This is filed pursuant to Rule 497(e).











[A/B](R)
[LOGO]

                  AB BOND FUND, INC.
                  -AB Total Return Bond Portfolio
                    (Class A-ABQUX; Class B-ABQBX; Class C-ABQCX; Advisor
                     Class-ABQYX; Class R-ABQRX; Class K-ABQKX; Class I-ABQIX;
                     Class Z-ABQZX)
                  -AB Limited Duration High Income Portfolio
                     (Class A-ALHAX; Class C-ALHCX; Advisor Class-ALHYX)
                  -AB Income Fund
                     (Class A-AKGAX; Class C-AKGCX; Advisor Class-ACGYX)
                  -AB Tax-Aware Fixed Income Portfolio
                     (Class A-ATTAX; Class C-ATCCX; Advisor Class-ATTYX)
                  AB UNCONSTRAINED BOND FUND, INC.
                     (Class A-AGSAX; Class B-AGSBX; Class C-AGCCX;
                     Advisor Class-AGSIX; Class R-AGSRX; Class K-AGSKX;
                     Class I-AGLIX; Class Z-AGSZX)
                  AB HIGH INCOME FUND, INC.
                     (Class A-AGDAX; Class B-AGDBX; Class C-AGDCX;
                      Advisor Class-AGDYX; Class R-AGDRX; Class K- AGDKX;
                      Class I-AGDIX; Class Z-AGDZX)
                  AB GLOBAL BOND FUND, INC.
                     (Class A-ANAGX; Class B-ANABX; Class C-ANACX;
                      Advisor Class-ANAYX; Class R-ANARX; Class K-ANAKX;
                      Class I-ANAIX; Class Z-ANAZX)

--------------------------------------------------------------------------------

                 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
                   January 31, 2019, as revised July 12, 2019

--------------------------------------------------------------------------------

            This Statement of Additional Information ("SAI") is not a prospectus
but supplements and should be read in conjunction with the current prospectus,
dated January 31, 2019, for the AB Total Return Bond Portfolio ("Total Return
Bond"), AB Limited Duration High Income Portfolio ("Limited Duration"), AB
Income Fund ("Income Fund") and AB Tax-Aware Fixed Income Portfolio
("Tax-Aware") of AB Bond Fund, Inc., AB Unconstrained Bond Fund, Inc.
("Unconstrained Bond"), AB Global Bond Fund, Inc. ("Global Bond") and AB High
Income Fund, Inc. ("High Income") (each a "Fund", and collectively, the "Funds")
that offers Class A, Class B, Class C, Advisor Class, Class R, Class K, Class I
and Class Z shares of the Funds (except Limited Duration, Income Fund and
Tax-Aware, which offer Class A, Class C and Advisor Class Shares in the
prospectus) (the "Prospectus").

            Financial statements for Total Return Bond, Income Fund, Tax-Aware,
Unconstrained Bond and High Income for the year ended October 31, 2018, and
financial statements for Global Bond and Limited Duration for the year ended
September 30, 2018 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.



INFORMATION ABOUT THE FUNDS AND THEIR INVESTMENTS..............................1
INVESTMENT RESTRICTIONS.......................................................53
MANAGEMENT OF THE FUNDS.......................................................55
EXPENSES OF THE FUNDS.........................................................93
PURCHASE OF SHARES...........................................................105
REDEMPTION AND REPURCHASE OF SHARES..........................................132
SHAREHOLDER SERVICES.........................................................135
NET ASSET VALUE..............................................................139
DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................143
PORTFOLIO TRANSACTIONS.......................................................152
GENERAL INFORMATION..........................................................159
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM........................................................189
APPENDIX A: PROXY VOTING AND GOVERNANCE 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

--------------------------------------------------------------------------------


Introduction to the Funds
-------------------------

            Except as otherwise noted, each Fund's investment objectives 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 Fund's Board of Directors (the "Board") 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.

            Income Fund commenced operations on April 22, 2016. Income Fund
acquired the assets and liabilities of the AllianceBernstein Income Fund, Inc.,
a closed-end fund, effective at the close of business on April 21, 2016.

Additional Investment Policies and Practices
--------------------------------------------

            The following information about the Funds' investment policies and
practices supplements the information set forth in the Prospectus.

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 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, currency, 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).

            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 (e.g., 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") approval of contracts for central clearing. The Securities
and Exchange Commission ("SEC") may adopt similar clearing requirements with
respect to security-based swaps. 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.

                  -- Illiquid Investments Risk. Illiquid investments 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
                  unclear, and proposed regulations may be revised before
                  adoption or may never be adopted, 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, except Unconstrained Bond and
Income Fund, have claimed an exclusion from the definition of CPO under CFTC
Rule 4.5 under the CEA and are not currently subject to these recordkeeping,
reporting and disclosure requirements under the CEA. The trading exemption in
Rule 4.5 is not available to Unconstrained Bond and Income Fund, and
AllianceBernstein L.P., the Funds' adviser (the "Adviser") has registered as a
CPO with respect to these Funds. This registration subjects Unconstrained Bond
and Income Fund to certain registration and reporting requirements but, under
rules recently adopted by the CFTC, compliance with SEC disclosure and filing
requirements will, for the most part, constitute compliance with comparable CFTC
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 and Municipal and U.S. Government
Securities. A Fund may write and purchase call and put options on securities.
Tax-Aware may also write and purchase call and put options on municipal and U.S.
Government 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 and Municipal and U.S. Government
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, Tax-Aware 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 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 or 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 ("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 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 may be
for investment purposes. They may also be 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 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 may 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, illiquid investments 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 bilaterally 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.

            It may be more difficult for a Fund to trade or close out interest
rate caps and floors in comparison to other types of 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, swaption, 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.

            -- Inflation (CPI) Swaps. Inflation swap agreements are contracts in
which one party agrees to pay the cumulative percentage increase in a price
index (the Consumer Price Index with respect to CPI swaps) over the term of the
swap (with some lag on the inflation index), and the other pays a compounded
fixed rate. Inflation swap agreements may be used to protect the NAV of the Fund
against an unexpected change in the rate of inflation measured by an inflation
index since the value of these agreements is expected to increase if unexpected
inflation increases.

            -- 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
underlying 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 from or make a payment to the
counterparty.

            -- Variance and Correlation Swaps. A Fund, except Tax-Aware, 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. 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.

            -- 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).

Event-Linked Securities
-----------------------

            Event-linked securities are variable rate or fixed-rate fixed-income
securities or types of equity securities for which the return of principal and
payment of interest are contingent on the non-occurrence of various catastrophe
exposures, which may be specific trigger events or a diversified group of
events, such as hurricanes, typhoons, wind events or earthquakes. The most
common type of fixed-income securities are known as "catastrophe" or "CAT"
bonds. In some cases, the trigger event(s) will not be deemed to have occurred
unless the event(s) happened in a particular geographic area and was of a
certain magnitude (based on independent scientific readings) or caused a certain
amount of actual or modeled loss. If the trigger event(s) occurs prior to the
securities' maturity, the Fund may lose all or a portion of its principal and
forgo additional interest.

            These securities may have a special condition that states that if
the issuer (i.e., an insurance or reinsurance company) suffers a loss from a
particular pre-defined catastrophe, then the issuer's obligation to pay interest
and/or repay the principal is either deferred or completely forgiven. For
example, if a Fund holds a fixed-income security that covers an insurer's losses
due to a hurricane with a "trigger" at $1 billion and a hurricane hits causing
$1 billion or more in losses to such insurer, then the Fund will lose all or a
portion of its principal invested in the security and forgo any future interest
payments. If the trigger event(s) does not occur, the Fund will recover its
principal plus interest. Interest typically accrues and is paid on a quarterly
basis. Although principal typically is repaid only on the maturity date, it may
be repaid in installments, depending on the terms of the securities.

            Event-linked securities may be issued by government agencies,
insurance companies, reinsurers, special purpose companies or other on-shore or
off-shore entities. Event-linked securities are a relatively new type of
financial instrument. As a result, there is no significant trading history of
these securities and these securities may be illiquid or the markets for these
instruments may not be liquid at all times. These securities may be rated,
generally below investment grade or the unrated equivalent, and have the same or
equivalent risks as higher yield debt securities ("junk bonds"). The rating
primarily reflects the rating agency's calculated probability that a pre-defined
trigger event will occur as well as the overall expected loss to the principal
of the security.

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 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.

            When-issued securities and forward commitments may be sold prior to
the settlement date. If the 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.

            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.

            Forward commitments include "To be announced" ("TBA")
mortgage-backed securities, which are contracts for the purchase or sale of
mortgage-backed securities to be delivered at a future agreed-upon date, whereby
the specific mortgage pool number or the number of pools that will be delivered
to fulfill the trade obligation or terms of the contract are unknown at the time
of the trade. Subsequent to the time of the trade, a mortgage pool or pools
guaranteed by the Government National Mortgage Association, or GNMA, the Federal
National Mortgage Association, or FNMA, or the Federal Home Loan Mortgage
Corporation, or FHLMC, (including fixed-rate or variable-rate mortgages) are
allocated to the TBA mortgage-backed securities transactions.

            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 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. 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 ("Rule
144A Securities"). 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 Board, 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.

Insurance Feature
-----------------

            The insurance feature is generally described in the Prospectus under
"Additional Information about the Funds' Risks and Investments--Insured
Securities."

            Tax-Aware may obtain insurance on its municipal bonds or purchase
insured municipal bonds covered by policies issued by monoline insurance
companies. Currently, only Assured Guaranty Municipal Corp. ("AGM") is writing
policies on newly issued municipal bonds. AGM (formerly, Financial Security
Assurance Holdings Ltd.) is an indirect subsidiary of Assured Guaranty Ltd.
("Assured"). Prior to the 2008 financial crisis, there were several other
insurers writing policies on municipal bonds, but the ratings of these insurers
have been severely downgraded and, while they are still insuring municipal bonds
under policies written prior to the financial crisis, they are no longer writing
new policies. As noted above, most of these insurers have been downgraded and it
is possible that additional downgrades may occur. Moody's Investors Service,
Inc. ("Moody's") and S&P Global Ratings ("S&P") ratings reflect the respective
rating agency's current assessment of the creditworthiness of each insurer and
its ability to pay claims on its policies of insurance. Any further explanation
as to the significance of the ratings may be obtained only from the applicable
rating agency. The ratings are not recommendations to buy, sell or hold the
municipal bonds, and such ratings may be subject to revision or withdrawal at
any time by the rating agencies. Any downward revision or withdrawal of either
or both ratings may have an adverse effect on the market price of the municipal
bonds.

            It should be noted that insurance is not a substitute for the basic
credit of an issuer, but supplements the existing credit and provides additional
security therefore. Moreover, while insurance coverage for the municipal
securities held by Tax-Aware may reduce credit risk, it does not protect against
market fluctuations caused by changes in interest rates and other factors. As a
result of declines in the credit quality and associated downgrades of most fund
insurers, insurance has less value than it did in the past. The market now
values insured municipal securities primarily based on the credit quality of the
issuer of the security with little value given to the insurance feature. In
purchasing insured municipal securities, the Adviser currently evaluates the
risk and return of such securities through its own research.

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 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.

            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 to
the extent not waived or reimbursed, 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 the
oversight of the Board) 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. The 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 Fund 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.

Loan Participations and Assignments
-----------------------------------

            A Fund may invest in direct debt instruments, which are interests in
amounts owed to lenders or lending syndicates by corporate, governmental, or
other borrowers ("Loans") either by participating as co-lender at the time the
loan is originated ("Participations") or by buying an interest in the loan in
the secondary market from a financial institution or institutional investor
("Assignments"). The financial status of an institution interposed between a
Fund and a borrower may affect the ability of the Fund to receive principal and
interest payments.

            A Fund's investment may depend on the skill with which an agent bank
administers the terms of the corporate loan agreements, monitors borrower
compliance with covenants, collects principal, interest and fee payments from
borrowers and, where necessary, enforces creditor remedies against borrowers.
Agent banks typically have broad discretion in enforcing loan agreements.

            A Fund's investment in Participations typically will result in the
Fund having a contractual relationship only with the financial institution
arranging the Loan with the borrower (the "Lender") and not with the borrower
directly. A Fund will have the right to receive payments of principal, interest
and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the Loan, nor any rights of set-off against the borrower,
and the Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, the Fund may be subject
to the credit risk of both the borrower and the Lender that is selling the
Participation. In the event of the insolvency of the Lender selling a
Participation, the Fund may be treated as a general creditor of the Lender and
may not benefit from any set-off between the Lender and the borrower. Certain
Participations may be structured in a manner designed to avoid purchasers of
Participations being subject to the credit risk of the Lender with respect to
the Participation; but even under such a structure, in the event of the Lender's
insolvency, the Lender's servicing of the Participation may be delayed and the
assignability of the Participation impaired. A Fund will acquire Participations
only if the Lender interpositioned between the Fund and the borrower is a Lender
having total assets of more than $25 billion and whose senior unsecured debt is
rated investment grade or higher.

            When a Fund purchases Assignments from Lenders it will typically
acquire direct rights against the borrower on a Loan. Because Assignments are
arranged through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by the Fund as the
purchaser of an assignment may differ from, and be more limited than, those held
by the assigning Lender. The assignability of certain obligations is restricted
by the governing documentation as to the nature of the assignee such that the
only way in which the Fund may acquire an interest in a Loan is through a
Participation and not an Assignment.

            Loans in which a Fund may invest include participations in "bridge
loans", which are loans taken out by borrowers for a short period (typically
less than six months) pending arrangement of more permanent financing through,
for example, the issuance of bonds, frequently high-yield bonds issued for the
purpose of an acquisition. A Fund may also participate in unfunded loan
commitments, which are contractual obligations for future funding, and receive a
commitment fee based on the amount of the commitment.

            A Fund may have difficulty disposing of Assignments and
Participations because in order to do so it will have to assign such securities
to a third party. Because there is no liquid market for such securities, the
Fund anticipates that such securities could be sold only to a limited number of
institutional investors. The lack of a liquid secondary market may have an
adverse impact on the value of such securities and the Fund's ability to dispose
of particular Assignments or Participations when necessary to meet the Fund's
liquidity needs in response to a specific economic event such as a deterioration
in the creditworthiness of the borrower. The lack of a liquid secondary market
for Assignments and Participations also may make it more difficult for the Fund
to assign a value to these securities for purposes of valuing the Fund's
portfolio and calculating its asset value.

Mortgage-Related Securities, Other Asset-Backed Securities and Structured
-------------------------------------------------------------------------
Financings
----------

            The mortgage-related securities in which a Fund may invest typically
are securities representing interests in pools of mortgage loans made by lenders
such as savings and loan associations, mortgage bankers and commercial banks and
are assembled for sale to investors (such as the Funds) by governmental,
government-related or private organizations. Private organizations include
commercial banks, savings associations, mortgage companies, investment banking
firms, finance companies, special purpose finance entities (called special
purpose vehicles or SPVs) and other entities that acquire and package loans for
resale as mortgage-related securities. Specifically, these securities may
include pass-through mortgage-related securities, collateralized mortgage
obligations ("CMOs"), CMO residuals, adjustable-rate mortgage securities
("ARMS"), stripped mortgage-backed securities ("SMBSs"), commercial
mortgage-backed securities ("CMBS"), TBA mortgage-backed securities, mortgage
dollar rolls, collateralized obligations and other securities that directly or
indirectly represent a participation in or are secured by and payable from
mortgage loans on real property and other assets.

            Pass-Through Mortgage-Related Securities. Interests in pools of
mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment consisting of both interest and principal
payments. In effect, these payments are a "pass-through" of the monthly payments
made by the individual borrowers on their residential mortgage loans, net of any
fees paid to the issuer or guarantor of such securities. Additional payments are
caused by repayments of principal resulting from the sale of the underlying
residential property, refinancing or foreclosure, net of fees or costs that may
be incurred. Some mortgage-related securities, such as securities issued by
GNMA, are described as "modified pass-through". These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, regardless of whether or not the mortgagor actually makes
the payment.

            The average life of pass-through pools varies with the maturities of
the underlying mortgage instruments. In addition, a pool's term may be shortened
by unscheduled or early payments of principal and interest on the underlying
mortgages. The occurrence of mortgage prepayments is affected by factors
including the level of interest rates, general economic conditions, the location
and age of the mortgage and other social and demographic conditions. As
prepayment rates of individual pools vary widely, it is not possible to
accurately predict the average life of a particular pool. For pools of
fixed-rate, 30-year mortgages, common industry practice is to assume that
prepayments will result in a 12-year average life. Pools of mortgages with other
maturities or different characteristics will have varying average life
assumptions. The assumed average life of pools of mortgages having terms of less
than 30 years, is less than 12 years, but typically not less than 5 years.

            Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and the
associated average life assumption. In periods of falling interest rates, the
rate of prepayment tends to increase, thereby shortening the actual average life
of a pool of mortgage-related securities. Conversely, in periods of rising
interest rates the rate of prepayment tends to decrease, thereby lengthening the
actual average life of the pool. Historically, actual average life has been
consistent with the 12-year assumption referred to above. Actual prepayment
experience may cause the yield to differ from the assumed average life yield.
Reinvestment of prepayments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of the Fund. The compounding
effect from reinvestment of monthly payments received by the Fund will increase
the yield to shareholders compared with bonds that pay interest semi-annually.

            The principal governmental (i.e., backed by the full faith and
credit of the U.S. Government) guarantor of mortgage-related securities is GNMA.
GNMA is a wholly-owned U.S. Government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the U.S. Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks and mortgage bankers) and backed by
pools of Federal Housing Administration-insured or U.S. Department of Veterans
Affairs-guaranteed mortgages.

            Government-related (i.e., not backed by the full faith and credit of
the U.S. Government) guarantors include FNMA and FHLMC. FNMA and FHLMC are
government-sponsored corporations or corporate instrumentalities of the U.S.
Government respectively (government-sponsored entities or "GSEs"), which were
owned entirely by private stockholders until 2008 when they were placed in
conservatorship by the U.S. Government. After being placed in conservatorship,
the GSEs issued senior preferred stock and common stock to the U.S. Department
of the Treasury ("U.S. Treasury") in an amount equal to 79.9% of each GSE in
return for certain funding and liquidity arrangements. The GSEs continue to
operate as going concerns while in conservatorship and each remains liable for
all of its obligations associated with its mortgage-backed securities. The U.S.
Treasury provided additional funding to the GSEs, but the GSEs have paid
dividends to the U.S. Treasury in a cumulative amount that exceeds the payments
made to the GSEs by the U.S. Treasury since 2008. The future of the GSEs is
unclear as Congress is considering whether to adopt legislation that would
severely restrict or even terminate their operations. FNMA purchases residential
mortgages from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through securities
issued by FNMA are guaranteed as to timely payment of principal and interest by
FNMA. Participation certificates issued by FHLMC, which represent interests in
mortgages from FHLMC's national portfolio, are guaranteed by FHLMC as to the
timely payment of interest and ultimate collection of principal.

            Commercial banks, savings and loan associations, private mortgage
insurance companies, mortgage bankers and other secondary market issuers create
pass-through pools of conventional residential mortgage loans. Securities
representing interests in pools created by non-governmental private issuers
generally offer a higher rate of interest than securities representing interests
in pools created by governmental issuers because there are no direct or indirect
governmental guarantees of the underlying mortgage payments. However, private
issuers sometimes obtain committed loan facilities, lines of credit, letters of
credit, surety bonds or other forms of liquidity and credit enhancement to
support the timely payment of interest and principal with respect to their
securities if the borrowers on the underlying mortgages fail to make their
mortgage payments. The ratings of such non-governmental securities are generally
dependent upon the ratings of the providers of such liquidity and credit support
and would be adversely affected if the rating of such an enhancer were
downgraded.

            The structuring of the pass-through pool may also provide credit
enhancement. Examples of such credit support arising out of the structure of the
transaction include the issue of senior and subordinated securities (e.g., the
issuance of securities by a SPV in multiple classes or "tranches", with one or
more classes being senior to other subordinated classes as to payment of
principal and interest, with the result that defaults on the underlying mortgage
loans are borne first by the holders of the subordinated class); creation of
"reserve funds" (in which case cash or investments sometimes funded from a
portion of the payments on the underlying mortgage loans, are held in reserve
against future losses); and "overcollateralization" (in which case the scheduled
payments on, or the principal amount of, the underlying mortgage loans exceeds
that required to make payment of the securities and pay any servicing or other
fees). There can be no guarantee that the credit enhancements, if any will be
sufficient to prevent losses in the event of defaults on the underlying mortgage
loans.

            In addition, mortgage-related securities that are issued by private
issuers are not subject to the underwriting requirements for the underlying
mortgages that are applicable to those mortgage-related securities that have a
government or GSE guarantee. As a result, the mortgage loans underlying private
mortgage-related securities may, and frequently do, have less favorable
collateral, credit risk or other underwriting characteristics than government or
government-sponsored, mortgage-related securities and have wider variances in a
number of terms, including interest rate, term, size, purposes and borrower
characteristics. Privately-issued pools more frequently include second
mortgages, high loan-to-value mortgages and manufactured housing loans. The
coupon rates and maturities of the underlying mortgage loans in a private-label,
mortgage-related pool may vary to a greater extent than those included in a
government guaranteed pool, and the pool may include subprime mortgage loans.
Subprime loans refer to loans made to borrowers with weakened credit histories
or with a lower capacity to make timely payments on their loans. For these
reasons, the loans underlying these securities have had in many cases higher
default rates than those loans that meet government underwriting requirements.

            Collateralized Mortgage Obligations. Another form of
mortgage-related security is a "pay-through" security, which is a debt
obligation of the issuer secured by a pool of mortgage loans pledged as
collateral that is legally required to be paid by the issuer, regardless of
whether payments are actually made on the underlying mortgages. CMOs are the
predominant type of "pay-through" mortgage-related security. In a CMO, a series
of bonds or certificates is issued in multiple classes. Each class of a CMO,
often referred to as a "tranche", is issued at a specific coupon rate and has a
stated maturity or final distribution date. Principal prepayments on collateral
underlying a CMO may cause one or more tranches of the CMO to be retired
substantially earlier than the stated maturities or final distribution dates of
the collateral. Although payment of the principal of, and interest on, the
underlying collateral securing privately issued CMOs may be guaranteed by GNMA,
FNMA or FHLMC, these CMOs represent obligations solely of the private issuer and
are not insured or guaranteed by GNMA, FNMA, FHLMC, any other governmental
agency or any other person or entity.

            Adjustable-Rate Mortgage Securities. ARMS bear interest at a rate
determined by reference to a predetermined interest rate or index. ARMS may be
secured by fixed-rate mortgages or adjustable-rate mortgages. ARMS secured by
fixed-rate mortgages generally have lifetime caps on the coupon rates of the
securities. To the extent that general interest rates increase faster than the
interest rates on the ARMS, these ARMS will decline in value. The
adjustable-rate mortgages that secure ARMS will frequently have caps that limit
the maximum amount by which the interest rate or the monthly principal and
interest payments on the mortgages may increase. These payment caps can result
in negative amortization (i.e., an increase in the balance of the mortgage
loan). Furthermore, since many adjustable-rate mortgages only reset on an annual
basis, the values of ARMS tend to fluctuate to the extent that changes in
prevailing interest rates are not immediately reflected in the interest rates
payable on the underlying adjustable-rate mortgages.

            Stripped Mortgage-Related Securities. SMRS are mortgage-related
securities that are usually structured with separate classes of securities
collateralized by a pool of mortgages or a pool of mortgage-backed bonds or
pass-through securities, with each class receiving different proportions of the
principal and interest payments from the underlying assets. A common type of
SMRS has one class of interest-only securities (IOs) receiving all of the
interest payments from the underlying assets and one class of principal-only
securities (POs) receiving all of the principal payments from the underlying
assets. IOs and POs are extremely sensitive to interest rate changes and are
more volatile than mortgage-related securities that are not stripped. IOs tend
to decrease in value as interest rates decrease and are extremely sensitive to
the rate of principal payments (including prepayments) on the related underlying
mortgage assets, and a rapid rate of principal prepayments may have a material
adverse effect on the yield to maturity of the IO class. POs generally increase
in value as interest rates decrease. If prepayments of the underlying mortgages
are greater than anticipated, the amount of interest earned on the overall pool
will decrease due to the decreasing principal balance of the assets. Due to
their structure and underlying cash flows, SMRS may be more volatile than
mortgage-related securities that are not stripped. Changes in the values of IOs
and POs can be substantial and occur quickly, such as occurred in the first half
of 1994 when the value of many POs dropped precipitously due to increases in
interest rates.

