Notice to Hong Kong Shareholders of

Transcription

1 IMPORTANT: This letter is important and requires your immediate attention. If you have any questions about the content of this letter, you should seek independent professional advice. AB SICAV I Société d'investissement à Capital Variable 2-4, rue Eugène Ruppert L-2453 Luxembourg R.C.S. Luxembourg B Notice to Hong Kong Shareholders of All Market Income Portfolio 25 May 2018 Dear Valued Hong Kong Shareholders, The purpose of this letter is to inform you of the following clarification to the All Market Income Portfolio (the Portfolio ), a portfolio of AB SICAV I (the Fund ). The Fund is an investment company (société d investissement à capital variable) organized under the laws of the Grand Duchy of Luxembourg. Clarification to the Investment Policies Currently, the Portfolio may use financial derivative instruments extensively for investment purpose, with an expected level of leverage as calculated under the commitment approach estimated to be in the range of 0 to 100% of its net asset value. With effect from 1 July 2018, the Portfolio s investment policies will be clarified, with respect to applicable Hong Kong regulations, to reflect that the Portfolio will not use financial derivative instruments extensively for investment purposes. The Portfolio will still be entitled to use financial derivative instruments for hedging, risk management, efficient portfolio management, and investment purposes, but will not use financial derivative instruments extensively for investment purposes. Use of financial derivative instruments for efficient portfolio management, hedging techniques, and for investment purposes may include use of exchange-traded and OTC derivative instruments, including swaps, options, futures and currency transactions. Rationale for the Clarification Notwithstanding that the Portfolio currently has the flexibility to use financial derivative instruments extensively for investment purposes, the Portfolio has not been investing extensively in financial derivative instruments since the Portfolio was provided with such flexibility. Therefore, upon further review of the product and the use of financial derivative instruments in implementing the investment strategy, the board of directors (the Board ) of the Fund believes that the Portfolio will not need such ability to use financial derivative instruments extensively for investment purposes and therefore proposes to clarify the Portfolio s investment policy accordingly. After this clarification, the expected level of leverage of the Portfolio as calculated under the commitment approach will be revised from an estimated range of 0 to 100% to an estimated range of 0 to 50% of its net asset value. However, the types of risks the Portfolio is subject to remain similar before and after the clarification. Investors should note that, in adverse situations, the Portfolio s use of financial derivative instruments may become ineffective in hedging or efficient portfolio management and the Portfolio may suffer significant losses. The fee level / cost in managing the Portfolio will remain unchanged. The clarification will not materially prejudice the Portfolio's existing investors rights or interests.

2 The costs / expenses associated with the clarification to the investment policy of Portfolio are estimated to be approximately USD13,000. While expenses (including expenses associated with the clarification) are generally borne by the Portfolio, AllianceBernstein (Luxembourg) S.à r.l., the management company of the Fund (the Management Company ), has voluntarily undertaken that if the aggregate fees and expenses of the relevant share class of the Portfolio (exclusive of certain other taxes, brokerage (if applicable) and interest on borrowings) exceed the expense thresholds, if applicable, set forth in the Fund s prospectus (the Voluntary Expense Thresholds ), the Portfolio may deduct from the payment to be made to the Management Company, or the Management Company will otherwise bear, such excess fees and expenses subject to the Voluntary Expense Thresholds. Other Investment Options The Board is of the opinion that the above mentioned clarification is in the best interests of the shareholders of the Portfolio. If you feel otherwise, there are various options available to you: (1) You may request the exchange of your investment free of charge in shares of the Portfolio for the same share class of another AB-sponsored SFC-authorised UCITS fund; or (2) You may redeem your shares in the Portfolio free of charge, from the date of this letter until the clarification becomes effective. For the avoidance of doubt, contingent deferred sales charge (if any) for the relevant shares charged by the Fund and any fees charged by the distributors may still apply. Availability of Documents Copies of the revised prospectus and additional information for Hong Kong investors of the Fund, as well as the Product Key Facts Statement of the Portfolio, may be obtained upon request, free of charge, by contacting your financial adviser, AllianceBernstein Investor Services service center or AllianceBernstein Hong Kong Limited under Contact information below. Contact Information How to get more information. If you have questions about the clarification described above, please contact AllianceBernstein Hong Kong Limited (as the Hong Kong Representative of the Fund) of 39 th Floor, One Island East, Taikoo Place, 18 Westlands Road, Quarry Bay, Hong Kong, or at The Board accepts responsibility for the accuracy of the contents of this letter. Yours sincerely, The Board of Directors of AB SICAV I 2

3 AB SICAV I > International Health Care Portfolio > International Technology Portfolio > Global Real Estate Securities Portfolio > Thematic Research Portfolio > India Growth Portfolio > Euro High Yield Portfolio > US Small and Mid-Cap Portfolio > Emerging Markets Multi-Asset Portfolio > Short Duration High Yield Portfolio > Select US Equity Portfolio > Global Plus Fixed Income Portfolio > Emerging Market Local Currency Debt Portfolio > Asia Pacific Local Currency Debt Portfolio > Emerging Market Corporate Debt Portfolio > US High Yield Portfolio > Low Volatility Equity Portfolio > Emerging Markets Equity Portfolio > Diversified Yield Plus Portfolio > Global Equity Income Portfolio > Concentrated Global Equity Portfolio > Concentrated US Equity Portfolio > Global Core Equity Portfolio > Asia Income Opportunities Portfolio > All Market Income Portfolio 1 > European Equity Portfolio 1 > Eurozone Equity Portfolio 1 > American Growth Portfolio 1 Additional Information for Hong Kong Investors April 2018 AB SICAV I (the "Fund") is an open-ended investment company with variable capital (société d'investissement à capital variable) incorporated under the laws of the Grand Duchy of Luxembourg. Purchase orders can be accepted only on the basis of the Prospectus of the Fund dated January 2018 (the "Prospectus") and this statement of additional information for Hong Kong investors (this "Hong Kong Supplement"), which together form the offering documents for the Fund for the purpose of marketing Shares of the Fund in the Hong Kong Special Administrative Region of the People's Republic of China ("Hong Kong") (the "Hong Kong Offering Document"). If you are in any doubt about the contents of the Prospectus, this Hong Kong Supplement or the financial statements accompanying this document you should seek independent professional advice. 1 Shares in this Portfolio will only be made available from 4 May

