avatar Alliancebernstein National Municipal Income Fund, Inc. Finance, Insurance, And Real Estate
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    2017 ANNUAL REPORT Gaining Momentum in a Year of Change


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    2017 FINANCIAL HIGHLIGHTS AB HOLDING (The Publicly Traded Partnership) Years Ended December 31 2017 2016 2015 1 Adjusted Net Income (USD Thousands) $218,979 $184,218 $185,100 Adjusted1 Diluted Net Income per Unit $2.30 $1.89 $1.84 Distributions per Unit $2.30 $1.92 $1.86 AB (The Operating Partnership) Years Ended December 31 2017 2016 2015 Assets Under Management (USD Millions) $554,491 $480,201 $467,440 1 Adjusted Revenues (USD Thousands) $2,704,016 $2,469,314 $2,523,918 Adjusted1 Operating Income (USD Thousands) $750,118 $624,402 $618,641 Employees 3,466 3,438 3,600 ASSETS UNDER MANAGEMENT (USD Billions) By Investment Service By Channel By Client Location Fixed Income Passive2 Private Wealth $10 Fixed Income 17% Active Non-US Equity Passive 2 36% $54 $92 $63 $200 Other3 $288 $269 Retail 35% $193 $354 Equity Active $139 US 64% Institutions 48% 1 The adjusted financial measures are all non-GAAP financial measures. See page 38 and pages 47–49 of the enclosed Form 10-K for reconciliations of GAAP financial results to adjusted financial results and notes describing the adjustments. 2 Includes index and enhanced index services 3 Includes multi-asset solutions and services, and certain alternative investments Front Cover: AB’s new Hong Kong location, 39th Floor, One Island East Taikoo Place; Quarry Bay Hong Kong


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    LETTER FROM THE CHAIRMAN AND CEO If we had to choose just two words to describe 2017 at AllianceBernstein, they would be momentum and change. We took the helm of this remarkable firm in May, just as it was beginning to reap the benefits of years of investment to rejuvenate its product offering and restore its standing in the marketplace. As AB’s new leaders, we aim to maintain this strong momentum by building upon the firm’s growth strategy. We have also strengthened and diversified the Board by adding three stellar leaders from finance, industry, technology and academia as independent directors: Paul Audet, Das Narayandas and Shelley Leibowitz. We take our responsibilities as stewards of the firm seriously, and it’s been gratifying to see how our momentum has accelerated in the year since we joined. Today, AB enjoys its strongest competitive position in years, even as the challenges for active asset managers intensify. We are privileged to be leading AB on this promising journey. MARKET ENVIRONMENT ASSET FLOWS AND FINANCIALS Global equity and bond markets rose in 2017, and AB Passive asset growth continues unabated: US industry-wide capitalized on this constructive environment across its equity mutual fund inflows of $464 billion were up 50% in businesses. Even as US equity markets hit record levels, 2017—for a fifth consecutive record-setting year. However, their performance was eclipsed by that of non-US stocks for US industry-wide active equity mutual fund outflows of $201 the first time since 2012. This risk-on environment created billion in 2017 were about one-third less than their 2016 peak. tighter credit spreads, and monetary policy around the world appears well aligned with respective economic recoveries. This challenging environment makes AB’s flow success in The combination of these two trends benefited AB’s credit- 2017 that much more impressive. AB’s total annual gross intensive global fixed income business. sales were $78.7 billion, and the firm’s net flows were $13.2 billion, producing an organic growth rate of 2.7%. Even more In the US, the Federal Reserve implemented three interest impressive, AB was one of the few publicly traded asset rate increases in 2017 and signaled at least three more for managers to generate organic growth in active equities in 2018—the first of which occurred in March—as the economy 2017. AB’s total active net flows of $19.1 billion translated to continued to exhibit low unemployment, ongoing GDP growth an active organic growth rate of 4.5%. and emerging evidence of rising inflation. AB is closely monitoring how tax legislation enacted at year-end 2017, and Net flows were positive in all AB’s client channels. The firm’s the omnibus spending bill enacted earlier this year, will affect Retail net inflows of $8.9 billion in 2017 represented a $13.7 the US economy. billion swing from outflows of $4.8 billion in 2016. Institutional net inflows of $3.6 billion were up $9.0 billion from the prior Economic growth remains relatively strong around the world. year’s $5.4 billion in outflows. And AB’s Private Wealth In Europe, the European Central Bank expects to end asset Management net inflows nearly doubled, to $700 million. purchases in 2018, Brexit negotiations are ongoing and the European Union implemented MiFID II (the Markets in The combination of revenue growth and continued expense Financial Instruments Directive II) at the start of 2018. In discipline produced strong financial results in 2017: adjusted China, tighter policies may moderate the pace of growth. net revenues of $2.7 billion increased 10%, adjusted operating income of $750 million was up 20% and AB’s adjusted operating margin of 27.7% was up 240 basis points.


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    PROGRESS ON THE STRATEGY In Retail, AB had its best gross sales year since the firm’s We knew when we joined AllianceBernstein that the firm’s 2012 peak, with sales increases in the Asia Pacific region, strategy of broadening its platform with differentiated new EMEA, Latin America and the US. In a market where client offerings was working. The firm had also reduced passive still reigns supreme, AB generated impressive its cost structure, while still investing for growth. These active equity gross sales growth of 66% in 2017. The impressive achievements were the result of the talented AB strength was broad-based: more than 20 diverse products staff’s relentless focus and execution. attracted $100 million or more in net inflows in 2017—split fairly evenly between long-standing services and newer AB is now working to refine the long-term strategy to better offerings. In fixed income, AB’s flagship Global High Yield suit the next phase of growth. AB needs to transition from its (GHY) and American Income Portfolio (AIP) in Asia ex Japan focus on product development and diversification, to broaden led the way in flows. This region is a volatile market for the distribution of its diverse investment services. Therefore, high yield mutual funds; the current industry-wide sales AB is commercializing and scaling its services globally. slowdown began late in 2017. If that slowdown continues, + Deliver differentiated return streams to AB’s clients: the increased diversity of AB’s business should help AB was a true standout among traditional asset managers mitigate the impact on Retail flows. in 2017. The firm has maintained consistently excellent AB also achieved several performance and growth returns across its fixed income offerings for years: at year- milestones in 2017. The All Market Income Fund earned a end 2017, 80% or more of AB’s assets were invested in 5-star rating at its three-year anniversary and the Multi- outperforming strategies for the one-, three- and five-year Manager target-date fund series celebrated its three-year periods. AB has also steadily improved equity track records: anniversary in December with 10 out of 11 vintages rated 66%, 85% and 91% of active equity assets were invested 4- or 5- stars for the period. AB attracted nearly $3 billion in outperforming strategies for the one-, three- and five- in net inflows in Taiwan in 2017, after being named the #1 year periods, respectively, through year-end. multi-asset discretionary investment manager (DIM) in AB’s progress is most evident in the Retail channel, with 2016; AB’s total onshore assets in Taiwan reached more strong track records across innovative new offerings and than $8 billion in total by year-end. some long-standing services: AB’s number of Morningstar Finally, AB launched the FlexFee series of performance- 4- and 5-star-rated US- and Luxembourg-based funds fee based US mutual funds in the second half of 2017. has nearly quadrupled since 2009, to 70 today. And 72% These actively-managed funds offer a new and compelling of AB’s US mutual fund assets, and 52% of its Luxembourg solution for investors who prefer cheaper passive fund assets, are now rated 4- and 5-stars. strategies by charging ETF-like base fees, adding capped + Commercialize and scale AB’s suite of services: AB performance fees only when results significantly exceed has built a competitive suite of services across multi-asset, the benchmark. AB recently announced a series of major alternatives, equities and fixed income that delivers the broker-dealer partnerships to distribute these funds. This differentiated return streams that clients can’t replicate on revolutionary new offering could transform both AB and the their own. AB is now intensifying efforts to engage retail entire active asset management industry. investors, institutional clients and consultants—and the In Institutional, AB has complemented its strong base in marketplace is responding positively. fixed income with new capabilities in active equities and


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    alternatives in order to better serve clients and increase maintained top rankings in nearly every global independent revenues. In a marketplace that is under significant fee research and trading survey. BRS expanded internationally pressure, AB has made considerable progress. Gross sales in 2017. Revenues in Asia, where AB continues to invest for of both equity and alternative offerings were up appreciably growth, were up 16% for the year. AB established a broker- in 2017, and AB finished the year with a diverse pipeline dealer in Dublin ahead of Brexit and a new India trading of new and unfunded business by both asset class and operation. Clients highly value Bernstein research, so AB region. At year-end, 85% of AB’s $7 billion active pipeline should be able to gain additional market share as clients was in equity and alternative services, including mandates consolidate providers. in International Value, Commercial Real Estate Debt, + Maintain continuous and rigorous focus on expense Global Core Equity, Middle Market Direct Lending, AB management: By generating revenue growth that well Arya Partners (multi-manager hedge funds) and Emerging outpaced expense growth in 2017, AB expanded its Markets Strategic Core. The average fee rate on the active adjusted operating margin for a sixth consecutive year—to pipeline grew to more than three times the channel’s overall a post-financial crisis high of 27.7%. AB recently set a 30% fee rate at year-end because the firm added higher fee margin target for 2020, which the firm is on track to meet, services—a good sign for future revenue growth. provided markets continue to cooperate. In Private Wealth, AB’s 2017 results added to the firm’s In the second half of 2018, the firm will begin executing a multi-year momentum. Both gross sales and advisor multi-year project to relocate the majority of AB’s New York productivity increased for the fifth straight year. AB’s metro area employees to a new location in the southeastern success with unique, research-based Targeted Services, US. While this move will significantly reduce expenses over designed to attract more independent and self-directed time, AB is unlikely to achieve any meaningful margin impact investors, is reinvigorating this business. Private clients until 2020. In the meantime, AB will seek to grow assets committed $2.7 billion to Targeted Services in 2017, profitably and manage overall expenses to generate higher bringing total deployed and committed assets to nearly earnings and produce superior returns for unitholders. $7 billion. AB has added new technology tools, including Bernstein’s first-ever mobile app, which provides PEOPLE AND CULTURE streamlined access to account information, transaction AB has an impressive team of people who continually strive to updates, original content and advice. create better outcomes for clients. AB encourages a culture of Relentless Ingenuity, built upon tenacity, creative thinking, Bernstein Research Services (BRS) was challenged by the teamwork and accountability. Everyone at AB has a unique difficult environment for the sell-side research and trading voice that deserves to be heard, creating a healthy diversity industry in 2017. US market volumes and volatility hit of thought. AB’s 10 Employee Resource Groups around the multi-year lows; activity continued to migrate to lower-fee world cultivate a dynamic, diverse and inclusive workplace automated trading. Commission pools contracted further. where employees feel challenged, valued and excited about The dollar weakened over the course of 2017, and the building a career. To that end, AB is proud to have earned a new MiFID II rules introduced in Europe and the UK roiled third consecutive perfect score on the annual Human Rights these markets. As a result, total BRS revenues of $450 Campaign (HRC) Corporate Equality Index in 2017, ranking million declined 6% in 2017. Despite these stiff headwinds, AB as one of the best places to work for LGBTQ equality this business grew market share across all regions and in the US.


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    AB is constantly looking for ways to make the firm an even LOOKING FORWARD better place for talented people to build and enjoy successful We’ll finish this letter as we started it: with a deep appreciation careers. The Associate Leadership Council provides for the firm we’ve joined and the amazing people here who associates worldwide with opportunities for networking, have advanced AB as a mark of excellence. AllianceBernstein exposure to senior leadership, career mobility and skill has made remarkable progress in building strong competitive development. The firm’s Well Ahead initiative offers employees advantages and prospects for long-term growth. We look a wide range of wellness-related opportunities, and 14 forward to building upon this success in 2018 and beyond. We Employee Wellness Groups around the globe sponsor a variety thank you for your trust in us. of activities to support a healthy lifestyle. AB is also committed to serving the communities where its employees live and work. About 1,400 employees participated in the 2017 global Day of Service initiative, which included 90 volunteer events in support of 75 global organizations. And to help protect the environment, AB has eliminated plastic bottles and introduced a global paperless initiative. Finally, AB recently introduced the role of Chief Corporate Responsibility (CR) Officer to define and balance the firm’s diversity, inclusion and CR efforts as they relate to clients, unitholders, employees and communities. Since long before it was “in fashion,” AB has been focused on the areas of responsible investing, diversity and inclusion, regulatory and government relations, environmental policies, and philanthropy Robert B. Zoellick, and community outreach. The firm has been a member of the Chairman of the Board Council of Institutional Investors since 1997, a signatory to the Principles of Responsible Investment (PRI) since 2011, a member of the International Corporate Governance Network since 2014, the Climate Bonds Initiative since 2016, and the PRI Global Policy Reference Group since 2017. AB is fully committed to advancing its responsibilities as a corporate citizen, and the Chief CR Officer will play a critical role in Seth P. Bernstein, accelerating the firm’s CR efforts. President and Chief Executive Officer


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    AB DIRECTORS AND EXECUTIVE OFFICERS BOARD OF DIRECTORS EXECUTIVE OFFICERS Robert B. Zoellick2, 3, 4 Daniel G. Kaye1, 2 Seth P. Bernstein Non-Executive Chairman Independent Director President and Chief of the Board Executive Officer Shelley B. Leibowitz1 Seth P. Bernstein3, 4 Independent Director James A. Gingrich President and Chief Chief Operating Officer Executive Officer Anders Malmstrom Senior Executive Vice President Kate C. Burke Paul L. Audet 1, 2 and Chief Financial Officer, Head of Human Capital and Independent Director AXA Equitable Holdings Chief Talent Officer Ramon de Oliveira2, 4 Das Narayandas Laurence E. Cranch Independent Director Independent Director General Counsel Denis Duverne2, 3, 4 Mark Pearson John C. Weisenseel Chairman of the Board, AXA Director, President and Chief Financial Officer Chief Executive Officer, Barbara Fallon-Walsh2, 3 AXA Equitable Holdings Independent Director 1 Member of the Audit Committee 2 Member of the Compensation Committee 3 Member of the Corporate Governance Committee 4 Member of the Executive Committee


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    AllianceBernstein Holding L.P. Form 10-K 2017


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    UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2017 OR ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-09818 ALLIANCE BERNSTEIN HOLDING L.P. (Exact name of registrant as specified in its charter) Delaware 13-3434400 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1345 Avenue of the Americas, New York, N.Y. 10105 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (212) 969-1000 Securities registered pursuant to Section 12(b) of the Act: Title of Class Name of each exchange on which registered units representing assignments of beneficial ownership New York Stock Exchange of limited partnership interests Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes È No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. È Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth company ‘ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È The aggregate market value of the units representing assignments of beneficial ownership of limited partnership interests held by non-affiliates computed by reference to the price at which such units were last sold on the New York Stock Exchange as of June 30, 2017 was approximately $2.2 billion. The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of December 31, 2017 was 96,461,989. (This figure includes 100,000 general partnership units having economic interests equivalent to the economic interests of the units representing assignments of beneficial ownership of limited partnership interests.) DOCUMENTS INCORPORATED BY REFERENCE This Form 10-K does not incorporate any document by reference.


