UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05088
THE AB PORTFOLIOS
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Joseph J. Mantineo
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant’s telephone number, including area code: (800) 221-5672
Date of fiscal year end: August 31, 2017
Date of reporting period: February 28, 2017
ITEM 1. REPORTS TO STOCKHOLDERS.
FEB 02.28.17
SEMI-ANNUAL REPORT
AB TAX-MANAGED WEALTH
STRATEGIES
+ | AB TAX-MANAGED WEALTH APPRECIATION STRATEGY |
+ | AB TAX-MANAGED BALANCED WEALTH STRATEGY |
Investment Products Offered
•Are Not FDIC Insured •May Lose Value •Are Not Bank Guaranteed |
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.abfunds.com or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.
This shareholder report must be preceded or accompanied by the Fund’s prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com, or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AB publishes full portfolio holdings for the Fund monthly at www.abfunds.com.
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
April 16, 2017
Semi-Annual Report
This report provides management’s discussion of fund performance for the portfolios of AB Tax-Managed Wealth Strategies (the “Strategies” and individually a “Strategy”) for the semi-annual reporting period ended February 28, 2017.
At meetings held on January 31-February 1, 2017, the Tax-Managed Balanced Wealth Strategy’s Board of Trustees approved changes to the Strategy’s name, investment objective and principal strategies, which will take effect on or about April 17, 2017. The Strategy is expected to be renamed “AB Tax-Managed All Market Income Portfolio.”
On January 30, 2017, the Tax-Managed Conservative Wealth Strategy was liquidated.
All of the Strategies invest in Underlying Portfolios that are intended to provide additional diversification by seeking returns that are less sensitive to the general direction of the equity markets. These Underlying Portfolios include the Multi-Manager Alternative Strategies Fund, which is designed to provide exposure to non-traditional and alternative investment strategies through investments allocated to various sub-advisers selected and overseen by AllianceBernstein L.P. (the “Adviser”). These investments will be primarily in four different alternative investment strategies—long/short equity, special situations, credit and global macro. Also in this category is the All Market Real
Return Portfolio, which invests primarily in instruments that the Adviser expects to outperform broad equity markets during periods of rising inflation. This Underlying Portfolio invests primarily in inflation-indexed securities, commodity-related equity securities, commodities (principally through derivative instruments), real estate equity securities and inflation-sensitive equity securities.
As part of their diversification investments, the Strategies invest in the Volatility Management Portfolio. This Underlying Portfolio is designed to reduce the overall effect of equity market volatility on the Strategies’ portfolios and the effects of adverse market conditions on their performance. Under normal market conditions, this Underlying Portfolio will invest predominantly in equity securities. If the Adviser determines that the equity markets pose disproportionate risks, the Adviser will reduce the Underlying Portfolio’s equity investments and invest in fixed-income securities or other non-equity asset classes to reduce the risks of the Strategies’ investments in equity securities.
For the Strategies’ traditional equity investments, the Adviser selects growth and value equity securities by drawing from a variety of its fundamental growth and value investment disciplines to produce a blended portfolio. Within each investment discipline, the Adviser is able to draw on the
AB TAX-MANAGED WEALTH STRATEGIES • | 1 |
resources and expertise of multiple growth and value equity investment teams, specializing in different capitalization ranges and geographic regions (US and non-US), which are supported by equity research analysts specializing in growth and equity research analysts specializing in value research.
The Strategies also may enter into forward commitments, make short sales of securities or maintain a short position, invest in rights or warrants, and may invest in the securities of companies in emerging markets.
Currencies can have a dramatic impact on equity returns, significantly adding to returns in some years and greatly diminishing them in others. Currency and equity positions are evaluated separately. The Adviser may seek to hedge the currency exposure resulting from securities positions when it finds the currency exposure unattractive. To hedge all or a portion of its currency risk, the Strategies may, from time to time, invest in currency-related derivatives, including forward currency exchange contracts, futures contracts, options on futures contracts, swaps and options. The Adviser may also seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives. The Strategies may enter into other derivatives transactions, such as options, futures contracts, forwards and swaps.
AB Tax-Managed
Wealth Appreciation Strategy
Investment Objective and Policies
The Tax-Managed Wealth Appreciation Strategy’s investment objective is long-term growth of capital. The Strategy invests in a portfolio of equity securities that is designed as a solution for investors who seek tax-efficient equity returns but also want broad diversification of the related risks across styles, capitalization ranges and geographic regions. The Strategy may also invest in certain Underlying Portfolios with additional investment styles, which, while not necessarily tax-efficient, are designed to add diversification to the Strategy’s investments. The Strategy targets a weighting of approximately 73% in equity securities of companies, or traditional equity investments, and approximately 28% in diversification investments. In managing the Strategy, the Adviser efficiently diversifies between growth and value equity investment styles, between US and non-US markets and among diversification investments. Normally, the Strategy targets an equal weighting of growth and value style stocks (50% each) for the traditional equity component of the Strategy, with approximately 60% of each equity style invested in US companies and the remaining 40% in non-US companies.
The Adviser will allow the relative weightings of the Strategy’s investments in traditional equity
2 | • AB TAX-MANAGED WEALTH STRATEGIES |
growth and value, and in US and non-US company securities, to vary in response to market conditions, but ordinarily only by ±5% of the Strategy’s net assets. Beyond those ranges, the Adviser will rebalance the Strategy toward the targeted blend. However, under extraordinary circumstances, such as when market conditions favoring one investment style are compelling, the range may expand to ±10% of the Strategy’s net assets. The Strategy’s targeted percentages may change from time to time without notice to shareholders based on the Adviser’s assessment of market conditions.
The Strategy invests approximately 8% of its assets in the Multi-Manager Alternative Strategies Fund, approximately 5% in the All Market Real Return Portfolio and approximately 15% in the Volatility Management Portfolio.
AB Tax-Managed
Balanced Wealth Strategy
Investment Objective and Policies
Prior to April 17, 2017:
The Tax-Managed Balanced Wealth Strategy’s investment objective is to achieve the highest total return consistent with the Adviser’s determination of reasonable risk. The Strategy invests in a portfolio of equity and debt securities that is designed as a solution for investors who seek a moderate tilt toward tax-efficient equity returns but also want the risk diversification offered by tax-exempt debt securities and
the broad diversification of their equity risk across styles, capitalization ranges and geographic regions. The Strategy may also invest in certain Underlying Portfolios with additional investment styles, which, while not necessarily tax-efficient, are designed to add diversification to the Strategy’s investments. In managing the Strategy, the Adviser efficiently diversifies between the debt and equity investment styles and in diversification investments to produce the desired risk/return profile of the Strategy. The Strategy targets a weighting of 29% equity securities of companies, or traditional equity investments, 41% traditional tax-exempt debt securities and 30% diversification investments (a portion of which includes tax-exempt debt securities) with a goal of providing moderate upside potential without excessive volatility. Within the Strategy’s traditional equity component, the targeted blend is an equal weighting of growth and value style stocks (50% each), with approximately 60% of each equity style invested in US companies and the remaining 40% in non-US companies.
The Adviser will allow the relative weightings of the Strategy’s investments in equity and debt, growth and value, and in US and non-US company securities, to vary in response to market conditions, but ordinarily only by ±5% of the Strategy’s net assets. Beyond those ranges, the Adviser will
AB TAX-MANAGED WEALTH STRATEGIES • | 3 |
rebalance the Strategy toward the targeted blend. However, under extraordinary circumstances, such as when market conditions favoring one investment style are compelling, the range may expand to ±10% of the Strategy’s net assets. The Strategy’s targeted percentages may change from time to time without notice to shareholders based on the Adviser’s assessment of market conditions.
The Strategy invests approximately 6% of its assets in the Multi-Manager Alternative Strategies Fund, approximately 3% in the All Market Real Return Portfolio and approximately 11% in the Volatility Management Portfolio.
The Strategy intends to meet the tax requirement for passing municipal bond interest through to Strategy shareholders as tax-exempt interest dividends (currently requires that at least 50% of the Strategy’s assets be invested in tax-exempt debt securities). In the event that the Internal Revenue Code or the related rules, regulations and interpretations of the Internal Revenue Service should, in the future, change so as to permit the Strategy to pass through tax-exempt dividends when the Strategy invests less than 50% of its assets in tax-exempt debt securities, the targeted blend for the Strategy may become 60% equity securities and 40% debt securities.
In selecting tax-exempt fixed-income investments for the Strategy’s debt investments, the Adviser may draw
on the capabilities of separate investment teams that specialize in different areas that are generally defined by the maturity of the debt securities and/or their ratings, which may include subspecialties. These fixed-income teams draw on the resources and expertise of the Adviser’s internal fixed-income research staff, which includes fixed-income research analysts and economists. The Strategy’s fixed-income securities will primarily be investment-grade debt securities, but may also include lower-rated securities (“junk bonds”). The Strategy will not invest more than 25% of its total assets in securities rated at the time of purchase below investment-grade.
With the goal of protecting against inflation risk in addition to its investment in the All Market Real Return Portfolio, the Strategy may (i) allocate approximately 10% of the Strategy’s portfolio from traditional municipal bonds to inflation-indexed securities, including inflation-indexed municipal securities, (ii) enter into inflation Consumer Price Index (“CPI”) swap agreements or other types of swap agreements that the Adviser believes offer protection against inflation risk, with a combined notional amount of approximately 10% of the Strategy’s assets, or (iii) use a combination of the foregoing so that approximately 10% of the Strategy’s direct investments are “inflation-indexed”.
The Strategy may invest up to 10% of its total assets in the securities of companies in emerging markets.
4 | • AB TAX-MANAGED WEALTH STRATEGIES |
Effective April 17, 2017:
The Strategy is expected to be renamed “AB Tax-Managed All Market Income Portfolio” (the “Fund”).
The Fund’s investment objective will be to seek current income with consideration of capital appreciation.
The Adviser will allocate the Fund’s investments primarily among a broad range of income-producing securities, including common stock of companies that regularly pay dividends (including real estate investment trusts), preferred stocks, fixed-income securities, and derivatives related to these types of securities. The Fund will pursue a global strategy, typically investing in securities of issuers located in the United States and in other countries throughout the world, including emerging market countries.
In selecting equity securities for the Fund, the Adviser will focus on securities that have high dividend yields and that it believes are undervalued by the market relative to their long-term earnings potential. In order to provide diversification and the opportunity for increased return, the Adviser will also acquire equity securities for the Fund that are expected to exhibit relatively little correlation with the returns of the Fund’s holdings in high dividend yield equity securities.
In addition, the Fund may engage in certain alternative income strategies
that generally utilize derivatives to diversify sources of income and manage risk. For example, the Fund may take long positions in currency derivatives on higher yielding currencies and/or short positions in currency derivatives on lower yielding currencies.
The Adviser will adjust the Fund’s investment exposure utilizing the Adviser’s Dynamic Asset Allocation (“DAA”) approach. DAA comprises a series of analytical and forecasting tools employed by the Adviser to gauge fluctuations in the risk/return profile of various asset classes. DAA seeks to adjust the Acquiring Fund’s investment exposure in changing market conditions and thereby reduce overall portfolio volatility by mitigating the effects of market fluctuations, while preserving consistent long-term return potential. For example, the Adviser may seek to reduce the Fund’s risk exposure to one or more asset classes when DAA suggests that market risks relevant to those asset classes are rising but return opportunities are declining. In addition to merely increasing or decreasing asset class exposure by buying or selling securities of that asset class, the Adviser may pursue DAA implementation for the Fund by investing in derivatives or exchange-traded funds (“ETFs”).
The Adviser intends to utilize a variety of derivatives in its management of the Fund. The Adviser may use derivatives to gain exposure to an asset class, such as
AB TAX-MANAGED WEALTH STRATEGIES • | 5 |
using interest rate derivatives to gain exposure to certain bonds. As noted above, the Adviser may separately pursue certain alternative investment strategies that utilize derivatives, and may enter into derivatives in making the adjustments called for by DAA. As a result of the use of derivatives, the Fund will frequently be leveraged in the sense that its gross investment exposure substantially exceeds its net assets.
Currency exchange rate fluctuation can have a dramatic impact on returns. The Fund’s foreign currency exposures will come from investment in securities priced or denominated in foreign currencies and from direct holdings in foreign currencies and currency-related derivatives. The Adviser may seek to hedge all or a portion of the currency exposure resulting from Fund investments or decide not to hedge this exposure.
Investment Results
The tables on pages 12-13 show performance for each Strategy compared to its respective benchmarks for the six- and 12-month periods ended February 28, 2017. Each Strategy’s blended benchmark is as follows: Tax-Managed Wealth Appreciation Strategy, 60% Standard & Poor’s (“S&P”) 500 Index / 40% Morgan Stanley Capital International All Country World Index (“MSCI ACWI”) ex-US; Tax-Managed Balanced Wealth Strategy, 50% Bloomberg Barclays 5-Year General Obligation
(“GO”) Municipal Bond Index / 50% S&P 500 Index.
All share classes of the Tax-Managed Wealth Appreciation Strategy underperformed the primary and blended benchmarks for the six and 12-month periods, before sales charges; versus the secondary benchmark, all share classes outperformed for the six-month period and underperformed for the 12-month period. For the six-month period, all investment style components contributed positively to absolute performance. Versus their respective style benchmarks, performance was mixed; notably, US value and Multi-Manager Alternative Strategies Fund outperformed, while non-US growth and Volatility Management Portfolio underperformed. For the 12-month period, all investment style components contributed positively to absolute performance. Versus their respective style benchmarks, most components underperformed, although non-US value and Multi-Manager Alternative Strategies Fund outperformed. The Strategy utilized derivatives in the form of futures and forwards for hedging and investment purposes, which added to absolute performance for both periods.
For both periods, all class shares of the Tax-Managed Balanced Wealth Strategy outperformed the primary benchmark before sales charges, while underperforming the secondary and blended benchmarks. For
6 | • AB TAX-MANAGED WEALTH STRATEGIES |
the six-month period, all investment style components contributed positively to absolute performance, with the exception of intermediate municipal. Versus their respective style benchmarks, performance was mixed; notably, inflation protection and Multi-Manager Alternative Strategies Fund outperformed, while non-US growth and Volatility Management Portfolio underperformed. For the 12-month period, all style components contributed positively to absolute performance. Versus their respective style benchmarks, performance was mixed; notably, inflation protection and Multi-Manager Alternative Strategies Fund outperformed, while Volatility Management Portfolio and Multi-Asset Real Return Portfolio underperformed. The Strategy utilized derivatives in the form of futures, forwards, inflation swaps and interest rate swaps, for hedging and investment purposes. Futures had no material impact on performance for the six-month period, and added to absolute performance for 12-month period; forwards, inflation swaps and interest rate swaps added to performance for both periods.
Market Review and Investment Strategy
Global equities rose during the six-month period ended February 28, 2017. US stocks outperformed, while emerging-market and international equities both delivered solid results. US dollar strength greatly enhanced returns in other currencies.
In fixed-income markets, global bonds decreased in absolute terms (bond yields move inversely to price). Although emerging-market local-currency government bonds posted negative returns in the period, they outperformed developed-market treasuries which, in turn, finished just ahead of investment-grade credit securities. Global high yield rallied in the period. Developed-market yields rose across the board, while elsewhere they generally fell along the short end of the curve.
President Trump’s unexpected election victory and first forays into governing strongly impacted markets. Initial speculation over economic and trade policy changes—as well as inflation—was somewhat overshadowed by a new US travel ban. By the end of the period, questions remained regarding how the new administration and Congress would approach fiscal stimulus, tax reform and deregulation, yet optimism continued.
Markets were also influenced by central bank measures. The European Central Bank surprised markets in early December with its decision to reduce the monthly pace of its asset purchase program, though investors were mollified by its pledge for a “sustained presence” in euro-area markets. In contrast, the US Federal Reserve raised official rates in December and signaled a drastic increase in the likelihood of a rate hike in March.
AB TAX-MANAGED WEALTH STRATEGIES • | 7 |
The Tax-Managed Balanced Wealth Strategy’s municipal components may purchase municipal securities that are insured under policies issued by certain insurance companies. Historically, insured municipal securities typically received a higher credit rating, which meant that the issuer of the securities paid a lower interest rate. As a result of declines in the credit quality and associated downgrades of most fund insurers, insurance has less value than it did in the past. The market now values insured municipal securities primarily based on the credit quality of the issuer of the security with little value given to the insurance feature. In purchasing such insured securities, the Adviser evaluates the risk and return of municipal securities through its own research. If an insurance company’s rating is downgraded or the company becomes
insolvent, the prices of municipal securities insured by the insurance company may decline. As of February 28, 2017, the Strategy’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity were 6.99% and 0.00%, respectively.
The Strategy’s Senior Investment Management Team believes that downgrades in insurance company ratings or insurance company insolvencies present limited risk to the Strategy. The municipal components generally invest in investment-grade securities, as the underlying credit quality of the insured municipal securities reduces the risk of a significant reduction in the value of the insured municipal security.
8 | • AB TAX-MANAGED WEALTH STRATEGIES |
DISCLOSURES AND RISKS
Benchmark Disclosure
All indices are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The S&P 500 Index includes 500 US stocks and is a common representation of the performance of the overall US stock market. The MSCI ACWI ex-US (free float-adjusted, market capitalization weighted) represents the equity market performance of developed and emerging markets, excluding the United States. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. The Bloomberg Barclays 5-Year GO Municipal Bond Index represents the performance of long-term, investment-grade tax-exempt bonds with maturities ranging from four to six years. Net returns include the reinvestment of dividends after deduction of non-US withholding tax; gross returns include reinvestment of dividends prior to such deduction. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Strategies.
A Word About Risk
The Strategies may employ strategies that take into account the tax impact of buy and sell decisions on the Strategies’ shareholders. While the Strategies seek to maximize after-tax returns, there can be no assurance that the strategies will be effective, and the use of these strategies may affect the gross returns of the Strategies. The Strategies may not be suitable for tax-advantaged accounts, such as qualified retirement plans. The Strategies allocate their investments among multiple asset classes which will include US and foreign securities. The Tax-Managed Balanced Wealth Strategy will include both equity and fixed-income securities.
Market Risk: The value of the Strategies’ assets will fluctuate as the stock, bond or commodities markets fluctuate. The value of their investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events that affect large portions of the market. It includes the risk that a particular style of investing, such as growth or value, may be underperforming the stock market generally.
Foreign (Non-US) Risk: The Strategies’ investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be less liquid due to adverse market, economic, political, regulatory or other factors. These risks may be heightened if the Strategies invest in securities of emerging-market countries, where there may be an increased amount of economic, political and social instability.
(Disclosures, Risks and Note about Historical Performance continued on next page)
AB TAX-MANAGED WEALTH STRATEGIES • | 9 |
Disclosures and Risks
DISCLOSURES AND RISKS
(continued from previous page)
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Strategies’ investments or reduce their returns.
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Allocation Risk: The allocation of investments among different investment styles, such as equity or debt, growth or value, US or non-US securities, or diversification strategies, may have a more significant effect on the Strategies’ net asset value (“NAV”), when one of these investments is performing more poorly than another.
Derivatives Risk: Derivatives may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Strategies and may be subject to counterparty risk to a greater degree than more traditional investments.
Credit Risk: (Tax-Managed Balanced Wealth Strategy) An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Investments in fixed-income securities with lower ratings (commonly known as “junk bonds”) are subject to a higher probability that an issuer will default or fail to meet its payment obligations.
Interest Rate Risk: (Tax-Managed Balanced Wealth Strategy) Changes in interest rates will affect the value of the Strategy’s investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. The Strategy may be subject to heightened interest rate risk due to rising rates as the current period of historically low interest rates may be ending. Interest rate risk is generally greater for fixed-income securities with longer maturities or durations.
Municipal Market Risk: (Tax-Managed Balanced Wealth Strategy) This is the risk that special factors may adversely affect the value of municipal securities and have a significant effect on the yield or value of the Strategy’s investments in municipal securities. These factors include economic conditions, political or legislative changes, uncertainties related to the tax
(Disclosures, Risks and Note about Historical Performance continued on next page)
10 | • AB TAX-MANAGED WEALTH STRATEGIES |
Disclosures and Risks
DISCLOSURES AND RISKS
(continued from previous page)
status of municipal securities, or the rights of investors in these securities. To the extent that the Strategy invests more of its assets in a particular state’s municipal securities, the Strategy may be vulnerable to events adversely affecting that state, including economic, political and regulatory occurrences, court decisions, terrorism and catastrophic natural disasters, such as hurricanes or earthquakes. The Strategy’s investments in certain municipal securities with principal and interest payments that are made from the revenues of a specific project or facility, and not general tax revenues, may have increased risks. Factors affecting the project or facility, such as local business or economic conditions, could have a significant effect on the project’s ability to make payments of principal and interest on these securities.
These risks are fully discussed in the Strategies’ prospectus. As with all investments, you may lose money by investing in the Strategies.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Strategies will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. Performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.abfunds.com.
All fees and expenses related to the operation of the Strategies have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Strategies’ quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1-year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes.
AB TAX-MANAGED WEALTH STRATEGIES • | 11 |
Disclosures and Risks
TAX-MANAGED WEALTH APPRECIATION STRATEGY
HISTORICAL PERFORMANCE
THE STRATEGY VS. ITS BENCHMARKS PERIODS ENDED FEBRUARY 28, 2017 (unaudited) | NAV Returns | |||||||||||
6 Months | 12 Months | |||||||||||
AB Tax-Managed Wealth Appreciation Strategy* | ||||||||||||
Class A | 6.38% | 18.39% | ||||||||||
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Class B† | 5.94% | 17.53% | ||||||||||
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Class C | 5.95% | 17.53% | ||||||||||
| ||||||||||||
Advisor Class‡ | 6.49% | 18.63% | ||||||||||
| ||||||||||||
Primary Benchmark: S&P 500 Index | 10.01% | 24.98% | ||||||||||
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Secondary Benchmark: MSCI ACWI ex-US | 5.15% | 19.31% | ||||||||||
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Blended Benchmark: 60% S&P 500 Index / 40% MSCI ACWI ex-US | 8.10% | 22.78% | ||||||||||
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* Includes the impact of a non-recurring refund for overbilling of prior years’ custody out of pocket fees, which enhanced performance for the six- and 12-month periods ended February 28, 2017, by 0.01% and 0.01%, respectively.
† Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. See Note A for additional information.
‡ Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies.
Please keep in mind that high, double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions. |
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See Disclosures, Risks and Note about Historical Performance on pages 9-11.
(Historical Performance continued on next page)
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Historical Performance
TAX-MANAGED BALANCED WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
THE STRATEGY VS. ITS BENCHMARKS PERIODS ENDED FEBRUARY 28, 2017 (unaudited) | NAV Returns | |||||||||||
6 Months | 12 Months | |||||||||||
AB Tax-Managed Balanced Wealth Strategy* | ||||||||||||
Class A | 2.07% | 7.87% | ||||||||||
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Class B† | 1.62% | 7.02% | ||||||||||
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Class C | 1.68% | 6.96% | ||||||||||
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Advisor Class‡ | 2.20% | 8.08% | ||||||||||
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Primary Benchmark: Bloomberg Barclays 5-Year GO Municipal Bond Index | -1.25% | -0.19% | ||||||||||
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Secondary Benchmark: S&P 500 Index | 10.01% | 24.98% | ||||||||||
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Blended Benchmark: 50% Bloomberg Barclays 5-Year GO Municipal Bond Index / 50% S&P 500 Index | 4.30% | 11.85% | ||||||||||
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* Includes the impact of a non-recurring refund for overbilling of prior years’ custody out of pocket fees, which enhanced performance for the six- and 12-month periods ended February 28, 2017, by 0.09% and 0.09%, respectively.
† Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. See Note A for additional information.
‡ Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
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See Disclosures, Risks and Note about Historical Performance on pages 9-11.
(Historical Performance continued on next page)
AB TAX-MANAGED WEALTH STRATEGIES • | 13 |
Historical Performance
TAX-MANAGED WEALTH APPRECIATION STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2017 (unaudited) | ||||||||
NAV Returns | SEC Returns (reflects applicable sales charges) | |||||||
Class A Shares | ||||||||
1 Year | 18.39 | % | 13.37 | % | ||||
5 Years | 8.20 | % | 7.27 | % | ||||
10 Years | 2.75 | % | 2.30 | % | ||||
Class B Shares | ||||||||
1 Year | 17.53 | % | 13.53 | % | ||||
5 Years | 7.40 | % | 7.40 | % | ||||
10 Years(a) | 2.12 | % | 2.12 | % | ||||
Class C Shares | ||||||||
1 Year | 17.53 | % | 16.53 | % | ||||
5 Years | 7.42 | % | 7.42 | % | ||||
10 Years | 2.00 | % | 2.00 | % | ||||
Advisor Class Shares* | ||||||||
1 Year | 18.63 | % | 18.63 | % | ||||
5 Years | 8.48 | % | 8.48 | % | ||||
10 Years | 3.02 | % | 3.02 | % |
The Strategy’s current prospectus fee table shows the Strategy’s total annual operating expense ratios as 1.25%, 2.01%, 2.00% and 1.00% for Class A, Class B, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursement agreements reduced the Strategy’s annual operating expense ratios to 1.17%, 1.93%, 1.92% and 0.92% for Class A, Class B, Class C and Advisor Class shares, respectively. These waivers/reimbursement agreements may not be terminated before December 31, 2017. Absent reimbursements or waivers, performance would have been lower. The net and gross expenses shown include the total operating expenses of the Strategy and the indirect expenses of the Strategy’s Underlying Portfolios, as based upon the allocation of the Strategy’s assets among the Underlying Portfolios. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods and include acquired fund fees.
(a) | Assumes conversion of Class B shares into Class A shares after eight years. |
* | This share class is offered at NAV to eligible investors and its SEC returns are the same as its NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 9-11.
(Historical Performance continued on next page)
14 | • AB TAX-MANAGED WEALTH STRATEGIES |
Historical Performance
TAX-MANAGED WEALTH APPRECIATION STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS AS OF THE MOST RECENT CALENDAR QUARTER-END MARCH 31, 2017 (unaudited) | ||||
SEC Returns (reflects applicable | ||||
Class A Shares | ||||
1 Year | 7.75 | % | ||
5 Years | 7.15 | % | ||
10 Years | 2.24 | % | ||
Class B Shares | ||||
1 Year | 7.69 | % | ||
5 Years | 7.27 | % | ||
10 Years(a) | 2.08 | % | ||
Class C Shares | ||||
1 Year | 10.66 | % | ||
5 Years | 7.29 | % | ||
10 Years | 1.94 | % | ||
Advisor Class Shares* | ||||
1 Year | 12.78 | % | ||
5 Years | 8.38 | % | ||
10 Years | 2.97 | % |
(a) | Assumes conversion of Class B shares into Class A shares after eight years. |
* | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 9-11.
(Historical Performance continued on next page)
AB TAX-MANAGED WEALTH STRATEGIES • | 15 |
Historical Performance
TAX-MANAGED WEALTH APPRECIATION STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
RETURNS AFTER TAXES ON DISTRIBUTIONS AS OF THE MOST RECENT CALENDAR QUARTER-END MARCH 31, 2017 (unaudited) | ||||
Returns | ||||
Class A Shares | ||||
1 Year | 6.88 | % | ||
5 Years | 6.29 | % | ||
10 Years | 1.70 | % | ||
Class B Shares | ||||
1 Year | 7.11 | % | ||
5 Years | 6.68 | % | ||
10 Years(a) | 1.68 | % | ||
Class C Shares | ||||
1 Year | 10.00 | % | ||
5 Years | 6.63 | % | ||
10 Years | 1.56 | % | ||
Advisor Class Shares* | ||||
1 Year | 11.78 | % | ||
5 Years | 7.43 | % | ||
10 Years | 2.36 | % | ||
RETURNS AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES AS OF THE MOST RECENT CALENDAR QUARTER-END MARCH 31, 2017 (unaudited) | ||||
Class A Shares | ||||
1 Year | 4.78 | % | ||
5 Years | 5.45 | % | ||
10 Years | 1.69 | % | ||
Class B Shares | ||||
1 Year | 4.65 | % | ||
5 Years | 5.62 | % | ||
10 Years(a) | 1.58 | % | ||
Class C Shares | ||||
1 Year | 6.36 | % | ||
5 Years | 5.62 | % | ||
10 Years | 1.47 | % | ||
Advisor Class Shares* | ||||
1 Year | 7.67 | % | ||
5 Years | 6.42 | % | ||
10 Years | 2.26 | % |
(a) | Assumes conversion of Class B shares into Class A shares after eight years. |
* | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 9-11.
(Historical Performance continued on next page)
16 | • AB TAX-MANAGED WEALTH STRATEGIES |
Historical Performance
TAX-MANAGED BALANCED WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2017 (unaudited) | ||||||||
NAV Returns | SEC Returns (reflects applicable | |||||||
Class A Shares | ||||||||
1 Year | 7.87 | % | 3.32 | % | ||||
5 Years | 4.10 | % | 3.19 | % | ||||
10 Years | 2.97 | % | 2.52 | % | ||||
Class B Shares | ||||||||
1 Year | 7.02 | % | 3.02 | % | ||||
5 Years | 3.32 | % | 3.32 | % | ||||
10 Years(a) | 2.38 | % | 2.38 | % | ||||
Class C Shares | ||||||||
1 Year | 6.96 | % | 5.96 | % | ||||
5 Years | 3.34 | % | 3.34 | % | ||||
10 Years | 2.24 | % | 2.24 | % | ||||
Advisor Class Shares* | ||||||||
1 Year | 8.08 | % | 8.08 | % | ||||
5 Years | 4.38 | % | 4.38 | % | ||||
10 Years | 3.27 | % | 3.27 | % |
The Strategy’s current prospectus fee table shows the Strategy’s total annual operating expense ratios as 1.36%, 2.11%, 2.11% and 1.11% for Class A, Class B, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursement agreements reduced the Strategy’s annual operating expense ratios to 1.30%, 2.05%, 2.06% and 1.06% for Class A, Class B, Class C and Advisor Class shares, respectively. These waivers/reimbursement agreements may not be terminated before December 31, 2017. Absent reimbursements or waivers, performance would have been lower. The net and gross expenses shown include the total operating expenses of the Strategy and the indirect expenses of the Strategy’s Underlying Portfolios, as based upon the allocation of the Strategy’s assets among the Underlying Portfolios. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods and include acquired fund fees.
(a) | Assumes conversion of Class B shares into Class A shares after eight years. |
* | This share class is offered at NAV to eligible investors and its SEC returns are the same as its NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 9-11.
(Historical Performance continued on next page)
AB TAX-MANAGED WEALTH STRATEGIES • | 17 |
Historical Performance
TAX-MANAGED BALANCED WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS AS OF THE MOST RECENT CALENDAR QUARTER-END MARCH 31, 2017 (unaudited) | ||||
SEC Returns (reflects applicable | ||||
Class A Shares | ||||
1 Year | 0.71 | % | ||
5 Years | 3.20 | % | ||
10 Years | 2.49 | % | ||
Class B Shares | ||||
1 Year | 0.35 | % | ||
5 Years | 3.33 | % | ||
10 Years(a) | 2.34 | % | ||
Class C Shares | ||||
1 Year | 3.44 | % | ||
5 Years | 3.36 | % | ||
10 Years | 2.20 | % | ||
Advisor Class Shares* | ||||
1 Year | 5.45 | % | ||
5 Years | 4.39 | % | ||
10 Years | 3.22 | % |
(a) | Assumes conversion of Class B shares into Class A shares after eight years. |
* | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 9-11.
(Historical Performance continued on next page)
18 | • AB TAX-MANAGED WEALTH STRATEGIES |
Historical Performance
TAX-MANAGED BALANCED WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
RETURNS AFTER TAXES ON DISTRIBUTIONS MARCH 31, 2017 (unaudited) | ||||
Returns | ||||
Class A Shares | ||||
1 Year | 0.40 | % | ||
5 Years | 2.65 | % | ||
10 Years | 2.16 | % | ||
Class B Shares | ||||
1 Year | 0.22 | % | ||
5 Years | 2.92 | % | ||
10 Years(a) | 2.06 | % | ||
Class C Shares | ||||
1 Year | 3.23 | % | ||
5 Years | 2.91 | % | ||
10 Years | 1.94 | % | ||
Advisor Class Shares* | ||||
1 Year | 5.10 | % | ||
5 Years | 3.80 | % | ||
10 Years | 2.86 | % | ||
RETURNS AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES AS OF THE MOST RECENT CALENDAR QUARTER-END MARCH 31, 2017 (unaudited) | ||||
Class A Shares | ||||
1 Year | 0.92 | % | ||
5 Years | 2.57 | % | ||
10 Years | 2.12 | % | ||
Class B Shares | ||||
1 Year | 0.31 | % | ||
5 Years | 2.60 | % | ||
10 Years(a) | 1.94 | % | ||
Class C Shares | ||||
1 Year | 2.24 | % | ||
5 Years | 2.65 | % | ||
10 Years | 1.82 | % | ||
Advisor Class Shares* | ||||
1 Year | 3.72 | % | ||
5 Years | 3.53 | % | ||
10 Years | 2.74 | % |
(a) | Assumes conversion of Class B shares into Class A shares after eight years. |
* | Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 9-11.
AB TAX-MANAGED WEALTH STRATEGIES • | 19 |
Historical Performance
EXPENSE EXAMPLE
(unaudited)
As a shareholder of a Strategy, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Strategy expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Strategy and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on a Strategy’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Strategy’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Strategy and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the hypothetical example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
AB Tax-Managed Wealth Appreciation Strategy
Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period* | Annualized Expense Ratio* | Effective Expenses Paid During Period+ | Effective Annualized Expense Ratio+ | |||||||||||||||||||
Class A | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,063.80 | $ | 4.76 | 0.93 | % | $ | 5.88 | 1.15 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.18 | $ | 4.66 | 0.93 | % | $ | 5.76 | 1.15 | % | ||||||||||||
Class B | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,059.40 | $ | 8.73 | 1.71 | % | $ | 9.85 | 1.93 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.31 | $ | 8.55 | 1.71 | % | $ | 9.65 | 1.93 | % | ||||||||||||
Class C | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,059.50 | $ | 8.58 | 1.68 | % | $ | 9.70 | 1.90 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.46 | $ | 8.40 | 1.68 | % | $ | 9.50 | 1.90 | % |
20 | • AB TAX-MANAGED WEALTH STRATEGIES |
Expense Example
EXPENSE EXAMPLE
(unaudited)
(continued from previous page)
Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period* | Annualized Expense Ratio* | Effective Expenses Paid During Period+ | Effective Annualized Expense Ratio+ | |||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,064.90 | $ | 3.48 | 0.68 | % | $ | 4.61 | 0.90 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.42 | $ | 3.41 | 0.68 | % | $ | 4.51 | 0.90 | % |
AB Tax-Managed Balanced Wealth Strategy
Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period* | Annualized Expense Ratio* | Effective Expenses Paid During Period+ | Effective Annualized Expense Ratio+ | |||||||||||||||||||
Class A | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,020.70 | $ | 5.71 | 1.14 | % | $ | 6.51 | 1.30 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,019.14 | $ | 5.71 | 1.14 | % | $ | 6.51 | 1.30 | % | ||||||||||||
Class B | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,016.20 | $ | 9.65 | 1.93 | % | $ | 10.45 | 2.09 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,015.22 | $ | 9.64 | 1.93 | % | $ | 10.44 | 2.09 | % | ||||||||||||
Class C | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,016.80 | $ | 9.50 | 1.90 | % | $ | 10.30 | 2.06 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,015.37 | $ | 9.49 | 1.90 | % | $ | 10.29 | 2.06 | % | ||||||||||||
Advisor Class | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,022.00 | $ | 4.46 | 0.89 | % | $ | 5.26 | 1.05 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.38 | $ | 4.46 | 0.89 | % | $ | 5.26 | 1.05 | % |
* | Expenses are equal to the classes’ annualized expense ratios multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
** | Assumes 5% annual return before expenses. |
+ | In connection with the Strategies’ investments in affiliated/unaffiliated underlying portfolios, the Strategies incur no direct expenses, but bear proportionate shares of the acquired fund fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated/unaffiliated underlying portfolios. Currently the Adviser has contractually agreed to waive its fees from the Strategies in an amount equal to the Strategies’ pro rata share of certain acquired fund fees and expenses of the affiliated underlying portfolios. The Strategies’ effective expenses are equal to the classes’ annualized expense ratio plus the Strategies’ pro rata share of the weighted average expense ratio of the affiliated/unaffiliated underlying portfolios in which it invests, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
AB TAX-MANAGED WEALTH STRATEGIES • | 21 |
Expense Example
AB TAX-MANAGED WEALTH APPRECIATION STRATEGY
PORTFOLIO SUMMARY
February 28, 2017 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $690.6
* | All data are as of February 28, 2017. The Strategy’s security type and sector breakdowns are expressed as a percentage of total investments and may vary over time. The Strategy also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Strategy’s prospectus.
22 | • AB TAX-MANAGED WEALTH STRATEGIES |
Portfolio Summary
AB TAX-MANAGED BALANCED WEALTH STRATEGY
PORTFOLIO SUMMARY
February 28, 2017 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $132.9
* | All data are as of February 28, 2017. The Strategy’s security type and sector breakdowns are expressed as a percentage of total investments and may vary over time. The Strategy also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Strategy’s prospectus.