4 Important Notice WARNING: Please note that the Prospectus is a global offering document and therefore also contains details of funds which are not authorised by the Securities and Futures Commission (the "SFC") for offering to the public in Hong Kong or share classes not available to Hong Kong investors. Investors should note that the Hong Kong Offering Document of the Fund is authorised on the condition that the Management Company shall ensure that only the share classes of the SFCauthorised funds listed on pages 3 to 4 of this Hong Kong Supplement which are specified as available to Hong Kong investors are and shall be offered to the public in Hong Kong. It is an offence to offer any of the following non-sfc authorised funds below to the public in Hong Kong unless an exemption under section 103 of the Securities and Futures Ordinance of Hong Kong (Cap. 571) ("SFO") applies. Intermediaries should take note of this restriction. Investors should note that the following Portfolios and funds referred to in the Prospectus are not authorized by the SFC: Multi-Sector Credit Portfolio Global Income Portfolio RMB Income Plus Portfolio Select Absolute Alpha Portfolio RMB Income Plus II Portfolio (USD) Global Factor Portfolio AB ESG Responsible Global Factor Portfolio Asia Discovery Equity Portfolio All Market Total Return Portfolio Asia Low Volatility Equity Portfolio Emerging Market Debt Total Return Portfolio Alternative Risk Premia Portfolio - 2 -

5 Information for Hong Kong Investors The aim of this Hong Kong Supplement is to set out all the information relating to the Fund and each of its Portfolios that is particular to the offering of the Portfolios to investors in Hong Kong. All terms used in this Hong Kong Supplement shall bear the same meaning as in the Prospectus unless the context otherwise requires. The directors of the Fund (the "Directors") have taken all reasonable care to ensure that the facts stated herein are true and accurate in all material respects at the date hereof and that there are no other material facts the omission of which makes misleading any statement herein, whether of fact or opinion. The Directors accept responsibility accordingly. In the event of any inconsistency between the contents of the Prospectus and this Hong Kong Supplement, the information contained in the latter shall prevail. Investors should note that the Portfolios are generally entitled to use derivative instruments for hedging and risk management purposes, as well as investment purposes, including, for example, efficient portfolio management and as an alternative to investing directly in the underlying securities or instruments. The use of derivatives may involve additional risks. However other than Short Duration High Yield Portfolio, Emerging Markets Multi-Asset Portfolio, Asia Pacific Local Currency Debt Portfolio and Emerging Market Local Currency Debt Portfolio, the other Portfolios will not use derivative instruments extensively to achieve the relevant Portfolio's investment objectives or for investment purposes. The Short Duration High Yield Portfolio, Emerging Markets Multi-Asset Portfolio, Asia Pacific Local Currency Debt Portfolio, Emerging Market Local Currency Debt Portfolio and All Market Income Portfolio may use derivative instruments extensively for investment purposes. The expected level of leverage of the Short Duration High Yield Portfolio, Emerging Markets Multi-Asset Portfolio, Asia Pacific Local Currency Debt Portfolio, Emerging Market Local Currency Debt Portfolio and All Market Income Portfolio is estimated to be in the range of 20%-300%, 0%-125%, 100%-350%, 20%-300% and 0%-350% of its Net Asset Value, respectively. The expected level of leverage is calculated as the sum of the notionals of the financial derivative instruments held by the Portfolio, which neither takes into account the fact that a particular financial derivative instrument increases or decreases the Portfolio's investment risks nor permits to net financial derivative instruments with reverse positions. With this methodology, the use of derivatives for hedging purposes will automatically increase the level of leverage. In addition, the actual leverage of the relevant Portfolio may deviate from the above mentioned expected level of leverage. Investors should note that annual rates of the management fee, depositary fee, administration fee payable to the Administrator, transfer agent fee, distribution fee and administration fee payable to the Management Company are stated in the Prospectus as annualized percentage by reference to the average of daily Net Asset Value over the relevant fiscal year. Authorisation in Hong Kong Warning: In relation to the Portfolios as set out in the Prospectus, only the following Portfolios are authorized by the SFC pursuant to section 104 of the SFO and hence may be offered to the public of Hong Kong: 1. International Health Care Portfolio 2. International Technology Portfolio 3. Global Real Estate Securities Portfolio 4. Thematic Research Portfolio - 3 -

