Seward & Kissel LLP
901 K Street, N.W.
Suite 800
Washington, D.C. 20001
Telephone: (202) 737-8833
Facsimile: (202) 737-5184
www.sewkis.com
April 24, 2015
VIA EDGAR
---------
Mr. Sonny Oh
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: AB Variable Products Series Fund, Inc. ("Registrant") (AB Global
Bond Portfolio, AB Global Risk Allocation--Moderate Portfolio and
AB Multi-Manager Alternative Strategies Portfolio)
Post-Effective Amendment No. 62
File Nos. 33-18647 and 811-05398
Dear Mr. Oh:
This letter responds to comments of the staff (the "Staff") of the
Securities and Exchange Commission (the "SEC") to the post-effective amendments
to the registration statement filed on Form N-1A of AB Global Bond Portfolio, AB
Global Risk Allocation--Moderate Portfolio and AB Multi-Manager Alternative
Strategies Portfolio (each a "Portfolio" and collectively the "Portfolios"), as
provided orally to Anna C. Leist of this office on March 27, 2015. The Staff's
comments and our responses are discussed below.
Prospectus
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General Comments (All Funds)
----------------------------
Comment 1: If the Registrant intends to distribute Summary Prospectuses
with the next post-effective amendment, please provide the
Staff with a draft of the Rule 498(b)(1)(v) legend that the
Registrant intends to use with the Summary Prospectuses.
Response: The Summary Prospectus of each Portfolio will contain the
following legend:
Before you invest, you may want to review the Portfolio's
Prospectus, which contains more information about the
Portfolio and its risks. The Portfolio's Prospectus dated
[__________] and Statement of Additional Information ("SAI")
dated [_________] are incorporated by reference into this
Summary Prospectus. For free paper or electronic copies of the
Portfolio's Prospectus and other information about the
Portfolio, go to http://www.ABglobal.com/links/mf, email a
request to prorequest@ABglobal.com, call (800) 227-4618, or
ask any insurance company that offers shares of the Portfolio.
Comment 2: Please confirm to the Staff that the Registrant will comply
with the requirement to file an interactive data filing as
required by Form N-1A.
Response: The Registrant confirms that it will make an interactive data
filing as required by Form N-1A.
Comment 3: Please ensure that the facing sheet of each Portfolio's next
post-effective amendment includes: (1) the approximate date of
the proposed public offering and (2) the title of the
securities being registered and appropriate related
disclosure.
Response: The facing sheet of the Registrant's next post-effective
amendment will include the approximate date of the proposed
public offering and the title of the securities being
registered and appropriate related disclosure.
Summary Information (All Funds, unless noted)
---------------------------------------------
Comment 4(a): Fees and Expenses of the Portfolio: Please delete the
following disclosure in the fee table narrative that is
neither permitted nor required by Form N-1A:
The operating expenses information below is designed to
assist Contractholders of variable products that invest
in the Portfolio in understanding the fees and expenses
that they may pay as an investor.
Response: We believe that the disclosure is permitted by Form N-1A.
General Instruction 1(b) to Item 3 states that a fund "may
modify the narrative explanation if the explanation contains
comparable information to that shown." Instruction 3(d)(ii)(B)
of Paragraph C of the General Instructions to Form N-1A
permits a fund to modify disclosure in the prospectus
consistent with offering the fund as a specific investment
option for separate accounts. We believe the disclosure in the
narrative is consistent with the flexibility to modify
disclosure for specific types of funds and provides
Contractholders with useful information about the Portfolios'
fees in the context of investing in a separate account.
Comment 4(b): Fees and Expenses of the Portfolio: The following sentences
which appear in the fee table narrative should be repeated in
the Examples narrative:
Because the information does not reflect deductions at
the separate account level or contract level for any
charges that may be incurred under a contract,
Contractholders that invest in the Portfolio should
refer to the variable contract prospectus for a
description of fees and expenses that apply to
Contractholders. Inclusion of these charges would
increase the fees and expenses provided below.
Response: We do not believe it is consistent with Plain English
principles or necessary for investor understanding to include
this narrative disclosure twice in the "Fees and Expenses of
the Portfolio" section of the Prospectus. We have not revised
the Prospectus in response to this comment.