            A Fund will only invest in SMRS that are issued by the U.S.
Government, its agencies or instrumentalities and supported by the full faith
and credit of the United States or by other U.S. Government sponsored entities.
Although SMRS are purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers, the complexity of these
instruments and the smaller number of investors in the sector can lend to
illiquid markets in the sector.

            Commercial Mortgage-Backed Securities. CMBS are securities that
represent an interest in, or are secured by, mortgage loans secured by
multifamily or commercial properties, such as industrial and warehouse
properties, office buildings, retail space and shopping malls, and cooperative
apartments, hotels and motels, nursing homes, hospitals and senior living
centers. CMBS have been issued in public and private transactions by a variety
of public and private issuers using a variety of structures, some of which were
developed in the residential mortgage context, including multi-class structures
featuring senior and subordinated classes. CMBS may pay fixed or floating rates
of interest. The commercial mortgage loans that underlie commercial
mortgage-related securities have certain distinct risk characteristics.
Commercial mortgage loans generally lack standardized terms, which may
complicate their structure, tend to have shorter maturities than residential
mortgage loans and may not be fully amortizing. Commercial properties themselves
tend to be unique and are more difficult to value than single-family residential
properties. In addition, commercial properties, particularly industrial and
warehouse properties, are subject to environmental risks and the burdens and
costs of compliance with environmental laws and regulations.

            Certain Risks. The value of mortgage-related securities is affected
by a number of factors. Unlike traditional debt securities, which have fixed
maturity dates, mortgage-related securities may be paid earlier than expected as
a result of prepayments of underlying mortgages. Such prepayments generally
occur during periods of falling mortgage interest rates. If property owners make
unscheduled prepayments of their mortgage loans, these prepayments will result
in the early payment of the applicable mortgage-related securities. In that
event, the Fund may be unable to invest the proceeds from the early payment of
the mortgage-related securities in investments that provide as high a yield as
the mortgage-related securities. Early payments associated with mortgage-related
securities cause these securities to experience significantly greater price and
yield volatility than is experienced by traditional fixed-income securities. The
level of general interest rates, general economic conditions and other social
and demographic factors affect the occurrence of mortgage prepayments. During
periods of falling interest rates, the rate of mortgage prepayments tends to
increase, thereby tending to decrease the life of mortgage-related securities.
Conversely, during periods of rising interest rates, a reduction in prepayments
may increase the effective life of mortgage-related securities, subjecting them
to greater risk of decline in market value in response to rising interest rates.
If the life of a mortgage-related security is inaccurately predicted, the Fund
may not be able to realize the rate of return it expected.

            As with other fixed-income securities, there is also the risk of
nonpayment of mortgage-related securities, particularly for those securities
that are backed by mortgage pools that contain subprime loans. Market factors
adversely affecting mortgage loan repayments include a general economic
downturn, high unemployment, a general slowdown in the real estate market, a
drop in the market prices of real estate, or higher mortgage payments required
to be made by holders of adjustable rate mortgages due to scheduled increases or
increases due to higher interest rates.

            Subordinated mortgage-related securities may have additional risks.
The subordinated mortgage-related security may serve as credit support for the
senior securities purchased by other investors. In addition, the payments of
principal and interest on these subordinated securities generally will be made
only after payments are made to the holders of securities senior to the
subordinated securities. Therefore, if there are defaults on the underlying
mortgage loans, the holders of subordinated mortgage-related securities will be
less likely to receive payments of principal and interest and will be more
likely to suffer a loss.

            Commercial mortgage-related securities, like all fixed-income
securities, generally decline in value as interest rates rise. Moreover,
although generally the value of fixed-income securities increases during periods
of falling interest rates, this inverse relationship is not as marked in the
case of single-family residential mortgage-related securities, due to the
increased likelihood of prepayments during periods of falling interest rates,
and may not be as marked in the case of commercial mortgage-related securities.
The process used to rate commercial mortgage-related securities may focus on,
among other factors, the structure of the security, the quality and adequacy of
collateral and insurance, and the creditworthiness of the originators, servicing
companies and providers of credit support.

            Although the market for mortgage-related securities is becoming
increasingly liquid, those issued by certain private organizations may not be
readily marketable, thus there may be a limited market for these securities,
especially when there is a perceived weakness in the mortgage and real estate
market sectors. In particular, the secondary markets for CMOs, IOs and POs may
be more volatile and less liquid than those for other mortgage-related
securities, thereby potentially limiting a Fund's ability to buy or sell those
securities at any particular time. Without an active trading market,
mortgage-related securities held in a Fund's portfolio may be particularly
difficult to value because of the complexities involved in the value of the
underlying mortgages. In addition, the rating agencies may have difficulties in
rating commercial mortgage-related securities through different economic cycles
and in monitoring such ratings on a longer-term basis.

            As with fixed-income securities generally, the value of
mortgage-related securities can also be adversely affected by increases in
general interest rates relative to the yield provided by such securities. Such
an adverse effect is especially possible with fixed-rate mortgage securities. If
the yield available on other investments rises above the yield of the fixed-rate
mortgage securities as a result of general increases in interest rate levels,
the value of the mortgage-related securities will decline.

            GSE Risk-Sharing Bonds. Another type of mortgage-related security,
known as GSE Risk-Sharing Bonds or Credit Risk Transfer securities ("CRTs"),
transfers a portion of the risk of borrower defaults from the issuing GSE to
investors through the issuance of a bond whose return of principal is linked to
the performance of a selected pool of mortgages. CRTs are issued by GSEs (and
sometimes banks or mortgage insurers) and structured without any government or
GSE guarantee in respect of borrower defaults or underlying collateral.
Typically, CRTs are issued at par and have stated final maturities. CRTs are
structured so that: (i) interest is paid directly by the issuing GSE and (ii)
principal is paid by the issuing GSE in accordance with the principal payments
and default performance of a certain pool of residential mortgage loans acquired
by the GSE.

            The risks associated with an investment in CRTs differ from the
risks associated with an investment in mortgage-backed securities issued by GSEs
because, in CRTs, some or all of the credit risk associated with the underlying
mortgage loans is transferred to the end-investor. As a result, in the event
that a GSE fails to pay principal or interest on a CRT or goes through
bankruptcy, insolvency or similar proceeding, holders of such CRT have no direct
recourse to the underlying mortgage loans.

            Other Asset-Backed Securities. A Fund may invest in other
asset-backed securities. The securitization techniques used to develop
mortgage-related securities are being applied to a broad range of financial
assets. Through the use of trusts and special purpose corporations, various
types of assets, including automobile loans and leases, credit card receivables,
home equity loans, equipment leases and trade receivables, are being securitized
in structures similar to the structures used in mortgage securitizations. For
example, the Fund may invest in collateralized debt obligations ("CDOs"), which
include collateralized bond obligations ("CBOs"), collateralized loan
obligations ("CLOs"), and other similarly structured securities. CBOs and CLOs
are types of asset-backed securities. A CBO is a trust, which is backed by a
diversified pool of high-risk, below investment grade 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, including loans that may be rated below
investment grade or equivalent unrated loans. These asset-backed securities are
subject to risks associated with changes in interest rates, prepayment of
underlying obligations and defaults similar to the risks of investment in
mortgage-related securities discussed above.

            Each type of asset-backed security also entails unique risks
depending on the type of assets involved and the legal structure used. For
example, credit card receivables are generally unsecured obligations of the
credit card holder and the debtors are entitled to the protection of a number of
state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. There have also been proposals to cap the interest rate that a
credit card issuer may charge. In some transactions, the value of the
asset-backed security is dependent on the performance of a third party acting as
credit enhancer or servicer. Furthermore, in some transactions (such as those
involving the securitization of vehicle loans or leases) it may be
administratively burdensome to perfect the interest of the security issuer in
the underlying collateral and the underlying collateral may become damaged or
stolen.

            Structured Financings. A Fund may invest in fixed-income securities
issued in structured financing transactions, which generally involve aggregating
types of debt assets in a pool or special purpose entity and then issuing new
securities. Types of structured financings include, for example,
mortgage-related real estate and other asset-backed securities. These securities
may be privately-negotiated and are generally not publicly traded and are
illiquid. A Fund's investments include investments in structured securities that
represent interests in entities organized and operated solely for the purpose of
restructuring the investment characteristics of debt obligations. This type of
restructuring involves the deposit with or purchase by an entity, such as a
corporation or trust, of specified instruments (such as commercial bank loans)
and the issuance by that entity of one or more classes of securities
("Structured Securities") backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued Structured Securities to create securities
with different investment characteristics such as varying maturities, payment
priorities and interest rate provisions, and the extent of the payments made
with respect to Structured Securities is dependent on the extent of the cash
flow on the underlying instruments. Because Structured Securities of the type in
which the Fund anticipates it will invest typically involve no credit
enhancement, their credit risk generally will be equivalent to that of the
underlying instruments.

            A Fund is permitted to invest in a class of Structured Securities
that is either subordinated or unsubordinated to the right of payment of another
class. Subordinated Structured Securities typically have higher yields and
present greater risks than unsubordinated Structured Securities.

            Under the terms of subordinated securities, payments that would be
made to their holders may be required to be made to the holders of more senior
securities and/or the subordinated or junior securities may have junior liens,
if they have any rights at all, in any collateral (meaning proceeds of the
collateral are required to be paid first to holders of more senior securities).
As a result, subordinated or junior securities will be disproportionately
affected by a default or even a perceived decline in the creditworthiness of the
issuer.

Municipal Securities
--------------------

            Tax-Aware will invest in municipal securities. Municipal securities
include municipal bonds as well as short-term (i.e., maturing in under one year
to as much as three years) municipal notes, demand notes and tax-exempt
commercial paper. In the event Tax-Aware invests in demand notes, the Adviser
will continually monitor the ability of the obligor under such notes to meet its
obligations. Typically, municipal bonds are issued to obtain funds used to
construct a wide range of public facilities, such as schools, hospitals,
housing, mass transportation, airports, highways and bridges. The funds may also
be used for general operating expenses, refunding of outstanding obligations and
loans to other public institutions and facilities.

            Municipal bonds have two principal classifications: general
obligation bonds and revenue or special obligation bonds. General obligation
bonds are secured by the issuer's pledge of its faith, credit and taxing power
for the payment of principal and interest. Revenue or special obligation bonds
are payable only from the revenues derived from a particular facility or class
of facilities or, in some cases, from the proceeds of a special excise tax or
other specific revenue source but not from general tax and other unrestricted
revenues of the issuer. The term "issuer" means the agency, authority,
instrumentality or other political subdivision whose assets and revenues are
available for the payment of principal and interest on the bonds. Certain types
of private activity bonds are also considered municipal bonds if the interest
thereon is exempt from federal income tax.

            Private activity bonds are in most cases revenue bonds and do not
generally constitute the pledge of the credit or taxing power of the issuer of
such bonds. The payment of the principal and interest on such private activity
bonds depends solely on the ability of the user of the facilities financed by
the bonds to meet its financial obligations and the pledge, if any, of real and
personal property so financed as security for such payment.

            Tax-Aware may invest a portion of its assets in municipal securities
that pay interest at a coupon rate equal to a base rate plus additional interest
for a certain period of time if short-term interest rates rise above a
predetermined level or "cap". Although the specific terms of these municipal
securities may differ, the amount of any additional interest payment typically
is calculated pursuant to a formula based upon an applicable short-term interest
rate index multiplied by a designated factor. The additional interest component
of the coupon rate of these municipal securities generally expires before the
maturity of the underlying instrument. These municipal securities may also
contain provisions that provide for conversion at the option of the issuer to
constant interest rates in addition to standard call features.

            Tax-Aware may invest in zero-coupon municipal securities, which are
debt obligations that do not entitle the holder to any periodic payments prior
to maturity and are issued and traded at a discount from their face amounts. The
discount varies depending on the time remaining until maturity, prevailing
interest rates, liquidity of the security and perceived credit quality of the
issuer. The market prices of zero-coupon municipal securities are generally more
volatile than the market prices of securities that pay interest periodically and
are likely to respond to changes in interest rates to a greater degree than do
securities having similar maturities and credit quality that do pay periodic
interest.

            Tax-Aware may also invest in municipal securities, the interest rate
on which has been divided into two different and variable components, which
together result in a fixed interest rate. Typically, the first of the components
(the "Auction Component") pays an interest rate that is reset periodically
through an auction process, whereas the second of the components (the "Residual
Component") pays a current residual interest rate based on the difference
between the total interest paid by the issuer on the municipal securities and
the auction rate paid on the Auction Component. Tax-Aware may purchase both
Auction and Residual Components.

            Because the interest rate paid to holders of Residual Components is
generally determined by subtracting the interest rate paid to the holders of
Auction Components from a fixed amount, the interest rate paid to Residual
Component holders will decrease the Auction Component's rate increases and
increase as the Auction Component's rate decreases. Moreover, the extent of the
increases and decreases in market value of Residual Components may be larger
than comparable changes in the market value of an equal principal amount of a
fixed rate municipal security having similar credit quality, redemption
provisions and maturity.

            Tax-Aware may also invest in (i) asset-backed securities, which are
securities issued by special purpose entities whose primary assets consist of,
for the purposes of Tax-Aware's investment, a pool of municipal securities, or
(ii) partnership and grantor trust-type derivative securities, whose ownership
allows the purchaser to receive principal and interest payments on underlying
municipal securities. The securities may be in the form of a beneficial interest
in a special purpose trust, limited partnership interest, or other debt
securities issued by a special purpose corporation. Although the securities may
have some form of credit or liquidity enhancement, payments on the securities
depend predominately upon the municipal securities held by the issuer. There are
many types of these securities, including securities in which the tax-exempt
interest rate is determined by an index, a swap agreement, or some other
formula, for example, the interest rate payable on the security may adjust
either at pre-designated periodic intervals or whenever there is a change in the
market rate to which the security's interest rate is tied. Other features may
include the right of Tax-Aware to tender the security prior to its stated
maturity. Tax-Aware will not purchase an asset-backed or derivatives security of
the type discussed in this paragraph unless it has opinion of counsel in
connection with the purchase that interest earned by the Fund from the
securities is exempt from, as applicable, federal and state income taxes.

            Municipal notes in which Tax-Aware may invest include demand notes,
which are tax-exempt obligations that have stated maturities in excess of one
year, but permit the holder to sell back the security (at par) to the issuer
within one to seven days' notice. The payment of principal and interest by the
issuer of these obligations will ordinarily be guaranteed by letters of credit
offered by banks. The interest rate on a demand note may be based upon a known
lending rate, such as a bank's prime rate, and may be adjusted when such rate
changes, or the interest rate on a demand note may be a market rate that is
adjusted at specified intervals.

            Other short-term obligations constituting municipal notes include
tax anticipation notes, revenue anticipation notes, bond anticipation notes and
tax-exempt commercial paper.

            Tax anticipation notes are issued to finance working capital needs
of municipalities. Generally, they are issued in anticipation of various
seasonal tax revenues, such as ad valorem, income, sales, use and business
taxes. Revenue anticipation notes are issued in expectation of receipt of other
types of revenues, such as federal revenues available under the Federal Revenue
Sharing Programs. Bond anticipation notes are issued to provide interim
financing until long-term financing can be arranged. In most such cases, the
long-term bonds provide the money for the repayment of the notes.

            Tax-exempt commercial paper is a short-term obligation with a stated
maturity of 365 days or less (however, issuers typically do not issue such
obligations with maturities longer than seven days). Such obligations are issued
by state and local municipalities to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term financing.

            There are, of course, variations in the terms of, and the security
underlying, municipal securities, both within a particular rating classification
and between such classifications, depending on many factors. The ratings of
Moody's, S&P and Fitch Ratings ("Fitch") represent their opinions of the quality
of the municipal securities rated by them. It should be emphasized that such
ratings are general and are not absolute standards of quality. Consequently,
municipal securities with the same maturity, coupon and rating may have
different yields, while the municipal securities of the same maturity and
coupon, but with different ratings, may have the same yield. The Adviser
appraises independently the fundamental quality of the securities included in
Tax-Aware Fund's portfolio.

            Yields on municipal securities are dependent on a variety of
factors, including the general conditions of the municipal securities market,
the size of a particular offering, the maturity of the obligation and the rating
of the issue. An increase in interest rates generally will reduce the market
value of portfolio investments, and a decline in interest rates generally will
increase the value of portfolio investments. Municipal securities with longer
maturities tend to produce higher yields and are generally subject to greater
price movements than obligations with shorter maturities. However, Tax-Aware
does not have any restrictions on the maturity of municipal securities in which
it may invest. Tax-Aware will seek to invest in municipal securities of such
maturities that, in the judgment of the Adviser, will provide a high level of
current income consistent with liquidity requirements and market conditions. The
achievement of Tax-Aware's investment objective depends in part on the
continuing ability of the issuers of municipal securities in which the Fund
invests to meet their obligations for the payment of principal and interest when
due. Municipal securities historically have not been subject to registration
with the SEC, although from time to time there have been proposals which would
require registration in the future.

            Tax-Aware may invest in municipal securities rated below investment
grade or unrated municipal securities. These securities may present a
substantial risk of default or may be in default at the time of purchase. See
"Certain Risk and Other Considerations - Investments in Lower-Rated and Unrated
Instruments" below.

            After purchase by Tax-Aware, a municipal security may cease to be
rated or it may default. These events do not require sales of such securities by
Tax-Aware, but the Adviser will consider such event in its determination of
whether the Fund should continue to hold the security. To the extent that the
ratings given by Moody's, S&P or Fitch may change as a result of changes in such
organizations or their rating systems, the Adviser will attempt to use such
changed ratings in a manner consistent with Tax-Aware's quality criteria as
described in the Prospectus.

            Obligations of issuers of municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code. In addition, the
obligations of such issuers may become subject to laws enacted in the future by
Congress, state legislatures, or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of
such obligations or upon the ability of municipalities to levy taxes. There is
also the possibility that, as a result of litigation or other conditions, the
ability of any issuer to pay, when due, the principal or the interest on its
municipal bonds may be materially affected.

            From time to time, proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income tax exemption
for interest on municipal securities. It can be expected that similar proposals
may be introduced in the future. If such a proposal were enacted, the
availability of municipal securities for investment by Tax-Aware and the value
of the Fund would be affected. Additionally, Tax-Aware's investment objective
and policies would be reevaluated.

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.

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, the 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 and Dollar Rolls
----------------------------------------------

            Reverse repurchase agreements are identical to repurchase agreements
except that rather than buying securities for cash subject to their repurchase
by the seller, a Fund sells portfolio assets concurrently with an agreement by
the Fund to repurchase the same assets at a later date at a fixed price slightly
higher than the sale price. During the reverse repurchase agreement period, the
Fund continues to receive principal and interest payments on these securities.
Generally, the effect of a reverse repurchase agreement 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, i.e., the difference between the sale and
repurchase price for the securities, is less than the cost of otherwise
obtaining the cash invested in portfolio securities.

            Reverse repurchase agreements are considered to be a loan to the
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, the Fund obtains additional cash to invest in
other securities. The Funds 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 the 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.

            Dollar rolls involve sales by a Fund of securities for delivery in
the current month and the Fund's simultaneously contracting to repurchase
substantially similar (same type and coupon) securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
the securities. The Fund is compensated by the difference between the current
sales price and the lower forward price for the future purchase (often referred
to as the "drop") as well as by the interest earned on the cash proceeds of the
initial sale.

            Reverse repurchase agreements and dollar rolls 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 or dollar roll files for
bankruptcy or becomes insolvent, the 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.
In addition, the use of these investments results in leveraging the Fund's
common stocks because the Fund uses the proceeds to make investments in other
securities. See "Borrowing and Use of Leverage" below.

Rights and Warrants
-------------------

            Tax-Aware 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 the 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 that 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.

Securities Ratings
------------------

            The ratings of fixed-income securities by Moody's, S&P, Fitch and
A.M. Best Company are a generally accepted barometer of credit risk. They are,
however, subject to certain limitations from an investor's standpoint. The
rating of an issuer is heavily weighted by past developments and does not
necessarily reflect probable future conditions. There is frequently a lag
between the time a rating is assigned and the time it is updated. In addition,
there may be varying degrees of difference in credit risk of securities within
each rating category.

            Securities rated Baa, BBB+, BBB, or BBB- by S&P or Baa1, Baa2 or
Baa3 by Moody's are considered by Moody's to have speculative characteristics.
Sustained periods of deteriorating economic conditions or rising interest rates
are more likely to lead to a weakening in the issuer's capacity to pay interest
and repay principal than in the case of higher-rated securities.

            Non-rated securities will also be considered for investment by a
Fund when the Adviser believes that the financial condition of the issuers of
such securities, or the protection afforded by the terms of the securities
themselves, limits the risk to the Fund to a degree comparable to that of rated
securities which are consistent with the Fund's objectives and policies.

            The Adviser generally uses ratings issued by S&P, Moody's and Fitch.
Some securities are rated by more than one of these ratings agencies, and the
ratings assigned to the security by the rating agencies may differ. In such an
event and for purposes of determining compliance with restrictions on
investments for the Fund, if a security is rated by two or more rating agencies,
the Adviser will deem the security to be rated at the highest rating. For
example, if a security is rated by Moody's and S&P only, with Moody's rating the
security as Ba and S&P as BBB, the Adviser will deem the security to be rated as
the equivalent of BBB (i.e., Baa by Moody's and BBB by S&P). Or, if a security
is rated by Moody's, S&P and Fitch, with Moody's rating the security as Ba, S&P
as BBB and Fitch as BB, the Adviser will deem the security to be rated as the
equivalent of BBB (i.e., Ba1 by Moody's, BBB by S&P and BBB by Fitch).

            The Adviser will try to reduce the risk inherent in the Fund's
investment approach through credit analysis, diversification and attention to
current developments and trends in interest rates and economic conditions.
However, there can be no assurance that losses will not occur. In considering
investments for Funds that invest in high-yielding securities, the Adviser will
attempt to identify those high-yielding securities whose financial condition is
adequate to meet future obligations, has improved, or is expected to improve in
the future. The Adviser's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earnings prospects,
and the experience and managerial strength of the issuer.

            In the event that the credit rating of a security held by the Fund
is downgraded, the credit quality deteriorates after purchase, or the security
defaults, the Fund will not be obligated to dispose of that security and may
continue to hold the security if, in the opinion of the Adviser, such investment
is appropriate in the circumstances.

            Unless otherwise indicated, references to securities ratings by one
rating agency in this SAI shall include the equivalent rating by another rating
agency.

Short Sales
-----------

            A Fund 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 the sale. Among other reasons, a Fund may make short sales of
securities or maintain a short position for the purpose of deferring realization
of gain or loss for U.S. federal income tax purposes. The Fund may not make a
short sale if more than 10% of the Fund's net assets (taken at market value) is
held as collateral for short sales at any one time. A short sale of a security
involves the risk that, instead of declining, the price of the security sold
short will rise. If the price of the securities sold short increases between the
time of a 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 gain. The potential for the price of a fixed-income security sold short to
rise is a function of both the remaining maturity of the obligation, its
creditworthiness and its yield. Unlike short sales of equities or other
instruments, the potential for the price of a fixed-income security to rise may
be limited due to the fact that the security will be no more than par at
maturity. However, the short sale of other instruments or securities generally,
including fixed-income securities convertible into equities or other
instruments, a fixed-income security trading at a deep discount from par or
which pays a coupon that is high in relative or absolute terms, or which is
denominated in a currency other than the U.S. Dollar, involves the possibility
of a theoretically unlimited loss since there is a theoretically unlimited
potential for the market price of the security sold short to increase. 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.

Standby Commitment Agreements
-----------------------------

            Tax-Aware may, from time to time, enter into standby commitment
agreements. Such agreements commit Tax-Aware, 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 or not the security is
ultimately issued. Tax-Aware 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, Tax-Aware
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 Tax-Aware'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 carry greater trading risk and be 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,
carry greater trading risk and be 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, 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
reduced liquidity for the securities.

