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.

Investment Products Offered

• Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed

4Q:2016 CAPITAL MARKETS OUTLOOK

1|CMO 4Q 2016

Current assessment does not guarantee future results.As of September 30, 2016Source: AB

The Big Picture

Global economic growth remains modest; more monetary easing and potential for fiscal stimulus

Developed-market growth is mixed; emerging world faster than developed, but with challenges

After the Beta Trade theme continues to play out, with muted returns and spiking volatility

Key recent market drivers include political risks, China, oil and global growth concerns

Investors should embrace active management and incorporate downside protection

Fixed Income: consider credit—selectively; don’t abandon global rates; municipals remain attractive

Equities: capture growth through high-conviction, active opportunities; small-cap valuations attractive

Alternatives: diversify across strategies; integrate downside protection; alpha opportunities increasing

2|CMO 4Q 2016

1.24.3

0.1

7.46.2

5.14.0

6.412.8

15.1

16.01.7

11.57.8

Past performance does not guarantee future results.As of September 30, 2016Global corporates, 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 AB portfolio. The unmanaged index does not reflect the fees and expenses associated with the active management of a portfolio.*Europe, Australasia and the Far East†Returns reflect Morningstar US open-end fund category averages.Source: Bloomberg Barclays, Morningstar, MSCI, Standard & Poor’s (S&P) and AB

Returns in US Dollars

0.92.12.3

1.1–1.6

–0.3–0.3

0.53.1

5.6

9.06.4

9.13.9

Improved Returns for Risk Assets

Equities

Government Bonds

Credit

Alternatives†

Jan–Sep 2016 Returns (Percent)3Q:2016 Returns (Percent)

Japan

US High Yield

US

Euro Area

Emerging-Market Debt

Long/Short Equity

MultialternativeNontraditional Bond

Global Corporate

EAFE*

US Large-Cap

Emerging Markets

US Small-Cap

Municipals

3|CMO 4Q 2016

Market Levels Haven’t Changed MuchHigh-Yield Option-Adjusted Spreads and Level of S&P 500 Index

1,800

1,900

2,000

2,100

2,200

2,300

4

5

6

7

8

9

Mar 15 Sep 15 Mar 16 Sep 16

Perc

ent

Past performance and forecasts do not guarantee future results.As of September 30, 2016Beta trade calculated from October 1, 2010, to February 28, 2015. After the Beta Trade is from March 1, 2015, to September 30, 2016. 60/40 is 60% S&P 500 and 40% Bloomberg Barclays US Aggregate Bond. High yield spreads represented by Bloomberg Barclays US High-Yield Bond average option-adjusted spreadsSource: Bloomberg Barclays, S&P and AB

Portfolio Forecasts Are LowerExpected Returns for a 60/40 Blend

After the Beta Trade: Market Returns Challenged

Equity Returns MutedAnnualized Returns of the S&P 500 Index and a 60/40 Portfolio (Percent)

Bonds40%Stocks

60%

Expected Returns 4%–5%

Standard Deviation

Inflation and Taxes ??

9.1

17.3

4.1

8.6

11.8

3.9

20 Years Priorto the Beta

Trade

Beta Trade After the BetaTrade

S&P 500 60/40

HY Spreads(Left Scale)

S&P Level

4|CMO 4Q 2016

Higher Volatility Increases Security DispersionMonthly Dispersion† vs. Level of VIX (Percent)

Volatility Surges Have IncreasedS&P 500 10-Day Volatility (Percent)

Past performance and current forecasts do not guarantee future results.Left display through September 30, 2016; right display as of May 2016*Volatility jumps defined as a surge in realized volatility of the S&P 500 from below 10 to above 20 within six weeks†Dispersion is cross-sectional standard deviation of monthly returns.‡Median monthly return of the S&P 500Source: Bloomberg Barclays, Chicago Board Options Exchange, S&P and AB

After the Beta Trade: Volatility and Dispersion Higher

0

5

10

15

20

25

30

35

40

45

2013 2014 2015 2016

Five Volatility Jumps Since 2014 = Total

Jumps in Preceding 20 Years*

–0.4%

–1.6%

1.4%

2.3%

MedianMonthly Return‡

Feb 1990–Sep 2010 Oct 2010–Jun 2015 Jul 2015–May 2016

0

20

40

60

80

0 20 40 60

Mon

thly

Dis

pers

ion

Previous Month-End VIX

% Months Dispersion < 20 2.5% 38.6% 0.0%

5|CMO 4Q 2016

Historical analysis and current forecasts do not guarantee future results. Left display: policy rates for emerging, global and developed markets as of December 31, 2015; estimates. Country rates are target policy rates as of March 31, 2016. Middle display through June 30, 2016; right display through September 30, 2016*G4 is a weighted average of the US, euro area, Japan and the UK. Historical data are IMF estimates of the change in the cyclically adjusted primary budget balance. 2016 and 2017 are AB estimates.Source: Haver Analytics, International Monetary Fund and AB

Monetary Policy Remains Accommodative; Fiscal Stimulus on the Horizon

…and Quantitative Easing Continues…Change in Base Money Since January 2008 (Percent of 2008 GDP)

