Document/Exhibit Description Pages Size
1: 485BPOS Post-Effective Amendment 439± 1.85M
6: EX-99 Miscellaneous Exhibit 10 39K
2: EX-99.A.14 Miscellaneous Exhibit 2 13K
3: EX-99.I Miscellaneous Exhibit 2± 9K
4: EX-99.J Miscellaneous Exhibit 1 6K
5: EX-99.N.TXT Miscellaneous Exhibit 5± 21K
As filed with the Securities and Exchange Commission on October 30, 2017
File No. 2-70427
811-03131
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933
Pre-Effective Amendment
Post-Effective Amendment No. 71 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940
Amendment No. 67 X
AB SUSTAINABLE GLOBAL THEMATIC FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(800) 221-5672
EMILIE D. WRAPP
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and Address of Agent for Service)
Copies of communications to:
Paul M. Miller
Seward & Kissel LLP
901 K Street, N.W.
Suite 800
Washington, DC 20001
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[X] on October 31, 2017 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
[A/B]
[LOGO]/R/
PROSPECTUS | OCTOBER 31, 2017
[Download Table]
(Shares Offered--Exchange Ticker Symbol)
AB Growth Fund
(Class A-AGRFX; Class B-AGBBX; Class C-AGRCX;
Class R-AGFRX; Class K-AGFKX; Class I-AGFIX;
Advisor Class-AGRYX)
AB Large Cap Growth Fund
(Class A-APGAX; Class B-APGBX; Class C-APGCX;
Class R-ABPRX; Class K-ALCKX; Class I-ALLIX;
Advisor Class-APGYX; Class Z-APGZX)
AB Concentrated Growth Fund
(Class A-WPASX; Class C-WPCSX; Class R-WPRSX;
Class K-WPSKX; Class I-WPSIX; Advisor
Class-WPSGX; Class Z-WPSZX)
AB Discovery Growth Fund
(Class A-CHCLX; Class B-CHCBX; Class C-CHCCX;
Class R-CHCRX; Class K-CHCKX; Class I-CHCIX;
Advisor Class-CHCYX; Class Z-CHCZX)
AB Small Cap Growth Portfolio
(Class A-QUASX; Class B-QUABX; Class C-QUACX;
Class R-QUARX; Class K-QUAKX; Class I-QUAIX;
Advisor Class-QUAYX; Class Z-QUAZX)
AB Select US Equity Portfolio
(Class A-AUUAX; Class C-AUUCX; Advisor
Class-AUUYX; Class R-AUURX; Class K-AUUKX;
Class I-AUUIX)
AB Select US Long/Short Portfolio
(Class A-ASLAX; Class C-ASCLX; Advisor
Class-ASYLX; Class R-ASRLX; Class K-ASLKX;
Class I-ASILX)
AB Sustainable Global Thematic Fund
(Class A-ALTFX; Class B-ATEBX; Class C-ATECX;
Class R-ATERX; Class K-ATEKX; Class I-AGTIX;
Advisor Class-ATEYX)
AB International Growth Fund
(Class A-AWPAX; Class B-AWPBX; Class C-AWPCX;
Class R-AWPRX; Class K-AWPKX; Class I-AWPIX;
Advisor Class-AWPYX)
AB Global Core Equity Portfolio
(Class A-GCEAX; Class C-GCECX; Advisor Class-GCEYX)
AB International Strategic Core Portfolio
(Class A-ISARX; Class C-ISCRX; Advisor Class-ISRYX)
AB Concentrated International Growth Portfolio
(Class A-CIAGX; Class C-CICGX; Advisor Class-CIGYX)
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.
INVESTMENT PRODUCTS OFFERED
[Download Table]
ARE NOT FDIC INSURED
MAY LOSE VALUE
ARE NOT BANK GUARANTEED
TABLE OF CONTENTS
--------------------------------------------------------------------------------
[Download Table]
Page
SUMMARY INFORMATION....................................................... 4
AB GROWTH FUND.......................................................... 4
AB LARGE CAP GROWTH FUND................................................ 8
AB CONCENTRATED GROWTH FUND............................................. 12
AB DISCOVERY GROWTH FUND................................................ 16
AB SMALL CAP GROWTH PORTFOLIO........................................... 20
AB SELECT US EQUITY PORTFOLIO........................................... 24
AB SELECT US LONG/SHORT PORTFOLIO....................................... 28
AB SUSTAINABLE GLOBAL THEMATIC FUND..................................... 33
AB INTERNATIONAL GROWTH FUND............................................ 38
AB GLOBAL CORE EQUITY PORTFOLIO......................................... 42
AB INTERNATIONAL STRATEGIC CORE PORTFOLIO............................... 46
AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO.......................... 50
ADDITIONAL INFORMATION ABOUT THE FUNDS' RISKS AND INVESTMENTS............. 55
INVESTING IN THE FUNDS.................................................... 65
How to Buy Shares....................................................... 65
The Different Share Class Expenses...................................... 66
Sales Charge Reduction Programs for Class A Shares...................... 68
CDSC Waivers and Other Programs......................................... 69
Choosing a Share Class.................................................. 69
Payments to Financial Advisors and Their Firms.......................... 70
How to Exchange Shares.................................................. 71
How to Sell or Redeem Shares............................................ 71
Frequent Purchases and Redemptions of Fund Shares....................... 72
How the Funds Value Their Shares........................................ 74
MANAGEMENT OF THE FUNDS................................................... 75
DIVIDENDS, DISTRIBUTIONS AND TAXES........................................ 82
GENERAL INFORMATION....................................................... 83
GLOSSARY OF INVESTMENT TERMS.............................................. 84
FINANCIAL HIGHLIGHTS...................................................... 85
APPENDIX A--HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION............... A-1
APPENDIX B--FINANCIAL INTERMEDIARY WAIVERS................................ B-1
SUMMARY INFORMATION
--------------------------------------------------------------------------------
AB GROWTH FUND
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Enlarge/Download Table]
CLASS B SHARES CLASS
CLASS A (NOT CURRENTLY OFFERED CLASS C ADVISOR CLASS R, K AND I
SHARES TO NEW INVESTORS) SHARES SHARES SHARES
---------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.25% None None None None
---------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or redemption
proceeds, whichever is lower) None(a) 4.00%(b) 1.00%(c) None None
---------------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None None
---------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
---------------------------------------------------------------------------------------------------------------------------
Management Fees .75% .75% .75% .75% .75% .75% .75%
Distribution and/or Service (12b-1) Fees .25% 1.00% 1.00% None .50% .25% None
Other Expenses:
Transfer Agent .18% .19% .20% .18% .26% .20% .02%
Other Expenses .07% .07% .07% .07% .07% .07% .08%
------ ------ ------ ------ ------ ------ ------
Total Other Expenses .25% .26% .27% .25% .33% .27% .10%
------ ------ ------ ------ ------ ------ ------
Acquired Fund Fees and Expenses .01% .01% .01% .01% .01% .01% .01%
------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses 1.26% 2.02% 2.03% 1.01% 1.59% 1.28% .86%
====== ====== ====== ====== ====== ====== ======
Fee Waiver and/or Expense Reimbursement(d) (.01)% (.01)% (.01)% (.01)% (.01)% (.01)% (.01)%
------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses After Fee Wavier and/or
Expense Reimbursement 1.25% 2.01% 2.02% 1.00% 1.58% 1.27% .85%
====== ====== ====== ====== ====== ====== ======
---------------------------------------------------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)Class B shares automatically convert to Class A shares after eight years.
The CDSC decreases over time. For Class B shares, the CDSC decreases 1.00%
annually to 0% after the fourth year.
(c)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(d)In connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the
4
end of those periods. The Examples also assume that your investment has a 5%
return each year, that the Fund's operating expenses stay the same and that any
fee waiver remains in effect for only the first year. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
[Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
-------------------------------------------------------------------------------
After 1 Year $ 547 $ 604 $ 305 $ 102 $ 161 $ 129 $ 87
After 3 Years $ 807 $ 833 $ 636 $ 321 $ 501 $ 405 $ 273
After 5 Years $1,086 $1,087 $1,092 $ 557 $ 865 $ 701 $ 476
After 10 Years $1,882 $2,152 $2,358 $1,235 $1,888 $1,544 $1,060
-------------------------------------------------------------------------------
For the share classes listed below, you would pay the following expenses if you
did not redeem your shares at the end of the period.
[Download Table]
CLASS B CLASS C
-------------------------------------------------------------------------------
After 1 Year $ 204 $ 205
After 3 Years $ 633 $ 636
After 5 Years $1,087 $1,092
After 10 Years $2,152 $2,358
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 54% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Fund invests primarily in a domestic portfolio of equity securities of
companies selected by the Fund's Adviser for their growth potential within
various market sectors. When selecting securities, the Adviser looks for
companies that have experienced management teams, strong market positions, and
the potential to deliver greater-than-expected earnings growth rates.
In managing the Fund, the Adviser allocates investments among broad sector
groups and selects specific investments based on the fundamental company
research conducted by the Adviser's internal research staff, assessing the
current and forecasted investment opportunities and conditions, as well as
diversification and risk considerations. The Adviser's research focus is on
companies with high sustainable growth prospects, high or improving return on
invested capital, transparent business models, and clear competitive advantages.
The Fund has the flexibility to invest across the capitalization spectrum. The
Fund is designed for those seeking exposure to companies of various sizes, and
typically has substantial investments in both large-capitalization companies
and mid-capitalization companies, and may also invest in small-capitalization
companies.
The Fund may enter into derivatives transactions, such as options, futures
contracts, forwards and swaps. The Fund may use options strategies involving
the purchase and/or writing of various combinations of call and/or put options,
including on individual securities and stock indices, futures contracts
(including futures contracts on individual securities and stock indices) or
shares of exchange-traded funds ("ETFs"). These transactions may be used, for
example, in an effort to earn extra income, to adjust exposure to individual
securities or markets, or to protect all or a portion of the Fund's portfolio
from a decline in value.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond market fluctuates. The value of its 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, may underperform the market
generally.
.. 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: Derivatives may be illiquid, difficult to price, and
leveraged so that small changes may produce disproportionate losses for the
Fund, and may be subject to counterparty risk to a greater degree than more
traditional investments.
.. FOCUSED PORTFOLIO RISK: Investments in a limited number of companies may
have more risk because changes in the value of a single security may have a
more significant effect, either negative or positive, on the Fund's net
asset value, or NAV.
5
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over ten years; and
.. how the Fund's average annual returns for one, five and ten years compare to
those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 24.11%.
[CHART]
07 08 09 10 11 12 13 14 15 16
------ ------- ------ ------ ----- ------ ------ ------ ----- -----
12.76% -43.38% 35.05% 14.95% 1.04% 13.34% 33.41% 12.89% 8.81% 1.46%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 15.47%, 1ST QUARTER, 2012; AND WORST QUARTER WAS DOWN
-22.97%, 4TH QUARTER, 2008.
PERFORMANCE TABLE*
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A** Return Before Taxes -2.86% 12.53% 6.09%
---------------------------------------------------------------
Return After Taxes on Distributions -3.09% 11.75% 5.72%
---------------------------------------------------------------
Return After Taxes on Distributions and
Sale of Fund Shares -1.42% 10.01% 4.90%
-------------------------------------------------------------------------------
Class B Return Before Taxes -3.30% 12.60% 5.87%
-------------------------------------------------------------------------------
Class C Return Before Taxes -0.31% 12.66% 5.77%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 1.70% 13.83% 6.87%
-------------------------------------------------------------------------------
Class R Return Before Taxes 1.14% 13.23% 6.38%
-------------------------------------------------------------------------------
Class K Return Before Taxes 1.47% 13.60% 6.72%
-------------------------------------------------------------------------------
Class I Return Before Taxes 1.83% 13.97% 7.07%
-------------------------------------------------------------------------------
Russell 3000(R) Growth Index (reflects no deduction
for fees, expenses, or taxes) 7.39% 14.44% 8.28%
-------------------------------------------------------------------------------
* Includes the impact of proceeds of a residual distribution relating to
regulatory settlements, which enhanced the performance of all share classes
of the Fund for the 1-Year period ended July 31, 2016, by 0.22%.
**After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual federal
marginal income tax rates, and do not reflect the impact of state and local
taxes; actual after-tax returns depend on an individual investor's tax
situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
6
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Bruce K. Aronow Since 2013 Senior Vice President of the Adviser
Frank V. Caruso Since 2008 Senior Vice President of the Adviser
John H. Fogarty Since 2013 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
7
AB LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Enlarge/Download Table]
CLASS B SHARES CLASS
CLASS A (NOT CURRENTLY OFFERED CLASS C ADVISOR CLASS R, K, I AND Z
SHARES TO NEW INVESTORS) SHARES SHARES SHARES
------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.25% None None None None
------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or redemption
proceeds, whichever is lower) None(a) 4.00%(b) 1.00%(c) None None
------------------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None None
------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I CLASS Z
----------------------------------------------------------------------------------------------------------------------------
Management Fees(d) .59% .59% .59% .59% .59% .59% .59% .59%
Distribution and/or Service (12b-1) Fees .25% 1.00% 1.00% None .50% .25% None None
Other Expenses:
Transfer Agent .13% .18% .14% .13% .26% .20% .11% .02%
Other Expenses .03% .03% .03% .03% .03% .03% .03% .02%
------ ------ ------ ------ ------ ------ ------ ------
Total Other Expenses .16% .21% .17% .16% .29% .23% .14% .04%
------ ------ ------ ------ ------ ------ ------ ------
Acquired Fund Fees and Expenses .02% .02% .02% .02% .02% .02% .02% .02%
------ ------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses 1.02% 1.82% 1.78% .77% 1.40% 1.09% .75% .65%
====== ====== ====== ====== ====== ====== ====== ======
Fee Waiver and/or Expense Reimbursement(e) (.02)% (.02)% (.02)% (.02)% (.02)% (.02)% (.02)% (.02)%
------ ------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses After Fee Waiver
and/or Expense Reimbursement 1.00% 1.80% 1.76% .75% 1.38% 1.07% .73% .63%
====== ====== ====== ====== ====== ====== ====== ======
----------------------------------------------------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)Class B shares automatically convert to Class A shares after eight years.
The CDSC decreases over time. For Class B shares, the CDSC decreases 1.00%
annually to 0% after the fourth year.
(c)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(d)Restated to reflect current management fees, which became effective on
February 3, 2017.
(e)In connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the
8
end of those periods. The Examples also assume that your investment has a 5%
return each year, that the Fund's operating expenses stay the same and that any
fee waiver remains in effect for only the first year. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I CLASS Z
---------------------------------------------------------------------------------------
After 1 Year $ 523 $ 583 $ 279 $ 77 $ 140 $ 109 $ 75 $ 64
After 3 Years $ 734 $ 771 $ 558 $244 $ 441 $ 345 $238 $206
After 5 Years $ 962 $ 983 $ 963 $426 $ 764 $ 599 $415 $360
After 10 Years $1,618 $1,926 $2,093 $952 $1,678 $1,327 $928 $809
---------------------------------------------------------------------------------------
For the share classes listed below, you would pay the following expenses if you
did not redeem your shares at the end of the period:
[Download Table]
CLASS B CLASS C
-------------------------------------------------------------------------------
After 1 Year $ 183 $ 179
After 3 Years $ 571 $ 558
After 5 Years $ 983 $ 963
After 10 Years $1,926 $2,093
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 60% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Fund invests primarily in equity securities of a limited number of large,
carefully selected, high-quality U.S. companies. The Fund invests primarily in
the domestic equity securities of companies selected by the Fund's Adviser for
their growth potential within various market sectors. The Fund emphasizes
investments in large, seasoned companies. Under normal circumstances, the Fund
will invest at least 80% of its net assets in common stocks of
large-capitalization companies.
For these purposes, "large-capitalization companies" are those that, at the
time of investment, have market capitalizations within the range of market
capitalizations of companies appearing in the Russell 1000(R) Growth Index.
While the market capitalizations of companies in the Russell 1000(R) Growth
Index ranged from approximately $2.16 billion to $750.90 billion as of June 30,
2017, the Fund normally will invest in common stocks of companies with market
capitalizations of at least $5 billion at the time of purchase.
The Adviser expects that normally the Fund's portfolio will tend to emphasize
investments in securities issued by U.S. companies, although it may invest in
foreign securities.
The investment team allocates the Fund's investments among broad sector groups
based on the fundamental company research conducted by the Adviser's internal
research staff, assessing the current and forecasted investment opportunities
and conditions, as well as diversification and risk considerations. The
investment team may vary the percentage allocations among market sectors and
may change the market sectors in which the Fund invests as companies' potential
for growth within a sector matures and new trends for growth emerge.
The Adviser's research focus is in companies with high sustainable growth
prospects, high or improving return on invested capital, transparent business
models, and strong and lasting competitive advantages.
The Fund may, at times, invest in shares of exchange-traded funds ("ETFs") in
lieu of making direct investments in securities. ETFs may provide more
efficient and economical exposure to the types of companies and geographic
locations in which the Fund seeks to invest than direct investments.
The Fund may enter into derivatives transactions, such as options, futures
contracts, forwards and swaps. The Fund may use options strategies involving
the purchase and/or writing of various combinations of call and/or put options,
including on individual securities and stock indices, futures contracts
(including futures contracts on individual securities and stock indices) or
shares of ETFs. These transactions may be used, for example, in an effort to
earn extra income, to adjust exposure to individual securities or markets, or
to protect all or a portion of the Fund's portfolio from a decline in value,
sometimes within certain ranges.
9
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond market fluctuates. The value of its 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, may underperform the market
generally.
.. FOCUSED PORTFOLIO RISK: Investments in a limited number of companies may
have more risk because changes in the value of a single security may have a
more significant effect, either negative or positive, on the Fund's net
asset value, or NAV.
.. 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.
.. DERIVATIVES RISK: Derivatives may be illiquid, difficult to price, and
leveraged so that small changes may produce disproportionate losses for the
Fund, and may be subject to counterparty risk to a greater degree than more
traditional investments.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over ten years; and
.. how the Fund's average annual returns for one, five and ten years compare to
those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 22.77%.
[CHART]
07 08 09 10 11 12 13 14 15 16
------ ------- ------ ----- ------ ------ ------ ------ ------ -----
13.77% -31.66% 41.15% 9.41% -0.89% 18.08% 36.92% 13.56% 10.51% 2.79%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 16.94%, 1ST QUARTER, 2012; AND WORST QUARTER WAS DOWN
-15.76%, 3RD QUARTER, 2011.
10
PERFORMANCE TABLE*
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A** Return Before Taxes -1.58% 14.83% 9.04%
---------------------------------------------------------------
Return After Taxes on Distributions -2.20% 13.26% 8.29%
---------------------------------------------------------------
Return After Taxes on Distributions and
Sale of Fund Shares -0.38% 11.83% 7.37%
-------------------------------------------------------------------------------
Class B Return Before Taxes -1.95% 14.88% 8.77%
-------------------------------------------------------------------------------
Class C Return Before Taxes 1.02% 14.95% 8.66%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 3.04% 16.12% 9.78%
-------------------------------------------------------------------------------
Class R Return Before Taxes 2.41% 15.47% 9.26%
-------------------------------------------------------------------------------
Class K Return Before Taxes 2.74% 15.82% 9.59%
-------------------------------------------------------------------------------
Class I Return Before Taxes 3.09% 16.23% 9.97%
-------------------------------------------------------------------------------
Class Z*** Return Before Taxes 3.17% 16.16% 9.81%
-------------------------------------------------------------------------------
Russell 1000(R) Growth Index
(reflects no deduction for fees, expenses, or taxes) 7.08% 14.50% 8.33%
-------------------------------------------------------------------------------
* Includes the impact of proceeds of a residual distribution relating to
regulatory settlements, which enhanced the performance of all share classes
of the Fund for the 1-Year period ended July 31, 2016, by 0.38%.
** After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
***Inception date for Class Z shares: 7/1/15. Performance information for
periods prior to the inception of Class Z shares is the performance of the
Fund's Class A shares adjusted to reflect the expense ratio of Class Z
shares.
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Frank V. Caruso Since 2012 Senior Vice President of the Adviser
Vincent C. Dupont Since 2012 Senior Vice President of the Adviser
John H. Fogarty Since 2012 Senior Vice President of the Adviser
Karen A. Sesin Since 2016 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
11
AB CONCENTRATED GROWTH FUND
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Download Table]
CLASS
CLASS A CLASS C ADVISOR CLASS R, K, I AND Z
SHARES SHARES SHARES SHARES
-------------------------------------------------------------------------------
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of offering
price) 4.25% None None None
-------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(Load)
(as a percentage of offering
price or redemption proceeds,
whichever is lower) None(a) 1.00%(b) None None
-------------------------------------------------------------------------------
Exchange Fee None None None None
-------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Enlarge/Download Table]
CLASS A CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I CLASS Z
---------------------------------------------------------------------------------------------------------------------------
Management Fees .80% .80% .80% .80% .80% .80% .80%
Distribution and/or Service (12b-1) Fees .25% 1.00% None .50% .25% None None
Other Expenses:
Transfer Agent .05% .05% .05% .06% .05% .02% .02%
Other Expenses .12% .12% .12% .11% .12% .14% .12%
------ ------ ------ ------ ------ ------ ------
Total Other Expenses .17% .17% .17% .17% .17% .16% .14%
------ ------ ------ ------ ------ ------ ------
Acquired Fund Fees and Expenses .01% .01% .01% .01% .01% .01% .01%
------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses 1.23% 1.98% .98% 1.48% 1.23% .97% .95%
====== ====== ====== ====== ====== ====== ======
Fee Waiver and/or Expense Reimbursement(c) (.01)% (.01)% (.01)% (.01)% (.01)% (.01)% (.01)%
------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses After Fee Waiver and/or
Expense Reimbursement 1.22% 1.97% .97% 1.47% 1.22% .96% .94%
====== ====== ====== ====== ====== ====== ======
---------------------------------------------------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(c)In connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
12
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Examples also assume that your
investment has a 5% return each year, that the Fund's operating expenses stay
the same and that any fee waivers are in effect for only the first year.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
[Download Table]
CLASS A CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I CLASS Z
-------------------------------------------------------------------------------
After 1 Year $ 544 $ 300* $ 99 $ 150 $ 124 $ 98 $ 96
After 3 Years $ 798 $ 620 $ 311 $ 467 $ 389 $ 308 $ 302
After 5 Years $1,071 $1,067 $ 541 $ 807 $ 675 $ 535 $ 525
After 10 Years $1,850 $2,305 $1,200 $1,768 $1,488 $1,189 $1,165
-------------------------------------------------------------------------------
*If you did not redeem your shares at the end of the period, your expenses
would be decreased by approximately $100.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal period, the Fund's portfolio
turnover rate was 29% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Adviser seeks to achieve the Fund's investment objective of long-term
growth of capital by investing primarily in common stocks of listed U.S.
companies. The Adviser employs an appraisal method that attempts to measure
each prospective company's quality and growth rate by numerous factors. Such
factors include: a company's record and projections of profit and earnings
growth, accuracy and availability of information with respect to the company,
success and experience of management, accessibility of management to the Fund's
Adviser, product lines and competitive position both in the United States and
abroad, lack of cyclicality, large market capitalization and liquidity of the
company's securities. The Adviser compares these results to the general stock
markets to determine the relative attractiveness of each company at a given
time. The Adviser weighs economic, political and market factors in making
investment decisions; this appraisal technique attempts to measure each
investment candidate not only against other stocks of the same industry group,
but also against a broad spectrum of investments. While the Fund primarily
invests in companies that have market capitalizations of $5 billion or more, it
may invest in companies that have market capitalizations of $3 billion to
$5 billion.
The Fund invests in a relatively small number of individual stocks. The Fund is
considered to be "non-diversified", which means that the securities laws do not
limit the percentage of its assets that it may invest in any one company
(subject to certain limitations under the Internal Revenue Code of 1986, as
amended (the "Code")).
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the equity
markets fluctuate. The value of the Fund's investments may decline,
sometimes rapidly and unpredictably, simply because of economic changes or
other events that affect large portions of the market.
.. FOCUSED PORTFOLIO RISK: Investments in a limited number of companies may
have more risk because changes in the value of a single security may have a
more significant effect, either negative or positive, on the Fund's net
asset value, or NAV.
.. CAPITALIZATION RISK: Investments in mid-capitalization companies may be more
volatile and less liquid than investments in large-capitalization companies.
.. NON-DIVERSIFICATION RISK: The Fund may have more risk because it is
"non-diversified", meaning that it can invest more of its assets in a
smaller number of issuers. Accordingly, changes in the value of a single
security may have a more significant effect, either negative or positive, on
the Fund's NAV.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
13
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over ten years; and
.. how the Fund's average annual returns for one, five and ten years compare to
those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
The information shown below reflects the historical performance of the W.P.
Stewart & Co. Growth Fund and that fund's predecessor (together the
"Predecessor Fund") prior to the reorganization of the Predecessor Fund into
Advisor Class shares of the Fund on February 28, 2014. The Predecessor Fund and
the Fund have substantially similar investment strategies and the same
portfolio management team.
BAR CHART
The annual returns in the bar chart are for the Predecessor Fund's shares for
periods prior to its reorganization into Advisor Class shares of the Fund.
Through September 30, 2017, the year-to-date unannualized return for Advisor
Class shares was 18.52%.
[CHART]
07 08 09 10 11 12 13 14 15 16
------ ------- ------ ------ ----- ------ ------ ------ ----- -----
-0.04% -31.06% 32.64% 12.60% 0.81% 15.87% 36.44% 13.09% 1.32% 5.36%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 17.10%, 1ST QUARTER, 2012; AND WORST QUARTER WAS DOWN
-20.33%, 4TH QUARTER, 2008.
PERFORMANCE TABLE
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A*/,/** Return Before Taxes 0.65% 12.55% 6.37%
---------------------------------------------------------------
Return After Taxes on Distributions 0.55% 12.09% 5.84%
---------------------------------------------------------------
Return After Taxes on Distributions and
Sale of Fund Shares 0.46% 9.99% 5.07%
-------------------------------------------------------------------------------
Class C* Return Before Taxes 3.35% 12.69% 6.03%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 5.36% 13.80% 7.07%
-------------------------------------------------------------------------------
Class R* Return Before Taxes 4.86% 13.25% 6.53%
-------------------------------------------------------------------------------
Class K* Return Before Taxes 5.17% 13.54% 6.84%
-------------------------------------------------------------------------------
Class I* Return Before Taxes 5.43% 13.83% 7.09%
-------------------------------------------------------------------------------
Class Z* Return Before Taxes 5.44% 13.82% 7.08%
-------------------------------------------------------------------------------
S&P 500(R) Index
(reflects no deduction for fees, expenses, or taxes) 11.96% 14.66% 6.95%
-------------------------------------------------------------------------------
* Inception date for Class A, Class C, Class R, Class K, Class I and Class Z
shares: 2/28/14. Performance information for periods prior to the inception
of Class A, Class C, Class R, Class K, Class I and Class Z shares is the
performance of the Fund's Advisor Class shares adjusted to reflect the
respective expense ratios of the Class A, Class C, Class R, Class K, Class I
and Class Z shares.
**After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual federal
marginal income tax rates, and do not reflect the impact of state and local
taxes; actual after-tax returns depend on an individual investor's tax
situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
14
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGER
James Tierney, a Senior Vice President of the Adviser, has been the person
responsible for day-to-day management of the Fund's portfolio since 2013.
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
15
AB DISCOVERY GROWTH FUND
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Enlarge/Download Table]
CLASS B SHARES CLASS
CLASS A (NOT CURRENTLY OFFERED CLASS C ADVISOR CLASS R, K, I AND Z
SHARES TO NEW INVESTORS) SHARES SHARES SHARES
---------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.25% None None None None
---------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or redemption proceeds,
whichever is lower) None(a) 4.00%(b) 1.00%(c) None None
---------------------------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None None
---------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I CLASS Z
----------------------------------------------------------------------------------------------------------------------------
Management Fees .63% .63% .63% .63% .63% .63% .63% .63%
Distribution and/or Service (12b-1) Fees .23% 1.00% 1.00% None .50% .25% None None
Other Expenses:
Transfer Agent .09% .13% .09% .09% .22% .20% .09% .02%
Other Expenses .04% .04% .04% .04% .04% .04% .04% .04%
------ ------ ------ ------ ------ ------ ------ ------
Total Other Expenses .13% .17% .13% .13% .26% .24% .13% .06%
------ ------ ------ ------ ------ ------ ------ ------
Acquired Fund Fees and Expenses .01% .01% .01% .01% .01% .01% .01% .01%
------ ------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses 1.00% 1.81% 1.77% .77% 1.40% 1.13% .77% .70%
====== ====== ====== ====== ====== ====== ====== ======
Fee Waiver and/or Expense Reimbursement(d) (.01)% (.01)% (.01)% (.01)% (.01)% (.01)% (.01)% (.01)%
------ ------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses After Fee Waiver
and/or Expense Reimbursement .99% 1.80% 1.76% .76% 1.39% 1.12% .76% .69%
====== ====== ====== ====== ====== ====== ====== ======
----------------------------------------------------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)Class B shares automatically convert to Class A shares after eight years.
The CDSC decreases over time. For Class B shares, the CDSC decreases 1.00%
annually to 0% after the fourth year.
(c)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(d)In connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the
16
end of those periods. The Examples also assume that your investment has a 5%
return each year, that the Fund's operating expenses stay the same and that any
fee waiver remains in effect for only the first year. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I CLASS Z
---------------------------------------------------------------------------------------
After 1 Year $ 522 $ 583 $ 279 $ 78 $ 142 $ 114 $ 78 $ 69
After 3 Years $ 729 $ 768 $ 556 $245 $ 442 $ 358 $245 $220
After 5 Years $ 953 $ 979 $ 958 $427 $ 765 $ 621 $427 $383
After 10 Years $1,597 $1,913 $2,083 $953 $1,679 $1,374 $953 $858
---------------------------------------------------------------------------------------
For the share classes listed below, you would pay the following expenses if you
did not redeem your shares at the end of the period:
[Download Table]
CLASS B CLASS C
-------------------------------------------------------------------------------
After 1 Year $ 183 $ 179
After 3 Years $ 568 $ 556
After 5 Years $ 979 $ 958
After 10 Years $1,913 $2,083
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 70% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Fund invests primarily in a diversified portfolio of equity securities with
relatively smaller capitalizations as compared to the overall U.S. market.
Under normal circumstances, the Fund invests at least 80% of its net assets in
the equity securities of small- and mid-capitalization companies. For these
purposes, "small- and mid-capitalization companies" are generally those
companies that, at the time of investment, fall within the lowest 25% of the
total U.S. equity market capitalization (excluding, for purposes of this
calculation, companies with market capitalizations of less than $10 million).
As of June 30, 2017, there were approximately 4,324 companies within the lowest
25% of the total U.S. equity market capitalization (excluding companies with
market capitalizations of less than $10 million) with market capitalizations
ranging from $10.00 million to $18.07 billion. Because the Fund's definition of
small- and mid-capitalization companies is dynamic, the limits on market
capitalization will change with the markets. In the future, the Fund may define
small- and mid-capitalization companies using a different classification system.
The Fund may invest in any company and industry and in any type of equity
security with potential for capital appreciation. It invests in well-known and
established companies and in new and less-seasoned companies. The Fund's
investment policies emphasize investments in companies that are demonstrating
improving financial results and a favorable earnings outlook. The Fund may
invest in foreign securities.
When selecting securities, the Adviser typically looks for companies that have
strong, experienced management teams, strong market positions, and the
potential to support greater than expected earnings growth rates. In making
specific investment decisions for the Fund, the Adviser combines fundamental
and quantitative analysis in its stock selection process. The Fund may
periodically invest in the securities of companies that are expected to
appreciate due to a development particularly or uniquely applicable to that
company regardless of general business conditions or movements of the market as
a whole.
The Fund invests principally in equity securities but may also invest in other
types of securities, such as preferred stocks. The Fund may, at times, invest
in shares of exchange-traded funds ("ETFs") in lieu of making direct
investments in securities. ETFs may provide more efficient and economical
exposure to the types of companies and geographic locations in which the Fund
seeks to invest than direct investments. The Fund may also invest up to 20% of
its total assets in rights and warrants.
The Fund may enter into derivatives transactions, such as options, futures
contracts, forwards and swaps to manage risk and to seek to generate additional
returns. The Fund may use options strategies involving the purchase and/or
writing of various combinations of call and/or put options, including on
individual securities and stock indices, futures contracts (including futures
contracts on individual securities and stock indices) or shares of ETFs. These
transactions may be used, for example, in an effort to earn extra income, to
adjust exposure to individual securities or markets, or to protect all or a
portion of the Fund's portfolio from a decline in value, sometimes within
certain ranges.
17
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond market fluctuates. The value of its 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, may underperform the market
generally.
.. 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.
.. 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.
.. DERIVATIVES RISK: Derivatives may be illiquid, difficult to price, and
leveraged so that small changes may produce disproportionate losses for the
Fund, and may be subject to counterparty risk to a greater degree than more
traditional investments.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over ten years; and
.. how the Fund's average annual returns for one, five and ten years compare to
those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 21.69%.
[CHART]
07 08 09 10 11 12 13 14 15 16
------ ------- ------ ------ ----- ------ ------ ----- ------ -----
11.88% -48.52% 46.96% 39.08% 3.64% 14.67% 38.46% 2.76% -0.86% 4.78%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 19.95%, 3RD QUARTER 2010; AND WORST QUARTER WAS DOWN
-30.35%, 4TH QUARTER, 2008.
18
PERFORMANCE TABLE*
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A** Return Before Taxes 0.34% 10.16% 7.07%
---------------------------------------------------------------
Return After Taxes on Distributions 0.34% 9.18% 6.37%
---------------------------------------------------------------
Return After Taxes on Distributions and
Sale of Fund Shares 0.19% 8.02% 5.70%
-------------------------------------------------------------------------------
Class B Return Before Taxes -0.08% 10.18% 6.79%
-------------------------------------------------------------------------------
Class C Return Before Taxes 2.89% 10.25% 6.69%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 5.09% 11.40% 7.78%
-------------------------------------------------------------------------------
Class R Return Before Taxes 4.38% 10.70% 7.16%
-------------------------------------------------------------------------------
Class K Return Before Taxes 4.69% 11.03% 7.47%
-------------------------------------------------------------------------------
Class I Return Before Taxes 5.14% 11.42% 7.89%
-------------------------------------------------------------------------------
Class Z*** Return Before Taxes 5.14% 11.46% 7.85%
-------------------------------------------------------------------------------
Russell 2500(R) Growth Index
(reflects no deduction for fees, expenses, or taxes) 9.73% 13.88% 8.24%
-------------------------------------------------------------------------------
* Includes the impact of proceeds of a residual distribution relating to
regulatory settlements, which enhanced the performance of all share classes
of the Fund for the 1-Year period ended July 31, 2016, by 0.13%.
** After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
***Inception date for Class Z: 5/30/14. Performance information for periods
prior to the inception of Class Z shares is the performance of the Fund's
Class A shares adjusted to reflect the expense ratio of the Class Z shares.
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Bruce K. Aronow Since 2008 Senior Vice President of the Adviser
N. Kumar Kirpalani Since 2008 Senior Vice President of the Adviser
Samantha S. Lau Since 2008 Senior Vice President of the Adviser
Wen-Tse Tseng Since 2008 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
19
AB SMALL CAP GROWTH PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Enlarge/Download Table]
CLASS B SHARES CLASS
CLASS A (NOT CURRENTLY OFFERED CLASS C ADVISOR CLASS R, K, I AND Z
SHARES TO NEW INVESTORS) SHARES SHARES SHARES
--------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases
(as a percentage of offering price) 4.25% None None None None
--------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or
redemption proceeds, whichever is lower) None(a) 4.00%(b) 1.00%(c) None None
--------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None None
--------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I CLASS Z
---------------------------------------------------------------------------------------------------------------
Management Fees .75% .75% .75% .75% .75% .75% .75% .75%
Distribution and/or Service (12b-1) Fees .25% 1.00% 1.00% None .50% .25% None None
Other Expenses:
Transfer Agent .12% .16% .14% .13% .21% .15% .10% .02%
Other Expenses .07% .07% .06% .06% .07% .07% .08% .06%
----- ----- ----- ---- ----- ----- ---- ----
Total Other Expenses .19% .23% .20% .19% .28% .22% .18% .08%
----- ----- ----- ---- ----- ----- ---- ----
Total Annual Fund Operating Expenses 1.19% 1.98% 1.95% .94% 1.53% 1.22% .93% .83%
===== ===== ===== ==== ===== ===== ==== ====
---------------------------------------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)Class B shares automatically convert to Class A shares after eight years.
The CDSC decreases over time. For Class B shares, the CDSC decreases 1.00%
annually to 0% after the fourth year.
(c)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
stay the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I CLASS Z
-------------------------------------------------------------------------------------
After 1 Year $ 541 $ 601 $ 298 $ 96 $ 156 $ 124 $ 95 $ 85
After 3 Years $ 787 $ 821 $ 612 $ 300 $ 483 $ 387 $ 296 $ 265
After 5 Years $1,052 $1,068 $1,052 $ 520 $ 834 $ 670 $ 515 $ 460
After 10 Years $1,807 $2,102 $2,275 $1,155 $1,824 $1,477 $1,143 $1,025
-------------------------------------------------------------------------------------
20
For the share classes listed below, you would pay the following expenses if you
did not redeem your shares at the end of the period:
[Download Table]
CLASS B CLASS C
-------------------------------------------------------------------------------
After 1 Year $ 201 $ 198
After 3 Years $ 621 $ 612
After 5 Years $1,068 $1,052
After 10 Years $2,102 $2,275
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 66% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Fund invests primarily in a diversified portfolio of equity securities with
relatively smaller capitalizations as compared to the overall U.S. market.
Under normal circumstances, the Fund invests at least 80% of its net assets in
equity securities of smaller companies. For these purposes, "smaller companies"
are those that, at the time of investment, fall within the lowest 20% of the
total U.S. equity market capitalization (excluding, for purposes of this
calculation, companies with market capitalizations of less than $10 million).
As of June 30, 2017, there were approximately 4,212 smaller companies, and
those smaller companies had market capitalizations ranging up to approximately
$13.25 billion. Because the Fund's definition of smaller companies is dynamic,
the limits on market capitalization will change with the markets.
The Fund may invest in any company and industry and in any type of equity
security with potential for capital appreciation. It invests in well-known and
established companies and in new and less-seasoned companies. The Fund's
investment policies emphasize investments in companies that are demonstrating
improving financial results and a favorable earnings outlook. The Fund may
invest in foreign securities.
When selecting securities, the Adviser typically looks for companies that have
strong, experienced management teams, strong market positions, and the
potential to support greater than expected earnings growth rates. In making
specific investment decisions for the Fund, the Adviser combines fundamental
and quantitative analysis in its stock selection process. The Fund may
periodically invest in the securities of companies that are expected to
appreciate due to a development particularly or uniquely applicable to that
company regardless of general business conditions or movements of the market as
a whole.
The Fund invests primarily in equity securities but may also invest in other
types of securities, such as preferred stocks. The Fund may, at times, invest
in shares of exchange-traded funds ("ETFs") in lieu of making direct
investments in securities. ETFs may provide more efficient and economical
exposure to the types of companies and geographic locations in which the Fund
seeks to invest than direct investments. The Fund may also invest up to 20% of
its total assets in rights or warrants.
The Fund may enter into derivatives transactions, such as options, futures
contracts, forwards, and swaps. The Fund may use options strategies involving
the purchase and/or writing of various combinations of call and/or put options,
including on individual securities and stock indices, futures contracts
(including futures contracts on individual securities and stock indices) or
shares of ETFs. These transactions may be used, for example, in an effort to
earn extra income, to adjust exposure to individual securities or markets, or
to protect all or a portion of the Fund's portfolio from a decline in value,
sometimes within certain ranges.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond market fluctuates. The value of its 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, may underperform the market
generally.
.. 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.
.. 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.
.. DERIVATIVES RISK: Derivatives may be illiquid, difficult to price, and
leveraged so that small changes may produce disproportionate losses for the
Fund, and may be subject to counterparty risk to a greater degree than more
traditional investments.
21
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over ten years; and
.. how the Fund's average annual returns for one, five and ten years compare to
those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 25.21%.
[CHART]
07 08 09 10 11 12 13 14 15 16
------ ------- ------ ------ ----- ------ ------ ------ ------ -----
13.97% -45.14% 42.02% 37.00% 4.13% 15.03% 45.11% -1.76% -1.19% 6.41%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 21.22%, 2ND QUARTER, 2009; AND WORST QUARTER WAS DOWN
-28.82%, 4TH QUARTER, 2008.
PERFORMANCE TABLE*
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A** Return Before Taxes 1.89% 10.54% 7.66%
---------------------------------------------------------------
Return After Taxes on Distributions 1.34% 8.95% 6.84%
---------------------------------------------------------------
Return After Taxes on Distributions and
Sale of Fund Shares 1.52% 8.33% 6.20%
-------------------------------------------------------------------------------
Class B Return Before Taxes 1.54% 10.60% 7.40%
-------------------------------------------------------------------------------
Class C Return Before Taxes 4.59% 10.67% 7.30%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 6.67% 11.80% 8.41%
-------------------------------------------------------------------------------
Class R Return Before Taxes 6.13% 11.19% 7.92%
-------------------------------------------------------------------------------
Class K Return Before Taxes 6.49% 11.56% 8.24%
-------------------------------------------------------------------------------
Class I Return Before Taxes 6.80% 11.90% 8.61%
-------------------------------------------------------------------------------
Class Z*** Return Before Taxes 6.91% 11.84% 8.42%
-------------------------------------------------------------------------------
Russell 2000(R) Growth Index(reflects no deduction for
fees, expenses, or taxes) 11.32% 13.74% 7.76%
-------------------------------------------------------------------------------
* Includes the impact of proceeds of a residual distribution relating to
regulatory settlements, which enhanced the performance of all share classes
of the Fund for the 1-Year period ended July 31, 2016, by 0.01%.
** After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
***Inception date for Class Z shares: 7/1/15. Performance information for
periods prior to the inception of Class Z shares is the performance of the
Fund's Class A shares adjusted to reflect the expense ratio of the Class Z
shares.
22
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Bruce K. Aronow Since 2000 Senior Vice President of the Adviser
N. Kumar Kirpalani Since 2004 Senior Vice President of the Adviser
Samantha S. Lau Since 2004 Senior Vice President of the Adviser
Wen-Tse Tseng Since 2006 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
23
AB SELECT US EQUITY PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Download Table]
CLASS
CLASS A CLASS C ADVISOR CLASS R, K AND I
SHARES SHARES SHARES SHARES
-------------------------------------------------------------------------------
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of offering price) 4.25% None None None
-------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(Load)(as a percentage of offering
price or redemption proceeds,
whichever is lower) None(a) 1.00%(b) None None
-------------------------------------------------------------------------------
Exchange Fee None None None None
-------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Download Table]
CLASS A CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
---------------------------------------------------------------------------------
Management Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution and/or
Service (12b-1) Fees .25% 1.00% None .50% .25% None
Other Expenses:
Transfer Agent .03% .04% .03% .06% .15% .02%
Other Expenses .17% .17% .17% .18% .22% .17%
------ ------ ------ ------ ------ ------
Total Other Expenses .20% .21% .20% .24% .37% .19%
------ ------ ------ ------ ------ ------
Acquired Fund Fees and
Expenses .02% .02% .02% .02% .02% .02%
------ ------ ------ ------ ------ ------
Total Annual Fund
Operating Expenses 1.47% 2.23% 1.22% 1.76% 1.64% 1.21%
====== ====== ====== ====== ====== ======
Fee Waiver and/or
Expense Reimbursement(c) (.01)% (.01)% (.01)% (.01)% (.08)%(d) (.01)%
------ ------ ------ ------ ------ ------
Total Annual Fund
Operating Expenses
After Fee Waiver and/or
Expense Reimbursement 1.46% 2.22% 1.21% 1.75% 1.56% 1.20%
====== ====== ====== ====== ====== ======
---------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(c)In connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
(d)The fee waiver and/or expense reimbursement agreement will remain in effect
until October 31, 2018 and will be automatically extended for one-year terms
unless the Adviser provides notice of termination 60 days prior to that date.
24
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Examples also assume that your
investment has a 5% return each year, that the Fund's operating expenses stay
the same and that any fee waiver remains in effect only for the first year.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
[Download Table]
CLASS A CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
-------------------------------------------------------------------------------
After 1 Year $ 567 $ 325* $ 123 $ 178 $ 159 $ 122
After 3 Years $ 869 $ 696 $ 386 $ 553 $ 509 $ 383
After 5 Years $1,193 $1,194 $ 669 $ 953 $ 884 $ 664
After 10 Years $2,107 $2,564 $1,476 $2,072 $1,937 $1,465
-------------------------------------------------------------------------------
*If you did not redeem your shares at the end of the period, your expenses
would be decreased by approximately $100.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 292% of the average value of its portfolio.
PRINCIPAL STRATEGIES
Under normal circumstances, the Fund invests at least 80% of its net assets in
equity securities of U.S. companies. For purposes of this requirement, equity
securities include common stock, preferred stock and derivatives related to
common and preferred stocks.
The Adviser selects investments for the Fund through an intensive "bottom-up"
approach that places an emphasis on companies that are engaged in business
activities with solid long-term growth potential and operating in industries
with high barriers to entry, that have strong cash flows and other financial
metrics, and that have transparent financial statements and business models.
The Adviser also evaluates the quality of company management based on a series
of criteria, including: (1) management's focus on shareholder returns, such as
through a demonstrated commitment to dividends and dividend growth, share
buybacks or other shareholder-friendly corporate actions; (2) management's
employment of conservative accounting methodologies; (3) management incentives,
such as direct equity ownership; and (4) management accessibility. The Adviser
seeks to identify companies where events or catalysts may drive the company's
share price higher, such as earnings and/or revenue growth above consensus
forecasts, potential market recognition of undervaluation or overstated
market-risk discount, or the institution of shareholder-focused changes
discussed in the preceding sentence. In light of this catalyst-focused
approach, the Adviser expects to engage in active and frequent trading for the
Fund. The Adviser may reduce or eliminate the Fund's holdings in a company's
securities for a number of reasons, including if its evaluation of the above
factors changes adversely, if the anticipated events or catalysts do not occur
or do not affect the price of the securities as expected, or if the anticipated
events or catalysts do occur and cause the securities to be, in the Adviser's
view, overvalued or fully valued. At any given time the Fund may emphasize
growth stocks over value stocks, or vice versa.
The Fund's investments will be focused on securities of companies with large
and medium market capitalizations, but it may also invest in securities of
small-capitalization companies. The Adviser anticipates that the Fund's
portfolio normally will include between 30-80 companies. The Fund may invest in
non-U.S. companies, but will limit its investments in such companies to no more
than 10% of its net assets. The Fund may purchase securities in initial public
offerings and expects to do so on a regular basis.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock,
bond or currency markets fluctuate. The value of the Fund's investments may
decline, sometimes rapidly and unpredictably, simply because of economic
changes or other events that affect large portions of the market.
.. CAPITALIZATION RISK: Investments in small- and mid-capitalization companies
may be more volatile than investments in large-capitalization companies.
Investments in these companies may have additional risks because these
companies may have limited product lines, markets or financial resources.
.. ACTIVE TRADING RISK: The Fund expects to engage in active and frequent
trading of its portfolio securities and its portfolio turnover rate may
greatly exceed 100%. A higher rate of portfolio turnover increases
transaction costs, which may negatively affect the Fund's return. In
addition, a high rate of portfolio turnover may result in substantial
short-term gains, which may have adverse tax consequences for Fund
shareholders.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
25
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over the life of the
Fund; and
.. how the Fund's average annual returns for one year, five years and since
inception compare to those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 13.31%.
[CHART]
07 08 09 10 11 12 13 14 15 16
---- ---- ---- ---- ---- ------ ------ ------ ----- -----
n/a n/a n/a n/a n/a 16.21% 30.80% 12.76% 1.18% 9.24%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 11.62%, 1ST QUARTER, 2012; AND WORST QUARTER WAS DOWN
-5.78%, 3RD QUARTER, 2015.
PERFORMANCE TABLE
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
SINCE
1 YEAR 5 YEARS INCEPTION*
-------------------------------------------------------------------------------
Class A** Return Before Taxes 4.61% 12.66% 13.02%
---------------------------------------------------------------
Return After Taxes on Distributions 3.47% 10.87% 11.24%
---------------------------------------------------------------
Return After Taxes on Distributions
and Sale of Fund Shares 3.01% 9.45% 9.76%
-------------------------------------------------------------------------------
Class C Return Before Taxes 7.37% 12.79% 13.15%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 9.50% 13.94% 14.31%
-------------------------------------------------------------------------------
Class R Return Before Taxes 8.92% 13.33% 13.70%
-------------------------------------------------------------------------------
Class K Return Before Taxes 9.13% 13.56% 13.93%
-------------------------------------------------------------------------------
Class I Return Before Taxes 9.51% 13.91% 14.29%
-------------------------------------------------------------------------------
S&P 500 Index(reflects no deduction for fees,
expenses or taxes) 11.96% 14.66% 14.90%
-------------------------------------------------------------------------------
* Inception date for all Classes: 12/8/11.
** After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
26
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Kurt A. Feuerman Since 2011 Senior Vice President of the Adviser
Anthony Nappo Since 2015 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
27
AB SELECT US LONG/SHORT PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Download Table]
CLASS
CLASS A CLASS C ADVISOR CLASS R, K AND I
SHARES SHARES SHARES SHARES
-------------------------------------------------------------------------------
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of offering price) 4.25% None None None
-------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(Load)
(as a percentage of offering price
or redemption proceeds, whichever
is lower) None(a) 1.00%(b) None None
-------------------------------------------------------------------------------
Exchange Fee None None None None
-------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Download Table]
CLASS A CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
-----------------------------------------------------------------------------------
Management Fees(c) 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
Distribution and/or
Service (12b-1) Fees .25% 1.00% None .50% .25% None
Other Expenses:
Transfer Agent .07% .07% .07% .19% .14% .03%
Dividend Expense,
Borrowing Costs and
Brokerage Expense on
Securities Sold Short .17% .17% .18% .16% .16% .18%
Other Expenses .06% .06% .06% .06% .04% .06%
------ ------ ------ ------ ------ ------
Total Other Expenses .30% .30% .31% .41% .34% .27%
------ ------ ------ ------ ------ ------
Acquired Fund Fees and
Expenses .07% .07% .07% .07% .07% .07%
------ ------ ------ ------ ------ ------
Total Annual Fund
Operating Expenses 2.12% 2.87% 1.88% 2.48% 2.16% 1.84%
====== ====== ====== ====== ====== ======
Fee Waiver and/or
Expense
Reimbursement(c)(d) (.07)% (.07)% (.07)% (.17)%(e) (.10)%(e) (.07)%
------ ------ ------ ------ ------ ------
Total Annual Fund
Operating Expenses
After Fee Waiver and/or
Expense Reimbursement 2.05% 2.80% 1.81% 2.31% 2.06% 1.77%
====== ====== ====== ====== ====== ======
-----------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(c)Restated to reflect current management fees and expense limitations, which
became effective on February 3, 2017.
(d)In connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
(e)The fee waiver and/or expense reimbursement agreement will remain in effect
until October 31, 2018 and will be automatically extended for one-year terms
unless the Adviser provides notice of termination 60 days prior to that date.
28
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Examples also assume that your
investment has a 5% return each year, that the Fund's operating expenses stay
the same and that any fee waiver is in effect through the date indicated above.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
[Download Table]
CLASS A CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
-------------------------------------------------------------------------------
After 1 Year $ 624 $ 383* $ 184 $ 234 $ 209 $ 180
After 3 Years $1,054 $ 882 $ 584 $ 756 $ 666 $ 572
After 5 Years $1,509 $1,507 $1,010 $1,305 $1,150 $ 989
After 10 Years $2,767 $3,190 $2,195 $2,803 $2,485 $2,153
-------------------------------------------------------------------------------
*If you did not redeem your shares at the end of the period, your expenses
would decrease by approximately $100.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 528% of the average value of its portfolio.
PRINCIPAL STRATEGIES
Under normal circumstances, the Fund invests at least 80% of its net assets in
equity securities of U.S. companies, short positions in such securities, and
cash and U.S. cash equivalents.
The Adviser selects investments for the Fund's long positions through an
intensive "bottom-up" approach that places an emphasis on companies that are
engaged in business activities with solid long-term growth potential and high
barriers to entry, that have strong cash flows and other financial metrics, and
that have transparent financial statements and business models. The Adviser
also evaluates the quality of company management based on a series of criteria,
including: (1) management's focus on shareholder returns, such as through a
demonstrated commitment to dividends and dividend growth, share buybacks or
other shareholder-friendly corporate actions; (2) management's employment of
conservative accounting methodologies; (3) management incentives, such as
direct equity ownership; and (4) management accessibility. The Adviser seeks to
identify companies where events or catalysts may drive the company's share
price higher, such as earnings and/or revenue growth above consensus forecasts,
potential market recognition of undervaluation or overstated market-risk
discount, or the institution of any of the shareholder-friendly practices
discussed in the preceding sentence. In light of this catalyst-focused
approach, the Adviser expects to engage in active and frequent trading for the
Fund.
The Adviser may reduce or eliminate the Fund's holdings in a company's
securities for a number of reasons, including if its evaluation of the above
factors changes adversely, if the anticipated events or catalysts do not occur
or do not affect the price of the securities as expected, or if the anticipated
events or catalysts do occur and cause the securities to be, in the Adviser's
view, overvalued or fully valued. At any given time the Fund may emphasize
growth stocks over value stocks, or vice versa.
In determining securities to be sold short, the Adviser looks for companies
facing near-term difficulties such as high valuations, quality of earnings
issues, or weakness in demand due to economic factors or long-term issues such
as changing technology or competitive concerns in their industries. The Fund
may also sell securities of exchange-traded funds ("ETFs") short, including to
hedge its exposure to specific market sectors or if it believes a specific
sector or asset will decline in value. When the Fund sells securities short, it
sells a stock that it does not own (but has borrowed) at its current market
price in anticipation that the price of the stock will decline. To complete, or
close out, the short sale transaction, the Fund buys the same stock in the
market at a later date and returns it to the lender.
The Adviser derives the ratio between long and short positions for the Fund
based on its bottom-up analysis supplemented with macro-economic and market
analyses. Under normal market conditions, the net long exposure of the Fund
(long exposure minus short exposure) will range between 30% and 70%. The
Adviser seeks to minimize the variability of Fund returns through industry
diversification as well as by managing long and short exposures and/or by
holding a material level of cash and/or cash equivalents. For example, the Fund
may hold long positions in equity securities with a value equal to 60% of its
net assets and have short sale obligations equal to 15% of its net assets,
resulting in 45% net long exposure. Assuming a 60% long exposure, 40% of Fund
assets will be held in cash or cash equivalents, including cash and cash
equivalents held to cover the Fund's short sale obligations. During periods of
excessive market risk, the Adviser may reduce the net long exposure of the
Fund. The Fund may at times hold long and short positions that in the aggregate
exceed the value of its net assets (i.e., so that the Fund is effectively
leveraged).
The Fund's investments will be focused on securities of companies with large
and medium market capitalizations, but it may also take long and short
positions in securities of small-capitalization companies. The Fund may invest
in non-U.S. companies, but currently intends to limit its investments in such
companies to no more than 10% of its net assets. The Fund may purchase
securities in initial public offerings and expects to do so on a regular basis.
29
The Fund may enter into derivatives transactions, such as options, futures
contracts, forwards, and swaps, as part of its investment strategies or for
hedging or other risk management purposes. These transactions may be used, for
example, as a means to take a short position in a security or sector without
actually selling securities short.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock,
bond or currency markets fluctuate. The value of the Fund's investments may
decline, sometimes rapidly and unpredictably, simply because of economic
changes or other events that affect large portions of the market.
.. SHORT SALE RISK: Short sales involve the risk that the Fund will incur a
loss by subsequently buying a security at a higher price than the price at
which it sold the security. The amount of such loss is theoretically
unlimited, as it will be based on the increase in value of the security sold
short. In contrast, the risk of loss from a long position is limited to the
Fund's investment in the security, because the price of the security cannot
fall below zero. The Fund may not always be able to close out a short
position on favorable terms.
.. DERIVATIVES RISK: Derivatives may be illiquid, difficult to price, and
leveraged so that small changes may produce disproportionate losses for the
Fund, and may be subject to counterparty risk to a greater degree than more
traditional investments.
.. LEVERAGE RISK: To the extent the Fund uses leveraging techniques, the value
of its shares may be more volatile because leverage tends to exaggerate the
effect of any increase or decrease in the value of the Fund's investments.
.. CAPITALIZATION RISK: Investments in small- and mid-capitalization companies
may be more volatile than investments in large-capitalization companies.
Investments in these companies may have additional risks because these
companies may have limited product lines, markets or financial resources.
.. ACTIVE TRADING RISK: The Fund expects to engage in active and frequent
trading of its portfolio securities and its portfolio turnover rate is
expected to greatly exceed 100%. A higher rate of portfolio turnover
increases transaction costs, which may negatively affect the Fund's return.
In addition, a high rate of portfolio turnover may result in substantial
short-term gains, which may have adverse tax consequences for Fund
shareholders.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over the life of the
Fund; and
.. how the Fund's average annual returns for one year and since inception
compare to those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
30
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 6.77%.
[CHART]
07 08 09 10 11 12 13 14 15 16
---- ---- ---- ---- ---- ---- ------ ----- ------ -----
n/a n/a n/a n/a n/a n/a 20.55% 3.27% -1.03% 4.61%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 6.70%, 4TH QUARTER, 2013; AND WORST QUARTER WAS DOWN
-4.50%, 3RD QUARTER, 2015.
PERFORMANCE TABLE
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
SINCE
1 YEAR INCEPTION*
-------------------------------------------------------------------------------
Class A** Return Before Taxes 0.17% 5.36%
---------------------------------------------------------------
Return After Taxes on Distributions 0.17% 4.42%
---------------------------------------------------------------
Return After Taxes on Distributions and Sale
of Fund Shares 0.10% 3.73%
-------------------------------------------------------------------------------
Class C Return Before Taxes 2.81% 5.72%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 4.83% 6.76%
-------------------------------------------------------------------------------
Class R Return Before Taxes 4.28% 6.23%
-------------------------------------------------------------------------------
Class K Return Before Taxes 4.60% 6.51%
-------------------------------------------------------------------------------
Class I Return Before Taxes 4.91% 6.81%
-------------------------------------------------------------------------------
S&P 500 Index
(reflects no deduction for fees, expenses or taxes) 11.96% 14.11%
-------------------------------------------------------------------------------
* Inception date for all Classes: 12/12/12.
** After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
31
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Kurt A. Feuerman Since 2012 Senior Vice President of the Adviser
Anthony Nappo Since 2015 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
32
AB SUSTAINABLE GLOBAL THEMATIC FUND
(FORMERLY, AB GLOBAL THEMATIC GROWTH FUND)
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Enlarge/Download Table]
CLASS B SHARES CLASS
CLASS A (NOT CURRENTLY OFFERED CLASS C ADVISOR CLASS R, K AND I
SHARES TO NEW INVESTORS) SHARES SHARES SHARES
---------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.25% None None None None
---------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or redemption
proceeds, whichever is lower) None(a) 4.00%(b) 1.00%(c) None None
---------------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None None
---------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
---------------------------------------------------------------------------------------------------------------------------
Management Fees .75% .75% .75% .75% .75% .75% .75%
Distribution and/or Service (12b-1) Fees .25% 1.00% 1.00% None .50% .25% None
Other Expenses:
Transfer Agent .29% .34% .32% .29% .27% .21% .07%
Other Expenses .12% .12% .12% .12% .12% .12% .12%
------ ------ ------ ------ ------ ------ ------
Total Other Expenses .41% .46% .44% .41% .39% .33% .19%
------ ------ ------ ------ ------ ------ ------
Acquired Fund Fees and Expenses .01% .01% .01% .01% .01% .01% .01%
------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses 1.42% 2.22% 2.20% 1.17% 1.65% 1.34% .95%
====== ====== ====== ====== ====== ====== ======
Fee Waiver and/or Expense Reimbursement(d) (.01)% (.01)% (.01)% (.01)% (.01)% (.01)% (.01)%
------ ------ ------ ------ ------ ------ ------
Total Annual Fund Operating Expenses After Fee Waiver and/or
Expense Reimbursement 1.41% 2.21% 2.19% 1.16% 1.64% 1.33% .94%
====== ====== ====== ====== ====== ====== ======
---------------------------------------------------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)Class B shares automatically convert to Class A shares after eight years.
The CDSC decreases over time. For Class B shares, the CDSC decreases 1.00%
annually to 0% after the fourth year.
(c)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(d)In connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
33
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Examples also assume that your
investment has a 5% return each year, that the Fund's operating expenses stay
the same and that any fee waiver remains in effect for only the first year.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
[Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
-------------------------------------------------------------------------------
After 1 Year $ 562 $ 624 $ 322 $ 118 $ 167 $ 135 $ 96
After 3 Years $ 854 $ 893 $ 687 $ 371 $ 519 $ 424 $ 302
After 5 Years $1,167 $1,189 $1,179 $ 643 $ 896 $ 733 $ 525
After 10 Years $2,054 $2,352 $2,533 $1,419 $1,954 $1,612 $1,165
-------------------------------------------------------------------------------
For the share classes listed below, you would pay the following expenses if you
did not redeem your shares at the end of the period:
[Download Table]
CLASS B CLASS C
-------------------------------------------------------------------------------
After 1 Year $ 224 $ 222
After 3 Years $ 693 $ 687
After 5 Years $1,189 $1,179
After 10 Years $2,352 $2,533
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 65% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Fund pursues opportunistic growth by investing in a global universe of
companies that are positively exposed to sustainable investment themes. Under
normal circumstances, the Fund invests at least 80% of its net assets in equity
securities of issuers located throughout the world that the Adviser believes
are positively exposed to sustainable investment themes.
The Adviser employs a combination of "top-down" and "bottom-up" investment
processes with the goal of identifying securities of companies worldwide,
fitting into sustainable investment themes. The Adviser identifies sustainable
investment themes that are broadly consistent with achieving the United Nations
Sustainable Development Goals. Examples of these themes may include energy
transformation, resource preservation, equality and opportunity, and improving
human health and safeguarding lives, and the themes are expected to change over
time based on the Adviser's research. In addition to this "top-down" thematic
approach, the Adviser also uses a "bottom-up" analysis of individual companies,
focusing on prospective earnings growth, valuation, and quality of company
management and on evaluating a company's exposure to environmental, social and
corporate governance ("ESG") factors. The Adviser emphasizes company-specific
positive selection criteria over broad-based negative screens in assessing a
company's exposure to ESG factors.
The Adviser normally considers a large universe of mid- to large-capitalization
companies worldwide for investment.
The Fund invests in securities issued by U.S. and non-U.S. companies from
multiple industry sectors in an attempt to maximize opportunity, which should
also tend to reduce risk. The Fund invests in both developed and emerging
market countries. Under normal market conditions, the Fund invests
significantly (at least 40%--unless market conditions are not deemed favorable
by the Adviser) in securities of non-U.S. companies. In addition, the Fund
invests, under normal circumstances, in the equity securities of companies
located in at least three countries. The percentage of the Fund's assets
invested in securities of companies in a particular country or denominated in a
particular currency varies in accordance with the Adviser's assessment of the
appreciation potential of such securities. The Fund may invest in any company
and industry and in any type of equity security, listed and unlisted, with
potential for capital appreciation. It invests in well-known, established
companies as well as new, smaller or less-seasoned companies. Investments in
new, smaller or less-seasoned companies may offer more reward but may also
entail more risk than is generally true of larger, established companies. The
Fund may also invest in synthetic foreign equity securities, which are various
types of warrants used internationally that entitle a holder to buy or sell
underlying securities, real estate investment trusts ("REITs") and zero-coupon
bonds.
The Fund may, at times, invest in shares of exchange-traded funds ("ETFs") in
lieu of making direct investments in securities. ETFs may provide more
efficient and economical exposure to the types of companies and geographic
locations in which the Fund seeks to invest than direct investments.
Investments in ETFs will not be subject to the Fund's sustainable investment
themes or ESG factors.
34
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 Fund 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 Fund may enter into other derivatives transactions, such as options,
futures contracts, forwards, and swaps. The Fund may use options strategies
involving the purchase and/or writing of various combinations of call and/or
put options, including on individual securities and stock indices, futures
contracts (including futures contracts on individual securities and stock
indices) or shares of ETFs. These transactions may be used, for example, in an
effort to earn extra income, to adjust exposure to individual securities or
markets, or to protect all or a portion of the Fund's portfolio from a decline
in value, sometimes within certain ranges.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond market fluctuates. The value of its 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 the Fund's growth approach, may
underperform the market generally.
.. ESG RISK: Applying ESG and sustainability criteria to the investment process
may exclude securities of certain issuers for non-investment reasons and
therefore the Fund may forgo some market opportunities available to funds
that do not use ESG or sustainability criteria. Securities of companies with
ESG practices may shift into and out of favor depending on market and
economic conditions, and the Fund's performance may at times be better or
worse than the performance of funds that do not use ESG or sustainability
criteria.
.. 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.
.. EMERGING MARKET RISK: Investments in emerging market countries may have more
risk because the markets are less developed and less liquid as well as being
subject to increased economic, political, regulatory, or other uncertainties.
.. CURRENCY RISK: Fluctuations in currency exchange rates may negatively affect
the value of the Fund's investments or reduce its returns.
.. CAPITALIZATION RISK: Investments in mid-capitalization companies may be more
volatile than investments in large-capitalization companies. Investments in
mid-capitalization companies may have additional risks because these
companies may have limited product lines, markets or financial resources.
.. DERIVATIVES RISK: Derivatives may be illiquid, difficult to price, and
leveraged so that small changes may produce disproportionate losses for the
Fund, and may be subject to counterparty risk to a greater degree than more
traditional investments.
.. FOCUSED PORTFOLIO RISK: Investments in a limited number of companies may
have more risk because changes in the value of a single security may have a
more significant effect, either negative or positive, on the Fund's net
asset value, or NAV.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over ten years; and
.. how the Fund's average annual returns for one, five and ten years compare to
those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
35
ON NOVEMBER 1, 2016, THE FUND IMPLEMENTED ITS CURRENT INVESTMENT POLICIES
(PREVIOUSLY, THE FUND'S INVESTMENT POLICIES DID NOT EMPHASIZE SUSTAINABLE
INVESTMENT THEMES) AND ALSO CHANGED ITS NAME FROM AB GLOBAL THEMATIC GROWTH
FUND TO AB SUSTAINABLE GLOBAL THEMATIC FUND. ACCORDINGLY, THE PERFORMANCE SHOWN
BELOW FOR PERIODS PRIOR TO NOVEMBER 1, 2016 IS BASED ON THE FUND'S PRIOR
INVESTMENT STRATEGIES AND MAY NOT BE REPRESENTATIVE OF THE FUND'S PERFORMANCE
UNDER ITS CURRENT INVESTMENT POLICIES.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 28.09%.
[CHART]
07 08 09 10 11 12 13 14 15 16
------ ------- ------ ------ ------- ------ ------ ----- ----- -----
20.29% -45.43% 55.54% 18.43% -23.71% 12.97% 22.62% 4.49% 2.46% 2.69%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 25.86%, 2ND QUARTER, 2009; AND WORST QUARTER WAS DOWN
-25.03%, 3RD QUARTER, 2011.
PERFORMANCE TABLE*
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A** Return Before Taxes -1.69% 7.83% 3.01%
---------------------------------------------------------------
Return After Taxes on Distributions -3.15% 7.51% 2.82%
---------------------------------------------------------------
Return After Taxes on Distributions
and Sale of Fund Shares -0.76% 6.04% 2.30%
-------------------------------------------------------------------------------
Class B Return Before Taxes -2.08% 7.90% 2.79%
-------------------------------------------------------------------------------
Class C Return Before Taxes 0.94% 7.97% 2.69%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 2.95% 9.08% 3.76%
-------------------------------------------------------------------------------
Class R Return Before Taxes 2.51% 8.64% 3.37%
-------------------------------------------------------------------------------
Class K Return Before Taxes 2.83% 8.98% 3.69%
-------------------------------------------------------------------------------
Class I Return Before Taxes 3.23% 9.38% 4.06%
-------------------------------------------------------------------------------
MSCI ACWI Index (Net)
(reflects no deduction for fees, expenses, or taxes
except the reinvestment of dividends of non-U.S.
withholding taxes) 7.86% 9.36% 3.56%
-------------------------------------------------------------------------------
* Includes the impact of proceeds of a residual distribution relating to
regulatory settlements, which enhanced the performance of all share classes
of the Fund for the 1-Year period ended July 31, 2016, by 4.33%.
** After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
36
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGER
The following table lists the person responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Daniel C. Roarty Since 2013 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
37
AB INTERNATIONAL GROWTH FUND
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Enlarge/Download Table]
CLASS B SHARES CLASS
CLASS A (NOT CURRENTLY OFFERED CLASS C ADVISOR CLASS R, K AND I
SHARES TO NEW INVESTORS) SHARES SHARES SHARES
--------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.25% None None None None
--------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or redemption
proceeds, whichever is lower) None(a) 4.00%(b) 1.00%(c) None None
--------------------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None None
--------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Enlarge/Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
-------------------------------------------------------------------------------------------------------
Management Fees .75% .75% .75% .75% .75% .75% .75%
Distribution and/or Service (12b-1) Fees .25% 1.00% 1.00% None .50% .25% None
Other Expenses:
Transfer Agent .23% .31% .25% .23% .26% .20% .10%
Other Expenses .20% .20% .20% .20% .21% .21% .21%
----- ----- ----- ----- ----- ----- -----
Total Other Expenses .43% .51% .45% .43% .47% .41% .31%
----- ----- ----- ----- ----- ----- -----
Total Annual Fund Operating Expenses 1.43% 2.26% 2.20% 1.18% 1.72% 1.41% 1.06%
===== ===== ===== ===== ===== ===== =====
-------------------------------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)Class B shares automatically convert to Class A shares after eight years.
The CDSC decreases over time. For Class B shares, the CDSC decreases 1.00%
annually to 0% after the fourth year.
(c)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
stay the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
[Download Table]
CLASS A CLASS B CLASS C ADVISOR CLASS CLASS R CLASS K CLASS I
-------------------------------------------------------------------------------
After 1 Year $ 564 $ 629 $ 323 $ 120 $ 175 $ 144 $ 108
After 3 Years $ 858 $ 906 $ 688 $ 375 $ 542 $ 446 $ 337
After 5 Years $1,173 $1,210 $1,180 $ 649 $ 933 $ 771 $ 585
After 10 Years $2,065 $2,386 $2,534 $1,432 $2,030 $1,691 $1,294
-------------------------------------------------------------------------------
38
For the share classes listed below, you would pay the following expenses if you
did not redeem your shares at the end of the period:
[Download Table]
CLASS B CLASS C
-------------------------------------------------------------------------------
After 1 Year $ 229 $ 223
After 3 Years $ 706 $ 688
After 5 Years $1,210 $1,180
After 10 Years $2,386 $2,534
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 27% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Fund invests primarily in an international portfolio of equity securities
of companies selected by the Adviser for their growth potential within various
market sectors. Examples of the types of market sectors in which the Fund may
invest include, but are not limited to, information technology (which includes
telecommunications), health care, financial services, infrastructure, energy
and natural resources, and consumer groups. The Adviser's growth analysts seek
to identify companies or industries that other investors have underestimated
earnings potential--for example, some hidden earnings driver (including, but
not limited to, reduced competition, market share gain, better margin trend,
increased customer base, or similar factors) that would cause a company to grow
faster than market forecasts.
The Adviser allocates the Fund's investments among broad sector groups
utilizing the fundamental company research conducted by its internal research
staff, assessing the current and forecasted investment opportunities and
conditions, as well as diversification and risk considerations. The Adviser may
vary the percentage allocations among market sectors and may change the market
sectors in which the Fund invests as companies' potential for growth within a
sector matures and new trends for growth emerge.
The Fund invests, under normal circumstances, in the equity securities of
companies located in at least three countries (and normally substantially more)
other than the United States. The Fund invests in securities of companies in
both developed and emerging market countries. Geographic distribution of the
Fund's investments among countries or regions also will be a product of the
stock selection process rather than a pre-determined allocation. The Fund may
also invest in synthetic foreign equity securities, which are various types of
warrants used internationally that entitle a holder to buy or sell underlying
securities. The Adviser expects that normally the Fund's portfolio will tend to
emphasize investments in larger capitalization companies, although the Fund may
invest in smaller or medium capitalization companies.
The Fund may, at times, invest in shares of exchange-traded funds ("ETFs") in
lieu of making direct investments in securities. ETFs may provide more
efficient and economical exposure to the types of companies and geographic
locations in which the Fund seeks to invest than direct investments.
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 Fund 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 Fund may enter into other derivatives transactions, such as options,
futures contracts, forwards, and swaps. The Fund may use options strategies
involving the purchase and/or writing of various combinations of call and/or
put options, including on individual securities and stock indices, futures
contracts (including futures contracts on individual securities and stock
indices) or shares of ETFs. These transactions may be used, for example, in an
effort to earn extra income, to adjust exposure to individual securities or
markets, or to protect all or a portion of the Fund's portfolio from a decline
in value, sometimes within certain ranges.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond market fluctuates. The value of its 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, may underperform the market
generally.
39
.. 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.
.. EMERGING MARKET RISK: Investments in emerging market countries may have more
risk because the markets are less developed and less liquid as well as being
subject to increased economic, political, regulatory or other uncertainties.
.. CURRENCY RISK: Fluctuations in currency exchange rates may negatively affect
the value of the Fund's 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: Derivatives may be illiquid, difficult to price, and
leveraged so that small changes may produce disproportionate losses for the
Fund, and may be subject to counterparty risk to a greater degree than more
traditional investments.
.. SECTOR RISK: The Fund may have more risk because of concentrated investments
in a particular market sector, such as the technology or financial services
sector. Market or economic factors affecting that sector could have a major
effect on the value of the Fund's investments.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over ten years; and
.. how the Fund's average annual returns for one, five and ten years compare to
those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 30.94%.
[CHART]
07 08 09 10 11 12 13 14 15 16
------ ------- ------ ------ ------- ------ ------ ------ ------ ------
17.14% -49.39% 40.09% 12.39% -16.51% 15.40% 13.30% -1.41% -2.11% -7.10%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 24.65%, 2ND QUARTER, 2009; AND WORST QUARTER WAS DOWN
-27.28%, 3RD QUARTER, 2008.
40
PERFORMANCE TABLE
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A* Return Before Taxes -11.05% 2.34% -1.33%
---------------------------------------------------------------
Return After Taxes on Distributions -11.22% 2.27% -1.58%
---------------------------------------------------------------
Return After Taxes on Distributions
and Sale of Fund Shares -6.12% 1.86% -0.82%
-------------------------------------------------------------------------------
Class B Return Before Taxes -11.59% 2.43% -1.50%
-------------------------------------------------------------------------------
Class C Return Before Taxes -8.80% 2.46% -1.63%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes -6.94% 3.51% -0.62%
-------------------------------------------------------------------------------
Class R Return Before Taxes -7.40% 2.96% -1.16%
-------------------------------------------------------------------------------
Class K Return Before Taxes -7.13% 3.27% -0.86%
-------------------------------------------------------------------------------
Class I Return Before Taxes -6.81% 3.69% -0.47%
-------------------------------------------------------------------------------
MSCI ACWI Index (ex. U.S.) (Net)
(reflects no deduction for fees, expenses, or taxes
except the reinvestment of dividends of non-U.S.
withholding taxes) 4.50% 5.00% 0.96%
-------------------------------------------------------------------------------
* After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGER
The following table lists the person responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Daniel C. Roarty Since 2011 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
41
AB GLOBAL CORE EQUITY PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Download Table]
CLASS A CLASS C ADVISOR CLASS
SHARES SHARES SHARES
-------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases
(as a percentage of offering price) 4.25% None None
-------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or
redemption proceeds, whichever is lower) None(a) 1.00%(b) None
-------------------------------------------------------------------------------
Exchange Fee None None None
-------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Download Table]
CLASS A CLASS C ADVISOR CLASS
-------------------------------------------------------------------------------
Management Fees .75% .75% .75%
Distribution and/or Service (12b-1) Fees .25% 1.00% None
Other Expenses:
Transfer Agent .03% .12% .03%
Other Expenses .19% .19% .19%
------ ------ ------
Total Other Expenses .22% .31% .22%
------ ------ ------
Total Annual Fund Operating Expenses 1.22% 2.06% .97%
====== ====== ======
Fee Waiver and/or Expense Reimbursement(c) (.07)% (.16)% (.07)%
------ ------ ------
Total Annual Fund Operating Expenses After Fee
Waiver and/or Expense Reimbursement 1.15% 1.90% .90%
====== ====== ======
-------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(c)The Adviser has contractually agreed to waive its management fees and/or to
bear expenses of the Fund through October 31, 2018 to the extent necessary
to prevent total Fund operating expenses (excluding acquired fund fees and
expenses other than the advisory fees of any AB Mutual Funds in which the
Fund may invest, interest expense, taxes, extraordinary expenses, and
brokerage commissions and other transaction costs), on an annualized basis,
from exceeding 1.15%, 1.90% and .90% of average daily net assets,
respectively, for Class A, Class C and Advisor Class shares ("expense
limitations"). The expense limitations will remain in effect until
October 31, 2018 and will continue thereafter from year to year unless the
Adviser provides notice of termination to the Fund at least 60 days prior to
the end of the period. Any fees waived and expenses borne by the Adviser
through October 31, 2018 under the expense limitations in effect prior to
that date may be reimbursed by the Fund until the end of the third fiscal
year after the fiscal period in which the fee was waived or the expense was
borne, provided that no reimbursement payment will be made that would cause
the Fund's covered operating expenses to exceed the applicable expense
limitations.
42
EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Examples also assume that your
investment has a 5% return each year, that the Fund's operating expenses stay
the same and that any fee waiver remains in effect only for the first year.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
[Download Table]
CLASS A CLASS C ADVISOR CLASS
-------------------------------------------------------------------------------
After 1 Year $ 537 $ 293* $ 92
After 3 Years $ 789 $ 630 $ 302
After 5 Years $1,060 $1,094 $ 529
After 10 Years $1,834 $2,377 $1,183
-------------------------------------------------------------------------------
*If you did not redeem your shares at the end of the period, your expenses
would be decreased by approximately $100.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 51% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Fund invests primarily in a portfolio of equity securities of issuers from
markets around the world. Under normal circumstances, the Fund invests at least
80% of its net assets in equity securities, at least 40% of its net assets in
securities of non-U.S. companies, and invests in companies in at least three
countries (including the United States).
The Fund is principally comprised of companies considered by the Adviser to
offer good prospects for attractive returns relative to the general stock
market. The Adviser will seek companies that are attractively valued and have
the ability to generate high and sustainable returns on invested capital. In
addition to returns on invested capital, other criteria that the Adviser will
consider include strong business fundamentals, capable management, prudent
corporate governance, strong balance sheet, strong earnings power, high
earnings quality, low downside risk, and substantial upside potential. In
managing the Fund, the Adviser will not seek to have a bias towards any
investment style, economic sector, country or company size. The Fund's holdings
of non-U.S. companies will frequently include companies located in emerging
markets, and at times emerging market companies will make up a significant
portion of the Fund.
Fluctuations in currency exchange rates can have a dramatic impact of the
returns of equity securities. While the Adviser may hedge the foreign currency
exposure resulting from the Fund's security positions through the use of
currency-related derivatives, it is not required to do so.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond market fluctuates. The value of its 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, may underperform the market
generally.
.. 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 with
respect to investments in emerging market countries, where there may be an
increased amount of economic, political and social instability.
.. EMERGING MARKET RISK: Investments in emerging market countries may have more
risk because the markets are less developed and less liquid as well as being
subject to increased economic, political, regulatory or other uncertainties.
.. CURRENCY RISK: Fluctuations in currency exchange rates may negatively affect
the value of the Fund's investments or reduce its returns.
.. NON-DIVERSIFICATION RISK: The Fund may have more risk because it is
"non-diversified", meaning that it can invest more of its assets in a
smaller number of issuers. Accordingly, changes in the value of a single
security may have a more significant effect, either negative or positive, on
the Fund's net asset value, or NAV.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
43
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed from year to year over the life of the
Fund; and
.. how the Fund's average annual returns for one year and since inception
compare to those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 17.84%.
[CHART]
07 08 09 10 11 12 13 14 15 16
---- ---- ---- ---- ---- ---- ---- ---- ------ -----
n/a n/a n/a n/a n/a n/a n/a n/a -2.77% 7.75%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 6.80%, 3RD QUARTER, 2016; AND WORST QUARTER WAS DOWN
-8.57%, 3RD QUARTER, 2015.
PERFORMANCE TABLE
AVERAGE ANNUAL TOTAL RETURNS
(For the periods ended December 31, 2016)
[Download Table]
SINCE
1 YEAR INCEPTION*
-------------------------------------------------------------------------------
Class A** Return Before Taxes 3.13% 0.17%
---------------------------------------------------------------
Return After Taxes on Distributions 2.93% -0.11%
---------------------------------------------------------------
Return After Taxes on Distributions and Sale
of Fund Shares 1.93% 0.07%
-------------------------------------------------------------------------------
Class C Return Before Taxes 5.93% 1.42%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes 7.93% 2.42%
-------------------------------------------------------------------------------
MSCI ACWI Index (Net)
(reflects no deduction for fees, expenses, or taxes except
the reinvestment of dividends of non-U.S. withholding taxes) 7.86% 2.20%
-------------------------------------------------------------------------------
* Inception date for all Classes: 11/12/14.
** After-tax returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
44
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
David Dalgas Since 2014 Senior Vice President of the Adviser
Klaus Ingemann Since 2014 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
45
AB INTERNATIONAL STRATEGIC CORE PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs for Class A Shares on page 129 of the
Fund's Statement of Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Download Table]
CLASS A CLASS C ADVISOR CLASS
SHARES SHARES SHARES
-------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases
(as a percentage of offering price) 4.25% None None
-------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or
redemption proceeds, whichever is lower) None(a) 1.00%(b) None
-------------------------------------------------------------------------------
Exchange Fee None None None
-------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Download Table]
CLASS A CLASS C ADVISOR CLASS
-------------------------------------------------------------------------------
Management Fees .75% .75% .75%
Distribution and/or Service (12b-1) Fees .25% 1.00% None
Other Expenses:
Transfer Agent .10% .20% .11%
Other Expenses 4.03% 3.75% 3.51%
------- ------- -------
Total Other Expenses 4.13% 3.95% 3.62%
------- ------- -------
Acquired Fund Fees and Expenses .01% .01% .01%
------- ------- -------
Total Annual Fund Operating Expenses 5.14% 5.71% 4.38%
======= ======= =======
Fee Waiver and/or Expense Reimbursement(c) (3.94)% (3.76)% (3.43)%
------- ------- -------
Total Annual Fund Operating Expenses After Fee
Waiver and/or Expense Reimbursement 1.20% 1.95% .95%
======= ======= =======
-------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(c)The Adviser has contractually agreed to waive its management fees and/or to
bear expenses of the Fund through October 31, 2018 to the extent necessary
to prevent total Fund operating expenses (excluding acquired fund fees and
expenses other than the advisory fees of any AB Mutual Funds in which the
Fund may invest, interest expense and extraordinary expenses), on an
annualized basis, from exceeding 1.20%, 1.95% and .95% of average daily net
assets, respectively, for Class A, Class C and Advisor Class shares
("expense limitations"). The expense limitations will remain in effect until
October 31, 2018 and will continue thereafter from year to year unless the
Adviser provides notice of termination to the Fund at least 60 days prior to
the end of the period. Any fees waived and expenses borne by the Adviser may
be reimbursed by the Fund until the end of the third fiscal year after the
fiscal period in which the fee was waived or the expense was borne, provided
that no reimbursement payment will be made that would cause the Fund's
covered operating expenses to exceed the applicable expense limitations. In
connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
46
EXAMPLE
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of these periods. The Examples also assume that your
investment has a 5% return each year, that the Fund's operating expenses stay
the same and that any fee waiver is in effect for only the first year. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
[Download Table]
CLASS A CLASS C ADVISOR CLASS
-------------------------------------------------------------------------------
After 1 Year $ 542 $ 298* $ 97
After 3 Years $1,562 $1,366 $1,014
After 5 Years $2,580 $2,518 $1,943
After 10 Years $5,111 $5,328 $4,315
-------------------------------------------------------------------------------
*If you did not redeem your shares at the end of the period, your expenses
would be decreased by approximately $100.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal period, the Fund's portfolio
turnover rate was 64% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Adviser seeks to achieve the Fund's investment objective by investing,
under normal circumstances, primarily in common stocks of non-U.S. companies,
and in companies in at least three countries other than the United States.
The Fund will invest in companies that are determined by the Adviser to offer
favorable long-term sustainable profitability, price stability, and attractive
valuations. The Adviser will employ an integrated approach that combines both
fundamental and quantitative research to identify attractive investment
opportunities. Factors that the Adviser will consider in this regard will
include: a company's record and projections of profitability, accuracy and
availability of information with respect to the company, success and experience
of management, competitive advantage, low stock price volatility, and liquidity
of the company's securities. The Adviser will compare these results to the
characteristics of the general stock markets to determine the relative
attractiveness of each company at a given time. The Adviser will weigh
economic, political and market factors in making investment decisions. The
Adviser will seek to manage the Fund so that it is subject to less share price
volatility than many other international mutual funds, although there can be no
guarantee that the Adviser will be successful in this regard.
The Fund will primarily invest in mid- and large-capitalization companies,
which are currently defined for the Fund as companies that have market
capitalizations of $1.5 billion or more. The Fund's holdings of non-U.S.
companies will generally include some companies located in emerging markets.
Fluctuations in currency exchange rates can have a dramatic impact on the
returns of equity securities. The Adviser may adjust the foreign currency
exposure resulting from the Fund's security positions through the use of
currency-related derivatives, primarily in an effort to minimize the currency
risk to which the Fund is subject. However, the Adviser is not required to use
such derivatives.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond markets fluctuate. The value of the Fund's investments may decline,
sometimes rapidly and unpredictably, simply because of economic changes or
other events that affect large portions of the market.
.. 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 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 Fund's investments or reduce its returns.
.. CAPITALIZATION RISK: Investments in mid-capitalization companies may be more
volatile than investments in large-capitalization companies. Investments in
mid-capitalization companies may have additional risks because these
companies have limited product lines, markets or financial resources.
.. DERIVATIVES RISK: Derivatives may be illiquid, difficult to price, and
leveraged so that small changes may produce disproportionate losses for the
Fund, and may be subject to counterparty risk to a greater degree than more
traditional investments.
47
.. NON-DIVERSIFICATION RISK: The Fund may have more risk because it is
"non-diversified", meaning that it can invest more of its assets in a
smaller number of issuers. Accordingly, changes in the value of a single
security may have a more significant effect, either negative or positive, on
the Fund's net asset value, or NAV.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed over the life of the Fund; and
.. how the Fund's average annual returns for one year and since inception
compare to those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 19.27%.
[CHART]
07 08 09 10 11 12 13 14 15 16
---- ---- ---- ---- ---- ---- ---- ---- ---- ------
n/a n/a n/a n/a n/a n/a n/a n/a n/a -0.30%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 3.78%, 3RD QUARTER, 2016; AND WORST QUARTER WAS DOWN
-4.72%, 4TH QUARTER, 2016.
PERFORMANCE TABLE
AVERAGE ANNUAL TOTAL RETURNS
(For the period ended December 31, 2016)
[Download Table]
SINCE
1 YEAR INCEPTION*
-------------------------------------------------------------------------------
Class A** Return Before Taxes -4.53% -4.30%
---------------------------------------------------------------
Return After Taxes on Distributions -4.71% -4.70%
---------------------------------------------------------------
Return After Taxes on Distributions and Sale
of Fund Shares -2.40% -3.33%
-------------------------------------------------------------------------------
Class C Return Before Taxes -2.02% -2.09%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes -0.15% -1.19%
-------------------------------------------------------------------------------
MSCI EAFE Index
(reflects no deduction for fees, expenses or taxes) 1.00% -4.31%
-------------------------------------------------------------------------------
* Inception date for all Classes: 7/29/15.
** After-tax Returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold Fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
48
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Kent W. Hargis Since 2015 Senior Vice President of the Adviser
Sammy Suzuki Since 2015 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
49
AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek long-term growth of capital.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AB Mutual Funds. More information about these and other discounts
is available from your financial intermediary and in Investing in the
Funds--Sales Charge Reduction Programs for Class A Shares on page 68 of this
Prospectus, in Appendix B--Financial Intermediary Waivers and in Purchase of
Shares--Sales Charge Reduction Programs on page 129 of the Fund's Statement of
Additional Information ("SAI").
You may be required to pay commissions and/or other forms of compensation to a
broker for transactions in Advisor Class shares, which are not reflected in the
tables or the examples below.
SHAREHOLDER FEES (fees paid directly from your investment)
[Download Table]
CLASS A CLASS C ADVISOR CLASS
SHARES SHARES SHARES
-------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases
(as a percentage of offering price) 4.25% None None
-------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or
redemption proceeds, whichever is lower) None(a) 1.00%(b) None
-------------------------------------------------------------------------------
Exchange Fee None None None
-------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)
[Download Table]
CLASS A CLASS C ADVISOR CLASS
-------------------------------------------------------------------------------
Management Fees .85% .85% .85%
Distribution and/or Service (12b-1) Fees .25% 1.00% None
Other Expenses:
Transfer Agent .02% .16% .07%
Other Expenses 7.82% 7.36% 2.81%
------- ------- -------
Total Other Expenses 7.84% 7.52% 2.88%
------- ------- -------
Acquired Fund Fees and Expenses .01% .01% .01%
------- ------- -------
Total Annual Fund Operating Expenses 8.95% 9.38% 3.74%
======= ======= =======
Fee Waiver and/or Expense Reimbursement(c) (7.65)% (7.33)% (2.69)%
------- ------- -------
Total Annual Fund Operating Expenses After Fee
Waiver and/or Expense Reimbursement 1.30% 2.05% 1.05%
======= ======= =======
-------------------------------------------------------------------------------
(a)Purchases of Class A shares in amounts of $1,000,000 or more, or by certain
group retirement plans, may be subject to a 1%, 1-year contingent deferred
sales charge, or CDSC, which may be subject to waiver in certain
circumstances.
(b)For Class C shares, the CDSC is 0% after the first year. Class C shares
automatically convert to Class A shares after ten years.
(c)The Adviser has contractually agreed to waive its management fees and/or to
bear expenses of the Fund through October 31, 2018 to the extent necessary
to prevent total Fund operating expenses (excluding acquired fund fees and
expenses other than the advisory fees of any AB Mutual Funds in which the
Fund may invest, interest expense and extraordinary expenses), on an
annualized basis, from exceeding 1.30%, 2.05% and 1.05% of average daily net
assets, respectively, for Class A, Class C and Advisor Class shares
("expense limitations"). The expense limitations will remain in effect until
October 31, 2018 and will continue thereafter from year to year unless the
Adviser provides notice of termination to the Fund at least 60 days prior to
the end of the period. Any fees waived and expenses borne by the Adviser may
be reimbursed by the Fund until the end of the third fiscal year after the
fiscal period in which the fee was waived or the expense was borne, provided
that no reimbursement payment will be made that would cause the Fund's
covered operating expenses to exceed the applicable expense limitations. In
connection with the Fund's investments in AB Government Money Market
Portfolio (the "Money Market Portfolio"), the Adviser has contractually
agreed to waive its management fee from the Fund and/or reimburse other
expenses of the Fund in an amount equal to the Fund's pro rata share of the
Money Market Portfolio's effective management fee, as included in "Acquired
Fund Fees and Expenses".
50
EXAMPLE
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of these periods. The Examples also assume that your
investment has a 5% return each year, that the Fund's operating expenses stay
the same and that any fee waiver is in effect through the date indicated above.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
[Download Table]
CLASS A CLASS C ADVISOR CLASS
-------------------------------------------------------------------------------
After 1 Year $ 552 $ 308* $ 107
After 3 Years $2,261 $2,057 $ 896
After 5 Years $3,838 $3,748 $1,706
After 10 Years $7,265 $7,367 $3,819
-------------------------------------------------------------------------------
*If you did not redeem your shares at the end of the period, your expenses
would be decreased by approximately $100.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio
turnover rate was 66% of the average value of its portfolio.
PRINCIPAL STRATEGIES
The Adviser seeks to achieve the Fund's investment objective by investing,
under normal circumstances, primarily in common stocks of non-U.S. companies,
and in companies in at least three countries other than the United States.
The Fund will invest in companies that are determined by the Adviser to offer
favorable long-term growth potential and that are trading at attractive
valuations. The Adviser will employ an appraisal method which attempts to
measure each prospective company's quality and growth rate by numerous factors.
Such factors will include: a company's record and projections of profit and
earnings growth, accuracy and availability of information with respect to the
company, success and experience of management, accessibility of management to
the Adviser, product lines and competitive position both in the United States
and abroad, lack of cyclicality, large market capitalization and liquidity of
the company's securities. The Adviser will compare these results to the
characteristics of the general stock markets to determine the relative
attractiveness of each company at a given time. The Adviser will weigh
economic, political and market factors in making investment decisions; this
appraisal technique attempts to measure each investment candidate not only
against other stocks of the same industry and region, but also against a broad
spectrum of investments.
The Fund will invest in a relatively small number of individual stocks,
generally 25 to 35 companies. In addition, the Fund is a non-diversified Fund
as that term is defined in the Investment Company Act of 1940 (the "1940 Act"),
which means that it may invest more of its assets in a smaller number of
companies than a diversified fund. The Fund will primarily invest in mid- and
large-capitalization companies, which are currently defined for the Fund as
companies that have market capitalizations of $2.0 billion or more. The Fund's
holdings of non-U.S. companies may include some companies located in emerging
markets, and at times emerging market companies may make up a significant
portion of the Fund.
Fluctuations in currency exchange rates can have a dramatic impact of the
returns of equity securities. While the Adviser may hedge the foreign currency
exposure resulting from the Fund's security positions through the use of
currency-related derivatives, it is not required to do so.
PRINCIPAL RISKS
.. MARKET RISK: The value of the Fund's assets will fluctuate as the stock or
bond market fluctuates. The value of its 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 the Fund's growth approach, may
underperform the market generally.
.. 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.
.. EMERGING MARKET RISK: Investments in emerging market countries may have more
risk because the markets are less developed and less liquid, and because
these investments may be subject to increased economic, political,
regulatory or other uncertainties.
.. CURRENCY RISK: Fluctuations in currency exchange rates may negatively affect
the value of the Fund's investments or reduce its returns.
51
.. NON-DIVERSIFICATION RISK: The Fund may have more risk because it is
"non-diversified," meaning that it can invest more of its assets in a
smaller number of issuers. Accordingly, changes in the value of a single
security may have a more significant effect, either negative or positive, on
the Fund's net asset value, or NAV.
.. SECTOR RISK: The Fund may have more risk because of concentrated investments
in a particular market sector, such as the technology or financial services
sector. Market or economic factors affecting that sector could have a major
effect on the value of the Fund's investments.
.. CAPITALIZATION RISK: Investments in mid-capitalization companies may be more
volatile than investments in large-capitalization companies. Investments in
mid-capitalization companies may have additional risks because these
companies have limited product lines, markets or financial resources.
.. MANAGEMENT RISK: The Fund is subject to management risk because it is an
actively-managed investment fund. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
results.
As with all investments, you may lose money by investing in the Fund.
BAR CHART AND PERFORMANCE INFORMATION
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing:
.. how the Fund's performance changed over the life of the Fund; and
.. how the Fund's average annual returns for one year and since inception
compare to those of a broad-based securities market index.
You may obtain updated performance information on the Fund's website at
www.abfunds.com (click on "Investments--Mutual Funds").
The Fund's past performance before and after taxes, of course, does not
necessarily indicate how it will perform in the future.
BAR CHART
The annual returns in the bar chart are for the Fund's Class A shares and do
not reflect sales loads. If sales loads were reflected, returns would be less
than those shown. Through September 30, 2017, the year-to-date unannualized
return for Class A shares was 32.64%.
[CHART]
07 08 09 10 11 12 13 14 15 16
---- ---- ---- ---- ---- ---- ---- ---- ---- ------
n/a n/a n/a n/a n/a n/a n/a n/a n/a -5.97%
During the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 8.98%, 3RD QUARTER, 2016; AND WORST QUARTER WAS DOWN
-6.07%, 4TH QUARTER, 2016.