6 5. India Growth Portfolio 6. Euro High Yield Portfolio 7. US Small and Mid-Cap Portfolio 8. Emerging Markets Multi-Asset Portfolio 9. Short Duration High Yield Portfolio 10. Select US Equity Portfolio 11. Global Plus Fixed Income Portfolio 12. Emerging Market Local Currency Debt Portfolio 13. Asia Pacific Local Currency Debt Portfolio 14. Emerging Market Corporate Debt Portfolio 15. US High Yield Portfolio 16. Low Volatility Equity Portfolio 17. Emerging Markets Equity Portfolio 18. Diversified Yield Plus Portfolio 19. Global Equity Income Portfolio 20. Concentrated Global Equity Portfolio 21. Concentrated US Equity Portfolio 22. Global Core Equity Portfolio 23. Asia Income Opportunities Portfolio 24. European Equity Portfolio 25. Eurozone Equity Portfolio 26. American Growth Portfolio 27. All Market Income Portfolio Please note that the Prospectus is a global offering document and therefore also contains information of the Portfolios and funds listed on page 2 of this Hong Kong Supplement which are not authorized by the SFC. No offer shall be made to the public of Hong Kong in respect of the funds listed on page 2 of this Hong Kong Supplement which are not authorized by the SFC. The issue of the Prospectus was authorized by the SFC only in relation to the offer of the above SFC-authorized funds to the public of Hong Kong. Intermediaries should take note of this restriction. SFC authorization is not a recommendation or endorsement of the Fund nor the Portfolios nor does it guarantee the commercial merits of the Fund or any Portfolio or its performance. It does not mean the Fund and the Portfolios are suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. Global Real Estate Securities Portfolio is authorized under the Code on Unit Trusts and Mutual Funds and not under the Code of Real Estate Investment Trusts

7 The following classes of shares are offered to the public of Hong Kong**: 1. International Health Care Portfolio (Classes A, B and C Shares) 2. International Technology Portfolio (Classes A, B and C Shares) 3. Global Real Estate Securities Portfolio (Classes A, B, C, AD, AD AUD H, AD CAD H, AD SGD H, AD NZD H, BD, BD AUD H and ID Shares) 4. Thematic Research Portfolio (Classes A, A AUD H, A EUR H, A SGD H, AX^, B, B AUD H, B CAD H, BX^, C and CX^ Shares) 5. India Growth Portfolio (Classes AX^, A, A SGD H, AD, AD AUD H, BX^, B, B SGD H, BD and BD AUD H Shares) 6. Euro High Yield Portfolio (Classes A, A2, A2 USD H, AA, AA AUD H, AA HKD H, AA SGD H, AA USD H, AT, AT AUD H, AT SGD H, AT USD H, B2, C, C2, CT USD H, I2 GBP H, I2 USD H and IT USD H Shares) 7. US Small and Mid-Cap Portfolio (Classes A, A EUR H, A SGD H, B, C and C EUR H Shares) 8. Emerging Markets Multi-Asset Portfolio (Classes A, A SGD H, AD, AD SGD H, B, BD, C, I, ID, A AUD H, AD AUD H, A CAD H, AD CAD H, A EUR H, AD EUR H, A GBP H, AD GBP H, I GBP H and I EUR H Shares) 9. Short Duration High Yield Portfolio (Classes A2, AA, AA AUD H, AA SGD H, AT, B2, BT, C2, CT, AT AUD H, AT CAD H, A2 EUR H, AT EUR H, AT GBP H, AT SGD H, BT CAD H, I2, I2 EUR H, IT, IT EUR H, IT GBP H and IT SGD H Shares) 10. Select US Equity Portfolio (Classes A, A AUD H, C, A EUR H, A GBP H, A SGD H, I, I AUD H, I EUR H, I GBP H and I SGD H Shares) 11. Global Plus Fixed Income Portfolio (Classes A2, AT, BT, AT AUD H, AT CAD H, AT EUR H, AT GBP H, AT SGD H, A2 SGD H, BT CAD H, I2 and IT EUR H Shares) 12. Emerging Market Local Currency Debt Portfolio (Classes A2, AT, B2, BT, A2 EUR H, AT EUR H and AT SGD H Shares) 13. Asia Pacific Local Currency Debt Portfolio (Classes A2, AA, AA AUD H, AA CAD H, AA EUR H, AA GBP H, AA SGD H, AT, B2, BT, C2, C2 EUR H, CT, I2, I2 EUR H, I2 SGD H, IT, IT AUD H, IT EUR H, IT SGD H, A2 EUR H, A2 SGD H, AT AUD H, AT CAD H, AT EUR H, AT GBP H, AT SGD H, BT AUD H, BT CAD H, BT EUR H and BT GBP H Shares) 14. Emerging Market Corporate Debt Portfolio (Classes A2, AA, AA AUD H, AT, C2, CT, I2, I2 EUR H, IT, A2 EUR H, AT EUR H, AT AUD H, AT CAD H, A2 SGD H, AA SGD H, AT SGD H, AT GBP H and AT NZD H Shares) 15. US High Yield Portfolio (Classes A2, AA, AT, I2, IT, A2 EUR H, AA AUD H, AT AUD H, AT EUR H, I2 EUR H, IT AUD H, AA SGD H, AT SGD H and IT SGD H Shares) - 5 -