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    Table of Contents Glossary of Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Part I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 AB Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . 35 Executive Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 AB Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 AB Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 AB Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . .125 Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126 Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127 Part III Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128 Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . .157 Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . .162 Item 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165 Part IV Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166 Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .169 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170


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    Glossary of Certain Defined Terms “AB” – AllianceBernstein L.P. (Delaware limited partnership formerly known as Alliance Capital Management L.P., “Alliance Capital”), the operating partnership, and its subsidiaries and, where appropriate, its predecessors, AB Holding and ACMC, Inc. and their respective subsidiaries. “AB Holding” – AllianceBernstein Holding L.P. (Delaware limited partnership). “AB Holding Partnership Agreement” – the Amended and Restated Agreement of Limited Partnership of AB Holding, dated as of October 29, 1999 and as amended February 24, 2006. “AB Holding Units” – units representing assignments of beneficial ownership of limited partnership interests in AB Holding. “AB Partnership Agreement” – the Amended and Restated Agreement of Limited Partnership of AB, dated as of October 29, 1999 and as amended February 24, 2006. “AB Units” – units of limited partnership interest in AB. “AUM” – AB’s assets under management. “AXA” – AXA (société anonyme organized under the laws of France) is the holding company for the AXA Group, a worldwide leader in financial protection. AXA operates primarily in Europe, North America, the Asia/Pacific regions and, to a lesser extent, in other regions, including the Middle East, Africa and Latin America. AXA has five operating business segments: Life and Savings, Property and Casualty, International Insurance, Asset Management and Banking. “AXA Equitable” – AXA Equitable Life Insurance Company (New York stock life insurance company), a subsidiary of AXA Financial, and its subsidiaries other than AB and its subsidiaries. “AXA Equitable Holdings” – AXA Equitable Holdings, Inc. (Delaware corporation), a subsidiary of AXA S.A., and its subsidiaries other than AB and its subsidiaries. “AXA Financial” – AXA Financial, Inc. (Delaware corporation), a subsidiary of AXA. “Bernstein Transaction” – AB’s acquisition of the business and assets of SCB Inc., formerly known as Sanford C. Bernstein Inc., and the related assumption of the liabilities of that business, completed on October 2, 2000. “Exchange Act” – the Securities Exchange Act of 1934, as amended. “ERISA” – the Employee Retirement Income Security Act of 1974, as amended. “General Partner” – AllianceBernstein Corporation (Delaware corporation), the general partner of AB and AB Holding and a sub- sidiary of AXA Equitable, and, where appropriate, ACMC, LLC, its predecessor. “Investment Advisers Act” – the Investment Advisers Act of 1940, as amended. “Investment Company Act” – the Investment Company Act of 1940, as amended. “NYSE” – the New York Stock Exchange, Inc. “Partnerships” – AB and AB Holding together. “SEC” – the United States Securities and Exchange Commission. “Securities Act” – the Securities Act of 1933, as amended. ii


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    PART I Item 1. Business The words “we” and “our” in this Form 10-K refer collectively to AB Holding and AB and its subsidiaries, or to their officers and employees. Similarly, the words “company” and “firm” refer to both AB Holding and AB. Where the context requires distinguishing between AB Holding and AB, we identify which company is being discussed. Cross-references are in italics. We use “global” in this Form 10-K to refer to all nations, including the United States; we use “international” or “non-U.S.” to refer to nations other than the United States. We use “emerging markets” in this Form 10-K to refer to countries included in the Morgan Stanley Capital International (“MSCI”) emerging markets index, which are, as of December 31, 2017, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Pakistan, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. Clients We provide research, diversified investment management and related services globally to a broad range of clients through our three buy-side distribution channels: Institutions, Retail and Private Wealth Management, and our sell-side business, Bernstein Research Services. See “Distribution Channels” in this Item 1 for additional information. As of December 31, 2017, 2016 and 2015, our AUM were approximately $554 billion, $480 billion and $467 billion, respectively, and our net revenues as of December 31, 2017, 2016 and 2015 were approximately $3.3 billion, $3.0 billion and $3.0 billion, respectively. AXA, our parent company, and its subsidiaries, whose AUM consist primarily of fixed income investments, together constitute our largest client. Our affiliates represented approximately 23%, 24% and 24% of our AUM as of December 31, 2017, 2016 and 2015, and we earned approximately 5% of our net revenues from services we provided to our affiliates in each of those years. See “Distribution Channels” below and “Assets Under Management” and “Net Revenues” in Item 7 for additional information regarding our AUM and net revenues. Generally, we are compensated for our investment services on the basis of investment advisory and services fees calculated as a per- centage of AUM. For additional information about our investment advisory and services fees, including performance-based fees, see “Risk Factors” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7. Research Our high-quality, in-depth research is the foundation of our business. We believe that our global team of research professionals, whose disciplines include economic, fundamental equity, fixed income and quantitative research, gives us a competitive advantage in achieving investment success for our clients. We also have experts focused on multi-asset strategies, wealth management and alternative investments. Investment Services Our broad range of investment services includes: • Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities; • Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies; • Passive management, including index and enhanced index strategies; • Alternative investments, including hedge funds, fund of funds and private equity (e.g., direct real estate investing and direct lending); and • Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds. Annual Report 2017 1


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    Our services span various investment disciplines, including market capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-, intermediate- and short-duration debt securities), and geographic location (e.g., U.S., international, global, emerging markets, regional and local), in major markets around the world. Our AUM by client domicile and investment service as of December 31, 2017, 2016 and 2015 were as follows: By Client Domicile ($ in billions): U.S. Non-U.S. $200 $169 $155 $354 $311 $312 36% 35% 33% 64% 65% 67% December 31, 2017 December 31, 2016 December 31, 2015 By Investment Service ($ in billions): U.S. Non-U.S. $263 $215 $291 $265 $249 $218 47% 45% 53% 55% 53% 47% December 31, 2017 December 31, 2016 December 31, 2015 Distribution Channels Institutions We offer to our institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and various of our affiliates, separately-managed accounts, sub-advisory rela- tionships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“Institutional Services”). We manage the assets of our institutional clients pursuant to written investment management agreements or other arrange- ments, which generally are terminable at any time or upon relatively short notice by either party. In general, our written investment management agreements may not be assigned without the client’s consent. For information about our institutional investment advi- sory and services fees, including performance-based fees, see “Risk Factors” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7. AXA and its subsidiaries together constitute our largest institutional client. AXA’s AUM accounted for approximately 34%, 35% and 33% of our institutional AUM as of December 31, 2017, 2016 and 2015, respectively, and approximately 25%, 28% and 26% of our institutional revenues for 2017, 2016 and 2015, respectively. No single institutional client other than AXA and its subsidiaries accounted for more than approximately 1% of our net revenues for the year ended December 31, 2017. 2 AB


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    As of December 31, 2017, 2016 and 2015, Institutional Services represented approximately 48%, 50% and 51%, respectively, of our AUM, and the fees we earned from providing these services represented approximately 14% of our net revenues for each of those years. Our AUM and revenues are as follows: Institutional Services Assets Under Management (by Investment Service) December 31, % Change 2017 2016 2015 2017-16 2016-15 (in millions) Equity Actively Managed: U.S. $ 10,521 $ 8,792 $ 9,156 19.7% (4.0)% Global & Non-US 22,577 18,215 16,705 23.9 9.0 Total 33,098 27,007 25,861 22.6 4.4 Equity Passively Managed(1): U.S. 18,515 16,135 15,573 14.8 3.6 Global & Non-US 3,521 3,467 4,250 1.6 (18.4) Total 22,036 19,602 19,823 12.4 (1.1) Total Equity 55,134 46,609 45,684 18.3 2.0 Fixed Income Taxable: U.S. 103,073 97,610 88,997 5.6 9.7 Global & Non-US 60,233 52,598 54,897 14.5 (4.2) Total 163,306 150,208 143,894 8.7 4.4 Fixed Income Tax-Exempt: U.S. 1,051 1,819 1,920 (42.2) (5.3) Global & Non-US — — — — — Total 1,051 1,819 1,920 (42.2) (5.3) Fixed Income Passively Managed(1): U.S. 66 1,305 64 (94.9) 1,939.1 Global & Non-US 20 15 18 33.3 (16.7) Total 86 1,320 82 (93.5) 1,509.8 Total Fixed Income 164,443 153,347 145,896 7.2 5.1 Other(2): U.S. 5,258 3,831 2,939 37.2 30.4 Global & Non-US 44,442 35,477 41,683 25.3 (14.9) Total 49,700 39,308 44,622 26.4 (11.9) Total: U.S. 138,484 129,492 118,649 6.9 9.1 Global & Non-US 130,793 109,772 117,553 19.1 (6.6) Total $269,277 $239,264 $236,202 12.5 1.3 Affiliated $ 91,903 $ 82,721 $ 78,048 11.1 6.0 Non-affiliated 177,374 156,543 158,154 13.3 (1.0) Total $269,277 $239,264 $236,202 12.5 1.3 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services and certain alternative investments. Annual Report 2017 3


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    Revenues from Institutional Services (by Investment Service) Years Ended December 31, % Change 2017 2016 2015 2017-16 2016-15 (in thousands) Equity Actively Managed: U.S. $ 53,352 $ 49,369 $ 54,150 8.1% (8.8)% Global & Non-US 88,676 75,815 88,096 17.0 (13.9) Total 142,028 125,184 142,246 13.5 (12.0) Equity Passively Managed(1): U.S. 3,721 2,964 2,824 25.5 5.0 Global & Non-US 1,882 2,345 4,295 (19.7) (45.4) Total 5,603 5,309 7,119 5.5 (25.4) Total Equity 147,631 130,493 149,365 13.1 (12.6) Fixed Income Taxable: U.S. 107,262 101,874 94,272 5.3 8.1 Global & Non-US 112,294 111,602 125,888 0.6 (11.3) Total 219,556 213,476 220,160 2.8 (3.0) Fixed Income Tax-Exempt: U.S. 1,989 2,591 2,361 (23.2) 9.7 Global & Non-US — — — — — Total 1,989 2,591 2,361 (23.2) 9.7 Fixed Income Passively Managed(1): U.S. 202 322 68 (37.3) 373.5 Global & Non-US 16 1 81 1,500.0 (98.8) Total 218 323 149 (32.5) 116.8 Fixed Income Servicing(2): U.S. 13,597 12,718 13,510 6.9 (5.9) Global & Non-US (14) 1,530 1,715 (100.9) (10.8) Total 13,583 14,248 15,225 (4.7) (6.4) Total Fixed Income 235,346 230,638 237,895 2.0 (3.1) Other(3): U.S. 62,287 34,577 23,130 80.1 49.5 Global & Non-US 38,153 25,162 24,070 51.6 4.5 Total 100,440 59,739 47,200 68.1 26.6 Total Investment Advisory and Services Fees: U.S. 242,410 204,415 190,315 18.6 7.4 Global & Non-US 241,007 216,455 244,145 11.3 (11.3) Consolidated company-sponsored investment funds (8,717) 27 — n/m n/m 474,700 420,897 434,460 12.8 (3.1) Distribution Revenues 1,047 684 248 53.1 175.8 Shareholder Servicing Fees 488 479 497 1.9 (3.6) Total $476,235 $422,060 $435,205 12.8 (3.0) Affiliated $ 120,925 $ 116,392 $ 113,187 3.9 2.8 Non-affiliated 355,310 305,668 322,018 16.2 (5.1) Total $476,235 $422,060 $435,205 12.8 (3.0) (1) Includes index and enhanced index services. (2) Fixed Income Servicing includes advisory-related services fees that are not based on AUM, including derivative transaction fees, capital purchase program-related advisory services and other fixed income advisory services. (3) Includes certain multi-asset solutions and services and certain alternative services. 4 AB


