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

3Q:2015 Capital Markets OutlOOk

CMO 3Q 2015 | 1

Current assessment does not guarantee future results.As of June 30, 2015Source: AB

After the Beta Trade

Moderate growth and low inflation has enabled an extended accommodative monetary policy

Policies have driven the beta trade, removed volatility and dispersion, and altered correlations

Beta trades have become more focused, intensifying the risk of crowding

Expected returns are lower across asset classes, requiring a different approach

Investors should embrace adding alpha and incorporating downside protection

Fixed Income: balance rates and credit; be selective and global

Equities: meaningful high-conviction active opportunities

Alternatives: valuations support downside protection and security-selection opportunities

CMO 3Q 2015 | 2

Past performance does not guarantee future results.As of June 30, 2015Global high yield, global corporates, and Japan and euro-area government bonds in hedged USD terms. All other non-US returns in unhedged USD terms. Emerging-Market Debt returns are for dollar-denominated bonds as represented by the J.P. Morgan Emerging Markets Bond Index Global. 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 averagesSource: Barclays, FactSet, FTSE, J.P. Morgan, Morningstar, MSCI, S&P Dow Jones and AB

Returns in US Dollars

–1.5–0.1

–0.4

–5.4–0.1

–1.6–0.9

–2.8–0.3

0.5

0.70.60.30.4

Second Quarter Returns Modest Outside the US, Weak Within

Equities

Government Bonds

Credit

Alternatives†

2015 Returns (Percent)2Q:2015 Returns (Percent)

Japan

Global High-Yield

US

Euro Area

Emerging-Market Debt

Long/Short Equity

MultialternativeNontraditional Bond

Global Corporate

EAFE*

US Small-Cap

Emerging Market

US Large-Cap

0.40.80.8

–1.4–0.5

0.00.1

–0.71.8

3.4

3.05.5

1.24.8

Municipals

CMO 3Q 2015 | 3

Country/ Region

GDP (%) Inflation (%)Expected

Policy Rate Path

FX Change (%)

FX Forecast

(%) The Latest2015 2016 2015 2016

Global 2.7 3.2 1.8 2.5 — — — Regional growth patterns still show significant differences

US 2.7 3.6 0.4 2.7 — — Fed expected to begin policy rate increases in second half

Canada 1.5 1.7 1.0 2.2 –7.0 –4.8 Low oil prices weighing on growth, but BoClikely on hold in near term

UK 2.7 2.6 0.2 1.5 +0.9 –6.0 Solid growth, but BoE likely on hold until 2016

Euro Area 1.5 1.8 0.3 1.3 –7.9 –6.6 ECB likely continues QE; may adjust to limit Greek contagion

Japan 1.6 1.8 0.8 1.2 –2.2 –0.3 Central bank likely to continue—but not increase—QE program

China 6.6 6.5 1.6 1.8 +0.1 1.8 Still balancing policy stimulus with economic rebalancing

Russia –2.5 –0.5 15.7 7.2 +9.8 –2.3 Recession deepened in first half due to cheap oil and sanctions

Brazil –1.5 1.0 8.6 5.7 –14.4 –3.5 Hiking cycle near end, tightening fiscal policy despite growth weakness

Current forecasts do not guarantee future results. As of July 1, 2015GDP represents the year-over-year change in real terms. Inflation represents year-over-year change in Consumer Price Index. FX change is currency spot return for last six months vs. US dollar; FX forecast is AB economists’ return projections for next six months vs. the US dollarSource: AB

Moderate Growth and Inflation Continue…with Divergence

CMO 3Q 2015 | 4

Neither past nor forecast performance is a guarantee of future results.As of June 30, 2015Current yield represented by yield-to-worst. Annualized returns in US dollars. Markets are represented from left to right by the Lipper/Intermediate Municipal Bond Fund Average, Barclays US Aggregate Index, Barclays US High Yield Index, S&P 500 Index, MSCI EAFE Index (unhedged). Median forecast based on proprietary AB forecasts. Source: Barclays, FactSet, Lipper, MSCI, Standard & Poor’s (S&P) and AB