52
PERFORMANCE TABLE
AVERAGE ANNUAL TOTAL RETURNS
(For the period ended December 31, 2016)
[Download Table]
SINCE
1 YEAR INCEPTION*
-------------------------------------------------------------------------------
Class A** Return Before Taxes -9.98% -10.33%
---------------------------------------------------------------
Return After Taxes on Distributions -10.00% -10.35%
---------------------------------------------------------------
Return After Taxes on Distributions and Sale
of Fund Shares -5.45% -7.74%
-------------------------------------------------------------------------------
Class C Return Before Taxes -7.69% -8.73%
-------------------------------------------------------------------------------
Advisor Class Return Before Taxes -5.74% -7.82%
-------------------------------------------------------------------------------
MSCI EAFE Index
(reflects no deduction for fees, expenses or taxes) 1.00% -4.34%
-------------------------------------------------------------------------------
* Inception date for all Classes: 4/15/15.
** After-tax Returns:
-Are shown for Class A shares only and will vary for the other Classes of
shares because these Classes have different expense ratios;
-Are an estimate, which is based on the highest historical individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes; actual after-tax returns depend on an individual
investor's tax situation and are likely to differ from those shown; and
-Are not relevant to investors who hold Fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.
PORTFOLIO MANAGERS
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:
[Download Table]
EMPLOYEE LENGTH OF SERVICE TITLE
-------------------------------------------------------------------------------
Dev Chakrabarti Since 2015 Senior Vice President of the Adviser
Mark Phelps Since 2015 Senior Vice President of the Adviser
ADDITIONAL INFORMATION
For important information about the purchase and sale of Fund shares, tax
information and financial intermediary compensation, please turn to ADDITIONAL
INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL
INTERMEDIARIES, page 54 in this Prospectus.
53
ADDITIONAL INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND
FINANCIAL INTERMEDIARIES
. PURCHASE AND SALE OF FUND SHARES
PURCHASE MINIMUMS
[Download Table]
INITIAL SUBSEQUENT
-------------------------------------------------------------------------------
Class A/Class C shares, including $2,500 $50
traditional IRAs and Roth IRAs
(Class B shares are not currently
offered to new investors)
-------------------------------------------------------------------------------
Automatic Investment Program None $50
If initial minimum investment is
less than $2,500, then $200
monthly until account balance
reaches $2,500
-------------------------------------------------------------------------------
Advisor Class shares (only available None None
to fee-based programs or through
other limited arrangements and
certain commission-based brokerage
arrangements)
-------------------------------------------------------------------------------
Class A, Class R, Class K, Class I None None
and Class Z shares are available at
NAV, without an initial sales
charge, to 401(k) plans, 457 plans,
employer-sponsored 403(b) plans,
profit-sharing and money purchase
pension plans, defined benefit
plans, and non-qualified deferred
compensation plans where plan level
or omnibus accounts are held on the
books of a Fund.
-------------------------------------------------------------------------------
You may sell (redeem) your shares each day the New York Stock Exchange (the
"Exchange") is open. You may sell your shares through your financial
intermediary or by mail (AllianceBernstein Investor Services, Inc., P.O. Box
786003, San Antonio, TX 78278-6003) or telephone (800-221-5672).
. TAX INFORMATION
Each Fund may pay income dividends or make capital gains distributions, which
may be subject to federal income taxes and taxable as ordinary income or
capital gains, and may also be subject to state and local taxes.
. PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of a Fund through a broker-dealer or other financial
intermediary (such as a bank or a group retirement plan), the Fund and its
related companies may pay the intermediary for the sale of Fund shares and
related services. These payments may create a conflict of interest by
influencing the broker-dealer or other financial intermediary and your
salesperson to recommend the Fund over another investment. Ask your salesperson
or visit your financial intermediary's website for more information.
54
ADDITIONAL INFORMATION ABOUT THE FUNDS' RISKS AND INVESTMENTS
--------------------------------------------------------------------------------
This section of the Prospectus provides additional information about the Funds'
investment practices and related risks, including principal and non-principal
strategies and risks. Most of these investment practices are discretionary,
which means that the Adviser may or may not decide to use them. This Prospectus
does not describe all of a Fund's investment practices and additional
information about each Fund's risks and investments can be found in the Funds'
SAI.
DERIVATIVES
Each Fund may, but is not required to, use derivatives for hedging or other
risk management purposes or as part of its investment strategies. Derivatives
are financial contracts whose value depends on, or is derived from, the value
of an underlying asset, reference rate or index. A Fund may use derivatives to
earn income and enhance returns, to hedge or adjust the risk profile of its
investments, to replace more traditional direct investments and to obtain
exposure to otherwise inaccessible markets.
There are four principal types of derivatives--options, futures contracts,
forwards and swaps--each of which is described below. Derivatives include
listed and cleared transactions where a Fund's derivative trade counterparty is
an exchange or clearinghouse, and non-cleared bilateral "over-the-counter"
transactions where a Fund's derivative trade counterparty is a financial
institution. Exchange-traded or cleared derivatives transactions tend to be
more liquid and subject to less counterparty credit risk than those that are
privately negotiated.
A Fund's use of derivatives may involve risks that are different from, or
possibly greater than, the risks associated with investing directly in
securities or other more traditional instruments. These risks include the risk
that the value of a derivative instrument may not correlate perfectly, or at
all, with the value of the assets, reference rates, or indices that they are
designed to track. Other risks include: the possible absence of a liquid
secondary market for a particular instrument and possible exchange-imposed
price fluctuation limits, either of which may make it difficult or impossible
to close out a position when desired; and the risk that the counterparty will
not perform its obligations. Certain derivatives may have a leverage component
and involve leverage risk. Adverse changes in the value or level of the
underlying asset, note or index can result in a loss substantially greater than
the Fund's investment (in some cases, the potential loss is unlimited).
The Funds' investments in derivatives may include, but are not limited to, the
following:
.. FORWARD CONTRACTS. A forward contract is an agreement that obligates one
party to buy, and the other party to sell, a specific quantity of an
underlying commodity or other tangible asset for an agreed-upon price at a
future date. A forward contract generally is settled by physical delivery of
the commodity or tangible asset to an agreed-upon location (rather than
settled by cash) or is rolled forward into a new forward contract, or, in
the case of a non-deliverable forward, by a cash payment at maturity. The
Funds' investments in forward contracts may include the following:
- Forward Currency Exchange Contracts. A Fund may purchase or sell forward
currency exchange contracts for hedging purposes to minimize the risk from
adverse changes in the relationship between the U.S. Dollar and other
currencies or for non-hedging purposes as a means of making direct
investments in foreign currencies, as described below under "Other
Derivatives and Strategies--Currency Transactions". A Fund, for example, may
enter into a forward contract as a transaction hedge (to "lock in" the
U.S. Dollar price of a non-U.S. Dollar security), as a position hedge (to
protect the value of securities the Fund owns that are denominated in a
foreign currency against substantial changes in the value of the foreign
currency) or as a cross-hedge (to protect the value of securities the Fund
owns that are denominated in a foreign currency against substantial changes
in the value of that foreign currency by entering into a forward contract
for a different foreign currency that is expected to change in the same
direction as the currency in which the securities are denominated).
.. FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A futures contract is a
standardized, exchange-traded agreement that obligates the buyer to buy and
the seller to sell a specified quantity of an underlying asset (or settle
for cash the value of a contract based on an underlying asset, rate or
index) at a specific price on the contract maturity date. Options on futures
contracts are options that call for the delivery of futures contracts upon
exercise. A Fund may purchase or sell futures contracts and options thereon
to hedge against changes in interest rates, securities (through index
futures or options) or currencies. A Fund may also purchase or sell futures
contracts for foreign currencies or options thereon for non-hedging purposes
as a means of making direct investments in foreign currencies, as described
below under "Other Derivatives and Strategies--Currency Transactions".
.. OPTIONS. An option is an agreement that, for a premium payment or fee, gives
the option holder (the buyer) the right but not the obligation to buy (a
"call option") or sell (a "put option") the underlying asset (or settle for
cash an amount based on an underlying asset, rate or index) at a specified
price (the exercise price) during a period of time or on a specified date.
Investments in options are considered speculative. A Fund may lose the
premium paid for them if the price of the underlying security or other asset
decreased or remained the same (in the case of a call option) or increased
or remained the same (in the case of a put option). If a put or call option
purchased by a Fund were permitted to expire without being sold or
exercised, its premium would represent a loss to the Fund. The Funds'
investments in options include the following:
- Options on Foreign Currencies. A Fund may invest in options on foreign
currencies that are privately negotiated
55
or traded on U.S. or foreign exchanges for hedging purposes to protect
against declines in the U.S. Dollar value of foreign currency denominated
securities held by a Fund and against increases in the U.S. Dollar cost of
securities to be acquired. The purchase of an option on a foreign currency
may constitute an effective hedge against fluctuations in exchange rates,
although if rates move adversely, a Fund may forfeit the entire amount of
the premium plus related transaction costs. A Fund may also invest in
options on foreign currencies for non-hedging purposes as a means of making
direct investments in foreign currencies, as described below under "Other
Derivatives and Strategies--Currency Transactions".
- Options on Securities. A Fund may purchase or write a put or call option on
securities. A Fund will only exercise an option it purchased if the price of
the reference security is less (in the case of a put option) or more (in the
case of a call option) than the exercise price. If a Fund does not exercise
a purchased option, the premium it paid for the option will be lost. A Fund
may write covered options, which means writing an option for securities the
Fund owns, and uncovered options. A Fund may also enter into options on the
yield "spread" or yield differential between two securities. In contrast to
other types of options, this option is based on the difference between the
yields of designated securities, futures or other instruments. In addition,
a Fund may write covered straddles. A straddle is a combination of a call
and a put written on the same underlying security. In purchasing an option
on securities, a Fund would be in a position to realize a gain if, during
the option period, the price of the underlying securities increased (in the
case of a call) or decreased (in the case of a put) by an amount in excess
of the premium paid; otherwise the Fund would experience a loss not greater
than the premium paid for the option. Thus, a Fund would realize a loss if
the price of the underlying security declined or remained the same (in the
case of a call) or increased or remained the same (in the case of a put) or
otherwise did not increase (in the case of a put) or decrease (in the case
of a call) by more than the amount of the premium. If a put or call option
purchased by a Fund were permitted to expire without being sold or
exercised, its premium would represent a loss to the Fund.
If a Fund purchases or writes privately-negotiated options on securities, it
will effect such transactions only with investment dealers and other
financial institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Adviser. The Adviser has adopted
procedures for monitoring the creditworthiness of such counterparties.
- Options on Securities Indices. An option on a securities index is similar to
an option on a security except that, rather than taking or making delivery
of a security at a specified price, an option on a securities index gives
the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the chosen index is greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the
option.
- Other Option Strategies. In an effort to earn extra income, to adjust
exposure to individual securities or markets, or to protect all or a portion
of its portfolio from a decline in value, sometimes within certain ranges, a
Fund may use option strategies such as the concurrent purchase of a call or
put option, including on individual securities and stock indices, futures
contracts (including on individual securities and stock indices) or shares
of exchange-traded funds ("ETFs") at one strike price and the writing of a
call or put option on the same individual security, stock index, futures
contract or ETF at a higher strike price in the case of a call option or at
a lower strike price in the case of a put option. The maximum profit from
this strategy would result for the call options from an increase in the
value of the individual security, stock index, futures contract or ETF above
the higher strike price or, for the put options, from the decline in the
value of the individual security, stock index, futures contract or ETF below
the lower strike price. If the price of the individual security, stock
index, futures contract or ETF declines, in the case of the call option, or
increases, in the case of the put option, the Fund has the risk of losing
the entire amount paid for the call or put options.
.. SWAP TRANSACTIONS. A swap is an agreement that obligates two parties to
exchange a series of cash flows at specified intervals (payment dates) based
upon or calculated by reference to changes in specified prices or rates
(e.g., interest rates in the case of interest rate swaps or currency
exchange rates in the case of currency swaps) for a specified amount of an
underlying asset (the "notional" principal amount). Generally, the notional
principal amount is used solely to calculate the payment stream, but is not
exchanged. Most swaps are entered into on a net basis (i.e., the two payment
streams are netted out, with a Fund receiving or paying, as the case may be,
only the net amount of the two payments). 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. Funds post initial and
variation margin to support their obligations under cleared swaps by making
payments to their clearing member FCMs. Central clearing is expected to
reduce counterparty credit risks and increase liquidity, but central
clearing does not make swap transactions risk free. Centralized clearing
will be required for additional categories of swaps on a phased-in basis
based on Commodity Futures Trading Commission approval of contracts for
central clearing. Bilateral swap agreements are two-party contracts entered
into primarily by institutional investors and are not cleared through a
third party.
The Funds' investments in swap transactions include the following:
- Currency Swaps. A Fund may invest in currency swaps for hedging purposes to
protect against adverse changes in exchange rates between the U.S. Dollar
and other currencies or for non-hedging purposes as a means of
56
making direct investments in foreign currencies, as described below under
"Other Derivatives and Strategies--Currency Transactions". Currency swaps
involve the exchange by a Fund with another party of a series of payments in
specified currencies. Currency swaps may be bilateral and privately
negotiated with the Fund expecting to achieve an acceptable degree of
correlation between its portfolio investments and its currency swaps
position. Currency swaps may involve the exchange of actual principal
amounts of currencies by the counterparties at the initiation, and again
upon the termination, of the transaction.
- Total Return Swaps. A Fund may enter into total return swaps in order to
take a "long" or "short" position with respect to an underlying asset. A
total return swap involves commitments to pay interest in exchange for a
market-linked return based on a notional amount of the underlying asset.
Therefore, when a Fund enters into a total return swap, it is subject to the
market price volatility of the underlying asset. To the extent that the
total return of the security, group of securities or index underlying the
swap exceeds or falls short of the offsetting interest obligation, the Fund
will receive or make a payment to the counterparty.
- Interest Rate Swaps, Swaptions, Caps, and Floors. Interest rate swaps
involve the exchange by a Fund with another party of payments calculated by
reference to specified interest rates (e.g., an exchange of floating-rate
payments for fixed-rate payments). Unless there is a counterparty default,
the risk of loss to the Fund from interest rate swap transactions is limited
to the net amount of interest payments that the Fund is contractually
obligated to make. If the counterparty to an interest rate swap transaction
defaults, the Fund's risk of loss consists of the net amount of interest
payments that the Fund contractually is entitled to receive.
An option on a swap agreement, also called a "swaption", is an option that
gives the buyer the right, but not the obligation, to enter into a swap on a
future date in exchange for paying a market-based "premium". A receiver
swaption gives the owner the right to receive the total return of a
specified asset reference rate, or index. A payer swaption gives the owner
the right to pay the total return of a specified asset, reference rate, or
index. Swaptions also include options that allow an existing swap to be
terminated or extended by one of the counterparties.
The purchase of an interest rate cap entitles the purchaser, to the extent
that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually-based principal amount from the
party selling the interest rate cap. The purchase of an interest rate floor
entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on an agreed
principal amount from the party selling the interest rate floor. Caps and
floors may be less liquid than swaps.
The value of these transactions will fluctuate based on changes in interest
rates. Interest rate swap, swaption, cap, and floor transactions may be used
to preserve a return or spread on a particular investment or a portion of a
Fund's portfolio or to protect against an increase in the price of
securities a Fund anticipates purchasing at a later date.
- Credit Default Swaps. The "buyer" in a credit default swap contract is
obligated to pay the "seller" a periodic stream of payments over the term of
the contract in return for a contingent payment upon the occurrence of a
credit event with respect to an underlying reference obligation. Generally,
a credit event means bankruptcy, failure to pay, obligation acceleration or
restructuring. A Fund may be either the buyer or seller in the transaction.
If a Fund is a seller, the Fund receives a fixed rate of income throughout
the term of the contract, which typically is between one month and ten
years, provided that no credit event occurs. If a credit event occurs, a
Fund typically must pay the contingent payment to the buyer, which will be
either (i) the "par value" (face amount) of the reference obligation in
which case the Fund will receive the reference obligation in return or
(ii) an amount equal to the difference between the par value and the current
market value of the reference obligation. The periodic payments previously
received by the Fund, coupled with the value of any reference obligation
received, may be less than the full amount it pays to the buyer, resulting
in a loss to the Fund. If a Fund is a buyer and no credit event occurs, the
Fund will lose its periodic stream of payments over the term of the
contract. However, if a credit event occurs, the buyer typically receives
full notional value for a reference obligation that may have little or no
value.
Credit default swaps may involve greater risks than if a Fund had invested
in the reference obligation directly. Credit default swaps are subject to
general market risk, liquidity risk and credit risk.
.. OTHER DERIVATIVES AND STRATEGIES
- Currency Transactions. A Fund may invest in non-U.S. Dollar-denominated
securities on a currency hedged or un-hedged basis. The Adviser may actively
manage a Fund's currency exposures and 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 contracts and options on futures contracts, swaps and options. The
Adviser 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 a Fund 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 Fund 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).
57
- Synthetic Foreign Equity Securities. A Fund may invest in different types of
derivatives generally referred to as synthetic foreign equity securities.
These securities may include international warrants or local access
products. International warrants are financial instruments issued by banks
or other financial institutions, which may or may not be traded on a foreign
exchange. International warrants are a form of derivative security that may
give holders the right to buy or sell an underlying security or a basket of
securities representing an index from or to the issuer of the warrant for a
particular price or may entitle holders to receive a cash payment relating
to the value of the underlying security or index, in each case upon exercise
by the Fund. Local access products are similar to options in that they are
exercisable by the holder for an underlying security or a cash payment based
upon the value of that security, but are generally exercisable over a longer
term than typical options. These types of instruments may be American style,
which means that they can be exercised at any time on or before the
expiration date of the international warrant, or European style, which means
that they may be exercised only on the expiration date.
Other types of synthetic foreign equity securities in which a Fund may
invest include covered warrants and low exercise price warrants. Covered
warrants entitle the holder to purchase from the issuer, typically a
financial institution, upon exercise, common stock of an international
company or receive a cash payment (generally in U.S. Dollars). The issuer of
the covered warrants usually owns the underlying security or has a
mechanism, such as owning equity warrants on the underlying securities,
through which it can obtain the underlying securities. The cash payment is
calculated according to a predetermined formula, which is generally based on
the difference between the value of the underlying security on the date of
exercise and the strike price. Low exercise price warrants are warrants with
an exercise price that is very low relative to the market price of the
underlying instrument at the time of issue (e.g., one cent or less). The
buyer of a low exercise price warrant effectively pays the full value of the
underlying common stock at the outset. In the case of any exercise of
warrants, there may be a time delay between the time a holder of warrants
gives instructions to exercise and the time the price of the common stock
relating to exercise or the settlement date is determined, during which time
the price of the underlying security could change significantly. In
addition, the exercise or settlement date of the warrants may be affected by
certain market disruption events, such as difficulties relating to the
exchange of a local currency into U.S. Dollars, the imposition of capital
controls by a local jurisdiction or changes in the laws relating to foreign
investments. These events could lead to a change in the exercise date or
settlement currency of the warrants, or postponement of the settlement date.
In some cases, if the market disruption events continue for a certain period
of time, the warrants may become worthless, resulting in a total loss of the
purchase price of the warrants.
A Fund will acquire synthetic foreign equity securities issued by entities
deemed to be creditworthy by the Adviser, which will monitor the
creditworthiness of the issuers on an ongoing basis. Investments in these
instruments involve the risk that the issuer of the instrument may default
on its obligation to deliver the underlying security or cash in lieu
thereof. These instruments may also be subject to liquidity risk because
there may be a limited secondary market for trading the warrants. They are
also subject, like other investments in foreign securities, to foreign
(non-U.S.) risk and currency risk.
CONVERTIBLE SECURITIES
Prior to conversion, convertible securities have the same general
characteristics as non-convertible debt securities, which generally provide a
stable stream of income with generally higher yields than those of equity
securities of the same or similar issuers. The price of a convertible security
will normally vary with changes in the price of the underlying equity security,
although the higher yield tends to make the convertible security less volatile
than the underlying equity security. As with debt securities, the market value
of convertible securities tends to decrease as interest rates rise and increase
as interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they offer investors the potential to benefit from increases in the
market prices of the underlying common stock. Convertible debt securities that
are rated Baa3 or lower by Moody's Investors Service, Inc. or BBB- or lower by
S&P Global Ratings ("S&P") or Fitch Ratings and comparable unrated securities
may share some or all of the risks of debt securities with those ratings.
DEPOSITARY RECEIPTS AND SECURITIES OF SUPRANATIONAL ENTITIES
A Fund may invest in depositary receipts. American Depositary Receipts, or
ADRs, are depositary receipts typically issued by a U.S. bank or trust company
that evidence ownership of underlying securities issued by a foreign
corporation. Global Depositary Receipts, or GDRs, European Depositary Receipts,
or EDRs, and other types of depositary receipts are typically issued by
non-U.S. banks or trust companies and evidence ownership of underlying
securities issued by either a U.S. or a non-U.S. company. Depositary receipts
may not necessarily be denominated in the same currency as the underlying
securities into which they may be converted. In addition, the issuers of the
stock underlying unsponsored depositary receipts are not obligated to disclose
material information in the United States. Generally, depositary receipts in
registered form are designed for use in the U.S. securities markets, and
depositary receipts in bearer form are designed for use in securities markets
outside of the United States. For purposes of determining the country of
issuance, investments in depositary receipts of either type are deemed to be
investments in the underlying securities.
A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include the World Bank
(International Bank for Reconstruction and Development) and the European
58
Investment Bank. "Semi-governmental securities" are securities issued by
entities owned by either a national, state or equivalent government or are
obligations of one of such government jurisdictions that are not backed by its
full faith and credit and general taxing powers.
FORWARD COMMITMENTS
Forward commitments for the purchase or sale of securities may include
purchases on a when-issued basis or purchases or sales on a delayed delivery
basis. In some cases, a forward commitment may be conditioned upon the
occurrence of a subsequent event, such as approval and consummation of a
merger, corporate reorganization or debt restructuring or approval of a
proposed financing by appropriate authorities (i.e., a "when, as and if issued"
trade).
When forward commitments with respect to fixed-income securities are
negotiated, the price, which is generally expressed in yield terms, is fixed at
the time the commitment is made, but payment for and delivery of the securities
take place at a later date. Securities purchased or sold under a forward
commitment are subject to market fluctuation and no interest or dividends
accrue to the purchaser prior to the settlement date. There is the risk of loss
if the value of either a purchased security declines before the settlement date
or the security sold increases before the settlement date. The use of forward
commitments helps a Fund to protect against anticipated changes in interest
rates and prices.
ILLIQUID SECURITIES
Each Fund limits its investments in illiquid securities to 15% of its net
assets, except for AB CONCENTRATED GROWTH FUND, which limits its investments in
illiquid securities to 5% of its net assets. Until the Funds' compliance date
of December 1, 2018 for new Rule 22e-4 under the Investment Company Act of 1940
("the 1940 Act"), the term "illiquid securities" for this purpose means
securities that cannot be disposed of within seven days in the ordinary course
of business at approximately the amount a Fund has valued the securities. After
such date, the term shall mean any security or investment that a Fund
reasonably expects cannot be sold or disposed of in current market conditions
in seven calendar days or less without the sale or disposition significantly
changing the market value of the investment.
A Fund that invests in illiquid securities may not be able to sell such
securities and may not be able to realize their full value upon sale.
Restricted securities (securities subject to legal or contractual restrictions
on resale) may be illiquid. Some restricted securities (such as securities
issued pursuant to Rule 144A under the Securities Act of 1933, or certain
commercial paper) may be treated as liquid, although they may be less liquid
than registered securities traded on established secondary markets.
INVESTMENT IN EXCHANGE-TRADED FUNDS AND OTHER INVESTMENT COMPANIES
A Fund may invest in shares of ETFs, subject to the restrictions and
limitations of the 1940 Act, or any applicable rules, exemptive orders or
regulatory guidance thereunder. ETFs are pooled investment vehicles, which may
be managed or unmanaged, that generally seek to track the performance of a
specific index. ETFs will not track their underlying indices precisely since
the ETFs have expenses and may need to hold a portion of their assets in cash,
unlike the underlying indices, and the ETFs may not invest in all of the
securities in the underlying indices in the same proportion as the indices for
varying reasons. A Fund will incur transaction costs when buying and selling
ETF shares, and indirectly bear the expenses of the ETFs. In addition, the
market value of an ETF's shares, which is based on supply and demand in the
market for the ETF's shares, may differ from its NAV. Accordingly, there may be
times when an ETF's shares trade at a discount to its NAV.
A Fund may also invest in investment companies other than ETFs, as permitted by
the 1940 Act or the rules and regulations or exemptive orders thereunder. As
with ETF investments, if the Fund acquires shares in other investment
companies, shareholders would bear, indirectly, the expenses of such investment
companies (which may include management and advisory fees), which if not waived
or reimbursed in whole or in part, would be in addition to the Fund's expenses.
The Funds intend to invest uninvested cash balances in an affiliated money
market fund as permitted by Rule 12d1-1 under the 1940 Act. A Fund's investment
in other investment companies, including ETFs, subjects the Fund indirectly to
the underlying risks of those investment companies.
INVESTMENTS IN PRE-IPO SECURITIES
A Fund may invest in pre-IPO (initial public offering) securities. Pre-IPO
securities, or venture capital investments, are investments in new and early
stage companies, often funded by venture capital and referred to as "venture
capital companies", whose securities have not been offered to the public and
that are not publicly traded. These investments may present significant
opportunities for capital appreciation but involve a high degree of risk that
may result in significant decreases in the value of these investments. Venture
capital companies may not have established products, experienced management or
earnings history. A Fund may not be able to sell such investments when the
portfolio managers and/or investment personnel deem it appropriate to do so
because they are not publicly traded. As such, these investments are generally
considered to be illiquid until a company's public offering (which may never
occur) and are often subject to additional contractual restrictions on resale
following any public offering that may prevent a Fund from selling its shares
of these companies for a period of time. Market conditions, developments within
a company, investor perception or regulatory decisions may adversely affect a
venture capital company and delay or prevent a venture capital company from
ultimately offering its securities to the public.
LOANS OF PORTFOLIO SECURITIES
For the purpose of achieving income, a Fund may make secured loans of portfolio
securities to brokers, dealers and financial institutions ("borrowers") to the
extent permitted under the 1940 Act or the rules and regulations thereunder (as
such statute, rules or regulations may be amended from time to time) or by
guidance regarding, interpretations of or exemptive orders under the 1940 Act.
Under the Fund's securities lending
59
program, all securities loans will be secured continually by cash collateral.
The loans will be made only to borrowers deemed by the Adviser to be
creditworthy, and when, in the judgment of the Adviser, the consideration that
can be earned currently from securities loans justifies the attendant risk. The
Fund will be compensated for the loan from a portion of the net return from the
interest earned on cash collateral after a rebate paid to the borrower (in some
cases this rebate may be a "negative rebate" or fee paid by the borrower to the
Fund in connection with the loan) and payments for fees of the securities
lending agent and for certain other administrative expenses.
A Fund will have the right to call a loan and obtain the securities loaned at
any time on notice to the borrower within the normal and customary settlement
time for the securities. While the securities are on loan, the borrower is
obligated to pay the Fund amounts equal to any income or other distributions
from the securities. The Fund will not have the right to vote any securities
during the existence of a loan, but will have the right to regain ownership of
loaned securities in order to exercise voting or other ownership rights. When
the Fund lends securities, its investment performance will continue to reflect
changes in the value of the securities loaned.
A Fund will invest cash collateral in a money market fund approved by the
Fund's Board of Directors or Trustees (the "Board") and expected to be managed
by the Adviser. Any such investment will be at the Fund's risk. The Fund may
pay reasonable finders', administrative, and custodial fees in connection with
a loan.
A principal risk of lending portfolio securities is that the borrower will fail
to return the loaned securities upon termination of the loan and that the
collateral will not be sufficient to replace the loaned securities.
AB CONCENTRATED GROWTH FUND intends to limit its securities lending activities
so that no more than 5% of the value of the Fund's assets will be represented
by securities loaned.
PREFERRED STOCK
A Fund may invest in preferred stock. Preferred stock is a class of capital
stock that typically pays dividends at a specified rate. Preferred stock is
generally senior to common stock, but is subordinated to any debt the issuer
has outstanding. Accordingly, preferred stock dividends are not paid until all
debt obligations are first met. Preferred stock may be subject to more
fluctuations in market value, due to changes in market participants'
perceptions of the issuer's ability to continue to pay dividends, than debt of
the same issuer. These investments include convertible preferred stock, which
includes an option for the holder to convert the preferred stock into the
issuer's common stock under certain conditions, among which may be the
specification of a future date when the conversion must begin, a certain number
of shares of common stock per share of preferred stock, or a certain price per
share for the common stock. Convertible preferred stock tends to be more
volatile than non-convertible preferred stock because its value is related to
the price of the issuer's common stock, as well as the dividends payable on the
preferred stock.
REAL ESTATE INVESTMENT TRUSTS
Real estate investment trusts, or REITs, are pooled investment vehicles that
invest primarily in income-producing real estate or real estate related loans
or interests. REITs are generally classified as equity REITs, mortgage REITs or
a combination of equity and mortgage REITs. Equity REITs invest the majority of
their assets directly in real property and derive income primarily from the
collection of rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest the majority
of their assets in real estate mortgages and derive income from the collection
of interest and principal payments. Similar to investment companies such as the
Funds, REITs are not taxed on income distributed to shareholders, provided they
comply with several requirements of the Code. A Fund will indirectly bear its
proportionate share of expenses incurred by REITs in which the Fund invests in
addition to the expenses incurred directly by the Fund.
REPURCHASE AGREEMENTS AND BUY/SELL BACK TRANSACTIONS
A Fund may enter into repurchase agreements. From a technical perspective, in a
repurchase agreement transaction the Fund buys a security and simultaneously
agrees to sell it back to the counterparty at a specified price in the future.
However, a repurchase agreement is economically similar to a secured loan, in
that the Fund lends cash to a counterparty for a specific term, normally a day
or a few days, and is given acceptable collateral (the purchased securities) to
hold in case the counterparty does not repay the loan. The difference between
the purchase price and the repurchase price of the securities reflects an
agreed-upon "interest rate". Given that the price at which a Fund will sell the
collateral back is specified in advance, a Fund is not exposed to price
movements on the collateral unless the counterparty defaults. If the
counterparty defaults on its obligation to buy back the securities at the
maturity date and the liquidation value of the collateral is less than the
outstanding loan amount, a Fund would suffer a loss. In order to further
mitigate any potential credit exposure to the counterparty, if the value of the
securities falls below a specified level that is linked to the loan amount
during the life of the agreement, the counterparty must provide additional
collateral to support the loan.
A Fund may enter into buy/sell back transactions, which are similar to
repurchase agreements. In this type of transaction, a Fund enters a trade to
buy securities at one price and simultaneously enters a trade to sell the same
securities at another price on a specified date. Similar to a repurchase
agreement, the repurchase price is higher than the sale price and reflects
current interest rates. Unlike a repurchase agreement, however, the buy/sell
back transaction is considered two separate transactions.
REVERSE REPURCHASE AGREEMENTS
A Fund may enter into reverse repurchase agreements. The terms of these
agreements are essentially the reverse of "Repurchase Agreements" described
above. In a reverse repurchase agreement transaction, the Fund sells a security
and simultaneously agrees to repurchase it at a specified time and price. The
economic effect of a reverse repurchase agreement
60
is that of the Fund borrowing money on a secured basis, and reverse repurchase
agreements may be considered a form of borrowing for some purposes. Even though
the Fund posts securities as collateral, the Fund maintains exposure to price
declines on these securities since it has agreed to repurchase the securities
at a fixed price. Accordingly, reverse repurchase agreements create leverage
risk for the Fund because the Fund maintains exposure to price declines of both
the securities it sells in the reverse repurchase agreement and any securities
it purchases with the cash it receives under the reverse repurchase agreement.
If the value of the posted collateral declines, the counterparty would require
the Fund to post additional collateral. If the value of the collateral
increases, the Fund may ask for some of its collateral back. If the
counterparty defaults and fails to sell the securities back to the Fund at a
time when the market purchase price of the securities exceeds the agreed-upon
repurchase price, the Fund would suffer a loss.
In the event the buyer of securities under a reverse repurchase agreement files
for bankruptcy or becomes insolvent, a Fund's use of the proceeds of the
agreement may be restricted pending a determination by the other party, or its
trustee or receiver, whether to enforce the Fund's obligation to repurchase the
securities.
RIGHTS AND WARRANTS
Rights and warrants are option securities permitting their holders to subscribe
for other securities. Rights are similar to warrants except that they have a
substantially shorter duration. Rights and warrants do not carry with them
dividend or voting rights with respect to the underlying securities, or any
rights in the assets of the issuer. As a result, an investment in rights and
warrants may be considered more speculative than certain other types of
investments. In addition, the value of a right or a warrant does not
necessarily change with the value of the underlying securities, and a right or
a warrant ceases to have value if it is not exercised prior to its expiration
date.
SHORT SALES
A Fund may make short sales as a part of overall portfolio management or to
offset a potential decline in the value of a security. AB SELECT US LONG/SHORT
PORTFOLIO makes short sales as part of its principal investment strategies. A
short sale involves the sale of a security that a Fund does not own or, if the
Fund owns the security, is not to be delivered upon consummation of the sale.
When the Fund makes a short sale of a security that it does not own, it must
borrow from a broker-dealer the security sold short and deliver the security to
the broker-dealer upon conclusion of the short sale.
If the price of the security sold short increases between the time of the short
sale and the time a Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a short-term
capital gain. Although a Fund's gain is limited to the price at which it sold
the security short, its potential loss is theoretically unlimited because there
is a theoretically unlimited potential for the price of a security sold short
to increase.
STANDBY COMMITMENT AGREEMENTS
Standby commitment agreements are similar to put options that commit a Fund,
for a stated period of time, to purchase a stated amount of a security that may
be issued and sold to the Fund at the option of the issuer. The price and
coupon of the security are fixed at the time of the commitment. At the time of
entering into the agreement, the Fund is paid a commitment fee, regardless of
whether the security ultimately is issued. The Funds will enter into such
agreements only for the purpose of investing in the security underlying the
commitment at a yield and price considered advantageous to the Fund and
unavailable on a firm commitment basis.
There is no guarantee that a security subject to a standby commitment will be
issued. In addition, the value of the security, if issued, on the delivery date
may be more or less than its purchase price. Since the issuance of the security
is at the option of the issuer, a Fund will bear the risk of capital loss in
the event the value of the security declines and may not benefit from an
appreciation in the value of the security during the commitment period if the
issuer decides not to issue and sell the security to the Fund.
STRUCTURED PRODUCTS
A Fund may invest in certain derivatives-type instruments that combine features
of a stock or bond with those of, for example, a futures contract or an option.
These instruments include structured notes and indexed securities and
commodity-linked notes and commodity index-linked notes. The performance of the
structured product, which is generally structured as a note or other
fixed-income security, is tied (positively or negatively) to the price or
prices of an unrelated reference indicator such as a security or basket of
securities, currencies, commodities or a securities or commodities index. The
structured product may not pay interest or protect the principal invested. The
structured product or its interest rate may be a multiple of the reference
indicator and, as a result, may be leveraged and move (up or down) more rapidly
than the reference indicator. Investments in structured products may provide a
more efficient and less expensive means of obtaining exposure to underlying
securities or commodities and related derivatives, but may potentially be more
volatile, less liquid and carry greater market risk than investments in
traditional securities. The purchase of a structured product also exposes a
Fund to the credit risk of the issuer of the structured product.
Structured notes are derivative debt instruments. The interest rate or
principal of these notes is determined by reference to an unrelated indicator
(for example, a currency, security, or index thereof), unlike a typical note
where the borrower agrees to make fixed or floating interest payments and to
pay a fixed sum at maturity. Indexed securities may include structured notes as
well as securities other than debt securities, the interest or principal of
which is determined by an unrelated indicator.
Commodity-linked notes and commodity index-linked notes provide exposure to the
commodities markets. These are derivative securities with one or more
commodity-linked
61
components that have payment features similar to commodity futures contracts,
commodity options, commodity indices or similar instruments. Commodity-linked
products may be either equity or debt securities, leveraged or unleveraged, and
have both security and commodity-like characteristics. A portion of the value
of these instruments may be derived from the value of a commodity, futures
contract, index or other economic variable.
ZERO-COUPON AND PAYMENT-IN-KIND BONDS
Zero-coupon bonds are issued at a significant discount from their principal
amount in lieu of paying interest periodically. Payment-in-kind bonds allow the
issuer to make current interest payments on the bonds in additional bonds.
Because zero-coupon bonds and payment-in-kind bonds do not pay current interest
in cash, their value is generally subject to greater fluctuation in response to
changes in market interest rates than bonds that pay interest in cash
currently. Both zero-coupon and payment-in-kind bonds allow an issuer to avoid
the need to generate cash to meet current interest payments. These bonds may
involve greater credit risks than bonds paying interest currently. Although
these bonds do not pay current interest in cash, a Fund is nonetheless required
to accrue interest income on such investments and to distribute such amounts at
least annually to shareholders. Thus, a Fund could be required at times to
liquidate other investments in order to satisfy its dividend requirements.
ADDITIONAL RISKS AND OTHER CONSIDERATIONS
Investments in a Fund may involve the risk considerations described below.
FOREIGN (NON-U.S.) SECURITIES
Investing in foreign securities involves special risks and considerations not
typically associated with investing in U.S. securities. The securities markets
of many foreign countries are relatively small, with the majority of market
capitalization and trading volume concentrated in a limited number of companies
representing a small number of industries. A Fund that invests in foreign
securities may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in securities of U.S. companies.
These markets may be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant blocks of
securities, than is usual in the United States.
Securities registration, custody, and settlement may in some instances be
subject to delays and legal and administrative uncertainties. Foreign
investment in the securities markets of certain foreign countries is restricted
or controlled to varying degrees. These restrictions or controls may at times
limit or preclude investment in certain securities and may increase the costs
and expenses of a Fund. In addition, the repatriation of investment income,
capital or the proceeds of sales of securities from certain of the countries is
controlled under regulations, including in some cases the need for certain
advance government notification or authority, and if a deterioration occurs in
a country's balance of payments, the country could impose temporary
restrictions on foreign capital remittances.
A Fund also could be adversely affected by delays in, or a refusal to grant,
any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investment. Investing in local
markets may require a Fund to adopt special procedures or seek local
governmental approvals or other actions, any of which may involve additional
costs to a Fund. These factors may affect the liquidity of a Fund's investments
in any country and the Adviser will monitor the effect of any such factor or
factors on a Fund's investments. Transaction costs, including brokerage
commissions for transactions both on and off the securities exchanges, in many
foreign countries are generally higher than in the United States.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements, and timely disclosure of information. The reporting, accounting,
and auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects, and less information
may be available to investors in foreign securities than to investors in U.S.
securities. Substantially less information is publicly available about certain
non-U.S. issuers than is available about most U.S. issuers.
The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability, revolutions, wars or
diplomatic developments could affect adversely the economy of a foreign
country. In the event of nationalization, expropriation, or other confiscation,
a Fund could lose its entire investment in securities in the country involved.
In addition, laws in foreign countries governing business organizations,
bankruptcy and insolvency may provide less protection to security holders such
as the Fund than that provided by U.S. laws.
In June 2016, the United Kingdom ("UK") voted in a referendum to leave the
European Union ("EU"). On March 29, 2017, the UK notified the European Council
of its intention to withdraw from the EU. It is expected that the UK's
withdrawal will be completed within two years of such notification. There is
still considerable uncertainty relating to the potential consequences of the
withdrawal. During this period and beyond, the impact on the UK and European
economies and the broader global economy could be significant, resulting in
increased volatility and illiquidity, currency fluctuations, impacts on
arrangements for trading and on other existing cross-border cooperation
arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise),
and in potentially lower growth for companies in the UK, Europe and globally,
which could have an adverse effect on the value of a Fund's investments.
Investments in securities of companies in emerging markets involve special
risks. There are approximately 100 countries identified by the World Bank as
Low Income, Lower Middle
62
Income and Upper Middle Income countries that are generally regarded as
emerging markets. Emerging market countries that the Adviser currently
considers for investment are listed below. Countries may be added to or removed
from this list at any time.
Argentina Hungary Peru
Belarus India Philippines
Belize Indonesia Poland
Brazil Iraq Russia
Bulgaria Ivory Coast Senegal
Chile Jamaica Serbia
China Jordan South Africa
Colombia Kazakhstan South Korea
Croatia Lebanon Sri Lanka
Dominican Republic Lithuania Taiwan
Ecuador Malaysia Thailand
Egypt Mexico Turkey
El Salvador Mongolia Ukraine
Gabon Nigeria Uruguay
Georgia Pakistan Venezuela
Ghana Panama Vietnam
Investing in emerging market securities imposes risks different from, or
greater than, risks of investing in domestic securities or in foreign,
developed countries. These risks include: smaller market capitalization of
securities markets, which may suffer periods of relative illiquidity;
significant price volatility; restrictions on foreign investment; and possible
repatriation of investment income and capital. In addition, foreign investors
may be required to register the proceeds of sales; and future economic or
political crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies. The currencies of emerging market countries may experience
significant declines against the U.S. Dollar, and devaluation may occur
subsequent to investments in these currencies by a Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging market
countries.
Additional risks of emerging market securities may include: greater social,
economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise
make it difficult to engage in such transactions. Settlement problems may cause
a Fund to miss attractive investment opportunities, hold a portion of its
assets in cash pending investment, or be delayed in disposing of a portfolio
security. Such a delay could result in possible liability to a purchaser of the
security.
FOREIGN (NON-U.S.) CURRENCIES
Investing in and exposure to foreign currencies involve special risks and
considerations. A Fund that invests some portion of its assets in securities
denominated in, and receives revenues in, foreign currencies will be adversely
affected by reductions in the value of those currencies relative to the
U.S. Dollar. Foreign currency exchange rates may fluctuate significantly. They
are determined by supply and demand in the foreign exchange markets, the
relative merits of investments in different countries, actual or perceived
changes in interest rates, and other complex factors. Currency exchange rates
also can be affected unpredictably by intervention (or the failure to
intervene) by U.S. or foreign governments or central banks or by currency
controls or political developments. In light of these risks, a Fund may engage
in certain currency hedging transactions, as described above, which involve
certain special risks.
A Fund may also invest directly in foreign currencies for non-hedging purposes,
directly on a spot basis (i.e., cash) or through derivative transactions, such
as forward currency exchange contracts, futures contracts and options thereon,
swaps and options as described above. These investments will be subject to the
same risks. In addition, currency exchange rates may fluctuate significantly
over short periods of time, causing a Fund's NAV to fluctuate.
BORROWINGS AND LEVERAGE
A Fund may use borrowings for investment purposes subject to its investment
policies and procedures and to applicable statutory or regulatory requirements.
Borrowings by a Fund result in leveraging of the Fund's shares. Likewise, a
Fund's use of certain derivatives may effectively leverage the Fund's
portfolio. A Fund may use leverage for investment purposes by entering into
transactions such as reverse repurchase agreements, forward contracts, dollar
rolls or certain derivatives. This means that the Fund uses cash made available
during the term of these transactions to make investments in other securities.
Utilization of leverage, which is usually considered speculative, involves
certain risks to the Fund's shareholders. These include a higher volatility of
the NAV of the Fund's shares and the relatively greater effect of changes in
the value of the Fund's portfolio on the NAV of the shares. In the case of
borrowings for investment purposes, so long as the Fund is able to realize a
net return on its investment portfolio that is higher than the interest expense
paid on borrowings, the effect of such leverage will be to cause the Fund's
shareholders to realize a higher net return than if the Fund were not
leveraged. With respect to the Fund's use of derivatives that result in
leverage of the Fund's shares, if the Fund is able to realize a net return on
its investments that is higher than the costs of the leverage, the effect of
such leverage will be to cause the Fund to realize a higher return than if the
Fund were not leveraged. If the interest expense on borrowings or other costs
of the leverage approach the return on the Fund's investment portfolio or
investments made through leverage, as applicable, the benefit of leverage to
the Fund's shareholders will be reduced. If the interest expense on borrowings
or other costs of leverage were to exceed the net return to the Fund, the
Fund's use of leverage would result in a lower rate of return than if the Fund
were not leveraged. Similarly, the effect of leverage in a declining market
would normally be a greater decrease in NAV than if the Fund were not leveraged.
63
INVESTMENT IN SMALLER, LESS-SEASONED COMPANIES
Investment in smaller, less-seasoned companies involves greater risks than are
customarily associated with securities of more established companies. Companies
in the earlier stages of their development often have products and management
personnel that have not been thoroughly tested by time or the marketplace;
their financial resources may not be as substantial as those of more
established companies. The securities of smaller, less-seasoned companies may
have relatively limited marketability and may be subject to more abrupt or
erratic market movements than securities of larger, more established companies
or broad market indices. The revenue flow of such companies may be erratic and
their results of operations may fluctuate widely and may also contribute to
stock price volatility.
FUTURE DEVELOPMENTS
A Fund may take advantage of other investment practices that are not currently
contemplated for use by the Fund, or are not available but may yet be
developed, to the extent such investment practices are consistent with the
Fund's investment objective and legally permissible for the Fund. Such
investment practices, if they arise, may involve risks that exceed those
involved in the activities described above.
CHANGES IN INVESTMENT OBJECTIVES AND POLICIES
A Fund's Board may change a Fund's investment objective without shareholder
approval. The Fund will provide shareholders with 60 days' prior written notice
of any change to the Fund's investment objective. Funds that have a policy to
invest at least 80% of their net assets in securities indicated by their name
will not change their policies without 60 days' prior written notice to
shareholders. Unless otherwise noted, all other policies of a Fund may be
changed without shareholder approval.
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes in an attempt to respond to adverse market,
economic, political or other conditions, each Fund may reduce its position in
equity securities and longer-term debt securities and invest in, without limit,
certain types of short-term, liquid, high-grade or high-quality (depending on
the Fund) debt securities. While a Fund is investing for temporary defensive
purposes, it may not meet its investment objectives.
PORTFOLIO HOLDINGS
A description of each Fund's policies and procedures with respect to the
disclosure of each Fund's portfolio securities is available in the Funds' SAI.
CYBER SECURITY RISK
Mutual funds, including the Funds, are susceptible to cyber security risk.
Cyber security breaches may allow an unauthorized party to gain access to Fund
assets, customer data, or proprietary information, or cause the Funds and/or
their service providers to suffer data corruption or lose operational
functionality. In addition, cyber security breaches at issuers in which a Fund
invests may affect the value of your investment in the Fund.
64
INVESTING IN THE FUNDS
--------------------------------------------------------------------------------
This section discusses how to buy, sell or redeem, or exchange different
classes of shares of a Fund that are offered through this Prospectus. The Funds
offer seven classes of shares through this Prospectus, except for the AB
DISCOVERY GROWTH FUND, AB SMALL CAP GROWTH PORTFOLIO and AB LARGE CAP GROWTH
FUND, which offer eight classes of shares, AB SELECT US EQUITY PORTFOLIO and AB
SELECT US LONG/SHORT PORTFOLIO, which offer six classes of shares, and AB
GLOBAL CORE EQUITY PORTFOLIO, AB INTERNATIONAL STRATEGIC CORE PORTFOLIO and AB
CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO, which offer three classes of
shares, through this Prospectus.
Each share class represents an investment in the same portfolio of securities,
but the classes may have different sales charges and bear different ongoing
distribution expenses. For additional information on the differences between
the different classes of shares and factors to consider when choosing among
them, please see "The Different Share Class Expenses" and "Choosing a Share
Class" below. ONLY CLASS A SHARES OFFER QUANTITY DISCOUNTS ON SALES CHARGES, as
described below.
HOW TO BUY SHARES
The purchase of a Fund's shares is priced at the next-determined NAV after your
order is received in proper form.
CLASS A, CLASS B AND CLASS C SHARES - SHARES AVAILABLE TO RETAIL INVESTORS
EFFECTIVE JANUARY 31, 2009, SALES OF CLASS B SHARES OF THE FUNDS TO NEW
INVESTORS WERE SUSPENDED. CLASS B SHARES MAY ONLY BE PURCHASED (I) BY EXISTING
CLASS B SHAREHOLDERS AS OF JANUARY 31, 2009, (II) THROUGH EXCHANGE OF CLASS B
SHARES FROM ANOTHER AB MUTUAL FUND, OR (III) AS OTHERWISE DESCRIBED BELOW.
You may purchase a Fund's Class A, Class B or Class C shares through financial
intermediaries, such as broker-dealers or banks. You also may purchase shares
directly from the Funds' principal underwriter, AllianceBernstein Investments,
Inc., or ABI. These purchases may be subject to an initial sales charge, an
asset-based sales charge or CDSC, as described below.
[Download Table]
PURCHASE MINIMUMS AND MAXIMUMS
------------------------------
MINIMUMS:*
[Download Table]
--Initial: $2,500
--Subsequent: $ 50
*Purchase minimums may not apply to some accounts established in connection
with the Automatic Investment Program and to some retirement-related
investment programs. These investment minimums also do not apply to persons
participating in a fee-based program sponsored and maintained by a registered
broker-dealer or other financial intermediary.
MAXIMUM INDIVIDUAL PURCHASE AMOUNT:
[Download Table]
--Class A shares None
--Class B shares $ 100,000
--Class C shares $1,000,000
OTHER PURCHASE INFORMATION
Your broker or financial advisor must receive your purchase request by the Fund
Closing Time, which is the close of regular trading on any day the Exchange is
open (ordinarily, 4:00 p.m., Eastern time, but sometimes earlier, as in the
case of scheduled half-day trading or unscheduled suspensions of trading) and
submit it to the Fund by a pre-arranged time for you to receive the
next-determined NAV, less any applicable initial sales charge.
If you are an existing Fund shareholder and you have completed the appropriate
section of the Mutual Fund Application, you may purchase additional shares by
telephone with payment by electronic funds transfer in amounts not exceeding
$500,000. AllianceBernstein Investor Services, Inc., or ABIS, must receive and
confirm telephone requests before the Fund Closing Time to receive that day's
public offering price. Call 800-221-5672 to arrange a transfer from your bank
account.
Shares of the Funds are generally available for purchase in the United States,
Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands. Except to the
extent otherwise permitted by a Fund, the Funds will only accept purchase
orders directly from U.S. citizens with a U.S. address (including an APO or FPO
address) or resident aliens with a U.S. address (including an APO or FPO
address) and a U.S. taxpayer identification number (i.e., W-9 tax status).
Subject to the requirements of local law applicable to the offering of Fund
shares, U.S. citizens (i.e., W-9 tax status) residing in foreign countries are
permitted to purchase shares of the Funds through their accounts at U.S.
registered broker-dealers and other similar U.S. financial intermediaries,
provided the broker-dealer or intermediary has an agreement with the Funds'
distributor permitting it to accept orders for the purchase and sale of Fund
shares.
The Funds will not accept purchase orders (including orders for the purchase of
additional shares) from foreign persons or entities or from resident aliens
who, to the knowledge of a Fund, have reverted to non-resident status (e.g., a
resident alien who has a non-U.S. address at time of purchase).
TAX-DEFERRED ACCOUNTS
Class A shares are also available to the following tax-deferred arrangements:
.. Traditional and Roth IRAs (minimums listed in the table above apply);
.. SEPs, SAR-SEPs, SIMPLE IRAs, and individual 403(b) plans (no investment
minimum); and
.. AllianceBernstein-sponsored Coverdell Education Savings Accounts ($2,000
initial investment minimum, $150 Automatic Investment Program monthly
minimum).
Class C shares are available to AllianceBernstein Link, AllianceBernstein
Individual 401(k), AllianceBernstein SIMPLE IRA plans with less than $250,000
in plan assets and 100 employees, and to group retirement plans.
65
ADVISOR CLASS SHARES
You may purchase Advisor Class shares through your financial advisor at NAV.
Advisor Class shares may be purchased and held solely:
.. through accounts established under a fee-based program, sponsored and
maintained by a registered broker-dealer or other financial intermediary and
approved by ABI;
.. through a defined contribution employee benefit plan (e.g., a 401(k) plan)
that purchases shares directly without the involvement of a financial
intermediary;
.. by investment advisory clients of, and certain other persons associated
with, the Adviser and its affiliates or the Funds; and
.. through certain special arrangements approved by the Adviser.
Advisor Class shares may also be available on brokerage platforms of firms that
have agreements with ABI to offer such shares when acting solely on an agency
basis for the purchase or sale of such shares. If you transact in Advisor
Class shares through one of these programs, you may be required to pay a
commission and/or other forms of compensation to the broker. Shares of the
Funds are available in other share classes that have different fees and
expenses.
The Funds' SAI has more detailed information about who may purchase and hold
Advisor Class shares.
CLASS A, CLASS R, CLASS K, CLASS I AND CLASS Z SHARES - SHARES AVAILABLE TO
GROUP RETIREMENT PLANS
Class A, Class R, Class K, Class I and Class Z shares are available at NAV,
without an initial sales charge, to 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit-sharing and money purchase pension plans, defined benefit
plans, and non-qualified deferred compensation plans where plan level or
omnibus accounts are held on the books of a Fund ("group retirement plans").
Class A shares are also available at NAV to the AllianceBernstein Link,
AllianceBernstein Individual 401(k) and AllianceBernstein SIMPLE IRA plans but
only if such plans have at least $250,000 in plan assets or 100 employees, and
to certain defined contribution retirement plans that do not have plan level or
omnibus accounts on the books of the Fund.
Class A, Class R, Class K, Class I and Class Z shares are also available to
certain AllianceBernstein-sponsored group retirement plans. Class R, Class K,
Class I and Class Z shares generally are not available to retail non-retirement
accounts, traditional and Roth IRAs, Coverdell Education Savings Accounts,
SEPs, SAR-SEPs, SIMPLE IRAs and individual 403(b) plans. Class I shares are not
currently available to group retirement plans in the
AllianceBernstein-sponsored programs known as the "Informed Choice" programs.
Class I and Class Z shares are also available to certain institutional clients
of the Adviser that invest at least $2,000,000 in a Fund.
REQUIRED INFORMATION
A Fund is required by law to obtain, verify and record certain personal
information from you or persons on your behalf in order to establish an
account. Required information includes name, date of birth, permanent
residential address and taxpayer identification number (for most investors,
your social security number). A Fund may also ask to see other identifying
documents. If you do not provide the information, the Fund will not be able to
open your account. If a Fund is unable to verify your identity, or that of
another person(s) authorized to act on your behalf, or if the Fund believes it
has identified potentially criminal activity, the Fund reserves the right to
take action it deems appropriate or as required by law, which may include
closing your account. If you are not a U.S. citizen or resident alien, your
account must be affiliated with a Financial Industry Regulatory Authority, or
FINRA, member firm.
A Fund is required to withhold 28% of taxable dividends, capital gains
distributions, and redemptions paid to any shareholder who has not provided the
Fund with his or her correct taxpayer identification number. To avoid this, you
must provide your correct taxpayer identification number on your Mutual Fund
Application.
GENERAL
IRA custodians, plan sponsors, plan fiduciaries, plan recordkeepers, and other
financial intermediaries may establish their own eligibility requirements as to
the purchase, sale or exchange of Fund shares, including minimum and maximum
investment requirements. A Fund is not responsible for, and has no control
over, the decisions of any plan sponsor, fiduciary or other financial
intermediary to impose such differing requirements.
ABI may refuse any order to purchase shares. Each Fund reserves the right to
suspend the sale of its shares to the public in response to conditions in the
securities markets or for other reasons.
THE DIFFERENT SHARE CLASS EXPENSES
This section describes the different expenses of investing in each class and
explains factors to consider when choosing a class of shares. The expenses can
include distribution and/or service (Rule 12b-1) fees, initial sales charges
and/or CDSCs. ONLY CLASS A SHARES OFFER QUANTITY DISCOUNTS as described below.
ASSET-BASED SALES CHARGES OR DISTRIBUTION AND/OR SERVICE (RULE 12b-1) FEES
WHAT IS A RULE 12b-1 FEE?
A Rule 12b-1 fee is a fee deducted from a Fund's assets that is used to pay
for personal service, maintenance of shareholder accounts and distribution
costs, such as advertising and compensation of financial intermediaries. Each
Fund has adopted a plan under Securities and Exchange Commission (the
"Commission") Rule 12b-1 that allows the Fund to pay asset-based sales
charges or distribution and/or service (Rule 12b-1) fees for the distribution
and sale of its shares. The amount of each share class's Rule 12b-1 fee, if
any, is disclosed below and in a Fund's fee table included in the Summary
Information section above.
66
The amount of Rule 12b-1 and/or service fees for each class of a Fund's shares
is up to:
[Download Table]
DISTRIBUTION AND/OR SERVICE
(RULE 12b-1) FEE (AS A
PERCENTAGE OF AGGREGATE
AVERAGE DAILY NET ASSETS)
-------------------------------------------------------------------------------
Class A 0.25%*
Class B 1.00%
Class C 1.00%
Advisor Class None
Class R 0.50%
Class K 0.25%
Class I None
Class Z None
* The maximum fee allowed under the Rule 12b-1 Plan for the Class A shares of
AB GROWTH FUND and AB LARGE CAP GROWTH FUND is .50% of the aggregate average
daily net assets, and the maximum fee allowed under the Rule 12b-1 Plan for
Class A shares of all other Funds is .30% of the aggregate average daily net
assets. The Boards of the Funds currently limit the Funds' payments to .25%,
except with respect to AB DISCOVERY GROWTH FUND, for which payments are
currently limited to .23%.
Because these fees are paid out of a Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales fees. Class B, Class C, and Class R shares are
subject to higher Rule 12b-1 fees than Class A or Class K shares. Class B
shares are subject to these higher fees for a period of eight years, after
which they convert to Class A shares. Class C shares are subject to these
higher fees for a period of ten years, after which they convert to Class A
shares. Share classes with higher Rule 12b-1 fees will have a higher expense
ratio, pay correspondingly lower dividends and may have a lower NAV (and
returns). All or some of these fees may be paid to financial intermediaries,
including your financial intermediary's firm.
SALES CHARGES
CLASS A SHARES. You can purchase Class A shares at their public offering price
(or cost), which is NAV plus an initial sales charge of up to 4.25% of the
offering price. Any applicable sales charge will be deducted directly from your
investment.
The initial sales charge you pay each time you buy Class A shares differs
depending on the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. These discounts, which are also known as
BREAKPOINTS OR QUANTITY DISCOUNTS, can reduce or, in some cases, eliminate the
initial sales charges that would otherwise apply to your investment in Class A
shares.
The sales charge schedule of Class A share QUANTITY DISCOUNTS is as follows:
[Download Table]
INITIAL SALES CHARGE
------------------
AS % OF AS % OF
NET AMOUNT OFFERING
AMOUNT PURCHASED INVESTED PRICE
-----------------------------------------------
Up to $100,000 4.44% 4.25%
$100,000 up to $250,000 3.36 3.25
$250,000 up to $500,000 2.30 2.25
$500,000 up to $1,000,000 1.78 1.75
$1,000,000 and above 0.00 0.00
Except as noted below, purchases of Class A shares in the amount of $1,000,000
or more or by AllianceBernstein or non-AllianceBernstein sponsored group
retirement plans are not subject to an initial sales charge, but may be subject
to a 1% CDSC if redeemed or terminated within one year.
CLASS A SHARE PURCHASES NOT SUBJECT TO SALES CHARGES.
The Funds may sell their Class A shares at NAV without an initial sales charge
or CDSC to some categories of investors, including:
.. persons participating in a fee-based program, sponsored and maintained by a
registered broker-dealer or other financial intermediary, under which
persons pay an asset-based fee for services in the nature of investment
advisory or administrative services, or clients of broker-dealers or other
financial intermediaries who purchase Class A shares for their own accounts
through self-directed and/or non-discretionary brokerage accounts with the
broker-dealers or other financial intermediaries that may or may not charge
a transaction fee to its customers;
.. plan participants who roll over amounts distributed from employer maintained
retirement plans to AllianceBernstein-sponsored IRAs where the plan is a
client of or serviced by the Adviser's Institutional Investment Management
Division or Bernstein Global Wealth Management Division including subsequent
contributions to those IRAs;
.. certain other investors, such as investment management clients of the
Adviser or its affiliates, including clients and prospective clients of the
Adviser's Institutional Investment Management Division, employees of
selected dealers authorized to sell a Fund's shares, and employees of the
Adviser; or
.. persons participating in a "Mutual Fund Only" brokerage program, sponsored
and maintained by a registered broker-dealer or other financial intermediary.
The availability of certain sales charge waivers and discounts will depend on
whether you purchase your shares directly from a Fund or through a financial
intermediary. Intermediaries may have different policies and procedures
regarding the availability of front-end sales load waivers and discounts or
CDSC waivers. In all instances, it is the purchaser's responsibility to notify
the Fund or the purchaser's financial intermediary at the time of purchase of
any relationship or other facts qualifying the purchaser for sales charge
waivers or discounts. FOR WAIVERS AND DISCOUNTS NOT AVAILABLE THROUGH A
PARTICULAR INTERMEDIARY, SHAREHOLDERS WILL HAVE TO PURCHASE FUND SHARES
DIRECTLY FROM THE FUND OR THROUGH ANOTHER INTERMEDIARY TO RECEIVE THESE WAIVERS
OR DISCOUNTS.
Please see the Funds' SAI for more information about purchases of Class A
shares without sales charges.
Certain intermediaries impose different eligibility criteria for sales load
waivers and discounts, which are described in Appendix B--Financial
Intermediary Waivers.
CLASS B SHARES. EFFECTIVE JANUARY 31, 2009, SALES OF CLASS B SHARES OF THE
FUNDS TO NEW INVESTORS WERE SUSPENDED. CLASS B SHARES MAY ONLY BE PURCHASED
(I) BY EXISTING CLASS B SHAREHOLDERS AS OF JANUARY 31, 2009,
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(II) THROUGH EXCHANGE OF CLASS B SHARES FROM ANOTHER AB MUTUAL FUND, OR
(III) AS OTHERWISE DESCRIBED BELOW.
You can purchase Class B shares at NAV without an initial sales charge. This
means that the full amount of your purchase is invested in a Fund. Your
investment is subject to a CDSC if you redeem shares within four years of
purchase. The CDSC varies depending on the number of years you hold the shares.
The CDSC amounts for Class B shares are:
[Download Table]
YEAR SINCE PURCHASE CDSC
---------------------------
First 4.00%
Second 3.00%
Third 2.00%
Fourth 1.00%
Fifth and thereafter None
If you exchange your shares for the Class B shares of another AB Mutual Fund,
the CDSC also will apply to the Class B shares received. The CDSC period begins
with the date of your original purchase, not the date of exchange for the other
Class B shares.
Class B shares purchased for cash automatically convert to Class A shares eight
years after the end of the month of your purchase. If you purchase shares by
exchange for the Class B shares of another AB Mutual Fund, the conversion
period runs from the date of your original purchase.
CLASS C SHARES. You can purchase Class C shares at NAV without an initial sales
charge. This means that the full amount of your purchase is invested in the
Fund. Your investment is subject to a 1% CDSC if you redeem your shares within
1 year. If you exchange your shares for the Class C shares of another AB Mutual
Fund, the 1% CDSC also will apply to the Class C shares received. The 1-year
period for the CDSC begins with the date of your original purchase, not the
date of the exchange for the other Class C shares.
Class C shares purchased for cash automatically convert to Class A shares ten
years after the end of the month of your purchase. If you purchase shares by
exchange for the Class C shares of another AB Mutual Fund, the conversion
period runs from the date of your original purchase.
HOW IS THE CDSC CALCULATED?
The CDSC is applied to the lesser of NAV at the time of redemption or the
original cost of shares being redeemed (or, as to Fund shares acquired
through an exchange, the cost of the AB Mutual Fund shares originally
purchased for cash). This means that no sales charge is assessed on increases
in NAV above the initial purchase price. Shares obtained from dividend or
distribution reinvestment are not subject to the CDSC. In determining the
CDSC, it will be assumed that the redemption is, first, of any shares not
subject to a CDSC and, second, of shares held the longest.
ADVISOR CLASS, CLASS R, CLASS K, CLASS I AND CLASS Z SHARES.
These classes of shares are not subject to any initial sales charge or CDSC,
although your financial advisor may charge a fee.
SALES CHARGE REDUCTION PROGRAMS FOR CLASS A SHARES
THIS SECTION INCLUDES IMPORTANT INFORMATION ABOUT SALES CHARGE REDUCTION
PROGRAMS AVAILABLE TO INVESTORS IN CLASS A SHARES AND DESCRIBES INFORMATION OR
RECORDS YOU MAY NEED TO PROVIDE TO A FUND OR YOUR FINANCIAL INTERMEDIARY IN
ORDER TO BE ELIGIBLE FOR SALES CHARGE REDUCTION PROGRAMS. YOUR FINANCIAL
INTERMEDIARY MAY HAVE DIFFERENT POLICIES AND PROCEDURES REGARDING ELIGIBILITY
FOR SALES CHARGE REDUCTION PROGRAMS. SEE APPENDIX B--FINANCIAL INTERMEDIARY
WAIVERS.
Information about QUANTITY DISCOUNTS and sales charge reduction programs also
is available free of charge and in a clear and prominent format on our website
at www.abfunds.com (click on "Investments--Mutual Funds", select the Fund, then
click on "More Literature-Understanding Sales Charges & Expenses").
RIGHTS OF ACCUMULATION
To determine if a new investment in Class A shares is eligible for a QUANTITY
DISCOUNT, a shareholder can combine the value of the new investment in a Fund
with the higher of cost or NAV of existing investments in the Fund, any other
AB Mutual Fund and AB Institutional Funds. The AB Mutual Funds use the higher
of cost or current NAV of your existing investments when combining them with
your new investment.
COMBINED PURCHASE PRIVILEGES
A shareholder may qualify for a QUANTITY DISCOUNT by combining purchases of
shares of a Fund into a single "purchase". A "purchase" means a single purchase
or concurrent purchases of shares of a Fund or any other AB Mutual Fund,
including AB Institutional Funds, by:
.. an individual, his or her spouse or domestic partner, or the individual's
children under the age of 21 purchasing shares for his, her or their own
account(s);
.. a trustee or other fiduciary purchasing shares for a single trust, estate or
single fiduciary account with one or more beneficiaries involved;
.. the employee benefit plans of a single employer; or
.. any company that has been in existence for at least six months or has a
purpose other than the purchase of shares of the Fund.
LETTER OF INTENT
An investor may not immediately invest a sufficient amount to reach a QUANTITY
DISCOUNT, but may plan to make one or more additional investments over a period
of time that, in the end, would qualify for a QUANTITY DISCOUNT. For these
situations, the Funds offer a LETTER OF INTENT, which permits new investors to
express the intention, in writing, to invest at least $100,000 in Class A
shares of a Fund or any other AB Mutual Fund within 13 months. The Fund will
then apply the QUANTITY DISCOUNT to each of the investor's purchases of Class A
shares that would apply to the total amount stated in the LETTER OF INTENT. In
the event an existing investor chooses to initiate a LETTER OF INTENT, the AB
Mutual Funds will use the higher of cost or current NAV of the investor's
existing
68
investments and of those accounts with which investments are combined via
COMBINED PURCHASE PRIVILEGES toward the fulfillment of the LETTER OF INTENT.
For example, if the combined cost of purchases totaled $80,000 and the current
NAV of all applicable accounts is $85,000 at the time a $100,000 LETTER OF
INTENT is initiated, the subsequent investment of an additional $15,000 would
fulfill the LETTER OF INTENT. If an investor fails to invest the total amount
stated in the LETTER OF INTENT, a Fund will retroactively collect the sales
charge otherwise applicable by redeeming shares in the investor's account at
their then current NAV. Investors qualifying for COMBINED PURCHASE PRIVILEGES
may purchase shares under a single LETTER OF INTENT.
REQUIRED SHAREHOLDER INFORMATION AND RECORDS
In order for shareholders to take advantage of sales charge reductions, a
shareholder or his or her financial intermediary must notify the Fund that the
shareholder qualifies for a reduction. Without notification, the Fund is unable
to ensure that the reduction is applied to the shareholder's account. A
shareholder may have to provide information or records to his or her financial
intermediary or a Fund to verify eligibility for breakpoint privileges or other
sales charge waivers. This may include information or records, including
account statements, regarding shares of the Fund or other AB Mutual Funds held
in:
.. all of the shareholder's accounts at the Funds or a financial intermediary;
and
.. accounts of related parties of the shareholder, such as members of the same
family, at any financial intermediary.
CDSC WAIVERS AND OTHER PROGRAMS
Here Are Some Ways To Avoid Or
Minimize Charges On Redemption.
CDSC WAIVERS
The Funds will waive the CDSCs on redemptions of shares in the following
circumstances, among others:
.. permitted exchanges of shares;
.. following the death or disability of a shareholder;
.. if the redemption represents a minimum required distribution from an IRA or
other retirement plan to a shareholder who has attained the age of 70 1/2 ;
or
.. if the redemption is necessary to meet a plan participant's or beneficiary's
request for a distribution or loan from a group retirement plan or to
accommodate a plan participant's or beneficiary's direction to reallocate
his or her plan account among other investment alternatives available under
a group retirement plan.
Please see the Funds' SAI for a list of additional circumstances under which
the Funds will waive the CDSCs on redemption of shares.
Your financial intermediary may have different policies and procedures
regarding eligibility for CDSC waivers. See Appendix B--Financial Intermediary
Waivers.
OTHER PROGRAMS
DIVIDEND REINVESTMENT PROGRAM
Unless you specifically have elected to receive dividends or distributions in
cash, they will automatically be reinvested, without an initial sales charge or
CDSC, in the same class of additional shares of a Fund. If you elect to receive
distributions in cash, you will only receive a check if the amount of the
distribution is equal to or exceeds $25.00. Distributions of less than $25.00
will automatically be reinvested in shares of the Fund. To receive
distributions of less than $25.00 in cash, you must have bank instructions
associated to your account so that distributions can be delivered to you
electronically via Electronic Funds Transfer using the Automated Clearing House
or "ACH". In addition, the Fund may reinvest your distribution check (and
future checks) in additional shares of the Fund if your check (i) is returned
as undeliverable or (ii) remains uncashed for nine months.
DIVIDEND DIRECTION PLAN
A shareholder who already maintains accounts in more than one AB Mutual Fund
may direct the automatic investment of income dividends and/or capital gains by
one Fund, in any amount, without the payment of any sales charges, in shares of
any eligible class of one or more other AB Mutual Fund(s) in which the
shareholder maintains an account.
AUTOMATIC INVESTMENT PROGRAM
The Automatic Investment Program allows investors to purchase shares of a Fund
through pre-authorized transfers of funds from the investor's bank account.
Under the Automatic Investment Program, an investor may (i) make an initial
purchase of at least $2,500 and invest at least $50 monthly or (ii) make an
initial purchase of less than $2,500 and commit to a monthly investment of $200
or more until the investor's account balance is $2,500 or more. As of
January 31, 2009, the Automatic Investment Program is available for purchase of
Class B shares only if a shareholder was enrolled in the Program prior to
January 31, 2009. Please see the Funds' SAI for more details.
REINSTATEMENT PRIVILEGE
A shareholder who has redeemed all or any portion of his or her Class A shares
may reinvest all or any portion of the proceeds from the redemption in Class A
shares of any AB Mutual Fund at NAV without any sales charge, if the
reinvestment is made within 120 calendar days after the redemption date.
SYSTEMATIC WITHDRAWAL PLAN
The Funds offer a systematic withdrawal plan that permits the redemption of
Class A, Class B or Class C shares without payment of a CDSC. Under this plan,
redemptions equal to 1% a month, 2% every two months or 3% a quarter of the
value of a Fund account would be free of a CDSC. Shares would be redeemed so
that Class B shares not subject to a CDSC (such as shares acquired with
reinvested dividends or distributions) would be redeemed first and Class B
shares that are held the longest would be redeemed next. For Class A and
Class C shares, shares held the longest would be redeemed first.
CHOOSING A SHARE CLASS
Each share class represents an interest in the same portfolio of securities,
but each class has its own sales charge and expense
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structure allowing you to choose the class that best fits your situation. In
choosing a class of shares, you should consider:
.. the amount you intend to invest;
.. how long you expect to own shares;
.. expenses associated with owning a particular class of shares;
.. whether you qualify for any reduction or waiver of sales charges (for
example, if you are making a large investment that qualifies for a QUANTITY
DISCOUNT, you might consider purchasing Class A shares); and
.. whether a share class is available for purchase (Class R, K, I and Z shares
are only offered to group retirement plans, not individuals).
Among other things, Class A shares, with their lower Rule 12b-1 fees, are
designed for investors with a long-term investing time frame. Class C shares
should not be considered as a long-term investment because they are subject to
a higher distribution fee for ten years. Class C shares do not, however, have
an initial sales charge or a CDSC so long as the shares are held for one year
or more. Class C shares are designed for investors with a short-term investing
time frame.
A transaction, service, administrative or other similar fee may be charged by
your broker-dealer, agent or other financial intermediary, with respect to the
purchase, sale or exchange of Class A, Class B, Class C or Advisor Class shares
made through your financial advisor. Financial intermediaries, a fee-based
program, or, for group retirement plans, a plan sponsor or plan fiduciary, also
may impose requirements on the purchase, sale or exchange of shares that are
different from, or in addition to, those described in this Prospectus and the
Funds' SAI, including requirements as to the minimum initial and subsequent
investment amounts. In addition, group retirement plans may not offer all
classes of shares of a Fund. A Fund is not responsible for, and has no control
over, the decision of any financial intermediary, plan sponsor or fiduciary to
impose such differing requirements.
YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR FOR ASSISTANCE IN CHOOSING A CLASS OF
FUND SHARES.
PAYMENTS TO FINANCIAL ADVISORS AND THEIR FIRMS
Financial intermediaries market and sell shares of the Funds. These financial
intermediaries employ financial advisors and receive compensation for selling
shares of the Funds. This compensation is paid from various sources, including
any sales charge, CDSC and/or Rule 12b-1 fee that you or the Funds may pay.
Your individual financial advisor may receive some or all of the amounts paid
to the financial intermediary that employs him or her.
WHAT IS A FINANCIAL INTERMEDIARY?
A financial intermediary is a firm that receives compensation for selling
shares of the Funds offered in this Prospectus and/or provides services to
the Funds' shareholders. Financial intermediaries may include, among others,
your broker, your financial planner or advisor, banks and insurance
companies. Financial intermediaries may employ financial advisors who deal
with you and other investors on an individual basis.
All or a portion of the initial sales charge that you pay may be paid by ABI to
financial intermediaries selling Class A shares. ABI may also pay financial
intermediaries a fee of up to 1% on purchases of Class A shares that are sold
without an initial sales charge.
ABI may pay, at the time of your purchase, a commission to financial
intermediaries selling Class B shares in an amount equal to 4% of your
investment for sales of Class B shares and an amount equal to 1% of your
investment for sales of Class C shares.
For Class A, Class C, Class R and Class K shares, up to 100% and, for Class B
shares, up to 30% of the Rule 12b-1 fees applicable to these classes of shares
each year may be paid to financial intermediaries.
Your financial advisor's firm receives compensation from the Funds, ABI
and/or the Adviser in several ways from various sources, which include some
or all of the following:
- upfront sales commissions;
- Rule 12b-1 fees;
- additional distribution support;
- defrayal of costs for educational seminars and training; and
- payments related to providing shareholder recordkeeping and/or transfer
agency services.
Please read this Prospectus carefully for information on this compensation.
OTHER PAYMENTS FOR DISTRIBUTION SERVICES AND EDUCATIONAL SUPPORT
In addition to the commissions paid to or charged by financial intermediaries
at the time of sale and Rule 12b-1 fees, some or all of which may be paid to
financial intermediaries (and, in turn, to your financial advisor), ABI, at its
expense, currently provides additional payments to firms that sell shares of
the AB Mutual Funds. Although the individual components may be higher and the
total amount of payments made to each qualifying firm in any given year may
vary, the total amount paid to a financial intermediary in connection with the
sale of shares of the AB Mutual Funds will generally not exceed the sum of
(a) 0.25% of the current year's fund sales by that firm and (b) 0.10% of
average daily net assets attributable to that firm over the year. These sums
include payments for distribution analytical data regarding AB Mutual Fund
sales by financial advisors of these firms and to reimburse directly or
indirectly
70
the costs incurred by these firms and their employees in connection with
educational seminars and training efforts about the AB Mutual Funds for the
firms' employees and/or their clients and potential clients. The costs and
expenses associated with these efforts may include travel, lodging,
entertainment and meals. ABI may pay a portion of "ticket" or other
transactional charges.
For 2017, ABI's additional payments to these firms for distribution services
and educational support related to the AB Mutual Funds are expected to be
approximately 0.06% of the average monthly assets of the AB Mutual Funds, or
approximately $23 million. In 2016, ABI paid approximately 0.05% of the average
monthly assets of the AB Mutual Funds or approximately $21 million for
distribution services and educational support related to the AB Mutual Funds.
A number of factors are considered in determining the additional payments,
including each firm's AB Mutual Fund sales, assets and redemption rates, and
the willingness and ability of the firm to give ABI access to its financial
advisors for educational and marketing purposes. In some cases, firms will
include the AB Mutual Funds on a "preferred list". ABI's goal is to make the
financial advisors who interact with current and prospective investors and
shareholders more knowledgeable about the AB Mutual Funds so that they can
provide suitable information and advice about the funds and related investor
services.
The Funds and ABI also make payments for recordkeeping and other transfer
agency services to financial intermediaries that sell AB Mutual Fund shares.
Please see "Management of the Funds--Transfer Agency and Retirement Plan
Services" below. If paid by the Funds, these expenses are included in "Other
Expenses" under "Fees and Expenses of the Fund--Annual Fund Operating Expenses"
in the Summary Information at the beginning of this Prospectus.
IF ONE MUTUAL FUND SPONSOR MAKES GREATER DISTRIBUTION ASSISTANCE PAYMENTS
THAN ANOTHER, YOUR FINANCIAL ADVISOR AND HIS OR HER FIRM MAY HAVE AN
INCENTIVE TO RECOMMEND ONE FUND COMPLEX OVER ANOTHER. SIMILARLY, IF YOUR
FINANCIAL ADVISOR OR HIS OR HER FIRM RECEIVES MORE DISTRIBUTION ASSISTANCE
FOR ONE SHARE CLASS VERSUS ANOTHER, THEN THEY MAY HAVE AN INCENTIVE TO
RECOMMEND THAT CLASS.
PLEASE SPEAK WITH YOUR FINANCIAL ADVISOR TO LEARN MORE ABOUT THE TOTAL
AMOUNTS PAID TO YOUR FINANCIAL ADVISOR AND HIS OR HER FIRM BY THE FUNDS, THE
ADVISER, ABI AND BY SPONSORS OF OTHER MUTUAL FUNDS HE OR SHE MAY RECOMMEND TO
YOU. YOU SHOULD ALSO CONSULT DISCLOSURES MADE BY YOUR FINANCIAL ADVISOR AT
THE TIME OF PURCHASE.
As of the date of this Prospectus, ABI anticipates that the firms that will
receive additional payments for distribution services and/or educational
support include:
AIG Advisor Group
Ameriprise Financial Services
AXA Advisors
Cadaret, Grant & Co.
Citigroup Global Markets
Citizens Securities
Commonwealth Financial Network
Donegal Securities
Institutional Cash Distributors (ICD)
JP Morgan Securities
Lincoln Financial Advisors Corp.
Lincoln Financial Securities Corp.
LPL Financial
Merrill Lynch
Morgan Stanley
Northwestern Mutual Investment Services
PNC Investments
Raymond James
RBC Wealth Management
Robert W. Baird
Santander Securities
SunTrust Bank
UBS Financial Services
US Bancorp Investments
Wells Fargo Advisors
Although the Funds may use brokers and dealers that sell shares of the Funds to
effect portfolio transactions, the Funds do not consider the sale of AB Mutual
Fund shares as a factor when selecting brokers or dealers to effect portfolio
transactions.
HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of the same class of other AB
Mutual Funds provided that the other fund offers the same class of shares and,
in the case of retirement plans, is an investment option under the plan.
Exchanges of shares are made at the next-determined NAV, without sales or
service charges, after your order is received in proper form. All exchanges are
subject to the minimum investment restrictions set forth in the prospectus for
the AB Mutual Fund whose shares are being acquired. You may request an exchange
either directly or through your financial intermediary or, in the case of
retirement plan participants, by following the procedures specified by your
plan sponsor or plan recordkeeper. In order to receive a day's NAV, ABIS must
receive and confirm your telephone exchange request by the Fund Closing Time on
that day. The Funds may modify, restrict or terminate the exchange privilege on
60 days' written notice.
HOW TO SELL OR REDEEM SHARES
You may "redeem" your shares (i.e., sell your shares to a Fund) on any day the
Exchange is open, either directly or through your financial intermediary or, in
the case of retirement plan participants, by following the procedures specified
by your plan sponsor or plan recordkeeper. Your sale price will be the
next-determined NAV, less any applicable CDSC, after the Fund receives your
redemption request in proper form. The Fund expects that it will typically take
one to three business days following the receipt of your redemption request in
proper form to pay out redemption proceeds. However, while
71
not expected, payment of redemption proceeds may take up to seven days from the
day your request is received in proper form by the Fund by the Fund Closing
Time. If you recently purchased your shares by check or electronic funds
transfer, your redemption payment may be delayed until the Fund is reasonably
satisfied that the check or electronic funds transfer has been collected (which
may take up to 10 days). For Advisor Class shares, if you are in doubt about
what procedures or documents are required by your fee-based program or employee
benefit plan to sell your shares, you should contact your financial advisor.
Each Fund expects, under normal circumstances, to use cash or cash equivalents
held by the Fund to satisfy redemption requests. Each Fund may also determine
to sell portfolio assets to meet such requests. Under certain circumstances,
including stressed market conditions, each Fund may determine to pay a
redemption request by accessing a bank line of credit or by distributing wholly
or partly in kind securities from its portfolio, instead of cash.
SALE IN-KIND. Each Fund normally pays proceeds of a sale of Fund shares in
cash. However, each Fund has reserved the right to pay the sale price in whole
or in part by a distribution in-kind of securities in lieu of cash. If the
redemption payment is made in-kind, the securities received will be subject to
market risk and may decline in value. In addition, you may incur brokerage
commissions if you elect to sell the securities for cash.
SELLING SHARES THROUGH YOUR FINANCIAL INTERMEDIARY OR RETIREMENT PLAN
Your financial intermediary or plan recordkeeper must receive your sales
request by the Fund Closing Time and submit it to the Fund by a pre-arranged
time for you to receive that day's NAV, less any applicable CDSC. Your
financial intermediary, plan sponsor or plan recordkeeper is responsible for
submitting all necessary documentation to the Fund and may charge you a fee for
this service.
SELLING SHARES DIRECTLY TO THE FUND
BY MAIL:
.. Send a signed letter of instruction or stock power, along with certificates,
to:
AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
.. For certified or overnight deliveries, send to:
AllianceBernstein Investor Services, Inc.
8000 IH 10 W, 4th floor
San Antonio, TX 78230
.. For your protection, a bank, a member firm of a national stock exchange or
another eligible guarantor institution must guarantee signatures. Stock
power forms are available from your financial intermediary, ABIS and many
commercial banks. Additional documentation is required for the sale of
shares by corporations, intermediaries, fiduciaries and surviving joint
owners. If you have any questions about these procedures, contact ABIS.
BY TELEPHONE:
.. You may redeem your shares for which no stock certificates have been issued
by telephone request. Call ABIS at 800-221-5672 with instructions on how you
wish to receive your sale proceeds.
.. ABIS must receive and confirm a telephone redemption request by the Fund
Closing Time for you to receive that day's NAV, less any applicable CDSC.
.. For your protection, ABIS will request personal or other information from
you to verify your identity and will generally record the calls. Neither the
Fund nor the Adviser, ABIS, ABI or other Fund agent will be liable for any
loss, injury, damage or expense as a result of acting upon telephone
instructions purporting to be on your behalf that ABIS reasonably believes
to be genuine.
.. If you have selected electronic funds transfer in your Mutual Fund
Application, the redemption proceeds will be sent directly to your bank.
Otherwise, the proceeds will be mailed to you.
.. Redemption requests by electronic funds transfer or check may not exceed
$100,000 per Fund account per day.
.. Telephone redemption is not available for shares held in nominee or "street
name" accounts, retirement plan accounts, or shares held by a shareholder
who has changed his or her address of record within the previous 30 calendar
days.
FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES
Each Fund's Board has adopted policies and procedures designed to detect and
deter frequent purchases and redemptions of Fund shares or excessive or
short-term trading that may disadvantage long-term Fund shareholders. These
policies are described below. There is no guarantee that the Funds will be able
to detect excessive or short-term trading or to identify shareholders engaged
in such practices, particularly with respect to transactions in omnibus
accounts. Shareholders should be aware that application of these policies may
have adverse consequences, as described below, and should avoid frequent
trading in Fund shares through purchases, sales and exchanges of shares. Each
Fund reserves the right to restrict, reject or cancel, without any prior
notice, any purchase or exchange order for any reason, including any purchase
or exchange order accepted by any shareholder's financial intermediary.
RISKS ASSOCIATED WITH EXCESSIVE OR SHORT-TERM TRADING GENERALLY. While the
Funds will try to prevent market timing by utilizing the procedures described
below, these procedures may not be successful in identifying or stopping
excessive or short-term trading in all circumstances. By realizing profits
through short-term trading, shareholders that engage in rapid purchases and
sales or exchanges of a Fund's shares dilute the value of shares held by
long-term shareholders. Volatility resulting from excessive purchases and sales
or exchanges of Fund shares, especially involving large dollar amounts, may
disrupt efficient portfolio management and cause a Fund to sell
72
portfolio securities at inopportune times to raise cash to accommodate
redemptions relating to short-term trading activity. In particular, a Fund may
have difficulty implementing its long-term investment strategies if it is
forced to maintain a higher level of its assets in cash to accommodate
significant short-term trading activity. In addition, a Fund may incur
increased administrative and other expenses due to excessive or short-term
trading, including increased brokerage costs and realization of taxable capital
gains.
Funds that may invest significantly in securities of foreign issuers may be
particularly susceptible to short-term trading strategies. This is because
securities of foreign issuers are typically traded on markets that close well
before the time a Fund ordinarily calculates its NAV at 4:00 p.m., Eastern
time, which gives rise to the possibility that developments may have occurred
in the interim that would affect the value of these securities. The time zone
differences among international stock markets can allow a shareholder engaging
in a short-term trading strategy to exploit differences in Fund share prices
that are based on closing prices of securities of foreign issuers established
some time before the Fund calculates its own share price (referred to as "time
zone arbitrage"). Each Fund has procedures, referred to as fair value pricing,
designed to adjust closing market prices of securities of foreign issuers to
reflect what is believed to be the fair value of those securities at the time a
Fund calculates its NAV. While there is no assurance, the Funds expect that the
use of fair value pricing, in addition to the short-term trading policies
discussed below, will significantly reduce a shareholder's ability to engage in
time zone arbitrage to the detriment of other Fund shareholders.
A shareholder engaging in a short-term trading strategy may also target a Fund
irrespective of its investments in securities of foreign issuers. Any Fund that
invests in securities that are, among other things, thinly traded, traded
infrequently or relatively illiquid has the risk that the current market price
for the securities may not accurately reflect current market values. A
shareholder may seek to engage in short-term trading to take advantage of these
pricing differences (referred to as "price arbitrage"). All Funds may be
adversely affected by price arbitrage.
POLICY REGARDING SHORT-TERM TRADING. Purchases and exchanges of shares of the
Funds should be made for investment purposes only. The Funds seek to prevent
patterns of excessive purchases and sales of Fund shares to the extent they are
detected by the procedures described below, subject to each Fund's ability to
monitor purchase, sale and exchange activity. The Funds reserve the right to
modify this policy, including any surveillance or account blocking procedures
established from time to time to effectuate this policy, at any time without
notice.
.. TRANSACTION SURVEILLANCE PROCEDURES. The Funds, through their agents, ABI
and ABIS, maintain surveillance procedures to detect excessive or short-term
trading in Fund shares. This surveillance process involves several factors,
which include scrutinizing transactions in Fund shares that exceed certain
monetary thresholds or numerical limits within a specified period of time.
Generally, more than two exchanges of Fund shares during any 60-day period
or purchases of shares followed by a sale within 60 days will be identified
by these surveillance procedures. For purposes of these transaction
surveillance procedures, the Funds may consider trading activity in multiple
accounts under common ownership, control or influence. Trading activity
identified by either, or a combination, of these factors, or as a result of
any other information available at the time, will be evaluated to determine
whether such activity might constitute excessive or short-term trading. With
respect to managed or discretionary accounts for which the account owner
gives his/her broker, investment adviser or other third-party authority to
buy and sell Fund shares, the Funds may consider trades initiated by the
account owner, such as trades initiated in connection with bona fide cash
management purposes, separately in their analysis. These surveillance
procedures may be modified from time to time, as necessary or appropriate to
improve the detection of excessive or short-term trading or to address
specific circumstances.
.. ACCOUNT BLOCKING PROCEDURES. If the Funds determine, in their sole
discretion, that a particular transaction or pattern of transactions
identified by the transaction surveillance procedures described above is
excessive or short-term trading in nature, the Funds will take remedial
action that may include issuing a warning, revoking certain account-related
privileges (such as the ability to place purchase, sale and exchange orders
over the internet or by phone) or prohibiting or "blocking" future purchase
or exchange activity. However, sales of Fund shares back to a Fund or
redemptions will continue to be permitted in accordance with the terms of
the Fund's current Prospectus. As a result, unless the shareholder redeems
his or her shares, which may have consequences if the shares have declined
in value, a CDSC is applicable or adverse tax consequences may result, the
shareholder may be "locked" into an unsuitable investment. A blocked account
will generally remain blocked for 90 days. Subsequent detections of
excessive or short-term trading may result in an indefinite account block or
an account block until the account holder or the associated broker, dealer
or other financial intermediary provides evidence or assurance acceptable to
the Fund that the account holder did not or will not in the future engage in
excessive or short-term trading.
.. APPLICATIONS OF SURVEILLANCE PROCEDURES AND RESTRICTIONS TO OMNIBUS
ACCOUNTS. Omnibus account arrangements are common forms of holding shares of
the Funds, particularly among certain brokers, dealers and other financial
intermediaries, including sponsors of retirement plans. The Funds apply
their surveillance procedures to these omnibus account arrangements. As
required by Commission rules, the Funds have entered into agreements with
all of their financial intermediaries that require the financial
intermediaries to provide the Funds, upon the request of the Funds or their
agents, with individual account level information about their transactions.
If the Funds detect excessive trading through their monitoring of omnibus
accounts, including trading at the individual account level, the financial
intermediaries will also execute instructions
73
from the Funds to take actions to curtail the activity, which may include
applying blocks to accounts to prohibit future purchases and exchanges of
Fund shares. For certain retirement plan accounts, the Funds may request that
the retirement plan or other intermediary revoke the relevant participant's
privilege to effect transactions in Fund shares via the internet or
telephone, in which case the relevant participant must submit future
transaction orders via the U.S. Postal Service (i.e., regular mail).
HOW THE FUNDS VALUE THEIR SHARES
Each Fund's NAV is calculated at the close of regular trading on any day the
Exchange is open (ordinarily, 4:00 p.m., Eastern time, but sometimes earlier,
as in the case of scheduled half-day trading or unscheduled suspensions of
trading). To calculate NAV, a Fund's assets are valued and totaled, liabilities
are subtracted, and the balance, called net assets, is divided by the number of
shares outstanding. If a Fund invests in securities that are primarily traded
on foreign exchanges that trade on weekends or other days when the Fund does
not price its shares, the NAV of the Fund's shares may change on days when
shareholders will not be able to purchase or redeem their shares in the Fund.
The Funds value their securities at their current market value determined on
the basis of market quotations or, if market quotations are not readily
available or are unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of each Board. When
a Fund uses fair value pricing, it may take into account any factors it deems
appropriate. A Fund may determine fair value based upon developments related to
a specific security, current valuations of foreign stock indices (as reflected
in U.S. futures markets) and/or U.S. sector or broader stock market indices.
The prices of securities used by the Fund to calculate its NAV may differ from
quoted or published prices for the same securities. Fair value pricing involves
subjective judgments and it is possible that the fair value determined for a
security is materially different than the value that could be realized upon the
sale of that security.
Each Fund expects to use fair value pricing for securities primarily traded on
U.S. exchanges only under very limited circumstances, such as the early closing
of the exchange on which a security is traded or suspension of trading in the
security. A Fund may use fair value pricing more frequently for securities
primarily traded in non-U.S. markets because, among other things, most foreign
markets close well before the Fund ordinarily values its 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. For example, the Funds believe that foreign
security values may be affected by events that occur after the close of foreign
securities markets. To account for this, the Funds may frequently value many of
their foreign equity securities using fair value prices based on third-party
vendor modeling tools to the extent available.
Subject to its oversight, each Fund's Board has delegated responsibility for
valuing a Fund's assets to the Adviser. The Adviser has established a Valuation
Committee, which operates under the policies and procedures approved by the
Board, to value the Fund's assets on behalf of the Fund. The Valuation
Committee values Fund assets as described above. More information about the
valuation of the Funds' assets is available in the Funds' SAI.
74
MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------------
INVESTMENT ADVISER
Each Fund's Adviser is AllianceBernstein L.P., 1345 Avenue of the Americas,
New York, NY 10105. The Adviser is a leading global investment adviser
supervising client accounts with assets as of September 30, 2017 totaling
approximately $535 billion (of which over $105 billion represented assets of
registered investment companies sponsored by the Adviser). As of September 30,
2017, the Adviser managed retirement assets for many of the largest public and
private employee benefit plans (including 16 of the nation's FORTUNE 100
companies), for public employee retirement funds in 28 states and the District
of Columbia, for investment companies, and for foundations, endowments, banks
and insurance companies worldwide. The 30 registered investment companies
managed by the Adviser, comprising approximately 117 separate investment
portfolios, had as of September 30, 2017 approximately 2.1 million shareholder
accounts.
The Adviser provides investment advisory services and order placement
facilities for the Funds. For these advisory services, each of the Funds paid
the Adviser, during its most recent fiscal year or period, a percentage of net
assets as follows:
[Download Table]
FEE AS A PERCENTAGE OF
AVERAGE NET FISCAL YEAR
FUND ASSETS* ENDED
-------------------------------------------------------------------------------
AB Growth Fund .75% 7/31/17
AB Large Cap Growth Fund .59% 7/31/17
AB Concentrated Growth Fund .80% 6/30/17
AB Discovery Growth Fund .63% 7/31/17
AB Small Cap Growth Portfolio .75% 7/31/17
AB Select US Equity Portfolio 1.00% 6/30/17
AB Select US Long/Short Portfolio 1.50% 6/30/17
AB Sustainable Global Thematic Fund .75% 7/31/17
AB International Growth Fund .75% 6/30/17
AB Global Core Equity Portfolio .68% 6/30/17
AB International Strategic Core Portfolio .00% 6/30/17
AB Concentrated International Growth
Portfolio .00% 6/30/17
--------
*Fee stated net of any expense limitations. See "Fees and Expenses of the Fund"
in the Summary Information at the beginning of this Prospectus for more
information about fee waivers.
A discussion regarding the basis for the Board's approval of each Fund's
investment advisory agreement is available in the Fund's annual report to
shareholders for the fiscal year ended June 30, 2017 or July 31, 2017 as shown
in the table above.
The Adviser may act as an investment adviser to other persons, firms or
corporations, including investment companies, hedge funds, pension funds and
other institutional investors. The Adviser may receive management fees,
including performance fees, that may be higher or lower than the advisory fees
it receives from the Funds. Certain other clients of the Adviser may have
investment objectives and policies similar to those of a Fund. The Adviser may,
from time to time, make recommendations that result in the purchase or sale of
a particular security by its other clients simultaneously with a Fund. If
transactions on behalf of more than one client during the same period increase
the demand for securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. It is the policy of
the Adviser to allocate advisory recommendations and the placing of orders in a
manner that is deemed equitable by the Adviser to the accounts involved,
including the Funds. When two or more of the clients of the Adviser (including
a Fund) are purchasing or selling the same security on a given day from the
same broker-dealer, such transactions may be averaged as to price.
PORTFOLIO MANAGERS
The day-to-day management of, and investment decisions for, the AB GROWTH FUND
are made by the Adviser's Growth Investment Team.
