2014...AllianceBernstein.com CMO 3Q 2014 | 5 AllianceBernstein.com CMO 3Q 2014 | 5 4 7 10 13 0 30 60...

2014

Investment Products Offered • Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed

The information herein reflects prevailing market conditions and our judgments as of the date of this document, which are subject to change. In preparing this document, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. Opinions and estimates may be changed without notice and involve a number of assumptions which may not prove valid. There is no guarantee that any forecasts or opinions in this material will be realized. Information should not be construed as investment advice.

Balance Risk and Be Active

AllianceBernstein.com CMO 3Q 2014 | 1AllianceBernstein.com CMO 3Q 2014 | 1

The Big Picture

Global growth expected at 2.9% in 2014, rising to 3.5% in 2015

Inflation should remain benign, allowing for continued accommodative monetary policy

Interest rates remain low, but US official rates expected to begin rising early next year

Bond investors should position for a gradual increase in rates

Pursue a proper balance of credit and interest-rate risk

Be selective and avoid stretching for yield

Equity-market returns should be attractive, but muted going forward

Corporate fundamentals remain solid, providing support for accelerating earnings

Global valuations are at median or above, but stocks remain compelling as interest rates normalize

The environment increasingly favors active management to generate alpha

Current analysis does not guarantee future results. As of June 30, 2014Source: AllianceBernstein


7.9%3.8%

0.1%

3.0%0.8%1.4%2.6%

2.4%4.5%

3.0%

6.6%4.1%5.2%

2.0%

12.2%5.8%7.1%

6.9%1.7%2.7%

6.0%

5.1%7.4%

6.1%

6.1%4.8%7.1%

3.2%

H1:2014 ReturnsAnnualized Returns

Since February 2009

Returns in US dollars

Strong Returns in Most Market Segments

2Q:2014 Returns

Past performance does not guarantee future results.As of June 30, 2014Global high yield, global corporates, and Japan and euro-area government bonds in hedged USD terms. All other non-US returns in unhedged USD terms. An investor cannot invest directly in an index and its performance does not reflect the performance of any AllianceBernstein portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio. *Europe, Australasia and the Far East. **Treasury Inflation-Protected Securities. †Global Real Estate Investment TrustsSource: Barclays, FactSet, FTSE, MSCI, S&P Dow Jones and AllianceBernstein

Japan

Global High Yield

US

Euro Area

Emerging-Market DebtGlobal Corporates

EAFE*

US Small-Cap

Emerging Markets

Equities

Credit

GovernmentBonds

CommoditiesAlternatives

Global REITs†TIPS**

Municipals

US Large-Cap

24.7%6.5%

4.7%

5.4%2.5%3.2%

5.9%

8.6%13.4%

18.4%

17.8%17.2%

22.8%25.1%


Low US Interest Rates Not Sustainable

Historical analysis and current forecasts do not guarantee future results.Left display through March 31, 2014; right display as of July 1, 2014*Eastern Europe, the Middle East and Africa (the forecast aggregate includes Hungary, Poland, Turkey, Russia and South Africa)Source: Bloomberg, Haver Analytics, US Bureau of Economic Analysis (BEA), US Federal Reserve Board and AllianceBernstein

US Yields Are Lower than Economic Growth Rates…

Nominal GDP vs. 5-Year Treasury Yield

…While the Pace of Growth Is Expected to Pick Up

AllianceBernstein World Economic Growth Forecast(Calendar Year Percentage Change)

–6

–3

0

3

6

9

12

83 86 89 92 95 98 01 04 07 10 13

Per

cent

5-YearTreasury

Yield

Nominal GDP

6.1%

3.2%

2.9%

2.4%

2.1%

2.0%

1.8%

1.7%

1.1%

6.1%

2.9%

3.5%

4.3%

2.2%

1.8%

2.6%

2.6%

1.7%

Asia ex Japan

United Kingdom

Global

United States

Canada

Japan

Latin America

EEMEA*

Euro Area20142015


–8

–6

–4

–2

0

2

4

6

83Q

:09

2Q:1

0

1Q:1

1

4Q:1

1

3Q:1

2

2Q:1

3

1Q:1

4

Ann

ualiz

ed Q

uarte

rly %

Cha

nge

Private Sector GDP

Public Sector GDP

Historical analysis and current forecasts do not guarantee future results. As of July 1, 2014. Right display reflects year-over-year annualized growth (sum of components may not equal total due to rounding).Source: BEA, Haver Analytics, US Bureau of Labor Statistics (BLS), US Federal Reserve Board and AllianceBernstein