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    Retail We provide investment management and related services to a wide variety of individual retail investors, both in the U.S. and inter- nationally, through retail mutual funds we sponsor, mutual fund sub-advisory relationships, separately-managed account programs (see below), and other investment vehicles (“Retail Products and Services”). We distribute our Retail Products and Services through financial intermediaries, including broker-dealers, insurance sales representa- tives, banks, registered investment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act (“U.S. Funds”), or (ii) not regis- tered under the Investment Company Act and generally not offered to U.S. persons (“Non-U.S. Funds” and, collectively with the U.S. Funds, “AB Funds”). They also include separately-managed account programs, which are sponsored by financial inter- mediaries and generally charge an all-inclusive fee covering investment management, trade execution, asset allocation, and custodial and administrative services. In addition, we provide distribution, shareholder servicing, transfer agency services and administrative services for our Retail Products and Services. See “Net Revenues – Investment Advisory and Services Fees” in Item 7 for information about our retail investment advisory and services fees. See Note 2 to AB’s consolidated financial statements in Item 8 for a discussion of the commissions we pay to financial intermediaries in connection with the sale of open-end AB Funds. Fees paid by the U.S. Funds are reflected in the applicable investment management agreement, which generally must be approved annually by the boards of directors or trustees of those funds, including by a majority of the independent directors or trustees. Increases in these fees must be approved by fund shareholders; decreases need not be, including any decreases implemented by a fund’s directors or trustees. In general, each investment management agreement with the U.S. Funds provides for termination by either party at any time upon 60 days’ notice. Fees paid by Non-U.S. Funds are reflected in management agreements that continue until they are terminated. Increases in these fees generally must be approved by the relevant regulatory authority, depending on the domicile and structure of the fund, and Non-U.S. Fund shareholders must be given advance notice of any fee increases. The mutual funds we sub-advise for AXA and its subsidiaries together constitute our largest retail client. They accounted for approx- imately 19%, 21% and 22% of our retail AUM as of December 31, 2017, 2016 and 2015, respectively, and approximately 4% of our retail net revenues in each of 2017, 2016 and 2015. Certain subsidiaries of AXA, including AXA Advisors, LLC (“AXA Advisors”), a subsidiary of AXA Financial, were responsible for approximately 1%, 2% and 4% of total sales of shares of open-end AB Funds in 2017, 2016 and 2015, respectively. HSBC was responsible for approximately 9% and 12% of our open-end AB Fund sales in 2017 and 2016, respectively. Neither our affiliates nor HSBC are under any obligation to sell a specific amount of AB Fund shares and each also sells shares of mutual funds that it sponsors and that are sponsored by unaffiliated organizations. No other entity accounted for 10% or more of our open-end AB Fund sales. Most open-end U.S. Funds have adopted a plan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund, distribution and service fees for the distribution and sale of its shares (“Rule 12b-1 Fees”). The open-end U.S. Funds have entered into such agreements with us, and we have entered into selling and distribution agreements pursuant to which we pay sales commissions to the financial intermediaries that distribute our open-end U.S. Funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares. As of December 31, 2017, retail U.S. Fund AUM were approximately $47 billion, or 25% of retail AUM, as compared to $41 billion, or 26%, as of December 31, 2016, and $45 billion, or 29%, as of December 31, 2015. Non-U.S. Fund AUM, as of December 31, 2017, totaled $76 billion, or 40% of retail AUM, as compared to $59 billion, or 37%, as of December 31, 2016, and $52 billion, or 33%, as of December 31, 2015. Annual Report 2017 5


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    Our Retail Services represented approximately 35%, 33% and 33% of our AUM as of December 31, 2017, 2016 and 2015, respectively, and the fees we earned from providing these services represented approximately 43%, 42% and 45% of our net rev- enues for the years ended December 31, 2017, 2016 and 2015, respectively. Our AUM and revenues are as follows: Retail Services Assets Under Management (by Investment Service) December 31, % Change 2017 2016 2015 2017-16 2016-15 (in millions) Equity Actively Managed: U.S. $ 37,720 $ 31,717 $ 31,481 18.9% 0.7% Global & Non-US 20,274 12,514 14,810 62.0 (15.5) Total 57,994 44,231 46,291 31.1 (4.5) Equity Passively Managed(1): U.S. 23,294 20,997 19,483 10.9 7.8 Global & Non-US 8,758 7,025 6,664 24.7 5.4 Total 32,052 28,022 26,147 14.4 7.2 Total Equity 90,046 72,253 72,438 24.6 (0.3) Fixed Income Taxable: U.S. 7,699 6,175 5,905 24.7 4.6 Global & Non-US 65,963 54,328 47,891 21.4 13.4 Total 73,662 60,503 53,796 21.7 12.5 Fixed Income Tax-Exempt: U.S. 15,654 13,579 11,601 15.3 17.1 Global & Non-US 53 10 12 430.0 (16.7) Total 15,707 13,589 11,613 15.6 17.0 Fixed Income Passively Managed(1): U.S. 5,173 5,216 5,010 (0.8) 4.1 Global & Non-US 4,250 4,041 4,492 5.2 (10.0) Total 9,423 9,257 9,502 1.8 (2.6) Total Fixed Income 98,792 83,349 74,911 18.5 11.3 Other(2): U.S. 2,799 3,229 5,116 (13.3) (36.9) Global & Non-US 1,311 1,339 1,903 (2.1) (29.6) Total 4,110 4,568 7,019 (10.0) (34.9) Total: U.S. 92,339 80,913 78,596 14.1 2.9 Global & Non-US 100,609 79,257 75,772 26.9 4.6 Total $192,948 $160,170 $154,368 20.5 3.8 Affiliated $ 36,965 $ 33,774 $ 33,364 9.4 1.2 Non-affiliated 155,983 126,396 121,004 23.4 4.5 Total $192,948 $160,170 $154,368 20.5 3.8 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services and certain alternative investments. 6 AB


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    Revenues from Retail Services (by Investment Service) Years Ended December 31, % Change 2017 2016 2015 2017-16 2016-15 (in thousands) Equity Actively Managed: U.S. $ 204,363 $ 186,442 $ 182,802 9.6% 2.0% Global & Non-US 114,277 92,953 107,787 22.9 (13.8) Total 318,640 279,395 290,589 14.0 (3.9) Equity Passively Managed(1): U.S. 8,508 7,670 8,187 10.9 (6.3) Global & Non-US 6,636 5,267 5,268 26.0 — Total 15,144 12,937 13,455 17.1 (3.8) Total Equity 333,784 292,332 304,044 14.2 (3.9) Fixed Income Taxable: U.S. 23,142 16,993 15,842 36.2 7.3 Global & Non-US 454,613 373,997 397,731 21.6 (6.0) Total 477,755 390,990 413,573 22.2 (5.5) Fixed Income Tax-Exempt: U.S. 54,106 52,847 44,917 2.4 17.7 Global & Non-US 121 63 73 92.1 (13.7) Total 54,227 52,910 44,990 2.5 17.6 Fixed Income Passively Managed(1): U.S. 6,055 6,105 5,663 (0.8) 7.8 Global & Non-US 7,567 7,815 8,198 (3.2) (4.7) Total 13,622 13,920 13,861 (2.1) 0.4 Total Fixed Income 545,604 457,820 472,424 19.2 (3.1) Other(2): U.S. 59,751 52,025 71,129 14.9 (26.9) Global & Non-US 6,583 6,672 8,456 (1.3) (21.1) Total 66,334 58,697 79,585 13.0 (26.2) Total Investment Advisory and Services Fees: U.S. 355,925 322,082 328,540 10.5 (2.0) Global & Non-US 589,797 486,767 527,513 21.2 (7.7) Consolidated company-sponsored investment funds 1,005 105 — 857.1 n/m 946,727 808,954 856,053 17.0 (5.5) Distribution Revenues 405,939 379,881 423,410 6.9 (10.3) Shareholder Servicing Fees 71,225 73,072 83,078 (2.5) (12.0) Total $1,423,891 $1,261,907 $1,362,541 12.8 (7.4) Affiliated $ 50,162 $ 46,045 $ 47,650 8.9 (3.4) Non-affiliated 1,373,729 1,215,862 1,314,891 13.0 (7.5) Total $1,423,891 $1,261,907 $1,362,541 12.8 (7.4) (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services and certain alternative investments. Annual Report 2017 7


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    Private Wealth Management We offer to our private wealth clients, which include high-net-worth individuals and families, trusts and estates, charitable founda- tions, partnerships, private and family corporations, and other entities, separately-managed accounts, hedge funds, mutual funds and other investment vehicles (“Private Wealth Services”). We manage these accounts pursuant to written investment advisory agreements, which generally are terminable at any time or upon relatively short notice by any party and may not be assigned without the client’s consent. For information about our investment advisory and services fees, including performance-based fees, see “Risk Factors” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7. Our Private Wealth Services represented approximately 17%, 17% and 16% of our AUM as of December 31, 2017, 2016 and 2015, and the fees we earned from providing these services represented approximately 24%, 23% and 23% of our net revenues for 2017, 2016 and 2015, respectively. Our AUM and revenues are as follows: Private Wealth Services Assets Under Management (by Investment Service) December 31, % Change 2017 2016 2015 2017-16 2016-15 (in millions) Equity Actively Managed: U.S. $ 26,492 $ 23,857 $ 22,873 11.0% 4.3% Global & Non-US 21,880 16,851 15,595 29.8 8.1 Total 48,372 40,708 38,468 18.8 5.8 Equity Passively Managed(1): U.S. 130 193 177 (32.6) 9.0 Global & Non-US 51 208 210 (75.5) (1.0) Total 181 401 387 (54.9) 3.6 Total Equity 48,553 41,109 38,855 18.1 5.8 Fixed Income Taxable: U.S. 6,772 6,674 6,742 1.5 (1.0) Global & Non-US 4,141 3,528 3,053 17.4 15.6 Total 10,913 10,202 9,795 7.0 4.2 Fixed Income Tax-Exempt: U.S. 23,636 21,501 19,973 9.9 7.7 Global & Non-US 18 3 3 500.0 — Total 23,654 21,504 19,976 10.0 7.6 Fixed Income Passively Managed(1): U.S. — 18 4 (100.0) 350.0 Global & Non-US 401 468 372 (14.3) 25.8 Total 401 486 376 (17.5) 29.3 Total Fixed Income 34,968 32,192 30,147 8.6 6.8 Other(2): U.S. 3,606 2,650 2,439 36.1 8.7 Global & Non-US 5,139 4,816 5,429 6.7 (11.3) Total 8,745 7,466 7,868 17.1 (5.1) Total: U.S. 60,636 54,893 52,208 10.5 5.1 Global & Non-US 31,630 25,874 24,662 22.2 4.9 Total $92,266 $80,767 $76,870 14.2 5.1 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services and certain alternative investments. 8 AB


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    Revenues From Private Wealth Services (by Investment Service) Years Ended December 31, % Change 2017 2016 2015 2017-16 2016-15 (in thousands) Equity Actively Managed: U.S. $ 272,577 $ 255,902 $ 260,706 6.5% (1.8)% Global & Non-US 212,021 176,169 171,101 20.4 3.0 Total 484,598 432,071 431,807 12.2 0.1 Equity Passively Managed(1): U.S. 206 423 1,229 (51.3) (65.6) Global & Non-US 510 1,053 834 (51.6) 26.3 Total 716 1,476 2,063 (51.5) (28.5) Total Equity 485,314 433,547 433,870 11.9 (0.1) Fixed Income Taxable: U.S. 34,173 35,756 36,689 (4.4) (2.5) Global & Non-US 26,425 23,384 20,488 13.0 14.1 Total 60,598 59,140 57,177 2.5 3.4 Fixed Income Tax-Exempt: U.S. 114,974 111,304 106,162 3.3 4.8 Global & Non-US 88 31 34 183.9 (8.8) Total 115,062 111,335 106,196 3.3 4.8 Fixed Income Passively Managed(1): U.S. 58 38 11 52.6 245.5 Global & Non-US 4,059 3,336 4,299 21.7 (22.4) Total 4,117 3,374 4,310 22.0 (21.7) Total Fixed Income 179,777 173,849 167,683 3.4 3.7 Other(2): U.S. 67,019 41,595 22,177 61.1 87.6 Global & Non-US 49,365 54,629 59,594 (9.6) (8.3) Total 116,384 96,224 81,771 21.0 17.7 Total Investment Advisory and Services Fees: U.S. 489,007 445,018 426,974 9.9 4.2 Global & Non-US 292,468 258,602 256,350 13.1 0.9 Consolidated company-sponsored investment funds (2,501) — — n/m n/m Total 778,974 703,620 683,324 10.7 3.0 Distribution Revenues 5,077 3,840 3,498 32.2 9.8 Shareholder Servicing Fees 3,311 4,139 3,031 (20.0) 36.6 Total $787,362 $711,599 $689,853 10.6 3.2 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services and certain alternative investments. Annual Report 2017 9


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    Bernstein Research Services We offer high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options to institutional investors, such as pension fund, hedge fund and mutual fund managers, and other institutional investors (“Bernstein Research Services”). We serve our clients, which are based in the United States and in other major markets around the world, through our trading professionals, who primarily are based in New York, London and Hong Kong, and our sell-side analysts, who provide fundamental company and industry research along with quantitative research into securities valuation and factors affecting stock-price movements. We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser extent by paying us directly for research through commission sharing agreements or cash payments. Bernstein Research Services accounted for approximately 14%, 16% and 16% of our net revenues as December 31, 2017, 2016 and 2015, respectively. For information regarding trends in fee rates charged for brokerage transactions, see “Risk Factors” in Item 1A. Our Bernstein Research Services revenues are as follows: Revenues From Bernstein Research Services Years Ended December 31, % Change 2017 2016 2015 2017-16 2016-15 (in thousands) Bernstein Research Services $449,919 $479,875 $493,463 (6.2)% (2.8)% Custody Our U.S.-based broker-dealer subsidiary acts as custodian for the majority of our Private Wealth Management AUM and some of our Institutions AUM. Other custodial arrangements are maintained by client-designated banks, trust companies, brokerage firms or custodians. Employees As of December 31, 2017, our firm had 3,466 full-time employees, representing a 0.8% increase compared to the end of 2016. We consider our employee relations to be good. Service Marks We have registered a number of service marks with the U.S. Patent and Trademark Office and various foreign trademark offices, including the mark “AllianceBernstein”. The logo set forth below and “Ahead of Tomorrow” are service marks of AB: In January 2015, we established a new brand identity by prominently incorporating “AB” into our brand architecture, while main- taining the legal names of our corporate entities. With this and other related refinements, our company, and our Institutional and Retail businesses, now are referred to “AllianceBernstein (AB)” or simply “AB”. Private Wealth Management and Bernstein Research Services now are referred to as “AB Bernstein”. Also, we adopted the logo and “Ahead of Tomorrow” service marks described above. 10 AB