Fixed Income (Percent)

The Great Beta Trade Is Likely OverOutlook for Returns Is Below Average for Most Asset Classes (Percent)

Equities (Percent)

2.3 2.4

6.64.53.4

8.6

USMunicipals

US Investment-Grade Bonds

USHigh-Yield

Bonds

Current Yield Past Five-Year Average Return

5.67.0

17.3

10.0

US Equities Developed InternationalEquities

Five-Year Median ForecastPast Five-Year Average Return

CMO 3Q 2015 | 5

Historical/current analysis and forecasts do not guarantee future results.Through June 30, 2015*Rolling six-month average of monthly returns dispersion, based on the AB US Large Cap Equity universe†Monthly correlation of US bonds and global equitiesSource: Center for Research in Security Prices, Morningstar, MSCI, S&P Dow Jones and AB

Volatility Has Fallen Off Dramatically

Volatility and Differentiation Have Been Mostly Absent from Markets

Dispersion in Markets Has Declined*

4

5

6

7

8

9

10

11

12

05 07 09 11 13 15

Per

cent

Trough

0

5

10

15

20

25

30

35

40

45

0

5

10

15

20

25

30

35

40

45

Jan

10Ju

l 10

Jan

11Ju

l 11

Jan

12Ju

l 12

Jan

13Ju

l 13

Jan

14Ju

l 14

Per

cent VIX

US Treasuries (Left Scale)

US HY (Left Scale)

Policy Moves Have Altered Correlations†

–1.0

–0.8

–0.6

–0.4

–0.2

0.0

0.2

0.4

0.6

0.8

Dec

09

Jun

10D

ec 1

0Ju

n 11

Dec

11

Jun

12D

ec 1

2Ju

n 13

Dec

13

Jun

14D

ec 1

4

Equity/Bond Correlation

US HY/Treasury Correlations

CMO 3Q 2015 | 6

Past performance does not guarantee future results.Left display through March 31, 2015; right display as of December 31, 2014*US large-cap stocks, excluding financials. 1995–4Q:2014E. Trailing four-quarter data. Smoothed on a trailing three-month basis. Manufacturers include 173 companies with at least some manufacturing business.Source: Deutsche Bank, Empirical Research Partners, S&P Compustat, S&P Dow Jones, US Federal Reserve Board, company reports and AB

Lower Costs Boosted Margins*Interest Expense as Percent of Sales and Long-Term Debt/Total

Margins’ Significant Contribution to EPS Growth Unlikely to Continue

Margins Were the Biggest Contributor to EPS Growth (Percent)

1.50

1.75

2.00

2.25

2.50

2.75

3.00

3.25

0

2

4

6

8

10

12

14

Jan

00O

ct 0

0Ju

l 01

Apr

02

Jan

03O

ct 0

3Ju

l 04

Apr

05

Jan

06O

ct 0

6Ju

l 07

Apr

08

Jan

09O

ct 0

9Ju

l 10

Apr

11

Jan

12O

ct 1

2Ju

l 13

Apr

14

Jan

15

PercentPerc

ent

Margins—Core Manufacturers

(Left Scale)

Margins—All (Left Scale)

Interest Expense

–20

–10

0

10

20

30

40

1967 toPresent

1981 to2008

2009 2010 2011 2012 2013 2014 2009 toPresent

EPS Growth Due to Share Count ChgNet Margin Growth YoYSales Growth YoYEPS Growth YoYM

ar 1

5

CMO 3Q 2015 | 7

Investment Flows Reflect Beta-Driven Environment

Passive Investing Has Dominated

–40

–20

0

20

40

60

80

100

–200,000

–100,000

0

100,000

200,000

300,000

400,000

500,000

05 06 07 08 09 10 11 12 13 14

Share (Percent)

Bill

ions

Passive (ETF and Index) as Percent of Assets

Active as Percent of

Assets

Passive Flows (Left Scale)Flows into Active (Left Scale)

Flows Have Been More Focused/Thematic (Rank in Net Flows)*

Left display through December 31, 2014; right display through March 31, 2015*Out of 95 categoriesSource: Morningstar and AB