8 16. Low Volatility Equity Portfolio (Classes A, AD, I, S, S1, A EUR H, AD EUR H, I EUR H, S EUR H, S1 EUR H, A AUD H, AD AUD H, AD CAD H, AD GBP H, A SGD H, AD SGD H, A NZD H, AD NZD H and C Shares) 17. Emerging Markets Equity Portfolio (Classes A, AD, I, A AUD H, A EUR H, A GBP H, A CAD H, A NZD H, A SGD H, AD AUD H, AD EUR H, AD GBP H, AD CAD H, AD NZD H and AD SGD H Shares) 18. Diversified Yield Plus Portfolio (Classes A2 USD H and I2 USD H Shares) 19. Global Equity Income Portfolio (Classes A, AD, C, CD, I, A EUR H, A SGD H, AD SGD H, C EUR H, I EUR H and I GBP H Shares) 20. Concentrated Global Equity Portfolio (Classes A, A EUR H, A SGD H, AD SGD H, I, I EUR H and I GBP H Shares) 21. Concentrated US Equity Portfolio (Classes A, A EUR H, A AUD H, A SGD H, C, I, I EUR H, I AUD H, I SGD H and I GBP H Shares) 22. Global Core Equity Portfolio (Classes A, A EUR H, A AUD H, A SGD H, C, I, I EUR H, I AUD H, I SGD H, I GBP H and RX Shares) 23. Asia Income Opportunities Portfolio (Classes A2, A2 AUD H, A2 CAD H, A2 EUR H, A2 GBP H, A2 NZD H, A2 SGD H, AT, AT EUR H, AT GBP H, AT AUD H, AT CAD H, AT NZD H, AT SGD H, AA, AA AUD H, AA CAD H, AA EUR H, AA GBP H, AA NZD H, I2 and IT Shares) 24. European Equity Portfolio (Classes A, A AUD H, A HKD H, A SGD H, A USD H, AD, AD AUD H, AD HKD H, AD SGD H, AD USD H, B, BD, BD AUD H, BD USD H, C, C USD H and I USD H Shares) 25. Eurozone Equity Portfolio (Classes AX^, A, A AUD H, A SGD H, A USD H, BX^, B, C, C USD H and I USD H Shares) 26. American Growth Portfolio (Classes A, A EUR H, AD, AD AUD H, B, B EUR H, BD, BD AUD H, C, C EUR H, I and I EUR H Shares) 27. All Market Income Portfolio (Classes AX^, A2X^, A, A SGD H, AD, AD AUD H, AD CAD H, AD EUR H, AD GBP H, AD NZD H, AD SGD H, BX^, B2X^, B, CX^, C2X^, C and CD Shares) Shares in this Portfolio will only be made available from 4 May ^ Classes AX, BX and CX Shares are not open for subscription by new investors, and are only offered to existing shareholders of these respective classes of Shares. ** Different minimum investment and additional investment limits apply to different classes of shares denominated in different currencies. Investors should refer to the Prospectus for details. Classes S and S1 Shares are reserved for institutional investors. Effective 15 December 2016, all Classes B, BD, BT and B2 Shares (and corresponding H Shares) are no longer open for subscription by new and existing investors. However, investors may request the exchange of their holdings of Classes B, BD, BT and B2 Shares (and corresponding H Shares) for the same share class of another AB-sponsored Luxembourg-domiciled UCITS fund authorised - 6 -

9 in Hong Kong for retail distribution or otherwise available through an AB authorised dealer in Hong Kong. Hong Kong Representative The Hong Kong Representative of the Fund (the "Hong Kong Representative") is AllianceBernstein Hong Kong Limited of 39 th Floor, One Island East, Taikoo Place, 18 Westlands Road, Quarry Bay, Hong Kong (Tel: and Fax: ). Investment Restrictions Securities Lending Transactions: The Fund may enter into securities lending transactions. The Fund, however, will not enter into such transactions with the affiliates of the Management Company or the Investment Manager. No securities lending agent will be an affiliate of the Management Company or the Investment Manager. All incremental income generated from such transactions will be accrued to the relevant Portfolios of the Fund. No securities lending may be made for more than 50% of the value of the securities of the relevant Portfolio and the Investment Manager may choose to terminate any securities lending transaction at any time. All securities lending transactions entered into by a Portfolio are collateralised with cash or securities issued by governments of member states of the OECD with value equal to 105% of the reference security. The lending agent independently selects counterparties based on its own credit and business analysis and shares them with the Investment Manager. The Investment Manager, through its dedicated counterparty risk management team, independently conducts credit reviews and approves counterparties from this list, and monitors the counterparties on an ongoing basis. The Investment Manager also takes comfort in the additional counterparty protection afforded in the securities lending program through overcollateralization: counterparties post minimum collateral equal to 105% of the value of each loaned security, marked-to-market daily. Repurchase/Reverse Repurchase Agreements or Similar Over the Counter Transactions: The Fund may enter into repurchase/reverse repurchase agreements or similar over-the-counter transactions. The Fund, however, will not enter into repurchase/reverse repurchase agreements or similar over-thecounter transactions with the affiliates of the Management Company or the Investment Manager. The maximum level of the Fund's assets available for such transactions is 100% of its Net Asset Value. Should the Fund enter into reverse repurchase agreements or similar over-the-counter transactions, all incremental income generated from such transactions will be accrued to the relevant Portfolios of the Fund. All repurchase/reverse repurchase agreement transactions entered into by the Fund are collateralised with OECD member state government securities with value at least equal to the cash received from/delivered to the counterparty. Taking into account factors including the types of transactions, exposure, concentration to a particular counterparty and credit rating, the Investment Manager conducts initial and on-going counterparty reviews with a view to evaluating the creditworthiness of its proposed and existing counterparties. The Investment Manager maintains a list of approved counterparties which provides the names of the entities and the types of transactions for which each entity has been approved. Risk in investing in securities issued by or guaranteed by a single sovereign issuer with a credit rating below Investment Grade Each of the Asia Pacific Local Currency Debt Portfolio, Emerging Market Local Currency Debt Portfolio and Asia Income Opportunities Portfolio may invest in debt securities issued and/or guaranteed by a country (including such country's government and any public or local authority of that country) with a credit rating below Investment Grade in excess of 10% (but not in excess of 35%) of the relevant Portfolio's net assets. This will allow the Investment Manager to have the flexibility to take advantage - 7 -