0

10

20

30

40

50

60

08 09 10 11 12 13 14 15 16

…but the Baton Will Likely Pass to Fiscal PolicyG4 Plus China Fiscal Tightening/Loosening (Percent of GDP)*

Stimulus

Contraction

Many Policy Rates Are Negative… Percent

4.9

2.0

0.3

–0.1–0.4 –0.5 –0.7 –0.8

Em

ergi

ng

Glo

bal

Dev

elop

ed

Japa

n

Eur

ope

Sw

eden

Den

mar

k

Sw

itzer

land

Euro-Area

Japan

UK

US

1.9

–0.1

–0.8 –0.8 –0.9

–0.4

0.1

0.40.6

09 10 11 12 13 14 15 16E 17E

6|CMO 4Q 2016

Historical and current analysis and forecasts do not guarantee future results.As of September 30, 2016GDP represents forecast year-over-year change in real terms. Inflation represents forecast year-over-year change in Consumer Price Index. Expectations for monetary policy are through end of 2016. FX change is currency spot return for last nine months vs. US dollar; FX forecast is AB economists’ return projections for next six months vs. US dollar.Source: Bloomberg and AB

Country/Region

GDP (%) Inflation (%)Expected

Policy Rate Path

Jan–Sep FX Change

(%) FX Forecast The Latest2016 2017 2016 2017

Global 2.6 2.7 2.1 2.3 — — — Solid global growth in 2016 and 2017—but uneven pace amid political uncertainties

Developed Countries 1.6 2.0 0.9 1.9 — — — While central banks are likely to remain accommodative, fiscal

stimulus is increasingly likely; tepid but positive growth and below-target but rising inflation

Emerging Countries 3.6 3.9 3.6 3.3 — — — Growth stabilizing at slower-than-historical pace; inflation mostly

benign; political risks declining in select countries

US 1.7 2.8 1.4 2.7 — — Positive US growth coming from the consumer sector; possible rate hike in 2016; rate increases likely to be low and slow

UK 1.9 1.1 1.7 2.1 –12.0 Political uncertainty could dominate headlines; accommodativemonetary policy should be supplemented by fiscal expansion

Euro Area 1.7 1.3 0.6 1.4 +3.4 Negative rates and QE purchases to continue amid persistently low-inflation expectations

Japan 0.7 1.4 –0.1 0.9 +18.6 Enhanced QQE to include yield targeting and negative rates; fiscal boost likely into 2017

China 6.4 5.6 2.2 1.7 –2.7 Growth likely to disappoint, but no hard landing as the transition from export- and investment-led growth proceeds slowly

Brazil –3.3 1.1 8.3 6.3 +21.6 Political climate improving and growth turning modestly positive; monetary easing likely as inflation stabilizes

Global Growth Projections

7|CMO 4Q 2016

Global Spotlights: Blander Brexit, Weaker China, Stronger EM

Historical analysis does not guarantee future results.Left display through August 31, 2016; middle display through May 31, 2016; right display through June 30, 2016Source: CEIC Data, General Administration of Customs, Haver Analytics, People’s Bank of China, Royal Institution of Chartered Surveyors and AB

Brexit Short-Term Impact OverhypedStandard Deviations from Long-Term Mean

China Outlook Stands on One LegRetail Sales Real Growth andInfrastructure Investment Growth(YoY Percent Change)

Positive Outlook in Emerging MarketsPurchasing Managers’ Index

–2.5

–2.0

–1.5

–1.0

–0.5

0.0

0.5

1.0

1.5

10 11 12 13 14 15 16

RICS House Price Expecations

Willingness to Make Major Purchases

–20

0

20

40

60

80

8

10

12

14

16

18

06 07 08 09 10 11 12 13 14 15 16

48

49

50

51

52

53

13 14 15 16Retail Sales (Left Scale)

Infrastructure Investment (Real)

Average

8|CMO 4Q 2016

Historical analysis does not guarantee future results.*Average hourly earnings annualized as of August 31, 2016. Household incomes as of December 31, 2015. Jobs gain is average of last three months ending August 31, 2016. Unemployment claims are a four-week moving average as of October 1, 2016. Small businesses with job openings as of August 31, 2016.Middle display as of December 31, 2015; right display through June 30, 2016Source: Bloomberg, Bureau of Economic Analysis, Haver Analytics, Markit, National Federation of Independent Businesses, national sources and AB

Consumer Spending Revised UpPercent Change in Real Personal Consumption Expenditures (QoQ)

Private Sector GDP Has Been SolidReal GDP Growth (Percent)