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    In connection with the Bernstein Transaction, we acquired all of the rights in, and title to, the Bernstein service marks, including the mark “Bernstein”. In connection an acquisition we completed in 2013, we acquired all of the rights in, and title to, the W.P. Stewart & Co. service marks, including the logo “WPSTEWART”. Regulation Virtually all aspects of our business are subject to various federal and state laws and regulations, rules of various securities regulators and exchanges, and laws in the foreign countries in which our subsidiaries conduct business. These laws and regulations primarily are intended to protect clients and fund shareholders and generally grant supervisory agencies broad administrative powers, includ- ing the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations. Possible sanctions that may be imposed on us include the suspension of individual employees, limitations on engaging in business for specific periods, the revocation of the registration as an investment adviser or broker-dealer, censures and fines. AB, AB Holding, the General Partner and six of our subsidiaries (Sanford C. Bernstein & Co., LLC (“SCB LLC”), AllianceBern- stein Global Derivatives Corporation, AB Custom Alternative Solutions LLC, AB Private Credit Investors LLC, W.P. Stewart & Co., LLC and W.P. Stewart Asset Management LLC) are registered with the SEC as investment advisers under the Investment Advisers Act. Additionally, AB Holding is an NYSE-listed company and, accordingly, is subject to applicable regulations promul- gated by the NYSE. Also, AB, SCB LLC and AB Custom Alternative Solutions LLC are registered with the Commodity Futures Trading Commission (“CFTC”) as commodity pool operators and commodity trading advisers; SCB LLC also is registered with the CFTC as a commodities introducing broker. Each U.S. Fund is registered with the SEC under the Investment Company Act and each Non-U.S. Fund is subject to the laws in the jurisdiction in which the fund is registered. For example, our platform of Luxembourg-based funds operates pursuant to Lux- embourg laws and regulations, including Undertakings for the Collective Investment in Transferable Securities Directives, and is authorized and supervised by the Commission de Surveillance du Secteur Financier (“CSSF”), the primary regulator in Lux- embourg. AllianceBernstein Investor Services, Inc., one of our subsidiaries, is registered with the SEC as a transfer and servicing agent. SCB LLC and another of our subsidiaries, AllianceBernstein Investments, Inc., are registered with the SEC as broker-dealers, and both are members of the Financial Industry Regulatory Authority. In addition, SCB LLC is a member of the NYSE and other principal U.S. exchanges. Many of our subsidiaries are subject to the oversight of regulatory authorities in the jurisdictions outside the United States in which they operate, including the European Securities and Markets Authority, the Financial Conduct Authority in the U.K., the CSSF in Luxembourg, the Financial Services Agency in Japan, the Securities & Futures Commission in Hong Kong, the Monetary Authority of Singapore, the Financial Services Commission in South Korea and the Financial Supervisory Commission in Taiwan. While these regulatory requirements often may be comparable to the requirements of the SEC and other U.S. regulators, they are some- times more restrictive and may cause us to incur substantial expenditures of time and money related to our compliance efforts. For additional information relating to the regulations that impact our business, please refer to “Risk Factors” in Item 1A. Iran Threat Reduction and Syria Human Rights Act AB, AB Holding and their global subsidiaries had no transactions or activities requiring disclosure under the Iran Threat Reduction and Syria Human Rights Act, nor were they involved in the AXA Group matters described immediately below. The non-U.S. based subsidiaries of AXA operate in compliance with applicable laws and regulations of the various jurisdictions in which they operate, including applicable international (United Nations and European Union) laws and regulations. While AXA Group companies based and operating outside the United States generally are not subject to U.S. law, as an international group, Annual Report 2017 11


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    AXA has in place policies and standards (including the AXA Group International Sanctions Policy) that apply to all AXA Group companies worldwide and often impose requirements that go well beyond local law. For additional information regarding AXA, see “Principal Security Holders” in Item 12. AXA has informed us that AXA Konzern AG, an AXA insurance subsidiary organized under the laws of Germany, provides car, accident and health insurance to diplomats based at the Iranian Embassy in Berlin, Germany. The total annual premium of these policies is approximately $181,000 before tax and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $26,900. These policies were underwritten by a broker who specializes in providing insurance coverage for diplomats. Provision of motor vehicle insurance is mandatory in Germany and cannot be canceled until the policy expires. In addition, AXA has informed us that AXA Insurance Ireland, an AXA insurance subsidiary, provides statutorily required car insurance under four separate policies to the Iranian Embassy in Dublin, Ireland. AXA has informed us that compliance with the Declined Cases Agreement of the Irish Government prohibits the cancellation of these policies unless another insurer is willing to assume the coverage. The total annual premium for these policies is approximately $6,094 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $914. Also, AXA has informed us that AXA Sigorta, a subsidiary of AXA organized under the laws of Turkey, provides car insurance coverage for vehicle pools of the Iranian General Consulate and the Iranian Embassy in Istanbul, Turkey. Motor liability insurance coverage is mandatory in Turkey and cannot be canceled unilaterally. The total annual premium in respect of these policies is approximately $3,150 and the annual net profit, which is difficult to calculate with precision, is estimated to be $473. Additionally, AXA has informed us that AXA Ukraine, an AXA insurance subsidiary, provides car insurance for the Attaché of the Iranian Embassy in Ukraine. Motor liability insurance coverage cannot be canceled under Ukrainian law. The total annual premium in respect of this policy is approximately $1,000 and the annual net profit, which is difficult to calculate with precision, is estimated to be $150. AXA also has informed us that AXA Ubezpieczenia, an AXA insurance subsidiary organized under the laws of Poland, provides car insurance to two diplomats based at the Iranian embassy in Warsaw, Poland. Provision of motor vehicle insurance is mandatory in Poland. The total annual premium of these policies is approximately $676 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $101. This business had ceased by December 31, 2017. In addition, AXA has informed us that AXA Winterthur, an AXA insurance subsidiary organized under the laws of Switzerland, provides Naftiran Intertrade, a wholly-owned subsidiary of the Iranian state-owned National Iranian Oil Company, with life, dis- ability and accident coverage for its employees. The provision of these forms of coverage is mandatory for employees in Switzerland. The total annual premium of these policies is approximately $373,668 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $56,000. Lastly, AXA has informed us that AXA Egypt, an AXA insurance subsidiary organized under the laws of Egypt, provides the Iranian state-owned Iran Development Bank, two life insurance contracts, covering individuals who have loans with the bank. The total annual premium of these policies is approximately $34,446 and annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $3,500. The aggregate annual premium for the above-referenced insurance policies is approximately $600,034, representing approximately 0.0006% of AXA’s 2017 consolidated revenues, which exceed $100 billion. The related net profit, which is difficult to calculate with precision, is estimated to be $88,038, representing approximately 0.001% of AXA’s 2017 aggregate net profit. History and Structure We have been in the investment research and management business for 50 years. Bernstein was founded in 1967; Alliance Capital was founded in 1971 when the investment management department of Donaldson, Lufkin & Jenrette, Inc. (since November 2000, a part of Credit Suisse Group) merged with the investment advisory business of Moody’s Investors Service, Inc. 12 AB


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    In April 1988, AB Holding “went public” as a master limited partnership. AB Holding Units, which trade under the ticker symbol “AB”, have been listed on the NYSE since that time. In October 1999, AB Holding reorganized by transferring its business and assets to AB, a newly-formed operating partnership, in exchange for all of the AB Units (“Reorganization”). Since the date of the Reorganization, AB has conducted the business for- merly conducted by AB Holding and AB Holding’s activities have consisted of owning AB Units and engaging in related activities. Unlike AB Holding Units, AB Units do not trade publicly and are subject to significant restrictions on transfer. The General Partner is the general partner of both AB and AB Holding. In October 2000, our two legacy firms, Alliance Capital and Bernstein, combined, bringing together Alliance Capital’s expertise in growth equity and corporate fixed income investing and its family of retail mutual funds, with Bernstein’s expertise in value equity investing, tax-exempt fixed income management, and its Private Wealth Management and Bernstein Research Services businesses. For additional details about this business combination, see Note 2 to AB’s consolidated financial statements in Item 8. As of December 31, 2017, the condensed ownership structure of AB is as follows (for a more complete description of our owner- ship structure, see “Principal Security Holders” in Item 12): Directors, Public Officers, AXA Employees 64.9% 31.1% 3.9% 100% 96.0% 62.3% General Unaffiliated AB Holding Partner Holders 0.1% 35.5% 1.0% 1.2% AB The General Partner owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB. Including these general partnership interests, AXA, through certain of its subsidiaries (see “Principal Security Holders” in Item 12), had an approx- imate 64.7% economic interest in AB as of December 31, 2017. Competition We compete in all aspects of our business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations, and other financial institutions that often pro- vide investment products that have similar features and objectives as those we offer. Our competitors offer a wide range of financial services to the same customers that we seek to serve. Some of our competitors are larger, have a broader range of product choices and investment capabilities, conduct business in more markets, and have substantially greater resources than we do. These factors may place us at a competitive disadvantage, and we can give no assurance that our strategies and efforts to maintain and enhance our current client relationships, and create new ones, will be successful. In addition, AXA and its subsidiaries provide financial services, some of which compete with those we offer. The AB Partnership Agreement specifically allows AXA and its subsidiaries (other than the General Partner) to compete with AB and to pursue Annual Report 2017 13


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    opportunities that may be available to us. AXA, AXA Equitable Holdings, AXA Financial, AXA Equitable and certain of their respective subsidiaries have substantially greater financial resources than we do and are not obligated to provide resources to us. To grow our business, we believe we must be able to compete effectively for AUM. Key competitive factors include: • our investment performance for clients; • our commitment to place the interests of our clients first; • the quality of our research; • our ability to attract, motivate and retain highly skilled, and often highly specialized, personnel; • the array of investment products we offer; • the fees we charge; • Morningstar/Lipper rankings for the AB Funds; • our ability to sell our actively-managed investment services despite the fact that many investors favor passive services; • our operational effectiveness; • our ability to further develop and market our brand; and • our global presence. Competition is an important risk that our business faces and should be considered along with the other factors we discuss in “Risk Factors” in Item 1A. Available Information AB and AB Holding file or furnish annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to such reports, and other reports (and amendments thereto) required to comply with federal securities laws, including Section 16 beneficial ownership reports on Forms 3, 4 and 5, registration statements and proxy statements. We maintain an Internet site (http://www.alliancebernstein.com) where the public can view these reports, free of charge, as soon as reasonably practicable after each report is filed with, or furnished to, the SEC. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 14 AB


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    Item 1A. Risk Factors Please consider this section along with the description of our business in Item 1, the competition section immediately above and AB’s financial information contained in Items 6, 7 and 8. The majority of the risk factors discussed below directly affect AB. These risk factors also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB. See also “Cautions Regarding Forward-Looking Statements” in Item 7. Business-related Risks Our revenues and results of operations depend on the market value and composition of our AUM, which can fluctuate significantly based on various factors, including many factors outside of our control. We derive most of our revenues from investment advisory and services fees, which typically are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of the account and the total amount of assets we manage for a particular client. The value and composition of our AUM can be adversely affected by several factors, including: • Market Factors. After the uncertainties of 2016, global equity markets increased substantially in 2017 while fixed income mar- kets also rose, as the global economic recovery gained momentum and breadth. However, since the end of 2017, volatility has increased significantly as investors’ concerns over rising interest rates and their effect on the pace of economic growth have become more prevalent. Other issues continue to concern global investors as well, including the effect of new U.S. tax legis- lation, rising inflation, the Brexit negotiations, implementation of MiFID II and slowing asset purchases by the European Cen- tral Bank in Europe, and the pace of growth in China. These factors, and the market volatility they cause, may adversely affect our AUM and revenues. • Client Preferences. Generally, our clients may withdraw their assets at any time and on short notice. Also, changing market dynamics and investment trends, particularly with respect to sponsors of defined benefit plans choosing to invest in less risky investments and the ongoing shift to lower-fee passive services described below, may continue to reduce interest in some of the investment products we offer, and/or clients and prospects may continue to seek investment products that we may not cur- rently offer. Loss of, or decreases in, AUM reduces our investment advisory and services fees and revenues. • Our Investment Performance. Our ability to achieve investment returns for clients that meet or exceed investment returns for comparable asset classes and competing investment services is a key consideration when clients decide to keep their assets with us or invest additional assets, and when a prospective client is deciding whether to invest with us. Poor investment performance, both in absolute terms and/or relative to peers and stated benchmarks, may result in clients withdrawing assets and prospective clients choosing to invest with competitors. • Investing Trends. Our fee rates can vary significantly among the various investment products and services we offer to our clients (see “Net Revenues” in Item 7 for additional information regarding our fee rates); our fee realization rate fluctuates as clients shift assets between accounts or products with different fee structures. • Service Changes. We may be required to reduce our fee levels, restructure the fees we charge and/or adjust the services we offer to our clients because of, among other things, regulatory initiatives (whether industry-wide or specifically targeted), changing technology in the asset management business (including algorithmic strategies and emerging financial technology), court decisions and competitive considerations. A reduction in fees would reduce our revenues. A decrease in the value of our AUM, or a decrease in the amount of AUM we manage, or an adverse mix shift in our AUM, would adversely affect our investment advisory and services fees and revenues. A reduction in revenues, without a commensurate reduc- tion in expenses, adversely affects our results of operations. Annual Report 2017 15