Morningstar ETF Category 2010 2011 2012 2013 2014 1Q:15

Europe Stock 83 75 11 3 9 1

Foreign Large Blend 15 4 17 2 2 2

Health 85 26 24 13 11 3

High-Yield Bond 4 5 6 22 30 4

Corporate Bond 23 6 5 93 7 5

Equity Energy 17 83 76 36 8 6

Japan Stock 80 18 49 4 66 7

Intermediate-Term Bond 10 3 3 58 4 8

Consumer Cyclical 21 79 23 20 27 9

Large Blend US 90 1 1 1 1 95

CMO 3Q 2015 | 8

Issuance Trends Can Drive Unwanted Passive Exposures

0

25

50

75

100

125

150

175

200

225

06 07 08 09 10 11 12 13 14

New

Issu

ance

s (U

SD

Bill

ions

)

Independent E&P Oil-Field ServicesRefining Midstream/Pipeline

Equity Sector Crowding Is Evident

Crowded Trades Are Risky—Especially in a Less Liquid World

Historical analysis does not guarantee future results.Left display January 1,1988, through April 30, 2015; note: 100 means most crowded 0 means least crowded.Middle display through October 31, 2014; right display through December 31, 2014 Source: Barclays, Bloomberg, Haver Analytics, Investment Company Institute, J.P. Morgan and S&P Leveraged Commentary & Data, US Federal Reserve Board and AB

Illiquidity Magnifies Crowding RiskGrowth of Market vs. Dealer Balance Sheets (USD Billions)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

0

20

40

60

80

100

120

140

160

180

05 06 07 08 09 10 11 12 13 14

Primary Dealer Positions

>One Year (Left Scale)

US CorporateCredit

Outstanding

October 2007: 8% of Market

December 2014: 1% of Market

0

20

40

60

80

100

Hea

lthca

re

Con

sum

er D

iscr

etio

nary

Tech

nolo

gy

Tele

com

Indu

stria

ls

Util

ities

Con

sum

er S

tapl

es

Fina

ncia

ls

Mat

eria

ls

Ene

rgy

Percent of Market Cap Percent of Companies

Cro

wdi

ngM

ore

Less

Energy as a Percentageof Barclays HY Index

Percent

18

16

14

0

12

10

2

4

8

6

CMO 3Q 2015 | 9

…and the Fed Market Showdown NearsFed vs. Market Rate Expectations (Percent)

0

1

2

3

4

5

2015 2016 2017* 2018

Current analysis and forecasts do not guarantee future results.As of June 30, 2015*2017 expectations are defined as expectations for the official rates on July 9, 2017. †Long-run expectations are for July 9, 2019. All other expectations are as of year-end. Long-run expectations by the market are defined as expectations for the official rates on March 31, 2019.Source: Bloomberg, US Federal Reserve and AB

Today’s Reality: After the Beta Trade

Long Run

Fed Funds Median

Market Expectations†

An Inconvenient Beta Truth…Expected Returns for a 60/40 Blend

Expected Return 4.04%

Standard Deviation ??

Inflation and Taxes ??

Bonds40%

Stocks60%

CMO 3Q 2015 | 10

Recent US Federal Reserve Hike Cycles

Current analysis and forecasts do not guarantee future results.As of June 30, 2015The time periods shown above are as of the month-end prior to the official rate hike and through the month-end following the last increase in official rates.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.*Basis point (b.p.): A unit equal to 1/100th of 1%, used to denote the change in a financial instrument.Source: Barclays, Bloomberg and AB

US Rates: As Fed Hikes, What Should We Expect?