AB TAX-MANAGED WEALTH STRATEGIES • | 23 |
Portfolio Summary
AB TAX-MANAGED BALANCED WEALTH STRATEGY
PORTFOLIO SUMMARY
February 28, 2017 (unaudited)
* | All data are as of February 28, 2017. The Strategy’s quality rating breakdown is expressed as a percentage of the Strategy’s total investments in municipal securities and may vary over time. The Strategy also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). The quality ratings are determined by using the Standard & Poor’s Ratings Services (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Ltd. (“Fitch”). The Strategy considers the credit ratings issued by S&P, Moody’s and Fitch and uses the highest rating issued by the agencies. These ratings are a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is the highest (best) and D is the lowest (worst). If applicable, the pre-refunded category includes bonds which are secured by U.S. Government securities and therefore are deemed high-quality investment-grade by the Adviser. If applicable, Not Applicable (N/A) includes non-creditworthy investments such as equities, currency contracts, futures and options. If applicable, the Not Rated category includes bonds that are not rated by a nationally recognized statistical rating organization. The Adviser evaluates the creditworthiness of non-rated securities based on a number of factors including, but not limited to, cash flows, enterprise value and economic environment. |
24 | • AB TAX-MANAGED WEALTH STRATEGIES |
Portfolio Summary
AB TAX-MANAGED WEALTH APPRECIATION STRATEGY
PORTFOLIO OF INVESTMENTS
February 28, 2017 (unaudited)
Company | Shares | U.S. $ Value | ||||||
| ||||||||
COMMON STOCKS – 70.3% | ||||||||
Information Technology – 16.6% | ||||||||
Communications Equipment – 1.0% | ||||||||
Arista Networks, Inc.(a) | 16,310 | $ | 1,940,727 | |||||
Cisco Systems, Inc. | 34,600 | 1,182,628 | ||||||
Nokia Oyj | 209,310 | 1,071,658 | ||||||
Nokia Oyj (Sponsored ADR) – Class A | 304,768 | 1,566,508 | ||||||
Palo Alto Networks, Inc.(a) | 7,755 | 1,177,984 | ||||||
|
| |||||||
6,939,505 | ||||||||
|
| |||||||
Electronic Equipment, Instruments & Components – 0.6% | ||||||||
Amphenol Corp. – Class A | 12,751 | 882,497 | ||||||
Corning, Inc. | 17,025 | 470,060 | ||||||
Keyence Corp. | 5,200 | 2,010,745 | ||||||
Largan Precision Co., Ltd. | 7,000 | 1,038,890 | ||||||
|
| |||||||
4,402,192 | ||||||||
|
| |||||||
Internet Software & Services – 4.2% | ||||||||
Alibaba Group Holding Ltd. (Sponsored ADR)(a) | 12,850 | 1,322,265 | ||||||
Alphabet, Inc. – Class A(a) | 1,595 | 1,347,663 | ||||||
Alphabet, Inc. – Class C(a) | 11,465 | 9,438,103 | ||||||
Criteo SA (Sponsored ADR)(a) | 29,130 | 1,368,528 | ||||||
Facebook, Inc. – Class A(a) | 75,891 | 10,286,266 | ||||||
Tencent Holdings Ltd. | 166,600 | 4,421,056 | ||||||
Yahoo Japan Corp. | 166,100 | 771,143 | ||||||
|
| |||||||
28,955,024 | ||||||||
|
| |||||||
IT Services – 2.1% | ||||||||
Booz Allen Hamilton Holding Corp. | 37,289 | 1,333,828 | ||||||
Cognizant Technology Solutions Corp. – Class A(a) | 20,360 | 1,206,737 | ||||||
Fiserv, Inc.(a) | 21,360 | 2,464,944 | ||||||
HCL Technologies Ltd. | 40,610 | 510,655 | ||||||
Vantiv, Inc. – Class A(a) | 22,630 | 1,479,549 | ||||||
Visa, Inc. – Class A | 90,364 | 7,946,610 | ||||||
|
| |||||||
14,942,323 | ||||||||
|
| |||||||
Semiconductors & Semiconductor Equipment – 3.0% | ||||||||
Applied Materials, Inc. | 4,450 | 161,179 | ||||||
ASML Holding NV | 11,870 | 1,442,923 | ||||||
Infineon Technologies AG | 33,100 | 588,378 | ||||||
Intel Corp. | 99,159 | 3,589,556 | ||||||
NVIDIA Corp. | 17,266 | 1,752,154 | ||||||
Realtek Semiconductor Corp. | 195,000 | 725,344 | ||||||
SCREEN Holdings Co., Ltd. | 11,200 | 755,550 | ||||||
SK Hynix, Inc. | 32,840 | 1,353,169 | ||||||
Sumco Corp. | 72,300 | 1,062,536 |
AB TAX-MANAGED WEALTH STRATEGIES • | 25 |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Taiwan Semiconductor Manufacturing Co., Ltd. | 338,000 | $ | 2,070,768 | |||||
Texas Instruments, Inc. | 26,760 | 2,050,351 | ||||||
Tokyo Electron Ltd. | �� | 5,200 | 518,775 | |||||
Xilinx, Inc. | 75,042 | 4,413,970 | ||||||
|
| |||||||
20,484,653 | ||||||||
|
| |||||||
Software – 2.8% | ||||||||
Adobe Systems, Inc.(a) | 35,100 | 4,153,734 | ||||||
Constellation Software, Inc./Canada | 7,732 | 3,629,651 | ||||||
Dassault Systemes SE | 19,065 | 1,540,184 | ||||||
Electronic Arts, Inc.(a) | 38,120 | 3,297,380 | ||||||
Nintendo Co., Ltd. | 4,300 | 898,165 | ||||||
Oracle Corp. | 87,933 | 3,745,067 | ||||||
salesforce.com, Inc.(a) | 8,881 | 722,469 | ||||||
ServiceNow, Inc.(a) | 12,938 | 1,124,571 | ||||||
|
| |||||||
19,111,221 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals – 2.9% | ||||||||
Apple, Inc. | 50,414 | 6,906,214 | ||||||
Hewlett Packard Enterprise Co. | 69,443 | 1,584,689 | ||||||
HP, Inc. | 109,806 | 1,907,330 | ||||||
NCR Corp.(a) | 28,720 | 1,380,571 | ||||||
Pegatron Corp. | 276,000 | 726,749 | ||||||
Samsung Electronics Co., Ltd. | 3,334 | 5,665,907 | ||||||
Samsung Electronics Co., Ltd. | 440 | 582,380 | ||||||
Xerox Corp. | 162,380 | 1,208,107 | ||||||
|
| |||||||
19,961,947 | ||||||||
|
| |||||||
114,796,865 | ||||||||
|
| |||||||
Financials – 12.2% | ||||||||
Banks – 6.2% | ||||||||
Australia & New Zealand Banking Group Ltd. | 70,010 | 1,657,007 | ||||||
Axis Bank Ltd. | 92,980 | 703,971 | ||||||
Bank of America Corp. | 240,056 | 5,924,582 | ||||||
Bank of Montreal | 7,270 | 551,681 | ||||||
Bank of Queensland Ltd. | 97,355 | 883,514 | ||||||
Barclays PLC | 366,570 | 1,030,312 | ||||||
BNP Paribas SA | 47,280 | 2,766,372 | ||||||
BOC Hong Kong Holdings Ltd. | 276,500 | 1,092,289 | ||||||
Citigroup, Inc. | 30,338 | 1,814,516 | ||||||
Citizens Financial Group, Inc. | 4,183 | 156,319 | ||||||
Comerica, Inc. | 18,653 | 1,329,586 | ||||||
Danske Bank A/S | 30,280 | 1,009,268 | ||||||
DNB ASA | 62,370 | 1,022,592 | ||||||
Erste Group Bank AG | 34,780 | 1,011,544 | ||||||
Fifth Third Bancorp | 12,631 | 346,595 |
26 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
HDFC Bank Ltd. | 24,056 | $ | 519,204 | |||||
HSBC Holdings PLC | 58,380 | 468,913 | ||||||
IndusInd Bank Ltd. | 16,300 | 320,390 | ||||||
ING Groep NV | 90,633 | 1,248,613 | ||||||
Intesa Sanpaolo SpA | 212,030 | 493,688 | ||||||
Itau Unibanco Holding SA (Preference Shares) | 63,980 | 819,315 | ||||||
JPMorgan Chase & Co. | 51,202 | 4,639,925 | ||||||
KB Financial Group, Inc. | 18,782 | 775,319 | ||||||
KBC Group NV | 15,110 | 924,703 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 207,600 | 1,373,433 | ||||||
PNC Financial Services Group, Inc. (The) | 6,584 | 837,682 | ||||||
Sberbank of Russia PJSC (Sponsored ADR) | 102,434 | 1,121,652 | ||||||
Shinhan Financial Group Co., Ltd. | 12,560 | 516,731 | ||||||
SunTrust Banks, Inc. | 8,050 | 478,894 | ||||||
Toronto-Dominion Bank (The) | 19,040 | 981,387 | ||||||
US Bancorp | 17,777 | 977,735 | ||||||
Wells Fargo & Co. | 87,162 | 5,044,937 | ||||||
|
| |||||||
42,842,669 | ||||||||
|
| |||||||
Capital Markets – 1.3% | ||||||||
Amundi SA(b) | 10,500 | 608,465 | ||||||
BM&FBovespa SA – Bolsa de Valores Mercadorias e Futuros | 115,700 | 704,892 | ||||||
Franklin Resources, Inc. | 4,771 | 205,344 | ||||||
Goldman Sachs Group, Inc. (The) | 4,902 | 1,215,990 | ||||||
MarketAxess Holdings, Inc. | 2,964 | 578,662 | ||||||
Morgan Stanley | 18,903 | 863,300 | ||||||
Partners Group Holding AG | 3,973 | 2,078,322 | ||||||
Thomson Reuters Corp. | 5,543 | 234,469 | ||||||
UBS Group AG | 170,259 | 2,624,686 | ||||||
|
| |||||||
9,114,130 | ||||||||
|
| |||||||
Consumer Finance – 1.1% | ||||||||
American Express Co. | 10,596 | 848,316 | ||||||
Capital One Financial Corp. | 19,599 | 1,839,562 | ||||||
Discover Financial Services | 3,650 | 259,661 | ||||||
Hitachi Capital Corp. | 27,400 | 708,037 | ||||||
OneMain Holdings, Inc.(a) | 32,450 | 909,249 | ||||||
Shriram Transport Finance Co., Ltd. | 13,938 | 193,443 | ||||||
Synchrony Financial | 70,665 | 2,560,899 | ||||||
|
| |||||||
7,319,167 | ||||||||
|
| |||||||
Diversified Financial Services – 0.4% | ||||||||
Berkshire Hathaway, Inc. – Class B(a) | 9,400 | 1,611,348 | ||||||
GRENKE AG | 3,880 | 678,291 | ||||||
Haci Omer Sabanci Holding AS | 158,380 | 436,988 | ||||||
|
| |||||||
2,726,627 | ||||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 27 |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Insurance – 2.8% | ||||||||
Admiral Group PLC | 41,232 | $ | 935,175 | |||||
AIA Group Ltd. | 647,200 | 4,085,090 | ||||||
Allstate Corp. (The) | 18,742 | 1,539,843 | ||||||
American International Group, Inc. | 47,199 | 3,016,960 | ||||||
Dongbu Insurance Co., Ltd. | 18,160 | 980,481 | ||||||
First American Financial Corp. | 29,186 | 1,140,297 | ||||||
FNF Group | 44,886 | 1,720,480 | ||||||
Hartford Financial Services Group, Inc. (The) | 6,610 | 323,163 | ||||||
Lincoln National Corp. | 6,882 | 482,841 | ||||||
Loews Corp. | 3,979 | 186,933 | ||||||
NN Group NV | 17,435 | 542,550 | ||||||
Progressive Corp. (The) | 9,400 | 368,292 | ||||||
Prudential Financial, Inc. | 5,852 | 646,880 | ||||||
Prudential PLC | 144,920 | 2,896,233 | ||||||
Suncorp Group Ltd. | 57,873 | 587,981 | ||||||
|
| |||||||
19,453,199 | ||||||||
|
| |||||||
Thrifts & Mortgage Finance – 0.4% | ||||||||
Housing Development Finance Corp. Ltd. | 149,830 | 3,074,034 | ||||||
|
| |||||||
84,529,826 | ||||||||
|
| |||||||
Health Care – 9.4% | ||||||||
Biotechnology – 1.6% | ||||||||
Alexion Pharmaceuticals, Inc.(a) | 10,335 | 1,356,469 | ||||||
Biogen, Inc.(a) | 23,275 | 6,717,165 | ||||||
China Biologic Products, Inc.(a) | 3,790 | 372,178 | ||||||
Gilead Sciences, Inc. | 33,012 | 2,326,685 | ||||||
Grifols SA (ADR) | 38,460 | 669,204 | ||||||
|
| |||||||
11,441,701 | ||||||||
|
| |||||||
Health Care Equipment & Supplies – 2.4% | ||||||||
Align Technology, Inc.(a) | 12,347 | 1,268,778 | ||||||
Danaher Corp. | 44,744 | 3,827,849 | ||||||
Edwards Lifesciences Corp.(a) | 37,890 | 3,563,176 | ||||||
Essilor International SA | 25,630 | 2,942,241 | ||||||
Intuitive Surgical, Inc.(a) | 5,296 | 3,903,152 | ||||||
Sartorius AG (Preference Shares) | 10,444 | 782,865 | ||||||
|
| |||||||
16,288,061 | ||||||||
|
| |||||||
Health Care Providers & Services – 1.8% | ||||||||
Aetna, Inc. | 11,574 | 1,490,268 | ||||||
Cigna Corp. | 13,028 | 1,939,869 | ||||||
Express Scripts Holding Co.(a) | 3,900 | 275,535 | ||||||
McKesson Corp. | 10,128 | 1,520,517 | ||||||
Quest Diagnostics, Inc. | 8,643 | 842,174 | ||||||
UnitedHealth Group, Inc. | 33,219 | 5,493,758 | ||||||
VCA, Inc.(a) | 7,780 | 707,202 | ||||||
|
| |||||||
12,269,323 | ||||||||
|
|
28 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Health Care Technology – 0.3% | ||||||||
Cerner Corp.(a) | 37,840 | $ | 2,082,714 | |||||
|
| |||||||
Life Sciences Tools & Services – 0.6% | ||||||||
Eurofins Scientific SE | 6,998 | 2,989,867 | ||||||
Mettler-Toledo International, Inc.(a) | 2,179 | 1,037,684 | ||||||
|
| |||||||
4,027,551 | ||||||||
|
| |||||||
Pharmaceuticals – 2.7% | ||||||||
Johnson & Johnson | 29,489 | 3,603,851 | ||||||
Mallinckrodt PLC(a) | 22,646 | 1,187,103 | ||||||
Merck & Co., Inc. | 22,700 | 1,495,249 | ||||||
Novartis AG (REG) | 7,110 | 555,233 | ||||||
Pfizer, Inc. | 29,546 | 1,008,110 | ||||||
Roche Holding AG | 11,870 | 2,889,209 | ||||||
Sanofi | 21,970 | 1,895,088 | ||||||
Shire PLC | 44,460 | 2,680,874 | ||||||
STADA Arzneimittel AG | 13,270 | 802,487 | ||||||
Teva Pharmaceutical Industries Ltd. | 10,915 | 383,956 | ||||||
Teva Pharmaceutical Industries Ltd. | 69,056 | 2,418,341 | ||||||
|
| |||||||
18,919,501 | ||||||||
|
| |||||||
65,028,851 | ||||||||
|
| |||||||
Consumer Discretionary – 8.7% | ||||||||
Auto Components – 1.1% | ||||||||
Hankook Tire Co., Ltd.(a) | 13,550 | 715,719 | ||||||
Lear Corp. | 9,913 | 1,407,547 | ||||||
Magna International, Inc. – Class A | 62,442 | 2,676,264 | ||||||
Sumitomo Electric Industries Ltd. | 43,900 | 715,130 | ||||||
Valeo SA | 28,290 | 1,742,199 | ||||||
|
| |||||||
7,256,859 | ||||||||
|
| |||||||
Automobiles – 0.6% | ||||||||
General Motors Co. | 21,027 | 774,635 | ||||||
Honda Motor Co., Ltd. | 44,600 | 1,381,589 | ||||||
Peugeot SA(a) | 64,250 | 1,224,648 | ||||||
Tata Motors Ltd. – Class A | 125,046 | 516,006 | ||||||
Toyota Motor Corp. | 8,500 | 480,869 | ||||||
|
| |||||||
4,377,747 | ||||||||
|
| |||||||
Diversified Consumer Services – 0.1% | ||||||||
Kroton Educacional SA | 96,700 | 423,788 | ||||||
Tarena International, Inc. (ADR) | 20,700 | 299,529 | ||||||
|
| |||||||
723,317 | ||||||||
|
| |||||||
Hotels, Restaurants & Leisure – 0.8% | ||||||||
IMAX China Holding, Inc.(a)(b) | 96,500 | 462,459 | ||||||
Sodexo SA | 4,374 | 480,028 | ||||||
Starbucks Corp. | 75,610 | 4,299,941 | ||||||
|
| |||||||
5,242,428 | ||||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 29 |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Household Durables – 0.2% | ||||||||
Panasonic Corp. | 96,800 | $ | 1,062,209 | |||||
|
| |||||||
Internet & Direct Marketing Retail – 0.4% | ||||||||
Ctrip.com International Ltd. (ADR)(a) | 11,200 | 531,328 | ||||||
Priceline Group, Inc. (The)(a) | 1,308 | 2,255,162 | ||||||
|
| |||||||
2,786,490 | ||||||||
|
| |||||||
Media – 2.0% | ||||||||
CBS Corp. – Class B | 14,054 | 926,440 | ||||||
Comcast Corp. – Class A | 124,790 | 4,669,642 | ||||||
CTS Eventim AG & Co. KGaA | 43,815 | 1,593,015 | ||||||
Liberty Global PLC – Series C(a) | 40,327 | 1,415,074 | ||||||
Naspers Ltd. – Class N | 16,644 | 2,660,805 | ||||||
Regal Entertainment Group – Class A | 17,299 | 373,312 | ||||||
Twenty-First Century Fox, Inc. – Class A | 5,947 | 177,934 | ||||||
Walt Disney Co. (The) | 19,018 | 2,093,692 | ||||||
|
| |||||||
13,909,914 | ||||||||
|
| |||||||
Multiline Retail – 0.6% | ||||||||
Dollar General Corp. | 14,608 | 1,066,676 | ||||||
Dollar Tree, Inc.(a) | 37,134 | 2,847,435 | ||||||
Target Corp. | 7,505 | 441,069 | ||||||
|
| |||||||
4,355,180 | ||||||||
|
| |||||||
Specialty Retail – 2.1% | ||||||||
ABC-Mart, Inc. | 26,700 | 1,610,585 | ||||||
Burlington Stores, Inc.(a) | 10,235 | 911,017 | ||||||
Foot Locker, Inc. | 10,507 | 795,065 | ||||||
Home Depot, Inc. (The) | 42,408 | 6,145,343 | ||||||
Industria de Diseno Textil SA | 911 | 29,194 | ||||||
O’Reilly Automotive, Inc.(a) | 6,630 | 1,801,437 | ||||||
Office Depot, Inc. | 50,300 | 209,751 | ||||||
Ross Stores, Inc. | 11,256 | 771,937 | ||||||
TJX Cos., Inc. (The) | 10,022 | 786,226 | ||||||
Ulta Salon Cosmetics & Fragrance, Inc.(a) | 5,477 | 1,497,576 | ||||||
|
| |||||||
14,558,131 | ||||||||
|
| |||||||
Textiles, Apparel & Luxury Goods – 0.8% | ||||||||
HUGO BOSS AG | 11,500 | 790,824 | ||||||
Kering | 1,930 | 469,604 | ||||||
NIKE, Inc. – Class B | 63,210 | 3,613,084 | ||||||
Samsonite International SA | 261,000 | 791,389 | ||||||
|
| |||||||
5,664,901 | ||||||||
|
| |||||||
59,937,176 | ||||||||
|
| |||||||
Industrials – 5.9% | ||||||||
Aerospace & Defense – 1.2% | ||||||||
Airbus SE | 19,440 | 1,428,381 | ||||||
B/E Aerospace, Inc. | 23,098 | 1,469,033 |
30 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
BAE Systems PLC | 86,840 | $ | 679,831 | |||||
Hexcel Corp. | 16,708 | 918,606 | ||||||
L3 Technologies, Inc. | 15,030 | 2,529,850 | ||||||
United Technologies Corp. | 10,844 | 1,220,492 | ||||||
|
| |||||||
8,246,193 | ||||||||
|
| |||||||
Airlines – 0.9% | ||||||||
Air Canada(a) | 51,170 | 515,476 | ||||||
Delta Air Lines, Inc. | 40,472 | 2,020,767 | ||||||
International Consolidated Airlines Group SA | 166,380 | 1,109,293 | ||||||
Japan Airlines Co., Ltd. | 42,200 | 1,379,063 | ||||||
Qantas Airways Ltd. | 401,221 | 1,153,470 | ||||||
United Continental Holdings, Inc.(a) | 4,778 | 354,002 | ||||||
|
| |||||||
6,532,071 | ||||||||
|
| |||||||
Building Products – 0.3% | ||||||||
Allegion PLC | 10,909 | 791,885 | ||||||
AO Smith Corp. | 28,620 | 1,441,303 | ||||||
|
| |||||||
2,233,188 | ||||||||
|
| |||||||
Commercial Services & Supplies – 0.4% | ||||||||
Babcock International Group PLC | 201,744 | 2,371,905 | ||||||
IWG PLC | 150,665 | 529,045 | ||||||
Republic Services, Inc. – Class A | 3,709 | 229,773 | ||||||
|
| |||||||
3,130,723 | ||||||||
|
| |||||||
Construction & Engineering – 0.1% | ||||||||
IRB Infrastructure Developers Ltd. | 83,146 | 288,563 | ||||||
Quanta Services, Inc.(a) | 13,748 | 513,075 | ||||||
|
| |||||||
801,638 | ||||||||
|
| |||||||
Electrical Equipment – 0.3% | ||||||||
Eaton Corp. PLC | 28,592 | 2,058,052 | ||||||
|
| |||||||
Industrial Conglomerates – 0.5% | ||||||||
General Electric Co. | 27,634 | 823,770 | ||||||
Roper Technologies, Inc. | 12,110 | 2,533,412 | ||||||
|
| |||||||
3,357,182 | ||||||||
|
| |||||||
Machinery – 1.0% | ||||||||
Cummins, Inc. | 2,248 | 333,806 | ||||||
Deere & Co. | 3,187 | 348,945 | ||||||
IDEX Corp. | 6,200 | 571,578 | ||||||
IHI Corp.(a) | 331,000 | 1,029,174 | ||||||
Ingersoll-Rand PLC | 12,416 | 985,334 | ||||||
Oshkosh Corp. | 21,876 | 1,485,162 | ||||||
Parker-Hannifin Corp. | 1,898 | 293,886 | ||||||
Snap-on, Inc. | 6,750 | 1,145,272 | ||||||
WABCO Holdings, Inc.(a) | 4,984 | 559,603 | ||||||
|
| |||||||
6,752,760 | ||||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 31 |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Professional Services – 0.3% | ||||||||
Teleperformance | 16,059 | $ | 1,777,730 | |||||
|
| |||||||
Road & Rail – 0.6% | ||||||||
Canadian National Railway Co. (Toronto) | 5,850 | 406,796 | ||||||
Central Japan Railway Co. | 6,500 | 1,064,048 | ||||||
Union Pacific Corp. | 22,390 | 2,416,776 | ||||||
|
| |||||||
3,887,620 | ||||||||
|
| |||||||
Trading Companies & Distributors – 0.3% | ||||||||
BOC Aviation Ltd.(b) | 175,600 | 914,655 | ||||||
Brenntag AG | 9,610 | 550,708 | ||||||
United Rentals, Inc.(a) | 5,999 | 768,052 | ||||||
|
| |||||||
2,233,415 | ||||||||
|
| |||||||
41,010,572 | ||||||||
|
| |||||||
Consumer Staples – 5.5% | ||||||||
Beverages – 0.6% | ||||||||
Asahi Group Holdings Ltd. | 9,300 | 328,772 | ||||||
Constellation Brands, Inc. – Class A | 6,630 | 1,052,910 | ||||||
Monster Beverage Corp.(a) | 60,506 | 2,507,369 | ||||||
|
| |||||||
3,889,051 | ||||||||
|
| |||||||
Food & Staples Retailing – 1.6% | ||||||||
Costco Wholesale Corp. | 17,170 | 3,042,181 | ||||||
Koninklijke Ahold Delhaize NV | 96,032 | 2,044,241 | ||||||
Kroger Co. (The) | 65,505 | 2,083,059 | ||||||
Lenta Ltd. (GDR)(a)(b) | 134,192 | 891,035 | ||||||
Loblaw Cos., Ltd. | 9,100 | 474,527 | ||||||
Sugi Holdings Co., Ltd. | 5,000 | 230,358 | ||||||
Tesco PLC(a) | 270,660 | 632,489 | ||||||
Wal-Mart Stores, Inc. | 19,166 | 1,359,444 | ||||||
X5 Retail Group NV (GDR)(a)(b) | 12,464 | 377,659 | ||||||
|
| |||||||
11,134,993 | ||||||||
|
| |||||||
Food Products – 0.7% | ||||||||
Archer-Daniels-Midland Co. | 9,579 | 449,926 | ||||||
BRF SA | 47,000 | 612,420 | ||||||
Gruma SAB de CV – Class B | 53,350 | 700,800 | ||||||
Ingredion, Inc. | 3,195 | 386,244 | ||||||
JBS SA | 124,300 | 466,634 | ||||||
Orkla ASA | 91,710 | 806,205 | ||||||
Tyson Foods, Inc. – Class A | 14,954 | 935,522 | ||||||
WH Group Ltd.(b) | 846,000 | 660,500 | ||||||
|
| |||||||
5,018,251 | ||||||||
|
| |||||||
Household Products – 0.5% | ||||||||
Henkel AG & Co. KGaA (Preference Shares) | 8,030 | 1,003,197 | ||||||
Procter & Gamble Co. (The) | 12,993 | 1,183,273 | ||||||
Reckitt Benckiser Group PLC | 13,470 | 1,223,071 | ||||||
|
| |||||||
3,409,541 | ||||||||
|
|
32 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Personal Products – 0.3% | ||||||||
Amorepacific Corp. | 1,290 | $ | 343,214 | |||||
LG Household & Health Care Ltd. | 1,210 | 939,024 | ||||||
Unilever PLC | 21,740 | 1,031,379 | ||||||
|
| |||||||
2,313,617 | ||||||||
|
| |||||||
Tobacco – 1.8% | ||||||||
Altria Group, Inc. | 21,660 | 1,622,767 | ||||||
British American Tobacco PLC | 97,761 | 6,175,029 | ||||||
Imperial Brands PLC | 15,831 | 745,248 | ||||||
Japan Tobacco, Inc. | 66,000 | 2,208,044 | ||||||
Philip Morris International, Inc. | 13,793 | 1,508,264 | ||||||
|
| |||||||
12,259,352 | ||||||||
|
| |||||||
38,024,805 | ||||||||
|
| |||||||
Energy – 5.0% | ||||||||
Energy Equipment & Services – 0.8% | ||||||||
Helmerich & Payne, Inc. | 23,169 | 1,584,064 | ||||||
Petrofac Ltd. | 57,590 | 637,931 | ||||||
Schlumberger Ltd. | 38,019 | 3,055,207 | ||||||
|
| |||||||
5,277,202 | ||||||||
|
| |||||||
Oil, Gas & Consumable Fuels – 4.2% | ||||||||
Canadian Natural Resources Ltd. (Toronto) | 27,750 | 795,812 | ||||||
Canadian Natural Resources Ltd. | 49,950 | 1,434,064 | ||||||
Chevron Corp. | 8,865 | 997,312 | ||||||
CNOOC Ltd. | 378,000 | 447,171 | ||||||
Devon Energy Corp. | 41,106 | 1,782,356 | ||||||
EOG Resources, Inc. | 27,209 | 2,639,001 | ||||||
Exxon Mobil Corp. | 33,759 | 2,745,282 | ||||||
Hess Corp. | 30,216 | 1,554,311 | ||||||
JX Holdings, Inc. | 266,800 | 1,271,867 | ||||||
LUKOIL PJSC (Sponsored ADR) | 12,950 | 686,663 | ||||||
LUKOIL PJSC (London) (Sponsored ADR) | 14,210 | 751,354 | ||||||
Marathon Petroleum Corp. | 11,387 | 564,795 | ||||||
Novatek PJSC (Sponsored GDR)(b) | 4,410 | 571,627 | ||||||
PetroChina Co., Ltd. – Class H | 866,000 | 657,796 | ||||||
QEP Resources, Inc.(a) | 69,373 | 954,572 | ||||||
Royal Dutch Shell PLC – Class A | 225,460 | 5,841,682 | ||||||
SM Energy Co. | 7,081 | 174,547 | ||||||
TOTAL SA | 63,993 | 3,192,991 | ||||||
Valero Energy Corp. | 12,600 | 856,170 | ||||||
YPF SA (Sponsored ADR) | 51,881 | 1,076,531 | ||||||
|
| |||||||
28,995,904 | ||||||||
|
| |||||||
34,273,106 | ||||||||
|
| |||||||
Materials – 2.7% | ||||||||
Chemicals – 1.2% | ||||||||
Air Water, Inc. | 35,700 | 678,628 | ||||||
Arkema SA | 10,685 | 1,035,803 |
AB TAX-MANAGED WEALTH STRATEGIES • | 33 |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
CF Industries Holdings, Inc. | 44,133 | $ | 1,386,659 | |||||
Dow Chemical Co. (The) | 14,998 | 933,775 | ||||||
Ecolab, Inc. | 10,780 | 1,336,397 | ||||||
Incitec Pivot Ltd. | 238,840 | 671,516 | ||||||
Johnson Matthey PLC | 15,870 | 603,464 | ||||||
LG Chem Ltd. | 2,050 | 512,569 | ||||||
LyondellBasell Industries NV – Class A | 2,747 | 250,636 | ||||||
Mosaic Co. (The) | 4,700 | 146,593 | ||||||
Nippon Shokubai Co., Ltd. | 10,200 | 675,214 | ||||||
|
| |||||||
8,231,254 | ||||||||
|
| |||||||
Construction Materials – 0.1% | ||||||||
Buzzi Unicem SpA | 26,040 | 644,416 | ||||||
|
| |||||||
Metals & Mining – 1.3% | ||||||||
BHP Billiton PLC | 193,280 | 3,115,275 | ||||||
BlueScope Steel Ltd. | 41,673 | 389,750 | ||||||
Boliden AB | 26,920 | 819,735 | ||||||
Gerdau SA (Preference Shares) | 172,200 | 714,658 | ||||||
Glencore PLC(a) | 385,080 | 1,535,146 | ||||||
Goldcorp, Inc. | 28,450 | 450,890 | ||||||
MMC Norilsk Nickel PJSC (ADR) | 58,129 | 926,472 | ||||||
Newmont Mining Corp. | 6,873 | 235,331 | ||||||
Novolipetsk Steel PJSC (GDR)(b) | 31,190 | 597,778 | ||||||
|
| |||||||
8,785,035 | ||||||||
|
| |||||||
Paper & Forest Products – 0.1% | ||||||||
Mondi PLC | 31,250 | 728,364 | ||||||
|
| |||||||
18,389,069 | ||||||||
|
| |||||||
Telecommunication Services – 2.2% | ||||||||
Diversified Telecommunication Services – 1.3% | ||||||||
AT&T, Inc. | 63,210 | 2,641,546 | ||||||
BT Group PLC | 501,060 | 2,024,814 | ||||||
China Unicom Hong Kong Ltd. | 852,000 | 1,035,921 | ||||||
Nippon Telegraph & Telephone Corp. | 54,900 | 2,322,232 | ||||||
TDC A/S(a) | 179,570 | 964,883 | ||||||
Tower Bersama Infrastructure Tbk PT | 594,900 | 222,836 | ||||||
|
| |||||||
9,212,232 | ||||||||
|
| |||||||
Wireless Telecommunication Services – 0.9% | ||||||||
SoftBank Group Corp. | 19,300 | 1,439,875 | ||||||
T-Mobile US, Inc.(a) | 43,877 | 2,743,629 | ||||||
Vodafone Group PLC | 661,387 | 1,656,356 | ||||||
|
| |||||||
5,839,860 | ||||||||
|
| |||||||
15,052,092 | ||||||||
|
|
34 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Utilities – 1.6% | ||||||||
Electric Utilities – 1.2% | ||||||||
American Electric Power Co., Inc. | 25,400 | $ | 1,701,038 | |||||
Edison International | 23,423 | 1,867,750 | ||||||
EDP – Energias de Portugal SA | 192,940 | 596,479 | ||||||
Enel SpA | 151,610 | 650,662 | ||||||
Exelon Corp. | 44,937 | 1,649,637 | ||||||
FirstEnergy Corp. | 6,551 | 212,449 | ||||||
PG&E Corp. | 2,729 | 182,161 | ||||||
Portland General Electric Co. | 25,818 | 1,170,330 | ||||||
|
| |||||||
8,030,506 | ||||||||
|
| |||||||
Multi-Utilities – 0.3% | ||||||||
DTE Energy Co. | 2,669 | 270,583 | ||||||
NiSource, Inc. | 59,671 | 1,426,734 | ||||||
Public Service Enterprise Group, Inc. | 8,000 | 367,840 | ||||||
WEC Energy Group, Inc. | 4,456 | 268,563 | ||||||
|
| |||||||
2,333,720 | ||||||||
|
| |||||||
Water Utilities – 0.1% | ||||||||
Cia de Saneamento Basico do Estado de Sao Paulo | 47,700 | 502,482 | ||||||
Pennon Group PLC | 45,230 | 486,630 | ||||||
|
| |||||||
989,112 | ||||||||
|
| |||||||
11,353,338 | ||||||||
|
| |||||||
Real Estate – 0.5% | ||||||||
Real Estate Management & Development – 0.5% | ||||||||
Ayala Land, Inc. | 987,400 | 693,559 | ||||||
Daito Trust Construction Co., Ltd. | 11,800 | 1,650,796 | ||||||
Global Logistic Properties Ltd. | 151,000 | 286,306 | ||||||
LendLease Group | 77,110 | 899,666 | ||||||
|
| |||||||
3,530,327 | ||||||||
|
| |||||||
Total Common Stocks | 485,926,027 | |||||||
|
| |||||||
INVESTMENT COMPANIES – 27.5% | ||||||||
Funds and Investment Trusts – 27.5%(c) | ||||||||
AB Multi-Manager Alternative Strategies Fund – Class Z | 5,449,130 | 55,472,142 | ||||||
AB Pooling Portfolios – AB Multi-Asset Real Return Portfolio | 4,775,268 | 30,991,488 | ||||||
AB Pooling Portfolios – AB Volatility Management Portfolio | 11,124,920 | 103,461,760 | ||||||
|
| |||||||
Total Investment Companies | 189,925,390 | |||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 35 |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
SHORT-TERM INVESTMENTS – 1.8% | ||||||||
Investment Companies – 1.8% | ||||||||
AB Fixed Income Shares, Inc. – | 12,217,153 | $ | 12,217,153 | |||||
|
| |||||||
Total Investments – 99.6% | 688,068,570 | |||||||
Other assets less liabilities – 0.4% | 2,507,705 | |||||||
|
| |||||||
Net Assets – 100.0% | $ | 690,576,275 | ||||||
|
|
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
Counterparty | Contracts to Deliver (000) | In Exchange (000) | Settlement Date | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||
Bank of America, NA | GBP | 4,850 | USD | 6,077 | 5/16/17 | $ | 48,413 | |||||||||||||
Bank of America, NA | USD | 811 | GBP | 642 | 5/16/17 | (12,511 | ) | |||||||||||||
Barclays Bank PLC | CHF | 503 | USD | 503 | 5/16/17 | 64 | ||||||||||||||
Barclays Bank PLC | EUR | 5,554 | USD | 5,947 | 5/16/17 | 42,450 | ||||||||||||||
Barclays Bank PLC | GBP | 794 | USD | 994 | 5/16/17 | 7,475 | ||||||||||||||
Barclays Bank PLC | ILS | 2,177 | USD | 582 | 5/16/17 | (17,083 | ) | |||||||||||||
Barclays Bank PLC | USD | 3,239 | SEK | 28,538 | 5/16/17 | (66,050 | ) | |||||||||||||
BNP Paribas SA | USD | 1,355 | AUD | 1,775 | 5/16/17 | 3,644 | ||||||||||||||
Citibank, NA | BRL | 4,077 | USD | 1,271 | 4/04/17 | (29,701 | ) | |||||||||||||
Citibank, NA | USD | 706 | BRL | 2,265 | 4/04/17 | 16,501 | ||||||||||||||
Citibank, NA | USD | 642 | RUB | 38,253 | 4/28/17 | 6,216 | ||||||||||||||
Citibank, NA | USD | 3,877 | AUD | 5,080 | 5/16/17 | 11,345 | ||||||||||||||
Citibank, NA | USD | 695 | CAD | 922 | 5/16/17 | (147 | ) | |||||||||||||
Credit Suisse International | USD | 940 | CAD | 1,229 | 5/16/17 | (13,791 | ) | |||||||||||||
Goldman Sachs Bank USA | JPY | 420,295 | USD | 3,769 | 5/16/17 | 15,968 | ||||||||||||||
Goldman Sachs Bank USA | NOK | 4,690 | USD | 564 | 5/16/17 | 3,992 | ||||||||||||||
Goldman Sachs Bank USA | USD | 2,913 | CAD | 3,834 | 5/16/17 | (24,429 | ) | |||||||||||||
Goldman Sachs Bank USA | USD | 5,928 | JPY | 660,999 | 5/16/17 | (25,113 | ) | |||||||||||||
Goldman Sachs Bank USA | USD | 1,131 | TWD | 34,927 | 5/16/17 | 11,924 | ||||||||||||||
JPMorgan Chase Bank, NA | GBP | 632 | USD | 793 | 5/16/17 | 7,264 | ||||||||||||||
JPMorgan Chase Bank, NA | NOK | 6,070 | USD | 717 | 5/16/17 | (7,015 | ) | |||||||||||||
Nomura Global Financial Products, Inc. | TWD | 17,314 | USD | 561 | 5/16/17 | (5,184 | ) | |||||||||||||
Nomura Global Financial Products, Inc. | USD | 747 | INR | 51,601 | 5/16/17 | 20,272 | ||||||||||||||
Northern Trust Co. | USD | 960 | ZAR | 13,133 | 5/16/17 | 28,541 | ||||||||||||||
Royal Bank of Scotland PLC | GBP | 475 | USD | 585 | 5/16/17 | (5,266 | ) | |||||||||||||
Royal Bank of Scotland PLC | KRW | 4,712,699 | USD | 4,099 | 5/16/17 | (58,190 | ) | |||||||||||||
Standard Chartered Bank | CNY | 4,578 | USD | 660 | 5/16/17 | (2,901 | ) | |||||||||||||
State Street Bank & Trust Co. | AUD | 508 | USD | 388 | 5/16/17 | (1,001 | ) | |||||||||||||
State Street Bank & Trust Co. | CHF | 2,459 | USD | 2,485 | 5/16/17 | 25,975 | ||||||||||||||
State Street Bank & Trust Co. | EUR | 1,015 | USD | 1,087 | 5/16/17 | 8,238 |
36 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
Counterparty | Contracts to Deliver (000) | In Exchange (000) | Settlement Date | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||
State Street Bank & Trust Co. | HKD | 25,713 | USD | 3,318 | 5/16/17 | $ | 2,367 | |||||||||||||||||
State Street Bank & Trust Co. | SGD | 495 | USD | 350 | 5/16/17 | (3,590 | ) | |||||||||||||||||
State Street Bank & Trust Co. | USD | 1,642 | CHF | 1,625 | 5/16/17 | (17,165 | ) | |||||||||||||||||
State Street Bank & Trust Co. | USD | 2,409 | CNY | 16,675 | 5/16/17 | 5,947 | ||||||||||||||||||
State Street Bank & Trust Co. | USD | 1,233 | EUR | 1,166 | 5/16/17 | 6,390 | ||||||||||||||||||
State Street Bank & Trust Co. | USD | 369 | GBP | 299 | 5/16/17 | 2,496 | ||||||||||||||||||
State Street Bank & Trust Co. | USD | 1,408 | JPY | 157,684 | 5/16/17 | (207 | ) | |||||||||||||||||
State Street Bank & Trust Co. | USD | 281 | MXN | 5,848 | 5/16/17 | 6,956 | ||||||||||||||||||
State Street Bank & Trust Co. | USD | 429 | NOK | 3,566 | 5/16/17 | (3,251 | ) | |||||||||||||||||
UBS AG | GBP | 825 | USD | 1,029 | 5/16/17 | 3,963 | ||||||||||||||||||
|
| |||||||||||||||||||||||
$ | (6,194 | ) | ||||||||||||||||||||||
|
|
(a) | Non-income producing security. |
(b) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At February 28, 2017, the aggregate market value of these securities amounted to $5,084,178 or 0.7% of net assets. |
(c) | To obtain a copy of the fund’s financial statements, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
(d) | Investment in affiliated money market mutual fund. The rate shown represents the 7-day yield as of period end. |
Currency Abbreviations:
AUD | – Australian Dollar |
BRL | – Brazilian Real |
CAD | – Canadian Dollar |
CHF | – Swiss Franc |
CNY | – Chinese Yuan Renminbi |
EUR | – Euro |
GBP | – Great British Pound |
HKD | – Hong Kong Dollar |
ILS | – Israeli Shekel |
INR | – Indian Rupee |
JPY | – Japanese Yen |
KRW | – South Korean Won |
MXN | – Mexican Peso |
NOK | – Norwegian Krone |
RUB | – Russian Ruble |
SEK | – Swedish Krona |
SGD | – Singapore Dollar |
TWD | – New Taiwan Dollar |
USD | – United States Dollar |
ZAR | – South African Rand |
Glossary:
ADR | – American Depositary Receipt |
GDR | – Global Depositary Receipt |
PJSC | – Public Joint Stock Company |
REG | – Registered Shares |
See notes to financial statements.
AB TAX-MANAGED WEALTH STRATEGIES • | 37 |
AB Tax-Managed Wealth Appreciation Strategy—Portfolio of Investments
AB TAX-MANAGED BALANCED WEALTH STRATEGY
PORTFOLIO OF INVESTMENTS
February 28, 2017 (unaudited)
Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
MUNICIPAL OBLIGATIONS – 53.8% | ||||||||
Long-Term Municipal Bonds – 51.0% | ||||||||
Alabama – 3.4% | ||||||||
Water Works Board of the City of Birmingham (The) | $ | 3,980 | $ | 4,461,500 | ||||
|
| |||||||
Arizona – 2.2% | ||||||||
Arizona Department of Transportation State Highway Fund Revenue | 2,100 | 2,402,085 | ||||||
City of Glendale AZ | 410 | 479,229 | ||||||
|
| |||||||
2,881,314 | ||||||||
|
| |||||||
California – 2.6% | ||||||||
City of Los Angeles Department of Airports | 365 | 408,410 | ||||||
State of California | 730 | 875,000 | ||||||
State of California Department of Water Resources Power Supply Revenue | 1,905 | 2,133,276 | ||||||
|
| |||||||
3,416,686 | ||||||||
|
| |||||||
Colorado – 2.4% | ||||||||
City & County of Denver CO Airport System Revenue | 1,220 | 1,383,821 | ||||||
PV Water & Sanitation Metropolitan District | 710 | 149,100 | ||||||
Regional Transportation District COP | 1,475 | 1,676,854 | ||||||
|
| |||||||
3,209,775 | ||||||||
|
|
38 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Connecticut – 2.5% | ||||||||
State of Connecticut | $ | 510 | $ | 570,639 | ||||
State of Connecticut Special Tax Revenue | 2,390 | 2,727,396 | ||||||
|
| |||||||
3,298,035 | ||||||||
|
| |||||||
District of Columbia – 1.2% | ||||||||
District of Columbia | 1,200 | 1,264,584 | ||||||
Series 2016E | 275 | 308,058 | ||||||
|
| |||||||
1,572,642 | ||||||||
|
| |||||||
Florida – 4.4% | ||||||||
County of Miami-Dade FL | 1,000 | 1,150,240 | ||||||
County of Miami-Dade FL Aviation Revenue | 665 | 770,157 | ||||||
Series 2015A | 200 | 228,264 | ||||||
County of Miami-Dade FL Spl Tax | 560 | 636,205 | ||||||
Overoaks Community Development District | 25 | 12,500 | ||||||
Series 2010A-1 | 15 | 15,017 | ||||||
Series 2010A-2 | 35 | 35,040 | ||||||
Series 2010B | 25 | 24,990 | ||||||
Parkway Center Community Development District | 50 | 50,512 | ||||||
Sarasota County School Board COP | 1,165 | 1,307,759 | ||||||
Tampa Bay Water | 1,380 | 1,588,932 | ||||||
|
| |||||||
5,819,616 | ||||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 39 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Georgia – 1.7% | ||||||||
City of Atlanta Department of Aviation | $ | 1,980 | $ | 2,299,651 | ||||
|
| |||||||
Illinois – 0.9% | ||||||||
Illinois Finance Authority | 150 | 172,444 | ||||||
Illinois State Toll Highway Authority | 305 | 325,273 | ||||||
State of Illinois | 315 | 334,464 | ||||||
Series 2014 | 75 | 79,038 | ||||||
Series 2016 | 135 | 142,999 | ||||||
State of Illinois | 130 | 149,356 | ||||||
|
| |||||||
1,203,574 | ||||||||
|
| |||||||
Indiana – 1.7% | ||||||||
Indiana Bond Bank | 1,945 | 2,094,998 | ||||||
Indiana Finance Authority | 145 | 152,607 | ||||||
|
| |||||||
2,247,605 | ||||||||
|
| |||||||
Massachusetts – 0.5% | ||||||||
Commonwealth of Massachusetts | 100 | 92,290 | ||||||
AGM Series 2006B | 500 | 608,305 | ||||||
|
| |||||||
700,595 | ||||||||
|
| |||||||
Michigan – 1.9% | ||||||||
Michigan Finance Authority | 955 | 1,041,972 |
40 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Michigan Finance Authority | $ | 325 | $ | 371,595 | ||||
Michigan Finance Authority | 1,000 | 1,143,370 | ||||||
|
| |||||||
2,556,937 | ||||||||
|
| |||||||
Minnesota – 2.5% | ||||||||
Elk River Independent School District No 728 | 1,600 | 1,879,968 | ||||||
South Washington County Independent School District No 833/MN | 1,290 | 1,429,423 | ||||||
|
| |||||||
3,309,391 | ||||||||
|
| |||||||
Mississippi – 0.3% | ||||||||
State of Mississippi Gaming | 370 | 419,499 | ||||||
|
| |||||||
Nebraska – 0.6% | ||||||||
Douglas County Hospital Authority No 2 | 155 | 172,052 | ||||||
Lancaster County School District 001 | 535 | 592,432 | ||||||
|
| |||||||
764,484 | ||||||||
|
| |||||||
Nevada – 0.2% | ||||||||
Clark County School District | 315 | 331,396 | ||||||
|
| |||||||
New Jersey – 4.4% | ||||||||
New Jersey Economic Development Authority | 1,195 | 1,340,240 | ||||||
New Jersey Transit Corp. | 300 | 323,943 |
AB TAX-MANAGED WEALTH STRATEGIES • | 41 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
New Jersey Transportation Trust Fund Authority | $ | 1,840 | $ | 1,937,905 | ||||
New Jersey Turnpike Authority | 100 | 90,007 | ||||||
Series 2014A | 1,870 | 2,127,499 | ||||||
|
| |||||||
5,819,594 | ||||||||
|
| |||||||
New York – 5.4% | ||||||||
Metropolitan Transportation Authority | 460 | 537,220 | ||||||
New York City Transitional Finance Authority | 2,275 | 2,638,522 | ||||||
New York State Dormitory Authority | 205 | 236,632 | ||||||
New York State Energy Research & Development Authority | 375 | 344,854 | ||||||
XLCA Series 2004A | 400 | 360,512 | ||||||
New York State Thruway Authority | 425 | 459,727 | ||||||
Triborough Bridge & Tunnel Authority | 1,000 | 1,164,340 | ||||||
Series 2013B | 1,215 | 1,376,388 | ||||||
|
| |||||||
7,118,195 | ||||||||
|
| |||||||
North Carolina – 0.1% | ||||||||
North Carolina Eastern Municipal Power Agency | 150 | 170,175 | ||||||
|
|
42 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Pennsylvania – 2.2% | ||||||||
Commonwealth of Pennsylvania | $ | 600 | $ | 693,024 | ||||
Pennsylvania Higher Educational Facilities Authority | 1,000 | 1,047,970 | ||||||
Pennsylvania Turnpike Commission | 1,000 | 1,151,420 | ||||||
Philadelphia Authority for Industrial Development | 55 | 550 | ||||||
|
| |||||||
2,892,964 | ||||||||
|
| |||||||
Texas – 6.1% | ||||||||
City of Houston TX Airport System Revenue | 2,815 | 2,956,775 | ||||||
City of San Antonio TX Electric & Gas Systems Revenue | 855 | 1,027,402 | ||||||
Harris County-Houston Sports Authority | 615 | 721,592 | ||||||
Texas A&M University | 2,220 | 2,328,647 | ||||||
Texas Transportation Commission State Highway Fund | 850 | 1,029,928 | ||||||
|
| |||||||
8,064,344 | ||||||||
|
| |||||||
Utah – 0.3% | ||||||||
Washington County School District Board of Education/St George | 405 | 461,955 | ||||||
|
| |||||||
Virginia – 1.0% | ||||||||
Virginia College Building Authority | 1,190 | 1,400,416 | ||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 43 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Principal Amount (000) | U.S. $ Value | |||||||
| ||||||||
Washington – 2.3% | ||||||||
Chelan County Public Utility District No 1 | $ | 1,815 | $ | 2,086,814 | ||||
State of Washington | 535 | 622,660 | ||||||
State of Washington | 145 | 173,200 | ||||||
State of Washington COP | 225 | 237,269 | ||||||
|
| |||||||
3,119,943 | ||||||||
|
| |||||||
Wisconsin – 0.2% | ||||||||
Wisconsin Public Finance Authority | 265 | 288,776 | ||||||
|
| |||||||
Total Long-Term Municipal Bonds | 67,829,062 | |||||||
|
| |||||||
Short-Term Municipal Notes – 2.8% | ||||||||
Ohio – 1.3% | ||||||||
County of Montgomery OH | 1,700 | 1,700,000 | ||||||
|
| |||||||
Washington – 1.5% | ||||||||
Washington Health Care Facilities Authority | 2,000 | 2,000,000 | ||||||
|
| |||||||
Total Short-Term Municipal Notes | 3,700,000 | |||||||
|
| |||||||
Total Municipal Obligations | 71,529,062 | |||||||
|
| |||||||
Shares | ||||||||
COMMON STOCKS – 27.0% | ||||||||
Information Technology – 6.5% | ||||||||
Communications Equipment – 0.4% | ||||||||
Arista Networks, Inc.(c) | 1,230 | 146,358 | ||||||
Cisco Systems, Inc. | 3,262 | 111,495 | ||||||
Nokia Oyj | 15,120 | 77,414 |
44 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Nokia Oyj (Sponsored ADR) – Class A | 21,702 | $ | 111,548 | |||||
Palo Alto Networks, Inc.(c) | 597 | 90,684 | ||||||
|
| |||||||
537,499 | ||||||||
|
| |||||||
Electronic Equipment, Instruments & Components – 0.3% | ||||||||