US Growth Debate: Jobs and Income vs. GDP and Productivity

Jobs and Income Data Are Strong

2.9 3.0

2.0

–1.1

2.7

2.2

2002–2007 2010–2015

Private Sector Public Sector Total GDP

Economic Indicator*

Latest Number Best Since…

Average HourlyEarnings +2.8%

Largest YoYchange since2007

Household Incomes +5.2%

Only YoY change greater than 4% ever

Average Monthly Jobs Gain 239,000

Long-term average of 132,000

Unemployment Initial Claims 235,500 Lowest since

1973

Small Businesses with Job Opening(s) 29% Highest since

2006

Small Businesses with Few or No Qualified Applicants

48%Tied for highest since financial crisis

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

10 11 12 13 14 15 16

Perc

ent

9|CMO 4Q 2016

Historical analysis does not guarantee future results. Left display through July 29, 2016; right display through May 31, 2016*The red line is an estimate up to July using actual data for Japan and assuming euro-area purchases continue at the same rate as the average of the last six months. Foreign bond purchases include government and nongovernment assets. Source: Bloomberg Barclays, Citigroup, Morgan Stanley and AB

US Rates: Negative Rates Abroad and Fed’s Slow Path to Normal Boost Foreign Demand for US Assets

Expectations of Slow Fed Hikes Make US Treasuries Appealing Market Expectations of Fed Funds Rate

Demand from Europe and Japan for Foreign Bonds Is StrongEuro-Area/Japan Foreign Bond Purchases*

0.0

0.4

0.8

1.2

1.6

2.0

1 2 3 5 7 10

Perc

ent

Years–400

–200

0

200

400

600

800

1,000

09 10 11 12 13 14 15 166-M

onth

Ann

ualiz

ed R

ollin

g Av

g. (U

SD B

illion

s)

10|CMO 4Q 2016

High Yield: Attractive vs. Passive Equities, but Selectivity Is Key

Yield Typically Good Indicator of Future ReturnsYield to Worst and Forward Return

–4

0

4

8

12

16

20

24

01 04 07 10 13 16

Perc

ent

Historical analysis does not guarantee future results.Left display as of September 30, 2016, except equity forecast as of June 30, 2016; middle display as of October 3, 2016; right display as of June 30, 2016High yield is represented by Bloomberg Barclays Global Corporate High Yield (USD Hedged). An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect the fees and expenses associated with the active management of a portfolio.Source: Bloomberg Barclays, Credit Suisse, J.P. Morgan, Morningstar, S&P Capital IQ and AB

Five-Year ForwardAnnualized Return

Leverage Has Risen, but Less So Outside Commodity Sectors

3.5

3.7

3.9

4.1

4.3

4.5

4.7

4.9

5.1

5.3

1Q:0

83Q

:08

1Q:0

93Q

:09

1Q:1

03Q

:10

1Q:1

13Q

:11

1Q:1

23Q

:12

1Q:1

33Q

:13

1Q:1

43Q

:14

1Q:1

53Q

:15

1Q:1

6

LTM

Deb

t/EBI

TDA

(×)

Leverage Leverage ex Commodities

High Yield Spans a Wide Range Today (Percent)

Yield to Worst

US Equity Five-Year Forecast:

5.7%

Yield to Worst: 6.17% 0

2

4

6

8

10

12

14

<–5

.0–4

.5–3

.5–2

.5–1

.5–0

.5+0

.5+1

.5+2

.5+3

.5+4

.5>

5.0

Yield to Worst (Percent)

Be Selective

Here

Inde

x Av

erag

e

LowerYields,Fewer

Problems

11|CMO 4Q 2016

High Yield: Supported by Strong Demand and Reduced Supply

Past performance does not guarantee future results.Left display through June 30, 2016; middle display as of August 31, 2016; right display as of September 30, 2016Ownership of corporate bonds includes investment-grade and high-yield bonds. ETF and mutual fund flows are for Morningstar categories.*Existing nine-month data annualized Source: Bloomberg Barclays, Morgan Stanley, Morningstar and US Federal Reserve

Strong Flows into Active High-Yield Mutual Funds

Foreign Investors Drawn to YieldOwnership of US Corporate Bonds by Non-US Investors

10

12

14

16

18

20

22

24

26

28

92 95 98 01 04 07 10 13 16

Perc

ent

–4

–2

0

2

4

6

8

10

12

Jan 16 Mar 16 May 16 Jul 16

USD

Billi

ons

HY Bond Funds HY Bond ETFs

Strong Demand

US HY Supply on Pace for Weakest Year Since 2009

0

50

100

150

200

250

300

350

09 10 11 12 13 14 15 16*

USD

Billi

ons

HY Supply CCC B BB

Issuance Mostly amid

Higher Quality Issuers

12|CMO 4Q 2016

Securitizations Are an Attractive Diversifier to Corporate High Yield…

Mortgage Rates Near Historical Lows; Housing More Affordable than Precrisis

Past performance does not guarantee future results. Historical information provided for illustrative purposes only.Left display through November 30, 2015; middle display through October 3, 2016; right display through September 30, 2016*At 100, a family with a median income has enough money to make payments on a median-priced house with an 80% loan-to-value mortgage and a 25% debt-to-income ratio.†Credit risk transfers (CRT) are mortgage pools created by government-sponsored enterprises, which then transfer a portion of the risk of borrower defaults to investors.‡BBB 7- to 10-year ex energy bonds with maturities before 2024; CMBX.BBB tracks 25 BBB bonds, which were originated in 2012.Source: Bank of America Merrill Lynch, Bloomberg Barclays, CoreLogic, Freddie Mac, Haver Analytics, J.P. Morgan, Moody’s Investors Service, Morgan Stanley, National Association of Realtors, S&P/Case-Shiller Home Price Index, US Bureau of Labor Statistics, US Census Bureau, US Federal Reserve Board and AB