January 31, 1994–February 28, 1995 June 30, 2004–June 30, 2006

Change in Yields (b.p.)* Annualized Return (%) Change in Yields (b.p.)* Annualized Return (%)

Fed Funds Rate +300 — +425 —

10-Year US Treasury +156 –3.93 +52 +1.66

10-Year AAA Municipal +90 –0.63 +19 +3.61

US Aggregate Index +188 +0.08 +115 +2.93

Corporate Bonds +180 –0.91 +111 +2.84

High Yield +216 +1.43 +58 +7.79

10-Year BBB Municipal +110 –0.80 –4 +5.22

Less like today’s environmentSurprising and rapid hikesInflation worries

More like today’s environmentSlow, steady hiking cycle—well telegraphedModest growthModest inflationAttractive valuationsNo unorthodox monetary policy measures (i.e., QE)

CMO 3Q 2015 | 11

Historical analysis does not guarantee future results.Left display: Flow data is for EPFR categories through May 31, 2015, and includes ETF and actively managed offshore and onshore funds.*Represents the median exposure of 320 factor regression analyses on advisors’ portfolios surveyed by AB over the period March 1, 2015, through June 23, 2015The rates factor is proxied by the Barclays 10-Year Treasury Index; the credit factor is proxied by 50% Barclays US HY excess returns and 50% MSCI World monthly returns, rebalanced monthly; and the volatility factor is proxied by month-over-month change in the VIX.Source: Barclays, Emerging Portfolio Fund Research Global, Morningstar, MSCI and AB

…Have Left Many Investors OverexposedMedian Exposure to Key Risk Factors*

Persistently High Flows into Credit…

Many Investors Have More Credit Exposure than They Realize

Rates26%

Credit68%

Volatility6%

–30

0

30

60

09 10 11 12 13 14 15

US

D B

illio

ns

Intermediate-Term Government Global Bonds

High-Yield Global Bond

CMO 3Q 2015 | 12

Balance Interest Rates and Credit

Current analysis does not guarantee future results. For illustrative purposes onlyAs of June 30, 2015 Source: AB

A Balanced Approach Is More Appropriate in This Environment

Rates

Globalize

Use muni bonds if taxes are a consideration

Position along the yield curve: take advantage of roll

Credit

Be selective

Avoid stretching for yield

Loans

CCC-rated bonds

Diversify across sectors

Consider municipal credit

Enhance Trading

Infrastructure

Underwrite to Maturity

Incorporate Liquidity

Management Tools

Use a Broad Multi-Sector Approach

Incorporate Liquidity Management

CMO 3Q 2015 | 13

No Country Always WinsGlobal Bond Returns Hedged to USD* (Percent)

Gap between best and worst

Current analysis does not guarantee future results. As of December 31, 2014*Returns are represented by Barclays government bond indices. 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.Global Bonds Hedged is represented by the Barclays Global Aggregate Hedged to USD. US Bonds is represented by the Barclays US Aggregate. Global Bonds Unhedged is represented by the Barclays Global Aggregate USD Unhedged.Source: Barclays, Bloomberg, Morningstar and AB

Attractive Risk/Return Profile1994–2014

5.8 5.85.4

2.9

3.6

5.5

Global BondsHedged

USBonds

Global BondsUnhedged

Returns (Percent) Volatility (Percent)

Global Outperforms When US FallsUp vs. Down Capture (Percent)Mar 1990–Dec 2014

Interest Rates: Policy Differences Create Active Opportunities in Global Bonds

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 Index Global Aggregate Index

Up Capture: 95%Down Capture: 67%

2010 2011 2012 2013 2014

UK7.2

UK16.1

Euro Area11.2

Euro Area2.5

UK14.2

US5.9

US9.8

UK2.4

Japan2.3

EuroArea13.1

Canada5.6

Australia8.9

Japan2.2

Australia–2.4

Australia8.3

Japan2.9

Canada8.3

US2.0

US–2.8

Canada6.5

Euro Area1.0

Japan2.6

Australia1.4

Canada–3.1

US5.1

Australia0.3

Euro Area2.6

Canada1.4

UK–4.4

Japan4.7

6.9 13.5 9.8 6.9 9.5

BestPerformer

Worst Performer Sharpe

Ratio 1.0 0.8 0.5

CMO 3Q 2015 | 14

Opportunities in Corporates Differ Across Industries and Geographies

Historical analysis does not guarantee future results.Left display as of June 30, 2015; middle display as of December 31, 2014; right display for illustrative purposes only. Precrisis average for BBs, Bs and CCCs is for September 30,1995–December 31, 2007; precrisis average for Tier 2 is for January 31, 2001–December 31, 2007. 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. The default rates are for global issuers, which were originally issued with the shown credit rating. *IG represents investment grade. †HY represents high yield.Source: Barclays, Bloomberg, Credit Suisse, Moody's Analytics, S&P Capital IQ and AB