Amphenol Corp. – Class A | 969 | 67,064 | ||||||
Corning, Inc. | 1,350 | 37,274 | ||||||
Keyence Corp. | 400 | 154,673 | ||||||
Largan Precision Co., Ltd. | 1,000 | 148,413 | ||||||
|
| |||||||
407,424 | ||||||||
|
| |||||||
Internet Software & Services – 1.6% | ||||||||
Alibaba Group Holding Ltd. (Sponsored ADR)(c) | 1,100 | 113,190 | ||||||
Alphabet, Inc. – Class A(c) | 117 | 98,857 | ||||||
Alphabet, Inc. – Class C(c) | 874 | 719,485 | ||||||
Criteo SA (Sponsored ADR)(c) | 2,171 | 101,994 | ||||||
Facebook, Inc. – Class A(c) | 5,830 | 790,198 | ||||||
Tencent Holdings Ltd. | 12,500 | 331,712 | ||||||
Yahoo Japan Corp. | 11,900 | 55,247 | ||||||
|
| |||||||
2,210,683 | ||||||||
|
| |||||||
IT Services – 0.9% | ||||||||
Booz Allen Hamilton Holding Corp. | 2,959 | 105,843 | ||||||
Cognizant Technology Solutions Corp. – Class A(c) | 1,890 | 112,020 | ||||||
Fiserv, Inc.(c) | 1,540 | 177,716 | ||||||
HCL Technologies Ltd. | 3,120 | 39,233 | ||||||
Vantiv, Inc. – Class A(c) | 1,690 | 110,492 | ||||||
Visa, Inc. – Class A | 6,870 | 604,148 | ||||||
|
| |||||||
1,149,452 | ||||||||
|
| |||||||
Semiconductors & Semiconductor Equipment – 1.2% | ||||||||
Applied Materials, Inc. | 1,055 | 38,212 | ||||||
ASML Holding NV | 880 | 106,973 | ||||||
Infineon Technologies AG | 2,350 | 41,773 | ||||||
Intel Corp. | 7,261 | 262,848 | ||||||
NVIDIA Corp. | 1,313 | 133,243 | ||||||
Realtek Semiconductor Corp. | 13,000 | 48,356 | ||||||
SCREEN Holdings Co., Ltd. | 800 | 53,968 | ||||||
SK Hynix, Inc. | 2,540 | 104,661 | ||||||
Sumco Corp. | 5,500 | 80,829 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. | 24,000 | 147,037 | ||||||
Texas Instruments, Inc. | 2,030 | 155,539 | ||||||
Tokyo Electron Ltd. | 400 | 39,906 | ||||||
Xilinx, Inc. | 5,711 | 335,921 | ||||||
|
| |||||||
1,549,266 | ||||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 45 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Software – 1.1% | ||||||||
Adobe Systems, Inc.(c) | 2,730 | $ | 323,068 | |||||
Constellation Software, Inc./Canada | 536 | 251,616 | ||||||
Dassault Systemes SE | 1,470 | 118,755 | ||||||
Electronic Arts, Inc.(c) | 2,880 | 249,120 | ||||||
Nintendo Co., Ltd. | 300 | 62,663 | ||||||
Oracle Corp. | 6,328 | 269,510 | ||||||
salesforce.com, Inc.(c) | 675 | 54,911 | ||||||
ServiceNow, Inc.(c) | 976 | 84,834 | ||||||
Symantec Corp. | 581 | 16,599 | ||||||
|
| |||||||
1,431,076 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals – 1.0% | ||||||||
Apple, Inc. | 3,852 | 527,685 | ||||||
Hewlett Packard Enterprise Co. | 5,343 | 121,927 | ||||||
HP, Inc. | 7,248 | 125,898 | ||||||
NCR Corp.(c) | 671 | 32,255 | ||||||
Pegatron Corp. | 19,000 | 50,030 | ||||||
Samsung Electronics Co., Ltd. | 208 | 353,482 | ||||||
Samsung Electronics Co., Ltd. (Preference Shares) | 30 | 39,708 | ||||||
Xerox Corp. | 12,727 | 94,689 | ||||||
|
| |||||||
1,345,674 | ||||||||
|
| |||||||
8,631,074 | ||||||||
|
| |||||||
Financials – 4.7% | ||||||||
Banks – 2.3% | ||||||||
Australia & New Zealand Banking Group Ltd. | 5,070 | 119,998 | ||||||
Axis Bank Ltd. | 7,750 | 58,677 | ||||||
Bank of America Corp. | 16,654 | 411,021 | ||||||
Bank of Montreal | 510 | 38,701 | ||||||
Bank of Queensland Ltd. | 7,122 | 64,633 | ||||||
Barclays PLC | 26,400 | 74,202 | ||||||
BNP Paribas SA | 3,570 | 208,882 | ||||||
BOC Hong Kong Holdings Ltd. | 19,500 | 77,033 | ||||||
Citigroup, Inc. | 2,126 | 127,156 | ||||||
Citizens Financial Group, Inc. | 318 | 11,884 | ||||||
Comerica, Inc. | 1,408 | 100,362 | ||||||
Danske Bank A/S | 2,240 | 74,662 | ||||||
DNB ASA | 4,470 | 73,288 | ||||||
Erste Group Bank AG | 2,490 | 72,419 | ||||||
Fifth Third Bancorp | 1,030 | 28,263 | ||||||
HDFC Bank Ltd. | 2,540 | 54,821 | ||||||
HSBC Holdings PLC | 4,470 | 35,904 | ||||||
ING Groep NV | 6,664 | 91,807 | ||||||
Intesa Sanpaolo SpA | 15,370 | 35,787 | ||||||
Itau Unibanco Holding SA (Preference Shares) | 4,730 | 60,571 |
46 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
JPMorgan Chase & Co. | 3,523 | $ | 319,254 | |||||
KB Financial Group, Inc. | 1,390 | 57,379 | ||||||
KBC Group NV | 1,200 | 73,438 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 15,500 | 102,544 | ||||||
PNC Financial Services Group, Inc. (The) | 469 | 59,671 | ||||||
Sberbank of Russia PJSC (Sponsored ADR) | 8,130 | 89,024 | ||||||
Shinhan Financial Group Co., Ltd. | 900 | 37,027 | ||||||
SunTrust Banks, Inc. | 657 | 39,085 | ||||||
Toronto-Dominion Bank (The) | 1,350 | 69,584 | ||||||
US Bancorp | 1,418 | 77,990 | ||||||
Wells Fargo & Co. | 6,307 | 365,049 | ||||||
|
| |||||||
3,110,116 | ||||||||
|
| |||||||
Capital Markets – 0.5% | ||||||||
Amundi SA(h) | 755 | 43,751 | ||||||
BM&FBovespa SA – Bolsa de Valores Mercadorias e Futuros | 8,200 | 49,958 | ||||||
Franklin Resources, Inc. | 368 | 15,839 | ||||||
Goldman Sachs Group, Inc. (The) | 363 | 90,046 | ||||||
MarketAxess Holdings, Inc. | 225 | 43,927 | ||||||
Morgan Stanley | 1,446 | 66,039 | ||||||
Partners Group Holding AG | 305 | 159,549 | ||||||
Thomson Reuters Corp. | 238 | 10,067 | ||||||
UBS Group AG | 11,593 | 178,716 | ||||||
|
| |||||||
657,892 | ||||||||
|
| |||||||
Consumer Finance – 0.4% | ||||||||
American Express Co. | 818 | 65,489 | ||||||
Capital One Financial Corp. | 1,346 | 126,336 | ||||||
Discover Financial Services | 704 | 50,083 | ||||||
Hitachi Capital Corp. | 2,000 | 51,681 | ||||||
OneMain Holdings, Inc.(c) | 1,994 | 55,872 | ||||||
Shriram Transport Finance Co., Ltd. | 1,090 | 15,128 | ||||||
Synchrony Financial | 5,431 | 196,819 | ||||||
|
| |||||||
561,408 | ||||||||
|
| |||||||
Diversified Financial Services – 0.2% | ||||||||
Berkshire Hathaway, Inc. – Class B(c) | 754 | 129,251 | ||||||
GRENKE AG | 330 | 57,690 | ||||||
Haci Omer Sabanci Holding AS | 12,250 | 33,799 | ||||||
|
| |||||||
220,740 | ||||||||
|
| |||||||
Insurance – 1.1% | ||||||||
Admiral Group PLC | 3,118 | 70,719 | ||||||
AIA Group Ltd. | 49,400 | 311,810 | ||||||
Allstate Corp. (The) | 1,464 | 120,282 | ||||||
American International Group, Inc. | 3,569 | 228,130 | ||||||
Dongbu Insurance Co., Ltd. | 1,060 | 57,231 | ||||||
First American Financial Corp. | 1,980 | 77,359 | ||||||
FNF Group | 3,101 | 118,861 |
AB TAX-MANAGED WEALTH STRATEGIES • | 47 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Hartford Financial Services Group, Inc. (The) | 396 | $ | 19,360 | |||||
Lincoln National Corp. | 929 | 65,179 | ||||||
Loews Corp. | 308 | 14,470 | ||||||
NN Group NV | 1,266 | 39,396 | ||||||
Progressive Corp. (The) | 1,943 | 76,127 | ||||||
Prudential Financial, Inc. | 376 | 41,563 | ||||||
Prudential PLC | 10,800 | 215,838 | ||||||
Suncorp Group Ltd. | 4,340 | 44,094 | ||||||
|
| |||||||
1,500,419 | ||||||||
|
| |||||||
Thrifts & Mortgage Finance – 0.2% | ||||||||
Housing Development Finance Corp. Ltd. | 11,680 | 239,636 | ||||||
|
| |||||||
6,290,211 | ||||||||
|
| |||||||
Health Care – 3.6% | ||||||||
Biotechnology – 0.7% | ||||||||
Alexion Pharmaceuticals, Inc.(c) | 787 | 103,294 | ||||||
Biogen, Inc.(c) | 1,774 | 511,977 | ||||||
China Biologic Products, Inc.(c) | 170 | 16,694 | ||||||
Gilead Sciences, Inc. | 2,528 | 178,173 | ||||||
Grifols SA (ADR) | 2,940 | 51,156 | ||||||
|
| |||||||
861,294 | ||||||||
|
| |||||||
Health Care Equipment & Supplies – 0.9% | ||||||||
Align Technology, Inc.(c) | 936 | 96,184 | ||||||
Danaher Corp. | 3,517 | 300,879 | ||||||
Edwards Lifesciences Corp.(c) | 2,817 | 264,911 | ||||||
Essilor International SA | 1,865 | 214,096 | ||||||
Intuitive Surgical, Inc.(c) | 388 | 285,956 | ||||||
Sartorius AG (Preference Shares) | 762 | 57,118 | ||||||
|
| |||||||
1,219,144 | ||||||||
|
| |||||||
Health Care Providers & Services – 0.7% | ||||||||
Aetna, Inc. | 858 | 110,476 | ||||||
Cigna Corp. | 934 | 139,073 | ||||||
McKesson Corp. | 748 | 112,297 | ||||||
Quest Diagnostics, Inc. | 395 | 38,489 | ||||||
UnitedHealth Group, Inc. | 2,517 | 416,261 | ||||||
VCA, Inc.(c) | 610 | 55,449 | ||||||
|
| |||||||
872,045 | ||||||||
|
| |||||||
Health Care Technology – 0.1% | ||||||||
Cerner Corp.(c) | 2,850 | 156,864 | ||||||
|
| |||||||
Life Sciences Tools & Services – 0.2% | ||||||||
Eurofins Scientific SE | 551 | 235,412 | ||||||
Mettler-Toledo International, Inc.(c) | 163 | 77,624 | ||||||
|
| |||||||
313,036 | ||||||||
|
|
48 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Pharmaceuticals – 1.0% | ||||||||
Johnson & Johnson | 2,166 | $ | 264,707 | |||||
Mallinckrodt PLC(c) | 1,281 | 67,150 | ||||||
Merck & Co., Inc. | 1,467 | 96,631 | ||||||
Novartis AG (REG) | 220 | 17,180 | ||||||
Pfizer, Inc. | 1,369 | 46,710 | ||||||
Roche Holding AG | 780 | 189,856 | ||||||
Sanofi | 1,610 | 138,875 | ||||||
Shire PLC | 3,340 | 201,397 | ||||||
STADA Arzneimittel AG | 1,000 | 60,474 | ||||||
Teva Pharmaceutical Industries Ltd. | 660 | 23,217 | ||||||
Teva Pharmaceutical Industries Ltd. (Sponsored ADR) | 5,037 | 176,396 | ||||||
|
| |||||||
1,282,593 | ||||||||
|
| |||||||
4,704,976 | ||||||||
|
| |||||||
Consumer Discretionary – 3.3% | ||||||||
Auto Components – 0.4% | ||||||||
Hankook Tire Co., Ltd.(c) | 1,020 | 53,877 | ||||||
Lear Corp. | 607 | 86,188 | ||||||
Magna International, Inc. – Class A | 4,286 | 183,698 | ||||||
Sumitomo Electric Industries Ltd. | 3,100 | 50,499 | ||||||
Valeo SA | 1,738 | 107,032 | ||||||
|
| |||||||
481,294 | ||||||||
|
| |||||||
Automobiles – 0.2% | ||||||||
General Motors Co. | 1,436 | 52,902 | ||||||
Honda Motor Co., Ltd. | 3,300 | 102,225 | ||||||
Peugeot SA(c) | 4,790 | 91,301 | ||||||
Tata Motors Ltd. – Class A | 9,329 | 38,496 | ||||||
Toyota Motor Corp. | 600 | 33,944 | ||||||
|
| |||||||
318,868 | ||||||||
|
| |||||||
Diversified Consumer Services – 0.0% | ||||||||
Kroton Educacional SA | 8,400 | 36,813 | ||||||
Tarena International, Inc. (ADR) | 1,200 | 17,364 | ||||||
|
| |||||||
54,177 | ||||||||
|
| |||||||
Hotels, Restaurants & Leisure – 0.3% | ||||||||
IMAX China Holding, Inc.(c)(h) | 8,000 | 38,338 | ||||||
Sodexo SA | 358 | 39,289 | ||||||
Starbucks Corp. | 5,880 | 334,396 | ||||||
|
| |||||||
412,023 | ||||||||
|
| |||||||
Household Durables – 0.1% | ||||||||
Panasonic Corp. | 7,000 | 76,813 | ||||||
|
| |||||||
Internet & Direct Marketing Retail – 0.2% | ||||||||
Ctrip.com International Ltd. (ADR)(c) | 840 | 39,849 | ||||||
Priceline Group, Inc. (The)(c) | 105 | 181,034 | ||||||
|
| |||||||
220,883 | ||||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 49 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Media – 0.7% | ||||||||
CBS Corp. – Class B | 836 | $ | 55,109 | |||||
Comcast Corp. – Class A | 9,644 | 360,878 | ||||||
CTS Eventim AG & Co. KGaA | 3,238 | 117,726 | ||||||
Interpublic Group of Cos., Inc. (The) | 605 | 14,581 | ||||||
Liberty Global PLC – Series C(c) | 3,004 | 105,410 | ||||||
Naspers Ltd. – Class N | 875 | 139,883 | ||||||
Regal Entertainment Group – Class A | 1,442 | 31,118 | ||||||
Twenty-First Century Fox, Inc. – Class A | 491 | 14,691 | ||||||
Walt Disney Co. (The) | 1,372 | 151,044 | ||||||
|
| |||||||
990,440 | ||||||||
|
| |||||||
Multiline Retail – 0.3% | ||||||||
Dollar General Corp. | 1,110 | 81,052 | ||||||
Dollar Tree, Inc.(c) | 2,831 | 217,081 | ||||||
Target Corp. | 593 | 34,851 | ||||||
|
| |||||||
332,984 | ||||||||
|
| |||||||
Specialty Retail – 0.8% | ||||||||
ABC-Mart, Inc. | 2,000 | 120,643 | ||||||
Burlington Stores, Inc.(c) | 681 | 60,616 | ||||||
Foot Locker, Inc. | 759 | 57,433 | ||||||
Home Depot, Inc. (The) | 3,395 | 491,969 | ||||||
O’Reilly Automotive, Inc.(c) | 480 | 130,421 | ||||||
Ross Stores, Inc. | 827 | 56,716 | ||||||
TJX Cos., Inc. (The) | 719 | 56,406 | ||||||
Ulta Salon Cosmetics & Fragrance, Inc.(c) | 417 | 114,020 | ||||||
|
| |||||||
1,088,224 | ||||||||
|
| |||||||
Textiles, Apparel & Luxury Goods – 0.3% | ||||||||
HUGO BOSS AG | 840 | 57,765 | ||||||
Kering | 140 | 34,065 | ||||||
NIKE, Inc. – Class B | 4,828 | 275,968 | ||||||
PVH Corp. | 275 | 25,190 | ||||||
Samsonite International SA | 20,200 | 61,249 | ||||||
|
| |||||||
454,237 | ||||||||
|
| |||||||
4,429,943 | ||||||||
|
| |||||||
Industrials – 2.3% | ||||||||
Aerospace & Defense – 0.4% | ||||||||
Airbus SE | 1,420 | 104,337 | ||||||
B/E Aerospace, Inc. | 1,684 | 107,102 | ||||||
BAE Systems PLC | 6,760 | 52,921 | ||||||
Hexcel Corp. | 1,263 | 69,440 | ||||||
L3 Technologies, Inc. | 1,048 | 176,399 | ||||||
United Technologies Corp. | 525 | 59,089 | ||||||
|
| |||||||
569,288 | ||||||||
|
| |||||||
Airlines – 0.4% | ||||||||
Air Canada(c) | 4,030 | 40,597 | ||||||
Delta Air Lines, Inc. | 2,541 | 126,872 |
50 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
International Consolidated Airlines Group SA | 11,850 | $ | 79,007 | |||||
Japan Airlines Co., Ltd. | 3,100 | 101,306 | ||||||
Qantas Airways Ltd. | 28,382 | 81,595 | ||||||
United Continental Holdings, Inc.(c) | 378 | 28,006 | ||||||
|
| |||||||
457,383 | ||||||||
|
| |||||||
Building Products – 0.1% | ||||||||
Allegion PLC | 900 | 65,331 | ||||||
AO Smith Corp. | 2,160 | 108,778 | ||||||
|
| |||||||
174,109 | ||||||||
|
| |||||||
Commercial Services & Supplies – 0.2% | ||||||||
Babcock International Group PLC | 15,210 | 178,824 | ||||||
IWG PLC | 11,920 | 41,856 | ||||||
|
| |||||||
220,680 | ||||||||
|
| |||||||
Construction & Engineering – 0.0% | ||||||||
IRB Infrastructure Developers Ltd. | 6,290 | 21,830 | ||||||
Quanta Services, Inc.(c) | 974 | 36,349 | ||||||
|
| |||||||
58,179 | ||||||||
|
| |||||||
Electrical Equipment – 0.1% | ||||||||
Eaton Corp. PLC | 2,035 | 146,479 | ||||||
|
| |||||||
Industrial Conglomerates – 0.2% | ||||||||
General Electric Co. | 2,530 | 75,419 | ||||||
Roper Technologies, Inc. | 952 | 199,159 | ||||||
|
| |||||||
274,578 | ||||||||
|
| |||||||
Machinery – 0.4% | ||||||||
Cummins, Inc. | 178 | 26,431 | ||||||
Deere & Co. | 310 | 33,942 | ||||||
IDEX Corp. | 480 | 44,251 | ||||||
IHI Corp.(c) | 24,000 | 74,623 | ||||||
Ingersoll-Rand PLC | 816 | 64,758 | ||||||
Oshkosh Corp. | 1,415 | 96,064 | ||||||
Parker-Hannifin Corp. | 144 | 22,297 | ||||||
Snap-on, Inc. | 590 | 100,105 | ||||||
WABCO Holdings, Inc.(c) | 370 | 41,544 | ||||||
|
| |||||||
504,015 | ||||||||
|
| |||||||
Professional Services – 0.1% | ||||||||
Teleperformance | 1,295 | 143,356 | ||||||
|
| |||||||
Road & Rail – 0.2% | ||||||||
Canadian National Railway Co. (Toronto) | 450 | 31,292 | ||||||
Central Japan Railway Co. | 500 | 81,850 | ||||||
Union Pacific Corp. | 1,620 | 174,863 | ||||||
|
| |||||||
288,005 | ||||||||
|
| |||||||
Trading Companies & Distributors – 0.2% | ||||||||
BOC Aviation Ltd.(h) | 12,800 | 66,672 |
AB TAX-MANAGED WEALTH STRATEGIES • | 51 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Brenntag AG | 800 | $ | 45,844 | |||||
United Rentals, Inc.(c) | 735 | 94,102 | ||||||
|
| |||||||
206,618 | ||||||||
|
| |||||||
3,042,690 | ||||||||
|
| |||||||
Consumer Staples – 2.1% | ||||||||
Beverages – 0.2% | ||||||||
Asahi Group Holdings Ltd. | 700 | 24,746 | ||||||
Constellation Brands, Inc. – Class A | 500 | 79,405 | ||||||
Monster Beverage Corp.(c) | 4,604 | 190,790 | ||||||
|
| |||||||
294,941 | ||||||||
|
| |||||||
Food & Staples Retailing – 0.6% | ||||||||
Costco Wholesale Corp. | 1,315 | 232,992 | ||||||
Koninklijke Ahold Delhaize NV | 6,907 | 147,030 | ||||||
Kroger Co. (The) | 4,909 | 156,106 | ||||||
Lenta Ltd. (GDR)(c)(h) | 10,311 | 68,465 | ||||||
Loblaw Cos., Ltd. | 640 | 33,373 | ||||||
Sugi Holdings Co., Ltd. | 400 | 18,429 | ||||||
Tesco PLC(c) | 19,250 | 44,984 | ||||||
Wal-Mart Stores, Inc. | 1,492 | 105,827 | ||||||
X5 Retail Group NV (GDR)(c)(h) | 963 | 29,179 | ||||||
|
| |||||||
836,385 | ||||||||
|
| |||||||
Food Products – 0.3% | ||||||||
Archer-Daniels-Midland Co. | 791 | 37,153 | ||||||
BRF SA | 3,600 | 46,909 | ||||||
Gruma SAB de CV – Class B | 3,590 | 47,158 | ||||||
Ingredion, Inc. | 175 | 21,156 | ||||||
JBS SA | 9,400 | 35,288 | ||||||
Orkla ASA | 6,880 | 60,481 | ||||||
Tyson Foods, Inc. – Class A | 1,015 | 63,498 | ||||||
WH Group Ltd.(h) | 56,000 | 43,721 | ||||||
|
| |||||||
355,364 | ||||||||
|
| |||||||
Household Products – 0.2% | ||||||||
Henkel AG & Co. KGaA (Preference Shares) | 590 | 73,710 | ||||||
Procter & Gamble Co. (The) | 1,004 | 91,434 | ||||||
Reckitt Benckiser Group PLC | 580 | 52,664 | ||||||
|
| |||||||
217,808 | ||||||||
|
| |||||||
Personal Products – 0.1% | ||||||||
Amorepacific Corp. | 100 | 26,606 | ||||||
LG Household & Health Care Ltd. | 90 | 69,845 | ||||||
Unilever PLC | 1,710 | 81,125 | ||||||
|
| |||||||
177,576 | ||||||||
|
| |||||||
Tobacco – 0.7% | ||||||||
Altria Group, Inc. | 1,576 | 118,074 | ||||||
British American Tobacco PLC | 7,255 | 458,258 | ||||||
Imperial Brands PLC | 1,200 | 56,490 |
52 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Japan Tobacco, Inc. | 5,500 | $ | 184,004 | |||||
Philip Morris International, Inc. | 1,050 | 114,818 | ||||||
|
| |||||||
931,644 | ||||||||
|
| |||||||
2,813,718 | ||||||||
|
| |||||||
Energy – 1.9% | ||||||||
Energy Equipment & Services – 0.3% | ||||||||
Helmerich & Payne, Inc. | 1,990 | 136,056 | ||||||
Petrofac Ltd. | 4,260 | 47,189 | ||||||
Schlumberger Ltd. | 2,764 | 222,115 | ||||||
|
| |||||||
405,360 | ||||||||
|
| |||||||
Oil, Gas & Consumable Fuels – 1.6% | ||||||||
Canadian Natural Resources Ltd. | 5,530 | 158,699 | ||||||
Chevron Corp. | 485 | 54,563 | ||||||
CNOOC Ltd. | 30,000 | 35,490 | ||||||
Devon Energy Corp. | 3,134 | 135,890 | ||||||
EOG Resources, Inc. | 2,173 | 210,759 | ||||||
Exxon Mobil Corp. | 2,414 | 196,306 | ||||||
Hess Corp. | 3,232 | 166,254 | ||||||
JX Holdings, Inc. | 19,400 | 92,482 | ||||||
LUKOIL PJSC (Sponsored ADR) | 2,082 | 110,080 | ||||||
Novatek PJSC (Sponsored GDR)(h) | 550 | 71,291 | ||||||
PetroChina Co., Ltd. – Class H | 60,000 | 45,575 | ||||||
QEP Resources, Inc.(c) | 2,540 | 34,950 | ||||||
Royal Dutch Shell PLC – Class A | 17,358 | 449,747 | ||||||
SM Energy Co. | 539 | 13,286 | ||||||
TOTAL SA | 4,376 | 218,345 | ||||||
Valero Energy Corp. | 465 | 31,597 | ||||||
YPF SA (Sponsored ADR) | 3,190 | 66,193 | ||||||
|
| |||||||
2,091,507 | ||||||||
|
| |||||||
2,496,867 | ||||||||
|
| |||||||
Materials – 1.0% | ||||||||
Chemicals – 0.5% | ||||||||
Air Water, Inc. | 2,800 | 53,226 | ||||||
Arkema SA | 760 | 73,674 | ||||||
CF Industries Holdings, Inc. | 2,878 | 90,427 | ||||||
Dow Chemical Co. (The) | 1,144 | 71,226 | ||||||
Ecolab, Inc. | 780 | 96,697 | ||||||
Incitec Pivot Ltd. | 17,740 | 49,877 | ||||||
Johnson Matthey PLC | 1,230 | 46,771 | ||||||
LG Chem Ltd. | 160 | 40,005 | ||||||
LyondellBasell Industries NV – Class A | 216 | 19,708 | ||||||
Mosaic Co. (The) | 357 | 11,135 | ||||||
Nippon Shokubai Co., Ltd. | 700 | 46,338 | ||||||
|
| |||||||
599,084 | ||||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 53 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Construction Materials – 0.0% | ||||||||
Buzzi Unicem SpA | 1,970 | $ | 48,752 | |||||
|
| |||||||
Metals & Mining – 0.5% | ||||||||
BHP Billiton PLC | 14,330 | 230,970 | ||||||
BlueScope Steel Ltd. | 3,246 | 30,358 | ||||||
Boliden AB | 2,090 | 63,642 | ||||||
Gerdau SA (Preference Shares) | 12,300 | 51,047 | ||||||
Glencore PLC(c) | 19,220 | 76,622 | ||||||
Goldcorp, Inc. | 2,090 | 33,123 | ||||||
MMC Norilsk Nickel PJSC (ADR) | 4,345 | 69,332 | ||||||
Newmont Mining Corp. | 603 | 20,647 | ||||||
Novolipetsk Steel PJSC (GDR)(h) | 2,400 | 45,997 | ||||||
|
| |||||||
621,738 | ||||||||
|
| |||||||
Paper & Forest Products – 0.0% | ||||||||
Mondi PLC | 2,431 | 56,661 | ||||||
|
| |||||||
1,326,235 | ||||||||
|
| |||||||
Telecommunication Services – 0.8% | ||||||||
Diversified Telecommunication Services – 0.5% | ||||||||
AT&T, Inc. | 4,601 | 192,276 | ||||||
BT Group PLC | 36,480 | 147,418 | ||||||
China Unicom Hong Kong Ltd. | 60,000 | 72,952 | ||||||
Nippon Telegraph & Telephone Corp. | 4,100 | 173,427 | ||||||
TDC A/S(c) | 9,530 | 51,207 | ||||||
Tower Bersama Infrastructure Tbk PT | 48,000 | 17,980 | ||||||
|
| |||||||
655,260 | ||||||||
|
| |||||||
Wireless Telecommunication Services – 0.3% | ||||||||
SoftBank Group Corp. | 900 | 67,145 | ||||||
T-Mobile US, Inc.(c) | 3,145 | 196,657 | ||||||
Vodafone Group PLC | 50,210 | 125,744 | ||||||
|
| |||||||
389,546 | ||||||||
|
| |||||||
1,044,806 | ||||||||
|
| |||||||
Utilities – 0.6% | ||||||||
Electric Utilities – 0.4% | ||||||||
American Electric Power Co., Inc. | 1,763 | 118,068 | ||||||
Edison International | 1,756 | 140,024 | ||||||
EDP – Energias de Portugal SA | 13,800 | 42,663 | ||||||
Enel SpA | 11,140 | 47,809 | ||||||
Exelon Corp. | 3,206 | 117,692 | ||||||
FirstEnergy Corp. | 573 | 18,582 | ||||||
PG&E Corp. | 560 | 37,380 | ||||||
Portland General Electric Co. | 1,996 | 90,479 | ||||||
|
| |||||||
612,697 | ||||||||
|
|
54 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
| ||||||||
Multi-Utilities – 0.1% | ||||||||
DTE Energy Co. | 228 | $ | 23,115 | |||||
NiSource, Inc. | 4,013 | 95,951 | ||||||
|
| |||||||
119,066 | ||||||||
|
| |||||||
Water Utilities – 0.1% | ||||||||
American Water Works Co., Inc. | 200 | 15,600 | ||||||
Cia de Saneamento Basico do Estado de Sao Paulo | 3,200 | 33,709 | ||||||
Pennon Group PLC | 3,080 | 33,138 | ||||||
|
| |||||||
82,447 | ||||||||
|
| |||||||
814,210 | ||||||||
|
| |||||||
Real Estate – 0.2% | ||||||||
Real Estate Management & Development – 0.2% | ||||||||
Ayala Land, Inc. | 79,600 | 55,912 | ||||||
Daito Trust Construction Co., Ltd. | 1,000 | 139,898 | ||||||
Global Logistic Properties Ltd. | 12,000 | 22,753 | ||||||
LendLease Group | 5,570 | 64,987 | ||||||
SM Prime Holdings, Inc. | 4,500 | 2,631 | ||||||
|
| |||||||
286,181 | ||||||||
|
| |||||||
Total Common Stocks | 35,880,911 | |||||||
|
| |||||||
INVESTMENT COMPANIES – 18.8% | ||||||||
Funds and Investment Trusts – 18.8%(i) | ||||||||
AB Pooling Portfolios – AB Multi-Asset Real Return Portfolio | 570,908 | 3,705,191 | ||||||
AB Multi-Manager Alternative Strategies Fund – Class Z | 743,751 | 7,571,380 | ||||||
AB Pooling Portfolios – AB Volatility Management Portfolio | 1,475,932 | 13,726,165 | ||||||
|
| |||||||
Total Investment Companies | 25,002,736 | |||||||
|
| |||||||
SHORT-TERM INVESTMENTS – 0.3% | ||||||||
Investment Companies – 0.3% | ||||||||
AB Fixed Income Shares, Inc. – Government Money Market Portfolio – Class AB, 0.39%(i)(j) (cost $384,696) | 384,696 | 384,696 | ||||||
|
| |||||||
Total Investments – 99.9% | 132,797,405 | |||||||
Other assets less liabilities – 0.1% | 127,807 | |||||||
|
| |||||||
Net Assets – 100.0% | $ | 132,925,212 | ||||||
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 55 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
Counterparty | Contracts to Deliver (000) | In Exchange For (000) | Settlement Date | Unrealized Appreciation/ (Depreciation) | ||||||||||||
Citibank, NA | USD | 36 | RUB | 2,133 | 4/28/17 | $ | 347 | |||||||||
Goldman Sachs Bank USA | USD | 19 | TWD | 579 | 5/16/17 | 198 | ||||||||||
HSBC Bank USA | BRL | 291 | USD | 91 | 4/04/17 | (1,949 | ) | |||||||||
HSBC Bank USA | USD | 52 | BRL | 165 | 4/04/17 | 1,105 | ||||||||||
Nomura Global Financial Products, Inc. | USD | 51 | INR | 3,557 | 5/16/17 | 1,397 | ||||||||||
Royal Bank of Scotland PLC | KRW | 298,280 | USD | 261 | 5/16/17 | (2,119 | ) | |||||||||
State Street Bank & Trust Co. | BRL | 86 | USD | 27 | 4/04/17 | (135 | ) | |||||||||
State Street Bank & Trust Co. | CHF | 195 | USD | 197 | 5/16/17 | 2,054 | ||||||||||
State Street Bank & Trust Co. | EUR | 493 | USD | 529 | 5/16/17 | 4,944 | ||||||||||
State Street Bank & Trust Co. | GBP | 535 | USD | 672 | 5/16/17 | 6,676 | ||||||||||
State Street Bank & Trust Co. | HKD | 1,945 | USD | 251 | 5/16/17 | 166 | ||||||||||
State Street Bank & Trust Co. | ILS | 197 | USD | 53 | 5/16/17 | (1,557 | ) | |||||||||
State Street Bank & Trust Co. | JPY | 31,116 | USD | 279 | 5/16/17 | 1,336 | ||||||||||
State Street Bank & Trust Co. | JPY | 12,518 | USD | 111 | 5/16/17 | (1,083 | ) | |||||||||
State Street Bank & Trust Co. | NOK | 467 | USD | 55 | 5/16/17 | (550 | ) | |||||||||
State Street Bank & Trust Co. | NOK | 344 | USD | 41 | 5/16/17 | 314 | ||||||||||
State Street Bank & Trust Co. | SGD | 45 | USD | 32 | 5/16/17 | (326 | ) | |||||||||
State Street Bank & Trust Co. | TWD | 579 | USD | 19 | 5/16/17 | (42 | ) | |||||||||
State Street Bank & Trust Co. | USD | 366 | AUD | 479 | 5/16/17 | 938 | ||||||||||
State Street Bank & Trust Co. | USD | 59 | CAD | 78 | 5/16/17 | 83 | ||||||||||
State Street Bank & Trust Co. | USD | 284 | CAD | 373 | 5/16/17 | (3,200 | ) | |||||||||
State Street Bank & Trust Co. | USD | 123 | CHF | 122 | 5/16/17 | (1,285 | ) | |||||||||
State Street Bank & Trust Co. | USD | 142 | CNY | 984 | 5/16/17 | 351 | ||||||||||
State Street Bank & Trust Co. | USD | 74 | EUR | 70 | 5/16/17 | 353 | ||||||||||
State Street Bank & Trust Co. | USD | 71 | GBP | 56 | 5/16/17 | (1,145 | ) | |||||||||
State Street Bank & Trust Co. | USD | 584 | JPY | 65,109 | 5/16/17 | (2,403 | ) | |||||||||
State Street Bank & Trust Co. | USD | 22 | MXN | 454 | 5/16/17 | 540 | ||||||||||
State Street Bank & Trust Co. | USD | 32 | NOK | 268 | 5/16/17 | (244 | ) | |||||||||
State Street Bank & Trust Co. | USD | 23 | NZD | 32 | 5/16/17 | (366 | ) | |||||||||
State Street Bank & Trust Co. | USD | 227 | SEK | 2,003 | 5/16/17 | (4,583 | ) | |||||||||
State Street Bank & Trust Co. | USD | 74 | ZAR | 1,020 | 5/16/17 | 2,373 | ||||||||||
|
| |||||||||||||||
$ | 2,188 | |||||||||||||||
|
|
INFLATION (CPI) SWAPS (see Note D)
Rate Type | ||||||||||||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Upfront Premiums Paid (Received) | Unrealized Appreciation/ | ||||||||||||||||||
Bank of America, NA | $ | 200 | 9/02/20 | 1.548 | % | CPI | # | $ | – 0 | – | $ | 4,787 | ||||||||||||
Bank of America, NA | 900 | 3/04/24 | 2.493 | % | CPI | # | (500 | ) | (56,997 | ) | ||||||||||||||
Bank of America, NA | 600 | 7/09/24 | 2.613 | % | CPI | # | – 0 | – | (45,752 | ) | ||||||||||||||
Barclays Bank PLC | 2,000 | 1/31/19 | 2.385 | % | CPI | # | – 0 | – | (119,043 | ) | ||||||||||||||
Barclays Bank PLC | 200 | 5/05/25 | 2.125 | % | CPI | # | – 0 | – | 429 | |||||||||||||||
Barclays Bank PLC | 1,800 | 1/31/27 | 2.628 | % | CPI | # | – 0 | – | (199,679 | ) | ||||||||||||||
Citibank, NA | 2,000 | 5/05/18 | 1.843 | % | CPI | # | – 0 | – | 9,304 | |||||||||||||||
Citibank, NA | 350 | 8/26/20 | 2.298 | % | CPI | # | – 0 | – | (14,317 | ) | ||||||||||||||
Citibank, NA | 310 | 12/14/20 | 1.548 | % | CPI | # | – 0 | – | 9,543 | |||||||||||||||
Citibank, NA | 100 | 8/09/21 | 1.540 | % | CPI | # | – 0 | – | 3,579 | |||||||||||||||
Citibank, NA | 300 | 5/24/23 | 2.533 | % | CPI | # | – 0 | – | (23,487 | ) | ||||||||||||||
Deutsche Bank AG | 150 | 7/15/20 | 1.265 | % | CPI | # | – 0 | – | 7,160 |
56 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
Rate Type | ||||||||||||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments made by the Fund | Payments received by the Fund | Upfront Premiums Paid (Received) | Unrealized Appreciation/ | ||||||||||||||||||
Goldman Sachs Bank USA | $ | 1,400 | 1/31/22 | 2.515 | % | CPI | # | $ | – 0 | – | $ | (116,872 | ) | |||||||||||
Morgan Stanley Capital Services LLC | 250 | 4/16/23 | 2.690 | % | CPI | # | – 0 | – | (24,439 | ) | ||||||||||||||
|
|
|
| |||||||||||||||||||||
$ | (500 | ) | $ | (565,784 | ) | |||||||||||||||||||
|
|
|
|
# | Variable interest rate based on the rate of inflation as determined by the Consumer Price Index (CPI). |
INTEREST RATE SWAPS (see Note D)
Rate Type | ||||||||||||||||||||
Swap Counterparty | Notional Amount (000) | Termination Date | Payments Fund | Payments received by the Fund | Unrealized Appreciation/ (Depreciation) | |||||||||||||||
Citibank, NA | $ | 465 | 3/01/23 | 0.904 | % | SIFMA | * | $ | 19,168 | |||||||||||
JPMorgan Chase Bank, NA | 235 | 10/26/22 | 1.123 | % | SIFMA | * | 6,043 | |||||||||||||
JPMorgan Chase Bank, NA | 450 | 2/22/23 | 0.902 | % | SIFMA | * | 18,775 | |||||||||||||
|
| |||||||||||||||||||
$ | 43,986 | |||||||||||||||||||
|
|
* | Variable interest rate based on the Securities Industry & Financial Markets Association (SIFMA) Municipal Swap Index. |
(a) | Position, or a portion thereof, has been segregated to collateralize OTC derivatives outstanding. |
(b) | Defaulted. |
(c) | Non-income producing security. |
(d) | Illiquid security. |
(e) | An auction rate security whose interest rate resets at each auction date. Auctions are typically held every week or month. The rate shown is as of February 28, 2017 and the aggregate market value of these securities amounted to $887,663 or 0.67% of net assets. |
(f) | Defaulted matured security. |
(g) | Variable Rate Demand Notes are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. |
(h) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At February 28, 2017, the aggregate market value of these securities amounted to $407,414 or 0.3% of net assets. |
(i) | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
(j) | Investment in affiliated money market mutual fund. The rate shown represents the 7-day yield as of period end. |
AB TAX-MANAGED WEALTH STRATEGIES • | 57 |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
As of February 28, 2017, the Strategy’s percentages of investments in municipal bonds that are insured and in insured municipal bonds that have been pre-refunded or escrowed to maturity are 7.0% and 0.0%, respectively.
Currency Abbreviations:
AUD | – Australian Dollar |
BRL | – Brazilian Real |
CAD | – Canadian Dollar |
CHF | – Swiss Franc |
CNY | – Chinese Yuan Renminbi |
EUR | – Euro |
GBP | – Great British Pound |
HKD | – Hong Kong Dollar |
ILS | – Israeli Shekel |
INR | – Indian Rupee |
JPY | – Japanese Yen |
KRW | – South Korean Won |
MXN | – Mexican Peso |
NOK | – Norwegian Krone |
NZD | – New Zealand Dollar |
RUB | – Russian Ruble |
SEK | – Swedish Krona |
SGD | – Singapore Dollar |
TWD | – New Taiwan Dollar |
USD | – United States Dollar |
ZAR | – South African Rand |
Glossary:
ADR | – American Depositary Receipt |
AGM | – Assured Guaranty Municipal |
AMBAC | – Ambac Assurance Corporation |
COP | – Certificate of Participation |
ETM | – Escrowed to Maturity |
GDR | – Global Depositary Receipt |
NATL | – National Interstate Corporation |
OSF | – Order of St. Francis |
PJSC | – Public Joint Stock Company |
REG | – Registered Shares |
XLCA | – XL Capital Assurance Inc. |
See notes to financial statements.
58 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Tax-Managed Balanced Wealth Strategy—Portfolio of Investments
STATEMENT OF ASSETS & LIABILITIES
February 28, 2017 (unaudited)
AB Tax-Managed Wealth Appreciation Strategy | AB Tax-Managed Balanced Wealth Strategy | |||||||
Assets | ||||||||
Investments in securities, at value | ||||||||
Unaffiliated issuers (cost $394,223,564 and $98,184,476, respectively) | $ | 485,926,027 | $ | 107,409,973 | ||||
Affiliated issuers (cost $217,995,397 and $27,355,191, respectively) | 202,142,543 | 25,387,432 | ||||||
Foreign currencies, at value (cost $459,914 and $94,419, respectively) | 460,193 | 94,022 | ||||||
Receivable for investment securities sold | 3,784,909 | 189,890 | ||||||
Unaffiliated dividends receivable | 1,128,974 | 798,566 | ||||||
Receivable for shares of beneficial interest sold | 558,270 | 18,839 | ||||||
Unrealized appreciation of forward currency exchange contracts | 286,401 | 23,175 | ||||||
Due from custodian | 36,151 | 118,791 | ||||||
Affiliated dividends receivable | 4,099 | 694 | ||||||
Unrealized appreciation on interest rate swaps | – 0 | – | 43,986 | |||||
Unrealized appreciation on inflation swaps | – 0 | – | 34,802 | |||||
Other receivable | 2,183 | 579 | ||||||
|
|
|
| |||||
Total assets | 694,329,750 | 134,120,749 | ||||||
|
|
|
| |||||
Liabilities | ||||||||
Payable for investment securities purchased and foreign currency transactions | 2,060,088 | 163,684 | ||||||
Payable for shares of beneficial interest redeemed | 891,692 | 181,570 | ||||||
Advisory fee payable | 302,189 | 50,336 | ||||||
Unrealized depreciation of forward currency exchange contracts | 292,595 | 20,987 | ||||||
Distribution fee payable | 17,458 | 31,968 | ||||||
Transfer Agent fee payable | 9,912 | 8,182 | ||||||
Administrative fee payable | 8,307 | – 0 | – | |||||
Upfront premiums received on inflation swaps | – 0 | – | 500 | |||||
Unrealized depreciation on inflation swaps | – 0 | – | 600,586 | |||||
Accrued expenses | 171,234 | 137,724 | ||||||
|
|
|
| |||||
Total liabilities | 3,753,475 | 1,195,537 | ||||||
|
|
|
| |||||
Net Assets | $ | 690,576,275 | $ | 132,925,212 | ||||
|
|
|
| |||||
Composition of Net Assets | ||||||||
Shares of beneficial interest, at par | $ | 442 | $ | 101 | ||||
Additional paid-in capital | 591,493,535 | 121,387,527 | ||||||
Undistributed net investment income | 204,963 | 1,856,303 | ||||||
Accumulated net realized gain on investment and foreign currency transactions | 23,052,762 | 2,943,931 | ||||||
Net unrealized appreciation on investments and foreign currency denominated assets and liabilities | 75,824,573 | 6,737,350 | ||||||
|
|
|
| |||||
Net Assets | $ | 690,576,275 | $ | 132,925,212 | ||||
|
|
|
|
See notes to financial statements.
AB TAX-MANAGED WEALTH STRATEGIES • | 59 |
Statement of Assets & Liabilities
Net Asset Value Per Share—unlimited shares authorized, $.00001 par value
AB Tax-Managed Wealth Appreciation Strategy | Net Assets | Shares Outstanding | Net Asset Value | |||||||||
| ||||||||||||
Class A | $ | 32,309,674 | 2,072,617 | $ | 15.59 | * | ||||||
| ||||||||||||
Class B | $ | 465,929 | 30,069 | $ | 15.50 | |||||||
| ||||||||||||
Class C | $ | 14,327,313 | 932,246 | $ | 15.37 | |||||||
| ||||||||||||
Advisor Class | $ | 643,473,359 | 41,157,729 | $ | 15.63 | |||||||
| ||||||||||||
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||
| ||||||||||||
Class A | $ | 69,045,056 | 5,228,181 | $ | 13.21 | * | ||||||
| ||||||||||||
Class B | $ | 833,112 | 62,132 | $ | 13.41 | |||||||
| ||||||||||||
Class C | $ | 23,538,707 | 1,775,153 | $ | 13.26 | |||||||
| ||||||||||||
Advisor Class | $ | 39,508,337 | 2,987,199 | $ | 13.23 | |||||||
|
* | The maximum offering price per share for Class A shares of Tax-Managed Wealth Appreciation Strategy and Tax-Managed Balanced Wealth Strategy was $16.28 and $13.80, respectively, which reflects a sales charge of 4.25%. |
See notes to financial statements.
60 | • AB TAX-MANAGED WEALTH STRATEGIES |
Statement of Assets & Liabilities
STATEMENT OF OPERATIONS
Six Months Ended February 28, 2017 (unaudited)
AB Tax-Managed Wealth Appreciation Strategy | AB Tax-Managed Balanced Wealth Strategy | |||||||
Investment Income | ||||||||
Dividends | ||||||||
Affiliated issuers | $ | 9,241,444 | $ | 1,269,639 | ||||
Unaffiliated issuers (net of foreign taxes withheld of $163,782 and $12,118, respectively) | 3,439,325 | 264,154 | ||||||
Interest | – 0 | – | 1,011,468 | |||||
Other income(a) | 35,439 | 118,791 | ||||||
|
|
|
| |||||
Total income | 12,716,208 | 2,664,052 | ||||||
|
|
|
| |||||
Expenses | ||||||||
Advisory fee (see Note B) | 2,190,482 | 368,773 | ||||||
Distribution fee – Class A | 39,649 | 87,615 | ||||||
Distribution fee – Class B | 2,525 | 5,376 | ||||||
Distribution fee – Class C | 69,971 | 118,258 | ||||||
Transfer agency – Class A | 3,800 | 29,235 | ||||||
Transfer agency – Class B | 151 | 676 | ||||||
Transfer agency – Class C | 1,916 | 10,280 | ||||||
Transfer agency – Advisor Class | 75,210 | 16,393 | ||||||
Custodian | 118,791 | 77,016 | ||||||
Registration fees | 34,328 | 29,173 | ||||||
Audit and tax | 29,442 | 33,632 | ||||||
Administrative | 24,181 | – 0 | – | |||||
Legal | 22,378 | 22,542 | ||||||
Printing | 16,813 | 24,894 | ||||||
Trustees’ fees | 13,235 | 13,237 | ||||||
Miscellaneous | 20,214 | 11,233 | ||||||
|
|
|
| |||||
Total expenses | 2,663,086 | 848,333 | ||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (270,993 | ) | (38,391 | ) | ||||
|
|
|
| |||||
Net expenses | 2,392,093 | 809,942 | ||||||
|
|
|
| |||||
Net investment income | 10,324,115 | 1,854,110 | ||||||
|
|
|
|
See notes to financial statements.
AB TAX-MANAGED WEALTH STRATEGIES • | 61 |
Statement of Operations
AB Tax-Managed Wealth Appreciation Strategy | AB Tax-Managed Balanced Wealth Strategy | |||||||
Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions | ||||||||
Net realized gain on: | ||||||||
Affiliated Underlying Portfolios | $ | (1,594,826 | ) | $ | (380,856 | ) | ||
Investment transactions(b) | 20,301,801 | 1,694,710 | ||||||
Futures | 15,574 | – 0 | – | |||||
Swaps | – 0 | – | 25,936 | |||||
Foreign currency transactions | 118,459 | 17,274 | ||||||
Net realized gain distributions received from Underlying Portfolios | 12,904,196 | 1,785,834 | ||||||
Net change in unrealized appreciation/depreciation of: | ||||||||
Affiliated Underlying Portfolios | (10,560,805 | ) | (1,312,101 | ) | ||||
Investments | 11,062,699 | (1,581,315 | ) | |||||
Futures | (7,226 | ) | – 0 | – | ||||
Swaps | – 0 | – | 473,343 | |||||
Foreign currency denominated assets and liabilities | 163,225 | 9,961 | ||||||
|
|
|
| |||||
Net gain on investment and foreign currency transactions | 32,403,097 | 732,786 | ||||||
|
|
|
| |||||
Net Increase in Net Assets from Operations | $ | 42,727,212 | $ | 2,586,896 | ||||
|
|
|
|
(a) | Other income represents a non-recurring refund for overbilling of prior years’ custody out-of-pocket fees. |
(b) | Net of foreign capital gains taxes of $40,780 and $3,612, respectively |
See notes to financial statements.
62 | • AB TAX-MANAGED WEALTH STRATEGIES |
Statement of Operations
STATEMENT OF CHANGES IN NET ASSETS
AB Tax-Managed Wealth Appreciation Strategy | ||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 10,324,115 | $ | 9,454,819 | ||||
Net realized gain (loss) on investment and foreign currency transactions | 18,841,008 | (320,634 | ) | |||||
Net realized gain distributions from Underlying Portfolios | 12,904,196 | 2,491,063 | ||||||
Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities | 657,893 | 24,746,993 | ||||||
Contributions from Affiliates (see Note B) | – 0 | – | 69 | |||||
|
|
|
| |||||
Net increase in net assets from operations | 42,727,212 | 36,372,310 | ||||||
Dividends and Distributions to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (607,091 | ) | (361,483 | ) | ||||
Class B | (4,431 | ) | – 0 | – | ||||
Class C | (164,450 | ) | (40,174 | ) | ||||
Advisor Class | (13,450,035 | ) | (8,548,992 | ) | ||||
Net realized gain on investment transactions | ||||||||
Class A | (298,821 | ) | (2,065,522 | ) | ||||
Class B | (4,468 | ) | (44,662 | ) | ||||
Class C | (133,493 | ) | (955,499 | ) | ||||
Advisor Class | (5,844,092 | ) | (39,003,215 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net increase (decrease) | (18,604,081 | ) | 1,738,568 | |||||
|
|
|
| |||||
Total increase (decrease) | 3,616,250 | (12,908,669 | ) | |||||
Net Assets | ||||||||
Beginning of period | 686,960,025 | 699,868,694 | ||||||
|
|
|
| |||||
End of period (including undistributed net investment income of $204,963 and $4,106,855, respectively) | $ | 690,576,275 | $ | 686,960,025 | ||||
|
|
|
|
See notes to financial statements.