Tender Option Bond ("TOB") Transactions
---------------------------------------

            Tax-Aware may enter into TOB transactions ("TOBs") in which the Fund
sells a municipal security to a broker, which, in turn deposits the bond into a
special purpose vehicle, which is generally organized as a trust, sponsored by
the broker (the "Trust"). The Fund receives cash and a residual interest
security (sometimes referred to as "inverse floaters") issued by the Trust in
return. The Trust simultaneously issues securities, which pay an interest rate
that is reset each week based on an index of high-grade short-term demand notes.
These securities, sometimes referred to as "floaters", are bought by third
parties, including tax-exempt money market funds, and can be tendered by these
holders to a liquidity provider at par, unless certain events occur. Under
certain circumstances, the Trust may be terminated or collapsed, either by the
Fund or upon the occurrence of certain events, such as a downgrade in the credit
quality of the underlying bond or in the event holders of the floaters tender
their securities to the liquidity provider. The Fund continues to earn all the
interest from the transferred bond less the amount of interest paid on the
floaters and the expenses of the SPV, which include payments to the trustee and
the liquidity provider and organizational costs. The Fund uses the cash received
from the transaction for investment purposes, which involves leverage risk.

U.S. Government Securities
--------------------------

            U.S. Government securities may be backed by the full faith and
credit of the United States, supported only by the right of the issuer to borrow
from the U.S. Treasury or backed only by the credit of the issuing agency
itself. These securities include: (i) the following U.S. Treasury securities,
which are backed by the full faith and credit of the United States and differ
only in their interest rates, maturities and times of issuance: U.S. Treasury
bills (maturities of one year or less with no interest paid and hence issued at
a discount and repaid at full face value upon maturity), U.S. Treasury notes
(maturities of one to ten years with interest payable every six months) and U.S.
Treasury bonds (generally maturities of greater than ten years with interest
payable every six months); (ii) obligations issued or guaranteed by U.S.
Government agencies and instrumentalities that are supported by the full faith
and credit of the U.S. Government, such as securities issued by GNMA, the
Farmers Home Administration, the Department of Housing and Urban Development,
the Export-Import Bank, the General Services Administration and the Small
Business Administration and including obligations that are issued by private
issuers that are guaranteed as to principal or interest by the U.S. Government,
its agencies or institutions; and (iii) obligations issued or guaranteed by U.S.
Government agencies and instrumentalities that were historically not supported
by the full faith and credit of the U.S. Government or a right to borrow from
the U.S. Treasury, such as securities issued by the FNMA and FHLMC, and
governmental CMOs. The maturities of the U.S. Government securities listed in
paragraphs (i) and (ii) above usually range from three months to 30 years. Such
securities, except GNMA certificates, normally provide for periodic payments of
interest in fixed amounts with principal payments at maturity or specified call
dates.

            U.S. Government securities also include zero-coupon securities and
principal-only securities and certain SMRS. Zero-coupon securities are described
in more detail in "Zero-Coupon Securities" below, and SMRS and principal-only
securities are described in more detail in "Mortgage-Related Securities, Other
Asset-Backed Securities and Structured Financings - Stripped Mortgage-Related
Securities" above. In addition, other U.S. Government agencies and
instrumentalities have issued stripped securities that are similar to SMRS.

            Inflation-indexed securities such as Treasury Inflation-Protected
Securities, or TIPS, are fixed-income securities whose principal value is
periodically adjusted according to the rate of inflation. If the index measuring
inflation falls, the principal value of these securities will be adjusted
downward, and consequently the interest payable on these securities (calculated
with respect to a smaller principal amount) will be reduced. Repayment of the
original bond principal upon maturity (as adjusted for inflation) is guaranteed
in the case of TIPS. For bonds that do not provide a similar guarantee, the
adjusted principal value of the bond repaid at maturity may be less than the
original principal.

            Inflation-indexed securities tend to react to changes in real
interest rates. In general, the price of these securities can fall when real
interest rates rise, and can rise when real interest rates fall. In addition,
the value of these securities may be vulnerable to changes in expectations of
inflation. Interest payments on these securities can be unpredictable and will
vary as the principal and/or interest is adjusted for inflation.

            TIPS, which are issued by the U.S Treasury, use the Consumer Price
Index for Urban Consumers, or the CPI, as the inflation measure. The principal
of a TIPS increases with inflation and decreases with deflation, as measured by
the CPI. When a TIPS matures, the holder is paid the adjusted principal or
original principal, whichever is greater. TIPS pay interest twice a year, at a
fixed rate, which is determined by auction at the time the TIPS are issued. The
rate is applied to the adjusted principal; so, like the principal, interest
payments rise with inflation and fall with deflation. TIPS are issued in terms
of 5, 10, and 30 years.

            Guarantees of securities by the U.S. Government or its agencies or
instrumentalities guarantee only the payment of principal and interest on the
securities, and do not guarantee the securities' yield or value or the yield or
value of the shares of the Fund that holds the securities.

            U.S. Government securities are considered among the safest of
fixed-income investments. As a result, however, their yields are generally lower
than the yields available from other fixed-income securities.

Variable, Floating and Inverse Floating Rate Securities
-------------------------------------------------------

            These securities have interest rates that are reset at periodic
intervals, usually by reference to some interest rate index or market interest
rate. Some of these securities are backed by pools of mortgage loans. Although
the rate adjustment feature may act as a buffer to reduce sharp changes in the
value of these securities, they are still subject to changes in value based on
changes in market interest rates or changes in the issuer's creditworthiness.
Because the interest rate is reset only periodically, changes in the interest
rate on these securities may lag behind changes in prevailing market interest
rates. Also, some of these securities (or the underlying mortgages) are subject
to caps or floors that limit the maximum change in the interest rate during a
specified period or over the life of the security.

Zero-Coupon Securities
----------------------

            A zero-coupon security pays no interest to its holder during its
life. An investor acquires a zero-coupon security at a discounted price from the
face value of the security, which is generally based upon its present value, and
which, depending upon the time remaining until maturity, may be significantly
less than its face value (sometimes referred to as a "deep discount" price).
Upon maturity of the zero-coupon security, the investor receives the face value
of the security.

            A Fund may invest in zero-coupon Treasury securities, which consist
of Treasury bills or the principal components of U.S. Treasury bonds or notes. A
Fund may also invest in zero-coupon securities issued by U.S. Government
agencies or instrumentalities that are supported by the full faith and credit of
the United States, which consist of the principal components of securities of
U.S. Government agencies or instrumentalities.

            Currently, the only U.S. Treasury security issued without coupons is
the Treasury bill. The zero-coupon securities purchased by the Funds may consist
of principal components held in STRIPS form issued through the U.S. Treasury's
STRIPS program, which permits the beneficial ownership of the component to be
recorded directly in the Treasury book-entry system. In addition, in the last
few years a number of banks and brokerage firms have separated ("stripped") the
principal portions ("corpus") from the coupon portions of the U.S. Treasury
bonds and notes and sold them separately in the form of receipts or certificates
representing undivided interests in these instruments (which instruments are
generally held by a bank in a custodial or trust account).

            Because zero-coupon securities trade at a discount from their face
or par value but pay no periodic interest, they are subject to greater
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities which make periodic distributions of
interest.

            Current federal tax law requires that a holder (such as the Funds)
of a zero-coupon security accrue a portion of the discount at which the security
was purchased as income each year even though the holder receives no interest
payment in cash on the security during the year (generally referred to as
"original issue discount" or "OID"). As a result, in order to make the
distributions necessary for a Fund not to be subject to federal income or excise
taxes, a Fund may be required to pay out as an income distribution each year an
amount, obtained by liquidation of portfolio securities or borrowings if
necessary, greater than the total amount of cash that the Fund has actually
received as interest during the year. The Funds believe, however, that it is
highly unlikely that it would be necessary to liquidate portfolio securities or
borrow money in order to make such required distributions or to meet their
investment objectives.

Certain Risk and Other Considerations
-------------------------------------

            Borrowing and Use of Leverage. A Fund may use borrowings for
investment purposes subject to the restrictions of the 1940 Act. A Fund may also
use leverage for investment purposes by entering into transactions such as
reverse repurchase agreements, forward contracts and dollar rolls and, with
respect to Tax-Aware, TOBs. This means that the Fund uses the cash proceeds made
available during the term of these transactions to make investments in other
securities.

            Borrowings by a Fund result in leveraging of the Fund's shares of
common stock. The proceeds of such borrowings will be invested in accordance
with the Fund's investment objective and policies. The Adviser anticipates that
the difference between the interest expense paid by the Fund on borrowings and
the rates received by the Fund from its investment portfolio issuers will
provide the Fund's shareholders with a potentially higher yield.

            Utilization of leverage, which is usually considered speculative,
however, involves certain risks to a Fund's shareholders. These include a higher
volatility of the NAV of the Fund's shares of common stock and the relatively
greater effect on the NAV of the shares caused by favorable or adverse changes
in market conditions or interest rates. So long as the Fund is able to realize a
net return on the portion of its investment portfolio resulting from leverage
that is higher than the interest expense paid on borrowings or the carrying
costs of leveraged transactions, the effect of leverage will be to cause the
Fund's shareholders to realize a higher net return than if the Fund were not
leveraged. However, to the extent that the interest expense on borrowings or the
carrying costs of leveraged transactions approaches the net return on the
leveraged portion of the Fund's investment portfolio, the benefit of leverage to
the Fund's shareholders will be reduced, and if the interest expense on
borrowings or carrying costs of leveraged transactions were to exceed the net
return to shareholders, the Fund's use of leverage would result in a lower rate
of net return than if the Fund were not leveraged. Similarly, the effect of
leverage in a declining market could be a greater decrease in NAV per share than
if the Fund were not leveraged. In an extreme case, if the Fund's current
investment income were not sufficient to meet the interest expense on borrowings
or the carrying costs of leveraged transactions, it could be necessary for the
Fund to liquidate certain of its investments in adverse circumstances,
potentially significantly reducing its NAV.

            During periods of rising short-term interest rates, the interest
paid on floaters in TOB transactions would increase, which may adversely affect
Tax-Aware's net returns. If rising interest rates coincide with a period of
rising long-term rates, the value of long-term municipal bonds purchased with
the proceeds of leverage would decline, adversely affecting the Fund's NAV. In
certain circumstances, adverse changes in interest rates or other events could
cause a TOB Trust to terminate or collapse, potentially requiring Tax-Aware to
liquidate longer-term municipal securities at unfavorable prices to meet the
Trust's outstanding obligations.

            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 other 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
the 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 their service providers,
financial intermediaries and companies in which they invest or with which they
do business.

            Investments in Lower-Rated and Unrated Instruments. A Fund may
invest in lower-rated securities, in some cases, substantially (High Income),
which may include securities having the lowest rating for non-subordinated debt
securities (i.e., rated C by Moody's or CCC or lower by S&P & Fitch) and unrated
securities of equivalent investment quality (commonly referred to as "junk
bonds"). Debt securities with such a rating are considered by the rating
organizations to be subject to greater risk of loss of principal and interest
than higher-rated securities and are considered to be predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal, which
may in any case decline during sustained periods of deteriorating economic
conditions or rising interest rates. These securities are considered to have
extremely poor prospects of ever attaining any real investment standing, to have
a current identifiable vulnerability to default, to be unlikely to have the
capacity to pay interest and repay principal when due in the event of adverse
business, financial or economic conditions, and/or to be in default or not
current in the payment of interest or principal.

            Lower-rated securities generally are considered to be subject to
greater market risk than higher-rated securities in times of deteriorating
economic conditions. In addition, lower-rated securities may be more susceptible
to real or perceived adverse economic and competitive industry conditions than
investment grade securities, although the market values of securities rated
below investment grade and comparable unrated securities tend to react less to
fluctuations in interest rate levels than do those of higher-rated securities.
The market for lower-rated securities may be thinner and less active than that
for higher-quality securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, the Adviser may experience
difficulty in valuing such securities and, in turn, a Fund's assets. In
addition, adverse publicity and investor perceptions about lower-rated
securities, whether or not based on fundamental analysis, may tend to decrease
the market value and liquidity of such lower-rated securities. Transaction costs
with respect to lower-rated securities may be higher, and in some cases
information may be less available, than is the case with investment grade
securities.

            Many fixed-income securities, including certain U.S. corporate
fixed-income securities in which a Fund may invest, contain call or buy-back
features that permit the issuer of the security to call or repurchase it. Such
securities may present risks based on payment expectations. If an issuer
exercises such a "call option" and redeems the security, the Fund may have to
replace the called security with a lower yielding security, resulting in a
decreased rate of return for the Fund.

            Non-rated municipal or other fixed-income securities will also be
considered for investment by Tax-Aware when the Adviser believes that the
financial condition of the issuers of such obligations and the protection
afforded by the terms of the obligations themselves limit the risk to the Fund
to a degree comparable to that of rated securities which are consistent with the
Fund's objective and policies.

            In seeking to achieve a Fund's investment objectives, there will be
times, such as during periods of rising interest rates, when depreciation and
realization of capital losses on securities in the Fund's portfolio will be
unavoidable. Moreover, medium- and lower-rated securities and non-rated
securities of comparable quality may be subject to wider fluctuations in yield
and market values than higher-rated securities under certain market conditions.
Such fluctuations after a security is acquired do not affect the cash income
received from that security but are reflected in the NAV of the Fund.

            U.S. Corporate Fixed-Income Securities. A Fund may invest in U.S.
corporate fixed-income securities that may include securities issued in
connection with corporate restructurings such as takeovers or leveraged buyouts,
which may pose particular risks. Securities issued to finance corporate
restructurings may have special credit risks due to the highly leveraged
conditions of the issuer. In addition, such issuers may lose experienced
management as a result of the restructuring. Finally, the market price of such
securities may be more volatile to the extent that expected benefits from the
restructuring do not materialize. A Fund may also invest in U.S. corporate
fixed-income securities that are not current in the payment of interest or
principal or are in default, so long as the Adviser believes such investment is
consistent with the Fund's investment objectives. A Fund's rights with respect
to defaults on such securities will be subject to applicable U.S. bankruptcy,
moratorium and other similar laws.

            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 OTC
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 more difficult to
trade or dispose of and more volatile than securities of comparable United
States companies. Similarly, volume and liquidity in most foreign bond markets
is 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
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 a deterioration occurs in a
country's balance of payments, the country could impose temporary restrictions
on foreign capital remittances.

            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 the Fund will not be subject to change. A shareholder otherwise subject
to U.S. 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 Taxation of Dividends and Distributions".

            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.

            Investments in China. Risks of investments in securities of Chinese
issuers include market volatility, heavy dependence on exports, which may
decrease, sometimes significantly, when the world economy weakens, and the
continuing importance of the role of the Chinese Government, which may take
actions that affect economic and market practices. While the Chinese economy has
grown rapidly in recent years, there is no guarantee that past growth rates will
be maintained. In addition, trade disputes between China and its trading
counterparties, including the United States, have arisen and may continue to
arise. Such disputes have resulted in trade tariffs and may potentially result
in future trade tariffs, as well as embargoes, trade limitations, trade wars and
other negative consequences. These consequences could trigger, among other
things, a substantial reduction in international trade and adverse effects on,
and potential failure of, individual companies and/or large segments of China's
export industry, which could have potentially significant negative effects on
the Chinese economy as well as the global economy. Risks of investments in
issuers based in Hong Kong, a special administrative region of China, include
heavy reliance on the U.S. economy and regional economies, particularly the
Chinese economy, which makes these investments vulnerable to changes in these
economies. These and related factors may result in adverse effects on
investments in China and Hong Kong and have a negative impact on a Fund's
performance.

            A Fund may invest in renminbi-denominated bonds issued in China
("RMB Bonds"). RMB Bonds, including government and corporate bonds, are
available in the China Interbank Bond Market ("CIBM") to eligible foreign
investors through the CIBM Direct Access Program and through the China-Hong Kong
Bond Connect program ("Bond Connect"). Both programs are relatively new. Laws,
rules, regulations, policies and guidelines relating to each program are
untested and subject to change.

            The CIBM Direct Access Program, established by the People's Bank of
China, allows eligible foreign institutional investors to conduct trading in the
CIBM, subject to other rules and regulations as promulgated by Chinese
authorities. Eligible foreign institutional investors who wish to invest
directly in the CIBM through the CIBM Direct Access Program may do so through an
onshore settlement agent, who would be responsible for making the relevant
filings and account opening with the relevant authorities. The Funds are
therefore subject to the risk of default or errors on the part of such agent.

            Bond Connect provides a channel for overseas investors to invest in
the Chinese bond market through investment links between Hong Kong and mainland
China. In China, the Hong Kong Monetary Authority Central Money Markets Unit
holds Bond Connect securities on behalf of the ultimate investors (such as a
Fund) in accounts maintained with a China-based custodian (either the China
Central Depository & Clearing Co. or the Shanghai Clearing House). This
recordkeeping system subjects a Fund to numerous risks, including the risk that
the Fund may have a limited ability to enforce its rights as a bondholder and
the risks of settlement delays and counterparty default of the Hong Kong
sub-custodian. Trading through Bond Connect is subject to other restrictions and
risks. For example, Bond Connect is generally only available on business days
when both the China and Hong Kong markets are open, which may limit a Fund's
ability to trade when it would be otherwise attractive to do so. Investing
through Bond Connect also subjects the Fund to the clearance and settlement
procedures associated with Bond Connect, which could pose risks to the Fund.
Furthermore, securities purchased through Bond Connect generally may not be
sold, purchased or otherwise transferred other than through Bond Connect in
accordance with applicable rules.

            Uncertainties in China's tax rules related to the taxation of income
and gains from investments in Chinese interbank bonds could result in unexpected
tax liabilities for a Fund. Investing in the CIBM will also expose the Fund to
renminbi currency risks. The ability to hedge renminbi currency risks may be
limited. In addition, given the renminbi is subject to exchange control
restrictions, a Fund could be adversely affected by delays in converting other
currencies into renminbi and vice versa and at times when there are unfavorable
market conditions.

            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, among other things, 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, a Fund may engage in certain
currency hedging transactions, which themselves, involve certain special risks.
See "Additional Investment Policies and Practices", above.

            Additional Risks of Options on Forward Currency Exchange Contracts,
Options on Foreign Currencies, Swaps and Other Options. Unlike transactions
entered into by a Fund in futures contracts and exchange-traded options, options
on foreign currencies and forward currency exchange contracts may not be traded
on contract markets regulated by the CFTC or (with the exception of certain
foreign currency options) by 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, subject to SEC
regulation. Similarly, options on currencies may be traded OTC. 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 and a trader of forward currency
exchange contracts could lose amounts substantially in excess of their initial
investments, due to the margin and collateral requirements associated with such
positions.

            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 entered into, 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 them.

            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,
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, the OCC may, if it 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, 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.

            Options on U.S. Government securities, futures contracts, options on
futures contracts, forward currency exchange contracts and options on foreign
currencies may be traded on foreign exchanges. Such transactions are subject to
the risk of governmental actions affecting trading in or the prices of foreign
currencies or securities. The value of such positions also could be adversely
affected by (i) other complex foreign political and economic factors, (ii)
lesser availability than in the United States of data on which to make trading
decisions, (iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during nonbusiness hours in the United States, (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the United States, and (v) lesser trading volume
period.

            Sovereign Debt Obligations. No established secondary markets may
exist for many of the Sovereign Debt Obligations in which a Fund may invest.
Reduced secondary market liquidity may have an adverse effect on the market
price and the Fund's ability to dispose of particular instruments when necessary
to meet its liquidity requirements or in response to specific economic events
such as a deterioration in the creditworthiness of the issuer. Reduced secondary
market liquidity for certain Sovereign Debt Obligations may also make it more
difficult for a Fund to obtain accurate market quotations for the purpose of
valuing its portfolio. Market quotations are generally available on many
Sovereign Debt Obligations only from a limited number of dealers and may not
necessarily represent firm bids of those dealers or prices for actual sales.

            By investing in Sovereign Debt Obligations, a Fund will be exposed
to the direct or indirect consequences of political, social and economic changes
in various countries. Political changes in a country may affect the willingness
of a foreign government to make or provide for timely payments of its
obligations. The country's economic status, as reflected, among other things, in
its inflation rate, the amount of its external debt and its gross domestic
product, will also affect the government's ability to honor its obligations.

            Many countries providing investment opportunities for a Fund have
experienced substantial, and in some periods extremely high, rates of inflation
for many years. Inflation and rapid fluctuations in inflation rates have had and
may continue to have adverse effects on the economies and securities markets of
certain of these countries. In an attempt to control inflation, wage and price
controls have been imposed in certain countries.

            Investing in Sovereign Debt Obligations involves economic and
political risks. The Sovereign Debt Obligations in which a Fund may invest in
most cases pertain to countries that are among the world's largest debtors to
commercial banks, foreign governments, international financial organizations and
other financial institutions. In recent years, the governments of some of these
countries have encountered difficulties in servicing their external debt
obligations, which led to defaults on certain obligations and the restructuring
of certain indebtedness. Restructuring arrangements have included, among other
things, obtaining new credit to finance interest payments. Certain governments
have not been able to make payments of interest on or principal of Sovereign
Debt Obligations as those payments have come due. Obligations arising from past
restructuring agreements may affect the economic performance and political and
social stability of those issuers.

            Central banks and other governmental authorities which control the
servicing of Sovereign Debt Obligations may not be willing or able to permit the
payment of the principal or interest when due in accordance with the terms of
the obligations. As a result, the issuers of Sovereign Debt Obligations may
default on their obligations. Defaults on certain Sovereign Debt Obligations
have occurred in the past. Holders of certain Sovereign Debt Obligations may be
requested to participate in the restructuring and rescheduling of these
obligations and to extend further loans to the issuers. The interests of holders
of Sovereign Debt Obligations could be adversely affected in the course of
restructuring arrangements or by certain other factors referred to below.
Furthermore, some of the participants in the secondary market for Sovereign Debt
Obligations may also be directly involved in negotiating the terms of these
arrangements and may therefore have access to information not available to other
market participants.

            The ability of governments to make timely payments on their
obligations is likely to be influenced strongly by the issuer's balance of
payments, including export performance, and its access to international credits
and investments. A country whose exports are concentrated in a few commodities
could be vulnerable to a decline in the international prices of one or more of
those commodities. Increased protectionism on the part of a country's trading
partners could also adversely affect the country's exports and diminish its
trade account surplus, if any.

            To the extent that a country receives payment for its exports in
currencies other than dollars, its ability to make debt payments denominated in
dollars could be adversely affected. To the extent that a country develops a
trade deficit, it will need to depend on continuing loans from foreign
governments, multilateral organizations or private commercial banks, aid
payments from foreign governments and on inflows of foreign investment. The
access of a country to these forms of external funding may not be certain, and a
withdrawal of external funding could adversely affect the capacity of a
government to make payments on its obligations. In addition, the cost of
servicing debt obligations can be affected by a change in international interest
rates since the majority of these obligations carry interest rates that are
adjusted periodically based upon international rates.

            Another factor bearing on the ability of a country to repay
Sovereign Debt Obligations is the level of the country's international reserves.
Fluctuations in the level of these reserves can affect the amount of foreign
exchange readily available for external debt payments and, thus, could have a
bearing on the capacity of the country to make payments on its Sovereign Debt
Obligations.

            A Fund, except Tax-Aware, is permitted to invest in Sovereign Debt
Obligations that are not current in the payment of interest or principal or are
in default, so long as the Adviser believes it to be consistent with the Fund's
investment objectives. A Fund may have limited legal recourse in the event of a
default with respect to certain Sovereign Debt Obligations it holds. For
example, remedies from defaults on certain Sovereign Debt Obligations, unlike
those on private debt, must, in some cases, be pursued in the courts of the
defaulting party itself. Legal recourse therefore may be significantly
diminished. Bankruptcy, moratorium and other similar laws applicable to issuers
of Sovereign Debt Obligations may be substantially different from those
applicable to issuers of private debt obligations. The political context,
expressed as the willingness of an issuer of Sovereign Debt Obligations to meet
the terms of the debt obligation, for example, is of considerable importance. In
addition, no assurance can be given that the holders of commercial bank debt
will not contest payments to the holders of securities issued by foreign
governments in the event of default under commercial bank loan agreements.

--------------------------------------------------------------------------------

                              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 the 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 be
                        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)   with respect to High Income and Global Bond, 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, and, with
                        respect to Total Return Bond, Unconstrained Bond, Income
                        Fund and Tax-Aware may purchase or sell commodities or
                        options thereon to the extent permitted by applicable
                        law; 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 matter of fundamental policy, each of Global Bond, Total Return
Bond, Unconstrained Bond, Limited Duration, High Income, Income Fund and
Tax-Aware 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.

Non-Fundamental Investment Policies
-----------------------------------

            As a matter of non-fundamental policy, each Fund has adopted a
policy that provides that 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.