More Value in Higher-Quality Corporates

Defaults Should Magnify DifferencesFive-Year Cumulative Default Rates1983–2014 (Percent)

0

200

400

600

800

1,000

LowerTier 2

BB B CCC

Opt

ion-

Adj

uste

d S

prea

d (b

.p.)

Credit: Still Attractive, but Investors Must Be Selective

10

23

44

76

BB B CCC CC&C

Current

Precrisis Average

Industrials

Repair

Latin America Corps

Recovery

EuropeanFinancials

US Financials

Expansion

HY† ex Energy

US IG* Industrial ex Energy

Contraction Downturn

Energy

CMO 3Q 2015 | 15

Historical analysis does not guarantee future results.As of June 30, 2015Nominal 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.‡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. Credit rating is a measure of the quality and safety of a bond or portfolio, based on the issuer’s financialcondition and not of the fund itself. AAA is highest (best) and D is lowest (worst). Investment grade securities are those rated BBB and above. Ratings are subject to change. Source: Barclays, Investment Company Institute, J.P. Morgan, Municipal Market Data, US Federal Reserve and AB

Muni Credit Continues to Offer ValueYield Advantage of BBB-Rated Debt over AAA-Rated Debt

Positioning Along the Curve MattersRoll Plus Yield (Percent)

0.82

1.73

2.55 2.69 2.823.37 3.37

3.88

0.52

1.21

1.36 1.061.08

0.59 0.59

0.08

Maturity (Years)

Municipals: Still Attractive, but Positioning Matters

A-Rated Municipal Roll‡ A-Rated Municipal Yield

30205 8 9 10 152

Munis Offer Attractive Yields vs. Taxable Bonds10-Year Yields (Percent)

2.35

4.093.88

5.83

Treasury Taxable-Equivalent-Yield AAA

Muni

BBBCorps

Taxable-Equivalent-Yield BBB

Muni0

1

2

3

4

87 90 93 96 99 02 05 08 11 14

Perc

ent

Jun 30, 20150.96%

Apr 1, 20093.5%

Jun 30, 20070.4%

CMO 3Q 2015 | 16

Historical analysis does not guarantee future results.Middle display as of March 31, 2015*Payment defaults onlySource: Distressed Debt Securities Newsletter, J.P. Morgan, Moody’s and AB

Why Active Management for Munis?Muni Defaults Have Been RareFive-Year Cumulative Average Default Rates* 1970–2013 (Percent)

Municipals: Fundamentals Improving Despite Recent Headlines

0.0 0.0 0.11.1

1.9

4.4

20.9

USTsy

IGMuni

BBBMuni

IGCorp

BBBCorp

HYMuni

HYCorp

What Investors Are NOT Reading About

19 of the last 20 quarters have seen increases in state tax revenues

48 of 50 states have enacted pension reform measures

The average level of pension funding is an adequate 72%

37 defaults in 2014 out of 90,000units of government; only 0.06% of the market

What Investors Are Reading About

Puerto Rico and Chicago

Underfunded pensions

Transaction costs are higher

Sourcing bonds is more difficult

Bond insurance has disappeared

CMO 3Q 2015 | 17

Not All Sectors Perform the SameAnnualized S&P 500 Sector Returns Following Increases in the Fed Funds Rate (Percent)‡

Low-Inflation Environment Supports Current ValuationsAverage S&P 500 P/FE by YoY CPI†

Past performance and historical analysis do not guarantee future results. Not all sectors perform the same.As of June 30, 2015*Average returns before and after fed funds initial rate increase within the Empirical US Large-Cap universe, equal-weighted six months before and one year after the initial increase in the fed funds rate, based on 20 episodes from 1952 to 2015†Based on quarterly data from December 31,1977, to March 31, 2015 ‡Top and bottom three sectors annualized three-month returns following increases in the fed funds rate between December 31, 1989 and June 30, 2015Source: Bloomberg, Empirical Research Partners, FactSet, Strategas Research Partners, S&P Dow Jones, US Bureau of Labor Statistics, US Federal Reserve Board and AB