Comment 4(c): Fees and Expenses of the Portfolio- Annual Portfolio Operating
Expenses (AB Multi-Manager Alternative Strategies Portfolio):
Please add a line item for expenses arising from short sales,
if applicable.
Response: A line item in the Fee Table for expenses for short sales is
not applicable.
Comment 4(d): Fees and Expenses of the Portfolio- Annual Portfolio Operating
Expenses (AB Global Bond Portfolio): We note that there is no
line item for Acquired Fund Fees and Expenses. Please delete
the reference to Acquired Fund Fees and Expenses in Footnote
(a) if not currently being applied in the fee table.
Additionally, delete the last sentence of Footnote (b) if the
waiver referred to in that sentence is not currently being
applied in the fee table.
Response: We will revise Footnote (a). The last sentence in Footnote (b)
is disclosure intended to inform investors of the scope of the
fee waiver and could apply during the first year of the
Portfolio's operations. We have not revised Footnote (b) in
response to this comment.
Comment 4(e): Fees and Expenses of the Portfolio- Fee Waiver and/or Expense
Reimbursement: Please confirm that only a Portfolio's Board
can terminate the fee waiver and/or expense reimbursement
obligation prior to its expiration date.
Response: The Registrant confirms that only a Portfolio's Board can
terminate the fee waiver and/or expense reimbursement
obligation prior to its expiration date.
Comment 4(f): Fees and Expenses of the Portfolio- Annual Portfolio Operating
Expenses (AB Multi-Manager Alternative Strategies Portfolio):
Please delete the last sentence of Footnote (b) if the waiver
referred to in that sentence is not currently being applied in
the fee table.
Response: As noted above in the response to Comment 4(d), the last
sentence in Footnote (b) is disclosure intended to inform
investors of the scope of the fee waiver and could apply
during the first year of the Portfolio's operations. We have
not revised Footnote (b) in response to this comment.
Comment 4(g): Fees and Expenses of the Portfolio- Examples: Confirm to the
Staff and disclose in the narrative that the examples reflect
fees as though expense waivers are only in effect for one
year.
Response: We will revise the Prospectus to disclose in the narrative
that the examples reflect the Portfolios' expense limitation
only for such periods during which the expense limitation will
be in effect. We note that the expense limitations for Global
Bond and Multi-Manager Alternative Strategies will extend for
two years.
Comment 5(a)(1): Principal Strategies (AB Global Bond Portfolio): Please
disclose in this section the method in which the Adviser
determines whether a country is an emerging market.
Response: The Portfolio believes that the emerging market countries
reference is a commonly understood reference and that there is
no reason for a precise definition of emerging markets. We
also note that certain additional information about which
countries constitute emerging markets is included in the
"Additional Information about the Fund's Risks and
Investments" section of the Prospectus.
Comment 5(a)(2): Principal Strategies (AB Global Bond Portfolio): Pursuant to
Rule 35d-1 under the Investment Company Act of 1940 ("1940
Act"), please insert the term "bonds" in place of
"fixed-income securities" in the first sentence of the
"Principal Strategies" section, as the Portfolio name suggests
the Portfolio will concentrate its investments in bonds. We
note that not all fixed-income securities are necessarily
bonds.
Response: We believe it is industry practice that funds with the term
"bond" in their name, such as the Fund, frequently have a
policy to invest at least 80% of their assets in "fixed-income
securities" (see, e.g., Guggenheim Enhanced Core Bond ETF
(GIY), Invesco Core Plus Bond Fund (ACPSX) and Dreyfus
International Bond Fund (DIBAX)). Consequently, we have not
revised the Prospectus in response to this comment.
Comment 5(a)(3): Glossary: Relating to the previous comment, please revise the
definition of "Bonds" in the Glossary section of the
Prospectus, and in doing so, please identify the types of
fixed income securities that are deemed to be bonds.
Response: In light of the response to the previous comment, we believe
the definition of bonds is correct and have not revised the
Prospectus in response to this comment.
Comment 5(a)(4): Principal Strategies (AB Global Bond Portfolio): Please revise
the second sentence of the first paragraph to describe how the
Portfolio will invest its assets that are tied economically to
a number of countries in the world (e.g., "Under normal
circumstances, the Portfolio will invest at least 40% of its
net assets in securities of non-U.S. companies").