The following table lists the senior members of the Growth Investment Team with
the responsibility for day-to-day management of the Fund's portfolio, the
length of time that each person has been jointly and primarily responsible for
the Fund, and each person's principal occupation during the past five years:
[Download Table]
PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
-------------------------------------------------------------------------------
Bruce K. Aronow; since 2013; Senior Senior Vice President of the Adviser,
Vice President of the Adviser with which he has been associated in a
substantially similar capacity as a
portfolio manager since prior to 2012,
and Chief Investment Officer of U.S.
Small/SMID Cap Growth.
Frank V. Caruso; since 2008; Senior Senior Vice President of the Adviser,
Vice President of the Adviser with which he has been associated in a
substantially similar capacity as a
portfolio manager since prior to 2012,
and Chief Investment Officer of U.S.
Growth Equities.
John H. Fogarty; since 2013; Senior Senior Vice President of the Adviser and
Vice President of the Adviser portfolio manager for the US Mid Cap
Fundamental Growth, US Growth
Equities, and US Growth and Income
portfolios since prior to 2012, portfolio
manager for US Large Cap Growth
since 2012.
The day-to-day management of, and investment decisions for, the AB LARGE CAP
GROWTH FUND are made by the Adviser's U.S. Large Cap Growth Investment Team.
The following table lists the senior members of the U.S. Large Cap Growth
Investment Team with the responsibility for day-to-day management of the Fund's
portfolio, the length of time that each person has been jointly and primarily
responsible for the Fund, and each person's principal occupation during the
past five years:
[Download Table]
PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
-------------------------------------------------------------------------------
Frank V. Caruso; since 2012; Senior (see above)
Vice President of the Adviser
Vincent C. Dupont; since 2012; Senior Senior Vice President of the Adviser,
Vice President of the Adviser with which he has been associated in a
substantially similar capacity as a
portfolio manager since prior to 2012.
John H. Fogarty; since 2012; Senior (see above)
Vice President of the Adviser
Karen A. Sesin; since 2016; Senior Senior Vice President of the Adviser,
Vice President of the Adviser with which she has been associated in
a substantially similar capacity as a
portfolio manager since prior to 2012.
75
The day-to-day management of, and investment decisions for, the AB CONCENTRATED
GROWTH FUND are made by Mr. James Tierney, a Senior Vice President of the
Adviser, with which he has been associated since December 2013 and Chief
Investment Officer of Concentrated U.S. Growth, when the Adviser acquired WPS
Advisors, Inc. ("WPS"). Prior thereto, he was Chief Investment Officer of WPS
(2010-2013) and Portfolio Manager/Analyst and Senior Vice President of WPS
(2003-2010).
The day-to-day management of, and investment decisions for, the AB DISCOVERY
GROWTH FUND are made by the Adviser's U.S. Small/Mid Cap Growth Investment Team.
The following table lists the senior members of the U.S. Small/Mid Cap Growth
Investment Team with the responsibility for day-to-day management of the Fund's
portfolio, the length of time that each person has been jointly and primarily
responsible for the Fund, and each person's principal occupation during the
past five years:
[Download Table]
PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
-------------------------------------------------------------------------------
Bruce K. Aronow; since 2008; (see above)
Senior Vice President of the
Adviser
N. Kumar Kirpalani; since 2008; Senior Vice President of the Adviser,
Senior Vice President of the with which he has been associated in a
Adviser substantially similar capacity as a
portfolio manager since prior to 2012.
Samantha S. Lau; since 2008; Senior Vice President of the Adviser,
Senior Vice President of the with which she has been associated in
Adviser a substantially similar capacity as a
portfolio manager since prior to 2012
and Co-Chief Investment Officer of U.S.
Small/Smid Cap Growth.
Wen-Tse Tseng; since 2008; Senior Senior Vice President of the Adviser,
Vice President of the Adviser with which he has been associated in a
substantially similar capacity since prior
to 2012.
The day-to-day management of, and investment decisions for, the AB SMALL CAP
GROWTH PORTFOLIO are made by the Adviser's Small Cap Growth Investment Team.
The following table lists the persons within the Small Cap Growth Investment
Team with the most significant responsibility for the day-to-day management of
the Fund's portfolio, the length of time that each person has been jointly and
primarily responsible for the Fund, and each person's principal occupation
during the past five years:
[Download Table]
PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
-------------------------------------------------------------------------------
Bruce K. Aronow; since 2000; Senior Vice (see above)
President of the Adviser
N. Kumar Kirpalani; since 2004; Senior Vice (see above)
President of the Adviser
Samantha S. Lau; since 2004; Senior Vice (see above)
President of the Adviser
Wen-Tse Tseng; since 2006; Senior Vice President (see above)
of the Adviser
The day-to-day management of, and investment decisions for, the AB SELECT US
EQUITY PORTFOLIO and AB SELECT US LONG/SHORT PORTFOLIO are made by the
Adviser's Select Equity Portfolios Investment Team. The following table lists
the senior members of the Select Equity Portfolios Investment Team with the
primary responsibility for day-to-day management of the Funds' portfolios, the
year that each person assumed joint and primary responsibility for each Fund,
and each person's principal occupation during the past five years:
[Download Table]
PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
-------------------------------------------------------------------------------
Kurt A. Feuerman; since 2011 for the Senior Vice President and Chief
AB Select US Equity Portfolio and Investment Officer, Select US Equity
since 2012 for the AB Select US Portfolios of the Adviser, with which he
Long/Short Portfolio; Senior Vice has been associated in this current
President of the Adviser position since prior to 2012.
Anthony Nappo; since 2015; Senior Senior Vice President and Co-Chief
Vice President of the Adviser Investment Officer, Select US Equity
Portfolios of the Adviser since June
2015, and a Portfolio Manager/
Research Analyst on the Select Equities
Portfolio Investment Team since prior to
2012.
The day-to-day management of, and investment decisions for, the AB SUSTAINABLE
GLOBAL THEMATIC FUND are made by the Adviser's Thematic and Sustainable
Equities Investment Team.
The following table lists the person within the Thematic and Sustainable
Equities Investment Team with the most significant responsibility for the
day-to-day management of the Fund's portfolio, the length of time that the
person has been jointly or primarily responsible for the Fund, and that
person's principal occupation during the past five years:
[Download Table]
PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
--------------------------------------------------------------------------------
Daniel C. Roarty; since 2013; Senior Senior Vice President of the Adviser,
Vice President of the Adviser with which he has been associated
since prior to 2012, and Chief
Investment Officer of the Thematic and
Sustainable Equities Team since 2013.
Prior thereto, he was named sector
head for the technology sector on the
Global/International Research Growth
team as of July 1, 2011, and team
leader for that team in early 2012.
The day-to-day management of, and investment decisions for, the AB
INTERNATIONAL GROWTH FUND are made by the Adviser's Thematic and Sustainable
Equities Investment Team.
The following table lists the person within the Thematic and Sustainable
Equities Investment Team with the responsibility for the day-to-day management
of the Fund's portfolio, the length of time that the person has been jointly or
primarily responsible for the Fund, and that person's principal occupation
during the past five years:
[Download Table]
PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
-------------------------------------------------------------------------------
Daniel C. Roarty; since 2011; Senior Vice (see above)
President of the Adviser
The day-to-day management of, and investment decisions for, the AB GLOBAL CORE
EQUITY PORTFOLIO are made by an Investment Policy Team.
The following table lists the persons with the most significant responsibility
for the day-to-day management of the Fund's portfolio, the length of time that
each person has been jointly
76
and primarily responsible for the Fund, and each person's principal occupation
during the past five years:
[Download Table]
PRINCIPAL OCCUPATION(S) DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
--------------------------------------------------------------------------------
David Dalgas; since 2014; Senior Senior Vice President of the Adviser and
Vice President of the Adviser Chief Investment Officer of Global Core
Equity since 2014. Previously, he served
as Head of Equities and Chief
Investment Officer of CPH Capital
Fondsmaeglerselskab A/S ("CPH
Capital"), since prior to 2012.
Klaus Ingemann; since 2014; Senior Senior Vice President and Senior Research
Vice President of the Adviser Analyst/Portfolio Manager of the Adviser
since 2014. Previously, he was an
executive member of the Investment
Board of CPH Capital since prior to 2012.
The day-to-day management of, and investment decisions for, the AB
INTERNATIONAL STRATEGIC CORE PORTFOLIO are made by the Adviser's Strategic Core
Investment Team.
The following table lists the senior members of the Strategic Core Investment
Team with the responsibility for day-to-day management of the Fund's portfolio,
the length of time that each person has been jointly and primarily responsible
for the Fund, and each person's principal occupation during the past five years:
[Download Table]
PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE THE PAST FIVE (5) YEARS
----------------------------------------------------------------------------------
Kent W. Hargis; since 2015; Senior Senior Vice President, Portfolio Manager
Vice President of the Adviser of Strategic Core Equities and Head of
Quantitative Research--Equities of the
Adviser, with which he has been
associated in a similar capacity to his
current position since prior to 2012.
Sammy Suzuki; since 2015; Senior Vice Senior Vice President, Portfolio Manager
President of the Adviser of Strategic Core Equities of the Adviser
since 2015. Previously, he was Director
of Research, Emerging Markets Value
Equities from prior to 2012 until 2015.
The day-to-day management of, and investment decisions for, the AB CONCENTRATED
INTERNATIONAL GROWTH PORTFOLIO are made by the Adviser's Concentrated
International Growth Investment Team.
The following table lists the senior members of the Concentrated International
Growth Investment Team with the responsibility for day-to-day management of the
Fund's portfolio, the length of time that each person has been jointly and
primarily responsible for the Fund, and each person's principal occupation
during the past five years:
[Download Table]
PRINCIPAL OCCUPATION(S) DURING
EMPLOYEE; YEAR; TITLE THE PAST FIVE (5) YEARS
-------------------------------------------------------------------------------
Dev Chakrabarti; since 2015; Senior Senior Vice President of the Adviser and
Vice President of the Adviser Portfolio Manager and Senior Research
Analyst for Concentrated Global
Growth. Prior to joining the Adviser in
December 2013, he was a Portfolio
Manager/Analyst on the Global Equity
Research and Portfolio Management
Team at WPS Advisors, Inc. ("WPS")
since prior to 2012.
Mark Phelps; since 2015; Senior Vice Senior Vice President of the Adviser and
President of the Adviser Chief Investment Officer of Concentrated
Global Growth, with which he has been
associated since December 2013, when
the Adviser acquired WPS. Prior thereto,
he was President and managing director
of Global Investments of WPS (from prior
to 2012 until December 2013) and Chief
Investment Officer of WPS (from prior to
2012 until June 2013).
The Funds' SAI provides additional information about the portfolio managers'
compensation, other accounts managed by the portfolio managers, and the
portfolio managers' ownership of securities in the Funds.
PERFORMANCE OF SIMILARLY MANAGED ACCOUNTS
AB GLOBAL CORE EQUITY PORTFOLIO, AB SELECT US EQUITY PORTFOLIO, AB SELECT US
LONG/SHORT PORTFOLIO AND AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO
The investment teams employed by the Adviser to manage the AB GLOBAL CORE
EQUITY PORTFOLIO, AB SELECT US EQUITY PORTFOLIO, AB SELECT US LONG/SHORT
PORTFOLIO and AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO have substantial
experience in managing discretionary accounts of institutional clients, pooled
investment vehicles and/or other registered investment companies (the
"Similarly Managed Accounts") that have substantially the same investment
objectives and policies and are managed in accordance with substantially the
same investment strategies as those applicable to each Fund. The Similarly
Managed Accounts that are not registered investment companies are not subject
to certain limitations, diversification requirements and other restrictions
imposed under the 1940 Act and the Code to which the Funds, as registered
investment companies, are subject and which, if applicable to the Similarly
Managed Accounts, may have adversely affected their performance.
Set forth below is performance data provided by the Adviser relating to the
Similarly Managed Accounts managed by the investment team that manages each
Fund's assets. Performance data is shown for the period during which the
investment teams of the Adviser managed the Similarly Managed Accounts through
September 30, 2017. The aggregate assets for the Similarly Managed Accounts as
of September 30, 2017 are also shown.
Prior to June 2011, the Similarly Managed Accounts of AB SELECT US EQUITY
PORTFOLIO and AB SELECT US LONG/SHORT PORTFOLIO were managed at Caxton
Associates L.P. by an investment team led by Mr. Feuerman. As of June 2011,
Mr. Feuerman and his team joined the Adviser, which became the investment
adviser of the Similarly Managed Accounts.
The performance data is net of all fees (including brokerage commissions)
charged to the Similarly Managed Accounts, calculated on a monthly basis. The
performance data has been calculated by deducting the maximum management fee
paid by investors in a Similarly Managed Account. The maximum fee for the
Similarly Managed Accounts of AB GLOBAL CORE EQUITY PORTFOLIO is 0.80% of
assets annually. The maximum fee for the Similarly Managed Accounts of AB
SELECT US EQUITY PORTFOLIO is 1.50% annually or, after January 1, 2012, 1.00%
annually. The maximum fee for the Similarly Managed Accounts of AB SELECT US
LONG/SHORT PORTFOLIO is 1.00% annually, plus 20% of net realized and unrealized
appreciation (subject to "high water mark" provisions that require payment of
the fee on net appreciation only when the Similarly Managed Account's NAV
exceeds the Similarly Managed Account's highest prior NAV determined as of
certain specified dates). The highest investment management fee charged to a
Similarly Managed Account of AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO
77
is 0.90% of account assets and the current management fee schedule for the
Similarly Managed Accounts of the Fund is 0.90% of the first $50 million of
account assets, 0.75% of the next $50 million of account assets, and 0.65% of
account assets in excess of $100 million. Net-of-fee performance figures
reflect the compounding effect of such fees.
The data has not been adjusted to reflect any fees that will be payable by the
Funds, which may be higher than the fees imposed on the Similarly Managed
Accounts, and will reduce the returns of the Funds. Furthermore, investors in
the Similarly Managed Accounts pay no sales charges in connection with their
investments, and the data below has not been adjusted to reflect any sales
charge that may be paid by Fund investors. The deduction of any such higher
fees or sales charges would have resulted in lower performance. While Similarly
Managed Account performance is net of foreign withholding taxes, except as
noted, the performance data has not been adjusted for U.S. corporate or
individual taxes, if any, payable by owners of the Similarly Managed Accounts.
The Adviser has calculated the investment performance of the Similarly Managed
Accounts on a trade-date basis. Income has been accrued daily, dividends have
been accrued at the end of the month and cash flows weighted daily. Investment
performance for each Fund has been determined on an asset-weighted basis. New
accounts are included in the composite investment performance computations at
the beginning of the quarter following the initial contribution. The total
returns set forth below are calculated using a method that links the monthly
return amounts for the disclosed periods, resulting in a time-weighted rate of
return. Other methods of computing the investment performance of the Similarly
Managed Accounts may produce different results, and the results for different
periods may vary.
Performance for certain Similarly Managed Accounts is for the Class A interests
of such Similarly Managed Accounts. Pursuant to applicable rules of FINRA, the
Class A interests (which are generally available only to investors unaffiliated
with the Adviser) receive all or a substantial majority (at least 90%) of the
profits and losses of the Similarly Managed Account attributable to investments
in "new issue" securities.
The MSCI ACWI Index (Net) is used by AB GLOBAL CORE EQUITY PORTFOLIO and its
Similarly Managed Accounts, for purposes of this example, as a benchmark to
measure its relative performance. The MSCI ACWI Index (Net) is a free
float-adjusted market capitalization index designed to measure the equity
market performance of developed and emerging markets.
To the extent the investment team utilizes investment techniques such as swaps,
futures contracts, forwards or options, the performance of the MSCI ACWI Index
(Net) may not be substantially comparable to the performance of the investment
team's Similarly Managed Accounts.
The S&P 500 Index is used by AB SELECT US EQUITY PORTFOLIO and AB SELECT US
LONG/SHORT PORTFOLIO and their Similarly Managed Accounts, for purposes of this
example, as a benchmark to measure their relative performance. The S&P 500
Index is a stock market index containing the stocks of 500 large-capitalization
corporations. Widely regarded as the best single gauge of the U.S. equity
market, the S&P 500 Index includes a representative sample of 500 leading
companies in leading industries of the U.S. economy. The index performance is
included to illustrate material economic and market factors that existed during
the time period shown. The index does not reflect the deduction of any fees. If
the Funds were to purchase a portfolio of securities substantially identical to
the securities comprising the index, the performance of the Funds relative to
the index would be reduced by the Funds' expenses, including brokerage
commissions, advisory fees, distribution fees, custodial fees, transfer agency
costs and other administrative expenses, as well as by the impact on the Funds'
shareholders of sales charges and income taxes.
The MSCI EAFE Index is used by AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO
and its Similarly Managed Accounts, for purposes of this example as a benchmark
to measure its relative performance. The MSCI EAFE Index is a free
float-adjusted market capitalization index designed to measure developed-market
equity performance throughout the world.
To the extent the investment team utilizes investment techniques such as swaps,
futures contracts, forwards or options, the performance of the MSCI EAFE Index
may not be substantially comparable to the performance of the investment team's
Similarly Managed Accounts.
The performance data below is provided solely to illustrate each investment
team's performance in managing the Similarly Managed Accounts as measured
against a broad-based market index. The performance of each Fund will be
affected by the performance of the investment teams managing each Fund's
assets. If the investment teams were to perform relatively poorly, the
performance of the corresponding Fund would suffer. Investors should not rely
on the performance data of the Similarly Managed Accounts as an indication of
future performance of a Fund.
The investment performance for the periods presented may not be indicative of
future rates of return. The performance was not calculated pursuant to the
methodology established by the Commission that is used to calculate each Fund's
performance. The use of a methodology different from that used to calculate
performance could result in different performance data.
SCHEDULE OF HISTORICAL PERFORMANCE - SIMILARLY MANAGED ACCOUNTS*
[Download Table]
SIMILARLY
MANAGED ACCOUNTS MSCI ACWI INDEX
AB GLOBAL CORE EQUITY PORTFOLIO TOTAL RETURN** (NET)
-------------------------------------------------------------------------------
Year Ended December 31, except for period
ended September 30, 2017:
2017 17.97% 17.25%
2016 7.99% 7.86%
2015 -2.47% -2.36%
2014 1.17% 4.16%
2013 29.16% 22.80%
2012 25.09% 16.13%
Six months ended December 31, 2011*** -12.19% -11.49%
Cumulative total return for the period from
July 1, 2011 (inception of Similarly Managed
Accounts) to September 30, 2017 78.34% 62.35%
78
[Download Table]
SIMILARLY
MANAGED ACCOUNTS
AB SELECT US EQUITY PORTFOLIO TOTAL RETURN** S&P 500 INDEX
-------------------------------------------------------------------------------
Year Ended December 31, except for period ended
September 30, 2017:
2017 13.23% 14.24%
2016 9.13% 11.96%
2015 1.04% 1.38%
2014 13.17% 13.69%
2013 30.88% 32.39%
2012 16.18% 16.00%
2011 3.82% 2.11%
2010 19.84% 15.06%
2009 35.64% 26.46%
2008 -35.32% -37.00%
2007 12.18% 5.49%
2006 20.48% 15.79%
2005 15.04% 4.91%
[Download Table]
SIMILARLY
MANAGED ACCOUNTS
AB SELECT US LONG/SHORT PORTFOLIO TOTAL RETURN** S&P 500 INDEX
-------------------------------------------------------------------------------
Year Ended December 31, except for period ended
September 30, 2017:
2017 5.84% 14.24%
2016 4.34% 11.96%
2015 -0.27% 1.38%
2014 3.28% 13.69%
2013 16.95% 32.39%
2012 6.52% 16.00%
2011 0.58% 2.11%
2010 8.12% 15.06%
2009 10.15% 26.46%
2008 -8.00% -37.00%
[Download Table]
SIMILARLY
MANAGED ACCOUNTS
AB SELECT US LONG/SHORT PORTFOLIO TOTAL RETURN** S&P 500 INDEX
-------------------------------------------------------------------------------
2007 6.82% 5.49%
2006 13.03% 15.79%
2005 6.77% 4.91%
2004 15.68% 10.88%
2003 21.63% 28.68%
2002 0.52% -22.10%
2001 18.82% -11.88%
2000 34.36% -9.11%
[Download Table]
SIMILARLY
MANAGED ACCOUNTS MSCI
AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO TOTAL RETURN** EAFE INDEX
-------------------------------------------------------------------------------
Year Ended December 31, except for period ended
September 30, 2017:
2017 31.80% 19.96%
2016 -5.59% 1.00%
2015 2.90% -0.81%
2014 3.72% -4.90%
2013 8.69% 22.78%
2012 20.63% 17.32%
2011 -15.05% -12.14%
2010 12.24% 7.75%
2009 29.95% 31.78%
2008 -39.55% -43.38%
2007 7.73% 11.17%
One month ended December 31, 2006# 2.68% 3.14%
Cumulative total return for the period from
November 30, 2006 (inception of Similarly Managed
Accounts) to September 30, 2017 44.28% 33.32%
AVERAGE ANNUAL TOTAL RETURNS AS OF SEPTEMBER 30, 2017
SIMILARLY MANAGED ACCOUNTS--NET OF FEES PERFORMANCE
Average annual returns for periods ended September 30, 2017, with aggregate
assets as of September 30, 2017.
[Enlarge/Download Table]
ASSETS SINCE
AB GLOBAL CORE EQUITY PORTFOLIO (IN MILLIONS) 1 YEAR 3 YEARS 5 YEARS INCEPTION***
-----------------------------------------------------------------------------------------------------------------
Similarly Managed Accounts** $2,789.74 17.95% 7.93% 10.87% 9.70%
MSCI ACWI Index (Net) 18.65% 7.43% 10.20% 8.06%
-----------------------------------------------------------------------------------------------------------------
ASSETS SINCE
AB SELECT US EQUITY PORTFOLIO (IN MILLIONS) 1 YEAR 3 YEARS 5 YEARS INCEPTION+
-----------------------------------------------------------------------------------------------------------------
Similarly Managed Accounts $5,187.62 18.36% 9.39% 13.16% 10.68%
S&P 500 Index 18.61% 10.81% 14.22% 8.15%
-----------------------------------------------------------------------------------------------------------------
ASSETS SINCE
AB SELECT US LONG/SHORT PORTFOLIO (IN MILLIONS) 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION^
-----------------------------------------------------------------------------------------------------------------
Similarly Managed Accounts $1,920.08 7.90% 3.51% 5.84% 4.69% 8.90%
S&P 500 Index 18.61% 10.81% 14.22% 7.44% 5.10%
-----------------------------------------------------------------------------------------------------------------
ASSETS SINCE
AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO (IN MILLIONS) 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION#
-----------------------------------------------------------------------------------------------------------------
Similarly Managed Accounts## $ 200.55 23.89% 8.43% 9.11% 2.32% 3.44%
MSCI EAFE Index 19.10% 5.04% 8.38% 1.34% 2.69%
-----------------------------------------------------------------------------------------------------------------
* Total return is a measure of investment performance that is based upon the
change in value of an investment from the beginning to the end of a
specified period and assumes reinvestment of all dividends and other
distributions. The basis of presentation of this data is described in the
preceding discussion.
** Net of all fees.
***Inception date of the Similarly Managed Accounts is July 1, 2011.
+ Inception date of the Similarly Managed Accounts is December 31, 2004.
^ Inception date of the Similarly Managed Accounts is December 31, 1999.
# Inception date of the Similarly Managed Accounts is November 30, 2006.
## Net of fees charged by the Adviser and portfolio transaction costs.
79
AB INTERNATIONAL STRATEGIC CORE PORTFOLIO
Certain members of the investment team employed by the Adviser to manage the AB
INTERNATIONAL STRATEGIC CORE PORTFOLIO have experience in managing a non-fee
paying discretionary account of the Adviser (the "Proprietary Account") that
had substantially the same investment objective and policies and was managed in
accordance with substantially similar investment strategies as the Fund. The
Proprietary Account was not a registered investment company and was not subject
to certain limitations, diversification requirements and other restrictions
imposed under the 1940 Act and the Code to which the Fund, as a registered
investment company, is subject and which, if applicable to the Proprietary
Account, may have adversely affected the performance of the Proprietary Account.
Set forth below is performance data provided by the Adviser relating to the
Proprietary Account and the Fund (together, the "Similarly Managed Accounts").
The performance data shown reflects the performance of the Proprietary Account
for the period from its inception on October 1, 2011 through September 30, 2017
and for the Fund from July 31, 2015 through September 30, 2017. The net assets
of the Fund as of September 30, 2017 were approximately $48.81 million. The
performance data is net of fees charged by the Adviser, generally calculated by
deducting the highest fee that would be charged to an institutional account
managed in a substantially similar manner (0.55% of account assets), and
portfolio transaction costs. Net-of-fee performance figures reflect the
compounding effect of such fees.
For the periods prior to July 31, 2015, the data has not been adjusted to
reflect any fees and expenses that are payable by the Fund, which may be higher
than the fees imposed on other accounts and will reduce the returns of the
Fund. Among other fees and expenses, expenses associated with the distribution
of Class A and Class C shares of the Fund in accordance with the plans adopted
by the Fund's Board under Commission Rule 12b-1 are excluded. While Similarly
Managed Accounts performance is net of foreign withholding taxes, the
performance data has not been adjusted for corporate or individual taxes, if
any, payable by account owners.
The MSCI EAFE Index is used for purposes of this example as a benchmark to
measure the relative performance of the Similarly Managed Accounts. The MSCI
EAFE Index is a free float-adjusted market capitalization index designed to
measure developed-market equity performance throughout the world.
To the extent the Adviser utilizes investment techniques such as swaps, futures
contracts, forwards or options, the performance of the MSCI EAFE Index may not
be substantially comparable to the performance of the investment team's
Similarly Managed Accounts.
The performance data below is provided solely to illustrate the performance of
the Similarly Managed Accounts as measured against a broad-based market index.
The performance of the Fund will be affected by the performance of the
investment team managing the Fund's assets. If the investment team were to
perform relatively poorly, the performance of the Fund would suffer. Investors
should not rely on the performance data of the Similarly Managed Accounts as an
indication of future performance of the Fund.
The investment performance for the periods presented may not be indicative of
future rates of return. For the periods prior to July 31, 2015, the performance
was not calculated pursuant to the methodology established by the Commission
that is used to calculate the Fund's performance. The use of methodology
different from that used to calculate performance could result in different
performance data.
SIMILARLY MANAGED ACCOUNTS - SCHEDULE OF HISTORICAL PERFORMANCE*
[Download Table]
AB INTERNATIONAL
STRATEGIC CORE
PORTFOLIO
SIMILARLY
MANAGED ACCOUNTS MSCI
TOTAL RETURN** EAFE INDEX
-------------------------------------------------------------------------------
Year Ended December 31, except for period ended
September 30, 2017:
2017 19.94% 19.96%
2016 0.25% 1.00%
2015 5.51% -0.81%
2014 3.57% -4.90%
2013 23.54% 22.78%
2012 10.55% 17.32%
Three months ended December 31, 2011*** 4.31% 3.33%
Cumulative total return for the period from
October 1, 2011 (inception of Proprietary
Account) to September 30, 2017 87.19% 70.10%
AVERAGE ANNUAL TOTAL RETURNS AS OF SEPTEMBER 30, 2017*
[Download Table]
SINCE
1 YEAR 3 YEARS INCEPTION***
-------------------------------------------------------------------------------
AB INTERNATIONAL STRATEGIC CORE PORTFOLIO
Similarly Managed Accounts** 14.34% 7.96% 11.01%
MSCI EAFE Index 19.10% 5.04% 9.26%
--------
* Total return is a measure of investment performance that is based upon the
change in value of an investment from the beginning to the end of a
specified period and assumes reinvestment of all dividends and other
distributions. The basis of presentation of this data is described in the
preceding discussion.
** Net of fees charged by the Adviser and portfolio transaction costs.
***Inception date of the Proprietary Account is October 1, 2011.
TRANSFER AGENCY AND RETIREMENT PLAN SERVICES
ABIS acts as the transfer agent for the Funds. ABIS, an indirect wholly-owned
subsidiary of the Adviser, registers the transfer, issuance and redemption of
Fund shares and disburses dividends and other distributions to Fund
shareholders.
Many Fund shares are owned by financial intermediaries for the benefit of their
customers. Retirement plans may also hold Fund shares in the name of the plan,
rather than the participant. In those cases, the Funds often do not maintain an
account for you. Thus, some or all of the transfer agency functions for these
and certain other accounts are performed by the financial intermediaries and
plan recordkeepers. Financial
80
intermediaries and recordkeepers, which may have affiliated financial
intermediaries that sell shares of the AB Mutual Funds, may be paid by a Fund,
the Adviser, ABI and ABIS (i) account fees in amounts up to $19 per account per
annum, (ii) asset-based fees of up to 0.25% (except in respect of a limited
number of intermediaries) per annum of the average daily assets held through
the intermediary, or (iii) a combination of both. These amounts include fees
for shareholder servicing, sub-transfer agency, sub-accounting and
recordkeeping services. These amounts do not include fees for shareholder
servicing that may be paid separately by the Fund pursuant to its Rule 12b-1
plan. Amounts paid by a Fund for these services are included in "Other
Expenses" under "Fees and Expenses of the Fund" in the Summary Information
section of this Prospectus. In addition, financial intermediaries may be
affiliates of entities that receive compensation from the Adviser or ABI for
maintaining retirement plan "platforms" that facilitate trading by affiliated
and non-affiliated financial intermediaries and recordkeeping for retirement
plans.
Because financial intermediaries and plan recordkeepers may be paid varying
amounts per class for sub-transfer agency and related recordkeeping services,
the service requirements of which may also vary by class, this may create an
additional incentive for financial intermediaries and their financial advisors
to favor one fund complex over another or one class of shares over another.
For more information, please refer to the Fund's SAI, call your financial
advisor or visit our website at www.abfunds.com.
81
DIVIDENDS, DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------
Income dividends and capital gains distributions, if any, declared by a Fund on
its outstanding shares will, at the election of each shareholder, be paid in
cash or in additional shares of the same class of shares of that Fund. If paid
in additional shares, the shares will have an aggregate NAV as of the close of
business on the declaration date of the dividend or distribution equal to the
cash amount of the dividend or distribution. You may make an election to
receive dividends and distributions in cash or in shares at the time you
purchase shares. Your election can be changed at any time prior to a record
date for a dividend. There is no sales or other charge in connection with the
reinvestment of dividends or capital gains distributions. Cash dividends may be
paid by check, or, at your election, electronically via the ACH network.
If you receive an income dividend or capital gains distribution in cash you
may, within 120 days following the date of its payment, reinvest the dividend
or distribution in additional shares of that Fund without charge by returning
to the Adviser, with appropriate instructions, the check representing the
dividend or distribution. Thereafter, unless you otherwise specify, you will be
deemed to have elected to reinvest all subsequent dividends and distributions
in shares of that Fund.
While it is the intention of each Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and timing of any dividend or distribution will
depend on the realization by the Fund of income and capital gains from
investments. There is no fixed dividend rate and there can be no assurance that
a Fund will pay any dividends or realize any capital gains. The final
determination of the amount of a Fund's return of capital distributions for the
period will be made after the end of each calendar year.
You will normally have to pay federal income tax, and any state or local income
taxes, on the distributions you receive from a Fund, whether you take the
distributions in cash or reinvest them in additional shares. Distributions of
net capital gains from the sale of investments that a Fund owned for more than
one year and that are properly designated as capital gains distributions are
taxable as long-term capital gains. Distributions of dividends to a Fund's
non-corporate shareholders may be treated as "qualified dividend income", which
is taxed at the same preferential tax rates applicable to long-term capital
gains, if such distributions are derived from, and designated by a Fund as,
"qualified dividend income" and provided that holding period and other
requirements are met by both the shareholder and the Fund. "Qualified dividend
income" generally is income derived from dividends from U.S. corporations and
"qualified foreign corporations". Other distributions by a Fund are generally
taxable to you as ordinary income. Dividends declared in October, November, or
December and paid in January of the following year are taxable as if they had
been paid the previous December. A Fund will notify you as to how much of the
Fund's distributions, if any, qualify for these reduced tax rates.
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that a
Fund is liable for foreign income taxes withheld at the source, the Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits for foreign income taxes paid
(or to permit shareholders to claim a deduction for such foreign taxes), but
there can be no assurance that a Fund will be able to do so, and Funds that
invest primarily in U.S. securities will not do so. Furthermore, a
shareholder's ability to claim a foreign tax credit or deduction for foreign
taxes paid by a Fund may be subject to certain limitations imposed by the Code,
as a result of which a shareholder may not be permitted to claim a credit or
deduction for all or a portion of the amount of such taxes.
Under certain circumstances, if a Fund realizes losses (e.g., from fluctuations
in currency exchange rates) after paying a dividend, all or a portion of the
dividend may subsequently be characterized as a return of capital. Returns of
capital are generally nontaxable, but will reduce a shareholder's basis in
shares of the Fund. If that basis is reduced to zero (which could happen if the
shareholder does not reinvest distributions and returns of capital are
significant), any further returns of capital will be taxable as a capital gain.
If you buy shares just before a Fund deducts a distribution from its NAV, you
will pay the full price for the shares and then receive a portion of the price
back as a taxable distribution.
The sale or exchange of Fund shares is a taxable transaction for federal income
tax purposes.
Each year shortly after December 31, each Fund will send you tax information
stating the amount and type of all its distributions for the year. You are
encouraged to consult your tax adviser about the federal, state, and local tax
consequences in your particular circumstances, as well as about any possible
foreign tax consequences.
NON-U.S. SHAREHOLDERS
If you are a nonresident alien individual or a foreign corporation for federal
income tax purposes, please see the Funds' SAI for information on how you will
be taxed as a result of holding shares in the Funds.
82
GENERAL INFORMATION
--------------------------------------------------------------------------------
Under unusual circumstances, a Fund may suspend redemptions or postpone payment
for up to seven days or longer, as permitted by federal securities law. The
Funds reserve the right to close an account that has remained below $1,000 for
90 days.
During drastic economic or market developments, you might have difficulty in
reaching ABIS by telephone, in which event you should issue written
instructions to ABIS. ABIS is not responsible for the authenticity of telephone
requests to purchase, sell, or exchange shares. ABIS will employ reasonable
procedures to verify that telephone requests are genuine, and could be liable
for losses resulting from unauthorized transactions if it failed to do so.
Dealers and agents may charge a commission for handling telephone requests. The
telephone service may be suspended or terminated at any time without notice.
Shareholder Services. ABIS offers a variety of shareholder services. For more
information about these services or your account, call ABIS's toll-free number,
800-221-5672. Some services are described in the Mutual Fund Application.
Householding. Many shareholders of the AB Mutual Funds have family members
living in the same home who also own shares of the same Funds. In order to
reduce the amount of duplicative mail that is sent to homes with more than one
Fund account and to reduce expenses of the Funds, all AB Mutual Funds will,
until notified otherwise, send only one copy of each prospectus, shareholder
report and proxy statement to each household address. This process, known as
"householding", does not apply to account statements, confirmations, or
personal tax information. If you do not wish to participate in householding, or
wish to discontinue householding at any time, call ABIS at 800-221-5672. We
will resume separate mailings for your account within 30 days of your request.
83
GLOSSARY OF INVESTMENT TERMS
--------------------------------------------------------------------------------
EQUITY SECURITIES include (i) common stocks, partnership interests, business
trust shares and other equity or ownership interests in business enterprises
and (ii) securities convertible into, and rights and warrants to subscribe for
the purchase of, such stocks, shares and interests.
FIXED-INCOME SECURITIES are debt securities and dividend-paying preferred
stocks, including floating-rate and variable-rate instruments.
MSCI ACWI INDEX is a free float-adjusted market capitalization weighted index
that is designed to measure the equity market performance of developed and
emerging markets. The MSCI ACWI consists of 47 country indexes comprising 23
developed and 24 emerging market country indexes. The developed market country
indexes included are: Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands,
New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the
United Kingdom and the United States. The emerging market country indexes
included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece,
Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru,
Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and
United Arab Emirates.
MSCI EAFE INDEX is a stock market index of foreign stocks, from the perspective
of a North American investor. The index is market capitalization weighted
(meaning that the weight of securities is determined based on their respective
market capitalizations). The index targets coverage of 85% of the market
capitalization of the equity markets of all countries that are a part of the
index. The EAFE acronym stands for "Europe, Australasia, and Far East".
NON-U.S. COMPANY OR NON-U.S. ISSUER is an entity that (i) is organized under
the laws of a foreign country and conducts business in a foreign country,
(ii) derives 50% or more of its total revenues from business in foreign
countries, or (iii) issues equity or debt securities that are traded
principally on a stock exchange in a foreign country.
RUSSELL 1000(R) GROWTH INDEX measures the performance of those Russell 1000(R)
companies (the largest 1,000 U.S. companies by capitalization) with higher
price-to-book ratios and higher forecasted growth values.
RUSSELL 2000(R) GROWTH INDEX measures the performance of the small to
mid-capitalization growth segment of the U.S. equity universe. It includes
those Russell 2000(R) companies with higher price-to-book ratios and higher
forecasted growth values.
RUSSELL 2500(R) GROWTH INDEX measures the performance of the small to
mid-capitalization growth segment of the U.S. equity universe. It includes
those Russell 2500(R) companies with higher price-to-book ratios and higher
forecasted growth values.
RUSSELL 3000(R) GROWTH INDEX measures the performance of the broad growth
segment of the U.S. equity universe. It includes those Russell 3000(R) Index
companies with higher price-to-book ratios and higher forecasted growth values.
S&P 500 INDEX is a stock market index containing the stocks of 500 U.S.
large-capitalization corporations. Widely regarded as the best single gauge of
the U.S. equities market, the S&P 500 Index includes a representative sample of
500 leading companies in leading industries of the U.S. economy.
84
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each Fund's
financial performance for the past five years (or, if shorter, the period of
the Fund's operations). Certain information reflects financial results for a
single share of each Fund. The total returns in the table represent the rate
that an investor would have earned (or lost) on an investment in the Fund
(assuming reinvestment of all dividends and distributions). With respect to AB
CONCENTRATED GROWTH FUND, the financial statements for the four most recent
fiscal periods have been audited by Ernst & Young LLP, independent registered
public accounting firm. The financial statements pertaining to the Fund's
Advisor Class shares for the fiscal years prior to the four most recent fiscal
periods were audited by the previous independent registered public accounting
firm of the Fund. With respect to all other Funds, the financial statements for
all fiscal years have been audited by Ernst & Young LLP, independent registered
public accounting firm. The reports of the independent registered public
accounting firms, along with each Fund's financial statements, are included in
each Fund's annual report, which is available upon request.
85
AB GROWTH FUND
[Enlarge/Download Table]
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CLASS A
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 61.79 $ 66.15 $ 57.43 $ 48.62 $ 40.28
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.31)(b)+ (.30)(b) (.25) (.31) (.08)
Net realized and unrealized gain on investment and foreign
currency transactions 11.01 1.64 11.91 9.12 8.42
Capital contributions - 0 - .12 - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase in net asset value from operations 10.70 1.46 11.66 8.81 8.34
-------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.62) (5.82) (2.94) - 0 - - 0 -
-------- -------- -------- -------- --------
Net asset value, end of period $ 71.87 $ 61.79 $ 66.15 $ 57.43 $ 48.62
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(c)* 17.48%+ 2.40% 20.93% 18.12% 20.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $672,808 $581,533 $621,337 $554,270 $513,991
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) 1.24% 1.28% 1.29% 1.38% 1.44%
Expenses, before waivers/reimbursements(d) 1.25% 1.28% 1.29% 1.38% 1.44%
Net investment loss (.49)%(b)+ (.50)%(b) (.40)% (.56)% (.18)%
Portfolio turnover rate 54% 47% 59% 72% 70%
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[Enlarge/Download Table]
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CLASS B
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
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Net asset value, beginning of period $ 35.94 $ 41.20 $ 37.11 $ 31.65 $ 26.43
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.45)(b)+ (.47)(b) (.48) (.46) (.27)
Net realized and unrealized gain on investment and foreign currency
transactions 6.31 .91 7.51 5.92 5.49
Capital contributions - 0 - .12 - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase in net asset value from operations 5.86 .56 7.03 5.46 5.22
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.62) (5.82) (2.94) - 0 - - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 41.18 $ 35.94 $ 41.20 $ 37.11 $ 31.65
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(c)* 16.61%+ 1.57% 19.85% 17.25% 19.75%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $11,202 $13,567 $17,178 $18,466 $21,313
RATIO TO AVERAGE NET ASSETS OF:
Expenses, net of waivers/reimbursements(d) 2.00% 2.08% 2.12% 2.14% 2.22%
Expenses, before waivers/reimbursements(d) 2.01% 2.08% 2.12% 2.14% 2.22%
Net investment loss (1.22)%(b)+ (1.30)%(b) (1.23)% (1.32)% (.95)%
Portfolio turnover rate 54% 47% 59% 72% 70%
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See footnotes on page 89.
86
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CLASS C
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
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Net asset value, beginning of period $ 36.37 $ 41.61 $ 37.42 $ 31.90 $ 26.62
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.45)(b)+ (.46)(b) (.45) (.45) (.26)
Net realized and unrealized gain on investment and foreign currency
transactions 6.39 .92 7.58 5.97 5.54
Capital contributions - 0 - .12 - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase in net asset value from operations 5.94 .58 7.13 5.52 5.28
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.62) (5.82) (2.94) - 0 - - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 41.69 $ 36.37 $ 41.61 $ 37.42 $ 31.90
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(c)* 16.60%+ 1.64% 19.96% 17.30% 19.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $25,188 $70,221 $73,695 $66,232 $61,326
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) 2.01% 2.03% 2.04% 2.09% 2.16%
Expenses, before waivers/reimbursements(d) 2.02% 2.03% 2.04% 2.09% 2.16%
Net investment loss (1.20)%(b)+ (1.26)%(b) (1.15)% (1.28)% (.90)%
Portfolio turnover rate 54% 47% 59% 72% 70%
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ADVISOR CLASS
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
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Net asset value, beginning of period $ 66.36 $ 70.45 $ 60.83 $ 51.34 $42.40
------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.19)(b)+ (.16)(b) (.12) (.15) .05
Net realized and unrealized gain on investment and foreign currency
transactions 11.88 1.77 12.68 9.64 8.89
Capital contributions - 0 - .12 - 0 - - 0 - - 0 -
------- ------- ------- ------- ------
Net increase in net asset value from operations 11.69 1.73 12.56 9.49 8.94
------- ------- ------- ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.62) (5.82) (2.94) - 0 - - 0 -
------- ------- ------- ------- ------
Net asset value, end of period $ 77.43 $ 66.36 $ 70.45 $ 60.83 $51.34
======= ======= ======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(c)* 17.80%+ 2.63% 21.24% 18.48% 21.09%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $39,856 $22,489 $32,687 $12,673 $6,938
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) .99% 1.03% 1.02% 1.08% 1.14%
Expenses, before waivers/reimbursements(d) 1.00% 1.03% 1.02% 1.08% 1.14%
Net investment income (loss) (.27)%(b)+ (.25)%(b) (.18)% (.26)% .12%
Portfolio turnover rate 54% 47% 59% 72% 70%
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See footnotes on page 89.
87
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CLASS R
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
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Net asset value, beginning of period $60.75 $65.33 $56.92 $48.29 $40.06
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.51)(b)+ (.49)(b) (.42) (.42) (.12)
Net realized and unrealized gain on investment and foreign currency
transactions 10.80 1.61 11.77 9.05 8.35
Capital contributions - 0 - .12 - 0 - - 0 - - 0 -
------ ------ ------ ------ ------
Net increase in net asset value from operations 10.29 1.24 11.35 8.63 8.23
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.62) (5.82) (2.94) - 0 - - 0 -
------ ------ ------ ------ ------
Net asset value, end of period $70.42 $60.75 $65.33 $56.92 $48.29
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(c)* 17.11%+ 2.08% 20.56% 17.87% 20.55%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,611 $1,579 $1,302 $1,205 $1,186
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) 1.57% 1.59% 1.58% 1.59% 1.59%
Expenses, before waivers/reimbursements(d) 1.58% 1.59% 1.58% 1.59% 1.59%
Net investment loss (.81)%(b)+ (.82)%(b) (.69)% (.78)% (.29)%
Portfolio turnover rate 54% 47% 59% 72% 70%
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CLASS K
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
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Net asset value, beginning of period $63.23 $67.55 $58.57 $49.52 $40.97
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.29)(b)+ (.30)(b) (.24) (.25) (.03)
Net realized and unrealized gain on investment and foreign currency
transactions 11.23 1.68 12.16 9.30 8.58
Capital contributions - 0 - .12 - 0 - - 0 - - 0 -
------ ------ ------ ------ ------
Net increase in net asset value from operations 10.94 1.50 11.92 9.05 8.55
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.62) (5.82) (2.94) - 0 - - 0 -
------ ------ ------ ------ ------
Net asset value, end of period $73.55 $63.23 $67.55 $58.57 $49.52
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(c)* 17.47%+ 2.39% 20.96% 18.28% 20.87%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,387 $2,455 $2,866 $2,208 $1,985
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) 1.26% 1.26% 1.26% 1.26% 1.28%
Expenses, before waivers/reimbursements(d) 1.27% 1.26% 1.26% 1.26% 1.28%
Net investment loss (.44)%(b)+ (.49)%(b) (.38)% (.45)% (.06)%
Portfolio turnover rate 54% 47% 59% 72% 70%
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See footnotes on page 89.
88
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CLASS I
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
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Net asset value, beginning of period $ 65.93 $69.98 $60.38 $ 50.89 $41.96
------- ------ ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.08)(b)+ (.10)(b) .03 (.14) .13
Net realized and unrealized gain on investment and foreign currency
transactions 11.82 1.75 12.51 9.63 8.80
Capital contributions - 0 - .12 - 0 - - 0 - - 0 -
------- ------ ------ ------- ------
Net increase in net asset value from operations 11.74 1.77 12.54 9.49 8.93
------- ------ ------ ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.62) (5.82) (2.94) - 0 - - 0 -
------- ------ ------ ------- ------
Net asset value, end of period $ 77.05 $65.93 $69.98 $ 60.38 $50.89
======= ====== ====== ======= ======
TOTAL RETURN
Total investment return based on net asset value(c)* 17.96%+ 2.73% 21.37% 18.65% 21.28%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $13,030 $ 34 $ 37 $16,638 $ 16
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) .83% .94% .95% .95% .95%
Expenses, before waivers/reimbursements(d) .85% .94% .95% .95% .95%
Net investment income (loss) (.12)%(b)+ (.16)%(b) .04% (.24)% .29%
Portfolio turnover rate 54% 47% 59% 72% 70%
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(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 fund distributions or the redemption
of fund shares. Total investment return calculated for a period of less than
one year is not annualized.
(d)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses, but bears proportionate
shares of the 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 Fund in an
amount equal to the Fund's pro rata share of certain acquired fund fees and
expenses, and for the year ended July 31, 2017, such waiver amounted to
0.01% for the Fund.
+ For the year ended July 31, 2017 the amount includes a refund for
overbilling of prior years' custody out of pocket fees as follows:
[Download Table]
NET INVESTMENT NET INVESTMENT TOTAL
INCOME PER SHARE INCOME RATIO RETURN
- - ---------------- -------------- ------
$.01 .02% .02%
* Includes the impact of proceeds received and credited to the Fund resulting
from class action settlements, which enhanced the Fund's performance for the
years ended July 31, 2017, July 31, 2016, July 31, 2015, July 31, 2014 and
July 31, 2013 by 0.05%, 0.04%, 0.06%, 0.09% and 0.06%, respectively.
Includes the impact of proceeds received and credited to the Fund resulting
from regulatory settlements, which enhanced the Fund's performance for the
year ended July 31, 2016 by 0.22%.
89
AB LARGE CAP GROWTH FUND
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CLASS A
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
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Net asset value, beginning of period $39.11 $41.19 $39.47 $33.98 $27.33
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a)(b) (.09) (.13) (.12) (.16) (.11)
Net realized and unrealized gain on investment and foreign currency transactions 7.08 1.40 7.57 7.26 6.76
Contributions from Affiliates - 0 - .00(c) - 0 - - 0 - - 0 -
Capital contributions - 0 - .14 - 0 - - 0 - - 0 -
------ ------ ------ ------ ------
Net increase in net asset value from operations 6.99 1.41 7.45 7.10 6.65
------ ------ ------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.01) - 0 - - 0 - - 0 - - 0 -
Distributions from net realized gain on investment transactions (1.03) (3.49) (5.73) (1.61) - 0 -
------ ------ ------ ------ ------
Total dividends and distributions (1.04) (3.49) (5.73) (1.61) - 0 -
------ ------ ------ ------ ------
Net asset value, end of period $45.06 $39.11 $41.19 $39.47 $33.98
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d)* 18.34% 3.59% 20.67% 21.23% 24.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000,000's omitted) $1,954 $1,551 $1,425 $1,176 $1,061
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.03% 1.16% 1.21% 1.25% 1.25%
Expenses, before waivers/reimbursements(e) 1.04% 1.16% 1.21% 1.29% 1.33%
Net investment loss(b) (.22)% (.35)% (.30)% (.43)% (.36)%
Portfolio turnover rate 60% 59% 74% 66% 68%
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CLASS B
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.18 $ 32.81 $ 32.77 $ 28.67 $ 23.25
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.32)(b) (.34)(b) (.35) (.38) (.30)
Net realized and unrealized gain on investment and foreign currency
transactions 5.39 1.06 6.12 6.09 5.72
Contributions from Affiliates - 0 - .00(c) - 0 - - 0 - - 0 -
Capital contributions - 0 - .14 - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase in net asset value from operations 5.07 .86 5.77 5.71 5.42
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (1.03) (3.49) (5.73) (1.61) - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 34.22 $ 30.18 $ 32.81 $ 32.77 $ 28.67
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d)* 17.41%++ 2.79%++ 19.66% 20.29% 23.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $21,504 $26,546 $35,089 $42,847 $50,425
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.82% 1.95% 1.98% 2.03% 2.09%
Expenses, before waivers/reimbursements(e) 1.84% 1.96% 1.98% 2.03% 2.09%
Net investment loss (1.02)%(b) (1.13)%(b) (1.06)% (1.21)% (1.19)%
Portfolio turnover rate 60% 59% 74% 66% 68%
---------------------------------------------------------------------------------------------------------------------------------
See footnotes on page 94.
90
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CLASS C
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.53 $ 33.14 $ 33.02 $ 28.87 $ 23.41
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.32)(b) (.33)(b) (.34) (.37) (.30)
Net realized and unrealized gain on investment and foreign currency
transactions 5.47 1.07 6.19 6.13 5.76
Contributions from Affiliates - 0 - .00(c) - 0 - - 0 - - 0 -
Capital contributions - 0 - .14 - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase in net asset value from operations 5.15 .88 5.85 5.76 5.46
-------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (1.03) (3.49) (5.73) (1.61) - 0 -
-------- -------- -------- -------- --------
Net asset value, end of period $ 34.65 $ 30.53 $ 33.14 $ 33.02 $ 28.87
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d)* 17.47% 2.82% 19.77% 20.32% 23.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $313,124 $390,433 $272,789 $234,286 $208,720
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.79% 1.92% 1.95% 2.00% 2.05%
Expenses, before waivers/reimbursements(e) 1.80% 1.92% 1.95% 2.00% 2.05%
Net investment loss (1.01)%(b) (1.12)%(b) (1.04)% (1.18)% (1.16)%
Portfolio turnover rate 60% 59% 74% 66% 68%
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ADVISOR CLASS
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 42.17 $ 44.04 $ 41.73 $ 35.75 $ 28.69
---------- ---------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) .01(b) (.05)(b) (.01) (.07) (.05)
Net realized and unrealized gain on investment and foreign
currency transactions 7.65 1.53 8.05 7.66 7.11
Contributions from Affiliates - 0 - .00(c) - 0 - - 0 - - 0 -
Capital contributions - 0 - .14 - 0 - - 0 - - 0 -
---------- ---------- -------- -------- --------
Net increase in net asset value from operations 7.66 1.62 8.04 7.59 7.06
---------- ---------- -------- -------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.06) - 0 - - 0 - - 0 - - 0 -
Distributions from net realized gain on investment transactions (1.03) (3.49) (5.73) (1.61) - 0 -
---------- ---------- -------- -------- --------
Total dividends and distributions (1.09) (3.49) (5.73) (1.61) - 0 -
---------- ---------- -------- -------- --------
Net asset value, end of period $ 48.74 $ 42.17 $ 44.04 $ 41.73 $ 35.75
========== ========== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d)* 18.63% 3.86% 20.99% 21.56% 24.61%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,968,083 $1,136,459 $551,440 $455,211 $392,438
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .77% .91% .95% .99% 1.03%
Expenses, before waivers/reimbursements(e) .79% .92% .95% .99% 1.03%
Net investment income (loss) .03%(b) (.12)%(b) (.03)% (.17)% (.14)%
Portfolio turnover rate 60% 59% 74% 66% 68%
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See footnotes on page 94.
91
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CLASS R
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 37.90 $ 40.16 $ 38.73 $ 33.46 $ 27.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.24)(b) (.26)(b) (.24) (.26) (.21)
Net realized and unrealized gain on investment and foreign currency
transactions 6.83 1.35 7.40 7.14 6.67
Contributions from Affiliates - 0 - .00(c) - 0 - - 0 - - 0 -
Capital contributions - 0 - .14 - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase in net asset value from operations 6.59 1.23 7.16 6.88 6.46
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (1.03) (3.49) (5.73) (1.61) - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 43.46 $ 37.90 $ 40.16 $ 38.73 $ 33.46
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d)* 17.88% 3.22% 20.28% 20.89% 23.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $53,805 $40,787 $28,972 $24,675 $19,594
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.40% 1.52% 1.53% 1.54% 1.56%
Expenses, before waivers/reimbursements(e) 1.42% 1.52% 1.53% 1.54% 1.56%
Net investment loss (.60)%(b) (.72)%(b) (.62)% (.72)% (.68)%
Portfolio turnover rate 60% 59% 74% 66% 68%
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CLASS K
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 39.80 $ 41.88 $ 40.06 $ 34.46 $ 27.72
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.12)(b) (.15)(b) (.13) (.16) (.11)
Net realized and unrealized gain on investment and foreign currency
transactions 7.20 1.42 7.68 7.37 6.85
Contributions from Affiliates - 0 - .00(c) - 0 - - 0 - - 0 -
Capital contributions - 0 - .14 - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase in net asset value from operations 7.08 1.41 7.55 7.21 6.74
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (1.03) (3.49) (5.73) (1.61) - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 45.85 $ 39.80 $ 41.88 $ 40.06 $ 34.46
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d)* 18.27% 3.54% 20.61% 21.25% 24.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $90,686 $75,983 $67,836 $49,304 $49,878
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.10% 1.21% 1.23% 1.24% 1.25%
Expenses, before waivers/reimbursements(e) 1.11% 1.21% 1.23% 1.24% 1.25%
Net investment loss (.29)%(b) (.40)%(b) (.33)% (.42)% (.36)%
Portfolio turnover rate 60% 59% 74% 66% 68%
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See footnotes on page 94.
92
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CLASS I
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 41.96 $ 43.80 $ 41.51 $ 35.54 $ 28.48
-------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) .03(b) .00(b)(c) (.02) (.03) .00(c)
Net realized and unrealized gain on investment and foreign
currency transactions 7.59 1.51 8.04 7.61 7.06
Contributions from Affiliates - 0 - .00(c) - 0 - - 0 - - 0 -
Capital contributions - 0 - .14 - 0 - - 0 - - 0 -
-------- -------- -------- ------- -------
Net increase in net asset value from operations 7.62 1.65 8.02 7.58 7.06
-------- -------- -------- ------- -------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.06) - 0 - - 0 - - 0 - - 0 -
Distributions from net realized gain on investment transactions (1.03) (3.49) (5.73) (1.61) - 0 -
-------- -------- -------- ------- -------
Total dividends and distributions (1.09) (3.49) (5.73) (1.61) - 0 -
-------- -------- -------- ------- -------
Net asset value, end of period $ 48.49 $ 41.96 $ 43.80 $ 41.51 $ 35.54
======== ======== ======== ======= =======
TOTAL RETURN
Total investment return based on net asset value(d)* 18.64% 3.95% 21.02% 21.69% 24.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $237,269 $120,151 $159,794 $39,161 $36,168
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .74% .82% .87% .90% .88%
Expenses, before waivers/reimbursements(e) .76% .82% .87% .90% .88%
Net investment income (loss) .06%(b) .00%(b)(f) (.05)% (.07)% .00%(f)
Portfolio turnover rate 60% 59% 74% 66% 68%
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CLASS Z
JUNE 30,
2015(g) TO
YEAR ENDED JULY 31, JULY 31,
2017 2016 2015
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Net asset value, beginning of period $ 41.97 $ 43.80 $42.68
-------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) .07(b) (.04)(b) (.01)
Net realized and unrealized gain on investment and foreign currency transactions 7.60 1.56 1.13
Contributions from Affiliates - 0 - .00(c) - 0 -
Capital contributions - 0 - .14 - 0 -
-------- -------- ------
Net increase in net asset value from operations 7.67 1.66 1.12
-------- -------- ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.08) - 0 - - 0 -
Distributions from net realized gain on investment transactions (1.03) (3.49) - 0 -
-------- -------- ------
Total dividends and distributions (1.11) (3.49) - 0 -
-------- -------- ------
Net asset value, end of period $ 48.53 $ 41.97 $43.80
======== ======== ======
TOTAL RETURN
Total investment return based on net asset value(d)* 18.78% 3.97% 2.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $373,424 $128,040 $ 10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .65% .79% .81%^
Expenses, before waivers/reimbursements(e) .67% .79% .81%^
Net investment income (loss) .15%(b) (.10)%(b) (.35)%^
Portfolio turnover rate 60% 59% 74%
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See footnotes on page 94.
93
(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 fund distributions or the redemption
of fund shares. Total investment return calculated for a period of less than
one year is not annualized.
(e)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses, but bears proportionate
shares of the 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 Fund in an
amount equal to the Fund's pro rata share of certain acquired fund fees and
expenses, and for the year ended July 31, 2017, such waiver amounted to
0.02% for the Fund.
(f)Amount is less than .005%.
(g)Commencement of distribution.
* Includes the impact of proceeds received and credited to the Fund resulting
from class action settlements, which enhanced the Fund's performance for the
years ended July 31, 2017, July 31, 2016, July 31, 2015, July 31, 2014 and
July 31, 2013 by 0.01%, 0.03%, 0.06%, 0.38% and 0.01%, respectively.
Includes the impact of proceeds received and credited to the Fund in
connection with a residual distribution relating to regulatory settlements,
which enhanced the Fund's performance for the year ended July 31, 2016 by
0.38%.
++ The net asset value and total return include adjustments in accordance with
accounting principles generally accepted in the United States of America for
financial reporting purposes. As such, the net asset value and total return
for shareholder transactions may differ from financial statements.
^ Annualized.
94
AB CONCENTRATED GROWTH FUND
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CLASS A
FEBRUARY 28,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014
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Net asset value, beginning of period $ 26.04 $ 28.61 $ 26.26 $24.85
------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b)(c) (.08) (.05) (.10) (.01)
Net realized and unrealized gain (loss) on investment transactions 6.82 (1.73) 3.24 1.42
------- ------- ------- ------
Net increase (decrease) in net asset value from operations 6.74 (1.78) 3.14 1.41
------- ------- ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.13) (.79) (.79) - 0 -
------- ------- ------- ------
Net asset value, end of period $ 32.65 $ 26.04 $ 28.61 $26.26
======= ======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(d) 25.93% (6.38)% 12.12% 5.67%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $26,579 $30,438 $13,785 $ 56
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.22% 1.24% 1.24% 1.24%^
Expenses, before waivers/reimbursements(e) 1.22% 1.27% 1.39% 2.58%^
Net investment income (loss)(c) (.27)% (.19)% (.37)% (.20)%^
Portfolio turnover rate 29% 44% 23% 17%
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CLASS C
FEBRUARY 28,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.58 $ 28.33 $ 26.20 $24.85
------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b)(c) (.29) (.25) (.32) (.05)
Net realized and unrealized gain (loss) on investment transactions 6.68 (1.71) 3.24 1.40
------- ------- ------- ------
Net increase (decrease) in net asset value from operations 6.39 (1.96) 2.92 1.35
------- ------- ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.13) (.79) (.79) - 0 -
------- ------- ------- ------
Net asset value, end of period $ 31.84 $ 25.58 $ 28.33 $26.20
======= ======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(d) 25.03% (7.10)% 11.29% 5.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $18,727 $19,617 $10,652 $ 47
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.97% 1.99% 1.99% 1.99%^
Expenses, before waivers/reimbursements(e) 1.97% 2.01% 2.14% 3.54%^
Net investment income (loss)(c) (1.02)% (.94)% (1.15)% (.93)%^
Portfolio turnover rate 29% 44% 23% 17%
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See footnotes on page 98.
95
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ADVISOR CLASS
JANUARY 1,
2014 TO YEAR ENDED
YEAR ENDED JUNE 30, JUNE 30, DECEMBER 31,
2017 2016 2015 2014(f) 2013 2012
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Net asset value, beginning of period $ 26.18 $ 28.69 $ 26.28 $ 25.80 $ 18.91 $ 16.32
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b)(c) (.01) .01 (.04) (.01) (.03) (.06)
Net realized and unrealized gain (loss) on investment
transactions 6.87 (1.73) 3.24 1.04 6.92 2.65
-------- -------- -------- ------- ------- -------
Net increase (decrease) in net asset value from operations 6.86 (1.72) 3.20 1.03 6.89 2.59
-------- -------- -------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions (.13) (.79) (.79) (.55) - 0 - - 0 -
Redemption fee - 0 - - 0 - - 0 - - 0 - .00(g) .00(g)
-------- -------- -------- ------- ------- -------
Net asset value, end of period $ 32.91 $ 26.18 $ 28.69 $ 26.28 $ 25.80 $ 18.91
======== ======== ======== ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 26.26% (6.16)% 12.34% 4.11% 36.44% 15.87%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $298,099 $227,787 $192,909 $36,630 $25,170 $18,433
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .96% .99% .99% 1.06%^ 1.23% 1.23%
Expenses, before waivers/reimbursements(e) .97% 1.01% 1.12% 2.26%^ 1.90% 1.93%
Net investment income (loss)(c) (.03)% .05% (.13)% (.06)%^ (.14)% (.30)%
Portfolio turnover rate 29% 44% 23% 17% 42% 34%
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CLASS R
FEBRUARY 28,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $25.88 $28.51 $26.24 $24.85
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b)(c) (.15) (.12) (.17) (.03)
Net realized and unrealized gain (loss) on investment transactions 6.77 (1.72) 3.23 1.42
------ ------ ------ ------
Net increase (decrease) in net asset value from operations 6.62 (1.84) 3.06 1.39
------ ------ ------ ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.13) (.79) (.79) - 0 -
------ ------ ------ ------
Net asset value, end of period $32.37 $25.88 $28.51 $26.24
====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 25.63% (6.62)% 11.82% 5.59%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 13 $ 33 $ 11 $ 10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.46% 1.49% 1.49% 1.49%^
Expenses, before waivers/reimbursements(e) 1.47% 1.50% 1.60% 2.79%^
Net investment income (loss)(c) (.53)% (.45)% (.62)% (.41)%^
Portfolio turnover rate 29% 44% 23% 17%
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See footnotes on page 98.
96
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CLASS K
FEBRUARY 28,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $26.04 $28.61 $26.26 $24.85
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b)(c) (.09) (.05) (.10) (.01)
Net realized and unrealized gain (loss) on investment transactions 6.84 (1.73) 3.24 1.42
------ ------ ------ ------
Net increase (decrease) in net asset value from operations 6.75 (1.78) 3.14 1.41
------ ------ ------ ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.13) (.79) (.79) - 0 -
------ ------ ------ ------
Net asset value, end of period $32.66 $26.04 $28.61 $26.26
====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 25.97% (6.38)% 12.12% 5.67%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 398 $ 99 $ 12 $ 10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.21% 1.24% 1.24% 1.24%^
Expenses, before waivers/reimbursements(e) 1.22% 1.24% 1.35% 2.58%^
Net investment income (loss)(c) (.31)% (.18)% (.38)% (.15)%^
Portfolio turnover rate 29% 44% 23% 17%
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CLASS I
FEBRUARY 28,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $26.21 $28.71 $26.28 $ 24.85
------ ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b)(c) .00(g) .02 (.02) (.02)
Net realized and unrealized gain (loss) on investment transactions 6.87 (1.73) 3.24 1.45
------ ------ ------ -------
Net increase (decrease) in net asset value from operations 6.87 (1.71) 3.22 1.43
------ ------ ------ -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.13) (.79) (.79) - 0 -
------ ------ ------ -------
Net asset value, end of period $32.95 $26.21 $28.71 $ 26.28
====== ====== ====== =======
TOTAL RETURN
Total investment return based on net asset value(d) 26.26% (6.12)% 12.42% 5.75%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 13 $ 25 $ 12 $26,344
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .95% .98% .99% .99%^
Expenses, before waivers/reimbursements(e) .96% .98% 1.09% 1.95%^
Net investment income (loss)(c) .01% .07% (.07)% (.27)%^
Portfolio turnover rate 29% 44% 23% 17%
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See footnotes on page 98.
97
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CLASS Z
FEBRUARY 28,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.19 $ 28.69 $ 26.28 $24.85
------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b)(c) .00(g) .02 (.04) .01
Net realized and unrealized gain (loss) on investment transactions 6.87 (1.73) 3.24 1.42
------- ------- ------- ------
Net increase (decrease) in net asset value from operations 6.87 (1.71) 3.20 1.43
------- ------- ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.13) (.79) (.79) - 0 -
------- ------- ------- ------
Net asset value, end of period $ 32.93 $ 26.19 $ 28.69 $26.28
======= ======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(d) 26.29% (6.12)% 12.34% 5.75%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $64,060 $44,764 $34,464 $ 11
Ratio to average net assets of:
Expenses, net of waivers(e) .93% .96% .99% .99%^
Expenses, before waivers(e) .94% .96% 1.08% 2.25%^
Net investment income (loss)(c) 0% .07% (.15)% .09%^
Portfolio turnover rate 29% 44% 23% 17%
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(a)Commencement of operations.
(b)Based on average shares outstanding.
(c)Net of fees and expenses waived/reimbursed by the Adviser.
(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 fund distributions or the redemption
of fund shares. Total investment return calculated for a period of less than
one year is not annualized.
(e)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses, but bears 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 voluntarily agreed to waive its fees from the
Fund in an amount equal to the Fund's pro rata share of certain acquired
fund fees and expenses, and for the year ended June 30, 2017, such waiver
amounted to 0.01% annualized for the Fund.
(f)The Predecessor Fund changed its fiscal year end from December 31 to June 30.
(g)Amount is less than $.005.
^ Annualized.
98
AB DISCOVERY GROWTH FUND
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CLASS A
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.58 $ 9.77 $ 9.13 $ 8.82 $ 6.81
-------- -------- ---------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.03)(b)+ (.04)(b) (.07) (.04) (.02)
Net realized and unrealized gain (loss) on investment
transactions 1.61 (.65) 1.42 .88 2.03
Capital contributions - 0 - .01 - 0 - - 0 - - 0 -
-------- -------- ---------- -------- --------
Net increase (decrease) in net asset value from operations 1.58 (.68) 1.35 .84 2.01
-------- -------- ---------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions - 0 - (.51) (.71) (.53) - 0 -
-------- -------- ---------- -------- --------
Net asset value, end of period $ 10.16 $ 8.58 $ 9.77 $ 9.13 $ 8.82
======== ======== ========== ======== ========
TOTAL RETURN
Total investment return based on net asset value(c)* 18.41%+ (6.90)% 15.62% 9.63% 29.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $573,081 $580,016 $1,088,392 $702,185 $627,176
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) .97% .99% .99% 1.04% 1.12%
Expenses, before waivers/reimbursements(d) .99% .99% .99% 1.04% 1.12%
Net investment loss (.33)%(b)+ (.48)%(b) (.75)% (.43)% (.31)%
Portfolio turnover rate 70% 67% 59% 74% 74%
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CLASS B
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.73 $ 6.76 $ 6.58 $ 6.54 $ 5.09
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.07)(b)+ (.07)(b) (.10) (.09) (.06)
Net realized and unrealized gain (loss) on investment transactions 1.07 (.46) .99 .66 1.51
Capital contributions - 0 - .01 - 0 - - 0 - - 0 -
------ ------ ------ ------ ------
Net increase (decrease) in net asset value from operations 1.00 (.52) .89 .57 1.45
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions - 0 - (.51) (.71) (.53) - 0 -
------ ------ ------ ------ ------
Net asset value, end of period $ 6.73 $ 5.73 $ 6.76 $ 6.58 $ 6.54
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(c)* 17.45%+++ (7.64)%++ 14.62% 8.81% 28.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 987 $1,374 $2,358 $3,382 $4,914
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) 1.79% 1.81% 1.80% 1.83% 1.94%
Expenses, before waivers/reimbursements(d) 1.80% 1.81% 1.80% 1.83% 1.94%
Net investment loss (1.10)%(b)+ (1.30)%(b) (1.55)% (1.28)% (1.13)%
Portfolio turnover rate 70% 67% 59% 74% 74%
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See footnotes on page 103.
99
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CLASS C
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.77 $ 6.81 $ 6.61 $ 6.57 $ 5.11
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.06)(b)+ (.07)(b) (.10) (.08) (.06)
Net realized and unrealized gain (loss) on investment transactions 1.07 (.47) 1.01 .65 1.52
Capital contributions - 0 - .01 - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 1.01 (.53) .91 .57 1.46
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions - 0 - (.51) (.71) (.53) - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 6.78 $ 5.77 $ 6.81 $ 6.61 $ 6.57
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(c)* 17.50%+ (7.73)% 14.87% 8.77% 28.57%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $36,692 $52,223 $72,549 $72,360 $43,043
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) 1.74% 1.77% 1.76% 1.81% 1.89%
Expenses, before waivers/reimbursements(d) 1.76% 1.77% 1.76% 1.81% 1.89%
Net investment loss (1.06)%(b)+ (1.25)%(b) (1.52)% (1.18)% (1.08)%
Portfolio turnover rate 70% 67% 59% 74% 74%
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ADVISOR CLASS
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.09 $ 10.30 $ 9.56 $ 9.19 $ 7.08
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.01)(b)+ (.02)(b) (.05) (.02) (.01)
Net realized and unrealized gain (loss) on investment transactions 1.70 (.69) 1.50 .92 2.12
Capital contributions - 0 - .01 - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from operations 1.69 (.70) 1.45 .90 2.11
-------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions - 0 - (.51) (.71) (.53) - 0 -
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.78 $ 9.09 $ 10.30 $ 9.56 $ 9.19
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(c)* 18.59%+ (6.72)% 15.98% 9.90% 29.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $985,457 $945,302 $939,463 $736,947 $567,507
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) .74% .76% .76% .81% .89%
Expenses, before waivers/reimbursements(d) .76% .77% .76% .81% .89%
Net investment loss (.11)%(b)+ (.24)%(b) (.52)% (.19)% (.08)%
Portfolio turnover rate 70% 67% 59% 74% 74%
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See footnotes on page 103.
100
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CLASS R
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.18 $ 9.38 $ 8.83 $ 8.57 $ 6.64
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.06)(b)+ (.07)(b) (.10) (.07) (.05)
Net realized and unrealized gain (loss) on investment
transactions 1.53 (.63) 1.36 .86 1.98
Capital contributions - 0 - .01 - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 1.47 (.69) 1.26 .79 1.93
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions - 0 - (.51) (.71) (.53) - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 9.65 $ 8.18 $ 9.38 $ 8.83 $ 8.57
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(c)* 17.83%+ (7.19)% 15.11% 9.31% 29.07%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $18,402 $31,192 $31,707 $25,320 $10,923
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) 1.37% 1.39% 1.38% 1.41% 1.47%
Expenses, before waivers/reimbursements(d) 1.39% 1.39% 1.38% 1.41% 1.47%
Net investment loss (.64)%(b)+ (.87)%(b) (1.14)% (.75)% (.66)%
Portfolio turnover rate 70% 67% 59% 74% 74%
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CLASS K
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.53 $ 9.73 $ 9.10 $ 8.80 $ 6.80
------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.04)(b)+ (.05)(b) (.08) (.04) (.03)
Net realized and unrealized gain (loss) on investment
transactions 1.59 (.65) 1.42 .87 2.03
Capital contributions - 0 - .01 - 0 - - 0 - - 0 -
------- ------- ------- ------- ------
Net increase (decrease) in net asset value from operations 1.55 (.69) 1.34 .83 2.00
------- ------- ------- ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions - 0 - (.51) (.71) (.53) - 0 -
------- ------- ------- ------- ------
Net asset value, end of period $ 10.08 $ 8.53 $ 9.73 $ 9.10 $ 8.80
======= ======= ======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(c)* 18.17%+ (7.03)% 15.56% 9.53% 29.41%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $17,262 $16,222 $20,556 $18,460 $9,537
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) 1.11% 1.10% 1.10% 1.13% 1.20%
Expenses, before waivers/reimbursements(d) 1.12% 1.10% 1.10% 1.13% 1.20%
Net investment loss (.47)%(b)+ (.58)%(b) (.86)% (.47)% (.39)%
Portfolio turnover rate 70% 67% 59% 74% 74%
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See footnotes on page 103.
101
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CLASS I
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
--------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.01 $ 10.20 $ 9.48 $ 9.11 $ 7.01
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.01)(b)+ (.02)(b) (.05) (.02) .02
Net realized and unrealized gain (loss) on investment
transactions 1.68 (.67) 1.48 .92 2.08
Capital contributions - 0 - .01 - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from
operations 1.67 (.68) 1.43 .90 2.10
-------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions - 0 - (.51) (.71) (.53) - 0 -
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.68 $ 9.01 $ 10.20 $ 9.48 $ 9.11
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(c)* 18.54%+ (6.59)% 15.90% 9.99% 29.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $128,235 $165,508 $195,036 $220,183 $152,931
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) .74% .75% .76% .77% .78%
Expenses, before waivers/reimbursements(d) .76% .76% .76% .77% .78%
Net investment income (loss) (.07)%(b)+ (.23)%(b) (.51)% (.16)% .32%
Portfolio turnover rate 70% 67% 59% 74% 74%
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CLASS Z
MAY 30,
2014(e) TO
YEAR ENDED JULY 31, JULY 31,
2017 2016 2015 2014
--------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.01 $ 10.21 $ 9.48 $ 9.37
-------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.01)(b)+ (.01)(b) (.05) .01
Net realized and unrealized gain (loss) on investment
transactions 1.70 (.69) 1.49 .10
Capital contributions - 0 - .01 - 0 - - 0 -
-------- -------- -------- ------
Net increase (decrease) in net asset value from operations 1.69 (.69) 1.44 .11
-------- -------- -------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions - 0 - (.51) (.71) - 0 -
-------- -------- -------- ------
Net asset value, end of period $ 10.70 $ 9.01 $ 10.21 $ 9.48
======== ======== ======== ======
TOTAL RETURN
Total investment return based on net asset value(c) 18.76%*+ (6.68)%* 16.01%* 1.17%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $241,185 $131,346 $199,256 $ 10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(d) .68% .68% .68% .67%^
Expenses, before waivers/reimbursements(d) .69% .68% .68% .67%^
Net investment income (loss) (.11)%(b)+ (.15)%(b) (.49)% .73%^
Portfolio turnover rate 70% 67% 59% 74%
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See footnotes on page 103.
102
(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 fund distributions or the redemption
of fund shares. Total investment return calculated for a period of less than
one year is not annualized.
(d)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses but bears proportionate
shares of the 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 Fund in an
amount equal to the Fund's pro rata share of certain acquired fund fees and
expenses, and for the year ended July 31, 2017, such waiver amounted to
0.01% for the Fund.
(e)Commencement of distributions.
+ For the year ended July 31, 2017 the amount includes a refund for
overbilling of prior years' custody out of pocket fees as follows:
[Download Table]
NET INVESTMENT NET INVESTMENT TOTAL
INCOME PER SHARE INCOME RATIO RETURN
---------------- -------------- ------
$.001 .01% .01%
* Includes the impact of proceeds received and credited to the Fund resulting
from class action settlements, which enhanced the Fund's performance for the
years ended July 31, 2017, July 31, 2016, July 31, 2015, July 31, 2014 and
July 31, 2013 by 0.02%, 0.02%, 0.02%, 0.01% and 0.02%, respectively.
Includes the impact of proceeds received and credited to the Fund in
connection with a residual distribution relating to regulatory settlements,
which enhanced the Fund's performance for the year ended July 31, 2016 by
0.13%.
++ The net asset value and total return include adjustments in accordance with
accounting principles generally accepted in the United States of America for
financial reporting purposes. As such, the net asset value and total return
for shareholder transactions may differ from financial statements.
^ Annualized.
103
AB SMALL CAP GROWTH PORTFOLIO
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CLASS A
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 41.28 $ 48.82 $ 48.62 $ 47.08 $ 37.62
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.38)(b)+ (.32)(b) (.33) (.47) (.36)
Net realized and unrealized gain (loss) on investment
transactions 9.32 (3.52) 6.07 5.28 11.10
Capital contributions - 0 - .00(c) - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from
operations 8.94 (3.84) 5.74 4.81 10.74
-------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions (.97) (3.70) (5.54) (3.27) (1.28)
-------- -------- -------- -------- --------
Net asset value, end of period $ 49.25 $ 41.28 $ 48.82 $ 48.62 $ 47.08
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 22.05%+*++ (7.77)%*++ 13.24% 10.21%* 29.47%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $465,188 $293,237 $378,062 $475,832 $452,253
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.17% 1.27% 1.20% 1.27% 1.34%
Expenses, before waivers/reimbursements(e) 1.19% 1.28% 1.20% 1.27% 1.34%
Net investment loss (.85)%(b)+ (.80)%(b) (.70)% (.93)% (.89)%
Portfolio turnover rate 66% 70% 61% 80% 76%
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CLASS B
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 28.74 $ 35.48 $ 37.14 $ 36.93 $ 30.01
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.47)(b)+ (.46)(b) (.53) (.67) (.52)
Net realized and unrealized gain (loss) on investment
transactions 6.37 (2.58) 4.41 4.15 8.72
Capital contributions - 0 - .00(c) - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from
operations 5.90 (3.04) 3.88 3.48 8.20
-------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions (.97) (3.70) (5.54) (3.27) (1.28)
-------- -------- -------- -------- --------
Net asset value, end of period $ 33.67 $ 28.74 $ 35.48 $ 37.14 $ 36.93
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 21.07%+*++ (8.48)%*++ 12.22% 9.37%* 28.45%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 1,290 $ 1,672 $ 2,652 $ 3,774 $ 5,329
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.97% 2.08% 1.99% 2.04% 2.12%
Expenses, before waivers/reimbursements(e) 1.98% 2.08% 1.99% 2.04% 2.12%
Net investment loss (1.53)%(b)+ (1.60)%(b) (1.49)% (1.72)% (1.63)%
Portfolio turnover rate 66% 70% 61% 80% 76%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 108.
104
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CLASS C
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 29.06 $ 35.82 $ 37.41 $ 37.17 $ 30.18
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.45)(b)+ (.45)(b) (.52) (.65) (.53)
Net realized and unrealized gain (loss) on investment
transactions 6.44 (2.61) 4.47 4.16 8.80
Capital contributions - 0 - .00(c) - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 5.99 (3.06) 3.95 3.51 8.27
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions (.97) (3.70) (5.54) (3.27) (1.28)
------- ------- ------- ------- -------
Net asset value, end of period $ 34.08 $ 29.06 $ 35.82 $ 37.41 $ 37.17
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 21.15%+*++ (8.46)%*++ 12.33% 9.39%* 28.52%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $27,343 $39,132 $59,262 $67,619 $60,274
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.93% 2.02% 1.95% 2.00% 2.08%
Expenses, before waivers/reimbursements(e) 1.95% 2.03% 1.95% 2.00% 2.08%
Net investment loss (1.46)%(b)+ (1.54)%(b) (1.45)% (1.66)% (1.64)%
Portfolio turnover rate 66% 70% 61% 80% 76%
---------------------------------------------------------------------------------------------------------------------
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ADVISOR CLASS
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 44.33 $ 52.00 $ 51.31 $ 49.39 $ 39.30
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.25)(b)+ (.23)(b) (.22) (.35) (.27)
Net realized and unrealized gain (loss) on investment
transactions 9.99 (3.74) 6.45 5.54 11.64
Capital contributions - 0 - .00(c) - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from
operations 9.74 (3.97) 6.23 5.19 11.37
-------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions (.97) (3.70) (5.54) (3.27) (1.28)
-------- -------- -------- -------- --------
Net asset value, end of period $ 53.10 $ 44.33 $ 52.00 $ 51.31 $ 49.39
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 22.34%+*++ (7.53)%*++ 13.51% 10.51%* 29.82%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $309,330 $269,857 $491,170 $426,149 $320,624
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .93% 1.01% .94% 1.00% 1.07%
Expenses, before waivers/reimbursements(e) .94% 1.02% .94% 1.00% 1.07%
Net investment loss (.52)%(b)+ (.54)%(b) (.44)% (.65)% (.64)%
Portfolio turnover rate 66% 70% 61% 80% 76%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 108.
105
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CLASS R
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 40.44 $ 48.03 $ 48.09 $ 46.71 $ 37.42
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.47)(b)+ (.43)(b) (.49) (.59) (.45)
Net realized and unrealized gain (loss) on investment
transactions 9.05 (3.46) 5.97 5.24 11.02
Capital contributions - 0 - .00(c) - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 8.58 (3.89) 5.48 4.65 10.57
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions (.97) (3.70) (5.54) (3.27) (1.28)
------- ------- ------- ------- -------
Net asset value, end of period $ 48.05 $ 40.44 $ 48.03 $ 48.09 $ 46.71
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 21.61%+*++ (8.01)%*++ 12.81% 9.94%* 29.17%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $33,842 $40,284 $54,094 $53,267 $50,283
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.51% 1.56% 1.54% 1.52% 1.55%
Expenses, before waivers/reimbursements(e) 1.53% 1.56% 1.54% 1.52% 1.55%
Net investment loss (1.08)%(b)+ (1.08)%(b) (1.04)% (1.18)% (1.12)%
Portfolio turnover rate 66% 70% 61% 80% 76%
---------------------------------------------------------------------------------------------------------------------
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CLASS K
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 42.18 $ 49.77 $ 49.48 $ 47.83 $ 38.16
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.30)(b)+ (.31)(b) (.35) (.44) (.33)
Net realized and unrealized gain (loss) on investment
transactions 9.42 (3.58) 6.18 5.36 11.28
Capital contributions - 0 - .00(c) - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 9.12 (3.89) 5.83 4.92 10.95
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions (.97) (3.70) (5.54) (3.27) (1.28)
------- ------- ------- ------- -------
Net asset value, end of period $ 50.33 $ 42.18 $ 49.77 $ 49.48 $ 47.83
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 22.00%+*++ (7.71)%*++ 13.16% 10.30%* 29.60%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $40,370 $69,770 $87,627 $82,244 $75,804
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.20% 1.23% 1.22% 1.19% 1.21%
Expenses, before waivers/reimbursements(e) 1.22% 1.23% 1.22% 1.19% 1.21%
Net investment loss (.67)%(b)+ (.76)%(b) (.73)% (.85)% (.78)%
Portfolio turnover rate 66% 70% 61% 80% 76%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 108.
106
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CLASS I
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 44.15 $ 51.75 $ 51.07 $ 49.13 $ 39.05
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.24)(b)+ (.19)(b) (.20) (.30) (.21)
Net realized and unrealized gain (loss) on investment transactions 9.95 (3.71) 6.42 5.51 11.57
Capital contributions - 0 - .00(c) - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from operations 9.71 (3.90) 6.22 5.21 11.36
-------- -------- -------- -------- --------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions (.97) (3.70) (5.54) (3.27) (1.28)
-------- -------- -------- -------- --------
Net asset value, end of period $ 52.89 $ 44.15 $ 51.75 $ 51.07 $ 49.13
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 22.36%+*++ (7.42)%*++ 13.57% 10.61%* 29.98%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $319,437 $301,866 $462,296 $436,828 $474,383
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .91% .92% .91% .91% .92%
Expenses, before waivers/reimbursements(e) .93% .92% .91% .91% .92%
Net investment loss (.51)%(b)+ (.45)%(b) (.41)% (.57)% (.51)%
Portfolio turnover rate 66% 70% 61% 80% 76%
---------------------------------------------------------------------------------------------------------------------------------
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CLASS Z
JUNE 30,
2015(f) TO
YEAR ENDED JULY 31, JULY 31,
2017 2016 2015
---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 44.20 $ 51.75 $52.05
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.23)(b)+ (.16)(b) (.05)
Net realized and unrealized gain (loss) on investment
transactions 10.00 (3.69) (.25)**
Capital contributions - 0 - .00(c) - 0 -
------- ------- ------
Net increase (decrease) in net asset value from operations 9.77 (3.85) (.30)
------- ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions (.97) (3.70) - 0 -
------- ------- ------
Net asset value, end of period $ 53.00 $ 44.20 $51.75
======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(d) 22.47%+*++ (7.32)%++* (.58)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $98,090 $93,108 $ 10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .82% .85% .71%^
Expenses, before waivers/reimbursements(e) .83% .85% .71%^
Net investment income (loss) (.49)%(b)+ (.40)%(b) (1.06)%^
Portfolio turnover rate 66% 70% 61%
---------------------------------------------------------------------------------------------------
See footnotes on page 108.
107
(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 fund distributions or the redemption
of fund shares. Total investment return calculated for a period of less than
one year is not annualized.
(e)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses, but bears proportionate
shares of the 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 Fund in an
amount equal to the Fund's pro rata share of certain acquired fund fees and
expenses, and for the year ended July 31, 2017, such waiver amounted to
0.02% for the Fund.
(f)Commencement of distributions.
+ For the year ended July 31, 2017 the amount includes a refund for
overbilling of prior years' custody out of pocket fees as follows:
[Download Table]
NET INVESTMENT NET INVESTMENT TOTAL
INCOME PER SHARE INCOME RATIO RETURN
---------------- -------------- ------
$.004 .01% .01%
* Includes the impact of proceeds received and credited to the Fund resulting
from class action settlements, which enhanced the Fund's performance for the
years ended July 31, 2017, July 31, 2016, July 31, 2014, and July 31, 2013
by 0.03%, 0.02%, 0.01% and 0.08%, respectively.
Includes the impact of proceeds received and credited to the Fund in
connection with a residual distribution relating to regulatory settlements,
which enhanced the Fund's performance for the year ended July 31, 2016 by
0.01%.
++ The net asset value and total return include adjustments in accordance with
accounting principles generally accepted in the United States of America for
financial reporting purposes. As such, the net asset value and total return
for shareholder transactions may differ from financial statements.
** Due to timing of sales and repurchase of capital shares, the net realized
and unrealized gain (loss) per share is not in accord with the Fund's change
in net realized and unrealized gain (loss) on investment transactions for
the period.
^ Annualized.
108
AB SELECT US EQUITY PORTFOLIO
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CLASS A
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
-----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.70 $ 15.56 $ 15.62 $ 13.26 $ 11.13
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .06(b) .06(b) .01 .02 .04(b)
Net realized and unrealized gain on investment and foreign
currency transactions 2.32 .21 1.20 2.68 2.42
Contributions from Affiliates - 0 - - 0 - .00(c) - 0 - - 0 -
------- ------- ------- ------- -------
Net increase in net asset value from operations 2.38 .27 1.21 2.70 2.46
------- ------- ------- ------- -------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - 0 - (.02) (.03) (.02) (.00)(c)
Distributions from net realized gain on investment and foreign
currency transactions (.54) (1.11) (1.24) (.32) (.33)
------- ------- ------- ------- -------
Total dividends and distributions (.54) (1.13) (1.27) (.34) (.33)
------- ------- ------- ------- -------
Net asset value, end of period $ 16.54 $ 14.70 $ 15.56 $ 15.62 $ 13.26
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 16.47% 1.74% 8.02% 20.53% 22.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $11,694 $42,856 $18,958 $17,535 $10,285
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.45% 1.45% 1.45% 1.49% 1.60%
Expenses, before waivers/reimbursements(e) 1.45% 1.45% 1.45% 1.49% 2.02%
Net investment income .37%(b) .44%(b) .08% .12% .34%(b)
Portfolio turnover rate 292% 269% 348% 495% 560%
-----------------------------------------------------------------------------------------------------------------------
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CLASS C
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
-----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.23 $ 15.19 $ 15.34 $ 13.11 $11.09
------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.05)(b) (.06)(b) (.10) (.08) (.05)(b)
Net realized and unrealized gain on investment and foreign
currency transactions 2.23 .21 1.19 2.63 2.40
Contributions from Affiliates - 0 - - 0 - .00(c) - 0 - - 0 -
------- ------- ------- ------- ------
Net increase in net asset value from operations 2.18 .15 1.09 2.55 2.35
------- ------- ------- ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment and
foreign currency transactions (.54) (1.11) (1.24) (.32) (.33)
------- ------- ------- ------- ------
Net asset value, end of period $ 15.87 $ 14.23 $ 15.19 $ 15.34 $13.11
======= ======= ======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(d) 15.59% 0.98% 7.31% 19.65% 21.59%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $10,647 $12,613 $16,791 $10,645 $2,528
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 2.20% 2.20% 2.19% 2.20% 2.30%
Expenses, before waivers/reimbursements(e) 2.21% 2.20% 2.19% 2.20% 2.70%
Net investment loss (.33)%(b) (.41)%(b) (.66)% (.57)% (.43)%(b)
Portfolio turnover rate 292% 269% 348% 495% 560%
-----------------------------------------------------------------------------------------------------------------------
See footnotes on page 111.
109
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ADVISOR CLASS
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.73 $ 15.60 $ 15.64 $ 13.26 $ 11.15
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .10(b) .09(b) .05 .06 .07(b)
Net realized and unrealized gain on investment and
foreign currency transactions 2.33 .21 1.21 2.68 2.43
Contributions from Affiliates - 0 - - 0 - .00(c) - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase in net asset value from operations 2.43 .30 1.26 2.74 2.50
-------- -------- -------- -------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.09) (.06) (.06) (.04) (.06)
Distributions from net realized gain on investment and
foreign currency transactions (.54) (1.11) (1.24) (.32) (.33)
-------- -------- -------- -------- --------
Total dividends and distributions (.63) (1.17) (1.30) (.36) (.39)
-------- -------- -------- -------- --------
Net asset value, end of period $ 16.53 $ 14.73 $ 15.60 $ 15.64 $ 13.26
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 16.82% 1.91% 8.40% 20.89% 22.88%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $239,659 $216,896 $260,521 $225,377 $116,470
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.20% 1.20% 1.19% 1.19% 1.30%
Expenses, before waivers/reimbursements(e) 1.20% 1.20% 1.19% 1.19% 2.01%
Net investment income .67%(b) .60%(b) .34% .42% .56%(b)
Portfolio turnover rate 292% 269% 348% 495% 560%
---------------------------------------------------------------------------------------------------------------------
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CLASS R
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $14.48 $15.37 $15.44 $13.13 $11.05
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) .02(b) .01(b) (.03) (.01) .01(b)
Net realized and unrealized gain on investment and foreign
currency transactions 2.28 .21 1.20 2.64 2.40
Contributions from Affiliates - 0 - - 0 - .00(c) - 0 - - 0 -
------ ------ ------ ------ ------
Net increase in net asset value from operations 2.30 .22 1.17 2.63 2.41
------ ------ ------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.02) - 0 - - 0 - - 0 - (.00)(c)
Distributions from net realized gain on investment and foreign
currency transactions (.54) (1.11) (1.24) (.32) (.33)
------ ------ ------ ------ ------
Total dividends and distributions (.56) (1.11) (1.24) (.32) (.33)
------ ------ ------ ------ ------
Net asset value, end of period $16.22 $14.48 $15.37 $15.44 $13.13
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 16.14% 1.44% 7.80% 20.23% 22.26%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 16 $ 15 $ 15 $ 16 $ 13
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.74% 1.72% 1.72% 1.70% 1.80%
Expenses, before waivers/reimbursements(e) 1.74% 1.72% 1.72% 1.70% 3.27%
Net investment income (loss) .12%(b) .09%(b) (.18)% (.10)% .04%(b)
Portfolio turnover rate 292% 269% 348% 495% 560%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 111.
110
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CLASS K
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
-----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $14.56 $15.43 $15.47 $13.14 $11.07
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a)(b) .05 .04 (.00)(c) .01 .04
Net realized and unrealized gain on investment and foreign currency
transactions 2.29 .21 1.20 2.64 2.41
Contributions from Affiliates - 0 - - 0 - .00(c) - 0 - - 0 -
------ ------ ------ ------ ------
Net increase in net asset value from operations 2.34 .25 1.20 2.65 2.45
------ ------ ------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.03) (.01) - 0 - - 0 - (.05)
Distributions from net realized gain on investment and foreign
currency transactions (.54) (1.11) (1.24) (.32) (.33)
------ ------ ------ ------ ------
Total dividends and distributions (.57) (1.12) (1.24) (.32) (.38)
------ ------ ------ ------ ------
Net asset value, end of period $16.33 $14.56 $15.43 $15.47 $13.14
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 16.38% 1.58% 8.05% 20.37% 22.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,636 $3,739 $3,604 $2,678 $1,620
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.55% 1.55% 1.55% 1.55% 1.55%
Expenses, before waivers/reimbursements(e) 1.62% 1.60% 1.59% 1.62% 2.64%
Net investment income (loss)(b) .32% .27% (.02)% .07% .29%
Portfolio turnover rate 292% 269% 348% 495% 560%
-----------------------------------------------------------------------------------------------------------------
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CLASS I
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.61 $ 15.48 $ 15.52 $ 13.17 $11.09
------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .11(b) .08(b) .05 .06 .07(b)
Net realized and unrealized gain on investment and foreign currency
transactions 2.29 .22 1.20 2.65 2.40
Contributions from Affiliates - 0 - - 0 - .00(c) - 0 - - 0 -
------- ------- ------- ------- ------
Net increase in net asset value from operations 2.40 .30 1.25 2.71 2.47
------- ------- ------- ------- ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.09) (.06) (.05) (.04) (.06)
Distributions from net realized gain on investment and foreign currency
transactions (.54) (1.11) (1.24) (.32) (.33)
------- ------- ------- ------- ------
Total dividends and distributions (.63) (1.17) (1.29) (.36) (.39)
------- ------- ------- ------- ------
Net asset value, end of period $ 16.38 $ 14.61 $ 15.48 $ 15.52 $13.17
======= ======= ======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(d) 16.76% 2.00% 8.34% 20.81% 22.82%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,121 $21,461 $38,186 $30,164 $8,179
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.19% 1.18% 1.22% 1.18% 1.30%
Expenses, before waivers/reimbursements(e) 1.19% 1.18% 1.22% 1.18% 2.78%
Net investment income .72%(b) .57%(b) .31% .40% .55%(b)
Portfolio turnover rate 292% 269% 348% 495% 560%
-------------------------------------------------------------------------------------------------------------------------------
(a)Based on average shares outstanding.
(b)Net of expenses waived/reimbursed by the Adviser.
(c)Amount is less than $0.005
(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 charge or contingent
deferred sales charge is not reflected in the calculation of total
investment return. Total investment return does not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Total investment return for a period of less than one year
is not annualized.
(e)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses but bears 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
Fund in an amount equal to the Fund's pro rata share of certain acquired
fund fees and expenses, and for year ended June 30, 2017, such waiver
amounted to 0.01% for the Fund.