AB TAX-MANAGED WEALTH STRATEGIES • | 63 |
Statement of Changes in Net Assets
AB Tax-Managed Balanced Wealth Strategy | ||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 1,854,110 | $ | 1,761,758 | ||||
Net realized gain on investment and foreign currency transactions | 1,357,064 | 450,244 | ||||||
Net realized gain distributions from Underlying Portfolios | 1,785,834 | 349,339 | ||||||
Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities | (2,410,112 | ) | 3,189,349 | |||||
Contributions from Affiliates (see Note B) | – 0 | – | 6 | |||||
|
|
|
| |||||
Net increase in net assets from operations | 2,586,896 | 5,750,696 | ||||||
Dividends and Distributions to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (982,853 | ) | (1,242,662 | ) | ||||
Class B | – 0 | – | (3,540 | ) | ||||
Class C | (136,909 | ) | (208,427 | ) | ||||
Advisor Class | (661,148 | ) | (715,637 | ) | ||||
Net realized gain on investment transactions | ||||||||
Class A | (387,898 | ) | (2,596,598 | ) | ||||
Class B | (5,921 | ) | (68,008 | ) | ||||
Class C | (131,295 | ) | (891,517 | ) | ||||
Advisor Class | (217,581 | ) | (1,269,237 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net decrease | (6,343,491 | ) | (9,207,347 | ) | ||||
|
|
|
| |||||
Total decrease | (6,280,200 | ) | (10,452,277 | ) | ||||
Net Assets | ||||||||
Beginning of period | 139,205,412 | 149,657,689 | ||||||
|
|
|
| |||||
End of period (including undistributed net investment income of $1,856,303 and $1,783,103, respectively) | $ | 132,925,212 | $ | 139,205,412 | ||||
|
|
|
|
See notes to financial statements.
64 | • AB TAX-MANAGED WEALTH STRATEGIES |
Statement of Changes in Net Assets
NOTES TO FINANCIAL STATEMENTS
February 28, 2017 (unaudited)
NOTE A
Significant Accounting Policies
The AB Portfolios (the “Trust”) was organized as a Massachusetts Business Trust on March 26, 1987 and is registered under the Investment Company Act of 1940 as a diversified, open end management investment company. The Trust operates as a series company currently comprised of six series. Each series is considered to be a separate entity for financial reporting and tax purposes. This report relates only to AB Tax-Managed Wealth Appreciation Strategy and AB Tax-Managed Balanced Wealth Strategy (the “Strategies”). The Strategies offer Class A, Class B, Class C and Advisor Class shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Effective January 31, 2009, sales of Class B shares of the Strategies to new investors were suspended. Class B shares will only be issued (i) upon the exchange of Class B shares from another AB Mutual Fund, (ii) for purposes of dividend reinvestment, (iii) through the Strategies’ Automatic Investment Program (the “Program”) for accounts that established the Program prior to January 31, 2009, and (iv) for purchases of additional shares by Class B shareholders as of January 31, 2009. The ability to establish a new Program for accounts containing Class B shares was suspended as of January 31, 2009. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Advisor Class shares are sold without any initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All four classes of shares have identical voting, dividend, liquidation and other rights, except that the classes bear different distribution and transfer agency expenses. Each class has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Each Strategy is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Strategies.
AB TAX-MANAGED WEALTH STRATEGIES • | 65 |
Notes to Financial Statements
1. Security Valuation
Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at “fair value” as determined in accordance with procedures established by and under the general supervision of the Trust’s Board of Trustees (the “Board”).
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, AllianceBernstein L.P. (the “Adviser”) will have discretion to determine the best valuation (e.g. last trade price in the case of listed options); open futures are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Such factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. Fixed-income securities, including mortgage-backed and asset-backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker-dealers. In cases where broker-dealer quotes are obtained, the Adviser may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open end mutual funds are valued at the
66 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Strategies may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Strategies value their securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Strategies may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Strategies would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market value as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Strategies. Unobservable inputs reflect the Strategies’ own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
• | Level 1—quoted prices in active markets for identical investments |
• | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3—significant unobservable inputs (including the Strategies’ own assumptions in determining the fair value of investments) |
AB TAX-MANAGED WEALTH STRATEGIES • | 67 |
Notes to Financial Statements
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3. In addition, non-agency rated investments are classified as Level 3.
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
Other fixed income investments, including non-U.S. government and corporate debt, are generally valued using quoted market prices, if available, which are typically impacted by current interest rates, maturity dates and any perceived credit risk of the issuer. Additionally, in the absence of quoted market prices, these inputs are used by pricing vendors to derive a valuation based upon industry or proprietary models which incorporate issuer specific data with relevant yield/spread comparisons with more widely quoted bonds with similar key characteristics. Those investments for which there are observable inputs are classified as Level 2. Where the inputs are not observable, the investments are classified as Level 3.
68 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
The following tables summarize the valuation of the Strategies’ investments by the above fair value hierarchy levels as of February 28, 2017:
AB Tax-Managed Wealth Appreciation Strategy | ||||||||||||||||
Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Information Technology | $ | 87,041,890 | $ | 27,754,975 | $ | – 0 | – | $ | 114,796,865 | |||||||
Financials | 44,757,980 | 39,771,846 | – 0 | – | 84,529,826 | |||||||||||
Health Care | 49,107,031 | 15,921,820 | – 0 | – | 65,028,851 | |||||||||||
Consumer Discretionary | 42,787,116 | 17,150,060 | – 0 | – | 59,937,176 | |||||||||||
Industrials | 26,734,706 | 14,275,866 | – 0 | – | 41,010,572 | |||||||||||
Consumer Staples | 18,574,980 | 19,449,825 | – 0 | – | 38,024,805 | |||||||||||
Energy | 20,965,378 | 13,307,728 | – 0 | – | 34,273,106 | |||||||||||
Materials | 4,988,930 | 13,400,139 | – 0 | – | 18,389,069 | |||||||||||
Telecommunication Services | 5,385,175 | 9,666,917 | – 0 | – | 15,052,092 | |||||||||||
Utilities | 9,117,085 | 2,236,253 | – 0 | – | 11,353,338 | |||||||||||
Real Estate | – 0 | – | 3,530,327 | – 0 | – | 3,530,327 | ||||||||||
Investment Companies | 189,925,390 | – 0 | – | – 0 | – | 189,925,390 | ||||||||||
Short-Term Investments | 12,217,153 | – 0 | – | – 0 | – | 12,217,153 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | 511,602,814 | 176,465,756 | – 0 | – | 688,068,570 | |||||||||||
Other Financial Instruments(a) : | ||||||||||||||||
Assets: | ||||||||||||||||
Forward Currency Exchange Contracts | – 0 | – | 286,401 | – 0 | – | 286,401 | ||||||||||
Liabilities: | ||||||||||||||||
Forward Currency Exchange Contracts | – 0 | – | (292,595 | ) | – 0 | – | (292,595 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total(b) | $ | 511,602,814 | $ | 176,459,562 | $ | – 0 | – | $ | 688,062,376 | |||||||
|
|
|
|
|
|
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 69 |
Notes to Financial Statements
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||||||
Investments in Securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Municipal Obligations: | ||||||||||||||||
Long-Term Municipal Bonds | $ | – 0 | – | $ | 67,541,353 | $ | 287,709 | $ | 67,829,062 | |||||||
Short-Term Municipal Notes | – 0 | – | 3,700,000 | – 0 | – | 3,700,000 | ||||||||||
Common Stocks: | ||||||||||||||||
Information Technology | 6,576,241 | 2,054,833 | – 0 | – | 8,631,074 | |||||||||||
Financials | 3,348,143 | 2,942,068 | – 0 | – | 6,290,211 | |||||||||||
Health Care | 3,567,351 | 1,137,625 | – 0 | – | 4,704,976 | |||||||||||
Consumer Discretionary | 3,229,985 | 1,199,958 | – 0 | – | 4,429,943 | |||||||||||
Industrials | 1,968,669 | 1,074,021 | – 0 | – | 3,042,690 | |||||||||||
Consumer Staples | 1,389,428 | 1,424,290 | – 0 | – | 2,813,718 | |||||||||||
Energy | 1,501,221 | 995,646 | – 0 | – | 2,496,867 | |||||||||||
Materials | 383,936 | 942,299 | – 0 | – | 1,326,235 | |||||||||||
Telecommunication Services | 388,933 | 655,873 | – 0 | – | 1,044,806 | |||||||||||
Utilities | 656,891 | 157,319 | – 0 | – | 814,210 | |||||||||||
Real Estate | – 0 | – | 286,181 | – 0 | – | 286,181 | ||||||||||
Investment Companies | 25,002,736 | – 0 | – | – 0 | – | 25,002,736 | ||||||||||
Short-Term Investments | 384,696 | – 0 | – | – 0 | – | 384,696 | ||||||||||
|
|
|
| �� |
|
|
|
| ||||||||
Total Investments in Securities | 48,398,230 | 84,111,466 | 287,709 | 132,797,405 | ||||||||||||
Other Financial Instruments(a) : | ||||||||||||||||
Assets: | ||||||||||||||||
Forward Currency Exchange Contracts | – 0 | – | 23,175 | – 0 | – | 23,175 | ||||||||||
Inflation (CPI) Swaps | – 0 | – | 34,802 | – 0 | – | 34,802 | ||||||||||
Interest Rate Swaps | – 0 | – | 43,986 | – 0 | – | 43,986 | ||||||||||
Liabilities: | ||||||||||||||||
Forward Currency Exchange Contracts | – 0 | – | (20,987 | ) | – 0 | – | (20,987 | ) | ||||||||
Inflation (CPI) Swaps | – 0 | – | (600,586 | ) | – 0 | – | (600,586 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total(b) | $ | 48,398,230 | $ | 83,591,856 | $ | 287,709 | $ | 132,277,795 | ||||||||
|
|
|
|
|
|
|
|
(a) | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation/(depreciation) on the instrument. |
(b) | There were de minimis transfers under 1% of net assets between Level 1 and Level 2 during the reporting period. |
The Strategies recognize all transfers between levels of the fair value hierarchy assuming the financial instruments were transferred at the beginning of the reporting period.
70 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value.
AB Tax-Managed Balanced Wealth Strategy | Long-Term Municipal Bonds | Total | ||||||
Balance as of 8/31/16 | $ | 298,956 | $ | 298,956 | ||||
Accrued discounts/(premiums) | 796 | 796 | ||||||
Realized gain (loss) | 109 | 109 | ||||||
Change in unrealized appreciation/depreciation | 2,848 | 2,848 | ||||||
Purchases | – 0 | – | – 0 | – | ||||
Sales | (15,000 | ) | (15,000 | ) | ||||
Transfers in to Level 3 | – 0 | – | – 0 | – | ||||
Transfers out of Level 3 | – 0 | – | – 0 | – | ||||
|
|
|
| |||||
Balance as of 2/28/17 | $ | 287,709 | $ | 287,709 | ||||
|
|
|
| |||||
Net change in unrealized appreciation/depreciation from investments held as of 2/28/17(a) | $ | 2,848 | $ | 2,848 | ||||
|
|
|
|
(a) | The unrealized appreciation/(depreciation) is included in net change in unrealized appreciation/(depreciation) on investments and other financial instruments in the accompanying statement of operations. |
The Adviser established the Committee to oversee the pricing and valuation of all securities held in the Strategies. The Committee operates under pricing and valuation policies and procedures established by the Adviser and approved by the Board, including pricing policies which set forth the mechanisms and processes to be employed on a daily basis to implement these policies and procedures. In particular, the pricing policies describe how to determine market quotations for securities and other instruments. The Committee’s responsibilities include: 1) fair value and liquidity determinations (and oversight of any third parties to whom any responsibility for fair value and liquidity determinations is delegated), and 2) regular monitoring of the Adviser’s pricing and valuation policies and procedures and modification or enhancement of these policies and procedures (or recommendation of the modification of these policies and procedures) as the Committee believes appropriate.
The Committee is also responsible for monitoring the implementation of the pricing policies by the Adviser’s Pricing Group (the “Pricing Group”) and any third party which performs certain pricing functions in accordance with the pricing policies. The Pricing Group is responsible for the oversight of the third party on a day-to-day basis. The Committee and the Pricing Group perform a series of activities to provide reasonable assurance of the accuracy of prices including: 1) periodic vendor due diligence meetings, review of methodologies, new developments and processes at vendors, 2) daily comparison of security valuation versus prior day for all securities that exceeded established thresholds, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed by senior management and the Committee.
AB TAX-MANAGED WEALTH STRATEGIES • | 71 |
Notes to Financial Statements
In addition, several processes outside of the pricing process are used to monitor valuation issues including: 1) performance and performance attribution reports are monitored for anomalous impacts based upon benchmark performance, and 2) portfolio managers review all portfolios for performance and analytics (which are generated using the Adviser’s prices).
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Strategies’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of foreign currency denominated assets and liabilities.
4. Taxes
It is the Strategies’ policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. The Strategies may be subject to taxes imposed by countries in which they invest. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Strategies’ tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Strategies’ financial statements.
72 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Strategies are informed of the dividend. Investment gains or losses are determined on the identified cost basis. The Strategies amortize premiums and accrete discounts as adjustments to interest income. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold.
6. Class Allocations
All income earned and expenses incurred by the Strategies are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the Strategy represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Expenses of the Trust are charged proportionately to each series or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. GAAP. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement, the Strategies pay the Adviser at the annual rates as follows:
Average Daily Net Assets | ||||||||||||
AB Tax-Managed Strategy | First $2.5 Billion | Next $2.5 Billion | In Excess of $5 Billion | |||||||||
Wealth Appreciation | .65 | % | .55 | % | .50 | % | ||||||
Balanced Wealth | .55 | % | .45 | % | .40 | % |
Such fees are accrued daily and paid monthly.
During the year ended August 31, 2016, the Adviser reimbursed the Strategies the following amounts for trading losses incurred due to a trade entry error:
AB Tax-Managed Strategy | Amount | |||
Wealth Appreciation | $ | 69 | ||
Balanced Wealth | 6 |
AB TAX-MANAGED WEALTH STRATEGIES • | 73 |
Notes to Financial Statements
In connection with the Strategies’ investments in AB Cap Fund—Multi-Manager Alternative Strategies Fund (“MMAS”), the Adviser has contractually agreed to (i) waive the portion of its advisory fee attributable to its services after paying sub advisory fees to sub-advisors and (ii) waive an additional portion of the advisory fee in an amount equal to, or reimburse the Strategy for, the total other expenses of MMAS (excluding interest and short sales expenses), in each case as paid by a Strategy as an acquired fund fee and expense. This fee waiver and/or expense reimbursement will remain in effect until December 31, 2017. For the six months ended February 28, 2017, the advisory fees paid were reduced by $258,399 and $37,141 for the AB Tax-Managed Wealth Appreciation Strategy and AB Tax-Managed Balanced Wealth Strategy, respectively.
A summary of the Strategies’ transactions in AB mutual funds for the six months ended February 28, 2017 is as follows:
AB Multi-Manager Alternative Strategies Fund | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
AB Tax- Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Appr./(Depr.) (000) | Market (000) | Income (000) | Realized (000) | ||||||||||||||||||||||||
Wealth Appreciation | $ | 55,140 | $ | 1,489 | $ | 2,601 | $ | (31 | ) | $ | 1,475 | $ | 55,472 | $ | 516 | $ | – 0 | – | ||||||||||||||
Balanced Wealth | 7,816 | 420 | 875 | 4 | 206 | 7,571 | 73 | – 0 | – |
AB Pooling Portfolio—AB Volatility Management Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
AB Tax- Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Appr./(Depr.) (000) | Market (000) | Income (000) | Realized (000) | ||||||||||||||||||||||||
Wealth Appreciation | $ | 102,845 | $ | 21,896 | $ | 6,410 | $ | (610 | ) | $ | (14,259 | ) | $ | 103,462 | $ | 7,923 | $ | 12,904 | ||||||||||||||
Balanced Wealth | 14,306 | 3,763 | 2,281 | (197 | ) | (1,865 | ) | 13,726 | 1,097 | 1,786 |
AB Pooling Portfolio—AB Multi-Asset Real Return Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
AB Tax- Managed Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Appr./(Depr.) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
Wealth Appreciation | $ | 30,284 | $ | 2,571 | $ | 3,133 | $ | (954 | ) | $ | 2,223 | $ | 30,991 | $ | 782 | $ | – 0 | – | ||||||||||||||
Balanced Wealth | 3,804 | 270 | 527 | (188 | ) | 346 | 3,705 | 98 | – 0 | – |
The Strategies may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the Strategies’ average daily net assets
74 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
invested in such portfolio and bear its own expenses. In connection with the investment by the Strategies in the Government Money Market Portfolio, the Adviser has agreed to waive its advisory fee from the Strategies in an amount equal to the Strategies’ pro rata share of the effective advisory fees of Government Money Market Portfolio, as borne indirectly by the Strategies as an acquired fund fee and expense. For the six months ended February 28, 2017, such waivers amounted to:
Tax-Managed Strategy | Amount | |||
AB Wealth Appreciation | $ | 12,594 | ||
AB Balanced Wealth | 1,250 |
A summary of the Strategies’ transactions in shares of the Government Money Market Portfolio for the six months ended February 28, 2017 is as follows:
AB Tax-Managed Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Market Value 2/28/17 (000) | Dividend Income (000) | |||||||||||||||
Wealth Appreciation | $ | 9,927 | $ | 62,297 | $ | 60,007 | $ | 12,217 | $ | 21 | ||||||||||
Balanced Wealth | 656 | 14,419 | 14,690 | 385 | 2 |
The Strategies compensate AllianceBernstein Investor Services, Inc. (“ABIS”), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Strategies. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $51,627 and $27,871 for the AB Tax-Managed Wealth Appreciation Strategy and AB Tax-Managed Balanced Wealth Strategy, for the six months ended February 28, 2017.
AllianceBernstein Investments, Inc. (the “Distributor”), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Strategies’ shares. The Distributor has advised the Strategies that it has retained front-end sales charges from the sale of Class A shares and received contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares for each Strategy for the six months ended February 28, 2017 as follows:
Front-End Sales Charges | Contingent Deferred Sales Charges | |||||||||||||||
AB Tax-Managed Strategy | Class A | Class A | Class B | Class C | ||||||||||||
Wealth Appreciation | $ | 507 | $ | – 0 | – | $ | 239 | $ | 184 | |||||||
Balanced Wealth | 389 | 14 | 948 | 118 |
AB TAX-MANAGED WEALTH STRATEGIES • | 75 |
Notes to Financial Statements
Brokerage commissions paid on investment transactions for the six months ended February 28, 2017 amounted to $139,595 and $10,897 for the AB Tax-Managed Wealth Appreciation Strategy and AB Tax-Managed Balanced Wealth Strategy, of which $0 and $0 and $0 and $0 were paid, respectively to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates of the Adviser.
NOTE C
Distribution Plans
The Strategies have adopted a Plan for each class of shares of the Strategies pursuant to Rule 12b-1 under the Investment Company Act of 1940 (each a “Plan” and collectively the “Plans”). Under the Plans, the Strategies pay distribution and servicing fees to the Distributor at an annual rate of up to .50% of the Strategies’ average daily net assets attributable to Class A shares and 1% of the Strategies’ average daily net assets attributable to both Class B and Class C shares. There are no distribution and servicing fees on the Advisor Class shares. The fees are accrued daily and paid monthly. Effective August 1, 2014, payments under the Class A shares for AB Tax-Managed Wealth Appreciation Strategy and AB Tax-Managed Balanced Wealth Strategy are limited to an annual rate of .25% of Class A shares’ average daily net assets. The Plans provide that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Strategies are not obligated under the Plans to pay any distribution services fee in excess of the amounts set forth above. The purpose of the payments to the Distributor under the Plans is to compensate the Distributor for its distribution services with respect to the sale of the Strategies’ shares. Since the Distributor’s compensation is not directly tied to its expenses, the amount of compensation received by it under the Plan during any year may be more or less than its actual expenses. For this reason, the Plans are characterized by the staff of the Securities Exchange Commission as being a “compensation” plan.
In the event that a Plan is terminated or not continued, no distribution services fees (other than current amounts accrued but not yet paid) would be owed by the Strategies to the Distributor with respect to the relevant class. The Plans also provide that the Adviser may use its own resources to finance the distribution of the Strategies’ shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments) for the six months ended February 28, 2017, were as follows:
AB Tax-Managed Strategy | Purchases | Sales | ||||||
Wealth Appreciation | $ | 153,319,904 | $ | 171,487,742 | ||||
Balanced Wealth | 21,249,674 | 26,409,658 |
76 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
There were no investment transactions in U.S. government securities during the six months ended February 28, 2017.
The cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation (excluding futures, foreign currency and swap transactions) are as follows:
Gross Unrealized | Net Unrealized Appreciation | |||||||||||
AB Tax-Managed Strategy | Appreciation | (Depreciation) | ||||||||||
Wealth Appreciation | $ | 102,733,139 | $ | (26,883,530 | ) | $ | 75,849,609 | |||||
Balanced Wealth | 10,613,068 | (3,355,330 | ) | 7,257,738 |
1. Derivative Financial Instruments
The Strategies may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The principal types of derivatives utilized by the Strategies, as well as the methods in which they may be used are:
• | Futures |
The Strategies may buy or sell futures for investment purposes or for the purpose of hedging their portfolios against adverse effects of potential movements in the market. The Strategy bears the market risk that arises from changes in the value of these instruments and the imperfect correlation between movements in the price of the futures and movements in the price of the assets, reference rates or indices which they are designed to track. Among other things, the Strategies may purchase or sell futures for foreign currencies or options thereon for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.
At the time the Strategy enters into futures, the Strategy deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Such amount is shown as cash collateral due from broker on the statement of assets and liabilities. Pursuant to the contract, the Strategy agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Strategy as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of the contract. The credit/counterparty risk for exchange-traded futures is
AB TAX-MANAGED WEALTH STRATEGIES • | 77 |
Notes to Financial Statements
generally less than privately negotiated futures, since the clearinghouse, which is the issuer or counterparty to each exchange-traded future, has robust risk mitigation standards, including the requirement to provide initial and variation margin. When the contract is closed, the Strategy records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed.
Use of long futures subjects the Strategy to risk of loss in excess of the amounts shown on the statement of assets and liabilities, up to the notional value of the futures. Use of short futures subjects the Strategy to unlimited risk of loss. Under some circumstances, futures exchanges may establish daily limits on the amount that the price of futures can vary from the previous day’s settlement price, which could effectively prevent liquidation of unfavorable positions.
During the six months ended February 28, 2017, the Strategies held futures for hedging and non-hedging purposes.
• | Forward Currency Exchange Contracts |
The Strategies may enter into forward currency exchange contracts in order to hedge their exposure to changes in foreign currency exchange rates on their foreign portfolio holdings, to hedge certain firm purchase and sale commitments denominated in foreign currencies and for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions”.
A forward currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Strategy. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
During the six months ended February 28, 2017, the Strategies held forward currency exchange contracts for hedging and non-hedging purposes.
• | Swaps |
The Strategy may enter into swaps to hedge its exposure to interest rates. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a
78 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
specified amount of an underlying asset. The payment flows are usually netted against each other, with the difference being paid by one party to the other. In addition, collateral may be pledged or received by the Strategy in accordance with the terms of the respective swaps to provide value and recourse to the Strategy or its counterparties in the event of default, bankruptcy or insolvency by one of the parties to the swap.
Risks may arise as a result of the failure of the counterparty to the swap to comply with the terms of the swap. The loss incurred by the failure of a counterparty is generally limited to the net interim payment to be received by the Strategy, and/or the termination value at the end of the contract. Therefore, the Strategy considers the creditworthiness of each counterparty to a swap in evaluating potential counterparty risk. This risk is mitigated by having a netting arrangement between the Strategy and the counterparty and by the posting of collateral by the counterparty to the Strategy to cover the Strategies’ exposure to the counterparty. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying securities. The Strategy accrues for the interim payments on swaps on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swaps on the statement of assets and liabilities, where applicable. Once the interim payments are settled in cash, the net amount is recorded as realized gain/(loss) on swaps on the statement of operations, in addition to any realized gain/(loss) recorded upon the termination of swaps. Upfront premiums paid or received are recognized as cost or proceeds on the statement of assets and liabilities and are amortized on a straight line basis over the life of the contract. Amortized upfront premiums are included in net realized gain/(loss) from swaps on the statement of operations. Fluctuations in the value of swaps are recorded as a component of net change in unrealized appreciation/depreciation of swaps on the statement of operations.
Certain standardized swaps, including certain interest rate swaps and credit default swaps, are (or soon will be) subject to mandatory central clearing. Cleared swaps are transacted through futures commission merchants (“FCMs”) that are members of central clearinghouses, with the clearinghouse serving as central counterparty, similar to transactions in futures contracts. Centralized clearing will be required for additional categories of swaps on a phased-in basis based on requirements published by the Securities and Exchange Commission and Commodity Futures Trading Commission.
AB TAX-MANAGED WEALTH STRATEGIES • | 79 |
Notes to Financial Statements
At the time the Strategy enters into a centrally cleared swap, the Strategy deposits and maintains as collateral an initial margin with the broker, as required by the clearinghouse on which the transaction is effected. Such amount is shown as cash collateral due from broker on the statement of assets and liabilities. Pursuant to the contract, the Strategy agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Strategy as unrealized gains or losses. Risks may arise from the potential of a counterparty to meet the terms of the contract. The credit/counterparty risk for centrally cleared swaps is generally less than non-centrally cleared swaps, since the clearinghouse, which is the issuer or counterparty to each centrally cleared swap, has robust risk mitigation standards, including the requirement to provide initial and variation margin. When the contract is closed, the Strategy records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed.
Interest Rate Swaps:
The Strategy is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. Because the Strategy holds fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, the Strategy may enter into interest rate swaps. Interest rate swaps are agreements between two parties to exchange cash flows based on a notional amount. The Strategy may elect to pay a fixed rate and receive a floating rate, or, receive a fixed rate and pay a floating rate on a notional amount.
In addition, the Strategy may also enter into interest rate swap transactions to preserve a return or spread on a particular investment or portion of its portfolio, or protecting against an increase in the price of securities the Strategy anticipates purchasing at a later date. Interest rate swaps involve the exchange by a Strategy with another party of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments) computed based on a contractually-based principal (or “notional”) amount. Interest rate swaps are entered into on a net basis (i.e., the two payment streams are netted out, with the Strategy receiving or paying, as the case may be, only the net amount of the two payments).
During the six months ended February 28, 2017, the AB Tax-Managed Balanced Wealth Strategy held interest rate swaps for hedging and non-hedging purposes.
80 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
Inflation (CPI) Swaps:
Inflation swaps are contracts in which one party agrees to pay the cumulative percentage increase in a price index (the Consumer Price Index with respect to CPI swaps) over the term of the swap (with some lag on the inflation index), and the other pays a compounded fixed rate. Inflation swaps may be used to protect the net asset value, or NAV, of a Strategy against an unexpected change in the rate of inflation measured by an inflation index since the value of these agreements is expected to increase if unexpected inflation increases.
During the six months ended February 28, 2017, the AB Tax-Managed Balanced Wealth Strategy held inflation (CPI) swaps for hedging and non-hedging purposes.
The Strategies typically enter into International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement”) or similar master agreements (collectively, “Master Agreements”) with its derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Strategy typically may offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination.
Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as derivative transactions, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Strategy and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party. In the event of a default by a Master Agreements counterparty, the return of collateral with market value in excess of the Strategy’s net liability, held by the defaulting party, may be delayed or denied.
The Strategy’s Master Agreements may contain provisions for early termination of OTC derivative transactions in the event the net assets of the Strategy decline below specific levels (“net asset contingent features”). If these levels are triggered, the Strategy’s counterparty has the right to
AB TAX-MANAGED WEALTH STRATEGIES • | 81 |
Notes to Financial Statements
terminate such transaction and require the Strategy to pay or receive a settlement amount in connection with the terminated transaction. For additional details, please refer to netting arrangements by counterparty tables below.
During the six months ended February 28, 2017, the Strategies had entered into the following derivatives:
AB Tax-Managed Wealth Appreciation Strategy | ||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||
Derivative Type | Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | ||||||||||
Foreign exchange contracts | Unrealized | $ | 286,401 |
| | Unrealized depreciation on forward currency exchange contracts | $ | 292,595 |
| |||||
|
|
|
| |||||||||||
Total | $ | 286,401 | $ | 292,595 | ||||||||||
|
|
|
|
Derivative Type | Location of | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Equity contracts | Net realized gain (loss) on futures; Net change in unrealized appreciation/depreciation of futures | $ | 15,574 | $ | (7,226 | ) | ||||
Foreign exchange contracts | Net realized gain (loss) on foreign currency transactions; Net change in unrealized appreciation/depreciation of foreign currency denominated assets and liabilities | 205,746 | 169,269 | |||||||
|
|
|
| |||||||
Total | $ | 221,320 | $ | 162,043 | ||||||
|
|
|
|
82 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Type | Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | ||||||||
Foreign exchange contracts | Unrealized appreciation on forward currency exchange contracts | $ | 23,175 |
| Unrealized depreciation on forward currency exchange contracts | $ | 20,987 |
| ||||
Interest rate contracts | Unrealized appreciation on interest rate swaps |
| 43,986 |
| ||||||||
Interest rate contracts | Unrealized appreciation on inflation swaps |
| 34,802 |
| Unrealized depreciation on inflation swaps |
| 600,586 |
| ||||
|
|
|
| |||||||||
Total | $ | 101,963 | $ | 621,573 | ||||||||
|
|
|
|
Derivative Type | Location of Gain or (Loss) on Derivatives Within Statement of Operations | Realized Gain or (Loss) on Derivatives | Change in Unrealized Appreciation or (Depreciation) | |||||||
Foreign exchange contracts | Net realized gain (loss) on foreign currency transactions; Net change in unrealized appreciation/depreciation of foreign currency denominated assets and liabilities | $ | 19,658 | $ | 9,590 | |||||
Interest rate contracts | Net realized gain (loss) on swaps; Net change in unrealized appreciation/depreciation of swaps | 25,936 | 473,343 | |||||||
|
|
|
| |||||||
Total | $ | 45,594 | $ | 482,933 | ||||||
|
|
|
|
AB TAX-MANAGED WEALTH STRATEGIES • | 83 |
Notes to Financial Statements
The following tables represent the average monthly volume of the Strategies’ derivative transactions during the six months ended February 28, 2017:
AB Tax-Managed Wealth Appreciation Strategy | ||||
Futures: | ||||
Average original value of buy contracts | $ | 123,695 | (a) | |
Forward Currency Exchange Contracts: | ||||
Average principal amount of buy contracts | $ | 48,557,347 | ||
Average principal amount of sale contracts | $ | 52,888,417 |
(a) | Positions were open for four months during the year. |
AB Tax-Managed Balanced Wealth Strategy | ||||
Forward Currency Exchange Contracts: | ||||
Average principal amount of buy contracts | $ | 3,622,366 | ||
Average principal amount of sale contracts | $ | 3,974,510 | ||
Interest Rate Swaps: | ||||
Average notional amount | $ | 1,150,000 | ||
Inflation Swaps: | ||||
Average notional amount | $ | 11,118,571 |
For financial reporting purposes, the Strategies do not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
All derivatives held at period end were subject to netting arrangements. The following tables present the Strategies’ derivative assets and liabilities by counterparty net of amounts available for offset under Master Agreements (“MA”) and net of the related collateral received/pledged by the Strategies as of February 28, 2017:
AB Tax-Managed Wealth Appreciation Strategy
Counterparty | Derivative Assets Subject to a MA | Derivative Available for Offset | Cash Collateral Received | Security Collateral Received | Net Amount of Derivatives Assets | |||||||||||||||
OTC Derivatives: |
| |||||||||||||||||||
Bank of America, NA | $ | 48,413 | $ | (12,511 | ) | $ | – 0 | – | $ | – 0 | – | $ | 35,902 | |||||||
Barclays Bank PLC | 49,989 | (49,989 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
BNP Paribas SA | 3,644 | – 0 | – | – 0 | – | – 0 | – | 3,644 | ||||||||||||
Citibank, NA | 34,062 | (29,848 | ) | – 0 | – | – 0 | – | 4,214 | ||||||||||||
Goldman Sachs Bank USA | 31,884 | (31,884 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
JPMorgan Chase Bank, NA | 7,264 | (7,015 | ) | – 0 | – | – 0 | – | 249 |
84 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
Counterparty | Derivative Assets Subject to a MA | Derivative Available for Offset | Cash Collateral Received | Security Collateral Received | Net Amount of Derivatives Assets | |||||||||||||||
Nomura Global Financial Products, Inc. | $ | 20,272 | $ | (5,184 | ) | $ | – 0 | – | $ | – 0 | – | $ | 15,088 | |||||||
Northern Trust Co. | 28,541 | – 0 | – | – 0 | – | – 0 | – | 28,541 | ||||||||||||
State Street Bank & Trust Co. | 58,369 | (25,214 | ) | – 0 | – | – 0 | – | 33,155 | ||||||||||||
UBS AG | 3,963 | – 0 | – | – 0 | – | – 0 | – | 3,963 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 286,401 | $ | (161,645 | ) | $ | – 0 | – | $ | – 0 | – | $ | 124,756 | ^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Counterparty | Derivative Liabilities Subject to a MA | Derivative Available for Offset | Cash Collateral Pledged | Security Collateral Pledged | Net Amount of Derivatives Liabilities | |||||||||||||||
OTC Derivatives: |
| |||||||||||||||||||
Bank of America, NA | $ | 12,511 | $ | (12,511 | ) | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | ||||||
Barclays Bank PLC | 83,133 | (49,989 | ) | – 0 | – | – 0 | – | 33,144 | ||||||||||||
Citibank, NA | 29,848 | (29,848 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
Credit Suisse International | 13,791 | – 0 | – | – 0 | – | – 0 | – | 13,791 | ||||||||||||
Goldman Sachs Bank USA | 49,542 | (31,884 | ) | – 0 | – | – 0 | – | 17,658 | ||||||||||||
JPMorgan Chase Bank, NA | 7,015 | (7,015 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
Nomura Global Financial Products, Inc. | 5,184 | (5,184 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
Royal Bank of Scotland PLC | 63,456 | – 0 | – | – 0 | – | – 0 | – | 63,456 | ||||||||||||
Standard Chartered Bank | 2,901 | – 0 | – | – 0 | – | – 0 | – | 2,901 | ||||||||||||
State Street Bank & Trust Co. | 25,214 | (25,214 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 292,595 | $ | (161,645 | ) | $ | – 0 | – | $ | – 0 | – | $ | 130,950 | ^ | ||||||
|
|
|
|
|
|
|
|
|
|
^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
AB TAX-MANAGED WEALTH STRATEGIES • | 85 |
Notes to Financial Statements
AB Tax-Managed Balanced Wealth Strategy
Counterparty | Derivative Assets Subject to a MA | Derivative Available for Offset | Cash Collateral Received | Security Collateral Received | Net Amount of Derivatives Assets | |||||||||||||||
OTC Derivatives: |
| |||||||||||||||||||
Bank of America, NA | $ | 4,787 | $ | (4,787 | ) | $ | – 0 | – | $ | – 0 | – | $ | – 0 | – | ||||||
Barclays Bank PLC | 429 | (429 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
Citibank, NA | 41,941 | (37,804 | ) | – 0 | – | – 0 | – | 4,137 | ||||||||||||
Deutsche Bank AG | 7,160 | – 0 | – | – 0 | – | – 0 | – | 7,160 | ||||||||||||
Goldman Sachs Bank USA | 198 | (198 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
HSBC Bank USA | 1,105 | (1,105 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
JPMorgan Chase Bank, NA | 24,818 | – 0 | – | – 0 | – | – 0 | – | 24,818 | ||||||||||||
Nomura Global Financial Products, Inc. | 1,397 | – 0 | – | – 0 | – | – 0 | – | 1,397 | ||||||||||||
State Street Bank & Trust Co. | 20,128 | (16,919 | ) | – 0 | – | – 0 | – | 3,209 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 101,963 | $ | (61,242 | ) | $ | – 0 | – | $ | – 0 | – | $ | 40,721 | ^ | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Counterparty | Derivative Liabilities Subject to a MA | Derivative Available for Offset | Cash Collateral Pledged | Security Collateral Pledged* | Net Amount of Derivatives Liabilities | |||||||||||||||
OTC Derivatives: |
| |||||||||||||||||||
Bank of America, NA | $ | 102,749 | $ | (4,787 | ) | $ | – 0 | – | $ | – 0 | – | $ | 97,962 | |||||||
Barclays Bank PLC | 318,722 | (429 | ) | – 0 | – | (318,293 | ) | – 0 | – | |||||||||||
Citibank, NA | 37,804 | (37,804 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
Goldman Sachs Bank USA | 116,872 | (198 | ) | – 0 | – | – 0 | – | 116,674 | ||||||||||||
HSBC Bank USA | 1,949 | (1,105 | ) | – 0 | – | – 0 | – | 844 | ||||||||||||
Morgan Stanley Capital Services LLC | 24,439 | – 0 | – | – 0 | – | – 0 | – | 24,439 | ||||||||||||
Royal Bank of Scotland PLC | 2,119 | – 0 | – | – 0 | – | – 0 | – | 2,119 | ||||||||||||
State Street Bank & Trust Co. | 16,919 | (16,919 | ) | – 0 | – | – 0 | – | – 0 | – | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 621,573 | $ | (61,242 | ) | $ | – 0 | – | $ | (318,293 | ) | $ | 242,038 | ^ | ||||||
|
|
|
|
|
|
|
|
|
|
* | The actual collateral pledged is more than the amount reported due to over-collateralization. |
^ | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
86 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
2. Currency Transactions
The Strategies may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Strategies may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Strategies may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Strategies and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Strategies may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E
Shares of Beneficial Interest
Transactions in shares of beneficial interest for each class were as follows:
AB Tax-Managed Wealth Appreciation Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Shares sold | 61,706 | 82,311 | $ | 926,384 | $ | 1,230,446 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions | 56,439 | 154,337 | 840,377 | 2,254,865 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class B | 7,478 | 16,284 | 113,001 | 237,721 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (201,074 | ) | (363,778 | ) | (3,021,928 | ) | (5,376,381 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (75,451 | ) | (110,846 | ) | $ | (1,142,166 | ) | $ | (1,653,349 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Shares sold | 1,114 | 1,886 | $ | 16,650 | $ | 27,242 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions | 595 | 2,958 | 8,821 | 42,919 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (7,567 | ) | (16,456 | ) | (113,001 | ) | (237,721 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (2,999 | ) | (3,512 | ) | (44,825 | ) | (53,605 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (8,857 | ) | (15,124 | ) | $ | (132,355 | ) | $ | (221,165 | ) | ||||||||||||||
|
AB TAX-MANAGED WEALTH STRATEGIES • | 87 |
Notes to Financial Statements
AB Tax-Managed Wealth Appreciation Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Shares sold | 13,903 | 26,253 | $ | 209,076 | $ | 382,356 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions | 15,983 | 54,517 | 234,947 | 786,682 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (68,055 | ) | (173,395 | ) | (1,006,788 | ) | (2,530,663 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (38,169 | ) | (92,625 | ) | $ | (562,765 | ) | $ | (1,361,625 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Shares sold | 2,274,066 | 5,684,335 | $ | 34,353,836 | $ | 82,988,847 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions | 1,064,976 | 3,136,331 | 15,900,099 | 45,915,883 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (4,414,971 | ) | (8,470,833 | ) | (67,020,730 | ) | (123,930,023 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | (1,075,929 | ) | 349,833 | $ | (16,766,795 | ) | $ | 4,974,707 | ||||||||||||||||
|
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | Six Months Ended (unaudited) | Year Ended 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Shares sold | 189,766 | 134,104 | $ | 2,487,052 | $ | 1,733,496 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions | 92,015 | 268,617 | 1,181,476 | 3,446,354 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class B | 32,409 | 69,442 | 423,174 | 902,580 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (655,970 | ) | (853,311 | ) | (8,546,207 | ) | (11,084,932 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (341,780 | ) | (381,148 | ) | $ | (4,454,505 | ) | $ | (5,002,502 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Shares sold | 2,065 | 4,584 | $ | 27,158 | $ | 59,924 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions | 435 | 5,306 | 5,685 | 68,811 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | 32,066 | (69,148 | ) | (423,174 | ) | (902,580 | ) | |||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (73,619 | ) | (14,312 | ) | (124,689 | ) | (186,357 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (39,053 | ) | (73,570 | ) | $ | (515,020 | ) | $ | (960,202 | ) | ||||||||||||||
|
88 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | Six Months Ended (unaudited) | Year Ended 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Shares sold | 34,036 | 110,585 | $ | 445,379 | $ | 1,441,938 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions | 18,386 | 74,375 | 237,358 | 959,442 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (168,813 | ) | (337,231 | ) | (2,202,650 | ) | (4,377,277 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (116,391 | ) | (152,271 | ) | $ | (1,519,913 | ) | $ | (1,975,897 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Shares sold | 301,184 | 652,652 | $ | 3,931,327 | $ | 8,469,553 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions | 54,739 | 130,157 | 703,396 | 1,672,520 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (343,153 | ) | (871,433 | ) | (4,488,776 | ) | (11,410,819 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | 12,770 | (88,624 | ) | $ | 145,947 | $ | (1,268,746 | ) | ||||||||||||||||
|
NOTE F
Risks Involved in Investing in the Strategies
Interest Rate Risk and Credit Risk—Interest rate risk is the risk that changes in interest rates will affect the value of the Strategies’ investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Strategies’ investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as “junk bonds”) have speculative elements or are predominantly speculative risks.
Municipal Market Risk—This is the risk that special factors may adversely affect the value of municipal securities and have a significant effect on the yield or value of the Strategies’ investments in municipal securities. These factors include economic conditions, political or legislative changes, uncertainties related to the tax status of municipal securities, or the rights of investors in these securities. To the extent that the Strategies invest more of its assets in a particular state’s municipal securities, the Strategies’ may be vulnerable to events adversely affecting that state, including economic, political and regulatory occurrences, court decisions, terrorism and catastrophic natural disasters, such as hurricanes or earthquakes. The
AB TAX-MANAGED WEALTH STRATEGIES • | 89 |
Notes to Financial Statements
Strategies’ investments in certain municipal securities with principal and interest payments that are made from the revenues of a specific project or facility, and not general tax revenues, may have increased risks. Factors affecting the project or facility, such as local business or economic conditions, could have a significant effect on the project’s ability to make payments of principal and interest on these securities.
Foreign (Non-U.S.) Risk—The Strategies’ Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be less liquid due to adverse market, economic, political, regulatory or other factors. These risks may be heightened if the Strategies invest in securities of emerging market countries, where there may be an increased amount of economic, political and social instability.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Strategies’ investments or reduce its returns.
Capitalization Risk—Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Derivatives Risk—The Strategies may enter into derivative transactions such as forwards, options, futures and swaps. Derivatives may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Strategies, and subject to counterparty risk to a greater degree than more traditional investments. Derivatives may result in significant losses, including losses that are far greater than the value of the derivatives reflected on the statement of assets and liabilities.
Allocation Risk—The allocation of investments among different investment styles, such as equity or debt, growth or value, U.S. or non-U.S. securities, or diversification strategies, may have a more significant effect on the Strategies’ net asset value, or NAV, when one of these investments is performing more poorly than another.
Indemnification Risk—In the ordinary course of business, the Strategies enter into contracts that contain a variety of indemnifications. The Strategies’ maximum exposure under these arrangements is unknown. However, the Strategies have not had prior claims or losses pursuant to these indemnification provisions and expect the risk of loss thereunder to be remote. Therefore, the Strategies have not accrued any liability in connection with these indemnification provisions.
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Strategies, participate in a $280 million revolving credit facility (the
90 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
“Facility”) intended to provide short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Strategies did not utilize the Facility during the six months ended February 28, 2017.
NOTE H
Distributions to Shareholders
The tax character of distributions to be paid for the year ending August 31, 2017 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended August 31, 2016 and August 31, 2015 were as follows:
AB Tax-Managed Wealth Appreciation Strategy | 2016 | 2015 | ||||||
Distributions paid from: | ||||||||
Ordinary income | $ | 8,950,649 | $ | 13,204,160 | ||||
Long-term capital gains | 42,068,898 | 6,243,209 | ||||||
|
|
|
| |||||
Total taxable distributions | 51,019,547 | 19,447,369 | ||||||
|
|
|
| |||||
Total distributions paid | $ | 51,019,547 | $ | 19,447,369 | ||||
|
|
|
| |||||
AB Tax-Managed Balanced Wealth Strategy | 2016 | 2015 | ||||||
Distributions paid from: | ||||||||
Ordinary income | $ | 1,188,142 | $ | 655,723 | ||||
Long-term capital gains | 4,825,360 | 5,312,124 | ||||||
|
|
|
| |||||
Total taxable distributions | 6,013,502 | 5,967,847 | ||||||
Tax exempt distributions | 982,124 | 4,843 | ||||||
|
|
|
| |||||
Total distributions paid | $ | 6,995,626 | $ | 5,972,690 | ||||
|
|
|
|
As of August 31, 2016, the components of accumulated earnings/(deficit) on a tax basis were as follows:
AB Tax-Managed Strategy | Undistributed Ordinary Income(a) | Accumulated Capital and Other Gains (Losses) | Unrealized Appreciation/ (Depreciation)(b) | Total Accumulated Earnings/ (Deficit)(c) | ||||||||||||
AB Wealth Appreciation | $ | 3,964,088 | $ | 206,747 | $ | 72,691,127 | $ | 76,861,962 | ||||||||
AB Balanced Wealth | 1,780,068 | 740,728 | 8,955,287 | 11,476,083 |
(a) | Includes tax exempt income as shown below: |
AB Wealth Appreciation | $ | – 0 | – | |
AB Balanced Wealth | 862,588 |
(b) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales, the tax treatment of passive foreign investment companies (PFICs), and the realization for tax purposes of gains/losses on certain derivative instruments. |
(c) | The difference between book-basis and tax-basis components of accumulated earnings/(deficit) is attributable primarily to the tax treatment of defaulted securities. |
AB TAX-MANAGED WEALTH STRATEGIES • | 91 |
Notes to Financial Statements
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses incurred for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of August 31, 2016, none of the Strategies had any capital loss carryforwards.
NOTE I
Other
In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on the financial statements and related disclosures.
NOTE J
Subsequent Events
At meetings held on January 31-February 1, 2017, the Tax-Managed Balanced Wealth Strategy’s Board of Trustees approved changes to the Strategy’s name, investment objective and principal strategies. Effective April 17, 2017, the Strategy changed its name to “AB Tax-Managed All Market Income Portfolio” and adopted the new investment objective and principal strategies.
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no other material events that would require disclosure in the Strategies’ financial statements through this date.