CRT Spreads Track Similarly Rated Corporates, but Offer Stronger Fundamentals

100

120

140

160

180

200

220

2

3

4

5

6

7

8

05 07 09 11 13 15

Per

cent

More A

ffordableLess A

ffordableMortgage Rates(Left Scale)

Affordability Index*

CMBS Offer Premium over CorporatesSpread Difference of CMBX.BBB vs. BBB Corporates‡

Average

50

150

250

350

Jun

13S

ep 1

3D

ec 1

3M

ar 1

4Ju

n 14

Sep

14

Dec

14

Mar

15

Jun

15S

ep 1

5D

ec 1

5M

ar 1

6Ju

n 16

Sep

16

Bas

is P

oint

s

0

100

200

300

400

500

600

Oct

13

Mar

14

Aug

14

Jan

15

Jun

15

Nov

15

Apr

16

Sep

16

Opt

ion-

Adj

uste

d S

prea

d (B

asis

Poi

nts)

BBCredit

BBB Credit

BB CRT Securities†

BBB CRTSecurities†

13|CMO 4Q 2016

…as Is Emerging-Market Debt

Historical information is provided for illustrative purpose only.Through September 30, 2016EM local is represented by J.P. Morgan Government Bond Index–Emerging Markets. An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.Source: Bloomberg, J.P. Morgan and AB

Local-Currency EM Debt Yields Remain Relatively High Select Opportunities in Countries with Improving Fundamentals

Political Change Boosts Bond Markets Protests denounce corruption—Rousseff impeached New government seeks political and economic reform Focus on prudent policymaking, market-oriented approach at state companies Judiciary demonstrating its independence Rate cuts still likely by end of 2016, as inflation appears to have stabilized

Macri’s Market-Friendly Administration Return to capital markets after settling 2002 sovereign-debt dispute Improved relationship with IMF Lifting of currency controls and devaluation Gradual phase-out of energy subsidies Foreign investment returning—more than US$20 billion pledged through 2020 Increasing clarity and credibility of official statistics New inflation-targeting regime, with target inflation to decline gradually

Argentina

–2

0

2

4

6

8

10

10 11 12 13 14 15 16

Yiel

ds (P

erce

nt)

US Treasury 10-Year

EM Local

Japanese GovernmentBond 10-Year German

Bund 10-Year

US High Yield Brazil

14|CMO 4Q 2016

Some Hedges Particularly Attractive TodayHedging Costs/Benefits to USD

Interest-Rate Exposure Is as Important as Ever, but Globalizing It Is Key

Global Outperforms When US FallsUp vs. Down Capture(Mar 1990–Dec 2015)

Current analysis does not guarantee future results. Left display as of December 31, 2015; middle and right displays as of September 30, 2016Bar height may differ due to rounding. US bonds is represented by Bloomberg Barclays US Aggregate; global bonds hedged by Bloomberg Barclays Global Aggregate Hedged to USD. An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.*Credit rating is represented by the Bloomberg Barclays methodology.Source: Bloomberg Barclays, S&P and AB

Currency Hedging Can Make Low-Yielding Bonds More Attractive

2.3%

–0.9%

2.2%

–0.6%

Average QuarterlyReturn When

US Aggregate IndexWas Positive

Average Quarterly Return When

US Aggregate IndexWas Negative

US Aggregate Bond Global Aggregate Bond

Up Capture: 96%Down Capture: 65%

10-Year Bond Yield

10-Year Yield

(Hedged)Credit

Rating*

Australia 1.91% 1.02% AAA

US 1.60 1.60 AAA

Canada 0.99 1.24 AAA

Germany –0.12 1.38 AAA

New Zealand 2.27 0.74 AA+

UK 0.75 1.39 AA

France 0.18 1.68 AA

Japan –0.09 1.46 A+

Spain 0.88 2.38 BBB+

Italy 1.19 2.69 BBB

Portugal 3.31 4.81 BB+

–1.5

–1.0

–0.5

0.0

0.5

1.0

1.5

Jan

09

Jul 1

0

Jan

12

Jul 1

3

Jan

15

Jul 1

6

Per

cent

Hedging B

enefitH

edging Cost

JPY

EUR

15|CMO 4Q 2016

Historical analysis does not guarantee future results.As of September 30, 2016Nominal 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. Bloomberg Barclays long indices are used for each respective rating category.*Bonds with five-year maturities. †After-tax returnsSource: Bloomberg Barclays, Investment Company Institute, J.P. Morgan, Municipal Market Data, US Federal Reserve and AB

Munis Have Fared Well When Rates Rise…Annualized Returns When Fed Raises Rates (Percent)*

–1.6

–0.2

–3.7

–0.7

0.0

4.2

2.6

0.70.4

2.2

7.1

5.5

1.3 0.9

3.6

Municipals: An Attractive Solution in Today’s Environment

AAA Municipal Treasury† BBB Municipal

Fed FundsRate Change 3.3 3.9 3.0 1.8 4.3

Apr 83–Aug 84

Nov 86–Feb 89

Feb 94–Feb 95

May 99–May 00

May 04–Jun 06

Munis Are Still Attractive vs. Other High-Grade Bonds10-Year Yields (Percent)

1.38 1.461.59

2.18

3.223.34

GermanBund

Hedged

JGBHedged

Treasury Taxable-Equiv.Yield

AAA Muni

BBBCorp.