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    The industry-wide shift from actively-managed investment services to passive services has adversely affected our invest- ment advisory and services fees, revenues and results of operations, and this trend may continue. Our competitive environment has become increasingly difficult over the past decade, as active managers, which invest based on individual security selection, have, on average, consistently underperformed passive services, which invest based on market indices. Although the investment performance of active managers improved in 2017, they continued to struggle to attract new assets as the popularity of passive strategies persisted. Active equity net outflows from U.S. mutual funds of $201 billion in 2017 were about one-third lower than the total in 2016, but passive equity inflows of $464 billion increased 49% during 2017. In addition, in U.S. active fixed income funds, net inflows of $220 billion more than doubled compared to 2016, but U.S. fixed income passive net inflows, which totaled $215 billion, increased 40% in 2017. In total, U.S. retail passive net inflows of $692 billion in 2017 repre- sented a new all-time high. The most recent data available for U.S. institutions (through September 30, 2017) indicates a similar trend. Total industry active equity and fixed income net outflows for the year-to-date through September 30, 2017 were $69 billion, which, while down substantially compared to 2016, still resulted in the active share of total industry assets decreasing from 76% to 75%. Further, passive inflows of $107 billion through September 30, 2017 already had exceeded the full-year 2016 total of $85 billion and increased the passive share of total industry assets from 24% to 25%. In this environment, organic growth through positive net inflows is difficult to achieve for active managers, such as AB, and requires taking market share from other active managers. The significant shift from active services to passive services adversely affects Bernstein Research Services revenues as well. Global market volumes have declined in recent years, and we expect this to continue, fueled by persistent active equity outflows and pas- sive equity inflows. As a result, portfolio turnover has decreased and investors hold fewer shares that are actively traded by managers. Our reputation could suffer if we are unable to deliver consistent, competitive investment performance. Our business is based on the trust and confidence of our clients. Damage to our reputation, resulting from poor or inconsistent investment performance, among other factors, can reduce substantially our AUM and impair our ability to maintain or grow our business. Maintaining adequate liquidity for our general business needs depends on certain factors, including operating cash flows and our access to credit on reasonable terms. Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow AUM and other factors beyond our control. Our ability to issue public or private debt on reason- able terms may be limited by adverse market conditions, our profitability, our creditworthiness as perceived by lenders and changes in government regulations, including tax rates and interest rates. Furthermore, our access to credit on reasonable terms is partially dependent on our firm’s credit ratings. Both Moody’s Investors Service, Inc. and Standard & Poor’s Rating Service recently affirmed AB’s long-term and short-term credit ratings and indicated a stable outlook in 2018. Future changes in our credit ratings are possible and any downgrade to our ratings is likely to increase our borrowing costs and limit our access to the capital markets. If this occurs, we may be forced to incur unanticipated costs or revise our strategic plans, which could have a material adverse effect on our financial condition, results of operations and business prospects. AXA and its affiliates, including AXA Equitable Holdings, provide a significant amount of our AUM and fund a significant portion of our seed investments, and if they choose to terminate their investment advisory agreements or withdraw capital support, whether as a result of AXA Equitable Holdings’s planned initial public offering (“IPO”) or another factor, it could have a material adverse effect on our business, results of operations or financial condition. AXA and its affiliates, including AXA Equitable Holdings, collectively are our largest client. AXA Equitable Holdings represented 17% of our total AUM as of December 31, 2017 and 3% of our net revenues for the year ended December 31, 2017. AXA and its affiliates other than AXA Equitable Holdings represented 6% of our total AUM as of December 31, 2017 and 2% of our net rev- enues for the year ended December 31, 2017. Our investment management agreements with these affiliates are terminable at any time or on short notice by either party, and none of these affiliates are under any obligation to maintain any level of AUM with us. 16 AB


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    A material adverse effect on our business, results of operations or financial condition could result if AXA Equitable Holdings or AXA and its other affiliates were to terminate their investment management agreements with us. Further, while we currently cannot predict the eventual impact, if any, on us of AXA Equitable Holdings’s planned IPO, such impact could include a reduction in the support AXA has provided to us in the past with respect to our investment management business, resulting in a decrease to our revenues and ability to initiate new investment services. Also, we rely on AXA for a number of significant services and we benefit from our affiliation with AXA in certain common vendor relationships. These arrangements may change with possible negative financial implications for us. We may be unable to continue to attract, motivate and retain key personnel, and the cost to retain key personnel could put pressure on our adjusted operating margin. Our business depends on our ability to attract, motivate and retain highly skilled, and often highly specialized, technical, investment, managerial and executive personnel and there is no assurance that we will be able to do so. The market for these professionals is extremely competitive. They often maintain strong, personal relationships with investors in our products and other members of the business community so their departure may cause us to lose client accounts or result in fewer opportunities to win new business, either of which factors could have a material adverse effect on our results of operations and business prospects. Additionally, a decline in revenues may limit our ability to pay our employees at competitive levels, and maintaining (or increasing) compensation without a revenue increase, in order to retain key personnel, may adversely affect our adjusted operating margin. As a result, we remain vigilant about aligning our cost structure (including headcount) with our revenue base. For additional information regarding our compensation practices, see “Compensation Discussion and Analysis” in Item 11. Also, while the impact on AB from our firm’s relocation strategy (see “Relocation Strategy” in Item 7) is not yet known, the uncertainty created by these circumstances could have a significant adverse effect on AB’s ability to motivate and retain current employees. Further, significant managerial and operational challenges could arise if AB experiences significantly greater attrition among current employees than the firm anticipates in connection with the relocation. Our business is dependent on investment advisory agreements with clients, and selling and distribution agreements with various financial intermediaries and consultants, which generally are subject to termination or non-renewal on short notice. We derive most of our revenues pursuant to written investment management agreements (or other arrangements) with institutional investors, mutual funds and private wealth clients, and selling and distribution agreements with financial intermediaries that distrib- ute AB Funds. Generally, the investment management agreements (and other arrangements), including our agreements with AXA and its subsidiaries, are terminable at any time or upon relatively short notice by either party. The investment management agree- ments pursuant to which we manage the U.S. Funds must be renewed and approved by the Funds’ boards of directors annually. A significant majority of the directors are independent. Consequently, there can be no assurance that the board of directors of each fund will approve the fund’s investment management agreement each year, or will not condition its approval on revised terms that may be adverse to us. In addition, investors in AB Funds can redeem their investments without notice. Any termination of, or fail- ure to renew, a significant number of these agreements, or a significant increase in redemption rates, could have a material adverse effect on our results of operations and business prospects. Similarly, the selling and distribution agreements with securities firms, brokers, banks and other financial intermediaries (including our agreement with HSBC, with respect to which HSBC was responsible for approximately 9% of our open-end AB Fund sales in 2017) are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares. These intermediaries generally offer their clients investment products that compete with our prod- ucts. In addition, certain institutional investors rely on consultants to advise them about choosing an investment adviser and some of our services may not be considered among the best choices by these consultants. As a result, investment consultants may advise their clients to move their assets invested with us to other investment advisers, which could result in significant net outflows. Annual Report 2017 17


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    Lastly, our Private Wealth Services rely on referrals from financial planners, registered investment advisers and other professionals. We cannot be certain that we will continue to have access to, or receive referrals from, these third parties. Loss of such access or referrals could have a material adverse effect on our results of operations and business prospects. Performance-based fee arrangements with our clients may cause greater fluctuations in our net revenues. We sometimes charge our clients performance-based fees, whereby we charge a base advisory fee and are eligible to earn an addi- tional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a per- centage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account underperforms relative to its performance target (whether in absolute terms or relative to a specified benchmark), it must gain back such underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve the performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance- based fees will be impaired. We are eligible to earn performance-based fees on 7.1%, 4.1% and 0.7% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 4.4% of our AUM). If the percentage of our AUM subject to performance- based fees increases, seasonality and volatility of revenue and earnings are likely to become more significant. Our performance-based fees in 2017, 2016 and 2015 were $94.8 million, $32.8 million and $23.7 million, respectively. An impairment of goodwill may occur. Determining whether an impairment of the goodwill asset exists requires management to exercise a substantial amount of judgment. In addition, to the extent that securities valuations are depressed for prolonged periods of time and/or market conditions deteriorate, or if we experience significant net redemptions, our AUM, revenues, profitability and unit price will be adversely affected. Although the price of an AB Holding Unit is just one factor in the calculation of fair value, if AB Holding Unit price levels decline significantly, reaching the conclusion that fair value exceeds carrying value will, over time, become more diffi- cult. In addition, control premiums, industry earnings multiples and discount rates are impacted by economic conditions. As a result, subsequent impairment tests may occur more frequently and be based on more negative assumptions and future cash flow projec- tions, and may result in an impairment of goodwill. An impairment may result in a material charge to our earnings. For additional information about our impairment testing, see Item 7. We may engage in strategic transactions that could pose risks. As part of our business strategy, we consider potential strategic transactions, including acquisitions, dispositions, mergers, con- solidations, joint ventures and similar transactions, some of which may be material. These transactions, if undertaken, may involve a number of risks and present financial, managerial and operational challenges, including: • adverse effects on our earnings if acquired intangible assets or goodwill become impaired; • existence of unknown liabilities or contingencies that arise after closing; • potential disputes with counterparties; and • potential dilution to our existing unitholders, if we fund the purchase price of a transaction with AB Units or AB Holding Units Acquisitions also pose the risk that any business we acquire may lose customers or employees or could underperform relative to expectations. Additionally, the loss of investment personnel poses the risk that we may lose the AUM we expected to manage, which could adversely affect our results of operations. Furthermore, strategic transactions may require us to increase our leverage or, if we issue AB Units or AB Holding Units to fund an acquisition, would dilute the holdings of our existing Unitholders. Fluctuations in the exchange rates between the U.S. dollar and various other currencies can adversely affect our AUM, revenues and results of operations. Although significant portions of our net revenues and expenses, as well as our AUM, presently are denominated in U.S. dollars, we have subsidiaries and clients outside of the United States with functional currencies other than the U.S. dollar. Weakening of these 18 AB


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    currencies relative to the U.S. dollar adversely affects the value in U.S. dollar terms of our revenues and our AUM denominated in these other currencies. Accordingly, fluctuations in U.S. dollar exchange rates affect our AUM, revenues and reported financial results from one period to the next. We may not be successful in our efforts to hedge our exposure to such fluctuations, which could negatively impact our revenues and reported financial results. Our seed capital investments are subject to market risk. While we enter into various futures, forwards, swap and option contracts to economically hedge many of these investments, we also may be exposed to market risk and credit-related losses in the event of non-performance by counterparties to these derivative instruments. We have a seed investment program for the purpose of building track records and assisting with the marketing initiatives pertaining to our firm’s new products. These seed capital investments are subject to market risk. Our risk management team oversees a seed hedging program that attempts to minimize this risk, subject to practical and cost considerations. Also, not all seed investments are deemed appropriate to hedge, and in those cases we are exposed to market risk. In addition, we may be subject to basis risk in that we cannot always hedge with precision our market exposure and, as a result, we may be subject to relative spreads between market sectors. As a result, volatility in the capital markets may cause significant changes in our period-to-period financial and operating results. We use various derivative instruments, including futures, forwards, swap and option contracts, in conjunction with our seed hedg- ing program. While in most cases broad market risks are hedged, our hedges are imperfect and some market risk remains. In addi- tion, our use of derivatives results in counterparty risk (i.e., the risk that we may be exposed to credit-related losses in the event of non-performance by counterparties to these derivative instruments), regulatory risk (e.g., short selling restrictions) and cash/synthetic basis risk (i.e., the risk that the underlying positions do not move identically to the related derivative instruments). The revenues generated by Bernstein Research Services may be adversely affected by circumstances beyond our control, including declines in brokerage transaction rates, declines in global market volumes, failure to settle our trades by sig- nificant counterparties and the effects of MiFID II. Electronic, or “low-touch”, trading represents a significant percentage of buy-side trading activity and typically produce transaction fees for execution-only services that are approximately one-third the price of traditional full service fee rates. As a result, blended pricing throughout our industry is lower now than it was historically, and price declines may continue. In addition, fee rates we charge and charged by other brokers for traditional brokerage services have historically experienced price pressure, and we expect these trends to continue. Also, while increases in transaction volume and market share often can offset decreases in rates, this may not continue. In addition, the failure or inability of any of our broker-dealer’s significant counterparties to perform could expose us to substantial expenditures and adversely affect our revenues. For example, SCB LLC, as a member of clearing and settlement exchanges, would be required to settle open trades of any non-performing counterparty. This exposes us to the mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periods of severe market volatility. Also, our ability to access liquidity in such situations may be limited by what our funding relationships are able to offer us at such times. We discuss the risks associated with the second installment of the Markets in Financial Instruments Directive II (“MiFID II”) below in this Item 1A. The individuals, third-party vendors or issuers on whom we rely to perform services for us or our clients may be unable or unwilling to honor their contractual obligations to us. We rely on various counterparties and other third-party vendors to augment our existing investment, operational, financial and technological capabilities, but the use of a third-party vendor does not diminish AB’s responsibility to ensure that client and regu- latory obligations are met. Default rates, credit downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress. Disruptions in the financial markets and other economic challenges may cause our counter- parties and other third-party vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs and impair our ability to conduct business. Annual Report 2017 19