92 | • AB TAX-MANAGED WEALTH STRATEGIES |
Notes to Financial Statements
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Tax-Managed Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 15.08 | $ 15.41 | $ 16.51 | $ 13.86 | $ 11.85 | $ 11.36 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .22 | (b)† | .17 | (b) | .20 | (b) | .32 | (b) | .10 | .11 | ||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .72 | .60 | (.91 | ) | 2.65 | 1.98 | .53 | |||||||||||||||||
Contributions from Affiliates | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .94 | .77 | (.71 | ) | 2.97 | 2.08 | .64 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.29 | ) | (.16 | ) | (.25 | ) | (.32 | ) | (.07 | ) | (.15 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.14 | ) | (.94 | ) | (.14 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.43 | ) | (1.10 | ) | (.39 | ) | (.32 | ) | (.07 | ) | (.15 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.59 | $ 15.08 | $ 15.41 | $ 16.51 | $ 13.86 | $ 11.85 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(d) | 6.38 | %† | 5.23 | %* | (4.34 | )%* | 21.66 | % | 17.65 | %* | 5.76 | %* | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $32,310 | $32,398 | $34,813 | $39,534 | $32,587 | $33,959 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(e)(f) | .93 | %^ | .93 | % | .93 | % | 1.04 | % | 1.07 | % | 1.08 | % | ||||||||||||
Expenses, before waivers/reimbursements(e)(f) | 1.01 | %^ | 1.01 | % | 1.00 | % | 1.04 | % | 1.07 | % | 1.08 | % | ||||||||||||
Net investment income | 2.88 | %(b)†^ | 1.16 | %(b) | 1.24 | %(b) | 2.05 | %(b) | .80 | % | .93 | % | ||||||||||||
Portfolio turnover rate | 23 | % | 47 | % | 49 | % | 61 | % | 46 | % | 93 | % |
See footnote summary on page 101.
AB TAX-MANAGED WEALTH STRATEGIES • | 93 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Tax-Managed Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Six Months (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 14.91 | $ 15.19 | $ 16.24 | $ 13.61 | $ 11.66 | $ 11.14 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .14 | (b)† | .06 | (b) | .08 | (b) | .22 | (b) | .01 | .02 | ||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .73 | .60 | (.90 | ) | 2.59 | 1.94 | .54 | |||||||||||||||||
Contributions from Affiliates | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .87 | .66 | (.82 | ) | 2.81 | 1.95 | .56 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.14 | ) | – 0 | – | (.09 | ) | (.18 | ) | – 0 | – | (.04 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.14 | ) | (.94 | ) | (.14 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.28 | ) | (.94 | ) | (.23 | ) | (.18 | ) | – 0 | – | (.04 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.50 | $ 14.91 | $ 15.19 | $ 16.24 | $ 13.61 | $ 11.66 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(d) | 5.94 | %† | 4.50 | %* | (5.09 | )%* | 20.79 | % | 16.72 | %* | 5.08 | %* | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $466 | $580 | $821 | $1,837 | $2,709 | $4,043 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(e)(f) | 1.71 | %^ | 1.69 | % | 1.69 | % | 1.76 | % | 1.80 | % | 1.82 | % | ||||||||||||
Expenses, before waivers/reimbursements(e)(f) | 1.79 | %^ | 1.77 | % | 1.77 | % | 1.76 | % | 1.80 | % | 1.82 | % | ||||||||||||
Net investment income | 1.87 | %(b)†^ | .43 | %(b) | .51 | %(b) | 1.43 | %(b) | .08 | % | .19 | % | ||||||||||||
Portfolio turnover rate | 23 | % | 47 | % | 49 | % | 61 | % | 46 | % | 93 | % |
See footnote summary on page 101.
94 | • AB TAX-MANAGED WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Tax-Managed Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 14.82 | $ 15.15 | $ 16.23 | $ 13.62 | $ 11.67 | $ 11.16 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .15 | (b)† | .06 | (b) | .07 | (b) | .21 | (b) | .01 | .03 | ||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .72 | .59 | (.87 | ) | 2.60 | 1.94 | .53 | |||||||||||||||||
Contributions from Affiliates | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .87 | .65 | (.80 | ) | 2.81 | 1.95 | .56 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.18 | ) | (.04 | ) | (.14 | ) | (.20 | ) | – 0 | – | (.05 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.14 | ) | (.94 | ) | (.14 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.32 | ) | (.98 | ) | (.28 | ) | (.20 | ) | – 0 | – | (.05 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.37 | $ 14.82 | $ 15.15 | $ 16.23 | $ 13.62 | $ 11.67 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(d) | 5.95 | %† | 4.44 | %* | (4.99 | )%* | 20.83 | % | 16.71 | %* | 5.09 | %* | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $14,327 | $14,380 | $16,102 | $17,964 | $16,589 | $18,337 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(e)(f) | 1.68 | %^ | 1.68 | % | 1.68 | % | 1.75 | % | 1.78 | % | 1.79 | % | ||||||||||||
Expenses, before waivers/reimbursements(e)(f) | 1.76 | %^ | 1.76 | % | 1.76 | % | 1.75 | % | 1.78 | % | 1.79 | % | ||||||||||||
Net investment income | 2.09 | %(b)†^ | .42 | %(b) | .47 | %(b) | 1.35 | %(b) | .10 | % | .22 | % | ||||||||||||
Portfolio turnover rate | 23 | % | 47 | % | 49 | % | 61 | % | 46 | % | 93 | % |
See footnote summary on page 101.
AB TAX-MANAGED WEALTH STRATEGIES • | 95 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Tax-Managed Wealth Appreciation Strategy | ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 15.14 | $ 15.47 | $ 16.58 | $ 13.91 | $ 11.90 | $ 11.42 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .23 | (b)† | .21 | (b) | .24 | (b) | .37 | (b) | .14 | .14 | ||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .73 | .61 | (.91 | ) | 2.66 | 1.98 | .53 | |||||||||||||||||
Contributions from Affiliates | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .96 | .82 | (.67 | ) | 3.03 | 2.12 | .67 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.33 | ) | (.21 | ) | (.30 | ) | (.36 | ) | (.11 | ) | (.19 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.14 | ) | (.94 | ) | (.14 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.47 | ) | (1.15 | ) | (.44 | ) | (.36 | ) | (.11 | ) | (.19 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.63 | $ 15.14 | $ 15.47 | $ 16.58 | $ 13.91 | $ 11.90 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(d) | 6.49 | %† | 5.50 | %* | (4.10 | )%* | 22.08 | % | 17.95 | %* | 6.04 | %* | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $643,473 | $639,602 | $648,133 | $687,496 | $585,431 | $552,610 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(e)(f) | .68 | %^ | .68 | % | .68 | % | .74 | % | .77 | % | .78 | % | ||||||||||||
Expenses, before waivers/reimbursements(e)(f) | .76 | %^ | .76 | % | .76 | % | .74 | % | .77 | % | .78 | % | ||||||||||||
Net investment income | 3.10 | %(b)†^ | 1.41 | %(b) | 1.46 | %(b) | 2.36 | %(b) | 1.09 | % | 1.23 | % | ||||||||||||
Portfolio turnover rate | 23 | % | 47 | % | 49 | % | 61 | % | 46 | % | 93 | % |
See footnote summary on page 101.
96 | • AB TAX-MANAGED WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.20 | $ 13.32 | $ 14.13 | $ 12.87 | $ 12.28 | $ 11.88 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .18 | (b)† | .17 | (b) | .19 | (b) | .28 | (b) | .17 | .18 | ||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .09 | .37 | (.49 | ) | 1.24 | .57 | .44 | |||||||||||||||||
Contributions from Affiliates | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .27 | .54 | (.30 | ) | 1.52 | .74 | .62 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.19 | ) | (.21 | ) | (.06 | ) | (.26 | ) | (.15 | ) | (.22 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.07 | ) | (.45 | ) | (.45 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.26 | ) | (.66 | ) | (.51 | ) | (.26 | ) | (.15 | ) | (.22 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 13.21 | $ 13.20 | $ 13.32 | $ 14.13 | $ 12.87 | $ 12.28 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(d) | 2.07 | %† | 4.19 | %* | (2.19 | )%* | 11.89 | %* | 6.08 | %* | 5.26 | %* | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $69,045 | $73,526 | $79,242 | $95,133 | $89,453 | $97,866 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(e)(f) | 1.14 | %^ | 1.13 | % | 1.13 | % | 1.19 | % | 1.24 | % | 1.19 | % | ||||||||||||
Expenses, before waivers/reimbursements(e)(f) | 1.20 | %^ | 1.19 | % | 1.18 | % | 1.20 | % | 1.24 | % | 1.19 | % | ||||||||||||
Net investment income | 2.83 | %(b)†^ | 1.31 | %(b) | 1.39 | %(b) | 2.03 | %(b) | 1.32 | % | 1.53 | % | ||||||||||||
Portfolio turnover rate | 16 | % | 25 | % | 29 | % | 58 | % | 32 | % | 55 | % |
See footnote summary on page 101.
AB TAX-MANAGED WEALTH STRATEGIES • | 97 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.27 | $ 13.29 | $ 14.15 | $ 12.90 | $ 12.29 | $ 11.88 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .13 | (b)† | .08 | (b) | .09 | (b) | .19 | (b) | .08 | .10 | ||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .08 | .37 | (.50 | ) | 1.24 | .58 | .43 | |||||||||||||||||
Contributions from Affiliates | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .21 | .45 | (.41 | ) | 1.43 | .66 | .53 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | – 0 | – | (.02 | ) | – 0 | – | (.18 | ) | (.05 | ) | (.12 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.07 | ) | (.45 | ) | (.45 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.07 | ) | (.47 | ) | (.45 | ) | (.18 | ) | (.05 | ) | (.12 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 13.41 | $ 13.27 | $ 13.29 | $ 14.15 | $ 12.90 | $ 12.29 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(d) | 1.62 | %† | 3.46 | %* | (2.98 | )%* | 11.14 | %* | 5.39 | %* | 4.49 | %* | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $833 | $1,342 | $2,322 | $4,631 | $7,066 | $11,386 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(e)(f) | 1.93 | %^ | 1.88 | % | 1.88 | % | 1.91 | % | 1.96 | % | 1.91 | % | ||||||||||||
Expenses, before waivers/reimbursements(e)(f) | 1.99 | %^ | 1.94 | % | 1.94 | % | 1.91 | % | 1.96 | % | 1.91 | % | ||||||||||||
Net investment income | 2.02 | %(b)†^ | .60 | %(b) | .68 | %(b) | 1.41 | %(b) | .62 | % | .82 | % | ||||||||||||
Portfolio turnover rate | 16 | % | 25 | % | 29 | % | 58 | % | 32 | % | 55 | % |
See footnote summary on page 101.
98 | • AB TAX-MANAGED WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.19 | $ 13.30 | $ 14.17 | $ 12.92 | $ 12.32 | $ 11.92 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .13 | (b)† | .07 | (b) | .09 | (b) | .18 | (b) | .08 | .10 | ||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .09 | .37 | (.50 | ) | 1.25 | .58 | .43 | |||||||||||||||||
Contributions from Affiliates | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .22 | .44 | (.41 | ) | 1.43 | .66 | .53 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.08 | ) | (.10 | ) | (.01 | ) | (.18 | ) | (.06 | ) | (.13 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.07 | ) | (.45 | ) | (.45 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.15 | ) | (.55 | ) | (.46 | ) | (.18 | ) | (.06 | ) | (.13 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 13.26 | $ 13.19 | $ 13.30 | $ 14.17 | $ 12.92 | $ 12.32 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(d) | 1.68 | %† | 3.40 | %* | (2.96 | )%* | 11.17 | %* | 5.36 | %* | 4.48 | %* | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $23,539 | $24,955 | $27,177 | $31,135 | $30,434 | $35,615 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(e)(f) | 1.90 | %^ | 1.89 | % | 1.88 | % | 1.90 | % | 1.95 | % | 1.90 | % | ||||||||||||
Expenses, before waivers/reimbursements(e)(f) | 1.95 | %^ | 1.94 | % | 1.94 | % | 1.90 | % | 1.95 | % | 1.90 | % | ||||||||||||
Net investment income | 2.07 | %(b)†^ | .56 | %(b) | .63 | %(b) | 1.33 | %(b) | .62 | % | .83 | % | ||||||||||||
Portfolio turnover rate | 16 | % | 25 | % | 29 | % | 58 | % | 32 | % | 55 | % |
See footnote summary on page 101.
AB TAX-MANAGED WEALTH STRATEGIES • | 99 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Tax-Managed Balanced Wealth Strategy | ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.24 | $ 13.36 | $ 14.16 | $ 12.88 | $ 12.29 | $ 11.89 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .20 | (b)† | .20 | (b) | .22 | (b) | .31 | (b) | .21 | .22 | ||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .08 | .38 | (.49 | ) | 1.26 | .57 | .44 | |||||||||||||||||
Contributions from Affiliates | – 0 | – | .00 | (c) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .28 | .58 | (.27 | ) | 1.57 | .78 | .66 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.22 | ) | (.25 | ) | (.08 | ) | (.29 | ) | (.19 | ) | (.26 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.07 | ) | (.45 | ) | (.45 | ) | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.29 | ) | (.70 | ) | (.53 | ) | (.29 | ) | (.19 | ) | (.26 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 13.23 | $ 13.24 | $ 13.36 | $ 14.16 | $ 12.88 | $ 12.29 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(d) | 2.20 | %† | 4.48 | %* | (1.96 | )%* | 12.29 | %* | 6.37 | %* | 5.58 | %* | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $39,508 | $39,382 | $40,917 | $40,249 | $27,789 | $22,824 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(e)(f) | .89 | %^ | .89 | % | .88 | % | .89 | % | .94 | % | .90 | % | ||||||||||||
Expenses, before waivers/reimbursements(e)(f) | .95 | %^ | .94 | % | .94 | % | .90 | % | .94 | % | .90 | % | ||||||||||||
Net investment income | 3.10 | %(b)†^ | 1.55 | %(b) | 1.61 | %(b) | 2.24 | %(b) | 1.60 | % | 1.83 | % | ||||||||||||
Portfolio turnover rate | 16 | % | 25 | % | 29 | % | 58 | % | 32 | % | 55 | % |
See footnote summary on page 101.
100 | • AB TAX-MANAGED WEALTH STRATEGIES |
Financial Highlights
(a) | Based on average shares outstanding. |
(b) | Net of fees and expenses waived/reimbursed by the Adviser. |
(c) | Amount is less than $.005. |
(d) | Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on Strategy distributions or the redemption of Strategy shares. Total investment return calculated for a period of less than one year is not annualized. |
(e) | Expense ratios do not include expenses of the Underlying Portfolios in which the Strategy invests. For the periods shown below, the acquired fund fees of AB mutual funds, including interest expense, were as follows: |
Six Months Ended February 28, 2017 (uaudited) | Year Ended August 31, | |||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||
AB Tax Managed Wealth Appreciation | .22 | %^ | .23 | % | .23 | % | .01 | % | ||||||||
AB Tax Managed Balanced Wealth | .16 | %^ | .16 | % | .17 | % | .01 | % |
(f) | In connection with the Strategies’ investments in affiliated underlying portfolios, the Strategies incur no direct expenses, but bear proportionate shares of the acquired fund fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Funds in an amount equal to the Funds’ pro rata share of certain acquired fund fees and expenses, and for the period shown below, such waiver amounted to: |
Six Months Ended February 28, 2017 (unaudited) | ||||
AB Tax Managed Wealth Appreciation | .08 | %^ | ||
AB Tax Managed Balanced Wealth | .06 | %^ |
† | For the six months ended February 28, 2017 the amount includes a non-recurring refund for overbilling of prior years’ custody out of pocket fees as follows: |
Net Investment Income Per Share | Net Investment Income Ratio | Total Return | ||||||||||
AB Tax Managed Wealth Appreciation | $ | .001 | .01 | % | .01 | % | ||||||
AB Tax Managed Balanced Wealth | $ | .012 | .18 | % | .09 | % |
* | Includes the impact of proceeds received and credited to the Strategy resulting from class action settlements, which enhanced the performance for AB Tax-Managed Wealth Appreciation Strategy for the years ended August 31, 2016, August 31, 2015, August 31, 2013 and August 31, 2012 by 0.01%, 0.04%, 0.01% and 0.01%, respectively, and AB Tax- Managed Balanced Wealth Strategy for the years ended August 31, 2016, August 31, 2015, August 31, 2014, August 31, 2013 and August 31, 2012 by 0.02%, 0.05%, 0.01%, 0.01% and 0.02%, respectively. |
^ | Annualized. |
See notes to financial statements.
AB TAX-MANAGED WEALTH STRATEGIES • | 101 |
Financial Highlights
TRUSTEES
Marshall C. Turner, Jr.(1), Chairman John H. Dobkin(1) Michael J. Downey(1) William H. Foulk, Jr.(1) D. James Guzy(1) | Nancy P. Jacklin(1) Robert M. Keith, President and Carol C. McMullen(1) Garry L. Moody(1) Earl D. Weiner(1) |
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Daniel J. Loewy(2), Vice President Christopher H. Nikolich(2), Vice President Vadim Zlotnikov(2), Vice President | Emilie D. Wrapp, Clerk Joseph J. Mantineo, Treasurer and Chief Financial Officer Phyllis J. Clarke, Controller and Chief Accounting Officer Vincent S. Noto, Chief Compliance Officer |
Custodian and Accounting Agent State Street Bank and Trust Company State Street Corporation CCB/5 1 Iron Street Boston, MA 02210
Principal Underwriter AllianceBernstein Investments, Inc. 1345 Avenue of the Americas New York, NY 10105
Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 | Transfer Agent AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-Free (800) 221-5672
Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York, NY 10036 |
(1) | Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. |
(2) | The day-to-day management of, and investment decisions for, each Strategy’s portfolio are made by the Adviser’s Multi-Asset Solutions Team. Messrs. Loewy, Nikolich and Zlotnikov are the investment professionals primarily responsible for the day-to-day management of each Strategy’s portfolio. |
102 | • AB TAX-MANAGED WEALTH STRATEGIES |
Trustees
Information Regarding the Review and Approval of the Advisory Agreement in Respect of Each Fund
The disinterested trustees (the “directors”) of The AB Portfolios (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of each of the portfolios listed below (each, a “Fund” and collectively, the “Funds”) at a meeting held on August 2-3, 2016 (the “Meeting”):
• | AB Tax-Managed Wealth Appreciation Strategy |
• | AB Tax-Managed Balanced Wealth Strategy |
• | AB Tax-Managed Conservative Wealth Strategy |
Prior to approval of the continuance of the Advisory Agreement in respect of each Fund, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed an independent evaluation prepared by the Company’s Senior Officer (who is also the Company’s Independent Compliance Officer) of the reasonableness of the advisory fee in respect of each Fund, in which the Senior Officer concluded that the contractual fee for each Fund was reasonable. The directors also discussed the proposed continuances in private sessions with counsel and the Company’s Senior Officer.
The directors noted that each Fund primarily invests directly in securities but currently also invests in certain portfolios of The AB Pooling Portfolios (“Pooling”) and in AB Cap Fund, Inc.—AB Multi-Manager Alternative Strategies Fund. The directors noted that with the recent withdrawal from Pooling of assets of an unaffiliated institutional investor, the Funds and three other Wealth Strategies are the only remaining investors in Pooling, and that they expected to receive a proposal from the Adviser for changes to Pooling at a future date.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Funds gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each
AB TAX-MANAGED WEALTH STRATEGIES • | 103 |
year, at each of which they receive presentations from the Adviser on the investment results of the Funds and review extensive materials and information presented by the Adviser.
The directors also considered all other factors they believed relevant, including the specific matters discussed below. In their deliberations, the directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage each Fund and the overall arrangements between each Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The directors approved continuance of the Advisory Agreement in respect of each Fund contingent on the continuance of the current fee waivers and expense caps related to the Funds’ investment in investment companies advised by the Adviser for the period of the contract continuance on terms at least as favorable to the Funds. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Funds. They also noted the professional experience and qualifications of each Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that AB Tax-Managed Wealth Appreciation Strategy will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to such Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid in respect of AB Tax-Managed Wealth Appreciation Strategy, result in a higher rate of total compensation from such Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant retained by the Company’s Senior Officer. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of each Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to each of the Funds under the Advisory Agreement.
104 | • AB TAX-MANAGED WEALTH STRATEGIES |
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues, expenses and related notes indicating the profitability of each Fund to the Adviser for calendar years 2014 and 2015 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant retained by the Company’s Senior Officer. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationships with the Funds, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Funds. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationships with the Funds before taxes and distribution expenses. The directors noted that AB Tax-Managed Conservative Wealth Strategy was not profitable to the Adviser in the periods reviewed. The directors concluded that the Adviser’s level of profitability from its relationship with the other two Funds was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Funds and the underlying funds advised by the Adviser in which the Funds invest, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients; 12b-1 fees and sales charges received by the Funds’ principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of certain classes of the Funds’ shares; brokerage commissions paid by the Funds to brokers affiliated with the Adviser; and transfer agency fees paid by the Funds to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower (and unprofitability would be exacerbated) without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Funds.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for each Fund at each regular Board meeting during the year.
AB TAX-MANAGED WEALTH STRATEGIES • | 105 |
At the Meeting, the directors reviewed information prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an analytical service that is not affiliated with the Adviser, showing the performance of the Class A Shares of each Fund against a peer group and a peer universe selected by Broadridge, and information prepared by the Adviser showing performance of the Class A Shares of each Fund against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended May 31, 2016 and (in the case of comparisons with the broad-based securities market index) the period since inception.
AB Tax-Managed Wealth Appreciation Strategy
Based on their review, the directors concluded that the Fund’s performance was acceptable.
AB Tax-Managed Balanced Wealth Strategy
AB Tax-Managed Conservative Wealth Strategy
Based on their review, and their discussion with the Adviser of the reasons for each Fund’s underperformance in certain periods, the directors concluded that each Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate paid by each Fund to the Adviser and information prepared by Broadridge concerning advisory fee rates paid by other funds in the same Broadridge category as such Fund at a common asset level. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors considered each Fund’s contractual effective advisory fee rate against a peer group median and, in the case of AB Tax-Managed Wealth Appreciation Strategy, took into account the impact on the advisory fee rate of the administrative expense reimbursement paid to the Adviser in the latest fiscal year.
The Adviser informed the directors that there were no institutional products managed by it that have a substantially similar investment style.
The directors also considered the total expense ratio of the Class A Shares of each Fund in comparison to a peer group and a peer universe selected by Broadridge. The expense ratio of each Fund was based on the Fund’s latest fiscal year and the information for AB Tax-Managed Conservative Wealth Strategy included the pro forma expense ratio to reflect a reduction in the 12b-1 fee effective December 31, 2015. The directors noted the effects of any fee waivers and/or expense reimbursements as a result of an undertaking by the Adviser. The directors noted that it was likely that the expense ratios of some of the other
106 | • AB TAX-MANAGED WEALTH STRATEGIES |
funds in each Fund’s Broadridge category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Funds by others.
AB Tax-Managed Wealth Appreciation Strategy
Based on their review, the directors concluded that the Fund’s expense ratio was acceptable.
AB Tax-Managed Balanced Wealth Strategy
After reviewing and discussing the Adviser’s explanations of the reasons that the Fund’s expense ratio was above the medians, the directors concluded that the Fund’s expense ratio was acceptable.
AB Tax-Managed Conservative Wealth Strategy
After reviewing and discussing the Adviser’s explanations of the reasons that the Fund’s pro forma expense ratio was above the medians, the directors concluded that the Fund’s pro forma expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedules for the Funds contain breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Funds’ shareholders would benefit from a sharing of economies of scale in the event a Fund’s net assets exceed a breakpoint in the future.
AB TAX-MANAGED WEALTH STRATEGIES • | 107 |
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
AB FAMILY OF FUNDS
US EQUITY
US Core
Core Opportunities Fund
Select US Equity Portfolio
US Growth
Concentrated Growth Fund
Discovery Growth Fund
Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
US Value
Discovery Value Fund
Equity Income Fund
Relative Value Fund*
Small Cap Value Portfolio
Value Fund
INTERNATIONAL/ GLOBAL EQUITY
International/Global Core
Global Core Equity Portfolio
International Portfolio
International Strategic Core Portfolio
Sustainable Global Thematic Fund*
Tax-Managed International Portfolio
International/Global Growth
Concentrated International Growth Portfolio
International Growth Fund
International/Global Value
Asia ex-Japan Equity Portfolio
International Value Fund
FIXED INCOME
Municipal
High Income Municipal Portfolio
Intermediate California Municipal Portfolio
FIXED INCOME (continued)
Intermediate Diversified Municipal Portfolio
Intermediate New York Municipal Portfolio
Municipal Bond Inflation Strategy
Tax-Aware Fixed Income Portfolio
National Portfolio
Arizona Portfolio
California Portfolio
Massachusetts Portfolio
Minnesota Portfolio
New Jersey Portfolio
New York Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
Taxable
Bond Inflation Strategy
Global Bond Fund
High Income Fund
High Yield Portfolio
Income Fund
Intermediate Bond Portfolio
Limited Duration High Income Portfolio
Short Duration Portfolio
ALTERNATIVES
All Market Real Return Portfolio
Credit Long/Short Portfolio
Global Real Estate Investment Fund
Long/Short Multi-Manager Fund
Multi-Manager Alternative Strategies Fund
Select US Long/Short Portfolio
Unconstrained Bond Fund
MULTI-ASSET
All Market Income Portfolio
All Market Total Return Portfolio*
Conservative Wealth Strategy
Emerging Markets Multi-Asset Portfolio
Global Risk Allocation Fund
Tax-Managed All Market Income Portfolio*
Tax-Managed Wealth Appreciation Strategy
Wealth Appreciation Strategy
Target-Date
Multi-Manager Select Retirement Allocation Fund
Multi-Manager Select 2010 Fund
Multi-Manager Select 2015 Fund
Multi-Manager Select 2020 Fund
Multi-Manager Select 2025 Fund
Multi-Manager Select 2030 Fund
Multi-Manager Select 2035 Fund
Multi-Manager Select 2040 Fund
Multi-Manager Select 2045 Fund
Multi-Manager Select 2050 Fund
Multi-Manager Select 2055 Fund
CLOSED-END FUNDS
AB Multi-Manager Alternative Fund
Alliance California Municipal Income Fund
AllianceBernstein Global High Income Fund
AllianceBernstein National Municipal Income Fund
We also offer Government Exchange Reserves, which serves as the money market fund exchange vehicle for the AB mutual funds. An investment in Government Exchange Reserves is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.abfunds.com or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.
* Prior to November 1, 2016, Sustainable Global Thematic Fund was named Global Thematic Growth Fund; prior to January 9, 2017, Relative Value Fund was named Growth & Income Fund; prior to April 17, 2017, Tax-Managed All Market Income Portfolio was named Tax-Managed Balanced Wealth Strategy; prior to April 24, 2017, All Market Total Return Portfolio was named Balanced Wealth Strategy.
108 | • AB TAX-MANAGED WEALTH STRATEGIES |
AB Family of Funds
AB TAX-MANAGED WEALTH STRATEGIES
1345 Avenue of the Americas
New York, NY 10105
800.221.5672
TMW-0152-0217
FEB 02.28.17
SEMI-ANNUAL REPORT
AB WEALTH STRATEGIES
+ | AB WEALTH APPRECIATION STRATEGY |
+ | AB BALANCED WEALTH STRATEGY |
+ | AB CONSERVATIVE WEALTH STRATEGY |
Investment Products Offered
•Are Not FDIC Insured •May Lose Value •Are Not Bank Guaranteed |
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.abfunds.com or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.
This shareholder report must be preceded or accompanied by the Fund’s prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com, or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AB publishes full portfolio holdings for the Fund monthly at www.abfunds.com.
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
April 16, 2017
Semi-Annual Report
This report provides management’s discussion of fund performance for the portfolios of AB Wealth Strategies (the “Strategies”, and individually a “Strategy”) for the semi-annual reporting period ended February 28, 2017.
At meetings held on January 31-February 1, 2017, the Balanced Wealth Strategy’s Board of Trustees approved changes to the Strategy’s name and principal strategies, which will take effect on or about April 24, 2017. The Strategy is expected to be renamed “AB All Market Total Return Portfolio.”
Effective March 31, 2017, (the “Effective Date”), the Strategies implement their respective strategies primarily through direct investments (while continuing to invest a portion of their assets in certain Underlying Portfolios, as defined below) rather than through a fund-of-funds structure, as described below.
Prior thereto and during the transition period, the Strategies invested in a combination of underlying mutual funds managed by the Adviser (the “Underlying Portfolios”), the underlying investments of which were in approximately the same investment components and targeted percentages set forth below. The Strategies sought to efficiently diversify between growth and value equity investment styles, between US and non-US markets and among diversification investments as
described below, except that they invested primarily in Underlying Portfolios in doing so.
Beginning in late January 2017, the Strategies began transitioning from a fund-of-funds structure to a direct investment structure, under which the Strategies primarily invest directly in a portfolio of equity securities (while continuing to invest a portion of their assets in certain Underlying Portfolios), as described below. During the transition, Strategy investments remained in approximately the same investment components and targeted percentages set forth below, but investments were increasingly made in securities directly instead of Underlying Portfolios as the Effective Date approached.
AllianceBernstein L.P. (the “Adviser”) will allow the relative weightings of the Strategies’ investments in growth and value, and in US and non-US company securities, to vary in response to market conditions, but ordinarily only by ±5% of the Strategies’ net assets. Beyond those ranges, the Adviser will generally rebalance the portfolios toward the targeted blend. However, under extraordinary circumstances, such as when market conditions favoring one investment component are compelling, the range may expand to ±10% of the Strategies’ net assets. The Strategies’ targeted percentages may change from time to time without notice to shareholders based on the Adviser’s assessment of market conditions.
AB WEALTH STRATEGIES • | 1 |
All of the Strategies also invest in Underlying Portfolios that are intended to provide additional diversification by seeking returns that are less sensitive to the general direction of the equity markets. This category of Underlying Portfolios includes the Multi-Manager Alternative Strategies Fund, which is designed to provide exposure to non-traditional and alternative investment strategies through investments allocated to various sub-advisers selected and overseen by the Adviser. These investments will be primarily in four different alternative investment strategies—
long/short equity, special situations, credit and global macro. Also in this category is the All Market Real Return Portfolio, which invests primarily in instruments that the Adviser expects to outperform broad equity markets during periods of rising inflation. This Underlying Portfolio invests primarily in inflation-indexed fixed-income securities, commodity-related equity securities, commodities (principally through derivative instruments), real estate equity securities, inflation sensitive equity securities and currencies. Prior to March 31, 2017, this investment component was named “Multi-Asset Real Return,” exposure to which was gained through the Strategies’ investment in the Multi-Asset Real Return Pooling Portfolio.
As part of their diversification investments, the Strategies invest in the Volatility Management Portfolio, which is designed to
reduce the overall effect of equity market volatility on the Strategies’ portfolios and the effects of adverse market conditions on their performance. Under normal market conditions, this Underlying Portfolio will invest predominantly in equity securities. If the Adviser determines that the equity markets pose disproportionate risks, the Adviser will reduce this Underlying Portfolio’s equity investments and invest in fixed-income securities or other non-equity asset classes to reduce the risks of the Strategies’ investments in equity securities.
For the Strategies’ traditional equity investments, the Adviser selects growth and value equity securities by drawing from a variety of its fundamental growth and value investment disciplines to produce a blended portfolio. Within each investment discipline, the Adviser is able to draw on the resources and expertise of multiple growth and value equity investment teams, specializing in different capitalization ranges and geographic regions (US and non-US), which are supported by equity research analysts specializing in growth and equity research analysts specializing in value research.
Currencies can have a dramatic impact on equity returns, significantly adding to returns in some years and greatly diminishing them in others. Currency and equity positions are evaluated separately. The Adviser may seek to hedge the currency exposure resulting from securities positions when it finds the
2 | • AB WEALTH STRATEGIES |
currency exposure unattractive. To hedge all or a portion of their currency risk, the Underlying Portfolios may, from time to time, invest in currency-related derivatives, including forward currency exchange contracts, futures contracts, options on futures contracts, swaps and options. The Adviser may also seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives. The Strategies may enter into other derivatives transactions, such as options, futures contracts, forwards and swaps.
AB Wealth Appreciation Strategy
Investment Objective and Policies
The Wealth Appreciation Strategy’s investment objective is long-term growth of capital.
The Strategy invests in a portfolio of equity securities that is designed as a solution for investors who seek equity returns without regard to taxes but also want broad diversification of the related risks across styles, capitalization ranges and geographic regions. The Strategy also invests in certain Underlying Portfolios with additional investment styles that are designed to add diversification to the Strategy’s investments. The Strategy targets a weighting of approximately 67% in equity securities of companies, or traditional equity investments, and approximately 33% in diversification investments (described below). In managing the Strategy, the Adviser seeks to efficiently diversify between growth and value
equity investment styles, between US and non-US markets and among diversification investments. Normally, the Strategy targets an equal weighting of growth and value style stocks (50% each) for the traditional equity component of the Strategy, with approximately 60% of each equity style invested in US companies and the remaining 40% in non-US companies.
The Strategy invests approximately 12% of its assets in the Multi-Manager Alternative Strategies Fund, approximately 7% in the All Market Real Return Portfolio and approximately 14% in the Volatility Management Portfolio.
AB Balanced Wealth Strategy
Investment Objective and Policies
The Balanced Wealth Strategy’s investment objective is to achieve the highest total return consistent with the Adviser’s determination of reasonable risk.
Effective until April 24, 2017
The Strategy invests in a portfolio of equity and debt securities that is designed as a solution for investors who seek a moderate tilt toward equity returns without regard to taxes but also want the risk diversification offered by debt securities and the broad diversification of their equity risk across styles, capitalization ranges and geographic regions. The Strategy also invests in certain Underlying Portfolios with additional investment styles that are designed to add diversification to the Strategy’s investments. In
AB WEALTH STRATEGIES • | �� | 3 |
managing the Strategy, the Adviser seeks to efficiently diversify between the debt and equity investment styles and in diversification investments (described below) to produce the desired risk/return profile of the Strategy. The Strategy targets a weighting of approximately 38% in equity securities of companies, or traditional equity investments, approximately 25% in traditional debt securities (by investing directly, and indirectly in the high yield (commonly known as “junk bond”) sector through an Underlying Portfolio) and approximately 37% in diversification investments with a goal of providing moderate upside potential without excessive volatility. Within the Strategy’s traditional equity component, the targeted blend is an equal weighting of growth and value style stocks (50% each), with approximately 60% of each equity style invested in US companies and the remaining 40% in non-US companies.
The Strategy’s fixed-income securities will primarily be investment-grade debt securities, but will also include lower-rated securities (“junk bonds”) and preferred stock. The Strategy will not invest more than 25% of its total assets in Underlying Portfolios investing in securities rated, at the time of purchase, below investment-grade. The Strategy invests in AB High Yield Portfolio in order to gain exposure to a diversified mix of high yield, below investment-grade debt securities. The Strategy will not invest more than 25% of its
total assets (directly, and indirectly through AB High Yield Portfolio) in securities rated, at the time of purchase, below investment-grade.
The Strategy invests approximately 8% of its assets in the Multi-Manager Alternative Strategies Fund, approximately 5% in the All Market Real Return Portfolio and approximately 17% in the Volatility Management Portfolio. With the goal of protecting against inflation risk, in addition to its investment in the All Market Real Return Portfolio, the Strategy will directly invest approximately 8% of its assets in inflation-protected debt securities.
Effective April 24, 2017
The Strategy is to be renamed AB All Market Total Return Portfolio (the “Fund”).
The Adviser will allocate the Fund’s investments primarily among a number of asset classes, including equity securities, fixed-income securities, and a number of alternative asset classes and alternative investment strategies. The Fund pursues a global strategy, typically investing in securities of issuers located in the United States and in other countries throughout the world, including emerging market countries. Under normal circumstances, at least 40% of the Fund’s net assets will be invested in securities of non-US issuers.
Equity securities will primarily be large-capitalization securities, but will include small- and mid-capitalization securities to a lesser
4 | • AB WEALTH STRATEGIES |
extent, and will include derivatives related to equity securities. In selecting equity securities for the Fund, the Adviser will use fundamental and quantitative analysis with the goal of generating returns primarily from security selection rather than price movements in equity securities generally. Fixed-income securities include corporate and sovereign debt securities as well as interest rate derivatives and credit derivatives such as credit default swaps. In selecting fixed-income securities for the Fund, the Adviser will attempt to take advantage of inefficiencies that it believes exist in the global fixed-income markets. These inefficiencies arise from investor behavior, market complexity, and the investment limitations to which investors are subject.
Alternative investments include various instruments the returns on which are expected to have low correlation with returns on equity and fixed-income securities, such as commodities and related derivatives, real estate-related securities, and inflation-indexed securities. In order to gain exposure to certain alternative investment strategies using various asset classes, the Adviser intends to invest a portion of the Fund’s assets in the All Market Alternative Return Portfolio, a registered investment company advised by the Adviser.
The Adviser will adjust the Fund’s asset class exposure utilizing both fundamental analysis and the Adviser’s Dynamic Asset Allocation (“DAA”) approach. DAA comprises a series of analytical and
forecasting tools employed by the Adviser to gauge fluctuations in the risk/return profile of various asset classes. DAA seeks to adjust the Fund’s investment exposure in changing market conditions and thereby reduce overall portfolio volatility by mitigating the effects of market fluctuations, while preserving consistent long-term return potential. For example, the Adviser may seek to reduce the Fund’s risk exposure to one or more assets classes when DAA suggests that market risks relevant to those asset classes are rising but return opportunities are declining. In addition to merely increasing or decreasing asset class exposure by buying or selling securities of that asset class, the Adviser may pursue DAA implementation for the Fund by utilizing derivatives.
The Adviser intends to utilize a variety of derivatives in its management of the Fund. As noted above, the Adviser may use derivatives to gain exposure to various asset classes, and may cause the Fund to enter into derivatives in making the adjustments called for by DAA. As a result of the use of derivatives, the Fund will frequently be leveraged, with net investment exposure substantially in excess of net assets.
While the Fund may seek to gain exposure to physical commodities traded in the commodities markets through investments in a variety of derivative instruments, the Adviser expects that the Fund will seek to
AB WEALTH STRATEGIES • | 5 |
gain such exposure to commodities and commodities-related instruments and derivatives primarily through investments in AB All Market Total Return Portfolio (Cayman), Ltd., a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the “Subsidiary”). The Subsidiary is advised by the Adviser and has the same investment objective and substantially similar investment policies and restrictions as the Fund except that the Subsidiary, unlike the Fund, may invest, without limitation, in commodities and commodities-related instruments. The Fund will be subject to the risks associated with the commodities, derivatives and other instruments in which the Subsidiary invests, to the extent of its investment in the Subsidiary. The Fund limits its investment in the Subsidiary to no more than 25% of its total assets. Investment in the Subsidiary is expected to provide the Fund with commodity exposure within the limitations of federal tax requirements that apply to the Fund.
Currency exchange rate fluctuations can have a dramatic impact on returns. The Fund’s foreign currency exposures will come from investment in securities priced or denominated in foreign currencies and from direct holdings in foreign currencies and currency-related derivatives. The Adviser may seek to hedge all or a portion of the currency exposure resulting from Fund investments or decide not to hedge this exposure. The Adviser
may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives.
AB Conservative Wealth Strategy
Investment Objective and Policies
The Conservative Wealth Strategy’s investment objective is to achieve a high total return without, in the opinion of the Adviser, undue risk to principal.
The Strategy invests in a portfolio of equity and debt securities that is designed as a solution for investors who seek some opportunities for equity returns without regard to taxes if the related risks are broadly diversified and overall portfolio volatility reflects a preponderance of debt securities. The Strategy also invests in certain Underlying Portfolios with additional investment styles, which are designed to add diversification to the Strategy’s investments. In managing the strategy, the Adviser seeks to efficiently diversify between debt and equity investment styles and in diversification investments (described below) to produce the desired risk/return profile of the Strategy. The Strategy targets a weighting of approximately 20% in equity securities of companies, or traditional equity investments, approximately 52% in traditional debt securities and approximately 29% in diversification investments with a goal of providing reduced volatility and modest upside potential. Within the Strategy’s traditional equity component, the targeted blend is an equal weighting of growth and value style stocks
6 | • AB WEALTH STRATEGIES |
(approximately 50% each), with approximately 60% of each equity style invested in US companies and the remaining 40% in non-US companies.
Within the Strategy’s traditional equity component, the targeted blend is an equal weighting of Underlying Portfolios that invest in growth and value style stocks (approximately 50% each), with approximately 60% of each equity style invested in Underlying Portfolios that invest in US companies and the remaining 40% in Underlying Portfolios that invest in non-US companies.
All fixed-income securities in which the Strategy invests will be of investment grade at the time of purchase. In the event that the rating of any security held by the Strategy falls below investment grade, the Strategy will not be obligated to dispose of such security and may continue to hold the obligation if, in the opinion of the Adviser, such investment is appropriate under the circumstances.
The Strategy invests approximately 6% of its assets in the Multi-Manager Alternative Strategies Fund, approximately 2% in the All Market Real Return Portfolio and approximately 12% in the Volatility Management Portfolio. With the goal of protecting against inflation risk, in addition to its investment in the All Market Real Return Portfolio, the Strategy will directly invest approximately 10% of its assets in inflation-protected debt securities.
Investment Results
The tables on pages 15-17 show performance for each Strategy compared to its respective benchmarks for the six- and 12-month periods ended February 28, 2017. Each Strategy’s blended benchmark is as follows: Wealth Appreciation Strategy, 60% Standard & Poor’s (“S&P”) 500 Index / 40% Morgan Stanley Capital International All Country World Index (“MSCI ACWI”) ex-US; Balanced Wealth Strategy, 65% S&P 500 Index / 35% Bloomberg Barclays US Aggregate Bond Index; and Conservative Wealth Strategy, 65% Bloomberg Barclays US Aggregate Bond Index / 35% S&P 500 Index. Performance for each Underlying Portfolio compared to its benchmark may be found on page 18. Additional performance for the Underlying Portfolios may be found on pages 28-30.
All share classes of the Wealth Appreciation Strategy underperformed the primary and blended benchmarks for both periods, before sales charges; versus the secondary benchmark, all share classes outperformed for the six-month period, and underperformed for the 12-month period. For the six-month period, all components positively impacted absolute performance, with the exception of the International Growth Portfolio. Versus their respective benchmarks, performance was mixed; notably, International Growth Portfolio and Volatility Management Portfolio underperformed, while International
AB WEALTH STRATEGIES • | 7 |
Value and Multi-Manager Alternative Strategies Fund outperformed. For the 12-month period, all Underlying Portfolios positively contributed to absolute performance. Versus their respective benchmarks, most Underlying Portfolios underperformed, with the exception of Small-Mid Cap Value Portfolio, International Value Portfolio and Multi-Manager Alternative Strategies Fund.
All share classes of the Balanced Wealth Strategy underperformed the primary and blended benchmarks for both periods, before sales charges; versus the secondary benchmark, all share classes outperformed for both periods. For the six-month period, all components except Global Core Bond Portfolio positively impacted absolute performance. Versus their respective benchmarks, performance was mixed; notably, International Growth Portfolio and Volatility Management underperformed, while International Value Portfolio and Multi-Manager Alternative Strategies Fund outperformed. For the 12-month period, all Underlying Portfolios positively contributed to absolute performance. Versus their respective benchmarks, performance was mixed; notably, Volatility Management and Multi-Asset Real Return Portfolio underperformed, while Multi-Manager Alternative Strategies Fund and Global Core Bond Portfolio outperformed.
For both periods, all share classes of the Conservative Wealth Strategy outperformed the primary benchmark and underperformed the secondary benchmark, before sales charges. Versus the blended benchmark, for the six-month period, all share classes underperformed except Class A, Class I and Advisor Class shares; for the 12-month period, all share classes underperformed. For the six-month period, all components except Global Core Bond Portfolio positively impacted absolute performance. Versus their respective benchmarks, performance was mixed; notably, International Growth Portfolio and Volatility Management Portfolio underperformed, while Short Duration Bond Portfolio and Multi-Manager Alternative Strategies Fund outperformed. For the 12-month period, all Underlying Portfolios positively contributed to absolute performance. Versus their respective benchmarks, performance was mixed; notably, International Growth Portfolio and Volatility Management Portfolio underperformed, while Global Core Bond Portfolio and Multi-Manager Alternative Strategies Fund outperformed.
The U.S. Value Portfolio, U.S. Large Cap Growth Portfolio, Small-Mid Cap Value Portfolio and Small-Mid Cap Growth Portfolio did not use derivatives during the six- and 12-month periods. The Multi-Manager Alternative Strategies Fund did not use derivatives directly. All
8 | • AB WEALTH STRATEGIES |
other Portfolios used derivatives as stated below; performance impact is stated in absolute terms.
The International Value Portfolio utilized derivatives including futures for investment purposes, which added to returns during both periods. Foreign currency forwards for hedging and investment purposes added during the six-month period and detracted during the 12-month period. The International Growth Portfolio utilized derivatives in the form of foreign currency forwards for hedging purposes, which had an immaterial impact on returns during the six-month period and added for the 12-month period.
The Short Duration Bond Portfolio utilized derivatives during both periods, including currency forwards to hedge currency risk. Credit default swaps were utilized to gain exposure to the commercial mortgage-backed securities market. Treasury futures and interest rate swaps were utilized to manage duration, country exposure and yield-curve positioning.
During both periods, the Global Core Bond Portfolio utilized derivatives including Treasury futures to manage duration, country exposure and yield-curve positioning; currency forwards and currency options, both purchased and written, were used to hedge currency exposure as well as to manage active currency risk.
The Bond Inflation Protection Portfolio utilized derivatives during both periods, including currency forwards and options to hedge currency risk and actively manage currency positions. Credit default swaps were utilized for hedging and investment purposes, which had an immaterial impact on performance during both periods. Treasury futures, interest rate and CPI swaps, and interest rate swaptions were utilized to manage duration, inflation protection, country exposure and yield-curve positioning. Equity options were utilized to manage market exposure.
During both periods, the High Yield Portfolio utilized currency forwards to hedge currency exposure as well as to manage active currency risk. Purchased and written equity options were also used for hedging and investment purposes. Total return swaps and credit default swaps (both single name and index) were used to hedge credit risk as well as to take active credit and growth risk. Interest rate swaps and Treasury futures were used to manage duration, country exposure and yield-curve positioning.
The Multi-Asset Real Return Portfolio utilized derivatives for hedging and investment purposes in the form of currency forwards, total return swaps, inflation (CPI) swaps and written options, which added to returns during both periods. Treasury futures detracted for the six-month period and added during the 12-month period, while interest
AB WEALTH STRATEGIES • | 9 |
rate swaps added during the six-month period, but detracted in the 12-month period, and purchased options detracted during both periods.
The Volatility Management Portfolio utilized derivatives for hedging and investment purposes including total return swaps, which added to returns during both periods. Treasury futures and purchased options added during the six-month period and detracted during the 12-month period. Currency forwards detracted during both periods, while written options added during the 12-month period.
Market Review and Investment Strategy
Global equities rose during the six-month period ended February 28, 2017. US stocks outperformed, while emerging-market and international equities both delivered solid results.
In fixed-income markets, global bonds decreased in absolute terms (bond yields move inversely to price). Although emerging-market local-currency government bonds posted negative returns in the period, they outperformed developed-market
treasuries which, in turn, finished just ahead of investment-grade credit securities. Global high yield rallied in the period. Developed-market yields rose across the board, while elsewhere they generally fell along the short end of the curve.