Taxable-Equiv.

Yield BBBMuni

…and Continue to Perform with Low VolatilityStandard Deviation (Percent)Sep 30, 2011–Sep 30, 2016

2.1

6.2

11.1

14.1

Municipals CorporateHigh Yield

USEquity

GlobalEquity

16|CMO 4Q 2016

Municipals: Positioning Matters

Roll Plus Yield (Percent)

Historical analysis does not guarantee future results.As of September 30, 2016Nominal 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. Bloomberg Barclays long indices are used for each respective rating category.*Roll is the natural price gain that a bond experiences as it ages, assuming interest rates are unchanged. Yield advantage shown is for 10-year municipal securities. Short taxable bonds are represented by Bloomberg Barclays 1–3 Year US Aggregate ex Government.Source: Bloomberg Barclays, Investment Company Institute, J.P. Morgan, Municipal Market Data, US Federal Reserve and AB

Shorter Bonds: Amid higher yields, favor short-maturity municipals over taxables

Intermediate Bonds: Focus on rolland carry

Longer Bonds: Dip down in credit for an extra yield pickup

0.89 1.13 1.35 1.51 1.64 1.752.17 2.42 2.58

0.10

0.360.68

0.96 0.93 0.860.47

0.310.08

0.85

2.94

2 5 7 8 9 10 15 20 30Maturity (Years)

Roll*YieldShort Taxable After-Tax BBB Muni

17|CMO 4Q 2016

Past performance and current forecasts do not guarantee future results.An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio. Numbers may not sum due to rounding. *Represents relative performance of Morningstar open-end US large-cap managers vs. S&P 500 starting January 1, 1995, through December 31, 2015, when the one-year (YoY) change in P/E was positive or negative and the US market return was positive or negative over that same one-year period.†As of December 31, 2015. Factor index performance represents the returns of the MSCI indices—dividend yield: MSCI USA High Dividend Yield; value: MSCI USA Value; quality: MSCI USA Quality; low beta: MSCI USA Minimum Volatility; momentum: MSCI USA Momentum. These indices may not be investable and do not take into account transaction costs.Source: Cornerstone Macro, eVestment, Morningstar, MSCI, S&P, Style Research and AB

After the Beta Trade: Conditions Favor Active Management

Over Time, Active High-Conviction Equity Strategies Have Outperformed Passive FactorsAnnualized Relative Performance vs. S&P 500 (Percent)Jan 2004–Dec 2015†

Active Management Likely Poised to OutperformRelative Return (Percent)*

1.91.6

2.02.4

3.0

0.0

–0.3

0.6 0.7

1.4

Dividend Yield Value Quality Low Beta Momentum

Active High-Conviction Strategy Passive Factor Index Strategy

P/ECompression

P/EExpansion

Market Up +0.8 –2.5

Market Down +2.9 +2.5

18|CMO 4Q 2016

Large Gaps Between Stock and Bond Yields Are Rare…Stock Earnings Yields vs. Bond Yields (Percent)

0

2

4

6

8

10

12

14

83 86 89 92 95 98 01 04 07 10 13 16

Equities Today Present Attractive Return Potential

Historical analysis and past performance do not guarantee future results.As of September 30, 2016Source: Bloomberg Barclays, S&P and AB

…but Have Typically Signaled Strong Equity PotentialStock and Bond Returns After Large Yield Gaps (Percent)

10-Year Treasury

Yield

S&P 500 Earnings

Yield

Bloomberg Barclays

Aggregate 3-Year Cum.

Return

S&P 500 3-Year Cum.

Return

Nov 1987–Mar 1988 8.5 9.6 29.2 47.7

Jul 1993–Jun 1994 6.0 7.0 18.7 58.5

Jul 2002–May 2007 4.3 6.2 13.7 14.4

Oct 2008–Feb 2013 2.7 7.6 12.3 47.8

TODAY (Sep 2016) 1.6 4.9 ? ?