US: Economic Fundamentals Are Improving

Strong Private Sector, Improving Public Outlook

2014

For

ecas

t

Consumption, Housing Should Be Key Drivers

Contributions to GDP (Percent)

1.6

0.6

0.10.10.0

0.0

1.0

2.0

1

Consumption

Net Exports

Investments

Housing

2.4

Government and Inventories

AllianceBernstein Forecast

2014


4

7

10

13

0

30

60

90

80 84 88 92 96 00 04 08 12

USD

Trillions†U

SD T

rillio

ns

US: A Solid Foundation for Consumption

Current analysis does not guarantee future results.Left display through May 31, 2014; right display through March 31, 2014*Directly held equities do not include equities held through life insurance companies, pension plans, federal government retirement funds or mutual funds. **Other includes pension fund reserves, equities in noncorporate business, miscellaneous and security credit. †Base-year 2009 chain-weighted seasonally adjusted annualized rate (SAAR).Source: BLS, Haver Analytics, National Association of Realtors, US Federal Reserve Board and AllianceBernstein

1Q:2014: $1.5 Trillion Directly Held Equities:

$300 Billion* Household Real Estate:

$758 Billion Indirectly Held Equities:

$183 Billion Other: $318 Billion**

The “Wealth Effect” Cuts Across Income Levels

US Real Disposable

Personal Income

US HouseholdNet Worth

(Left Scale)

The Jobs Picture Is Improving

4

6

8

10

12

14

16

18

03 04 05 06 07 08 09 10 11 12 13 14

Per

cent

Unemployment Rate

Underemployment Rate


US: Sentiment Has Improved Across Sectors

Current analysis does not guarantee future results. Left display through June 30, 2014; middle and right displays through May 31, 2014*University of Michigan Consumer Sentiment Index**National Association of Home Builders (NAHB) †Purchasing Managers’ IndexSource: BLS, Haver Analytics, Institute for Supply Management, University of Michigan and AllianceBernstein

Consumer Sentiment* Manufacturing PMI†

0

10

20

30

40

50

60

70

80

01 03 05 07 09 11 13

Inde

x

30

35

40

45

50

55

60

65

00 02 04 06 08 10 12 14

Inde

x

50

70

90

110

00 02 04 06 08 10 12 14

Inde

x

Housing SurveysHousing Market Index**

(Expectations for Sales of New Homes—Diffusion Index)


Europe: Will the UK Be the First to Tighten?

Past performance and current forecasts do not guarantee future results. Left display as of March 31, 2014; right display as of May 31, 2014*UK Labour Force Survey Unemployment Rate Aged 16 and Over (Seasonally Adjusted, Percent)Source: European Commission, Haver Analytics and AllianceBernstein

Euro Area: Inflation Still LowUK: Watching the Data

4

6

8

10

–8

–5

–2

1

4

1Q:0

54Q

:05

3Q:0

62Q

:07

1Q:0

84Q

:08

3Q:0

92Q

:10

1Q:1

14Q

:11

3Q:1

22Q

:13

1Q:1

4

Year

-ove

r-Ye

ar %

Cha

nge

Real GDP (Left Scale)Unemployment Rate (SA, %)*

–1

0

1

2

3

4

5

00 02 04 06 08 10 12 14Y

ear-o

ver-Y

ear %

Cha

nge

Euro-Area Consumer Price Index Inflation

2014Forecast


Japan: Continued Improvement Expected

Current analysis does not guarantee future results. Through May 31, 2014Source: Bloomberg, CEIC Data, Haver Analytics and Thomson Reuters Datastream

Economy Watchers Survey Rebounds Labor Market Tightens Further; Skill Shortages Emerge

10

20

30

40

50

60

10 11 12 13 14

Inde

x

Great EastJapan Earthquake

3.0

3.5

4.0

4.5

5.0

5.5

6.0

05 06 07 08 09 10 11 12 13 14P

erce

nt

Actual

Forecast

Unemployment RateEconomy Watchers Survey:

Headline and Expectation Indices

Actual Historical Average


China: Assessing Potential Growth Trajectories

Historical analysis and current forecasts do not guarantee future results. Left display actual data through March 31, 2014; dotted lines represent AllianceBernstein forecasts.Source: CEIC Data and AllianceBernstein

3

6

9

12

15

06 07 08 09 10 11 12 13 14

Year

-ove

r-Ye

ar %

Cha

nge

Reflation/Growth

Reform

Base Case

Reflation/GrowthGrowth likely to surprise on the upside if

credit-fueled investment cycle resumes

Base CaseGrowth impacted by a tighter policy designed

to rein in credit growth and rebalance the economy

Financial reforms, including more market-based interest rates and currency internationalization