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    Weaknesses or failures within a third-party vendor’s internal processes or systems, or inadequate business continuity plans, can mate- rially disrupt our business operations. Also, third-party vendors may lack the necessary infrastructure or resources to effectively safe- guard our confidential data. If we are unable to effectively manage the risks associated with such third-party relationships, we may suffer fines, disciplinary action and reputational damage. We may not accurately value the securities we hold on behalf of our clients or our company investments. In accordance with applicable regulatory requirements, contractual obligations or client direction, we employ procedures for the pricing and valuation of securities and other positions held in client accounts or for company investments. We have established a Valuation Committee, composed of senior officers and employees, which oversees pricing controls and valuation processes. If mar- ket quotations for a security are not readily available, the Valuation Committee determines a fair value for the security. Extraordinary volatility in financial markets, significant liquidity constraints or our failure to adequately consider one or more factors when determining the fair value of a security based on information with limited market observability could result in our failing to properly value securities we hold for our clients or investments accounted for on our balance sheet. Improper valuation likely would result in our basing fee calculations on inaccurate AUM figures, our striking incorrect net asset values for company- sponsored mutual funds or hedge funds or, in the case of company investments, our inaccurately calculating and reporting our financial condition and operating results. Although the overall percentage of our AUM that we fair value based on information with limited market observability is not significant, inaccurate fair value determinations can harm our clients, create regulatory issues and damage our reputation. We may not have sufficient information to confirm or review the accuracy of valuations provided to us by underlying external managers for the funds in which certain of our alternative investment products invest. Certain of our alternative investment services invest in funds managed by external managers (“External Managers”) rather than investing directly in securities and other instruments. As a result, our abilities will be limited with regard to (i) monitoring such investments, (ii) regularly obtaining complete, accurate and current information with respect to such investments and (iii) exercising control over such investments. Accordingly, we may not have sufficient information to confirm or review the accuracy of valuations provided to us by External Managers. In addition, we will be required to rely on External Managers’ compliance with any appli- cable investment guidelines and restrictions. Any failure of an External Manager to operate within such guidelines or to provide accurate information with respect to the investment could subject our alternative investment products to losses and cause damage to our reputation. The quantitative models we use in certain of our investment services may contain errors, resulting in imprecise risk assess- ments and unintended output. We use quantitative models in a variety of our investment services, generally in combination with fundamental research. These models are developed by senior quantitative professionals and typically are implemented by IT professionals. Our Model Risk Oversight Committee oversees the model governance framework and associated model review activities, which are then executed by our Model Risk Team. However, due to the complexity and large data dependency of such models, it is possible that errors in the models could exist and our controls could fail to detect such errors. Failure to detect errors could result in client losses and repu- tational damage. We may not always successfully manage actual and potential conflicts of interest that arise in our business. Increasingly, we must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived to conflict, with the interests of another client. Failure to adequately address potential conflicts of interest could adversely affect our reputation, results of operations and business prospects. We have procedures and controls that are designed to identify and mitigate conflicts of interest, including those designed to prevent the improper sharing of information. However, appropriately managing conflicts of interest is complex. Our reputation could be damaged and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if we fail, or appear to fail, to deal appropriately with actual or perceived conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions. 20 AB


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    Technology failures and disruptions, including failures to properly safeguard confidential information, can significantly constrain our operations and result in significant time and expense to remediate, which could result in a material adverse effect on our results of operations and business prospects. We are highly dependent on software and related technologies throughout our business, including both proprietary systems and those provided by third-party vendors. We use our technology to, among other things, obtain securities pricing information, proc- ess client transactions, store and maintain data, and provide reports and other services to our clients. Despite our protective meas- ures, including measures designed to effectively secure information through system security technology and established and tested business continuity plans, we may still experience system delays and interruptions as a result of natural disasters, hardware failures, software defects, power outages, acts of war and third-party failures. We cannot predict with certainty all of the adverse effects that could result from our failure, or the failure of a third party, to efficiently address and resolve these delays and interruptions. These adverse effects could include the inability to perform critical business functions or failure to comply with financial reporting and other regulatory requirements, which could lead to loss of client confidence, reputational damage, exposure to disciplinary action and liability to our clients. Many of the software applications that we use in our business are licensed from, and supported, upgraded and maintained by, third- party vendors. A suspension or termination of certain of these licenses or the related support, upgrades and maintenance could cause temporary system delays or interruption. Additionally, technology rapidly evolves and we cannot guarantee that our competitors may not implement more advanced technology platforms for their products and services, which may place us at a competitive dis- advantage and adversely affect our results of operations and business prospects. Also, we could be subject to losses if we fail to properly safeguard sensitive and confidential information. As part of our normal operations, we maintain and transmit confidential information about our clients as well as proprietary information relating to our business operations. Although we take protective measures, our systems still could be vulnerable to cyber attack or other forms of unauthorized access (including computer viruses) that have a security impact, such as an authorized employee or vendor inadvertently or intentionally causing us to release confidential or proprietary information. Such disclosure could, among other things, allow competitors access to our proprietary business information and require significant time and expense to investigate and remediate the breach. Moreover, loss of confidential client information could harm our reputation and subject us to liability under laws that protect confidential personal data, resulting in increased costs or loss of revenues. Any significant security breach of our information and cyber security infrastructure may significantly harm our operations and reputation. It is critical that we ensure the continuity and effectiveness of our information and cyber security infrastructure, policies, procedures and capabilities to protect our computer and telecommunications systems and the data that reside on or are transmitted through them and contracted third-party systems. Although we take protective measures, including measures to effectively secure information through system security technology, our technology systems may still be vulnerable to unauthorized access, computer viruses or other events that have a security impact, such as an external attack by one or more cyber criminals (including phishing attacks attempting to obtain confidential information and ransomware attacks attempting to block access to a computer system until a sum of money is paid), which could materially harm our operations and reputation. Additionally, while we take precautions to password protect and encrypt our laptops and sensitive information on our other mobile electronic devices, if such devices are sto- len, misplaced or left unattended, they may become vulnerable to hacking or other unauthorized use, creating a possible security risk and resulting in potentially costly actions by us. Unpredictable events, including climate change, natural disaster, dangerous weather conditions, technology failure, terro- rist attack and political unrest, may adversely affect our ability to conduct business. War, terrorist attack, political unrest, power failure, climate change, natural disaster and rapid spread of infectious diseases could interrupt our operations by: • causing disruptions in global economic conditions, thereby decreasing investor confidence and making investment products generally less attractive; Annual Report 2017 21


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    • inflicting loss of life; • triggering large-scale technology failures or delays; • breaching our information and cyber security infrastructure; and • requiring substantial capital expenditures and operating expenses to remediate damage and restore operations. Despite the contingency plans and facilities we have in place, including system security measures, information back-up and disaster recovery processes, our ability to conduct business may be adversely affected by a disruption in the infrastructure that supports our operations and the communities in which they are located. This may include a disruption involving electrical, communications, transportation or other services we may use or third parties with which we conduct business. If a disruption occurs in one location and our employees in that location are unable to occupy our offices or communicate with or travel to other locations, our ability to conduct business with and on behalf of our clients may suffer, and we may not be able to successfully implement contingency plans that depend on communication or travel. Furthermore, unauthorized access to our systems as a result of a security breach, the failure of our systems, or the loss of data could give rise to legal proceedings or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, and damage our reputation. Our operations require experienced, professional staff. Loss of a substantial number of such persons or an inability to provide prop- erly equipped places for them to work may, by disrupting our operations, adversely affect our financial condition, results of oper- ations and business prospects. In addition, our property and business interruption insurance may not be adequate to compensate us for all losses, failures or breaches that may occur. Our own operational failures or those of third parties on which we rely, including failures arising out of human error, could disrupt our business, damage our reputation and reduce our revenues. Weaknesses or failures in our internal processes or systems could lead to disruption of our operations, liability to clients, exposure to disciplinary action or harm to our reputation. Our business is highly dependent on our ability to process, on a daily basis, large numbers of transactions, many of which are highly complex, across numerous and diverse markets. These transactions generally must comply with client investment guidelines, as well as stringent legal and regulatory standards. Our obligations to clients require us to exercise skill, care and prudence in performing our services. Despite our employees being highly trained and skilled, the large number of transactions we process makes it highly likely that errors will occasionally occur. If we make a mistake in performing our services that causes financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. The occurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, results of operations and business prospects. The insurance that we maintain may not fully cover all potential exposures. We maintain professional liability, fidelity, cyber, property, casualty, business interruption and other types of insurance, but such insurance may not cover all risks associated with the operation of our business. Our coverage is subject to exclusions and limitations, including high self-insured retentions or deductibles and maximum limits and liabilities covered. In addition, from time to time, various types of insurance may not be available on commercially acceptable terms or, in some cases, at all. We can make no assur- ance that a claim or claims will be covered by our insurance policies or, if covered, will not exceed our available insurance cover- age, or that our insurers will remain solvent and meet their obligations. In the future, we may not be able to obtain coverage at current levels, if at all, and our premiums may increase significantly on coverage that we maintain. Also, we currently are party to certain joint insurance arrangements with subsidiaries of Equitable Hold- ings. If our affiliates choose not to include us as insured parties under any such policies, we may need to obtain stand-alone insurance coverage, which could have coverage terms that are less beneficial to us and/or cost more. Our business is subject to pervasive, complex and continuously evolving global regulation, compliance with which involves substantial expenditures of time and money, and violation of which may result in material adverse consequences. Virtually all aspects of our business are subject to federal and state laws and regulations, rules of securities regulators and exchanges, and laws and regulations in the foreign jurisdictions in which our subsidiaries conduct business. If we violate these laws or regulations, we 22 AB


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    could be subject to civil liability, criminal liability or sanction, including restriction or revocation of our and our subsidiaries’ pro- fessional licenses or registrations, revocation of the licenses of our employees, censures, fines, or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a material adverse effect on our financial condition, results of oper- ations and business prospects. A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanction, could require substantial expenditures of time and money and could potentially damage our reputation. In recent years, global regulators have substantially increased their oversight of financial services. Some of the newly-adopted and proposed regulations are focused on investment management services. Others, while more broadly focused, nonetheless impact our business. Moreover, the adoption of new laws, regulations or standards and changes in the interpretation or enforcement of existing laws, regulations or standards have directly affected, and will continue to affect, our business, including making our efforts to com- ply more expensive and time-consuming. For example, the Financial Supervisory Commission in Taiwan (“FSC”) implemented, as of January 1, 2015, new limits on the degree to which local investors can own an offshore investment product. While certain exemptions have been available to us, should we not continue to qualify, the FSC’s rules could force some of our local resident investors to redeem their investments in our funds sold in Taiwan (and/or prevent further sales of those funds in Taiwan), some of which funds have local ownership levels substantially above the FSC limits. This could lead to significant declines in our investment advisory and services fees and revenues earned from these funds. In addition, pending and newly-enacted regulations in the U.S. and Europe could pose significant challenges to AB, including the fiduciary duty rules adopted by the U.S. Department of Labor (“DOL”). A simplified version of these rules became effective during a transition period, which had been scheduled to conclude on January 1, 2018 but which the DOL extended through July 1, 2019. During the transition period, the only substantive requirement of the simplified rules is to act in the best interest of clients, charge reasonable fees and make no misleading statements. Implementation of the rules may impact how we compensate our financial advi- sors and the financial intermediaries that sell our investment funds, as well as increase the cost and complexity of our compliance efforts. In Europe, MiFID II, which became effective on January 3, 2018, makes significant modifications to the manner in which European broker-dealers can be compensated for research. These modifications are recognized in the industry as having the potential to significantly decrease the overall research spend by European buy-side firms. Consequently, our U.K.-based broker- dealer is considering new charging mechanisms for its research in order to minimize this impact as part of its broader MiFID II implementation program. It is important to note, however, that our new charging mechanisms and other strategic decisions to address the new environment created by MiFID II, both in the Eurozone and globally, may not be successful, which could result in a significant decline in our sell-side revenues. Also, although MiFID II permits buy-side firms to purchase research through the use of client-funded research payment accounts, most buy-side firms that operate in the Eurozone, including our U.K. buy-side subsidiaries, are using their own funds to pay for research in the Eurozone in order to avoid a potentially significant competitive disadvantage. However, this practice will increase our research costs on the buy-side and significant operational changes are required to implement the rule. The ultimate impact of MiFID II on payments for research globally is not yet certain. Lastly, it also is uncertain how regulatory trends will evolve under the current U.S. President’s administration and abroad. For example, in June 2016, a narrow majority of voters in a U.K. referendum voted to exit the European Union (“Brexit”), but it remains unclear exactly how the U.K.’s status in relation to the European Union (“EU”) will change when it ultimately leaves. Accordingly, our U.K.-based buy-side and sell-side subsidiaries are considering alternative arrangements in EU jurisdictions in order to ensure continued operations in the Eurozone. In addition, any other changes in the composition of the EU’s member states may add further complexity to our global risks and operations. Annual Report 2017 23