Earnings historically drive total returns; intermediate bond yields are historically low today

When the yield gap between equities and bonds is big, consider tilting toward equity earnings—if underlying fundamentals are strong

S&P 500 Earnings Yield

US 10-Year Treasury Yield

19|CMO 4Q 2016

Historical analysis does not guarantee future results.As of September 30, 2016. *Fund flows include all US equity mutual funds and ETFs sold in the US—4,923 funds included; highest-yielding equity funds are the top quintile of US equity managers with the highest SEC or dividend yield within the US open-end fund categories within Morningstar. †Highest 20% of dividend payers among 1,500 US-listed stocks in the AllianceBernstein equity universe, excluding 33 companies that do not currently have a P/E ratio because they are not profitable. ‡2013 Taper Tantrum: May 23, 2013. §Start date is May 22, 2012. ||High-dividend yield defined as stocks with yields 20% or more that are greater than the cap-weighted average for the S&P 500. Long-term average shares of S&P 500 from January 1965 through June 2016. Source: FactSet, Morningstar, S&P and AB

High-Dividend Focus: A Crowded Trade Where Caution Is Warranted

…That Can Turn Safety into RiskRelative Performance of the S&P High Yield Dividend Aristocrats Index vs. the S&P 500 (Basis Points)‡

Crowding into High-Yielding Strategies…US Equity Funds and ETFs: Three-Year Net Flows (USD Billions)*

465

–897

Highest-YieldingEquity Funds(1,005 Funds)

All OtherEquity Funds

(3,918 Funds)

399

–470

One Year Prior to Taper Tantrum§

One Year AfterTaper Tantrum

Running a Different Offense Reduce: “Highest-Dividend” Plays Increase: “High-Dividend-Growth” Plays

SectorLT

Avg.Peak Date

Index Share

at Peak

Returns Two Years After Peak

Energy 13.5% Nov 1980 33.0% –38.0%

Technology 12.2 Aug 2000 34.0 –73.1

Financials 10.1 Jan 2007 22.1 –69.9

High-Dividend YieldingStocks||

35.0 Jun 2016 45.3 ?

…Means Overpaying for Bond-Like Stocks…Price/Earnings Ratio (×)†

0

10

20

30

40

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

Highest-DividendPayers Trading

WellAbove

Average

Average13.6×

20|CMO 4Q 2016

Historical analysis does not guarantee future results.Left display as of June 30, 2016; middle and right displays as through September 30, 2016Data are based on the highest 20% of earnings growth and ROE among 1,500 of the largest US-listed stocks by market capitalization in the AB Bernstein equity universe, excluding 33 companies that do not currently have a P/E ratio because they are not profitable.Source: FactSet and AB Bernstein

Profitability (ROE)Price/Earnings Ratio of Highest ROE Companies vs. Market

Unpopular, but Profitable and Fast-Growing Companies Attractively Priced

The Passive “Safety” Trade Has Been Unusually Popular LatelyTop Quintile 12-Month Returns vs. Percentile History

Earnings GrowthPrice/Earnings Ratio of Highest Earnings Growth Companies vs. Market

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

78 82 86 90 94 98 02 06 10 140.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

78 82 86 90 94 98 02 06 10 14

0

10

20

30

40

50

60

70

80

90

100

–15

–10

–5

0

5

10

15

High-DividendYield

High ROE

Percentile vs. H

istoryPer

cent

Cha

nge

TTM Performance (Left Scale)Percentile vs. History

Highest (Q1)

Average

AverageHighest (Q1)

21|CMO 4Q 2016

Historical analysis does not guarantee future results.Left and middle displays as of June 30, 2016; right display as of September 30, 2016Source: Ned Davis Research, S&P and AB

Stark Contrast in Earnings Growth Between These Sectors

Yield Trade Reverses: Profit Growth a Factor

Stock Prices Ultimately Follow Profit Growth Sector Returns Jul–Sep 2016

High-Dividend Stocks: Key Leaders in First Half 2016Sector Returns Jan–Jun 2016

24.9%

23.4%

10.5%

0.7%

0.4%

–0.3%

Telecom

Utilities

Consumer Staples

Consumer Discretionary

Healthcare

Technology

High Dividend Growth Oriented

12.9%

3.1%

0.9%

–2.6%

–5.6%

–5.9%

Technology

Consumer Discretionary

Healthcare

High Dividend Growth Oriented

Utilities

Consumer Staples

Telecom

Sector

2Q Median Reported

Growth Rate

Telecom 4.3%

Utilities 4.9%

Consumer Staples 4.1%

S&P 500 7.2%

Consumer Discretionary 11.3%

Healthcare 11.0%

Technology 11.4%

22|CMO 4Q 2016

Historical analysis does not guarantee future results.As of September 30, 2016An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect the fees and expenses associated with the active management of a portfolio.*Valuation composite is one-third price to forward earnings, one-third price to book and one-third price to sales.Source: Bloomberg, FactSet, Russell Investments, Thomson Reuters I/B/E/S and AB

Small-Caps Are OutperformingJan–Sep 2016 Returns

Small-Caps: Opportunity Remains Despite Recent Outperformance

11.5%

7.9%

Russell 2000 Russell 1000

Smaller-Cap Stocks Are Still Attractively Valued Relative Valuations* (Russell 2000 vs. Russell 1000)

0.50

0.75

1.00

1.25

1.50

80 84 88 92 96 00 04 08 12 16

Rat

io (×

)

Small-Cap Is Cheap

Large-Cap Is Cheap

Average

23|CMO 4Q 2016

Market Winners Vary over TimeAnnual Returns (Percent)

Current analysis does not guarantee future results. Left and middle displays as of June 30, 2016; right display as of December 31, 2015EM equity is represented by MSCI Emerging Markets; global equity by MSCI World; EM sovereign debt by J.P. Morgan EMBIG; EM corporate debt by J.P. Morgan CEMBI; and EM local currency debt by J.P. Morgan GBI-EM.NTM: next twelve monthsSource: J.P. Morgan, Morningstar Direct, MSCI and AB