            As a matter of non-fundamental policy, High Income has adopted a
policy that provides that the Fund may not purchase shares of any registered
open-end investment company or registered unit investment trust in reliance on
Section 12(d)(1)(F) or (G) of the 1940 Act at any time the Fund has knowledge
that its shares are purchased by another investment company investor in reliance
on the provisions of subparagraph (G) of Section 12(d)(1).

--------------------------------------------------------------------------------

                              MANAGEMENT OF THE FUNDS

--------------------------------------------------------------------------------

The 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 March 31, 2019, totaling
approximately $555 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 March 31, 2019, the ownership structure of the Adviser,
expressed as a percentage of general and limited partnership interests, was as
follows:

       AXA Equitable Holdings and its subsidiaries           64.0%
       AllianceBernstein Holding L.P.                        35.2
       Unaffiliated holders                                   0.8
                                                  ----------------
                                                            100.0%
                                                  ================


            AXA S.A. ("AXA"), a French holding company for the AXA Group, a
worldwide leader in life, property and casualty and health insurance and asset
management, currently owns approximately 38.9% of the outstanding common stock
of AXA Equitable Holdings, Inc. ("AXA Equitable").

            As of March 31, 2019, AXA Equitable owns approximately 4.2% of the
issued and outstanding units representing assignments of beneficial ownership of
limited partnership interests in AllianceBernstein Holding L.P. ("AB Holding").
AllianceBernstein Corporation (an indirect wholly-owned subsidiary of AXA
Equitable, "GP") is the general partner of both AB Holding and the Adviser. The
GP owns 100,000 general partnership units in AB Holding and a 1% general
partnership interest in the Adviser.

            Including both the general partnership and limited partnership
interests in AB Holding and the Adviser, AXA Equitable and its subsidiaries have
an approximate 65.6% economic interest in the Adviser as of March 31, 2019.

            See "Management of Funds - Investment Adviser" in the Funds'
Prospectus for additional information about the ownership structure of the
Adviser and related matters.

Advisory Agreements and Expenses
--------------------------------

            The Adviser serves as investment manager and adviser of each of the
Funds, continuously furnishes an investment program for each Fund, and manages,
supervises and conducts the affairs of each Fund, subject to supervision of each
Fund's Board.

            Under the Advisory Agreements for the Funds, 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 each Fund's Advisory Agreement, responsible
for certain expenses incurred by the 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 have under the 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 the
Funds. 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 Fund's Board. For the fiscal year ended October 31, 2018, for Total Return
Bond, Unconstrained Bond, High Income, Income Fund and Tax-Aware, the Funds paid
the Adviser a total of $73,345, $90,270, $63,952, $67,265 and $55,897,
respectively, for these services. For the fiscal year ended September 30, 2018
for Limited Duration and Global Bond, the Funds paid the Adviser a total of
$70,027 and $69,045, respectively, for these services.

            Each Advisory Agreement continues in effect, provided that such
continuance is specifically approved at least annually by a vote of a majority
of the Fund's outstanding voting securities or by the Fund's Board and, in
either case, by a majority of the Directors who are not parties to the Advisory
Agreement or interested persons of any such party. Most recently, continuance of
each advisory agreement was approved for an additional annual term by the Board
at meetings held on November 6-8, 2018.

            Any material amendments to the Advisory Agreements must be approved
by a vote of the outstanding securities of the relevant Fund and by a 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 or by a vote of a majority of the Directors or by the Adviser, and
will automatically terminate in the event of assignment. Each Advisory Agreement
provides 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.

            The Adviser is compensated for its services at the following annual
rates:



           Fund             Annual Percentage Rate
           -----            ----------------------

                         
Total Return Bond*          .45 of 1% of the first $2.5 billion of average net assets
                            .40 of 1% of the excess of $2.5 billion up to $5 billion of average net assets
                            .35 of 1% of the excess over $5 billion up to $8 billion of average net assets
                            .30 of 1% of the excess over $8 billion of average net assets

Limited Duration**          .55 of 1% of the first $2.5 billion of average net assets
                            .50 of 1% of the excess of $2.5 billion up to $5 billion of average net assets
                            .45 of 1% of the excess over $5 billion of average net assets

Unconstrained Bond          .50 of 1% for the first $2.5 billion of average daily net assets
                            .45 of 1% of the excess of $2.5 billion up to $5 billion of average daily net assets
                            .40 of 1% of the excess over $5 billion of average daily net assets

Global Bond                 .50 of 1% for the first $2.5 billion of average daily adjusted total assets
                            .45 of 1% of the excess of $2.5 billion up to $5 billion of average daily adjusted
                            total assets
                            .40 of 1% of the excess over $5 billion of average daily adjusted total assets (i.e.,
                            the average daily value of total assets, minus the sum of accrued liabilities (other
                            than the principal amount of money borrowed))

High Income                 .50 of 1% for the first $2.5 billion of average daily adjusted total assets
                            .45 of 1% of the excess of $2.5 billion up to $5 billion of average daily adjusted
                            total assets
                            .40 of 1% of the excess over $5 billion of average daily adjusted total assets (i.e.,
                            the average daily value of total assets, minus the sum of accrued liabilities (other
                            than the principal amount of money borrowed))

Income Fund***              .45 of 1% for the first $2.5 billion of average net assets
                            .40 of 1% of the excess of $2.5 billion up to $5 billion of average net assets
                            .35 of 1% of the excess over $5 billion of average net assets

Tax-Aware****               .45 of 1% for the first $2.5 billion of average net assets
                            .40 of 1% of the excess of $2.5 billion up to $5 billion of average net assets
                            .35 of 1% of the excess over $5 billion of average net assets


*     Effective January 31, 2018. Prior to January 31, 2018, the Adviser was
      compensated at an annual rate of .45 of 1% of the first $2.5 billion of
      average net assets, .40 of 1% of the excess over $2.5 billion up to $5
      billion of average net assets and .35 of 1% of the excess over $5 billion
      of average net assets with respect to Total Return Bond.

**    Effective January 1, 2017. Prior to January 1, 2017, the Adviser was
      compensated at an annual rate of .60 of 1% of the first $2.5 billion of
      average net assets, .55 of 1% of the excess of $2.5 billion up to $5
      billion of average net assets and .50 of 1% of the excess over $5 billion
      of average net assets with respect to Limited Duration.

***   Effective January 29, 2017. Prior to January 29, 2017, the Adviser was
      compensated at an annual rate of .60 of 1% of the first $2.5 billion of
      average net assets, .55 of 1% of the excess over $2.5 billion up to $5
      billion of average net assets and .50 of 1% of the excess over $5 billion
      of average net assets with respect to Income Fund.

****  Effective January 1, 2017. Prior to January 1, 2017, the Adviser was
      compensated at an annual rate of .50% of average net assets with respect
      to Tax-Aware.

            The fee is accrued daily and paid monthly.

            Effective January 1, 2017, with respect to Limited Duration, the
Adviser has agreed to waive its management fee and/or bear expenses of the Fund
until January 31, 2020 to the extent necessary to prevent total Fund operating
expenses, on an annual basis, from exceeding .95%, 1.70% and .70% of average
daily net assets, respectively, for Class A, Class C and Advisor Class shares
(excluding acquired fund fees and expenses of any AB Mutual Funds in which the
Fund may invest, interest expense, taxes, extraordinary expenses, and brokerage
commissions and other transaction costs). Prior to January 1, 2017, the Adviser
had agreed to waive its fee and bear certain expenses so that the total
operating expenses, excluding interest expense, did not, on an annual basis,
exceed 1.05%, 1.80% and .80% of average daily net assets, respectively, for
Class A, Class C and Advisor Class shares.

            Effective January 29, 2017, with respect to Income Fund, the Adviser
has contractually agreed to waive its fee and bear certain expenses until
January 31, 2020 so that total 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 .77%, 1.52% and .52% 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 January 31,
2020 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 are 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 otherwise cause the Fund's total
annualized operating expenses to exceed the expense limitations. Prior to
January 29, 2017, the Adviser had agreed to waive its fee and bear certain
expenses so that the total 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) did
not, on an annual basis, exceed .88%, 1.63%, .63%, 1.13%, .88%, .63% and .63% of
average daily net assets, respectively, for Class A, Class C, Advisor Class,
Class R, Class K, Class I and Class Z shares.

            The Adviser has contractually agreed, with respect to Total Return
Bond, Unconstrained Bond and Tax-Aware, for the period from the effective date
of each Fund's Prospectus to the effective date of the subsequent Prospectus
incorporating each Fund's annual financial statements (for Total Return Bond,
until July 12, 2020) (the "Period") to waive its fee and bear certain expenses
so that total operating expenses, excluding interest expense (or for Tax-Aware,
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), do not, on an annual basis, exceed the
amounts noted for the Funds listed in the table below. These fee waiver and/or
expense reimbursement agreements automatically extend each year unless the
Adviser provides notice 60 days prior to the end of the Period.

Fund                                         Expense Caps
----                                         ------------
Total Return Bond*      Class A              .77% of average net assets
                        Class B             1.52% of average net assets
                        Class C             1.52% of average net assets
                        Advisor Class        .52% of average net assets
                        Class R             1.02% of average net assets
                        Class K              .77% of average net assets
                        Class I              .52% of average net assets
                        Class Z              .52% of average net assets

Unconstrained Bond      Class A              .90% of aggregate daily net assets
                        Class B             1.65% of aggregate daily net assets
                        Class C             1.65% of aggregate daily net assets
                        Advisor Class        .65% of aggregate daily net assets
                        Class R             1.15% of aggregate daily net assets
                        Class K              .90% of aggregate daily net assets
                        Class I              .65% of aggregate daily net assets
                        Class Z              .65% of aggregate daily net assets

Tax-Aware**             Class A              .75% of aggregate daily net assets
                        Class C             1.50% of aggregate daily net assets
                        Advisor Class        .50% of aggregate daily net assets

*     Effective February 1, 2017. Prior to February 1, 2017, the Adviser had
      agreed to waive its fee and bear certain expenses so that the total
      operating expenses, excluding interest expense, did not, on an annual
      basis, exceed .85%, 1.60%, 1.60%, .60%, 1.10%, .85%, .60% and .60% of
      average net assets, respectively, for Class A, Class B, Class C, Advisor
      Class, Class R, Class K, Class I and Class Z shares.

**    Effective January 1, 2017. Prior to January 1, 2017, the Adviser had
      agreed to waive its fee and bear certain expenses so that the total
      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) did not, on an annual basis, exceed .80%, 1.55% and .55% of
      aggregate daily net assets, respectively, for Class A, Class C and Advisor
      Class shares.

            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 January 31, 2020 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. In
connection with the investment by the Funds in the AB Government Money Market
Portfolio, the Adviser waived its investment management fee from Total Return
Bond, Unconstrained Bond, High Income, Income Fund and Tax-Aware in the amount
of $7,737, $23,602, $277,019, $16,967 and $1,076, respectively, for the fiscal
year ended October 31, 2016, $8,359, $62,024, $359,745, $29,559 and $5,796,
respectively, for the fiscal year ended October 31, 2017, and $7,405, $26,657,
$165,770, $63,228 and $1,573, respectively, for the fiscal year ended October
31, 2018, and from Limited Duration and Global Bond in the amount of $32,249 and
$116,131, respectively, for the fiscal year ended September 30, 2016, $76,102
and $223,351, respectively, for the fiscal year ended September 30, 2017, and
$14,870 and $213,644, respectively, for the fiscal year ended September 30,
2018.

            For the three most recent fiscal years or since inception of the
Funds, the Funds paid the Adviser advisory fees as follows:

                                                    Amounts Waived or
                                                 Reimbursed under Expense
       Fund                    Advisory Fees      Limitation Undertaking
       ----                    -------------      ----------------------

       Total Return Bond
       2018                       $1,617,102               $840,486
       2017                       $1,615,767               $836,778
       2016                       $1,591,173               $625,527

       Limited Duration
       2018                       $1,540,794               $266,035
       2017                       $1,896,053               $229,482
       2016                       $1,741,495               $175,273

       Unconstrained Bond
       2018                       $1,526,873               $496,464
       2017                       $1,507,596               $418,033
       2016                       $1,596,625               $452,745

       Global Bond
       2018                      $31,413,114                     $0
       2017                      $29,134,610                     $0
       2016                      $24,097,113                     $0

       High Income
       2018                      $32,529,621                     $0
       2017                      $35,531,703                     $0
       2016                      $30,115,930                     $0

       Income Fund
       2018                      $11,554,392             $2,076,002
       2017                       $5,759,192             $1,361,441
       2016                       $6,979,775               $990,111

       Tax-Aware
       2018                         $312,885               $305,597
       2017                         $258,988               $300,737
       2016                         $196,813               $308,027

            The Adviser may act as an investment adviser to other persons, firms
or corporations, including investment companies, and is the investment adviser
to 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 Real Estate Investment Fund, Inc., AB Global Risk
Allocation Fund, Inc., AB Institutional Funds, 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 Sustainable
International Thematic Fund, Inc., AB Trust, AB Variable Products Series Fund,
Inc., Sanford C. Bernstein Fund, Inc., 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 the AB Multi-Manager Alternative
Fund, are referred to collectively below as the "AB 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 which result in the purchase or sale of the particular
security by its other clients simultaneously with a purchase or sale thereof by
the 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. 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 the
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.

Board of Directors Information
------------------------------

      Certain information concerning the Funds' Directors is set forth below.



                                                                              PORTFOLIOS IN AB
NAME, ADDRESS*,                                                               FUND COMPLEX         OTHER PUBLIC COMPANY
AGE AND                               PRINCIPAL OCCUPATION(S) DURING PAST     OVERSEEN             DIRECTORSHIPS CURRENTLY
(YEAR FIRST ELECTED**)                FIVE YEARS AND OTHER INFORMATION        BY DIRECTOR          HELD BY DIRECTOR
----------------------                --------------------------------        ----------------     ------------------------


INDEPENDENT
DIRECTORS
---------

                                                                                          
Marshall C. Turner, Jr.,#             Private Investor since prior to 2014.           92           Xilinx, Inc.
77                                    Former Chairman and CEO of Dupont                            (programmable logic
Chairman of the Board                 Photomasks, Inc. (components of                              semi-conductors) since
(2005 - Total Return Bond)            semi-conductor manufacturing). He has                        2007
(2005 - Global Bond)                  extensive operating leadership and
(2005 - High Income)                  venture capital investing experience,
(2005 - Unconstrained Bond)           including five interim or full-time
(2011 - Limited Duration)             CEO roles, and prior service as
(2013 - Tax-Aware)                    general partner of institutional
(2015 - Income Fund)                  venture capital partnerships. He also
                                      has extensive non-profit board
                                      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.

Michael J. Downey,#                   Private Investor since prior to 2014.           92           None
75                                    Formerly, Chairman of The Asia Pacific
(2005 - Total Return Bond)            Fund, Inc. (registered investment
(2005 - Global Bond)                  company) since prior to 2014 until
(2005 - High Income)                  January 2019; managing partner of
(2005 - Unconstrained Bond)           Lexington Capital, LLC (investment
(2011 - Limited Duration)             advisory firm) from December 1997 until
(2013 - Tax-Aware)                    December 2003. He served as a Director
(2015 - Income Fund)                  of Prospect Acquisition Corp.
                                      (financial services) from 2007 until
                                      2009. From 1987 until 1993, Chairman
                                      and CEO of Prudential Mutual Fund
                                      Management, director of the Prudential
                                      mutual 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.

Nancy P. Jacklin,#                    Private Investor since prior to 2014.           92           None
71                                    Professorial Lecturer at the Johns
(2006 - Total Return Bond)            Hopkins School of Advanced
(2006 - Global Bond)                  International Studies (2008-2015);
(2006 - High Income)                  U.S. Executive Director of the
(2006 - Unconstrained Bond)           International Monetary Fund (which is
(2011 - Limited Duration)             responsible for ensuring the stability
(2013 - Tax-Aware)                    of the international monetary system)
(2015 - Income Fund)                  (December 2002-May 2006); Partner,
                                      Clifford Chance (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 Chair of the
                                      Governance and Nominating Committees
                                      of the AB Funds since August 2014.

Carol C. McMullen,#                   Managing Director of Slalom Consulting          92           None
63                                    (consulting) since 2014, private
(2016)                                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. Formerly,               92           None
66                                    Partner, Deloitte & Touche LLP
(2008 - Total Return Bond)            (1995-2008) where he held a number of
(2008 - Global Bond)                  senior positions, including Vice
(2008 - High Income)                  Chairman, and U.S. and Global
(2008 - Unconstrained Bond)           Investment Management Practice
(2011 - Limited Duration)             Managing Partner; President, Fidelity
(2013 - Tax-Aware)                    Accounting and Custody Services
(2015 - Income Fund)                  Company (1993-1995), where he was
                                      responsible for accounting, pricing,
                                      custody and reporting 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 prior to                92           None
79                                    January 2007, of the law firm Sullivan
(2007 - Total Return Bond)            & Cromwell LLP and is a former member
(2007 - Global Bond)                  of the ABA Federal Regulation of
(2007 - High Income)                  Securities Committee Task Force to
(2007 - Unconstrained Bond)           draft editions of the Fund Director's
(2011 - Limited Duration)             Guidebook. He also serves as a
(2013 - Tax-Aware)                    director or trustee of various
(2015 - Income Fund)                  non-profit organizations and has
                                      served as Chairman or Vice Chairman of
                                      a 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 of the Adviser++          92           None
59                                    and the head of AllianceBernstein
(2010 - Total Return Bond)            Investments, Inc. ("ABI")++ since July
(2010 - Global Bond)                  2008; Director of ABI and President of
(2010 - High Income)                  the AB Mutual Funds. Previously, he
(2010 - Unconstrained Bond)           served as Executive Managing Director
(2011 - Limited Duration)             of ABI from December 2006 to June
(2013 - Tax-Aware)                    2008. Prior to joining ABI in 2006,
(2015 - Income Fund)                  Executive Managing Director of
                                      Bernstein Global Wealth Management,
                                      and prior 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: Legal & Compliance Department - Mutual Fund Legal, 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 2014 until
July 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 Funds, 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. 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; 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 Chair
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 non-profit
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 a 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 included registered investment companies and as a director or trustee
of various nonprofit organizations and served as Chairman or Vice Chairman of a
number of them, and has 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 typically 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 of the Adviser), 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 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 Total Return Bond, Limited Duration,
Unconstrained Bond, Global Bond, High Income, Income Fund and Tax-Aware 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 Total Return Bond, Limited
Duration, Unconstrained Bond, Global Bond, High Income, Income Fund and
Tax-Aware met four 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 for nomination 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 Director 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 prior to
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 their 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 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 Fund, and the candidate's ability to
qualify as an Independent Director. 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 met seven times during the Funds' most recently completed
fiscal year.

            The dollar range of each Fund's securities owned by each Director
and the aggregate dollar range of securities of funds in the AB Fund Complex
owned by each Director are set forth below.

                 Dollar Range of Equity Securities in the Funds
                            As of December 31, 2018
                            -----------------------

                       Total Return    Unconstrained
Name of Director           Bond             Bond       Global Bond  High Income
----------------           ----             ----       -----------  -----------

Michael J. Downey          None             None          None   $10,001-$50,000
Nancy P. Jacklin           None             None          None         None
Robert M. Keith            None             None          None         None
Carol C. McMullen          None             None          None         None
Garry L. Moody             None             None          None         None
Marshall C. Turner, Jr.    None             None          None         None
Earl D. Weiner             None             None          None   $10,001-$50,000

                 Dollar Range of Equity Securities in the Funds
                            As of December 31, 2018
                            -----------------------

                         Limited
Name of Director         Duration        Income Fund     Tax-Aware
----------------         --------        -----------      ---------

Michael J. Downey          None          $1-$10,000          None
Nancy P. Jacklin           None       $50,001-$100,000       None
Robert M. Keith            None             None             None
Carol C. McMullen          None             None             None
Garry L. Moody             None             None             None
Marshall C. Turner, Jr.    None         Over $100,000        None
Earl D. Weiner             None             None             None

                           Aggregate Dollar Range
                           of Equity Securities in
                             the AB Fund Complex
Name of Director           as of December 31, 2018
----------------           -----------------------

Michael J. Downey               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
-------                   --------------      ----------------------

Robert M. Keith,          President and       See biography above.
59                        Chief Executive
                          Officer

Emilie D. Wrapp,          Secretary           Senior Vice President, Assistant
63                                            General Counsel and Assistant
                                              Secretary of ABI,** with which she
                                              has been associated since prior to
                                              2014.

Michael B. Reyes,         Senior Analyst      Vice President of the Adviser,**
42                                            with which he has been associated
                                              since prior to 2014.

Joseph J. Mantineo,       Treasurer and       Senior Vice President of ABIS,**
60                        Chief               with which he has been associated
                          Financial           since prior to 2014.
                          Officer

Vincent S. Noto,          Chief               Senior Vice President since 2015
54                        Compliance          and Mutual Fund Chief Compliance
                          Officer             Officer of the Adviser** since
                                              2014. Prior thereto, he was Vice
                                              President and Director of Mutual
                                              Fund Compliance of the Adviser
                                              since 2012.

Stephen M. Woetzel,       Controller          Senior Vice President of ABIS,**
47                                            with which he has been associated
                                              since prior to 2014.

Total Return Bond
-----------------

Michael Canter,           Vice President      Senior Vice President of the
49                                            Adviser,** with which he has been
                                              associated since prior to 2014. He
                                              is also the Director of US Multi-
                                              Sector and Securitized Assets.

Shawn E. Keegan,          Vice President      Senior Vice President of the
47                                            Adviser,** with which he has been
                                              associated since prior to 2014.

Douglas J. Peebles,       Vice President      Senior Vice President of the
53                                            Adviser,** with which he has been
                                              associated since prior to 2014. He
                                              is also Chief Investment Officer
                                              of Fixed Income.

Janaki Rao,               Vice President      Senior Vice President of the
48                                            Adviser,** with which he has been
                                              associated since March 2014.

Greg J. Wilensky,         Vice President      Senior Vice President of the
51                                            Adviser,** with which he has been
                                              associated since prior to 2014. He
                                              is also Director of US Multi-
                                              Sector Fixed Income, US Inflation-
                                              Linked Fixed Income and Stable
                                              Value Investments.

Limited Duration
----------------

Gershon M. Distenfeld,    Vice President      Senior Vice President of the
43                                            Adviser,** with which he has been
                                              associated since prior to 2014. He
                                              is also co-Head of Fixed-Income.

Jacqueline Pincus,        Vice President      Vice President of the Adviser,**
32                                            with which he has been associated
                                              since prior to 2014.

William Smith,            Vice President      Vice President of the Adviser,**
31                                            with which he has been associated
                                              since prior to 2014. He is a
                                              member of the High Yield Credit
                                              portfolio-management team,
                                              focusing on US and global multi-
                                              sector portfolios as well as a
                                              member of the High Income
                                              portfolio-management team.

Unconstrained Bond
------------------

Scott A. DiMaggio,        Vice President      Senior Vice President of the
47                                            Adviser,** with which he has been
                                              associated since prior to 2014. He
                                              is also co-Head of Fixed-Income.

Gershon M. Distenfeld,    Vice President      See above.
43

Douglas J. Peebles,       Vice President      See above.
53

Dimitri Silva,            Vice President      Vice President of the Adviser,**
36                                            with which he has been associated
                                              since prior to 2014.

John Taylor,              Vice President      Senior Vice President of the
41                                            Adviser,** with which he has been
                                              associated since prior to 2014. He
                                              is also Co-Head of European Fixed
                                              Income.

Global Bond
-----------

Paul J. DeNoon,^          Vice President      Senior Vice President of the
56                                            Adviser,** with which he has been
                                              associated since prior to 2014.

Scott A. DiMaggio,        Vice President      See above.
47

Douglas J. Peebles,       Vice President      See above.
53

Matthew S. Sheridan,      Vice President      Senior Vice President of the
43                                            Adviser,** with which he has been
                                              associated since prior to 2014.

John Taylor,              Vice President      See above.
41

High Income
-----------

Paul J. DeNoon,^          Vice President      See above.
56

Gershon M. Distenfeld,    Vice President      See above.
43

Shamaila Khan,            Vice President      Senior Vice President of the
47                                            Adviser,** with which she has been
                                              associated since prior to 2014.
                                              She is also Director of Emerging
                                              Market Debt.