10 of investment opportunities based upon market conditions at the time or to take advantage of favourable opportunities in terms of price, or to increase exposures to certain countries. In particular, as at the date of this Hong Kong Supplement, the Asia Pacific Local Currency Debt Portfolio may invest in debt securities issued and/or guaranteed by Indonesia (which is a non- Investment Grade country) in excess of 10% (but not in excess of 35%) of the Portfolio's net assets depending on market conditions and investment opportunities. Also the Emerging Market Local Currency Debt Portfolio may invest in debt securities issued by each of Indonesia and Turkey (which are non-investment Grade countries), in excess of 10% (but not in excess of 35%) of the Portfolio's net assets depending on market conditions and investment opportunities. The Asia Income Opportunities Portfolio may invest in fixed-income securities issued and/or guaranteed by a single sovereign issuer (including its government, public or local authority) which is below Investment Grade (i.e. Sri Lanka), in excess of 10% (but not in excess of 35%) of the Portfolio's net assets depending on market conditions and investment opportunities. Due to market movements or the Investment Manager's view on investment opportunities, the relevant Portfolio's exposure to certain countries may change over time, and the credit ratings of particular countries also may change from time to time. The above-mentioned countries are only for reference and may change without prior notice to investors. Information on the relevant Portfolio's investments, including those securities issued by such countries rated below Investment Grade in excess of 10% of the relevant Portfolio's net assets, is available on the following website and may be obtained from the Hong Kong Representative, and is updated on a monthly basis. As a result, each of the Asia Pacific Local Currency Debt Portfolio's, Emerging Market Local Currency Debt Portfolio's and Asia Income Opportunities Portfolio's investments may potentially be concentrated in a particular country or geographic region and thus exposed to the direct or indirect consequences of political, social and economic changes in such country or geographic region. The relevant Portfolio may also have higher volatility and risks than a portfolio investing in a more diversified geographic region. Investments in below Investment Grade sovereign debt securities may present higher risks for investors as set forth under "Credit Risk-Sovereign Debt Obligations" and "Fixed Income Securities Risk-Lower Rated and Unrated Instruments" in the Prospectus (pages II-46 and II-47). The relevant Portfolio may suffer significant losses when there is a default of country issuers. With respect to Short Duration High Yield Portfolio, Global Plus Fixed Income Portfolio, Emerging Markets Multi-Asset Portfolio, Emerging Market Corporate Debt Portfolio, US High Yield Portfolio, Diversified Yield Plus Portfolio and All Market Income Portfolio, these Portfolios' respective investments in debt securities issued by or guaranteed by a country (including such country's government and any public or local authority of that country) with a credit rating below Investment Grade will not exceed 10% of the relevant Portfolio's Net Asset Value. Investment Types Each Portfolio of the Fund may invest in certain types of investments as illustrated in the chart commencing on page II-14 of the Prospectus (which should however not be construed as limiting a Portfolio's ability to invest in other types of securities). Debt Securities Notwithstanding the disclosure in the chart on page II-14 of the Prospectus, Global Real Estate Securities Portfolio, Euro High Yield Portfolio, Emerging Markets Multi-Asset Portfolio and Short Duration High Yield Portfolio may also invest in other debt securities such as non-agency (i.e. privately issued) mortgage-backed securities, adjustable-rate mortgage securities, collateralized mortgage obligations, asset-backed securities, commercial mortgage-backed securities, collateralized debt obligations or related financial derivative instruments and currencies (as applicable), as disclosed under "Investment Objective and Policies" of the respective Portfolios in the Prospectus

11 To supplement the disclosure in the chart on page II-14 of the Prospectus, Thematic Research Portfolio may invest in zero coupon bonds, convertible notes or convertible bonds. Please refer to the section "Investment Types" of the Prospectus for a description and further detail on collateralized mortgage obligations, commercial mortgage-backed securities, adjustable rate mortgage securities, asset-backed securities, "zero coupon" treasury securities and convertible securities. Collateralized debt obligations ("CDOs") include collateralized bond obligations ("CBOs"), collateralized loan obligations ("CLOs"), and other similarly structured securities. CBOs and CLOs are types of assetbacked securities. A CBO is a trust that is backed by a diversified pool of fixed income securities. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans. Debt securities such as collateralized mortgage obligations, mortgage-backed securities and CDOs are subject to risks associated with changes in interest rate, prepayment of underlying obligations and defaults similar to the risks of investment in mortgage-related securities described in Section II under "Investment Types Debt Securities Types" of the Prospectus. Derivatives and Other Debt Securities Investors should note that the Portfolios are generally entitled to use derivative instruments for hedging and risk management purposes, as well as investment purposes, including, for example, efficient portfolio management and as an alternative to investing directly in the underlying securities or instruments. The use of derivatives may involve additional risks. Risks associated with derivatives include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element/component of a derivative can result in a loss significantly greater than the amount invested in the derivative by the relevant Portfolio. Exposure to derivatives may lead to a high risk of significant loss by the relevant Portfolio. In adverse situations, the Portfolio's use of derivative instruments may become ineffective in hedging, risk management or efficient portfolio management and the Portfolio may suffer significant losses. Other than the Short Duration High Yield Portfolio, Emerging Markets Multi-Asset Portfolio, Asia Pacific Local Currency Debt Portfolio, Emerging Market Local Currency Debt Portfolio and All Market Income Portfolio, the other Portfolios will not use derivative instruments extensively to achieve the relevant Portfolio's investment objectives or for investment purposes. Each of the Emerging Markets Multi-Asset Portfolio, Short Duration High Yield Portfolio, Asia Pacific Local Currency Debt Portfolio, Emerging Market Local Currency Debt Portfolio and All Market Income Portfolio may use derivative instruments extensively for investment purposes and invest in a wide array of derivative products when implementing its investment strategy. It is important to note that the use of derivatives by each of the above Portfolios does not alter their existing guidelines with respect to credit quality, duration and currency exposures, nor does it alter the acceptable ranges for some of the Portfolios' other key risk parameters, including interest rate risk, credit risk, foreign exchange risk and liquidity risk. Such derivatives may be exchange-traded and over the counter ("OTC") financial derivative instruments and may include options (including for example, options on securities and options on securities indices), futures, forwards and swaps, forward foreign currency exchange contracts, currency futures, currency options, options on currency futures and currency swaps and credit default swaps. Each of the Eurozone Equity Portfolio and All Market Income Portfolio may invest in certain derivative instruments and strategies which allow itself to obtain exposure to certain markets, sectors and individual securities and facilitate more effective currency management. Such derivatives may include options, interest rate swaps, currency swaps, total return swaps, credit default swaps, futures and forwards