Intensified anti-corruption campaign

Tighter policy bias with select defaults permitted

Targeted or selective stimulus that should support rebalancing while containing leverage

ReformGrowth likely to drag if reform push

intensifies

Real GDP Growth


Factors Keeping US Treasury Yields Low Today

Current analysis does not guarantee future results. Left display as of December 31, 2013. Middle display as of June 30, 2014. Right display: funded ratio is for S&P 500 companies through December 31, 2013; flows are through March 31, 2014.Source: Bank of America Merrill Lynch Global Research, Haver Analytics, Standard & Poor’s (S&P), US Federal Reserve Board and AllianceBernstein

Pension Buyers Are Active

10-Year Ratings

Australia 3.54 AAA

US 2.53 AAA

Canada 2.23 AAA

Germany 1.24 AAA

UK 2.67 AA+

France 1.70 AA+

New Zealand 4.42 AA

Japan 0.56 AA–

Spain 2.66 BBB

Italy 2.85 BBB

Portugal 3.64 BB

Relatively Attractive US Yields

70

80

90

100

110

–10

0

10

20

30

40

50

60

70

06 07 08 09 10 11 12 13 14

Strong Demand from Major Buyers

Foreign and Fed Holdings of Treasuries as Percent of Total Outstanding Debt

0

10

20

30

40

50

60

70

80 84 88 92 96 00 04 08 12

Foreign Fed

Per

cent

Institutional Long-Duration Flows (Left Scale)

─ Funded Ratio

Percent

USD

Billi

ons


US Rates: We Project a Long Path to “Normal”

Current analysis and forecasts do not guarantee future results.As of June 30, 2014An investor cannot invest directly in an index and its performance does not reflect the performance of any AllianceBernstein portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.*Yield curves projected based on historical analysis of Treasury yield curves and on applying the slope to the fed funds rate projections as implied by the forward market.**Basis point (b.p.): a unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.Source: Barclays, Bloomberg and AllianceBernstein

June 30, 2003–June 30, 2006

Change inYields

Annualized Return

Fed Funds +425 b.p.** —

10-Year US Treasury +161 b.p. –0.09%

10-Year Municipal AAA +91 b.p. +1.91%

US Aggregate +223 b.p. +2.05%

Corporates +201 b.p. +1.96%

High Yield –25 b.p. +8.63%

Municipal High Yield –213 b.p. +10.50%

The 20032006 Interest-Rate Cycle

0

2

4

6

Per

cent

30Yrs.

10Yrs.

2Yrs.

3Mos.

June 30, 2014June 2015

June 2017June 2019

Market-Implied Fed Funds Rates*


Fixed Income: Balance Rates and Credit

Current analysis does not guarantee future results. For illustrative purposes. As of June 30, 2014Source: AllianceBernstein

Rates Credit

Position along the yield curve: take advantage of roll

Globalize

Use municipal bonds if taxes are a consideration

Avoid crowded trades

Loans

CCC-rated bonds

Alternative strategies: understand your exposure

Consider municipal credit


Hedged Global Bonds Diversify Rate Exposure…Without Currency Risk

Country Returns Vary Across Cycles

1.0

–0.4

0.1

0.7 0.7

S&P 500 GlobalTreasuryHedged

GlobalTreasury

Unhedged

EMCurrency

DevelopedCurrency

12.1 13.6

2.5 4.610.5

6.9

S&P 500 MSCIWorld

GlobalTreasuryHedged

GlobalTreasury

Unhedged

EMCurrency

DevelopedCurrency

Three-Year Correlation to Equity**

Three-Year Volatility (Percent)**

EM Currency Has Not Provided Diversification

Past performance does not guarantee future results. Please refer to slide 26 for important risk information related to investing in emerging markets and foreign currencies. These returns are for illustrative purposes only and do not reflect the performance of any fund. Please see end of presentation for index information.As of June 30, 2014*Returns represented by respective Barclays government bond indices within each country. An investor cannot invest directly in an index and its performance does not reflect the performance of any AllianceBernstein portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.**Correlation is a statistical measure of how two values move in relation to each other. EM currency represented by WisdomTree Emerging Currency Strategy Fund (CEW); developed currency represented by PowerShares DB US Dollar Index Bullish Fund (UUP)Source: Barclays, Bloomberg, Invesco, MSCI, S&P Dow Jones, WisdomTree Investments and AllianceBernstein