Douglas J. Peebles,       Vice President      See above.
53

Matthew S. Sheridan,      Vice President      See above.
43

Income Fund
-----------

Paul J. DeNoon,^          Vice President      See above.
56

Scott A. DiMaggio,        Vice President      See above.
47

Gershon M. Distenfeld,    Vice President      See above.
43

Douglas J. Peebles,       Vice President      See above.
53

Matthew S. Sheridan,      Vice President      See above.
43

Tax-Aware
---------

Robert B. (Guy) Davidson, Vice President      Senior Vice President of the
III,                                          Adviser,** with which he has been
57                                            associated since prior to 2014. He
                                              is also Director for Municipal
                                              Bond Management.

Terrance T. Hults,        Vice President      Senior Vice President of the
52                                            Adviser,** with which he has been
                                              associated since prior to 2014.

Shawn E. Keegan,          Vice President      See above.
47

Matthew J. Norton,        Vice President      Vice President of the Adviser,**
36                                            with which he has been associated
                                              since prior to 2014.

Andrew D. Potter,         Vice President      Vice President of the Adviser,
33                                            with which he has been associated
                                              since prior to 2014.

--------
*     The address for each of the Fund's Officers is 1345 Avenue of the
      Americas, New York, NY 10105.

**    The Adviser, ABI and ABIS are affiliates of each Fund.

^     Mr. DeNoon is expected to retire from the Adviser effective January 1,
      2020.

            The Funds do not pay any fees to, or reimburse expenses of, their
Directors who are considered "interested persons" (as defined in Section
2(a)(19) of the 1940 Act) of the Funds. The aggregate compensation paid by a
Fund to each of the Directors during its most recent fiscal year, the aggregate
compensation paid to each of the Directors during calendar year 2018 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 or trustee are set
forth below. Neither the Funds nor any other fund 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 or trustee of one
or more other registered investment companies in the AB Fund Complex.



                             Aggregate                               Aggregate
                             Compensation      Aggregate             Compensation
                             from              Compensation          from                  Aggregate
                             Total Return      from Limited          Unconstrained         Compensation
Name of Director             Bond              Duration              Bond                  from Global Bond
----------------             ----              --------              ----                  ----------------

                                                                                 
Michael J. Downey            $3,107              $3,107                $3,107                $3,107
William H. Foulk, Jr.*       $3,107              $3,107                $3,107                $3,107
Nancy P. Jacklin             $3,317              $3,317                $3,317                $3,317
Robert M. Keith              $    0              $    0                $    0                $    0
Carol C. McMullen            $3,107              $3,107                $3,107                $3,107
Garry L. Moody               $3,527              $3,527                $3,527                $3,527
Marshall C. Turner, Jr.      $5,042              $5,042                $5,042                $5,042
Earl D. Weiner               $3,107              $3,107                $3,107                $3,107




                            Aggregate         Aggregate           Aggregate
                            Compensation      Compensation        Compensation
Name of Director            from High Income  from Income Fund    from Tax-Aware
----------------            ----------------  ----------------    --------------

                                                                
Michael J. Downey                $3,107            $3,107                $3,107
William H. Foulk, Jr.*           $3,107            $3,107                $3,107
Nancy P. Jacklin                 $3,317            $3,317                $3,317
Robert M. Keith                  $    0            $    0                $    0
Carol C. McMullen                $3,107            $3,107                $3,107
Garry L. Moody                   $3,527            $3,527                $3,527
Marshall C. Turner, Jr.          $5,042            $5,042                $5,042
Earl D. Weiner                   $3,107            $3,107                $3,107




                                                         Total Number of                Total Number of
                                                         Registered Investment          Investment Portfolios
                                                         Companies in the               within the AB Fund
                              Total Compensation         AB Fund Complex,               Complex, including the
                              from the                   including the Funds, as to     Funds, as to which the
                              AB Fund  Complex,          which the Director is a        Director is a
Name of Director              including the Funds        Director or Trustee            Director or Trustee
----------------              -------------------        ---------------------------     -------------------

                                                                                           
Michael J. Downey                     $299,250                       26                             92
William H. Foulk, Jr.*                $299,250                       26                             92
Nancy P. Jacklin                      $319,250                       26                             92
Robert M. Keith                       $      0                       26                             92
Carol C. McMullen                     $299,250                       26                             92
Garry L. Moody                        $339,250                       26                             92
Marshall C. Turner, Jr.               $480,000                       26                             92
Earl D. Weiner                        $299,250                       26                             92


*     Mr. Foulk retired as Director effective December 31, 2018.

            As of July 1, 2019, the Directors and officers of each Fund as a
group owned less than 1% of the shares of each Fund.

Additional Information About the Funds' Portfolio Managers
----------------------------------------------------------

TOTAL RETURN BOND

            The management of, and investment decisions for, the Fund's
portfolio are made by the U.S. Investment Grade: Core Fixed Income Investment
Team. Michael Canter, Shawn E. Keegan, Douglas J. Peebles, Janaki Rao and Greg
J. Wilensky 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 Fund - Fund 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 October 31, 2018 are set
forth below:

                   DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
                   ---------------------------------------------

                   Michael Canter                       None
                   Shawn E. Keegan                      None
                   Douglas J. Peebles                   None
                   Janaki Rao                           None
                   Greg J. Wilensky                     None

            As of October 31, 2018, employees of the Adviser had approximately
$155,141 invested in shares of the Fund and $50,035,632 invested in shares of
all AB Mutual Funds (excluding AB Government Money Market Portfolio) 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 October
31, 2018.

--------------------------------------------------------------------------------
                        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
-----------------     -------------  ---------------  ------------  ------------

Michael Canter           34         $8,790,000,000       None           None
Shawn E. Keegan           1          $341,000,000        None           None
Douglas J. Peebles       29         $15,181,000,000      None           None
Janaki Rao              None             None            None           None
Greg J. Wilensky         34         $8,790,000,000       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
-----------------   -------------    ---------------  ------------  ------------

Michael Canter           33          $4,453,000,000      None            None
Shawn E. Keegan          38          $44,266,000,000     None            None
Douglas J. Peebles       68          $7,964,000,000      None            None
Janaki Rao                5          $3,298,000,000      None            None
Greg J. Wilensky         33          $4,453,000,000      None            None


--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

                                                    Number of      Total Assets
                                                    Other          of Other
                   Total Number    Total Assets of  Accounts       Accounts
                   of Other        Other            Managed with   Managed with
                   Accounts        Accounts         Performance-   Performance-
Portfolio Manager  Managed         Managed          based Fees     based Fees
-----------------  -------------   ---------------  ------------   -------------

Michael Canter         109          $5,715,000,000       3          $423,000,000
Shawn E. Keegan        150         $40,402,000,000       3        $4,835,000,000
Douglas J. Peebles      74         $26,395,000,000       2        $1,638,000,000
Janaki Rao               1            $209,000,000       1          $209,000,000
Greg J. Wilensky       109          $5,715,000,000       3          $423,000,000

LIMITED DURATION

            The management of, and investment decisions for, the Fund's
portfolio are made by its senior investment management team. Gershon M.
Distenfeld, Jacqueline Pincus and William Smith are the investment professionals
primarily responsible for the day-to-day management of the Fund's portfolio (the
"Portfolio Managers"). For additional information about the portfolio management
of the Fund, see "Management of the Fund - 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 September 30, 2018 are set
forth below:

               DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND(2)
               ------------------------------------------------

                 Gershon M. Distenfeld                None
                 Jacqueline Pincus                    None
                 William Smith                        None

--------
(2)   The dollar ranges presented above include any vested shares awarded under
      the Adviser's Partners Compensation Plan.

            As of September 30, 2018, employees of the Adviser had approximately
$52,931,266 in shares of all AB Mutual Funds (excluding AB Government Money
Market Portfolio) 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 each 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 September 30, 2018.

--------------------------------------------------------------------------------
                        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
-----------------     -------------  ---------------  ------------  ------------

Gershon M. Distenfeld      15         $10,286,000,000     None          None
Jacqueline Pincus          1            $55,000,000       None          None
William Smith              1            $21,000,000       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
-----------------   -------------    ---------------  ------------  ------------

Gershon M. Distenfeld      60         $36,602,000,000     None          None
Jacqueline Pincus         None             None           None          None
William Smith              33         $4,332,000,000      None          None


--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

                                                    Number of      Total Assets
                                                    Other          of Other
                   Total Number    Total Assets of  Accounts       Accounts
                   of Other        Other            Managed with   Managed with
                   Accounts        Accounts         Performance-   Performance-
Portfolio Manager  Managed         Managed          based Fees     based Fees
-----------------  -------------   ---------------  ------------   -------------

Gershon M. Distenfeld      12     $2,883,000,000      None          None
Jacqueline Pincus          6       $578,000,000        1        $228,000,000
William Smith              10     $2,244,000,000      None          None

UNCONSTRAINED BOND

            The management of, and investment decisions for, the Fund's
portfolio are made by the Global Fixed Income Investment Team and the Global
Credit Investment Team. Scott A. DiMaggio, Gershon M. Distenfeld, Douglas J.
Peebles, Dimitri Silva and John Taylor 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 Fund - 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 October 31, 2018 are set
forth below:

              DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND(3)
              ------------------------------------------------

                 Scott A. DiMaggio                       None
                 Gershon M. Distenfeld                   None
                 Douglas J. Peebles                 Over $1,000,000
                 Dimitri Silva                           None
                 John Taylor                             None

--------
(3)   The dollar ranges presented above include any vested shares awarded under
      the Adviser's Partners Compensation Plan.

            As of October 31, 2018, employees had approximately $50,035,632
invested in shares of all AB Mutual Funds (excluding AB Government Money Market
Portfolio) 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 October
31, 2018.

--------------------------------------------------------------------------------
                        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
-----------------     -------------  ---------------  ------------  ------------

Scott A. DiMaggio        27         $14,849,000,000     None           None
Gershon M. Distenfeld    16         $10,093,000,000     None           None
Douglas J. Peebles       29         $15,181,000,000     None           None
Dimitri Silva           None             None           None           None
John Taylor               2          $333,000,000       None           None


--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                      Total Number                    Other Pooled  Other Pooled
                      of Other       Total Assets of  Investment    Investment
                      Pooled         Other Pooled     Vehicles      Vehicles
                      Investment     Investment       Managed with  Managed with
                      Vehicles       Vehicles         Performance-  Performance-
Portfolio Manager     Managed        Managed          based Fees    based Fees
-----------------     ------------   ---------------  ------------  ------------

Scott A. DiMaggio        55         $3,852,000,000     None            None
Gershon M. Distenfeld    60        $35,137,000,000     None            None
Douglas J. Peebles       68         $7,964,000,000     None            None
Dimitri Silva           None             None          None            None
John Taylor              11         $2,853,000,000     None            None


--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

                                                   Number of      Total Assets
                      Total                        Other          of Other
                      Number of   Total Assets     Accounts       Accounts
                      Other       of Other         Managed with   Managed with
                      Accounts    Accounts         Performance-   Performance-
Portfolio Manager     Managed     Managed          based Fees     based Fees
-----------------     ----------  ---------------  ------------   -------------

Scott A. DiMaggio        57       $24,091,000,000      2         $1,638,000,000
Gershon M. Distenfeld    12       $2,794,000,000      None           None
Douglas J. Peebles       74       $26,395,000,000      2         $1,638,000,000
Dimitri Silva           None           None           None           None
John Taylor              17       $2,304,000,000      None           None

GLOBAL BOND

            The management of, and investment decisions for, the Fund's
portfolio are made by the Global Fixed Income Investment Team. Paul J. DeNoon,
Scott A. DiMaggio, Douglas J. Peebles, Matthew S. Sheridan and John Taylor 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 Fund - 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 September 30, 2018 are set
forth below:

              DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND(4)
              ------------------------------------------------

               Paul J. DeNoon                  Over $1,000,000
               Scott A. DiMaggio              $100,001-$500,000
               Douglas J. Peebles                   None
               Matthew S. Sheridan                  None
               John Taylor                          None

--------
(4)   The dollar ranges presented above include any vested shares awarded under
      the Adviser's Partners Compensation Plan.

            As of September 30, 2018, employees of the Adviser had approximately
$52,931,266 invested in shares of all AB Mutual Funds (excluding AB Government
Money Market Portfolio) 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 September
30, 2018.

--------------------------------------------------------------------------------
                        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
-----------------     -------------  ---------------  ------------  ------------

Paul J. DeNoon          19           $10,657,000,000      None            None
Scott A. DiMaggio       26           $8,424,000,000       None            None
Douglas J. Peebles      28           $8,767,000,000       None            None
Matthew S. Sheridan     36           $12,155,000,000      None            None
John Taylor              2            $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
-----------------   -------------    ---------------  ------------  ------------

Paul J. DeNoon          56          $36,834,000,000      None            None
Scott A. DiMaggio       61          $3,803,000,000       None            None
Douglas J. Peebles      73          $7,754,000,000       None            None
Matthew S. Sheridan     87          $35,613,000,000      None            None
John Taylor             10          $2,757,000,000       None            None


--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

                                                    Number of      Total Assets
                                                    Other          of Other
                     Total Number  Total Assets of  Accounts       Accounts
                     of Other      Other            Managed with   Managed with
                     Accounts      Accounts         Performance-   Performance-
Portfolio Manager    Managed       Managed          based Fees     based Fees
-----------------    ------------  ---------------  ------------   -------------

Paul J. DeNoon          38           $8,543,000,000        2       $756,000,000
Scott A. DiMaggio       57          $24,421,000,000        2      $1,660,000,000
Douglas J. Peebles      74          $26,773,000,000        2      $1,660,000,000
Matthew S. Sheridan     42          $20,775,000,000        2      $1,660,000,000
John Taylor             17           $2,352,000,000      None          None

HIGH INCOME

            The management of, and investment decisions for, the Fund's
portfolio are made by the Global Fixed Income Team and Global Credit Investment
Team. Paul J. DeNoon, Gershon M. Distenfeld, Shamaila Khan, Douglas J. Peebles
and Matthew S. Sheridan 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 Fund - 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 October 31, 2018 are set
forth below:

                DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND(5)
                ------------------------------------------------

                Paul J. DeNoon                $500,001-$1,000,000
                Gershon M. Distenfeld         $500,001-$1,000,000
                Shamaila Khan                         None
                Douglas J. Peebles                    None
                Matthew S. Sheridan                   None

--------
(5)   The dollar ranges presented above include any vested shares awarded under
      the Adviser's Partners Compensation Plan.

            As of October 31, 2018, employees of the Adviser had approximately
$3,113,704 invested in shares of the Fund and approximately $50,035,632 invested
in shares of all AB Mutual Funds (excluding AB Government Money Market
Portfolio) 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 October
31, 2018.

--------------------------------------------------------------------------------
                        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
-----------------     -------------  ---------------  ------------  ------------

Paul J. DeNoon            18        $4,209,000,000     None           None
Gershon M. Distenfeld     15        $4,108,000,000     None           None
Shamaila Khan             4          $273,000,000      None           None
Douglas J. Peebles        29       $15,181,000,000     None           None
Matthew S. Sheridan       36       $12,378,000,000     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
-----------------   -------------    ---------------  ------------  ------------

Paul J. DeNoon            56       $35,037,000,000     None           None
Gershon M. Distenfeld     60       $35,137,000,000     None           None
Shamaila Khan             28        $4,074,000,000     None           None
Douglas J. Peebles        68        $7,964,000,000     None           None
Matthew S. Sheridan       81       $34,356,000,000     None           None


--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

                                                    Number of      Total Assets
                                                    Other          of Other
                     Total Number  Total Assets     Accounts       Accounts
                     of Other      of Other         Managed with   Managed with
                     Accounts      Accounts         Performance-   Performance-
Portfolio Manager    Managed       Managed          based Fees     based Fees
-----------------    ------------  ---------------  ------------   -------------

Paul J. DeNoon             38       $8,777,000,000      2         $881,000,000
Gershon M. Distenfeld      12       $2,794,000,000     None           None
Shamaila Khan              36       $8,152,000,000      2         $881,000,000
Douglas J. Peebles         74      $26,395,000,000      2        $1,638,000,000
Matthew S. Sheridan        41      $20,547,000,000      2        $1,638,000,000

INCOME FUND

            The management of, and investment decisions for, the Fund's
portfolio are made by the U.S. Investment Grade: Core Fixed Income Investment
Team. Paul J. DeNoon, Scott A. DiMaggio, Gershon M. Distenfeld, Douglas J.
Peebles and Matthew S. Sheridan 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 Fund - Fund 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 October 31, 2018 are set
forth below:

                   DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND

                  Paul J. DeNoon                $100,001-$500,000
                  Scott A. DiMaggio             $50,001-$100,000
                  Gershon M. Distenfeld                None
                  Douglas J. Peebles             Over $1,000,000
                  Matthew S. Sheridan            $50,001-$100,000

            As of October 31, 2018, employees of the Adviser had approximately
$50,035,632 invested in shares of all AB Mutual Funds (excluding AB Government
Money Market Portfolio) 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 October
31, 2018.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Fund)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets     Investment    Investment
                      of Registered  of Registered    Companies     Companies
                      Investment     Investment       Managed with  Managed with
                      Companies      Companies        Performance-  Performance-
Portfolio Manager     Managed        Managed          based Fees    based Fees
-----------------     -------------  ---------------  ------------  ------------

Paul J. DeNoon            18         $7,701,000,000      None          None
Scott A. DiMaggio         27        $14,849,000,000      None          None
Gershon M. Distenfeld     15         $7,599,000,000      None          None
Douglas J. Peebles        29        $15,181,000,000      None          None
Matthew S. Sheridan       36        $15,869,000,000      None          None


--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                   Total
                                                     Number of     Assets of
                      Total                          Other Pooled  Other Pooled
                      Number of     Total Assets of  Investment    Investment
                      Other Pooled  Other Pooled     Vehicles      Vehicles
                      Investment    Investment       Managed with  Managed with
                      Vehicles      Vehicles         Performance-  Performance-
Portfolio Manager     Managed       Managed          based Fees    based Fees
-----------------     ------------  ---------------  ------------  ------------

Paul J. DeNoon             56       $35,037,000,000      None           None
Scott A. DiMaggio          55        $3,852,000,000      None           None
Gershon M. Distenfeld      60       $35,137,000,000      None           None
Douglas J. Peebles         68        $7,964,000,000      None           None
Matthew S. Sheridan        81       $34,356,000,000      None           None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

                                                    Number of      Total Assets
                       Total                        Other          of Other
                       Number      Total Assets     Accounts       Accounts
                       of Other    of Other         Managed with   Managed with
                       Accounts    Accounts         Performance-   Performance-
Portfolio Manager      Managed     Managed          based Fees     based Fees
-----------------      -------     -------------    ------------   -------------

Paul J. DeNoon           38        $8,777,000,000      2         $881,000,000
Scott A. DiMaggio        57       $24,091,000,000      2        $1,638,000,000
Gershon M. Distenfeld    12        $2,794,000,000     None           None
Douglas J. Peebles       74       $26,395,000,000      2        $1,638,000,000
Matthew S. Sheridan      41       $20,547,000,000      2        $1,638,000,000

TAX-AWARE

            The management of, and investment decisions for, the Fund's
portfolio are made by Robert B. (Guy) Davidson, III, Terrance T. Hults, Shawn E.
Keegan, Matthew J. Norton and Andrew D. Potter, who 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 Fund - Portfolio
Managers" in the Fund's Prospectus. As of October 31, 2018 the Fund's portfolio
managers owned none of the Fund's equity securities directly or beneficially.

                DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND(6)
                ------------------------------------------------

                Robert B. (Guy) Davidson, III             None
                Terrance T. Hults                         None
                Shawn E. Keegan                           None
                Matthew J. Norton                     $1-$10,000
                Andrew D. Potter                          None

--------
(6)   The dollar ranges presented above include any vested shares awarded under
      the Adviser's Partners Compensation Plan.

            As of October 31, 2018, employees of the Adviser had approximately
$50,035,632 invested in shares of all AB Mutual Funds (excluding AB Government
Money Market Portfolio) 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 October
31, 2018.

--------------------------------------------------------------------------------
                        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
-----------------        ------------- --------------- ------------ ------------

R.B. (Guy) Davidson, III       53     $26,120,000,000     None           None
Terrance T. Hults              53     $26,120,000,000     None           None
Shawn E. Keegan                 1      $341,000,000       None           None
Matthew J. Norton              53     $26,120,000,000     None           None
Andrew D. Potter               53     $26,120,000,000     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
-----------------     -------------   --------------- ------------ ------------

R.B. (Guy) Davidson, III      38       $3,280,000,000      None           None
Terrance T. Hults             38       $3,280,000,000      None           None
Shawn E. Keegan               38       $44,266,000,000     None           None
Matthew J. Norton             38       $3,280,000,000      None           None
Andrew D. Potter              38       $3,280,000,000      None           None


--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

                                                    Number of      Total Assets
                                                    Other          of Other
                      Total Number Total Assets of  Accounts       Accounts
                      of Other     Other            Managed with   Managed with
                      Accounts     Accounts         Performance-   Performance-
Portfolio Manager     Managed      Managed          based Fees     based Fees
-----------------     ----------------------------  ------------   -------------

R.B. (Guy) Davidson, III    3,472   $20,503,000,000      5          $794,000,000
Terrance T. Hults           3,472   $20,503,000,000      5          $794,000,000
Shawn E. Keegan               150   $40,402,000,000      3        $4,835,000,000
Matthew J. Norton           3,472   $20,503,000,000      5          $794,000,000
Andrew D. Potter            3,472   $20,503,000,000      5          $794,000,000

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.

--------------------------------------------------------------------------------

                               EXPENSES OF THE FUNDS

--------------------------------------------------------------------------------

Distribution Services Agreement
-------------------------------

            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 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 (the "Plan").

            In approving the Plan, the Directors of each Fund determined that
there was a reasonable likelihood that the Plan would benefit the Funds 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 Plan continues in effect with respect to each Fund and each
class of shares thereof for successive one-year periods provided that each such
continuance is specifically approved at least annually by a majority of the
Independent Directors of the Funds who have no direct or indirect financial
interest in the operation of the Plan or any agreement related thereto (the
"Qualified Directors") and by a vote of a majority of the entire Board cast in
person at a meeting called for that purpose. Most recently, the Directors
approved the continuance of the Plan at their meetings held on November 6-8,
2018.

            All material amendments to the Agreement will become effective only
upon approval as provided in the preceding paragraph, and the Plan 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 Agreement, any party must give the
other parties 60 days' written notice; to terminate the Plan only, the Fund is
not required to give 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 the 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 Agreement not previously recovered by ABI from distribution services
fees in respect of shares of such class or through deferred sales charges.

            During the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond, High Income, Income Fund and Tax-Aware, and during the
fiscal year ended September 30, 2018 for Limited Duration and Global Bond, with
respect to Class A shares, the distribution services fees for expenditures
payable to ABI were as follows:


                                       Percentage per annum of
                    Distribution       the aggregate average
                    services fees for  daily net assets
                    expenditures       attributable to Class A
Fund                payable to ABI     shares*
----                --------------     -----------------------

                                   
Total Return Bond     $573,473           .25%

Limited Duration      $51,664            .25%

Unconstrained Bond    $79,998            .25%

High Income           $4,038,959         .25%

Global Bond           $2,278,623         .25%

Income Fund           $646,516           .25%

Tax-Aware             $16,348            .25%


*     The Board has limited the distribution services fee for Class A shares to
      0.25%.