111
AB SELECT US LONG/SHORT PORTFOLIO
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CLASS A
DECEMBER 12,
2012(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.40 $ 11.77 $ 12.12 $ 10.92 $ 10.00
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b) (.09)(c) (.11)(c) (.16) (.10)(d) (.04)(c)(d)
Net realized and unrealized gain on
investment and foreign currency transactions .97 .12 .31 1.47 .96
-------- -------- -------- -------- -------
Net increase in net asset value from
operations .88 .01 .15 1.37 .92
-------- -------- -------- -------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on
investment transactions - 0 - (.38) (.50) (.17) - 0 -
-------- -------- -------- -------- -------
Net asset value, end of period $ 12.28 $ 11.40 $ 11.77 $ 12.12 $ 10.92
======== ======== ======== ======== =======
TOTAL RETURN
Total investment return based on net asset
value(e) 7.72% .02% 1.31% 12.55% 9.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $113,847 $166,015 $308,235 $480,571 $24,783
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements(f)(g) 2.11% 2.29% 2.27% 2.31% 2.34%^
Expenses, before
waivers/reimbursements(f)(g) 2.18% 2.30% 2.27% 2.36% 3.41%^
Net investment income (loss) (.77)%(c) (.98)%(c) (1.34)% (.88)%(d) (.94)%(c)(d)^
Portfolio turnover rate (excluding
securities sold short) 295% 329% 535% 581% 282%
Portfolio turnover rate (including
securities sold short) 528% 519% 718% 673% 321%
---------------------------------------------------------------------------------------------------------------------
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CLASS C
DECEMBER 12
2012(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014 2013
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.09 $ 11.55 $ 11.99 $ 10.88 $10.00
-------- -------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b) (.18)(c) (.19)(c) (.25) (.19) (.05)(c)
Net realized and unrealized gain on investment and
foreign currency transactions .95 .11 .31 1.47 .93
-------- -------- -------- -------- ------
Net increase (decrease) in net asset value from
operations .77 (.08) .06 1.28 .88
-------- -------- -------- -------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions - 0 - (.38) (.50) (.17) - 0 -
-------- -------- -------- -------- ------
Net asset value, end of period $ 11.86 $ 11.09 $ 11.55 $ 11.99 $10.88
======== ======== ======== ======== ======
TOTAL RETURN
Total investment return based on net asset value(e) 6.94% (.78)% .56% 11.76% 8.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $111,027 $159,990 $232,110 $182,059 $3,836
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f)(g) 2.86% 3.05% 3.04% 3.06% 3.06%^
Expenses, before waivers/reimbursements(f)(g) 2.94% 3.06% 3.04% 3.06% 3.53%^
Net investment income (loss) (1.53)%(c) (1.73)%(c) (2.09)% (1.64)% (1.62)%(c)^
Portfolio turnover rate (excluding securities
sold short) 295% 329% 535% 581% 282%
Portfolio turnover rate (including securities sold
short) 528% 519% 718% 673% 321%
----------------------------------------------------------------------------------------------------------------------
See footnotes on page 115.
112
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ADVISOR CLASS
DECEMBER 12,
2012(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014 2013
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.51 $ 11.86 $ 12.17 $ 10.94 $ 10.00
-------- -------- ---------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b) (.06)(c) (.08)(c) (.13) (.07) (.02)(c)
Net realized and unrealized gain on investment
and foreign currency transactions .98 .11 .32 1.47 .96
-------- -------- ---------- -------- -------
Net increase in net asset value from operations .92 .03 .19 1.40 .94
-------- -------- ---------- -------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on
investment transactions - 0 - (.38) (.50) (.17) - 0 -
-------- -------- ---------- -------- -------
Net asset value, end of period $ 12.43 $ 11.51 $ 11.86 $ 12.17 $ 10.94
======== ======== ========== ======== =======
TOTAL RETURN
Total investment return based on net asset
value(e) 7.99% .27% 1.56% 12.80% 9.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $692,136 $816,563 $1,189,226 $810,892 $23,466
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f)(g) 1.86% 2.05% 2.04% 2.06% 2.05%^
Expenses, before waivers/reimbursements(f)(g) 1.94% 2.06% 2.04% 2.06% 2.90%^
Net investment income (loss) (.53)%(c) (.73)%(c) (1.09)% (.63)% (.60)%(c)^
Portfolio turnover rate (excluding securities
sold short) 295% 329% 535% 581% 282%
Portfolio turnover rate (including securities
sold short) 528% 519% 718% 673% 321%
----------------------------------------------------------------------------------------------------------------------
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CLASS R
DECEMBER 12,
2012(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014 2013
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.30 $11.70 $12.07 $10.91 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b) (.13)(c) (.14)(c) (.18) (.13) (.05)(c)
Net realized and unrealized gain on investment and foreign
currency transactions .97 .12 .31 1.46 .96
------ ------ ------ ------ ------
Net increase (decrease) in net asset value from operations .84 (.02) .13 1.33 .91
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions - 0 - (.38) (.50) (.17) - 0 -
------ ------ ------ ------ ------
Net asset value, end of period $12.14 $11.30 $11.70 $12.07 $10.91
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(e) 7.43% (.25)% 1.15% 12.19% 9.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 391 $ 698 $ 630 $ 121 $ 61
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f)(g) 2.44% 2.54% 2.57% 2.56% 2.52%^
Expenses, before waivers/reimbursements(f)(g) 2.56% 2.55% 2.57% 2.56% 4.30%^
Net investment income (loss) (1.09)%(c) (1.20)%(c) (1.55)% (1.12)% (1.06)%(c)^
Portfolio turnover rate (excluding securities sold short) 295% 329% 535% 581% 282%
Portfolio turnover rate (including securities sold short) 528% 519% 718% 673% 321%
----------------------------------------------------------------------------------------------------------------------
See footnotes on page 115.
113
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CLASS K
DECEMBER 12,
2012(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014 2013
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.40 $11.78 $12.11 $10.92 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b) (.10)(c) (.11)(c) (.16) (.12)(c) (.06)(c)
Net realized and unrealized gain on investment and foreign
currency transactions .98 .11 .33 1.48 .98
------ ------ ------ ------ ------
Net increase in net asset value from operations .88 - 0 - .17 1.36 .92
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions - 0 - (.38) (.50) (.17) - 0 -
------ ------ ------ ------ ------
Net asset value, end of period $12.28 $11.40 $11.78 $12.11 $10.92
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(e) 7.72% .01% 1.40% 12.46% 9.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 12 $ 31 $ 30 $ 12 $ 11
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f)(g) 2.14% 2.27% 2.31% 2.31% 2.28%^
Expenses, before waivers/reimbursements(f)(g) 2.23% 2.28% 2.31% 2.33% 4.59%^
Net investment income (loss) (.83)%(c) (.94)%(c) (1.33)% (.99)%(c) (.95)%(c)^
Portfolio turnover rate (excluding securities sold short) 295% 329% 535% 581% 282%
Portfolio turnover rate (including securities sold short) 528% 519% 718% 673% 321%
--------------------------------------------------------------------------------------------------------------------------------
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CLASS I
DECEMBER 12,
2012(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015 2014 2013
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.52 $ 11.86 $ 12.16 $ 10.93 $ 10.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b) (.06)(c) (.08)(c) (.12) (.08)(c) (.04)(c)
Net realized and unrealized gain on investment and
foreign currency transactions .99 .12 .32 1.48 .97
------- ------- ------- ------- -------
Net increase in net asset value from operations .93 .04 .20 1.40 .93
------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment
transactions - 0 - (.38) (.50) (.17) - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 12.45 $ 11.52 $ 11.86 $ 12.16 $ 10.93
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(e) 8.07% .27% 1.73% 12.81% 9.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $11,749 $12,724 $23,250 $34,519 $27,282
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f)(g) 1.82% 1.97% 1.97% 2.07% 2.02%^
Expenses, before waivers/reimbursements(f)(g) 1.90% 1.98% 1.97% 2.09% 4.32%^
Net investment income (loss) (.49)%(c) (.67)%(c) (1.03)% (.71)%(c) (.70)%(c)^
Portfolio turnover rate (excluding securities sold
short) 295% 329% 535% 581% 282%
Portfolio turnover rate (including securities sold
short) 528% 519% 718% 673% 321%
------------------------------------------------------------------------------------------------------------------------
See footnotes on page 115.
114
(a)Commencement of operations.
(b)Based on average shares outstanding.
(c)Net of fees and expenses waived/reimbursed by the Adviser.
(d)Net of fees and expenses waived by the Distributor.
(e)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 fund distributions or the redemption
of fund shares. Total investment return calculated for a period of less than
one year is not annualized.
(f)The expense ratios presented below exclude non-operating expenses:
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YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
-----------------------------------------------------------------------------------------------------
CLASS A
Net of waivers/reimbursements 1.94% 2.09% 2.09% 2.17% 2.25%^
Before waivers/reimbursements 2.01% 2.09% 2.09% 2.22% 3.32%^
CLASS C
Net of waivers/reimbursements 2.69% 2.84% 2.85% 2.92% 2.95%^
Before waivers/reimbursements 2.76% 2.84% 2.85% 2.92% 3.42%^
ADVISOR CLASS
Net of waivers/reimbursements 1.68% 1.84% 1.85% 1.92% 1.95%^
Before waivers/reimbursements 1.76% 1.84% 1.85% 1.92% 2.80%^
CLASS R
Net of waivers/reimbursements 2.28% 2.32% 2.34% 2.44% 2.45%^
Before waivers/reimbursements 2.40% 2.32% 2.34% 2.44% 4.23%^
CLASS K
Net of waivers/reimbursements 1.98% 2.05% 2.07% 2.19% 2.20%^
Before waivers/reimbursements 2.08% 2.05% 2.07% 2.22% 4.52%^
CLASS I
Net of waivers/reimbursements 1.64% 1.77% 1.78% 1.95% 1.95%^
Before waivers/reimbursements 1.72% 1.77% 1.78% 1.97% 4.24%^
(g)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses, but bears 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 voluntarily agreed to waive its fees from the
Fund in an amount equal to the Fund's pro rata share of certain acquired
fund fees and expenses, and for the year ended June 30, 2017, such waiver
amounted to 0.07% annualized for the Fund.
^ Annualized.
115
AB SUSTAINABLE GLOBAL THEMATIC FUND
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CLASS A
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 91.49 $ 92.00 $ 83.73 $ 70.76 $ 57.72
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.16)(b)+ (.20)(b) (.26) (.23) .06
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 19.65 (3.97) 8.51 13.20 12.98
Contributions from Affiliates - 0 - - 0 - .02 - 0 - .00(c)
Capital contributions - 0 - 3.66 - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from
operations 19.49 (.51) 8.27 12.97 13.04
-------- -------- -------- -------- --------
LESS: DIVIDENDS
Dividends from net investment income (3.46) - 0 - - 0 - - 0 - - 0 -
Tax return of capital (.01) - 0 - - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Total dividends and distributions (3.47) - 0 - - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net asset value, end of period $ 107.51 $ 91.49 $ 92.00 $ 83.73 $ 70.76
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 22.26%+ (.55)%* 9.88%* 18.33%* 22.59%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $600,512 $501,931 $567,548 $579,848 $569,053
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.41% 1.45% 1.45% 1.51% 1.50%
Expenses, before waivers/reimbursements(e) 1.43% 1.45% 1.45% 1.51% 1.50%
Net investment income (loss) (.17)%(b)+ (.23)%(b) (.29)% (.29)% .09%
Portfolio turnover rate 65% 40% 49% 44% 131%
---------------------------------------------------------------------------------------------------------------------
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CLASS B
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 76.05 $ 77.12 $ 70.75 $ 60.25 $ 49.53
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.77)(b)+ (.75)(b) (.81) (.73) (.39)
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 16.30 (3.98) 7.16 11.23 11.11
Contributions from Affiliates - 0 - - 0 - .02 - 0 - .00(c)
Capital contributions - 0 - 3.66 - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from
operations 15.53 (1.07) 6.37 10.50 10.72
-------- -------- -------- -------- --------
LESS: DIVIDENDS
Dividends from net investment income (2.74) - 0 - - 0 - - 0 - - 0 -
Tax return of capital (.00)(c) - 0 - - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Total dividends and distributions (2.74) - 0 - - 0 - - 0 - - 0 -
-------- -------- -------- -------- --------
Net asset value, end of period $ 88.84 $ 76.05 $ 77.12 $ 70.75 $ 60.25
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 21.30%+++ (1.39)%*++ 9.00%* 17.43%* 21.64%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 9,518 $ 10,899 $ 14,406 $ 18,090 $ 22,077
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 2.21% 2.27% 2.24% 2.28% 2.30%
Expenses, before waivers/reimbursements(e) 2.23% 2.28% 2.24% 2.28% 2.30%
Net investment loss (.98)%(b)+ (1.07)%(b) (1.09)% (1.08)% (.69)%
Portfolio turnover rate 65% 40% 49% 44% 131%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 119.
116
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CLASS C
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 76.67 $ 77.70 $ 71.25 $ 60.64 $ 49.82
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(a) (.74)(b)+ (.71)(b) (.78) (.69) (.36)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 16.37 (3.98) 7.21 11.30 11.18
Contributions from Affiliates - 0 - - 0 - .02 - 0 - .00(c)
Capital contributions - 0 - 3.66 - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 15.63 (1.03) 6.45 10.61 10.82
------- ------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net investment income (2.92) - 0 - - 0 - - 0 - - 0 -
Tax return of capital (.01) - 0 - - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Total dividends and distributions (2.93) - 0 - - 0 - - 0 - - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 89.37 $ 76.67 $ 77.70 $ 71.25 $ 60.64
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 21.34%+ (1.33)%* 9.07%* 17.48%* 21.72%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $22,709 $64,727 $74,114 $75,765 $74,286
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 2.19% 2.21% 2.20% 2.23% 2.23%
Expenses, before waivers/reimbursements(e) 2.21% 2.21% 2.20% 2.23% 2.23%
Net investment loss (.95)%(b)+ (.99)%(b) (1.05)% (1.01)% (.64)%
Portfolio turnover rate 65% 40% 49% 44% 131%
---------------------------------------------------------------------------------------------------------------------
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ADVISOR CLASS
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 96.54 $ 96.84 $ 87.90 $ 74.05 $ 60.23
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) .10(b)+ .02(b) (.03) (.05) .28
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 20.73 (3.98) 8.95 13.90 13.54
Contributions from Affiliates - 0 - - 0 - .02 - 0 - .00(c)
Capital contributions - 0 - 3.66 - 0 - - 0 - - 0 -
-------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 20.83 (.30) 8.94 13.85 13.82
-------- ------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net investment income (3.76) - 0 - - 0 - - 0 - - 0 -
Tax return of capital (.01) - 0 - - 0 - - 0 - - 0 -
-------- ------- ------- ------- -------
Total dividends and distributions (3.77) - 0 - - 0 - - 0 - - 0 -
-------- ------- ------- ------- -------
Net asset value, end of period $ 113.60 $ 96.54 $ 96.84 $ 87.90 $ 74.05
======== ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 22.56%+ (.31)%* 10.17%* 18.70%* 22.95%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $154,499 $62,661 $44,334 $34,973 $59,189
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.16% 1.20% 1.18% 1.22% 1.21%
Expenses, before waivers/reimbursements(e) 1.18% 1.20% 1.18% 1.22% 1.21%
Net investment income (loss) .09%(b)+ .02%(b) (.03)% (.06)% .40%
Portfolio turnover rate 65% 40% 49% 44% 131%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 119.
117
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CLASS R
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 90.58 $91.24 $83.17 $70.34 $57.44
------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.36)(b)+ (.33)(b) (.40) (.31) .00(c)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 19.45 (3.99) 8.45 13.14 12.90
Contributions from Affiliates - 0 - - 0 - .02 - 0 - .00(c)
Capital contributions - 0 - 3.66 - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Net increase (decrease) in net asset value from operations 19.09 (.66) 8.07 12.83 12.90
------- ------ ------ ------ ------
LESS: DIVIDENDS
Dividends from net investment income (3.31) - 0 - - 0 - - 0 - - 0 -
Tax return of capital (.01) - 0 - - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Total dividends and distributions (3.32) - 0 - - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Net asset value, end of period $106.35 $90.58 $91.24 $83.17 $70.34
======= ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 21.99%+ (.72)%* 9.71%* 18.24%* 22.45%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 3,099 $2,941 $3,613 $3,961 $5,829
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.64% 1.61% 1.61% 1.60% 1.60%
Expenses, before waivers/reimbursements(e) 1.65% 1.61% 1.61% 1.60% 1.60%
Net investment income (loss) (.39)%(b)+ (.39)%(b) (.46)% (.39)% .00%(f)
Portfolio turnover rate 65% 40% 49% 44% 131%
---------------------------------------------------------------------------------------------------------------------
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CLASS K
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 93.46 $93.85 $85.29 $71.90 $58.52
------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.07)(b)+ (.07)(b) (.13) (.06) .21
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 20.07 (3.98) 8.67 13.45 13.17
Contributions from Affiliates - 0 - - 0 - .02 - 0 - .00(c)
Capital contributions - 0 - 3.66 - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Net increase (decrease) in net asset value from operations 20.00 (.39) 8.56 13.39 13.38
------- ------ ------ ------ ------
LESS: DIVIDENDS
Dividends from net investment income (3.62) - 0 - - 0 - - 0 - - 0 -
Tax return of capital (.01) - 0 - - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Total dividends and distributions (3.63) - 0 - - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Net asset value, end of period $109.83 $93.46 $93.85 $85.29 $71.90
======= ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 22.38%+ (.42)%* 10.05%* 18.61%* 22.86%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $11,481 $9,385 $9,530 $8,981 $8,811
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.33% 1.30% 1.30% 1.29% 1.28%
Expenses, before waivers/reimbursements(e) 1.34% 1.31% 1.30% 1.29% 1.28%
Net investment income (loss) (.08)%(b)+ (.08)%(b) (.15)% (.07)% .31%
Portfolio turnover rate 65% 40% 49% 44% 131%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 119.
118
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CLASS I
YEAR ENDED JULY 31,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 96.70 $96.75 $87.63 $73.64 $59.71
------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .32(b)+ .24(b) .19 .17 .66
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 20.77 (3.95) 8.90 13.82 13.27
Contributions from Affiliates - 0 - - 0 - .03 - 0 - .00(c)
Capital contributions - 0 - 3.66 - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Net increase (decrease) in net asset value from operations 21.09 (.05) 9.12 13.99 13.93
------- ------ ------ ------ ------
LESS: DIVIDENDS
Dividends from net investment income (3.93) - 0 - - 0 - - 0 - - 0 -
Tax return of capital (.01) - 0 - - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Total dividends and distributions (3.94) - 0 - - 0 - - 0 - - 0 -
------- ------ ------ ------ ------
Net asset value, end of period $113.85 $96.70 $96.75 $87.63 $73.64
======= ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 22.86%+ (.05)%* 10.41%* 19.00%* 23.33%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 802 $ 555 $ 693 $ 387 $ 392
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .94% .94% .96% .96% .86%
Expenses, before waivers/reimbursements(e) .96% .94% .96% .96% .86%
Net investment income .32%(b)+ .27%(b) .20% .20% .97%
Portfolio turnover rate 65% 40% 49% 44% 131%
---------------------------------------------------------------------------------------------------------------------
(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 fund distributions or the redemption
of fund shares. Total investment return calculated for a period of less than
one year is not annualized.
(e)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses, but bears proportionate
shares of the 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 Fund in an
amount equal to the Fund's pro rata share of certain acquired fund fees and
expenses, and for the year ended July 31, 2017, such waiver amounted to less
than .02% for the Fund.
(f)Amount is less than .005%.
+ For the year ended July 31, 2017 the amount includes a refund for overbilling
of prior years' custody out of pocket fees as follows:
[Download Table]
NET INVESTMENT NET INVESTMENT TOTAL
INCOME PER SHARE INCOME RATIO RETURN
---------------- -------------- ------
$.02 .03% .03%
* Includes the impact of proceeds received and credited to the Fund resulting
from class action settlements, which enhanced the Fund's performance for the
years ended July 31, 2015, July 31, 2014 and July 31, 2013 by 0.05%, 0.05%
and 0.05%, respectively.
Includes the impact of proceeds received and credited to the Fund in
connection with a residual distribution relating to regulatory settlements,
which enhanced the Fund's performance for the year ended July 31, 2016 by
4.33%.
++The net asset value and total return include adjustments in accordance with
accounting principles generally accepted in the United States of America for
financial reporting purposes. As such, the net asset value and total return
for shareholder transactions may differ from financial statements.
119
AB INTERNATIONAL GROWTH FUND
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CLASS A
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.36 $ 16.76 $ 17.23 $ 14.65 $ 13.07
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) (.00)(b)(c) .08(c) .10 .14 .13
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 2.52 (1.48) (.57) 2.61 1.57
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from
operations 2.52 (1.40) (.47) 2.75 1.70
-------- -------- -------- -------- --------
LESS: DIVIDENDS
Dividends from net investment income (.11) - 0 - - 0 - (.17) (.12)
-------- -------- -------- -------- --------
Net asset value, end of period $ 17.77 $ 15.36 $ 16.76 $ 17.23 $ 14.65
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 16.59% (8.35)% (2.78)% 18.94%+ 12.99%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $231,141 $219,182 $278,008 $358,142 $399,308
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.42% 1.35% 1.39% 1.37% 1.32%
Expenses, before waivers/reimbursements(e) 1.43% 1.35% 1.39% 1.37% 1.32%
Net investment income (loss) (.02)%(c) .49%(c) .58% .87% .93%
Portfolio turnover rate 27% 45% 18% 36% 30%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
CLASS B
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.63 $ 14.99 $ 15.54 $ 13.26 $ 11.83
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.14)(c) (.07)(c) (.05) (.00)(b) .02
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 2.26 (1.29) (.50) 2.38 1.41
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from
operations 2.12 (1.36) (.55) 2.38 1.43
-------- -------- -------- -------- --------
LESS: DIVIDENDS
Dividends from net investment income - 0 - - 0 - - 0 - (.10) - 0 -
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.75 $ 13.63 $ 14.99 $ 15.54 $ 13.26
======== ======== ======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 15.55% (9.07)% (3.54)% 18.06%+ 12.09%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 1,306 $ 2,000 $ 5,240 $ 10,793 $ 16,753
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 2.26% 2.18% 2.16% 2.11% 2.07%
Expenses, before waivers/reimbursements(e) 2.26% 2.18% 2.16% 2.11% 2.07%
Net investment income (loss) (.97)%(c) (.49)%(c) (.34)% (.01)% .14%
Portfolio turnover rate 27% 45% 18% 36% 30%
------------------------------------------------------------------------------------------------------------------------
See footnotes on page 123.
120
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CLASS C
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.69 $ 15.05 $ 15.60 $ 13.32 $ 11.87
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.15)(c) (.04)(c) (.02) .02 .03
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 2.30 (1.32) (.53) 2.38 1.42
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 2.15 (1.36) (.55) 2.40 1.45
------- ------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net investment income - 0 - - 0 - - 0 - (.12) - 0 -
------- ------- ------- ------- -------
Net asset value, end of period $ 15.84 $ 13.69 $ 15.05 $ 15.60 $ 13.32
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 15.70% (9.04)% (3.52)% 18.09%+ 12.22%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $14,278 $40,800 $56,865 $70,259 $74,259
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 2.20% 2.11% 2.13% 2.07% 2.03%
Expenses, before waivers/reimbursements(e) 2.20% 2.11% 2.13% 2.07% 2.03%
Net investment income (loss) (1.03)%(c) (.30)%(c) (.16)% .16% .21%
Portfolio turnover rate 27% 45% 18% 36% 30%
---------------------------------------------------------------------------------------------------------------------
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ADVISOR CLASS
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.63 $ 17.01 $ 17.45 $ 14.81 $ 13.24
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .04(c) .11(c) .14 .19 .18
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 2.56 (1.49) (.58) 2.65 1.58
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 2.60 (1.38) (.44) 2.84 1.76
------- ------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net investment income (.15) - 0 - - 0 - (.20) (.19)
------- ------- ------- ------- -------
Net asset value, end of period $ 18.08 $ 15.63 $ 17.01 $ 17.45 $ 14.81
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 16.84% (8.11)% (2.52)% 19.32%+ 13.27%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $41,582 $45,816 $62,213 $83,622 $84,113
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.17% 1.10% 1.12% 1.06% 1.02%
Expenses, before waivers/reimbursements(e) 1.18% 1.10% 1.12% 1.06% 1.02%
Net investment income .22%(c) .69%(c) .85% 1.17% 1.23%
Portfolio turnover rate 27% 45% 18% 36% 30%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 123.
121
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CLASS R
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.15 $ 16.57 $ 17.09 $ 14.54 $ 12.97
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.05)(c) .03(c) .06 .09 .09
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 2.49 (1.45) (.58) 2.60 1.56
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from operations 2.44 (1.42) (.52) 2.69 1.65
------- ------- ------- ------- -------
LESS: DIVIDENDS
Dividends from net investment income (.06) - 0 - - 0 - (.14) (.08)
------- ------- ------- ------- -------
Net asset value, end of period $ 17.53 $ 15.15 $ 16.57 $ 17.09 $ 14.54
======= ======= ======= ======= =======
TOTAL RETURN
Total investment return based on net asset value(d) 16.19% (8.57)% (3.04)% 18.59%+ 12.69%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $11,659 $12,449 $15,394 $18,149 $20,995
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.71% 1.67% 1.64% 1.62% 1.58%
Expenses, before waivers/reimbursements(e) 1.72% 1.67% 1.64% 1.62% 1.58%
Net investment income (loss) (.33)%(c) .17%(c) .34% .58% .64%
Portfolio turnover rate 27% 45% 18% 36% 30%
---------------------------------------------------------------------------------------------------------------------
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CLASS K
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.29 $16.69 $17.15 $14.57 $13.03
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .01(c) .08(c) .11 .15 .12
Net realized and unrealized gain (loss) on investment and foreign
currency transactions 2.50 (1.48) (.57) 2.60 1.56
------ ------ ------ ------ ------
Net increase (decrease) in net asset value from operations 2.51 (1.40) (.46) 2.75 1.68
------ ------ ------ ------ ------
LESS: DIVIDENDS
Dividends from net investment income (.12) - 0 - - 0 - (.17) (.14)
------ ------ ------ ------ ------
Net asset value, end of period $17.68 $15.29 $16.69 $17.15 $14.57
====== ====== ====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 16.60% (8.39)% (2.68)% 18.99%+ 12.93%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,605 $5,001 $6,224 $6,146 $5,434
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.40% 1.36% 1.33% 1.31% 1.28%
Expenses, before waivers/reimbursements(e) 1.41% 1.36% 1.33% 1.31% 1.28%
Net investment income .03%(c) .52%(c) .67% .97% .86%
Portfolio turnover rate 27% 45% 18% 36% 30%
---------------------------------------------------------------------------------------------------------------------
See footnotes on page 123.
122
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CLASS I
YEAR ENDED JUNE 30,
2017 2016 2015 2014 2013
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.56 $16.90 $17.30 $14.67 $ 13.15
------ ------ ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .06(c) .14(c) .19 .15 .21
Net realized and unrealized gain (loss) on investment and foreign
currency transactions 2.53 (1.48) (.59) 2.69 1.56
------ ------ ------ ------ -------
Net increase (decrease) in net asset value from operations 2.59 (1.34) (.40) 2.84 1.77
------ ------ ------ ------ -------
LESS: DIVIDENDS
Dividends from net investment income (.18) - 0 - - 0 - (.21) (.25)
------ ------ ------ ------ -------
Net asset value, end of period $17.97 $15.56 $16.90 $17.30 $ 14.67
====== ====== ====== ====== =======
TOTAL RETURN
Total investment return based on net asset value(d) 16.95% (7.93)% (2.31)% 19.48%+ 13.45%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,891 $1,484 $1,376 $1,123 $19,171
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.05% .95% .90% .92% .87%
Expenses, before waivers/reimbursements(e) 1.06% .95% .90% .92% .87%
Net investment income .39%(c) .92%(c) 1.15% .97% 1.42%
Portfolio turnover rate 27% 45% 18% 36% 30%
------------------------------------------------------------------------------------------------------------------------
(a)Based on average shares outstanding.
(b)Amount is less than $0.005.
(c)Net of expenses waived/reimbursed by the Adviser.
(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 charge or contingent
deferred sales charge is not reflected in the calculation of total
investment return. Total investment return does not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Total investment return for a period of less than one year
is not annualized.
+ Includes the impact of proceeds received and credited to the Fund resulting
from third party regulatory settlements, which enhanced the Fund's
performance for the year ended June 30, 2014 by 0.01%.
* Includes the impact of proceeds received and credited to the Fund resulting
from class action settlements, which enhanced the Fund's performance for the
year ended June 30, 2013 by 0.01%.
(e)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses but bears 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
Fund in an amount equal to the Fund's pro rata share of certain acquired
fund fees and expenses, and for the year ended June 30, 2017, such waiver
amounted to less than 0.01% annualized for the Fund.
123
AB GLOBAL CORE EQUITY PORTFOLIO
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CLASS A
NOVEMBER 12,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015
---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.70 $10.15 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(b)(c) .16 .16 .06
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 1.94 (.51) .11+
------ ------ ------
Net increase (decrease) in net asset value from operations 2.10 (.35) .17
------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.08) (.07) (.02)
Distributions from net realized gain on investment and foreign
currency transactions - 0 - (.03) - 0 -
------ ------ ------
Total dividends and distributions (.08) (.10) (.02)
------ ------ ------
Net asset value, end of period $11.72 $ 9.70 $10.15
====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 21.81% (3.40)% 1.72%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,911 $ 939 $ 48
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.15% 1.15% 1.15%(e)
Expenses, before waivers/reimbursements 1.22% 1.38% 2.84%(e)
Net investment income(c) 1.43% 1.64% .90%(e)
Portfolio turnover rate 51% 51% 24%
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CLASS C
NOVEMBER 12,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015
---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.67 $10.11 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(b)(c) .05 .06 .05
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 1.96 (.47) .07+
------ ------ ------
Net increase (decrease) in net asset value from operations 2.01 (.41) .12
------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.05) - 0 - (.01)
Distributions from net realized gain on investment and foreign
currency transactions - 0 - (.03) - 0 -
------ ------ ------
Total dividends and distributions (.05) (.03) (.01)
------ ------ ------
Net asset value, end of period $11.63 $ 9.67 $10.11
====== ====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 20.80% (4.09)% 1.22%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 70 $ 16 $ 11
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.90% 1.90% 1.90%(e)
Expenses, before waivers/reimbursements 2.06% 2.09% 4.73%(e)
Net investment income(c) .49% .61% .81%(e)
Portfolio turnover rate 51% 51% 24%
---------------------------------------------------------------------------------------------------
See footnotes on page 125.
124
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ADVISOR CLASS
NOVEMBER 12,
2014(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015
------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.72 $ 10.16 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(b)(c) .16 .15 .18
Net realized and unrealized gain (loss) on investment and foreign
currency transactions 1.97 (.48) .01+
-------- -------- --------
Net increase (decrease) in net asset value from operations 2.13 (.33) .19
-------- -------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.10) (.08) (.03)
Distributions from net realized gain on investment and foreign currency
transactions - 0 - (.03) - 0 -
-------- -------- --------
Total dividends and distributions (.10) (.11) (.03)
-------- -------- --------
Net asset value, end of period $ 11.75 $ 9.72 $ 10.16
======== ======== ========
TOTAL RETURN
Total investment return based on net asset value(d) 22.09% (3.17)% 1.86%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $310,829 $156,608 $101,359
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .90% .90% .90%(e)
Expenses, before waivers/reimbursements .97% 1.08% 2.43%(e)
Net investment income(c) 1.52% 1.59% 2.71%(e)
Portfolio turnover rate 51% 51% 24%
------------------------------------------------------------------------------------------------------------
(a)Commencement of operations.
(b)Based on average shares outstanding.
(c)Net of expenses waived/reimbursed by the Adviser.
(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 charge or contingent
deferred sales charge is not reflected in the calculation of total
investment return. Total investment return does not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Total investment return for a period of less than one year
is not annualized.
(e)Annualized.
+ Due to timing of sales and repurchase of capital shares, the net realized
and unrealized gain (loss) per share is not in accord with the Fund's change
in net realized and unrealized gain (loss) on investment transactions for
the period.
125
AB INTERNATIONAL STRATEGIC CORE PORTFOLIO
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CLASS A
JULY 29,
YEAR ENDED 2015(a) TO
JUNE 30, JUNE 30,
2017 2016
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.79 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(b)(c) .22 .26
Net realized and unrealized gain (loss) on investment and foreign currency transactions 1.11 (.35)
------ ------
Net increase (decrease) in net asset value from operations 1.33 (.09)
------ ------
LESS: DIVIDENDS
Dividends from net investment income (.08) (.12)
------ ------
Net asset value, end of period $11.04 $ 9.79
====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 13.72% (.84)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 234 $ 57
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.19% 1.20%(f)
Expenses, before waivers/reimbursements(e) 5.13% 23.67%(f)
Net investment income(c) 2.15% 2.87%(f)
Portfolio turnover rate 64% 52%
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CLASS C
JULY 29,
YEAR ENDED 2015(a) TO
JUNE 30, JUNE 30,
2017 2016
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.75 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(b)(c) .19 .12
Net realized and unrealized gain (loss) on investment and foreign currency transactions 1.07 (.28)
------ ------
Net increase (decrease) in net asset value from operations 1.26 (.16)
------ ------
LESS: DIVIDENDS
Dividends from net investment income - 0 - (.09)
------ ------
Net asset value, end of period $11.01 $ 9.75
====== ======
TOTAL RETURN
Total investment return based on net asset value(d) 12.92% (1.55)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 62 $ 10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.94% 1.95%(f)
Expenses, before waivers/reimbursements(e) 5.70% 15.57%(f)
Net investment income(c) 1.80% 1.31%(f)
Portfolio turnover rate 64% 52%
---------------------------------------------------------------------------------------------------------------------------------
See footnotes on page 127.
126
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ADVISOR CLASS
JULY 29,
YEAR ENDED 2015(a) TO
JUNE 30, JUNE 30,
2017 2016
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.80 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(b)(c) .27 .21
Net realized and unrealized gain (loss) on investment and foreign currency transactions 1.08 (.28)
------- ------
Net increase (decrease) in net asset value from operations 1.35 (.07)
------- ------
LESS: DIVIDENDS
Dividends from net investment income (.09) (.13)
------- ------
Net asset value, end of period $ 11.06 $ 9.80
======= ======
TOTAL RETURN
Total investment return based on net asset value(d) 13.98% (.63)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $35,275 $2,932
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) .94% .95%(f)
Expenses, before waivers/reimbursements(e) 4.37% 14.60%(f)
Net investment income(c) 2.60% 2.32%(f)
Portfolio turnover rate 64% 52%
--------------------------------------------------------------------------------------------------------------------------------
(a)Commencement of operations.
(b)Based on average shares outstanding.
(c)Net of expenses waived/reimbursed by the Adviser.
(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 charge or contingent
deferred sales charge is not reflected in the calculation of total
investment return. Total investment return does not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Total investment return for a period of less than one year
is not annualized.
(e)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses but bears 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
Fund in an amount equal to the Fund's pro rata share of certain acquired
fund fees and expenses, and for the year ended June 30, 2017, such waiver
amounted to 0.01% for the Fund.
(f)Annualized.
127
AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO
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CLASS A
APRIL 15,
2015(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015
---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.46 $ 9.77 $10.00
------ ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(b)(c) .05 .03 .03
Net realized and unrealized gain (loss) on investment transactions
and foreign currency 2.04 (1.34) (.26)
------ ------- ------
Net increase (decrease) in net asset value from operations 2.09 (1.31) (.23)
------ ------- ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.05) (.00)(d) - 0 -
Distributions from net realized gain on investment transactions - 0 - (.00)(d) - 0 -
------ ------- ------
Total dividends and distributions (.05) - 0 - - 0 -
------ ------- ------
Net asset value, end of period $10.50 $ 8.46 $ 9.77
====== ======= ======
TOTAL RETURN
Total investment return based on net asset value(e) 24.83% (13.39)% (2.30)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 11 $ 9 $ 10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f) 1.29% 1.30% 1.30%^
Expenses, before waivers/reimbursements(f) 8.96% 17.79% 18.01%^
Net investment income(c) .54% .34% 1.58%^
Portfolio turnover rate 66% 42% 2%
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CLASS C
APRIL 15,
2015(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015
----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.39 $ 9.75 $10.00
------ ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(b)(c) (.02) (.04) .02
Net realized and unrealized gain (loss) on investment transactions
and foreign currency 2.02 (1.32) (.27)
------ ------- ------
Net increase (decrease) in net asset value from operations 2.00 (1.36) (.25)
------ ------- ------
LESS: DISTRIBUTIONS
Distributions from net realized gain on investment transactions - 0 - (.00)(d) - 0 -
------ ------- ------
Net asset value, end of period $10.39 $ 8.39 $ 9.75
====== ======= ======
TOTAL RETURN
Total investment return based on net asset value(e) 23.84% (13.93)% (2.50)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 28 $ 8 $ 9
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f) 2.04% 2.05% 2.05%^
Expenses, before waivers/reimbursements(f) 9.39% 18.58% 18.73%^
Net investment income (loss)(c) (.20)% (.43)% .81%^
Portfolio turnover rate 66% 42% 2%
----------------------------------------------------------------------------------------------------
See footnotes on page 129.
128
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------
ADVISOR CLASS
APRIL 15,
2015(a) TO
YEAR ENDED JUNE 30, JUNE 30,
2017 2016 2015
----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.47 $ 9.77 $10.00
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(b)(c) .20 .05 .04
Net realized and unrealized gain (loss) on investment transactions
and foreign currency 1.91 (1.33) (.27)
------- ------- ------
Net increase (decrease) in net asset value from operations 2.11 (1.28) (.23)
------- ------- ------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.07) (.02) - 0 -
Distributions from net realized gain on investment transactions - 0 - (.00)(d) - 0 -
------- ------- ------
Total dividends and distributions (.07) (.02) - 0 -
------- ------- ------
Net asset value, end of period $ 10.51 $ 8.47 $ 9.77
======= ======= ======
TOTAL RETURN
Total investment return based on net asset value(e) 25.12% (13.13)% (2.30)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $32,602 $ 1,678 $1,935
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f) 1.04% 1.05% 1.05%^
Expenses, before waivers/reimbursements(f) 3.75% 17.53% 17.75%^
Net investment income(c) 2.04% .58% 1.81%^
Portfolio turnover rate 66% 42% 2%
----------------------------------------------------------------------------------------------------
(a)Commencement of operations.
(b)Based on average shares outstanding.
(c)Net of expenses waived and reimbursed by the Adviser.
(d)Amount is less than $.005.
(e)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 fund distributions or the redemption
of fund shares. Total investment return calculated for a period of less than
one year is not annualized.
(f)In connection with the Fund's investments in affiliated underlying
portfolios, the Fund incurs no direct expenses, but bears 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 voluntarily agreed to waive its fees from the
Fund in an amount equal to the Fund's pro rata share of certain acquired
fund fees and expenses, and for the year ended June 30, 2017, such waiver
amounted to 0.01% annualized for the Fund.
^ Annualized.
129
APPENDIX A
--------------------------------------------------------------------------------
HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION
--------------------------------------------------------------------------------
The following supplemental hypothetical investment information provides
additional information calculated and presented in a manner different from
expense information found under "Fees and Expenses of the Fund" in the Summary
Information at the beginning of this Prospectus about the effect of a Fund's
expenses, including investment advisory fees and other Fund costs, on each
Fund's returns over a 10-year period. The chart shows the estimated expenses
that would be charged on a hypothetical investment of $10,000 in Class A shares
of each Fund assuming a 5% return each year, including an initial sales charge
of 4.25%. Except as otherwise indicated, the chart also assumes that the
current annual expense ratio stays the same throughout the 10-year period. The
current annual expense ratio for each Fund is the same as stated under "Fees
and Expenses of the Fund". Additional information concerning the fees and
expenses incurred by the Funds may be found at FINRA's Fund Analyzer web page
(available at http://apps.finra.org/fundanalyzer/1/fa.aspx). Your actual
expenses may be higher or lower.
AB GROWTH FUND
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 550.67 $ 9,928.08
2 9,928.08 496.40 10,424.48 131.35 10,293.13
3 10,293.13 514.66 10,807.79 136.18 10,671.61
4 10,671.61 533.58 11,205.19 141.19 11,064.00
5 11,064.00 553.20 11,617.20 146.38 11,470.82
6 11,470.82 573.54 12,044.36 151.76 11,892.60
7 11,892.60 594.63 12,487.23 157.34 12,329.89
8 12,329.89 616.49 12,946.38 163.12 12,783.26
9 12,783.26 639.16 13,422.42 169.12 13,253.30
10 13,253.30 662.67 13,915.97 175.34 13,740.63
--------------------------------------------------------------------------
Cumulative $5,663.08 $1,922.45
AB LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 500.00 $10,500.00 $ 105.00 $10,395.00
2 10,395.00 519.75 10,914.75 111.33 10,803.42
3 10,803.42 540.17 11,343.59 115.70 11,227.89
4 11,227.89 561.39 11,789.28 120.25 11,669.03
5 11,669.03 583.45 12,252.48 124.98 12,127.50
6 12,127.50 606.38 12,733.88 129.89 12,603.99
7 12,603.99 630.20 13,234.19 134.99 13,099.20
8 13,099.20 654.96 13,754.16 140.29 13,613.87
9 13,613.87 680.69 14,294.56 145.80 14,148.76
10 14,148.76 707.44 14,856.20 151.53 14,704.67
--------------------------------------------------------------------------
Cumulative $5,984.43 $1,279.76
AB CONCENTRATED GROWTH FUND
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 547.66 $ 9,931.09
2 9,931.09 496.55 10,427.64 128.26 10,299.38
3 10,299.38 514.97 10,814.35 133.02 10,681.33
4 10,681.33 534.07 11,215.40 137.95 11,077.45
5 11,077.45 553.87 11,631.32 143.07 11,488.25
6 11,488.25 574.41 12,062.66 148.37 11,914.29
7 11,914.29 595.71 12,510.00 153.87 12,356.13
8 12,356.13 617.81 12,973.94 159.58 12,814.36
9 12,814.36 640.72 13,455.08 165.50 13,289.58
10 13,289.58 664.48 13,954.06 171.63 13,782.43
--------------------------------------------------------------------------
Cumulative $5,671.34 $1,888.91
A-1
AB DISCOVERY GROWTH FUND
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 524.53 $ 9,954.22
2 9,954.22 497.71 10,451.93 104.52 10,347.41
3 10,347.41 517.37 10,864.78 108.65 10,756.13
4 10,756.13 537.81 11,293.94 112.94 11,181.00
5 11,181.00 559.05 11,740.05 117.40 11,622.65
6 11,622.65 581.13 12,203.78 122.04 12,081.74
7 12,081.74 604.09 12,685.83 126.86 12,558.97
8 12,558.97 627.95 13,186.92 131.87 13,055.05
9 13,055.05 652.75 13,707.80 137.08 13,570.72
10 13,570.72 678.54 14,249.26 142.49 14,106.77
--------------------------------------------------------------------------
Cumulative $5,735.15 $1,628.38
AB SMALL CAP GROWTH PORTFOLIO
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 544.64 $ 9,934.11
2 9,934.11 496.71 10,430.82 124.13 10,306.69
3 10,306.69 515.33 10,822.02 128.78 10,693.24
4 10,693.24 534.66 11,227.90 133.61 11,094.29
5 11,094.29 554.71 11,649.00 138.62 11,510.38
6 11,510.38 575.52 12,085.90 143.82 11,942.08
7 11,942.08 597.10 12,539.18 149.22 12,389.96
8 12,389.96 619.50 13,009.46 154.81 12,854.65
9 12,854.65 642.73 13,497.38 160.62 13,336.76
10 13,336.76 666.84 14,003.60 166.64 13,836.96
--------------------------------------------------------------------------
Cumulative $5,681.85 $1,844.89
AB SELECT US EQUITY PORTFOLIO
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 571.78 $ 9,906.97
2 9,906.97 495.35 10,402.32 152.91 10,249.41
3 10,249.41 512.47 10,761.88 158.20 10,603.68
4 10,603.68 530.18 11,133.86 163.67 10,970.19
5 10,970.19 548.51 11,518.70 169.32 11,349.38
6 11,349.38 567.47 11,916.85 175.18 11,741.67
7 11,741.67 587.08 12,328.75 181.23 12,147.52
8 12,147.52 607.38 12,754.90 187.50 12,567.40
9 12,567.40 628.37 13,195.77 193.98 13,001.79
10 13,001.79 650.09 13,651.88 200.68 13,451.20
--------------------------------------------------------------------------
Cumulative $5,605.65 $2,154.45
AB SELECT US LONG/SHORT PORTFOLIO
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 631.10 $ 9,847.65
2 9,847.65 492.38 10,340.03 219.21 10,120.82
3 10,120.82 506.04 10,626.86 225.29 10,401.57
4 10,401.57 520.08 10,921.65 231.54 10,690.11
5 10,690.11 534.51 11,224.62 237.96 10,986.66
6 10,986.66 549.33 11,535.99 244.56 11,291.43
7 11,291.43 564.57 11,856.00 251.35 11,604.65
8 11,604.65 580.23 12,184.88 258.32 11,926.56
9 11,926.56 596.33 12,522.89 265.49 12,257.40
10 12,257.40 612.87 12,870.27 272.85 12,597.42
--------------------------------------------------------------------------
Cumulative $5,435.09 $2,837.67
A-2
AB SUSTAINABLE GLOBAL THEMATIC FUND
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 566.76 $ 9,911.99
2 9,911.99 495.60 10,407.59 147.79 10,259.80
3 10,259.80 512.99 10,772.79 152.97 10,619.82
4 10,619.82 530.99 11,150.81 158.34 10,992.47
5 10,992.47 549.62 11,542.09 163.90 11,378.19
6 11,378.19 568.91 11,947.10 169.65 11,777.45
7 11,777.45 588.87 12,366.32 175.60 12,190.72
8 12,190.72 609.54 12,800.26 181.76 12,618.50
9 12,618.50 630.93 13,249.43 188.14 13,061.29
10 13,061.29 653.06 13,714.35 194.74 13,519.61
--------------------------------------------------------------------------
Cumulative $5,619.26 $2,099.65
AB INTERNATIONAL GROWTH FUND
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 568.77 $ 9,909.98
2 9,909.98 495.50 10,405.48 148.80 10,256.68
3 10,256.68 512.83 10,769.51 154.00 10,615.51
4 10,615.51 530.78 11,146.29 159.39 10,986.90
5 10,986.90 549.35 11,536.25 164.97 11,371.28
6 11,371.28 568.56 11,939.84 170.74 11,769.10
7 11,769.10 588.46 12,357.56 176.71 12,180.85
8 12,180.85 609.04 12,789.89 182.90 12,606.99
9 12,606.99 630.35 13,237.34 189.29 13,048.05
10 13,048.05 652.40 13,700.45 195.92 13,504.53
--------------------------------------------------------------------------
Cumulative $5,616.02 $2,111.49
AB GLOBAL CORE EQUITY PORTFOLIO
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 540.62 $ 9,938.13
2 9,938.13 496.91 10,435.04 296.36 10,138.68
3 10,138.68 506.93 10,645.61 302.34 10,343.27
4 10,343.27 517.16 10,860.43 308.44 10,551.99
5 10,551.99 527.60 11,079.59 314.66 10,764.93
6 10,764.93 538.25 11,303.18 321.01 10,982.17
7 10,982.17 549.11 11,531.28 327.49 11,203.79
8 11,203.79 560.19 11,763.98 334.10 11,429.88
9 11,429.88 571.49 12,001.37 340.84 11,660.53
10 11,660.53 583.03 12,243.56 347.72 11,895.84
--------------------------------------------------------------------------
Cumulative $5,329.42 $3,433.58
AB INTERNATIONAL STRATEGIC CORE PORTFOLIO
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 545.65 $9,933.10
2 9,933.10 496.66 10,429.76 536.09 9,893.67
3 9,893.67 494.68 10,388.35 533.96 9,854.39
4 9,854.39 492.72 10,347.11 531.84 9,815.27
5 9,815.27 490.76 10,306.03 529.73 9,776.30
6 9,776.30 488.82 10,265.12 527.63 9,737.49
7 9,737.49 486.87 10,224.36 525.53 9,698.83
8 9,698.83 484.94 10,183.77 523.45 9,660.32
9 9,660.32 483.02 10,143.34 521.37 9,621.97
10 9,621.97 481.10 10,103.07 519.30 9,583.77
--------------------------------------------------------------------------
Cumulative $4,878.32 $5,294.55
A-3
AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO
--------------------------------------------------------------------------------
[Download Table]
HYPOTHETICAL INVESTMENT HYPOTHETICAL
HYPOTHETICAL PERFORMANCE AFTER HYPOTHETICAL ENDING
YEAR INVESTMENT EARNINGS RETURNS EXPENSES* INVESTMENT
--------------------------------------------------------------------------
1 $10,000.00 $ 478.75 $10,053.75 $ 555.70 $9,923.05
2 9,923.05 496.15 10,419.20 933.56 9,485.64
3 9,485.64 474.28 9,959.92 892.41 9,067.51
4 9,067.51 453.38 9,520.89 853.07 8,667.82
5 8,667.82 433.39 9,101.21 815.47 8,285.74
6 8,285.74 414.29 8,700.03 779.52 7,920.51
7 7,920.51 396.03 8,316.54 745.16 7,571.38
8 7,571.38 378.57 7,949.95 712.32 7,237.63
9 7,237.63 361.88 7,599.51 680.92 6,918.59
10 6,918.59 345.93 7,264.52 650.90 6,613.62
--------------------------------------------------------------------------
Cumulative $4,232.65 $7,619.03
--------
* Expenses are net of any fee waiver or expense waiver in the first year.
Thereafter, the expense ratio reflects the Fund's operating expenses as
reflected under "Fees and Expenses of the Fund" before waiver in the Summary
Information at the beginning of this Prospectus.
A-4
APPENDIX B--FINANCIAL INTERMEDIARY WAIVERS
--------------------------------------------------------------------------------
WAIVER SPECIFIC TO MERRILL LYNCH
--------------------------------------------------------------------------------
Effective April 10, 2017, shareholders purchasing Fund shares through a Merrill
Lynch platform or account will be eligible only for the following load waivers
(front-end sales charge waivers and contingent deferred, or back-end, sales
charge waivers) and discounts, which may differ from those disclosed elsewhere
in this Funds' prospectus or SAI:
FRONT-END SALES LOAD WAIVERS ON CLASS A SHARES AVAILABLE AT MERRILL LYNCH
.. Employer-sponsored retirement, deferred compensation and employee benefit
plans (including health savings accounts) and trusts used to fund those
plans, provided that the shares are not held in a commission-based brokerage
account and shares are held for the benefit of the plan
.. Shares purchased by or through a 529 Plan
.. Shares purchased through a Merrill Lynch affiliated investment advisory
program
.. Shares purchased by third party investment advisors on behalf of their
advisory clients through Merrill Lynch's platform
.. Shares of funds purchased through the Merrill Edge Self-Directed platform
(if applicable)
.. Shares purchased through reinvestment of capital gains distributions and
dividend reinvestment when purchasing shares of the same fund (but not any
other fund within the fund family)
.. Shares exchanged from Class C (i.e. level-load) shares of the same fund in
the month of or following the 10-year anniversary of the purchase date
.. Employees and registered representatives of Merrill Lynch or its affiliates
and their family members
.. Directors or Trustees of the Fund, and employees of the Fund's investment
adviser or any of its affiliates, as described in this prospectus
.. Shares purchased from the proceeds of redemptions within the same fund
family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and
(3) redeemed shares were subject to a front-end or deferred sales load
(known as Rights of Reinstatement)
CDSC WAIVERS ON A, B AND C SHARES AVAILABLE AT MERRILL LYNCH
.. Death or disability of the shareholder
.. Shares sold as part of a systematic withdrawal plan as described in the
Fund's prospectus
.. Return of excess contributions from an IRA Account
.. Shares sold as part of a required minimum distribution for IRA and
retirement accounts due to the shareholder reaching age 70 1/2
.. Shares sold to pay Merrill Lynch fees but only if the transaction is
initiated by Merrill Lynch
.. Shares acquired through a right of reinstatement
.. Shares held in retirement brokerage accounts, that are exchanged for a lower
cost share class due to transfer to a fee based account or platform
(applicable to A and C shares only)
FRONT-END LOAD DISCOUNTS AVAILABLE AT MERRILL LYNCH: BREAKPOINTS, RIGHTS OF
ACCUMULATION & LETTERS OF INTENT
.. Breakpoints as described in this prospectus
.. Rights of Accumulation (ROA) which entitle shareholders to breakpoint
discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's household at
Merrill Lynch. Eligible fund family assets not held at Merrill Lynch may be
included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets
.. Letters of Intent (LOI) which allow for breakpoint discounts based on
anticipated purchases within a fund family, through Merrill Lynch, over a
13-month period of time (if applicable)
B-1
For more information about the Funds, the following documents are available
upon request:
.. ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that
significantly affected a Fund's performance during its last fiscal year.
.. STATEMENT OF ADDITIONAL INFORMATION (SAI)
The Funds have an SAI, which contains more detailed information about the
Funds, including their operations and investment policies. The Funds' SAI and
the independent registered public accounting firm's report and financial
statements in each Fund's most recent annual report to shareholders are
incorporated by reference into (and are legally part of) this Prospectus.
You may request a free copy of the current annual/semi-annual report or the
SAI, or make inquiries concerning the Funds, by contacting your broker or other
financial intermediary, or by contacting the Adviser:
[Download Table]
BY MAIL: c/o AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
BY PHONE: For Information: (800) 221-5672
For Literature: (800) 227-4618
ON THE INTERNET: www.abfunds.com
Or you may view or obtain these documents from the Commission:
.. Call the Commission at 1-202-551-8090 for information on the operation of
the Public Reference Room.
.. Reports and other information about the Funds are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov.
.. Copies of the information may be obtained, after paying a duplicating fee,
by electronic request at publicinfo@sec.gov, or by writing to the
Commission's Public Reference Section, Washington, DC 20549-1520.
You also may find these documents and more information about the Adviser and
the Funds on the Internet at: www.abfunds.com.
The [A/B] Logo is a service mark of AllianceBernstein and AllianceBernstein(R)
is a registered trademark used by permission of the owner, AllianceBernstein
L.P.
[Download Table]
FUND COMMISSION FILE NO.
-------------------------------------------------------------------
AB Growth Fund 811-05088
AB Large Cap Growth Fund 811-06730
AB Concentrated Growth Fund 811-01716
AB Discovery Growth Fund 811-00204
AB Small Cap Growth Portfolio 811-01716
AB Select US Equity Portfolio 811-01716
AB Select US Long/Short Portfolio 811-01716
AB Sustainable Global Thematic Fund 811-03131
AB International Growth Fund 811-08426
AB Global Core Equity Portfolio 811-01716
AB International Strategic Core Portfolio 811-01716
AB Concentrated International Growth Portfolio 811-01716
PRO-0101-1017
[GRAPHIC]
[A/B](R)
(LOGO)
(Shares Offered-Exchange Ticker Symbol)
> AB Growth Fund
(Class A-AGRFX; Class B-AGBBX; Class C-AGRCX; Class
R-AGFRX; Class K-AGFKX; Class I-AGFIX; Advisor
Class-AGRYX)
> AB Large Cap Growth Fund
(Class A-APGAX; Class B-APGBX; Class C-APGCX; Class
R-ABPRX; Class K-ALCKX; Class I-ALLIX; Class
Z-APGZX; Advisor Class-APGYX)
> AB Concentrated Growth Fund
(Class A-WPASX; Class C-WPCSX; Advisor Class-WPSGX;
Class R-WPRSX; Class K-WPSKX; Class I-WPSIX;
Class Z-WPSZX)
> AB Discovery Growth Fund
(Class A-CHCLX; Class B-CHCBX; Class C-CHCCX;
Class R-CHCRX; Class K-CHCKX; Class I-CHCIX;
Class Z-CHCZX; Advisor Class-CHCYX)
> AB Small Cap Growth Portfolio
(Class A-QUASX; Class B-QUABX; Class C-QUACX; Class
R-QUARX; Class K-QUAKX; Class I-QUAIX; Class
Z-QUAZX; Advisor Class-QUAYX)
> AB Select US Equity Portfolio
(Class A-AUUAX; Class C-AUUCX; Advisor Class-AUUYX;
Class R-AUURX; Class K-AUUKX; Class I-AUUIX)
> AB Select US Long/Short Portfolio
(Class A-ASLAX; Class C-ASCLX; Advisor Class-ASYLX;
Class R-ASRLX; Class K-ASLKX; Class I-ASILX)
> AB Sustainable Global Thematic Fund
(Class A-ALTFX; Class B-ATEBX, Class C-ATECX; Class
R-ATERX; Class K-ATEKX; Class I-AGTIX; Advisor
Class-ATEYX)
> AB International Growth Fund
(Class A-AWPAX; Class B-AWPBX; Class C-AWPCX; Class
R-AWPRX; Class K-AWPKX; Class I-AWPIX; Advisor
Class-AWPYX)
> AB Global Core Equity Portfolio
(Class A-GCEAX; Class C-GCECX; Advisor Class-GCEYX)
> AB International Strategic Core Portfolio
(Class A-ISARX; Class C-ISCRX; Advisor Class-ISRYX)
> AB Concentrated International Growth Portfolio
(Class A-CIAGX; Class C-CICGX; Advisor Class-CIGYX)
c/o AllianceBernstein Investor Services, Inc.
P.O. Box 786003, San Antonio, Texas 78278-6003
Toll Free (800) 221-5672
For Literature Toll Free (800) 227-4618
--------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
October 31, 2017
--------------------------------------------------------------------------------
This Statement of Additional Information ("SAI") is not a
prospectus, but supplements and should be read in conjunction with the current
prospectus, dated October 31, 2017 that offers Class A, Class B, Class C, Class
R, Class K, Class I and Advisor Class shares for the AB Growth Fund ("Growth
Fund") of The AB Portfolios, the AB Sustainable Global Thematic Fund
("Sustainable Global Thematic") and the AB International Growth Fund
("International Growth"), and offers Class A, Class C, Class R, Class K, Class
I, Class Z and Advisor Class shares for the AB Concentrated Growth Fund
("Concentrated Growth") of the AB Cap Fund, Inc. ("AB Cap Fund"), and offers
Class A, Class B, Class C, Class R, Class K, Class I, Class Z and Advisor Class
shares for the AB Discovery Growth Fund ("Discovery Growth"), the AB Large Cap
Growth Fund ("Large Cap Growth") and the AB Small Cap Growth Portfolio ("Small
Cap Growth") of AB Cap Fund, and offers Class A, Class C, Class R, Class K,
Class I and Advisor Class shares for the AB Select US Equity Portfolio ("Select
US Equity") and the AB Select US Long/Short Portfolio ("Select US Long/Short")
of AB Cap Fund, and offers Class A, Class C and Advisor Class shares for the AB
Global Core Equity Portfolio ("Global Core Equity"), AB International Strategic
Core Portfolio ("International Strategic Core") and AB Concentrated
International Growth Portfolio ("Concentrated International Growth") of AB Cap
Fund (the "Prospectus"). Each of the funds listed above is hereinafter referred
to as a Fund, and collectively the Funds. Financial statements for Growth Fund,
Large Cap Growth, Discovery Growth, Small Cap Growth and Sustainable Global
Thematic for the year ended July 31, 2017 and financial statements for
International Growth, Concentrated Growth, Select US Equity, Select US
Long/Short, Global Core Equity, International Strategic Core and Concentrated
International Growth for the year ended June 30, 2017 are included in each
Fund's annual report to shareholders and are incorporated into the SAI by
reference. Copies of the Prospectus and each Fund's annual report may be
obtained by contacting AllianceBernstein Investor Services, Inc. ("ABIS") at the
address or the "For Literature" telephone number shown above or on the Internet
at www.abfunds.com.
TABLE OF CONTENTS
Page
INFORMATION ABOUT THE FUNDS AND THEIR INVESTMENTS...........................1
INVESTMENT RESTRICTIONS....................................................36
MANAGEMENT OF THE FUNDS....................................................38
EXPENSES OF THE FUNDS......................................................91
PURCHASE OF SHARES........................................................110
REDEMPTION AND REPURCHASE OF SHARES.......................................138
SHAREHOLDER SERVICES......................................................140
NET ASSET VALUE...........................................................143
DIVIDENDS, DISTRIBUTIONS AND TAXES........................................147
PORTFOLIO TRANSACTIONS....................................................155
GENERAL INFORMATION.......................................................162
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.......................................208
APPENDIX A: PROXY VOTING POLICY STATEMENT................................A-1
-----------------------------------------
The [A/B] Logo is a service mark of AllianceBernstein and AllianceBernstein(R)
is a registered trademark used by permission of the owner, AllianceBernstein
L.P.
--------------------------------------------------------------------------------
INFORMATION ABOUT THE FUNDS AND THEIR INVESTMENTS
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Introduction to the Funds
-------------------------
Except as otherwise noted, the Funds' investment objective and
policies described below are not "fundamental policies" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"), and may,
therefore, be changed by the Board of Directors or Board of Trustees of each
Fund (each a "Board" and together, the "Boards") without shareholder approval.
However, no Fund will change its investment objective without at least 60 days'
prior written notice to shareholders. There is no guarantee that a Fund will
achieve its investment objective. Whenever any investment policy or restriction
states a percentage of a Fund's assets that may be invested in any security or
other asset, it is intended that such percentage limitation be determined
immediately after and as a result of a Fund's acquisition of such securities or
other assets. Accordingly, except with respect to borrowing, any later increases
or decreases in percentage beyond the specified limitations resulting from a
change in values or net assets will not be considered a violation of this
percentage limitation.
Additional Investment Policies and Practices
--------------------------------------------
The following information about the Funds' investment policies and
practices supplements the information set forth in the Prospectus.
Common Stock
------------
Common stock, also referred to as equity securities, represents an
equity (ownership) interest in a company, and usually possesses voting rights
and earns dividends. Dividends on common stock are not fixed but are declared at
the discretion of the issuer. Common stock generally represents the riskiest
investment in a company. In addition, common stock generally has the greatest
appreciation and depreciation potential because increases and decreases in
earnings are usually reflected in a company's stock price.
The fundamental risk of investing in common stock is that the value
of the stock might decrease. Stock values fluctuate in response to the
activities of an individual company or in response to general market and/or
economic conditions. While common stocks have historically provided greater
long-term returns than preferred stocks, fixed-income and money market
investments, common stocks have also experienced significantly more volatility
in those returns.
Convertible Securities
----------------------
Convertible securities include bonds, debentures, corporate notes
and preferred stocks that are convertible at a stated exchange rate into shares
of the underlying common stock. Prior to their conversion, convertible
securities have the same general characteristics as non-convertible debt
securities, which provide a stable stream of income with generally higher yields
than those of equity securities of the same or similar issuers. As with debt
securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely, to increase as interest rates decline.
While convertible securities generally offer lower interest or dividend yields
than non-convertible debt securities of similar quality, they do enable the
investors to benefit from increases in the market price of the underlying common
stock.
When the market price of the common stock underlying a convertible
security increases, the price of the convertible security increasingly reflects
the value of the underlying common stock and may rise accordingly. As the market
price of the underlying common stock declines, the convertible security tends to
trade increasingly on a yield basis, and thus may not depreciate to the same
extent as the underlying common stock. Convertible securities rank senior to
common stocks in an issuer's capital structure. They are consequently of higher
quality and entail less risk than the issuer's common stock, although the extent
to which such risk is reduced depends in large measure upon the degree to which
the convertible security sells above its value as a fixed-income security.
Debt Securities
---------------
Debt securities, also referred to as fixed-income securities, are
used by issuers to borrow money. Generally, issuers pay investors periodic
interest and repay the amount borrowed either periodically during the life of
the security and/or at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are purchased at a discount from their
face values and accrue interest at the applicable coupon rate over a specified
time period. The market prices of debt securities fluctuate depending on such
factors as interest rates, credit quality and maturity. In general, market
prices of debt securities decline when interest rates rise and increase when
interest rates fall.
Lower rated debt securities, those rated Ba or below by Moody's
Investors Service, Inc. and/or BB or below by S&P Global Ratings or unrated but
determined by AllianceBernstein L.P., the Funds' adviser (the "Adviser"), to be
of comparable quality (sometimes referred to as "junk bonds"), are described by
the rating agencies as speculative and involve greater risk of default or price
changes than higher rated debt securities due to changes in the issuer's
creditworthiness or the fact that the issuer may already be in default. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. It may be more difficult to sell or to determine the value of lower
rated debt securities.
Certain additional risk factors related to debt securities are
discussed below:
Sensitivity to interest rate and economic changes. Debt securities
may be sensitive to economic changes, political and corporate developments, and
interest rate changes. In addition, during an economic downturn or periods of
rising interest rates, issuers that are highly leveraged may experience
increased financial stress that could adversely affect their ability to meet
projected business goals, obtain additional financing, and service their
principal and interest payment obligations. Furthermore, periods of economic
change and uncertainty can be expected to result in increased volatility of
market prices and yields of certain debt securities. For example, prices of
these securities can be affected by financial contracts held by the issuer or
third parties (such as derivatives) related to the security or other assets or
indices.
Payment expectations. Debt securities may contain redemption or call
provisions. If an issuer exercises these provisions in a lower interest rate
environment, the Fund would have to replace the security with a lower yielding
security, resulting in decreased income to investors. If the issuer of a debt
security defaults on its obligations to pay interest or principal or is the
subject of bankruptcy proceedings, the Fund may incur losses or expenses in
seeking recovery of amounts owed to it.
Liquidity and valuation. There may be limited trading in the
secondary market for particular debt securities, which may adversely affect the
Fund's ability to accurately value or sell such debt securities. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the value and/or liquidity of debt securities. The
Adviser attempts to reduce the risks described above through diversification of
the Fund's portfolio, credit analysis of each issuer, and by monitoring broad
economic trends as well as corporate and legislative developments, but there can
be no assurance that it will be successful in doing so. Credit ratings of debt
securities provided by rating agencies indicate a measure of the safety of
principal and interest payments, not market value risk. The rating of an issuer
is a rating agency's view of past and future potential developments related to
the issuer and may not necessarily reflect actual outcomes. There can be a lag
between corporate developments and the time a rating is assigned and updated.
Bond rating agencies may assign modifiers (such as +/-) to ratings
categories to signify the relative position of a credit within the rating
category. Investment policies that are based on ratings categories should be
read to include any security within that category, without considering the
modifier.
Depositary Receipts
-------------------
A Fund may invest in depositary receipts. American Depositary
Receipts ("ADRs") are depositary receipts typically issued by a U.S. bank or
trust company that evidence ownership of underlying securities issued by a
foreign corporation. European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs") or other types of depositary receipts are typically issued by
non-U.S. banks or trust companies and evidence ownership of underlying
securities issued by either a U.S. or non-U.S. company. Transactions in these
securities may not necessarily be settled in the same currency as transactions
in the securities into which they represent. In addition, the issuers of the
securities of unsponsored depositary receipts are not obligated to disclose
material information in the United States. Generally, ADRs, in registered form,
are designed for use in the U.S. securities markets; EDRs, in bearer form, are
designed for use in European securities markets; and GDRs, in bearer form, are
designed for use in two or more securities markets, such as Europe and Asia.
Derivatives
-----------
A Fund may, but is not required to, use derivatives for hedging or
other risk management purposes or as part of its investment strategies.
Derivatives are financial contracts whose value depends on, or is derived from,
the value of an underlying asset, reference rate or index. These assets, rates,
and indices may include bonds, stocks, mortgages, commodities, interest rates,
currency exchange rates, bond indices and stock indices.
There are four principal types of derivatives--options, futures
contracts, forwards and swaps. These principal types of derivative instruments,
as well as the methods in which they may be used by a Fund are described below.
Derivatives include listed and cleared transactions where the Fund's derivative
trade counterparty is an exchange or clearinghouse, and non-cleared bilateral
"over-the-counter" ("OTC") transactions where the Fund's derivative trade
counterparty is a financial institution. Exchange-traded or cleared derivatives
transactions tend to be more liquid and subject to less counterparty credit risk
than those that are privately negotiated. The Funds may use derivatives to earn
income and enhance returns, to hedge or adjust the risk profile of a portfolio
and either to replace more traditional direct investments or to obtain exposure
to otherwise inaccessible markets.
Forward Contracts. A forward contract, which may be standardized and
exchange-traded or customized and privately negotiated, is an agreement for one
party to buy, and the other party to sell, a specific quantity of an underlying
security, commodity or other asset for an agreed-upon price at a future date. A
forward contract generally is settled by physical delivery of the security,
commodity or other tangible asset underlying the forward contract to an
agreed-upon location at a future date (rather than settled by cash) or will be
rolled forward into a new forward contract. Non-deliverable forwards ("NDFs")
specify a cash payment upon maturity.
Futures Contracts and Options on Futures Contracts. A futures
contract is an agreement that obligates the buyer to buy and the seller to sell
a specified quantity of an underlying asset (or settle for cash the value of a
contract based on an underlying asset, rate or index) at a specific price on the
contract maturity date. Options on futures contracts are options that call for
the delivery of futures contracts upon exercise. Futures contracts are
standardized, exchange-traded instruments and are fungible (i.e., considered to
be perfect substitutes for each other). This fungibility allows futures
contracts to be readily offset or canceled through the acquisition of equal but
opposite positions, which is the primary method in which futures contracts are
liquidated. A cash-settled futures contract does not require physical delivery
of the underlying asset but instead is settled for cash equal to the difference
between the values of the contract on the date it is entered into and its
maturity date.
Options. An option, which may be standardized and exchange-traded or
customized and privately negotiated, is an agreement that, for a premium payment
or fee, gives the option holder (the buyer) the right but not the obligation to
buy (a "call") or sell (a "put") the underlying asset (or settle for cash an
amount based on an underlying asset, rate or index) at a specified price (the
exercise price) during a period of time or on a specified date. Likewise, when
an option is exercised the writer of the option is obligated to sell (in the
case of a call option) or to purchase (in the case of a put option) the
underlying asset (or settle for cash an amount based on an underlying asset,
rate or index). Concentrated Growth will not invest in put or call options.
Swaps. A swap is an agreement that obligates two parties to exchange
a series of cash flows at specified intervals (payment dates) based upon or
calculated by reference to changes in specified prices or rates (interest rates
in the case of interest rate swaps, currency exchange rates in the case of
currency swaps) for a specified amount of an underlying asset (the "notional"
principal amount). Most swaps are entered into on a net basis (i.e., the two
payment streams are netted out, with the Funds receiving or paying, as the case
may be, only the net amount of the two payments). Generally, the notional
principal amount is used solely to calculate the payment streams but is not
exchanged. Certain standardized swaps, including certain interest rate swaps and
credit default swaps, are 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. Funds post initial and variation
margin to support their obligations under cleared swaps by making payments to
their clearing member FCMs. Central clearing is expected to reduce counterparty
credit risks and increase liquidity, but central clearing does not make swap
transactions risk free. Centralized clearing will be required for additional
categories of swaps on a phased-in basis based on Commodity Futures Trading
Commission ("CFTC") or Securities and Exchange Commission ("SEC") approval of
contracts for central clearing. Bilateral swap agreements are two-party
contracts entered into primarily by institutional investors and are not cleared
through a third party.
Risks of Derivatives and Other Regulatory Issues. Investment
techniques employing such derivatives involve risks different from, and, in
certain cases, greater than, the risks presented by more traditional
investments. Following is a general discussion of important risk factors and
issues concerning the use of derivatives.
-- Market Risk. This is the general risk attendant to all
investments that the value of a particular investment will change
in a way detrimental to a Fund's interest.
-- Management Risk. Derivative products are highly specialized
instruments that require investment techniques and risk analyses
different from those associated with stocks and bonds. The use of
a derivative requires an understanding not only of the underlying
instrument but also of the derivative itself, without the benefit
of observing the performance of the derivative under all possible
market conditions. In particular, the use and complexity of
derivatives require the maintenance of adequate controls to
monitor the transactions entered into, the ability to assess the
risk that a derivative adds to a Fund's investment portfolio, and
the ability to forecast price, interest rate or currency exchange
rate movements correctly.
-- Credit Risk. This is the risk that a loss may be sustained by
a Fund as a result of the failure of another party to a
derivative (usually referred to as a "counterparty") to comply
with the terms of the derivative contract. The credit risk for
derivatives traded on an exchange or through a clearinghouse is
generally less than for uncleared OTC derivatives, since the
exchange or clearinghouse, which is the issuer or counterparty to
each derivative, provides a guarantee of performance. This
guarantee is supported by a daily payment system (i.e., margin
requirements) operated by the clearinghouse in order to reduce
overall credit risk. For uncleared OTC derivatives, there is no
similar clearing agency guarantee. Therefore, a Fund considers
the creditworthiness of each counterparty to an uncleared OTC
derivative in evaluating potential credit risk.
-- Counterparty Risk. The value of an OTC derivative will depend
on the ability and willingness of a Fund's counterparty to
perform its obligations under the transaction. If the
counterparty defaults, a Fund will have contractual remedies but
may choose not to enforce them to avoid the cost and
unpredictability of legal proceedings. In addition, if a
counterparty fails to meet its contractual obligations, a Fund
could miss investment opportunities or otherwise be required to
retain investments it would prefer to sell, resulting in losses
for the Fund. Participants in OTC derivatives markets generally
are not subject to the same level of credit evaluation and
regulatory oversight as are exchanges or clearinghouses. As a
result, OTC derivatives generally expose a Fund to greater
counterparty risk than derivatives traded on an exchange or
through a clearinghouse.
New regulations affecting derivatives transactions require
certain standardized derivatives, including many types of swaps,
to be subject to mandatory central clearing. Under these new
requirements, a central clearing organization is substituted as
the counterparty to each side of the derivatives transaction.
Each party to derivatives transactions is required to maintain
its positions with a clearing organization through one or more
clearing brokers. Central clearing is intended to reduce, but not
eliminate, counterparty risk. A Fund is subject to the risk that
its clearing member or clearing organization will itself be
unable to perform its obligations.
-- Liquidity Risk. Liquidity risk exists when a particular
instrument is difficult to purchase or sell. If a derivative
transaction is particularly large or if the relevant market is
illiquid (as is the case with many privately negotiated
derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous price.
-- Leverage Risk. Since many derivatives have a leverage
component, adverse changes in the value or level of the
underlying asset, rate or index can result in a loss
substantially greater than the amount invested in the derivative
itself. In the case of swaps, the risk of loss generally is
related to a notional principal amount, even if the parties have
not made any initial investment. Certain derivatives have the
potential for unlimited loss, regardless of the size of the
initial investment.
-- Regulatory Risk. Various U.S. Government entities, including
the CFTC and the SEC, are in the process of adopting and
implementing additional regulations governing derivatives markets
required by, among other things, the Dodd-Frank Act, including
clearing as discussed above, margin, reporting and registration
requirements. In December 2015, the SEC proposed a new rule
regarding derivatives imposing, among other things, limits on the
amount of leverage a fund could be exposed to through derivatives
and other senior securities transactions. While the full extent
and cost of these regulations is currently unclear, these
regulations could, among other things, restrict a Fund's ability
to engage in derivatives transactions and/or increase the cost of
such derivatives transactions (through increased margin or
capital requirements). In addition, Congress, various exchanges
and regulatory and self-regulatory authorities have undertaken
reviews of options and futures trading in light of market
volatility. Among the actions that have been taken or proposed to
be taken are new limits and reporting requirements for
speculative positions new or more stringent daily price
fluctuation limits for futures and options transactions, and
increased margin requirements for various types of futures
transactions. These regulations and actions may adversely affect
the instruments in which a Fund invests and its ability to
execute its investment strategy.
-- Other Risks. Other risks in using derivatives include the risk
of mispricing or improper valuation of derivatives and the
inability of derivatives to correlate perfectly with underlying
assets, rates and indices. Many derivatives, in particular
privately negotiated derivatives, are complex and often valued
subjectively. Improper valuations can result in increased cash
payment requirements to counterparties or a loss of value to a
Fund. Derivatives do not always perfectly or even highly
correlate with or track the value of the assets, rates or indices
they are designed to closely track. Consequently, a Fund's use of
derivatives may not always be an effective means of, and
sometimes could be counterproductive to, furthering the Fund's
investment objective.
Other. A Fund may purchase and sell derivative instruments only to
the extent that such activities are consistent with the requirements of the
Commodity Exchange Act ("CEA") and the rules adopted by the CFTC thereunder.
Under CFTC rules, a registered investment company that conducts more than a
certain amount of trading in futures contracts, commodity options, certain swaps
and other commodity interests is a commodity pool and its adviser must register
as a commodity pool operator ("CPO"). Under such rules, registered investment
companies that are commodity pools are subject to additional recordkeeping,
reporting and disclosure requirements. The Funds have claimed an exclusion from
the definition of CPO under CFTC Rule 4.5 under the CEA with respect to the
Funds and are not currently subject to these recordkeeping, reporting and
disclosure requirements.
Use of Options, Futures Contracts, Forwards and Swaps by a Fund
---------------------------------------------------------------
--Forward Currency Exchange Contracts. A forward currency exchange
contract is an obligation by one party to buy, and the other party to sell, a
specific amount of a currency for an agreed-upon price at a future date. A
forward currency exchange contract may result in the delivery of the underlying
asset upon maturity of the contract in return for the agreed-upon payment. NDFs
specify a cash payment upon maturity. NDFs are normally used when the market for
physical settlement of the currency is underdeveloped, heavily regulated or
highly taxed.
A Fund may, for example, enter into forward currency exchange
contracts to attempt to minimize the risk to the Fund from adverse changes in
the relationship between the U.S. Dollar and other currencies. A Fund may
purchase or sell forward currency exchange contracts for hedging purposes
similar to those described below in connection with its transactions in foreign
currency futures contracts. A Fund may also purchase or sell forward currency
exchange contracts for non-hedging purposes as a means of making direct
investments in foreign currencies, as described below under "Currency
Transactions".
If a hedging transaction in forward currency exchange contracts is
successful, the decline in the value of portfolio securities or the increase in
the cost of securities to be acquired may be offset, at least in part, by
profits on the forward currency exchange contract. Nevertheless, by entering
into such forward currency exchange contracts, a Fund may be required to forgo
all or a portion of the benefits which otherwise could have been obtained from
favorable movements in exchange rates.
A Fund may also use forward currency exchange contracts to seek to
increase total return when the Adviser anticipates that a foreign currency will
appreciate or depreciate in value but securities denominated in that currency
are not held by the Fund and do not present attractive investment opportunities.
For example, a Fund may enter into a foreign currency exchange contract to
purchase a currency if the Adviser expects the currency to increase in value.
The Fund would recognize a gain if the market value of the currency is more than
the contract value of the currency at the time of settlement of the contract.
Similarly, a Fund may enter into a foreign currency exchange contract to sell a
currency if the Adviser expects the currency to decrease in value. The Fund
would recognize a gain if the market value of the currency is less than the
contract value of the currency at the time of settlement of the contract.
The cost of engaging in forward currency exchange contracts varies
with such factors as the currencies involved, the length of the contract period
and the market conditions then prevailing. Since transactions in foreign
currencies are usually conducted on a principal basis; no fees or commissions
are involved.
--Options on Securities. A Fund may write and purchase call and put
options on securities. In purchasing an option on securities, a Fund would be in
a position to realize a gain if, during the option period, the price of the
underlying securities increased (in the case of a call) or decreased (in the
case of a put) by an amount in excess of the premium paid; otherwise the Fund
would experience a loss not greater than the premium paid for the option. Thus,
a Fund would realize a loss if the price of the underlying security declined or
remained the same (in the case of a call) or increased or remained the same (in
the case of a put) or otherwise did not increase (in the case of a put) or
decrease (in the case of a call) by more than the amount of the premium. If a
put or call option purchased by a Fund were permitted to expire without being
sold or exercised, its premium would represent a loss to the Fund.
A Fund may write a put or call option in return for a premium, which
is retained by the Fund whether or not the option is exercised. A Fund may write
covered options or uncovered options. A call option written by a Fund is
"covered" if the Fund owns the underlying security, has an absolute and
immediate right to acquire that security upon conversion or exchange of another
security it holds, or holds a call option on the underlying security with an
exercise price equal to or less than the exercise price of the call option it
has written. A put option written by a Fund is covered if the Fund holds a put
option on the underlying securities with an exercise price equal to or greater
than the exercise price of the put option it has written. Uncovered options or
"naked options" are riskier than covered options. For example, if a Fund wrote a
naked call option and the price of the underlying security increased, the Fund
would have to purchase the underlying security for delivery to the call buyer
and sustain a loss, which could be substantial, equal to the difference between
the option price and the market price of the security.
A Fund may also purchase call options to hedge against an increase
in the price of securities that the Fund anticipates purchasing in the future.
If such increase occurs, the call option will permit the Fund to purchase the
securities at the exercise price, or to close out the options at a profit. The
premium paid for the call option plus any transaction costs will reduce the
benefit, if any, realized by the Fund upon exercise of the option, and, unless
the price of the underlying security rises sufficiently, the option may expire
worthless to the Fund and the Fund will suffer a loss on the transaction to the
extent of the premium paid.
A Fund may purchase put options to hedge against a decline in the
value of portfolio securities. If such decline occurs, the put options will
permit the Fund to sell the securities at the exercise price or to close out the
options at a profit. By using put options in this way, the Fund will reduce any
profit it might otherwise have realized on the underlying security by the amount
of the premium paid for the put option and by transaction costs.
A Fund may also, as an example, write combinations of put and call
options on the same security, known as "straddles", with the same exercise and
expiration date. By writing a straddle, the Fund undertakes a simultaneous
obligation to sell and purchase the same security in the event that one of the
options is exercised. If the price of the security subsequently rises above the
exercise price, the call will likely be exercised and the Fund will be required
to sell the underlying security at or below market price. This loss may be
offset, however, in whole or in part, by the premiums received on the writing of
the two options. Conversely, if the price of the security declines by a
sufficient amount, the put will likely be exercised. The writing of straddles
will likely be effective, therefore, only where the price of the security
remains stable and neither the call nor the put is exercised. In those instances
where one of the options is exercised, the loss on the purchase or sale of the
underlying security may exceed the amount of the premiums received.
A Fund may purchase or write options on securities of the types in
which it is permitted to invest in privately-negotiated (i.e., OTC)
transactions. By writing a call option, a Fund limits its opportunity to profit
from any increase in the market value of the underlying security above the
exercise price of the option. By writing a put option, a Fund assumes the risk
that it may be required to purchase the underlying security for an exercise
price above its then current market value, resulting in a capital loss unless
the security subsequently appreciates in value. Where options are written for
hedging purposes, such transactions constitute only a partial hedge against
declines in the value of portfolio securities or against increases in the value
of securities to be acquired, up to the amount of the premium.
A Fund will effect such transactions only with investment dealers
and other financial institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Adviser, and the Adviser has adopted
procedures for monitoring the creditworthiness of such entities. Options
purchased or written in negotiated transactions may be illiquid and it may not
be possible for the Fund to effect a closing transaction at a time when the
Adviser believes it would be advantageous to do so.
--Options on Securities Indices. An option on a securities index is
similar to an option on a security except that, rather than taking or making
delivery of a security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the chosen index is greater than (in the case of a
call) or less than (in the case of a put) the exercise price of the option.
A Fund may write (sell) call and put options and purchase call and
put options on securities indices. If a Fund purchases put options on securities
indices to hedge its investments against a decline in the value of portfolio
securities, it will seek to offset a decline in the value of securities it owns
through appreciation of the put option. If the value of the Fund's investments
does not decline as anticipated, or if the value of the option does not
increase, the Fund's loss will be limited to the premium paid for the option.
The success of this strategy will largely depend on the accuracy of the
correlation between the changes in value of the index and the changes in value
of the Fund's security holdings.
A Fund may also write put or call options on securities indices to,
among other things, earn income. If the value of the chosen index declines below
the exercise price of the put option, the Fund has the risk of loss of the
amount of the difference between the exercise price and the closing level of the
chosen index, which it would be required to pay to the buyer of the put option
and which may not be offset by the premium it received upon sale of the put
option. Similarly, if the value of the index is higher than the exercise price
of the call option, the Fund has the risk of loss of the amount of the
difference between the exercise price and the closing level of the chosen index,
which may not be offset by the premium it received upon sale of the call option.
If the decline or increase in the value securities index is significantly below
or above the exercise price of the written option, the Fund could experience a
substantial loss.
The purchase of call options on securities indices may be used by a
Fund to attempt to reduce the risk of missing a broad market advance, or an
advance in an industry or market segment, at a time when the Fund holds
uninvested cash or short-term debt securities awaiting investment. When
purchasing call options for this purpose, the Fund will also bear the risk of
losing all or a portion of the premium paid if the value of the index does not
rise. The purchase of call options on stock indices when a Fund is substantially
fully invested is a form of leverage, up to the amount of the premium and
related transaction costs, and involves risks of loss and of increased
volatility similar to those involved in purchasing call options on securities
the Fund owns.
--Other Option Strategies. In an effort to earn extra income, to
adjust exposure to individual securities or markets, or to protect all or a
portion of its portfolio from a decline in value, sometimes within certain
ranges, a Fund may use option strategies such as the concurrent purchase of a
call or put option, including on individual securities and stock indexes,
futures contracts (including on individual securities and stock indexes) or
shares of exchange-traded funds ("ETFs") at one strike price and the writing of
a call or put option on the same individual security, stock index, futures
contract or ETF at a higher strike price in the case of a call option or at a
lower strike price in the case of a put option. The maximum profit from this
strategy would result for the call options from an increase in the value of the
individual security, stock index, futures contract or ETF above the higher
strike price or for the put options the decline in the value of the individual
security, stock index, futures contract or ETF below the lower strike price. If
the price of the individual security, stock index, futures contract or ETF
declines in the case of the call option or increases in the case of the put
option, the Fund has the risk of losing the entire amount paid for the call or
put options.
--Options on Foreign Currencies. A Fund may purchase and write
options on foreign currencies for hedging and non-hedging purposes. For example,
a decline in the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In order to protect
against such diminutions in the value of portfolio securities, the Fund may
purchase put options on the foreign currency. If the value of the currency does
decline, the Fund will have the right to sell such currency for a fixed amount
in dollars and could thereby offset, in whole or in part, the adverse effect on
its portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a Fund may purchase call options thereon. The purchase
of such options could offset, at least partially, the effects of the adverse
movements in exchange rates. As in the case of other types of options, however,
the benefit to the Fund from purchases of foreign currency options will be
reduced by the amount of the premium and related transaction costs. In addition,
where currency exchange rates do not move in the direction or to the extent
anticipated, the Fund could sustain losses on transactions in foreign currency
options which would require it to forgo a portion or all of the benefits of
advantageous changes in such rates.
A Fund may write options on foreign currencies for hedging purposes
or to increase return. For example, where a Fund anticipates a decline in the
dollar value of non-U.S. Dollar-denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected decline occurs,
the option will most likely not be exercised, and the diminution in value of
portfolio securities could be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, a Fund
could write a put option on the relevant currency, which, if rates move in the
manner projected, will expire unexercised and allow the Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund will be required to purchase or sell the underlying currency at a loss
which may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, the Fund also may be required to forgo all or a
portion of the benefits that might otherwise have been obtained from favorable
movements in exchange rates.
In addition to using options for the hedging purposes described
above, a Fund may also invest in options on foreign currencies for non-hedging
purposes as a means of making direct investments in foreign currencies. A Fund
may use options on currency to seek to increase total return when the Adviser
anticipates that a foreign currency will appreciate or depreciate in value but
securities denominated in that currency are not held by the Fund and do not
present attractive investment opportunities. For example, the Fund may purchase
call options in anticipation of an increase in the market value of a currency. A
Fund would ordinarily realize a gain if, during the option period, the value of
such currency exceeded the sum of the exercise price, the premium paid and
transaction costs. Otherwise, the Fund would realize no gain or a loss on the
purchase of the call option. Put options may be purchased by a Fund for the
purpose of benefiting from a decline in the value of a currency that the Fund
does not own. A Fund would normally realize a gain if, during the option period,
the value of the underlying currency decreased below the exercise price
sufficiently to more than cover the premium and transaction costs. Otherwise,
the Fund would realize no gain or loss on the purchase of the put option. For
additional information on the use of options on foreign currencies for
non-hedging purposes, see "Currency Transactions" below.
Special Risks Associated with Options on Currencies. An
exchange-traded options position may be closed out only on an options exchange
that provides a secondary market for an option of the same series. Although a
Fund will generally purchase or sell options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option, or at any particular time. For
some options, no secondary market on an exchange may exist. In such event, it
might not be possible to effect closing transactions in particular options, with
the result that the Fund would have to exercise its options in order to realize
any profit and would incur transaction costs on the sale of the underlying
currency.
--Futures Contracts and Options on Futures Contracts. Futures
contracts that a Fund may buy and sell may include futures contracts on
fixed-income or other securities, and contracts based on interest rates, foreign
currencies or financial indices, including any index of U.S. Government
securities. A Fund may, for example, purchase or sell futures contracts and
options thereon to hedge against changes in interest rates, securities (through
index futures or options) or currencies.
Interest rate futures contracts are purchased or sold for hedging
purposes to attempt to protect against the effects of interest rate changes on a
Fund's current or intended investments in fixed-income securities. For example,
if a Fund owned long-term bonds and interest rates were expected to increase,
that Fund might sell interest rate futures contracts. Such a sale would have
much the same effect as selling some of the long-term bonds in that Fund's
portfolio. However, since the futures market is more liquid than the cash
market, the use of interest rate futures contracts as a hedging technique allows
a Fund to hedge its interest rate risk without having to sell its portfolio
securities. If interest rates were to increase, the value of the debt securities
in the portfolio would decline, but the value of that Fund's interest rate
futures contracts would be expected to increase at approximately the same rate,
thereby keeping the net asset value (the "NAV") of that Fund from declining as
much as it otherwise would have. On the other hand, if interest rates were
expected to decline, interest rate futures contracts could be purchased to hedge
in anticipation of subsequent purchases of long-term bonds at higher prices.
Because the fluctuations in the value of the interest rate futures contracts
should be similar to those of long-term bonds, a Fund could protect itself
against the effects of the anticipated rise in the value of long-term bonds
without actually buying them until the necessary cash becomes available or the
market has stabilized. At that time, the interest rate futures contracts could
be liquidated and that Fund's cash reserves could then be used to buy long-term
bonds on the cash market.
A Fund may purchase and sell foreign currency futures contracts for
hedging or risk management purposes in order to protect against fluctuations in
currency exchange rates. Such fluctuations could reduce the dollar value of
portfolio securities denominated in foreign currencies, or increase the cost of
non-U.S. Dollar-denominated securities to be acquired, even if the value of such
securities in the currencies in which they are denominated remains constant. A
Fund may sell futures contracts on a foreign currency, for example, when it
holds securities denominated in such currency and it anticipates a decline in
the value of such currency relative to the dollar. If such a decline were to
occur, the resulting adverse effect on the value of non-U.S. Dollar-denominated
securities may be offset, in whole or in part, by gains on the futures
contracts. However, if the value of the foreign currency increases relative to
the dollar, a Fund's loss on the foreign currency futures contract may or may
not be offset by an increase in the value of the securities because a decline in
the price of the security stated in terms of the foreign currency may be greater
than the increase in value as a result of the change in exchange rates.
Conversely, a Fund could protect against a rise in the dollar cost
of non-U.S. Dollar-denominated securities to be acquired by purchasing futures
contracts on the relevant currency, which could offset, in whole or in part, the
increased cost of such securities resulting from a rise in the dollar value of
the underlying currencies. When a Fund purchases futures contracts under such
circumstances, however, and the price in dollars of securities to be acquired
instead declines as a result of appreciation of the dollar, the Fund will
sustain losses on its futures position which could reduce or eliminate the
benefits of the reduced cost of portfolio securities to be acquired.
A Fund may also engage in currency "cross hedging" when, in the
opinion of the Adviser, the historical relationship among foreign currencies
suggests that a Fund may achieve protection against fluctuations in currency
exchange rates similar to that described above at a reduced cost through the use
of a futures contract relating to a currency other than the U.S. Dollar or the
currency in which the foreign security is denominated. Such "cross hedging" is
subject to the same risks as those described above with respect to an
unanticipated increase or decline in the value of the subject currency relative
to the U.S. Dollar.
A Fund may also use foreign currency futures contracts and options
on such contracts for non-hedging purposes. Similar to options on currencies
described above, a Fund may use foreign currency futures contracts and options
on such contracts to seek to increase total return when the Adviser anticipates
that a foreign currency will appreciate or depreciate in value but securities
denominated in that currency are not held by the Fund and do not present
attractive investment opportunities. The risks associated with foreign currency
futures contracts and options on futures contracts are similar to those
associated with options on foreign currencies, as described above. For
additional information on the use of options on foreign currencies for
non-hedging purposes, see "Currency Transactions" below.
Purchases or sales of stock or bond index futures contracts are used
for hedging or risk management purposes to attempt to protect a Fund's current
or intended investments from broad fluctuations in stock or bond prices. For
example, a Fund may sell stock or bond index futures contracts in anticipation
of or during a market decline to attempt to offset the decrease in market value
of the Fund's portfolio securities that might otherwise result. If such decline
occurs, the loss in value of portfolio securities may be offset, in whole or in
part, by gains on the futures position. When a Fund is not fully invested in the
securities market and anticipates a significant market advance, it may purchase
stock or bond index futures contracts in order to gain rapid market exposure
that may, in whole or in part, offset increases in the cost of securities that
the Fund intends to purchase. As such purchases are made, the corresponding
positions in stock or bond index futures contracts will be closed out.
Options on futures contracts are options that call for the delivery
of futures contracts upon exercise. Options on futures contracts written or
purchased by a Fund will be traded on U.S. exchanges.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the securities in a Fund's portfolio.
If the futures price at expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium, which provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the securities or other instruments
required to be delivered under the terms of the futures contract. If the futures
price at expiration of the put option is higher than the exercise price, a Fund
will retain the full amount of the option premium, which provides a partial
hedge against any increase in the price of securities which the Fund intends to
purchase. If a put or call option a Fund has written is exercised, the Fund will
incur a loss which will be reduced by the amount of the premium it receives.
Depending on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its options on futures
positions, a Fund's losses from exercised options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
A Fund may purchase options on futures contracts for hedging
purposes instead of purchasing or selling the underlying futures contracts. For
example, where a decrease in the value of portfolio securities is anticipated as
a result of a projected market-wide decline or changes in interest or exchange
rates, a Fund could, in lieu of selling futures contracts, purchase put options
thereon. In the event that such decrease were to occur, it may be offset, in
whole or in part, by a profit on the option. If the anticipated market decline
were not to occur, the Fund will suffer a loss equal to the price of the put.
Where it is projected that the value of securities to be acquired by a Fund will
increase prior to acquisition due to a market advance or changes in interest or
exchange rates, a Fund could purchase call options on futures contracts, rather
than purchasing the underlying futures contracts. If the market advances, the
increased cost of securities to be purchased may be offset by a profit on the
call. However, if the market declines, the Fund will suffer a loss equal to the
price of the call, but the securities that the Fund intends to purchase may be
less expensive.
--Credit Default Swap Agreements. The "buyer" in a credit default
swap contract is obligated to pay the "seller" a periodic stream of payments
over the term of the contract in return for a contingent payment upon the
occurrence of a credit event with respect to an underlying reference obligation.
Generally, a credit event means bankruptcy, failure to pay, obligation
acceleration or restructuring. A Fund may be either the buyer or seller in the
transaction. As a seller, the Fund receives a fixed rate of income throughout
the term of the contract, which typically is between one month and ten years,
provided that no credit event occurs. If a credit event occurs, the Fund
typically must pay the contingent payment to the buyer. The contingent payment
will be either (i) the "par value" (full amount) of the reference obligation in
which case the Fund will receive the reference obligation in return, or (ii) an
amount equal to the difference between the par value and the current market
value of the obligation. The value of the reference obligation received by the
Fund as a seller if a credit event occurs, coupled with the periodic payments
previously received, may be less than the full notional value it pays to the
buyer, resulting in a loss of value to the Fund. If the Fund is a buyer and no
credit event occurs, the Fund will lose its periodic stream of payments over the
term of the contract. However, if a credit event occurs, the buyer typically
receives full notional value for a reference obligation that may have little or
no value.
Credit default swaps may involve greater risks than if a Fund had
invested in the reference obligation directly. Credit default swaps are subject
to general market risk, liquidity risk and credit risk.
--Currency Swaps. A Fund may enter into currency swaps for hedging
purposes in an attempt to protect against adverse changes in exchange rates
between the U.S. Dollar and other currencies or for non-hedging purposes as a
means of making direct investments in foreign currencies, as described below
under "Currency Transactions". Currency swaps involve the exchange by the Fund
with another party of a series of payments in specified currencies. Currency
swaps may involve the exchange of actual principal amounts of currencies by the
counterparties at the initiation and again upon termination of the transaction.
Currency swaps may be bilateral and privately negotiated, with the Fund
expecting to achieve an acceptable degree of correlation between its portfolio
investments and its currency swaps positions. The Funds will not enter into any
currency swap unless the credit quality of the unsecured senior debt or the
claims-paying ability of the counterparty thereto is rated in the highest
short-term rating category of at least one nationally recognized statistical
rating organization ("NRSRO") at the time of entering into the transaction.