Stocks Have Performed Well in Rising-Rate Environments

Large-Caps Have Fared Well in Rate-Hike Cycles* Average Returns (Percent)

11.7

4.2

5.8

6 MonthsPrior

First 6Months After

Next6 Months

Year After Increase

15.2×

16.7×15.8×

11.6×

8.1×

–2%–0% 0%–2% 2%–4% 4%–6% 6%–14%

June 30, 2015: 17.5×

–11.2

0.5

2.8

13.9

14.0

17.9

Consumer Cyclicals

Commodities

Technology

Healthcare

Energy

Auto & Housing

CMO 3Q 2015 | 18

Active Outperforms in Down MarketsRelative Active Return (Percent)†

Equity Returns Are Driven by Different Factors over TimeS&P 500 Returns: Attribution by Source (Percent)

Past performance and current forecasts do not guarantee future results. Numbers may not sum due to rounding. Left display as of March 31, 2015; right display as of June 30, 2015An 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.*Five-year annualized expected return for US equities uses proprietary AB forecasts. Display reflects composition of expected US equity returns.†Based on Morningstar Open-End US Large Value, US Large Blend and US Large Growth categories. Excludes index funds and enhanced index funds. Rolling one-year periods from January 1995—June 2015Source: Cornerstone Macro, Morningstar, S&P Dow Jones and AB

Equity Returns Likely Modest, but Supportive of Active Management

2.0

18.7

4.2

16.42.0 3.2

5.1

13.7

–4.3–0.6

Earnings Growth

Dividends

Valuation Change

Jun 2009–Jun 2012

Jul 2012–Dec 2014

Median Forecast*Apr 2015–Mar 2020

22.0

5.6

0.25

3.25

–0.13

–1.92

<–30%

–30%–0%

0%–20%

>20%

% of Periods

32

46

19

3

CMO 3Q 2015 | 19

With Growth Slowing, Firms That Can Grow Are Poised to Outperform

Earnings per Share (EPS) Growth Forecast Is Muted* Sustainable Growth Is Uncommon, but RewardingTop 1,000 Companies with Earnings-Growth Rates ≥10%†

Historical analysis does not guarantee future results.Left display as of May 31, 2015; right display as of December 31, 2014Trailing 12-month EPS; next 12-months’ consensus EPS growth is the next four quarters’ consensus EPS vs. the current trailing 12-month EPS.†Universe consists of the top 1,000 companies by market cap each year from 1979-2014, with annual rebalancing.Source: Bloomberg, CRSP, FactSet, MSCI, S&P Compustat, S&P Dow Jones and AB

360

79

23

0.0

0.3

0.6

0.9

1.2

1.5

1.8

2.1

2.4

2.7

3.0

0

50

100

150

200

250

300

350

400

One Year Three Years Five Years

Excess (P

ercent)

Num

ber o

f Com

pani

es

Annualized Excess

Returns vs. S&P 500

1.0%

1.4%

2.7%

Number of Companies(Left Scale)

0

20

40

60

80

100

120

2000 2003 2006 2009 2012 2015

US

D

Next 12 Months’Consensus

S&P 500: +2%

CMO 3Q 2015 | 20

Historical analysis does not guarantee future results.As of May 31, 2015*Relative returns for AB US Large Cap Equity universe sorted monthly into quintiles by persistent profitability vs. the universe average from January 31, 1989. Persistent growth is a proprietary forecast of a company’s ability to sustainably grow profits based on current level of profitability (ROA), volatility of historical profitability, earnings surprises and capital efficiency. It is a key metric used in the management of our Large Cap Growth services.†Price to forward earnings of highest quintile of persistent profitability stocks relative to the Russell 1000 Index Source: CRSP, FactSet, MSCI, S&P Compustat, S&P Dow Jones and AB