Global Bond Returns Hedged to USD (Percent)*

BestPerformer

Worst Performer

Gap between best and worst

2010 2011 2012 2013 1H:2014

UK7.2

UK16.1

Euro Area11.2

Euro Area2.5

Euro Area6.9

US5.9

US9.8

UK2.4

Japan2.3

Australia3.6

Canada5.6

Australia8.9

Japan2.2

Australia–2.4

Canada3.4

Japan2.9

Canada8.3

US2.0

US–2.8

UK3.3

Euro Area1.0

Japan2.6

Australia1.4

Canada–3.1

US2.7

Australia0.3

Euro Area2.6

Canada1.4

UK–4.4

Japan1.7

6.9 13.5 9.8 6.8 5.2


Crowded Trades: The Bank Loan Story

Surging Covenant-Light Issuance

Current analysis does not guarantee future results. Left display through May 31, 2014; middle display as of June 11, 2014; right display as of June 19, 2014*Refinancing is on a cumulative basis as a percentage of loans outstanding on May 31, 2014.Source: Barclays, Credit Suisse, J.P. Morgan and AllianceBernstein

Heavy Refinancing Activity

0

20

40

60

80

04 05 06 07 08 09 10 11 12 13

Per

cent

14

Outperformance of High-Yield Bonds vs. Loans (Percent)

0

20

40

60

0

3

6

9

06 07 08 09 10 11 12 13 14

Annual (Left Scale)Cumulative

Refinancing*(Left Scale)

Spreads450

500

550

0

20

40

60

Sep

12

Dec

12

Mar

13

Jun

13S

ep 1

3D

ec 1

3M

ar 1

4

Basis P

oints

Per

cent


0

200

400

600

800

1,000

BB B CCC

Opt

ion-

Adj

uste

d S

prea

d (b

.p.)

Not the Time to Reach for Yield in Taxable Bonds

Historical analysis does not guarantee future results.Left display as of June 30, 2014. Precrisis average is for September 30, 1995–December 31, 2007. Middle display through June 30, 2014; right display as of December 31, 2013A credit rating is a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is highest (best) and D is lowest (worst). Ratings are subject to change. Investment-grade securities are those rated BBB and above.Source: Barclays, Moody’s Investors Services and AllianceBernstein

CCC-Rated Bond Discount Is Gone

11

24

46

76

BB B CCC CC&C

Lower-Rated Defaults Are Substantial

25

50

75

100

125

90 94 98 02 06 10 14

Pric

e as

Per

cent

of P

ar

Par

Lower-Rated Bond Spreads Are Tight

Industrials

Five-Year Cumulative Default Rates1983–2013 (Percent)

Current

Precrisis Average


Nontraditional Funds: Risk Balance Is Critical

Historical analysis does not guarantee future results.As of December 31, 2013*Correlation from February 2011 through December 2013. Includes only largest 25 funds based on asset size in Morningstar nontraditional bond category**Returns are hedged.Source: Barclays, Morningstar and AllianceBernstein

Investors Seeking Core Alternatives Often Get More Credit Exposure

Nontraditional Bond Funds Correlations to Treasuries and High Yield*

–40 –20 0 20 40 60

20002001200220032004200520062007200820092010201120122013

Global High Yield Global Treasury

Annual Global High Yield/Treasury Returns**

Balancing Rate Risk and Credit Risk Has Helped

2.11.5

2.5

Treasuries 50/50

5-Year Risk-Adjusted Returns(Sharpe Ratio)

Returns (Percent) 50/50 Blend

–0.5

–0.3

0.0

0.3

0.5

0.8

1.0

1.3

–1.0 –0.8 –0.5 –0.3 0.0 0.3 0.5 0.8 1.0

Cor

rela

tion

to U

S H

igh

Yiel

d

Correlation to US Treasuries

Barclays US Aggregate

Barclays Corporate US High-Yield Issuer-Capped

S&P 500

Low Correlations

HighCorrelations

Hig

hC

orre

latio

nsLo

w C

orre

latio

ns

Bank Loans


Historical analysis does not guarantee future results. Left display as of June 27, 2014. Nominal yields. A credit rating is a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is highest (best) and D is lowest (worst). Ratings are subject to change. Investment-grade securities are those rated BBB and above. Barclays long indices are used for each respective rating category. Right display through June 30, 2014. Credit spreads shown are for 10-year municipal securities. *The long-term average was measured from January 1, 1987 through June 30, 2014.Source: Barclays, Delphis Hanover, J.P. Morgan, Municipal Market Data and AllianceBernstein

Municipals: Attractive Yields and Credit Potential

2.5

4.0 3.8

6.2

Treasury Taxable-EquivalentYield AAA

Muni

BBBCorp

Taxable-EquivalentYield BBB

Muni

10-Year Yields (Percent)