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    We are involved in various legal proceedings and regulatory matters and may be involved in such proceedings in the future, any one or combination of which could have a material adverse effect on our reputation, financial condition, results of operations and business prospects. We may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which allege significant damages, and we may be involved in additional matters in the future. Litigation is subject to significant uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, the litigation is in its early stages, or when the litigation is highly complex or broad in scope. The financial services industry is intensely competitive. We compete on the basis of a number of factors, including our investment performance for our clients, our array of investment services, innovation, reputation and price. By having a global presence, we often face competitors with more experience and more established relationships with clients, regulators and industry participants in the relevant market, which could adversely affect our ability to expand. Furthermore, if we are unable to maintain and/or continue to improve our investment performance, our client flows may be adversely affected, which may make it more difficult for us to compete effectively. Also, increased competition could reduce the demand for our products and services, which could have a material adverse effect on our financial condition, results of operations and business prospects. For additional information regarding competitive factors, see “Competition” in Item 1. Structure-related Risks The partnership structure of AB Holding and AB limits Unitholders’ abilities to influence the management and operation of AB’s business and is highly likely to prevent a change in control of AB Holding and AB. The General Partner, as general partner of both AB Holding and AB, generally has the exclusive right and full authority and responsi- bility to manage, conduct, control and operate their respective businesses, except as otherwise expressly stated in their respective Amended and Restated Agreements of Limited Partnership. AB Holding and AB Unitholders have more limited voting rights on matters affecting AB than do holders of common stock in a corporation. Both Amended and Restated Agreements of Limited Partner- ship provide that Unitholders do not have any right to vote for directors of the General Partner and that Unitholders only can vote on certain extraordinary matters (including removal of the General Partner under certain extraordinary circumstances). Additionally, the AB Partnership Agreement includes significant restrictions on the transfer of AB Units and provisions that have the practical effect of preventing the removal of the General Partner, which provisions are highly likely to prevent a change in control of AB’s management. AB Units are illiquid and subject to significant transfer restrictions. There is no public trading market for AB Units and we do not anticipate that a public trading market will develop. The AB Partner- ship Agreement restricts our ability to participate in a public trading market or anything substantially equivalent to one by providing that any transfer that may cause AB to be classified as a “publicly traded partnership” (“PTP”) as defined in Section 7704 of the Internal Revenue Code of 1986, as amended (“Code”), shall be deemed void and shall not be recognized by AB. In addition, AB Units are subject to significant restrictions on transfer, such as obtaining the written consent of AXA Equitable and the General Partner pursuant to the AB Partnership Agreement. Generally, neither AXA Equitable nor the General Partner will permit any transfer that it believes would create a risk that AB would be treated as a corporation for tax purposes. AXA Equitable and the General Partner have implemented a transfer program that requires a seller to locate a purchaser and imposes annual volume restrictions on transfers. You may request a copy of the transfer program from our Corporate Secretary (corporate_secretary@alliancebernstein.com). Also, we have filed the transfer program as Exhibit 10.12 to this Form 10-K. Changes in the partnership structure of AB Holding and AB and/or changes in the tax law governing partnerships would have significant tax ramifications. AB Holding, having elected under Section 7704(g) of the Code to be subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business, is a “grandfathered” PTP for federal income tax purposes. AB Holding is also subject 24 AB


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    to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB. In order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management seeks to ensure that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business. A “new line of business” includes any business that is not closely related to AB’s historical business of providing research and diversified investment management and related services to its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or uses more than 15% of its total assets in, the new line of business. AB is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, AB is subject to the 4.0% UBT. Domestic corporate subsidiaries of AB, which are subject to federal, state and local income taxes, generally are included in the filing of a consolidated federal income tax return with separate state and local income tax returns being filed. Each of AB’s non-U.S. corporate subsidiaries generally is subject to taxes in the foreign jurisdiction where it is located. If our business increasingly operates in countries other than the U.S., AB’s effective tax rate will increase as our interna- tional subsidiaries are subject to corporate taxes in the jurisdictions where they are located. In order to preserve AB’s status as a private partnership for federal income tax purposes, AB Units must not be considered publicly traded. If such units were to be considered readily tradable, AB would be subject to federal and state corporate income tax on its net income. Furthermore, as noted above, should AB enter into a substantial new line of business, AB Holding, by virtue of its ownership of AB, would lose its status as a grandfathered PTP and would become subject to corporate income tax as set forth above. If AB and AB Holding were to become subject to corporate income tax as set forth above, their net income and quarterly distributions to Unit- holders would be materially reduced. For information about the significant restrictions on transfer of AB Units, see the risk factor immediately above. If, pursuant to the Bipartisan Budget Act of 2015 (“2015 Act”), any audit by the Internal Revenue Service (“IRS”) of our income tax returns for any of our taxable years beginning after December 31, 2017 results in any adjustments, the IRS may collect any resulting taxes, including any applicable penalties and interest, directly from us, in which case our net income and the cash available for quarterly Unitholder distributions may be substantially reduced. Although the IRS, under current law, generally determines tax adjustments at the partnership level when it audits the income tax return of a partnership, the IRS is required to collect any additional taxes, interest and penalties from the partnership’s individual partners. The 2015 Act modifies this procedure for audits of a partnership’s taxable years beginning after December 31, 2017 and, if a partnership meets certain requirements and makes a proper election, for audits of a partnership’s taxable years beginning before January 1, 2018. We may choose to make such an election if we receive a written notice of selection for examination for an eligible taxable year or if we file, on or after January 1, 2018, an administrative adjustment request for an eligible taxable year and otherwise qualify to make such an election. Generally, we will have the ability to collect tax liability from our Unitholders in accordance with their percentage interests during the year under audit, but there can be no assurance that we will elect to do so or be able to do so under all circumstances. If we do not collect such tax liability from our Unitholders in accordance with their percentage interests in the tax year under audit, our net income and the available cash for quarterly distributions to current Unitholders may be substantially reduced. Accordingly, our current Unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such Unitholders did not own Units during the tax year under audit. In particular, as a publicly traded partnership, our Partnership Representative (as defined below) may, in certain instances, request that any “imputed underpayment” resulting from an audit be adjusted by amounts of cer- tain of our passive losses. If we successfully make such a request, we would have to reduce suspended passive loss carryovers in a manner which is binding on the partners. In June 2017, the IRS reissued proposed regulations (that had previously been issued and withdrawn) that implement the provisions of the 2015 Act (the “June 2017 Proposed Regulations”). In December 2017, the IRS issued additional proposed regulations that clarified the June 2017 Proposed Regulations and the 2015 Act (the “December 2017 Proposed Regulations”). Pursuant to the 2015 Act, the June 2017 Proposed Regulations and the December 2017 Proposed Regulations, for taxable years beginning after December 31, 2017, we will be required to designate a partner, or other person, with a substantial presence in the United States as the partnership representative (“Partnership Representative”) and we will no longer have a “tax matters partner.” The Partnership Representative will have the sole authority to act on our behalf for purposes of, among other things, U.S. federal income tax audits Annual Report 2017 25


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    and judicial review of administrative adjustments by the IRS. If we do not make such a designation, the IRS can select any person as the Partnership Representative. Any actions taken by us or by the Partnership Representative on our behalf with respect to, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS, will be binding on us and our unitholders. In addition, the December 2017 Proposed Regulations clarified that a partnership that is a partner of another partnership may elect to have its unitholders take an audit adjustment of the lower-tier partnership into account (i.e., the upper-tier partnership may push adjustments received from the lower-tier partnership through to the partners of the upper-tier partnership). The upper-tier partner- ship must timely complete the “push-out” of the adjustment in order for it to be effective, and the December 2017 Proposed Regulations do not provide any procedure for obtaining an extension. Newly enacted laws, such as Public Law No. Public Law No. 115-97 (the “Tax Cuts and Jobs Act”), or regulations and future changes in the U.S. taxation of businesses may adversely affect our business, financial condition and operating results. On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act, which significantly changed the Internal Rev- enue Code, including dramatic changes to the taxation of income earned from foreign sources and foreign subsidiaries. The Tax Cuts and Jobs Act also authorizes the Treasury Department to issue regulations with respect to the new provisions. We cannot pre- dict how the changes in the Tax Cuts and Jobs Act, or regulations or other guidance issued under it, might affect us or our business. For additional information, please refer to Item 7 – “Income Taxes”. Non-U.S. unitholders may be subject to 10% withholding tax on the sale of their units, which could reduce the value of our units. Under the Tax Cuts and Jobs Act, gain or loss from the sale or exchange of partnership interests after November 27, 2017 by a non-U.S. unitholder will be treated as effectively connected with a U.S. trade or business to the extent that the partner would have had effectively connected gain or loss had the partnership sold all of its assets at fair market value as of the date of the sale or exchange. The law also introduces certain withholding requirements for the sale of partnership interests by a non-U.S. partner. The Tax Cuts and Jobs Act authorizes the IRS to issue regulations to carry out the withholding rules in the case of publicly traded part- nerships, but such regulations have not yet been issued. In December 2017, the IRS issued a notice suspending the application of these new withholding rules to the disposition of publicly traded partnership until the IRS issued related guidance. We cannot pre- dict when or if the IRS will issue such regulations or other guidance or what the regulations or other guidance will say. If the guid- ance generally subjects publicly traded partnerships to the same rules as other partnerships, then any gain or loss from the hypothetical asset sale by us would be allocated to the units being transferred in the same manner as non-separately stated income and loss and the recipient of the units being transferred will be required to withhold 10% of the amount realized by the unitholder, unless the transferring unitholder provides the recipient with proper documentation proving that the transferring unitholder is not a nonresident alien individual or foreign corporation. If the recipient of the units being transferred fails to properly withhold, then we generally would be obligated to deduct and withhold from distributions to the recipient unitholder. 26 AB


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    Item 1B. Unresolved Staff Comments Neither AB nor AB Holding has unresolved comments from the staff of the SEC to report. Annual Report 2017 27


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    Item 2. Properties Our principal executive offices located at 1345 Avenue of the Americas, New York, New York are occupied pursuant to a lease expiring in 2024. At this location, we currently lease 992,043 square feet of space, within which we currently occupy approximately 523,373 square feet of space and have sub-let (or are seeking to sub-let) approximately 468,670 square feet of space. We also lease space at two other locations in New York City; we acquired one of these leases in connection with an acquisition, which lease expired as of December 31, 2017. In addition, we lease approximately 229,147 square feet of space at One North Lexington, White Plains, New York under a lease expiring in 2021 with options to extend to 2031. At this location, we currently occupy approximately 69,013 square feet of space and have sub-let (or are seeking to sub-let) approximately 160,134 square feet of space. We also lease 92,067 square feet of space in San Antonio, Texas under a lease expiring in 2019 with options to extend to 2029. At this location, we currently occupy approximately 59,004 square feet of space and have sub-let approximately 33,063 square feet of space. We have renewed 50,792 square feet for ten years, expiring in 2029. In addition, we lease less significant amounts of space in 21 other cities in the United States. Our subsidiaries lease space in 28 cities outside the United States, the most significant of which are in London, England, under a lease expiring in 2022, and in Hong Kong, China, under a lease expiring in 2027. In London, we currently lease 65,488 square feet of space, within which we currently occupy approximately 54,746 square feet of space and have sub-let approximately 10,742 square feet of space. In Hong Kong, we currently lease and occupy 35,878 square feet of space. 28 AB


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    Item 3. Legal Proceedings With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss. We may be involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that we could incur losses pertaining to these matters, but currently we cannot estimate any such losses. Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period. Annual Report 2017 29


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    Item 4. Mine Safety Disclosures Not applicable. 30 AB


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    PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for AB Holding Units and AB Units; Cash Distributions AB Holding Units are listed on the NYSE and trade publicly under the ticker symbol “AB”. There is no established public trading market for AB Units, which are subject to significant restrictions on transfer. For information about these transfer restrictions, see “Structure-related Risks” in Item 1A. AB Holding’s principal source of income and cash flow is attributable to its limited partnership interests in AB. Each of AB Holding and AB distributes on a quarterly basis all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement and the AB Partnership Agreement, respectively, to its Unitholders and the General Partner. For additional information concerning distribution of Available Cash Flow by AB Holding, see Note 2 to AB Holding’s financial statements in Item 8. For addi- tional information concerning distribution of Available Cash Flow by AB, see Note 2 to AB’s consolidated financial statements in Item 8. The distributions of Available Cash Flow made by AB and AB Holding during 2017 and 2016 and the high and low sale prices of AB Holding Units reflected on the NYSE composite transaction tape during 2017 and 2016 are as follows: Quarters Ended 2017 December 31 September 30 June 30 March 31 Total Cash distributions per AB Unit(1) $ 0.91 $ 0.58 $ 0.56 $ 0.52 $2.57 Cash distributions per AB Holding Unit(1) $ 0.84 $ 0.51 $ 0.49 $ 0.46 $2.30 AB Holding Unit prices: High $26.65 $26.15 $23.95 $25.13 Low $24.01 $22.55 $20.40 $21.35 Quarters Ended 2016 December 31 September 30 June 30 March 31 Total Cash distributions per AB Unit(1) $ 0.73 $ 0.51 $ 0.46 $ 0.45 $2.15 Cash distributions per AB Holding Unit(1) $ 0.67 $ 0.45 $ 0.40 $ 0.40 $1.92 AB Holding Unit prices: High $24.10 $24.69 $24.65 $23.98 Low $20.75 $21.29 $21.49 $16.11 (1) Declared and paid during the following quarter. On December 29, 2017, the last trading day during 2017, the closing price of an AB Holding Unit on the NYSE was $25.05 per Unit. On December 31, 2017, there were (i) 908 AB Holding Unitholders of record for approximately 80,000 beneficial owners, and (ii) 389 AB Unitholders of record (we do not believe there are substantial additional beneficial owners). Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities We did not engage in any unregistered sales of our securities during the years ended December 31, 2017, 2016 and 2015. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Each quarter since the third quarter of 2011, AB has implemented plans to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act. The plan adopted during the fourth quarter of 2017 expired at the close of business on February 12, 2018. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under the firm’s incentive compensation award program and for other corporate purposes. For additional information about Rule 10b5-1 plans, see “Units Outstanding” in Item 7. Annual Report 2017 31