Response: We will revise the Prospectus in response to this comment.
Comment 5(b)(1): Principal Strategies (AB Global Risk Allocation--Moderate
Portfolio): Please revise the first sentence of the first
paragraph in the "Principal Strategies" section to describe
the term "global".
Response: In response to this comment, we will revise the Prospectus to
clarify the Portfolio's global approach.
Comment 5(b)(2): Principal Strategies (AB Global Risk Allocation--Moderate
Portfolio): Please revise the first paragraph of the
"Principal Strategies" section in accordance with the Plain
English requirements.
Response: We will revise the Prospectus in an attempt to make the
disclosure of the relatively complex investment strategy
clearer.
Comment 5(c)(1): Principal Strategies (AB Multi-Manager Alternative Strategies
Portfolio): Please revise the first sentence of the first
paragraph in the "Principal Strategies" section to comply with
the 80% investment requirement under Rule 35d-1 (e.g., stating
that the Portfolio invests primarily in alternative
investments).
Response: Rule 35d-1 does not apply to investment strategies. The first
sentence of the disclosure states that the Portfolio
"primarily allocates its assets among non-traditional and
alternative investment strategies." The disclosure does not
make any reference to the Portfolio investing in "alternative
investments". We believe the disclosure appropriately
describes its strategies and have not revised the Prospectus
in response to this comment.
Comment 5(c)(2): Principal Strategies (AB Multi-Manager Alternative Strategies
Portfolio): Please disclose that the Portfolio is structured
as a fund of funds.
Response: We will revise the Prospectus in response to this comment.
Comment 5(c)(3): Principal Strategies (AB Multi-Manager Alternative Strategies
Portfolio): Confirm whether the Registrant has, or has applied
for, a fund of funds exemptive order. If not, or if relief
hasn't been received, explain why the Registrant has not
applied for, or received, this relief. Consider adding
disclosure regarding fund of funds exemptive relief similar to
the Prospectus disclosure on the manager of managers relief.
Response: The Registrant has received exemptive relief to invest in
other investment companies in excess of the limits imposed by
Section 12(d)(1) of the Investment Company Act of 1940 from
the Commission (Release No. 31332 (Notice); Release No. 31364
(December 3, 2014) (Order)). We will revise the Prospectus in
response to this comment.
Comment 5(c)(4): Principal Strategies (AB Multi-Manager Alternative Strategies
Portfolio): The "Principal Strategies" section of the
Prospectus states: "In the future, the Adviser may also
determine to allocate the Portfolio's assets to Underlying
Funds employing the Strategies and other strategies not
described in this Prospectus, including, but not limited to,
emerging markets, currency, high-frequency trading,
quantitative and real estate-related assets strategies."
If the investments disclosed in this sentence do not
constitute current principal strategies, please delete, as
applicable, and revise the "Principal Risks" section
accordingly.
Response: This disclosure is intended to inform investors of other
investment strategies that the Portfolio may use. We believe
it is material information for investors. We believe it is
appropriate and material to include a single sentence
regarding the possibility of the use of, or allocation to,
other investment strategies. We have not revised the
Prospectus in response to this comment.
Comment 5(d): Principal Strategies: As reflected in the ICI Letter,
derivatives risk disclosure needs to be tailored to the
contemplated use of the derivatives by a Portfolio and
specific as to a Portfolio's intent. Please ensure that the
derivatives risk disclosure is consistent with the ICI Letter.
Response: The Portfolios believe that the current disclosure is
consistent with the ICI Letter.
Comment 6(a): Principal Risks (AB Global Bond Portfolio and AB Global Risk
Allocation--Moderate Portfolio): Please rename
"Diversification Risk" as "Non-Diversification Risk" and
expand the disclosure to comply with Item 4(b)(1)(iv) (note
that the "Non-Diversification Risk" for the AB Multi-Manager
Alternative Strategies Portfolio could be used).
Response: We will revise the Prospectus to refer to "non-diversification
risk" in response to this comment.
Comment 6(b): Principal Risks (AB Global Risk Allocation--Moderate
Portfolio): Please disclose that "High Yield Securities Risk"
also refers to "junk bonds" (see, e.g., "Below Investment
Grade Securities Risk" for AB Global Bond Portfolio).