            For the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond, High Income, Income Fund and Tax-Aware, and during the
fiscal year ended September 30, 2018 for Limited Duration and Global Bond,
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:




Category of Expense          Total Return Bond       Limited Duration  Unconstrained Bond   High Income
-------------------          -----------------       ----------------  ------------------   -----------

                                                                                
Advertising                      $14,769                 $1,233              $1,902           $113,904

Printing and Mailing of
Prospectuses to Persons
Other Than Current
Shareholders                      $3,856                   $332                $484            $29,459

Compensation to
Broker-Dealers and Other
Financial Intermediaries
(excluding ABI)                 $596,032                $65,992             $78,844         $4,083,947

Compensation to ABI             $144,864                $12,287             $18,396         $1,048,457

Compensation to Sales
Personnel                        $57,852                 $8,355              $7,992           $743,654

Interest on Financing                 $0                     $0                  $0                 $0

Other (includes printing of
sales literature, travel,
entertainment, due
diligence and other
promotional expenses)            $42,863                 $3,772              $5,435           $324,204


Totals                          $860,236                $91,971            $113,053         $6,343,625





Category of Expense                Global Bond              Income Fund               Tax-Aware
-------------------                -----------              -----------               ---------

                                                                               
Advertising                           $64,391                $16,024                      $0

Printing and Mailing of
Prospectuses to Persons Other
Than Current Shareholders             $17,347                 $4,166                    $206

Compensation to Broker-Dealers
and Other Financial
Intermediaries (excluding ABI)     $2,264,723               $807,678                      $0

Compensation to ABI                  $622,532                 $5,870                      $0

Compensation to Sales Personnel      $469,183               $583,871                      $0

Interest on Financing                      $0                     $0                      $0

Other (includes printing of sales
literature, travel,
entertainment, due diligence and
other promotional expenses)        $191,207                 $46,653                       $0


Totals                             $3,629,383               $1,464,262                  $206


            During the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond and High Income and during the fiscal year ended September
30, 2018 for Global Bond, with respect to Class B shares, the distribution
services fees for expenditures payable to ABI were as follows:



                                                          Percentage per annum of
                           Distribution                   the aggregate average
                           services fees                  daily net assets
                           for expenditures               attributable
Fund                       payable to ABI                 to Class B shares
----                       --------------                 -----------------

                                                       
Total Return Bond             $6,265                            1.00%

Unconstrained Bond            $1,266                            1.00%

High Income                   $14,773                           1.00%

Global Bond                   $7,125                            1.00%


            For the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond and High Income and during the fiscal year ended September
30, 2018 for Global Bond, 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:



                                                       Unconstrained
Category of Expense          Total Return Bond         Bond              High Income          Global Bond
-------------------          -----------------         ----              -----------          -----------

                                                                                  
Advertising                     $41                      $8                $102                  $68

Printing and Mailing of
Prospectuses to Persons
Other Than Current
Shareholders                    $11                      $2                 $26                  $18

Compensation to
Broker-Dealers and Other
Financial Intermediaries
(excluding ABI)              $2,593                    $256              $5,369               $2,289

Compensation to ABI           $(88)                     $68                $750                 $366

Compensation to Sales
Personnel                      $161                     $30                $455                 $261

Interest on Financing            $0                      $0                  $0                   $0

Other (includes printing of
sales literature, travel,
entertainment, due
diligence and other
promotional expenses)          $119                     $22                $291                 $194

Totals                       $2,837                    $386              $6,993               $3,196


            During the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond, High Income, Income Fund and Tax-Aware, and during the
fiscal year ended September 30, 2018 for Limited Duration and Global Bond, with
respect to Class C shares, the distribution services fees for expenditures
payable to ABI were as follows:



                                                          Percentage per annum of
                                                          the aggregate average
                              Distribution services fees  daily net assets
                              for expenditures            attributable
Fund                          payable to ABI              to Class C shares
----                          --------------              -----------------

                                                    
Total Return Bond             $135,936                    1.00%

Limited Duration              $242,672                    1.00%

Unconstrained Bond            $119,284                    1.00%

High Income                   $9,971,346                  1.00%

Global Bond                   $1,815,649                  1.00%

Income Fund                   $808,398                    1.00%

Tax-Aware                     $9,072                      1.00%


            For the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond, High Income, Income Fund and Tax-Aware, and during the
fiscal year ended September 30, 2018 for Limited Duration and Global Bond,
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:




Category of Expense          Total Return Bond      Limited Duration    Unconstrained Bond  High Income
-------------------          -----------------      ----------------    ------------------  -----------

                                                                              
Advertising                        $858                   $1,444                $751          $61,934

Printing and Mailing of
Prospectuses to Persons
Other Than Current
Shareholders                       $221                     $390                $193          $16,006

Compensation to
Broker-Dealers and Other
Financial Intermediaries
(excluding ABI)                $123,556                 $226,464            $111,850       $9,461,087

Compensation to ABI              $6,855                  $14,728              $6,940         $564,390

Compensation to Sales
Personnel                        $3,427                   $7,054              $2,900         $335,314

Interest on Financing                $0                       $0                  $0               $0

Other (includes printing of
sales literature, travel,
entertainment, due
diligence and other
promotional expenses)            $2,475                   $4,406              $2,171         $179,760

Totals                         $137,392                 $254,486            $124,805      $10,618,491





Category of Expense                     Global Bond            Income Fund            Tax-Aware
-------------------                     -----------            -----------            ---------

                                                                               
Advertising                                $10,979                  $4,855                  $56

Printing and Mailing of
Prospectuses to Persons Other Than
Current Shareholders                        $2,949                  $1,278                  $14

Compensation to Broker-Dealers and
Other Financial Intermediaries
(excluding ABI)                         $1,728,011                $619,206               $9,161

Compensation to ABI                       $103,959               $(37,392)                 $364

Compensation to Sales Personnel            $58,003                $143,387                 $251

Interest on Financing                           $0                      $0                   $0

Other (includes printing of sales
literature, travel, entertainment,
due diligence and other
promotional expenses)                      $33,391                 $14,335                 $164


Totals                                  $1,937,292                $745,669              $10,010


            During the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond and High Income, and during the fiscal year ended September
30, 2018 for Global Bond, with respect to Class R shares, the distribution
services fees for expenditures payable to ABI were as follows:



                                                          Percentage per annum of
                                                          the aggregate average
                              Distribution services fees  daily net assets
                              for expenditures            attributable
Fund                          payable to ABI              to Class R shares
----                          --------------              -----------------

                                                        
Total Return Bond             $13,045                         .50%

Unconstrained Bond            $5,843                          .50%

High Income                   $402,210                        .50%

Global Bond                   $405,806                        .50%


            For the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond and High Income, and during the fiscal year ended September
30, 2018 for Global Bond, 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:




                                                Unconstrained
Category of Expense      Total Return Bond      Bond              High Income       Global Bond
-------------------      -----------------      ----              -----------       -----------

                                                                         
Advertising                    $252                $122              $8,526            $8,121

Printing and
Mailing of
Prospectuses to
Persons Other Than
Current
Shareholders                    $68                 $32              $2,243            $2,163

Compensation to
Broker-Dealers and
Other Financial
Intermediaries
(excluding ABI)             $12,568              $5,883            $393,324          $388,802

Compensation to ABI          $2,052                $948             $66,138           $66,753

Compensation to
Sales Personnel              $1,100                $510             $57,112           $67,257

Interest on
Financing                        $0                  $0                  $0                $0

Other (includes
printing of sales
literature, travel,
entertainment, due
diligence and other
promotional
expenses)                      $709                $336             $23,448           $23,017

Totals                      $16,749              $7,831            $550,792          $556,113


            During the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond and High Income, and during the fiscal year ended September
30, 2018 for Global Bond, with respect to Class K shares, the distribution
services fees for expenditures payable to ABI were as follows:



                                                            Percentage per annum of
                                                            the aggregate average
                              Distribution services fees    daily net assets
                              for expenditures              attributable
Fund                          payable to ABI                to Class K shares
----                          --------------                -----------------

                                                          
Total Return Bond                $15,608                        .25%

Unconstrained Bond               $692                           .25%

High Income                      $312,101                       .25%

Global Bond                      $91,732                        .25%


            For the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond and High Income, and during the fiscal year ended September
30, 2018 for Global Bond, 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:




                         Total Return     Unconstrained
Category of Expense      Bond             Bond              High Income        Global Bond
-------------------      ----             ----              -----------        -----------

                                                                     
Advertising                  $85              $5                $12,282            $2,656

Printing and
Mailing of
Prospectuses to
Persons Other Than
Current
Shareholders                 $23              $1                 $3,258              $710

Compensation to
Broker-Dealers and
Other Financial
Intermediaries
(excluding ABI)          $15,572            $694               $312,220           $92,805

Compensation to ABI         $671             $41                $96,955           $23,395

Compensation to
Sales Personnel             $354             $32                $76,652           $14,255

Interest on
Financing                     $0              $0                     $0                $0

Other (includes
printing of sales
literature, travel,
entertainment, due
diligence and other
promotional
expenses)                   $237             $14                $34,101            $7,450

Totals                   $16,942            $787               $535,468          $141,271


            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.

            For the fiscal year ended October 31, 2018 for Total Return Bond,
Unconstrained Bond, High Income, Income Fund and Tax-Aware, and during the
fiscal year ended September 30, 2018 for Global Bond and Limited Duration,
cumulative 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:




Class                    Total Return Bond        Limited Duration          Unconstrained Bond         High Income
-----                    -----------------        ----------------          ------------------         -----------

                                                                                           
Class B                  $0                       N/A                       $8,331,917                 $5,714,459
(% of the net
assets of Class B)       0%                       N/A                       7,264.35%                  495.43%

Class C                  $1,194,892               $245,843                  $2,171,919                 $18,178,641
(% of the net
assets of Class C)       1.43%                    1.15%                     23.70%                     2.16%

Class R                  $138,090                 N/A                       $45,716                    $1,055,746
(% of the net
assets of Class R)       5.29%                    N/A                       4.88%                      1.52%

Class K                  $54,308                  N/A                       $13,268                    $1,011,030
(% of the net
assets of Class K)        .87%                     N/A                       4.66%                      .83%





Class                    Global Bond              Income Fund               Tax-Aware
-----                    -----------              -----------               ---------

                                                                   
Class B                  $25,200,351              N/A                       N/A
(% of the net
assets of Class B)       4,851.17%                N/A                       N/A

Class C                  $15,335,367              $410,135                  N/A
(% of the net
assets of Class C)       10.48%                   .51%                      N/A

Class R                  $1,038,201               N/A                       N/A
(% of the net
assets of Class R)       1.38%                    N/A                       N/A

Class K                  $274,919                 N/A                       N/A
(% of the net
assets of Class K)       1.65%                    N/A                       N/A


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, acts as the
transfer agent for the Funds. ABIS registers the transfer, issuance and
redemption of Fund shares and disburses dividends and other distributions to
Fund shareholders.

            ABIS receives a transfer agency fee per account holder of each of
the Class A, Class B, Class C, Class R, Class K, Class I, Class Z and Advisor
Class shares of the Funds plus reimbursement for out-of-pocket expenses. For the
fiscal year ended October 31, 2018 for Total Return Bond, Unconstrained Bond,
High Income, Income Fund and Tax-Aware, and for the fiscal year ended September
30, 2018 for Limited Duration and Global Bond, the Fund paid ABIS $198,178,
$58,196, $1,908,202, $761,625, $18,221, $44,271 and $1,744,954, respectively,
for transfer agency services.

            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,
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 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 to Total Return Bond, Limited Duration, Income Fund and
Tax-Aware, 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 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.

            Brown Brothers Harriman & Co. ("BBH") serves as the securities
lending agent to Unconstrained Bond, Global Bond and High Income, and is
responsible for the implementation and administration of a securities lending
program pursuant to a Securities Lending Agency 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 the 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 did not engage in any securities lending activities
during the most recent fiscal year.

--------------------------------------------------------------------------------

                               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 Funds' 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 their NAV plus an initial sales charge at the time of purchase ("Class
A shares"), with a CDSC ("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
Total Return Bond, High Income, Global Bond, and Unconstrained Bond, to
investors, 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 of the classes of shares of the Funds, except the 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 the 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.

            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 intermediary 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 Fund, including requirements as to the
classes of shares available through that financial intermediary and the minimum
initial and subsequent investment amounts. A Fund is not responsible for, and
has no control over, the decision of any financial intermediary to impose such
differing requirements. Sales personnel of financial intermediaries distributing
the Fund's 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, physical address, social
security/taxpayer identification number, and ownership/control information (for
certain legal entities). Ownership/control information for legal entities may
include the name, date of birth, physical address, and identification number
(generally a social security or taxpayer identification number) of
owners/controlling persons. 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 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 that have limited capacity 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
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 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
                  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 at 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) 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 the 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 ABI
prior to the Fund Closing Time on each day the Exchange is open are priced at
the NAV next computed on that day (plus applicable Class A sales charges). In
the case of orders for purchases 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 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 the following day.

            Full and fractional shares are credited to a shareholder's account
in the amount of his or her subscription. As a convenience to the subscriber,
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. Lost certificates will
not be replaced with another certificate, but will be shown on the books of the
Fund's transfer agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost or stolen
certificates.

            Each class of shares of a Fund represents an interest in the same
portfolio of investments of the Fund, has the same rights and are 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 shares 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 three-year
(four-year for Unconstrained Bond) 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 three-year (four-year
for Unconstrained Bond) period during which Class B shares are subject to a CDSC
may find it more advantageous to purchase Class C shares.

            The following table shows the aggregate amount of underwriting
commissions payable with respect to the Funds' shares and the amounts ABI
received from such commissions payable over the Funds' last three fiscal years
or since inception.

                                                               Amounts ABI
                                               Aggregate       Received from
Fiscal Year/Period                             Amount of       Aggregate Amount
Ended October 31/                              Underwriting    of Underwriting
September 30/                                  Commissions     Commissions
August 31            Fund                      Payable         Payable*
---------            ----                      -------         --------

2018                 Total Return Bond          $136,591            $3,835
2017                                              76,094             3,747
2016                                             157,019             8,908

2018                 Limited Duration            $18,557              $697
2017                                              33,314             1,814
2016                                              58,266             3,232

2018                 Unconstrained Bond           $7,974              $398
2017                                               9,043               658
2016                                              30,680             1,512

2018                 Global Bond                $230,930           $11,321
2017                                             442,621            20,394
2016                                             688,437            34,621

2018                 High Income              $2,137,258          $142,097
2017                                           3,556,075           229,894
2016                                           4,450,686           257,875

2018                 Income Fund              $1,015,549           $58,042
2017                                           1,162,173            57,304
2016                                              34,756               758

2018                 Tax-Aware                   $13,892               $42
2017                                                   0                 0
2016                                                   0                 0

--------
*     The amount received by ABI represents that portion of the sales charges
paid on shares of the Fund sold during the year which was not re-allowed to
selected dealers (and was, accordingly, retained by ABI).

            The following table shows the CDSCs received by ABI from each share
class during the Funds' last three fiscal years or since inception.

Fiscal                               Amounts                       Amounts
Year/Period                          ABI Received  Amounts         ABI Received
Ended                                in CDSCs      ABI Received    in CDSCs
October 31/                          from          in CDSCs        from
September 30/                        Class A       from            Class C
August 31      Fund                  Shares        Class B Shares  Shares
---------      ----                  ------        --------------  ------

2018           Total Return Bond      $ 1,600           $491         $1,717
2017                                    3,712            564            896
2016                                    2,821            826            702

2018           Limited Duration       $   835             $0           $597
2017                                    1,131              0          8,125
2016                                        0              0            964

2018           Unconstrained Bond     $   185            $11          $ 580
2017                                      366             38            319
2016                                      126             27          1,211

2018           Global Bond            $ 1,085           $198        $11,315
2017                                    7,246            105         34,110
2016                                   23,175            405         16,120

2018           High Income            $23,676          $ 220        $60,968
2017                                   63,642            431        118,573
2016                                   17,602          1,094        103,592

2018           Income Fund            $37,088            N/A        $50,218
2017                                       71            N/A          5,248
2016                                        0            N/A              0

2018           Tax-Aware              $     0            N/A          $ 203
2017                                        0            N/A            492
2016                                        0            N/A          1,399

Class A Shares
--------------

            The public offering price of Class A shares is the NAV plus a sales
charge, as set forth below.

                    Sales Charge for All Funds except Tax-Aware
                    -------------------------------------------

                                                                   Discount or
                                                                   Commission
                                                                   to Dealers
                                                                   or Agents of
                                     As % of Net  As % of the      up to % of
                                     Amount       Public Offering  Offering
      Amount of Purchase             Invested     Price            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.


                            Sales Charge for Tax-Aware
                            --------------------------
                                                                   Discount or
                                                                   Commission
                                                                   to Dealers
                                                                   or Agents of
                                     As % of Net  As % of the      up to % of
                                     Amount       Public Offering  Offering
      Amount of Purchase             Invested     Price            Price
      ------------------             -----------  -----            -----

      Up to $100,000.............      3.09%        3.00%           3.00%
      $100,000 up to $250,000....      2.04         2.00            2.00
      $250,000 up to $500,000....      1.01         1.00            1.00
      $500,000 and above.........      0.00         0.00            0.00


            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 for
all Funds except Tax-Aware, and $500,000 or more for Tax-Aware, Class A shares
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 in the Prospectus 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 reallowance 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 AB Government Money Market Portfolio 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 as described
below under "Conversion Feature for Class B and Class C Shares".

            For all Funds except Tax-Aware, 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
$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.

            For Tax-Aware, commissions may be paid to selected dealers or agents
who initiate or are responsible for Class A share purchases by a single
shareholder of $500,000 or more that are not subject to an initial sales charge
at up to the following rates: 1.00% on purchase amounts up to $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 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 such persons pay an
                  asset-based fee for service 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 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 C
                  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.

            For Total Return Bond, Global Bond and High Income, six 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. For Unconstrained
Bond, 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 than other
classes of the Fund's shares, and will thus have a higher expense ratio and pay
correspondingly lower dividends than the other classes.

            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 of 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
will 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.

Unconstrained Bond:

            Year Since Purchase        Contingent Deferred Sales
                                       Charge for the Fund as a % of
                                       Dollar Amount Subject to
                                       Charge
            ----------------------------------------------------------
            First                                4.0%
            Second                               3.0%
            Third                                2.0%
            Fourth                               1.0%
            Fifth and thereafter                 None

All Other Funds:

            Year Since Purchase        Contingent Deferred Sales
                                       Charge for the Fund as a % of
                                       Dollar Amount Subject to
                                       Charge
            ----------------------------------------------------------
            First                             3.0%
            Second                            2.0%
            Third                             1.0%
            Fourth and thereafter             None

            In determining the CDSC applicable to a redemption of Class B and
Class C shares, 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 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 Internal Revenue Code of 1986, as amended (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 who has attained the age of 70 1/2, (iii) that
had been purchased by present or former Directors of the Funds, by a 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
--------------

            Class K shares are available at NAV to certain 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, and individual 403(b) plans. 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 programs known as the
"Informed Choice" programs. 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 and certain Alliance-Bernstein-sponsored group retirement plans. Class Z
shares generally are not available to 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 retirement programs known as the "Informed
Choice" programs. 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 also available to persons participating in certain fee-based programs
sponsored and maintained by registered broker-dealers or other financial
intermediaries with omnibus account arrangements with a Fund.

            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; 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"; or (v) through brokerage
platforms or 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, Class K or Class I 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 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. 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. 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 programs known as the "Informed Choice"
programs. 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 generally are not available to 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 also 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 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 lower Rule 12b-1 distribution services fees (0.30%)
                        (currently limited to 0.25%) and the 1%, 1-year CDSC
                        with respect to Class A shares;

                  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 FlexFee(TM) High Yield Portfolio
 - AB FlexFee(TM) International Bond Portfolio
 - AB Income Fund
 - AB Total Return 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 China Equity Portfolio
 - AB All Market Income Portfolio
 - AB Concentrated Growth Fund
 - AB Concentrated International Growth Portfolio
 - AB Emerging Markets Core Portfolio
 - AB Emerging Markets Multi-Asset Portfolio
 - AB FlexFee(TM) Core Opportunities Portfolio
 - AB FlexFee(TM) Emerging Markets Growth Portfolio
 - AB FlexFee(TM) International Strategic Core Portfolio
 - AB FlexFee(TM) Large Cap Growth Portfolio
 - AB FlexFee(TM) 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 Fixed-Income Shares, Inc.
 - AB Government Money Market Portfolio
AB Global Bond Fund, Inc.
AB Global Real Estate Investment Fund, Inc.
AB Global Risk Allocation Fund, Inc.
AB High Income 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 Sustainable International 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.
 - Emerging Markets Portfolio
 - 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 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 have invested including reinvested distributions but excluding
appreciation less the amount of any 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. 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 Automated Clearing House ("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 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 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 3% of your investment (4% with respect to sales of Class B
shares of Unconstrained Bond). 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 C--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 2019, ABI's additional payments to these firms for distribution
services and educational support related to the AB Mutual Funds are expected to
be approximately 0.05% of the average monthly assets of the AB Mutual Funds, or
approximately $22 million. In 2018, ABI is expected to pay approximately 0.05%
of the average monthly assets of the AB Mutual Funds or approximately $20
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 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 Fund -- 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
      American Enterprise Investment Services
      AXA Advisors
      Cadaret, Grant & Co.
      Citigroup Global Markets
      Citizens Securities
      Commonwealth Financial Network
      Donegal Securities
      Great-West Life & Annuity Insurance Co.
      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
      UBS Financial Services
      US Bancorp Investments
      Voya Financial Partners
      Waddell & Reed, Inc
      Wells Fargo Advisors

            ABI expects that additional firms may be added to this list from
time to time.

            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.

--------------------------------------------------------------------------------

                      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 it, 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. Each Fund expects
that it will typically take one to three business days following the reception
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. If a shareholder is in doubt about what documents are
required by his or her investment program or employee benefit plan, the
shareholder should contact his or her financial intermediary.

            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 gains (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 Funds reserve the right to suspend or terminate their
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 Funds,
the Adviser, ABI nor ABIS will be responsible for the authenticity of telephone
requests for redemptions that the Funds reasonably believe 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 Funds did not employ such
procedures, they 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 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 on that day if received by ABI prior
to a designated later time (pursuant to an 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 charges 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 the Fund are offered through a financial
intermediary, the redemption is settled by the shareholder as an ordinary
transaction with or through the 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 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 fee-based 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 and 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 purpose
of determining the CDSC, if any, upon redemption and, in the case of Class B or
Class C shares, for the purpose of conversion to Class A shares. 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 exchanges received before the Fund Closing Time,
on a 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 of a Fund 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 Fund's 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.

Shareholder Services Applicable to Class A and Class C Shareholders Only
------------------------------------------------------------------------

Checkwriting (not available to shareholders of High Income, Limited Duration
----------------------------------------------------------------------------
High Income and Tax-Aware)
--------------------------

            A new Class A or Class C investor may fill out the Signature Card to
authorize the Fund to arrange for a checkwriting service through State Street
Bank and Trust Company (the "Bank") to draw against Class A or Class C shares of
the Fund redeemed from the investor's account. Under this service, checks may be
made payable to any payee in any amount not less than $500 and not more than 90%
of the NAV of the Class A or Class C shares in the investor's account (excluding
for this purpose the current month's accumulated dividends and shares for which
certificates have been issued). A Class A or Class C shareholder wishing to
establish this checkwriting service subsequent to the opening of his or her Fund
account should contact the Fund by telephone or mail. Corporations, fiduciaries
and institutional investors are required to furnish a certified resolution or
other evidence of authorization. This checkwriting service will be subject to
the Bank's customary rules and regulations governing checking accounts, and the
Fund and the Bank each reserve the right to change or suspend the checkwriting
service. There is no charge to the shareholder for the initiation and
maintenance of this service or for the clearance of any checks.

            When a check is presented to the Bank for payment, the Bank, as the
shareholder's agent, causes the Fund to redeem, at the NAV next determined, a
sufficient number of full and fractional shares of the Fund in the shareholder's
account to cover the check. Because the level of net assets in a shareholder's
account constantly changes due to, among various factors, market fluctuations, a
shareholder should not attempt to close his or her account by use of a check. In
this regard, the Bank has the right to return checks (marked "insufficient
funds") unpaid to the presenting bank if the amount of the check exceeds 90% of
the assets in the account. Canceled (paid) checks are returned to the
shareholder. The checkwriting service enables the shareholder to receive the
daily dividends declared on the shares to be redeemed until the day that the
check is presented to the Bank for payment.

--------------------------------------------------------------------------------

                                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 a
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. A 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.

            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 Board. The Board has delegated to the
Adviser, subject to the Board's continuing oversight, certain of the Board's
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 Fund.

            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 ask 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 on which the security is traded (as determined by the Adviser);

            (d) a listed or OTC put or call option is valued at the mid level
between the current bid and ask 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, the Adviser will utilize the broker quote which
it believes is the most reliable (e.g., a market maker for that 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. 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. Each 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 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 a 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 ask 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. 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

--------------------------------------------------------------------------------

U.S. 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 contracts or forward currency exchange contracts) derived with
respect to its business of investing in stock, securities or currency or net
income derived from interests in certain "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 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 securities of any one issuer (other than U.S. Government securities or
securities of other regulated investment companies), 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 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.

            It is the present policy of each Fund to distribute to shareholders
all net investment income monthly and to distribute net realized capital gains,
if any, annually. The amount of any such distributions must necessarily depend
upon the realization by the Fund of income and capital gains from investments.

            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, if later during the calendar year, the last day of the
Fund's taxable year (i.e., November 30 or December 31) 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. 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 (All Funds, except Tax-Aware). 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. 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.