US President Trump’s unexpected election victory and first forays into governing strongly impacted markets. Initial speculation over economic and trade policy changes—as well as inflation—was somewhat overshadowed by a new US travel ban. By the end of the period, questions remained regarding how the president and Congress would approach fiscal stimulus, tax reform and deregulation, yet optimism continued.
Markets were also influenced by central bank measures. The European Central Bank surprised markets in early December with its decision to reduce the monthly pace of its asset purchase program, though investors were mollified by its pledge for a “sustained presence” in euro-area markets. In contrast, the US Federal Reserve raised official rates in December and signaled a drastic increase in the likelihood of a rate hike in March.
10 | • AB WEALTH STRATEGIES |
DISCLOSURES AND RISKS
Benchmark Disclosure
All indices are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The S&P 500 Index includes 500 US stocks and is a common representation of the performance of the overall US stock market. The MSCI ACWI ex-US (free float-adjusted, market capitalization weighted) represents the equity market performance of developed and emerging markets, excluding the United States. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. The Bloomberg Barclays US Aggregate Bond Index (US dollar hedged) represents the performance of securities within the US investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities, asset-backed securities, and commercial mortgage-backed securities. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Strategies.
The Russell 1000® Value Index is used to represent the allocation to U.S. Value, the Russell 1000® Growth Index to represent U.S. Large Cap Growth, the MSCI ACWI ex-US to represent International Value and International Growth, the Bank of America Merrill Lynch® (“BofA ML”) 1-3 Year US Treasury Index to represent Short Duration Bond, the Bloomberg Barclays Global Aggregate Bond Index (US dollar hedged) to represent Global Core Bond, the Bloomberg Barclays 1-10 Year TIPS Index to represent Bond Inflation Protection, the Bloomberg Barclays US High Yield 2% Issuer Capped Index to represent High Yield, the Russell 2500® Value Index to represent Small-Mid Cap Value, the Russell 2500® Growth Index to represent Small-Mid Cap Growth, the MSCI All Country (“AC”) World Commodity Producers Index and the All Market Real Return Portfolio Benchmark to represent Multi-Asset Real Return; the MSCI ACWI to represent Volatility Management and the BofA ML 3-Month US T-Bill Index to represent Multi-Manager Alternative Strategies Fund.
The Russell 1000 Value Index represents the performance of 1,000 large-cap value companies within the US. The Russell 1000 Growth Index represents the performance of 1,000 large-cap growth companies within the US. The BofA ML 1-3 Year US Treasury Index represents the performance of US dollar-denominated sovereign debt publicly issued by the US government in its domestic market with a remaining term to final maturity of one to three years. The Bloomberg Barclays Global Aggregate Bond Index represents the performance of global investment-grade
(Disclosures, Risks and Note about Historical Performance continued on next page)
AB WEALTH STRATEGIES • | 11 |
Disclosures and Risks
DISCLOSURES AND RISKS
(continued from previous page)
developed fixed-income markets. The Bloomberg Barclays 1-10 Year TIPS Index represents the performance of inflation-protected securities issued by the US Treasury. The Bloomberg Barclays US High Yield 2% Issuer Capped Index is the 2% issuer-capped component of the US Corporate High Yield Index, which represents the performance of fixed-income securities having a maximum quality rating of Ba1, a minimum amount outstanding of $150 million, and at least one year to maturity. The Russell 2500 Value Index represents the performance of 2,500 small- to mid-cap value companies within the US. The Russell 2500 Growth Index represents the performance of 2,500 small- to mid-cap growth companies within the US. The MSCI AC World Commodity Producers Index (free float-adjusted, market capitalization-weighted) is comprised of commodity producer companies based on the Global Industry Classification Standard (“GICS”). The All Market Real Return Portfolio Benchmark is an equally-weighted blend of the MSCI AC World Commodity Producers Index, the FTSE EPRA/NAREIT Global Index and the Dow Jones-UBS Commodity Index. The FTSE EPRA/NAREIT Global Index (market-value-weighted index based upon the last closing price of the month) represents the performance of tax-qualified REITs listed on the NYSE, AMEX and the NASDAQ. The Dow Jones-UBS Commodity Index measures price movements of the commodities included in the appropriate sub index. It does not account for effects of rolling futures contracts or the physical commodity. Commodities sectors include: energy, grains, industrial metals, petroleum, precious metals and softs. The BofA ML 3-Month US T-Bill Index tracks three-month government securities.
A Word About Risk
The Strategies allocate their investments among multiple asset classes which will include US and foreign securities. The Balanced Wealth and Conservative Wealth Strategies will include both equity and fixed-income securities. Price fluctuation in the Underlying Portfolio securities may be caused by changes in the general level of interest rates or changes in bond credit quality ratings.
Market Risk: The value of the Strategies’ assets will fluctuate as the stock, bond or commodities markets fluctuate. The value of their investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events that affect large portions of the market. It includes the risk that a particular style of investing, such as growth or value, may be underperforming the stock market generally.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be less liquid due to adverse
(Disclosures, Risks and Note about Historical Performance continued on next page)
12 | • AB WEALTH STRATEGIES |
Disclosures and Risks
DISCLOSURES AND RISKS
(continued from previous page)
market, economic, political, regulatory or other factors. These risks may be heightened with respect to investments in emerging market countries, where there may be an increased amount of economic, political and social instability.
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Strategies’ investments or reduce their returns.
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Allocation Risk: The allocation of investments among different investment styles, such as growth or value, US or non-US securities, or diversification strategies, may have a more significant effect on the Strategies’ net asset value (“NAV”) when one of these investments is performing more poorly than another.
Derivatives Risk: Derivatives may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Strategies, and may be subject to counterparty risk to a greater degree than more traditional investments.
Credit Risk: (Balanced Wealth and Conservative Wealth Strategies) An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Investments in fixed-income securities with lower ratings (commonly known as “junk bonds”) are subject to a higher probability that an issuer will default or fail to meet its payment obligations.
Interest Rate Risk: (Balanced Wealth and Conservative Wealth Strategies) Changes in interest rates will affect the value of the Strategies’ investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. The Strategies may be subject to heightened interest rate risk due to rising rates as the current period of historically low interest rates may be ending. Interest rate risk is generally greater for fixed-income securities with longer maturities or durations.
(Disclosures, Risks and Note about Historical Performance continued on next page)
AB WEALTH STRATEGIES • | 13 |
Disclosures and Risks
DISCLOSURES AND RISKS
(continued from previous page)
These risks are fully discussed in the Strategies’ prospectus. As with all investments, you may lose money by investing in the Strategies.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Strategies will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. Performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.abfunds.com.
All fees and expenses related to the operation of the Strategies have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Strategies’ quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1-year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes.
14 | • AB WEALTH STRATEGIES |
Disclosures and Risks
WEALTH APPRECIATION STRATEGY
HISTORICAL PERFORMANCE
THE STRATEGY VS. ITS BENCHMARKS PERIODS ENDED FEBRUARY 28, 2017 (unaudited) | NAV Returns | |||||||||||
6 Months | 12 Months | |||||||||||
AB Wealth Appreciation Strategy* | ||||||||||||
Class A | 6.47% | 18.69% | ||||||||||
| ||||||||||||
Class B† | 6.06% | 17.78% | ||||||||||
| ||||||||||||
Class C | 6.01% | 17.83% | ||||||||||
| ||||||||||||
Advisor Class‡ | 6.62% | 19.05% | ||||||||||
| ||||||||||||
Class R‡ | 6.26% | 18.20% | ||||||||||
| ||||||||||||
Class K‡ | 6.38% | 18.58% | ||||||||||
| ||||||||||||
Class I‡ | 6.51% | 18.94% | ||||||||||
| ||||||||||||
Primary Benchmark: S&P 500 Index | 10.01% | 24.98% | ||||||||||
| ||||||||||||
Secondary Benchmark: MSCI ACWI ex-US | 5.15% | 19.31% | ||||||||||
| ||||||||||||
Blended Benchmark: 60% S&P 500 Index / 40% MSCI ACWI ex-US | 8.10% | 22.78% | ||||||||||
| ||||||||||||
* Includes the impact of a non-recurring refund for overbilling of prior years’ custody out of pocket fees, which enhanced performance for the six- and 12-month periods ended February 28, 2017, by 0.002% and 0.002%, respectively.
† Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. Please see Note A for additional information.
‡ Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies.
Please keep in mind that high, double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions. |
| |||||||||||
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
AB WEALTH STRATEGIES • | 15 |
Historical Performance
BALANCED WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
THE STRATEGY VS. ITS BENCHMARKS PERIODS ENDED FEBRUARY 28, 2017 (unaudited) | NAV Returns | |||||||||||
6 Months | 12 Months | |||||||||||
AB Balanced Wealth Strategy* | ||||||||||||
Class A | 4.25% | 14.23% | ||||||||||
| ||||||||||||
Class B† | 3.88% | 13.35% | ||||||||||
| ||||||||||||
Class C | 3.90% | 13.35% | ||||||||||
| ||||||||||||
Advisor Class‡ | 4.49% | 14.52% | ||||||||||
| ||||||||||||
Class R‡ | 4.10% | 13.76% | ||||||||||
| ||||||||||||
Class K‡ | 4.26% | 14.19% | ||||||||||
| ||||||||||||
Class I‡ | 4.41% | 14.46% | ||||||||||
| ||||||||||||
Primary Benchmark: S&P 500 Index | 10.01% | 24.98% | ||||||||||
| ||||||||||||
Secondary Benchmark: Bloomberg Barclays US Aggregate Bond Index | -2.19% | 1.42% | ||||||||||
| ||||||||||||
Blended Benchmark: 65% S&P 500 Index / 35% Bloomberg Barclays US Aggregate Bond Index | 5.64% | 16.30% | ||||||||||
| ||||||||||||
* Includes the impact of a non-recurring refund for overbilling of prior years’ custody out of pocket fees, which enhanced performance for the six- and 12-month periods ended February 28, 2017, by 0.003% and 0.003%, respectively.
† Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. Please see Note A for additional information.
‡ Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies.
Please keep in mind that high, double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions. |
| |||||||||||
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
16 | • AB WEALTH STRATEGIES |
Historical Performance
CONSERVATIVE WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
THE STRATEGY VS. ITS BENCHMARKS PERIODS ENDED FEBRUARY 28, 2017 (unaudited) | NAV Returns | |||||||||||
6 Months | 12 Months | |||||||||||
AB Conservative Wealth Strategy | ||||||||||||
Class A | 2.03% | 7.69% | ||||||||||
| ||||||||||||
Class B* | 1.55% | 6.79% | ||||||||||
| ||||||||||||
Class C | 1.61% | 6.88% | ||||||||||
| ||||||||||||
Advisor Class† | 2.10% | 7.91% | ||||||||||
| ||||||||||||
Class R† | 1.70% | 7.16% | ||||||||||
| ||||||||||||
Class K† | 1.90% | 7.56% | ||||||||||
| ||||||||||||
Class I† | 2.12% | 7.94% | ||||||||||
| ||||||||||||
Primary Benchmark: Bloomberg Barclays US Aggregate Bond Index | -2.19% | 1.42% | ||||||||||
| ||||||||||||
Secondary Benchmark: S&P 500 Index | 10.01% | 24.98% | ||||||||||
| ||||||||||||
Blended Benchmark: 65% Bloomberg Barclays US Aggregate Bond Index / 35% S&P 500 Index | 1.98% | 9.23% | ||||||||||
| ||||||||||||
* Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. Please see Note A for additional information.
† Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
| |||||||||||
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
AB WEALTH STRATEGIES • | 17 |
Historical Performance
THE UNDERLYING PORTFOLIOS
HISTORICAL PERFORMANCE
(continued from previous page)
EACH UNDERLYING PORTFOLIO* VS. ITS BENCHMARK | Returns | |||||||||||
6 Months | 12 Months | |||||||||||
AB U.S. Value Portfolio | 11.46% | 25.81% | ||||||||||
| ||||||||||||
Russell 1000 Value Index | 11.07% | 29.13% | ||||||||||
| ||||||||||||
AB U.S. Large Cap Growth Portfolio | 8.22% | 20.40% | ||||||||||
| ||||||||||||
Russell 1000 Growth Index | 9.15% | 22.15% | ||||||||||
| ||||||||||||
AB International Value Portfolio | 7.00% | 20.87% | ||||||||||
| ||||||||||||
MSCI ACWI ex-US | 5.15% | 19.31% | ||||||||||
| ||||||||||||
AB International Growth Portfolio | 0.00% | 14.65% | ||||||||||
| ||||||||||||
MSCI ACWI ex-US | 5.15% | 19.31% | ||||||||||
| ||||||||||||
AB Short Duration Bond Portfolio | 0.79% | 1.68% | ||||||||||
| ||||||||||||
BofA ML 1-3 Year US Treasury Index | -0.09% | 0.39% | ||||||||||
| ||||||||||||
AB Global Core Bond Portfolio | -1.60% | 3.42% | ||||||||||
| ||||||||||||
Bloomberg Barclays Global Aggregate Bond Index | -1.87% | 1.97% | ||||||||||
| ||||||||||||
AB Bond Inflation Protection Portfolio | 1.27% | 5.97% | ||||||||||
| ||||||||||||
Bloomberg Barclays 1-10 Year TIPS Index | 0.26% | 2.85% | ||||||||||
| ||||||||||||
AB High Yield Portfolio (Class Z Shares)† | 5.71% | 20.20% | ||||||||||
| ||||||||||||
Bloomberg Barclays US High Yield 2% Issuer Capped Index | 5.43% | 21.83% | ||||||||||
| ||||||||||||
AB Small-Mid Cap Value Portfolio | 13.93% | 35.57% | ||||||||||
| ||||||||||||
Russell 2500 Value Index | 12.72% | 35.15% | ||||||||||
| ||||||||||||
AB Small-Mid Cap Growth Portfolio | 9.53% | 27.10% | ||||||||||
| ||||||||||||
Russell 2500 Growth Index | 8.52% | 28.05% | ||||||||||
| ||||||||||||
AB Multi-Asset Real Return Portfolio | 6.84% | 23.95% | ||||||||||
| ||||||||||||
Primary Benchmark: MSCI AC World Commodity Producers Index | 8.72% | 32.75% | ||||||||||
| ||||||||||||
Secondary Benchmark: All Market Real Return Portfolio Benchmark | 4.35% | 21.11% | ||||||||||
| ||||||||||||
AB Volatility Management Portfolio | 5.97% | 16.93% | ||||||||||
| ||||||||||||
MSCI ACWI | 7.53% | 22.07% | ||||||||||
| ||||||||||||
AB Multi-Manager Alternative Strategies Fund (Class Z Shares) | 3.71% | 6.73% | ||||||||||
| ||||||||||||
BofA ML 3-Month US T-Bill Index | 0.22% | 0.39% | ||||||||||
| ||||||||||||
* Shares of the Underlying Portfolios (specifically Class Z shares in the case of AB High Yield Portfolio and AB Multi-Manager Alternative Strategies Fund) are offered exclusively to mutual funds advised by, and certain institutional clients of, AllianceBernstein and are not currently offered to the general public. The Underlying Portfolios incur no sales charges or management fees (except in the case of AB High Yield Portfolio and AB Multi-Manager Alternative Strategies Fund).
† Performance information for AB High Yield Portfolio reflects the performance of the AB Pooling Portfolios—AB High Yield Portfolio until July 27, 2016 and AB Bond Fund Inc.—AB High Yield Portfolio thereafter. |
| |||||||||||
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
18 | • AB WEALTH STRATEGIES |
Historical Performance
WEALTH APPRECIATION STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2017 (unaudited) | ||||||||
NAV Returns | SEC Returns (reflects applicable | |||||||
Class A Shares | ||||||||
1 Year | 18.69 | % | 13.64 | % | ||||
5 Years | 7.31 | % | 6.39 | % | ||||
10 Years | 2.55 | % | 2.11 | % | ||||
Class B Shares | ||||||||
1 Year | 17.78 | % | 13.78 | % | ||||
5 Years | 6.52 | % | 6.52 | % | ||||
10 Years | 1.94 | % | 1.94 | % | ||||
Class C Shares | ||||||||
1 Year | 17.83 | % | 16.83 | % | ||||
5 Years | 6.51 | % | 6.51 | % | ||||
10 Years | 1.81 | % | 1.81 | % | ||||
Advisor Class Shares* | ||||||||
1 Year | 19.05 | % | 19.05 | % | ||||
5 Years | 7.60 | % | 7.60 | % | ||||
10 Years | 2.84 | % | 2.84 | % | ||||
Class R Shares* | ||||||||
1 Year | 18.20 | % | 18.20 | % | ||||
5 Years | 6.88 | % | 6.88 | % | ||||
10 Years | 2.16 | % | 2.16 | % | ||||
Class K Shares* | ||||||||
1 Year | 18.58 | % | 18.58 | % | ||||
5 Years | 7.20 | % | 7.20 | % | ||||
10 Years | 2.49 | % | 2.49 | % | ||||
Class I Shares* | ||||||||
1 Year | 18.94 | % | 18.94 | % | ||||
5 Years | 7.56 | % | 7.56 | % | ||||
10 Years | 2.82 | % | 2.82 | % |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance and footnotes continued on next page)
AB WEALTH STRATEGIES • | 19 |
Historical Performance
WEALTH APPRECIATION STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
The Strategy’s current prospectus fee table shows the Strategy’s total annual operating expense ratios as 1.43%, 2.18%, 2.18%, 1.18%, 1.87%, 1.54% and 1.23% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursement agreements reduced the Strategy’s annual operating expense ratios to 1.31%, 2.07%, 2.06%, 1.06%, 1.75%, 1.43% and 1.11% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively. These waivers/reimbursement agreements may not be terminated before December 31, 2017. Absent reimbursements or waivers, performance would have been lower. The net and gross expenses shown include the total operating expenses of the Strategy and the indirect expenses of the Strategy’s Underlying Portfolios, as based upon the allocation of the Strategy’s assets among the Underlying Portfolios. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods and include acquired fund fees.
* | These share classes are offered at NAV to eligible investors and their SEC returns are the same as their NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
20 | • AB WEALTH STRATEGIES |
Historical Performance
WEALTH APPRECIATION STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS AS OF THE MOST RECENT CALENDAR QUARTER-END MARCH 31, 2017 (unaudited) | ||||
SEC Returns (reflects applicable | ||||
Class A Shares | ||||
1 Year | 7.82 | % | ||
5 Years | 6.35 | % | ||
10 Years | 2.02 | % | ||
Class B Shares | ||||
1 Year | 7.71 | % | ||
5 Years | 6.47 | % | ||
10 Years | 1.86 | % | ||
Class C Shares | ||||
1 Year | 10.70 | % | ||
5 Years | 6.48 | % | ||
10 Years | 1.72 | % | ||
Advisor Class Shares* | ||||
1 Year | 12.86 | % | ||
5 Years | 7.57 | % | ||
10 Years | 2.76 | % | ||
Class R Shares* | ||||
1 Year | 12.05 | % | ||
5 Years | 6.84 | % | ||
10 Years | 2.08 | % | ||
Class K Shares* | ||||
1 Year | 12.48 | % | ||
5 Years | 7.17 | % | ||
10 Years | 2.41 | % | ||
Class I Shares* | ||||
1 Year | 12.83 | % | ||
5 Years | 7.53 | % | ||
10 Years | 2.74 | % |
* | Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
AB WEALTH STRATEGIES • | 21 |
Historical Performance
BALANCED WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS FEBRUARY 28, 2017 (unaudited) | ||||||||
NAV Returns | SEC Returns (reflects applicable | |||||||
Class A Shares | ||||||||
1 Year | 14.23 | % | 9.38 | % | ||||
5 Years | 5.82 | % | 4.90 | % | ||||
10 Years | 3.55 | % | 3.10 | % | ||||
Class B Shares | ||||||||
1 Year | 13.35 | % | 9.35 | % | ||||
5 Years | 5.06 | % | 5.06 | % | ||||
10 Years | 2.96 | % | 2.96 | % | ||||
Class C Shares | ||||||||
1 Year | 13.35 | % | 12.35 | % | ||||
5 Years | 5.05 | % | 5.05 | % | ||||
10 Years | 2.82 | % | 2.82 | % | ||||
Advisor Class Shares* | ||||||||
1 Year | 14.52 | % | 14.52 | % | ||||
5 Years | 6.13 | % | 6.13 | % | ||||
10 Years | 3.86 | % | 3.86 | % | ||||
Class R Shares* | ||||||||
1 Year | 13.76 | % | 13.76 | % | ||||
5 Years | 5.43 | % | 5.43 | % | ||||
10 Years | 3.18 | % | 3.18 | % | ||||
Class K Shares* | ||||||||
1 Year | 14.19 | % | 14.19 | % | ||||
5 Years | 5.74 | % | 5.74 | % | ||||
10 Years | 3.50 | % | 3.50 | % | ||||
Class I Shares* | ||||||||
1 Year | 14.46 | % | 14.46 | % | ||||
5 Years | 6.10 | % | 6.10 | % | ||||
10 Years | 3.84 | % | 3.84 | % |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance and footnotes continued on next page)
22 | • AB WEALTH STRATEGIES |
Historical Performance
BALANCED WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
The Strategy’s current prospectus fee table shows the Strategy’s total annual operating expense ratios as 1.30%, 2.06%, 2.05%, 1.05%, 1.71%, 1.39% and 1.07% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursement agreements reduced the Strategy’s annual operating expense ratios to 1.22%, 1.98%, 1.97%, 0.97%, 1.63%, 1.31% and 0.99% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively. These waivers/reimbursement agreements may not be terminated before December 31, 2017. Absent reimbursements or waivers, performance would have been lower. The net and gross expenses shown include the total operating expenses of the Strategy and the indirect expenses of the Strategy’s Underlying Portfolios, as based upon the allocation of the Strategy’s assets among the Underlying Portfolios. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods and include acquired fund fees.
* | These share classes are offered at NAV to eligible investors and their SEC returns are the same as their NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
AB WEALTH STRATEGIES • | 23 |
Historical Performance
BALANCED WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS AS OF THE MOST RECENT CALENDAR QUARTER-END MARCH 31, 2017 (unaudited) | ||||
SEC Returns (reflects applicable | ||||
Class A Shares | ||||
1 Year | 4.92 | % | ||
5 Years | 4.90 | % | ||
10 Years | 3.06 | % | ||
Class B Shares | ||||
1 Year | 4.82 | % | ||
5 Years | 5.06 | % | ||
10 Years | 2.91 | % | ||
Class C Shares | ||||
1 Year | 7.80 | % | ||
5 Years | 5.07 | % | ||
10 Years | 2.77 | % | ||
Advisor Class Shares* | ||||
1 Year | 9.89 | % | ||
5 Years | 6.12 | % | ||
10 Years | 3.81 | % | ||
Class R Shares* | ||||
1 Year | 9.13 | % | ||
5 Years | 5.42 | % | ||
10 Years | 3.13 | % | ||
Class K Shares* | ||||
1 Year | 9.45 | % | ||
5 Years | 5.75 | % | ||
10 Years | 3.45 | % | ||
Class I Shares* | ||||
1 Year | 9.82 | % | ||
5 Years | 6.09 | % | ||
10 Years | 3.79 | % |
* | Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
24 | • AB WEALTH STRATEGIES |
Historical Performance
CONSERVATIVE WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2017 (unaudited) | ||||||||
NAV Returns | SEC Returns (reflects applicable | |||||||
Class A Shares | ||||||||
1 Year | 7.69 | % | 3.12 | % | ||||
5 Years | 3.47 | % | 2.57 | % | ||||
10 Years | 2.92 | % | 2.47 | % | ||||
Class B Shares | ||||||||
1 Year | 6.79 | % | 2.79 | % | ||||
5 Years | 2.71 | % | 2.71 | % | ||||
10 Years | 2.33 | % | 2.33 | % | ||||
Class C Shares | ||||||||
1 Year | 6.88 | % | 5.88 | % | ||||
5 Years | 2.72 | % | 2.72 | % | ||||
10 Years | 2.19 | % | 2.19 | % | ||||
Advisor Class Shares* | ||||||||
1 Year | 7.91 | % | 7.91 | % | ||||
5 Years | 3.75 | % | 3.75 | % | ||||
10 Years | 3.22 | % | 3.22 | % | ||||
Class R Shares* | ||||||||
1 Year | 7.16 | % | 7.16 | % | ||||
5 Years | 3.07 | % | 3.07 | % | ||||
10 Years | 2.53 | % | 2.53 | % | ||||
Class K Shares* | ||||||||
1 Year | 7.56 | % | 7.56 | % | ||||
5 Years | 3.40 | % | 3.40 | % | ||||
10 Years | 2.87 | % | 2.87 | % | ||||
Class I Shares* | ||||||||
1 Year | 7.94 | % | 7.94 | % | ||||
5 Years | 3.72 | % | 3.72 | % | ||||
10 Years | 3.20 | % | 3.20 | % |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance and footnotes continued on next page)
AB WEALTH STRATEGIES • | 25 |
Historical Performance
CONSERVATIVE WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
The Strategy’s current prospectus fee table shows the Strategy’s total annual operating expense ratios as 1.25%, 2.00%, 2.00%, 1.00%, 1.65%, 1.34% and 1.02% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursement agreements reduced the Strategy’s annual operating expense ratios to 1.19%, 1.94%, 1.94%, 0.94%, 1.59%, 1.28% and 0.97% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively. These waivers/reimbursements agreements may not be terminated before December 31, 2017. Absent reimbursement or waivers, performance would have been lower. The net and gross expenses shown include the total operating expenses of the Strategy and the indirect expenses of the Strategy’s Underlying Portfolios, as based upon the allocation of the Strategy’s assets among the Underlying Portfolios. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods and include acquired fund fees.
* | These share classes are offered at NAV to eligible investors and their SEC returns are the same as their NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
26 | • AB WEALTH STRATEGIES |
Historical Performance
CONSERVATIVE WEALTH STRATEGY
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS | ||||
SEC Returns (reflects applicable sales charges) | ||||
Class A Shares | ||||
1 Year | 0.58 | % | ||
5 Years | 2.59 | % | ||
10 Years | 2.44 | % | ||
Class B Shares | ||||
1 Year | 0.27 | % | ||
5 Years | 2.73 | % | ||
10 Years | 2.29 | % | ||
Class C Shares | ||||
1 Year | 3.34 | % | ||
5 Years | 2.75 | % | ||
10 Years | 2.16 | % | ||
Advisor Class Shares* | ||||
1 Year | 5.39 | % | ||
5 Years | 3.77 | % | ||
10 Years | 3.19 | % | ||
Class R Shares* | ||||
1 Year | 4.74 | % | ||
5 Years | 3.09 | % | ||
10 Years | 2.51 | % | ||
Class K Shares* | ||||
1 Year | 5.04 | % | ||
5 Years | 3.42 | % | ||
10 Years | 2.84 | % | ||
Class I Shares* | ||||
1 Year | 5.42 | % | ||
5 Years | 3.75 | % | ||
10 Years | 3.17 | % |
* | Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Strategies. |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
AB WEALTH STRATEGIES • | 27 |
Historical Performance
THE UNDERLYING PORTFOLIOS
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS FOR THE UNDERLYING PORTFOLIOS* AS OF FEBRUARY 28, 2017 (unaudited) | ||||
NAV/SEC Returns | ||||
AB U.S. Value Portfolio | ||||
1 Year | 25.81 | % | ||
5 Years | 13.32 | % | ||
10 Years | 4.81 | % | ||
AB U.S. Large Cap Growth Portfolio | ||||
1 Year | 20.40 | % | ||
5 Years | 15.74 | % | ||
10 Years | 8.99 | % | ||
AB International Value Portfolio | ||||
1 Year | 20.87 | % | ||
5 Years | 4.98 | % | ||
10 Years | -1.17 | % | ||
AB International Growth Portfolio | ||||
1 Year | 14.65 | % | ||
5 Years | 2.82 | % | ||
10 Years | -1.32 | % | ||
AB Short Duration Bond Portfolio | ||||
1 Year | 1.68 | % | ||
5 Years | 1.11 | % | ||
10 Years | 1.87 | % | ||
AB Global Core Bond Portfolio | ||||
1 Year | 3.42 | % | ||
5 Years | 3.76 | % | ||
10 Years | 5.35 | % | ||
AB Bond Inflation Protection Portfolio | ||||
1 Year | 5.97 | % | ||
5 Years | 1.75 | % | ||
10 Years | 4.56 | % | ||
AB High Yield Portfolio | ||||
1 Year | 20.20 | % | ||
5 Years | 7.33 | % | ||
10 Years | 8.03 | % | ||
AB Small-Mid Cap Value Portfolio | ||||
1 Year | 35.57 | % | ||
5 Years | 15.30 | % | ||
10 Years | 9.42 | % |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance and footnotes continued on next page)
28 | • AB WEALTH STRATEGIES |
Historical Performance
THE UNDERLYING PORTFOLIOS
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS FOR THE UNDERLYING PORTFOLIOS* AS OF FEBRUARY 28, 2017 (unaudited) | ||||
NAV/SEC Returns | ||||
AB Small-Mid Cap Growth Portfolio | ||||
1 Year | 27.10 | % | ||
5 Years | 10.88 | % | ||
10 Years | 10.50 | % | ||
AB Multi-Asset Real Return Portfolio | ||||
1 Year | 23.95 | % | ||
5 Years | -3.12 | % | ||
10 Years | -3.38 | % | ||
AB Volatility Management Portfolio | ||||
1 Year | 16.93 | % | ||
5 Years | 7.11 | % | ||
Since Inception† | 7.16 | % | ||
AB Multi-Manager Alternative Strategies Fund | ||||
1 Year | 6.73 | % | ||
Since Inception‡ | 1.35 | % |
* | Please note, shares of the Underlying Portfolios are offered exclusively to mutual funds advised by, and certain institutional clients of, the Adviser that seek a blend of asset classes for investment, like the Strategies. These share classes are not currently offered for direct investment from the general public. The Underlying Portfolios do not contain sales charges or management fees. These Underlying Portfolios are offered at NAV and their SEC returns are the same as their NAV returns. The Underlying Portfolios can be purchased at the relevant NAV without a sales charge or other fee. However, there are sales charges in connection to purchases of other AB share classes invested in these Underlying Portfolios. |
† | Inception date: 4/16/2010. |
‡ | Inception date: 7/31/2014. |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
(Historical Performance continued on next page)
AB WEALTH STRATEGIES • | 29 |
Historical Performance
THE UNDERLYING PORTFOLIOS
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS FOR THE UNDERLYING PORTFOLIOS* AS OF THE MOST RECENT CALENDAR QUARTER-END MARCH 31, 2017 (unaudited) | ||||
NAV/SEC Returns | ||||
AB High Yield Portfolio | ||||
1 Year | 14.96 | % | ||
5 Years | 7.30 | % | ||
10 Years | 7.97 | % | ||
AB Volatility Management Portfolio | ||||
1 Year | 10.83 | % | ||
5 Years | 7.03 | % | ||
Since Inception† | 7.22 | % | ||
AB Multi-Manager Alternative Strategies Fund | ||||
1 Year | 5.09 | % | ||
Since Inception‡ | 1.27 | % |
* | Please note, shares of the Underlying Portfolios are offered exclusively to mutual funds advised by, and certain institutional clients of, the Adviser that seek a blend of asset classes for investment, like the Strategies. These share classes are not currently offered for direct investment from the general public. The Underlying Portfolios do not contain sales charges or management fees. These Underlying Portfolios are offered at NAV and their SEC returns are the same as their NAV returns. The Underlying Portfolios can be purchased at the relevant NAV without a sales charge or other fee. However, there are sales charges in connection to purchases of other AB share classes invested in these Underlying Portfolios. |
† | Inception date: 4/16/2010. |
‡ | Inception date: 7/31/2014. |
See Disclosures, Risks and Note about Historical Performance on pages 11-14.
30 | • AB WEALTH STRATEGIES |
Historical Performance
EXPENSE EXAMPLE
(unaudited)
As a shareholder of a Strategy, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Strategy expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Strategy and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Each Strategy will indirectly bear its pro rata share of the expenses incurred by the Underlying Portfolios in which the Strategy invests.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on a Strategy’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Strategy’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Strategy and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Each Strategy will indirectly bear its pro rata share of the expenses incurred by the Underlying Portfolios in which the Strategy invests.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
AB WEALTH STRATEGIES • | 31 |
Expense Example
EXPENSE EXAMPLE
(unaudited)
(continued from previous page)
AB Wealth Appreciation Strategy
Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period* | Annualized Expense Ratio* | Effective Expenses Paid During Period+ | Effective Annualized Expense Ratio+ | |||||||||||||||||||
Class A | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,064.70 | $ | 4.56 | 0.89 | % | $ | 6.55 | 1.28 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.38 | $ | 4.46 | 0.89 | % | $ | 6.41 | 1.28 | % | ||||||||||||
Class B | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,060.60 | $ | 8.53 | 1.67 | % | $ | 10.52 | 2.06 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.51 | $ | 8.35 | 1.67 | % | $ | 10.29 | 2.06 | % | ||||||||||||
Class C | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,060.10 | $ | 8.43 | 1.65 | % | $ | 10.42 | 2.04 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.61 | $ | 8.25 | 1.65 | % | $ | 10.19 | 2.04 | % | ||||||||||||
Advisor Class | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,066.20 | $ | 3.28 | 0.64 | % | $ | 5.28 | 1.03 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.62 | $ | 3.21 | 0.64 | % | $ | 5.16 | 1.03 | % | ||||||||||||
Class R | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,062.60 | $ | 6.80 | 1.33 | % | $ | 8.80 | 1.72 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,018.20 | $ | 6.66 | 1.33 | % | $ | 8.60 | 1.72 | % | ||||||||||||
Class K | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,063.80 | $ | 5.22 | 1.02 | % | $ | 7.22 | 1.41 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,019.74 | $ | 5.11 | 1.02 | % | $ | 7.05 | 1.41 | % | ||||||||||||
Class I | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,065.10 | $ | 3.53 | 0.69 | % | $ | 5.53 | 1.08 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.37 | $ | 3.46 | 0.69 | % | $ | 5.41 | 1.08 | % |
AB Balanced Wealth Strategy
Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period* | Annualized Expense Ratio* | Effective Expenses Paid During Period+ | Effective Annualized Expense Ratio+ | |||||||||||||||||||
Class A | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,042.50 | $ | 4.20 | 0.83 | % | $ | 6.03 | 1.19 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.68 | $ | 4.16 | 0.83 | % | $ | 5.96 | 1.19 | % | ||||||||||||
Class B | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,038.80 | $ | 8.09 | 1.60 | % | $ | 9.91 | 1.96 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.86 | $ | 8.00 | 1.60 | % | $ | 9.79 | 1.96 | % | ||||||||||||
Class C | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,039.00 | $ | 8.04 | 1.59 | % | $ | 9.86 | 1.95 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.91 | $ | 7.95 | 1.59 | % | $ | 9.74 | 1.95 | % | ||||||||||||
Advisor Class | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,044.90 | $ | 2.94 | 0.58 | % | $ | 4.77 | 0.94 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.92 | $ | 2.91 | 0.58 | % | $ | 4.71 | 0.94 | % | ||||||||||||
Class R | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,041.00 | $ | 6.28 | 1.24 | % | $ | 8.10 | 1.60 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,018.65 | $ | 6.21 | 1.24 | % | $ | 8.00 | 1.60 | % | ||||||||||||
Class K | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,042.60 | $ | 4.71 | 0.93 | % | $ | 6.53 | 1.29 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,020.18 | $ | 4.66 | 0.93 | % | $ | 6.46 | 1.29 | % | ||||||||||||
Class I | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,044.10 | $ | 3.04 | 0.60 | % | $ | 4.87 | 0.96 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.82 | $ | 3.01 | 0.60 | % | $ | 4.81 | 0.96 | % |
32 | • AB WEALTH STRATEGIES |
Expense Example
EXPENSE EXAMPLE
(unaudited)
(continued from previous page)
AB Conservative Wealth Strategy
Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period* | Annualized Expense Ratio* | Effective Expenses Paid During Period+ | Effective Annualized Expense Ratio+ | |||||||||||||||||||
Class A | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,020.30 | $ | 4.86 | 0.97 | % | $ | 6.16 | 1.23 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,019.98 | $ | 4.86 | 0.97 | % | $ | 6.16 | 1.23 | % | ||||||||||||
Class B | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,015.50 | $ | 8.65 | 1.73 | % | $ | 9.94 | 1.99 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.22 | $ | 8.65 | 1.73 | % | $ | 9.94 | 1.99 | % | ||||||||||||
Class C | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,016.10 | $ | 8.60 | 1.72 | % | $ | 9.90 | 1.98 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,016.27 | $ | 8.60 | 1.72 | % | $ | 9.89 | 1.98 | % | ||||||||||||
Advisor Class | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,021.00 | $ | 3.56 | 0.71 | % | $ | 4.86 | 0.97 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.27 | $ | 3.56 | 0.71 | % | $ | 4.86 | 0.97 | % | ||||||||||||
Class R | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,017.00 | $ | 6.85 | 1.37 | % | $ | 8.15 | 1.63 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,018.00 | $ | 6.85 | 1.37 | % | $ | 8.15 | 1.63 | % | ||||||||||||
Class K | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,019.00 | $ | 5.31 | 1.06 | % | $ | 6.61 | 1.32 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,019.54 | $ | 5.31 | 1.06 | % | $ | 6.61 | 1.32 | % | ||||||||||||
Class I | ||||||||||||||||||||||||
Actual | $ | 1,000 | $ | 1,021.20 | $ | 3.71 | 0.74 | % | $ | 5.01 | 1.00 | % | ||||||||||||
Hypothetical** | $ | 1,000 | $ | 1,021.12 | $ | 3.71 | 0.74 | % | $ | 5.01 | 1.00 | % |
* | Expenses are equal to the classes’ annualized expense ratios multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses of the underlying portfolios in which the Strategies invest are not included herein. |
** | Assumes 5% annual return before expenses. |
+ | In connection with the Strategies’ investments in affiliated/unaffiliated underlying portfolios, the Strategies incur no direct expenses, but bear proportionate shares of the acquired fund fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated/unaffiliated underlying portfolios. Currently the Adviser has contractually agreed to waive its fees from the Strategies in an amount equal to the Strategies’ pro rata share of certain acquired fund fees and expenses of the affiliated underlying portfolios. The Strategies’ effective expenses are equal to the classes’ annualized expense ratio plus the Strategies’ pro rata share of the weighted average expense ratio of the affiliated/unaffiliated underlying portfolios in which it invests, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
AB WEALTH STRATEGIES • | 33 |
Expense Example
AB WEALTH APPRECIATION STRATEGY
PORTFOLIO SUMMARY
February 28, 2017 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $1,328.8
* | All data are as of February 28, 2017. The Strategy’s holdings breakdown is expressed as a percentage of total investments and may vary over time. |
The Strategy invests in the Underlying Portfolios. Detailed information regarding the Strategy’s holdings, including specific breakdowns within the Underlying Portfolios, can be found in the shareholder report filed with the Securities and Exchange Commission’s website at www.sec.gov or by calling AB at (800) 227-4618. Performance for each of the Underlying Portfolios compared to its benchmark may be found on page 18. Additional performance for the Underlying Portfolios may be found on pages 28-30.
34 | • AB WEALTH STRATEGIES |
Portfolio Summary
AB BALANCED WEALTH STRATEGY
PORTFOLIO SUMMARY
February 28, 2017 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $976.8
* | All data are as of February 28, 2017. The Strategy’s holdings breakdown is expressed as a percentage of total investments and may vary over time. |
The Strategy invests in the Underlying Portfolios. Detailed information regarding the Strategy’s holdings, including specific breakdowns within the Underlying Portfolios, can be found in the shareholder report filed with the Securities and Exchange Commission’s website at www.sec.gov or by calling AB at (800) 227-4618. Performance for each of the Underlying Portfolios compared to its benchmark may be found on page 18. Additional performance for the Underlying Portfolios may be found on pages 28-30.
AB WEALTH STRATEGIES • | 35 |
Portfolio Summary
AB CONSERVATIVE WEALTH STRATEGY
PORTFOLIO SUMMARY
February 28, 2017 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $258.7
* | All data are as of February 28, 2017. The Strategy’s holdings breakdown is expressed as a percentage of total investments and may vary over time. |
The Strategy invests in the Underlying Portfolios. Detailed information regarding the Strategy’s holdings, including specific breakdowns within the Underlying Portfolios, can be found in the shareholder report filed with the Securities and Exchange Commission’s website at www.sec.gov or by calling AB at (800) 227-4618. Performance for each of the Underlying Portfolios compared to its benchmark may be found on page 18. Additional performance for the Underlying Portfolios may be found on pages 28-30.
36 | • AB WEALTH STRATEGIES |
Portfolio Summary
AB WEALTH APPRECIATION STRATEGY
PORTFOLIO OF INVESTMENTS
February 28, 2017 (unaudited)
Company | Shares | U.S. $ Value | ||||||
| ||||||||
INVESTMENT COMPANIES – 100.2% |
| |||||||
Funds and Investment Trusts – 100.2%* |
| |||||||
AB Multi-Manager Alternative Strategies Fund – Class Z | 15,721,451 | $ | 160,044,367 | |||||
AB Pooling Portfolio – AB International Growth Portfolio | 20,927,982 | 174,120,812 | ||||||
AB Pooling Portfolio – AB International Value Portfolio | 24,002,811 | 175,940,607 | ||||||
AB Pooling Portfolio – AB Multi-Asset Real Return Portfolio | 14,265,638 | 92,583,990 | ||||||
AB Pooling Portfolio – AB Small-Mid Cap Growth Portfolio | 7,255,352 | 66,894,347 | ||||||
AB Pooling Portfolio – AB Small-Mid Cap Value Portfolio | 6,213,340 | 66,544,874 | ||||||
AB Pooling Portfolio – AB U.S. Large Cap Growth Portfolio | 22,290,797 | 204,183,700 | ||||||
AB Pooling Portfolio – AB U.S. Value Portfolio | 13,969,553 | 203,955,475 | ||||||
AB Pooling Portfolio – AB Volatility Management Portfolio | 20,101,603 | 186,944,905 | ||||||
|
| |||||||
Total Investments – 100.2% | 1,331,213,077 | |||||||
Other assets less liabilities – (0.2)% | (2,380,060 | ) | ||||||
|
| |||||||
Net Assets – 100.0% | $ | 1,328,833,017 | ||||||
|
|
* | To obtain a copy of the fund’s financial statements, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
See notes to financial statements.
AB WEALTH STRATEGIES • | 37 |
AB Wealth Appreciation Strategy—Portfolio of Investments
AB BALANCED WEALTH STRATEGY
PORTFOLIO OF INVESTMENTS
February 28, 2017 (unaudited)
Company | Shares | U.S. $ Value | ||||||
| ||||||||
INVESTMENT COMPANIES – 100.3% | ||||||||
Funds and Investment Trusts – 100.3%* | ||||||||
AB Bond Fund, Inc. – AB High Yield Portfolio – Class Z | 6,582,788 | $ | 64,050,528 | |||||
AB Multi-Manager Alternative Strategies Fund – Class Z | 7,717,001 | 78,559,074 | ||||||
AB Pooling Portfolio – AB Bond Inflation Protection Portfolio | 7,762,103 | 73,507,117 | ||||||
AB Pooling Portfolio – AB Global Core Bond Portfolio | 18,542,022 | 181,711,817 | ||||||
AB Pooling Portfolio – AB International Growth Portfolio | 8,794,895 | 73,173,522 | ||||||
AB Pooling Portfolio – AB International Value Portfolio | 9,981,786 | 73,166,494 | ||||||
AB Pooling Portfolio – AB Multi-Asset Real Return Portfolio | 6,781,547 | 44,012,240 | ||||||
AB Pooling Portfolio – AB Small-Mid Cap Growth Portfolio | 2,395,891 | 22,090,110 | ||||||
AB Pooling Portfolio – AB Small-Mid Cap Value Portfolio | 2,064,797 | 22,113,972 | ||||||
AB Pooling Portfolio – AB U.S. Large Cap Growth Portfolio | 10,161,389 | 93,078,321 | ||||||
AB Pooling Portfolio – AB U.S. Value Portfolio | 6,383,134 | 93,193,761 | ||||||
AB Pooling Portfolio – AB Volatility Management Portfolio | 17,347,609 | 161,332,763 | ||||||
|
| |||||||
Total Investments – 100.3% | 979,989,719 | |||||||
Other assets less liabilities – (0.3)% | (3,196,844 | ) | ||||||
|
| |||||||
Net Assets – 100.0% | $ | 976,792,875 | ||||||
|
|
* | To obtain a copy of the fund’s financial statements, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
See notes to financial statements.
38 | • AB WEALTH STRATEGIES |
AB Balanced Wealth Strategy—Portfolio of Investments
AB CONSERVATIVE WEALTH STRATEGY
PORTFOLIO OF INVESTMENTS
February 28, 2017 (unaudited)
Company | Shares | U.S. $ Value | ||||||
|
|
|
|
| ||||
INVESTMENT COMPANIES – 100.2% | ||||||||
Funds and Investment Trusts – 100.2%* |
| |||||||
AB Multi-Manager Alternative Strategies Fund – Class Z | 1,529,398 | $ | 15,569,276 | |||||
AB Pooling Portfolio – AB Bond Inflation Protection Portfolio | 2,602,018 | 24,641,115 | ||||||
AB Pooling Portfolio – AB Global Core Bond Portfolio | 6,358,670 | 62,314,962 | ||||||
AB Pooling Portfolio – AB International Growth Portfolio | 1,236,402 | 10,286,864 | ||||||
AB Pooling Portfolio – AB International Value Portfolio | 1,402,811 | 10,282,608 | ||||||
AB Pooling Portfolio – AB Multi-Asset Real Return Portfolio | 597,495 | 3,877,740 | ||||||
AB Pooling Portfolio – AB Short Duration Bond Portfolio | 7,636,996 | 71,329,545 | ||||||
AB Pooling Portfolio – AB Small-Mid Cap Growth Portfolio | 209,700 | 1,933,431 | ||||||
AB Pooling Portfolio – AB Small-Mid Cap Value Portfolio | 180,541 | 1,933,598 | ||||||
AB Pooling Portfolio – AB U.S. Large Cap Growth Portfolio | 1,485,533 | 13,607,483 | ||||||
AB Pooling Portfolio – AB U.S. Value Portfolio | 932,983 | 13,621,548 | ||||||
AB Pooling Portfolio – AB Volatility Management Portfolio | 3,193,400 | 29,698,616 | ||||||
|
| |||||||
Total Investments – 100.2% | 259,096,786 | |||||||
Other assets less liabilities – (0.2)% | (411,808 | ) | ||||||
|
| |||||||
Net Assets – 100.0% | $ | 258,684,978 | ||||||
|
|
* | To obtain a copy of the fund’s financial statements, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
See notes to financial statements.