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    AB Holding Units bought by us or one of our affiliates during the fourth quarter of 2017 are as follows: Issuer Purchases of Equity Securities Maximum Number (or Approximate Total Number of Dollar Value) of Average Price AB Holding Units AB Holding Units that Paid Purchased as Part May Yet Be Total Number Per AB Holding of Publicly Purchased Under of AB Holding Units Unit, net of Announced Plans the Plans or Purchased Commissions or Programs Programs Period 10/1/17-10/31/17(1) 103 $ 24.10 — — 11/1/17-11/30/17(1) 873,289 25.90 — — 12/1/17-12/31/17(1) 2,534,667 24.85 — — Total 3,408,059 $25.12 — — (1) During the fourth quarter of 2017, we purchased 3,408,059 AB Holding Units from employees to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards. AB Units bought by us or one of our affiliates during the fourth quarter of 2017 are as follows: Issuer Purchases of Equity Securities Maximum Number (or Approximate Total Number of Dollar Value) of AB Units AB Units that Average Price Purchased as Part May Yet Be Total Number of Paid Per AB of Publicly Purchased Under AB Units Unit, net of Announced Plans the Plans or Purchased Commissions or Programs Programs Period 10/1/17-10/31/17 — $ — — — 11/1/17-11/30/17(1) 400 25.24 — — 12/1/17-12/31/17 — — — — Total 400 $25.24 — — (1) During November 2017, we purchased 400 AB Units in a private transaction. 32 AB


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    Item 6. Selected Financial Data AllianceBernstein Holding L.P. Years Ended December 31, 2017 2016 2015 2014 2013 (in thousands, except per unit amounts) Income Statement Data: Equity in net income (loss) attributable to AB Unitholders $ 232,393 $ 239,389 $ 210,084 $ 200,931 $ 184,778 Income taxes 24,971 22,803 24,320 22,463 20,410 Net income (loss) $ 207,422 $ 216,586 $ 185,764 $ 178,468 $ 164,368 Basic net income (loss) per unit $ 2.19 $ 2.24 $ 1.87 $ 1.84 $ 1.70 Diluted net income (loss) per unit $ 2.19 $ 2.23 $ 1.86 $ 1.84 $ 1.70 Cash Distributions Per Unit(1) $ 2.30 $ 1.92 $ 1.86 $ 1.86 $ 1.79 Balance Sheet Data at Period End: Total assets $1,544,704 $1,540,508 $1,576,120 $1,616,461 $1,524,569 Partners’ capital $1,543,550 $1,539,889 $1,575,846 $1,616,079 $1,523,793 (1) AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders; for all years presented, the cash distributions per unit reflect the impact of AB’s non-GAAP adjustments. Annual Report 2017 33


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    AllianceBernstein L.P. Selected Consolidated Financial Data Years Ended December 31, 2017 2016(1) 2015 2014 2013 (in thousands, except per unit amounts and unless otherwise indicated) Income Statement Data: Revenues: Investment advisory and services fees $2,200,400 $1,933,471 $1,973,837 $1,958,250 $1,849,105 Bernstein research services 449,919 479,875 493,463 482,538 445,083 Distribution revenues 412,063 384,405 427,156 444,970 465,424 Dividend and interest income 71,162 46,939 24,872 22,322 19,962 Investment gains (losses) 92,102 93,353 3,551 (9,076) 33,339 Other revenues 98,040 99,859 101,169 108,788 105,058 Total revenues 3,323,686 3,037,902 3,024,048 3,007,792 2,917,971 Less: interest expense 25,165 9,123 3,321 2,426 2,924 Net revenues 3,298,521 3,028,779 3,020,727 3,005,366 2,915,047 Expenses: Employee compensation and benefits: Employee compensation and benefits 1,313,469 1,229,721 1,267,926 1,265,664 1,212,011 Promotion and servicing: Distribution-related payments 420,350 371,607 393,033 413,054 426,824 Amortization of deferred sales commissions 31,886 41,066 49,145 41,508 41,279 Trade execution, marketing, T&E and other 204,392 208,538 223,415 224,576 204,568 General and administrative: General and administrative 481,488 426,147 431,635 426,960 423,043 Real estate charges 36,669 17,704 998 52 28,424 Contingent payment arrangements 267 (20,245) (5,441) (2,782) (10,174) Interest on borrowings 8,194 4,765 3,119 2,797 2,962 Amortization of intangible assets 27,896 26,311 25,798 24,916 21,859 Total expenses 2,524,611 2,305,614 2,389,628 2,396,745 2,350,796 Operating income 773,910 723,165 631,099 608,621 564,251 Income taxes 53,110 28,319 44,797 44,304 40,113 Net income 720,800 694,846 586,302 564,317 524,138 Net income (loss) of consolidated entities attributable to non-controlling interests 58,397 21,488 6,375 456 9,746 Net income attributable to AB Unitholders $ 662,403 $ 673,358 $ 579,927 $ 563,861 $ 514,392 Basic net income per AB Unit $ 2.46 $ 2.48 $ 2.11 $ 2.07 $ 1.88 Diluted net income per AB Unit $ 2.45 $ 2.47 $ 2.10 $ 2.07 $ 1.87 Operating margin(2) 21.7% 23.2% 20.7% 20.2% 19.0% Cash Distributions Per AB Unit(3) $ 2.57 $ 2.15 $ 2.11 $ 2.08 $ 1.97 Balance Sheet Data at Period End: Total assets $9,295,167 $8,741,158 $7,433,721 $7,375,621 $7,383,899 Debt $ 565,745 $ 512,970 $ 581,700 $ 486,156 $ 266,445 Total capital $4,063,304 $4,068,189 $4,017,221 $4,084,840 $4,045,227 Assets Under Management at Period End (in millions) $ 554,491 $ 480,201 $ 467,440 $ 474,027 $ 450,411 (1) Certain prior-year amounts have been reclassified to conform to our 2017 presentation; see Note 2 to AB’s financial statements in Item 8 for a discussion of reclassifications. (2) Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues. (3) Cash distributions per AB unit reflect the impact of AB’s non-GAAP adjustments. 34 AB


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    Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Percentage change figures are calculated using assets under management rounded to the nearest million and financial statement amounts rounded to the nearest thousand. Executive Overview Our total assets under management (“AUM”) as of December 31, 2017 were $554.5 billion, up $74.3 billion, or 15.5%, during 2017. The increase was driven by market appreciation of $61.1 billion and net inflows of $13.2 billion (primarily due to Retail and Institutional inflows of $8.9 billion and $3.6 billion, respectively). Institutional AUM increased $30.0 billion, or 12.5%, to $269.3 billion during 2017, due to market appreciation of $26.4 billion and net inflows of $3.6 billion. Gross sales decreased $8.2 billion, or 38.1%, from $21.6 billion in 2016 to $13.4 billion in 2017. Redemptions and terminations decreased $4.2 billion, or 27.3%, from $15.7 billion in 2016 to $11.5 billion in 2017. Retail AUM increased $32.7 billion, or 20.5%, to $192.9 billion during 2017, due to market appreciation of $23.8 billion and net inflows of $8.9 billion. Gross sales increased $12.6 billion, or 30.5%, from $41.2 billion in 2016 to $53.8 billion in 2017. Redemptions and terminations decreased $2.2 billion, or 5.4%, from $40.8 billion in 2016 to $38.6 billion in 2017. Private Wealth Management AUM increased $11.6 billion, or 14.2%, to $92.3 billion during 2017, due to market appreciation of $10.9 billion and net inflows of $0.7 billion. Gross sales increased $1.3 billion, or 13.2%, from $10.2 billion in 2016 to $11.5 billion in 2017. Redemptions and terminations increased $1.3 billion, or 14.2%, from $9.3 billion in 2016 to $10.6 billion in 2017. Bernstein Research Services revenue decreased $30.0 million, or 6.2%, in 2017. The decrease was driven by a decline in client activ- ity in the U.S. and a volume mix shift to electronic trading in Europe. The decrease was partially offset by increased client activity in Asia and a weaker U.S. dollar year-over-year. Our 2017 revenues of $3.3 billion increased $0.3 billion, or 8.9%, compared to the prior year’s net revenues of $3.0 billion. The most significant contributors to the increase were higher base advisory fees of $204.9 million, higher performance-based fees of $62.0 million and higher distribution revenues of $27.7 million, offset by lower Bernstein Research Services revenue of $30.0 million. Our operating expenses of $2.5 billion increased $0.2 billion, or 9.5%, compared to the prior year’s expenses of $2.3 billion. The increase primarily was due to higher employee compensation and benefits of $83.7 million, higher general and administrative expenses (excluding real estate charges) of $55.3 million, higher promotion and servicing expenses of $35.4 million, lower adjustments to contingent payment arrangements of $20.5 million and higher real estate charges of $19.0 million. Our operat- ing income increased $50.7 million, or 7.0%, to $773.9 million from $723.2 million in 2016 and our operating margin decreased from 23.2% in 2016 to 21.7% in 2017 as higher expenses outpaced revenue growth. Market Environment Global equity markets increased substantially in 2017, and fixed income markets rose as well, as the global recovery gained momentum and breadth throughout the year. For the first time in the past five years, non-U.S. stocks outperformed U.S. stocks, aided by a weaker dollar, and credit spreads tightened in a “risk-on” environment. After an uncertain and volatile 2016, U.S. mar- ket volatility was exceptionally low in 2017. While 2018 got off to a strong start, U.S. equity markets began to vacillate wildly in February, and volatility surged as a result of a sharp rise in investor concern over the pace of interest rate hikes and the chances of rising inflation, which could slow economic growth. These stresses created uncertainty across global markets as well. Despite the strong run in the global markets, inflation so far remains low and Central Banks’ monetary policies continue to vary among developed and emerging markets. In the U.S., three interest rate increases occurred during 2017 and several more are pre- dicted for 2018, particularly if the economy continues to exhibit low unemployment, ongoing growth and emerging evidence of rising inflation. It remains to be seen how new tax legislation enacted in December 2017 will affect the U.S. economy going for- ward. In Europe, which is earlier in its economic recovery than the U.S., asset purchases by the European Central Bank are expected to end in 2018, Brexit negotiations are ongoing and MiFID II went into effect at the start of 2018. And in China, with the pace of growth slowing, “quality” of growth is increasing in importance. Annual Report 2017 35


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    The challenges for active fund managers continued in 2017. While their investment performance improved on average in 2017, they still struggled to attract net new assets in the face of ongoing overwhelming demand for passive equity strategies and accelerat- ing demand for passive fixed income strategies. In the U.S., where the shift from active to passive has been most prevalent, total industry-wide active mutual fund flows turned positive in 2017, with $56 billion, on strength in fixed income and international equity services. Active U.S. equity mutual funds, however, still sustained $201 billion in outflows for the year, even though the percentage of outperforming active equity managers increased to 50%, versus 26% in 2016 and a long-term average of 34%. Mean- while, total passive inflows continued to accelerate in 2017 and reached an all-time high of $692 billion. MiFID II The second installment of the Markets in Financial Instruments Directive II (“MiFID II”), which became effective January 3, 2018, makes significant modifications to the manner in which European broker-dealers can be compensated for research. These mod- ifications are recognized in the industry as having the potential to significantly decrease the overall research spend by European buy-side firms. Consequently, our U.K.-based broker-dealer is considering new charging mechanisms for its research in order to minimize this impact as part of its broader MiFID II implementation program. It is important to note, however, that our new charging techniques and other strategic decisions to address the new environment created by MiFID II may not be successful, which could result in a significant decline in our sell-side revenues. Also, although MiFID II does permit buy-side firms to purchase research through the use of client-funded research payment accounts, most buy-side firms that operate in the Eurozone, including our U.K. buy-side subsidiaries, have decided to use their own funds to pay for research in the Eurozone. This change in practice will increase our expenses in the Eurozone and, if this practice becomes more pervasive globally, it may have a significant adverse effect on our net income in future periods. The ultimate impact of MiFID II on payments for research globally currently is uncertain. AXA Equitable Holdings IPO On May 10, 2017, AXA S.A. (“AXA”) announced its intention to sell and list for trading a minority stake of its U.S. operations (expected to consist of AXA’s U.S. Life & Savings business and its interest in AB) during the first half of 2018, subject to market conditions and SEC review process. While we cannot at this time predict the eventual impact, if any, on AB of this proposed trans- action, it could include a reduction in the support AXA has provided to AB in the past with respect to AB’s investment manage- ment business, resulting in a decrease to our revenues and ability to initiate new investment services. Also, AB relies on AXA for a number of significant services and benefits from its affiliation with AXA in certain common vendor relationships. These arrange- ments also may change with possible negative financial implications for AB. Relocation Strategy During 2017, we began exploring several U.S. cities for the purpose of establishing a second principal U.S. location. We intend to transition a significant number of our staff located in our New York metro offices to this new location once we have finalized the city and secured office space. The transition period is expected to last a number of years. We will continue to maintain an employee presence in New York City, which will remain a principal location. We believe a second principal location will afford us the opportunity to provide an improved quality of life alternative for our employees, enable us to attract and recruit new talented employees to a highly desirable location while improving the long-term cost structure of the firm. However, we expect to incur potentially material costs through the transition period, including relocation, severance, and duplicative compensation and occupancy costs, before realizing ongoing cost savings. We currently are unable to estimate either the transitional costs or the ongoing cost savings as we have not yet completed our search process or final- ized the scale of our relocation strategy. Adjusted Operating Margin Target We have adopted a goal of increasing our adjusted operating margin from 27.7% (which we achieved for 2017) to a target of 30% by 2020 (the “2020 Margin Target”), subject to the assumptions, factors and contingencies discussed below. Actual results related to this target may vary depending on various factors, including capital market outcomes, the global regulatory environment in which we operate, the performance of our investment services, the net flows experienced by our investment 36 AB

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