--Swaps: Interest Rate Transactions. A Fund may enter into interest
rate swap, swaption and cap or floor transactions, which may include preserving
a return or spread on a particular investment or portion of its portfolio or
protecting against an increase in the price of securities the Fund anticipates
purchasing at a later date. Unless there is a counterparty default, the risk of
loss to a Fund from interest rate transactions is limited to the net amount of
interest payments that the Fund is contractually obligated to make. If the
counterparty to an interest rate transaction defaults, the Fund's risk of loss
consists of the net amount of interest payments that the Fund is contractually
entitled to receive.
Interest rate swaps involve the exchange by a Fund with another
party of payments calculated by reference to specified interest rates (e.g., an
exchange of floating-rate payments for fixed-rate payments) computed based on a
contractually-based principal (or "notional") amount.
An option on a swap agreement, also called a "swaption", is an
option that gives the buyer the right, but not the obligation, to enter into a
swap on a future date in exchange for paying a market-based "premium". A
receiver swaption gives the owner the right to receive the total return of a
specified asset, reference rate, or index. A payer swaption gives the owner the
right to pay the total return of a specified asset, reference rate, or index.
Swaptions also include options that allow an existing swap to be terminated or
extended by one of the counterparties.
Interest rate caps and floors are similar to options in that the
purchase of an interest rate cap or floor entitles the purchaser, to the extent
that a specified index exceeds (in the case of a cap) or falls below (in the
case of a floor) a predetermined interest rate, to receive payments of interest
on a notional amount from the party selling the interest rate cap or floor.
Caps and floors are less liquid than swaps. These transactions do
not involve the delivery of securities or other underlying assets or principal.
A Fund will enter into bilateral swap agreements, including interest rate swap,
swaptions, cap or floor transactions only with counterparties who have credit
ratings of at least A- (or the equivalent) from any one NRSRO or counterparties
with guarantors with debt securities having such a rating. For cleared interest
rate swaps, the Adviser will monitor the creditworthiness of each of the central
clearing counterparty, clearing broker and executing broker but there will be no
prescribed NRSRO rating requirements for these entities.
--Total Return Swaps. A Fund may enter into total return swaps in
order to take a "long" or "short" position with respect to an underlying
referenced asset. The Fund is subject to market price volatility of the
referenced asset. A total return swap involves commitments to pay interest in
exchange for a market-linked return based on a notional amount. To the extent
that the total return of the security, group of securities or index underlying
the transaction exceeds or falls short of the offsetting interest obligation,
the Fund will receive a payment or make a payment to the counterparty.
--Variance and Correlation Swaps. A Fund may enter into variance or
correlation swaps in an attempt to hedge equity market risk or adjust exposure
to the equity markets. Variance swaps are contracts in which two parties agree
to exchange cash payments based on the difference between the stated level of
variance and the actual variance realized on an underlying asset or index.
Actual "variance" as used here is defined as the sum of the square of the
returns on the reference asset or index (which in effect is a measure of its
"volatility") over the length of the contract term. In other words, the parties
to a variance swap can be said to exchange actual volatility for a contractually
stated rate of volatility. Correlation swaps are contracts in which two parties
agree to exchange cash payments based on the differences between the stated and
the actual correlation realized on the underlying equity securities within a
given equity index. "Correlation" as used here is defined as the weighted
average of the correlations between the daily returns of each pair of securities
within a given equity index. If two assets are said to be closely correlated, it
means that their daily returns vary in similar proportions or along similar
trajectories.
--Special Risks Associated with Swaps. Risks may arise as a result
of the failure of the counterparty to a bilateral swap contract to comply with
the terms of the swap contract. The loss incurred by the failure of a
counterparty is generally limited to the net interim payment to be received by a
Fund, and/or the termination value at the end of the contract. Therefore, the
Fund considers the creditworthiness of the counterparty to a bilateral swap
contract. The risk is mitigated by having a netting arrangement between the Fund
and the counterparty and by the posting of collateral by the counterparty to the
Fund to cover the Fund's exposure to the counterparty. Certain standardized
swaps, including certain interest rate swaps and credit default swaps, are
subject to mandatory central clearing. Central clearing is expected, among other
things, to reduce counterparty credit risk, but does not eliminate it
completely.
Additionally, risks may arise from unanticipated movements in
interest rates or in the value of the underlying securities. The Fund accrues
for the changes in value on swap contracts on a daily basis, with the net amount
recorded within unrealized appreciation/depreciation of swap contracts on the
statement of assets and liabilities. 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 swap contracts. Fluctuations in the value of swap contracts
are recorded as a component of net change in unrealized
appreciation/depreciation of swap contracts on the statement of operations.
--Synthetic Foreign Equity Securities. A Fund may invest in
different types of derivatives generally referred to as synthetic foreign equity
securities. These securities may include international warrants or local access
products. International warrants are financial instruments issued by banks or
other financial institutions, which may or may not be traded on a foreign
exchange. International warrants are a form of derivative security that may give
holders the right to buy or sell an underlying security or a basket of
securities representing an index from or to the issuer of the warrant for a
particular price or may entitle holders to receive a cash payment relating to
the value of the underlying security or index, in each case upon exercise by the
Fund. Local access products are similar to options in that they are exercisable
by the holder for an underlying security or a cash payment based upon the value
of that security, but are generally exercisable over a longer term than typical
options. These types of instruments may be American style, which means that they
can be exercised at any time on or before the expiration date of the
international warrant, or European style, which means that they may be exercised
only on the expiration date.
Other types of synthetic foreign equity securities in which a Fund
may invest include covered warrants and low exercise price warrants. Covered
warrants entitle the holder to purchase from the issuer, typically a financial
institution, upon exercise, common stock of an international company or receive
a cash payment (generally in U.S. Dollars). The issuer of the covered warrant
usually owns the underlying security or has a mechanism, such as owning equity
warrants on the underlying securities, through which they can obtain the
securities. The cash payment is calculated according to a predetermined formula,
which is generally based on the difference between the value of the underlying
security on the date of exercise and the strike price. Low exercise price
warrants are warrants with an exercise price that is very low relative to the
market price of the underlying instrument at the time of issue (e.g., one cent
or less). The buyer of a low exercise price warrant effectively pays the full
value of the underlying common stock at the outset. In the case of any exercise
of warrants, there may be a time delay between the time a holder of warrants
gives instructions to exercise and the time the price of the common stock
relating to exercise or the settlement date is determined, during which time the
price of the underlying security could change significantly. In addition, the
exercise or settlement date of the warrants may be affected by certain market
disruption events, such as difficulties relating to the exchange of a local
currency into U.S. Dollars, the imposition of capital controls by a local
jurisdiction or changes in the laws relating to foreign investments. These
events could lead to a change in the exercise date or settlement currency of the
warrants, or postponement of the settlement date. In some cases, if the market
disruption events continue for a certain period of time, the warrants may become
worthless resulting in a total loss of the purchase price of the warrants.
A Fund's investments in synthetic foreign equity securities will be
those issued by entities deemed to be creditworthy by the Adviser, which will
monitor the creditworthiness of the issuers on an ongoing basis. Investments in
these instruments involve the risk that the issuer of the instrument may default
on its obligation to deliver the underlying security or cash in lieu thereof.
These instruments may also be subject to liquidity risk because there may be a
limited secondary market for trading the warrants. They are also subject, like
other investments in foreign securities, to foreign risk and currency risk.
International warrants also include equity warrants, index warrants,
and interest rate warrants. Equity warrants are generally issued in conjunction
with an issue of bonds or shares, although they also may be issued as part of a
rights issue or scrip issue. When issued with bonds or shares, they usually
trade separately from the bonds or shares after issuance. Most warrants trade in
the same currency as the underlying stock (domestic warrants), but also may be
traded in different currency (euro-warrants). Equity warrants are traded on a
number of foreign exchanges and in OTC markets. Index warrants and interest rate
warrants are rights created by an issuer, typically a financial institution,
entitling the holder to purchase, in the case of a call, or sell, in the case of
a put, respectively, an equity index or a specific bond issue or interest rate
index at a certain level over a fixed period of time. Index warrants
transactions settle in cash, while interest rate warrants can typically be
exercised in the underlying instrument or settle in cash.
A Fund also may invest in long-term options of, or relating to,
international issuers. Long-term options operate much like covered warrants.
Like covered warrants, long term-options are call options created by an issuer,
typically a financial institution, entitling the holder to purchase from the
issuer outstanding securities of another issuer. Long-term options have an
initial period of one year or more, but generally have terms between three and
five years. Unlike U.S. options, long-term European options do not settle
through a clearing corporation that guarantees the performance of the
counterparty. Instead, they are traded on an exchange and subject to the
exchange's trading regulations.
--Eurodollar Instruments. Eurodollar instruments are essentially
U.S. Dollar-denominated futures contracts or options thereon that are linked to
the London Interbank Offered Rate and are subject to the same limitations and
risks as other futures contracts and options.
--Currency Transactions. A Fund may invest in non-U.S.
Dollar-denominated securities on a currency hedged or un-hedged basis. The
Adviser may actively manage the Fund's currency exposures and 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 contracts and options on futures contracts, swaps and
options. The Adviser 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 Fund 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 Funds 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).
Forward Commitments and When-Issued and Delayed Delivery Securities
-------------------------------------------------------------------
Forward commitments for the purchase or sale of securities may
include purchases on a "when-issued" basis or purchases or sales on a "delayed
delivery" basis. In some cases, a forward commitment may be conditioned upon the
occurrence of a subsequent event, such as approval and consummation of a merger,
corporate reorganization or debt restructuring (i.e., a "when, as and if issued"
trade). When forward commitment transactions are negotiated, the price is fixed
at the time the commitment is made. The Fund assumes the rights and risks of
ownership of the security, but the Fund does not pay for the securities until
they are received. If a Fund is fully or almost fully invested when forward
commitment purchases are outstanding, such purchases may result in a form of
leverage. Leveraging the portfolio in this manner may increase the Fund's
volatility of returns.
The use of forward commitments enables a Fund to protect against
anticipated changes in exchange rates, interest rates and/or prices. For
instance, a Fund may enter into a forward contract when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. Dollar price of the security
("transaction hedge"). In addition, when a Fund believes that a foreign currency
may suffer a substantial decline against the U.S. Dollar, it may enter into a
forward sale contract to sell an amount of that foreign currency approximating
the value of some or all of that Fund's securities denominated in such foreign
currency, or when the Fund believes that the U.S. Dollar may suffer a
substantial decline against a foreign currency, it may enter into a forward
purchase contract to buy that foreign currency for a fixed dollar amount
("position hedge"). If the Adviser were to forecast incorrectly the direction of
exchange rate movements, a Fund might be required to complete such when-issued
or forward transactions at prices inferior to the then current market values.
When-issued securities and forward commitments may be sold prior to
the settlement date. If a Fund chooses to dispose of the right to acquire a
when-issued security prior to its acquisition or dispose of its right to deliver
or receive against a forward commitment, it may incur a gain or loss. Any
significant commitment of Fund assets to the purchase of securities on a "when,
as and if issued" basis may increase the volatility of the Fund's NAV.
At the time a Fund intends to enter into a forward commitment, it
will record the transaction and thereafter reflect the value of the security
purchased or, if a sale, the proceeds to be received, in determining its NAV.
Any unrealized appreciation or depreciation reflected in such valuation of a
"when, as and if issued" security would be canceled in the event that the
required conditions did not occur and the trade was canceled.
Purchases of securities on a forward commitment or when-issued basis
may involve more risk than other types of purchases. For example, by committing
to purchase securities in the future, a Fund subjects itself to a risk of loss
on such commitments as well as on its portfolio securities. Also, a Fund may
have to sell assets which have been set aside in order to meet redemptions. In
addition, if a Fund determines it is advisable as a matter of investment
strategy to sell the forward commitment or "when-issued" or "delayed delivery"
securities before delivery, that Fund may incur a gain or loss because of market
fluctuations since the time the commitment to purchase such securities was made.
Any such gain or loss would be treated as a capital gain or loss for tax
purposes. When the time comes to pay for the securities to be purchased under a
forward commitment or on a "when-issued" or "delayed delivery" basis, the Fund
will meet its obligations from the then available cash flow or the sale of
securities, or, although it would not normally expect to do so, from the sale of
the forward commitment or "when-issued" or "delayed delivery" securities
themselves (which may have a value greater or less than the Fund's payment
obligation). No interest or dividends accrue to the purchaser prior to the
settlement date for securities purchased or sold under a forward commitment. In
addition, in the event the other party to the transaction files for bankruptcy,
becomes insolvent, or defaults on its obligation, a Fund may be adversely
affected.
Illiquid Securities
-------------------
A Fund, except for Concentrated Growth, will not invest in illiquid
securities if immediately after such investment more than 15% of the Fund's net
assets would be invested in such securities. Concentrated Growth's investments
in illiquid securities are limited to 5% of the value of its net assets. For
this purpose, illiquid securities include, among others, (a) direct placements
or other securities which are subject to legal or contractual restrictions on
resale or for which there is no readily available market (e.g., trading in the
security is suspended or, in the case of unlisted securities, market makers do
not exist or will not entertain bids or offers), (b) options purchased by a Fund
OTC and the cover for options written by the Fund OTC, and (c) repurchase
agreements not terminable within seven days. Securities that have legal or
contractual restrictions on resale but have a readily available market are not
deemed illiquid for purposes of this limitation.
Mutual funds do not typically hold a significant amount of
restricted securities (securities that are subject to restrictions on resale to
the general public) or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund may also have to take certain steps
or wait a certain amount of time in order to remove the transfer restrictions
for such restricted securities in order to dispose of them, resulting in
additional expense and delay.
Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act") allows a broader institutional trading market for securities
otherwise subject to restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of the Securities
Act for resales of certain securities to qualified institutional buyers. To the
extent permitted by applicable law, Rule 144A Securities will not be treated as
illiquid for purposes of the foregoing restriction so long as such securities
meet the liquidity guidelines established by the Board. Pursuant to these
guidelines, the Adviser will monitor the liquidity of a Fund's investment in
Rule 144A Securities. An insufficient number of qualified institutional buyers
interested in purchasing certain restricted securities held by a Fund, however,
could affect adversely the marketability of such portfolio securities and the
Fund might be unable to dispose of such securities promptly or at reasonable
prices.
The Adviser, acting under the oversight of the Boards, will monitor
the liquidity of restricted securities in a Fund that are eligible for resale
pursuant to Rule 144A. In reaching liquidity decisions, the Adviser will
consider, among others, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers issuing quotations to
purchase or sell the security; (3) the number of other potential purchasers of
the security; (4) the number of dealers undertaking to make a market in the
security; (5) the nature of the security (including its unregistered nature) and
the nature of the marketplace for the security (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of the
transfer); and (6) any applicable SEC interpretation or position with respect to
such type of securities.
Investments in Pre-IPO Securities.
----------------------------------
The Funds may invest in pre-IPO (initial public offering)
securities. Pre-IPO securities, or venture capital investments, are investments
in new and early stage companies, often funded by venture capital and referred
to as "venture capital companies", whose securities have not been offered to the
public and that are not publicly traded. These investments may present
significant opportunities for capital appreciation but involve a high degree of
risk that may result in significant decreases in the value of these investments.
Venture capital companies may not have established products, experienced
management or earnings history. The Funds may not be able to sell such
investments when the portfolio managers and/or investment personnel deem it
appropriate to do so because they are not publicly traded. As such, these
investments are generally considered to be illiquid until a company's public
offering (which may never occur) and are often subject to additional contractual
restrictions on resale following any public offering that may prevent the Funds
from selling their shares of these companies for a period of time. Market
conditions, developments within a company, investor perception or regulatory
decisions may adversely affect a venture capital company and delay or prevent a
venture capital company from ultimately offering its securities to the public.
Investment in Exchange-Traded Funds and Other Investment Companies
------------------------------------------------------------------
The Funds may invest in shares of ETFs, subject to the restrictions
and limitations of the 1940 Act, or any applicable rules, exemptive orders or
regulatory guidance. ETFs are pooled investment vehicles, which may be managed
or unmanaged, that generally seek to track the performance of a specific index.
ETFs will not track their underlying indices precisely since the ETFs have
expenses and may need to hold a portion of their assets in cash, unlike the
underlying indices, and the ETFs may not invest in all of the securities in the
underlying indices in the same proportion as the indices for various reasons.
The Funds will incur transaction costs when buying and selling ETF shares, and
indirectly bear the expenses of the ETFs. In addition, the market value of an
ETF's shares, which are based on supply and demand in the market for the ETFs
shares, may differ from their NAV. Accordingly, there may be times when an ETF's
shares trade at a discount to its NAV.
The Funds may also invest in investment companies other than ETFs,
as permitted by the 1940 Act or the rules and regulations or exemptive orders
thereunder. As with ETF investments, if the Funds acquire shares in other
investment companies, shareholders would bear, indirectly, the expenses of such
investment companies (which may include management and advisory fees), which if
not waived or reimbursed in whole or in part, would be in addition to the Funds'
expenses. The Funds intend to invest uninvested cash balances in an affiliated
money market fund as permitted by Rule 12d1-1 under the 1940 Act. A Fund's
investment in other investment companies, including ETFs, subjects the Fund
indirectly to the underlying risks of those investment companies.
Loans of Portfolio Securities
-----------------------------
A Fund may seek to increase income by lending portfolio securities
to brokers, dealers, and financial institutions ("borrowers") to the extent
permitted under the 1940 Act or the rules or regulations thereunder (as such
statute, rules, or regulations may be amended from time to time) or by guidance
regarding, interpretations of, or exemptive orders under, the 1940 Act.
Generally, under the securities lending program, all securities loans will be
secured continually by cash collateral. A principal risk in lending portfolio
securities is that the borrower will fail to return the loaned securities upon
termination of the loan and, that the collateral will not be sufficient to
replace the loaned securities upon the borrower's default.
In determining whether to lend securities to a particular borrower,
the Adviser (subject to oversight by the Boards) will consider all relevant
facts and circumstances, including the creditworthiness of the borrower. The
loans would be made only to firms deemed by the Adviser to be creditworthy and
when, in the judgment of the Adviser, the consideration that can be earned
currently from securities loans of this type justifies the attendant risk. A
Fund will be compensated for the loan from a portion of the net return from the
interest earned on the cash collateral after a rebate paid to the borrower
(which may be a negative amount - i.e., the borrower may pay a fee to the Fund
in connection with the loan) and payments for fees paid to the securities
lending agent and for certain other administrative expenses.
A Fund will have the right to call a loan and obtain the securities
loaned on notice to the borrower within the normal and customary settlement time
for the securities. While securities are on loan, the borrower is obligated to
pay the Fund amounts equal to any income or other distribution from the
securities.
A Fund will invest any cash collateral from its securities lending
activities in shares of an affiliated money market fund managed by the Adviser
and approved by the Board. Any such investment of cash collateral will be
subject to the money market fund's investment risk. The Funds may pay reasonable
finders', administrative, and custodial fees in connection with a loan.
A Fund will not have the right to vote any securities having voting
rights during the existence of the loan. The Fund will have the right to regain
record ownership of loaned securities or equivalent securities in order to
exercise voting or ownership rights. When the Fund lends its securities, its
investment performance will continue to reflect the value of securities on loan.
Concentrated Growth intends to limit its securities lending
activities so that no more than 5% of the value of the Fund's assets will be
represented by securities loaned.
Preferred Stock
---------------
A Fund may invest in preferred stock. Preferred stock is an equity
security that has features of debt because it generally entitles the holder to
periodic payments at a fixed rate of return. Preferred stock is subordinated to
any debt the issuer has outstanding but has liquidation preference over common
stock. Accordingly, preferred stock dividends are not paid until all debt
obligations are first met. Preferred stock may be subject to more fluctuations
in market value, due to changes in market participants' perceptions of the
issuer's ability to continue to pay dividends, than debt of the same issuer.
Real Estate Investment Trusts
-----------------------------
Real Estate Investment Trusts ("REITs") are pooled investment
vehicles that invest primarily in income-producing real estate or real estate
related loans or interests. REITs are generally classified as equity REITs,
mortgage REITs or a combination of equity and mortgage REITs. Equity REITs
invest the majority of their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can also realize capital
gains by selling properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate mortgages and derive income
from the collection of interest and principal payments. Similar to investment
companies such as the Funds, REITs are not taxed on income distributed to
shareholders provided they comply with several requirements of the United States
Internal Revenue Code of 1986, as amended (the "Code"). A Fund will indirectly
bear its proportionate share of expenses incurred by REITs in which the Fund
invests in addition to the expenses incurred directly by the Fund.
Investing in REITs involves certain unique risks in addition to
those risks associated with investing in the real estate industry in general.
Equity REITs may be affected by changes in the value of the underlying property
owned by the REITs, while mortgage REITs may be affected by the quality of any
credit extended. REITs are dependent upon management skills, are not
diversified, and are subject to heavy cash flow dependency, default by borrowers
and self-liquidation.
Investing in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have had more price
volatility than larger capitalization stocks.
REITs are subject to the possibilities of failing to qualify for
tax-free pass-through of income under the Code and failing to maintain their
exemptions from registration under the 1940 Act. REITs (especially mortgage
REITs) also are subject to interest rate risks. When interest rates decline, the
value of a REIT's investment in fixed-rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of a REIT's investment in
fixed-rate obligations can be expected to decline. In contrast, as interest
rates on adjustable rate mortgage loans are reset periodically, yields on a
REIT's investments in such loans will gradually align themselves to reflect
changes in market interest rates, causing the value of such investments to
fluctuate less dramatically in response to interest rate fluctuations than would
investments in fixed-rate obligations.
Repurchase Agreements and Buy/Sell Back Transactions
----------------------------------------------------
A repurchase agreement is an agreement by which a Fund purchases a
security and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed-upon price and date, normally one day or a week later. The
purchase and repurchase obligations are transacted under one document. The
resale price is greater than the purchase price, reflecting an agreed-upon
"interest rate" that is effective for the period of time the buyer's money is
invested in the security, and which is related to the current market rate of the
purchased security rather than its coupon rate. During the term of the
repurchase agreement, a Fund monitors on a daily basis the market value of the
securities subject to the agreement and, if the market value of the securities
falls below the resale amount provided under the repurchase agreement, the
seller under the repurchase agreement is required to provide additional
securities or cash equal to the amount by which the market value of the
securities falls below the resale amount. Because a repurchase agreement permits
a Fund to invest temporarily available cash on a fully-collateralized basis,
repurchase agreements permit the Fund to earn a return on temporarily available
cash while retaining "overnight" flexibility in pursuit of investments of a
longer-term nature. Repurchase agreements may exhibit the characteristics of
loans by a Fund.
The obligation of the seller under the repurchase agreement is not
guaranteed, and there is a risk that the seller may fail to repurchase the
underlying security, whether because of the seller's bankruptcy or otherwise. In
such event, the Fund would attempt to exercise its rights with respect to the
underlying security, including possible sale of the securities. A Fund may incur
various expenses in connection with the exercise of its rights and may be
subject to various delays and risks of loss, including (a) possible declines in
the value of the underlying securities, (b) possible reduction in levels of
income and (c) lack of access to the securities (if they are held through a
third-party custodian) and possible inability to enforce the Fund's rights. The
Fund's Board has established procedures, which are periodically reviewed by the
Board, pursuant to which the Adviser monitors the creditworthiness of the
dealers with which the Fund enters into repurchase agreement transactions.
A Fund may enter into buy/sell back transactions, which are similar
to repurchase agreements. In this type of transaction, a Fund enters a trade to
buy securities at one price and simultaneously enters a trade to sell the same
securities at another price on a specified date. Similar to a repurchase
agreement, the repurchase price is higher than the sale price and reflects
current interest rates. Unlike a repurchase agreement, however, the buy/sell
back transaction, though done simultaneously, constitutes two separate legal
agreements. A buy/sell back transaction also differs from a repurchase agreement
in that the seller is not required to provide margin payments if the value of
the securities falls below the repurchase price because the transaction
constitutes two separate transactions. Each Fund has the risk of changes in the
value of the purchased security during the term of the buy/sell back agreement
although these agreements typically provide for the repricing of the original
transaction at a new market price if the value of the security changes by a
specific amount.
Reverse Repurchase Agreements
-----------------------------
Reverse repurchase agreements involve sales by a Fund of portfolio
assets concurrently with an agreement by the Fund to repurchase the same assets
at a later date at a fixed price. During the reverse repurchase agreement
period, a Fund continues to receive principal and interest payments on these
securities. Generally, the effect of such a transaction is that the Fund can
recover all or most of the cash invested in the portfolio securities involved
during the term of the reverse repurchase agreement, while it will be able to
keep the interest income associated with those portfolio securities. Such
transactions are advantageous only if the interest cost to the Fund of the
reverse repurchase transaction is less than the cost of otherwise obtaining the
cash.
Reverse repurchase agreements are considered to be a loan to a Fund
by the counterparty, collateralized by the assets subject to repurchase because
the incidents of ownership are retained by the Fund. By entering into reverse
repurchase agreements, a Fund obtains additional cash to invest in other
securities. A Fund may use reverse repurchase agreements for borrowing purposes
if it believes that the cost of this form of borrowing will be lower than the
cost of bank borrowing. Reverse repurchase agreements create leverage and are
speculative transactions because they allow a Fund to achieve a return on a
larger capital base relative to its NAV. The use of leverage creates the
opportunity for increased income for a Fund's shareholders when the Fund
achieves a higher rate of return on the investment of the reverse repurchase
agreement proceeds than it pays in interest on the reverse repurchase
transactions. However, there is the risk that returns could be reduced if the
rates of interest on the investment proceeds do not exceed the interest paid by
a Fund on the reverse repurchase transactions.
Reverse repurchase agreements involve the risk that the market value
of the securities the Fund is obligated to repurchase under the agreement may
decline below the repurchase price. In the event the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes insolvent, a Fund's
use of the proceeds of the agreement may be restricted, pending a determination
by the other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities.
Rights and Warrants
-------------------
A Fund may invest in rights and warrants, which entitle the holder
to buy equity securities at a specific price for a specific period of time, but
will do so only if the equity securities themselves are deemed appropriate by
the Adviser for inclusion in a Fund's portfolio. Rights and warrants may be
considered more speculative than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the
securities which may be purchased nor do they represent any rights in the assets
of the issuing company. Also, the value of a right or warrant does not
necessarily change with the value of the underlying securities and a right or
warrant ceases to have value if it is not exercised prior to the expiration
date.
Short Sales
-----------
A Fund, except for Concentrated Growth, may make short sales of
securities or maintain a short position. A short sale is effected by selling a
security that a Fund does not own, or if the Fund does own such security, it is
not to be delivered upon consummation of sale. A short sale is against the box
to the extent that the Fund contemporaneously owns or has the right to obtain
securities identical to those sold. A short sale of a security involves the risk
that, instead of declining, the price of the securities sold short will rise. If
the price of the security sold short increases between the time of the short
sale and the time a Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a capital gain.
Although the Fund's gain is limited to the price at which it sold the security
short, its potential loss is unlimited since there is a theoretically unlimited
potential for the market price of equity securities of the security sold short
to increase. Short sales may be used in some cases by a Fund to defer the
realization of gain or loss for federal income tax purposes on securities then
owned by the Fund. See "Dividends, Distributions and Taxes-Tax Straddles" for a
discussion of certain special federal income tax considerations that may apply
to short sales which are entered into by the Fund.
Special Situations
------------------
A Fund may invest in special situations from time to time. A special
situation arises when, in the opinion of the Fund's management, the securities
of a particular company will, within a reasonably estimable period of time, be
accorded market recognition at an appreciated value solely by reason of a
development particularly or uniquely applicable to that company and regardless
of general business conditions or movements of the market as a whole.
Developments creating special situations might include, among others, the
following: liquidations, reorganizations, recapitalizations or mergers, material
litigation, technological breakthroughs and new management or management
policies. Although large and well-known companies may be involved, special
situations often involve much greater risk than is inherent in ordinary
investment securities.
Standby Commitment Agreements
-----------------------------
A Fund may, from time to time, enter into standby commitment
agreements. Such agreements commit a Fund, for a stated period of time, to
purchase a stated amount of a security that may be issued and sold to the Fund
at the option of the issuer. The price and coupon of the security are fixed at
the time of the commitment. At the time of entering into the agreement a Fund is
paid a commitment fee, regardless of whether or not the security is ultimately
issued. A Fund will enter into such agreements only for the purpose of investing
in the security underlying the commitment at a yield and price which are
considered advantageous to the Fund and which are unavailable on a firm
commitment basis.
There can be no assurance that the securities subject to a standby
commitment will be issued and the value of the security, if issued, on the
delivery date may be more or less than its purchase price. Since the issuance of
the security underlying the commitment is at the option of the issuer, a Fund
will bear the risk of capital loss in the event the value of the security
declines and may not benefit from an appreciation in the value of the security
during the commitment period if the issuer decides not to issue and sell the
security to the Fund.
The purchase of a security subject to a standby commitment agreement
and the related commitment fee will be recorded on the date on which the
security can reasonably be expected to be issued and the value of the security
will thereafter be reflected in the calculation of a Fund's NAV. The cost basis
of the security will be adjusted by the amount of the commitment fee. In the
event the security is not issued, the commitment fee will be recorded as income
on the expiration date of the standby commitment.
Structured Products
-------------------
A Fund may invest in structured products. Structured products,
including indexed or structured securities, combine the elements of futures
contracts or options with those of debt, preferred equity or a depositary
instrument. Generally, the principal amount, amount payable upon maturity or
redemption, or interest rate of a structured product is tied (either positively
or negatively) to prices, changes in prices, or differences between prices, of
underlying assets, such as securities, currencies, intangibles, goods, articles
or commodities or by reference to an unrelated benchmark related to an objective
index, economic factor or other measure, such as interest rates, currency
exchange rates, commodity indices, and securities indices. The interest rate or
(unlike most fixed-income securities) the principal amount payable at maturity
of a structured product may be increased or decreased depending on changes in
the value of the underlying asset or benchmark.
Structured products may take a variety of forms. Most commonly, they
are in the form of debt instruments with interest or principal payments or
redemption terms determined by reference to the value of a currency or commodity
or securities index at a future point in time, but may also be issued as
preferred stock with dividend rates determined by reference to the value of a
currency or convertible securities with the conversion terms related to a
particular commodity.
Investing in structured products may be more efficient and less
expensive for a Fund than investing in the underlying assets or benchmarks and
the related derivative. These investments can be used as a means of pursuing a
variety of investment goals, including currency hedging, duration management and
increased total return. In addition, structured products may be a tax-advantaged
investment in that they generate income that may be distributed to shareholders
as income rather than short-term capital gains that may otherwise result from a
derivatives transaction.
Structured products, however, have more risk than traditional types
of debt or other securities. These products may not bear interest or pay
dividends. The value of a structured product or its interest rate may be a
multiple of a benchmark and, as a result, may be leveraged and move (up or down)
more steeply and rapidly than the benchmark. Under certain conditions, the
redemption value of a structured product could be zero. Structured products are
potentially more volatile and carry greater market risks than traditional debt
instruments. The prices of the structured instrument and the benchmark or
underlying asset may not move in the same direction or at the same time.
Structured products may be less liquid and more difficult to price than less
complex securities or instruments or more traditional debt securities. The risk
of these investments can be substantial with the possibility that the entire
principal amount is at risk. The purchase of structured products also exposes a
Fund to the credit risk of the issuer of the structured product.
Structured Notes and Indexed Securities: A Fund may invest in a
particular type of structured instrument sometimes referred to as a "structured
note". The terms of these notes may be structured by the issuer and the
purchaser of the note. Structured notes are derivative debt instruments, the
interest rate or principal of which is determined by an unrelated indicator (for
example, a currency, security, commodity or index thereof). Indexed securities
may include structured notes as well as securities other than debt securities,
the interest rate or principal of which is determined by an unrelated indicator.
The terms of structured notes and indexed securities may provide that in certain
circumstances no principal is due at maturity, which may result in a total loss
of invested capital. Structured notes and indexed securities may be positively
or negatively indexed, so that appreciation of the unrelated indicator may
produce an increase or a decrease in the interest rate or the value of the
structured note or indexed security at maturity may be calculated as a specified
multiple of the change in the value of the unrelated indicator. Therefore, the
value of such notes and securities may be very volatile. Structured notes and
indexed securities may entail a greater degree of market risk than other types
of debt securities because the investor bears the risk of the unrelated
indicator. Structured notes or indexed securities also may be more volatile,
less liquid, and more difficult to accurately price than less complex securities
and instruments or more traditional debt securities.
Commodity Index-Linked Notes and Commodity-Linked Notes: Structured
products may provide exposure to the commodities markets. These structured notes
may include leveraged or unleveraged commodity index-linked notes, which are
derivative debt instruments with principal and/or coupon payments linked to the
performance of commodity indices. They also include commodity-linked notes with
principal and/or coupon payments linked to the value of particular commodities
or commodities futures contracts, or a subset of commodities and commodities
future contracts. The value of these notes will rise or fall in response to
changes in the underlying commodity, commodity futures contract, subset of
commodities or commodities futures contracts or commodity index. These notes
expose the Fund economically to movements in commodity prices. These notes also
are subject to risks, such as credit, market and interest rate risks, that in
general affect the values of debt securities. In addition, these notes are often
leveraged, increasing the volatility of each note's market value relative to
changes in the underlying commodity, commodity futures contract or commodity
index. Therefore, the Fund might receive interest or principal payments on the
note that are determined based upon a specified multiple of the change in value
of the underlying commodity, commodity futures contract or index.
Credit-Linked Securities: Credit-linked securities are issued by a
limited purpose trust or other vehicle that, in turn, invests in a basket of
derivative instruments, such as credit default swaps, interest rate swaps and
other securities, in order to provide exposure to certain high-yield or other
fixed-income markets. For example, a Fund may invest in credit-linked securities
as a cash management tool in order to gain exposure to certain high-yield
markets and/or to remain fully invested when more traditional income-producing
securities are not available. Like an investment in a bond, investments in
credit-linked securities represent the right to receive periodic income payments
(in the form of distributions) and payment of principal at the end of the term
of the security. However, these payments are conditioned on the trust's receipt
of payments from, and the trust's potential obligations to, the counterparties
to the derivative instruments and other securities in which the trust invests.
For instance, the trust may sell one or more credit default swaps, under which
the trust would receive a stream of payments over the term of the swap
agreements provided that no event of default has occurred with respect to the
referenced debt obligation upon which the swap is based. If a default occurs,
the stream of payments may stop and the trust would be obligated to pay the
counterparty the par value (or other agreed-upon value) of the referenced debt
obligation. This, in turn, would reduce the amount of income and principal that
a Fund would receive as an investor in the trust. A Fund's investments in these
instruments are indirectly subject to the risks associated with derivative
instruments, including, among others, credit risk, default or similar event
risk, counterparty risk, interest rate risk, and leverage risk and management
risk. These securities are generally structured as Rule 144A securities so that
they may be freely traded among institutional buyers. However, changes in the
market for credit-linked securities or the availability of willing buyers may
result in the securities becoming illiquid.
U.S. Companies and U.S. Instruments
-----------------------------------
For purposes of Select US Equity's policy to invest at least 80% of
its net assets in equity securities of U.S. companies, a U.S. company is a
company (1) that is organized under the laws of the United States or a political
subdivision of the United States, (2) the equity securities of which are
principally traded on a U.S. exchange or in a U.S. market, or (3) that, in its
most recent fiscal year, derived at least 50% of its revenues or profits from
goods produced or sold, investments made, or services performed in the United
States or that has at least 50% of its assets in the United States. In addition
to U.S. companies, for the purposes of Select US Long/Short's 80% policy, U.S.
cash equivalents include U.S. registered money market mutual funds, repurchase
agreements related to U.S. Government securities, and commercial paper and other
short-term obligations of U.S. companies.
Certain Risk and Other Considerations
-------------------------------------
Borrowings and Use of Leverage. A Fund may use borrowings for
investment purposes subject to its investment policies and restrictions and to
applicable statutory or regulatory requirements. Borrowings by a Fund result in
leveraging of the Fund's shares. Likewise, a Fund's use of certain derivatives
may effectively leverage the Fund's portfolio. A Fund may use leverage for
investment purposes by entering into transactions such as reverse repurchase
agreements, forward contracts, dollar rolls or certain derivatives. This means
that the Fund uses cash made available during the term of these transactions to
make investments in other securities.
Utilization of leverage, which is usually considered speculative,
involves certain risks to the Fund's shareholders. These include a higher
volatility of the NAV of the Fund's shares and the relatively greater effect of
changes in the value of the Fund's portfolio on the NAV of the shares. In the
case of borrowings for investment purposes, so long as the Fund is able to
realize a net return on its investment portfolio that is higher than the
interest expense paid on borrowings, the effect of such leverage will be to
cause the Fund's shareholders to realize a higher net return than if the Fund
were not leveraged. With respect to a Fund's use of certain derivatives that
result in leverage of the Fund's shares, if the Fund is able to realize a net
return on its investments that is higher than the costs of the leveraged
transaction, the effect of such leverage will be to cause the Fund to realize a
higher return than if the Fund were not leveraged. If the interest expense on
borrowings or other costs of leverage approach the return on the Fund's
investment portfolio or investments made through leverage, as applicable, the
benefit of leverage to the Fund's shareholders will be reduced. If the interest
expense on borrowings or other costs of leverage were to exceed the net return
to the Fund, the Fund's use of leverage would result in a lower rate of return
than if the Fund were not leveraged. Similarly, the effect of leverage in a
declining market would normally be a greater decrease in NAV than if the Fund
were not leveraged.
Certain transactions, such as derivatives transactions, forward
commitments, reverse repurchase agreements and short sales, involve leverage and
may expose a Fund to potential losses that, in some cases, may exceed the amount
originally invested by the Fund. When a Fund engages in such transactions, it
will, in accordance with guidance provided by the SEC or its staff in, among
other things, regulations, interpretative releases and no-action letters,
deposit in a segregated account certain liquid assets with a value at least
equal to the Fund's exposure, on a marked-to-market or on another relevant
basis, to the transaction. Transactions for which assets have been segregated
will not be considered "senior securities" for purposes of the Fund's investment
restriction concerning senior securities. The segregation of assets is intended
to enable a Fund to have assets available to satisfy its obligations with
respect to these transactions, but will not limit the Fund's exposure to loss.
Cyber Security Risk. As the use of the Internet and other
technologies has become more prevalent in the course of business, the Funds and
their service providers, including the Adviser, have become more susceptible to
operational and financial risks associated with cyber security. Cyber security
incidents can result from deliberate attacks such as gaining unauthorized access
to digital systems (e.g., through "hacking" or malicious software coding) for
purposes of misappropriating assets or sensitive information, corrupting data,
or causing operational disruption, or from unintentional events, such as the
inadvertent release of confidential information. Cyber security failures or
breaches of the Funds or their service providers or the issuers of securities in
which the Funds invest have the ability to cause disruptions and affect business
operations, potentially resulting in financial losses, the inability of Fund
shareholders to transact business, violations of applicable privacy and other
laws, regulatory fines, reputational damage, reimbursement or other compensation
costs, and/or additional compliance costs. While measures have been developed
that are designed to reduce the risks associated with cyber security, there is
no guarantee that those measures will be effective, particularly since the Funds
do not control the cyber security defenses or plans of its service providers,
financial intermediaries and companies in which they invest or with which they
do business.
Risks of Investments in Foreign Securities. Investors should
understand and consider carefully the substantial risks involved in securities
of foreign companies and governments of foreign nations, some of which are
referred to below, and which are in addition to the usual risks inherent in
domestic investments. Investing in securities of non-U.S. companies which are
generally denominated in foreign currencies, and utilization of derivative
investment products denominated in, or the value of which is dependent upon
movements in the relative value of, a foreign currency, involve certain
considerations comprising both risk and opportunity not typically associated
with investing in U.S. companies. These considerations include changes in
exchange rates and exchange control regulations, political and social
instability, expropriation, imposition of foreign taxes, less liquid markets and
less available information than are generally the case in the United States,
higher transaction costs, less government supervision of exchanges, brokers and
issuers, difficulty in enforcing contractual obligations, lack of uniform
accounting and auditing standards and greater price volatility.
There is generally less publicly available information about foreign
companies comparable to reports and ratings that are published about companies
in the United States. Foreign issuers are subject to accounting and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. issuers. In particular, the assets and profits appearing on
the financial statements of a foreign issuer may not reflect its financial
position or results of operations in the way they would be reflected had the
financial statement been prepared in accordance with U.S. generally accepted
accounting principles. In addition, for an issuer that keeps accounting records
in local currency, inflation accounting rules in some of the countries in which
the Fund may invest require, for both tax and accounting purposes, that certain
assets and liabilities be restated on the issuer's balance sheet in order to
express items in terms of currency of constant purchasing power. Inflation
accounting may indirectly generate losses or profits. Consequently, financial
data may be materially affected by restatements for inflation and may not
accurately reflect the real condition of those issuers and securities markets.
Substantially less information is publicly available about certain non-U.S.
issuers than is available about U.S. issuers.
It is contemplated that foreign securities will be purchased in
over-the-counter markets or on stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. Foreign securities markets are
generally not as developed or efficient as those in the United States. While
growing in volume, they usually have substantially less volume than the New York
Stock Exchange (the "Exchange"), and securities of some foreign companies are
less liquid and more volatile than securities of comparable United States
companies. Similarly, volume and liquidity in most foreign bond markets are less
than in the United States and, at times, volatility of price can be greater than
in the United States. Fixed commissions on foreign stock exchanges are generally
higher than negotiated commissions on United States exchanges, although a Fund
will endeavor to achieve the most favorable net results on its portfolio
transactions. There is generally less government supervision and regulation of
stock exchanges, brokers and listed companies than in the United States.
Expropriation, confiscatory taxation, nationalization, political,
economic or social instability or other similar developments, such as military
coups, have occurred in the past in countries in which a Fund may invest and
could adversely affect a Fund's assets should these conditions or events recur.
In June 2016, the United Kingdom ("UK") voted in a referendum to
leave the European Union ("EU"). On March 29, 2017, the UK notified the European
Council of its intention to withdraw from the EU. It is expected that the UK's
withdrawal will be completed within two years of such notification. There is
still considerable uncertainty relating to the potential consequences of the
withdrawal. During this period and beyond, the impact on the UK and European
economies and the broader global economy could be significant, resulting in
increased volatility and illiquidity, currency fluctuations, impacts on
arrangements for trading and on other existing cross-border cooperation
arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise),
and in potentially lower growth for companies in the UK, Europe and globally,
which could have an adverse effect on the value of a Fund's investments.
Foreign investment in certain foreign securities is restricted or
controlled to varying degrees. These restrictions or controls may at times limit
or preclude foreign investment in certain foreign securities and increase the
costs and expenses of a Fund. Certain countries in which the Fund may invest
require governmental approval prior to investments by foreign persons, limit the
amount of investment by foreign persons in a particular issuer, limit the
investment by foreign persons only to a specific class of securities of an
issuer that may have less advantageous rights than the classes available for
purchase by domiciliaries of the countries and/or impose additional taxes on
foreign investors.
Certain countries may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if deterioration occurs in a
country's balance of payments, the country could impose temporary restrictions
on foreign capital remittances.
Investing in emerging market securities imposes risks different
from, or greater than, risks of investing in domestic securities or in foreign,
developed countries. These risks include: smaller market capitalization of
securities markets, which may suffer periods of relative illiquidity;
significant price volatility; restrictions on foreign investment; and possible
repatriation of investment income and capital. In addition, foreign investors
may be required to register the proceeds of sales; and future economic or
political crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies. The currencies of emerging market countries may experience
significant declines against the U.S. Dollar, and devaluation may occur
subsequent to investments in these currencies by a Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging market
countries.
Additional risks of emerging market securities may include: greater
social, economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise make
it difficult to engage in such transactions. Settlement problems may cause a
Fund to miss attractive investment opportunities, hold a portion of its assets
in cash pending investment, or be delayed in disposing of a portfolio security.
Such a delay could result in possible liability to a purchaser of the security.
Income from certain investments held by a Fund could be reduced by
foreign income taxes, including withholding taxes. It is impossible to determine
the effective rate of foreign tax in advance. A Fund's NAV may also be affected
by changes in the rates or methods of taxation applicable to that Fund or to
entities in which that Fund has invested. The Adviser generally will consider
the cost of any taxes in determining whether to acquire any particular
investments, but can provide no assurance that the tax treatment of investments
held by a Fund will not be subject to change. A shareholder otherwise subject to
United States federal income taxes may, subject to certain limitations, be
entitled to claim a credit or deduction for U.S. federal income tax purposes for
his or her proportionate share of such foreign taxes paid by the Fund. See "U.S.
Federal Income Taxes".
Investors should understand that the expense ratio of a fund
investing in foreign securities may be higher than investment companies
investing only in domestic securities since, among other things, the cost of
maintaining the custody of foreign securities is higher and the purchase and
sale of portfolio securities may be subject to higher transaction charges, such
as stamp duties and turnover taxes.
For many foreign securities, there are U.S. Dollar-denominated ADRs
that are traded in the United States on exchanges or OTC. ADRs do not lessen the
foreign exchange risk inherent in investing in the securities of foreign
issuers. However, by investing in ADRs rather than directly in stock of foreign
issuers, a Fund can avoid currency risks which might occur during the settlement
period for either purchases or sales.
Foreign Currency Transactions. A Fund may invest in securities
denominated in foreign currencies and a corresponding portion of the Fund's
revenues will be received in such currencies. In addition, a Fund may conduct
foreign currency transactions for hedging and non-hedging purposes on a spot
(i.e., cash) basis or through the use of derivatives transactions, such as
forward currency exchange contracts, currency futures and options thereon, and
options on currencies as described above. The dollar equivalent of a Fund's net
assets and distributions will be adversely affected by reductions in the value
of certain foreign currencies relative to the U.S. Dollar. Such changes will
also affect a Fund's income. A Fund will, however, have the ability to attempt
to protect itself against adverse changes in the values of foreign currencies by
engaging in certain of the investment practices listed above. While a Fund has
this ability, there is no certainty as to whether and to what extent the Fund
will engage in these practices.
Currency exchange rates may fluctuate significantly over short
periods of time causing, along with other factors, a Fund's NAV to fluctuate.
Currency exchange rates generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments in
different countries, actual or anticipated changes in interest rates and other
complex factors, as seen from an international perspective. Currency exchange
rates also can be affected unpredictably by the intervention of U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the United States or abroad. To the extent
a Fund's total assets, adjusted to reflect the Fund's net position after giving
effect to currency transactions, is denominated or quoted in the currencies of
foreign countries, the Fund will be more susceptible to the risk of adverse
economic and political developments within those countries.
A Fund will incur costs in connection with conversions between
various currencies. A Fund may hold foreign currency received in connection with
investments when, in the judgment of the Adviser, it would be beneficial to
convert such currency into U.S. Dollars at a later date, based on anticipated
changes in the relevant exchange rate. If the value of the foreign currencies in
which a Fund receives income falls relative to the U.S. Dollar between receipt
of the income and the making of Fund distributions, the Fund may be required to
liquidate securities in order to make distributions if the Fund has insufficient
cash in U.S. Dollars to meet the distribution requirements that the Fund must
satisfy to qualify as a regulated investment company for federal income tax
purposes. Similarly, if the value of a particular foreign currency declines
between the time a Fund incurs expenses in U.S. Dollars and the time cash
expenses are paid, the amount of the currency required to be converted into U.S.
Dollars in order to pay expenses in U.S. Dollars could be greater than the
equivalent amount of such expenses in the currency at the time they were
incurred. In light of these risks, the Fund may engage in certain currency
hedging transactions, which themselves, involve certain special risks.
Risks of Forward Currency Exchange Contracts, Foreign Currency
Futures Contracts and Options thereon, Options on Foreign Currencies,
Over-the-Counter Options on Securities. Transactions in forward currency
exchange contracts, as well as futures and options on foreign currencies, are
subject to all of the correlation, liquidity and other risks outlined above. In
addition, however, such transactions are subject to the risk of governmental
actions affecting trading in or the prices of currencies underlying such
contracts, which could restrict or eliminate trading and could have a
substantial adverse effect on the value of positions held by a Fund. In
addition, the value of such positions could be adversely affected by a number of
other complex political and economic factors applicable to the countries issuing
the underlying currencies.
Further, unlike trading in most other types of instruments, there is
no systematic reporting of last sale information with respect to the foreign
currencies underlying contracts thereon. As a result, the available information
on which trading decisions will be based may not be as complete as the
comparable data on which a Fund makes investment and trading decisions in
connection with other transactions. Moreover, because the foreign currency
market is a global, twenty-four hour market, events could occur in that market
but will not be reflected in the forward, futures or options markets until the
following day, thereby preventing a Fund from responding to such events in a
timely manner.
Settlements of exercises of OTC forward currency exchange contracts
or foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires traders to accept or make delivery
of such currencies in conformity with any U.S. or foreign restrictions and
regulations regarding the maintenance of foreign banking relationships and fees,
taxes or other charges.
Unlike transactions entered into by a Fund in futures contracts and
exchange-traded options, options on foreign currencies, forward currency
exchange contracts, and OTC options on securities and securities indices may not
be traded on contract markets regulated by the CFTC or (with the exception of
certain foreign currency options) the SEC. Such instruments may instead be
traded through financial institutions acting as market-makers, although foreign
currency options are also traded on certain national securities exchanges, such
as the Nasdaq PHLX and the Chicago Board Options Exchange, that are subject to
SEC regulation. In an OTC trading environment, many of the protections afforded
to exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option writer could lose
amounts substantially in excess of the initial investment due to the margin and
collateral requirements associated with such positions.
In addition, OTC transactions can be entered into only with a
financial institution willing to take the opposite side, as principal, of a
Fund's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Fund. Where
no such counterparty is available, it will not be possible to enter into a
desired transaction. There also may be no liquid secondary market in the trading
of OTC contracts, and a Fund could be required to retain options purchased or
written, or forward currency exchange contracts, until exercise, expiration or
maturity. This in turn could limit the Fund's ability to profit from open
positions or to reduce losses experienced, and could result in greater losses.
Further, OTC transactions are not subject to the guarantee of an
exchange clearinghouse, and a Fund will therefore be subject to the risk of
default by, or the bankruptcy of, the financial institution serving as its
counterparty. A Fund will enter into an OTC transaction only with parties whose
creditworthiness has been reviewed and found to be satisfactory by the Adviser.
Transactions in OTC options on foreign currencies are subject to a
number of conditions regarding the commercial purpose of the purchaser of such
option. A Fund is not able to determine at this time whether or to what extent
additional restrictions on the trading of OTC options on foreign currencies may
be imposed at some point in the future, or the effect that any such restrictions
may have on the hedging strategies to be implemented by the Fund.
Options on foreign currencies traded on national securities
exchanges are within the jurisdiction of the SEC, as are other securities traded
on such exchanges. As a result, many of the protections provided to traders on
organized exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options Clearing
Corporation ("OCC"), thereby reducing the risk of counterparty default. Further,
a liquid secondary market in options traded on a national securities exchange
may be more readily available than in the OTC market, potentially permitting the
Fund to liquidate open positions at a profit prior to exercise or expiration, or
to limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid secondary
market described above, as well as the risks regarding adverse market movements,
the margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the OTC market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in applicable foreign countries
for this purpose. As a result, if the OCC determines that foreign governmental
restrictions or taxes would prevent the orderly settlement of foreign currency
option exercises, or would result in undue burdens on the OCC or its clearing
member, the OCC may impose special procedures on exercise and settlement, such
as technical changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.
--------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
--------------------------------------------------------------------------------
Fundamental Investment Policies
-------------------------------
The following fundamental investment policies may not be changed
without approval by the vote of a majority of a Fund's outstanding voting
securities, which means the affirmative vote of the holders of (i) 67% or more
of the shares of the Fund represented at a meeting at which more than 50% of the
outstanding shares are present in person or by proxy or (ii) more than 50% of
the outstanding shares of the Fund, whichever is less.
As a matter of fundamental policy, a Fund:
(a) may not concentrate investments in an industry, as
concentration may be defined under the 1940 Act or the rules and regulations
thereunder (as such statute, rules or regulations may be amended from time to
time) or by guidance regarding, interpretations of, or exemptive orders under,
the 1940 Act or the rules or regulations thereunder published by appropriate
regulatory authorities;
(b) may not issue any senior security (as that term is
defined in the 1940 Act) or borrow money, except to the extent permitted by the
1940 Act or the rules and regulations thereunder (as such statute, rules or
regulations may be amended from time to time) or by guidance regarding, or
interpretations of, or exemptive orders under, the 1940 Act or the rules or
regulations thereunder published by appropriate regulatory authorities. For
purposes of this restriction, margin and collateral arrangements, including, for
example, with respect to permitted borrowings, options, futures contracts,
options on futures contracts and other derivatives such as swaps are not deemed
to involve the issuance of a senior security;
(c) may not make loans except through (i) the purchase of
debt obligations in accordance with its investment objective and policies; (ii)
the lending of portfolio securities; (iii) the use of repurchase agreements; or
(iv) the making of loans to affiliated funds as permitted under the 1940 Act,
the rules and regulations thereunder (as such statutes, rules or regulations may
be amended from time to time), or by guidance regarding, and interpretations of,
or exemptive orders under, the 1940 Act;
(d) may not purchase or sell real estate except that it may
dispose of real estate acquired as a result of the ownership of securities or
other instruments. This restriction does not prohibit the Fund from investing in
securities or other instruments backed by real estate or in securities of
companies engaged in the real estate business;
(e) may purchase or sell commodities to the extent permitted
by applicable law with the exception that Sustainable Global Thematic and
International Growth may not purchase or sell commodities regulated by the CFTC
under the CEA or commodities contracts except for futures contracts and options
on futures contracts; or
(f) may not act as an underwriter of securities, except that
the Fund may acquire restricted securities under circumstances in which, if such
securities were sold, the Fund might be deemed to be an underwriter for purposes
of the Securities Act.
As a fundamental policy, each Fund, except Concentrated Growth,
Global Core Equity, International Strategic Core and Concentrated International
Growth, is diversified (as that term is defined in the 1940 Act). This means
that at least 75% of the Fund's assets consist of:
o Cash or cash items;
o Government securities;
o Securities of other investment companies; and
o Securities of any one issuer that represent not more than 10% of the
outstanding voting securities of the issuer of the securities and not more
than 5% of the total assets of the Fund.
Concentrated Growth, Global Core Equity, International Strategic
Core and Concentrated International Growth are "non-diversified" investment
companies as defined in the 1940 Act, which means each Fund is not limited in
the proportion of its assets that may be invested in the securities of a single
issuer. This policy may be changed without a shareholder vote.
Non-Fundamental Investment Policies
-----------------------------------
The following are descriptions of operating policies that the Funds,
except Concentrated Growth, have adopted but that are not fundamental and are
subject to change without shareholder approval.
A Fund may not purchase securities on margin, except (i) as
otherwise provided under rules adopted by the SEC under the 1940 Act or by
guidance regarding the 1940 Act, or interpretations thereof, and (ii) that the
Fund may obtain such short-term credits as are necessary for the clearance of
portfolio transactions, and the Fund may make margin payments in connection with
futures contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments.
The following is a description of certain operating policies
Concentrated Growth has adopted but that are not fundamental and are subject to
change without shareholder approval:
(a) The Fund may not purchase securities on margin, except (i) as
otherwise provided under rules adopted by the SEC under the 1940 Act or by
guidance regarding the 1940 Act, or interpretations thereof, and (ii) that the
Fund may obtain such short-term credits as are necessary for the clearance of
portfolio transactions, and the Fund may make margin payments in connection with
futures contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments.
(b) The Fund will not make short sales of securities or invest in
put or call options.
(c) The Fund will not invest more than 5% of the value of its total
assets in securities that cannot be readily resold to the public because of
legal or contractual restrictions or because there are no market quotations
readily available or in other "illiquid" securities (including non-negotiable
deposits with banks or repurchase agreements of a duration of more than seven
days). For purposes of this policy, illiquid securities do not include
securities eligible for resale pursuant to Rule 144A under the Securities Act
that have been determined to be liquid by the Fund's Board of Directors based
upon the trading markets for such securities.
--------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------------
Adviser
-------
The Adviser, a Delaware limited partnership with principal offices
at 1345 Avenue of the Americas, New York, New York 10105, has been retained
under an investment advisory agreement (the "Advisory Agreement") to provide
investment advice and, in general, to conduct the management and investment
program of each of the Funds under the supervision of each Fund's Board (see
"Management of the Funds" in the Prospectus). The Adviser is an investment
adviser registered under the Investment Advisers Act of 1940, as amended.
The Adviser is a leading global investment management firm
supervising client accounts with assets as of September 30, 2017, totaling
approximately $535 billion. The Adviser provides management services for many of
the largest U.S. public and private employee benefit plans, endowments,
foundations, public employee retirement funds, banks, insurance companies and
high net worth individuals worldwide.
As of September 30, 2017, the ownership structure of the Adviser,
expressed as a percentage of general and limited partnership interests, was as
follows:
AXA and its subsidiaries 64.0%
AllianceBernstein Holding L.P. 34.9
Unaffiliated holders 1.1
--------------------
100.0%
====================
AXA S.A. ("AXA"), is a societe anonyme organized under the laws of
France and the holding company for an international group of insurance and
related financial services companies, through certain of its subsidiaries ("AXA
and its subsidiaries"). AllianceBernstein Holding L.P. ("Holding") is a Delaware
limited partnership, the units of which, ("Holding Units") are traded publicly
on the Exchange under the ticker symbol "AB". As of September 30, 2017, AXA
owned approximately 2.7% of the issued and outstanding assignments of beneficial
ownership of Holding Units.
AllianceBernstein Corporation (an indirect wholly-owned subsidiary
of AXA) is the general partner of both Holding and the Adviser.
AllianceBernstein Corporation owns 100,000 general partnership units in Holding
and a 1% general partnership interest in the Adviser. Including both the general
partnership and limited partnership interests in Holding and the Adviser, AXA
and its subsidiaries had an approximate 64.9% economic interest in the Adviser
as of September 30, 2017.
On May 10, 2017, AXA announced its intention to sell and list for
trading a minority stake of its U.S. operations (expected to consist of AXA's
U.S. Life & Savings business and its interest in AllianceBernstein Corporation)
during the first half of 2018, subject to market conditions and SEC review
process. AXA and its subsidiaries will maintain a controlling interest in the
Adviser.
Advisory Agreements and Expenses
--------------------------------
Under the Growth Fund's Advisory Agreement, the Adviser serves as
investment manager and adviser of the Fund, continuously furnishes an investment
program for the Fund and manages, supervises and conducts the affairs of the
Fund, subject to the supervision of the Fund's Board.
Under the Advisory Agreements for Large Cap Growth, Concentrated
Growth, Discovery Growth, Small Cap Growth, Sustainable Global Thematic,
International Growth, Select US Equity, Select US Long/Short, Global Core
Equity, International Strategic Core and Concentrated International Growth, the
Adviser furnishes advice and recommendations with respect to the Funds'
portfolio of securities and investments and provides persons satisfactory to the
Board to act as officers of the Funds. Such officers and employees may be
employees of the Adviser or its affiliates.
The Adviser is, under the Advisory Agreements, responsible for
certain expenses incurred by a Fund, including, for example, office facilities,
and any expenses incurred in promoting the sale of Fund shares (other than the
portion of the promotional expenses borne by the Fund in accordance with an
effective plan pursuant to Rule 12b-1 under the 1940 Act, and the costs of
printing Fund prospectuses and other reports to shareholders and fees related to
registration with the SEC and with state regulatory authorities).
The Funds, other than the Growth Fund, as noted below, have under
their Advisory Agreements assumed the obligation for payment of all of their
other expenses. As to the obtaining of services other than those specifically
provided to the Funds by the Adviser, each Fund may employ its own personnel.
The Advisory Agreements provide for reimbursement to the Adviser of the costs of
certain non-advisory services provided to a Fund. Costs currently reimbursed
include the costs of the Adviser's personnel performing certain administrative
services for the Funds, including clerical, accounting, legal and other services
("administrative services"), and associated overhead costs, such as office
space, supplies and information technology. The administrative services are
provided to the Funds on a fully-costed basis (i.e., includes each person's
total compensation and a factor reflecting the Adviser's total cost relating to
that person, including all related overhead expenses). The reimbursement of
these costs to the Adviser will be specifically approved by the Boards. During
the fiscal year ended July 31, 2017 for Large Cap Growth, Discovery Growth,
Small Cap Growth and Sustainable Global Thematic and during the fiscal year
ended June 30, 2017 for Concentrated Growth, International Growth, Select US
Equity, Select US Long/Short and Global Core Equity the amounts paid to the
Adviser amounted to a total of $69,958, $59,626, $66,424, $63,652, $49,738,
$58,018, $60,829, $54,471 and $61,303, respectively, for these services. The
Adviser agreed to voluntarily waive such fees in the amounts of $63,377 and
$64,995 for International Strategic Core and Concentrated International Growth,
respectively, for the fiscal year ended June 30, 2017.
Growth Fund is a series of The AB Portfolios (the "Trust"), a
Massachusetts business trust. For the Growth Fund, the Adviser will furnish or
pay the expenses of the Trust for office space, equipment, bookkeeping and
clerical services, and fees and expenses of officers and trustees of the Trust
who are affiliated with the Adviser.
Except as noted below, the Advisory Agreements continue in effect
from year-to-year provided that their continuance is specifically approved at
least annually by a vote of the majority of the outstanding voting securities of
each Fund or by the Directors/Trustees ("Directors") including, in either case,
by a vote of a majority of the Directors who are not parties to the Advisory
Agreements or interested persons of any such party. Information about the most
recent continuance of the Advisory Agreement for each Fund is set forth below.
In addition, to the extent that a Fund invests in AB Government
Money Market Portfolio (except for the investment of any cash collateral from
securities lending), the Adviser has contractually agreed to waive its
management fee from the Fund in an amount equal to the Fund's pro rata share of
the AB Government Money Market Portfolio's effective management fee. This
agreement will remain in effect until October 31, 2018 and will continue
thereafter from year to year unless the Adviser provides notice of termination
to the Fund at least 60 days prior to the end of the period. To the extent that
a Fund invests securities lending cash collateral in the AB Government Money
Market Portfolio, the Adviser has also agreed to waive a portion of the Fund's
share of the advisory fees of AB Government Money Market Portfolio.
Any material amendment to the Advisory Agreement must be approved by
the vote of a majority of the outstanding securities of the relevant Fund and by
the vote of a majority of the Directors who are not interested persons of the
Fund or the Adviser. The Advisory Agreements are terminable without penalty on
60 days' written notice by a vote of a majority of the Funds' outstanding voting
securities, by a vote of a majority of the Directors or by the Adviser, and will
automatically terminate in the event of their assignment. The Advisory
Agreements provide that, in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser, or of reckless disregard of its
obligations thereunder, the Adviser shall not be liable for any action or
failure to act in accordance with its duties thereunder.
Certain other clients of the Adviser may have investment objectives
and policies similar to those of a Fund. The Adviser may, from time to time,
make recommendations which result in the purchase or sale of the particular
security by its other clients simultaneously with a purchase or sale thereof by
one or more Funds. If transactions on behalf of more than one client during the
same period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price. It is the policy
of the Adviser to allocate advisory recommendations and the placing of orders in
a manner that is deemed equitable by the Adviser to the accounts involved,
including the Fund. When two or more of the Adviser's clients (including a Fund)
are purchasing or selling the same security on a given day through the same
broker or dealer, such transactions may be averaged as to price.
GROWTH FUND
For services under the terms of the Advisory Agreement, the Adviser
receives a fee at an annualized rate of 0.75% of the first $2.5 billion of the
Fund's average daily net assets, 0.65% of the excess over $2.5 billion up to $5
billion of such assets, and 0.60% of the excess over $5 billion as a percentage
of the Fund's average daily net assets. For the fiscal years ended July 31,
2017, July 31, 2016 and July 31, 2015 the Adviser received under the Advisory
Agreement the amount of $5,321,901, $5,151,480 and $5,356,283, respectively, in
management fees from the Fund. In connection with the investment by the Fund in
the AB Government Money Market Portfolio, the Adviser waived its investment
management fee from the Fund in the amount of $75,623 and $10,924 for the fiscal
years ended July 31, 2017 and July 31, 2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
LARGE CAP GROWTH
Effective as of February 3, 2017, under the terms of the Advisory
Agreement, the Fund has contractually agreed to pay a monthly fee to the Adviser
at an annual rate of 0.60% of the first $2.5 billion, 0.50% of the excess over
$2.5 billion up to $5 billion and 0.45% of the excess over $5 billion as a
percentage of the Fund's average daily net assets. Prior to February 3, 2017,
under the terms of the Advisory Agreement, the Fund paid the Adviser at the
annual rate of 0.75% of the first $2.5 billion, 0.65% of the excess over $2.5
billion up to $5 billion and 0.60% of the excess over $5 billion as a percentage
of the Fund's average daily net assets. The Adviser has contractually agreed to
waive its fee and bear certain expenses so that total expenses do not exceed on
an annual basis 1.25% of average daily net assets for Class A shares. This fee
waiver and/or expense reimbursement agreement automatically extends each year
unless the Adviser provides notice to the Fund at least 60 days prior to the end
of the Period. For the fiscal years of the Fund ended July 31, 2017, July 31,
2016 and July 31, 2015, the Adviser received from the Fund advisory fees of
$25,705,309, $21,258,038 and $16,839,635, respectively. In connection with the
investment by the Fund in the AB Government Money Market Portfolio, the Adviser
waived its investment management fee from the Fund in the amount of $730,667 and
$73,668 for the fiscal years ended July 31, 2017 and July 31, 2016,
respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
CONCENTRATED GROWTH
Effective as of November 1, 2016, the Fund has contractually agreed
to pay a monthly fee to the Adviser at an annualized rate of 0.80% of the Fund's
average daily net assets. Prior to November 1, 2016, the Fund paid a monthly fee
to the Adviser at an annualized rate of 1.00% of the Fund's average daily net
assets, and the Adviser had contractually agreed to waive 0.20% of the
management fee until October 31, 2016. The Adviser has contractually agreed to
waive its management fees and/or to bear expenses of the Fund through October
31, 2018 to the extent necessary to prevent total Fund operating expenses
(excluding expenses associated with acquired fund fees and expenses other than
the advisory fees of any AB Mutual Funds in which the Fund may invest, interest
expense, taxes, extraordinary expenses, and brokerage commissions and other
transaction costs), on an annualized basis, from exceeding 1.24%, 1.99%, 1.49%,
1.24%, 0.99%, 0.99% and 0.99% of average daily net assets, respectively, for
Class A, Class C, Class R, Class K, Class I, Class Z and Advisor Class shares.
The expense limitation agreement may be terminated after October 31, 2018 upon
60 days' prior notice by the Adviser. For the fiscal years of the Fund ended
June 30, 2017, June 30, 2016 and June 30, 2015, the Adviser received from the
Fund advisory fees of $2,866,411 (net of $0, which was waived by the Adviser
pursuant to the expense limitation agreement), $2,552,666 (net of $47,602, which
was waived by the Adviser pursuant to the expense limitation agreement), and
$998,680 (net of $177,326, which was waived by the Adviser pursuant to the
expense limitation agreement), respectively. In connection with the investment
by the Fund in the AB Government Money Market Portfolio, the Adviser waived its
investment management fee from the Fund in the amount of $26,639 and $308 for
the fiscal year ended June 30, 2017 and June 30, 2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
DISCOVERY GROWTH
For its services under the Advisory Agreement, the Adviser receives
a monthly fee at an annualized rate of 0.75% of the first $500 million of the
Fund's average daily net assets, 0.65% of the excess over $500 million of such
net assets up to $1 billion and 0.55% of the excess over $1 billion of such net
assets. During the fiscal years of the Fund ended July 31, 2017, July 31, 2016
and July 31, 2015, the Fund paid the Adviser total management fees of
$11,976,332, $12,762,785 and $13,057,431, respectively. In connection with the
investment by the Fund in the AB Government Money Market Portfolio, the Adviser
waived its investment management fee from the Fund in the amount of $231,237 and
$33,068 for the fiscal years ended July 31, 2017 and July 31, 2016,
respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
SMALL CAP GROWTH
For its services under the terms of the Advisory Agreement, the
Adviser receives a fee at an annualized rate of 0.75% of the first $2.5 billion
of the Fund's average daily net assets, 0.65% of the excess over $2.5 billion of
such assets up to $5 billion and 0.60% of the excess over $5 billion of such
assets. The advisory fees for the fiscal years ended July 31, 2017, July 31,
2016 and July 31, 2015 amounted to $8,509,709, $8,949,782 and $11,380,694,
respectively. In connection with the investment by the Fund in the AB Government
Money Market Portfolio, the Adviser waived its investment management fee from
the Fund in the amount of $171,846 and $30,348 for the fiscal years ended July
31, 2017 and July 31, 2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
SELECT US EQUITY
For its services under the terms of the Advisory Agreement, the
Adviser receives a fee at an annualized rate of 1.00% of the average daily net
assets of the Fund. The Adviser has contractually agreed to waive its management
fees and/or to bear expenses of the Fund through October 31, 2018 to the extent
necessary to prevent total Fund operating expenses (excluding expenses
associated with acquired fund fees and expenses other than the advisory fees of
any AB Mutual Funds in which the Fund may invest, interest expense, taxes,
extraordinary expenses, and brokerage commissions and other transaction costs),
on an annualized basis, from exceeding 1.55%, 2.30%, 1.30%, 1.80%, 1.55%, and
1.30% of average daily net assets, respectively, for Class A, Class C, Advisor
Class, Class R, Class K and Class I shares. The expense limitation agreement may
be terminated after October 31, 2018 upon 60 days' prior notice by the Adviser.
For the fiscal years of the Fund ended June 30, 2017, June 30, 2016 and June 30,
2015, the Adviser received from the Fund management fees of $2,900,181 (net of
$2,427, which was waived by the Adviser pursuant to the expense limitation
agreement), $3,219,279 (net of $1,642, which was waived by the Adviser pursuant
to the expense limitation agreement) and $3,293,693 (net of $1,179, which was
waived by the Adviser pursuant to the expense limitation agreement),
respectively. In connection with the investment by the Fund in the AB Government
Money Market Portfolio, the Adviser waived its investment management fee from
the Fund in the amount of $18,756 and $1,203 for the fiscal years ended June 30,
2017 and June 30, 2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
SELECT US LONG/SHORT
Effective as of February 3, 2017, the Fund has contractually agreed
to pay a monthly fee to the Adviser at an annualized rate of 1.50% of the first
$2.5 billion of the Fund's average daily net assets and 1.475% of the excess
over $2.5 billion. Effective February 3, 2017, the Adviser has contractually
agreed to waive its management fees and/or to bear expenses of the Fund to the
extent necessary to prevent total Fund operating expenses (excluding expenses
associated with securities sold short, acquired fund fees and expenses other
than the advisory fees of any AB Mutual Funds in which the Fund may invest,
interest expense, taxes, extraordinary expenses, and brokerage commissions and
other transaction costs), on an annualized basis, from exceeding 1.90%, 2.65%,
1.65%, 2.15%, 1.90% and 1.65% of average daily net assets, respectively, for
Class A, Class C, Advisor Class, Class R, Class K and Class I shares. The
expense limitation agreement may be terminated after October 31, 2018 upon 60
days' prior notice by the Adviser. No reimbursement payment will be made that
would cause the Fund's total annualized operating expenses to exceed the total
expense amount set forth above for each class. Prior to February 3, 2017, the
Fund had contractually agreed to pay a monthly fee to the Adviser at an
annualized rate of 1.70% of the first $2.5 billion of the Fund's average daily
net assets and 1.60% of the excess over $2.5 billion. Prior to July 1, 2015 the
Fund paid the Adviser an advisory fee at an annual rate of 1.70% of the Fund's
average daily net assets. Prior to February 3, 2017, the Adviser had
contractually agreed to waive its management fees and/or to bear expenses of the
Fund to the extent necessary to prevent total Fund operating expenses (excluding
expenses associated with securities sold short, acquired fund fees and expenses
other than the advisory fees of any AB Mutual Funds in which the Fund may
invest, interest expense, taxes, extraordinary expenses, and brokerage
commissions and other transaction costs), on an annualized basis, from exceeding
2.20%, 2.95%, 1.95%, 2.45%, 2.20% and 1.95% of average daily net assets,
respectively, for Class A, Class C, Advisor Class, Class R, Class K and Class I
shares. For the fiscal years of the Fund ended June 30, 2017, June 30, 2016 and
June 30, 2015, the Adviser received management fees of $16,671,793 (net of $0,
which was waived by the adviser pursuant to the expense limitation agreement),
$24,932,628 (net of $0, which was waived by the Adviser pursuant to the expense
limitation agreement) and $30,585,442 (net of $0, which was waived by the
Adviser pursuant to the expense limitation agreement), respectively. In
connection with the investment by the Fund in the AB Government Money Market
Portfolio, the Adviser waived its investment management fee from the Fund in the
amount of $746,550 and $64,774 for the fiscal years ended June 30, 2017 and June
30, 2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement for an
additional annual term was approved by a vote, cast in person, of the Board at
its meetings held on May 2-4, 2017.
SUSTAINABLE GLOBAL THEMATIC FUND
For its services under the terms of the Advisory Agreement, the
Adviser receives a quarterly fee equal to the following percentages of the value
of the Fund's aggregate net assets at the close of business on the last business
day of the previous quarter: 1/4 of 0.75% of the first $2.5 billion; 1/4 of
0.65% of the excess over $2.5 billion up to $5 billion; and 1/4 of 0.60% of the
excess over $5 billion. For the fiscal years of the Fund ended July 31, 2017,
July 31, 2016 and July 31, 2015, the Adviser received from the Fund advisory
fees of $5,244,165, $4,764,531 and $5,319,828, respectively. In connection with
the investment by the Fund in the AB Government Money Market Portfolio, the
Adviser waived its investment management fee from the Fund in the amount of
$103,537 and $10,054 for the fiscal years ended July 31, 2017 and July 31, 2016,
respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
INTERNATIONAL GROWTH
For its services under the terms of the Advisory Agreement, the
Adviser receives a fee of 0.75% of the first $2.5 billion, 0.65% of the excess
over $2.5 billion up to $5 billion and 0.60% of the excess over $5 billion as a
percentage of the Fund's average daily net assets. The Adviser has contractually
agreed to waive its fee and bear certain expenses so that total expenses do not
exceed on an annual basis 1.60%, 2.35%, 2.35%, 1.85%, 1.60%, 1.35% and 1.35% of
aggregate average daily net assets, respectively, for Class A, Class B, Class C,
Class R, Class K, Class I and Advisor Class shares. This fee waiver and/or
expense reimbursement agreement automatically extends each year unless the
Adviser provides notice to the Fund at least 60 days prior to the end of the
Period. For the fiscal years ended June 30, 2017, June 30, 2016 and June 30,
2015, the Adviser received from the Fund advisory fees of $2,277,806, $2,724,308
and $3,500,589, respectively. In connection with the investment by the Fund in
the AB Government Money Market Portfolio, the Adviser waived its investment
management fee from the Fund in the amount of $25,563 and $1,815 for the fiscal
year ended June 30, 2017 and June 30, 2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
GLOBAL CORE EQUITY
For its services under the terms of the Advisory Agreement, the
Adviser receives a monthly fee at an annualized rate of 0.75% of the first $2.5
billion, 0.65% of the excess over $2.5 billion up to $5 billion and 0.60% of the
excess over $5 billion as a percentage of the Fund's average daily net assets.
The Adviser has contractually agreed to waive its management fees and/or to bear
expenses of the Fund through October 31, 2018 to the extent necessary to prevent
total Fund operating expenses (excluding expenses associated with acquired fund
fees and expenses other than the advisory fees of any AB Mutual Funds in which
the Fund may invest, interest expense, taxes, extraordinary expenses, and
brokerage commissions and other transaction costs), on an annualized basis, from
exceeding 1.15%, 1.90%, 0.90%, 1.40%, 1.15%, 0.90% and 0.90% of average daily
net assets, respectively, for Class A, Class C, Advisor Class, Class R, Class K,
Class I and Class Z shares. Any fees waived and expenses borne by the Adviser
may be reimbursed by the Fund until the end of the third fiscal year after the
fiscal period in which the fee was waived or the expense was borne, provided
that no reimbursement payment will be made that would cause the Fund's total
annual fund operating expenses to exceed the amounts listed above. For the
fiscal years of the Fund ended June 30, 2017, June 30, 2016 and fiscal period
ended June 30, 2015, the Adviser received from the Fund advisory fees of
$1,488,603, $761,222 and $0 (net of $149,385, $231,010 and $269,481,
respectively, which was waived by the Adviser pursuant to the expense limitation
agreement), respectively. In connection with the investment by the Fund in the
AB Government Money Market Portfolio, the Adviser waived its investment
management fee from the Fund in the amount of $5,314 and $144 for the fiscal
years ended June 30, 2017 and June 30, 2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
INTERNATIONAL STRATEGIC CORE
For its services under the Advisory Agreement, the Adviser receives
a monthly fee at an annualized rate of 0.75% of the first $2.5 billion of the
Fund's average daily net assets, 0.65% of the excess of $2.5 billion up to $5
billion, and 0.60% of the excess over $5 billion. The Adviser has contractually
agreed to waive its fee and bear certain expenses so that total Fund operating
expenses (excluding acquired fund fees and expenses other than the advisory fees
of any AB Mutual Funds in which the Fund may invest, interest expense, expenses
on securities sold short, brokerage commissions and other transaction costs,
taxes and extraordinary expenses) do not exceed on an annual basis 1.20%, 1.95%
and 0.95% of average daily net assets, respectively, for Class A, Class C and
Advisor Class shares. This fee waiver and/or expense reimbursement agreement may
not be terminated before October 31, 2018. Fees waived and expenses borne by the
Adviser are subject to reimbursement until the end of the third fiscal year
after the fiscal period in which the fee was waived or the expense was borne. No
reimbursement payment will be made that would cause a Fund's total annualized
operating expenses to exceed the amounts listed above. For the fiscal year and
period of the Fund ended June 30, 2017 and June 30, 2016, the Adviser received
from the Fund advisory fees of $0 and $0 (net of $403,707 and $309,933,
respectively, which was waived by the Adviser pursuant to the expense limitation
agreement), respectively. In connection with the investment by the Fund in the
AB Government Money Market Portfolio, the Adviser waived its investment
management fee from the Fund in the amount of $1,016 and $13 for the fiscal year
ended June 30, 2017 and June 30, 2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
CONCENTRATED INTERNATIONAL GROWTH
For its services under the terms of the Advisory Agreement, the
Adviser receives a monthly fee at an annualized rate of 0.85% of the Fund's
average daily net assets. The Adviser has contractually agreed to waive its fee
and bear certain expenses so that total expenses (excluding Acquired Fund Fees
and Expenses other than the advisory fees of any AB Fund in which the Fund may
invest, interest expense, brokerage commissions and other transaction costs,
taxes and extraordinary expenses) do not exceed on an annual basis 1.30%, 2.05%,
1.55%, 1.30%, 1.05%, 1.05% and 1.05% of average daily net assets, respectively,
for Class A, Class C, Class R, Class K, Class I, Class Z and Advisor Class
shares. This fee waiver and/or expense reimbursement agreement may not be
terminated before October 31, 2018. Fees waived and expenses borne by the
Adviser are subject to reimbursement until the end of the third fiscal year
after the fiscal period in which the fee was waived or the expense was borne. No
reimbursement payment will be made that would cause the Fund's total annualized
operating expenses to exceed the amounts listed above. For the fiscal years
ended June 30, 2017 and June 30, 2016, the Adviser received from the Fund
advisory fees of $0 (net of $264,793, which was waived by the Adviser pursuant
to the expense limitation agreement) and $0 (net of $228,495, which was waived
by the Adviser pursuant to the expense limitation agreement), respectively. In
connection with the investment by the Fund in the AB Government Money Market
Portfolio, the Adviser waived its investment management fee from the Fund in the
amount of $978 and $4 for the fiscal years ended June 30, 2017 and June 30,
2016, respectively.
Most recently, continuance of the Fund's Advisory Agreement was
approved for an additional annual term by a vote, cast in person, of the Board
at its meetings held on May 2-4, 2017.
ALL FUNDS
The Adviser may act as an investment adviser to other persons, firms
or corporations, including investment companies, and is the investment adviser
to AB Bond Fund, Inc., AB Cap Fund, Inc., AB Corporate Shares, AB Core
Opportunities Fund, Inc., AB Discovery Growth Fund, Inc., AB Equity Income Fund,
Inc., AB Fixed-Income Shares, Inc., AB Global Bond Fund, Inc., AB Global Real
Estate Investment Fund, Inc., AB Global Risk Allocation Fund, Inc., AB
Government Exchange Reserves, AB High Income Fund, Inc., AB Institutional Funds,
Inc., AB International Growth Fund, Inc., AB Large Cap Growth Fund, Inc., AB
Municipal Income Fund, Inc., AB Municipal Income Fund II, AB Relative Value
Fund, Inc., AB Sustainable Global Thematic Fund, Inc., AB Trust, AB
Unconstrained Bond Fund, Inc., AB Variable Products Series Fund, Inc., Bernstein
Fund, Inc. Sanford C. Bernstein Fund, Inc., Sanford C. Bernstein Fund II, Inc.
and The AB Portfolios, all registered open-end investment companies; and to
AllianceBernstein Global High Income Fund, Inc., AB Multi-Manager Alternative
Fund, AllianceBernstein National Municipal Income Fund, Inc. and Alliance
California Municipal Income Fund, Inc., all registered closed-end investment
companies. The registered investment companies for which the Adviser serves as
investment adviser are referred to collectively below as the "AB Fund Complex",
while all of these investment companies, except Bernstein Fund, Inc., Sanford C.
Bernstein Fund, Inc., and AB Multi-Manager Alternative Fund, are referred to
collectively below as the "AB Funds".
Board of Directors Information
------------------------------
The Boards are comprised of the same Directors for all Funds.
Certain information concerning the Directors is set forth below.
OTHER PUBLIC
PORTFOLIOS COMPANY
PRINCIPAL IN AB FUND DIRECTORSHIPS
OCCUPATION(S) COMPLEX CURRENTLY
NAME, ADDRESS,* DURING PAST OVERSEEN HELD BY
AGE AND FIVE YEARS AND BY TRUSTEE TRUSTEE OR
(YEAR ELECTED**) OTHER INFORMATION OR DIRECTOR DIRECTOR
---------------- ----------------- ----------- -------------
INDEPENDENT DIRECTORS
Marshall C. Turner, Private investor since 98 Xilinx, Inc.
Jr.,+ prior to 2012. Former (programmable
Chairman of the Board Chairman and CEO of logic semi-
76 Dupont Photomasks, Inc. conductors)
(1992 - Sustainable (components of since 2007
Global Thematic) semi-conductor
(2005 - Growth Fund, manufacturing). He has
Large Cap Growth, extensive operating
Discovery Growth, leadership and venture
Small Cap Growth, capital investing
International Growth) experience, including
(2011 - Select US five interim or
Equity, Select US full-time CEO roles,
Long/Short) and prior service as
(2014 - Concentrated general partner of
Growth, Global Core institutional venture
Equity, Concentrated capital partnerships.
International Growth) He also has extensive
(2015 - International non-profit board
Strategic Core) leadership experience,
and currently serves on
the boards of two
education and
science-related
non-profit
organizations. He has
served as a director of
one AB Fund since 1992,
and director or trustee
of multiple AB Funds
since 2005. He has
been Chairman of the AB
Funds since January
2014, and the Chairman
of the Independent
Directors Committees of
such AB Funds since
February 2014.
John H. Dobkin,+ Independent Consultant 97 None
75 since prior to 2012.
(1992 - Large Cap Formerly, President of
Growth, Discovery Save Venice, Inc.
Growth) (preservation
(1994 - Small Cap organization) from
Growth, International 2001-2002, Senior
Growth) Advisor from June
(1999 - Growth Fund) 1999-June 2000 and
(2005 - Sustainable President of Historic
Global Thematic) Hudson Valley (historic
(2011 - Select US preservation) from
Equity, Select US December 1989-May 1999.
Long/Short) Previously, Director of
(2014 - Concentrated the National Academy of
Growth, Global Core Design. He has served
Equity, Concentrated as a director or
International Growth) trustee of various AB
(2015 - International Funds since 1992 and as
Strategic Core) Chairman of the Audit
Committees of a number
of such AB Funds from
2001-2008.
Michael J. Downey,+ Private Investor since 98 The Asia
73 prior to 2012. Pacific Fund,
(2005 - Growth Fund, Formerly, managing Inc.(registered
Large Cap Growth, partner of Lexington investment
Discovery Growth, Capital, LLC company) since
Small Cap Growth, (investment advisory prior to 2012
Sustainable Global firm) from December
Thematic, International 1997 until December
Growth) 2003. He served as a
(2011 - Select US Director of Prospect
Equity, Select US Acquisition Corp.
Long/Short) (financial services)
(2014 - Concentrated from 2007 until 2009.
Growth, From 1987 until 1993,
Global Core Equity, Chairman and CEO of
Concentrated Prudential Mutual Fund
International Growth) Management, director of
(2015 - International the Prudential mutual
Strategic Core) funds, and member of
the Executive Committee
of Prudential
Securities Inc. He has
served as a director or
trustee of the AB Funds
since 2005 and is a
director and chairman
of one other registered
investment company.
William H. Foulk, Jr.,+ Investment Adviser and 98 None
85 an Independent
(1992 - Large Cap Consultant since prior
Growth, Discovery to 2012. Previously,
Growth, Small Cap he was Senior Manager
Growth, Sustainable of Barrett Associates,
Global Thematic) Inc., a registered
(1994 - International investment adviser. He
Growth) was formerly Deputy
(1998 - Growth Fund) Comptroller and Chief
(2011 - Select US Investment Officer of
Equity, Select US the State of New York
Long/Short) and, prior thereto,
(2014 - Concentrated Chief Investment
Growth, Global Core Officer of the New York
Equity, Concentrated Bank for Savings. He
International Growth) has served as a
(2015 - International director or trustee of
Strategic Core) various AB Funds since
1983, and was Chairman
of the Independent
Directors Committees of
the AB Funds from 2003
to early February 2014.
He served as Chairman
of such AB Funds from
2003 through December
2013. He is also active
in a number of mutual
fund related
organizations and
committees.
D. James Guzy,+ Chairman of the Board 95 None
81 of SRC Computers, Inc.
(1982 - Sustainable (semi-conductors), with
Global Thematic) which he has been
(2005 - Growth Fund, associated since prior
Large Cap to 2012. He served as
Growth, Discovery Chairman of the Board
Growth, of PLX Technology
Small Cap Growth, (semi-conductors),
International Growth) since prior to 2012
(2011 - Select US until November 2013. He
Equity, Select US was a director of Intel
Long/Short) Corporation
(2014 - Concentrated (semi-conductors) from
Growth, Global Core 1969 until 2008, and
Equity, Concentrated served as Chairman of
International Growth) the Finance Committee
(2015 - International of such company for
Strategic Core) several years until May
2008. He has served as
a director or trustee
of one or more of the
AB Funds since 1982.
Nancy P. Jacklin,+ Private Investor since 98 None
69 prior to 2012.
(2006 - Growth Fund, Professorial Lecturer
Large Cap Growth, at the Johns Hopkins
Discovery Growth, School of Advanced
Small Cap Growth, International Studies
Sustainable Global (2008-2015). U.S.
Thematic, International Executive Director of
Growth) the International
(2011 - Select US Monetary Fund (which is
Equity, Select US responsible for
Long/Short) ensuring the stability
(2014 - Concentrated of the international
Growth, Global Core monetary system)
Equity, Concentrated (December 2002-May
International Growth) 2006); Partner,
(2015 - International Clifford Chance
Strategic Core) (1992-2002); Sector
Counsel, International
Banking and Finance,
and Associate General
Counsel, Citicorp
(1985-1992); Assistant
General Counsel
(International),
Federal Reserve Board
of Governors
(1982-1985); and
Attorney Advisor, U.S.
Department of the
Treasury (1973-1982).
Member of the Bar of
the District of
Columbia and of New
York; and member of the
Council on Foreign
Relations. She has
served as a director or
trustee of the AB Funds
since 2006 and has been
Chairman of the
Governance and
Nominating Committees
of the AB Funds since
August 2014.
Carol C. McMullen,+ Managing Director of 98 None
62 Slalom Consulting
(2016) (consulting) since
2014, private investor
and member of the
Partners Healthcare
Investment Committee.
Formerly, Director of
Norfolk & Dedham Group
(mutual property and
casualty insurance)
from 2011 until
November 2016; Director
of Partners Community
Physicians Organization
(healthcare) from 2014
until December 2016;
and Managing Director
of The Crossland Group
(consulting) from 2012
until 2013. She has
held a number of senior
positions in the asset
and wealth management
industries, including
at Eastern Bank (where
her roles included
President of Eastern
Wealth Management),
Thomson Financial
(Global Head of Sales
for Investment
Management), and Putnam
Investments (where her
roles included Head of
Global Investment
Research). She has
served on a number of
private company and
nonprofit boards, and
as a director or
trustee of the AB Funds
since June 2016.
Garry L. Moody,+ Independent Consultant. 98 None
65 Formerly, Partner,
(2008 - Growth Fund, Deloitte & Touche LLP
Large Cap Growth, (1995-2008) where he
Discovery Growth, held a number of senior
Small Cap Growth, positions, including
Sustainable Global Vice Chairman, and U.S.
Thematic, International and Global Investment
Growth) Management Practice
(2011 - Select US Managing Partner;
Equity, Select US President, Fidelity
Long/Short) Accounting and Custody
(2014 - Concentrated Services Company
Growth, Global Core (1993-1995), where he
Equity, Concentrated was responsible for
International Growth) accounting, pricing,
(2015 - International custody and reporting
Strategic Core) for the Fidelity mutual
funds; and Partner,
Ernst & Young LLP
(1975-1993), where he
served as the National
Director of Mutual Fund
Tax Services and
Managing Partner of its
Chicago Office Tax
department. He is a
member of the Trustee
Advisory Board of
BoardIQ, a biweekly
publication focused on
issues and news
affecting directors of
mutual funds. He has
served as a director or
trustee, and as
Chairman of the Audit
Committees of the AB
Funds since 2008.
Earl D. Weiner,+ Of Counsel, and Partner 98 None
78 prior to January 2007,
(2007 - Growth Fund, of the law firm
Large Cap Growth, Sullivan & Cromwell LLP
Discovery Growth, and is a former member
Small Cap Growth, of the ABA Federal
Sustainable Global Regulation of
Thematic, International Securities Committee
Growth) Task Force to draft
(2011 - Select US editions of the Fund
Equity, Select US Director's Guidebook.
Long/Short) He also serves as a
(2014 - Concentrated director or trustee of
Growth, Global Core various non-profit
Equity, Concentrated organizations and has
International Growth) served as Chairman or
(2015 - International Vice Chairman of a
Strategic Core) number of them. He has
served as a director or
trustee of the AB Funds
since 2007 and served
as Chairman of the
Governance and
Nominating Committees
of the AB Funds from
2007 until August 2014.
INTERESTED DIRECTOR
Robert M. Keith,# Senior Vice President 98 None
57 of the Adviser and the
(2010 - Growth Fund, head of
Large Cap Growth, AllianceBernstein
Discovery Growth, Investments, Inc.
Small Cap Growth, ("ABI")## since July
Sustainable Global 2008; Director of ABI
Thematic, International and President of the AB
Growth) Mutual Funds. Previously,
(2011 - Select US he served as Executive
Equity, Select US Managing Director of ABI
Long/Short) from December 2006 to June
(2014 - Concentrated 2008. Prior to joining
Growth, Global Core ABI in 2006, Executive
Equity, Concentrated Managing Director of
International Growth) Bernstein Global Wealth
(2015 - International Management, and prior
Strategic Core) thereto, Senior
Managing Director and
Global Head of Client
Service and Sales of
the Adviser's
institutional
investment management
business since 2004.
Prior thereto, he was
Managing Director and
Head of North American
Client Service and
Sales in the Adviser's
institutional
investment management
business, with which he
had been associated
since prior to 2004.
---------------
* The address for each of the Fund's Directors is c/o AllianceBernstein L.P.,
Attention: Philip L. Kirstein, 1345 Avenue of the Americas, New York, NY
10105.
** There is no stated term of office for the Funds' Directors.
+ Member of the Audit Committee, the Governance and Nominating Committee and
the Independent Directors Committee.
# Mr. Keith is an "interested person", as defined in Section 2(a)(19) of the
1940 Act, of the Funds because of his affiliation with the Adviser.
## The Adviser and ABI are affiliates of the Funds.
In addition to the public company directorships currently held by
the Directors set forth in the table above, Mr. Turner was a director of
SunEdison, Inc. (solar materials and power plants) since prior to 2012 until
July 2014, Mr. Downey was a director of The Merger Fund (a registered investment
company) since prior to 2012 until 2013, Mr. Guzy served as Chairman of the
Board of PLX Technology (semi-conductors) since prior to 2012 until November
2013, and Mr. Moody was a director of Greenbacker Renewable Energy Company LLC
(renewable energy and energy efficiency projects) from August 2013 until January
2014.
The business and affairs of each Fund are overseen by the Board.
Directors who are not "interested persons" of the Fund as defined in the 1940
Act, are referred to as "Independent Directors", and Directors who are
"interested persons" of the Fund are referred to as "Interested Directors".
Certain information concerning the Fund's governance structure and each Director
is set forth below.
Experience, Skills, Attributes and Qualifications of the Funds'
Directors. The Governance and Nominating Committee of each Fund's Board, which
is composed of Independent Directors, reviews the experience, qualifications,
attributes and skills of potential candidates for nomination or election by the
Board, and conducts a similar review in connection with the proposed nomination
of current Directors for re-election by shareholders at any annual or special
meeting of shareholders. In evaluating a candidate for nomination or election as
a Director, the Governance and Nominating Committee takes into account the
contribution that the candidate would be expected to make to the diverse mix of
experience, qualifications, attributes and skills that the Governance and
Nominating Committee believes contributes to good governance for the Fund.
Additional information concerning the Governance and Nominating Committee's
consideration of nominees appears in the description of the Committee below.
Each Fund's Board believes that, collectively, the Directors have
balanced and diverse experience, qualifications, attributes and skills, which
allow the Board to operate effectively in governing the Fund and protecting the
interests of shareholders. The Board of each Fund has concluded that, based on
each Director's experience, qualifications, attributes or skills on an
individual basis and in combination with those of the other Directors, each
Director is qualified and should continue to serve as such.
In determining that a particular Director was and continues to be
qualified to serve as a Director, each Board has considered a variety of
criteria, none of which, in isolation, was controlling. In addition, each Board
has taken into account the actual service and commitment of each Director during
his or her tenure (including the Director's commitment and participation in
Board and committee meetings, as well as his or her current and prior leadership
of standing and ad hoc committees) in concluding that each should continue to
serve. Additional information about the specific experience, skills, attributes
and qualifications of each Director, which in each case led to the Board's
conclusion that the Director should serve (or continue to serve) as trustee or
director of the Fund, is provided in the table above and in the next paragraph.
Among other attributes and qualifications common to all Directors
are their ability to review critically, evaluate, question and discuss
information provided to them (including information requested by the Directors),
to interact effectively with the Adviser, other service providers, counsel and
the Fund's independent registered public accounting firm, and to exercise
effective business judgment in the performance of their duties as Directors. In
addition to his or her service as a Director of the Fund and other AB Funds as
noted in the table above: Mr. Dobkin has experience as an executive of a number
of organizations and served as Chairman of the Audit Committees of many of the
AB Funds from 2001 to 2008; Mr. Downey has experience in the investment advisory
business including as Chairman and Chief Executive Officer of a large fund
complex and as director of a number of non-AB funds and as Chairman of a non-AB
closed-end fund; Mr. Foulk has experience in the investment advisory and
securities businesses, including as Deputy Comptroller and Chief Investment
Officer of the State of New York (where his responsibilities included bond
issuances, cash management and oversight of the New York Common Retirement
Fund), has served as Chairman of the Independent Directors Committees from 2003
until early February 2014, served as Chairman of the AB Funds from 2003 through
December 2013, and is active in a number of mutual fund related organizations
and committees; Mr. Guzy has experience as a corporate director including as
Chairman of a public company and Chairman of the Finance Committee of a large
public technology company; Ms. Jacklin has experience as a financial services
regulator, as U.S. Executive Director of the International Monetary Fund (which
is responsible for ensuring the stability of the international monetary system),
and as a financial services lawyer in private practice, and has served as
Chairman of the Governance and Nominating Committees of the AB Funds since
August 2014; Mr. Keith has experience as an executive of the Adviser with
responsibility for, among other things, the AB Funds; Ms. McMullen has
experience as a management consultant and as a director of various private
companies and nonprofit organizations, as well as extensive asset management
experience at a number of companies, including as an executive in the areas of
portfolio management, research, and sales and marketing; Mr. Moody has
experience as an certified public accountant including experience as Vice
Chairman and U.S. and Global Investment Management Practice Partner for a major
accounting firm, is a member of both the governing council of an organization of
independent directors of mutual funds, and the Trustee Advisory Board of
BoardIQ, a biweekly publication focused on issues and news affecting directors
of mutual funds, and has served as a director or trustee and Chairman of the
Audit Committees of the AB Funds since 2008; Mr. Turner has experience as a
director (including Chairman and Chief Executive Officer of a number of
companies) and as a venture capital investor including prior service as general
partner of three institutional venture capital partnerships, and has served as
Chairman of the AB Funds since January 2014 and Chairman of the Independent
Directors Committees of such Funds since February 2014; and Mr. Weiner has
experience as a securities lawyer whose practice includes registered investment
companies and as director or trustee of various non-profit organizations and
Chairman or Vice Chairman of a number of them, and served as Chairman of the
Governance and Nominating Committees of the AB Funds from 2007 until August
2014. The disclosure herein of a director's experience, qualifications,
attributes and skills does not impose on such director any duties, obligations,
or liability that are greater than the duties, obligations and liability imposed
on such director as a member of the Board and any committee thereof in the
absence of such experience, qualifications, attributes and skills.