Emerging Markets Offer Opportunities Across Capital Structure

EM Valuations Are Attractive

EM Sovereign-Debt Spread Ratio

EM EquityPrice/Book

EM Equity EM Debt

Q5

Q1

Q5

Q1

Current Percentile

99%

Positive Earnings Growth in Emerging MarketsMSCI EM vs. MSCI World Price/Earnings Ratio and MSCI EM Earnings per Share

0

20

40

60

80

100

120

–40

–35

–30

–25

–20

–15

–10

–5

0

10 11 12 13 14 15 16

EPS (Left Scale) P/E (NTM)

71%

EM Equity19.2

EM Sov.Debt8.5

EM Local Curr.Debt19.9

Global Equity17.4

EM Sov.Debt5.5

EM Corp. Debt1.3

EM Corp. Debt13.1

EM Corp. Debt2.3

EM Equity18.6

EM Corp. Debt–0.6

Global Equity5.5

EM Sov.Debt1.2

EM Local Curr.Debt13.1

Global Equity–5.0

EM Sov.Debt18.5

EM Equity–2.3

EM Corp. Debt5.0

Global Equity–0.3

Global Equity12.3

EM Local Curr.Debt–6.3

Global Equity16.5

EM Local Curr.Debt–5.5

EM Equity–1.8

EM Equity–14.6

EM Sov.Debt12.0

EM Equity–18.2

EM Corp. Debt15.0

EM Sov.Debt–6.6

EM Local Curr.Debt–6.1

EM Local Curr.Debt–18.0

2010 2011 2012 2013 2014 2015

High/Low Gap

7.2 26.7 4.9 24.0 11.6 19.3

18.4 7.0 14.9 6.15 3.9

Bes

t Ret

urn

Wor

st R

etur

n

Annualized Volatility

RelativelyInexpensive

Relatively Expensive

24|CMO 4Q 2016

Current analysis does not guarantee future results. Left display as of August 31, 2016, and categories are represented by HFRI indices. Right display as of September 30, 2016, and represents Morningstar categoriesSource: Hedge Fund Research, Morningstar and AB

Alternatives Attractive After the Beta Trade, but Mind the Dispersion

Alternative Funds Have Reversed Trend…Average Returns (Percent)

…but It’s Important to Be SelectiveAnnualized Return Dispersion (Percent)

–7.1

–3.9

–5.9

–3.7 –4.1

–0.7

2.7

10.1 10.38.5

6.3

3.3

0.3

–3.1

EventDriven

Credit EquityL/S

AllFunds

Fund of Funds

Disc.Macro

Sys. Macro

2015–Feb 2016 Mar–Aug 2016

2.4

5.9

3.4

8.0

10.4

12.3

2.4

8.0

6.1

9.7

12.7 12.3

Intermediate-Term Bond

Large-Cap Blend

NontraditionalBond

Multi-alternative

ManagedFutures

Long/ShortEquity

Jul 2012—Jun 2015 Jun 2015—Sep 2016

Traditional Asset Classes Alternative Asset Classes

25|CMO 4Q 2016

Prescription Within Asset Classes

Current analysis does not guarantee future results.As of September 30, 2016Source: AB

Putting It All Together: Strategy for Modest Growth, High Volatility

Fixed IncomeEquities

Alternatives

Fixed Income: Be Balanced Rates: Combine Global Core and US Core

Focus on intermediate part of curve

Be mindful of negative yields

Hedge currencies

Credit: Use Global Multi-Sector

High Yield still attractive despite recent strength

Underweight energy

Consider securitized assets, EM local bonds and currencies for diversification

Manage liquidity risk

Equities: Be Active Be concentrated

Seek downside protection

Embrace large-cap and secular growth

Favor dividend growers over highest yielders

Include small-caps, which remain attractively priced

Alternatives: Be Selective Diversify across strategies

Focus on strong up/down capture

Include Relative Value/Credit and Long/Short Equity

Take advantage of macroeconomic events and rising volatility

26|CMO 4Q 2016

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 ofthe 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.

27|CMO 4Q 2016

Index Definitions

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 AB mutual fund.

Bloomberg 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 corporate on slide 2.)

Bloomberg 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.

Bloomberg 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.)

Bloomberg 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.)

Bloomberg Barclays Investment Grade CMBS Index: Designed to mirror commercial mortgage-backed securities of investment-grade quality (Baa3/BBB-/BBB- or above) using Moody’s, S&P and Fitch, respectively, with maturity of at least one year.

Bloomberg 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.)

Bloomberg 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 (MBS [agency fixed-rate and hybrid ARM pass-throughs]), asset-backed securities (ABS), and commercial mortgage-backed securities (CMBS).

Bloomberg Barclays US Corporate High Yield Index: Represents the corporate component of the Bloomberg Barclays US High Yield Index. (Represents US high yield on slide 2.)

Bloomberg 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.)