12 Short Duration High Yield Portfolio, Euro High Yield Portfolio, Emerging Markets Multi-Asset Portfolio, Global Plus Fixed Income Portfolio, Asia Pacific Local Currency Debt Portfolio, Emerging Market Local Currency Debt, Emerging Market Corporate Debt Portfolio, US High Yield Portfolio, Diversified Yield Plus Portfolio, Asia Income Opportunities Portfolio, European Equity Portfolio and All Market Income Portfolio may invest in structured securities (both Investment Grade and non-investment Grade) originated by a wide range of originators and sponsors. Each Portfolio's investments in these structured securities will not exceed 20% of its net assets. The risk of investment in structured securities described in Section II under "Structured Instruments Risk" on page II-44 of the Prospectus is applicable to Short Duration High Yield Portfolio, Euro High Yield Portfolio, Emerging Markets Multi-Asset Portfolio, Global Plus Fixed Income Portfolio, Asia Pacific Local Currency Debt Portfolio, Emerging Market Local Currency Debt, Emerging Market Corporate Debt Portfolio, US High Yield Portfolio, Diversified Yield Plus Portfolio, Asia Income Opportunities Portfolio, European Equity Portfolio and All Market Income Portfolio. While the judicious use of derivatives can be beneficial, derivative instruments and strategies may carry different risks from those presented by more traditional investments and may expose the fund to significant losses. These risks include, for example, counterparty default risk (risk that the direct counterparty of an OTC derivative does not make timely interest or principal payments as contracted) or insolvency risk (risk that the counterparty may not have sufficient funds and files for bankruptcy), risk involved with effective management of derivative strategies (risk that the underlying investments in the derivatives-based investment strategy do not perform as expected), risk of mispricing or improper valuation of derivatives (operational risk that the derivative is not priced properly), risk of higher volatility, risk of illiquidity in the market for certain derivative strategies (risk that certain OTC derivatives may not be as easily exchangeable as others). Derivatives may give rise to leverage and the risk of loss may be greater than the amount invested in the derivative and may expose the Portfolios to significant losses. Please also refer to Section II of the Prospectus for greater details and in particular the section entitled "Derivatives Risk". Euro High Yield Portfolio Notwithstanding the disclosure in the chart on page II-14 of the Prospectus, as mentioned, Euro High Yield Portfolio may invest in derivatives including those set out above and credit derivatives, such as single-name CDS (credit default swap), CDS index products and CDS sub-index products and index managed by the CDS Index Company, as well as options on CDS and on CDS indices to obtain long and covered short exposure to the relevant underlying assets. 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 modified restructuring. A Portfolio may be either the buyer or seller in the transaction. If a Portfolio is a seller, the Portfolio receives a fixed rate of income throughout the term of the contract, which typically is between one month and five years, provided that no credit event occurs. If a credit event occurs, a Portfolio typically must pay the contingent payment to the buyer, which is typically the "par value" (full notional value) of the reference obligation. The contingent payment may be a cash settlement or by physical delivery of the reference obligation in return for payment of the face amount of the obligation. The value of the reference obligation received by a Portfolio 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 Portfolio. If the reference obligation is a defaulted security, physical delivery of the security will cause a Portfolio to hold a defaulted security. If a Portfolio is a buyer and no credit event occurs, the Portfolio 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 Portfolio had invested in the reference obligation directly