Board Structure and Oversight Function. Each Fund's Board is
responsible for oversight of that Fund. Each Fund has engaged the Adviser to
manage the Fund on a day-to-day basis. Each Board is responsible for overseeing
the Adviser and the Fund's other service providers in the operations of that
Fund in accordance with the Fund's investment objective and policies and
otherwise in accordance with its prospectus, the requirements of the 1940 Act
and other applicable Federal, state and other securities and other laws, and the
Fund's charter and bylaws. Each Board meets in-person at regularly scheduled
meetings four times throughout the year. In addition, the Directors may meet
in-person or by telephone at special meetings or on an informal basis at other
times. The Independent Directors also regularly meet without the presence of any
representatives of management. As described below, each Board has established
three standing committees - the Audit, Governance and Nominating and Independent
Directors Committees - and may establish ad hoc committees or working groups
from time to time, to assist the Board in fulfilling its oversight
responsibilities. Each committee is composed exclusively of Independent
Directors. The responsibilities of each committee, including its oversight
responsibilities, are described further below. The Independent Directors have
also engaged independent legal counsel, and may, from time to time, engage
consultants and other advisors, to assist them in performing their oversight
responsibilities.
An Independent Director serves as Chairman of each Board. The
Chairman's duties include setting the agenda for each Board meeting in
consultation with management, presiding at each Board meeting, meeting with
management between Board meetings, and facilitating communication and
coordination between the Independent Directors and management. The Directors
have determined that a Board's leadership by an Independent Director and its
committees composed exclusively of Independent Directors is appropriate because
they believe it sets the proper tone to the relationships between the Fund, on
the one hand, and the Adviser and other service providers, on the other, and
facilitates the exercise of the Board's independent judgment in evaluating and
managing the relationships. In addition, each Fund is required to have an
Independent Director as Chairman pursuant to certain 2003 regulatory settlements
involving the Adviser.
Risk Oversight. Each Fund is subject to a number of risks, including
investment, compliance and operational risks, including cyber risks. Day-to-day
risk management with respect to a Fund resides with the Adviser or other service
providers (depending on the nature of the risk), subject to supervision by the
Adviser. Each Board has charged the Adviser and its affiliates with (i)
identifying events or circumstances, the occurrence of which could have
demonstrable and material adverse effects on the Fund; (ii) to the extent
appropriate, reasonable or practicable, implementing processes and controls
reasonably designed to lessen the possibility that such events or circumstances
occur or to mitigate the effects of such events or circumstances if they do
occur; and (iii) creating and maintaining a system designed to evaluate
continuously, and to revise as appropriate, the processes and controls described
in (i) and (ii) above.
Risk oversight forms part of a Board's general oversight of a Fund's
investment program and operations and is addressed as part of various regular
Board and committee activities. Each Fund's investment management and business
affairs are carried out by or through the Adviser and other service providers.
Each of these persons has an independent interest in risk management but the
policies and the methods by which one or more risk management functions are
carried out may differ from the Fund's and each other's in the setting of
priorities, the resources available or the effectiveness of relevant controls.
Oversight of risk management is provided by the Board and the Audit Committee.
The Directors regularly receive reports from, among others, management
(including the Chief Risk Officer and the Global Heads of Investment Risk and
Trading Risk of the Adviser), a Fund's Senior Officer (who is also the Fund's
Independent Compliance Officer), the Fund's Chief Compliance Officer, the Fund's
independent registered public accounting firm, the Adviser's internal legal
counsel, the Adviser's Chief Compliance Officer and internal auditors for the
Adviser, as appropriate, regarding risks faced by the Fund and the Adviser's
risk management programs. In addition, the Directors receive regular updates on
cyber security matters from the Adviser.
Not all risks that may affect a Fund can be identified, nor can
controls be developed to eliminate or mitigate their occurrence or effects. It
may not be practical or cost-effective to eliminate or mitigate certain risks,
the processes and controls employed to address certain risks may be limited in
their effectiveness, and some risks are simply beyond the reasonable control of
the Fund or the Adviser, its affiliates or other service providers. Moreover, it
is necessary to bear certain risks (such as investment-related risks) to achieve
a Fund's goals. As a result of the foregoing and other factors a Fund's ability
to manage risk is subject to substantial limitations.
Board Committees. Each Fund's Board has three standing committees--
an Audit Committee, a Governance and Nominating Committee and an Independent
Directors Committee. The members of the Audit, Governance and Nominating, Fair
Value Pricing and Independent Directors Committees are identified above.
The function of the Audit Committee is to assist the Boards in their
oversight of each Fund's accounting and financial reporting policies and
practices. The Audit Committee of Growth Fund, Large Cap Growth, Concentrated
Growth, Discovery Growth, Small Cap Growth, Select US Equity, Select US
Long/Short, Sustainable Global Thematic, International Growth, Global Core
Equity, International Strategic Core and Concentrated International Growth each
met three times during the Funds' most recently completed fiscal year.
The function of the Governance and Nominating Committee includes the
nomination of persons to fill any vacancies or newly created positions on the
Boards. The Governance and Nominating Committee of Growth Fund, Large Cap
Growth, Discovery Growth, Concentrated Growth, , Small Cap Growth, Select US
Equity, Select US Long/Short, Sustainable Global Thematic, International Growth,
Global Core Equity, International Strategic Core and Concentrated International
Growth each met three times during the Funds' most recently completed fiscal
year.
The Board has adopted a charter for its Governance and Nominating
Committee. Pursuant to the charter, the Committee assists the Board in carrying
out its responsibilities with respect to governance of the Fund and identifies,
evaluates, selects and nominates candidates for the Board. The Committee may
also set standards or qualifications for Directors and reviews at least annually
the performance of each Director, taking into account factors such as attendance
at meetings, adherence to Board policies, preparation for and participation at
meetings, commitment and contribution to the overall work of the Board and its
committees, and whether there are health or other reasons that might affect the
Director's ability to perform his or her duties. The Committee may consider
candidates as Directors submitted by the Fund's current Board members, officers,
the Adviser, shareholders and other appropriate sources.
Pursuant to the charter, the Governance and Nominating Committee
will consider candidates for nomination as a trustee submitted by a shareholder
or group of shareholders who have beneficially owned at least 5% of the Fund's
common stock or shares of beneficial interest for at least two years at the time
of submission and who timely provide specified information about the candidates
and the nominating shareholder or group. To be timely for consideration by the
Governance and Nominating Committee, the submission, including all required
information, must be submitted in writing to the attention of the Secretary at
the principal executive offices of the Funds not less than 120 days before the
date of the proxy statement for the previous year's annual meeting of
shareholders. If the Funds did not hold an annual meeting of shareholders in the
previous year, the submission must be delivered or mailed and received within a
reasonable amount of time before the Funds begin to print and mail its proxy
materials. Public notice of such upcoming annual meeting of shareholders may be
given in a shareholder report or other mailing to shareholders or by other means
deemed by the Governance and Nominating Committee or the Board to be reasonably
calculated to inform shareholders.
Shareholders submitting a candidate for consideration by the
Governance and Nominating Committee must provide the following information to
the Governance and Nominating Committee: (i) a statement in writing setting
forth (A) the name, date of birth, business address and residence address of the
candidate; (B) any position or business relationship of the candidate, currently
or within the preceding five years, with the shareholder or an associated person
of the shareholder as defined below; (C) the class or series and number of all
shares of a Fund owned of record or beneficially by the candidate; (D) any other
information regarding the candidate that is required to be disclosed about a
nominee in a proxy statement or other filing required to be made in connection
with the solicitation of proxies for election of Directors pursuant to Section
20 of the 1940 Act and the rules and regulations promulgated thereunder; (E)
whether the shareholder believes that the candidate is or will be an "interested
person" of the Funds (as defined in the 1940 Act) and, if believed not to be an
"interested person," information regarding the candidate that will be sufficient
for the Funds to make such determination; and (F) information as to the
candidate's knowledge of the investment company industry, experience as a
director or senior officer of public companies, directorships on the boards of
other registered investment companies and educational background; (ii) the
written and signed consent of the candidate to be named as a nominee and to
serve as a Director if elected; (iii) the written and signed agreement of the
candidate to complete a directors' and officers' questionnaire if elected; (iv)
the shareholder's consent to be named as such by the Funds; (v) the class or
series and number of all shares of a fund of the Funds owned beneficially and of
record by the shareholder and any associated person of the shareholder and the
dates on which such shares were acquired, specifying the number of shares owned
beneficially but not of record by each, and stating the names of each as they
appear on the Funds' record books and the names of any nominee holders for each;
and (vi) a description of all arrangements or understandings between the
shareholder, the candidate and/or any other person or persons (including their
names) pursuant to which the recommendation is being made by the shareholder.
"Associated person of the shareholder" means any person who is required to be
identified under clause (vi) of this paragraph and any other person controlling,
controlled by or under common control with, directly or indirectly, (a) the
shareholder or (b) the associated person of the shareholder.
The Governance and Nominating Committee may require the shareholder
to furnish such other information as it may reasonably require or deem necessary
to verify any information furnished pursuant to the nominating procedures
described above or to determine the qualifications and eligibility of the
candidate proposed by the shareholder to serve on the Board. If the shareholder
fails to provide such other information in writing within seven days of receipt
of written request from the Governance and Nominating Committee, the
recommendation of such candidate as a nominee will be deemed not properly
submitted for consideration, and will not be considered, by the Committee.
The Governance and Nominating Committee will consider only one
candidate submitted by such a shareholder or group for nomination for election
at an annual meeting of shareholders. The Governance and Nominating Committee
will not consider self-nominated candidates. The Governance and Nominating
Committee will consider and evaluate candidates submitted by shareholders on the
basis of the same criteria as those used to consider and evaluate candidates
submitted from other sources. These criteria include the candidate's relevant
knowledge, experience, and expertise, the candidate's ability to carry out his
or her duties in the best interests of the Funds, and the candidate's ability to
qualify as an Independent Director or Trustee. When assessing a candidate for
nomination, the Committee considers whether the individual's background, skills,
and experience will complement the background, skills and experience of other
nominees and will contribute to the diversity of the Board.
The function of the Independent Directors Committee is to consider
and take action on matters that the Board or Committee believes should be
addressed in executive session of the Independent Directors, such as review and
approval of the Advisory and Distribution Services Agreements. The Independent
Directors Committee of Growth Fund, Large Cap Growth, Discovery Growth, Small
Cap Growth, and Sustainable Global Thematic each met seven times during the
Funds' most recently completed fiscal year. The Independent Directors Committee
of International Growth, Global Core Equity, Select US Equity, Select US
Long/Short, Concentrated Growth, International Strategic Core and Concentrated
International Growth each met seven times during the Funds' most recently
completed fiscal year.
The dollar range of each Fund's securities owned by each Director or
Trustee and the aggregate dollar range of securities of funds in the AB Fund
Complex owned by each Director are set forth
below.
DOLLAR RANGE DOLLAR RANGE DOLLAR RANGE
OF EQUITY OF EQUITY OF EQUITY
SECURITIES IN SECURITIES IN SECURITIES IN
GROWTH LARGE CAP CONCENTRATED
FUND AS OF GROWTH AS OF GROWTH AS OF
DECEMBER 31, 2016 DECEMBER 31, 2016 DECEMBER 31, 2016
----------------- ----------------- -----------------
John H. Dobkin None $10,001-$50,000 None
Michael J. Downey None None None
William H. Foulk, Jr. $10,001-$50,000 $50,001-$100,000 None
D. James Guzy None None None
Nancy P. Jacklin None None None
Robert M. Keith None None None
Carol C. McMullen None None None
Garry L. Moody None $10,001-$50,000 $10,001-$50,000
Marshall C. Turner, Jr. None None $10,001-$50,000
Earl D. Weiner None $10,001-$50,000 None
DOLLAR RANGE DOLLAR RANGE DOLLAR RANGE
OF EQUITY OF EQUITY OF EQUITY
SECURITIES IN SECURITIES IN SECURITIES IN
DISCOVERY SMALL CAP SELECT US
GROWTH AS OF GROWTH AS OF EQUITY AS OF
DECEMBER 31, 2016 DECEMBER 31, 2016 DECEMBER 31, 2016
----------------- --------------- ----------------
John H. Dobkin Over $100,000 $10,001-$50,000 None
Michael J. Downey $50,001-$100,000 None None
William H. Foulk, Jr. $10,001-$50,000 $10,001-$50,000 None
D. James Guzy None None None
Nancy P. Jacklin $10,001-$50,000 None $10,001-$50,000
Robert M. Keith None None None
Carol C. McMullen None None None
Garry L. Moody Over $100,000 None Over $100,000
Marshall C. Turner, Jr. $50,001-$100,000 $10,001-$50,000 $10,001-$50,000
Earl D. Weiner $10,001-$50,000 None None
DOLLAR RANGE DOLLAR RANGE DOLLAR RANGE
OF EQUITY OF EQUITY OF EQUITY
SECURITIES IN SECURITIES IN SECURITIES IN
SELECT US INTERNATIONAL SUSTAINABLE GLOBAL
LONG/SHORT AS OF GROWTH AS OF THEMATIC AS OF
DECEMBER 31, 2016 DECEMBER 31, 2016 DECEMBER 31, 2016
----------------- ---------------- -----------------
John H. Dobkin None None $50,001-$100,000
Michael J. Downey None None $50,001-$100,000
William H. Foulk, Jr. None $10,001-$50,000 $10,001-$50,000
D. James Guzy None None None
Nancy P. Jacklin None None None
Robert M. Keith None None None
Carol C. McMullen None None None
Garry L. Moody $10,001-$50,000 None $10,001-$50,000
Marshall C. Turner, Jr. $50,001-$100,000 None None
Earl D. Weiner None $10,001-$50,000 None
DOLLAR RANGE DOLLAR RANGE
DOLLAR RANGE OF EQUITY OF EQUITY
OF EQUITY SECURITIES IN SECURITIES IN
SECURITIES IN INTERNATIONAL CONCENTRATED
GLOBAL CORE STRATEGIC CORE INTERNATIONAL
EQUITY AS OF AS OF GROWTH AS OF
DECEMBER 31, 2016 DECEMBER 31, 2016 DECEMBER 31, 2016
----------------- ----------------- -----------------
John H. Dobkin None None None
Michael J. Downey None None None
William H. Foulk, Jr. None None None
D. James Guzy None None None
Nancy P. Jacklin None None None
Robert M. Keith None None None
Carol C. McMullen None None None
Garry L. Moody None None None
Marshall C. Turner, Jr. None None None
Earl D. Weiner None None None
AGGREGATE DOLLAR
RANGE OF EQUITY
SECURITIES IN THE AB
FUND COMPLEX AS OF
DECEMBER 31, 2016
-----------------------
John H. Dobkin Over $100,000
Michael J. Downey Over $100,000
William H. Foulk, Jr. Over $100,000
D. James Guzy Over $100,000
Nancy P. Jacklin Over $100,000
Robert M. Keith None
Carol C. McMullen Over $100,000
Garry L. Moody Over $100,000
Marshall C. Turner, Jr. Over $100,000
Earl D. Weiner Over $100,000
Officer Information
-------------------
Certain information concerning each Fund's officers is set forth
below.
NAME, ADDRESS,* POSITION(S) PRINCIPAL OCCUPATION
AND AGE HELD WITH FUND DURING PAST FIVE YEARS
--------------- -------------- ----------------------
All Funds
---------
Robert M. Keith, President and Chief See biography above.
57 Executive Officer
Philip L. Kirstein, Senior Vice Senior Vice President and
72 President and Independent Compliance
Independent Officer of the AB Funds,
Compliance Officer with which he has been
associated since 2004.
Prior thereto, he was Of
Counsel to Kirkpatrick &
Lockhart, LLP from October
2003 to October 2004, and
General Counsel of Merrill
Lynch Investment Managers,
L.P. since prior to March
2003.
Emilie D. Wrapp, Secretary/Clerk Senior Vice President,
61 Assistant General Counsel
and Assistant Secretary of
ABI,** with which she has
been associated since
prior to 2012.
Joseph J. Mantineo, Treasurer and Chief Senior Vice President of
58 Financial Officer ABIS,** with which he has
been associated since
prior to 2012.
Vincent S. Noto, Chief Compliance Senior Vice President
52 Officer since 2015 and Mutual Fund
Chief Compliance Officer
of the Adviser** since
2014. Prior thereto, he
was Vice President and
Director of Mutual Fund
Compliance of the
Adviser** since prior to
2012.
Other Officers
--------------
Growth Fund
-----------
Bruce K. Aronow, Vice President Senior Vice President of
51 the Adviser,** with which
he has been associated
since prior to 2012.
Frank V. Caruso, Vice President Senior Vice President of
61 the Adviser,** with which
he has been associated
since prior to 2012.
John H. Fogarty, Vice President Senior Vice President of
47 the Adviser,** with which
he has been associated
since prior to 2012.
Phyllis J. Clarke, Controller and Vice President of ABIS,**
56 Chief Accounting with which she has been
Officer associated since prior to
2012.
Large Cap Growth
----------------
Frank V. Caruso, Vice President See above.
61
Vincent C. Dupont, Vice President Senior Vice President of
55 the Adviser,** with which
he has been associated
since prior to 2012.
John H. Fogarty, Vice President See above.
47
Karen A. Sesin, Vice President Senior Vice President of
58 the Adviser,** with which
she has been associated
since prior to 2012.
Phyllis J. Clarke, Controller See above.
56
Concentrated Growth
-------------------
James Tierney, Jr., Vice President Senior Vice President,
50 Chief Investment Officer
of Concentrated U.S.
Growth and Portfolio
Manager of the Adviser**,
with which he has been
associated since December
2013. Prior thereto, he
was Chief Investment
Officer of W.P. Stewart
and Co. Ltd. ("WPS")
(2010-2013) and Portfolio
Manager/Analyst and Senior
Vice President of WPS
since prior to 2012.
Phyllis J. Clarke, Controller See above.
56
Discovery Growth
----------------
Bruce K. Aronow, Vice President See above.
51
N. Kumar Kirpalani, Vice President Senior Vice President of
63 the Adviser,** with which
he has been associated
since prior to 2012.
Samantha S. Lau, Vice President Senior Vice President of
45 the Adviser,** with which
she has been associated
since prior to 2012.
Wen-Tse Tseng, Vice President Senior Vice President of
51 the Adviser,** with which
he has been associated
since prior to 2012.
Stephen M. Woetzel, Controller Vice President of ABIS,**
45 with which he has been
associated since prior to
2012.
Small Cap Growth
----------------
Bruce K. Aronow, Vice President See above.
51
N. Kumar Kirpalani, Vice President See above.
63
Samantha S. Lau, Vice President See above.
45
Wen-Tse Tseng, Vice President See above.
51
Phyllis J. Clarke, Controller See above.
56
Select US Equity
----------------
Kurt A. Feuerman, Vice President Senior Vice President and
61 Chief Investment Officer,
Select US Equity
Portfolios of the
Adviser,** with which he
has been associated since
prior to 2012.
Anthony Nappo, Vice President Senior Vice President,
45 Portfolio Manager and
Co-Chief Investment
Officer - Select US Equity
Portfolios of the
Adviser** since June 2015,
and Research Analyst on
the Select Equity
Portfolio Investment Team
since prior to 2012.
Phyllis J. Clarke, Controller See above.
56
Select US Long/Short
--------------------
Kurt A. Feuerman, Vice President See above.
61
Anthony Nappo, Vice President See above.
45
Phyllis J. Clarke, Controller See above.
56
Sustainable Global
Thematic
-----------------
Daniel C. Roarty, Vice President Senior Vice President of
45 the Adviser,** with which
he has been associated
since prior to 2012. He is
also Chief Investment Officer
of Thematic and Sustainable
Equities.
Phyllis J. Clarke, Controller See above.
56
International Growth
--------------------
Daniel C. Roarty, Vice President See above.
45
Phyllis J. Clarke, Controller See above.
56
Global Core Equity
------------------
David Dalgas, Vice President Senior Vice President of
46 the Adviser** since 2014
and Chief Investment
Officer, Global Core
Equity. Previously, he
served as Head of Equities
and Chief Investment
Officer of CPH Capital
Fondsmaeglerselskab A/S
("CPH Capital") since
prior to 2012.
Klaus Ingemann, Vice President Senior Vice President and
43 Senior Research
Analyst/Portfolio Manager
of the Adviser** since
2014. Previously, he was
an executive member of the
Investment Board of CPH
Capital since prior to
2012.
Phyllis J. Clarke, Controller See above.
56
International Strategic
Core
-----------------------
Kent Hargis, Vice President Senior Vice President,
49 Portfolio Manager of
Strategic Core Equities
and Head of Quantitative
Research--Equities of the
Adviser**, with which he
has been associated since
prior to 2012.
Sammy Suzuki, Vice President Senior Vice President,
46 Portfolio Manager of
Strategic Core Equities of
the Adviser** since 2015.
Previously, he was
Director of Research,
Emerging Markets Value
Equities since prior to
2012 until 2015.
Phyllis J. Clarke, Controller See above.
56
Concentrated
International Growth
--------------------
Dev Chakrabarti, Vice President Senior Vice President of
40 the Adviser** and
Portfolio Manager and
Senior Research Analyst
for Concentrated Global
Growth. Prior to joining
the Adviser in December
2013, he was a portfolio
manager/analyst on the
global equity research and
portfolio-management team
at WPS Advisors since
prior to 2012.
Mark Phelps, Vice President Senior Vice President and
57 Chief Investment Officer
of Concentrated Global
Growth of the Adviser,**
with which he has been
associated since December
2013. Prior thereto, he
was president and managing
director of Global
Investments at WPS from
2008 to June 2013; he also
served as WPS's chief
executive officer since
prior to 2012.
Phyllis J. Clarke, Controller See above.
56
-------------------
* The address for each of the Funds' Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** The Adviser, ABI and ABIS are affiliates of the Funds.
The Funds do not pay any fees to, or reimburse expenses of, their
Directors who are considered an "interested person" (as defined in Section
2(a)(19) of the 1940 Act) of the Funds. The aggregate compensation paid to each
of the Directors by each Fund for the fiscal year ended June 30, 2017 or July
31, 2017, as applicable, the aggregate compensation paid to each of the
Directors during calendar year 2016 by the AB Fund Complex and the total number
of registered investment companies (and separate investment portfolios within
the companies) in the AB Fund Complex with respect to which each of the
Directors serves as a director, are set forth below. Neither the Funds nor any
other registered investment company in the AB Fund Complex provides compensation
in the form of pension or retirement benefits to any of its directors or
trustees. Each of the Directors is a director of one or more other registered
investment companies in the AB Fund Complex.
[Download Table]
Aggregate
Aggregate Aggregate Compensation Aggregate
Compensation Compensation from Compensation
Name of Trustee or from from Large Concentrated from Discovery
Director Growth Fund Cap Growth Growth Growth
------------------ ----------- ---------- ------------ --------------
John H. Dobkin $2,742 $2,742 $2,742 $2,742
Michael J. Downey $2,734 $2,734 $2,734 $2,734
William H. Foulk, Jr. $2,734 $2,734 $2,734 $2,734
D. James Guzy $2,758 $2,758 $2,758 $2,758
Nancy P. Jacklin $2,917 $2,917 $2,917 $2,917
Robert M. Keith $ 0 $ 0 $ 0 $ 0
Carol C. McMullen $2,734 $2,734 $2,734 $2,734
Garry L. Moody $3,094 $3,094 $3,094 $3,094
Marshall C. Turner, Jr. $4,605 $4,605 $4,605 $4,605
Earl D. Weiner $2,734 $2,734 $2,734 $2,734
[Download Table]
Aggregate
Aggregate Aggregate Compensation Aggregate
Compensation Compensation from Compensation
Name of Trustee or from Small from Sustainable International from Global
Director Cap Growth Global Thematic Growth Core Equity
------------------ ---------- --------------- ------------- -----------
John H. Dobkin $2,742 $2,742 $2,742 $2,742
Michael J. Downey $2,734 $2,734 $2,734 $2,734
William H. Foulk, Jr. $2,734 $2,734 $2,734 $2,734
D. James Guzy $2,758 $2,758 $2,758 $2,758
Nancy P. Jacklin $2,917 $2,916 $2,917 $2,917
Robert M. Keith $ 0 $ 0 $ 0 $ 0
Carol C. McMullen $2,734 $2,734 $2,783 $2,783
Garry L. Moody $3,094 $3,095 $3,094 $3,095
Marshall C. Turner, Jr. $4,605 $4,605 $4,605 $4,605
Earl D. Weiner $2,734 $2,734 $2,734 $2,734
[Download Table]
Aggregate
Aggregate Compensation
Aggregate Aggregate Compensation from
Compensation Compensation from Concentrated
Name of Trustee or from Select from Select International International
Director US Equity US Long/Short Strategic Core Growth
------------------ ------------- ------------- -------------- ------
John H. Dobkin $2,742 $2,742 $2,742 $2,742
Michael J. Downey $2,734 $2,734 $2,734 $2,734
William H. Foulk, Jr. $2,734 $2,734 $2,734 $2,734
D. James Guzy $2,758 $2,758 $2,758 $2,758
Nancy P. Jacklin $2,917 $2,917 $2,917 $2,917
Robert M. Keith $ 0 $ 0 $ 0 $ 0
Carol C. McMullen $2,783 $2,783 $2,783 $2,783
Garry L. Moody $3,094 $3,094 $3,095 $3,094
Marshall C. Turner, Jr. $4,605 $4,605 $4,605 $4,605
Earl D. Weiner $2,734 $2,734 $2,734 $2,734
Total Number
of Registered Total Number
Investment of Investment
Companies in Portfolios within
the AB Fund the AB Fund
Complex, Complex,
Total including the including the
Compensation Fund, as to Fund, as to
from the which the which the
AB Fund Trustee or Trustee or
Complex, Director is a Director is a
Name of Trustee including Director or Director or
or Director the Funds Trustee Trustee
--------------- ----------- ------------- -----------------
John H. Dobkin $285,000 26 97
Michael J. Downey $285,000 27 98
William H. Foulk, Jr. $285,000 27 98
D. James Guzy $285,000 24 95
Nancy P. Jacklin $303,000 27 98
Robert M. Keith $ 0 27 98
Carol C. McMullen* $147,816 27 98
Garry L. Moody $320,000 27 98
Marshall C. Turner, Jr. $480,000 27 98
Earl D. Weiner $285,000 27 98
---------------------------------
* Ms. McMullen was elected as a Director of the Funds effective June 22,
2016.
As of October 2, 2017, the Directors and officers of each of the
Funds, as a group owned less than 1% of the shares of each Fund.
Additional Information About the Funds' Portfolio Managers
----------------------------------------------------------
GROWTH FUND
-----------
The management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's Growth Investment Team. Bruce K. Aronow,
Frank V. Caruso and John H. Fogarty are the investment professionals(1) with the
most significant responsibility for the day-to-day management of the Fund's
portfolio. For additional information about the portfolio management of the
Fund, see "Management of the Funds - Portfolio Managers" in the Fund's
Prospectus.
----------------
(1) Investment professionals at the Adviser include portfolio managers and
research analysts. Investment professionals are part of investment groups
(or teams) that service individual fund portfolios. The number of
investment professionals assigned to a particular fund will vary from fund
to fund.
The dollar ranges of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio managers as of July 31, 2017 are set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Bruce K. Aronow $100,001-$500,000
Frank V. Caruso None
John H. Fogarty $10,001-$50,000
As of July 31, 2017, employees of the Adviser had approximately
$1,237,196 invested in shares of the Fund and approximately $57,002,321 invested
in shares of all AB Mutual Funds (excluding AB money market funds) through their
interests in certain deferred compensation plans, including the Partners
Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of July 31,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Bruce K. Aronow 17 $5,082,000,000 None None
Frank V. Caruso 23 $9,653,000,000 None None
John H. Fogarty 22 $9,173,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Bruce K. Aronow 23 $259,000,000 None None
Frank V. Caruso 5 $215,000,000 None None
John H. Fogarty 14 $3,332,000,000 None None
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Bruce K. Aronow 25 $2,957,000,000 2 $497,000,000
Frank V. Caruso 25,833 $15,176,000,000 None None
John H. Fogarty 2,964 $2,224,000,000 None None
LARGE CAP GROWTH
----------------
The management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's U.S. Large Cap Growth Investment Team. Frank
V. Caruso, Vincent C. Dupont, John H. Fogarty and Karen A. Sesin are the
investment professionals with the most significant responsibility for the
day-to-day management of the Fund's portfolio. For additional information about
the portfolio management of the Fund, see "Management of the Funds - Portfolio
Managers" in the Fund's Prospectus.
The dollar ranges of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio managers as of July 31, 2017 are set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Frank V. Caruso $50,001-$100,000
Vincent C. Dupont None
John H. Fogarty None
Karen A. Sesin $100,001-$500,000
As of July 31, 2017, employees of the Adviser had approximately
$933,094 invested in shares of the Fund and approximately $57,002,321 invested
in shares of all AB Mutual Funds (excluding AB money market funds) through their
interests in certain deferred compensation plans, including the Partners
Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of July 31,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Frank V. Caruso 24 $10,420,000,000 None None
Vincent C. Dupont 6 $1,896,000,000 None None
John H. Fogarty 22 $4,930,000,000 None None
Karen A. Sesin 4 $1,062,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Frank V. Caruso 5 $215,000,000 None None
Vincent C. Dupont 13 $2,901,000,000 None None
John H. Fogarty 14 $3,332,000,000 None None
Karen A. Sesin 13 $2,901,000,000 None None
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Frank V. Caruso 25,833 $15,176,000,000 None None
Vincent C. Dupont 2,956 $1,436,000,000 None None
John H. Fogarty 2,964 $2,224,000,000 None None
Karen A. Sesin 2,954 $1,289,000,000 None None
CONCENTRATED GROWTH
--------------------
The management of, and investment decisions for, the Fund's
portfolio are made by James Tierney. For additional information about the
portfolio management of the Fund, see "Management of the Fund - Portfolio
Managers" in the Fund's Prospectus.
The dollar range of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio manager as of June 30, 2017 is set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
James Tierney $500,001-$1,000,000
As of June 30, 2017, employees of the Adviser had approximately
$56,075,597 in shares of all AB Mutual Funds (excluding AB money market funds)
through their interests in certain deferred compensation plans, including the
Partners Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio manager also has day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of June 30,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
James Tierney 17 $648,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
James Tierney 8 $1,485,000,000 None None
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
James Tierney 636 $3,254,000,000 None None
DISCOVERY GROWTH
----------------
The management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's Small/Mid Cap Growth Investment Team. Bruce
K. Aronow, N. Kumar Kirpalani, Samantha S. Lau and Wen-Tse Tseng are the
investment professionals primarily responsible for the day-to-day management of
the Fund's portfolio. For additional information about the portfolio management
of the Fund, see "Management of the Funds - Portfolio Managers" in the Fund's
Prospectus.
The dollar ranges of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio managers as of July 31, 2017 are set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Bruce K. Aronow Over $1,000,000
N. Kumar Kirpalani $100,001-$500,000
Samantha S. Lau $100,001-$500,000
Wen-Tse Tseng $100,001-$500,000
As of July 31, 2017, employees of the Adviser had approximately
$1,002,825 invested in shares of the Fund and approximately $57,002,320 invested
in shares of all AB Mutual Funds (excluding AB money market funds) through their
interests in certain deferred compensation plans, including the Partners
Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of July 31,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Bruce K. Aronow 17 $3,898,000,000 None None
N. Kumar Kirpalani 15 $3,064,000,000 None None
Samantha S. Lau 15 $3,064,000,000 None None
Wen-Tse Tseng 15 $3,064,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Bruce K. Aronow 23 $259,000,000 None None
N. Kumar Kirpalani 19 $259,000,000 None None
Samantha S. Lau 19 $259,000,000 None None
Wen-Tse Tseng 19 $259,000,000 None None
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Bruce K. Aronow 25 $2,957,000,000 2 $497,000,000
N. Kumar Kirpalani 22 $2,602,000,000 2 $497,000,000
Samantha S. Lau 22 $2,602,000,000 2 $497,000,000
Wen-Tse Tseng 22 $2,602,000,000 2 $497,000,000
SMALL CAP GROWTH
-----------------
The management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's Small Cap Growth Investment Team. Bruce K.
Aronow, N. Kumar Kirpalani, Samantha S. Lau and Wen-Tse Tseng are the investment
professionals with the most significant responsibility for the day-to-day
management of the Fund's portfolio. For additional information about the
portfolio management of the Fund, see "Management of the Funds - Portfolio
Managers" in the Fund's Prospectus.
The dollar ranges of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio managers as of July 31, 2017 are set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Bruce K. Aronow Over $1,000,000
N. Kumar Kirpalani $100,001-$500,000
Samantha S. Lau $100,001-$500,000
Wen-Tse Tseng $100,001-$500,000
As of July 31, 2017, employees of the Adviser had approximately
$1,765,840 invested in shares of the Fund and approximately $57,002,321 invested
in shares of all AB Mutual Funds (excluding AB money market funds) through their
interests in certain deferred compensation plans, including the Partners
Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of July 31,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Bruce K. Aronow 17 $4,552,000,000 None None
N. Kumar Kirpalani 15 $3,718,000,000 None None
Samantha S. Lau 15 $3,718,000,000 None None
Wen-Tse Tseng 15 $3,718,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Bruce K. Aronow 23 $259,000,000 None None
N. Kumar Kirpalani 19 $259,000,000 None None
Samantha S. Lau 19 $259,000,000 None None
Wen-Tse Tseng 19 $259,000,000 None None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Bruce K. Aronow 25 $2,957,000,000 2 $497,000,000
N. Kumar Kirpalani 22 $2,602,000,000 2 $497,000,000
Samantha S. Lau 22 $2,602,000,000 2 $497,000,000
Wen-Tse Tseng 22 $2,602,000,000 2 $497,000,000
SELECT US EQUITY
----------------
The management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's Select Equity Portfolios Investment Team.
Kurt A. Feuerman and Anthony Nappo are the investment professionals primarily
responsible for the day-to-day management of the Funds' portfolios. For
additional information about the portfolio management of the Funds, see
"Management of the Funds - Portfolio Managers" in the Funds' Prospectus.
The dollar range of each Fund's equity securities owned directly or
beneficially by the Fund's portfolio manager as of June 30, 2017 are set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Kurt A. Feuerman None*
Anthony Nappo $10,001-$50,000
--------
*Mr. Feuerman does not directly or beneficially own shares of the Fund. However,
he invests through his foundation in the Select US Equity Limited Partnership,
managed by the Adviser. Mr. Feuerman has over $1,000,000 invested in the Select
US Equity Partnership.
As of June 30, 2017, employees of the Adviser had approximately
$56,075,597 invested in shares of all AB Mutual Funds (excluding AB money market
funds) through their interests in certain deferred compensation plans, including
the Partners Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Funds, other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of June 30,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Kurt A. Feuerman 3 $978,000,000 None None
Anthony Nappo 3 $978,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Kurt A. Feuerman 12 $5,955,000,000 None None
Anthony Nappo 12 $5,955,000,000 None None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Kurt A. Feuerman 22 $5,070,000,000 8 $745,000,000
Anthony Nappo 22 $5,070,000,000 8 $745,000,000
SELECT US LONG/SHORT
--------------------
The management of, and investment decisions for, the Fund's
portfolios are made by the Adviser's Select Equity Portfolios Investment Team.
Kurt A. Feuerman and Anthony Nappo are the investment professionals primarily
responsible for the day-to-day management of the Funds' portfolios. For
additional information about the portfolio management of the Funds, see
"Management of the Funds - Portfolio Managers" in the Funds' Prospectus.
The dollar range of each Fund's equity securities owned directly or
beneficially by the Fund's portfolio manager as of June 30, 2017 are set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Kurt A. Feuerman None*
Anthony Nappo $100,001-$500,000
--------
* Mr. Feuerman does not directly or beneficially own shares of the Fund.
However, he invests directly as well as through his foundation in the Select US
Long/Short Limited Partnership, managed by the Adviser. Mr. Feuerman has over
$1,000,000 invested in the Select US Long/Short Partnership.
As of June 30, 2017, employees of the Adviser had approximately
$56,075,597 invested in shares of all AB Mutual Funds (excluding AB money market
funds) through their interests in certain deferred compensation plans, including
the Partners Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Funds, other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of June 30,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Kurt A. Feuerman 3 $343,000,000 None None
Anthony Nappo 3 $343,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Kurt A. Feuerman 12 $5,955,000,000 None None
Anthony Nappo 12 $5,955,000,000 None None
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Kurt A. Feuerman 22 $5,070,000,000 8 $745,000,000
Anthony Nappo 22 $5,070,000,000 8 $745,000,000
SUSTAINABLE GLOBAL THEMATIC
---------------------------
The management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's Global Growth and Thematic Investment Team.
Daniel C. Roarty is the investment professional primarily responsible for the
day-to-day management of the Fund's portfolio. For additional information about
the portfolio management of the Fund, see "Management of the Funds - Portfolio
Managers" in the Fund's Prospectus.
The dollar range of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio manager as of July 31, 2017 is set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Daniel C. Roarty $100,001-$500,000
As of July 31, 2017, employees of the Adviser had approximately
$2,377,632 invested in shares of the Fund and approximately $57,002,321 invested
in shares of all AB Mutual Funds (excluding AB money market funds) through their
interests in certain deferred compensation plans, including the Partners
Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio manager also has day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of July 31,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Daniel C. Roarty 32 $5,432,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Daniel C. Roarty 34 $24,782,000,000 1 $108,000,000
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Daniel C. Roarty 216 $17,318,000,000 None None
INTERNATIONAL GROWTH
--------------------
The management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's Global Growth and Thematic Investment Team.
Daniel C. Roarty is the investment professional with the most significant
responsibility for the day-to-day management of the Fund's portfolio. For
additional information about the portfolio management of the Fund, see
"Management of the Funds - Portfolio Managers" in the Fund's Prospectus.
The dollar range of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio manager as of June 30, 2017 is set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Daniel C. Roarty $100,001-$500,000
As of June 30, 2017, employees of the Adviser had approximately
$1,105,375 invested in shares of the Fund and approximately $56,075,597 invested
in shares of all AB Mutual Funds (excluding AB money market funds) through their
interests in certain deferred compensation plans, including the Partners
Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio manager also has day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of June 30,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Daniel C. Roarty 30 $6,156,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Daniel C. Roarty 35 $24,212,000,000 1 $104,000,000
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Daniel C. Roarty 216 $16,968,000,000 None None
GLOBAL CORE EQUITY
------------------
The management of, and investment decisions for, the Fund's
portfolio are made by its senior investment management team. David Dalgas and
Klaus Ingemann are the investment professional primarily responsible for the
day-to-day management of the Fund's portfolio. For additional information about
the portfolio management of the Fund, see "Management of the Funds - Portfolio
Managers" in the Fund's Prospectus. As of June 30, 2017 the Portfolio Managers
did not directly or beneficially own any equity securities of the Fund.
As of June 30, 2017, employees of the Adviser had approximately
$56,075,597 invested in shares of all AB Mutual Funds (excluding AB money market
funds) through their interests in certain deferred compensation plans, including
the Partners Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of June 30,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
David Dalgas 4 $401,000,000 None None
Klaus Ingemann 4 $401,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
David Dalgas 20 $1,529,000,000 None None
Klaus Ingemann 19 $1,491,000,000 None None
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
David Dalgas 4 $2,704,000,000 1 $452,000,000
Klaus Ingemann 4 $2,704,000,000 1 $452,000,000
INTERNATIONAL STRATEGIC CORE
----------------------------
The management of, and investment decisions for, the Fund's
portfolio are made by its senior investment management team. Kent Hargis and
Sammy Suzuki are the investment professionals primarily responsible for the
day-to-day management of the Fund's portfolio. For additional information about
the portfolio management of the Fund, see "Management of the Funds - Portfolio
Managers" in the Fund's Prospectus.
The dollar ranges of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio managers as of June 30, 2017 are set forth
below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Kent Hargis $100,001-$500,000
Sammy Suzuki $50,001-$100,000
As of June 30, 2017, employees of the Adviser had approximately
$56,075,597 invested in shares of all AB Mutual Funds (excluding AB money market
funds) through their interests in certain deferred compensation plans, including
the Partners Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of June 30,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Kent Hargis 19 $6,567,000,000 None None
Sammy Suzuki 14 $1,666,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Kent Hargis 25 $1,658,000,000 None None
Sammy Suzuki 24 $1,516,000,000 None None
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Kent Hargis 27,682 $16,264,000,000 None None
Sammy Suzuki 1,794 $1,458,000,000 None None
CONCENTRATED INTERNATIONAL GROWTH
---------------------------------
The management of, and investment decisions for, the Fund's
portfolios are made by its senior investment management team. Dev Chakrabarti
and Mark Phelps are the investment professionals primarily responsible for the
day-to-day management of the Fund's portfolio. For additional information about
the portfolio management of the Fund, see "Management of the Fund - Portfolio
Managers" in the Fund's Prospectus. As of June 30, 2017 the Portfolio Managers
did not directly or beneficially own any equity securities of the Fund.
As of June 30, 2017, employees of the Adviser had approximately
$56,075,597 in shares of all AB Mutual Funds (excluding AB money market funds)
through their interests in certain deferred compensation plans, including the
Partners Compensation Plan, including both vested and unvested amounts.
The following tables provide information regarding registered
investment companies (other than the Fund), other pooled investment vehicles and
other accounts over which the Fund's portfolio managers also have day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of June 30,
2017.
--------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
--------------------------------------------------------------------------------
Total
Number of Assets of
Registered Registered
Total Number Total Assets of Investment Investment
of Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Dev Chakrabarti 17 $998,000,000 None None
Mark Phelps 17 $998,000,000 None None
--------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
Total
Number of Assets of
Other Pooled Other Pooled
Total Number Total Assets of Investment Investment
of Other Pooled Other Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ ------------
Dev Chakrabarti 8 $1,485,000,000 None None
Mark Phelps 8 $1,485,000,000 None None
--------------------------------------------------------------------------------
OTHER ACCOUNTS
--------------------------------------------------------------------------------
Number of Total Assets
Other of Other
Total Number Total Assets of Accounts Accounts
Other Other Managed with Managed with
Accounts Accounts Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
----------------- ------------- --------------- ------------ -------------
Dev Chakrabarti 636 $3,254,000,000 None None
Mark Phelps 636 $3,254,000,000 None None
Investment Professional Conflict of Interest Disclosure
-------------------------------------------------------
As an investment adviser and fiduciary, the Adviser owes its clients
and shareholders an undivided duty of loyalty. The Adviser recognizes that
conflicts of interest are inherent in its business and accordingly has developed
policies and procedures (including oversight monitoring) reasonably designed to
detect, manage and mitigate the effects of actual or potential conflicts of
interest in the area of employee personal trading, managing multiple accounts
for multiple clients, including AB Mutual Funds, and allocating investment
opportunities. Investment professionals, including portfolio managers and
research analysts, are subject to the above-mentioned policies and oversight
monitoring to ensure that all clients are treated equitably. The Adviser places
the interests of its clients first and expects all of its employees to meet
their fiduciary duties.
Employee Personal Trading. The Adviser has adopted a Code of
Business Conduct and Ethics that is designed to detect and prevent conflicts of
interest when investment professionals and other personnel of the Adviser own,
buy or sell securities which may be owned by, or bought or sold for, clients.
Personal securities transactions by an employee may raise a potential conflict
of interest when an employee owns or trades in a security that is owned or
considered for purchase or sale by a client, or recommended for purchase or sale
by an employee to a client. Subject to the reporting requirements and other
limitations of its Code of Business Conduct and Ethics, the Adviser permits its
employees to engage in personal securities transactions, and also allows them to
acquire investments in certain funds managed by the Adviser. The Adviser's Code
of Business Conduct and Ethics requires disclosure of all personal accounts and
maintenance of brokerage accounts with designated broker-dealers approved by the
Adviser. The Code of Business Conduct and Ethics also requires preclearance of
all securities transactions (except transactions in U.S. Treasuries and open-end
mutual funds) and imposes a 60-day holding period for securities purchased by
employees to discourage short-term trading.
Managing Multiple Accounts for Multiple Clients. The Adviser has
compliance policies and oversight monitoring in place to address conflicts of
interest relating to the management of multiple accounts for multiple clients.
Conflicts of interest may arise when an investment professional has
responsibilities for the investments of more than one account because the
investment professional may be unable to devote equal time and attention to each
account. The investment professional or investment professional teams for each
client may have responsibilities for managing all or a portion of the
investments of multiple accounts with a common investment strategy, including
other registered investment companies, unregistered investment vehicles, such as
hedge funds, pension plans, separate accounts, collective trusts and charitable
foundations. Among other things, the Adviser's policies and procedures provide
for the prompt dissemination to investment professionals of initial or changed
investment recommendations by analysts so that investment professionals are
better able to develop investment strategies for all accounts they manage. In
addition, investment decisions by investment professionals are reviewed for the
purpose of maintaining uniformity among similar accounts and ensuring that
accounts are treated equitably. Investment professional compensation reflects a
broad contribution in multiple dimensions to long-term investment success for
clients of the Adviser and is generally not tied specifically to the performance
of any particular client's account, nor is it generally tied directly to the
level or change in level of assets under management.
Allocating Investment Opportunities. The investment professionals at
the Adviser routinely are required to select and allocate investment
opportunities among accounts. The Adviser has adopted policies and procedures
intended to address conflicts of interest relating to the allocation of
investment opportunities. These policies and procedures are designed to ensure
that information relevant to investment decisions is disseminated promptly
within its portfolio management teams and investment opportunities are allocated
equitably among different clients. The policies and procedures require, among
other things, objective allocation for limited investment opportunities (e.g.,
on a rotational basis), and documentation and review of justifications for any
decisions to make investments only for select accounts or in a manner
disproportionate to the size of the account. Portfolio holdings, position sizes,
and industry and sector exposures tend to be similar across similar accounts,
which minimizes the potential for conflicts of interest relating to the
allocation of investment opportunities. Nevertheless, access to portfolio funds
or other investment opportunities may be allocated differently among accounts
due to the particular characteristics of an account, such as size of the
account, cash position, tax status, risk tolerance and investment restrictions
or for other reasons.
The Adviser's procedures are also designed to address potential
conflicts of interest that may arise when the Adviser has a particular financial
incentive, such as a performance-based management fee, relating to an account.
An investment professional may perceive that he or she has an incentive to
devote more time to developing and analyzing investment strategies and
opportunities or allocating securities preferentially to accounts for which the
Adviser could share in investment gains.
Portfolio Manager Compensation
------------------------------
The Adviser's compensation program for portfolio managers is
designed to align with clients' interests, emphasizing each portfolio manager's
ability to generate long-term investment success for the Adviser's clients,
including the Funds. The Adviser also strives to ensure that compensation is
competitive and effective in attracting and retaining the highest caliber
employees.
Portfolio managers receive a base salary, incentive compensation and
contributions to AllianceBernstein's 401(k) plan. Part of the annual incentive
compensation is generally paid in the form of a cash bonus, and part through an
award under the firm's Incentive Compensation Award Plan (ICAP). The ICAP awards
vest over a four-year period. Deferred awards are paid in the form of restricted
grants of the firm's Master Limited Partnership Units, and award recipients have
the ability to receive a portion of their awards in deferred cash. The amount of
contributions to the 401(k) plan is determined at the sole discretion of the
Adviser. On an annual basis, the Adviser endeavors to combine all of the
foregoing elements into a total compensation package that considers industry
compensation trends and is designed to retain its best talent.
The incentive portion of total compensation is determined by
quantitative and qualitative factors. Quantitative factors, which are weighted
more heavily, are driven by investment performance. Qualitative factors are
driven by contributions to the investment process and client success.
The quantitative component includes measures of absolute, relative
and risk-adjusted investment performance. Relative and risk-adjusted returns are
determined based on the benchmark in the Fund's prospectus and versus peers over
one-, three- and five-year calendar periods, with more weight given to
longer-time periods. Peer groups are chosen by Chief Investment Officers, who
consult with the product management team to identify products most similar to
our investment style and most relevant within the asset class. Portfolio
managers of the Funds do not receive any direct compensation based upon the
investment returns of any individual client account, and compensation is not
tied directly to the level or change in level of assets under management.
Among the qualitative components considered, the most important
include thought leadership, collaboration with other investment colleagues,
contributions to risk-adjusted returns of other portfolios in the firm, efforts
in mentoring and building a strong talent pool and being a good corporate
citizen. Other factors can play a role in determining portfolio managers'
compensation, such as the complexity of investment strategies managed, volume of
assets managed and experience.
The Adviser emphasizes four behavioral competencies--relentlessness,
ingenuity, team orientation and accountability--that support its mission to be
the most trusted advisor to its clients. Assessments of investment professionals
are formalized in a year-end review process that includes 360-degree feedback
from other professionals from across the investment teams and the Adviser.
Asset-Based and Performance-Based Compensation: With respect to the
Select US Equity and Select US Long/Short, Mr. Feuerman and members of the
investment team he leads (the "Investment Team") were hired by the Adviser in
2011. At that time, the Adviser entered into an employment agreement with Mr.
Feuerman under which a compensation pool for Mr. Feuerman and members of the
Investment Team is created based on specified percentages of the fees (both
asset-based and performance-based fees) received by the Adviser from the
accounts managed by the Investment Team. Performance fees are not assessed on
the Fund or the assets of the Fund. In general, a larger percentage of the fees
received by the Adviser is allocated to the compensation pool with respect to
assets that were managed by Mr. Feuerman at his prior employer and that followed
Mr. Feuerman to the Adviser than with respect to assets, such as the Fund, that
were obtained or created after Mr. Feuerman joined the Adviser. The compensation
pool is allocated among the members of the Investment Team based on the
recommendations of Mr. Feuerman subject to approval by the Adviser's
Compensation Committee. This compensation represents a portion of the overall
compensation received by members of the Investment Team.
--------------------------------------------------------------------------------
EXPENSES OF THE FUNDS
--------------------------------------------------------------------------------
Distribution Services Arrangements
----------------------------------
Each Fund has entered into a Distribution Services Agreement (the
"Agreement") with ABI, the Fund's principal underwriter, to permit ABI to
distribute the Fund's shares and to permit the Fund to pay distribution services
fees to defray expenses associated with distribution of its Class A shares,
Class B shares, Class C shares, Class R shares and Class K shares (as
applicable), in accordance with a plan of distribution that is included in the
Agreement and that has been duly adopted and approved in accordance with Rule
12b-1 adopted by the SEC under the 1940 Act (each a "Plan" and collectively the
"Plans").
In approving the Plan, the Directors determined that there was a
reasonable likelihood that the Plan would benefit each Fund and its
shareholders. The distribution services fee of a particular class will not be
used to subsidize the provision of distribution services with respect to any
other class.
The Adviser may, from time to time, and from its own funds or such
other resources as may be permitted by rules of the SEC, make payments for
distribution services to ABI; the latter may in turn pay part or all of such
compensation to brokers or other persons for their distribution assistance.
The Plans will continue in effect with respect to each Fund and each
class of shares thereof for successive one-year periods provided that such
continuance is specifically approved at least annually by a majority of the
Independent Directors who have no direct or indirect financial interest in the
operation of the Plans or any agreement related thereto the ("Qualified
Directors") and by a majority of the entire Board at a meeting called for that
purpose. Most recently, the Directors approved the continuance of the Plans for
an additional term at meetings held on May 2-4, 2017.
All material amendments to the Plans will become effective only upon
approval as provided in the preceding paragraph, and the Plans may not be
amended in order to increase materially the costs that the Fund may bear
pursuant to the Agreement without the approval of a majority of the holders of
the outstanding voting shares of the Fund or the class or classes of the Fund
affected. The Agreement may be terminated (a) by the Fund without penalty at any
time by a majority vote of the holders of the Fund's outstanding voting
securities, voting separately by class, or by a majority vote of the Qualified
Directors or (b) by ABI. To terminate the Plan or Agreement, any party must give
the other parties 60 days' written notice except that a Fund may terminate the
Plan without giving prior notice to ABI. The Agreement will terminate
automatically in the event of its assignment. The Plan is of a type known as a
"reimbursement plan", which means that it reimburses the distributor for the
actual costs of services rendered.
In the event that a Plan is terminated by either party or not
continued with respect to the Class A, Class B, Class C, Class R or Class K
shares, (i) no distribution services fees (other than current amounts accrued
but not yet paid) would be owed by the Fund to ABI with respect to that class
and (ii) the Fund would not be obligated to pay ABI for any amounts expended
under the Plan not previously recovered by ABI from distribution services fees
in respect of shares of such class or through deferred sales charges.
Distribution services fees are accrued daily and paid monthly and
charged as expenses of each Fund as accrued. The distribution services fees
attributable to the Class B, Class C, Class R and Class K shares are designed to
permit an investor to purchase such shares through broker-dealers without the
assessment of an initial sales charge and at the same time to permit ABI to
compensate broker-dealers in connection with the sale of such shares. In this
regard the purpose and function of the combined contingent deferred sales charge
("CDSC") and respective distribution services fee on the Class B shares and
Class C shares and distribution services fees on the Class R shares and the
Class K shares are the same as those of the initial sales charge and
distribution services fee with respect to the Class A shares in that in each
case the sales charge and/or distribution services fee provide for the financing
of the distribution of the relevant class of the Fund's shares.
With respect to Class A shares of each Fund, distribution expenses
accrued by ABI in one fiscal year may not be paid from distribution services
fees received from the Fund in subsequent fiscal years. ABI's compensation with
respect to Class B, Class C, Class R and Class K shares under the Plan is
directly tied to the expenses incurred by ABI. Actual distribution expenses for
Class B, Class C, Class R and Class K shares for any given year, however, will
probably exceed the distribution services fees payable under the Plan with
respect to the class involved and, in the case of Class B and Class C shares,
payments received from CDSCs. The excess will be carried forward by ABI and
reimbursed from distribution services fees payable under the Plan with respect
to the class involved and, in the case of Class B and Class C shares, payments
subsequently received through CDSCs, so long as the Plan is in effect.
During the fiscal year ended July 31, 2017 for Growth Fund, Large
Cap Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic
and during the fiscal year ended June 30, 2017 for International Growth,
Concentrated Growth, Select US Equity, Select US Long/Short, Global Core Equity,
International Strategic Core and Concentrated International Growth with respect
to Class A shares, the distribution services fees for expenditures payable to
ABI were as follows:
Percentage per
annum of the
aggregate average
Distribution services daily net assets
fees for attributable
Fund expenditured payable to ABI to Class A Shares*
---- --------------------------- ------------------
Growth Fund $1,491,455 .25%
Large Cap Growth $4,210,871 .25%
Concentrated Growth $68,153 .25%
Discovery Growth $1,300,907 .23%
Small Cap Growth $902,529 .25%
Select US Equity $55,459 .25%
Select US Long/Short $347,884 .25%
Sustainable Global Thematic $1,289,453 .25%
International Growth $525,984 .25%
Global Core Equity $7,378 .25%
International Strategic Core $282 .25%
Concentrated International Growth $23 .25%
-----------------
* The maximum fee allowed under the Rule 12b-1 Plan for the Class A shares of
Growth Fund and Large Cap Growth is .50% of the aggregate average daily net
assets, and the maximum fee allowed under the Rule 12b-1 Plan for Class A shares
of all other Funds is .30% of the aggregate average daily net assets. The Boards
of the Funds currently limit the Funds' payments to .25%, except with respect to
Discovery Growth, for which payments are currently limited to .23%.
For the fiscal year ended July 31, 2017 for Growth Fund, Large Cap
Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic and
during the fiscal year or period ended June 30, 2017 for International Growth,
Concentrated Growth, , Select US Equity, Select US Long/Short, Global Core
Equity, International Strategic Core and Concentrated International Growth
expenses incurred by each Fund and costs allocated to each Fund in connection
with activities primarily intended to result in the sale of Class A shares were
as follows:
[Download Table]
Category of Concentrated Discovery
Expense Growth Fund Large Cap Growth Growth Growth
------- ----------- ---------------- ------ ------
Advertising/
Marketing $34,553 $101,046 $1,342 $33,985
Printing and Mailing of
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders $11,868 $34,287 $571 $11,961
Compensation to
Underwriters $1,456,317 $4,232,916 $71,679 $1,088,226
Compensation to Dealers $393,571 $1,122,276 $18,515 $362,298
Compensation to Sales
Personnel $216,777 $1,316,600 $23,955 $234,351
Interest, Carrying or
Other Financing Charges $0 $0 $0 $0
Other (Includes Personnel
costs of those home
office employees involved
in the distribution
effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars) $138,493 $400,155 $6,842 $140,348
Totals $2,251,579 $7,207,280 $122,904 $1,871,169
[Enlarge/Download Table]
Category of Select US Sustainable
Expense Small Cap Growth Select US Equity Long/Short Global Thematic
------- ---------------- ---------------- ---------- ---------------
Advertising/
Marketing $18,452 $897 $7,086 $31,101
Printing and Mailing of
Prospectuses and Semi-Annual
and Annual Reports to Other
than Current Shareholders $6,417 $505 $3,022 $10,682
Compensation to Underwriters $917,171 $51,538 $366,898 $1,251,890
Compensation to Dealers $200,309 $14,525 $88,725 $348,464
Compensation to Sales
Personnel $120,146 $13,031 $77,846 $191,390
Interest, Carrying or Other
Financing Charges $0 $0 $0 $0
Other (Includes Personnel
costs of those home office
employees involved in the
distribution effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars) $74,885 $5,873 $36,159 $124,351
Totals $1,337,380 $86,369 $579,736 $1,957,878
[Enlarge/Download Table]
Concentrated
Category of International International
Expense International Growth Global Core Equity Strategic Core Growth
------- -------------------- ------------------ -------------- ------
Advertising/
Marketing $12,591 $8 $5 $0
Printing and Mailing of
Prospectuses and Semi-Annual
and Annual Reports to Other
than Current Shareholders
$5,213 $3 $2 $0
Compensation to Underwriters
$510,836 $7,139 $296 $0
Compensation to Dealers $156,542 $111 $74 $3
Compensation to Sales
Personnel $85,593 $120 $67 $0
Interest, Carrying or Other
Financing Charges $0 $0 $0 $0
Other (Includes Personnel
costs of those home office
employees involved in the
distribution effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars)
$60,851 $39 $21 $0
Totals $831,626 $7,420 $465 $3
During the fiscal year ended July 31, 2017 for Growth Fund, Large
Cap Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic
and during the fiscal year ended June 30, 2017 for International Growth with
respect to Class B shares, the distribution services fees for expenditures
payable to ABI were as follows:
Percentage per annum
Distribution of the aggregate
services fees average daily net
for expenditures assets attributable to
Fund payable to ABI to Class B Shares
---- ---------------- -----------------------
Growth Fund $119,656 1.00%
Large Cap Growth $233,806 1.00%
Discovery Growth $11,669 1.00%
Small Cap Growth $14,498 1.00%
Sustainable Global Thematic $98,349 1.00%
International Growth $15,450 1.00%
For the fiscal year ended July 31, 2017 for Growth Fund, Large Cap
Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic and
during the fiscal year ended June 30, 2017 for International Growth, expenses
incurred by each Fund and costs allocated to each Fund in connection with
activities primarily intended to result in the sale of Class B shares were as
follows:
[Enlarge/Download Table]
Category of Sustainable
Expense Growth Fund Large Cap Growth Discovery Growth Small Cap Growth Global Thematic
------- ----------- ---------------- ---------------- ---------------- ---------------
Advertising/
Marketing $664 $1,341 $66 $81 $566
Printing and Mailing of
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders $240 $484 $24 $29 $203
Compensation to
Underwriters $51,766 $90,409 $4,347 $6,298 $47,405
Compensation to Dealers $0 $4,103 $299 $(436) $(3,346)
Compensation to Sales
Personnel $4,638 $10,058 $482 $562 $3,941
Interest, Carrying or
Other Financing Charges $176 $344 $18 $21 $144
Other (Includes
Personnel costs of
those home office
employees involved in
the distribution effort
and the travel-related
expenses incurred by
the marketing personnel
conducting seminars) $2,829 $5,712 $286 $346 $2,394
Totals $60,313 $112,451 $5,522 $6,901 $51,307
[Download Table]
Category of
Expense International Growth
------- --------------------
Advertising/
Marketing $104
Printing and Mailing of
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders $44
Compensation to
Underwriters $6,003
Compensation to Dealers $466
Compensation to Sales
Personnel $684
Interest, Carrying or
Other Financing Charges $30
Other (Includes
Personnel costs of
those home office
employees involved in
the distribution effort
and the travel-related
expenses incurred by
the marketing personnel
conducting seminars) $511
Totals $7,842
During the fiscal year ended July 31, 2017 for Growth Fund, Large
Cap Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic
and during the fiscal year ended June 30, 2017 for International Growth,
Concentrated Growth, Select US Equity, Select US Long/Short, Global Core Equity,
International Strategic Core and Concentrated International Growth with respect
to Class C shares, the distribution services fees for expenditures payable to
ABI were as follows:
Percentage per annum
Distribution of the aggregate
services fees average daily net
for expenditures assets attributable to
Fund payable to ABI to Class C Shares
---- ---------------- -----------------------
Growth Fund $582,044 1.00%
Large Cap Growth $3,836,774 1.00%
Concentrated Growth $191,826 1.00%
Discovery Growth $454,137 1.00%
Small Cap Growth $352,269 1.00%
Select US Equity $115,792 1.00%
Select US Long/Short $1,330,881 1.00%
Sustainable Global Thematic $529,449 1.00%
International Growth $334,612 1.00%
Global Core Equity $371 1.00%
International Strategic Core $221 1.00%
Concentrated International Growth $102 1.00%
For the fiscal year ended July 31, 2017 for Growth Fund, Large Cap
Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic and
during the fiscal year or period ended June 30, 2017 for International Growth,
Concentrated Growth, , Select US Equity, Select US Long/Short, Global Core
Equity, International Strategic Core and Concentrated International Growth
expenses incurred by each Fund and costs allocated to each Fund in connection
with activities primarily intended to result in the sale of Class C shares were
as follows:
[Enlarge/Download Table]
Category of Concentrated Discovery Small Cap Select US
Expense Growth Fund Large Cap Growth Growth Growth Growth Equity
------- ----------- ---------------- ------ ------ ------ ------
Advertising/
Marketing $3,149 $21,499 $963 $2,546 $1,981 $584
Printing and Mailing
of Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders $1,241 $7,827 $398 $939 $728 $242
Compensation to
Underwriters $555,942 $3,686,456 $174,770 $445,288 $348,323 $118,995
Compensation to
Dealers $36,556 $195,300 $5,622 $27,553 $22,256 $6,771
Compensation to Sales
Personnel $23,434 $343,125 $12,021 $19,547 $13,521 $4,874
Interest, Carrying or
Other Financing
Charges $950 $5,520 $330 $687 $525 $203
Other (Includes
Personnel costs of
those home office
employees involved in
the distribution
effort and the
travel-related
expenses incurred by
the marketing
personnel conducting
seminars) $15,196 $93,812 $4,774 $11,183 $8,695 $2,913
Totals $636,468 $4,353,539 $198,878 $507,743 $396,029 $134,582
[Enlarge/Download Table]
Concentrated
Category of Select US Sustainable International Global Core International International
Expense Long/Short Global Thematic Growth Equity Strategic Core Growth
------- ---------- --------------- ------ ------ -------------- ------
Advertising/
Marketing $6,630 $2,864 $1,913 $1 $1 $0
Printing and Mailing of
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders $2,829 $1,137 $839 $0 $0 $0
Compensation to
Underwriters $1,321,613 $516,536 $336,395 $308 $475 $0
Compensation to Dealers $81,127 $33,857 $24,218 $23 $13 $5
Compensation to Sales
Personnel $63,996 $19,831 $13,462 $33 $13 $0
Interest, Carrying or
Other Financing Charges $2,486 $879 $661 $0 $0 $0
Other (Includes
Personnel costs of
those home office
employees involved in
the distribution effort
and the travel-related
expenses incurred by
the marketing personnel
conducting seminars) $33,895 $13,918 $9,987 $6 $1 $0
Totals $1,512,576 $589,022 $387,475 $371 $503 $5
During the fiscal year ended July 31, 2017 for Growth Fund, Large
Cap Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic
and during the fiscal year ended June 30, 2017 for International Growth,
Concentrated Growth, Select US Equity and Select US Long/Short with respect to
Class R shares, the distribution services fees for expenditures payable to ABI
were as follows:
Percentage per annum
of the aggregate
Distribution services average daily net
fees for expenditures assets attributable
Fund payable to ABI to Class R shares
---- -------------------- ---------------------
Growth Fund $11,877 .50%
Large Cap Growth $229,792 .50%
Concentrated Growth $70 .50%
Discovery Growth $120,229 .50%
Small Cap Growth $181,625 .50%
Select US Equity $77 .50%
Select US Long/Short $2,801 .50%
Sustainable Global Thematic $15,153 .50%
International Growth $58,816 .50%
For the fiscal year ended July 31, 2017 for Growth Fund, Large Cap
Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic and
during the fiscal year ended June 30, 2017 for International Growth,
Concentrated Growth, Select US Equity and Select US Long/Short expenses incurred
by each Fund and costs allocated to each Fund in connection with activities
primarily intended to result in the sale of Class R shares were as follows:
[Enlarge/Download Table]
Category of Concentrated
Expense Growth Fund Large Cap Growth Growth Discovery Growth Small Cap Growth
------- ----------- ---------------- ------ ---------------- ----------------
Advertising/
Marketing $184 $3,579 $0 $1,900 $2,927
Printing and Mailing
of Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders $61 $1,177 $0 $711 $1,047
Compensation to
Underwriters $11,691 $221,619 $10 $118,889 $180,337
Compensation to
Dealers $1,955 $37,534 $9 $20,573 $31,016
Compensation to Sales
Personnel $2,103 $54,799 $2 $19,201 $19,204
Interest, Carrying or
Other Financing
Charges $0 $0 $0 $0 $0
Other (Includes
Personnel costs of
those home office
employees involved in
the distribution
effort and the
travel-related
expenses incurred by
the marketing
personnel conducting
seminars) $713 $13,669 $2 $8,268 $12,119
Totals $16,707 $332,377 $23 $169,542 $246,650
[Enlarge/Download Table]
Category of Select US Sustainable International
Expense Select US Equity Long/Short Global Thematic Growth
------- ---------------- ---------- --------------- ------
Advertising/
Marketing $0 $40 $242 $869
Printing and Mailing of
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders $0 $18 $83 $364
Compensation to
Underwriters $0 $2,778 $14,653 $56,649
Compensation to Dealers $7 $474 $2,550 $10,111
Compensation to Sales
Personnel $0 $581 $1,508 $6,524
Interest, Carrying or
Other Financing Charges $0 $0 $0 $0
Other (Includes Personnel
costs of those home office
employees involved in the
distribution effort and
the travel-related
expenses incurred by the
marketing personnel
conducting seminars) $0 $203 $964 $4,155
Totals $7 $4,094 $20,000 $78,672
During the fiscal year ended July 31, 2017 for Growth Fund, Large
Cap Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic
and during the fiscal year ended June 30, 2017 for International Growth,
Concentrated Growth, Select US Equity and Select US Long/Short with respect to
Class K shares, the distribution services fees for expenditures payable to ABI
were as follows:
Percentage per annum
of the aggregate
Distribution services average daily net
fees for expenditures assets attributable
Fund payable to ABI to Class K shares
---- --------------------- --------------------
Growth Fund $4,961 .25%
Large Cap Growth $198,352 .25%
Concentrated Growth $668 .25%
Discovery Growth $40,073 .25%
Small Cap Growth $125,618 .25%
Select US Equity $8,600 .25%
Select US Long/Short $48 .25%
Sustainable Global Thematic $ 24,944 .25%
International Growth $12,891 .25%
For the fiscal year ended July 31, 2017 for Growth Fund, Large Cap
Growth, Discovery Growth, Small Cap Growth and Sustainable Global Thematic and
during the fiscal year ended June 30, 2017 for International Growth,
Concentrated Growth, Select US Equity and Select US Long/Short expenses incurred
by each Fund and costs allocated to each Fund in connection with activities
primarily intended to result in the sale of Class K shares were as follows:
[Enlarge/Download Table]
Category of Large Cap Concentrated Discovery Small Cap
Expense Growth Fund Growth Growth Growth Growth
------- ----------- ------ ------ ------ ------
Advertising/
Marketing $14 $2,209 $0 $559 $3,144
Printing and Mailing of
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders $4 $734 $0 $200 $1,228
Compensation to
Underwriters $4,956 $198,415 $641 $40,226 $132,483
Compensation to Dealers $145 $23,036 $5 $5,868 $34,476
Compensation to Sales
Personnel $90 $21,811 $0 $3,970 $20,990
Interest, Carrying or
Other Financing Charges $0 $0 $0 $0 $0
Other (Includes
Personnel costs of
those home office
employees involved in
the distribution effort
and the travel-related
expenses incurred by
the marketing personnel
conducting seminars) $52 $8,527 $0 $2,308 $14,272
Totals $5,261 $254,732 $646 $53,131 $206,593
[Download Table]
Sustainable
Category of Select US Global International
Expense Select US Equity Long/Short Thematic Growth
------- ---------------- ---------- -------- ------
Advertising/
Marketing $0 $0 $55 $133
Printing and Mailing
of Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders $0 $0 $18 $55
Compensation to
Underwriters $8,573 $18 $24,929 $12,913
Compensation to
Dealers $7 $6 $570 $1,563
Compensation to Sales
Personnel $2 $0 $304 $831
Interest, Carrying or
Other Financing
Charges $0 $0 $0 $0
Other (Includes
Personnel costs of
those home office
employees involved in
the distribution
effort and the
travel-related
expenses incurred by
the marketing
personnel conducting
seminars) $2 $0 $205 $632
Totals $8,584 $24 $26,081 $16,127
For the fiscal year ended July 31, 2017 for Large Cap Growth,
Discovery Growth, Small Cap Growth and Sustainable Global Thematic and during
the fiscal year ended June 30, 2017 for International Growth, Concentrated
Growth, Select US Equity, Select US Long/Short, Global Core Equity,
International Strategic Core and Concentrated International Growth the amount
of, and percentage of each class's net assets, of unreimbursed distribution
expenses incurred and carried over of reimbursement in future years in respect
of the Class B, Class C, Class R and Class K shares of each Fund were as
follows:
[Enlarge/Download Table]
Class Large Cap Growth Concentrated Growth Discovery Growth
----- ---------------- ------------------- ----------------
Class B $177,263,479 N/A $5,751,471
(% of the net assets of
Class B) 824.32% 0.00% 583.09%
Class C $19,923,794 $146,276 $2,900,264
(% of the net assets of
Class C) 6.36% 0.78% 7.90%
Class R $463,443 $0 $486,440
(% of the net assets of
Class R) 0.86% 0.00% 2.64%
Class K $554,638 $0 $311,496
(% of the net assets of
Class K) 0.61% 0.00% 1.80%
[Enlarge/Download Table]
Concentrated
Class Small Cap Growth Select US Equity Select US Long/Short International Growth
----- ---------------- ---------------- -------------------- --------------------
Class B $20,222,077 N/A N/A N/A
(% of the net assets of
Class B) 1,567.69% 0.00% 0.00% 0.00%
Class C $2,735,483 $75,137 $0 $0
(% of the net assets of
Class C) 10.00% 0.71% 0.00% 0.00%
Class R $623,888 $56 $0 N/A
(% of the net assets of
Class R) 1.84% 0.34% 0.00% 0.00%
Class K $672,749 $1,513 $0 N/A
(% of the net assets of
Class K) 1.67% 0.06% 0.00% 0.00%
[Enlarge/Download Table]
Sustainable Global International Global Core International
Class Thematic Growth Equity Strategic Core
----- -------- ------ ------ --------------
Class B $64,441,632 $5,185,070 N/A N/A
(% of the net assets of
Class B) 677.07% 397.13% 0.00% 0.00%
Class C $8,292,511 $4,442,058 $0 $199
(% of the net assets of
Class C) 36.52% 31.11% 0.00% 0.32%
Class R $289,232 $838,665 N/A N/A
(% of the net assets of
Class R) 9.33% 7.19% 0.00% 0.00%
Class K $78,280 $219,617 N/A N/A
(% of the net assets of
Class K) 0.68% 3.92% 0.00% 0.00%
Transfer Agency Agreement
-------------------------
ABIS, an indirect wholly-owned subsidiary of the Adviser, located
principally at 8000 IH 10 W, 4th Floor, San Antonio, Texas 78230, receives a
transfer agency fee per account holder of each of the Class A shares, Class B
shares, Class C shares, Class R shares, Class K shares, Class I shares, Class Z
shares and Advisor Class shares of the Funds plus reimbursement for
out-of-pocket expenses. For the fiscal year ended July 31, 2017 for Growth Fund,
Large Cap Growth, Discovery Growth, Small Cap Growth and Sustainable Global
Thematic and for the fiscal year ended June 30, 2017 for International Growth,
Concentrated Growth, Select US Equity, Select US Long/Short, Global Core
Equity,International Strategic Core and Concentrated International Growth, the
Funds paid ABIS $700,067, $1,832,505, $790,150, $436,919, $974,421, $289,831,
$71,324, $47,222, $194,323, $42,816, $12,412 and $1,500, respectively, for
transfer agency services.
ABIS acts as the transfer agent for each Fund. ABIS registers the
transfer, issuance and redemption of Fund shares and disburses dividends and
other distributions to Fund shareholders.
Many Fund shares are owned by selected dealers or selected agents,
as defined below, financial intermediaries or other financial representatives
("financial intermediaries") for the benefit of their customers. In those cases,
the Funds often do not maintain an account for you. Thus, some or all of the
transfer agency functions for these accounts are performed by the financial
intermediaries. Retirement plans may also hold Fund shares in the name of the
plan, rather than the participant. Financial intermediaries and recordkeepers,
who may have affiliated financial intermediaries who sell shares of the AB
Mutual Funds, may be paid by a Fund, the Adviser, ABI and ABIS (i) account fees
in amounts up to $19 per account per annum, (ii) asset-based fees of up to 0.25%
(except in respect of a limited number of intermediaries) per annum of the
average daily assets held through the intermediary, or (iii) a combination of
both. These amounts include fees for shareholder servicing, sub-transfer agency,
sub-accounting and recordkeeping services. These amounts do not include fees for
shareholder servicing that may be paid separately by the Fund pursuant to its
Rule 12b-1 plan. Amounts paid by a Fund for these services are included in
"Other Expenses" under "Fees and Expenses of the Fund" in the Summary
Information section of the Prospectus. In addition, financial intermediaries may
be affiliates of entities that receive compensation from the Adviser or ABI for
maintaining retirement plan "platforms" that facilitate trading by affiliated
and non-affiliated financial intermediaries and recordkeeping for retirement
plans.
Because financial intermediaries and plan recordkeepers may be paid
varying amounts per class for sub-transfer agency and related recordkeeping
services, the service requirements of which may also vary by class, this may
create an additional incentive for financial intermediaries and their financial
advisors to favor one fund complex over another or one class of shares over
another.
Securities Lending Agreement
----------------------------
State Street Bank and Trust Company ("State Street") serves as the
securities lending agent for the Growth Fund, Large Cap Growth, Discovery
Growth, Small Cap Growth, Sustainable Global Thematic, Concentrated Growth,
Select US Long/Short and Concentrated International Growth Funds and is
responsible for the implementation and administration of a securities lending
program pursuant to a Securities Lending Authorization Agreement ("Securities
Lending Agreement"). Pursuant to the Securities Lending Agreement, State Street
provides the following services: effecting loans of Fund securities to any
person on a list of approved borrowers; determining whether a loan shall be made
and negotiating and establishing the terms and conditions of the loan with the
borrower; ensuring that payments relating to distributions on loaned securities
are timely and properly credited to a Fund's account; collateral management
(including valuation and daily mark-to-market obligations); cash collateral
reinvestment in accordance with the Securities Lending Agreement; and
maintaining records and preparing reports regarding loans that are made and the
income derived therefrom.
The Funds earned income and paid fees and compensation related to
their securities lending activities during the most recent fiscal year as
follows:
[Enlarge/Download Table]
Fees and/or compensation for securities lending activities and related services:
--------------------------------------------------------------------------------
Fees paid for
any cash
collateral
management
services
(including
fees deducted
from a
pooled cash
collateral
Fees reinvestment
paid to vehicle) Agreggate
Gross securities that are Administrative Indemnification Other fees and/or Net
income lending not fees not fees not fees not compensation income
from agent included included included included for from
securities from in the in the in the Rebate in securities securities
lending revenue revenue revenue revenue (paid revenue lending lending
activities split split split split to borrow) split activities activities
---------- -------- ---------- ------------ ------------- ----------- -------- ---------- -----------
Growth Fund $53,651 $(4,510) $0 $0 $0 $(8,556) $0 $(13,066) $40,585
Large Cap
Growth $78,659 $(5,895) $0 $0 $0 $(19,711) $0 $(25,606) $53,053
Discovery
Growth $1,012,091 $(73,158) $0 $0 $0 $(280,630) $0 $(353,788) $658,303
Small Cap
Growth $827,117 $(65,129) $0 $0 $0 $(175,958) $0 $(241,087) $586,030
Sustainable
Global
Thematic $512,384 $(50,018) $0 $0 $0 $(12,272) $0 $(62,290) $450,094
Concentrated
Growth $7,334 $(555) $0 $0 $0 $(1,781) $0 $(2,336) $4,998
Select US
Long/Short $128,641 $(12,705) $0 $0 $0 $(1,605) $0 $(14,310) $114,331
Concentrated
International
Growth $0 $0 $0 $0 $0 $0 $0 $0 $0
Brown Brothers Harriman & Co. ("BBH") serves as the securities
lending agent for the International Growth, Select US Equity, Global Core Equity
and International Strategic Core Funds and is responsible for the implementation
and administration of a securities lending program pursuant to a Securities
Lending Authorization Agreement ("Securities Lending Agreement"). Pursuant to
the Securities Lending Agreement, BBH provides the following services: effecting
loans of Fund securities to any person on a list of approved borrowers;
determining whether a loan shall be made and negotiating and establishing the
terms and conditions of the loan with the borrower; ensuring that payments
relating to distributions on loaned securities are timely and properly credited
to a Fund's account; collateral management (including valuation and daily
mark-to-market obligations); cash collateral reinvestment in accordance with the
Securities Lending Agreement; and maintaining records and preparing reports
regarding loans that are made and the income derived therefrom.
The Funds earned income and paid fees and compensation related to
their securities lending activities during the most recent fiscal year as
follows:
[Enlarge/Download Table]
Fees and/or compensation for securities lending activities and related services:
--------------------------------------------------------------------------------
Fees paid for
any cash
collateral
management
services
(including
fees deducted
from a
pooled cash
collateral
Fees reinvestment
paid to vehicle) Agreggate
Gross securities that are Administrative Indemnification Other fees and/or Net
income lending not fees not fees not fees not compensation income
from agent included included included included for from
securities from in the in the in the Rebate in securities securities
lending revenue revenue revenue revenue (paid revenue lending lending
activities split split split split to borrow) split activities activities
---------- -------- ---------- ------------ ------------- ----------- -------- ---------- -----------
International
Growth $110,459 $ (10,791) $0 $0 $0 $ (2,552) $0 $ (13,343) $97,116
Select US
Equity $ 0 $ 0 $0 $0 $0 $ 0 $0 $ 0 $ 0
Global Core
Equity $ 32,760 $ (3,052) $0 $0 $0 $ (2,516) $0 $ (5,568) $27,192
International
Strategic
Core $ 0 $ 0 $0 $0 $0 $ 0 $0 $ 0 $ 0
--------------------------------------------------------------------------------
PURCHASE OF SHARES
--------------------------------------------------------------------------------
The following information supplements that set forth in your
Prospectus under the heading "Investing in the Funds".
Effective January 31, 2009, sales of Class B shares of the Funds to
new investors were suspended. Class B shares are only issued (i) upon the
exchange of Class B shares from another AB Fund, (ii) for purposes of dividend
reinvestment, (iii) through the Fund's Automatic Investment Program for accounts
that established the Program prior to January 31, 2009, and (iv) for purchase of
additional Class B shares by Class B shareholders as of January 31, 2009. The
ability to establish a new Automatic Investment Program for accounts containing
Class B shares was suspended as of January 31, 2009.
General
-------
Shares of the Funds are offered on a continuous basis at a price
equal to its NAV plus an initial sales charge at the time of purchase (the
"Class A shares"), with a CDSC (the "Class B shares"), without any initial sales
charge and, as long as the shares are held for one year or more, without any
CDSC ("Class C shares"), to Group Retirement Plans, as defined below, eligible
to purchase Class R shares, without any initial sales charge or CDSC ("Class R
shares"), to group retirement plans eligible to purchase Class K shares without
any initial sales charge or CDSC ("Class K shares"), to group retirement plans
and certain investment advisory clients of, and certain other persons associated
with, the Adviser and its affiliates eligible to purchase Class I shares,
without any initial sales charge or CDSC ("Class I shares"), with respect to
Discovery Growth, Concentrated Growth, Large Cap Growth and Small Cap Growth, to
Group Retirement Plans, as defined below, eligible to purchase Class Z shares,
without any initial sales charge or CDSC ("Class Z shares") or to investors
eligible to purchase Advisor Class shares, without any initial sales charge or
CDSC ("Advisor Class shares"),in each case as described below. "Group Retirement
Plans" are defined as 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase pension plans, defined benefit plans, and
non-qualified deferred compensation plans where plan level or omnibus accounts
are held on the books of the Fund. All classes of shares of the Funds, except
Class I, Class Z and Advisor Class shares, are subject to Rule 12b-1 asset-based
sales charges. Shares of the Funds that are offered subject to a sales charge
are offered through (i) investment dealers that are members of Financial
Industry Regulatory Authority and have entered into selected dealer agreements
with ABI ("selected dealers"), (ii) depository institutions and other financial
intermediaries or their affiliates, that have entered into selected agent
agreements with ABI ("selected agents"), and (iii) ABI. Concentrated Growth,
Select US Equity, Select US Long/Short, Global Core Equity, International
Strategic Core and Concentrated International Growth do not offer Class B
Shares.
Investors may purchase shares of the Funds either through financial
intermediaries or directly through ABI. A transaction, service, administrative
or other similar fee may be charged by your financial intermediary with respect
to the purchase, sale or exchange of shares made through the financial
intermediary. Such financial intermediaries may also impose requirements with
respect to the purchase, sale or exchange of shares that are different from, or
in addition to, those imposed by the Funds, including requirements as to the
classes of shares available through that financial intermediary and the minimum
initial and subsequent investment amounts. The Funds are not responsible for,
and have no control over, the decision of any financial intermediary to impose
such differing requirements. Sales personnel of financial intermediaries
distributing the Funds' shares may receive differing compensation for selling
different classes of shares.
In order to open your account, a Fund or your financial intermediary
is required to obtain certain information from you for identification purposes.
This information may include name, date of birth, permanent residential address
and social security/taxpayer identification number. It will not be possible to
establish your account without this information. If the Fund or your financial
intermediary is unable to verify the information provided, your account may be
closed and other appropriate action may be taken as permitted by law.
Frequent Purchases and Sales of Fund Shares
-------------------------------------------
Each Fund's Board has adopted policies and procedures designed to
detect and deter frequent purchases and redemptions of Fund shares or excessive
or short-term trading that may disadvantage long-term Fund shareholders. These
policies are described below. There is no guarantee that the Funds will be able
to detect excessive or short-term trading or to identify shareholders engaged in
such practices, particularly with respect to transactions in omnibus accounts.
Shareholders should be aware that application of these policies may have adverse
consequences, as described below, and should avoid frequent trading in Fund
shares through purchases, sales and exchanges of shares. Each Fund reserves the
right to restrict, reject or cancel, without any prior notice, any purchase or
exchange order for any reason, including any purchase or exchange order accepted
by any shareholder's financial intermediary.
Risks Associated With Excessive or Short-Term Trading Generally.
While the Funds will try to prevent market timing by utilizing the procedures
described below, these procedures may not be successful in identifying or
stopping excessive or short-term trading in all circumstances. By realizing
profits through short-term trading, shareholders that engage in rapid purchases
and sales or exchanges of a Fund's shares dilute the value of shares held by
long-term shareholders. Volatility resulting from excessive purchases and sales
or exchanges of Fund shares, especially involving large dollar amounts, may
disrupt efficient portfolio management and cause a Fund to sell shares at
inopportune times to raise cash to accommodate redemptions relating to
short-term trading. In particular, a Fund may have difficulty implementing its
long-term investment strategies if it is forced to maintain a higher level of
its assets in cash to accommodate significant short-term trading activity. In
addition, a Fund may incur increased administrative and other expenses due to
excessive or short-term trading, including increased brokerage costs and
realization of taxable capital gains.
Funds that may invest significantly in securities of foreign issuers
may be particularly susceptible to short-term trading strategies. This is
because securities of foreign issuers are typically traded on markets that close
well before the time a Fund ordinarily calculates its NAV at 4:00 p.m., Eastern
time, which gives rise to the possibility that developments may have occurred in
the interim that would affect the value of these securities. The time zone
differences among international stock markets can allow a shareholder engaging
in a short-term trading strategy to exploit differences in Fund share prices
that are based on closing prices of securities of foreign issuers established
some time before the Fund calculates its own share price (referred to as "time
zone arbitrage"). The Funds have procedures, referred to as fair value pricing,
designed to adjust closing market prices of securities of foreign issuers to
reflect what is believed to be the fair value of those securities at the time a
Fund calculates its NAV. While there is no assurance, the Funds expect that the
use of fair value pricing, in addition to the short-term trading policies
discussed below, will significantly reduce a shareholder's ability to engage in
time zone arbitrage to the detriment of other Fund shareholders.
A shareholder engaging in a short-term trading strategy may also
target a Fund that does not invest primarily in securities of foreign issuers.
Any Fund that invests in securities that are, among other things, thinly traded,
traded infrequently or relatively illiquid has the risk that the current market
price for the securities may not accurately reflect current market values. A
shareholder may seek to engage in short-term trading to take advantage of these
pricing differences (referred to as "price arbitrage"). All Funds may be
adversely affected by price arbitrage.
Policy Regarding Short-Term Trading. Purchases and exchanges of
shares of the Fund should be made for investment purposes only. The Funds seek
to prevent patterns of excessive purchases and sales or exchanges of Fund
shares. The Funds seek to prevent such practices to the extent they are detected
by the procedures described below, subject to the Funds' ability to monitor
purchase, sale and exchange activity. The Funds reserve the right to modify this
policy, including any surveillance or account blocking procedures established
from time to time to effectuate this policy, at any time without notice.
o Transaction Surveillance Procedures. The Funds, through their agents, ABI
and ABIS, maintain surveillance procedures to detect excessive or
short-term trading in Fund shares. This surveillance process involves
several factors, which include scrutinizing transactions in Fund shares
that exceed certain monetary thresholds or numerical limits within a
specified period of time. Generally, more than two exchanges of Fund
shares during any 60-day period or purchases of shares followed by a sale
within 60 days will be identified by these surveillance procedures. For
purposes of these transaction surveillance procedures, the Funds may
consider trading activity in multiple accounts under common ownership,
control or influence. Trading activity identified by either, or a
combination, of these factors, or as a result of any other information
available at the time, will be evaluated to determine whether such
activity might constitute excessive or short-term trading. With respect to
managed or discretionary accounts for which the account owner gives
his/her broker, investment adviser or other third party authority to buy
and sell Fund shares, the Funds may consider trades initiated by the
account owner, such as trades initiated in connection with bona fide cash
management purposes, separately in their analysis. These surveillance
procedures may be modified from time to time, as necessary or appropriate
to improve the detection of excessive or short-term trading or to address
specific circumstances.
o Account Blocking Procedures. If the Funds determine, in their sole
discretion, that a particular transaction or pattern of transactions
identified by the transaction surveillance procedures described above is
excessive or short-term trading in nature, the Funds will take remedial
action that may include issuing a warning, revoking certain
account-related privileges (such as the ability to place purchase, sale
and exchange orders over the internet or by phone) or prohibiting or
"blocking" future purchase or exchange activity. However, sales of Fund
shares back to a Fund or redemptions will continue to be permitted in
accordance with the terms of the Fund's current Prospectus. As a result,
unless the shareholder redeems his or her shares, which may have
consequences if the shares have declined in value, a CDSC is applicable or
adverse tax consequences may result, the shareholder may be "locked" into
an unsuitable investment. A blocked account will generally remain blocked
for 90 days. Subsequent detections of excessive or short-term trading may
result in an indefinite account block or an account block until the
account holder or the associated broker, dealer or other financial
intermediary provides evidence or assurance acceptable to the Fund that
the account holder did not or will not in the future engage in excessive
or short-term trading.
o Applications of Surveillance Procedures and Restrictions to Omnibus
Accounts. Omnibus account arrangements are common forms of holding shares
of the Funds, particularly among certain brokers, dealers and other
financial intermediaries, including sponsors of retirement plans and
variable insurance products. The Funds apply their surveillance procedures
to these omnibus account arrangements. As required by SEC rules, the Funds
have entered into agreements with all of its financial intermediaries that
require the financial intermediaries to provide the Funds, upon the
request of the Funds or their agents, with individual account level
information about their transactions. If the Funds detect excessive
trading through its monitoring of omnibus accounts, including trading at
the individual account level, the financial intermediaries will also
execute instructions from the Funds to take actions to curtail the
activity, which may include applying blocks to accounts to prohibit future
purchases and exchanges of Fund shares. For certain retirement plan
accounts, the Funds may request that the retirement plan or other
intermediary revoke the relevant participant's privilege to effect
transactions in Fund shares via the internet or telephone, in which case
the relevant participant must submit future transaction orders via the
U.S. Postal Service (i.e., regular mail).
Purchase of Shares
------------------
A Fund reserves the right to suspend the sale of its shares to the
public in response to conditions in the securities markets or for other reasons.
If the Fund suspends the sale of its shares, shareholders will not be able to
acquire its shares, including through an exchange.
The public offering price of shares of a Fund is its NAV, plus, in
the case of Class A shares of the Fund, a sales charge. On each Fund business
day on which a purchase or redemption order is received by the Fund and trading
in the types of securities in which the Fund invests might materially affect the
value of the Fund's shares, the NAV per share is computed as of the Fund Closing
Time, which is the close of regular trading on each day the Exchange is open
(ordinarily 4:00 p.m., Eastern time, but sometimes earlier, as in the case of
scheduled half-day trading or unscheduled suspensions of trading) by dividing
the value of the total assets attributable to a class, less its liabilities, by
the total number of its shares then outstanding. A Fund business day is any day
on which the Exchange is open for trading.
The respective NAVs of the various classes of shares of a Fund are
expected to be substantially the same. However, the NAVs of the Class B, Class C
and Class R shares of the Fund will generally be slightly lower than the NAVs of
the Class A, Class K, Class I, Class Z and Advisor Class shares of the Fund, as
a result of the differential daily expense accruals of the higher distribution
and, in some cases, transfer agency fees applicable with respect to those
classes of shares.
A Fund will accept unconditional orders for its shares to be
executed at the public offering price equal to its NAV next determined (plus
applicable Class A sales charges), as described below. Orders received by ABIS
prior to the Fund Closing Time are priced at the NAV computed as of the Fund
Closing Time on that day (plus applicable Class A sales charges). In the case of
orders for purchase of shares placed through financial intermediaries, the
applicable public offering price will be the NAV as so determined, but only if
the financial intermediary receives the order prior to the Fund Closing Time.
The financial intermediary is responsible for transmitting such orders by a
prescribed time to the Fund or its transfer agent. If the financial intermediary
fails to do so, the investor will not receive that day's NAV. If the financial
intermediary receives the order after the Fund Closing Time, the price received
by the investor will be based on the NAV determined as of the Fund Closing Time
on the next business day.
A Fund may, at its sole option, accept securities as payment for
shares of the Fund, including from certain affiliates of the Fund in accordance
with the Fund's procedures, if the Adviser believes that the securities are
appropriate investments for the Fund. The securities are valued by the method
described under "Net Asset Value" below as of the date the Fund receives the
securities and corresponding documentation necessary to transfer the securities
to the Fund. This is a taxable transaction to the shareholder.
Following the initial purchase of the Fund's shares, a shareholder
may place orders to purchase additional shares by telephone if the shareholder
has completed the appropriate portion of the Mutual Fund Application or an
"Autobuy" application, both of which may be obtained by calling the "For
Literature" telephone number shown on the cover of this SAI. Except with respect
to certain omnibus accounts, telephone purchase orders with payment by
electronic funds transfer may not exceed $500,000. Payment for shares purchased
by telephone can be made only by electronic funds transfer from a bank account
maintained by the shareholder at a bank that is a member of the National
Automated Clearing House Association ("NACHA"). Telephone purchase requests must
be received before the Fund Closing Time on a Fund business day to receive that
day's public offering price. Telephone purchase requests received after the Fund
Closing Time are automatically placed the following Fund business day, and the
applicable public offering price will be the public offering price determined as
of the Fund Closing Time on such following business day.
Full and fractional shares are credited to a shareholder's account
in the amount of his or her subscription. As a convenience, and to avoid
unnecessary expense to the Fund, the Fund will not issue share certificates
representing shares of the Fund. Ownership of the Fund's shares will be shown on
the books of the Fund's transfer agent.
Each class of shares of the Funds represents an interest in the same
portfolio of investments of the Fund, has the same rights and is identical in
all respects, except that (i) Class A shares bear the expense of the initial
sales charge (or CDSC, when applicable) and Class B shares and Class C shares
bear the expense of the CDSC, (ii) depending on the Fund, Class B shares, Class
C shares and Class R shares typically each bear the expense of a higher
distribution services fee than that borne by Class A shares and Class K shares;
and Class I shares, Class Z shares and Advisor Class shares do not bear such a
fee, (iii) Class B and Class C shares are subject to a conversion feature and
will convert to Class A shares under certain circumstances, and (iv) each of
Class A, Class B, Class C, Class R and Class K shares has exclusive voting
rights with respect to provisions of the Plan pursuant to which its distribution
services fee is paid and other matters for which separate class voting is
appropriate under applicable law, provided that, if the Fund submits to a vote
of the Class A shareholders an amendment to the Plan that would materially
increase the amount to be paid thereunder with respect to the Class A shares,
then such amendment will also be submitted to the Class B and Class C
shareholders because the Class B and Class C shares convert to Class A shares
under certain circumstances, and the Class A shareholders, the Class B
shareholders and the Class C shareholders will vote separately by class. Each
class has different exchange privileges and certain different shareholder
service options available.
The Directors of the Funds have determined that currently no
conflict of interest exists between or among the classes of shares of the Funds.
On an ongoing basis, the Directors of the Funds, pursuant to their fiduciary
duties under the 1940 Act and state law, will seek to ensure that no such
conflict arises.