Focus on Quality Companies and Sustainable Growth

Persistent Profitability Has PrevailedRelative Returns by Persistent Profitability Quintile (Percent)*

2.6

1.8 1.7

0.3

–1.2

Highest Persistent

Profitability

Lowest Persistent

Profitability

Persistent Growth Is Cheap TodayRelative Price/Forward Earnings of High-Persistent-Return Growth Stocks vs. Market†

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

90 93 96 99 02 05 08 11 14R

atio

(×)

Average

CMO 3Q 2015 | 21

Historical analysis does not guarantee future results.Left display through December 31, 2014; right displays as of March 31, 2015 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. *Average annual return of S&P 500 top quintiles by factor (1986–2014). Benchmark represented by equal-weighted Russell 1000 Index ex financials. Top quintile of valuation defined as cheapest companies based on price/free cash flow.†Average relative performance of Russell 1000 Index acquirers: one day before to one day after announcementSource: Barclays, Bank of America Merrill Lynch, Deutsche Bank, FactSet, Russell Investments, S&P Dow Jones, Yardeni Research, company reports and AB

Firms with High Free Cash Flow Have Other Ways to Generate Returns

Recently, Acquirers Have Outperformed†

Average Relative Return

Firms Have Put Cash to Shareholder-Friendly UsesS&P 500 ex Financials Uses of Available Cash

0.0

0.3

0.5

0.8

1.0

1.3

1.5

1.8

01 02 03 04 05 06 07 08 09 10 11 12 13 14

US

D T

rillio

ns

Capex Net Purchases Dividends Cash Acquisitions

Operating Cash Flow

Share Buybacks Have Helped Attractive Stocks Even MoreAverage Annual Return*

10.6% 12.2% 14.3%

Benchmark Top Quintile of ShareRepurchases

Top Quintile of ShareRepurchases &

Valuation

–0.1%

0.4%

1994–2011 2012–2015

CMO 3Q 2015 | 22

Past performance does not guarantee future results.Left display as of December 31, 2014; right chart as of June 30, 2015*Using data from Style Research, high-conviction strategies are defined as the top 20% of managers consistently displaying a high-conviction characteristic in the eVestment US Large Cap Equity universe. Average relative performance is calculated for the calendar years from 2004 to 2014 for those managers whose active share was above or below their high-conviction universe average active share each year. A manager may be classified in more than one category. These numbers do not represent the performance history of any AB-managed product. Source: eVestment, S&P, Style Research and AB

Higher-Conviction Strategies Can Make a Big Difference

High Active Share Approaches Add More Alpha…(Percent)

0.7

2.3

1.0

0.2

1.3

0.5

Income Growth Quality

Above-Average Active Share* Below-Average Active Share

…and Even a Little Alpha Can Go a Long WayBy Annual Equity Market Gains

100

125

150

175

200

225

250

1 2 3 4 5 6 7 8 9 10

US

Dol

lars

Year from Initial Investment

Equities at 6% Equities at 8% Equities at 9%

+21%

+32%

CMO 3Q 2015 | 23

Historical analysis does not guarantee future results.Left display as of June 30, 2015; middle display through February 28, 2015; right display as of December 31, 2014. *Price/book spread is the ratio between the highest and lowest quintiles of stocks in the AB US large-cap universe based on price/book value. †Emerging-market debt local is represented by J.P. Morgan GBI-EM (since 2002) and J.P. Morgan ELMI+ (prior to 2002); emerging-market corporates by J.P. Morgan CEMBI Broad Diversified; Asia credit by J.P. Morgan Asia Credit; emerging-market high yield by J.P. Morgan EMBI Global Non-Investment Grade; US high yield by Barclays US Corporate High-Yield; bank loans by Credit Suisse Leveraged Loan; Pan-European high yield by Barclays Pan-European High-Yield. An investor cannot invest directly in an index or average and neither includes sales charges or operating expenses associated with an investment in a mutual fund, which would reduce total returns. The low range is the fifth percentile and the high range is the 95th percentile of the yield-to-worst data for the indices. Source: Barclays, Credit Suisse, CRSP, HFR, J. P. Morgan, Morningstar, MSCI, Russell Investments and AB