Muni Yields Are Attractive vs. Taxable Equivalents

0

1

2

3

4

87 90 93 96 99 02 05 08 11 14

Credit Spreads: An Opportunity to Add Value

Yield Advantage of BBB-Rated Debt over AAA-Rated Debt (Percent)

1.23%Jun 30, 2014

0.35% Jun 30, 2007

Average: 1.02%*

Apr 1, 20093.54%

Today’s advantage is about 1.2 times the long-term average


Municipals: Strategies in a Rising-Rate Environment

0.5

1.62.5 2.7 2.9

3.4 3.8 4.0

0.3

1.7

1.7 1.6 1.20.8 0.4 0.0

0

1

2

3

4

5

1 2 3 4 5 6 7 8 9 10Maturity (Years)

Fed FundsChange

Historical analysis is not guaranteee indicative of future results.Left display through May 30, 2014; right display as of March 31, 2014*Five-year maturities. **After-tax returns. †Roll is the natural price gain that a bond experiences as it ages, assuming interest rates are unchanged. Source: Barclays, Bloomberg, Delphis Hanover, J.P. Morgan, Municipal Market Data, Thomson Reuters, US Federal Reserve, The Yield Book and AllianceBernstein

–1.6

–0.2

–3.7

–0.7

0.0

4.2

2.6

0.7 0.4

2.2

7.1

5.5

1.3 0.9

3.6

Treasury** AAA Municipal BBB Municipal

3.3 3.9 3.0 1.8 4.3

Municipals Have Fared Well When Rates Rise

Rol

l Plu

s Yi

eld

(Per

cent

)A Municipal Roll†A Municipal Yield

Municipals: Opportunities Across the Curve

Annualized Returns When Fed Raises Rates* (Percent)

Apr 83–Aug 84

Feb 94–Feb 95

May 99–May 00

May 04–Jun 06

Nov 86–Feb 89

2 5 8 9 10 15 20 30


S&P 500 ReturnsAttribution by Source

26.5 15.1

2.116.0

32.4

21.9

6.8

–40

–30

–20

–10

0

10

20

30

40

2009 2010 2011 2012 2013 2014 2015

Per

cent

Earnings Growth Valuation Expansion Dividends

2Q:09–4Q:13

5-Year Expected Return*

We Expect Attractive but Muted Equity Returns

Past performance and current forecasts do not guarantee future results.As of May 31, 2014An investor cannot invest directly in an index and its performance does not reflect the performance of any AllianceBernstein portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.*Five-year annualized expected return for US equities uses AllianceBernstein proprietary Capital Markets Engine forecasts.Source: Bloomberg, Cornerstone Macro, S&P Dow Jones and AllianceBernstein

Total Return


2.73.9 4.2

2.3

3.64.73.5

1.3

2.4

8.5 8.8

11.3

0

4

8

12

2013 2014E 2015E

Solid Earnings Growth Should Continue

Historical analysis and current forecasts do not guarantee future results.Left display as of June 30, 2014; right display as of June 16, 2014An investor cannot invest directly in an index and its performance does not reflect the performance of any AllianceBernstein portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio. *Trailing 12-month EPS; next 12 months consensus EPS growth is the next four quarters consensus EPS versus the current trailing 12 months EPS.**Drivers of S&P 500 EPS growth based on bottom-up sell-side estimates and AllianceBernstein analysisSource: Bloomberg, MSCI, S&P Compustat, S&P Dow Jones and AllianceBernstein

Higher Sales Growth Should Drive Earnings

FinancialsMargin GrowthSales Growth**

Earnings per Share (EPS)* Have Continued to Rise

Per

cent

0

40

80

120

160

95 00 05 10 15

US

D

Next 12 Months—Consensus Estimates:

S&P 500: +8%MSCI EAFE: +27%

MSCIEAFE

S&P 500

E


Valuations Have Risen but Stocks Remain Attractive as Rates Normalize

Past performance does not guarantee future results.Left display as of May 31, 2014; right display as of June 30, 2014An investor cannot invest directly in an index and its performance does not reflect the performance of any AllianceBernstein portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.*Percentile rankings reflect equity valuations since 1970**Global developed and emerging-market stocks†Total percent change in nominal 10-year US Treasury bond yield‡Average annualized MSCI World returns from 1970 through December 31, 2013: 9.3%Source: Bloomberg, Center for Research in Security Prices (CRSP), MSCI, S&P Dow Jones and AllianceBernstein

48

77

55 49

Global US DevelopedInternational

Emerging Markets

Equity Valuations Are at or Above Median:Price-to-Forward-Earnings Percentile Ranking Since 1970*