Response: We will revise the Prospectus in response to this comment.
Comment 6(c): Principal Risks (AB Multi-Manager Alternative Strategies
Portfolio): The "Principal Strategies" section of the
Prospectus states: "The Underlying Funds' principal investment
strategies may include: (a) equity securities, including
common and preferred stocks, convertible securities, rights
and warrants and depositary receipts ... ".
Please add principal risk disclosure for the risks relating to
the specific types of equity securities referred to in that
sentence.
Response: We do not believe that disclosure about the risks of each type
of equity security is necessary or appropriate. The broad
risks of equity securities are encompassed by various
principal risks currently disclosed in the prospectus, such as
market risk, volatility risk, and undervalued securities risk.
We have not revised the Prospectus in response to this
comment.
Comment 7: Portfolio Managers: Please include the actual beginning date
of the portfolio managers' service instead of "Since
Inception". Please make this same change in the "Management of
the Portfolios" section.
Response: We will revise the Prospectus in response to this comment when
the actual beginning date of each portfolio manager's service
is known.
Additional Information About the Portfolios' Risks and Investments
------------------------------------------------------------------
Comment 8(a): Please revise the caption and the first paragraph of this
section to clarify whether disclosure in this section
discusses Principal and/or Non-Principal Strategies and Risks.
In doing so, if Principal and Non-Principal Strategies and
Risks are described please delineate into two sections with
Principal Strategies and/or Risks first.
Response: The Portfolios will revise the Prospectus disclosure to state
that this section of the Prospectus provides additional
information about the Portfolios' investments and strategies,
including principal and non-principal strategies and risks.
Each Portfolio's principal strategies and risks are identified
in the corresponding Summary Section of the Prospectus.
General Instruction C.3(a) to Form N-1A states that
"Information that is included in response to Items 2 through 8
need not be repeated elsewhere in the prospectus." This
instruction permits a Portfolio to include and expand on
information discussed in response to Item 4 and does not
require that such information be identified again, as a
principal strategy or risk. The Portfolio believes that it has
identified its principal strategies and risks in the Item 4
disclosure and need not repeat such identification in Item 9.
Comment 8(b): Please confirm that all Principal Strategies and Principal
Risks discussed in the Summary sections are more fully
described in this section. Also, confirm that such disclosure
in this section is also discussed in the Summary sections.
Response: Consistent with General Instruction C.3(a) noted above, all
Principal Strategies and Principal Risks in the Summary
Sections are not necessarily more fully described in this
section. Similarly, disclosure in this section is not also
discussed in the Summary sections.
Comment 9: Additional Risk and Other Considerations. Revise the
introductory narrative to this section to clarify whether the
disclosures refer to principal or non-principal risks.
Response: See response to Comment 8(a).
Management of the Portfolios
----------------------------
Comment 10: Please provide the disclosure required by Item 10(a)(1)(iii)
of Form N-1A, which requires a statement that a discussion
regarding the basis for the board of directors approving any
investment advisory contract of the Portfolios is available in
each Portfolio's annual or semi-annual report to shareholders,
as applicable, and providing the period covered by the
relevant annual or semi-annual report.
Response: We will revise the Prospectus in response to this comment.
Comment 11(a): Please provide in your response the file number and date of
the application for manager of managers exemptive relief.
Response: The Registrant has received exemptive relief from the
Commission to appoint and replace sub-advisers and to amend
investment advisory agreements with such sub-advisers that are
that not "affiliated person[s]" as such term is defined in
Section 2(a)(3) of the 1940 Act ("non-affiliated
sub-advisers"), subject to Board approval. (Release No. 31449
(February 6, 2015) (Notice)); (Release No. 31496 (March 3,
2015) (Order)).
Comment 11(b): Please clarify in the manager of managers disclosure in both
the Prospectus and Statement of Additional Information ("SAI")
whether the exemptive application requests relief for all
sub-advisers or only for unaffiliated sub-advisers.
Response: We have revised the Prospectus to state that the exemptive
relief allows the Adviser to hire and fire only non-affiliated
sub-advisers.