Use Alternatives to Enhance Up/Down Market Capture

Large Dispersion in High Income Fixed Income Yields (Percent)†

1.8 1.8 1.43.7 4.2 4.2

1.1

7.15.4

4.2

11.1

6.6 6.34.7

15.012.7

10.4

32.7

16.7

13.1

29.0

0

5

10

15

20

25

30

35

EMDLocal

EMCorps

AsiaCredit

EMHY

USHY

BankLoans

EuroHY

Stock Valuations Range WidelyPrice/Book Spread*

3

4

5

6

7

8

9

10

11

73 81 89 97 05 13

Rat

io (×

)

Tech Bubble(Truncated)

GlobalFinancial

Crisis

TypicalTrough:

5.4

Current10.5

High

Low

Avg

Alternatives: Better Up/Down Capture

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0 0.5 1.0 1.5

Up/

Dow

n C

aptu

re

Beta

HFRI Equity Hedge Total USD

US OE Long/Short Equity

US OE Large Blend

US OE Large Blend

HFRI Equity Hedge Total

USD

US OE Long/Short

Equity

1990–2009

2010–Present

CMO 3Q 2015 | 24

What if There’s a Different Scenario?

Faster than Expected Growth

Equities: favor a more cyclical approach, such as value, as well as lower quality sectors like financials and energy

Fixed income: tilt a bit more towards credit risk, but still avoid stretching for yield

Slower than Expected Growth

Equities: emphasize income and quality attributes

Fixed Income: tilt more toward interest rates and remain global

Be BalancedRates: Combine Global Core and US Core

Manage yield curves/positioning

Hedge currencies

Credit: Use Global Multi-Sector

Diversify

Avoid crowded trades

Manage liquidity risk

Bar

bell

Current analysis does not guarantee future results.As of June 30, 2015Source: AB

Putting It All Together: Strategy for Moderate Growth, Low Inflation

Long/Short Equity Long/Short Credit

Opportunistic/Special Situations Risk-Balanced Fixed Income

Return Seeking

Risk ReducingRisk Reducing

Return Seeking

Be Selective

Be Active Be concentrated

Pursue stable and consistent sources of return

Seek downside protection

Maintain overweight to developed markets

Fixed IncomeEquities

Alternatives

CMO 3Q 2015 | 25

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 2015 | 26

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.

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.)

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 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.

CMO 3Q 2015 | 27

Index Definitions (continued)

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

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 Corporate High Yield Index: Represents the corporate component of the Barclays US High Yield Index.

Barclays US Corporate Investment Grade Index: Represents the performance of US corporate bonds within the US investment-grade fixed-rate bond market.

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.)

Bloomberg Commodities Index: Consists of exchange-traded futures on 19 physical commodities that are weighted to account for economic significance and market liquidity. (Repesents 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.)

CMO 3Q 2015 | 28

Index Definitions (continued)

HFRI Equity Hedge Total USD Index: HFRI Strategy Indices includes all qualifying funds grouped according to their main strategy. Equity Hedge strategies maintain positions both long and short in primarily equity and equity derivative securities.

J.P. Morgan Emerging Markets Bond Index Global (EMBI Global): Tracks total returns for traded external debt instruments in the emerging markets, and is an expanded version of the JPMorgan EMBI+.

Morningstar US OE Long/Short Equity Category: A collection of funds that hold sizable stakes in both long and short positions in equities and related derivatives. Some fundsthat fall into this category will shift their exposure to long and short positions depending on their macro outlook or the opportunities they uncover through bottom-up research.

Morningstar US OE Large Blend Category: Contains portfolios that are fairly representative of the overall U.S. stock market in size, growth rates, and price. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large-cap. The blend style is assigned to portfolios where neither growth nor value characteristics predominate.

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.

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.

15-1570 GEN–6340–0715

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.abglobal.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 service mark of AllianceBernstein and AllianceBernstein® is a registered trademark used by permission of the owner, AllianceBernstein L.P.

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