            Some or all of the distributions from a 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, provided that both the
fund and the shareholder satisfy certain holding period and other requirements.
Based upon the investment policies of the Funds, it is expected that only a
small portion, if any, of the Funds' distributions would be treated as
"qualified dividend income".

            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. The investment objectives of the Funds are such that only a small portion,
if any, of the Funds' distributions is expected to qualify for the
dividends-received deduction for corporate shareholders.

            Income dividends generally are declared daily and paid monthly,
except with respect to Unconstrained Bond, which generally declares and pays
monthly; capital gains distributions generally occur annually in December.

            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.

            Dividends and Distributions (Tax-Aware). For shareholders' federal
income tax purposes, distributions to shareholders out of tax-exempt interest
income earned by Tax-Aware are not subject to federal income tax if, at the
close of each quarter of the Fund's taxable year, at least 50% of the value of
the Fund's total assets consists of tax-exempt obligations. Tax-Aware intends to
meet this requirement. However, interest income earned and distributed to
shareholders on non-municipal securities would not be exempt from federal income
tax. Insurance proceeds received by Tax-Aware under any insurance policies in
respect of scheduled interest payments on defaulted municipal securities, as
described herein, will be excludable from gross income in the same manner as
interest payments from the insured municipal securities, and consequently such
insurance proceeds may be included in exempt-interest dividends which are
designated and paid by the Fund.

            A substantial portion of the dividends paid by Tax-Aware are
anticipated to be exempt from federal income taxes. See, however, "Investment
Policies and Restrictions--Alternative Minimum Tax" below. Shortly after the
close of each calendar year, a notice is sent to each shareholder advising him
of the total dividends paid into his account for the year and the portion of
such total that is exempt from federal income taxes. This portion is determined
by the ratio of the tax-exempt income to total income for the entire year and,
thus, is an annual average rather than a day-by-day determination for each
shareholder.

            Distributions out of taxable interest income, other investment
income, and short-term capital gains are taxable to shareholders as ordinary
income. Since Tax-Aware's investment income is derived from interest rather than
dividends, no portion of such distributions is eligible for the
dividends-received deduction available to corporations. Furthermore, since
Tax-Aware's investment income is derived from interest rather than dividends, it
is expected that for non-corporate shareholders no portion of such distributions
will be treated as "qualified dividend income" taxable at the same preferential
tax rates applicable to long-term capital gains. Long-term capital gains, if
any, distributed by Tax-Aware to a shareholder are taxable to the shareholder as
long-term capital gain, irrespective such shareholder's holding period in his or
her shares.

            If Tax-Aware's distributions exceed its income and capital gains
realized in any year and the Fund has current and accumulated earnings and
profits for federal income tax purposes, then all or a portion of those
distributions may be treated as ordinary income to shareholders for federal
income tax purposes.

            Income dividends generally are declared daily and paid monthly;
capital gains distributions generally occur annually in December. After the end
of the calendar year, Tax-Aware will notify shareholders of the federal income
tax status of any distributions made by the Fund's 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 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 so 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 IRS and 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 (at a rate
of 24%) if such shareholder fails to provide a Fund with his or her correct
taxpayer identification number, fails to make certain 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; rather, a shareholder generally may obtain a refund of any amounts withheld
under backup withholding rules that exceed such shareholder's U.S. federal
income tax liability 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 also 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 assets at the close of its
taxable year consists of stocks or securities of foreign corporations (which for
this purpose should include obligations issued by foreign governments), the Fund
will be eligible and intends to file an election with the IRS to pass through to
its shareholders the amount of foreign taxes paid by the Fund. However, there
can be no assurance that a Fund will be able to do so. If a Fund makes this
election, a shareholder will be required to (i) include in gross income (in
addition to taxable dividends actually received), his or her pro rata share of
foreign taxes paid by the Fund, (ii) treat his or her pro rata share of such
foreign taxes as having been paid by him and (iii) either deduct such pro rata
share of foreign taxes in computing his or her taxable income or treat such
foreign taxes as a credit against U.S. federal income taxes. 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
taxes by a Fund. No deduction for foreign taxes may be claimed by an individual
shareholder who does not itemize deductions. In addition, certain shareholders
may be subject to rules which limit or reduce their ability to fully deduct, or
claim a credit for, their pro rata share of the foreign taxes paid by the 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 the Fund's taxable year whether the
foreign taxes paid by the Fund will pass through for that year and, if so, such
notification will designate (i) the shareholder's portion of the foreign taxes
paid, to each such country and (ii) the portion of dividends that represents
income derived from sources within each such country.

            The federal income tax status of each year's distributions by the
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 U.S. 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.

U.S. Federal Income Taxation of the Funds
-----------------------------------------

            The following discussion relates to certain significant U.S. federal
income tax consequences to a Fund with respect to the determination of its
"investment company taxable income" each year. This discussion assumes that each
Fund will be taxed as a regulated investment company for each of its taxable
years.

            Original Issue Discount and Market Discount Obligations. Under the
original issue discount rules, a Fund will receive net investment income in the
form of interest by virtue of holding debt obligations that have an issue price
that is less than their stated redemption price at maturity (a "discount
obligation"). These rules require that a holder (such as a Fund) of a discount
obligation accrue a portion of the discount at which the security was purchased
as income each year even though the Fund receives no interest payment in cash on
the security during the year. Accordingly, a Fund may be required to pay out as
an income distribution each year an amount that is greater than the total amount
of cash interest the Fund actually received. Such distributions will be made
from the cash assets of the Fund or by liquidation of portfolio securities, if
necessary. If a distribution of cash necessitates the liquidation of portfolio
securities, the Adviser will select which securities to sell. A Fund may realize
a gain or loss from such sales. In the event a Fund realizes net capital gains
from such transactions, its shareholders may receive a larger capital gain
distribution, if any, than they would have in the absence of such transactions.
Under the market discount rules, a Fund may recognize ordinary income from the
sale of bonds which it purchased at a discount to their issue price in the
secondary market.

            Options, Futures Contracts, and Forward Currency Exchange Contracts.
Certain listed options, regulated futures contracts, and forward currency
exchange 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
currency exchange contracts will be considered 60% long-term and 40% short-term
capital gain or loss, although the Fund may elect to have the gain or loss it
realizes on certain contracts taxed as "section 988" gain or loss. Gain or loss
realized by a Fund on forward currency exchange contracts generally 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. A 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.

            With respect to OTC put and call options, gain or loss realized by a
Fund upon the lapse or sale of such options held by the Fund will be either
long-term or short-term capital gain or loss depending upon the Fund's holding
period with respect to such option. However, gain or loss realized upon the
lapse or closing out of such options that are written by a Fund will be treated
as short-term capital gain or loss. In general, if a Fund exercises an option,
or if an option that the Fund has written is exercised, gain or loss on the
option will not be separately recognized but the premium received or paid will
be included in the calculation of gain or loss upon disposition of the property
underlying the option.

            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 a 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 the 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.

            Stripped Mortgage-Related Securities. Certain classes of SMRS which
are issued at a discount, the payments of which are subject to acceleration by
reason of prepayments of the underlying mortgage assets securing such classes,
are subject to special rules for determining the portion of the discount at
which the class was issued which must be accrued as income each year. Under Code
section 1272(a)(6), a principal-only class or a class which receives a portion
of the interest and a portion of the principal from the underlying mortgage
assets is subject to rules which require accrual of interest to be calculated
and included in the income of a holder (such as a Fund) based on the increase in
the present value of the payments remaining on the class, taking into account
payments includable in the class's stated redemption price at maturity which are
received during the accrual period. For this purpose, the present value
calculation is made at the beginning of each accrual period (i) using the yield
to maturity determined for the class at the time of its issuance (determined on
the basis of compounding at the close of each accrual period and properly
adjusted for the length of the accrual period), calculated on the assumption
that certain prepayments will occur, and (ii) taking into account any
prepayments that have occurred before the close of the accrual period. Since
interest included in a Fund's income as a result of these rules will have been
accrued and not actually paid, the Fund may be required to pay out as an income
distribution each year an amount which is greater than the total amount of cash
interest it actually received, with possible results as described above.

            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.

            Zero-coupon Municipal Securities. Under current federal income tax
law, Tax-Aware will include in its net investment income as interest each year,
in addition to stated interest received on obligations held by the Fund,
tax-exempt interest income attributable to the Fund from holding zero-coupon
municipal securities. Current federal income tax law requires that a holder
(such as Tax-Aware) of a zero-coupon municipal security accrue as income each
year a portion of the original issue discount (i.e., the amount equal to the
excess of the stated redemption price of the security at maturity over its issue
price) attributable to such obligation even though the Fund does not receive
interest payments in cash on the security during the year which reflect the
accrued discount. As a result of the above rules, in order to make the
distributions necessary for Tax-Aware not to be subject to federal income or
excise taxes, the Fund may be required to pay out as an income distribution each
year an amount greater than the total amount of cash which the Fund has actually
received as interest during the year. Such distributions will be made from the
cash assets of the Fund, from borrowings or by liquidation of portfolio
securities, if necessary. If a distribution of cash necessitates the liquidation
of portfolio securities, the Adviser will select which securities to sell.
Tax-Aware may realize a gain or loss from such sales. In the event Tax-Aware
realizes capital gains from such sales, its shareholders may receive larger
distributions than they would receive in the absence of such sales.

            Currency Fluctuations -- "Section 988" Gains and 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 currency
exchange 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.

Alternative Minimum Tax
-----------------------

            Under current federal income tax law, interest on tax-exempt
municipal securities issued after August 7, 1986 which are "specified private
activity bonds," and the proportionate share of any exempt-interest dividend
paid by a regulated investment company that receives interest from such
specified private activity bonds, will be treated as an item of tax preference
for purposes of the alternative minimum tax ("AMT") imposed on individuals,
though for regular federal income tax purposes such interest will remain fully
tax-exempt. Such private activity bonds ("AMT-Subject Bonds"), which include
industrial development bonds and bonds issued to finance such projects as
airports, housing projects, solid waste disposal facilities, student loan
programs and water and sewage projects, have provided, and may continue to
provide, somewhat higher yields than other comparable municipal securities.

            In most instances, no state, municipality or other governmental unit
with taxing power will be obligated with respect to AMT-Subject Bonds.
AMT-Subject Bonds are in most cases revenue bonds and do not generally have the
pledge of the credit or the taxing power, if any, of the issuer of such bonds.
AMT-Subject Bonds are generally limited obligations of the issuer supported by
payments from private business entities and not by the full faith and credit of
a state or any governmental subdivision. Typically the obligation of the issuer
of AMT-Subject bonds is to make payments to bond holders only out of and to the
extent of, payments made by the private business entity for whose benefit the
AMT-Subject Bonds were issued. Payment of the principal and interest on such
revenue bonds depends solely on the ability of the user of the facilities
financed by the bonds to meet its financial obligations and the pledge, if any,
of real and personal property so financed as security for such payment. It is
not possible to provide specific detail on each of these obligations in which
assets of Tax-Aware may be invested.

Other Taxation
--------------

            A Fund may be subject to state and local taxes. A shareholder's
state of residence may impose income tax on distributions of tax-exempt interest
income, which are exempt from Federal income tax. Shareholders are urged to
consult their own tax advisors regarding the state and local income tax
consequences of an investment in the Funds.

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.
Distributions of a Fund attributable to U.S. source portfolio interest income
are not 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 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.

--------------------------------------------------------------------------------

                              PORTFOLIO TRANSACTIONS

--------------------------------------------------------------------------------

            Subject to the general oversight of each Fund's Board, the Adviser
is responsible for the investment decisions and the placing of orders for
portfolio transactions for 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.

            Most transactions for the Funds, 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. Most
transactions made by the Funds will be principal transactions at net prices and
the Funds will incur little or no brokerage costs. However, a Fund may make
opportunistic investments in equities from time to time and Tax-Aware regularly
invests in equity securities. The Funds will incur brokerage commissions on
those transactions. 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 are available elsewhere. Purchases
from underwriters of newly-issued securities for inclusion in a Fund 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 ask price.

            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 the brokerage, research and statistical services
provided by the executing broker.

            Tax-Aware may deal in some instances in securities that are not
listed on a national stock exchange but are traded in the OTC market. Tax-Aware
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 market or third market, Tax-Aware will seek
to deal with the primary market makers, but when necessary in order to obtain
the best price and execution, it will utilize the services of others. In all
cases, Tax-Aware will attempt to negotiate best execution.

            Many of Tax-Aware's portfolio transactions in equity securities will
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.

            No Fund has an obligation to enter into transactions in portfolio
securities with any broker, dealer, issuer, underwriter or other entity. In
placing orders, it is the policy of a Fund to obtain the best price and
execution for its transactions. Where best price and execution may be obtained
from more than one broker or dealer, the Adviser may, in its discretion,
purchase and sell securities through brokers and dealers who provide research,
statistical and other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and, accordingly, not
all such services may be used by the Adviser in connection with the Funds. The
supplemental information received from a dealer is in addition to the services
required to be performed by the Adviser under the Advisory Agreements, and the
expenses of the Adviser will not necessarily be reduced as a result of the
receipt of such information.

            Neither the Funds nor the Adviser have entered into agreements or
understandings with any brokers regarding the placement of securities
transactions because of research services they provide. 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, its receipt by the
Adviser 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) 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 the
Funds effect securities transactions are used by the Adviser in carrying out its
investment management responsibilities with respect to all its clients'
accounts.

            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 a 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 Adviser continuously monitors and evaluates the performance and
execution capabilities of brokers that transact orders for the Funds to ensure
consistent quality executions. This information is reported to the Adviser's
Brokerage Allocation Committee and Best Execution Committee, which oversee
broker-selection issues. In addition, the Adviser periodically reviews the
Funds' transaction costs in light of current market circumstances using internal
tools and analysis as well as statistical analysis and other relevant
information from external vendors.

            During the fiscal years ended September 30, 2018, September 30, 2017
and September 30, 2016, Global Bond paid brokerage commissions amounting in the
aggregate to $225,132, $141,444 and $127,032, respectively.

            During the fiscal years ended October 31, 2018, October 31, 2017 and
October 31, 2016, Total Return Bond paid brokerage commissions amounting in the
aggregate to $17,760, $17,782 and $12,026, respectively.

            During the fiscal years ended October 31, 2018, October 31, 2017 and
October 31, 2016, Unconstrained Bond paid brokerage commissions amounting in the
aggregate to $76,675, $147,246 and $124,770, respectively.

            During the fiscal years ended October 31, 2018, October 31, 2017 and
October 31, 2016, High Income paid brokerage commissions amounting in the
aggregate to $479,829, $382,435 and $183,473, respectively.

            During the fiscal years ended September 30, 2018, September 30, 2017
and September 30, 2016, Limited Duration paid brokerage commissions amounting in
the aggregate to $23,755, $56,525 and $39,525, respectively.

            During the fiscal years ended October 31, 2018 and October 31, 2017
and the fiscal period ended October 31, 2016, Income Fund paid brokerage
commissions amounting in the aggregate to $186,916, $382,435 and $74,559,
respectively.

            During the fiscal years ended October 31, 2018, October 31, 2017 and
October 31, 2016, Tax-Aware did not pay any brokerage commissions.

            The Funds 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 UK 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 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 Funds paid no brokerage commissions to the Affiliated Brokers
during the three most recent fiscal years or since inception, as applicable.

            As of the end of the most recent fiscal year or period, each Fund
listed below owned securities of its regular brokers or dealers (as defined in
Rule 10b-1 under the 1940 Act) or their parents as follows:

                                                              Aggregate Value
Fund                    Broker/Dealer                         of Securities Held
----                    -------------                         ------------------

Limited Duration        Morgan Stanley                              $685,038


Income Fund             Goldman Sachs Group, Inc.                   $225,015

                        Morgan Stanley                              $431,043

                        Barclays Bank PLC                         $4,949,995

                        Credit Suisse Group AG                    $4,360,721

                        UBS  Group Funding Switzerland AG         $1,928,615


Global Bond             JP Morgan Chase & Co.                     $59,446,123

                        Bank of America Corp.                     $49,993,390

                        Morgan Stanley                            $47,434,237

                        Citigroup, Inc.                           $45,879,516

                        Goldman Sachs Group, Inc.                 $30,755,616

                        Barclays PLC                              $24,637,876

                        Royal  Bank  of Scotland Group PLC        $13,563,201

                        UBS  Group Funding Switzerland AG         $13,318,924

                        Deutsche Bank AG                             $161,125


High Income             Credit Suisse Group AG                    $36,154,321

                        JP Morgan Chase & Co.                     $27,269,246

                        Bank of America Corp.                     $27,241,383

                        Citigroup, Inc.                           $24,461,576

                        Goldman Sachs Group, Inc.                 $23,384,677

                        UBS  Group Funding Switzerland AG         $15,392,781

                        BNP Paribas SA                            $12,186,759

                        Morgan Stanley                             $5,207,361

                        Deutsche Bank AG                           $2,556,227


Unconstrained Bond      JP Morgan Chase & Co.                      $1,061,074

                        Goldman Sachs Group, Inc.                    $756,353

                        Morgan Stanley                               $675,117

                        Deutsche Bank AG                             $292,500

                        Barclays PLC                                 $247,604

                        BNP Paribas SA                               $242,921

                        UBS  Group Funding Switzerland AG            $208,065

                        Credit Suisse Group AG                       $202,606

                        Bank of America Corp.                        $202,224

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 the 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.

            The 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 portfolio
security. 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 the 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, (i) to the Fund's
service providers who require access to the information in order to fulfill
their contractual duties relating to the Fund (including, without limitation,
pricing services and proxy voting services), (ii) to facilitate the review of
the Fund by ratings agencies, (iii) for the purpose of due diligence regarding a
merger or acquisition, or (iv) 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 to the Fund's individual or
institutional investors or to intermediaries that distribute the Fund's shares
without making such information public as described herein. Information may be
disclosed with any frequency and any lag, as appropriate.

            Before any non-public disclosure of information about the 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 determine 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) Donnelley Financial Solutions,
Inc., 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

--------------------------------------------------------------------------------

Description of the Funds
------------------------

Total Return Bond
-----------------

            Total Return Bond is a series of AB Bond Fund, Inc. (the "Company"),
a Maryland corporation organized in 1973 under the name "Alliance Bond Fund,
Inc." The Company's name was changed to "AllianceBernstein Bond Fund, Inc." on
March 31, 2003 and "AB Bond Fund, Inc." on January 20, 2015. The name of the
Fund was changed from "AllianceBernstein Intermediate Bond Portfolio" to "AB
Intermediate Bond Portfolio" on January 20, 2015. The name of the Fund was
changed from "AB Intermediate Bond Portfolio" to "AB Total Return Bond
Portfolio" on July 12, 2019.

Limited Duration
----------------

            Limited Duration is a series of AB Bond Fund, Inc., a Maryland
corporation. The Fund was organized in 2011 under the name "AllianceBernstein
Limited Duration High Income Portfolio". The name of the Fund was changed from
"AllianceBernstein Limited Duration High Income Portfolio" to "AB Limited
Duration High Income Portfolio" on January 20, 2015.

Unconstrained Bond
------------------

            The Fund is a Maryland corporation organized in 1995 under the name
of "Alliance Global Strategic Income Trust, Inc." The name became
"AllianceBernstein Global Strategic Income Trust, Inc. on March 31, 2003,
"AllianceBernstein Diversified Yield Fund, Inc." on November 5, 2007,
"AllianceBernstein Unconstrained Bond Fund, Inc." on February 3, 2011, and "AB
Unconstrained Bond Fund, Inc." on January 20, 2015.

Global Bond
-----------

            The Fund is a Maryland corporation organized in 1992 under the name
of "Alliance North American Government Income Fund, Inc." The name became
"Alliance Americas Government Income Trust, Inc." on March 1, 2002,
"AllianceBernstein Americas Government Income Trust, Inc." on March 31, 2003,
"AllianceBernstein Global Government Income Trust, Inc." on February 1, 2006,
"AllianceBernstein Global Bond Fund, Inc." on November 5, 2007, and "AB Global
Bond Fund, Inc." on January 20, 2015.

High Income
-----------

            The Fund is a Maryland corporation organized in 1993 under the name
of "Alliance Global Dollar Government Fund, Inc." The name became "Alliance
Emerging Market Debt Fund, Inc." on March 1, 2002, "AllianceBernstein Emerging
Market Debt Fund, Inc." on March 31, 2003, "AllianceBernstein High Income Fund,
Inc." on January 28, 2008, and "AB High Income Fund, Inc." on January 20, 2015.

Income Fund
-----------

            Income Fund is a series of AB Bond Fund, Inc., a Maryland
corporation. The Fund was organized in 2015 under the name "AB Income Fund."

Tax-Aware
---------

            Tax-Aware is a series of AB Bond Fund, Inc., a Maryland corporation.
The Fund was organized in 2013 under the name "AllianceBernstein Tax-Aware Fixed
Income Portfolio". The name of the Fund was changed from "AllianceBernstein
Tax-Aware Fixed Income Portfolio" to "AB Tax-Aware Fixed Income Portfolio" on
January 20, 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 a
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 portfolios,
which may have different investment objectives and policies than those of the
Fund, and additional classes of shares within the Fund. If an additional
portfolio or class were established in the Fund, each share of the portfolio or
class would normally be entitled to one vote for all purposes. Generally, shares
of each portfolio and class would vote together as a single class on matters,
such as the election of Directors, that affect each portfolio and 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 Plan and
other matters for which separate class voting is appropriate under applicable
law. Shares are, when issued, fully paid and non-assessable, freely
transferable, entitled to dividends as determined by the Directors and, in
liquidation of a Fund, are entitled to receive the net assets of the Fund.

            Each class of shares of a Fund represents an interest in the same
portfolio of investments, and has the same rights and is identical in all
respects, except that expenses related to the distribution of each class are
borne solely by each class and each class of shares has exclusive voting rights
with respect to provisions of the Plan which pertain to a particular class 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 shareholders, and the Class A shareholders and the
Class B shareholders will vote separately by class.

            A Fund's Board may, without shareholder approval, increase or
decrease the number of authorized but unissued shares of the Fund's Class A,
Class B, Class C, Class R, Class K, Class I, Class Z and Advisor Class Common
Stock.

Principal and Controlling Holders
---------------------------------

                               TOTAL RETURN BOND

            To the knowledge of the Fund, as of July 1, 2019, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the Fund.

            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.