Comment 12(a): Management of the Fund - Performance of Similarly Managed
Accounts (AB Global Bond Portfolio): Please confirm and
disclose to the Staff that the Performance Data is based on
all similarly managed accounts that have been managed by the
Adviser and not just the current investment team of the
Portfolio.
Response: The "Performance of Similarly Managed Accounts" section has
been revised to make clear that the Performance Data is for a
single similarly managed registered investment company. The
Portfolio confirms that the Performance Data is based on all
similarly managed accounts that have been managed by the
Adviser.
Comment 12(b): Management of the Fund - Performance of Similarly Managed
Accounts (AB Global Bond Portfolio): Please provide disclosure
that, if the Similarly Managed Accounts' fees were less than
the Portfolio's, then the use of the Similarly Managed
Accounts' fees would have resulted in higher performance than
the Portfolio would have achieved over the same period.
Response: In light of the response to Comment 12(a) above, we will
include comparable disclosure to that requested by the
comment.
Comment 12(c): Management of the Fund - Performance of Similarly Managed
Accounts (AB Global Bond Portfolio): In the third to last
sentence of the second paragraph, please use "net of all fees"
instead of "net of fees."
Response: The Prospectus disclosure has been revised to clarify that the
performance data is net of all fees and expenses of the
similarly managed fund.
Back Cover
----------
Comment 13: Disclose the additional information required by Form N-1A on
the back cover by Item 1(b).
Response: The Prospectus has been revised in response to this comment.
SAI
---
Comment 14: Provide information regarding the Portfolios' transfer agent
as required by Item 19(h)(2) of Form N-1A.
Response: We will revise the SAI in response to this comment.
Comment 15: The cover page of the SAI states that copies of the SAI may be
obtained by contacting the "For Literature" telephone number
on that page. Although a toll free number is provided on the
cover page, it does not indicate that it is a "For Literature"
telephone number. Please instead refer to the toll free
number, or provide the "For Literature" telephone number.
Response: We will revise the SAI in response to this comment.
Comment 16: Fundamental and Non-Fundamental Investment Policies: Please
provide additional disclosure relating to the 1940 Act and
applicable laws that describes the limitations on the
Portfolios' investments in greater detail.
Response: The Registrant believes the disclosure appropriately reflects
each Portfolio's fundamental and non-fundamental investment
policies as approved by the Portfolios' Board of Directors and
has not revised the SAI in response to this comment.
Comment 17: Management of the Portfolios--Advisory Agreement and Expenses
(AB Global Risk Allocation--Moderate Portfolio): Please
reconcile the description of the fee waiver and expense
reimbursement on page 51 with the description provided in the
footnote to the "Annual Portfolio Operating Expenses" table on
page 7 of the Prospectus.
Response: We will revise the SAI in response to this comment.
Comment 18: As applicable, please include all information required for
Item 18(a) and Item 18(b) of Form N-1A.
Response: The SAI has been revised to disclose that as of the date of
the SAI, shares of the Portfolios that have issued shares are
held solely by the Adviser.
Comment 19: Please delete disclosure relating to Frequent Trading in the
SAI that is already provided in the Portfolios' Prospectus.
Any information on such policies disclosed in the SAI that is
not included in the Prospectus should be included in the
Prospectus.
Response: We wish to retain this disclosure in both the Prospectus and
SAI and have not revised the SAI in response to this comment.
Comment 21: Please provide Tandy representations and a response letter in
the form of Edgar correspondence prior to the effective date
of the filing.
Response: The Tandy representations are provided herein.
* * *
We have been authorized to acknowledge that (i) each Portfolio is
responsible for the adequacy and accuracy of the disclosures in the filing; (ii)
Staff comments or changes to disclosure in response to Staff comments in the
filing reviewed by the Staff do not foreclose the SEC from taking any action
with respect to the filing; and (iii) the Portfolios may not assert Staff
comments as a defense in any proceedings initiated by the SEC or any person
under the federal securities laws of the United States.
If you have any additional comments or questions, please contact Kathleen
Clarke or the undersigned at (202) 737-8833.
Sincerely,
/s/ Anna C. Leist
-----------------
Anna C. Leist
cc: Emilie D. Wrapp, Esq.
Eric Freed, Esq.
Stephen J. Laffey, Esq.
Kathleen K. Clarke, Esq.