Expensive

Inexpensive

Equities Have Held Up Well When Rates Have Risen:Annualized Global Stock Returns

21.3%31.7%31.2%

14.8%18.7%

30.1%10.3%10.1%

3.0%–2.8%

21.9%41.5%

20.3%9.9%

2.2%

Jul 12–June 14Aug 10–Mar 11Dec 08–Dec 09Sep 02–Jun 06Oct 01–Mar 02Sep 98–Jan 00Nov 96–Mar 97Dec 95–Aug 96Sep 93–Nov 94

Jul 89–Apr 90Feb 88–Feb 89Aug 86–Sep 87Oct 82–Jun 84Dec 76–Oct 81Jan 71–Sep 75

Rising-RateCycles

Change inTreasury Yields

(Percent)†

2.47.83.12.71.11.22.51.40.92.21.21.51.61.01.1

AverageRising-RateStock

Return= 17.6%

Stocks OutperformedLong-Term Average

Stocks Lagged Long-Term Average

Average Long-TermReturn for Market ‡

-5

0

5

10

88 90 92 94 96 98 00 02 04 06 08 10 12 14

Stocks Are Attractive vs. Bonds GloballyForward Earnings Yield Minus Global Bond Yield**

Per

cent

Average


Corporate Fundamentals Are Strong

Historical analysis and current forecasts do not guarantee future results.As of May 31, 2014An investor cannot invest directly in an index and its performance does not reflect the performance of any AllianceBernstein portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.*Net debt/equity is total debt less cash and cash equivalents. **Return on equity and free-cash-flow yield are based on data from the AllianceBernstein US large-cap universe, capitalization weighted, excluding financials. Average net profit margins were 6.3% since 1952.Source: Bloomberg, CRSP, Deutsche Bank, Empirical Research Partners, MSCI, S&P Compustat, S&P Dow Jones and AllianceBernstein

Earnings and Balance Sheet Quality Are Higher TodayCash Levels Are High and Debt Remains Low

0

3

6

9

12

15

0

40

80

120

160

200

82 88 94 00 06 12

Per

cent

Percent

Cash/Assets

Mar 24,2000

Oct 31,2007

May 31,2014

Cash Flow per Share $87 $75 $201

Net Debt/Equity* 171% 156% 41%

Return on Equity** 20% 22% 23%

Free-Cash-Flow Yield** 1.8% 3.7% 3.5%

Net Profit Margins 6.7% 7.6% 9.1%

S&P 500 Index S&P 500 Index

Net Debt/Shareholders’ Equity (Left Scale)


Now May Be the Time for Active Management

Historical analysis does not guarantee future results.Left display through June 30, 2014; right display through December 31, 2013*Reflects the percentile ranking of the S&P 500 versus the AllianceBernstein US large-cap core universe. Data for rolling three-year periods. Figures are gross of fees on both active managers and index returns. Source: eVestment, MSCI, S&P Dow Jones and AllianceBernstein

Intra-Market Correlations Have Declined Active Management May Be Poised to Rebound*

0

10

20

30

40

50

60

88 90 92 94 96 98 00 02 04 06 08 10 12 14

Per

cent

Pre–Financial Crisis

Average

Post–Financial

Crisis Average

0

25

50

75

100

88 93 98 03 08 13S&

P 50

0 R

ank

Passive Outperforming

Post–Financial Crisis Median

Active Outperforming


Consistent Profits and Dividend Growth Offer a Compelling Opportunity

Historical analysis does not guarantee future results.As of March 31, 2014*Refers to the current percentile for the top quintile of each factor in the AllianceBernstein US large-cap universe. Valuation data from 1990 to 1Q:2014. **Represents large-cap stocks’ highest quintiles of dividend growth and dividend yield, and the ratio of their trailing P/Es Source: CRSP, FactSet, MSCI, Russell Investments, S&P Dow Jones, company reports and AllianceBernstein

0.5

1.0

1.5

2.0

2.5

3.0

52 62 72 82 92 02 12

Rat

io (×

)

Dividend Growth Cheaper than Dividend Yield**

Average

Dividend Growth Is Cheap

Dividend Yield Is Cheap

Consistent Profitability, Higher Growth Attractively Priced*

16 14 16

PersistentReturn on

Assets

Long-TermForecastGrowth

5-YearHistoricalGrowth

Expensive

Inexpensive

Price/Book Percentile

March 31, 2014


Despite Recent Volatility, Opportunity Remains in Small-and Mid-Cap Stocks

Historical and current analysis do not guarantee future results.Left and middle displays as of June 30, 2014; right display as of May 31, 2014An investor cannot invest directly in an index and its performance does not reflect the performance of any AllianceBernstein portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.*Represents subsectors with extreme outperformance including software and services**Percentile rank relative to history of the ratio of the median stock in the most expensive quintile (Q5) versus the cheapest quintile (Q1), as sorted by price/book, for the Russell 2500 Value Index; January 1970–May 2014.Source: FactSet, Russell Investments, S&P Dow Jones, company reports and AllianceBernstein