Alternative Purchase Arrangements
---------------------------------
Classes A, B and C Shares. Class A, Class B and Class C shares have
the following alternative purchase arrangements: Class A shares are generally
offered with an initial sales charge, Class B shares are generally offered with
a CDSC and Class C shares are sold to investors choosing the asset-based sales
charge alternative. Special purchase arrangements are available for Group
Retirement Plans. See "Alternative Purchase Arrangements - Group Retirement
Plans and Tax-Deferred Accounts" below. These alternative purchase arrangements
permit an investor to choose the method of purchasing shares that is most
beneficial given the amount of the purchase, the length of time the investor
expects to hold the shares, and other circumstances. Investors should consider
whether, during the anticipated life of their investment in the Fund, the
accumulated distribution services fee and CDSC on Class B or Class C shares
prior to conversion, would be less than the initial sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher return of Class A
shares. Class A shares will normally be more beneficial than Class B shares to
the investor who qualifies for reduced initial sales charges on Class A shares,
as described below. In this regard, ABI will reject any order (except orders
from certain group retirement plans) for more than $100,000 for Class B shares
(see "Alternative Purchase Arrangements - Group Retirement Plans and
Tax-Deferred Accounts" below). Class C shares will normally not be suitable for
the investor who qualifies to purchase Class A shares at NAV. For this reason,
ABI will reject any order for more than $1,000,000 for Class C shares.
Class A shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends per share than Class B shares
or Class C shares. However, because initial sales charges are deducted at the
time of purchase, most investors purchasing Class A shares would not have all of
their funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution
charges on Class B shares or Class C shares may exceed the initial sales charge
on Class A shares during the life of the investment. Again, however, such
investors must weigh this consideration against the fact that, because of such
initial sales charges, not all of their funds will be invested initially.
Other investors might determine, however, that it would be more
advantageous to purchase Class B shares or Class C shares in order to have all
of their funds invested initially, although remaining subject to higher
continuing distribution charges and being subject to a CDSC for a four-year and
one-year period, respectively. For example, based on current fees and expenses,
an investor subject to the 4.25% initial sales charge on Class A shares would
have to hold his or her investment approximately seven years for the Class C
distribution services fee to exceed the initial sales charge plus the
accumulated distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer period might
consider purchasing Class A shares. This example does not take into account the
time value of money, which further reduces the impact of the Class C
distribution services fees on the investment, fluctuations in NAV or the effect
of different performance assumptions.
Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the four-year period during
which Class B shares are subject to a CDSC may find it more advantageous to
purchase Class C shares.
Compensation Paid to Principal Underwriter
------------------------------------------
During the fiscal years ended July 31, 2017, July 31, 2016 and July
31, 2015, the aggregate amounts of underwriting commissions payable with respect
to shares of Growth Fund were $133,791, $166,971 and $168,613, respectively. Of
those amounts, ABI retained $6,761, $9,847 and $9,241, respectively,
representing that portion of the sales charges paid on Class A shares which was
not reallocated to selected dealers.
During the fiscal years ended July 31, 2017, July 31, 2016 and July
31, 2015, the aggregate amounts of underwriting commissions payable with respect
to shares of Large Cap Growth were $1,681,575, $1,856,864 and $794,522,
respectively. Of those amounts, ABI retained $102,767, $102,219 and $44,532,
respectively, representing that portion of the sales charges paid on Class A
shares which was not reallocated to selected dealers.
During the fiscal years ended June 30, 2017, June 30, 2016 and June
30, 2015, the aggregate amount of underwriting commissions payable with respect
to shares of Concentrated Growth were $44,863, $209,738 and $145,430,
respectively. Of that amount, ABI retained $2,760, $12,666 and $9,946,
respectively, representing that portion of the sales charge paid on Class A
shares which was not reallocated to selected dealers.
During the fiscal years ended July 31, 2017, July 31, 2016 and July
31, 2015, the aggregate amounts of underwriting commissions payable with respect
to shares of Discovery Growth were $118,134, $239,712 and $315,757,
respectively. Of those amounts, ABI retained $4,881, $8,197 and $13,936,
respectively, representing that portion of the sales charges paid on Class A
shares which was not reallocated to selected dealers.
During the fiscal years ended July 31, 2017, July 31, 2016 and July
31, 2015, the aggregate amounts of underwriting commissions payable with respect
to shares of Small Cap Growth were $127,656, $91,505 and $142,866, respectively.
Of those amounts, ABI retained $3,401, $2,497 and $4,148, respectively,
representing that portion of the sales charges paid on Class A shares which was
not reallocated to selected dealers.
During the fiscal years ended June 30, 2017, June 30, 2016 and June
30, 2015 the aggregate amounts of underwriting commissions payable with respect
to shares of Select US Equity were $17,487, $43,210 and $65,291, respectively.
Of that amount, ABI retained $1,241, $1,325 and $4,848, respectively,
representing that portion of the sales charges paid on Class A shares which was
not reallocated to selected dealers.
During the fiscal years ended June 30, 2017, June 30, 2016 and June
30, 2015, the aggregate amount of underwriting commissions payable with respect
to shares of Select US Long/Short was $77,424, $218,605 and $1,276,768,
respectively. Of that amount, ABI retained $3,930, $13,459 and $76,326,
representing that portion of the sales charges paid on Class A shares which was
not reallocated to selected dealers.
During the fiscal years ended July 31, 2017, July 31, 2016 and July
31, 2015, the aggregate amounts of underwriting commissions payable with respect
to shares of Sustainable Global Thematic were $126,797, $128,649 and $147,925,
respectively. Of those amounts, ABI retained $6,697, $6,976 and $8,173,
respectively, representing that portion of the sales charges paid on Class A
shares which was not reallocated to selected dealers.
During the fiscal years ended June 30, 2017, June 30, 2016 and June
30, 2015, the aggregate amounts of underwriting commissions payable with respect
to shares of International Growth were $35,401, $41,114 and $66,905,
respectively. Of those amounts, ABI retained $1,301, $1,336 and $2,721,
respectively, representing that portion of the sales charges paid on Class A
shares which was not reallocated to selected dealers.
During the fiscal years ended June 30, 2017 and June 30, 2016, and
the fiscal period ended June 30, 2015, the aggregate amounts of underwriting
commissions payable with respect to shares of Global Core Equity were $1,250,
$2,624 and $6,845, respectively. Of those amounts, ABI retained $83, $126 and
$16, respectively, representing that portion of the sales charges paid on Class
A shares which was not reallocated to selected dealers.
During the fiscal year or period ended June 30, 2017 and June 30,
2016, the aggregate amounts of underwriting commissions payable with respect to
shares of International Strategic Core were $977 and $7, respectively. Of that
amount, ABI retained $96 and $7, respectively, representing that portion of the
sales charges paid on Class A shares which was not reallocated to selected
dealers.
During the fiscal years ended June 30, 2017 and June 30, 2016, and
fiscal period ended June 30, 2015, there were no underwriting commissions paid
with respect to shares of Concentrated International Growth.
The following table shows the CDSCs received by ABI from each share
class during the Funds' last three fiscal years or since inception.
[Enlarge/Download Table]
Amounts Amounts Amounts
Fiscal Year ABI Received ABI Received ABI Received
Ended In CDSCs In CDSCs In CDSCs
July 31/ From From From
June 30 Fund Class A Shares Class B Shares Class C Shares
------- ---- -------------- --------------- -----------------
2017 Growth Fund $1,783 $7,932 $2,642
2016 $2,671 $7,969 $1,624
2015 $2,811 $9,577 $1,509
2017 Large Cap Growth $17,346 $11,693 $59,567
2016 $9,327 $10,141 $30,170
2015 $17,577 $14,725 $6,774
2017 Concentrated Growth $13 N/A $7,380
2016 $2,450 N/A $6,332
2015 $0 N/A $930
2017 Discovery Growth $25,469 $487 $2,896
2016 $36,487 $673 $4,592
2015 $4,588 $1,606 $14,100
2017 Small Cap Growth $4,909 $1,398 $1,364
2016 $8,087 $867 $2,706
2015 $3,976 $1,423 $18,436
2017 Select US Equity $504 N/A $1,085
2016 $93 N/A $1,546
2015 $6,121 N/A $2,396
2017 Select US Long/Short $6,710 N/A $9,463
2016 $9,794 N/A $38,550
2015 $506 N/A $84,677
2017 Sustainable Global Thematic $2,616 $9,983 $1,889
2016 $3,975 $6,604 $4,091
2015 $3,542 $12,797 $2,036
2017 International Growth $2,238 $797 $358
2016 $4,514 $963 $1,354
2015 $6,527 $2,199 $650
2017 Global Core Equity $0 N/A $0
2016 $0 N/A $0
2015 $0 N/A $0
2017 International Strategic $0 N/A $0
2016 Core $0 N/A $0
2017 Concentrated Interanational $0 N/A $0
2016 Growth $0 N/A $0
2015 $0 N/A $0
Class A Shares
--------------
The public offering price of Class A shares is the NAV plus a sales
charge, as set forth below:
Sales Charge
------------
Discount or
As % As % Commission
of Net of the to Dealers or
Amount Public Agents of up to
Amount of Purchase Invested Offering Price % of Offering Price
-------- -------------- -------------------
Up to $100,000................. 4.44% 4.25% 4.00%
$100,000 up to $250,000........ 3.36 3.25 3.00
$250,000 up to $500,000........ 2.30 2.25 2.00
$500,000 up to $1,000,000*..... 1.78 1.75 1.50
--------
* There is no initial sales charge on transactions of $1,000,000 or more.
All or a portion of the initial sales charge may be paid to your
financial representative. With respect to purchases of $1,000,000 or more, Class
A shares of a Fund redeemed within one year of purchase may be subject to a CDSC
of up to 1%. The CDSC on Class A shares will be waived on certain redemptions,
as described below under "Contingent Deferred Sales Charge". A Fund receives the
entire NAV of its Class A shares sold to investors. ABI's commission is the
sales charge shown above less any applicable discount or commission "re-allowed"
to selected dealers and agents. ABI will re-allow discounts to selected dealers
and agents in the amounts indicated in the table above. In this regard, ABI may
elect to re-allow the entire sales charge to selected dealers and agents for all
sales with respect to which orders are placed with ABI. A selected dealer who
receives re-allowance in excess of 90% of such a sales charge may be deemed to
be an "underwriter" under the Securities Act.
No initial sales charge is imposed on Class A shares issued (i)
pursuant to the automatic reinvestment of income dividends or capital gains
distributions, (ii) in exchange for Class A shares of other "AB Mutual Funds"
(as that term is defined under "Combined Purchase Privilege" below), except that
an initial sales charge will be imposed on Class A shares issued in exchange for
Class A shares of an AB money market fund that were purchased for cash without
the payment of an initial sales charge and without being subject to a CDSC, or
(iii) upon the automatic conversion of Class B shares of a Fund as described
below under "Class B Shares - Conversion Feature".
Commissions may be paid to selected dealers or agents who initiate
or are responsible for Class A share purchases by a single shareholder of
$1,000,000 or more that are not subject to an initial sales charge at up to the
following rates: 1.00% on purchase amounts up to $3,000,000; plus 0.75% on
purchase amounts over $3,000,000 up to $5,000,000; plus 0.50% on purchase
amounts over $5,000,000. Commissions are paid based on cumulative purchases by a
shareholder over the life of an account with no adjustments for redemptions,
transfers or market declines.
In addition to the circumstances described above, certain types of
investors may be entitled to pay no initial sales charge in certain
circumstances described below.
Class A Shares - Sales at NAV. A Fund may sell its Class A shares at
NAV (i.e., without any initial sales charge) to certain categories of investors
including:
(i) investment management clients of the Adviser or its
affiliates, including clients and prospective clients of the
Adviser's Institutional Investment Management Division;
(ii) officers and present or former Directors of the Funds or
other investment companies managed by the Adviser, officers,
directors and present or retired full-time employees and
former employees (for subsequent investment in accounts
established during the course of their employment) of the
Adviser, ABI, ABIS and their affiliates; officers, directors
and present and full-time employees of selected dealers or
agents; or the spouse or domestic partner, sibling, direct
ancestor or direct descendant (collectively, "relatives") of
any such person; or any trust, individual retirement account
or retirement plan account for the benefit of any such
person;
(iii) the Adviser, ABI, ABIS and their affiliates; certain
employee benefit plans for employees of the Adviser, ABI,
ABIS and their affiliates;
(iv) persons participating in a fee-based program, sponsored and
maintained by a registered broker-dealer or other financial
intermediary, under which persons pay an asset-based fee for
services in the nature of investment advisory or
administrative services; or clients of broker-dealers or
other financial intermediaries who purchase Class A shares
for their own accounts through self-directed brokerage
accounts with the broker-dealers or financial intermediaries
that may or may not charge a transaction fee to its clients;
(v) Plan participants who roll over amounts distributed from
employer maintained retirement plans to
AllianceBernstein-sponsored IRAs where the plan is a client
of or serviced by the Adviser's Institutional Investment
Management Division or Bernstein Global Wealth Management
Division, including subsequent contributions to those IRAs;
(vi) persons participating in a "Mutual Fund Only" brokerage
program, sponsored and maintained by a registered
broker-dealer or other financial intermediary;
(vii) certain retirement plan accounts as described under
"Alternative Purchase Arrangements-Group Retirement Plans
and Tax-Deferred Accounts";
(viii) current Class A shareholders of AB Mutual Funds and
investors who receive a "Fair Funds Distribution" (a
"Distribution") resulting from an SEC enforcement action
against the Adviser and current Class A shareholders of AB
Mutual Funds who receive a Distribution resulting from any
SEC enforcement action related to trading in shares of AB
Mutual Funds who, in each case, purchase shares of an AB
Mutual Fund from ABI through deposit with ABI of the
Distribution check; and
(ix) certain firm-specific waivers as disclosed in Appendix B of
the Prospectus.
Class B Shares
--------------
Effective January 31, 2009, sales of Class B shares of the Funds to
new investors were suspended. Class B shares are only issued (i) upon the
exchange of Class B shares from another AB Fund, (ii) for purposes of dividend
reinvestment, (iii) through the Fund's Automatic Investment Program for accounts
that established the Program prior to January 31, 2009, and (iv) for purchases
of additional Class B shares by Class B shareholders as of January 31, 2009. The
ability to establish a new Automatic Investment Program for accounts containing
Class B shares was suspended as of January 31, 2009.
Investors may purchase Class B shares at the public offering price
equal to the NAV per share of the Class B shares on the date of purchase without
the imposition of a sales charge at the time of purchase. The Class B shares are
sold without an initial sales charge so that the Fund will receive the full
amount of the investor's purchase payment.
Eight years after the end of the calendar month in which the
shareholder's purchase order was accepted Class B shares will automatically
convert to Class A shares and will no longer be subject to a higher distribution
services fee. Such conversion will occur on the basis of the relative NAVs of
the two classes, without the imposition of any sales load, fee or other charge.
The purpose of the conversion feature is to reduce the distribution services fee
paid by holders of Class B shares that have been outstanding long enough for ABI
to have been compensated for distribution expenses incurred in the sale of the
shares.
Class C Shares
--------------
Investors may purchase Class C shares at the public offering price
equal to the NAV per share of the Class C shares on the date of purchase without
the imposition of a sales charge either at the time of purchase or, as long as
the shares are held for one year or more, upon redemption. Class C shares are
sold without an initial sales charge, so that the Fund will receive the full
amount of the investor's purchase payment and, as long as the shares are held
for one year or more, without a CDSC so that the investor will receive as
proceeds upon redemption the entire NAV of his or her Class C shares. The Class
C distribution services fee enables the Fund to sell Class C shares without
either an initial sales charge or CDSC, as long as the shares are held for one
year or more. Class C shares incur higher distribution services fees and
transfer agency costs than Class A shares and Advisor Class shares, and will
thus have a higher expense ratio and pay correspondingly lower dividends than
Class A shares and Advisor Class shares.
Ten years after the end of the calendar month in which the
shareholder's purchase order was accepted Class C shares will automatically
convert to Class A shares and will no longer be subject to a higher distribution
services fee. Such conversion will occur on the basis of the relative NAVs of
the two classes, without the imposition of any sales load, fee or other charge.
The purpose of the conversion feature is to reduce the distribution services fee
paid by holders of Class C shares that have been outstanding long enough for ABI
to have been compensated for distribution expenses incurred in the sale of the
shares.
Conversion Feature for Class B and Class C Shares
-------------------------------------------------
For purposes of conversion to Class A, Class B or Class C shares
purchased through the reinvestment of dividends and distributions paid in
respect of such shares in a shareholder's account will be considered to be held
in a separate sub-account. Each time any Class B or Class C shares in the
shareholder's account (other than those in the sub-account) convert to Class A
shares, an equal pro-rata portion of such shares in the sub-account will also
convert to Class A shares.
The conversion to Class A shares is subject to the continuing
availability of an opinion of counsel to the effect that the conversion of Class
B or Class C shares to Class A shares does not constitute a taxable event under
federal income tax law. The conversion of Class B or Class C shares to Class A
shares may be suspended if such an opinion is no longer available at the time
such conversion is to occur. In that event, no further conversions of Class B or
Class C shares would occur, and shares might continue to be subject to the
higher distribution services fee for an indefinite period, which may extend
beyond the period ending eight years for Class B shares and ten years for Class
C shares after the end of the calendar month in which the shareholder's purchase
order was accepted.
Contingent Deferred Sales Charge
--------------------------------
Class B shares that are redeemed within four years of purchase will
be subject to a CDSC at the rates set forth below charged as a percentage of the
dollar amount subject thereto. Class A share purchases of $1,000,000 or more and
Class C shares that in either case are redeemed within one year of purchase will
be subject to a CDSC of 1%, as are Class A share purchases by certain group
retirement plans (see "Alternative Purchase Arrangements - Group Retirement
Plans and Tax-Deferred Accounts" below). The charge will be assessed on an
amount equal to the lesser of the cost of the shares being redeemed or their NAV
at the time of redemption. Accordingly, no sales charge will be imposed on
increases in NAV above the initial purchase price. In addition, no charge will
be assessed on shares derived from reinvestment of dividends or capital gains
distributions.
To illustrate, assume that an investor purchased 100 Class B shares
at $10 per share (at a cost of $1,000) and in the second year after purchase the
NAV per share is $12 and, during such time, the investor has acquired 10
additional Class B shares upon dividend reinvestment. If at such time the
investor makes his or her first redemption of 50 Class B shares (proceeds of
$600), 10 Class B shares will not be subject to the charge because of dividend
reinvestment. With respect to the remaining 40 Class B shares, the charge is
applied only to the original cost of $10 per share and not to the increase in
NAV of $2 per share. Therefore, $400 of the $600 redemption proceeds will be
charged at a rate of 3.0% (the applicable rate in the second year after purchase
as set forth below).
For Class B shares, the amount of the CDSC, if any, will vary
depending on the number of years from the time of payment for the purchase of
Class B shares until the time of redemption of such shares.
Contingent Deferred Sales Charge
for the Fund as a % of Dollar
Year Since Purchase Amount Subject to Charge
------------------- ------------------------
First 4.00%
Second 3.00%
Third 2.00%
Fourth 1.00%
Fifth and thereafter None
In determining the CDSC applicable to a redemption of Class B and
Class C shares of a Fund, it will be assumed that the redemption is, first, of
any shares that are not subject to a CDSC (for example, because the shares were
acquired upon the reinvestment of dividends or distributions) and, second, of
shares held longest during the time they are subject to the sales charge. When
shares acquired in an exchange are redeemed, the applicable CDSC and conversion
schedules will be the schedules that applied at the time of the purchase of
shares of the corresponding class of the AB Mutual Fund originally purchased by
the shareholder. The CDSC period begins with the date of your original purchase,
not the date of exchange for the other Class B shares or Class C shares, as
applicable.
Proceeds from the CDSC are paid to ABI and are used by ABI to defray
the expenses of ABI related to providing distribution-related services to the
Fund in connection with the sale of the Fund shares, such as the payment of
compensation to selected dealers and agents for selling Fund shares. The
combination of the CDSC and the distribution services fee enables the Fund to
sell shares without a sales charge being deducted at the time of purchase.
The CDSC is waived on redemptions of shares (i) following the death
or disability, as defined in the Code, of a shareholder, (ii) to the extent that
the redemption represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder that has attained
the age of 70 1/2, (iii) that had been purchased by present or former Directors
of the Funds, by the relative of any such person, by any trust, individual
retirement account or retirement plan account for the benefit of any such person
or relative, or by the estate of any such person or relative, (iv) pursuant to,
and in accordance with, a systematic withdrawal plan (see "Sales Charge
Reduction Programs for Class A Shares-Systematic Withdrawal Plan" below), (v) to
the extent that the redemption is necessary to meet a plan participant's or
beneficiary's request for a distribution or loan from a group retirement plan or
to accommodate a plan participant's or beneficiary's direction to reallocate his
or her plan account among other investment alternatives available under a group
retirement plan, (vi) due to the complete termination of a trust upon the death
of the trustor/grantor, beneficiary or trustee but only if the trust termination
is specifically provided for in the trust document or (vii) that had been
purchased with proceeds from a Distribution resulting from any SEC enforcement
action related to trading in shares of AB Mutual Funds through deposit with ABI
of the Distribution check. The CDSC is also waived for (i) permitted exchanges
of shares, (ii) holders of Class A shares who purchased $1,000,000 or more of
Class A shares where the participating broker or dealer involved in the sale of
such shares waived the commission it would normally receive from ABI or (iii)
Class C shares sold through programs offered by financial intermediaries and
approved by ABI where such programs offer only shares that are not subject to a
CDSC, where the financial intermediary establishes a single omnibus account for
the Fund or in the case of a group retirement plan, a single account for each
plan, and where no advance commission is paid to any financial intermediary in
connection with the purchase of such shares.
Class R Shares
--------------
Class R shares are offered to certain Group Retirement Plans. Class
R shares are not available to retail non-retirement accounts, traditional or
Roth IRAs, Coverdell Education Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs,
individual 403(b) plans and to AllianceBernstein-sponsored retirement products.
Class R shares do not have an initial sales charge or CDSC, but incur a .50%
distribution services fee and thus have a higher expense ratio and pay
correspondingly lower dividends than Class A shares, Class K shares and Class I
shares.
Class K Shares
--------------
Class K shares are available at NAV to Group Retirement Plans. Class
K shares generally are not available to retail non-retirement accounts,
traditional and Roth IRAs, Coverdell Education Savings Accounts, SEPs, SAR-SEPs,
SIMPLE IRAs, individual 403(b) plans and AllianceBernstein-sponsored retirement
products. Class K shares do not have an initial sales charge or CDSC but incur a
..25% distribution services fee and thus have (i) a lower expense ratio than
Class R shares and pay correspondingly higher dividends than Class R shares and
(ii) a higher expense ratio than Class I shares and pay correspondingly lower
dividends than Class I shares.
Class I Shares
--------------
Class I shares are available at NAV to Group Retirement Plans. Class
I shares are also available to certain institutional investment advisory clients
of, and certain other persons associated with, the Adviser and its affiliates
who invest at least $2 million in the Fund. Class I shares generally are not
available to retail non-retirement accounts, traditional and Roth IRAs,
Coverdell Education Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs, individual
403(b) plans and AllianceBernstein-sponsored retirement products. Class I shares
are not subject to an initial sales charge, CDSC or distribution services fee,
and thus have a lower expense ratio and pay correspondingly higher dividends
than Class R and Class K shares.
Class Z Shares
--------------
Class Z shares are available at NAV to certain Group Retirement
Plans. Class Z shares are also available to certain institutional investment
advisory clients of, and certain other persons associated with, the Adviser and
its affiliates who invest at least $2 million in the Fund. Class Z shares are
available to certain AllianceBernstein-sponsored group retirement plans. Class Z
shares generally are not available to retail non-retirement accounts,
traditional and Roth IRAs, Coverdell Education Savings Accounts, SEPs, SAR-SEPs,
SIMPLE IRAs and individual 403(b) plans. Class Z shares are not currently
available to group retirement plans in the AllianceBernstein-sponsored programs
known as the "Informed Choice" programs.
Class Z shares are not subject to an initial sales charge, CDSC or
distribution services fee, and thus have a lower expense ratio and pay
correspondingly higher dividends than Class R and Class K shares.
Advisor Class Shares
--------------------
Advisor Class shares may be purchased and held solely (i) through
accounts established under fee-based programs, sponsored and maintained by
registered broker-dealers or other financial intermediaries and approved by ABI;
(ii) through self-directed defined contribution employee benefit plans (e.g.,
401(k) plans) that purchase shares directly without the involvement of a
financial intermediary; (iii) by officers and present or former Directors of the
Funds or other investment companies managed by the Adviser, officers, directors
and present or retired full-time employees and former employees (for subsequent
investments in accounts established during the course of their employment) of
the Adviser, ABI, ABIS and their affiliates, or the relatives of any such
person, or any trust, individual retirement account or retirement plan for the
benefit of any such person; (iv) by the categories of investors described in
clauses (i), (iii) and (iv) under "Class A Shares --Sales at NAV" (other than
officers, directors and present and full-time employees of selected dealers or
agents, or relatives of such person, or any trust, individual retirement account
or retirement plan account for the benefit of such relative, none of whom is
eligible on the basis solely of such status to purchase and hold Advisor Class
shares); or (v) through brokerage platforms of firms that have agreements with
ABI to offer such shares when acting solely on an agency basis for the purchase
or sale of such shares. Generally, a fee-based program must charge an
asset-based or other similar fee and must invest at least $250,000 in Advisor
Class shares of the Fund in order to be approved by ABI for investment in
Advisor Class shares. A commission or other transaction fee may be charged by
your financial intermediary with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial intermediary. Advisor Class
shares are not subject to an initial sales charge, CDSC or distribution services
fees, and thus have a lower expense ratio and pay correspondingly higher
dividends than Class A, Class B, Class C, Class R or Class K shares.
Alternative Purchase Arrangements - Group Retirement Plans and Tax-Deferred
Accounts
--------------------------------------------------------------------------------
Each Fund offers special distribution arrangements for Group
Retirement Plans. However, plan sponsors, plan fiduciaries and other financial
intermediaries may establish requirements as to the purchase, sale or exchange
of shares of the Fund, including maximum and minimum initial investment
requirements, that are different from those described in this SAI. Group
Retirement Plans also may not offer all classes of shares of the Fund. In
addition, the Class A and Class B CDSC may be waived for investments made
through certain Group Retirement Plans. Therefore, plan sponsors or fiduciaries
may not adhere to these share class eligibility standards as set forth in the
Prospectus and this SAI. A Fund is not responsible for, and has no control over,
the decision of any plan sponsor or fiduciary to impose such differing
requirements.
Class A Shares. Class A shares are available at NAV to all
AllianceBernstein-sponsored group retirement plans, regardless of size, and to
the AllianceBernstein Link, AllianceBernstein Individual 401(k) and
AllianceBernstein SIMPLE IRA plans with at least $250,000 in plan assets or 100
or more employees. Effective June 30, 2005, for purposes of determining whether
a SIMPLE IRA plan has at least $250,000 in plan assets, all of the SIMPLE IRAs
of an employer's employees are aggregated. ABI measures the asset levels and
number of employees in these plans once monthly. Therefore, if a plan that is
not eligible at the beginning of a month for purchases of Class A shares at NAV
meets the asset level or number of employees required for such eligibility later
in that month, all purchases by the plan will be subject to a sales charge until
the monthly measurement of assets and employees. If the plan terminates the Fund
as an investment option within one year, then all plan purchases of Class A
shares will be subject to a 1%, 1-year CDSC on redemption. Class A shares are
also available at NAV to group retirement plans. The 1%, 1-year CDSC also
generally applies. However, the 1%, 1-year CDSC may be waived if the financial
intermediary agrees to waive all commissions or other compensation paid in
connection with the sale of such shares (typically up to a 1% advance payment
for sales of Class A shares at NAV) other than the service fee paid pursuant to
the Fund's distribution service plan.
Class B Shares. Class B shares are generally not available for
purchase by Group Retirement Plans. However, Class B shares may continue to be
purchased by Group Retirement Plans that have already selected Class B shares as
an investment alternative under their plan prior to September 2, 2003.
Class C Shares. Class C shares are available to AllianceBernstein
Link, AllianceBernstein Individual 401(k) and AllianceBernstein SIMPLE IRA plans
with less than $250,000 in plan assets and less than 100 employees. Class C
shares are also available to group retirement plans with plan assets of less
than $1 million. If an AllianceBernstein Link, AllianceBernstein Individual
401(k) or AllianceBernstein SIMPLE IRA plan holding Class C shares becomes
eligible to purchase Class A shares at NAV, the plan sponsor or other
appropriate fiduciary of such plan may request ABI in writing to liquidate the
Class C shares and purchase Class A shares with the liquidation proceeds. Any
such liquidation and repurchase may not occur before the expiration of the
1-year period that begins on the date of the plan's last purchase of Class C
shares.
Class R Shares. Class R shares are available to certain Group
Retirement Plans. Class R shares are not subject to an initial sales charge or
CDSC, but are subject to a .50% distribution services fee.
Class K Shares. Class K shares are available to certain Group
Retirement Plans. Class K shares are not subject to an initial sales charge or
CDSC, but are subject to a .25% distribution services fee.
Class I Shares. Class I shares are available to certain Group
Retirement Plans. Class I shares generally are not available to retail
non-retirement accounts, traditional and ROTH IRAs, Coverdell Education Savings
Accounts, SEPs, SAR-SEPs, SIMPLE IRAs, individual 403(b) plans and
AllianceBernstein-sponsored retirement products. Class I shares are not subject
to an initial sales charge, CDSC or a distribution services fee.
Class Z Shares. Class Z shares are available to certain Group
Retirement Plans. Class Z shares are also available to certain
AllianceBernstein-sponsored group retirement plans. Class Z shares generally are
not available to retail non-retirement accounts, traditional and Roth IRAs,
Coverdell Education Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs and individual
403(b) plans. Class Z shares are not currently available to group retirement
plans in the AllianceBernstein-sponsored programs known as the "Informed Choice"
programs. Class Z shares are not subject to an initial sales charge, CDSC or
distribution services fee.
Choosing a Class of Shares for Group Retirement Plans. Plan
sponsors, plan fiduciaries and other financial intermediaries may establish
requirements as to the purchase, sale or exchange of shares of the Fund,
including maximum and minimum initial investment requirements, that are
different from those described in this SAI. Plan fiduciaries should consider how
these requirements differ from the Fund's share class eligibility criteria
before determining whether to invest.
Currently, the Funds make their Class A shares available at NAV to
Group Retirement Plans. Unless waived under the circumstances described above, a
1%, 1-year CDSC applies to the sale of Class A shares by a plan. Because Class K
shares have no CDSC and lower Rule 12b-1 distribution services fees and Class I
shares and Class Z shares have no CDSC or Rule 12b-1 distribution services fees,
plans should consider purchasing Class K, Class I or Class Z shares, if
eligible, rather than Class A shares.
In selecting among the Class A, Class K and Class R shares, plans
purchasing shares through a financial intermediary that is not willing to waive
advance commission payments (and therefore are not eligible for the waiver of
the 1%, 1-year CDSC applicable to Class A shares) should weigh the following:
o the Rule 12b-1 distribution services fees (0.30%) and the 1%,
1-year CDSC with respect to Class A shares; (currently limited
to 0.25%, except with respect to Discovery Growth, for which
payments are limited to .23%);
o the higher Rule 12b-1 distribution services fees (0.50%) and
the absence of a CDSC with respect to Class R shares; and
o the lower Rule 12b-1 distribution services fees (0.25%) and
the absence of a CDSC with respect to Class K shares.
Because Class A and Class K shares have lower Rule 12b-1
distribution services fees than Class R shares, plans should consider purchasing
Class A or Class K shares, if eligible, rather than Class R shares.
As described above, effective January 31, 2009, sales of Class B
shares to new investors were suspended. While Class B shares were generally not
available to Group Retirement Plans, Class B shares are available for continuing
contributions from plans that have already selected Class B shares as an
investment option under their plans prior to September 2, 2003. Plans should
weigh the fact that Class B shares will convert to Class A shares after a period
of time against the fact that Class A, Class R, Class K, Class I and Class Z
shares have lower expenses, and therefore may have higher returns, than Class B
shares, before determining which class to make available to its plan
participants.
Sales Charge Reduction Programs for Class A Shares
--------------------------------------------------
The AB Mutual Funds offer shareholders various programs through
which shareholders may obtain reduced sales charges or reductions in CDSC
through participation in such programs. In order for shareholders to take
advantage of the reductions available through the combined purchase privilege,
rights of accumulation and letters of intent, the Fund must be notified by the
shareholder or his or her financial intermediary that they qualify for such a
reduction. If the Fund is not notified that a shareholder is eligible for these
reductions, the Fund will be unable to ensure that the reduction is applied to
the shareholder's account.
Combined Purchase Privilege. Shareholders may qualify for the sales
charge reductions by combining purchases of shares of a Fund (and/or any other
AB Mutual Fund) into a single "purchase." By combining such purchases,
shareholders may be able to take advantage of the quantity discounts described
under "Alternative Purchase Arrangements." A "purchase" means a single purchase
or concurrent purchases of shares of a Fund or any other AB Mutual Fund,
including AB Institutional Funds, by (i) an individual, his or her spouse or
domestic partner, or the individual's children under the age of 21 years
purchasing shares for his, her or their own account(s); (ii) a trustee or other
fiduciary purchasing shares for a single trust, estate or single fiduciary
account with one or more beneficiaries involved; or (iii) the employee benefit
plans of a single employer. The term "purchase" also includes purchases by any
"company," as the term is defined in the 1940 Act, but does not include
purchases by any such company that has not been in existence for at least six
months or that has no purpose other than the purchase of shares of the Fund or
shares of other registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals whose sole
organizational nexus is that the participants therein are credit card holders of
a company, policy holders of an insurance company, customers of either a bank or
broker-dealer or clients of an investment adviser.
Currently, the AB Mutual Funds include:
AB Bond Fund, Inc.
-AB All Market Real Return Portfolio
-AB Bond Inflation Strategy
-AB Credit Long/Short Portfolio
-AB FlexFee International Bond Portfolio
-AB Government Reserves Portfolio
-AB High Yield Portfolio
-AB Income Fund
-AB Intermediate Bond Portfolio
-AB Limited Duration High Income Portfolio
-AB Municipal Bond Inflation Strategy
-AB Tax-Aware Fixed Income Portfolio
AB Cap Fund, Inc.
-AB All Market Alternative Return Portfolio
-AB All Market Income Portfolio
-AB Asia ex-Japan Equity Portfolio
-AB Concentrated Growth Fund
-AB Concentrated International Growth Portfolio
-AB Emerging Markets Core Portfolio
-AB Emerging Markets Multi-Asset Portfolio
-AB FlexFee Core Opportunities Portfolio
-AB FlexFee Emerging Markets Growth Portfolio
-AB FlexFee International Strategic Core Portfolio
-AB FlexFee Large Cap Growth Portfolio
-AB FlexFee US Thematic Portfolio
-AB Global Core Equity Portfolio
-AB International Strategic Core Portfolio
-AB Multi-Manager Select Retirement Allocation Fund
-AB Multi-Manager Select 2010 Fund
-AB Multi-Manager Select 2015 Fund
-AB Multi-Manager Select 2020 Fund
-AB Multi-Manager Select 2025 Fund
-AB Multi-Manager Select 2030 Fund
-AB Multi-Manager Select 2035 Fund
-AB Multi-Manager Select 2040 Fund
-AB Multi-Manager Select 2045 Fund
-AB Multi-Manager Select 2050 Fund
-AB Multi-Manager Select 2055 Fund
-AB Select US Equity Portfolio
-AB Select US Long/Short Portfolio
-AB Small Cap Growth Portfolio
-AB Small Cap Value Portfolio
AB Core Opportunities Fund, Inc.
AB Discovery Growth Fund, Inc.
AB Equity Income Fund, Inc.
AB Global Bond Fund, Inc.
AB Global Real Estate Investment Fund, Inc.
AB Global Risk Allocation Fund, Inc.
AB Government Exchange Reserves
AB High Income Fund, Inc.
AB International Growth Fund, Inc.
AB Large Cap Growth Fund, Inc.
AB Municipal Income Fund, Inc.
-AB California Portfolio
-AB High Income Municipal Portfolio
-AB National Portfolio
-AB New York Portfolio
AB Municipal Income Fund II
-AB Arizona Portfolio
-AB Massachusetts Portfolio
-AB Minnesota Portfolio
-AB New Jersey Portfolio
-AB Ohio Portfolio
-AB Pennsylvania Portfolio
-AB Virginia Portfolio
AB Relative Value Fund, Inc.
AB Sustainable Global Thematic Fund, Inc.
AB Trust
-AB Discovery Value Fund
-AB International Value Fund
-AB Value Fund
AB Unconstrained Bond Fund, Inc.
The AB Portfolios
-AB All Market Total Return Portfolio
-AB Conservative Wealth Strategy
-AB Growth Fund
-AB Tax-Managed All Market Income Portfolio
-AB Tax-Managed Wealth Appreciation Strategy
-AB Wealth Appreciation Strategy
Sanford C. Bernstein Fund, Inc.
-Intermediate California Municipal Portfolio
-Intermediate Diversified Municipal Portfolio
-Intermediate New York Municipal Portfolio
-International Portfolio
-Short Duration Portfolio
-Tax-Managed International Portfolio
Prospectuses for the AB Mutual Funds may be obtained without charge
by contacting ABIS at the address or the "For Literature" telephone number shown
on the front cover of this SAI or on the Internet at www.abfunds.com.
Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of a Fund may be combined with the value
of the shareholder's existing accounts, thereby enabling the shareholder to take
advantage of the quantity discounts described under "Alternative Purchase
Arrangements." In such cases, the applicable sales charge on the newly purchased
shares will be based on the total of:
(i) the investor's current purchase;
(ii) the higher of cost or NAV (at the close of business on
the previous day) of (a) all shares of the relevant Fund
held by the investor and (b) all shares held by the
investor of any other AB Mutual Fund, including AB
Institutional Funds; and
(iii) the higher of cost or NAV of all shares described in
paragraph (ii) owned by another shareholder eligible to
combine his or her purchase with that of the investor
into a single "purchase" (see above).
The initial sales charge you pay on each purchase of Class A shares
will take into account your accumulated holdings in all classes of shares of AB
Mutual Funds. Your accumulated holdings will be calculated as (a) the value of
your existing holdings as of the day prior to your additional investment or (b)
the amount you invested including reinvested dividends but excluding
appreciation and less any amount of withdrawals, whichever is higher.
For example, if an investor owned shares of an AB Mutual Fund that
were purchased for $200,000 and were worth $190,000 at their then current NAV
and, subsequently, purchased Class A shares of a Fund worth an additional
$100,000, the initial sales charge for the $100,000 purchase would be at the
2.25% rate applicable to a single $300,000 purchase of shares of the Fund,
rather than the 3.25% rate.
Letter of Intent. Class A investors may also obtain the quantity
discounts described under "Alternative Purchase Arrangements" by means of a
written Letter of Intent, which expresses the investor's intention to invest at
least $100,000 in Class A shares of a Fund or any AB Mutual Fund within 13
months. Each purchase of shares under a Letter of Intent will be made at the
public offering price or prices applicable at the time of such purchase to a
single transaction of the dollar amount indicated in the Letter of Intent.
Investors qualifying for the Combined Purchase Privilege described
above may purchase shares of the AB Mutual Funds under a single Letter of
Intent. The AB Mutual Funds will use the higher of cost or current NAV of the
investor's existing investments and of those accounts with which investments are
combined via Combined Purchase Privileges toward the fulfillment of the Letter
of Intent. For example, if at the time an investor signs a Letter of Intent to
invest at least $100,000 in Class A shares of the Fund, the investor and the
investor's spouse or domestic partner each purchase shares of the Fund worth
$20,000 (for a total of $40,000), but the current NAV of all applicable accounts
is $45,000 at the time a $100,000 Letter of Intent is initiated, it will only be
necessary to invest a total of $55,000 during the following 13 months in shares
of the Fund or any other AB Mutual Fund, to qualify for the 3.25% sales charge
on the total amount being invested (the sales charge applicable to an investment
of $100,000).
The Letter of Intent is not a binding obligation upon the investor
to purchase the full amount indicated. The minimum initial investment under a
Letter of Intent is 5% of such amount. Shares purchased with the first 5% of
such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased, and
such escrowed shares will be involuntarily redeemed at their then NAV to pay the
additional sales charge, if necessary. Dividends on escrowed shares, whether
paid in cash or reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow will be released.
Investors wishing to enter into a Letter of Intent in conjunction
with their initial investment in Class A shares of a Fund can obtain a form of
Letter of Intent by contacting ABIS at the address or telephone numbers shown on
the cover of this SAI.
Reinstatement Privilege. A shareholder who has redeemed any or all
of his or her Class A shares may reinvest all or any portion of the proceeds
from that redemption in Class A shares of any AB Mutual Fund at NAV without any
sales charge, provided that such reinvestment is made within 120 calendar days
after the redemption or repurchase date. Shares are sold to a reinvesting
shareholder at the NAV next determined as described above. A reinstatement
pursuant to this privilege will not cancel the redemption or repurchase
transaction; therefore, any gain or loss so realized will be recognized for
federal income tax purposes except that no loss will be recognized to the extent
that the proceeds are reinvested in shares of the Fund within 30 calendar days
after the redemption or repurchase transaction. Investors may exercise the
reinstatement privilege by written request sent to the Fund at the address shown
on the cover of this SAI.
Dividend Reinvestment Program. Under a Fund's Dividend Reinvestment
Program, unless you specify otherwise, your dividends and distributions will be
automatically reinvested in the same class of shares of the Fund without an
initial sales charge or CDSC. If you elect to receive your distributions in
cash, you will only receive a check if the distribution is equal to or exceeds
$25.00. Distributions of less than $25.00 will automatically be reinvested in
Fund shares. To receive distributions of less than $25.00 in cash, you must have
bank instructions associated to your account so that distributions can be
delivered to you electronically via Electronic Funds Transfer using the
Automated Clearing House or "ACH". If you elect to receive distributions by
check, your distributions and all subsequent distributions may nonetheless be
reinvested in additional shares of the Fund under the following circumstances:
(a) the postal service is unable to deliver your checks to
your address of record and the checks are returned to the
Fund's transfer agent as undeliverable; or
(b) your checks remain uncashed for nine months.
Additional shares of the Fund will be purchased at the then current
NAV. You should contact the Fund's transfer agent to change your distribution
option. Your request to do so must be received by the transfer agent before the
record date for a distribution in order to be effective for that distribution.
No interest will accrue on amounts represented by uncashed distribution checks.
Dividend Direction Plan. A shareholder who already maintains
accounts in more than one AB Mutual Fund may direct that income dividends and/or
capital gains paid by one AB Mutual Fund be automatically reinvested, in any
amount, without the payment of any sales or service charges, in shares of any
eligible class of one or more other AB Mutual Fund(s) in which the shareholder
maintains an account. Further information can be obtained by contacting ABIS at
the address or the "For Literature" telephone number shown on the cover of this
SAI. Investors wishing to establish a dividend direction plan in connection with
their initial investment should complete the appropriate section of the Mutual
Fund Application found in your Prospectus. Current shareholders should contact
ABIS to establish a dividend direction plan.
Systematic Withdrawal Plan
--------------------------
General. Any shareholder who owns or purchases shares of a Fund
having a current NAV of at least $5,000 may establish a systematic withdrawal
plan under which the shareholder will periodically receive a payment in a stated
amount of not less than $50 on a selected date. The $5,000 account minimum does
not apply to a shareholder owning shares through an individual retirement
account or other retirement plan who has attained the age of 70 1/2 who wishes
to establish a systematic withdrawal plan to help satisfy a required minimum
distribution. Systematic withdrawal plan participants must elect to have their
dividends and distributions from the Fund automatically reinvested in additional
shares of the Fund.
Shares of a Fund owned by a participant in the Fund's systematic
withdrawal plan will be redeemed as necessary to meet withdrawal payments and
such payments will be subject to any taxes applicable to redemptions and, except
as discussed below with respect to Class A, Class B and Class C shares, any
applicable CDSC. Shares acquired with reinvested dividends and distributions
will be liquidated first to provide such withdrawal payments and thereafter
other shares will be liquidated to the extent necessary, and depending upon the
amount withdrawn, the investor's principal may be depleted. A systematic
withdrawal plan may be terminated at any time by the shareholder or the Fund.
Withdrawal payments will not automatically end when a shareholder's
account reaches a certain minimum level. Therefore, redemptions of shares under
the plan may reduce or even liquidate a shareholder's account and may subject
the shareholder to the Fund's involuntary redemption provisions. See "Redemption
and Repurchase of Shares -- General." Purchases of additional shares
concurrently with withdrawals are undesirable because of sales charges
applicable when purchases are made. While an occasional lump-sum investment may
be made by a holder of Class A shares who is maintaining a systematic withdrawal
plan, such investment should normally be an amount equivalent to three times the
annual withdrawal or $5,000, whichever is less.
Payments under a systematic withdrawal plan may be made by check or
electronically via the ACH network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in shares of a Fund
should complete the appropriate portion of the Mutual Fund Application, while
current Fund shareholders desiring to do so can obtain an application form by
contacting ABIS at the address or the "For Literature" telephone number shown on
the cover of this SAI.
CDSC Waiver for Class A Shares, Class B Shares and Class C Shares.
Under the systematic withdrawal plan, up to 1% monthly, 2% bi-monthly or 3%
quarterly of the value at the time of redemption of the Class A, Class B or
Class C shares in a shareholder's account may be redeemed free of any CDSC.
Class B shares that are not subject to a CDSC (such as shares
acquired with reinvested dividends or distributions) will be redeemed first and
will count toward the foregoing limitations. Remaining Class B shares that are
held the longest will be redeemed next. Redemptions of Class B shares in excess
of the foregoing limitations will be subject to any otherwise applicable CDSC.
With respect to Class A and Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing limitations.
Redemptions in excess of those limitations will be subject to any otherwise
applicable CDSC.
Payments to Financial Advisors and Their Firms
----------------------------------------------
Financial intermediaries market and sell shares of a Fund. These
financial intermediaries employ financial advisors and receive compensation for
selling shares of the Fund. This compensation is paid from various sources,
including any sales charge, CDSC and/or Rule 12b-1 fee that you or the Fund may
pay. Your individual financial advisor may receive some or all of the amounts
paid to the financial intermediary that employs him or her.
In the case of Class A shares, all or a portion of the initial sales
charge that you pay may be paid by ABI to financial intermediaries selling Class
A shares. ABI may also pay these financial intermediaries a fee of up to 1% on
purchases of $1 million or more. Additionally, up to 100% of the Rule 12b-1 fees
applicable to Class A shares each year may be paid to financial intermediaries,
including your financial intermediary, that sell Class A shares.
In the case of Class B shares, ABI may pay, at the time of your
purchase, a commission to financial intermediaries selling Class B shares in an
amount equal to 4% of your investment. Additionally, up to 30% of the Rule 12b-1
fees applicable to Class B shares each year may be paid to financial
intermediaries, including your financial intermediary, that sell Class B shares.
In the case of Class C shares, ABI may pay, at the time of your
purchase, a commission to firms selling Class C shares in an amount equal to 1%
of your investment. Additionally, up to 100% of the Rule 12b-1 fee applicable to
Class C shares each year may be paid to financial intermediaries, including your
financial intermediary, that sell Class C shares.
In the case of Class R and Class K shares, up to 100% of the Rule
12b-1 fee applicable to Class R and Class K shares each year may be paid to
financial intermediaries, including your financial intermediary, that sell Class
R and Class K shares.
In the case of Advisor Class shares, your financial advisor may
charge ongoing fees or transactional fees. ABI may pay a portion of "ticket" or
other transactional charges.
Your financial advisor's firm receives compensation from the Fund,
ABI and/or the Adviser in several ways from various sources, which include some
or all of the following:
o upfront sales commissions;
o Rule 12b-1 fees;
o additional distribution support;
o defrayal of costs for educational seminars and training;
and
o payments related to providing recordkeeping and/or
transfer agency services.
Please read your Prospectus carefully for information on this
compensation. Please also refer to Appendix B--Financial Intermediary Waivers in
the Prospectus.
Other Payments for Distribution Services and Educational Support
----------------------------------------------------------------
In addition to the commissions paid to financial intermediaries at
the time of sale and the fees described under "Asset-Based Sales Charges or
Distribution and/or Service (Rule 12b-1) Fees," in your Prospectus, some or all
of which may be paid to financial intermediaries (and, in turn, to your
financial advisor), ABI, at its expense, currently provides additional payments
to firms that sell shares of the AB Mutual Funds. Although the individual
components may be higher and the total amount of payments made to each
qualifying firm in any given year may vary, the total amount paid to a financial
intermediary in connection with the sale of shares of the AB Mutual Funds will
generally not exceed the sum of (a) 0.25% of the current year's fund sales by
that firm and (b) 0.10% of average daily net assets attributable to that firm
over the year. These sums include payments for distribution analytical data
regarding AB Mutual Fund sales by financial advisors of these firms and to
reimburse directly or indirectly the costs incurred by these firms and their
employees in connection with educational seminars and training efforts about the
AB Mutual Funds for the firms' employees and/or their clients and potential
clients. The costs and expenses associated with these efforts may include
travel, lodging, entertainment and meals.
For 2017, ABI expects to pay approximately 0.06% of the average
monthly assets of the AB Mutual Funds, or approximately $23 million, for
distribution services and education support related to the AB Mutual Funds. In
2016, ABI paid approximately 0.05% of the average monthly assets of the AB
Mutual Funds or approximately $21 million, for distribution services and
education support related to the AB Mutual Funds.
A number of factors are considered in determining the additional
payments, including each firm's AB Mutual Fund sales, assets and redemption
rates, and the willingness and ability of the firm to give ABI access to its
financial advisors for educational or marketing purposes. In some cases, firms
will include the AB Mutual Funds on a "preferred list". ABI's goal is to make
the financial advisors who interact with current and prospective investors and
shareholders more knowledgeable about the AB Mutual Funds so that they can
provide suitable information and advice about the funds and related investor
services.
Each Fund and ABI also make payments for recordkeeping and other
transfer agency services to financial intermediaries that sell AB Mutual Fund
shares. Please see "Expenses of the Fund - Transfer Agency Agreement" above.
These expenses paid by the Fund are included in "Other Expenses" under "Fees and
Expenses of the Funds - Annual Fund Operating Expenses" in your Prospectus.
If one mutual fund sponsor makes greater distribution assistance
payments than another, your financial advisor and his or her firm may have an
incentive to recommend one fund complex over another. Similarly, if your
financial advisor or his or her firm receives more distribution assistance for
one share class versus another, then they may have an incentive to recommend
that class.
Please speak with your financial advisor to learn more about the
total amounts paid to your financial advisor and his or her firm by the Fund,
the Adviser, ABI and by sponsors of other mutual funds he or she may recommend
to you. You should also consult disclosures made by your financial advisor at
the time of your purchase.
ABI anticipates that the firms that will receive additional payments
for distribution services and/or educational support include:
AIG Advisor Group
Ameriprise Financial Services
AXA Advisors
Cadaret, Grant & Co.
Citigroup Global Markets
Citizens Securities
Commonwealth Financial Network
Donegal Securities
Institutional Cash Distributors (ICD)
JP Morgan Securities
Lincoln Financial Advisors Corp.
Lincoln Financial Securities Corp.
LPL Financial
Merrill Lynch
Morgan Stanley
Northwestern Mutual Investment Services
PNC Investments
Raymond James
RBC Wealth Management
Robert W. Baird
Santander Securities
SunTrust Bank
UBS Financial Services
US Bancorp Investments
Wells Fargo Advisors
ABI expects that additional firms may be added to this list from
time to time.
Although a Fund may use brokers and dealers that sell shares of the
Fund to effect portfolio transactions, the Fund does not consider the sale of AB
Mutual Fund shares as a factor when selecting brokers or dealers to effect
portfolio transactions.
--------------------------------------------------------------------------------
REDEMPTION AND REPURCHASE OF SHARES
--------------------------------------------------------------------------------
The following information supplements that set forth in your
Prospectus under the heading "Investing in the Funds". If you are an Advisor
Class shareholder through an account established under a fee-based program or
commission-based brokerage program, your program may impose requirements with
respect to the purchase, sale or exchange of Advisor Class shares of the Fund
that are different from those described herein. A commission or other
transaction fee may be charged by your financial intermediary with respect to
the purchase, sale or exchange of Advisor Class shares made through such
financial intermediary. Similarly, if you are a shareholder through a group
retirement plan, your plan may impose requirements with respect to the purchase,
sale or exchange of shares of a Fund that are different from those imposed
below. Each Fund has authorized one or more brokers to receive on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to receive purchase and redemption orders on the Fund's behalf.
In such cases, orders will receive the NAV next computed after such order is
properly received by the authorized broker or designee and accepted by the Fund.
Redemption
----------
Subject only to the limitations described below, each Fund will
redeem the shares tendered to them, as described below, at a redemption price
equal to their NAV as next computed following the receipt of shares tendered for
redemption in proper form. Except for any CDSC which may be applicable to Class
A, Class B or Class C shares, there is no redemption charge. A Fund expects that
it will typically take one to three business days following the receipt of a
shareholder's redemption request in proper form to pay out redemption proceeds.
However, while not expected, payment of redemption proceeds may take up to seven
days after the day it is received in proper form by the Fund by the Fund Closing
Time.
The right of redemption may not be suspended or the date of payment
upon redemption postponed for more than seven days after shares are tendered for
redemption, except for any period during which the Exchange is closed (other
than customary weekend and holiday closings) or during which the SEC determines
that trading thereon is restricted, or for any period during which an emergency
(as determined by the SEC) exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or as a result of which it
is not reasonably practicable for the Fund fairly to determine the value of its
net assets, or for such other periods as the SEC may by order permit for the
protection of security holders of the Fund.
Payment of the redemption price normally will be made in cash but
may be made, at the option of the Fund, in kind. No interest will accrue on
uncashed redemption checks. The value of a shareholder's shares on redemption or
repurchase may be more or less than the cost of such shares to the shareholder,
depending upon the market value of the Fund's portfolio securities at the time
of such redemption or repurchase. Redemption proceeds from Class A, Class B and
Class C shares will reflect the deduction of the CDSC, if any. Payment received
by a shareholder upon redemption or repurchase of his or her shares, assuming
the shares constitute capital assets in his or her hands, will result in
long-term or short-term capital gain (or loss) depending upon the shareholder's
holding period and basis in respect of the shares redeemed.
To redeem shares of a Fund for which no share certificates have been
issued, the registered owner or owners should forward a letter to the Fund
containing a request for redemption. The Fund may require the signature or
signatures on the letter to be Medallion Signature Guaranteed. Please contact
ABIS to confirm whether a Medallion Signature Guarantee is needed.
To redeem shares of a Fund represented by share certificates, the
investor should forward the appropriate share certificate or certificates,
endorsed in blank or with blank stock powers attached, to the Fund with the
request that the shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each share
certificate surrendered to the Fund for redemption must be signed by the
registered owner or owners exactly as the registered name appears on the face of
the certificate or, alternatively, a stock power signed in the same manner may
be attached to the share certificate or certificates or, where tender is made by
mail, separately mailed to the relevant Fund. The signature or signatures on the
assignment form must be guaranteed in the manner described above.
Telephone Redemption by Electronic Funds Transfer. Each Fund
shareholder is entitled to request redemption by electronic funds transfer (of
shares for which no share certificates have been issued) by telephone at (800)
221-5672 if the shareholder has completed the appropriate portion of the Mutual
Fund Application or, if an existing shareholder has not completed this portion,
by an "Autosell" application obtained from ABIS (except for certain omnibus
accounts). A telephone redemption request by electronic funds transfer may not
exceed $100,000, and must be made before the Fund Closing Time, on a Fund
business day as defined above. Proceeds of telephone redemptions will be sent by
electronic funds transfer to a shareholder's designated bank account at a bank
selected by the shareholder that is a member of the NACHA.
Telephone Redemption by Check. Each Fund shareholder is eligible to
request redemption by check of Fund shares for which no share certificates have
been issued, by telephone at (800) 221-5672 before the Fund Closing Time, on a
Fund business day in an amount not exceeding $100,000. Proceeds of such
redemptions are remitted by check to the shareholder's address of record. A
shareholder otherwise eligible for telephone redemption by check may cancel the
privilege by written instruction to ABIS, or by checking the appropriate box on
the Mutual Fund Application.
Telephone Redemptions-General. During periods of drastic economic,
market or other developments, such as the terrorist attacks on September 11,
2001, it is possible that shareholders would have difficulty in reaching ABIS by
telephone (although no such difficulty was apparent at any time in connection
with the attacks). If a shareholder were to experience such difficulty, the
shareholder should issue written instructions to ABIS at the address shown on
the cover of this SAI. The Fund reserves the right to suspend or terminate its
telephone redemption service at any time without notice. Telephone redemption is
not available with respect to shares (i) for which certificates have been
issued, (ii) held in nominee or "street name" accounts, (iii) held by a
shareholder who has changed his or her address of record within the preceding 30
calendar days or (iv) held in any retirement plan account. Neither the Fund, the
Adviser, ABI nor ABIS will be responsible for the authenticity of telephone
requests for redemptions that the Fund reasonably believes to be genuine. The
Fund will employ reasonable procedures in order to verify that telephone
requests for redemptions are genuine, including, among others, recording such
telephone instructions and causing written confirmations of the resulting
transactions to be sent to shareholders. If the Fund did not employ such
procedures, it could be liable for losses arising from unauthorized or
fraudulent telephone instructions. Financial intermediaries may charge a
commission for handling telephone requests for redemptions.
Redemptions Through Intermediaries. A Fund may redeem shares through
ABI or financial intermediaries. The redemption price will be the NAV next
determined after the ABI receives the request (less the CDSC, if any, with
respect to the Class A, Class B and Class C shares), except that requests placed
through financial intermediaries before the Fund Closing Time will be executed
at the NAV determined as of the Fund Closing Time if received by ABI prior to a
designated later time (pursuant to an operating agreement between the financial
intermediary and ABI permitting such an arrangement; the designated time will
vary by financial intermediary). The financial intermediary is responsible for
transmitting the request to ABI on time. If the financial intermediary fails to
do so, the shareholder's right to receive that day's closing price must be
settled between the shareholder and that financial intermediary. Neither the
Funds nor ABI charge a fee or commission in connection with the redemption of
shares (except for the CDSC, if any, with respect to Class A, Class B and Class
C shares). Normally, if shares of a Fund are offered through a financial
intermediary, the redemption is settled by the shareholder as an ordinary
transaction with or through that financial intermediary, who may charge the
shareholder for this service.
Account Closure
---------------
Each Fund reserves the right to close out an account that has
remained below $1,000 for 90 days. No CDSC will be deducted from the proceeds of
this redemption. In the case of a redemption or repurchase of shares of a Fund
recently purchased by check, redemption proceeds will not be made available
until the relevant Fund is reasonably assured that the check has cleared,
normally up to 15 calendar days following the purchase date.
--------------------------------------------------------------------------------
SHAREHOLDER SERVICES
--------------------------------------------------------------------------------
The following information supplements that set forth in your
Prospectus under the heading "Investing in the Funds". The shareholder services
set forth below are applicable to all classes of shares unless otherwise
indicated.
If you are an Advisor Class shareholder through an account
established under a fee-based program or commission-based brokerage program or a
shareholder in a group retirement plan, your program or retirement plan may
impose requirements with respect to the purchase, sale or exchange of shares of
the Fund that are different from those described herein. A commission or other
transaction fee may be charged by your financial intermediary with respect to
the purchase, sale or exchange of Advisor Class shares made through such
intermediary.
Automatic Investment Program
----------------------------
Investors may purchase shares of a Fund through an automatic
investment program utilizing electronic funds transfer drawn on the investor's
own bank account. Under such a program, pre-authorized monthly drafts for a
fixed amount are used to purchase shares through the financial intermediary
designated by the investor at the public offering price next determined after
ABI receives the proceeds from the investor's bank. The monthly drafts must be
in minimum amounts of either $50 or $200, depending on the investor's initial
purchase. If an investor makes an initial purchase of at least $2,500, the
minimum monthly amount for pre-authorized drafts is $50. If an investor makes an
initial purchase of less than $2,500, the minimum monthly amount for
pre-authorized drafts is $200 and the investor must commit to a monthly
investment of at least $200 until the investor's account balance is $2,500 or
more. In electronic form, drafts can be made on or about a date each month
selected by the shareholder. Investors wishing to establish an automatic
investment program in connection with their initial investment should complete
the appropriate portion of the Mutual Fund Application. As of January 31, 2009,
the Automatic Investment Program is available for purchase of Class B shares
only if a shareholder was enrolled in the Program prior to January 31, 2009.
Current shareholders should contact ABIS at the address or telephone numbers
shown on the cover of this SAI to establish an automatic investment program.
Shareholders committed to monthly investments of $25 or more through
the Automatic Investment Program by October 15, 2004 are able to continue their
program despite the $50 monthly minimum.
Exchange Privilege
------------------
You may exchange your investment in a Fund for shares of the same
class of other AB Mutual Funds if the other AB Mutual Fund in which you wish to
invest offers shares of the same class. In addition, (i) present officers and
full-time employees of the Adviser, (ii) present Directors or Trustees of any AB
Mutual Fund, (iii) certain employee benefit plans for employees of the Adviser,
ABI, ABIS and their affiliates and (iv) certain persons participating in a
fee-based program, sponsored and maintained by a registered broker-dealer or
other financial intermediary and approved by ABI, under which such persons pay
an asset-based fee for service in the nature of investment advisory or
administrative services may, on a tax-free basis, exchange Class A, Class B,
Class C, Class R, Class K, Class I or Class Z shares of the Fund for Advisor
Class shares of the Fund or Class C shares of the Fund for Class A shares of the
Fund. Exchanges of shares are made at the NAV next determined and without sales
or service charges. Exchanges may be made by telephone or written request. In
order to receive a day's NAV, ABIS must receive and confirm a telephone exchange
request by the Fund Closing Time on that day.
Shares will continue to age without regard to exchanges for purposes
of determining the CDSC, if any, upon redemption and, in the case of Class B or
Class C shares of a Fund, for the purpose of conversion to Class A shares of
that Fund. After an exchange, your Class B or Class C shares will automatically
convert to Class A shares in accordance with the conversion schedule applicable
to the Class B or Class C shares of the AB Mutual Fund you originally purchased
for cash ("original shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.
Please read carefully the prospectus of the AB Mutual Fund into
which you are exchanging before submitting the request. Call ABIS at (800)
221-5672 to exchange uncertificated shares. Except with respect to exchanges of
Class A, Class B, Class C, Class R, Class K, Class I or Class Z shares of a Fund
for Advisor Class shares or Class C shares for Class A shares of the same Fund,
exchanges of shares as described above in this section are taxable transactions
for federal income tax purposes. The exchange service may be modified,
restricted, or terminated on 60 days' written notice.
All exchanges are subject to the minimum investment requirements and
any other applicable terms set forth in the prospectus for the AB Mutual Fund
whose shares are being acquired. An exchange is effected through the redemption
of the shares tendered for exchange and the purchase of shares being acquired at
their respective NAVs as next determined following receipt by the AB Mutual Fund
whose shares are being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's prospectus, or (ii) a telephone
request for such exchange in accordance with the procedures set forth in the
following paragraph. Exchanges of shares of AB Mutual Funds will generally
result in the realization of a capital gain or loss for federal income tax
purposes.
Each Fund shareholder and the shareholder's financial intermediary
are authorized to make telephone requests for exchanges unless ABIS receives
written instruction to the contrary from the shareholder, or the shareholder
declines the privilege by checking the appropriate box on the Mutual Fund
Application. Such telephone requests cannot be accepted with respect to shares
then represented by share certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account registration as the
shares redeemed through such exchange.
Eligible shareholders desiring to make an exchange should telephone
ABIS with their account number and other details of the exchange at (800)
221-5672 before the Fund Closing Time, on the Fund business day as defined
above. Telephone requests for exchange received before the Fund Closing Time, on
the Fund business day will be processed as of the close of business on that day.
During periods of drastic economic, market or other developments, such as the
terrorist attacks on September 11, 2001, it is possible that shareholders would
have difficulty in reaching ABIS by telephone (although no such difficulty was
apparent at any time in connection with the attacks). If a shareholder were to
experience such difficulty, the shareholder should issue written instructions to
ABIS at the address shown on the cover of this SAI.
A shareholder may elect to initiate a monthly "Auto Exchange"
whereby a specified dollar amount's worth of his or her Fund shares (minimum
$25) is automatically exchanged for shares of another AB Mutual Fund.
None of the AB Mutual Funds, the Adviser, ABI or ABIS will be
responsible for the authenticity of telephone requests for exchanges that the
Fund reasonably believes to be genuine. The Fund will employ reasonable
procedures in order to verify that telephone requests for exchanges are genuine,
including, among others, recording such telephone instructions and causing
written confirmations of the resulting transactions to be sent to shareholders.
If the Fund did not employ such procedures, it could be liable for losses
arising from unauthorized or fraudulent telephone instructions. Financial
intermediaries may charge a commission for handling telephone requests for
exchanges.
The exchange privilege is available only in states where shares of
the AB Mutual Funds being acquired may legally be sold. Each AB Mutual Fund
reserves the right, at any time on 60 days' notice to its shareholders, to
reject any order to acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.
Statements and Reports
----------------------
Each shareholder receives semi-annual and annual reports which
include a portfolio of investments, financial statements and, in the case of the
annual report, the report of the Funds' independent registered public accounting
firm, Ernst & Young LLP, 5 Times Square, New York, New York 10036, as well as a
confirmation of each purchase and redemption. By contacting his or her financial
intermediary or ABIS, a shareholder can arrange for copies of his or her account
statements to be sent to another person.
--------------------------------------------------------------------------------
NET ASSET VALUE
--------------------------------------------------------------------------------
The NAV of each Fund is calculated at the close of regular trading
on any day the Exchange is open (ordinarily 4:00 p.m., Eastern time, but
sometimes earlier, as in the case of scheduled half-day trading or unscheduled
suspensions of trading) following receipt of a purchase or redemption order by
the Fund on each Fund business day on which such an order is received and on
such other days as the Board deems appropriate or necessary in order to comply
with Rule 22c-1 under the 1940 Act. The Fund's per share NAV is calculated by
dividing the value of the Fund's total assets, less its liabilities, by the
total number of its shares then outstanding. A Fund business day is any weekday
on which the Exchange is open for trading.
Portfolio securities are valued at current market value or, if
market quotations are not readily available or are unreliable, at fair value as
determined in accordance with applicable rules under the 1940 Act and the Fund's
pricing policies and procedures (the "Pricing Policies") established by and
under the general supervision of the Boards. The Boards have delegated to the
Adviser, subject to the Boards' continuing oversight, certain of its duties with
respect to the Pricing Policies. The Adviser has established a Valuation
Committee, which operates under policies and procedures approved by the Boards,
to value a Fund's assets on behalf of the Funds.
Whenever possible, securities are valued based on market information
on the business day as of which the value is being determined as follows:
(a) an equity security listed on the Exchange, or on another
national or foreign exchange (other than securities listed on the Nasdaq Stock
Exchange ("NASDAQ")), is valued at the last sale price reflected on the
consolidated tape at the close of the exchange. If there has been no sale on the
relevant business day, the security is then valued at the last-traded price;
(b) an equity security traded on NASDAQ is valued at the NASDAQ
Official Closing Price;
(c) an OTC equity security is valued at the mid level between the
current bid and asked prices. If the mid price is not available, the security
will be valued at the bid price. An equity security traded on more than one
exchange is valued in accordance with paragraph (a) above by reference to the
principal exchange (as determined by the Adviser) on which the security is
traded;
(d) a listed or OTC put or call option is valued at the mid level
between the current bid and asked prices (for options or futures contracts, see
item (e)). If neither a current bid nor a current ask price is available, the
Adviser will have discretion to determine the best valuation (e.g., last trade
price) and then bring the issue to the Valuation Committee the next day;
(e) an open futures contract and any option thereon are valued at
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 relevant business
day, the security is valued at the last available closing settlement price;
(f) a listed right is valued at the last-traded price provided by
approved vendors. If there has been no sale on the relevant business day, the
right is valued at the last-traded price from the previous day. On the following
day, the security is valued in good faith at fair value. For an unlisted right,
the calculation used in determining a value is the price of the reference
security minus the subscription price multiplied by the terms of the right.
There may be some instances when the subscription price is greater than the
referenced security right. In such instances, the right would be valued as
worthless;
(g) a listed warrant is valued at the last-traded price provided by
approved vendors. If there is no sale on the relevant business day, the warrant
is valued at the last-traded price from the previous day. On the following day,
the security is valued in good faith at fair value. All unlisted warrants are
valued in good faith at fair value. Once a warrant has expired, it will no
longer be valued;
(h) preferred securities are valued based on prices received from
approved vendors that use last trade data for listed preferreds and evaluated
bid prices for non-listed preferreds, as well as for listed preferreds when
there is no trade activity;
(i) U.S. Government securities and any other debt instrument having
60 days or less remaining until maturity generally are valued at market by an
independent pricing service, if a market price is available. If a market price
is not available, the securities are valued at amortized cost. This methodology
pertains to 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 in which amortized cost is utilized, the
Valuation Committee must reasonably conclude that the utilization of amortized
cost is approximately the same as the fair value of the security. The factors
the Valuation Committee will consider include, but are not limited to, an
impairment of the creditworthiness of the issuer or material changes in interest
rates. The Adviser is responsible for monitoring any instances when a market
price is not applied to a short term security and will report any instances to
the Valuation Committee for review;
(j) a fixed-income security is typically valued on the basis of bid
prices provided by an approved pricing vendor when the Adviser reasonably
believes that such prices reflect the fair market value of the security. In
certain markets, the market convention may be to use the mid price between bid
and offer. Fixed-income securities may be valued on the basis of mid prices when
such prices reflect the conventions of the particular markets. The prices
provided by an approved pricing vendor may take into account many factors,
including institutional size trading in similar groups of securities and any
developments related to specific securities. If the Adviser determines that an
appropriate pricing vendor does not exist for a security in a market that
typically values such security on the basis of a bid price, the security is
valued on the basis of a quoted bid price or spread over the applicable yield
curve (a bid spread) by a broker/dealer in such security. If the Adviser
receives multiple broker quotes that are deemed to be reliable, then the Adviser
will utilize the second highest broker quote. If an appropriate pricing vendor
does not exist for a security in a market where convention is to use the mid
price, the security is valued on the basis of a quoted mid price by a
broker-dealer in such security;
(k) bank loans are valued on the basis of bid prices provided by a
pricing vendor;
(l) bridge loans are valued at fair value, which equates to the
outstanding loan amount unless it is determined by the Adviser that any
particular bridge loan should be valued at something other than outstanding loan
amount. This may occur, due to, for example, a significant change in the high
yield market and/or a significant change in the status of any particular issuer
or issuers of bridge loans;
(m) whole loans: residential and commercial mortgage whole loans and
whole loan pools are market priced by an approved vendor or broker-dealer;
(n) forward and spot currency pricing is provided by an independent
pricing vendor. The rate provided by the approved vendor is a mid price for
forward and spot rates. In most instances whenever both an "onshore" rate and an
"offshore" (i.e., NDF) rate is available, the Adviser will use the offshore
(NDF) rate. NDF contracts are used for currencies where it is difficult (and
sometimes impossible) to take actual delivery of the currency;
(o) OTC derivatives pricing: various independent pricing vendors are
used to obtain derivatives values or obtain information used to derive a price
for each investment. This information is placed into various pricing models that
can be sourced by the Adviser or from approved vendors (depending on the type of
derivative) to derive a price for each investment. These pricing models are
monitored/reviewed on an ongoing basis by the Adviser;
(p) mutual funds and other pooled vehicles: the Adviser receives
pricing information for mutual funds and other pooled vehicles from various
sources (including AB Global Fund Administrator and the external custodian
banks). Open-end mutual funds are valued at the closing NAV per share and
closed-end funds and ETFs are valued at the closing market price per share;
(q) repurchase agreements and reverse repurchase agreements:
repurchase agreements and reverse repurchase agreements will be valued based on
their original cost plus accrued interest;
(r) hedge funds: hedge funds will be priced at the most recent
available closing NAV per share;
(s) equity-linked notes: prices are sourced at the end of the
pricing day from approved vendors. The vendor methodology is to source the
relevant underlying non-U.S. dollar exchange closing prices and convert them to
U.S. dollars; and
(t) credit-linked notes: prices are sourced on the reference bond
consistent with fixed-income security methodology as noted above, which are
passed through as the price on the credit-linked note. Alternatively, broker
marks are obtained.
If the Adviser becomes aware of any news/market events that would
cause the Valuation Committee to believe the last traded or market-based price,
as applicable, does not reflect fair value, the security is then valued in good
faith at fair value by, or in accordance with, procedures approved by the Board.
When a Fund uses fair value pricing, it may take into account any
factors it deems appropriate. The Fund may determine fair value based upon
developments related to a specific security, current valuations of foreign stock
indices (as reflected in U.S. futures markets) and/or U.S. sector or broader
stock market indices. The prices of securities used by the Fund to calculate its
NAV may differ from quoted or published prices for the same securities. Fair
value pricing involves subjective judgments and it is possible that the fair
value determined for a security is materially different than the value that
could be realized upon the sale of that security.
Each Fund expects to use fair value pricing for securities primarily
traded on U.S. exchanges only under very limited circumstances, such as the
early closing of the exchange on which a security is traded or suspension of
trading in the security. A Fund may use fair value pricing more frequently for
securities primarily traded in non-U.S. markets because, among other things,
most foreign markets close well before the ordinarily Fund values its 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. For example, the Fund believes that foreign
security values may be affected by events that occur after the close of foreign
securities markets. To account for this, the Fund may frequently value many of
its foreign equity securities using fair value prices based on third party
vendor modeling tools to the extent available.
Each Fund's Board may suspend the determination of its NAV (and the
offering and sale of shares), subject to the rules of the SEC and other
governmental rules and regulations, at a time when: (1) the Exchange is closed,
other than customary weekend and holiday closings, (2) an emergency exists as a
result of which it is not reasonably practicable for the Fund to dispose of
securities owned by it or to determine fairly the value of its net assets, or
(3) for the protection of shareholders, the SEC by order permits a suspension of
the right of redemption or a postponement of the date of payment on redemption.
For purposes of determining the Fund's NAV per share, all assets and
liabilities initially expressed in a foreign currency will be converted into
U.S. Dollars at the mean of the current bid and asked prices of such currency
against the U.S. Dollar last quoted by a major bank that is a regular
participant in the relevant foreign exchange market or on the basis of a pricing
service that takes into account the quotes provided by a number of such major
banks. If such quotations are not available as of the close of the Exchange, the
rate of exchange will be determined in good faith by, or under the direction of,
the Board.
The assets attributable to the Class A shares, Class B shares, Class
C shares, Class R shares, Class K shares, Class I shares, Class Z shares and
Advisor Class shares are invested together in a single portfolio for each Fund.
The NAV of each class will be determined separately by subtracting the
liabilities allocated to that class from the assets belonging to that class in
conformance with the provisions of a plan adopted by the Fund in accordance with
Rule 18f-3 under the 1940 Act.
--------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------
Dividends paid by the Funds, if any, with respect to Class A, Class
B, Class C, Class R, Class K, Class I, Class Z and Advisor Class shares will be
calculated in the same manner at the same time on the same day and will be in
the same amount, except that the higher distribution services fee applicable to
Class B and C shares, and any incremental transfer agency costs relating to
Class B and Class C shares, will be borne exclusively by the class to which they
relate.
The following summary addresses only the principal United States
federal income tax considerations pertinent to the Funds and to shareholders of
the Funds. This summary does not address the United States federal income tax
consequences of owning shares to all categories of investors, some of which may
be subject to special rules. This summary is based upon the advice of counsel
for the Funds and upon current law and interpretations thereof. No confirmation
has been obtained from the relevant tax authorities. There is no assurance that
the applicable laws and interpretations will not change.
In view of the individual nature of tax consequences, each
shareholder is advised to consult the shareholder's own tax adviser with respect
to the specific tax consequences of being a shareholder of the Fund, including
the effect and applicability of federal, state, local, foreign and other tax
laws and the effects of changes therein.
United States Federal Income Taxation of Dividends and Distributions
--------------------------------------------------------------------
General
-------
Each Fund intends for each taxable year to qualify to be taxed as a
"regulated investment company" under the Code. To so qualify, a Fund must, among
other things, (i) derive at least 90% of its gross income in each taxable year
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currency, certain
other income (including, but not limited to, gains from options, futures or
forward contracts) derived with respect to its business of investing in stock,
securities or currency or net income derived from interests in qualified
publicly traded partnerships; and (ii) diversify its holdings so that, at the
end of each quarter of its taxable year, the following two conditions are met:
(a) at least 50% of the value of the Fund's assets is represented by cash, cash
items, U.S. Government securities, securities of other regulated investment
companies and other securities with respect to which the Fund's investment is
limited, in respect of any one issuer, to an amount not greater than 5% of the
value of the Fund's assets and to not more than 10% of the outstanding voting
securities of such issuer; and (b) not more than 25% of the value of the Fund's
assets is invested in (i) securities of any one issuer (other than U.S.
Government securities or securities of other regulated investment companies),
(ii) securities (other than securities of other regulated investment companies)
of any two or more issuers which the Fund controls and which are engaged in the
same or similar trades or businesses or related trades or businesses, or (iii)
securities of one or more qualified publicly traded partnerships.
If a Fund qualifies as a regulated investment company for any
taxable year and makes timely distributions to its shareholders of 90% or more
of its investment company taxable income for that year (calculated without
regard to its net capital gain, i.e., the excess of its net long-term capital
gain over its net short-term capital loss) it will not be subject to federal
income tax on the portion of its taxable income for the year (including any net
capital gain) that it distributes to shareholders.
Each Fund will also avoid the 4% federal excise tax that would
otherwise apply to certain undistributed income for a given calendar year if it
makes timely distributions to the shareholders equal to at least the sum of (i)
98% of its ordinary income for that year, (ii) 98.2% of its capital gain net
income and foreign currency gains for the twelve-month period ending on October
31 of that year or later, if the Fund is permitted to so elect and so elects,
and (iii) any ordinary income or capital gain net income from the preceding
calendar year that was not distributed during such year. Special rules apply to
foreign currency gains and certain income derived from passive foreign
investment companies for which the Fund has made a "mark-to-market" election.
For this purpose, income or gain retained by the Fund that is subject to
corporate income tax will be considered to have been distributed by the Fund
during such year. For federal income and excise tax purposes, dividends declared
and payable to shareholders of record as of a date in October, November or
December of a given year but actually paid during the immediately following
January will be treated as if paid by the Fund on December 31 of such earlier
calendar year, and will be taxable to these shareholders in the year declared,
and not in the year in which the shareholders actually receive the dividend.
The information set forth in the Prospectus and the following
discussion relate solely to the significant United States federal income taxes
on dividends and distributions by a Fund and assume that the Fund qualifies to
be taxed as a regulated investment company. An investor should consult his or
her own tax advisor with respect to the specific tax consequences of being a
shareholder in a Fund, including the effect and applicability of federal, state,
local and foreign tax laws to his or her own particular situation and the
possible effects of changes therein.
Dividends and Distributions
---------------------------
Each Fund intends to make timely distributions of the Fund's taxable
income (including any net capital gain) so that the Fund will not be subject to
federal income and excise taxes. Income dividends and capital gains
distributions are paid annually, generally in December. Dividends of the Fund's
net ordinary income and distributions of any net realized short-term capital
gain are taxable to shareholders as ordinary income. The investment objective of
the Fund is such that only a small portion, if any, of the Fund's distributions
is expected to qualify for the dividends-received deduction for corporate
shareholders.
Some or all of the distributions from the Fund may be treated as
"qualified dividend income", taxable to individuals, trusts and estates at the
reduced tax rates applicable to long-term capital gains. A distribution from the
Fund will be treated as qualified dividend income to the extent that it is
comprised of dividend income received by the Fund from taxable domestic
corporations and certain qualified foreign corporations, and provided that the
Fund meets certain holding period and other requirements with respect to the
security with respect to which the dividend is paid. In addition, the
shareholder must meet certain holding period requirements with respect to the
shares of the Fund in order to take advantage of this preferential tax rate. To
the extent distributions from the Fund are attributable to other sources, such
as taxable interest or short-term capital gains, dividends paid by the Fund will
not be eligible for the lower rates. The Fund will notify shareholders as to how
much of the Fund's distributions, if any, would qualify for the reduced tax
rate, assuming that the shareholder also satisfies the holding period
requirements.
Distributions of net capital gain are taxable as long-term capital
gain, regardless of how long a shareholder has held shares in the Funds. Any
dividend or distribution received by a shareholder on shares of a Fund will have
the effect of reducing the NAV of such shares by the amount of such dividend or
distribution. Furthermore, a dividend or distribution made shortly after the
purchase of such shares by a shareholder, although in effect a return of capital
to that particular shareholder, would be taxable to him or her as described
above. Dividends are taxable in the manner discussed regardless of whether they
are paid to the shareholder in cash or are reinvested in additional shares of a
Fund.
After the end of the calendar year, a Fund will notify shareholders
of the federal income tax status of any distributions made by the Fund to
shareholders during such year.
Sales and Redemptions. Any gain or loss arising from a sale or
redemption of Fund shares generally will be a capital gain or loss if a Fund
shares are held as a capital asset, and will be a long-term capital gain or loss
if the shareholder has held such shares for more than one year at the time of
the sale or redemption; otherwise it will be a short-term capital gain or loss.
If a shareholder has held shares in the Fund for six months or less and during
that period has received a distribution of net capital gain, any loss recognized
by the shareholder on the sale of those shares during the six-month period will
be treated as a long-term capital loss to the extent of the distribution. In
determining the holding period of such shares for this purpose, any period
during which a shareholder's risk of loss is offset by means of options, short
sales or similar transactions is not counted.
Any loss realized by a shareholder on a sale or exchange of shares
of a Fund will be disallowed to the extent the shares disposed of are reacquired
within a period of 61 days beginning 30 days before and ending 30 days after the
shares are sold or exchanged. For this purpose, acquisitions pursuant to the
Dividend Reinvestment Plan would constitute a reacquisition if made within the
period. If a loss is disallowed, then such loss will be reflected in an upward
adjustment to the basis of the shares acquired.
Cost Basis Reporting. As part of the Energy Improvement and
Extension Act of 2008, mutual funds are required to report to the Internal
Revenue Service (the "IRS") the "cost basis" of shares acquired by a shareholder
on or after January 1, 2012 ("covered shares") and subsequently redeemed. These
requirements do not apply to investments through a tax-deferred arrangement,
such as a 401(k) plan or an individual retirement plan. The "cost basis" of a
share is generally its purchase price adjusted for dividends, return of capital,
and other corporate actions. Cost basis is used to determine whether a sale of
the shares results in a gain or loss. The amount of gain or loss recognized by a
shareholder on the sale or redemption of shares is generally the difference
between the cost basis of such shares and their sale price. If you redeem
covered shares during any year, then the Funds will report the cost basis of
such covered shares to the IRSand you on Form 1099-B along with the gross
proceeds received on the redemption, the gain or loss realized on such
redemption and the holding period of the redeemed shares.
Your cost basis in your covered shares is permitted to be calculated
using any one of three alternative methods: Average Cost, First In-First Out
(FIFO) and Specific Share Identification. You may elect which method you want to
use by notifying the Funds. This election may be revoked or changed by you at
any time up to the date of your first redemption of covered shares. If you do
not affirmatively elect a cost basis method then a Fund's default cost basis
calculation method, which is currently the Average Cost method - will be applied
to your account(s). The default method will also be applied to all new accounts
established unless otherwise requested.
If you hold Fund shares through a broker (or another nominee),
please contact that broker (nominee) with respect to the reporting of cost basis
and available elections for your account.
You are encouraged to consult your tax advisor regarding the
application of the new cost basis reporting rules and, in particular, which cost
basis calculation method you should elect.
Qualified Plans. A dividend or capital gains distribution with
respect to shares of a Fund held by a tax-deferred or qualified plan, such as an
individual retirement account, section 403(b)(7) retirement plan or corporate
pension or profit-sharing plan, generally will not be taxable to the plan.
Distributions from such plans will be taxable to individual participants under
applicable tax rules without regard to the character of the income earned by the
qualified plan.
Backup Withholding. Any distributions and redemption proceeds
payable to a shareholder may be subject to "backup withholding" tax if such
shareholder fails to provide the Fund with his or her correct taxpayer
identification number, fails to make required certifications, or is notified by
the IRS that he or she is subject to backup withholding. Corporate shareholders
and certain other shareholders specified in the Code are exempt from such backup
withholding. Backup withholding is not an additional tax; any amounts so
withheld may be credited against a shareholder's U.S. federal income tax
liability or refunded by filing a refund claim with the IRS, provided that the
required information is furnished to the IRS.
Foreign Income Taxes. Investment income received by a Fund from
sources within foreign countries may be subject to foreign income taxes,
including taxes withheld at the source. The United States has entered into tax
treaties with many foreign countries which entitle a Fund to a reduced rate of
such taxes or exemption from taxes on such income. It is impossible to determine
the effective rate of foreign tax in advance since the amount of a Fund's assets
to be invested within various countries is not known.
If more than 50% of the value of a Fund's total assets at the close
of its taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund. Pursuant to such election, shareholders
would be required: (i) to include in gross income (in addition to taxable
dividends actually received), their respective pro-rata shares of foreign taxes
paid by the Fund; (ii) treat their pro rata share of such foreign taxes as
having been paid by them; and (iii) either to deduct their pro rata share of
foreign taxes in computing their taxable income, or to use it as a foreign tax
credit against federal income taxes (but not both). No deduction for foreign
taxes could be claimed by a shareholder who does not itemize deductions. In
addition, certain shareholders may be subject to rules which limit their ability
to fully deduct, or claim a credit for, their pro rata share of the foreign
taxes paid by a Fund. A shareholder's foreign tax credit with respect to a
dividend received from a Fund will be disallowed unless the shareholder holds
shares in the Fund on the ex-dividend date and for at least 15 other days during
the 30-day period beginning 15 days prior to the ex-dividend date.
Each shareholder will be notified within 60 days after the close of
each taxable year of a Fund whether the foreign taxes paid by the Fund will
"pass through" for that year, and, if so, the amount of each shareholder's
pro-rata share (by country) of (i) the foreign taxes paid, and (ii) the Fund's
gross income from foreign sources. Shareholders who are not liable for federal
income taxes, such as retirement plans qualified under section 401 of the Code,
will not be affected by any such "pass through" of foreign taxes.
The federal income tax status of each year's distributions by a Fund
will be reported to shareholders and to the IRS. The foregoing is only a general
description of the treatment of foreign taxes under the United States federal
income tax laws. Because the availability of a foreign tax credit or deduction
will depend on the particular circumstances of each shareholder, potential
investors are advised to consult their own tax advisers.
United States Federal Income Taxation of the Funds
--------------------------------------------------
The following discussion relates to certain significant United
States federal income tax consequences to a Fund with respect to the
determination of its "investment company taxable income" each year. This
discussion assumes that a Fund will be taxed as a regulated investment company
for each of its taxable years.
Passive Foreign Investment Companies. If a Fund owns shares in a
foreign corporation that constitutes a "passive foreign investment company" (a
"PFIC") for federal income tax purposes and the Fund does not elect or is unable
to elect to either treat such foreign corporation as a "qualified electing fund"
within the meaning of the Code or "mark-to-market" the stock of such foreign
corporation, the Fund may be subject to United States federal income taxation on
a portion of any "excess distribution" it receives from the PFIC or any gain it
derives from the disposition of such shares, even if such income is distributed
as a taxable dividend by the Fund to its shareholders. A Fund may also be
subject to additional interest charges in respect of deferred taxes arising from
such distributions or gains. Any tax paid by a Fund as a result of its ownership
of shares in a PFIC will not give rise to a deduction or credit to the Fund or
to any shareholder. A foreign corporation will be treated as a PFIC if, for the
taxable year involved, either (i) such foreign corporation derives at least 75%
of its gross income from "passive income" (including, but not limited to,
interest, dividends, royalties, rents and annuities), or (ii) on average, at
least 50% of the value (or adjusted tax basis, if elected) of the assets held by
the corporation produce or are held for the production of "passive income". A
Fund will generally be permitted to elect to "mark-to-market" stock in a PFIC.
If a Fund makes such an election, the Fund would include in its taxable income
each year an amount equal to the excess, if any, of the fair market value of the
PFIC stock as of the close of the taxable year over the Fund's adjusted basis in
the PFIC stock. A Fund would be allowed a deduction for the excess, if any, of
the adjusted basis of the PFIC stock over the fair market value of the PFIC
stock as of the close of the taxable year, but only to the extent of any net
mark-to-market gains included in the Fund's taxable income for prior taxable
years. A Fund's adjusted basis in the PFIC stock would be adjusted to reflect
the amounts included in, or deducted from, income under this election. Amounts
included in income pursuant to this election, as well as gain realized on the
sale or other disposition of the PFIC stock, would be treated as ordinary
income. The deductible portion of any mark-to-market loss, as well as loss
realized on the sale or other disposition of the PFIC stock to the extent that
such loss does not exceed the net mark-to-market gains previously included by
the Fund, would be treated as ordinary loss. A Fund generally would not be
subject to the deferred tax and interest charge provisions discussed above with
respect to PFIC stock for which a mark-to-market election has been made. If the
Fund purchases shares in a PFIC and the Fund elects to treat the foreign
corporation as a "qualified electing fund" under the Code, the Fund may be
required to include in its income each year a portion of the ordinary income and
net capital gains of such foreign corporation, even if this income is not
distributed to the Fund. Any such income would be subject to the 90% and
calendar year distribution requirements described above.
Options, Futures Contracts, and Forward Foreign Currency Contracts.
Certain listed options, regulated futures contracts, and forward foreign
currency contracts are considered "section 1256 contracts" for federal income
tax purposes. Section 1256 contracts held by a Fund at the end of each taxable
year will be "marked to market" and treated for federal income tax purposes as
though sold for fair market value on the last business day of such taxable year.
Gain or loss realized by a Fund on section 1256 contracts other than forward
foreign currency contracts will be considered 60% long-term and 40% short-term
capital gain or loss. Gain or loss realized by a Fund on forward foreign
currency contracts will be treated as section 988 gain or loss and will
therefore be characterized as ordinary income or loss and will increase or
decrease the amount of the Fund's net investment income available to be
distributed to shareholders as ordinary income, as described above. The Fund can
elect to exempt its section 1256 contracts which are part of a "mixed straddle"
(as described below) from the application of section 1256.
Gain or loss realized by a Fund on the lapse or sale of put and call
options on foreign currencies which are traded OTC or on certain foreign
exchanges will be treated as section 988 gain or loss and will therefore be
characterized as ordinary income or loss and will increase or decrease the
amount of the Fund's net investment income available to be distributed to
shareholders as ordinary income, as described above. The amount of such gain or
loss shall be determined by subtracting the amount paid, if any, for or with
respect to the option (including any amount paid by the Fund upon termination of
an option written by the Fund) from the amount received, if any, for or with
respect to the option (including any amount received by the Fund upon
termination of an option held by the Fund). In general, if a Fund exercises such
an option on a foreign currency, or if such an option that a Fund has written is
exercised, gain or loss on the option will be recognized in the same manner as
if the Fund had sold the option (or paid another person to assume the Fund's
obligation to make delivery under the option) on the date on which the option is
exercised, for the fair market value of the option. The foregoing rules will
also apply to other put and call options which have as their underlying property
foreign currency and which are traded OTC or on certain foreign exchanges to the
extent gain or loss with respect to such options is attributable to fluctuations
in foreign currency exchange rates.
Tax Straddles. Any option, futures contract or other position
entered into or held by a Fund in conjunction with any other position held by
the Fund may constitute a "straddle" for federal income tax purposes. A straddle
of which at least one, but not all, the positions are section 1256 contracts may
constitute a "mixed straddle." In general, straddles are subject to certain
rules that may affect the character and timing of the Fund's gains and losses
with respect to straddle positions by requiring, among other things, that (i)
loss realized on disposition of one position of a straddle not be recognized to
the extent that the Fund has unrealized gains with respect to the other position
in such straddle; (ii) the Fund's holding period in straddle positions be
suspended while the straddle exists (possibly resulting in gain being treated as
short-term capital gain rather than long-term capital gain); (iii) losses
recognized with respect to certain straddle positions which are part of a mixed
straddle and which are non-section 1256 positions be treated as 60% long-term
and 40% short-term capital loss; (iv) losses recognized with respect to certain
straddle positions which would otherwise constitute short-term capital losses be
treated as long-term capital losses; and (v) the deduction of interest and
carrying charges attributable to certain straddle positions may be deferred.
Various elections are available to the Fund which may mitigate the effects of
the straddle rules, particularly with respect to mixed straddles. In general,
the straddle rules described above do not apply to any straddles held by the
Fund, all of the offsetting positions of which consist of section 1256
contracts.
Currency Fluctuations -- "Section 988" Gains or Losses. Under the
Code, gains or losses attributable to fluctuations in exchange rates which occur
between the time a Fund accrues interest or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities are treated as
ordinary income or ordinary loss. Similarly, gains or losses from the
disposition of foreign currencies, from the disposition of debt securities
denominated in a foreign currency, or from the disposition of a forward contract
denominated in a foreign currency which are attributable to fluctuations in the
value of the foreign currency between the date of acquisition of the asset and
the date of disposition also are treated as ordinary income or loss. These gains
or losses, referred to under the Code as "section 988" gains or losses, increase
or decrease the amount of a Fund's investment company taxable income available
to be distributed to its shareholders as ordinary income, rather than increasing
or decreasing the amount of the Fund's net capital gain. Because section 988
losses reduce the amount of ordinary dividends a Fund will be allowed to
distribute for a taxable year, such section 988 losses may result in all or a
portion of prior dividend distributions for such year being recharacterized as a
non-taxable return of capital to shareholders, rather than as an ordinary
dividend, reducing each shareholder's basis in his or her Fund shares. To the
extent that such distributions exceed such shareholder's basis, each will be
treated as a gain from the sale of shares.
Other Taxes
-----------
The Funds may be subject to other state and local taxes.
Taxation of Foreign Stockholders
--------------------------------
Taxation of a shareholder who, under the Code, is a nonresident
alien individual, foreign trust or estate, foreign corporation or foreign
partnership ("foreign shareholder"), depends on whether the income from the Fund
is "effectively connected" with a U.S. trade or business carried on by the
foreign shareholder.
If the income from a Fund is not effectively connected with the
foreign shareholder's U.S. trade or business, then, except as discussed below,
distributions of the Fund attributable to ordinary income paid to a foreign
shareholder by the Fund will be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) upon the gross amount of the distribution. However,
distributions of a Fund attributable to U.S. source portfolio interest income
will not be subject to this withholding tax if so designated.
A foreign shareholder generally would be exempt from Federal income
tax on distributions of a Fund attributable to net long-term capital gain and
short-term capital gain and on gain realized from the sale or redemption of
shares of the Fund. Special rules apply in the case of a shareholder that is a
foreign trust or foreign partnership.
If the income from a Fund is effectively connected with a foreign
shareholder's U.S. trade or business, then ordinary income distributions,
capital gain distributions, and any gain realized upon the sale of shares of the
Fund will be subject to Federal income tax at the rates applicable to U.S.
citizens or U.S. corporations.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein.
The tax rules of other countries with respect to an investment in a
Fund can differ from the Federal income taxation rules described above. These
foreign rules are not discussed herein. Foreign shareholders are urged to
consult their own tax advisors as to the consequences of foreign tax rules with
respect to an investment in the Fund.
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PORTFOLIO TRANSACTIONS
--------------------------------------------------------------------------------
Subject to the general oversight of the Directors, the Adviser is
responsible for the investment decisions and the placing of orders for portfolio
transactions of the Funds. The Adviser determines the broker or dealer to be
used in each specific transaction with the objective of negotiating a
combination of the most favorable commission (for transactions on which a
commission is payable) and the best price obtainable on each transaction
(generally defined as "best execution"). In connection with seeking best price
and execution, a Fund does not consider sales of shares of the Fund or other
investment companies managed by the Adviser as a factor in the selection of
brokers and dealers to effect portfolio transactions and has adopted a policy
and procedures reasonably designed to preclude such considerations.
When consistent with the objective of obtaining best execution,
brokerage may be directed to persons or firms supplying investment information
to the Adviser. There may be occasions where the transaction cost charged by a
broker may be greater than that which another broker may charge if it is
determined in good faith that the amount of such transaction cost is reasonable
in relation to the value of brokerage, research and statistical services
provided by the executing broker.
Neither the Funds nor the Adviser has entered into agreements or
understandings with any brokers regarding the placement of securities
transactions because of research services they provide. A broker-dealer may
provide the Adviser with research or related services with an expectation, but
not necessarily an explicit agreement or contract, that the Adviser will use the
broker-dealer to execute client transactions in the future. To the extent that
such persons or firms supply investment information to the Adviser for use in
rendering investment advice to the Funds, such information may be supplied at no
cost to the Adviser and, therefore, may have the effect of reducing the expenses
of the Adviser in rendering advice to the Funds. While it is impracticable to
place an actual dollar value on such investment information, the Adviser
believes that its receipt probably does not reduce the overall expenses of the
Adviser to any material extent.
