AB 2020 Form 10-K

The amount of capital gains incentive fee expense related to a hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to the Adviser in the event of a complete liquidation of the Fund’s portfolio as of period end and the termination of the Advisory Agreement on such date. Also, it should be noted that the capital gains incentive fee expense fluctuates with the Fund’s overall investment results. The Fund will defer cash payment of any income-based incentive fee and/or any capital gains incentive fee otherwise earned by the Adviser if, during the most recent four full fiscal quarter periods ending on or prior to the date such payment is to be made, the sum of (a) the PIFNII, (b) the realized capital gain / loss and (c) unrealized capital appreciation/ depreciation, expressed as a rate of return on the value of the Fund’s net assets, is less than 6.0%. Any such deferred fees are carried over for payment in subsequent calculation periods to the extent such payment is payable under the Advisory Agreement. Examples of Quarterly Incentive Fee Calculations Example 1—Income Based Fee (1) : Assumptions • 6% Hurdle Rate (2) = 1.50% 6% Catch-up = 0.17% 6% Catch-up Cap = 1.67% 7% Hurdle Rate (3) = 1.94% 7% Catch-up = 0.11% 7% Catch-up Cap = 2.06% 8% Hurdle Rate (4) = 2.35% 8% Catch-up = 0.18% 8% Catch-up Cap = 2.50% • Management fee (5) = 0.38% • Other expenses (legal, accounting, custodian, transfer agent, etc.)(6) = 0.22% (1) The hypothetical amount of PIFNII shown is based on a percentage of total net assets. In addition, the example assumes that during the most recent four full fiscal quarter periods ending on or prior to the date the payment set forth in the example is to be made the sum of (a) the PIFNII, (b) the realized capital gain/loss and (c) the unrealized capital appreciation/depreciation, expressed as a rate of return on the value of the Fund’s net assets, is at least 6.0% (2) Represents a quarter of the 6.0% annualized 6% Hurdle Rate. (3) Represents a quarter of the 6.67% annualized 7% Hurdle Rate. (4) Represents a quarter of the 9.41% annualized 8% Hurdle Rate. (5) Represents a quarter of the 1.5% annualized management fee. (6) Excludes offering expenses. Alternative 1 Additional Assumptions • Investment income (including interest, dividends, fees, etc.) = 1.25% • PIFNII (investment income – (management fee + other expenses)) = 0.65% PIFNII does not exceed the hurdle rate, therefore there is no income based fee. Alternative 2 Additional Assumptions • Investment income (including interest, dividends, fees, etc.) = 2.20% 7