid

+

Source: AllianceBernstein estimates


6,200

4,700

1,850

AverageVehicle

CurrentHybrids

Plug-InHybrids

Energy Consumed per Mile*(BTUs)

*Energy consumed within the vehicleSource: AllianceBernstein estimates

Fuel Efficiency of Hybrids Has Potential to Be Transformational

Miles per Gallon 20 26 ~80


Opportunity in International Stocks


Trends Toward Global Investing

Net Stock Fund Cash Flows (Net Fund Flows — $ Billions)

2003%

of Total

International $3 7%

Total Equity $44 100%

Current analysis does not guarantee future results.Net fund flows includes: proprietary, non-proprietary and open-end fundsSource: Strategic Insight




2003%

of Total 2004%

of Total

International $3 7% $24 31%

Total Equity $44 100% $76 100%




2003%

of Total 2004%

of Total 2005%

of Total

International $3 7% $24 31% $42 54%

Total Equity $44 100% $76 100% $77 100%




International Returns Have Rebounded

Past performance does not guarantee future results.US stocks are represented by the S&P 500 Index; developed foreign markets by the MSCI EAFE Index; and Emerging Markets stocks by the MSCI EM Index Source: MSCI and Standard and Poor's

Annualized Returns2002–2006

6.2

15.0

26.6

US EAFE EmergingMarkets


Long-Term Returns Are Similar

Past performance does not guarantee future results.US stocks are represented by the S&P 500 Index; developed foreign markets by the MSCI EAFE IndexSource: MSCI and Standard and Poor's

Annualized Returns

8.5

12.4

1971-1980

16.4

13.9

81-90

17.5

8.2

91-00

2.9

7.9

01-06

11.4 11.6

71-06

US Developed Foreign Markets


Correlation: U.S. to EAFE*

Past performance does not guarantee future results. Investors cannot invest directly in an index and its results are not indicative of any AllianceBernstein mutual fund.Through December 31, 2006*36-month rolling correlation of monthly returns; EAFE returns are cap-weighted and hedged into the US dollar. US returns = S&P 500 TRISource: MSCI and Bernstein

Correlation Has Risen

0.0

0.2

0.4

0.6

0.8

1.0

95 96 98 99 01 02 04 06

(×)


0.0

0.2

0.4

0.6

0.8

1.0

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06

Global Events Produce Correlation Spikes

Correlation of U.S. to EAFE*

Oil CrisisGulf War

Bursting of Japan Bubble

Internet

SecondGulf War

(×)

Past performance does not guarantee future results. Investors cannot invest directly in an index and its results are not indicative of any AllianceBernstein mutual fund.Through December 31, 2006*36-month rolling correlation of monthly returns; EAFE returns are cap-weighted and hedged into the US dollar. US returns = S&P 500 TRISource: MSCI and Bernstein


13

14

15

16

17

0 10 20 30 40 50 60 70 80 90 100

% in International

Volatility (%)

Volatility of U.S./Foreign Stock Mixes

Historical analysis does not guarantee future results. Based on historic annualized volatilities of the S&P 500 and MSCI EAFE (unhedged) from January 1970 to December 2006, assuming a correlation of 80%Source: MSCI, Standard & Poor’s and Bernstein


40%

37%

37%

33%

32%

General Motors

IBM

CALPERS

General Electric

Wisconsin Investment Board

How Much Do Large Retirement Plans Invest Overseas?

International Equity Allocation asPercent of Total Equity Holdings

Source: Pensions & Investments; January 2006


Markets Have Grown Faster Overseas

Historical analysis does not guarantee future results. Market cap percentage as of January 31, 1970 and December 31, 2006, respectively Source: MSCI

34%

66% 45% 55%

1970: MSCI World 2006: MSCI ACWI

US

International

US International


Many Leading Companies Outside the U.S.

HSBC (UK)

Mitsubishi Tokyo (Japan)

UBS (Switzerland)

Toyota (Japan)

DaimlerChrysler (Germany)

Honda (Japan)

Sony (Japan)

Matsushita (Japan)

Electrolux (Sweden)

Industry Share by Market Value

As of December 31, 2006 Source: MSCI

33% 67% Non-USUS

Banking

89%

11%

Autos

80%

20%

Household Durables


Is Now a Good Time?


International Returns

Local Market

Return=

Currency

Effect

Returns

in Dollars+


9.9×

11.1×

MSCI EAFE S&P 500

Current valuations do not guarantee future results.As of December 31 , 2006The unmanaged Standard & Poor’s (S&P) 500 Stock Index includes 500 US stocks and is a common measure of the performance of the overall US stock marketThe unmanaged MSCI EAFE® Index (Europe, Australasia, Far East) is a free float-adjusted market-capitalization index that is designed to measure developed-marketequity performance, excluding the US and CanadaSource: MSCI and Standard & Poor's

Price/BookPrice/Cash Flow

2.5×2.9×

MSCI EAFE S&P 500

International Stocks Are Attractively Priced Today


Currency Moves Often Large and Sustained

U.S. Dollar vs. Major CurrenciesU.S. Dollar vs. Major Currencies

Historical analysis does not guarantee future results.US trade-weighted index through October 31, 2006Source: Datastream and IMF

40

60

80

100

120

140

160

180

80 82 85 88 90 93 96 98 05 05 06

Index

(44)%

(28)%

+56%

+40%


Historical analysis does not guarantee future results.Source: Datastream, MSCI and Bernstein

Currency: A Major Impact on Stock Returns

212%

125%86%

53%58%

424%

10%

111%

Nov 78–Feb 85

Strong Dollar

Mar 85–Apr 95

Weak Dollar

May 95–Jan 02

Strong Dollar

Feb 02–Dec 06

Weak Dollar

EAFEHedged

EAFEUnhedged

Cumulative ReturnsCumulative Returns


US Current Account Deficit Largest Financial Imbalance in the World

US Current Account as % of GDP(4 Quarter Moving Average)

Through September 30, 2006Source: Bureau of Economic Analysis, US Department of Commerce and Bernstein

(%)

(8)(7)(6)(5)(4)(3)(2)(1)012

70 75 79 84 88 93 97 05 06


Conclusion

Global economic landscape healthy

Energy prices pose risk, but help is on the way

Opportunities remain in international stocks

AllianceBernstein1345 Avenue of the Americas

New York, NY 10105212.823.2722 Direct212.848.2390 Fax

[email protected]

Eric FrancoSenior Portfolio Manager

Global Value Equities

Thank You!

u.s. economic

Documents

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alliancebernstein

developed

month rolling

end funds

emerging markets

month roe

eafe returns