Name and Address                                                           No. of Shares of Class     % of Class
----------------                                                           ----------------------     ----------

Class A
-------

                                                                                                 
MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484                                                       3,116,935            15.52%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                                                        1,671,863             8.32%

Wells Fargo Clearing Services, LLC
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523                                                        1,337,369             6.66%

Class B
-------

Ascensus Trust Company
Custody for Lorcan Coffey IRA
Brooklyn, NY 11214-2502                                                               2,776             6.77%

Ascensus Trust Company
Kington Management LLC
Myron R. Neuhauser
Barboursville, VA 22923-1831                                                          2,253             5.50%

Class C
-------

LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091                                                             56,469             5.74%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484                                                         107,764            10.96%

Morgan Stanley Smith Barney
For the Exclusive Benefit of Its Customers
1 New York Plaza, 12th Floor
New York, NY 10004-1965                                                              72,520             7.37%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310                                                                59,641             6.06%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                                                          180,589            18.36%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd.
Weehawken, NJ 07086-6761                                                             69,601             7.08%

Wells Fargo Clearing Services, LLC
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523                                                          221,636            22.54%

Advisor Class
-------------

American Enterprise Investment SVC
707 2nd Ave. South
Minneapolis, MN 55402-2405                                                          615,947             7.39%

LPL Financial
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091                                                            996,937            11.96%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484                                                       1,989,910            23.88%

Morgan Stanley Smith Barney LLC
For the Exclusive Benefit of Its Customers
1 New York Plaza, 12th Floor
New York, NY 10004-1965                                                             470,069              5.64%

National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310-1995                                                          913,033            10.96%

Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052                                                          581,423             6.98%

Raymond James
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102                                                       482,821             5.79%

UBS WM USA
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761                                                            728,650             8.74%

Wells Fargo Clearing Services, LLC
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523                                                        1,045,369            12.54%

Class R
-------

Capital Bank & Trust Co.
TTEE F River Garden 401K PSP
c/o Fascore LLC
8515 E. Orchard Rd., #2T2
Greenwood Village, CO 80111-5002                                                     38,980            13.04%

First Colonial Family Practice TTEE
First Colonial Family Practice 401K
c/o Fascore LLC
8515 E. Orchard Rd., #2T2
Greenwood Village, CO 80111-5002                                                    112,793            37.72%

George Maynard TTEE FBO
Spencer Research Inc. 401K PSP
c/o Fascore LLC
8515 E. Orchard Rd., #2T2
Greenwood Village, CO 80111-5002                                                     36,599            12.24%

MLPF&S
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484                                                          21,913             7.33%

Class K
-------

Ascensus Trust Co. FBO
Stepbrand Enterprises
401(k) PS Plan & Trust
P.O. Box 10758
Fargo, ND 58106-0758                                                                 43,882             5.71%

Capital Bank & Trust Co.
TTEE F Hawthorn Bancshares, Inc. 401K PST
8515 E. Orchard Rd., #2T2
Greenwood Village, CO 80111-5002                                                    150,651            19.59%

Great-West Trust Company LLC TTEE C
Minnesota Surgical Associates
8515 E. Orchard Rd., #2T2
Greenwood Village, CO 80111-5002                                                    227,522            29.58%

Great-West Trust Company LLC TTEE C
TAP & Affiliates 401(k)
8515 E. Orchard Rd., #2T2
Greenwood Village, CO 80111-5002                                                     98,766            12.84%

Class I
-------

Ascensus Trust Company FBO
Kerns Frost & Pearlman Retirement Plan
P.O. Box 10758
Fargo, ND 58106-0758                                                                 18,488             5.14%

Charles Schwab & Co.
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905                                                         95,589            26.57%

Charles Schwab & Co. Inc.
Special Custody Account FBO Customers
Attn: Mutual Funds
211 Main Street
San Francisco, CA 94105-1905                                                         23,216             6.45%

Diversified Investment Advisors
FBO TRS FBO Various Retirement Plans
TransAmerica Retirement Solutions
Harrison, NY 10528                                                                   18,292             5.08%

Mid Atlantic Trust Co.
FBO LatexCo US East LLC 401K Profit Sharing
1251 Waterfront Pl., Ste. 525
Pittsburgh, PA 15222-4228                                                            34,148             9.49%

Nationwide Trust Company FSB
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029                                                             155,110            43.11%

Class Z
-------

Ascensus Trust Company
FBO The PTR Group Inc. Safe Harbor 401(K)
P.O. Box 10758
Fargo, ND 58106-0758                                                                 57,331             8.34%

NFS LLC
FEBO FIIOC Agent
FBO Qualified Employee Plans (401K) FINOPS-IC Funds
100 Magellan Way #KWIC
Covington, KY 41015-1987                                                             48,003             6.98%

Saxon & Co.
VI Omnibus Account VICA
P.O. Box 7780-1888
Philadelphia, PA 19182-0001                                                         441,462            64.22%


                                LIMITED DURATION

            To the knowledge of the Fund, as of January 2, 2019, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the Fund.

            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.




Name and Address                                                              No. of Shares of Class  % of Class
----------------                                                              ----------------------  ----------

Class A
-------

                                                                                                 
Charles Schwab & Co.                                                                147,340             8.25%
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905

Charles Schwab & Co. Inc.                                                           104,453             5.85%
Special Custody Account FBO Customers
Attn: Mutual Funds
211 Main Street
San Francisco, CA 94105-1905

LPL Financial                                                                        91,900             5.14%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

MLPF&S                                                                              148,493             8.31%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                         232,176            12.99%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                     115,794             6.48%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                        260,545            14.58%
P.O. Box 2052
Jersey City, NJ 07303-2052

Raymond James                                                                        93,006             5.21%
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102

RBC Capital Markets LLC                                                             125,854             7.04%
Mutual Fund Omnibus Processing
Omnibus
Attn: Mutual Fund Operations Manager
60 S. 6th St. MSC P08
Minneapolis, MN 55402-4413

UBS WM USA                                                                          236,810            13.25%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761

Class C
-------

MLPF&S                                                                              374,012            18.10%
For the Sole Benefit of Its Customers
Attn: Fund Admin
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                         773,265            37.43%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                     116,810             5.65%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                        142,676             6.91%
P.O. Box 2052
Jersey City, NJ 07303-2052

UBS WM USA                                                                          182,080             8.81%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd, 5th Floor
Weehawken, NJ 07086-6761

Advisor Class
-------------

MLPF&S                                                                            1,054,555             5.14%
For the Sole Benefit of Its Customers
Attn: Fund Admin
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                       2,222,134            10.83%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

UBS WM USA                                                                        1,445,927             7.05%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761

Class R
-------

AllianceBernstein L.P.                                                                1,003            99.93%
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712

Class K
-------

AllianceBernstein L.P.                                                                1,003            99.93%
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712

Class I
-------

AllianceBernstein L.P.                                                                  943            99.93%
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712




                               UNCONSTRAINED BOND

            To the knowledge of the Fund, as of January 2, 2019, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the Fund.

            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.




Name and Address                                                              No. of Shares of Class  % of Class
----------------                                                              ----------------------  ----------

Class A
-------

                                                                                                 
LPL Financial                                                                       143,539             5.78%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

MLPF&S                                                                              263,050            10.59%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

National Financial Services LLC                                                     255,678            10.29%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                        317,038            12.76%
P.O. Box 2052
Jersey City, NJ 07303-2052

Sanford Bernstein & Co. LLC                                                         235,000             9.46%
1 N. Lexington Ave.
White Plains, NY 10601-1712

Wells Fargo Clearing Services, LLC                                                  201,144             8.10%
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523

Class B
-------

Ascensus Trust Company                                                                1,828            15.07%
C/F Donna Arciuolo SEP IRA
Ridgefield Park, NJ 07660-1557

Ascensus Trust Company                                                                  950             7.83%
Fredericktown Veterinary Clinic
Rachel Ann Lashley
Danville, OH 43014-9502

Ascensus Trust Company                                                                2,706            22.30%
Phoenix Boys Choir
Georg W. Stangelberger
Phoenix, AZ 85014-1056

Charles Schwab & Co., Inc.                                                            1,000             8.24%
Special Custody Account for the Benefit of Customers
Attn: Mutual Funds
211 Main Street
San Francisco, CA 94105-1905

MLPF&S                                                                                1,232            10.15%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
                                                                                      3,140            25.88%
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052

Class C
-------

MLPF&S                                                                              151,330            17.00%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                          95,710            10.75%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                     135,146            15.18%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                        101,146            11.36%
P.O. Box 2052
Jersey City, NJ 07303-2052

Raymond James                                                                       105,065            11.80%
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102

Wells Fargo Clearing Services, LLC                                                   94,352            10.60%
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523

Advisor Class
-------------

Charles Schwab & Co.                                                              1,857,882             8.58%
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905

National Financial Services LLC                                                   2,197,792            10.15%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310-1995

Pershing LLC                                                                      1,503,913             6.95%
P.O. Box 2052
Jersey City, NJ 07303-2052

UBS WM USA                                                                        1,666,722             7.70%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761

Wells Fargo Clearing Services, LLC                                                1,095,659             5.06%
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523

Class R
-------

Matrix Trust Company Cust. FBO                                                       44,292            46.65%
Miscor Group 401(K) Plan & Trust
717 17th Street, Suite 1300
Denver, CO 80202-3304

Minnesota Life Insurance Company                                                     27,103            28.54%
400 Robert Street N., Ste. A
Saint Paul, MN 55101-2099

State Street Bank and Trust                                                           5,824             6.13%
As TTEE and/or Cust. FBO ADP Access Product
1 Lincoln St.
Boston, MA 02111-2901

Structura Inc. Trustee FBO                                                            7,272             7.66%
Structura Inc. 401K Plan
C/O Fascore LLC
8515 E. Orchard Rd. #2T2
Greenwood Village, CO 80111-5002

Voya Institutional Trust Company                                                      6,091             6.42%
Qualified Plan
1 Orange Way, #B3N
Windsor, CT 06095-4773

Class K
-------

Great-West Trust Company LLC TTEE C                                                  18,488            53.92%
Stoner, Albright & Company Retirement Plan
8515 E. Orchard Rd., #2T2
Greenwood Village, CO 80111-5002

Great-West Trust Co. LLC TTEE                                                         8,056            23.50%
FBO Associated Specialist in Nephrology and Hypertension LLC 401K PSP
8515 E. Orchard Rd., #2T2
Greenwood Village, CO 80111-5002

Mid Atlantic Trust Company FBO                                                        1,859             5.42%
B. C. Flynn Contracting Corp. 401(K) Plan
1251 Waterfront Place, Suite 525
Pittsburgh, PA 15222-4228

Mid Atlantic Trust Company FBO                                                        3,750            10.94%
Roadside Development LLC 401(K) PRO
1251 Waterfront Place, Suite 525
Pittsburgh, PA 15222-4228

Class I
-------

Ascensus Trust Company                                                                2,810            42.21%
C/F Winxnet 401(K) Plan
P.O. Box 10758
Fargo, ND 58106-0758

Wells Fargo Bank                                                                      3,846            57.75%
FBO Aero Precision Repair & Overhaul
1525 West WT Harris Blvd.
Charlotte, NC 28288-1076

Class Z
-------

AB MMSRetirement Vintage 2015                                                       105,719             6.93%
1345 Avenue of the Americas
New York, NY 10105-0302

AB MMSRetirement Vintage 2020                                                       236,356            15.48%
1345 Avenue of the Americas
New York, NY 10105-0302

AB MMSRetirement Vintage 2025                                                       367,117            24.05%
1345 Avenue of the Americas
New York, NY 10105-0302

AB MMSRetirement Vintage 2030                                                       148,718             9.74%
1345 Avenue of the Americas
New York, NY 10105-0302

AB Multi-Manager Retirement 2020 CIT                                                110,365             7.23%
1345 Avenue of the Americas
New York, NY 10105-0302

AB Multi-Manager Retirement 2025 CIT                                                172,207            11.28%
1345 Avenue of the Americas
New York, NY 10105-0302

AB Multi-Manager Retirement 2030 CIT                                                174,423            11.43%
1345 Avenue of the Americas
New York, NY 10105-0302



                                  GLOBAL BOND

            To the knowledge of the Fund, as of January 2, 2019, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the Fund.

            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.




Name and Address                                                             No. of Shares of Class   % of Class
----------------                                                             ----------------------   ----------

Class A
-------

                                                                                                 
Charles Schwab & Co.                                                              5,836,142             6.13%
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905

MLPF&S                                                                            8,427,035             8.85%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                       5,015,339             5.27%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                   3,933,012            14.63%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                      5,550,192             5.83%
P.O. Box 2052
Jersey City, NJ 07303-2052

Wells Fargo Clearing Services, LLC                                                5,017,840             5.27%
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523

Class B
-------

LPL Financial                                                                         3,302             5.37%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

National Financial Services LLC                                                       8,571            13.94%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd, 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                         13,033            21.19%
P.O. Box 2052
Jersey City, NJ 07303-2052

Class C
-------

Charles Schwab & Co., Inc.                                                          926,840             5.59%
Special Custody Account FBO Customers
Attn: Mutual Funds
211 Main St.
San Francisco, CA 94105-1905

LPL Financial                                                                     1,130,783             6.82%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

MLPF&S                                                                            1,962,216            11.83%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                       2,546,113            15.35%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                   1,308,462             7.89%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                      1,658,548            10.00%
P.O. Box 2052
Jersey City, NJ 07303-2052

Raymond James                                                                     1,048,321             6.32%
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102

UBS WM USA                                                                        1,510,929             9.11%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761

Wells Fargo Clearing Services, LLC                                                2,025,430            12.21%
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523

Advisor Class
-------------

National Financial Services LLC                                                  46,461,073             8.71%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                     46,490,169             8.71%
P.O. Box 2052
Jersey City, NJ 07303-2052

Class R
-------

Hartford Life Insurance Company                                                   2,221,230            25.87%
Separate Account 401
Attn: UIT Operations
P.O. Box 2999
Hartford, CT 06104-2999

MassMutual Financial Group                                                          857,531             9.99%
Cust. FBO Massachusetts Mutual Insurance Company
1295 State Street
Springfield, MA 01111-0001

MLPF&S                                                                              557,928             6.50%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

State Street Bank & Trust as TTEE                                                 1,987,239            23.14%
And/or Cust. FBO ADP Access Product
1 Lincoln St.
Boston, MA 02111-2901

Voya Retirement Insurance and Annuity Co.                                         1,062,825            12.38%
Qualified Plan
1 Orange Way, #B3N
Windsor, CT 06095-4773

Class K
-------

Great-West Trust Company LLC TTEE F                                                 243,096            11.60%
Social Studies School Service 401K
8515 E. Orchard Rd. 2T2
Greenwood Village, CO 80111-5002

Voya Retirement Insurance and Annuity Co.                                           217,469            10.38%
Qualified Plan
1 Orange Way, #B3N
Windsor, CT 06095-4773

Class I
-------

John Hancock Trust Company LLC                                                   15,925,753            17.60%
Southern California IBEW-NECA Defin.
690 Canton St., Ste. 100
Westwood, MA 02090-2324

MLPF&S                                                                            9,144,911            10.11%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Sanford Bernstein & Co. LLC                                                      12,758,127            14.10%
1 N. Lexington Ave., 17th Floor
White Plains, NY 10601-1712

Class Z
-------

DCGT Trustee and/or Custodian                                                     3,385,714             5.56%
FBO PLIC Various Retirement Plans Omnibus
Attn: NPIO Trade Desk
711 High Street
Des Moines, IA 50392-0001

FIIOC as Agent for Certain Employee                                               3,192,613             5.24%
Benefits Plans
100 Magellan Way KWIC
Covington, KY 41015-1987

Sanford Bernstein & Co. LLC                                                       6,027,946             9.90%
1 N. Lexington Ave.
White Plains, NY 10601-1712

U.S. Bank                                                                         4,243,815             6.97%
P.O. Box 1787
Milwaukee, WI 53201-1787

Voya Retirement Insurance and Annuity Co.                                         5,317,505             8.73%
Qualified Plan
1 Orange Way, #B3N
Windsor, CT 06095-4773




                                  HIGH INCOME

            To the knowledge of the Fund, as of January 2, 2019, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the Fund.

            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 January 2,
2018.




Name and Address                                                           No. of Shares of Class    % of Class
----------------                                                           ----------------------    ----------

Class A
-------

                                                                                                 
LPL Financial                                                                     7,793,226             5.03%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

MLPF&S                                                                           15,586,451            10.05%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                      12,902,800             8.32%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                  16,374,207            10.56%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                     16,730,532            10.79%
P.O. Box 2052
Jersey City, NJ 07303-2052

Wells Fargo Clearing Services, LLC                                               12,154,113             7.84%
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523

Class B
-------

Miguel Velazquez Villanueva                                                          13,600            11.04%
MD Retirement Plan
FBO Master Account
San Juan, PR 00910-1587

Pershing LLC                                                                          6,576             5.34%
P.O. Box 2052
Jersey City, NJ 07303-2052

Class C
-------

MLPF&S                                                                            9,020,046             9.47%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                      16,073,201            16.87%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                   4,975,431             5.22%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                     14,623,095            15.35%
P.O. Box 2052
Jersey City, NJ  07303-2052

Raymond James                                                                     5,762,894             6.05%
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102

UBS WM USA                                                                        5,883,416             6.18%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761

Wells Fargo Clearing Services, LLC                                               16,804,521            17.64%
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO  63103-2523

Advisor Class
-------------

LPL Financial                                                                    20,015,075             5.99%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

MLPF&S                                                                           33,783,172            10.12%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                      41,692,969            12.49%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                  38,848,150            11.63%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310-1995

Pershing LLC                                                                     23,686,274             7.09%
P.O. Box 2052
Jersey City, NJ 07303-2052

Raymond James                                                                    19,710,549             5.90%
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Pkwy.
St. Petersburg, FL 33716-1102

UBS WM USA                                                                       25,785,273             7.72%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761

Wells Fargo Clearing Services, LLC                                               28,723,835             8.60%
Special Custody Account for the Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523

Class R
-------

Hartford Life Insurance Company                                                   3,014,478            37.04%
Separate Account 401
Attn: UIT Operations
P.O. Box 2999
Hartford, CT 06104-2999

MassMutual Financial Group                                                          961,243            11.81%
Cust. FBO Massachusetts Mutual Insurance Company
1295 State Street
Springfield, MA 01111-0001

MLPF&S                                                                              717,260             8.81%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

National Financial Services LLC                                                     709,720             8.72%
499 Washington Blvd.
Jersey City, NJ 07310-1995

Voya Retirement Insurance and Annuity Co.                                           494,627             6.08%
Qualified Plan
1 Orange Way, #B3N
Windsor, CT 06095-4773

Class K
-------

National Financial Services LLC                                                     730,240             5.07%
499 Washington Blvd.
Jersey City, NJ 07310-1995

National Financial Services LLC                                                  10,165,174            70.54%
499 Washington Blvd.
Jersey City, NJ 07310-1995

State of Florida Employees Deferred Compensation Plan                             1,419,945             9.85%
FBO Participating Employees
C/O IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029

Class I
-------

Charles Schwab & Co.                                                              1,461,796             6.54%
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905

MLPF&S                                                                            1,966,946             8.80%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

National Financial Services LLC                                                   6,424,748            28.73%
499 Washington Blvd.
Jersey City, NJ 07310-1995

Nationwide Trust Company FSB                                                      2,753,511            12.31%
C/O IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029

Class Z
-------

AB All Market Income                                                              6,086,040            13.60%
1345 Avenue of the Americas
New York, NY 10105-0302

AB Conservative Wealth Strategy                                                   2,341,726             5.23%
1345 Avenue of the Americas
New York, NY 10105-0302

JP Morgan Securities LLC                                                          4,532,977            10.13%
For the Exclusive Benefit of Customers
4 Chase Metrotech Center
Brooklyn, NY 11245-0001

MAC & Co.                                                                         2,748,297             6.14%
Attn: Mutual Fund Operations
500 Grant Street
Room 151-1010
Pittsburgh, PA 15219-2502

MLPF&S                                                                            2,659,952             5.94%
For the Sole Benefit of Its Customers
Attn: Fund Admin.
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Voya Retirement Insurance and Annuity Co.                                         2,640,452             5.90%
Qualified Plan
1 Orange Way, #B3N
Windsor, CT 06095-4773




                                  INCOME FUND

            To the knowledge of the Fund, as of January 2, 2019, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the Fund.

            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.




Name and Address                                                            No. of Shares of Class   % of Class
----------------                                                            ----------------------   ----------

Class A
-------

                                                                                                 
Charles Schwab & Co.                                                              5,961,486            26.02%
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905

JP Morgan Securities LLC                                                           1,587,675            6.93%
For the Exclusive Benefit of Customers
4 Chase Metrotech Center
Brooklyn, NY 11245-0001

Morgan Stanley Smith Barney                                                       3,185,593            13.90%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                   2,569,001            11.21%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310

Pershing LLC                                                                      2,740,160            11.96%
P.O. Box 2052
Jersey City, NJ 07303-2052

UBS WM USA                                                                        1,770,624             7.73%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761

Class C
-------

JP Morgan Securities LLC                                                            783,901             6.94%
For the Exclusive Benefit of Customers
4 Chase Metrotech Center
Brooklyn, NY 11245-0001

LPL Financial                                                                       738,639             6.54%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

Morgan Stanley Smith Barney                                                       3,460,578            30.63%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

Pershing LLC                                                                      2,352,579            20.83%
P.O. Box 2052
Jersey City, NJ 07303-2052

Raymond James                                                                       908,822             8.05%
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102

UBS WM USA                                                                          824,672             7.30%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761

Advisor Class
-------------

Charles Schwab & Co.                                                             18,255,787             6.76%
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905

LPL Financial                                                                    25,777,371             9.55%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

MLPF&S                                                                           20,350,430             7.54%
For the Sole Benefit of Its Customers
Attn: Fund Admin
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney                                                      39,874,829            14.77%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

National Financial Services LLC                                                  37,333,174            13.83%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept.
499 Washington Blvd., 4th Floor
Jersey City, NJ 07310-1995

Pershing LLC                                                                     20,087,504             7.44%
P.O. Box 2052
Jersey City, NJ 07303-2052

Raymond James                                                                    15,860,933             5.87%
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716-1102

UBS WM USA                                                                       27,638,593            10.24%
Omni Account M/F
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761




                                   TAX-AWARE

            To the knowledge of the Fund, as of January 2, 2019, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the Fund.

            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 January 2,
2018.




Name and Address                                                             No. of Shares of Class  % of Class
----------------                                                             ----------------------  ----------

Class A
-------

                                                                                                 
LPL Financial                                                                        32,058             5.65%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

Morgan Stanley Smith Barney                                                         152,416            26.86%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

Raymond James                                                                        42,823             7.55%
Omnibus for Mutual Funds
House Account Firm
Attn: Courtney Waller
880 Carillon Pkwy.
St. Petersburg, FL 33716-1102

RBC Capital Markets, LLC                                                            274,071            48.30%
Mutual Fund Omnibus Processing Omnibus
Attn: Mutual Fund Operations Manager
60 S. 6th Street, MSC P08
Minneapolis, MN 55402-4413

Class C
-------

LPL Financial                                                                        11,775            12.63%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

Morgan Stanley Smith Barney                                                          76,565            82.15%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311

Advisor Class
-------------

AllianceBernstein L.P.                                                              902,604            17.39%
Attn: Brent Mather-Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712

Charles Schwab & Co.                                                              1,818,854            35.04%
For the Exclusive Benefit of Customers
Mutual Fund Operations
211 Main Street
San Francisco, CA 94105-1905

LPL Financial                                                                       797,628            15.36%
Omnibus Customer Account
Attn: Mutual Fund Trading
4707 Executive Dr.
San Diego, CA 92121-3091

Morgan Stanley Smith Barney                                                       1,031,696            19.87%
Harborside Financial Center
Plaza II, 3rd Floor
Jersey City, NJ 07311




Custodians and Accounting Agents
--------------------------------

            State Street, c/o State Street Corporation CCB/5, 1 Iron Street,
Boston, Massachusetts 02210, acts as the custodian and as accounting agent for
Total Return Bond, Limited Duration, Income Fund and Tax-Aware, but plays no
part in deciding on the purchase or sale of portfolio securities. Subject to the
supervision of each Fund's Directors, State Street may enter into subcustodial
agreements for the holding of the Fund's foreign securities.

            BBH, 50 Post Office Square, Boston, MA 02110, acts as the custodian
and as accounting agent for Unconstrained Bond, Global Bond and High Income but
plays no part in deciding the purchase or sale of portfolio securities. Subject
to the supervision of each Fund's Directors, BBH may enter into subcustodial
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, and as such may solicit orders from the public to purchase
shares of the Funds. Under the Distribution Services Agreement, each Fund has
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 a
Fund 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 1940 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 Fund.

            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 a Fund 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., or on the Internet at www.abfunds.com.



--------------------------------------------------------------------------------

FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

--------------------------------------------------------------------------------

            The financial statements of each of Total Return Bond, Unconstrained
Bond, High Income, Income Fund and Tax-Aware for the fiscal year ended October
31, 2018 and the report of Ernst & Young LLP, the independent registered public
accounting firm, are incorporated herein by reference to the Fund's annual
report. The annual reports were filed on Form N-CSR with the SEC on January 4,
2019.

            The financial statements of Limited Duration and Global Bond for the
fiscal year ended September 30, 2018 and the report of Ernst & Young LLP,
independent registered public accounting firm, are incorporated herein by
reference to the Fund's annual report. The Funds' annual reports were filed on
Form N-CSR with the SEC on December 7, 2018.

            The annual reports are available without charge upon request by
calling ABIS at (800) 227-4618 or on the Internet at www.abfunds.com.



[A/B](R)
LOGO
                                                                Appendix A


                  Proxy Voting and Governance 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 and Governance Policy ("Proxy Voting and
Governance 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 and Governance 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 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 Voting and
Governance Committee, which provides oversight and includes senior investment
professionals from Equities, Legal personnel and Operations personnel. It is the
responsibility of the Proxy Voting and Governance 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 Voting and Governance 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 Voting and Governance
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 Voting and Governance 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 and
Governance 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 and may take
into account affiliations, related-party transactions and prior service to the
company. We consider the election of directors who are "bundled" on a single
slate to be a poor governance practice and vote on a case-by-case basis
considering the amount of information available and an assessment of the group's
qualifications.

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 may vote against proposals that use requirements that are stricter than the
SEC's framework including implementation restrictions 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 Conflicts Officer for his determination.

In addition, our Proxy Voting and Governance 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.