28|CMO 4Q 2016

Index Definitions (continued) HFRI Event Driven Index: Investment managers who maintain positions in companies currently or prospectively involved in corporate transactions of a wide variety including

but not limited to mergers, restructurings, financial distress, tender offers, shareholder buybacks, debt exchanges, security issuance or other capital structure adjustments. Security types can range from most senior in the capital structure to most junior or subordinated, and frequently involve additional derivative securities. Event Driven exposure includes a combination of sensitivities to equity markets, credit markets and idiosyncratic, company-specific developments. Investment theses are typically predicated on fundamental characteristics (as opposed to quantitative), with the realization of the thesis predicated on a specific development exogenous to the existing capital structure.

HFRI Equity Hedge Index: Investment managers who maintain positions both long and short in primarily equity and equity derivative securities. A wide variety of investmentprocesses can be employed to arrive at an investment decision, including both quantitative and fundamental techniques; strategies can be broadly diversified or narrowly focused on specific sectors and can range broadly in terms of levels of net exposure, leverage employed, holding period, concentrations of market capitalizations and valuation ranges of typical portfolios. Equity Hedge managers would typically maintain at least 50% exposure to, and may in some cases be entirely invested in, equities, both long and short.

HFRI Fund of Funds Composite Index: Fund of Funds invests with multiple managers through funds or managed accounts. The strategy designs a diversified portfolio of managers with the objective of significantly lowering the risk (volatility) of investing with an individual manager. The Fund of Funds manager has discretion in choosing which strategies to invest in for the portfolio. A manager may allocate funds to numerous managers within a single strategy, or with numerous managers in multiple strategies. The minimum investment in a Fund of Funds may be lower than an investment in an individual hedge fund or managed account. The investor has the advantage of diversification among managers and styles with significantly less capital than investing with separate managers.

HFRI Fund Weighted Composite Index: A global, equal-weighted index of more than 2,000 single-manager funds that report to HFR Database. Constituent funds report monthly performance net of all fees in US dollars and have a minimum of $50 million under management or 12-month track record of active performance.

HFRI Macro: Discretionary Thematic Index: Discretionary Thematic strategies are primarily reliant on the evaluation of market data, relationships and influences, as interpreted by an individual or group of individuals who make decisions on portfolio positions; strategies employ an investment process most heavily influenced by top-down analysis of macroeconomic variables. Investment managers may trade actively in developed and emerging markets, focusing on both absolute and relative levels on equity markets, interest rates/fixed-income markets, currency and commodity markets, frequently employing spread trades to isolate a differential between instruments identified by the investment manager to be inconsistent with expected value. Portfolio positions typically are predicated on the evolution of investment themes the manager expects to materialize over a relevant time frame, which in many cases contain contrarian or volatility focused components.

HFRI Macro: Systematic Diversified Index: Systematic: Diversified strategies have investment processes typically as function of mathematical, algorithmic and technicalmodels, with little or no influence of individuals over the portfolio positioning. Strategies which employ an investment process designed to identify opportunities in markets exhibiting trending or momentum characteristics across individual instruments or asset classes. Strategies typically employ quantitative process which focus on statistically robust or technical patterns in the return series of the asset, and typically focus on highly liquid instruments and maintain shorter holding periods than either discretionary or mean reverting strategies. Although some strategies seek to employ counter trend models, strategies benefit most from an environment characterized by persistent, discernable trending behavior. Systematic: Diversified strategies typically would expect to have no greater than 35% of portfolio in either dedicated currency or commodity exposures over a given market cycle.

HFRI RV: Fixed Income—Corporate Index: Includes strategies in which the investment thesis is predicated on realization of a spread between related instruments in whichone or multiple components of the spread are corporate fixed-income instruments. Strategies employ an investment process designed to isolate attractive opportunities between a variety of fixed-income instruments, typically realizing an attractive spread between multiple corporate bonds or between a corporate and risk-free government bond.

29|CMO 4Q 2016

Index Definitions (continued)

J.P. Morgan Corporate Emerging Markets Bond Index: A global, corporate emerging-market benchmark that tracks US-denominated corporate bonds issued by emerging-market entities.

J.P. Morgan Emerging Market Bond Index Global: A benchmark index for measuring the total return performance of government bonds issued by emerging-market countries that are considered sovereign (issued in something other than local currency) and that meet specific liquidity and structural requirements. In order to qualify for index membership, the debt must be more than one year to maturity, have more than $500 million outstanding, and meet stringent trading guidelines to ensure that pricing inefficiencies don’t affect the index.

J.P. Morgan Emerging Market Currency Index: A tradable benchmark for emerging-market currencies vs. the US dollar.

J.P. Morgan Government Bond Index–Emerging Markets: Tracks local-currency bonds issued by emerging-market governments.

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 debt on slide 2.)

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

Russell 1000 Index: A stock market index that represents the highest-ranking 1,000 stocks in the Russell 3000 Index, which represents about 90% of the total market capitalization of that index.

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.)

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.

16-1679 GEN–6340–1016

Investors should consider the investment objectives, risks, charges and expenses of the Fund/Portfolio carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.abfunds.com or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the manager of the funds.

The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.

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