91

Valuation Rank**

Wider

Narrower

Wide Valuation Dispersion Creates Opportunity for SMID Value (Percentile)

11.1

52.848.247.9

93.3100.0

Current YearEstimated

Sales Growth

QuarterlyPositiveSales

Surprise

YTD PositiveSales

EstimateRevision

Russell 2000 GrowthSmall-Cap Growth High-Growth Cohort*

0.8 0.6

–3.8

–10.2

2.34.8

7.7

10.5

DJIA S&P 500 R2000V R2000G

Feb 28–May 15, 2014May 15–Jun 30, 2014

US Equity Returns: Feb 28–Jun 30, 2014

Strong Fundamental Performers Create Opportunity for SMID Growth (Percent)Recent Performance (Percent)

AllianceBernstein.com CMO 3Q 2014 | 26AllianceBernstein.com

A Word About Risk

The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor's personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AllianceBernstein L.P. or its affiliates.

Important Risk Information Related to Investing in Equity and Short Strategies

All investments involve risk. Equity securities may rise and decline in value due to both real and perceived market and economic factors as well as general industry conditions.

A short strategy may not always be able to close out a short position on favorable terms. Short sales involve the risk of loss by subsequently buying a security at a higher price than the price at which it sold the security short. The amount of such loss is theoretically unlimited (since it is limited only by the increase in value of the security sold short). In contrast, the risk of loss from a long position is limited to the investment in the long position, since its value cannot fall below zero. Short selling is a form of leverage. To mitigate leverage risk, a strategy will always hold liquid assets (including its long positions) at least equal to its short position exposure, marked to market daily.

Important Risk Information Related to Investing in Emerging Markets and Foreign Currencies

Investing in emerging-market debt poses risks, including those generally associated with fixed-income investments. Fixed-income securities may lose value due to market fluctuations or changes in interest rates. Longer-maturity bonds are more vulnerable to rising interest rates. A bond issuer’s credit rating may be lowered due to deteriorating financial condition; this may result in losses and potentially default, or failure to meet payment obligations. The default probability is higher in bonds with lower, noninvestment-grade ratings (commonly known as “junk bonds”).

There are other potential risks when investing in emerging-market debt. Non-US securities may be more volatile because of the associated political, regulatory, market and economic uncertainties; these risks can be magnified in emerging-market securities. Emerging-market bonds may also be exposed to fluctuating currency values. If a bond’s currency weakens against the US dollar, this can negatively affect its value when translated back into US-dollar terms.

Bond Ratings Definition

A measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition, and not based on the financial condition of the fund itself. AAA is highest (best) and D is lowest (worst). Ratings are subject to change. Investment-grade securities are those rated BBB and above. If applicable, the Pre-Refunded category includes bonds which are secured by US government securities and therefore are deemed high-quality investment grade by the advisor.

CMO 3Q 2014 | 26


Index Definitions

Barclays EM USD Aggregate Index: A flagship hard-currency emerging-market-debt benchmark that includes USD-denominated debt from sovereign, quasi-sovereign and corporate EM issuers. The index is broad based in its coverage by sector and by country, and reflects the evolution of EM benchmarking from traditional sovereign bond indices to aggregate-style benchmarks that are more representative of the EM investment choice set. (Represents emerging-market debt on slide 2.)

Barclays Global Aggregate–Corporate Bond Index: Tracks the performance of investment-grade corporate bonds publicly issued in the global market found in the Global Aggregate. (Represents global corporates on slide 2.)

Barclays Global High Yield Index: Provides a broad-based measure of the global high-yield fixed-income markets. It represents the union of the US High Yield, Pan-European High Yield, US Emerging Markets High Yield, CMBS High Yield and Pan-European Emerging Markets High Yield Indices. (Represents global high yield on slide 2.)

Barclays Global Treasury: Australia Bond Index: Includes fixed-rate, local-currency sovereign debt that makes up the Australian Treasury sector of the Global Aggregate Index.

Barclays Global Treasury Bond Index: Tracks fixed-rate, local-currency sovereign debt of investment-grade countries. The index represents the Treasury sector of the Global Aggregate Index and currently contains issues from 37 countries denominated in 23 currencies. The three major components of this index are the US Treasury Index, the Pan-European Treasury Index and the Asian-Pacific Treasury Index, in addition to Canadian, Chilean, Mexican and South African government bonds.

