AB 2020 Form 10-K

obligations to other clients or investors in those entities, the fulfillment of which may not be in the Fund’s best interest or in the best interest of its investors. The Fund’s investment objective may overlap with the investment objectives or such investment funds, accounts or other investment vehicles. For example, the Adviser concurrently manages accounts that are pursuing an investment strategy similar to the Fund’s strategy, and the Fund may compete with these and other entities managed by affiliates of the Adviser for capital and investment opportunities. As a result, those individuals at the Adviser may face conflicts in the allocation of investment opportunities between the Fund and other investment funds or accounts advised by principals of, or affiliated with, the Adviser. See “ Risk Factors — Risks Related to the Fund’s Business and Structure — There are significant potential conflicts of interest which could impact the Fund’s investment returns; — The Fund’s incentive fee may induce the Adviser to pursue speculative investments and to use leverage when it may be unwise to do so; — The compensation the Fund will pay to the Adviser was not determined on an arm’s-length basis. Thus, the terms of such compensation may be less advantageous to the Fund than if such terms had been the subject of arm’s-length negotiations; — The Fund may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase the risk of investing in the Fund. ” Administration Agreement and Expense Reimbursement Agreement The Fund has entered into an administration agreement with the Administrator (the “Administration Agreement”) and a separate expense reimbursement agreement with the Adviser (the “Expense Reimbursement Agreement”) under which any allocable portion of the cost of the Fund’s Chief Compliance Officer and Chief Financial Officer and their respective staffs will be reimbursed by the Fund. Under the Administration Agreement, the Administrator is responsible for providing the Fund with clerical, bookkeeping, recordkeeping and other administrative services at such facilities. Pursuant to the Expense Reimbursement Agreement, the Fund pays the Adviser an amount equal to its allocable portion (subject to the review of the Board) of its overhead resulting from its obligations under the Expense Reimbursement Agreement, including the allocable portion of the cost of the Fund’s Chief Compliance Officer and Chief Financial Officer and their respective staffs associated with performing compliance functions. See “ Business — Administration Agreement” and “ Risk Factors — Risks Related to the Fund’s Business and Structure — There are significant potential conflicts of interest which could impact the Fund’s investment returns. ” Expense Support and Conditional Reimbursement Agreement On September 29, 2017, the Fund and the Adviser entered into an agreement, which the Fund refers to as the “Expense Support and Conditional Reimbursement Agreement,” to limit certain of the Fund’s Operating Expenses, as defined in the Expense Support and Conditional Reimbursement Agreement, to no more than 1.5% of the Fund’s average quarterly gross assets. To achieve this percentage limitation, the Adviser has agreed to reimburse the Fund for certain Operating Expenses on a quarterly basis, any such payment by the Adviser is referred to as an “Expense Payment,” and the Fund has agreed to later repay such amounts, any such payment by the Fund is referred to as a “Reimbursement Payment,” pursuant to the terms of the Expense Support and Conditional Reimbursement Agreement. As of December 31, 2020, the amount of Expense Payments provided by the Adviser since inception was $4,874,139. The following table reflects the Expense Payments that may be subject to reimbursement pursuant to the Expense Agreement: For the Quarters Ended Amount of Expense Support Amount of Reimbursement Payment Amount of Unreimbursed Expense Support Effective Rate of Distribution per Share (1) Reimbursement Eligibility Expiration Percentage Limit (2) September 30, 2017 $1,002,147 $ 1,002,147 $ — n/a September 30, 2020 1.5% December 31, 2017 1,027,398 1,027,398 — n/a December 31, 2020 1.5% March 31, 2018 503,592 503,592 — n/a March 31, 2021 1.5% June 30, 2018 1,086,482 13,879 1,072,603 4.787% June 30, 2021 1.0% September 30, 2018 462,465 — 462,465 4.715% September 30, 2021 1.0% December 31, 2018 254,742 — 254,742 6.762% December 31, 2021 1.0% March 31, 2019 156,418 — 156,418 5.599% March 31, 2022 1.0% June 30, 2019 259,263 — 259,263 6.057% June 30, 2022 1.0% September 30, 2019 31,875 — 31,875 5.154% September 30, 2022 1.0% December 31, 2019 — — — 6.423% December 31, 2022 1.0% March 31, 2020 89,757 — 89,757 10.17% March 31, 2023 1.0% June 30, 2020 — — — 5.662% June 30, 2023 1.5% September 30, 2020 — — — 6.063% September 30, 2023 1.5% December 31, 2020 — — — 6.266% December 31, 2023 1.5% Total $4,874,139 $ 2,547,016 $ 2,327,123 (1) The effective rate of distribution per share is expressed as a percentage equal to the projected annualized distribution amount as of the end of the applicable period (which is calculated by annualizing the regular quarterly cash distributions per share as of such date without compounding), divided by the Fund’s gross offering price per share as of such date. 91