AB WEALTH STRATEGIES • | 39 |
AB Conservative Wealth Strategy—Portfolio of Investments
STATEMENT OF ASSETS & LIABILITIES
February 28, 2017 (unaudited)
AB Wealth Appreciation Strategy | ||||
Assets | ||||
Investments in affiliated Underlying Portfolios, at value | $ | 1,331,213,077 | ||
Receivable for investments sold | 959,446 | |||
Receivable for shares of beneficial interest sold | 407,774 | |||
Due from custodian | 24,896 | |||
|
| |||
Total assets | 1,332,605,193 | |||
|
| |||
Liabilities | ||||
Due to custodian | 391,054 | |||
Payable for shares of beneficial interest redeemed | 2,447,599 | |||
Advisory fee payable | 546,788 | |||
Distribution fee payable | 149,886 | |||
Transfer Agent fee payable | 89,990 | |||
Administrative fee payable | 8,884 | |||
Accrued expenses | 137,975 | |||
|
| |||
Total liabilities | 3,772,176 | |||
|
| |||
Net Assets | $ | 1,328,833,017 | ||
|
| |||
Composition of Net Assets | ||||
Shares of beneficial interest, at par | $ | 879 | ||
Additional paid-in capital | 1,304,231,845 | |||
Undistributed net investment income | 3,451,799 | |||
Accumulated net realized loss on investment transactions | (39,857,923 | ) | ||
Net unrealized appreciation on investments | 61,006,417 | |||
|
| |||
$ | 1,328,833,017 | |||
|
|
Net Asset Value Per Share—unlimited shares authorized, $.00001 par value
Class | Net Assets | Shares Outstanding | Net Asset Value | |||||||||
| ||||||||||||
A | $ | 352,803,852 | 23,290,902 | $ | 15.15 | * | ||||||
| ||||||||||||
B | $ | 9,328,616 | 610,060 | $ | 15.29 | |||||||
| ||||||||||||
C | $ | 92,047,863 | 6,099,337 | $ | 15.09 | |||||||
| ||||||||||||
Advisor | $ | 856,676,989 | 56,709,227 | $ | 15.11 | |||||||
| ||||||||||||
R | $ | 3,541,248 | 235,201 | $ | 15.06 | |||||||
| ||||||||||||
K | $ | 12,830,869 | 851,924 | $ | 15.06 | |||||||
| ||||||||||||
I | $ | 1,603,580 | 106,322 | $ | 15.08 | |||||||
|
* | The maximum offering price per share for Class A shares was $15.82 which reflects a sales charge of 4.25%. |
See notes to financial statements.
40 | • AB WEALTH STRATEGIES |
Statement of Assets & Liabilities
AB Balanced Wealth Strategy | ||||
Assets | ||||
Investments in affiliated Underlying Portfolios, at value | $ | 979,989,719 | ||
Receivable for investments sold | 904,566 | |||
Receivable for shares of beneficial interest sold | 221,941 | |||
Affiliated dividends receivable | 216,123 | |||
Due from custodian | 27,158 | |||
|
| |||
Total assets | 981,359,507 | |||
|
| |||
Liabilities | ||||
Due to custodian | 493,869 | |||
Payable for shares of beneficial interest redeemed | 3,023,435 | |||
Advisory fee payable | 327,476 | |||
Distribution fee payable | 284,490 | |||
Payable for investments purchased | 221,281 | |||
Transfer Agent fee payable | 77,848 | |||
Accrued expenses | 138,233 | |||
|
| |||
Total liabilities | 4,566,632 | |||
|
| |||
Net Assets | $ | 976,792,875 | ||
|
| |||
Composition of Net Assets | ||||
Shares of beneficial interest, at par | $ | 699 | ||
Additional paid-in capital | 1,022,673,695 | |||
Undistributed net investment income | 11,996,189 | |||
Accumulated net realized loss on investment transactions | (97,783,579 | ) | ||
Net unrealized appreciation on investments | 39,905,871 | |||
|
| |||
$ | 976,792,875 | |||
|
|
Net Asset Value Per Share—unlimited shares authorized, $.00001 par value
Class | Net Assets | Shares Outstanding | Net Asset Value | |||||||||
| ||||||||||||
A | $ | 654,578,042 | 46,787,688 | $ | 13.99 | * | ||||||
| ||||||||||||
B | $ | 11,713,529 | 832,507 | $ | 14.07 | |||||||
| ||||||||||||
C | $ | 184,315,167 | 13,277,839 | $ | 13.88 | |||||||
| ||||||||||||
Advisor | $ | 85,280,841 | 6,063,253 | $ | 14.07 | |||||||
| ||||||||||||
R | $ | 6,670,136 | 478,296 | $ | 13.95 | |||||||
| ||||||||||||
K | $ | 22,524,116 | 1,613,992 | $ | 13.96 | |||||||
| ||||||||||||
I | $ | 11,711,044 | 835,191 | $ | 14.02 | |||||||
|
* | The maximum offering price per share for Class A shares was $14.61 which reflects a sales charge of 4.25%. |
See notes to financial statements.
AB WEALTH STRATEGIES • | 41 |
Statement of Assets & Liabilities
AB Conservative Wealth Strategy | ||||
Assets | ||||
Investments in affiliated Underlying Portfolios, at value | $ | 259,096,786 | ||
Receivable for investments sold | 536,129 | |||
Receivable for shares of beneficial interest sold | 241,918 | |||
|
| |||
Total assets | 259,874,833 | |||
|
| |||
Liabilities | ||||
Due to custodian | 597,714 | |||
Payable for shares of beneficial interest redeemed | 328,775 | |||
Advisory fee payable | 98,420 | |||
Distribution fee payable | 89,262 | |||
Transfer Agent fee payable | 16,385 | |||
Accrued expenses | 59,299 | |||
|
| |||
Total liabilities | 1,189,855 | |||
|
| |||
Net Assets | $ | 258,684,978 | ||
|
| |||
Composition of Net Assets | ||||
Shares of beneficial interest, at par | $ | 211 | ||
Additional paid-in capital | 254,872,233 | |||
Undistributed net investment income | 5,676,126 | |||
Accumulated net realized loss on investment transactions | (14,193,081 | ) | ||
Net unrealized appreciation on investments | 12,329,489 | |||
|
| |||
$ | 258,684,978 | |||
|
|
Net Asset Value Per Share—unlimited shares authorized, $.00001 par value
Class | Net Assets | Shares Outstanding | Net Asset Value | |||||||||
| ||||||||||||
A | $ | 168,874,068 | 13,711,087 | $ | 12.32 | * | ||||||
| ||||||||||||
B | $ | 2,005,586 | 161,446 | $ | 12.42 | |||||||
| ||||||||||||
C | $ | 66,824,118 | 5,494,925 | $ | 12.16 | |||||||
| ||||||||||||
Advisor | $ | 8,902,405 | 719,528 | $ | 12.37 | |||||||
| ||||||||||||
R | $ | 4,593,362 | 373,016 | $ | 12.31 | |||||||
| ||||||||||||
K | $ | 7,002,695 | 569,706 | $ | 12.29 | |||||||
| ||||||||||||
I | $ | 482,744 | 39,125 | $ | 12.34 | |||||||
|
* | The maximum offering price per share for Class A shares was $12.87 which reflects a sales charge of 4.25%. |
See notes to financial statements.
42 | • AB WEALTH STRATEGIES |
Statement of Assets & Liabilities
STATEMENT OF OPERATIONS
Six Months Ended February 28, 2017 (unaudited)
AB Wealth Appreciation Strategy | AB Balanced Wealth Strategy | AB Conservative Wealth Strategy | ||||||||||
Investment Income | ||||||||||||
Income distributions from affiliated Underlying Portfolios | $ | 32,873,592 | $ | 30,542,392 | $ | 7,246,797 | ||||||
Other income | 24,896 | (a) | 27,158 | (a) | – 0 | – | ||||||
|
|
|
|
|
| |||||||
Total income | 32,898,488 | 30,569,550 | 7,246,797 | |||||||||
|
|
|
|
|
| |||||||
Expenses | ||||||||||||
Advisory fee (see Note B) | 4,266,464 | 2,728,950 | 737,049 | |||||||||
Distribution fee – Class A | 432,799 | 827,089 | 216,246 | |||||||||
Distribution fee – Class B | 51,280 | 71,332 | 15,594 | |||||||||
Distribution fee – Class C | 463,921 | 939,848 | 349,429 | |||||||||
Distribution fee – Class R | 8,455 | 15,747 | 11,081 | |||||||||
Distribution fee – Class K | 18,358 | 29,793 | 8,755 | |||||||||
Transfer agency – Class A | 119,037 | 344,129 | 88,966 | |||||||||
Transfer agency – Class B | 5,037 | 8,874 | 1,925 | |||||||||
Transfer agency – Class C | 34,863 | 101,675 | 37,016 | |||||||||
Transfer agency – Advisor Class | 290,055 | 45,390 | 5,190 | |||||||||
Transfer agency – Class R | 4,396 | 8,188 | 5,762 | |||||||||
Transfer agency – Class K | 14,686 | 23,834 | 7,004 | |||||||||
Transfer agency – Class I | 1,030 | 6,621 | 275 | |||||||||
Printing | 59,032 | 59,973 | 17,827 | |||||||||
Registration fees | 50,750 | 47,900 | 48,590 | |||||||||
Custodian | 32,562 | 32,645 | 32,645 | |||||||||
Administrative | 24,189 | – 0 | – | – 0 | – | |||||||
Legal | 22,493 | 28,101 | 23,370 | |||||||||
Audit and tax | 16,378 | 16,378 | 16,378 | |||||||||
Trustees’ fees | 13,236 | 13,237 | 13,237 | |||||||||
Miscellaneous | 30,577 | 26,710 | 11,177 | |||||||||
|
|
|
|
|
| |||||||
Total expenses | 5,959,598 | 5,376,414 | 1,647,516 | |||||||||
Less: expenses waived and reimbursed by the Adviser (see Note B) | (753,197 | ) | (577,305 | ) | (77,600 | ) | ||||||
|
|
|
|
|
| |||||||
Net expenses | 5,206,401 | 4,799,109 | 1,569,916 | |||||||||
|
|
|
|
|
| |||||||
Net investment income | 27,692,087 | 25,770,441 | 5,676,881 | |||||||||
|
|
|
|
|
| |||||||
Realized and Unrealized Gain (Loss) on Investment Transactions | ||||||||||||
Net realized gain (loss) on sale of affiliated Underlying Portfolio shares | (11,862,271 | ) | (5,727,431 | ) | 165,072 | |||||||
Net realized gain distributions received from affiliated Underlying Portfolios | 73,642,605 | 44,972,161 | 7,653,176 | |||||||||
Net change in unrealized appreciation/depreciation of investments in affiliated Underlying Portfolios | (6,382,125 | ) | (24,458,095 | ) | (8,741,406 | ) | ||||||
|
|
|
|
|
| |||||||
Net gain (loss) on transactions | 55,398,209 | 14,786,635 | (923,158 | ) | ||||||||
|
|
|
|
|
| |||||||
Net Increase in Net Assets from Operations | $ | 83,090,296 | $ | 40,557,076 | $ | 4,753,723 | ||||||
|
|
|
|
|
|
(a) | Other income represents a non-recurring refund for overbilling of prior years’ custody out-of-pocket fees. |
See notes to financial statements.
AB WEALTH STRATEGIES • | 43 |
Statement of Operations
STATEMENT OF CHANGES IN NET ASSETS
AB Wealth Appreciation Strategy | ||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 27,692,087 | $ | 24,938,895 | ||||
Net realized loss on sale of affiliated Underlying Portfolio shares | (11,862,271 | ) | (11,389,407 | ) | ||||
Net realized gain distributions from affiliated Underlying Portfolios | 73,642,605 | 75,517,267 | ||||||
Net change in unrealized appreciation/depreciation of investments in affiliated Underlying Portfolios | (6,382,125 | ) | (28,727,701 | ) | ||||
|
|
|
| |||||
Net increase in net assets from operations | 83,090,296 | 60,339,054 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (10,846,833 | ) | (5,720,211 | ) | ||||
Class B | (188,566 | ) | (59,865 | ) | ||||
Class C | (2,182,049 | ) | (777,204 | ) | ||||
Advisor Class | (28,611,191 | ) | (15,798,469 | ) | ||||
Class R | (91,400 | ) | (39,826 | ) | ||||
Class K | (462,715 | ) | (218,945 | ) | ||||
Class I | (57,977 | ) | (29,121 | ) | ||||
Net realized gain on investment transactions | ||||||||
Class A | (8,526,561 | ) | – 0 | – | ||||
Class B | (240,870 | ) | – 0 | – | ||||
Class C | (2,296,861 | ) | – 0 | – | ||||
Advisor Class | (20,807,633 | ) | – 0 | – | ||||
Class R | (83,561 | ) | – 0 | – | ||||
Class K | (378,861 | ) | – 0 | – | ||||
Class I | (42,771 | ) | – 0 | – | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net decrease | (26,669,791 | ) | (74,599,753 | ) | ||||
|
|
|
| |||||
Total decrease | (18,397,344 | ) | (36,904,340 | ) | ||||
Net Assets | ||||||||
Beginning of period | 1,347,230,361 | 1,384,134,701 | ||||||
|
|
|
| |||||
End of period (including undistributed net investment income of $3,451,799 and $18,200,443, respectively) | $ | 1,328,833,017 | $ | 1,347,230,361 | ||||
|
|
|
|
See notes to financial statements.
44 | • AB WEALTH STRATEGIES |
Statement of Changes in Net Assets
AB Balanced Wealth Strategy | ||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 25,770,441 | $ | 29,392,241 | ||||
Net realized loss on sale of affiliated Underlying Portfolio shares | (5,727,431 | ) | (1,576,730 | ) | ||||
Net realized gain distributions from affiliated Underlying Portfolios | 44,972,161 | 36,391,249 | ||||||
Net change in unrealized appreciation/depreciation of investments in affiliated Underlying Portfolios | (24,458,095 | ) | (15,132,540 | ) | ||||
|
|
|
| |||||
Net increase in net assets from operations | 40,557,076 | 49,074,220 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (20,765,298 | ) | (16,168,585 | ) | ||||
Class B | (209,513 | ) | (398,255 | ) | ||||
Class C | (4,428,700 | ) | (3,265,158 | ) | ||||
Advisor Class | (2,942,929 | ) | (2,323,740 | ) | ||||
Class R | (169,859 | ) | (147,616 | ) | ||||
Class K | (681,135 | ) | (646,694 | ) | ||||
Class I | (369,785 | ) | (291,278 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net decrease | (70,739,532 | ) | (123,619,831 | ) | ||||
|
|
|
| |||||
Total decrease | (59,749,675 | ) | (97,786,937 | ) | ||||
Net Assets | ||||||||
Beginning of period | 1,036,542,550 | 1,134,329,487 | ||||||
|
|
|
| |||||
End of period (including undistributed net investment income of $11,996,189 and $15,792,967, respectively) | $ | 976,792,875 | $ | 1,036,542,550 | ||||
|
|
|
|
See notes to financial statements.
AB WEALTH STRATEGIES • | 45 |
Statement of Changes in Net Assets
AB Conservative Wealth Strategy | ||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | |||||||
Increase (Decrease) in Net Assets from Operations | ||||||||
Net investment income | $ | 5,676,881 | $ | 5,985,478 | ||||
Net realized gain (loss) on sale of affiliated Underlying Portfolio shares | 165,072 | (282,408 | ) | |||||
Net realized gain distributions from affiliated Underlying Portfolios | 7,653,176 | 5,423,193 | ||||||
Net change in unrealized appreciation/depreciation of investments in affiliated Underlying Portfolios | (8,741,406 | ) | (737,142 | ) | ||||
|
|
|
| |||||
Net increase in net assets from operations | 4,753,723 | 10,389,121 | ||||||
Dividends to Shareholders from | ||||||||
Net investment income | ||||||||
Class A | (4,286,170 | ) | (3,973,134 | ) | ||||
Class B | – 0 | – | (168,366 | ) | ||||
Class C | (1,162,894 | ) | (1,305,359 | ) | ||||
Advisor Class | (267,098 | ) | (332,915 | ) | ||||
Class R | (92,061 | ) | (93,967 | ) | ||||
Class K | (164,659 | ) | (171,049 | ) | ||||
Class I | (12,532 | ) | (10,497 | ) | ||||
Transactions in Shares of Beneficial Interest | ||||||||
Net decrease | (23,838,486 | ) | (40,701,911 | ) | ||||
|
|
|
| |||||
Total decrease | (25,070,177 | ) | (36,368,077 | ) | ||||
Net Assets | ||||||||
Beginning of period | 283,755,155 | 320,123,232 | ||||||
|
|
|
| |||||
End of period (including undistributed net investment income of $5,676,126 and $5,984,659, respectively) | $ | 258,684,978 | $ | 283,755,155 | ||||
|
|
|
|
See notes to financial statements.
46 | • AB WEALTH STRATEGIES |
Statement of Changes in Net Assets
NOTES TO FINANCIAL STATEMENTS
February 28, 2017 (unaudited)
NOTE A
Significant Accounting Policies
The AB Portfolios (the “Trust”) was organized as a Massachusetts Business Trust on March 26, 1987 and is registered under the Investment Company Act of 1940 as a diversified, open end management investment company. The Trust operates as a series company currently comprised of six series. Each series is considered to be a separate entity for financial reporting and tax purposes. This report relates only to AB Wealth Appreciation Strategy, AB Balanced Wealth Strategy and AB Conservative Wealth Strategy (the “Strategies”). The Strategies offer Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Effective January 31, 2009, sales of Class B shares of the Strategies to new investors were suspended. Class B shares will only be issued (i) upon the exchange of Class B shares from another AB Mutual Fund, (ii) for purposes of dividend reinvestment, (iii) through the Strategies’ Automatic Investment Program (the “Program”) for accounts that established the Program prior to January 31, 2009, and (iv) for purchases of additional shares by Class B shareholders as of January 31, 2009. The ability to establish a new Program for accounts containing Class B shares was suspended as of January 31, 2009. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, except that the classes bear different distribution and transfer agency expenses. Each class has exclusive voting rights with respect to its distribution plan. The Strategies invest primarily in a combination of portfolios of the AB Mutual Funds (the “Underlying Portfolios”) representing a variety of asset classes and investment styles that are managed by AllianceBernstein L.P. (the “Adviser”). The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Each Strategy is an investment company
AB WEALTH STRATEGIES • | 47 |
Notes to Financial Statements
under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Strategies.
1. Security Valuation
Net asset value per share of the Strategies, which may be based on the NAVs of the Underlying Portfolios, is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m., Eastern Time. Investments in the Underlying Portfolios are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Strategies would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Strategies. Unobservable inputs reflect the Strategies’ own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
• | Level 1—quoted prices in active markets for identical investments |
• | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3—significant unobservable inputs (including the Strategies’ own assumptions in determining the fair value of investments) |
48 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
The following table summarizes the valuation of the Strategies’ investments by the above fair value hierarchy levels as of February 28, 2017:
Investments in Underlying Portfolios(a): | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Wealth Appreciation Strategy | ||||||||||||||||
Investment Companies | $ | 1,331,213,077 | $ | – 0 | – | $ | – 0 | – | $ | 1,331,213,077 | ||||||
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Balanced Wealth Strategy | ||||||||||||||||
Investment Companies | $ | 979,989,719 | $ | – 0 | – | $ | – 0 | – | $ | 979,989,719 | ||||||
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Conservative Wealth Strategy | ||||||||||||||||
Investment Companies | $ | 259,096,786 | $ | – 0 | – | $ | – 0 | – | $ | 259,096,786 | ||||||
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(a) | There were no transfers between any levels during the reporting period. |
The Strategies recognize all transfers between levels of the fair value hierarchy assuming the financial instruments were transferred at the beginning of the reporting period.
The Adviser established a Valuation Committee (the “Committee”) to oversee the pricing and valuation of all securities held in the Strategies. The Committee operates under pricing and valuation policies and procedures established by the Adviser and approved by the Board, including pricing policies which set forth the mechanisms and processes to be employed on a daily basis to implement these policies and procedures. In particular, the pricing policies describe how to determine market quotations for securities and other instruments. The Committee’s responsibilities include: 1) fair value and liquidity determinations (and oversight of any third parties to whom any responsibility for fair value and liquidity determinations is delegated), and 2) regular monitoring of the Adviser’s pricing and valuation policies and procedures and modification or enhancement of these policies and procedures (or recommendation of the modification of these policies and procedures) as the Committee believes appropriate.
The Committee is also responsible for monitoring the implementation of the pricing policies by the Adviser’s Pricing Group (the “Pricing Group”) and any third party which performs certain pricing functions in accordance with the pricing policies. The Pricing Group is responsible for the oversight of the third party on a day-to-day basis. The Committee and the Pricing Group perform a series of activities to provide reasonable assurance of the accuracy of prices including: 1) periodic vendor due diligence meetings, review of methodologies, new developments and processes at vendors, 2) daily comparison of security valuation versus prior day for all securities that exceeded established thresholds, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed by senior management and the Committee.
AB WEALTH STRATEGIES • | 49 |
Notes to Financial Statements
In addition, several processes outside of the pricing process are used to monitor valuation issues including: 1) performance and performance attribution reports are monitored for anomalous impacts based upon benchmark performance, and 2) portfolio managers review all portfolios for performance and analytics (which are generated using the Adviser’s prices).
3. Taxes
It is each Strategy’s policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Strategies’ tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Strategies’ financial statements.
4. Investment Income and Investment Transactions
Income and capital gain distributions from the Underlying Portfolios, if any, are recorded on the ex-dividend date. Transactions in shares of the Underlying Portfolios are accounted for on the trade date. Investment gains and losses are determined on the identified cost basis.
5. Class Allocations
All income earned and expenses incurred by the Strategies are borne on a pro-rata basis by each settled class of shares, based on the proportionate interest in each series represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Expenses included in the accompanying statements of operations do not include any expenses of the Underlying Portfolios. Expenses of the Trust are charged proportionately to each series or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
6. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. GAAP. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification.
50 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement (the “Advisory Agreement”), the Strategies pay the Adviser at the annual rates as follows:
Average Daily Net Assets | ||||||||||||
Strategy | First $2.5 Billion | Next $2.5 Billion | In Excess of $5 Billion | |||||||||
AB Wealth Appreciation | .65 | % | .55 | % | .50 | % | ||||||
AB Balanced Wealth | .55 | % | .45 | % | .40 | % | ||||||
AB Conservative Wealth | .55 | % | .45 | % | .40 | % |
Such fees are accrued daily and paid monthly.
In connection with the Strategies’ investments in AB Cap Fund—Multi-Manager Alternative Strategies Fund (“MMAS”), the Adviser has contractually agreed to (i) waive the portion of its management fee attributable to its services after paying sub-advisory fees to sub-advisers and (ii) waive an additional portion of the Strategies investment advisory fee payable under the Advisory Agreement in an amount equal to, or reimburse the Strategies for, the total other expenses of MMAS (excluding interest and short sales expenses), in each case as paid by the Strategies as an acquired fund fee and expense. This fee waiver will remain in effect until December 31, 2017. In connection with AB Balanced Wealth Strategy’s investments in AB High Yield Portfolio (“High Yield Portfolio”), the Adviser has contractually agreed to waive fees and/or reimburse the expenses payable to the Adviser by the Strategies in an amount equal to the Strategies’ share of the advisory fees of the High Yield Portfolio, as paid by the Strategies as an acquired fund fee and expense. This fee waiver and/or expense reimbursement will remain in effect until December 31, 2017. For the six months ended February 28, 2017, the advisory fees paid were reduced by $753,197, $577,305 and $77,600 for the AB Wealth Appreciation Strategy, AB Balanced Wealth Strategy and AB Conservative Wealth Strategy, respectively.
A summary of the Strategies’ affiliated Underlying Portfolio transactions for the six months ended February 28, 2017 is as follows:
AB Bond Fund, Inc.—AB High Yield Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Balanced Wealth | $ | 67,688 | $ | 1,584 | $ | 7,249 | $ | 101 | $ | 1,927 | $ | 64,051 | $ | 1,638 | $ | – 0 – |
AB WEALTH STRATEGIES • | 51 |
Notes to Financial Statements
AB Multi-Manager Alternative Strategies Fund | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 158,459 | $ | 1,844 | $ | 4,477 | $ | (54 | ) | $ | 4,272 | $ | 160,044 | $ | 1,510 | $ | – 0 | – | ||||||||||||||
AB Balanced Wealth | 83,191 | 782 | 7,526 | (33 | ) | 2,145 | 78,559 | 772 | – 0 | – | ||||||||||||||||||||||
AB Conservative Wealth | 17,079 | 156 | 2,095 | (1 | ) | 430 | 15,569 | 154 | – 0 | – |
AB Pooling Portfolio—AB Bond Inflation Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Balanced Wealth | $ | 77,836 | $ | 4,443 | $ | 5,528 | $ | (510 | ) | $ | (2,734 | ) | $ | 73,507 | $ | 4,198 | $ | – 0 | – | |||||||||||||
AB Conservative Wealth | 27,096 | 1,463 | 2,778 | 4 | (1,144 | ) | 24,641 | 1,463 | – 0 | – |
AB Pooling Portfolio—AB Global Core Bond Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Balanced Wealth | $ | 192,074 | $ | 8,607 | $ | 10,103 | $ | 250 | $ | (9,116 | ) | $ | 181,712 | $ | 3,533 | $ | 2,339 | |||||||||||||||
AB Conservative Wealth | 68,256 | 2,203 | 4,976 | 52 | (3,220 | ) | 62,315 | 1,253 | 833 |
AB Pooling Portfolio—AB International Growth Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 179,748 | $ | 7,717 | $ | 6,493 | $ | (1,398 | ) | $ | (5,453 | ) | $ | 174,121 | $ | 7,001 | $ | – 0 | – | |||||||||||||
AB Balanced Wealth | 78,069 | 5,071 | 6,990 | (734 | ) | (2,242 | ) | 73,174 | 3,077 | – 0 | – | |||||||||||||||||||||
AB Conservative Wealth | 11,352 | 804 | 1,444 | 95 | (520 | ) | 10,287 | 442 | – 0 | – |
AB Pooling Portfolio—AB International Value Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 180,473 | $ | 2,983 | $ | 16,513 | $ | (5,157 | ) | $ | 14,155 | $ | 175,941 | $ | 2,982 | $ | – 0 | – | ||||||||||||||
AB Balanced Wealth | 78,384 | 1,296 | 10,340 | (1,078 | ) | 4,904 | 73,166 | 1,296 | – 0 | – | ||||||||||||||||||||||
AB��Conservative Wealth | 11,392 | 188 | 1,844 | 175 | 372 | 10,283 | 187 | – 0 | – |
52 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
AB Pooling Portfolio—AB U.S. Large Cap Growth Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 205,824 | $ | 35,516 | $ | 17,689 | $ | (5,651 | ) | $ | (13,816 | ) | $ | 204,184 | $ | 770 | $ | 34,746 | ||||||||||||||
AB Balanced Wealth | 98,257 | 16,778 | 12,635 | (4,006 | ) | (5,316 | ) | 93,078 | 365 | 16,412 | ||||||||||||||||||||||
AB Conservative Wealth | 14,818 | 2,527 | 2,335 | (725 | ) | (678 | ) | 13,607 | 55 | 2,444 |
AB Pooling Portfolio—AB Multi-Asset Real Return Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 91,447 | $ | 2,457 | $ | 5,103 | $ | (1,870 | ) | $ | 5,653 | $ | 92,584 | $ | 2,385 | $ | – 0 | – | ||||||||||||||
AB Balanced Wealth | 45,901 | 1,156 | 4,926 | (1,669 | ) | 3,550 | 44,012 | 1,156 | – 0 | – | ||||||||||||||||||||||
AB Conservative Wealth | 4,170 | 103 | 566 | (135 | ) | 306 | 3,878 | 103 | – 0 | – |
AB Pooling Portfolio—AB Short Duration Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Conservative Wealth | $ | 78,279 | $ | 993 | $ | 7,562 | $ | (360 | ) | $ | (21 | ) | $ | 71,329 | $ | 973 | $ | – 0 | – |
AB Pooling Portfolio—AB Small-Mid Cap Growth Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 68,055 | $ | 7,650 | $ | 7,330 | $ | (2,225 | ) | $ | 744 | $ | 66,894 | $ | 664 | $ | 6,986 | |||||||||||||||
AB Balanced Wealth | 23,414 | 2,581 | 3,405 | (811 | ) | 311 | 22,090 | 224 | 2,357 | |||||||||||||||||||||||
AB Conservative Wealth | 2,137 | 227 | 390 | (72 | ) | 31 | 1,933 | 20 | 208 |
AB Pooling Portfolio—AB Small-Mid Cap Value Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 68,234 | $ | 9,115 | $ | 10,763 | $ | 89 | $ | (130 | ) | $ | 66,545 | $ | 729 | $ | 8,386 | |||||||||||||||
AB Balanced Wealth | 23,476 | 3,082 | 4,465 | 319 | (298 | ) | 22,114 | 246 | 2,836 | |||||||||||||||||||||||
AB Conservative Wealth | 2,157 | 269 | 503 | 133 | (122 | ) | 1,934 | 22 | 248 |
AB WEALTH STRATEGIES • | 53 |
Notes to Financial Statements
AB Pooling Portfolio—AB U.S. Value Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 206,665 | $ | 2,390 | $ | 24,887 | $ | 7,046 | $ | 12,741 | $ | 203,955 | $ | 2,390 | $ | – 0 | – | |||||||||||||||
AB Balanced Wealth | 98,808 | 1,232 | 16,120 | 4,742 | 4,532 | 93,194 | 1,127 | – 0 | – | |||||||||||||||||||||||
AB Conservative Wealth | 14,963 | 198 | 2,923 | 1,447 | (63 | ) | 13,622 | 168 | – 0 | – |
AB Pooling Portfolio—AB Volatility Management Portfolio | ||||||||||||||||||||||||||||||||
Distributions | ||||||||||||||||||||||||||||||||
Strategy | Market Value 8/31/16 (000) | Purchases at Cost (000) | Sales Proceeds (000) | Realized Gain (Loss) (000) | Change in Unrealized Appr./(Depr.) (000) | Market Value 2/28/17 (000) | Income (000) | Realized Gains (000) | ||||||||||||||||||||||||
AB Wealth Appreciation | $ | 189,349 | $ | 37,968 | $ | 13,182 | $ | (2,642 | ) | $ | (24,548 | ) | $ | 186,945 | $ | 14,443 | $ | 23,525 | ||||||||||||||
AB Balanced Wealth | 171,104 | 33,949 | 19,300 | (2,299 | ) | (22,121 | ) | 161,333 | 12,910 | 21,028 | ||||||||||||||||||||||
AB Conservative Wealth | 32,499 | 6,382 | 4,622 | (448 | ) | (4,112 | ) | 29,699 | 2,407 | 3,920 |
Effective January 1, 2015, AB Wealth Appreciation Strategy may reimburse the Adviser for certain legal and accounting services provided to Strategy by the Adviser. For the six months ended February 28, 2017, the reimbursement for such services amounted to $24,189.
The Strategies compensate AllianceBernstein Investor Services, Inc. (“ABIS”), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Strategies. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $187,524, $164,452 and $44,232 for the AB Wealth Appreciation Strategy, AB Balanced Wealth Strategy and AB Conservative Wealth Strategy, for the six months ended February 28, 2017.
AllianceBernstein Investments, Inc. (the “Distributor”), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Strategies’ shares. The Distributor has advised the Strategies that it has retained front-end sales charges from the sale of Class A shares and received contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares for each Strategy for the six months ended February 28, 2017 as follows:
Front-End Sales Charges | Contingent Deferred Sales Charges | |||||||||||||||
Strategy | Class A | Class A | Class B | Class C | ||||||||||||
AB Wealth Appreciation | $ | 4,298 | $ | 586 | $ | 2,447 | $ | 1,256 | ||||||||
AB Balanced Wealth | 7,554 | 1,656 | 5,960 | 2,613 | ||||||||||||
AB Conservative Wealth | 2,512 | 266 | 523 | 812 |
54 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
NOTE C
Distribution Plans
The Strategies have adopted a Plan for each class of shares of the Strategies pursuant to Rule 12b-1 under the Investment Company Act of 1940 (each a “Plan” and collectively the “Plans”). Under the Plans, the Strategies pay distribution and servicing fees to the Distributor at an annual rate of up to .50% of each Strategies’ average daily net assets attributable to Class A shares, 1% of the Strategies’ average daily net assets attributable to both Class B and Class C shares, .50% of the Strategies’ average daily net assets attributable to Class R shares and .25% of the Strategies’ average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. The fees are accrued daily and paid monthly. Effective August 1, 2014, payments under the Plan in respect of Class A shares are limited to an annual rate of .25% of each Strategy’s Class A shares’ average daily net assets. The Plans provide that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Strategies are not obligated under the Plans to pay any distribution services fee in excess of the amounts set forth above. The purpose of the payments to the Distributor under the Plans is to compensate the Distributor for its distribution services with respect to the sale of each Strategy’s shares. Since the Distributor’s compensation is not directly tied to its expenses, the amount of compensation received by it under the Plan during any year may be more or less than its actual expenses. For this reason, the Plans are characterized by the staff of the Securities and Exchange Commission as being of the “compensation” variety.
In the event that a Plan is terminated or not continued, no distribution services fees (other than current amounts accrued but not yet paid) would be owed by the Strategies to the Distributor with respect to the relevant class. The Plans also provide that the Adviser may use its own resources to finance the distribution of the Strategies’ shares.
NOTE D
Investment Transactions
Purchases and sales of investments in the Underlying Portfolios for the six months ended February 28, 2017 were as follows:
Strategy | Purchases | Sales | ||||||
AB Wealth Appreciation | $ | 107,637,189 | $ | 106,435,796 | ||||
AB Balanced Wealth | 80,562,189 | 108,587,369 | ||||||
AB Conservative Wealth | 15,513,242 | 32,038,375 |
AB WEALTH STRATEGIES • | 55 |
Notes to Financial Statements
The cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation are as follows:
Gross Unrealized | Net Unrealized Appreciation | |||||||||||
Strategy | Appreciation | (Depreciation) | ||||||||||
AB Wealth Appreciation | $ | 107,154,236 | $ | (46,147,819 | ) | $ | 61,006,417 | |||||
AB Balanced Wealth | 67,418,143 | (27,512,272 | ) | 39,905,871 | ||||||||
AB Conservative Wealth | 14,885,507 | (2,556,018 | ) | 12,329,489 |
1. Currency Translation
A Strategy may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis through its investments in an Underlying Portfolio. A Strategy or an Underlying Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. A Strategy or an Underlying Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Strategy or the Underlying Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. A Strategy or an Underlying Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E
Shares of Beneficial Interest
Transactions in shares of beneficial interest for each class were as follows:
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Shares sold | 311,572 | 1,100,157 | $ | 4,646,817 | $ | 15,751,019 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 1,266,269 | 380,388 | 18,424,212 | 5,435,751 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class B | 196,198 | 924,110 | 2,941,579 | 13,356,607 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (2,052,075 | ) | (3,975,514 | ) | (30,597,824 | ) | (57,226,060 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (278,036 | ) | (1,570,859 | ) | $ | (4,585,216 | ) | $ | (22,682,683 | ) | ||||||||||||||
|
56 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Shares sold | 14,142 | 39,160 | $ | 211,870 | $ | 564,371 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 28,109 | 4,036 | 413,492 | 57,993 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (195,645 | ) | (924,014 | ) | (2,941,579 | ) | (13,356,607 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (50,378 | ) | (155,175 | ) | (758,004 | ) | (2,233,800 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (203,772 | ) | (1,035,993 | ) | $ | (3,074,221 | ) | $ | (14,968,043 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Shares sold | 72,999 | 178,907 | $ | 1,077,563 | $ | 2,540,977 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 283,194 | 49,521 | 4,111,980 | 705,671 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (753,339 | ) | (1,232,501 | ) | (11,173,858 | ) | (17,674,728 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (397,146 | ) | (1,004,073 | ) | $ | (5,984,315 | ) | $ | (14,428,080 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Shares sold | 2,560,203 | 7,664,462 | $ | 38,052,844 | $ | 109,861,263 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 3,188,419 | 1,042,901 | 46,232,070 | 14,850,914 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (6,309,681 | ) | (10,166,294 | ) | (93,829,979 | ) | (146,332,874 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (561,059 | ) | (1,458,931 | ) | $ | (9,545,065 | ) | $ | (21,620,697 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||
Shares sold | 17,720 | 67,409 | $ | 262,775 | $ | 947,455 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 12,083 | 2,800 | 174,961 | 39,826 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (19,470 | ) | (135,674 | ) | (288,169 | ) | (1,924,229 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | 10,333 | (65,465 | ) | $ | 149,567 | $ | (936,948 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Class K | ||||||||||||||||||||||||
Shares sold | 75,669 | 155,286 | $ | 1,131,651 | $ | 2,191,878 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 58,159 | 15,408 | 841,563 | 218,944 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (373,811 | ) | (161,723 | ) | (5,454,605 | ) | (2,288,994 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | (239,983 | ) | 8,971 | $ | (3,481,391 | ) | $ | 121,828 | ||||||||||||||||
|
AB WEALTH STRATEGIES • | 57 |
Notes to Financial Statements
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class I | ||||||||||||||||||||||||
Shares sold | 10,844 | 9,732 | $ | 161,524 | $ | 138,882 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 6,957 | 2,048 | 100,748 | 29,120 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (27,568 | ) | (17,758 | ) | (411,422 | ) | (253,132 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (9,767 | ) | (5,978 | ) | $ | (149,150 | ) | $ | (85,130 | ) | ||||||||||||||
|
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Shares sold | 969,665 | 2,094,209 | $ | 13,327,438 | $ | 27,637,969 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 1,419,315 | 1,153,448 | 19,203,327 | 15,040,965 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class B | 483,597 | 2,205,978 | 6,672,401 | 29,367,679 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (5,554,932 | ) | (8,871,876 | ) | (76,401,295 | ) | (118,071,314 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (2,682,355 | ) | (3,418,241 | ) | $ | (37,198,129 | ) | $ | (46,024,701 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Shares sold | 17,043 | 63,393 | $ | 233,279 | $ | 840,605 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 14,584 | 29,205 | 198,794 | 380,540 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (485,635 | ) | (2,221,209 | ) | (6,672,401 | ) | (29,367,679 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (106,100 | ) | (389,129 | ) | (1,459,702 | ) | (5,145,734 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (560,108 | ) | (2,517,740 | ) | $ | (7,700,030 | ) | $ | (33,292,268 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Shares sold | 153,139 | 479,994 | $ | 2,083,599 | $ | 6,344,404 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 286,747 | 220,831 | 3,856,748 | 2,859,754 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (1,691,718 | ) | (2,732,906 | ) | (23,035,855 | ) | (35,974,706 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (1,251,832 | ) | (2,032,081 | ) | $ | (17,095,508 | ) | $ | (26,770,548 | ) | ||||||||||||||
|
58 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | Six Months Ended February 28, 2017 (unaudited) | Year Ended 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Shares sold | 632,516 | 1,278,039 | $ | 8,763,040 | $ | 17,095,586 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 178,798 | 139,057 | 2,431,651 | 1,821,651 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (1,125,079 | ) | (2,031,249 | ) | (15,611,977 | ) | (27,046,799 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (313,765 | ) | (614,153 | ) | $ | (4,417,286 | ) | $ | (8,129,562 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||
Shares sold | 47,129 | 132,747 | $ | 646,087 | $ | 1,774,222 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 12,582 | 11,346 | 169,859 | 147,616 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (44,848 | ) | (484,258 | ) | (611,817 | ) | (6,462,417 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | 14,863 | (340,165 | ) | $ | 204,129 | $ | (4,540,579 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Class K | ||||||||||||||||||||||||
Shares sold | 135,870 | 139,791 | $ | 1,856,266 | $ | 1,840,403 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 50,435 | 49,746 | 680,868 | 646,692 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (538,547 | ) | (487,328 | ) | (7,368,694 | ) | (6,459,083 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (352,242 | ) | (297,791 | ) | $ | (4,831,560 | ) | $ | (3,971,988 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||
Shares sold | 71,107 | 35,141 | $ | 982,550 | $ | 469,015 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 27,164 | 22,221 | 368,339 | 290,212 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (76,407 | ) | (124,027 | ) | (1,052,037 | ) | (1,649,412 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | 21,864 | (66,665 | ) | $ | 298,852 | $ | (890,185 | ) | ||||||||||||||||
|
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | Six Months Ended (unaudited) | Year Ended August 31, 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Shares sold | 266,220 | 800,742 | $ | 3,261,676 | $ | 9,670,461 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 323,194 | 303,529 | 3,897,720 | 3,605,924 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted from Class B | 223,130 | 1,025,053 | 2,749,172 | 12,389,804 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (1,665,861 | ) | (3,146,384 | ) | (20,407,846 | ) | (37,961,912 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (853,317 | ) | (1,017,060 | ) | $ | (10,499,278 | ) | $ | (12,295,723 | ) | ||||||||||||||
|
AB WEALTH STRATEGIES • | 59 |
Notes to Financial Statements
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, 2016 | Six Months Ended (unaudited) | Year Ended August 31, 2016 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Shares sold | 2,246 | 15,044 | $ | 27,417 | $ | 180,070 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | – 0 | – | 13,385 | – 0 | – | 157,810 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares converted to Class A | (225,031 | ) | (1,036,783 | ) | (2,749,172 | ) | (12,389,804 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (36,835 | ) | (129,703 | ) | (450,061 | ) | (1,543,792 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (259,620 | ) | (1,138,057 | ) | $ | (3,171,816 | ) | $ | (13,595,716 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Shares sold | 98,613 | 272,099 | $ | 1,189,272 | $ | 3,230,999 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 85,143 | 97,595 | 1,014,906 | 1,145,769 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (741,647 | ) | (1,282,993 | ) | (8,943,772 | ) | (15,308,770 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (557,891 | ) | (913,299 | ) | $ | (6,739,594 | ) | $ | (10,932,002 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Shares sold | 182,385 | 286,129 | $ | 2,255,760 | $ | 3,470,076 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 19,709 | 22,760 | 238,482 | 271,299 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (468,303 | ) | (451,073 | ) | (5,791,602 | ) | (5,394,647 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (266,209 | ) | (142,184 | ) | $ | (3,297,360 | ) | $ | (1,653,272 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||
Shares sold | 32,718 | 69,706 | $ | 401,010 | $ | 839,679 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 7,633 | 7,910 | 92,062 | 93,967 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (34,147 | ) | (174,265 | ) | (415,933 | ) | (2,085,888 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | 6,204 | (96,649 | ) | $ | 77,139 | $ | (1,152,242 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Class K | ||||||||||||||||||||||||
Shares sold | 21,385 | 64,906 | $ | 261,834 | $ | 778,717 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 13,687 | 14,434 | 164,653 | 171,048 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (54,553 | ) | (165,485 | ) | (666,174 | ) | (2,013,943 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net decrease | (19,481 | ) | (86,145 | ) | $ | (239,687 | ) | $ | (1,064,178 | ) | ||||||||||||||
| ||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||
Shares sold | 1,901 | 3,187 | $ | 23,324 | $ | 38,668 | ||||||||||||||||||
| ||||||||||||||||||||||||
Shares issued in reinvestment of dividends | 1,038 | 883 | 12,532 | 10,497 | ||||||||||||||||||||
| ||||||||||||||||||||||||
Shares redeemed | (306 | ) | (4,788 | ) | (3,746 | ) | (57,943 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) | 2,633 | (718 | ) | $ | 32,110 | $ | (8,778 | ) | ||||||||||||||||
|
60 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
NOTE F
Risks Involved in Investing in the Strategies
Interest Rate Risk and Credit Risk—Interest rate risk is the risk that changes in interest rates will affect the value of the Strategies’ investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Strategies’ investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as “junk bonds”) have speculative elements or are predominantly speculative risks.
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be less liquid due to adverse market, economic, political, regulatory or other factors. These risks may be heightened if the Strategies invest in securities of emerging market countries, where there may be an increased amount of economic, political and social instability.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Strategy’s investments or reduce its returns.
Capitalization Risk—Investments in small- and mid-capitalization companies by the Underlying Portfolios may be more volatile than investments in large-capitalization companies. Investments in small-capitalization companies may have additional risks because these companies often have limited product lines, markets, or financial resources.
Allocation Risk—The allocation of investments among the Underlying Portfolios’ different investment styles, such as equity or debt, growth or value, U.S. or non-U.S securities, or diversification strategies, may have a more significant effect on the Strategy’s net asset value, or NAV, when one of these investments is performing more poorly than another.
Derivatives Risk—The Strategies may enter into derivative transactions such as forwards, options, futures and swaps. Derivatives may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Strategies, and subject to counterparty risk to a greater degree than more traditional investments. Derivatives may result in significant losses, including losses that are far greater than the value of the derivatives reflected on the statement of assets and liabilities.
AB WEALTH STRATEGIES • | 61 |
Notes to Financial Statements
Indemnification Risk—In the ordinary course of business, the Strategies enter into contracts that contain a variety of indemnifications. The Strategies’ maximum exposure under these arrangements is unknown. However, the Strategies have not had prior claims or losses pursuant to these indemnification provisions and expect the risk of loss thereunder to be remote. Therefore, the Strategies have not accrued any liability in connection with these indemnification provisions.
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Strategies, participate in a $280 million revolving credit facility (the “Facility”) intended to provide short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Strategies did not utilize the Facility during the six months ended February 28, 2017.
NOTE H
Distributions to Shareholders
The tax character of distributions to be paid for the year ending August 31, 2017 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended August 31, 2016 and August 31, 2015 were as follows:
AB Wealth Appreciation Strategy | 2016 | 2015 | ||||||
Distributions paid from: | ||||||||
Ordinary income | $ | 22,643,641 | $ | 35,000,313 | ||||
|
|
|
| |||||
Total taxable distributions | 22,643,641 | 35,000,313 | ||||||
|
|
|
| |||||
Total distributions paid | $ | 22,643,641 | $ | 35,000,313 | ||||
|
|
|
| |||||
AB Balanced Wealth Strategy | 2016 | 2015 | ||||||
Distributions paid from: | ||||||||
Ordinary income | $ | 23,241,326 | $ | 27,002,565 | ||||
|
|
|
| |||||
Total taxable distributions | 23,241,326 | 27,002,565 | ||||||
|
|
|
| |||||
Total distributions paid | $ | 23,241,326 | $ | 27,002,565 | ||||
|
|
|
| |||||
AB Conservative Wealth Strategy | 2016 | 2015 | ||||||
Distributions paid from: | ||||||||
Ordinary income | $ | 6,055,287 | $ | 1,000,799 | ||||
|
|
|
| |||||
Total taxable distributions | 6,055,287 | 1,000,799 | ||||||
|
|
|
| |||||
Total distributions paid | $ | 6,055,287 | $ | 1,000,799 | ||||
|
|
|
|
62 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
As of August 31, 2016, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Strategy | Undistributed Ordinary Income | Accumulated Capital and | Unrealized Appreciation/ (Depreciation)(b) | Total Accumulated Earnings/ (Deficit) | ||||||||||||
AB Wealth Appreciation Strategy | $ | 18,200,443 | $ | 39,700,816 | $ | (41,573,413 | ) | $ | 16,327,846 | |||||||
AB Balanced Wealth Strategy | 15,792,967 | (94,431,035 | ) | 21,766,692 | (56,871,376 | ) | ||||||||||
AB Conservative Wealth Strategy | 5,980,940 | (15,603,824 | ) | 14,667,110 | 5,044,226 |
(a) | During the fiscal year ended August 31, 2016 all three Strategies utilized capital loss carryforwards to offset current year net realized gains. AB Wealth Appreciation Strategy utilized $26,057,110 of capital loss carryforwards during the fiscal year. AB Balanced Wealth Strategy utilized $27,402,672 of capital loss carryforwards during the year, and had a net capital loss carryforward of $94,431,035 at fiscal year end. AB Conservative Wealth Strategy utilized $5,074,683 of capital loss carryforwards during the fiscal year, and had a net capital loss carryforward of $15,603,824 at fiscal year end. |
(b) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and return of capital distributions received from underlying securities. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an indefinite period. These post-December 22, 2010 capital losses must be utilized prior to the earlier capital losses, which are subject to expiration. Post-December 22, 2010 capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered short-term as under previous regulation.