Barclays Global Treasury: Canada Bond Index: Includes fixed-rate, local-currency sovereign debt that makes up the Canadian Treasury sector of the Global Aggregate Index.

Barclays Global Treasury: Euro Bond Index: Includes fixed-rate, local-currency sovereign debt that makes up the Euro Area Treasury sector of the Global Aggregate Index. (Represents euro-area government bonds on slide 2.)

Barclays Global Treasury: Japan Bond Index: Includes fixed-rate, local-currency sovereign debt that makes up the Japanese Treasury sector of the Global Aggregate Index. (Represents Japan government bonds on slide 2.)

Barclays Global Treasury: United Kingdom Bond Index: Includes fixed-rate, local-currency sovereign debt that makes up the UK Treasury sector of the Global Aggregate Index.

Barclays Municipal Bond Index: A rules-based, market value–weighted index engineered for the long-term tax-exempt bond market. (Represents municipals on slide 2.)

Barclays US Aggregate Bond Index: A broad-based benchmark that measures the investment-grade, US dollar–denominated, fixed-rate taxable bond market, including US Treasuries, government-related and corporate securities, mortgage-backed securities (MBSs [agency fixed-rate and hybrid ARM passthroughs]), asset-backed securities (ABSs) and commercial mortgage-backed securities (CMBSs).

Following are definitions of the indices referred to in this presentation. It is important to recognize that all indices are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. Investors cannot invest directly in an index, and its performance does not reflect the performance of any AllianceBernstein mutual fund.


Index Definitions (continued)

Barclays US Corporate Bond Index: A broad-based benchmark that measures the investment-grade, USD-denominated, fixed-rate, taxable corporate bond market. It includes USD-denominated securities publicly issued by US and non-US industrial, utility and financial issuers that meet specified maturity, liquidity and quality requirements.

Barclays US Corporate High-Yield 2% Issuer Capped Bond Index: A component of the US Corporate High-Yield Bond Index, which covers the universe of fixed-rate, noninvestment-grade corporate debt of issuers in developed-market countries. It is not market-capitalization weighted—each issuer is capped at 2% of the index.

Barclays US High-Yield Loan Index: An unmanaged index that provides broad and comprehensive total return metrics of the universe of USD-denominated syndicated term loans.

Barclays US Treasury Inflation-Protected Securities (TIPS) Index: Consists of inflation-protected securities issued by the US Treasury. (Represents TIPS on slide 2.)

Barclays US Treasury Index: Includes fixed-rate, local-currency sovereign debt that makes up the US Treasury sector of the Global Aggregate Index. (Represents US government bonds on slide 2.)

Dow Jones-UBS Commodities Index Total Return: Consists of exchange-traded futures on 19 physical commodities that are weighted to account for economic significance and market liquidity. (Represents commodities on slide 2.)

FTSE EPRA/NAREIT Global Real Estate Index: Designed to represent general trends in eligible real estate equities worldwide. (Represents global REITs on slide 2.)

MSCI EAFE Index: A free float–adjusted, market capitalization–weighted index designed to measure developed-market equity performance, excluding the US and Canada. It consists of 22 developed-market country indices. (Represents EAFE on slide 2.)

MSCI Emerging Markets Index: A free float–adjusted, market capitalization–weighted index designed to measure equity-market performance in the global emerging markets. It consists of 21 emerging-market country indices. (Represents Emerging Markets on slide 2.)

MSCI World Index: A market capitalization–weighted index that measures the performance of stock markets in 24 countries.

PowerShares DB US Dollar Index Bullish Fund (UUP): Designed for investors who want a cost-effective and convenient way to track the value of the US dollar relative to a basket of the six major world currencies—the euro, yen, British pound, Canadian dollar, Swedish krona and Swiss franc (collectively, the “Basket Currencies”).

Russell 2000 Index: Measures the performance of the small-cap segment of the US equity universe. It is a subset of the Russell 3000 Index representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. (Represents US small-cap on slide 2.)

S&P 500 Index: Includes a representative sample of 500 leading companies in leading industries of the US economy. (Represents US large-cap on slide 2.)

WisdomTree Emerging Currency Strategy Fund (CEW): Includes the following constituent currencies: Mexican peso, Brazilian real, Chilean peso, South African rand, Polish zloty, Russian ruble, Turkish new lira, Chinese yuan, South Korean won, Indonesian rupiah, Indian rupee and Malaysian ringgit.

MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI.

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