13 A credit default option is similar to a credit default swap except that there is only an initial payment at the inception of the option (as opposed to a periodic stream of payments over the term of the credit default swap). A credit default swap index is a credit derivative used to hedge credit risk or to take a position on a basket of credit entities. Unlike a credit default swap, which is an over the counter credit derivative, a credit default swap index is a standardised credit security and may therefore be more liquid. A credit default swap index enables investors to gain access to a pool of bonds. The protection seller in a credit default swap index takes on the credit exposure to the bonds and is exposed to the default risks of the underlying investments or credit entities. This can be a more cost efficient way to hedge a Portfolio of credit default swaps or bonds with a CDS index than it would be to buy many single name CDS to achieve a similar effect. The credit default swap indices trade at a fixed coupon, which is generally paid quarterly by the protection buyer on the index. Generally, the credit default swap index will vary in price and a payment is usually made upfront and at the close of the trade or the settlement date. Investment in credit default swaps, credit default options and credit default swap indices are subject to general market risk, liquidity risk and credit risk, among other risks. As a result, investment in Euro High Yield Portfolio will be subject to additional risks associated with derivatives notwithstanding the disclosure in the table on page II-32 of the Prospectus. All Market Income Portfolio Dynamic Asset Allocation Diversification Strategy The Investment Manager will utilize its proprietary "Dynamic Asset Allocation" strategy to adjust the All Market Income Portfolio s various investment exposures among these asset classes with the goal of producing what the Investment Manager considers to be the Portfolio s optimal risk/return profile at any particular point in time. Dynamic Asset Allocation comprises a series of analytical and forecasting tools employed by the Investment Manager to gauge market fluctuations in the risk/return profile of various asset classes. Dynamic Asset Allocation aims to adjust the Portfolio s investment exposure to changing market conditions and thereby to reduce overall portfolio volatility by mitigating the effects of market fluctuations, including "tail" events in extreme market environments, while preserving consistent longterm return potential. For example, the Investment Manager may seek to reduce the Portfolio s risk exposure to one or more asset classes when the Dynamic Asset Allocation tool suggests that market risks relevant to these asset classes are rising but return opportunities are declining. Conversely, the Investment Manager may tend to seek a more aggressive posture when the Dynamic Asset Allocation tool suggests that return opportunities for one or more of these asset classes are rising and market risks are declining. While the Portfolio may obtain investment exposures to individual asset classes through direct investment in securities or through the use of financial derivative instruments, dynamic adjustments to the Portfolio s various investment exposures are expected to be implemented principally through the use of financial derivative instruments. Strategies Using Derivative Instruments Extensively For Investment Purposes Short Duration High Yield Portfolio The Portfolio is generally entitled to use derivative instruments for hedging and risk management purposes, as well as investment purposes, including, for example, efficient portfolio management and as an alternative to investing directly in the underlying securities or instruments. The Portfolio may use financial derivative instruments extensively for investment purposes. The Investment Manager may use derivatives such as swaps (including interest rate swaps, swaptions, total rate of return swaps and credit default swaps), options, futures and currency transactions (including forward currency contracts). This enables the Investment Manager to efficiently gain exposure and manage the overall Portfolio

14 exposures such as duration, overall interest rate risk and currency exposures within the Portfolio. The Investment Manager can frequently use the derivatives market as an efficient alternative to purchasing the underlying investments. This enables the Investment Manager to efficiently pursue the Portfolio's investment objective to achieve high risk-adjusted returns through investing in a diversified portfolio of high yielding securities and related derivatives, with an average Portfolio duration of less than four years. Emerging Markets Multi-Asset Portfolio The Portfolio is generally entitled to use derivative instruments for hedging and risk management purposes, as well as investment purposes, including, for example, efficient portfolio management and as an alternative to investing directly in the underlying securities or instruments. The Portfolio may use financial derivative instruments extensively for investment purposes. The Investment Manager may use derivatives such as swaps (including interest rate swaps, total rate of return swaps and credit default swaps), swaptions, fixed income and equity options, futures and currency transactions (including forward currency contracts and currency options). This enables the Investment Manager to efficiently gain exposure and hedge against interest rate, credit and currency fluctuations. The Investment Manager can frequently use the derivatives market as an efficient alternative to purchasing the underlying investments. This also enables the Investment Manager to efficiently pursue the Portfolio's investment objective to maximize total return through asset allocation among stocks and bonds of emerging market issuers, sector and security analysis, interest rate management, country and currency selection. With respect to Emerging Markets Multi-Asset Portfolio derivatives are used predominantly for efficient portfolio management or hedging purposes; for example, the Investment Manager uses derivatives when the Investment Manager wants to shift from equity to fixed income exposure. Derivatives are generally not used to create additional exposure for this Portfolio. Asia Pacific Local Currency Debt Portfolio The Portfolio is generally entitled to use derivative instruments for hedging and risk management purposes, as well as investment purposes, including, for example, efficient portfolio management and as an alternative to investing directly in the underlying securities or instruments. The Portfolio may also use financial derivative instruments extensively for investment purposes. The Investment Manager may use derivatives (for investment purposes) such as forward contracts (including non-deliverable forwards), swaps including credit default swaps, total return swaps and interest rate swaps, credit-linked notes, options and futures. This enables the Investment Manager to efficiently gain exposure and hedge against interest rate, credit and currency fluctuations. The Investment Manager can frequently use the derivatives market as an efficient alternative to purchasing the underlying investments. This also enables the Investment Manager to efficiently pursue the Portfolio's investment objective to achieve high total returns through current income and long-term capital appreciation by investing in fixed income securities issued by Asia-Pacific issuers and related derivatives, or in fixed income securities denominated in Asia-Pacific currencies. With respect to Asia Pacific Local Currency Debt Portfolio, derivatives are used predominantly for efficient portfolio management or hedging purposes; for example, the Investment Manager uses derivatives when the Investment Manager wants to gain fixed income exposure. Derivatives are generally not used to create additional exposure for this Portfolio. Emerging Market Local Currency Debt Portfolio The Portfolio is generally entitled to use derivative instruments for hedging and risk management purposes, as well as investment purposes, including, for example, efficient portfolio management and as an alternative to investing directly in the underlying securities or instruments. The Portfolio may use financial derivative instruments extensively for investment purposes. The Investment Manager may use