The investment information provided to the Adviser is of the type
described in Section 28(e)(3) of the Securities Exchange Act of 1934, as
amended, and is designed to augment the Adviser's own internal research and
investment strategy capabilities. Research services furnished by brokers through
which a Fund effects securities transactions are used by the Adviser in carrying
out its investment management responsibilities with respect to all its client's
accounts but not all such services may be used by the Adviser in connection with
the Fund.
The extent to which commissions that will be charged by
broker-dealers selected by a Fund may reflect an element of value for research
cannot presently be determined. To the extent that research services of value
are provided by broker-dealers with or through whom the Fund places portfolio
transactions, the Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers as a result of the placement
of portfolio transactions could be useful and of value to the Adviser in
servicing its other clients as well as the Fund; on the other hand, certain
research services obtained by the Adviser as a result of the placement of
portfolio brokerage of other clients could be useful and of value to it in
servicing the Fund.
A Fund may deal in some instances in securities that are not listed
on a national securities exchange but are traded in the OTC market. It may also
purchase listed securities through the third market, (i.e., from a dealer) that
is not a member of the exchange on which a security is listed. Where
transactions are executed in the OTC or third market, a Fund will seek to deal
with the primary market makers; but when necessary in order to obtain best
execution, they will utilize the services of others. In all cases, a Fund will
attempt to negotiate best execution.
Transactions for a Fund in fixed-income securities, including
transactions in listed securities, are executed in the OTC market by
approximately fifteen principal market maker dealers with whom the Adviser
maintains regular contact. These transactions will generally be principal
transactions at net prices and the Fund will incur little or no brokerage costs.
Where possible, securities will be purchased directly from the issuer or from an
underwriter or market maker for the securities unless the Adviser believes a
better price and execution is available elsewhere. Purchases from underwriters
of newly-issued securities for inclusion in a portfolio usually will include a
concession paid to the underwriter by the issuer and purchases from dealers
serving as market makers will include the spread between the bid and asked
price.
A Fund's portfolio transactions in equity securities may occur on
foreign stock exchanges. Transactions on stock exchanges involve the payment of
brokerage commissions. On many foreign stock exchanges these commissions are
fixed. Securities traded in foreign OTC markets (including most fixed-income
securities) are purchased from and sold to dealers acting as principal. OTC
transactions generally do not involve the payment of a stated commission, but
the price usually includes an undisclosed commission or markup. The prices of
underwritten offerings, however, generally include a stated underwriter's
discount. The Adviser expects to effect the bulk of its transactions in
securities of companies based in foreign countries through brokers, dealers or
underwriters located in such countries. U.S. Government or other U.S. securities
constituting permissible investments will be purchased and sold through U.S.
brokers, dealers or underwriters.
Investment decisions for a Fund are made independently from those
for other investment companies and other advisory accounts managed by the
Adviser. It may happen, on occasion, that the same security is held in the
portfolio of the Fund and one or more of such other companies or accounts.
Simultaneous transactions are likely when several funds or accounts are managed
in accordance with a similar strategy by the Adviser, particularly when a
security is suitable for the investment objectives of more than one of such
companies or accounts. When two or more companies or accounts managed by the
Adviser are simultaneously engaged in the purchase or sale of the same security,
the transactions are allocated to the respective companies or accounts both as
to amount and price, in accordance with a method deemed equitable to each
company or account. In some cases this system may adversely affect the price
paid or received by the Fund or the size of the position obtainable for the
Fund.
Allocations are made by the officers of a Fund or of the Adviser.
Purchases and sales of portfolio securities are determined by the Adviser and
are placed with broker-dealers by the order department of the Adviser.
The amount of aggregate brokerage commissions paid by the Funds
during the three most recent fiscal years (or since inception), the related
commissions allocated to persons or firms because of research services provided
to the Fund or the Adviser during the most recent fiscal year and the aggregate
amount of transactions allocated to persons or firms because of research
services provided to the Fund or the Adviser during the most recent fiscal year
(or since inception) are as follows:
[Enlarge/Download Table]
Aggregate
Amount of
Brokerage
Transactions
Commissions Allocated to
Fiscal Year or Allocated to Persons Persons or Firms
Period Amount or Firms Because of Because of
Ended of Aggregate Research Services Research Services
July 31/ Brokerage Provided to the Fund to the Fund or
June 30 Fund Commissions or the Adviser the Adviser
------- ---- ----------- -------------- -----------
2017 Growth Fund $166,348 $147,887 $624,362,136
2016 260,301
2015 329,600
2017 Large Cap Growth $1,067,831 $752,188 $3,902,860,357
2016 1,370,711
2015 1,111,586
2017 Concentrated Growth $53,818 $49,656 $168,410,338
2016 152,736
2015 80,088
2017 Discovery Growth $1,395,964 $1,222,054 $2,015,125,861
2016 1,788,577
2015 1,603,644
2017 Small Cap Growth $860,663 $762,019 $1,122,687,064
2016 1,470,723
2015 1,545,760
2017 Select US Equity $556,033 $466,595 $1,147,016,691
2016 689,184
2015 908,819
2017 Select US Long/Short $2,092,664(1) $1,759,415 $5,758,940,330
2016 3,760,128
2015 5,588,002
2017 Sustainable Global Thematic $425,845 $324,186 $614,675,331
2016 455,848
2015 545,931
2017 International Growth $229,923 $1,224,221 $3,184,996,467
2016 335,810
2015 267,200
2017 Global Core Equity $181,677 $132,718 $219,905,214
2016 121,337
2015 60,019
2017 International Strategic Core $25,261 $19,251 $27,986,534
2016 4,135
Concentrated International
2017 Growth $23,195 $7,146 $13,302,541
2016 1,143
2015 1,099
--------
(1) The aggregate dollar amount of brokerage commissions paid in the 2017 fiscal year differed materially from the aggregate
dollar amount of brokerage commissions paid in the 2015 fiscal year due to a change in the number of portfolio transactions
effected by the Adviser.
A Fund may, from time to time, place orders for the purchase or sale
of securities (including listed call options) with SCB & Co. and SCB Limited (a
United Kingdom broker-dealer), affiliates of the Adviser (the "Affiliated
Brokers"). In such instances, the placement of orders with the Affiliated
Brokers would be consistent with the Fund's objective of obtaining the best
execution and would not be dependent upon the fact that the Affiliated Brokers
are affiliates of the Adviser. With respect to orders placed with the Affiliated
Brokers for execution on a national securities exchange, commissions received
must conform to Section 17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder,
which permit an affiliated person of a registered investment company (such as
the Funds), or any affiliated person of such person, to receive a brokerage
commission from such registered investment company provided that such commission
is reasonable and fair compared to the commissions received by other brokers in
connection with comparable transactions involving similar securities during a
comparable period of time.
The aggregate amount of brokerage commissions paid to the Affiliated
Brokers during each Fund's three most recent fiscal years (or since inception)
and, during the most recent fiscal year (or since inception), the Affiliated
Brokers' percentage of aggregate brokerage commissions and the aggregate dollar
amount of brokerage transactions, respectively, are as follows:
[Enlarge/Download Table]
Aggregate % of Fund's
Amount Aggregate Dollar
of Brokerage % of Fund's Amount of Brokerage
Fiscal Year Commissions Aggregate Brokerage Transactions
Ended Paid to Commissions Involving Payment of
July 31/ Affiliated Paid to Affiliated Commissions through
June 30 Fund Brokers Brokers Affiliated Brokers
------- ---- ------------ --------------- ------------------
2017 Growth Fund $0 0.00% 0.00%
2016 1,632
2015 548
2017 Large Cap Growth $0 0.00% 0.00%
2016 614
2015 710
2017 Concentrated Growth $0 0.00% 0.00%
2016 0
2015 175
2017 Discovery Growth $862 0.06% 0.05%
2016 1,003
2015 70
2017 Small Cap Growth $51 0.01% 0.00%
2016 1,187
2015 167
2017 Select US Equity $0 0.00% 0.00%
2016 0
2015 0
2017 Select US Long/Short $0 0.00% 0.00%
2016 0
2015 0
2017 Sustainable Global Thematic $0 0.00% 0.00%
2016 0
2015 0
2017 International Growth $0 0.00% 0.00%
2016 0
2015 0
2017 Global Core Equity $0 0.00% 0.00%
2016 0
2015 9
2017 International Strategic Core $0 0.00% 0.00%
2016 0
Concentrated International
2017 Growth $0 0.00% 0.00%
2016 0
2015 0
Disclosure of Portfolio Holdings
--------------------------------
Each Fund believes that the ideas of the Adviser's investment staff
should benefit the Fund and its shareholders, and does not want to afford
speculators an opportunity to profit by anticipating Fund trading strategies or
using Fund information for stock picking. However, each Fund also believes that
knowledge of the Fund's portfolio holdings can assist shareholders in monitoring
their investment, making asset allocation decisions, and evaluating portfolio
management techniques.
The Adviser has adopted, on behalf of each Fund, policies and
procedures relating to disclosure of the Fund's portfolio securities. The
policies and procedures relating to disclosure of a Fund's portfolio securities
are designed to allow disclosure of portfolio holdings information where
necessary to the Fund's operation or useful to the Fund's shareholders without
compromising the integrity or performance of the Fund. Except when there are
legitimate business purposes for selective disclosure and other conditions
(designed to protect the Fund and its shareholders) are met, the Fund does not
provide or permit others to provide information about the Fund's portfolio
holdings on a selective basis.
Each Fund includes portfolio holdings information as required in
regulatory filings and shareholder reports, discloses portfolio holdings
information as required by federal or state securities laws and may disclose
portfolio holdings information in response to requests by governmental
authorities. In addition, the Adviser may post portfolio holdings information on
the Adviser's website (www.abfunds.com). The Adviser generally posts on the
website a complete schedule of the Fund's portfolio securities, generally as of
the last day of each calendar month, approximately 30 days after the end of that
month. This posted information generally remains accessible on the website for
three months. For each portfolio security, the posted information includes its
name, the number of shares held by the Fund, the market value of the Fund's
holdings, and the percentage of the Fund's assets represented by the Fund's
holdings. In addition to the schedule of portfolio holdings, the Adviser may
post information about the number of securities the Fund holds, a summary of the
Fund's top ten holdings (including name and the percentage of the Fund's assets
invested in each holding), and a percentage breakdown of the Fund's investments
by country, sector and industry, as applicable approximately 10-15 days after
the end of the month. The day after portfolio holdings information is publicly
available on the website, it may be mailed, e-mailed or otherwise transmitted to
any person.
The Adviser may distribute or authorize the distribution of
information about a Fund's portfolio holdings that is not publicly available, on
the website or otherwise, to the Adviser's employees and affiliates that provide
services to the Fund. In addition, the Adviser may distribute or authorize
distribution of information about the Fund's portfolio holdings that is not
publicly available, on the website or otherwise, to the Fund's service providers
who require access to the information in order to fulfill their contractual
duties relating to the Fund, to facilitate the review of the Fund by rating
agencies, for the purpose of due diligence regarding a merger or acquisition, or
for the purpose of effecting in-kind redemption of securities to facilitate
orderly redemption of portfolio assets and minimal impact on remaining Fund
shareholders. The Adviser does not expect to disclose information about the
Fund's portfolio holdings that is not publicly available to the Fund's
individual or institutional investors or to intermediaries that distribute the
Fund's shares. Information may be disclosed with any frequency and any lag, as
appropriate.
Before any non-public disclosure of information about a Fund's
portfolio holdings is permitted, however, the Adviser's Chief Compliance Officer
(or his designee) must determine that the Fund has a legitimate business purpose
for providing the portfolio holdings information, that the disclosure is in the
best interests of the Fund's shareholders, and that the recipient agrees or has
a duty to keep the information confidential and agrees not to trade directly or
indirectly based on the information or to use the information to form a specific
recommendation about whether to invest in the Fund or any other security. Under
no circumstances may the Adviser or its affiliates receive any consideration or
compensation for disclosing the information.
The Adviser has established procedures to ensure that each Fund's
portfolio holdings information is only disclosed in accordance with these
policies. Only the Adviser's Chief Compliance Officer (or his designee) may
approve the disclosure, and then only if he or she and a designated senior
officer in the Adviser's product management group determines that the disclosure
serves a legitimate business purpose of the Fund and is in the best interest of
the Fund's shareholders. The Adviser's Chief Compliance Officer (or his
designee) approves disclosure only after considering the anticipated benefits
and costs to the Fund and its shareholders, the purpose of the disclosure, any
conflicts of interest between the interests of the Fund and its shareholders and
the interests of the Adviser or any of its affiliates, and whether the
disclosure is consistent with the policies and procedures governing disclosure.
Only someone approved by the Adviser's Chief Compliance Officer (or his
designee) may make approved disclosures of portfolio holdings information to
authorized recipients. The Adviser reserves the right to request certifications
from senior officers of authorized recipients that the recipient is using the
portfolio holdings information only in a manner consistent with the Adviser's
policy and any applicable confidentiality agreement. The Adviser's Chief
Compliance Officer (or his designee) or another member of the compliance team
reports all arrangements to disclose portfolio holdings information to the
Fund's Board on a quarterly basis. If the Board determines that disclosure was
inappropriate, the Adviser will promptly terminate the disclosure arrangement.
In accordance with these procedures, each of the following third
parties has been approved to receive information concerning each Fund's
portfolio holdings: (i) the Fund's independent registered public accounting
firm, for use in providing audit opinions; (ii) RR Donnelley Financial, Data
Communique International and, from time to time, other financial printers, for
the purpose of preparing Fund regulatory filings; (iii) the Fund's custodian in
connection with its custody of the Fund's assets; (iv) Institutional Shareholder
Services, Inc. for proxy voting services; and (v) data aggregators, such as
Vestek. Information may be provided to these parties at any time with no time
lag. Each of these parties is contractually and ethically prohibited from
sharing the Fund's portfolio holdings information unless specifically
authorized.
--------------------------------------------------------------------------------
GENERAL INFORMATION
--------------------------------------------------------------------------------
Growth Fund
The Fund is a series of the AB Portfolios which is organized as a
Massachusetts business trust (the "Trust") under the laws of The Commonwealth of
Massachusetts by an Agreement and Declaration of Trust ("Declaration of Trust")
dated March 26, 1987, a copy of which is on file with the Secretary of State of
The Commonwealth of Massachusetts. The Trust is a "series" company as described
in Rule 18f-2 under the 1940 Act, having seven separate portfolios, including
the Fund each of which is represented by a separate series of shares. The name
of the Trust was changed from "The Alliance Portfolios" to the
"AllianceBernstein Portfolios", and the name of the Fund was changed from
"Alliance Growth Fund" to "AllianceBernstein Growth Fund" on March 31, 2003. The
name of the Trust was changed from the "AllianceBernstein Portfolios" to "AB
Portfolios", and the name of the Fund was changed from "AllianceBernstein Growth
Fund" to "AB Growth Fund" on January 20, 2015.
The Declaration of Trust permits the Directors to issue an unlimited
number of full and fractional shares of each series and of each class of shares
thereof. The shares of the Fund and each class thereof do not have any
preemptive rights. Upon termination of the Fund or any class thereof, whether
pursuant to liquidation of the Trust or otherwise, shareholders of the Fund or
that class are entitled to share pro rata in the net assets of that Fund or that
class then available for distribution to such shareholders.
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust or any Fund, however, may be terminated at any time by vote of
at least a majority of the outstanding shares of the Fund affected. The
Declaration of Trust further provides that the Trustees may also terminate the
Trust upon written notice to the shareholders.
Under Massachusetts law shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
Growth Fund's property for all loss and expense of any shareholder of that Fund
held liable on account of being or having been a shareholder. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund of which he or she was a shareholder
would be unable to meet its obligations.
Large Cap Growth
The Fund is a Maryland corporation organized in 1992. The name of
the Fund became "Alliance Premier Growth Fund, Inc." on August 3, 1992, and
"AllianceBernstein Premier Growth Fund, Inc." on March 31, 2003. The Fund
changed its name to "AllianceBernstein Large Cap Growth Fund, Inc." on December
15, 2004, and "AB Large Cap Growth Fund" on January 20, 2015.
Concentrated Growth
The Fund is a series of AB Cap Fund, Inc., a Maryland corporation.
The Fund was organized in 2013 under the name "AllianceBernstein Concentrated
Growth Fund". The Fund changed its name to "AB Concentrated Growth Fund" on
January 20, 2015.
The Fund commenced operations on February 24, 1994 as the W.P.
Stewart & Co. Growth Fund, Inc., a Maryland corporation, the assets and
liabilities of which were acquired effective November 30, 2009 by the W.P.
Stewart & Co. Growth Fund (together, the "Predecessor Fund"). As of the close of
business on February 28, 2014, the Predecessor Fund was reorganized into the
Fund.
Discovery Growth
The Fund was organized as a Maryland corporation in 1979 under the
name Chemical Fund, Inc. and is the successor to a Delaware corporation of the
same name organized in 1938. The name of the Fund became "The Alliance Fund,
Inc." on March 13, 1987, "Alliance Mid-Cap Growth Fund, Inc." on February 1,
2002, "AllianceBernstein Mid-Cap Growth Fund, Inc." on March 31, 2003,
"AllianceBernstein Small/Mid Cap Growth Fund, Inc." on November 3, 2008,
"AllianceBernstein Discovery Growth Fund, Inc." on November 1, 2012 and "AB
Discovery Growth Fund" on January 20, 2015.
Small Cap Growth
The Fund was originally organized under the name Quasar Associates,
Inc. as a Delaware corporation on August 5, 1968 and, effective April 27, 1989,
was reorganized as a corporation under the laws of Maryland under the name
"Alliance Quasar Fund, Inc." The name of the Fund was changed to
"AllianceBernstein Small Cap Growth Fund, Inc." on November 1, 2003 and became a
series of AB Cap Fund, Inc. on September 8, 2004. The Fund changed its name to
"AB Small Cap Growth Portfolio" on January 20, 2015.
Select US Equity
The Fund is a series of AB Cap Fund, Inc., a Maryland corporation.
The Fund was organized in 2011 under the name "AllianceBernstein Select US
Equity Portfolio" and changed its name to "AB Select US Equity Portfolio" on
January 20, 2015.
Select US Long/Short
The Fund is a series of AB Cap Fund, Inc., a Maryland corporation.
The Fund was organized in 2012 under the name "AllianceBernstein Select US
Long/Short Portfolio" and changed its name to "AB Select US Long/Short
Portfolio" on January 20, 2015.
Sustainable Global Thematic
The Fund is a Maryland corporation organized in 1980 under the name
"Alliance Technology Fund, Inc." The name of the Fund became "AllianceBernstein
Technology Fund, Inc." on March 31, 2003, "AllianceBernstein Global Technology
Fund, Inc." on December 15, 2004, "AllianceBernstein Global Thematic Growth
Fund, Inc." on November 3, 2008, "AB Global Thematic Growth Fund" on January 20,
2015, and "AB Sustainable Global Thematic Fund" on October 31, 2016.
International Growth
The Fund is a Maryland corporation organized in 1994 under the name
"Alliance Worldwide Privatization Fund, Inc." The name of the Fund became
"AllianceBernstein Worldwide Privatization Fund, Inc." on March 31, 2003 and
"AllianceBernstein International Growth Fund, Inc." on May 13, 2005. The Fund
changed its name to "AB International Growth Fund" on January 20, 2015.
Global Core Equity
The Fund is a series of AB Cap Fund, Inc., a Maryland corporation.
The Fund was organized in 2014 under the name "AllianceBernstein Global Core
Equity Portfolio". The name of the Fund was changed from "AllianceBernstein
Global Core Equity Portfolio" to "AB Global Core Equity Portfolio" on January
20, 2015.
International Strategic Core
The Fund is a series of AB Cap Fund, Inc., a Maryland corporation.
The Fund was organized in 2015 under the name "AB International Strategic Core
Portfolio".
Concentrated International Growth
The Fund is a series of AB Cap Fund, Inc., a Maryland corporation.
The Fund was organized in 2014 under the name "AllianceBernstein Concentrated
Global Growth Portfolio" and changed its name to "AB Concentrated International
Growth Portfolio" on February 5, 2015.
All Funds
---------
It is anticipated that annual shareholder meetings will not be held;
shareholder meetings will be held only when required by federal or state law.
Shareholders have available certain procedures for the removal of Directors.
A shareholder will be entitled to share pro rata with other holders
of the same class of shares all dividends and distributions arising from the
Fund's assets and, upon redeeming shares, will receive the then-current NAV of
the Fund represented by the redeemed shares less any applicable CDSC. A Fund is
empowered to establish, without shareholder approval, additional classes of
shares within the Fund. If an additional class were established, each share of
the class would normally be entitled to one vote for all purposes. Generally,
shares of each class would vote together as a single class on matters, such as
the election of Directors, that affect each class in substantially the same
manner. Each class of shares of a Fund has the same rights and is identical in
all respects, except that each of Class A, Class B, Class C, Class R and Class K
shares of a Fund bears its own distribution expenses; Class B shares convert to
Class A shares under certain circumstances; and Class C shares convert to Class
A shares under certain circumstances. Each class of shares of a Fund votes
separately with respect to the Fund's Rule 12b-1 distribution plan and other
matters for which separate class voting is appropriate under applicable law.
Shares are freely transferable, are entitled to dividends as determined by the
Directors and, in liquidation of the Fund, are entitled to receive the net
assets of the Fund.
Principal and Controlling Holders
---------------------------------
AB GROWTH FUND
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 942,480 10.20%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 864,343 9.35%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 530,040 5.74%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 478,556 5.18%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 763,817 8.27%
Class C
-------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 55,023 8.83%
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 35,405 5.90%
MLPF&S for the Sole Benefit of its
Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 46,889 7.81%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 44,732 7.45%
National Financial Services LLC For
the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 53,577 8.92%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 46,860 7.80%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 125,978 20.98%
Wells Fargo Clearing Services, LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 36,827 6.13%
Advisor Class
-------------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 32,228 6.08%
MLPF&S for the Sole Benefit of its
Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 87,141 16.43%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 106,436 20.07%
National Financial Services LLC For
the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 67,717 12.77%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 38,170 7.20%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 65,501 12.35%
Wells Fargo Clearing Services, LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 47,434 8.94%
Class R
-------
Hartford Life Insurance Company
Separate Account 401
Attn: UIT Operations
P.O. Box 2999
Hartford, CT 06104-2999 17,562 47.93%
MLPF&S for the Sole Benefit of its
Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 4,267 11.65%
Reliance Trust Company Custodian FBO
MassMutual Omnibus PPL
P.O. Box 28004
Atlanta, GA 30358-0004 11,922 32.54%
Class K
-------
Ascensus Trust Company C/F
Luken LLC 401K & PS
P.O. Box 10758
Fargo, ND 58106-0758 2,323 12.23%
Great-West Trust Company, LLC TTEE C
Apex Technical School Inc. 401K
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 1,047 5.51%
Great-West Trust Company, LLC TTEE C
The Office Furniture Warehouse PSP
c/o Fascore LLC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 2,008 10.57%
Great-West Trust Company, LLC TTEE C
Rowbotham & Company LLP 401K
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 1,048 5.52%
Great-West Trust Company, LLC TTEE C
Sucherman-Insalaco LLC RP
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 5,005 26.35%
Great-West Trust Company, LLC TTEE F
Aaronson, Dickerson, Cohn & Lanzone APC 401K
c/o Fascore LLC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 2,237 11.78%
Luciano Prida & Company PA
401K Plan
1106 N. Franklin Street
Tampa, FL 33602-3841 3,807 20.05%
Class I
-------
NFS LLC FEBO
US Bank National Association
Omnibus Reinvest/Reinvest
1555 N. Rivercenter Dr., Suite 302
Milwaukee, WI 53212-3958 168,607 99.70%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB LARGE CAP GROWTH FUND
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
Charles Schwab & Co.
211 Main Street
San Francisco, CA 94105-1905 2,523,614 5.79%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 6,895,835 15.83%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 2,448,292 5.62%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 3,590,038 8.24%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 3,676,109 8.44%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 3,484,443 8.00%
Class B
-------
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 35,824 6.01%
Class C
-------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 596,553 6.48%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 1,597,223 17.35%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 1,322,537 14.36%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 673,351 7.31%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 869,415 9.44%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 533,462 5.79%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 1,515,180 16.46%
Advisor Class
-------------
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 4,041,946 9.61%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 4,469,920 10.62%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 3,159,056 7.51%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 4,806,537 11.42%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 3,332,502 7.92%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 2,551,204 6.06%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 2,515,682 5.98%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 3,956,628 9.40%
Class R
-------
Capital Bank & Trust Company TTEE F
CHC Retirement Savings Plan
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 63,401 5.19%
DCGT Trustee and/or Custodian
FBO PLIC Various Retirement Plans
Omnibus
Attn: NPIO Trade Desk
711 High Street
Des Moines, IA 50392-0001 61,924 5.07%
Matrix Trust Company Cust. FBO
Greenwich Public School (CT) 403(B)
717 17th Street, Suite 1300
Denver, CO 80202-3304 62,830 5.15%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 254,143 20.82%
Class K
-------
Great-West Trust Company, LLC
TTEE F
Fragomen Del Ray Bernsen & Loewy LLP 401K
c/o Fascore LLC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 194,032 9.63%
Nationwide Trust Company FSB
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029 397,866 19.74%
Class I
-------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 260,642 5.03%
DCGT Trustee and/or Custodian
FBO PLIC Various Retirement Plans
Omnibus
Attn: NPIO Trade Desk
711 High Street
Des Moines, IA 50392-0001 264,812 5.11%
FIIOC as Agent for Certain Employee Benefit Plans
100 Magellan Way KWIC
Covington, KY 41015-1987 441,539 8.52%
Nationwide Trust Company FSB
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029 1,160,653 22.39%
NFS LLC FEBO
Reliance Trust Company TTEE/CUST for TRS FBO Various
Retirement Plans
1150 S. Olive St., Suite 2700
Los Angeles, CA 90015-2211 303,856 5.86%
Patterson & Co. FBO
USI 401(k) Plan
1525 West W.T. Harris Blvd.
Charlotte, NC 28288-1076 528,307 10.19%
Reliance Trust Company TTEE
ADP Access Large Market 401K
1100 Abernathy Rd.
Atlanta, GA 30328-5620 578,587 11.16%
Class Z
-------
Matrix Trust Company Trustee
MFA Retirement Plans
717 17th Street, Suite 1300
Denver, CO 80202-3304 573,073 6.67%
Mid Atlantic Trust Co FBO
Dinsdale Financial Institutions 401
1251 Waterfront Pl., Ste. 525
Pittsburgh, PA 15222-4228 456,383 5.31%
US Bank NA FBO
Cedars-Sinai Health System
Mutual Funds
P.O. Box 1787
Milwaukee, WI 53201-1787 646,450 7.52%
Voya Retirement Insurance and Annuity Co.
Qualified Plan
1 Orange Way #B3N
Windsor, CT 06095-4773 992,509 11.55%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB CONCENTRATED GROWTH FUND
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 140,849 19.06%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 95,917 12.98%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 242,295 32.79%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 78,684 10.65%
Class C
-------
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 100,659 17.46%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 299,466 51.94%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 36,310 6.30%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 35,867 6.22%
Advisor Class
-------------
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 1,502,457 16.20%
Class R
-------
AllianceBernstein L.P.
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712 402 99.97%
Class K
-------
Great-West Trust Company, LLC TTEE
FBO Certified Services LLC
401(K) Retirement Savings Plan
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 1,543 11.31%
Great-West Trust Company, LLC TTEE
FBO Innovim LLC
401(K) Profit Sharing Plan
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 1,003 7.35%
Great-West Trust Company, LLC TTEE
FBO Philadelphia Eye Associates LTD
401(K) Profit Sharing Plan
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 1,005 7.37%
Great-West Trust Company, LLC TTEE
FBO Sterling Ruby Studio Inc.
Profit Sharing Plan & Trust
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 3,680 26.97%
Peter/George/Edwin Kunhardt
FBO Kunhardt Films LLC Incentive
48 Wheeler Ave
Pleasantville, NY 10570-3046 5,289 38,77%
Class I
-------
AllianceBernstein L.P.
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712 406 99.97%
Class Z
-------
AB MMSRetirement Vintage 2025
1345 Avenue of the Americas
New York, NY 10105-0302 125,910 6.39%
AB MMSRetirement Vintage 2035
1345 Avenue of the Americas
New York, NY 10105-0302 145,084 7.36%
AB MMSRetirement Vintage 2040
1345 Avenue of the Americas
New York, NY 10105-0302 158,769 8.06%
AB MMSRetirement Vintage 2045
1345 Avenue of the Americas
New York, NY 10105-0302
134,422 6.82%
AXA Versicherungen AG
General-Guisanstr. 40
Winterthur ZH 8400
Switzerland 1,160,767 58.91%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB DISCOVERY GROWTH FUND
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 2,934,340 5.31%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 2,893,607 5.23%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 3,298,418 5.96%
Class B
-------
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 8,382 6.31%
Class C
-------
MLPF&S For the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 846,548 16.63%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 617,143 12.12%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 326,698 6.42%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 548,292 10.77%
Wells Fargo Clearing Services, LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 926,816 18.21%
Class R
-------
American United Life Cust
FBO American United Trust
Separate Accounts Administration
P.O. Box 368
Indianapolis, IN 46206-0368 160,312 8.84%
American United Life Cust
FBO AUL American Group
Retirement Annuity
Separate Accounts Administration
P.O. Box 368
Indianapolis, IN 46206-0368
394,162 21.73%
MassMutual Financial Group Cust
FBO Massachusetts Mutual Insurance Company
1295 State Street
Springfield, MA 01111-0001 131,702 7.26%
Voya Retirement Insurance and Annuity Co.
Qualified Plan
1 Orange Way # B3N
Windsor, CT 06095-4773 155,709 8.59%
Class K
-------
Ascensus Trust Company
FBO International Integrated Solutions Ltd.
401(K) Profit Sharing Plan and Trust
P.O. Box 10758
Fargo, ND 58106-0758 77,887 5.19%
Nationwide Trust Company FSB
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029 83,043 5.54%
Nationwide Trust Company FSB
FBO Participating Retirement Plans
TPA-NTC
IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029 92,265 6.15%
Class I
-------
FIIOC as Agent for Certain Employee Benefit Plans
100 Magellan Way KWIC
Covington, KY 41015-1987 411,483 6.05%
Great-West Trust Company, LLC TTEE
F Employee Benefits Clients 401K
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 521,026 7.66%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 495,330 7.28%
PIMS/Prudential Retirement as Nominee for the
TTEE/Cust PL
WME IMG Profit Sharing
9601 Wilshire Blvd.
Beverly Hills, CA 90210-5213 1,464,666 21.52%
Sanford Bernstein & Co. LLC
One North Lexington Avenue
White Plains, NY 10601-1712 558,589 8.21%
Vanguard Fiduciary Trust Co.
FBO Concur Technologies 401K
Attn Investment Services
P.O. Box 2600
Valley Forge, PA 19482-2600 923,776 13.57%
Class Z
-------
AB Tax Managed Wealth Appreciation
1345 Avenue of the Americas
New York, NY 10105-0302 1,524,689 5.87%
AB Wealth Appreciation Strategy
1345 Avenue of the Americas
New York, NY 10105-0302 2,896,718 11.15%
SEI Private Trust C/O Citizens of RI
(CT Laborers Pension -Pooled Funds)
Attn Mutual Funds Administrator
One Freedom Valley Drive
Oaks, PA 19456-9989 3,945,865 15.19%
Voya Institutional Trust Company
Trustee or Custodian for
Core Market Retirement Plans
30 Braintree Hill Office Park
Braintree, MA 02184-8747 5,798,070 22.32%
Wells Fargo Bank FBO
Various Retirement Plans
1525 West W.T. Harris Blvd.
Charlotte, NC 28288-1076 9,225,304 35.51%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB SMALL CAP GROWTH PORTFOLIO
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 617,575 6.62%
Class C
-------
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 78,170 10.03%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 232,273 29.79%
National Financial Services LLC For the Exclusive
Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 72,717 9.33%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 42,471 5.45%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 40,169 5.15%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 58,957 7.56%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 94,770 12.15%
Advisor Class
-------------
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 586,606 10.18%
Maril & Co. FBO 5A
c/o BMO Harris Bank NA
Attn: MF
480 Pilgrim Way
Suite 1000
Green Bay, WI 54304-5280 308,550 5.36%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 2,415,358 41.93%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 479,954 8.33%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 341,770 5.93%
Class R
-------
American United Life Cust
FBO American United Trust
Separate Accounts Administration
P.O. Box 368
Indianapolis, IN 46206-0368 47,187 7.23%
American United Life Cust
FBO AUL American Group Retirement Annuity
Separate Accounts Administration
P.O. Box 368
Indianapolis, IN 46206-0368 73,395 11.24%
NFS LLC FEBO
Reliance Trust Company TTEE/CUST for TRS FBO Various
Retirement Plans
1150 S. Olive St., Ste. 2700
Los Angeles, CA 90015-2211 81,883 12.54%
State Street Bank and Trust as TTEE and/or
Cust FBO ADP Access Product
1 Lincoln Street
Boston, MA 02111-2901 153,015 23.44%
Voya Retirement Insurance and Annuity Co.
Qualified Plan
1 Orange Way # B3N
Windsor, CT 06095-4773 35,776 5.48%
Class K
-------
FIIOC as Agent for Certain Employee Benefit Plans
100 Magellan Way KWIC
Covington, KY 41015-1987 41,070 5.31%
Great-West Trust Company, LLC
TTEE F
Fragomen Del Ray Bernsen & Loewy LLP 401K
c/o Fascore LLC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 91,808 11.86%
Nationwide Trust Company FSB
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029 98,365 12.71%
NFS LLC FEBO
Transamerica Life Ins. Co.
1150 S. Olive St.
Los Angeles, CA 90015-2211 230,089 29.73%
Class I
-------
FIIOC as Agent for Certain Employee Benefit Plans
100 Magellan Way KWIC
Covington, KY 41015-1987 1,588,787 26.31%
John Hancock Trust Company LLC
Annuity Plan of Local #86 IBEW
690 Canton Street, Suite 100
Westwood, MA 02090-2324 308,638 5.11%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 1,391,023 23.04%
State of South Carolina Trustee
FBO State of South Carolina 401K
c/o Fascore LLC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 737,793 12.22%
Class Z
-------
Great-West Trust Company, LLC
TTEE F
The Fifth Third Bancorp Master Prof
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 916,965 48.83%
NFS LLC FEBO
FIIOC Agent FBO Qualified Employee
Plans 401K FINOPS-IC Funds
100 Magellan Way KWIC
Covington, KY 41015-1987 186,887 9.95%
Sanford Bernstein & Co. LLC
1 N. Lexington Avenue
White Plains, NY 10601-1712 268,664 14.31%
Sanford Bernstein & Co. LLC
1 N. Lexington Avenue
White Plains, NY 10601-1712 147,266 7.84%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB SELECT US EQUITY PORTFOLIO
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 45,436 6.51%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 56,482 8.10%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 83,810 12.01%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 175,927 25.22%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 50,455 7.23%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 58,795 8.43%
Class C
-------
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 95,193 12.96%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 198,969 27.09%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 197,578 26.90%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 39,351 5.36%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 71,827 9.78%
Advisor Class
-------------
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 2,629,136 18.77%
Class R
-------
AllianceBernstein L.P.
Attn: Brent Mather-seed Acct
1 N. Lexington Avenue
White Plains, NY 10601-1712 1,006 99.98%
Class K
-------
Great-West Trust Company, LLC TTEE C
Digestive Healthcare of Georgia PC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 82,859 50.56%
Great-West Trust Company, LLC TTEE
FBO Klatte Budenslek & Young-Agriesti LLP 401K Plan
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 21,993 13.42%
Great-West Trust Company, LLC TTEE
FBO Melinta Therapeutics 401K Plan
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 19,266 11.76%
Great-West Trust Company, LLC TTEE
FBO Solsbury Hill 401K Plan
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 24,089 14.70%
Class I
-------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 410,873 44.29%
NFS LLC FEBO
Charitable Gift Legacy Pool
Attn: Unitized Group
1 Spartan Way
Merrimack, NH 03054-4300 467,638 50.41%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB SELECT US LONG/SHORT PORTFOLIO
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 477,727 5.66%
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 440,845 5.23%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 1,216,784 14.43%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 1,737,582 20.60%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 1,685,545 19.99%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 943,032 11.18%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 584,646 6.93%
Class C
-------
MLPF&S For the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 611,058 7.04%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 2,675,594 30.83%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 1,047,670 12.07%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 1,511,251 17.41%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 988,013 11.38%
Advisor Class
-------------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 4,241,045 7.67%
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 4,977,731 9.00%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 12,638,455 22.86%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 5,619,549 10.16%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 3,846,782 6.96%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 4,191,822 7.58%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 9,727,176 17.59%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 3,176,668 5.75%
Class R
-------
Matrix Trust Company Cust. FBO
Innovative Combustion Tech Inc. 401(K)
717 17th Street, Ste. 1300
Denver, CO 80202-3304 9,325 28.38%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 13,919 42.36%
Raymond James & Assoc Inc.
FBO Iowa Clinic PSP 401K
Gregg Polzin MD
J. Willian Holtze MD TTEE
P.O. Box 71483
Clive, IA 50325-0483 9,611 29.25%
Class K
-------
AllianceBernstein L.P.
Attn: Brent Mather-Seed Acct
1 N. Lexington Avenue
White Plains, NY 10601-1712 1,000 99.98%
Class I
-------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 917,411 97.18%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB SUSTAINABLE GLOBAL THEMATIC FUND
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 525,074 9.52%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 436,851 7.92%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 310,991 5.64%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 377,340 6.84%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 460,153 8.34%
Class B
-------
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 5,426 5.32%
Class C
-------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 26,887 10.63%
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 17,176 6.79%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 38,608 15.27%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 31,901 12.62%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 33,514 13.25%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 14,230 5.63%
Advisor Class
-------------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905 133,073 8.60%
MLPF&S for the Sole Benefit of Its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 142,535 9.22%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 142,023 9.18%
Class R
-------
Ascensus Trust Company FBO
Asani Solutions 401(K) Plan
P.O. Box 10758
Fargo, ND 58106-0758 2,063 7.15%
State Street Bank and Trust as TTEE and/or
Cust FBO ADP Access Product
1 Lincoln Street
Boston, MA 02111-2901 5,739 19.89%
State Street Bank and Trust
FBO ADP/MSDW Alliance
Attn: Ralph Campbell
1 Lincoln Street
Boston, MA 02111-2900 2,401 8.32%
Steven Field and Ryan Goosen TTEES
INRAD Inc. 401K
c/o Fascore LLC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 3,518 12.19%
Class K
-------
Great-West Trust Company, LLC
TTEE F
Fragomen Del Ray Bernsen & Loewy LLP 401K
c/o Fascore LLC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 80,292 76.23%
Class I
-------
Great-West Trust Company, LLC
TTEE F
Employee Benefits Clients 401K
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 1,879 26.56%
Mid Atlantic Trust Co FBO Healthview Services LLC
401(K) PSP & Trust
1251 Waterfront Pl., Ste. 525
Pittsburgh, PA 15222-4228 792 11.19%
TD Ameritrade FBO
Voya Institutional Trust Co. as Custodian PSP for
Emp. of AllianceBernstein LP
FBO Benjamin Ruegsegger
Bryn Mawr, PA 19010-3825 1,714 24.23%
TD Ameritrade FBO
Voya Institutional Trust Co. as Custodian PSP for
Emp. of AllianceBernstein LP
FBO Bradley H. Robinson
New York, NY 10012-3074 454 6.41%
TD Ameritrade FBO
Voya Institutional Trust Co. as Custodian PSP for
Emp. of AllianceBernstein LP
FBO Daniel C Roarty
Villanova, PA 19085-2120 1,393 19.69%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB INTERNATIONAL GROWTH FUND
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Enlarge/Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 1,240,082 9.91%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 1,029,269 8.22%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 716,347 5.72%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 742,673 5.93%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 702,110 5.61%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 802,691 6.41%
Class C
-------
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 51,173 6.27%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 129,607 15.87%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 117,123 14.35%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 95,487 11.70%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 48,610 5.95%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 47,411 5.81%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 53,563 6.56%
Advisor Class
-------------
Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-4151 250,299 11.65%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 200,992 9.36%
Morgan Stanley Smith Barney
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311 203,927 9.49%
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310 181,442 8.45%
UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Boulevard, 5th Floor
Weehawken, NJ 07086-6761 398,328 18.54%
Wells Fargo Clearing Services LLC
Special Custody Account for the
Exclusive Benefit of Customer
2801 Market Street
Saint Louis, MO 63103-2523 370,726 17.26%
Class R
-------
American United Life Cust. FBO
American United Trust
Separate Accounts Administration
P.O. Box 368
Hartford, CT 06104-2999 31,989 5.05%
Hartford Life Insurance Company
Separate Account 401
Attn: UIT Operations
P.O. Box 2999
Hartford, CT 06104-2999 189,229 29.88%
MLPF&S for the Sole Benefit of its Customers
Attn: Fund Admin
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484 102,799 16.23%
Reliance Trust Company Custodian
FBO MassMutual Omnibus PPL
P.O. Box 48529
Atlanta, GA 30362-1529 61,409 9.70%
State Street Bank and Trust as TTEE and/or
Cust FBO ADP Access Product
1 Lincoln Street
Boston, MA 02111-2901 35,485 5.60%
Class K
-------
Ascensus Trust Company
FBO International Integrated Solutions
401(K) Profit Sharing Plan & Trust
P.O. Box 10758
Fargo, ND 58106-0758 23,802 6.99%
Ascensus Trust Company FBO Stepbrand Enterprises
401(K) PS Plan & Trust
P.O. Box 10758
Fargo, ND 58106-0758 24,893 7.31%
Great-West Trust Company, LLC
TTEE C
Digestive Healthcare of Georgia PC
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 32,902 9.66%
Great-West Trust Company, LLC TTEE
FBO Hamilton Cardiology Associates P.A. 401K Plan
8515 East Orchard Road, #2T2
Greenwood Village, CO 80111-5002 26,496 7.78%
Lincoln Retirement Services Company, LLC
FBO Texas A&M 403B ORP
P.O. Box 7876
Fort Wayne, IN 46801-7876 19,767 5.80%
Lincoln Retirement Services Company, LLC
FBO Univ of Texas ORP
P.O. Box 7876
Fort Wayne, IN 46801-7876 22,340 6.56%
Class I
-------
FIIOC as Agent for Certain Employee Benefit Plans
100 Magellan Way KWIC
Covington, KY 41015-1987 38,382 38.54%
Nationwide Trust Company FSB
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029 20,783 20.87%
Sanford Bernstein & Co. LLC
1 N. Lexington Avenue
White Plains, NY 10601-1712 13,567 13.62%
T. Rowe Price Retirement Plan Services
Retirement Plan Clients
4515 Painters Mill Road
Owings Mills, MD 21117-4903 11,237 11.28%
TD Ameritrade FBO
Voya Institutional Trust Co. as Custodian PSP for Emp. of
AllianceBernstein LP
FBO Daniel C. Roarty
Villanova, PA 19085-2120 6,182 6.21%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB GLOBAL CORE EQUITY PORTFOLIO
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
Ascensus Trust Company
FBO Lawrence P. Lotzof DDS
APC Retirement Savings
401K Plan
P.O. Box 10758
Fargo, ND 58106-0758 36,699 7.00%
Sanford Bernstein & Co. LLC
1 N. Lexington Avenue
White Plains, NY 10601-1712 291,275 55.58%
Sanford Bernstein & Co. LLC
1 N. Lexington Avenue
White Plains, NY 10601-1712 43,216 8.25%
Class C
-------
AllianceBernstein L.P.
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712 1,000 13.09%
Ascensus Trust Company
C/F Tae H. Yoo IRA
Porter Ranch, CA 91326-4035 663 8.67%
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 729 9.54%
Raymond James
Omnibus for Mutual Funds
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102 5,117 66.97%
Advisor Class
-------------
Sanford Bernstein & Co. LLC
1 N. Lexington Avenue
White Plains, NY 10601-1712 1,570,010 5.52%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB INTERNATIONAL STRATEGIC CORE PORTFOLIO
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
Ascensus Trust Company
Bare & Swett Agency Inc. NDFI
Christopher L. McClung
Eureka Springs, AR 72631-9102 3,611 16.62%
Ascensus Trust Company
C/F Jacqueline A. Rossini
IRA Rollover
Holliston, MA 01746-1711 1,740 8.01%
Ascensus Trust Company
Pope Insurance
Carolyn L. Pope
Englewood, FL 34223-2869 10,173 46.81%
LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Drive
San Diego, CA 92121-3091 1,982 9.12%
Class C
-------
AllianceBernstein L.P.
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712 1,000 9.67%
Andrew Krawczyk & Andrea Krawczyk JTWROS
Roseville, MN 55113-4462 1,079 10.44%
Ascensus Trust Company
C/F Eryn G. Dinyovszky IRA Rollover
Southport, NC 28461-8518 883 8.54%
Ascensus Trust Company
C/F Filomena I. Koempel Roth IRA
Matawan, NJ 07747-3031 887 8.58%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 6,488 62.76%
Advisor Class
-------------
AllianceBernstein L.P.
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712 300,952 7.60%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, no person beneficially
owned more than 25% of the Fund's outstanding voting securities as of October 2,
2017.
AB CONCENTRATED INTERNATIONAL GROWTH PORTFOLIO
To the knowledge of the Fund, as of October 2, 2017, the following
persons owned of record or beneficially 5% or more of a class of outstanding
shares of this Fund:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
Class A
-------
AllianceBernstein L.P.
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712 1,000 21.06%
Sixth Avenue Baptist Church
1101 Martin Luther King Jr. Drive SW
Birmingham, AL 35211-2895 3,280 69.08%
Vito J. Koempel & Filomena I. Koempel JTWROS
Matawan, NJ 07747-3031 468 9.85%
Class C
-------
AllianceBernstein L.P.
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712 1,000 24.24%
Andrew Krawczyk & Andrea Krawczyk JTWROS
Roseville, MN 55113-4462 1,389 33.67%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 1,736 42.08%
Advisor Class
-------------
SEI Private Trust Co.
c/o Dubuque Bank
1 Freedom Valley Drive
Oaks, PA 19456-9989 3,169,482 99.33%
A shareholder who beneficially owns more than 25% of a Fund's
outstanding voting securities is presumed to "control" the Fund, as that term is
defined in the 1940 Act, and may have a significant impact on matters submitted
to a shareholder vote. To the knowledge of the Fund, as of October 2, 2017, the
following persons owned of record or beneficially 25% or more of the Fund's
outstanding voting securities:
[Download Table]
Number of
Name and Address Shares of Class % of Class
---------------- --------------- ----------
SEI Private Trust Co.
c/o Dubuque Bank
1 Freedom Valley Drive
Oaks, PA 19456-9989 3,169,482 99.10%
Custodian and Accounting Agent
------------------------------
State Street, c/o State Street Corporation CCB/5, 1 Iron Street,
Boston, MA 02210 acts as the custodian and as accounting agent for the Growth
Fund, Large Cap Growth, Discovery Growth, Small Cap Growth, Sustainable Global
Thematic, Concentrated Growth, Select US Long/Short and Concentrated
International Growth, but plays no part in deciding the purchase or sale of
portfolio securities. Subject to the supervision of each Fund's Directors, State
Street may enter into sub-custodial agreements for the holding of the Fund's
securities outside of the United States.
BBH, 50 Post Office Square, Boston, MA 02110, will act as the
custodian and as accounting agent for International Growth, Select US Equity,
Global Core Equity and International Strategic Core but plays no part in
deciding the purchase or sale of portfolio securities. Subject to the
supervision of the Fund's Directors, BBH may enter into sub-custodial agreements
for the holding of the Fund's foreign securities.
Principal Underwriter
---------------------
ABI, an indirect, wholly-owned subsidiary of the Adviser, located at
1345 Avenue of the Americas, New York, NY 10105, is the principal underwriter of
shares of the Funds. Under the Distribution Services Agreement, the Funds have
agreed to indemnify ABI, in the absence of its willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations thereunder, against
certain civil liabilities, including liabilities under the Securities Act.
Counsel
-------
Legal matters in connection with the issuance of the shares of the
Funds offered hereby are passed upon by Seward & Kissel LLP, 901 K Street NW,
Suite 800, Washington, DC 20001.
Independent Registered Public Accounting Firm
---------------------------------------------
Ernst & Young LLP, 5 Times Square, New York, NY 10036, has been
appointed as the independent registered public accounting firm for the Funds.
Code of Ethics and Proxy Voting Policies and Procedures
-------------------------------------------------------
The Funds, the Adviser and ABI have each adopted Codes of Ethics
pursuant to Rule 17j-1 of the Act. These codes of ethics permit personnel
subject to the codes to invest in securities, including securities that may be
purchased or held by the Funds.
The Funds have adopted the Adviser's proxy voting policies and
procedures. A description of the Adviser's proxy voting policies and procedures
is attached as Appendix A.
Information regarding how each Fund voted proxies related to
portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 227-4618; or
through the Fund's website at www.abfunds.com; or both; and (2) on the SEC's
website at www.sec.gov.
Additional Information
----------------------
Shareholder inquiries may be directed to the shareholder's financial
intermediary or to ABIS at the address or telephone numbers shown on the front
cover of this SAI. This SAI does not contain all the information set forth in
the Registration Statement filed by the Funds with the SEC under the Securities
Act. Copies of the Registration Statement may be obtained at a reasonable charge
from the SEC or may be examined, without charge, at the offices of the SEC in
Washington, D.C.
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
The financial statements of each of the Growth Fund, Large Cap Growth, Small Cap
Growth, Sustainable Global Thematic and Discovery Growth for the fiscal year
ended July 31, 2017 and the report of Ernst & Young LLP, independent registered
public accounting firm, are incorporated herein by reference to the Funds'
annual reports. The annual reports for Small Cap Growth, Growth Fund, Large Cap
Growth, Discovery Growth and Sustainable Global Thematic were filed on Form
N-CSR with the SEC on October 2, 2017. These reports are available without
charge upon request by calling ABIS at (800) 227-4618 or on the Internet at
www.abfunds.com.
The financial statements of each of Concentrated Growth, International Growth,
Select US Equity, Select US Long/Short, Global Core Equity, International
Strategic Core and Concentrated International Growth for the fiscal year ended
June 30, 2017 and the report of Ernst & Young LLP, independent registered public
accounting firm, are incorporated herein by reference to the Funds' annual
reports. The annual reports were filed on Form N-CSR with the SEC on August 31,
2017. These reports are available without charge upon request by calling ABIS at
(800) 227-4618 or on the Internet at www.abfunds.com.
Appendix A
[A/B](R)
[LOGO]
Proxy Voting Policy Statement
Introduction
As an investment adviser, we are shareholder advocates and have a fiduciary duty
to make investment decisions that are in our clients' best interests by
maximizing the value of their shares. Proxy voting is an integral part of this
process, through which we support strong corporate governance structures,
shareholder rights and transparency.
We have an obligation to vote proxies in a timely manner and we apply the
principles in our Proxy Voting Policy ("Proxy Voting Policy" or "Policy") and
this policy statement to our proxy decisions. We believe a company's
environmental, social and governance ("ESG") practices may have a significant
effect on the value of the company, and we take these factors into consideration
when voting. For additional information regarding our ESG policies and
practices, please refer to our firm's Statement of Policy Regarding Responsible
Investment ("RI Policy").
Our Proxy Voting Policy, which outlines our policies for proxy voting and
includes a wide range of issues that often appear on proxies, applies to all of
AB's investment management subsidiaries and investment services groups investing
on behalf of clients globally. Both this Statement and the Policy are intended
for use by those involved in the proxy voting decision-making process and those
responsible for the administration of proxy voting ("Proxy Managers"), in order
to ensure that our proxy voting policies and procedures are implemented
consistently. Copies of the Policy, the RI Policy and our voting records, as
noted below in "Voting Transparency", can be found on our Internet site
(www.alliancebernstein.com).
We sometimes manage accounts where proxy voting is directed by clients or
newly-acquired subsidiary companies. In these cases, voting decisions may
deviate from the Policy.
Research Underpins Decision Making
As a research-driven firm, we approach our proxy voting responsibilities with
the same commitment to rigorous research and engagement that we apply to all of
our investment activities. The different investment philosophies utilized by our
investment teams may occasionally result in different conclusions being drawn
regarding certain proposals and, in turn, may result in the Proxy Manager making
different voting decisions on the same proposal. Nevertheless, the Proxy Manager
votes proxies with the goal of maximizing the value of the securities in client
portfolios.
In addition to our firm-wide proxy voting policies, we have a Proxy Committee,
which provides oversight and includes senior investment professionals from
Equities, Legal personnel and Operations personnel. It is the responsibility of
the Proxy Committee to evaluate and maintain proxy voting procedures and
guidelines, to evaluate proposals and issues not covered by these guidelines, to
consider changes in policy, and to review this Statement and the Policy no less
frequently than annually. In addition, the Proxy Committee meets at least three
times a year and as necessary to address special situations.
Research Services
We subscribe to the corporate governance and proxy research services of
Institutional Shareholder Services ("ISS"). All our investment professionals can
access these materials via the Proxy Manager and/or Proxy Committee.
Engagement
In evaluating proxy issues and determining our votes, we welcome and seek out
the points of view of various parties. Internally, the Proxy Manager may consult
the Proxy Committee, Chief Investment Officers, Directors of Research, and/or
Research Analysts across our equities platforms, and Portfolio Managers in whose
managed accounts a stock is held. Externally, we may engage with companies in
advance of their Annual General Meeting, and throughout the year. We believe
engagement provides the opportunity to share our philosophy, our corporate
governance values, and more importantly, affect positive change. Also, these
meetings often are joint efforts between the investment professionals, who are
best positioned to comment on company-specific details, and the Proxy
Manager(s), who offer a more holistic view of governance practices and relevant
trends. In addition, we engage with shareholder proposal proponents and other
stakeholders to understand different viewpoints and objectives.
Proxy Voting Guidelines
Our proxy voting guidelines are both principles-based and rules-based. We adhere
to a core set of principles that are described in the Proxy Voting Policy. We
assess each proxy proposal in light of these principles. Our proxy voting
"litmus test" will always be what we view as most likely to maximize long-term
shareholder value. We believe that authority and accountability for setting and
executing corporate policies, goals and compensation generally should rest with
the board of directors and senior management. In return, we support strong
investor rights that allow shareholders to hold directors and management
accountable if they fail to act in the best interests of shareholders.
Our proxy voting guidelines pertaining to specific issues are set forth in the
Policy and include guidelines relating to board and director proposals,
compensation proposals, capital changes and anti-takeover proposals, auditor
proposals, shareholder access and voting proposals, and environmental, social
and disclosure proposals. The following are examples of specific issues within
each of these broad categories:
Board and Director Proposals: Election of Directors
---------------------------------------------------
The election of directors is an important vote. We expect directors to represent
shareholder interests at the company and maximize shareholder value. We
generally vote in favor of the management-proposed slate of directors while
considering a number of factors, including local market best practice. We
believe companies should have a majority of independent directors and
independent key committees. However, we will incorporate local market regulation
and corporate governance codes into our decision making. We may support more
progressive requirements than those implemented in a local market if we believe
more progressive requirements may improve corporate governance practices. We
will generally regard a director as independent if the director satisfies the
criteria for independence (i) espoused by the primary exchange on which the
company's shares are traded, or (ii) set forth in the code we determine to be
best practice in the country where the subject company is domiciled. We consider
the election of directors who are "bundled" on a single slate on a case-by-case
basis considering the amount of information available and an assessment of the
group's qualifications.
Compensation Proposals: Approved Remuneration Reports and Policies
------------------------------------------------------------------
In certain markets, (e.g., Australia, Canada, Germany and the United States),
publicly traded issuers are required by law to submit their company's
remuneration report to a non-binding shareholder vote. The report contains,
among other things, the nature and amount of the compensation of the directors
and certain executive officers as well as a discussion of the company's
performance. In other markets, remuneration policy resolutions are binding.
We evaluate remuneration reports and policies on a case-by-case basis, taking
into account the reasonableness of the company's compensation structure and the
adequacy of the disclosure. Where a company permits retesting of
performance-based awards in its compensation plan, we will evaluate the specific
terms of the plan, including the volatility of the industry and the number and
duration of the retests, before determining whether or not to support the
company's remuneration report. We may abstain or vote against a report if
disclosure of the remuneration details is inadequate or the report is not
provided to shareholders with sufficient time prior to the meeting to consider
its terms.
In markets where remuneration reports are not required for all companies, we
will support shareholder proposals asking the board to adopt a policy (i.e.,
"say on pay") that the company's shareholders be given the opportunity to vote
on an advisory resolution to approve the compensation committee's report.
Although say on pay votes are by nature only broad indications of shareholder
views, they do lead to more compensation-related dialogue between management and
shareholders and help ensure that management and shareholders meet their common
objective: maximizing the value of the company.
Capital Changes and Anti-Takeover Proposals: Authorize Share Repurchase
-----------------------------------------------------------------------
We generally support share repurchase proposals that are part of a
well-articulated and well-conceived capital strategy. We assess proposals to
give the board unlimited authorization to repurchase shares on a case-by-case
basis. Furthermore, we would generally support the use of derivative instruments
(e.g., put options and call options) as part of a share repurchase plan absent a
compelling reason to the contrary. Also, absent a specific concern at the
company, we will generally support a repurchase plan that could be continued
during a takeover period.
Auditor Proposals: Appointment of Auditors
-------------------------------------------
We believe that the company is in the best position to choose its accounting
firm, and we generally support management's recommendation.
We recognize that there may be inherent conflicts when a company's independent
auditors perform substantial non-audit related services for the company.
Therefore, in reviewing a proposed auditor, we will consider the amount of fees
paid for non-audit related services performed compared to the total audit fees
paid by the company to the auditing firm, and whether there are any other
reasons for us to question the independence or performance of the firm's auditor
such as, for example, tenure. We generally will deem as excessive the non-audit
fees paid by a company to its auditor if those fees account for 50% or more of
total fees paid. In the UK market, which utilizes a different standard, we
adhere to a non-audit fee cap of 100% of audit fees. Under these circumstances,
we generally vote against the auditor and the directors, in particular the
members of the company's audit committee. In addition, we generally vote against
authorizing the audit committee to set the remuneration of such auditors. We
exclude from this analysis non-audit fees related to IPOs, bankruptcy emergence,
and spin-offs and other extraordinary events. We may vote against or abstain due
to a lack of disclosure of the name of the auditor while taking into account
local market practice.
Shareholder Access and Voting Proposals: Proxy Access for Annual Meetings
-------------------------------------------------------------------------
These proposals allow "qualified shareholders" to nominate directors. We
generally vote in favor of management and shareholder proposals for proxy access
that employ guidelines reflecting the SEC framework for proxy access (adopted by
the US Securities and Exchange Commission ("SEC") in 2010, but vacated by the DC
Circuit Court of Appeals in 2011), which would have allowed a single
shareholder, or group of shareholders, who hold at least 3% of the voting power
for at least three years continuously to nominate up to 25% of the current board
seats, or two directors, for inclusion in the subject company's annual proxy
statement alongside management nominees.
We will generally vote against proposals that use requirements that are stricter
than the SEC's framework and against individual board members, or entire boards,
who exclude from their ballot properly submitted shareholder proxy access
proposals or include their own competing, more strict, proposals on the same
ballot.
We will evaluate on a case-by-case basis proposals with less stringent
requirements than the vacated SEC framework.
From time to time we may receive requests to join with other shareholders to
support a shareholder action. We may, for example, receive requests to join a
voting block for purposes of influencing management. If the third parties
requesting our participation are not affiliated with us and have no business
relationships with us, we will consider the request on a case-by-case basis.
However, where the requesting party has a business relationship with us (e.g.,
the requesting party is a client or a significant service provider), agreeing to
such a request may pose a potential conflict of interest. As a fiduciary we have
an obligation to vote proxies in the best interest of our clients (without
regard to our own interests in generating and maintaining business with our
other clients) and given our desire to avoid even the appearance of a conflict,
we will generally decline such a request.
Environmental, Social and Disclosure Proposals: Lobbying and Political Spending
-------------------------------------------------------------------------------
We generally vote in favor of proposals requesting increased disclosure of
political contributions and lobbying expenses, including those paid to trade
organizations and political action committees, whether at the federal, state, or
local level. These proposals may increase transparency.
We generally vote proposals in accordance with these guidelines but, consistent
with our "principles-based" approach to proxy voting, we may deviate from the
guidelines if warranted by the specific facts and circumstances of the situation
(i.e., if, under the circumstances, we believe that deviating from our stated
policy is necessary to help maximize long-term shareholder value). In addition,
these guidelines are not intended to address all issues that may appear on all
proxy ballots. Proposals not specifically addressed by these guidelines, whether
submitted by management or shareholders, will be evaluated on a case-by-case
basis, always keeping in mind our fiduciary duty to make voting decisions that,
by maximizing long-term shareholder value, are in our clients' best interests.
Conflicts of Interest
As a fiduciary, we always must act in our clients' best interests. We strive to
avoid even the appearance of a conflict that may compromise the trust our
clients have placed in us, and we insist on strict adherence to fiduciary
standards and compliance with all applicable federal and state securities laws.
We have adopted a comprehensive Code of Business Conduct and Ethics ("Code") to
help us meet these obligations. As part of this responsibility and as expressed
throughout the Code, we place the interests of our clients first and attempt to
avoid any perceived or actual conflicts of interest.
We recognize that there may be a potential material conflict of interest when we
vote a proxy solicited by an issuer that sponsors a retirement plan we manage
(or administer), that distributes AB-sponsored mutual funds, or with which we or
one or more of our employees have another business or personal relationship that
may affect how we vote on the issuer's proxy. Similarly, we may have a potential
material conflict of interest when deciding how to vote on a proposal sponsored
or supported by a shareholder group that is a client. In order to avoid any
perceived or actual conflict of interest, we have established procedures for use
when we encounter a potential conflict to ensure that our voting decisions are
based on our clients' best interests and are not the product of a conflict.
These procedures include compiling a list of companies and organizations whose
proxies may pose potential conflicts of interest (e.g., if such company is our
client) and reviewing our proposed votes for these companies and organizations
in light of the Policy and ISS's recommendations. If our proposed vote is
contrary to, or not contemplated in, the Policy, is consistent with a client's
position and is contrary to ISS's recommendation, we refer to proposed vote to
our Independent Compliance Officer for his determination.
In addition, our Proxy Committee takes reasonable steps to verify that ISS
continues to be independent, including an annual review of ISS's conflict
management procedures. When reviewing these conflict management procedures, we
consider, among other things, whether ISS (i) has the capacity and competency to
adequately analyze proxy issues; and (ii) can offer research in an impartial
manner and in the best interests of our clients.
Voting Transparency
We publish our voting records on our Internet site (www.alliancebernstein.com)
quarterly, 30 days after the end of the previous quarter. Many clients have
requested that we provide them with periodic reports on how we voted their
proxies. Clients may obtain information about how we voted proxies on their
behalf by contacting their Advisor. Alternatively, clients may make a written
request to the Chief Compliance Officer.
Recordkeeping
All of the records referenced in our Policy will be kept in an easily accessible
place for at least the length of time required by local regulation and custom,
and, if such local regulation requires that records are kept for less than five
years from the end of the fiscal year during which the last entry was made on
such record, we will follow the U.S. rule of five years. We maintain the vast
majority of these records electronically. We will keep paper records, if any, in
one of our offices for at least two years.
PART C
OTHER INFORMATION
ITEM 28. Exhibits:
(a) (1) Articles of Incorporation of the Registrant, dated
December 23, 1980 - Incorporated by reference to Exhibit
1(a) to Post-Effective Amendment No. 29 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on October 31, 1997.
(2) Articles of Amendment to Articles of Incorporation of
the Registrant, dated December 21, 1981 and filed
January 5, 1982 - Incorporated by reference to Exhibit
1(b) to Post-Effective Amendment No. 29 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on October 31, 1997.
(3) Articles of Amendment to Articles of Incorporation of
the Registrant, dated October 16, 1989 and filed
December 5, 1989 - Incorporated by reference to Exhibit
1(c) to Post-Effective Amendment No. 29 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on October 31, 1997.
(4) Articles Supplementary to Articles of Incorporation of
the Registrant, dated September 30, 1996 - Incorporated
by reference to Exhibit 1(d) to Post-Effective Amendment
No. 29 of Registrant's Registration Statement on Form
N-1A (File Nos. 2-70427 and 811-03131), filed with the
Securities and Exchange Commission on October 31, 1997.
(5) Articles Supplementary to Articles of Incorporation of
the Registrant, - Incorporated by reference to Exhibit
1(e) to Post-Effective Amendment No. 29 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on October 31, 1997.
(6) Articles Supplementary to Articles of Incorporation of
the Registrant, dated May 21, 1998 and filed July 6,
1998 - Incorporated by reference to Exhibit 1(f) to
Post-Effective Amendment No. 31 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on October 30, 1998.
(7) Articles of Amendment to Articles of Incorporation of
the Registrant, dated March 19, 2003 and filed March 20,
2003 - Incorporated by reference to Exhibit (a)(7) to
Post-Effective Amendment No. 44 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on August 7, 2003.
(8) Articles Supplementary to Articles of Incorporation of
the Registrant, dated July 31, 2003 and filed August 1,
2003 - Incorporated by reference to Exhibit (a)(8) to
Post-Effective Amendment No. 44 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on August 7, 2003.
(9) Articles of Amendment to Articles of Incorporation,
dated October 19, 2004 and filed December 15, 2004 -
Incorporated by reference to Exhibit (a)(9) to
Post-Effective Amendment No. 48 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on February 28, 2005.
(10) Articles Supplementary to Articles of Incorporation of
the Registrant, dated February 17, 2005 and filed
February 22, 2005 - Incorporated by reference to Exhibit
(a)(10) to Post-Effective Amendment No. 48 of
Registrant's Registration Statement on Form N-1A (File
Nos. 2-70427 and 811-03131), filed with the Securities
and Exchange Commission on February 28, 2005.
(11) Articles of Amendment to Articles of Incorporation of
the Registrant, dated September 22, 2008 and filed
October 7, 2008 - Incorporated by reference to Exhibit
(a)(11) to Post-Effective Amendment No. 54 of
Registrant's Registration Statement on Form N-1A (File
Nos. 2-70427 and 811-03131), filed with the Securities
and Exchange Commission on October 30, 2008.
(12) Articles of Amendment to Articles of Incorporation of
the Registrant, effective January 20, 2015 and filed
January 20, 2015 - Incorporated by reference to Exhibit
(a)(12) to Post-Effective Amendment No. 66 of
Registrant's Registration Statement on Form N-1A (File
Nos. 2-70427 and 811-03131), filed with the Securities
and Exchange Commission on October 30, 2015.
(13) Articles of Amendment to Articles of Incorporation of
the Registrant - Incorporated by reference to Exhibit
(a)(13) to Post-Effective Amendment No. 69 of
Registrant's Registration Statement on Form N-1A (File
Nos. 2-70427 and 811-03131), filed with the Securities
and Exchange Commission on October 28, 2016.
(14) Articles Supplementary to Articles of Incorporation of
the Registrant, dated January 31, 2017 and filed
February 3, 2017 - Filed herewith.
(b) Amended and Restated By-Laws of the Registrant - Incorporated
by reference to Exhibit (b) to Post-Effective Amendment No. 50
of Registrant's Registration Statement on Form N-1A (File Nos.
2-70427 and 811-03131), filed with the Securities and Exchange
Commission on August 30, 2006.
(c) Not applicable.
(d) Advisory Agreement dated July 22, 1992, as amended February
15, 2000, September 7, 2004 and June 14, 2006 - Incorporated
by reference to Exhibit (d) to Post-Effective Amendment No. 69
of Registrant's Registration Statement on Form N-1A (File Nos.
2-70427 and 811-03131), filed with the Securities and Exchange
Commission on October 28, 2016.
(e) (1) Distribution Services Agreement between the Registrant
and AllianceBernstein Investments, Inc. (formerly known
as Alliance Fund Distributors, Inc.) - Incorporated by
reference to Exhibit 6(a) to Post-Effective Amendment
No. 29 of Registrant's Registration Statement on Form
N-1A (File Nos. 2-70427 and 811-03131), filed with the
Securities and Exchange Commission on October 31, 1997.
(2) Amendment to the Distribution Services Agreement, dated
July 11, 1996 - Incorporated by reference to Exhibit
6(b) to Post-Effective Amendment No. 29 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on October 31, 1997.
(3) Amendment to the Distribution Services Agreement, dated
as of November 3, 2003 - Incorporated by reference to
Exhibit (e)(3) to Post-Effective Amendment No. 46 of
Registrant's Registration Statement on Form N-1A (File
Nos. 2-70427 and 811-03131), filed with the Securities
and Exchange Commission on August 27, 2004.
(4) Amendment to the Distribution Services Agreement between
the Registrant and AllianceBernstein Investment Research
and Management, Inc. (formerly known as Alliance Fund
Distributors, Inc.), made as of March 1, 2005 -
Incorporated by reference to Exhibit (e)(4) to
Post-Effective Amendment No. 69 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on October 28, 2016.
(5) Amendment to Distribution Services Agreement between the
Registrant and AllianceBernstein Investments, Inc.
(formerly known as AllianceBernstein Investment Research
and Management, Inc.), made as of June 14, 2006 -
Incorporated by reference to Exhibit (e)(5) to
Post-Effective Amendment No. 69 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-70427
and 811-03131), filed with the Securities and Exchange
Commission on October 28, 2016.
(6) Form of Selected Dealer Agreement between
AllianceBernstein Investments, Inc. and selected dealers
offering shares of the Registrant - Incorporated by
reference to Exhibit (e)(6) to Post-Effective Amendment
No. 39 of the Registration Statement on Form N-1A of
AllianceBernstein Large Cap Growth Fund, Inc. (File Nos.
33-49530 and 811-06730), filed with the Securities and
Exchange Commission on October 15, 2009.
(7) Form of Selected Agent Agreement between
AllianceBernstein Investment Research and Management,
Inc. (formerly known as Alliance Fund Distributors,
Inc.) and selected agents making available shares of the
Registrant - Incorporated by reference to Exhibit (e)(4)
to Post-Effective Amendment No. 34 of the Registration
Statement on Form N-1A of AllianceBernstein Municipal
Income Fund, Inc. (File Nos. 33-07812 and 811-04791),
filed with the Securities and Exchange Commission on
January 28, 2005.
(8) Selected Dealer Agreement between AllianceBernstein
Investments, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated making available shares of the
Registrant effective April 30, 2009 - Incorporated by
reference to Exhibit (e)(8) to Post-Effective Amendment
No. 39 of the Registration Statement on Form N-1A of
AllianceBernstein Large Cap Growth Fund, Inc. (File Nos.
33-49530 and 811-06730), filed with the Securities and
Exchange Commission on October 15, 2009.
(9) Load Fund Operating Agreement between AllianceBernstein
Investments, Inc. and Charles Schwab & Co., Inc. making
available shares of the Registrant, dated June 1, 2007 -
Incorporated by reference to Exhibit (e)(9) to
Post-Effective Amendment No. 39 of the Registration
Statement on Form N-1A of AllianceBernstein Large Cap
Growth Fund, Inc. (File Nos. 33-49530 and 811-06730),
filed with the Securities and Exchange Commission on
October 15, 2009.
(10) Cooperation Agreement between AllianceBernstein
Investments, Inc. (formerly known as AllianceBernstein
Investment Research and Management, Inc.) and UBS AG,
dated November 1, 2005 - Incorporated by reference to
Exhibit (e)(10) to Post-Effective Amendment No. 39 of
the Registration Statement on Form N-1A of
AllianceBernstein Large Cap Growth Fund, Inc. (File Nos.
33-49530 and 811-06730), filed with the Securities and
Exchange Commission on October 15, 2009.
(f) Not applicable.
(g) Master Custodian Agreement between the Registrant and State
Street Bank and Trust Company, effective August 3, 2009 -
Incorporated by reference to Exhibit (g) to Post-Effective
Amendment No. 51 of the Registration Statement on Form N-1A of
AllianceBernstein Variable Products Series Fund, Inc. (File
Nos. 33-18647 and 811-05398), filed with the Securities and
Exchange Commission on April 29, 2010.
(h) (1) Transfer Agency Agreement between the Registrant and
AllianceBernstein Investor Services, Inc. (formerly
known as Alliance Fund Service, Inc.) - Incorporated by
reference to Exhibit 9 to Post-Effective Amendment No.
29 of Registrant's Registration Statement on Form N-1A
(File Nos. 2-70427 and 811-03131), filed with the
Securities and Exchange Commission on October 31, 1997.
(2) Amendment to Transfer Agency Agreement between the
Registrant and AllianceBernstein Investor Services,
Inc., dated June 14, 2006 - Incorporated by reference to
Exhibit (h)(2) to Post-Effective Amendment No. 69 of the
Registrant's Registration Statement on Form N-1A (File
Nos. 2-70427 and 811-03131), filed with the Securities
and Exchange Commission on October 28, 2016.
(i) Opinion and Consent of Seward & Kissel LLP - Filed herewith.
(j) Consent of Independent Registered Public Accounting Firm -
Filed herewith.
(k) Not applicable.
(l) Not applicable.
(m) Rule 12b-1 Plan - See Exhibit (e)(1) hereto.
(n) Amended and Restated Rule 18f-3 Plan, dated May 5, 2017 -
Filed herewith.
(o) Reserved.
(p) (1) Code of Ethics for the Fund - Incorporated by reference
to Exhibit (p)(1) to Post-Effective Amendment No. 74 of
the Registration Statement on Form N-1A of
AllianceBernstein Bond Fund, Inc. (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange
Commission on October 6, 2000, which is substantially
identical in all material respects except as to the
party which is the Registrant.
(2) Code of Ethics for AllianceBernstein L.P. and
AllianceBernstein Investments, Inc. - Incorporated by
reference to Exhibit (p)(3) to Post-Effective Amendment
No. 146 of the Registration Statement on Form N-1A of
AllianceBernstein Cap Fund, Inc. (File Nos. 2-29901 and
811-01716), filed with the Securities and Exchange
Commission on February 26, 2014.
Other Exhibits:
Powers of Attorney for: John H. Dobkin, Michael J. Downey, William
H. Foulk, Jr., D. James Guzy, Nancy P. Jacklin, Robert M. Keith,
Carol C. McMullen, Garry L. Moody, Marshall C. Turner, Jr. and Earl
D. Weiner - Filed herewith.
ITEM 29. Persons Controlled by or under Common Control with Registrant.
None.
ITEM 30. Indemnification.
It is the Registrant's policy to indemnify its directors and
officers, employees and other agents to the maximum extent permitted
by Section 2-418 of the General Corporation Law of the State of
Maryland, which is incorporated by reference herein, and as set
forth in Article EIGHTH of Registrant's Articles of Incorporation,
filed as Exhibit (a), Article IX of the Amended and Restated Bylaws,
filed as Exhibit (b), and Section 10 of the Distribution Services
Agreement filed as Exhibit (e)(1), all as set forth below. The
liability of the Registrant's directors and officers is dealt with
in Article EIGHTH of Registrant's Articles of Incorporation, as set
forth below. The Adviser's liability for any loss suffered by the
Registrant or its shareholders is set forth in Section 4 of the
Advisory Agreement filed as Exhibit (d) to this Registration
Statement, as set forth below.
ARTICLE EIGHTH OF THE REGISTRANT'S ARTICLES OF INCORPORATION READS
AS FOLLOWS:
"To the maximum extent permitted by the General Corporation Law of
the State of Maryland as from time to time amended, the Corporation
shall indemnify its currently acting and its former directors and
officers and those persons who, at the request of the Corporation,
serve or have served another corporation, partnership, joint
venture, trust or other enterprise in one or more of such
capacities."
ARTICLE IX OF THE REGISTRANT'S AMENDED AND RESTATED BYLAWS READS AS
FOLLOWS:
"To the maximum extent permitted by Maryland law in effect from time
to time, the Corporation shall indemnify and, without requiring a
preliminary determination of the ultimate entitlement to
indemnification, shall pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any individual
who is a present or former director or officer of the Corporation
and who is made or threatened to be made a party to the proceeding
by reason of his or her service in any such capacity or (b) any
individual who, while a director or officer of the Corporation and
at the request of the Corporation, serves or has served as a
director, officer, partner or trustee of another corporation, real
estate investment trust, partnership, joint venture, trust, employee
benefit plan or other enterprise and who is made or threatened to be
made a party to the proceeding by reason of his or her service in
any such capacity. The Corporation may, with the approval of its
Board of Directors or any duly authorized committee thereof, provide
such indemnification and advance for expenses to a person who served
a predecessor of the Corporation in any of the capacities described
in (a) or (b) above and to any employee or agent of the Corporation
or a predecessor of the Corporation. The termination of any claim,
action, suit or other proceeding involving any person, by judgment,
settlement (whether with or without court approval) or conviction or
upon a plea of guilty or nolo contendere, or its equivalent, shall
not create a presumption that such person did not meet the standards
of conduct required for indemnification or payment of expenses to be
required or permitted under Maryland law, these Bylaws or the
Charter. Any indemnification or advance of expenses made pursuant to
this Article shall be subject to applicable requirements of the 1940
Act. The indemnification and payment of expenses provided in these
Bylaws shall not be deemed exclusive of or limit in any way other
rights to which any person seeking indemnification or payment of
expenses may be or may become entitled under any bylaw, regulation,
insurance, agreement or otherwise.
Neither the amendment nor repeal of this Article, nor the adoption
or amendment of any other provision of the Bylaws or Charter
inconsistent with this Article, shall apply to or affect in any
respect the applicability of the preceding paragraph with respect to
any act or failure to act which occurred prior to such amendment,
repeal or adoption."
The Advisory Agreement between the Registrant and AllianceBernstein
L.P. provides that AllianceBernstein L.P. will not be liable under
such agreement for any mistake of judgment or in any event
whatsoever except for lack of good faith and that nothing therein
shall be deemed to protect AllianceBernstein L.P. against any
liability to the Registrant or its security holders to which it
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties
thereunder, or by reason of reckless disregard of its duties or
obligations thereunder.
The Distribution Services Agreement between the Registrant and
AllianceBernstein Investments, Inc. ("ABI") provides that the
Registrant will indemnify, defend and hold ABI and any person who
controls it within the meaning of Section 15 of the Securities Act
of 1933, as amended (the "Securities Act"), free and harmless from
and against any and all claims, demands, liabilities and expenses
which ABI or any controlling person may incur arising out of or
based upon any alleged untrue statement of a material fact contained
in Registrant's Registration Statement or Prospectus or arising out
of, or based upon any alleged omission to state a material fact
required to be stated in either of the foregoing or necessary to
make the statements in either of the foregoing not misleading,
provided that nothing therein shall be so construed as to protect
ABI against any liability to the Registrant or its security holders
to which it would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its
duties thereunder or by reason of reckless disregard of its
obligations and duties thereunder.
The foregoing summaries are qualified by the entire text of
Registrant's Articles of Incorporation, the Amended and Restated
Bylaws, the Advisory Agreement between the Registrant and
AllianceBernstein L.P. and the Distribution Services Agreement
between the Registrant and ABI which are filed herewith as Exhibits
(a), (d), and (e), respectively, in response to Item 28 and each of
which are incorporated by reference herein.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that, in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The Registrant participates in a joint directors' liability
insurance policy issued by the ICI Mutual Insurance Company. Under
this policy, outside trustees and directors are covered up to the
limits specified for any claim against them for acts committed in
their capacities as trustee or director. A pro rata share of the
premium for this coverage is charged to each participating
investment company. In addition, the Adviser's liability insurance
policy, which is issued by a number of underwriters, including
Greenwich Insurance Company as primary underwriter, extends to
officers of the Registrant and such officers are covered up to the
limits specified for any claim against them for acts committed in
their capacities as officers of the investment companies sponsored
by the Adviser.
ITEM 31. Business and Other Connections of Investment Adviser.
The descriptions of AllianceBernstein L.P. under the caption
"Management of the Fund" in the Prospectus and in the Statement of
Additional Information constituting Parts A and B, respectively, of
this Registration Statement are incorporated by reference herein.
The information as to the directors and executive officers of
AllianceBernstein L.P., set forth in its Form ADV filed with the
Securities and Exchange Commission on March 31, 2014 (File No.
801-56720) and amended through the date hereof, is incorporated by
reference.
ITEM 32. Principal Underwriters.
(a) ABI, the Registrant's Principal Underwriter in connection with the
sale of shares of the Registrant. ABI is also the Principal Underwriter or
Distributor for the following investment companies:
AB Bond Fund, Inc.
AB Cap Fund, Inc.
AB Core Opportunities Fund, Inc.
AB Corporate Shares
AB Discovery Growth Fund, Inc.
AB Equity Income Fund, Inc.
AB Fixed-Income Shares, Inc.
AB Global Bond Fund, Inc.
AB Global Real Estate Investment Fund, Inc.
AB Global Risk Allocation Fund, Inc.
AB Government Exchange Reserves
AB High Income Fund, Inc.
AB Institutional Funds, Inc.
AB Intermediate California Municipal Portfolio(1)
AB Intermediate Diversified Municipal Portfolio(1)
AB Intermediate New York Municipal Portfolio(1)
AB International Growth Fund, Inc.
AB International Portfolio(2)
AB Large Cap Growth Fund, Inc.
AB Municipal Income Fund, Inc.
AB Municipal Income Fund II
AB Relative Value Fund, Inc.
AB Short Duration Portfolio(3)
AB Tax-Managed International Portfolio(4)
AB Trust
AB Unconstrained Bond Fund, Inc.
AB Variable Products Series Fund, Inc.
Emerging Markets Portfolio(5)
Sanford C. Bernstein Fund II, Inc.
The AB Portfolios
--------
(1) This is a Portfolio of Sanford C. Bernstein Fund, Inc. which consists of
Classes A, B, C and Advisor Class Shares.
(2) This is a Portfolio of Sanford C. Bernstein Fund, Inc. which consists of
AB Classes A, B, C, R and Z Shares.
(3) This is a Portfolio of Sanford C. Bernstein Fund, Inc. which consists of
AB Classes A, B, C and R Shares.
(4) This is a Portfolio of Sanford C. Bernstein Fund, Inc. which consists of
AB Classes A, B, C and Z Shares.
(5) This is a Portfolio of Sanford C. Bernstein Fund, Inc. which consists of
AB Class Z Shares.
(b) The following are the Directors and Officers of ABI, the principal
place of business of which is 1345 Avenue of the Americas, New York, NY 10105.
POSITIONS AND POSITIONS AND OFFICES
NAME OFFICES WITH UNDERWRITER WITH REGISTRANT
---- ------------------------ ---------------------
Directors
---------
Robert M. Keith Director President and Chief
Executive Officer
Mark R. Manley Director, and Secretary
Christopher Bricker Director
Edward J. Farrell Director, Senior Vice
President and Controller and
Chief Accounting Officer
Officers
--------
Christopher C. Thompson Senior Vice President
and Chief Executive Officer
Emilie D. Wrapp Senior Vice President, Secretary
Assistant General Counsel
and Assistant Secretary
Laurence H. Bertan Senior Vice President and
Assistant Secretary
Peter G. Callahan Senior Vice President
Kevin T. Cannon Senior Vice President
Nelson Kin Hung Chow Senior Vice President
Flora Chi Ju Chuang Senior Vice President
Russell R. Corby Senior Vice President
Jose Cosio Senior Vice President
John W. Cronin Senior Vice President
Silvio Cruz Senior Vice President
Christine M. Dehil Senior Vice President
John C. Endahl Senior Vice President
John Edward English Senior Vice President
Daniel Ennis Senior Vice President
Robert K. Forrester Senior Vice President
Mark A. Gessner Senior Vice President
Kenneth L. Haman Senior Vice President
Michael S. Hart Senior Vice President
Ajai M. Kaul Senior Vice President
Scott M. Krauthamer Senior Vice President
Jonathan M. Liang Senior Vice President
Karen (Yeow Ping) Lim Senior Vice President
James M. Liptrot Senior Vice President and
Assistant Controller
William Marsalise Senior Vice President
Brendan Murray Senior Vice President
Joanna D. Murray Senior Vice President
John J. O'Connor Senior Vice President
Suchet Padhye (Pandurang) Senior Vice President
Guy Prochilo Senior Vice President
John D. Prosperi Senior Vice President
Kevin Rosenfeld Senior Vice President
Miguel A. Rozensztroch Senior Vice President
Elizabeth M. Smith Senior Vice President
Christian G. Wilson Senior Vice President
Derek Yung Senior Vice President
Eric Anderson Vice President
Constantin L. Andreae Vice President
DeAnna D. Beedy Vice President
Christopher M. Berenbroick Vice President
Chris Boeker Vice President
Brandon W. Born Vice President
James J. Bracken Vice President
Corey S. Beckerman Vice President
Robert A. Brazofsky Vice President
Friederike Grote Brink Vice President
Richard A. Brink Vice President
James Broderick Vice President
Steven B. Bruce Vice President
Michael A. Capella Vice President
Christopher J. Carrelha Vice President
Tso Hsiang Chang Vice President
Mikhail Cheskis Vice President
Peter T. Collins Vice President
Joseph (Don) Connell Vice President
Dwight P. Cornell Vice President
Nora E. (Murphy) Connerty Vice President
Massimo Dalla Vedova Vice President
Francesca Dattola Vice President
Kevin M. Dausch Vice President
Frank de Wit Vice President
Marc J. Della Pia Vice President
Patrick R. Denis Vice President
Ralph A. DiMeglio Vice President
Joseph T. Dominguez Vice President
Barbara Anne Donovan Vice President
Sarah Entzeroth Hartzke Vice President
Gregory M. Erwinski Vice President
Susan A. Flanagan Vice President
Carey Fortnam Vice Presdient
Eric C. Freed Vice President Assistant Secretary
Yuko Funato Vice President
Kimberly A. Collins Gorab Vice President
Joseph Haag Vice President
Brian P. Hanna Vice President
Kenneth Handler Vice President
Terry L. Harris Vice President
Nancy E. Hay Vice President Assistant Secretary
Philippe Hemery Vice President
Olivier Herson Vice President
Alexander Hoffmann Vice President
Brian Horvath Vice President
Eric S. Indovina Vice President
Tina Kao Vice President
Jeffrey Kelly Vice President
Gunnar Knierim Vice President
Anthony D. Knight Vice President
Tomas Kukla Vice President
Stephen J. Laffey Vice President and Counsel Assistant Secretary
Christopher J. Larkin Vice President
Chang Hyun Lee Vice President
Ginnie Li Vice President
Albert Yen Po Lien Vice President
Jim Lui (Chi-Hsiung) Vice President
Darren L. Luckfield Vice President
Matthew J. Malvey Vice President
Robert Mancini Vice President
Todd Mann Vice President
Osama Mari Vice President
Nicola Meotti Vice President
Yuji Mihashi Vice President
Aimee Minora Vice President
David Mitchell Vice President
Benjamin Moore Vice President
Paul S. Moyer Vice President
Jennifer A. Mulhall Vice President
Masaru Nakabachi Vice President
Robert D. Nelms Vice President
Jamie A. Nieradka Vice President
Masaki Nishino Vice President
Bryan R. Pacana Vice President
Alex E. Pady Vice President
David D. Paich Vice President
Kim Chu Perrington Vice President
Jared M. Piche Vice President
Jeffrey Pietragallo Vice President
Joseph J. Proscia Vice President
Damien Ramondo Vice President
Carol H. Rappa Vice President
Jessie A. Reich Vice President
Lauryn A. Rivello Vice President
Claudio Rondolini Vice President
David Saslowsky Vice President
Richard A. Schwam Vice President
Craig Schorr Vice President
Karen Sirett Vice President
John F. Skahan Vice President
Chang Min Song Vice President
Daniel L. Stack Vice President
Jason P. Stevens Vice President
Scott M. Tatum Vice President
Louis L. Tousignant Vice President
Christian B. Verlingo Vice President
Wendy Weng Vice President
Stephen M. Woetzel Vice President Assistant Controller
Isabelle (Hsin-I) Yen Vice President
Oscar Zarazua Vice President
Martin J. Zayac Vice President
Douglas E. Buckley Assistant Vice President
Daisy (Sze Kie) Chung Assistant Vice President
Isabelle Husson Assistant Vice President
Charissa A. Pal Assistant Vice President
Brian W. Paulson Assistant Vice President
Pablo Perez Assistant Vice President
Matthew L. Santora Assistant Vice President
Michiyo Tanaka Assistant Vice President
Miyako Taniguchi Assistant Vice President
Laurence Vandecasteele Assistant Vice President
William Wielgolewski Assistant Vice President
Henry M. Winchester Assistant Vice President
Matthew J. Wrzesniewsky Assistant Vice President
Colin T. Burke Assistant Secretary
(c) Not applicable.
ITEM 33. Location of Accounts and Records.
The majority of the accounts, books and other documents required to
be maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules thereunder are maintained as follows: journals,
ledgers, securities records and other original records are
maintained principally at the offices of AllianceBernstein Investor
Services, Inc., P.O. Box 786003, San Antonio, TX 78278-6003 and at
the offices of State Street Bank and Trust Company, the Registrant's
Custodian, One Lincoln Street, Boston, MA 02111. All other records
so required to be maintained are maintained at the offices of
AllianceBernstein L.P., 1345 Avenue of the Americas, New York, NY
10105.
ITEM 34. Management Services.
Not applicable.
ITEM 35. Undertakings.
Not applicable.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, duly authorized, in the City of New York and
State of New York, on the 30th day of October, 2017.
AB SUSTAINABLE GLOBAL THEMATIC FUND, INC.
By: Robert M. Keith*
---------------------
Robert M. Keith
President
Pursuant to the requirements of the Securities Act of 1933 this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
1) Principal
Executive Officer:
Robert M. Keith* President and October 30, 2017
--------------- Chief Executive
Robert M. Keith Officer
2) Principal Financial
and Accounting Officer:
/s/ Joseph J. Mantineo Treasurer and October 30, 2017
---------------------- Chief Financial
Joseph J. Mantineo Officer
3) All of the Directors:
---------------------
John H. Dobkin*
Michael J. Downey*
William H. Foulk, Jr.*
D. James Guzy*
Nancy P. Jacklin*
Robert M. Keith*
Carol C. McMullen*
Garry L. Moody*
Marshall C. Turner, Jr.*
Earl D. Weiner*
*By: /s/ Stephen J. Laffey October 30, 2017
---------------------
Stephen J. Laffey
(Attorney-in-fact)
| 485BPOS | Last “Page” of 156 | TOC | 1st | Previous | Next | ↓Bottom | Just 156th |
|---|
Index to Exhibits
-----------------
Exhibit No. Description of Exhibits
----------- -----------------------
(a)(14) Articles Supplementary to the Articles of Incorporation
(i) Opinion and Consent of Seward & Kissel LLP
(j) Consent of Independent Registered Public Accounting Firm
(n) Amended and Restated Rule 18f-3 Plan
Other Exhibits Powers of Attorney
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘485BPOS’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/1/18 | | 60 |
| | 10/31/18 | | 25 | | 139 |
| Effective on: | | 10/31/17 | | 1 | | 137 | | | 497K, N-Q |
| Filed on: | | 10/30/17 | | 1 | | 155 | | | 24F-2NT |
| | 10/2/17 | | 140 | | 152 | | | N-CSR |
| | 9/30/17 | | 7 | | 139 |
| | 8/31/17 | | 152 | | | | | N-PX |
| | 7/31/17 | | 76 | | 152 | | | 24F-2NT, N-CSR, NSAR-B |
| | 6/30/17 | | 10 | | 152 | | | N-PX |
| | 5/10/17 | | 139 |
| | 5/5/17 | | 154 | | | | | 497 |
| | 4/10/17 | | 135 |
| | 3/29/17 | | 63 | | 139 |
| | 2/3/17 | | 9 | | 154 |
| | 1/31/17 | | 154 | | | | | N-CSRS, NSAR-A |
| | 12/31/16 | | 7 | | 140 |
| | 11/1/16 | | 37 | | 139 | | | 485BPOS |
| | 10/31/16 | | 139 | | 140 | | | 497K, N-Q |
| | 10/28/16 | | 154 | | | | | 485BPOS |
| | 7/31/16 | | 7 | | 140 | | | 24F-2NT, N-CSR, NSAR-B |
| | 6/30/16 | | 139 | | 140 | | | N-PX |
| | 6/22/16 | | 140 |
| | 10/30/15 | | 154 | | | | | 485BPOS, 497K |
| | 7/31/15 | | 81 | | 140 | | | 24F-2NT, N-CSR, NSAR-B, NSAR-B/A |
| | 7/1/15 | | 139 | | | | | 497 |
| | 6/30/15 | | 94 | | 140 | | | N-PX |
| | 4/15/15 | | 129 | | 130 |
| | 2/5/15 | | 140 |
| | 1/20/15 | | 140 | | 154 | | | 497 |
| | 11/12/14 | | 125 | | 126 |
| | 7/31/14 | | 90 | | 120 | | | 24F-2NT, N-CSR, NSAR-B |
| | 6/30/14 | | 124 | | | | | N-PX |
| | 5/30/14 | | 103 |
| | 3/31/14 | | 154 |
| | 2/28/14 | | 15 | | 140 |
| | 2/26/14 | | 154 |
| | 1/1/14 | | 97 |
| | 7/31/13 | | 90 | | 120 | | | 24F-2NT, N-CSR, NSAR-B |
| | 6/30/13 | | 124 | | | | | N-PX |
| | 12/12/12 | | 113 | | 115 |
| | 11/1/12 | | 140 | | | | | 485BPOS, 497K |
| | 1/1/12 | | 78 | | 140 |
| | 12/31/11 | | 79 | | 81 |
| | 10/1/11 | | 81 |
| | 7/1/11 | | 77 | | 80 |
| | 4/29/10 | | 154 |
| | 11/30/09 | | 140 |
| | 10/15/09 | | 154 | | | | | 485BPOS, 497K |
| | 8/3/09 | | 154 |
| | 4/30/09 | | 154 | | | | | N-Q |
| | 1/31/09 | | 66 | | 140 | | | N-CSRS, NSAR-A |
| | 11/3/08 | | 140 | | | | | 485BPOS |
| | 10/30/08 | | 154 | | | | | 485BPOS |
| | 10/7/08 | | 154 |
| | 9/22/08 | | 154 |
| | 6/1/07 | | 154 | | | | | 497 |
| | 12/31/06 | | 80 |
| | 11/30/06 | | 80 |
| | 8/30/06 | | 154 | | | | | 485APOS, N-PX |
| | 6/14/06 | | 154 |
| | 11/1/05 | | 154 | | | | | 485BPOS |
| | 6/30/05 | | 140 | | | | | N-PX |
| | 5/13/05 | | 140 |
| | 3/1/05 | | 154 | | | | | 485BPOS |
| | 2/28/05 | | 154 | | | | | 485BPOS |
| | 2/22/05 | | 154 |
| | 2/17/05 | | 154 |
| | 1/28/05 | | 154 |
| | 12/31/04 | | 80 |
| | 12/15/04 | | 140 | | 154 |
| | 10/19/04 | | 154 | | | | | 24F-2NT |
| | 10/15/04 | | 140 |
| | 9/8/04 | | 140 |
| | 9/7/04 | | 154 |
| | 8/27/04 | | 154 | | | | | 485APOS, N-PX |
| | 11/3/03 | | 154 |
| | 11/1/03 | | 140 |
| | 9/2/03 | | 140 |
| | 8/7/03 | | 154 | | | | | 485APOS |
| | 8/1/03 | | 154 |
| | 7/31/03 | | 154 | | | | | 24F-2NT, N-CSR, NSAR-BT, NSAR-BT/A |
| | 3/31/03 | | 140 |
| | 3/20/03 | | 154 |
| | 3/19/03 | | 154 |
| | 2/1/02 | | 140 |
| | 9/11/01 | | 140 |
| | 10/6/00 | | 154 |
| | 2/15/00 | | 154 |
| | 12/31/99 | | 80 |
| | 10/30/98 | | 154 | | | | | 485BPOS |
| | 7/6/98 | | 154 |
| | 5/21/98 | | 154 |
| | 10/31/97 | | 154 | | | | | 485BPOS |
| | 9/30/96 | | 154 |
| | 7/11/96 | | 154 |
| | 2/24/94 | | 140 |
| | 8/3/92 | | 140 |
| | 7/22/92 | | 154 |
| List all Filings |
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