As of August 31, 2016, the Strategies had net capital loss carryforwards which will expire as follows:
Strategy | Short-Term Amount | Long-Term Amount | Expiration | |||||||||
AB Balanced Wealth | $ | 14,373,596 | n/a | 2018 | ||||||||
AB Balanced Wealth | 80,057,439 | n/a | 2019 | |||||||||
AB Conservative Wealth | 1,963,389 | n/a | 2018 | |||||||||
AB Conservative Wealth | 13,640,435 | n/a | 2019 |
NOTE I
Other
In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, “final rules”)
AB WEALTH STRATEGIES • | 63 |
Notes to Financial Statements
intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on the financial statements and related disclosures.
NOTE J
Subsequent Event
At meetings held on January 31-February 1, 2017, the Balanced Wealth Strategy’s Board of Trustees approved changes to the Strategy’s name and principal strategies. Effective April 24, 2017, the Strategy changed its name to “AB All Market Total Return Portfolio” and adopted the new principal strategies.
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no other material events that would require disclosure in the Strategies’ financial statements through this date.
64 | • AB WEALTH STRATEGIES |
Notes to Financial Statements
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 15.06 | $ 14.64 | $ 15.76 | $ 13.36 | $ 11.63 | $ 11.26 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .30 | (b)† | .26 | (b) | .34 | (b) | .37 | (b) | .06 | .10 | ||||||||||||||
Net realized and unrealized gain (loss) on sale of affiliated Underlying Portfolio shares | .64 | .39 | (1.11 | ) | 2.30 | 1.77 | .46 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .94 | .65 | (.77 | ) | 2.67 | 1.83 | .56 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.48 | ) | (.23 | ) | (.35 | ) | (.27 | ) | (.10 | ) | (.19 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.37 | ) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.85 | ) | (.23 | ) | (.35 | ) | (.27 | ) | (.10 | ) | (.19 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.15 | $ 15.06 | $ 14.64 | $ 15.76 | $ 13.36 | $ 11.63 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 6.47 | %† | 4.53 | % | (4.89 | )% | 20.21 | % | 15.86 | % | 5.11 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $352,803 | $354,972 | $367,939 | $417,381 | $382,178 | $406,461 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .89 | %^ | .89 | % | .88 | % | 1.05 | % | 1.07 | % | 1.09 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.01 | %^ | 1.01 | % | 1.00 | % | 1.06 | % | 1.07 | % | 1.09 | % | ||||||||||||
Net investment income | 4.12 | %(b)^† | 1.78 | %(b) | 2.18 | %(b) | 2.52 | %(b) | .48 | % | .88 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 9 | % | 9 | % | 20 | % | 4 | % | 29 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 65 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 15.07 | $ 14.57 | $ 15.64 | $ 13.20 | $ 11.47 | $ 11.08 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income (loss)(a) | .24 | (b)† | .20 | (b) | .28 | (b) | .31 | (b) | (.02 | ) | .02 | |||||||||||||
Net realized and unrealized gain (loss) on sale of affiliated Underlying Portfolio shares | .65 | .34 | (1.15 | ) | 2.23 | 1.75 | .45 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .89 | .54 | (.87 | ) | 2.54 | 1.73 | .47 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.30 | ) | (.04 | ) | (.20 | ) | (.10 | ) | – 0 | – | (.08 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.37 | ) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.67 | ) | (.04 | ) | (.20 | ) | (.10 | ) | – 0 | – | (.08 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.29 | $ 15.07 | $ 14.57 | $ 15.64 | $ 13.20 | $ 11.47 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 6.06 | %† | 3.72 | % | (5.59 | )% | 19.33 | % | 15.08 | % | 4.29 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $9,329 | $12,268 | $26,943 | $57,541 | $77,795 | $99,167 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.67 | %^ | 1.65 | % | 1.64 | % | 1.76 | % | 1.79 | % | 1.82 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.78 | %^ | 1.76 | % | 1.76 | % | 1.77 | % | 1.79 | % | 1.82 | % | ||||||||||||
Net investment income (loss) | 3.18 | %(b)^† | 1.37 | %(b) | 1.85 | %(b) | 2.10 | %(b) | (.17 | )% | .21 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 9 | % | 9 | % | 20 | % | 4 | % | 29 | % |
See footnote summary on page 86.
66 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 14.95 | $ 14.51 | $ 15.62 | $ 13.21 | $ 11.49 | $ 11.09 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income (loss)(a) | .25 | (b)† | .15 | (b) | .23 | (b) | .27 | (b) | (.03 | ) | .02 | |||||||||||||
Net realized and unrealized gain (loss) on sale of affiliated Underlying Portfolio shares | .62 | .40 | (1.11 | ) | 2.27 | 1.76 | .46 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .87 | .55 | (.88 | ) | 2.54 | 1.73 | .48 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.36 | ) | (.11 | ) | (.23 | ) | (.13 | ) | (.01 | ) | (.08 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.37 | ) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.73 | ) | (.11 | ) | (.23 | ) | (.13 | ) | (.01 | ) | (.08 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.09 | $ 14.95 | $ 14.51 | $ 15.62 | $ 13.21 | $ 11.49 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 6.01 | %† | 3.81 | % | (5.62 | )% | 19.36 | % | 15.02 | % | 4.39 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $92,048 | $97,091 | $108,828 | $134,675 | $129,818 | $141,224 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.65 | %^ | 1.64 | % | 1.63 | % | 1.75 | % | 1.78 | % | 1.80 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.76 | %^ | 1.76 | % | 1.75 | % | 1.76 | % | 1.78 | % | 1.80 | % | ||||||||||||
Net investment income (loss) | 3.35 | %(b)^† | 1.06 | %(b) | 1.51 | %(b) | 1.84 | %(b) | (.22 | )% | .19 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 9 | % | 9 | % | 20 | % | 4 | % | 29 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 67 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 15.04 | $ 14.62 | $ 15.75 | $ 13.37 | $ 11.64 | $ 11.29 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .32 | (b)† | .29 | (b) | .37 | (b) | .41 | (b) | .09 | .12 | ||||||||||||||
Net realized and unrealized gain (loss) on sale of affiliated Underlying Portfolio shares | .64 | .40 | (1.11 | ) | 2.30 | 1.79 | .46 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .96 | .69 | (.74 | ) | 2.71 | 1.88 | .58 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.52 | ) | (.27 | ) | (.39 | ) | (.33 | ) | (.15 | ) | (.23 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.37 | ) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.89 | ) | (.27 | ) | (.39 | ) | (.33 | ) | (.15 | ) | (.23 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.11 | $ 15.04 | $ 14.62 | $ 15.75 | $ 13.37 | $ 11.64 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 6.62 | %† | 4.82 | % | (4.66 | )% | 20.53 | % | 16.27 | % | 5.36 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $856,677 | $861,450 | $858,681 | $921,935 | $800,563 | $766,969 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .64 | %^ | .64 | % | .63 | % | .75 | % | .77 | % | .79 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | .76 | %^ | .76 | % | .75 | % | .76 | % | .77 | % | .79 | % | ||||||||||||
Net investment income | 4.37 | %(b)^† | 2.00 | %(b) | 2.42 | %(b) | 2.77 | %(b) | .74 | % | 1.07 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 9 | % | 9 | % | 20 | % | 4 | % | 29 | % |
See footnote summary on page 86.
68 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 14.94 | $ 14.51 | $ 15.63 | $ 13.22 | $ 11.45 | $ 11.07 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .27 | (b)† | .21 | (b) | .31 | (b) | .33 | (b) | .03 | .08 | ||||||||||||||
Net realized and unrealized gain (loss) on sale of affiliated Underlying Portfolio shares | .63 | .37 | (1.14 | ) | 2.26 | 1.74 | .44 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .90 | .58 | (.83 | ) | 2.59 | 1.77 | .52 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.41 | ) | (.15 | ) | (.29 | ) | (.18 | ) | – 0 | – | (.14 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.37 | ) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.78 | ) | (.15 | ) | (.29 | ) | (.18 | ) | – 0 | – | (.14 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.06 | $ 14.94 | $ 14.51 | $ 15.63 | $ 13.22 | $ 11.45 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 6.26 | %† | 4.06 | % | (5.33 | )% | 19.75 | % | 15.46 | % | 4.78 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $3,541 | $3,360 | $4,212 | $5,665 | $5,953 | $8,045 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.33 | %^ | 1.33 | % | 1.32 | % | 1.43 | % | 1.41 | % | 1.45 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.45 | %^ | 1.45 | % | 1.44 | % | 1.44 | % | 1.41 | % | 1.45 | % | ||||||||||||
Net investment income | 3.63 | %(b)^† | 1.46 | %(b) | 2.02 | %(b) | 2.27 | %(b) | .21 | % | .69 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 9 | % | 9 | % | 20 | % | 4 | % | 29 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 69 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class K | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 14.97 | $ 14.54 | $ 15.66 | $ 13.28 | $ 11.57 | $ 11.18 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .31 | (b)† | .22 | (b) | .28 | (b) | .37 | (b) | .05 | .09 | ||||||||||||||
Net realized and unrealized gain (loss) on sale of affiliated Underlying Portfolio shares | .61 | .42 | (1.07 | ) | 2.27 | 1.76 | .46 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .92 | .64 | (.79 | ) | 2.64 | 1.81 | .55 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.46 | ) | (.21 | ) | (.33 | ) | (.26 | ) | (.10 | ) | (.16 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.37 | ) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.83 | ) | (.21 | ) | (.33 | ) | (.26 | ) | (.10 | ) | (.16 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.06 | $ 14.97 | $ 14.54 | $ 15.66 | $ 13.28 | $ 11.57 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 6.38 | %† | 4.48 | % | (5.07 | )% | 20.12 | % | 15.78 | % | 5.07 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $12,831 | $16,346 | $15,751 | $17,865 | $16,319 | $16,616 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.02 | %^ | 1.01 | % | 1.01 | % | 1.12 | % | 1.11 | % | 1.13 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.14 | %^ | 1.12 | % | 1.13 | % | 1.13 | % | 1.11 | % | 1.13 | % | ||||||||||||
Net investment income | 4.20 | %(b)^† | 1.57 | %(b) | 1.85 | %(b) | 2.48 | %(b) | .42 | % | .83 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 9 | % | 9 | % | 20 | % | 4 | % | 29 | % |
See footnote summary on page 86.
70 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Wealth Appreciation Strategy | ||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 15.02 | $ 14.59 | $ 15.72 | $ 13.34 | $ 11.61 | $ 11.25 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .32 | (b)† | .28 | (b) | .62 | (b) | .41 | (b) | .09 | .18 | ||||||||||||||
Net realized and unrealized gain (loss) on sale of affiliated Underlying Portfolio shares | .62 | .41 | (1.36 | ) | 2.29 | 1.77 | .41 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .94 | .69 | (.74 | ) | 2.70 | 1.86 | .59 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.51 | ) | (.26 | ) | (.39 | ) | (.32 | ) | (.13 | ) | (.23 | ) | ||||||||||||
Distributions from net realized gain on investment transactions | (.37 | ) | – 0 | – | – 0 | – | – 0 | – | – 0 | – | – 0 | – | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.88 | ) | (.26 | ) | (.39 | ) | (.32 | ) | (.13 | ) | (.23 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 15.08 | $ 15.02 | $ 14.59 | $ 15.72 | $ 13.34 | $ 11.61 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 6.51 | %† | 4.82 | % | (4.72 | )% | 20.53 | % | 16.16 | % | 5.43 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $1,604 | $1,743 | $1,781 | $4,576 | $3,886 | $3,934 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .69 | %^ | .69 | % | .68 | % | .79 | % | .79 | % | .80 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | .81 | %^ | .81 | % | .80 | % | .81 | % | .79 | % | .80 | % | ||||||||||||
Net investment income | 4.36 | %(b)^† | 1.93 | %(b) | 3.99 | %(b) | 2.78 | %(b) | .72 | % | 1.53 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 9 | % | 9 | % | 20 | % | 4 | % | 29 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 71 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.85 | $ 13.49 | $ 14.31 | $ 12.74 | $ 11.85 | $ 11.47 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .36 | (b)† | .38 | (b) | .43 | (b) | .39 | (b) | .23 | .22 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .21 | .29 | (.93 | ) | 1.56 | .89 | .44 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .57 | .67 | (.50 | ) | 1.95 | 1.12 | .66 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.43 | ) | (.31 | ) | (.32 | ) | (.38 | ) | (.23 | ) | (.26 | ) | ||||||||||||
Tax return of capital | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.00 | )(f) | (.02 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.43 | ) | (.31 | ) | (.32 | ) | (.38 | ) | (.23 | ) | (.28 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 13.99 | $ 13.85 | $ 13.49 | $ 14.31 | $ 12.74 | $ 11.85 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 4.25 | %† | 5.13 | % | (3.46 | )% | 15.56 | % | 9.49 | % | 5.81 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $654,578 | $684,917 | $713,524 | $782,044 | $732,322 | $790,583 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .83 | %^ | .86 | % | .85 | % | .98 | % | .99 | % | 1.00 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | .95 | %^ | .94 | % | .93 | % | .99 | % | .99 | % | 1.00 | % | ||||||||||||
Net investment income | 5.35 | %(b)^† | 2.89 | %(b) | 3.07 | %(b) | 2.87 | %(b) | 1.87 | % | 1.93 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 14 | % | 9 | % | 15 | % | 4 | % | 34 | % |
See footnote summary on page 86.
72 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.76 | $ 13.32 | $ 14.13 | $ 12.64 | $ 11.80 | $ 11.40 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .29 | (b)† | .33 | (b) | .39 | (b) | .33 | (b) | .16 | .14 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .24 | .24 | (.98 | ) | 1.50 | .86 | .43 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .53 | .57 | (.59 | ) | 1.83 | 1.02 | .57 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.22 | ) | (.13 | ) | (.22 | ) | (.34 | ) | (.18 | ) | (.16 | ) | ||||||||||||
Tax return of capital | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.00 | )(f) | (.01 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.22 | ) | (.13 | ) | (.22 | ) | (.34 | ) | (.18 | ) | (.17 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 14.07 | $ 13.76 | $ 13.32 | $ 14.13 | $ 12.64 | $ 11.80 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 3.88 | %† | 4.33 | % | (4.19 | )% | 14.75 | % | 8.66 | % | 5.06 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $11,714 | $19,162 | $52,097 | $118,556 | $166,923 | $230,241 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.60 | %^ | 1.62 | % | 1.61 | % | 1.69 | % | 1.70 | % | 1.72 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.72 | %^ | 1.70 | % | 1.69 | % | 1.70 | % | 1.70 | % | 1.72 | % | ||||||||||||
Net investment income | 4.22 | %(b)^† | 2.50 | %(b) | 2.79 | %(b) | 2.41 | %(b) | 1.26 | % | 1.25 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 14 | % | 9 | % | 15 | % | 4 | % | 34 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 73 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.68 | $ 13.32 | $ 14.15 | $ 12.66 | $ 11.82 | $ 11.42 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .31 | (b)† | .29 | (b) | .33 | (b) | .30 | (b) | .15 | .14 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .21 | .27 | (.92 | ) | 1.54 | .87 | .43 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .52 | .56 | (.59 | ) | 1.84 | 1.02 | .57 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.32 | ) | (.20 | ) | (.24 | ) | (.35 | ) | (.18 | ) | (.16 | ) | ||||||||||||
Tax return of capital | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.00 | )(f) | (.01 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.32 | ) | (.20 | ) | (.24 | ) | (.35 | ) | (.18 | ) | (.17 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 13.88 | $ 13.68 | $ 13.32 | $ 14.15 | $ 12.66 | $ 11.82 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 3.90 | %† | 4.31 | % | (4.19 | )% | 14.74 | % | 8.67 | % | 5.08 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $184,315 | $198,792 | $220,663 | $266,720 | $262,751 | $296,426 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.59 | %^ | 1.61 | % | 1.60 | % | 1.69 | % | 1.69 | % | 1.70 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.70 | %^ | 1.69 | % | 1.68 | % | 1.69 | % | 1.69 | % | 1.70 | % | ||||||||||||
Net investment income | 4.56 | %(b)^† | 2.17 | %(b) | 2.40 | %(b) | 2.20 | %(b) | 1.17 | % | 1.24 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 14 | % | 9 | % | 15 | % | 4 | % | 34 | % |
See footnote summary on page 86.
74 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.93 | $ 13.58 | $ 14.40 | $ 12.79 | $ 11.88 | $ 11.51 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .38 | (b)† | .42 | (b) | .48 | (b) | .43 | (b) | .27 | .24 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .23 | .28 | (.94 | ) | 1.57 | .89 | .45 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .61 | .70 | (.46 | ) | 2.00 | 1.16 | .69 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.47 | ) | (.35 | ) | (.36 | ) | (.39 | ) | (.25 | ) | (.30 | ) | ||||||||||||
Tax return of capital | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.00 | )(f) | (.02 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.47 | ) | (.35 | ) | (.36 | ) | (.39 | ) | (.25 | ) | (.32 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 14.07 | $ 13.93 | $ 13.58 | $ 14.40 | $ 12.79 | $ 11.88 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 4.49 | %† | 5.30 | % | (3.21 | )% | 15.94 | % | 9.81 | % | 6.09 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $85,281 | $88,863 | $94,932 | $109,579 | $95,982 | $103,716 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .58 | %^ | .61 | % | .60 | % | .68 | % | .69 | % | .70 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | .70 | %^ | .69 | % | .68 | % | .69 | % | .69 | % | .70 | % | ||||||||||||
Net investment income | 5.59 | %(b)^† | 3.16 | %(b) | 3.42 | %(b) | 3.17 | %(b) | 2.14 | % | 2.12 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 14 | % | 9 | % | 15 | % | 4 | % | 34 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 75 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.77 | $ 13.39 | $ 14.21 | $ 12.69 | $ 11.82 | $ 11.44 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .33 | (b)† | .36 | (b) | .38 | (b) | .41 | (b) | .20 | .18 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .22 | .25 | (.92 | ) | 1.47 | .87 | .42 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .55 | .61 | (.54 | ) | 1.88 | 1.07 | .60 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.37 | ) | (.23 | ) | (.28 | ) | (.36 | ) | (.20 | ) | (.20 | ) | ||||||||||||
Tax return of capital | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.00 | )(f) | (.02 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.37 | ) | (.23 | ) | (.28 | ) | (.36 | ) | (.20 | ) | (.22 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 13.95 | $ 13.77 | $ 13.39 | $ 14.21 | $ 12.69 | $ 11.82 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 4.10 | %† | 4.69 | % | (3.82 | )% | 15.09 | % | 9.13 | % | 5.35 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $6,670 | $6,381 | $10,762 | $11,761 | $17,316 | $20,020 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.24 | %^ | 1.27 | % | 1.26 | % | 1.34 | % | 1.35 | % | 1.35 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.36 | %^ | 1.35 | % | 1.34 | % | 1.35 | % | 1.35 | % | 1.35 | % | ||||||||||||
Net investment income | 4.91 | %(b)^† | 2.70 | %(b) | 2.71 | %(b) | 3.05 | %(b) | 1.62 | % | 1.56 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 14 | % | 9 | % | 15 | % | 4 | % | 34 | % |
See footnote summary on page 86.
76 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Class K | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.80 | $ 13.44 | $ 14.26 | $ 12.71 | $ 11.83 | $ 11.45 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .34 | (b)† | .38 | (b) | .38 | (b) | .35 | (b) | .22 | .23 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .23 | .28 | (.89 | ) | 1.58 | .88 | .43 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .57 | .66 | (.51 | ) | 1.93 | 1.10 | .66 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.41 | ) | (.30 | ) | (.31 | ) | (.38 | ) | (.22 | ) | (.26 | ) | ||||||||||||
Tax return of capital | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.00 | )(f) | (.02 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.41 | ) | (.30 | ) | (.31 | ) | (.38 | ) | (.22 | ) | (.28 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 13.96 | $ 13.80 | $ 13.44 | $ 14.26 | $ 12.71 | $ 11.83 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 4.26 | %† | 5.04 | % | (3.55 | )% | 15.44 | % | 9.40 | % | 5.85 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $22,524 | $27,129 | $30,439 | $29,819 | $25,081 | $30,538 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .93 | %^ | .95 | % | .95 | % | 1.03 | % | 1.04 | % | 1.02 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.04 | %^ | 1.03 | % | 1.03 | % | 1.04 | % | 1.04 | % | 1.02 | % | ||||||||||||
Net investment income | 5.01 | %(b)^† | 2.85 | %(b) | 2.74 | %(b) | 2.59 | %(b) | 1.76 | % | 1.95 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 14 | % | 9 | % | 15 | % | 4 | % | 34 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 77 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Balanced Wealth Strategy | ||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||
Six Months (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 13.89 | $ 13.54 | $ 14.35 | $ 12.76 | $ 11.85 | $ 11.48 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .38 | (b)† | .42 | (b) | .49 | (b) | .43 | (b) | .26 | .27 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .22 | .27 | (.95 | ) | 1.55 | .89 | .42 | |||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .60 | .69 | (.46 | ) | 1.98 | 1.15 | .69 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends and Distributions | ||||||||||||||||||||||||
Dividends from net investment income | (.47 | ) | (.34 | ) | (.35 | ) | (.39 | ) | (.24 | ) | (.30 | ) | ||||||||||||
Tax return of capital | – 0 | – | – 0 | – | – 0 | – | – 0 | – | (.00 | )(f) | (.02 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Total dividends and distributions | (.47 | ) | (.34 | ) | (.35 | ) | (.39 | ) | (.24 | ) | (.32 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 14.02 | $ 13.89 | $ 13.54 | $ 14.35 | $ 12.76 | $ 11.85 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 4.41 | %† | 5.28 | % | (3.18 | )% | 15.82 | % | 9.82 | % | 6.10 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $11,711 | $11,299 | $11,912 | $14,204 | $12,653 | $12,925 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .60 | %^ | .63 | % | .62 | % | .70 | % | .71 | % | .70 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | .72 | %^ | .71 | % | .70 | % | .71 | % | .71 | % | .70 | % | ||||||||||||
Net investment income | 5.55 | %(b)^† | 3.14 | %(b) | 3.45 | %(b) | 3.14 | %(b) | 2.12 | % | 2.34 | % | ||||||||||||
Portfolio turnover rate | 8 | % | 14 | % | 9 | % | 15 | % | 4 | % | 34 | % |
See footnote summary on page 86.
78 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Six Months (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 12.38 | $ 12.18 | $ 12.43 | $ 11.59 | $ 11.34 | $ 11.17 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .27 | (b) | .27 | (b) | .28 | (b) | .23 | (b) | .20 | .23 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.02 | ) | .19 | (.48 | ) | .82 | .25 | .20 | ||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .25 | .46 | (.20 | ) | 1.05 | .45 | .43 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends | ||||||||||||||||||||||||
Dividends from net investment income | (.31 | ) | (.26 | ) | (.05 | ) | (.21 | ) | (.20 | ) | (.26 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 12.32 | $ 12.38 | $ 12.18 | $ 12.43 | $ 11.59 | $ 11.34 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 2.03 | % | 3.86 | % | (1.59 | )% | 9.20 | % | 3.93 | % | 3.93 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $168,874 | $180,380 | $189,751 | $209,189 | $219,653 | $255,748 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .97 | %^ | .94 | % | .92 | % | 1.02 | % | 1.03 | % | 1.02 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.02 | %^ | 1.00 | % | .98 | % | 1.03 | % | 1.03 | % | 1.02 | % | ||||||||||||
Net investment income | 4.46 | %(b)^ | 2.20 | %(b) | 2.28 | %(b) | 1.88 | %(b) | 1.70 | % | 2.08 | % | ||||||||||||
Portfolio turnover rate | 6 | % | 5 | % | 6 | % | 11 | % | 4 | % | 21 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 79 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Six Months (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 12.23 | $ 12.00 | $ 12.29 | $ 11.50 | $ 11.29 | $ 11.10 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .20 | (b) | .21 | (b) | .22 | (b) | .15 | (b) | .12 | .16 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.01 | ) | .16 | (.51 | ) | .81 | .24 | .19 | ||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .19 | .37 | (.29 | ) | .96 | .36 | .35 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends | ||||||||||||||||||||||||
Dividends from net investment income | – 0 | – | (.14 | ) | – 0 | – | (.17 | ) | (.15 | ) | (.16 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 12.42 | $ 12.23 | $ 12.00 | $ 12.29 | $ 11.50 | $ 11.29 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 1.55 | % | 3.11 | % | (2.36 | )% | 8.46 | % | 3.17 | % | 3.21 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $2,006 | $5,150 | $18,706 | $37,181 | $52,372 | $76,229 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.73 | %^ | 1.69 | % | 1.68 | % | 1.73 | % | 1.74 | % | 1.75 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.79 | %^ | 1.75 | % | 1.74 | % | 1.74 | % | 1.74 | % | 1.75 | % | ||||||||||||
Net investment income | 3.22 | %(b)^ | 1.77 | %(b) | 1.80 | %(b) | 1.28 | %(b) | 1.06 | % | 1.42 | % | ||||||||||||
Portfolio turnover rate | 6 | % | 5 | % | 6 | % | 11 | % | 4 | % | 21 | % |
See footnote summary on page 86.
80 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 12.17 | $ 12.00 | $ 12.29 | $ 11.50 | $ 11.29 | $ 11.10 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .22 | (b) | .17 | (b) | .19 | (b) | .14 | (b) | .11 | .15 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.03 | ) | .19 | (.48 | ) | .82 | .25 | .21 | ||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .19 | .36 | (.29 | ) | .96 | .36 | .36 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends | ||||||||||||||||||||||||
Dividends from net investment income | (.20 | ) | (.19 | ) | – 0 | – | (.17 | ) | (.15 | ) | (.17 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 12.16 | $ 12.17 | $ 12.00 | $ 12.29 | $ 11.50 | $ 11.29 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 1.61 | % | 3.09 | % | (2.36 | )% | 8.47 | % | 3.18 | % | 3.24 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $66,824 | $73,686 | $83,574 | $95,109 | $104,830 | $124,847 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.72 | %^ | 1.69 | % | 1.68 | % | 1.73 | % | 1.73 | % | 1.73 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.78 | %^ | 1.75 | % | 1.74 | % | 1.73 | % | 1.73 | % | 1.73 | % | ||||||||||||
Net investment income | 3.69 | %(b)^ | 1.45 | %(b) | 1.54 | %(b) | 1.20 | %(b) | .98 | % | 1.39 | % | ||||||||||||
Portfolio turnover rate | 6 | % | 5 | % | 6 | % | 11 | % | 4 | % | 21 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 81 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 12.45 | $ 12.24 | $ 12.48 | $ 11.62 | $ 11.35 | $ 11.19 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .27 | (b) | .32 | (b) | .33 | (b) | .24 | (b) | .24 | .27 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.02 | ) | .17 | (.49 | ) | .85 | .24 | .19 | ||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .25 | .49 | (.16 | ) | 1.09 | .48 | .46 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends | ||||||||||||||||||||||||
Dividends from net investment income | (.33 | ) | (.28 | ) | (.08 | ) | (.23 | ) | (.21 | ) | (.30 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 12.37 | $ 12.45 | $ 12.24 | $ 12.48 | $ 11.62 | $ 11.35 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 2.10 | % | 4.12 | % | (1.31 | )% | 9.52 | % | 4.27 | % | 4.22 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $8,902 | $12,277 | $13,802 | $16,800 | $11,701 | $13,501 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .71 | %^ | .69 | % | .67 | % | .72 | % | .73 | % | .72 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | .77 | %^ | .75 | % | .73 | % | .73 | % | .73 | % | .72 | % | ||||||||||||
Net investment income | 4.48 | %(b)^ | 2.60 | %(b) | 2.66 | %(b) | 1.97 | %(b) | 2.03 | % | 2.40 | % | ||||||||||||
Portfolio turnover rate | 6 | % | 5 | % | 6 | % | 11 | % | 4 | % | 21 | % |
See footnote summary on page 86.
82 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 12.36 | $ 12.15 | $ 12.42 | $ 11.60 | $ 11.37 | $ 11.19 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .25 | (b) | .25 | (b) | .25 | (b) | .19 | (b) | .15 | .22 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.05 | ) | .17 | (.50 | ) | .82 | .25 | .16 | ||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .20 | .42 | (.25 | ) | 1.01 | .40 | .38 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends | ||||||||||||||||||||||||
Dividends from net investment income | (.25 | ) | (.21 | ) | (.02 | ) | (.19 | ) | (.17 | ) | (.20 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 12.31 | $ 12.36 | $ 12.15 | $ 12.42 | $ 11.60 | $ 11.37 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 1.70 | % | 3.56 | % | (2.02 | )% | 8.84 | % | 3.53 | % | 3.46 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $4,593 | $4,532 | $5,632 | $7,237 | $7,280 | $8,059 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.37 | %^ | 1.34 | % | 1.34 | % | 1.39 | % | 1.39 | % | 1.39 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.43 | %^ | 1.40 | % | 1.40 | % | 1.39 | % | 1.39 | % | 1.39 | % | ||||||||||||
Net investment income | 4.04 | %(b)^ | 2.03 | %(b) | 2.00 | %(b) | 1.54 | %(b) | 1.27 | % | 1.94 | % | ||||||||||||
Portfolio turnover rate | 6 | % | 5 | % | 6 | % | 11 | % | 4 | % | 21 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 83 |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Class K | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 12.35 | $ 12.15 | $ 12.41 | $ 11.57 | $ 11.32 | $ 11.16 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .26 | (b) | .25 | (b) | .27 | (b) | .24 | (b) | .18 | .20 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.03 | ) | .20 | (.49 | ) | .81 | .26 | .22 | ||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .23 | .45 | (.22 | ) | 1.05 | .44 | .42 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends | ||||||||||||||||||||||||
Dividends from net investment income | (.29 | ) | (.25 | ) | (.04 | ) | (.21 | ) | (.19 | ) | (.26 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 12.29 | $ 12.35 | $ 12.15 | $ 12.41 | $ 11.57 | $ 11.32 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 1.90 | % | 3.82 | % | (1.73 | )% | 9.22 | % | 3.91 | % | 3.82 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $7,003 | $7,277 | $8,204 | $8,611 | $8,519 | $9,039 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | 1.06 | %^ | 1.03 | % | 1.01 | % | 1.08 | % | 1.07 | % | 1.05 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | 1.12 | %^ | 1.09 | % | 1.07 | % | 1.08 | % | 1.07 | % | 1.05 | % | ||||||||||||
Net investment income | 4.35 | %(b)^ | 2.08 | %(b) | 2.19 | %(b) | 1.97 | %(b) | 1.58 | % | 1.82 | % | ||||||||||||
Portfolio turnover rate | 6 | % | 5 | % | 6 | % | 11 | % | 4 | % | 21 | % |
See footnote summary on page 86.
84 | • AB WEALTH STRATEGIES |
Financial Highlights
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
AB Conservative Wealth Strategy | ||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Net asset value, beginning of period | $ 12.42 | $ 12.21 | $ 12.46 | $ 11.60 | $ 11.33 | $ 11.17 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net investment income(a) | .29 | (b) | .29 | (b) | .41 | (b) | .31 | (b) | .23 | .35 | ||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.03 | ) | .20 | (.59 | ) | .78 | .25 | .11 | ||||||||||||||||
|
| |||||||||||||||||||||||
Net increase (decrease) in net asset value from operations | .26 | .49 | (.18 | ) | 1.09 | .48 | .46 | |||||||||||||||||
|
| |||||||||||||||||||||||
Less: Dividends | ||||||||||||||||||||||||
Dividends from net investment income | (.34 | ) | (.28 | ) | (.07 | ) | (.23 | ) | (.21 | ) | (.30 | ) | ||||||||||||
|
| |||||||||||||||||||||||
Net asset value, end of period | $ 12.34 | $ 12.42 | $ 12.21 | $ 12.46 | $ 11.60 | $ 11.33 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Return | ||||||||||||||||||||||||
Total investment return based on net asset value(c) | 2.12 | % | 4.11 | % | (1.41 | )% | 9.54 | % | 4.26 | % | 4.19 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $483 | $453 | $454 | $538 | $874 | $1,118 | ||||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||
Expenses, net of waivers/reimbursements(d)(e) | .74 | %^ | .72 | % | .70 | % | .75 | % | .75 | % | .73 | % | ||||||||||||
Expenses, before waivers/reimbursements(d)(e) | .79 | %^ | .77 | % | .76 | % | .75 | % | .75 | % | .73 | % | ||||||||||||
Net investment income | 4.69 | %(b)^ | 2.41 | %(b) | 3.32 | %(b) | 2.56 | %(b) | 1.98 | % | 3.04 | % | ||||||||||||
Portfolio turnover rate | 6 | % | 5 | % | 6 | % | 11 | % | 4 | % | 21 | % |
See footnote summary on page 86.
AB WEALTH STRATEGIES • | 85 |
Financial Highlights
(a) | Based on average shares outstanding. |
(b) | Net of fees and expenses waived/reimbursed by the Adviser. |
(c) | Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on Strategy distributions or the redemption of Strategy shares. Total investment return calculated for a period of less than one year is not annualized. |
(d) | Expense ratios do not include expenses of the affiliated/unaffiliated Underlying Portfolios in which the Strategy invests. For the periods shown below, the acquired fund fees of the affiliated/unaffiliated Underlying Portfolios including interest expense were as follows: |
Six Months Ended February 28, 2017 (unaudited) | Year Ended August 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
AB Wealth Appreciation Strategy | .39 | %^ | .41 | % | .38 | % | .05 | % | .04 | % | .03 | % | ||||||||||||
AB Balanced Wealth Strategy | .36 | %^ | .31 | % | .27 | % | .05 | % | .04 | % | .03 | % | ||||||||||||
AB Conservative Wealth Strategy | .26 | %^ | .24 | % | .21 | % | .04 | % | .03 | % | .03 | % |
(e) | In connection with the Strategies’ investments in affiliated underlying portfolios, the Strategies incur no direct expenses, but bear proportionate shares of the acquired fund fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Funds in an amount equal to the Funds’ pro rata share of certain acquired fund fees and expenses, and for the period shown below, such waiver amounted to: |
Six Months Ended February 28, 2017 (unaudited) | ||||
AB Wealth Appreciation Strategy | .11 | %^ | ||
AB Balanced Wealth Strategy | .12 | %^ | ||
AB Conservative Wealth Strategy | .06 | %^ |
(f) | Amount is less than $.005. |
† | For the six months ended February 28, 2017 the amount includes a non-recurring refund for overbilling of prior years’ custody out of pocket fees as follows: |
Net Investment Income Per Share | Net Investment Income Ratio | Total Return | ||||||||||
AB Wealth Appreciation Strategy | $ | .0003 | .004 | % | .002 | % | ||||||
AB Balanced Wealth Strategy | $ | .0004 | .01 | % | .003 | % |
^ | Annualized. |
See notes to financial statements.
86 | • AB WEALTH STRATEGIES |
Financial Highlights
TRUSTEES
Marshall C. Turner, Jr.(1), Chairman John H. Dobkin(1) Michael J. Downey(1) William H. Foulk, Jr.(1) D. James Guzy(1) | Nancy P. Jacklin(1) Robert M. Keith, President and Chief Executive Officer Carol C. McMullen(1) Garry L. Moody(1) Earl D. Weiner(1) | |
OFFICERS | ||
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Daniel J. Loewy(2), Vice President Christopher H. Nikolich(2), Vice President Vadim Zlotnikov(2), Vice President | Emilie D. Wrapp, Clerk Joseph J. Mantineo, Treasurer and Chief Financial Officer Phyllis J. Clarke, Controller and Chief Accounting Officer Vincent S. Noto, Chief Compliance Officer |
Custodian and Accounting Agent State Street Bank and Trust Company
Principal Underwriter AllianceBernstein Investments, Inc.
Legal Counsel Seward & Kissel LLP | Transfer Agent AllianceBernstein Investor
Independent Registered Public Accounting Firm Ernst & Young LLP |
(1) | Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. |
(2) | The day-to-day management of, and investment decisions for, each Strategy’s portfolio are made by the Adviser’s Multi-Asset Solutions Team. Messrs. Loewy, Nikolich and Zlotnikov are the investment professionals primarily responsible for the day-to-day management of each Strategy’s portfolio. |
AB WEALTH STRATEGIES • | 87 |
Trustees
Information Regarding the Review and Approval of the Advisory Agreement in Respect of Each Fund
The disinterested trustees (the “directors”) of The AB Portfolios (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of each of the portfolios listed below (each, a “Fund” and collectively, the “Funds”) at a meeting held on August 2-3, 2016 (the “Meeting”):
• | AB Wealth Appreciation Strategy |
• | AB Balanced Wealth Strategy |
• | AB Conservative Wealth Strategy |
Prior to approval of the continuance of the Advisory Agreement in respect of each Fund, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed an independent evaluation prepared by the Company’s Senior Officer (who is also the Company’s Independent Compliance Officer) of the reasonableness of the advisory fee in respect of each Fund, in which the Senior Officer concluded that the contractual fee for each Fund was reasonable. The directors also discussed the proposed continuances in private sessions with counsel and the Company’s Senior Officer.
The directors noted that instead of investing directly in portfolio securities, each Fund pursues its investment objective by investing in a combination of the portfolios of The AB Pooling Portfolios (“Pooling”) and in AB Cap Fund, Inc.—AB Multi-Manager Alternative Strategies Fund. The directors noted that with the recent withdrawal from Pooling of assets of an unaffiliated institutional investor, the Funds and three other Wealth Strategies are the only remaining investors in Pooling, and that they expected to receive a proposal from the Adviser for changes to Pooling at a future date.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Funds gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB
88 | • AB WEALTH STRATEGIES |
Funds. The directors noted that they have four regular meetings each year, at each of which they receive presentations from the Adviser on the investment results of the Funds and review extensive materials and information presented by the Adviser.
The directors also considered all other factors they believed relevant, including the specific matters discussed below. In their deliberations, the directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage each Fund and the overall arrangements between each Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The directors approved continuance of the Advisory Agreement in respect of each Fund contingent on the continuance of the current fee waivers and expense caps related to the Funds’ investment in investment companies advised by the Adviser for the period of the contract continuance on terms at least as favorable to the Funds. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Funds. They also noted the professional experience and qualifications of each Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that AB Wealth Appreciation Strategy will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to such Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid in respect of AB Wealth Appreciation Strategy, result in a higher rate of total compensation from such Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant retained by the Company’s Senior Officer. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of each Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to each of the Funds under the Advisory Agreement.
AB WEALTH STRATEGIES • | 89 |
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues, expenses and related notes indicating the profitability of each Fund to the Adviser for calendar years 2014 and 2015 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant retained by the Company’s Senior Officer. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationships with the Funds, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Funds. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationships with the Funds before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with each Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Funds and the underlying funds advised by the Adviser in which the Funds invest, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients; 12b-1 fees and sales charges received by the Funds’ principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of certain classes of the Funds’ shares; brokerage commissions paid by the Funds to brokers affiliated with the Adviser; and transfer agency fees paid by the Funds to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Funds.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for each Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed information prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an analytical service that is
90 | • AB WEALTH STRATEGIES |
not affiliated with the Adviser, showing the performance of the Class A Shares of each Fund against a peer group and a peer universe selected by Broadridge, and information prepared by the Adviser showing performance of the Class A Shares of each Fund against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended May 31, 2016 and (in the case of comparisons with the broad-based securities market index) the period since inception.
AB Wealth Appreciation Strategy
AB Conservative Wealth Strategy
Based on their review, and their discussion with the Adviser of the reasons for each Fund’s underperformance in certain periods, the directors concluded that each Fund’s investment performance was acceptable.
AB Balanced Wealth Strategy
Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate paid by each Fund to the Adviser and information prepared by Broadridge concerning advisory fee rates paid by other funds in the same Broadridge category as such Fund at a common asset level. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors considered each Fund’s contractual effective advisory fee rate against a peer group median and, in the case of AB Wealth Appreciation Strategy, took into account the impact on the advisory fee rate of the administrative expense reimbursement paid to the Adviser in the latest fiscal year.
The Adviser informed the directors that there were no institutional products managed by it that have a substantially similar investment style. In the case of AB Balanced Wealth Strategy, the directors noted that the Adviser advises another AB Fund with a similar investment style for the same fee schedule as the Fund.
The directors also considered the total expense ratio of the Class A shares of each Fund in comparison to a peer group and a peer universe selected by Broadridge. The expense ratio of each Fund was based on the Fund’s latest fiscal year. The directors noted the effects of any fee waivers and/or expense reimbursements as a result of an undertaking by the Adviser. The directors noted that it was likely that the expense ratios of some of the other funds in each Fund’s Broadridge category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some
AB WEALTH STRATEGIES • | 91 |
cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Funds by others.
AB Wealth Appreciation Strategy
AB Conservative Wealth Strategy
After reviewing and discussing the Adviser’s explanations of the reasons that each Fund’s expense ratio was above the medians, the directors concluded that each Fund’s expense ratio was acceptable.
AB Balanced Wealth Strategy
After reviewing and discussing the Adviser’s explanations of the reasons that the Fund’s expense ratio was above the peer group median, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedules for the Funds contain breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Funds’ shareholders would benefit from a sharing of economies of scale in the event a Fund’s net assets exceed a breakpoint in the future.
92 | • AB WEALTH STRATEGIES |
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
AB FAMILY OF FUNDS
US EQUITY
US Core
Core Opportunities Fund
Select US Equity Portfolio
US Growth
Concentrated Growth Fund
Discovery Growth Fund
Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
US Value
Discovery Value Fund
Equity Income Fund
Relative Value Fund*
Small Cap Value Portfolio
Value Fund
INTERNATIONAL/ GLOBAL EQUITY
International/Global Core
Global Core Equity Portfolio
International Portfolio
International Strategic Core Portfolio
Sustainable Global Thematic Fund*
Tax-Managed International Portfolio
International/Global Growth
Concentrated International Growth Portfolio
International Growth Fund
International/Global Value
Asia ex-Japan Equity Portfolio
International Value Fund
FIXED INCOME
Municipal
High Income Municipal Portfolio
Intermediate California Municipal Portfolio
FIXED INCOME (continued)
Intermediate Diversified Municipal Portfolio
Intermediate New York Municipal Portfolio
Municipal Bond Inflation Strategy
Tax-Aware Fixed Income Portfolio
National Portfolio
Arizona Portfolio
California Portfolio
Massachusetts Portfolio
Minnesota Portfolio
New Jersey Portfolio
New York Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
Taxable
Bond Inflation Strategy
Global Bond Fund
High Income Fund
High Yield Portfolio
Income Fund
Intermediate Bond Portfolio
Limited Duration High Income Portfolio
Short Duration Portfolio
ALTERNATIVES
All Market Real Return Portfolio
Credit Long/Short Portfolio
Global Real Estate Investment Fund
Long/Short Multi-Manager Fund
Multi-Manager Alternative Strategies Fund
Select US Long/Short Portfolio
Unconstrained Bond Fund
MULTI-ASSET
All Market Income Portfolio
All Market Total Return Portfolio*
Conservative Wealth Strategy
Emerging Markets Multi-Asset Portfolio
Global Risk Allocation Fund
Tax-Managed All Market Income Portfolio*
Tax-Managed Wealth Appreciation Strategy
Wealth Appreciation Strategy
Target-Date
Multi-Manager Select Retirement Allocation Fund
Multi-Manager Select 2010 Fund
Multi-Manager Select 2015 Fund
Multi-Manager Select 2020 Fund
Multi-Manager Select 2025 Fund
Multi-Manager Select 2030 Fund
Multi-Manager Select 2035 Fund
Multi-Manager Select 2040 Fund
Multi-Manager Select 2045 Fund
Multi-Manager Select 2050 Fund
Multi-Manager Select 2055 Fund
CLOSED-END FUNDS
AB Multi-Manager Alternative Fund
Alliance California Municipal Income Fund
AllianceBernstein Global High Income Fund
AllianceBernstein National Municipal Income Fund
We also offer Government Exchange Reserves, which serves as the money market fund exchange vehicle for the AB mutual funds. An investment in Government Exchange Reserves is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.abfunds.com or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.
* Prior to November 1, 2016, Sustainable Global Thematic Fund was named Global Thematic Growth Fund; prior to January 9, 2017, Relative Value Fund was named Growth & Income Fund; prior to April 17, 2017, Tax-Managed All Market Income Portfolio was named Tax-Managed Balanced Wealth Strategy; prior to April 24, 2017, All Market Total Return Portfolio was named Balanced Wealth Strategy.
AB WEALTH STRATEGIES • | 93 |
AB Family of Funds
NOTES
94 | • AB WEALTH STRATEGIES |
NOTES
AB WEALTH STRATEGIES • | 95 |
NOTES
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NOTES
AB WEALTH STRATEGIES • | 97 |
NOTES
98 | • AB WEALTH STRATEGIES |
NOTES
AB WEALTH STRATEGIES • | 99 |
NOTES
100 | • AB WEALTH STRATEGIES |
AB WEALTH STRATEGIES
1345 Avenue of the Americas
New York, NY 10105
800.221.5672
WS-0152-0217
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Directors since the Fund last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no changes in the registrant’s internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. | DESCRIPTION OF EXHIBIT | |
12 (b) (1) | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
12 (b) (2) | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
12 (c) | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): The AB Portfolios
By: | /s/ Robert M. Keith | |
Robert M. Keith | ||
President | ||
Date: | April 26, 2017 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Robert M. Keith | |
Robert M. Keith | ||
President | ||
Date: | April 26, 2017 |
By: | /s/ Joseph J. Mantineo | |
Joseph J. Mantineo | ||
Treasurer and Chief Financial Officer | ||
Date: | April 26, 2017 |