15 derivatives such as forward contracts, non-deliverable forward contracts, credit-linked notes, swaps (including interest rate swaps, total rate of return swaps and credit default swaps), swaptions, options, futures and currency transactions (including forward currency contracts). This enables the Investment Manager to efficiently gain exposure and hedge against interest rate, credit and currency fluctuations. The Investment Manager can frequently use the derivatives market as an efficient alternative to purchasing the underlying investments. This also enables the Investment Manager to efficiently pursue the Portfolio's investment objective to maximize total return through current income and long-term capital appreciation. All Market Income Portfolio The All Market Income Portfolio may use derivative instruments extensively for investment purposes. The expected level of leverage of the All Market Income Portfolio is estimated to be in the 0% to 350% range of its Net Asset Value. The expected level of leverage is calculated as the sum of notionals of the financial derivative instruments held by the Portfolio, which neither takes into account the fact that a particular financial derivative instrument increases or decreases the Portfolio s investment risks nor permits to net financial derivative instruments with reverse positions. With this methodology, the use of derivatives for hedging purposes will automatically increase the level of leverage. In addition, the actual leverage of the Portfolio may deviate from the above mentioned expected level of leverage. The expected level of leverage of the Portfolio as calculated under the commitment approach in accordance with CSSF Circular 11/512 is estimated to be in the range of 0 to 100% of its Net Asset Value. The Investment Manager may use derivatives (for investment purposes extensively) such as futures (both short and long), and total return or excess return swaps to change allocations among various different asset classes within the Portfolio, such as between return-oriented asset classes (e.g. equities) and more stable asset classes (e.g. bonds). This enables the Investment Manager to efficiently pursue the Portfolio s multi-asset strategy, seeking to capture the positive returns associated with asset classes such as equities when market conditions are favorable, and flexing the allocations towards more stable asset classes such as bonds when market conditions become less favorable. Other Types of Investments Pooled Vehicles The Investment Manager may not (for its own benefit) obtain a rebate on any fees or charges levied by a collective investment scheme (or its management company) in which a Portfolio invested in, and any such rebates will be for the benefit of the Fund. REITs Certain Portfolios (such as Global Real Estate Portfolio, Thematic Research Portfolio, Emerging Markets Multi-Asset Portfolio, Emerging Markets Equity Portfolio, Global Equity Income Portfolio, Concentrated Global Equity Portfolio, Concentrated US Equity Portfolio, Global Core Equity Portfolio and All Market Income Portfolio) may invest in real estate investment trusts ("REITs"). In the case of All Market Income Portfolio, it will not invest more than 5% of its net assets in REITs. Investors should note that the underlying REITs which a Portfolio may invest in may not necessarily be authorized by the SFC and their dividend or payout policies will not be representative of the dividend or payout policy of a Portfolio. Commodity Related Securities The Emerging Markets Multi-Asset Portfolio may invest in commodity related securities, which include securities of companies whose businesses are reliant upon or may be heavily impacted by commodity prices. There are numerous events and circumstances that can impact commodities markets and

16 commodity-related companies, including but not limited to, general economic and political conditions; war, other armed conflicts, acts of terrorism and criminality; fire, flood and other natural disasters; actions by governmental authorities, such as increased regulation, enforcement or restraints on trade; actions by a major producer or producers, such as Organization of the Petroleum Exporting Countries; significant changes in supply and demand, which may be sudden and unforeseen; commodity speculation or other disruptive market effects; disruptions in the delivery of commodities and related raw materials; changes in laws affecting energy companies or other commodity-related businesses; and environmental laws and regulation. High Yield Securities With respect to Portfolios with Share Classes that pay dividends and may invest in high yield securities, the investment in high yield securities by the relevant Portfolio does not necessarily represent high dividend distributions of an investment in the Shares of the relevant Portfolio. Liquidity Risk Management The Management Company operates as a UCITS-compliant Management Company subject to the supervision of the Commission de Surveillance du Secteur Financier, the Luxembourg financial supervisory authority. As such, the Management Company has established a UCITS-compliant overall risk management framework in respect of its various activities. The Management Company has appointed AllianceBernstein L.P., the Investment Manager, as its delegate with respect to investment management and advisory functions for each Portfolio. The Investment Manager, a New York, U.S.A.-based limited partnership, is registered with the U.S. Securities and Exchange Commission as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended. The Investment Manager has established a liquidity risk management framework for the identification, assessment, measurement, control and mitigation of liquidity risks both at a firm-wide level and in respect of each Portfolio. The liquidity risk management of each Portfolio is primarily the responsibility of the Investment Manager s portfolio investment function, with independent oversight carried out by the Investment Manager s risk management function. The Investment Manager s Liquidity Risk Management Committee consisting of senior representations from compliance, portfolio management, quantitative research, trading, technology and risk management generally meets on a monthly (and ad hoc) basis. Issues, concerns and exceptions relating to liquidity risk of a Portfolio shall be escalated to the Liquidity Risk Management Committee and/or directly to the appropriate portfolio management team. The Investment Manager employs a holistic approach to liquidity risk management by assessing fund product characteristics, assets/liabilities in each Portfolio, Shareholder profiles, liquidity stress testing of each Portfolio and other ongoing assessments as necessary. The Investment Manager aims to ensure that the liquidity profile of each Portfolio is appropriate to facilitate compliance with each such Portfolio s obligation to meet redemption requests in an orderly manner under normal and stressed markets. Such framework, combined with the liquidity management tools that may be employed, also seeks to achieve fair treatment of Shareholders and safeguard the interests of remaining Shareholders in case of sizeable redemptions. The Investment Manager may use a range of quantitative metrics and qualitative factors in assessing the liquidity of a Portfolio s assets including, but not limited to, trading volumes, turnover ratios, average trade size, number of counterparties, dealer inventory, price impact measures, days to liquidate measures, bid/ask spreads, sector, maturity, credit rating and bond age